Bentley Systems Q3 2026 Earnings Call Transcript

Bentley Systems (NASDAQ:BSY) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://bentley-com.zoom.us/webinar/register/WN_T9StoRzJTMSMNGnMCu6j3Q#/registration

Summary

Bentley Systems reported a strong Q3 2026 performance with a 13% year-over-year ARR growth, surpassing its annual outlook range, and a net revenue retention rate reaching a historical high of 110%.

The company’s strategic initiatives included the acquisition of ELIIS to enhance its subsurface modeling capabilities and the divestment of its Cohesive business, which is expected to enhance strategic significance in infrastructure operations.

Management highlighted the resilience of its revenue streams despite global economic challenges, with private infrastructure financing growing and less than a quarter of revenue directly from government sources.

The company is focused on AI adoption and integration, particularly in asset analytics for infrastructure operations, which is already contributing to monetization.

Bentley Systems raised its ARR growth outlook to 12.5% to 13.5%, excluding the impact of the Cohesive divestiture, and expects subscription revenues to reach the high end of its outlook range.

Full Transcript

Eric Boyer (Investor Relations Officer)

Good morning and thank you for joining Bentley Systems’ Q3 2026 results. I’m Eric Boyer, Bentley’s Investor Relations Officer. On the webcast today we have Bentley Systems Executive Chair Greg Bentley, Chief Executive Officer Nicholas Cumins, and Chief Financial Officer Werner Andre. This webcast includes forward-looking statements made as of November 5, 2026 regarding future results of operations and financial position, business strategy and plans, and objectives for future operations of Bentley Systems, Inc. All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements.

This webcast will be available for replay on Bentley Systems’ investor relations website at investors.bentley.com on November 5, 2026. After our presentation, we will conclude with Q&A. And with that, let me introduce the Executive Chair of Bentley Systems, Greg Bentley.

Gregory S Bentley (Chairman)

Welcome and thanks to each of you for your interest and attention. As always, we’re excited to report Q3 2026 operating performance, in which many factors contributed so impressively that our key metric, year-over-year ARR growth, after already notching up during each quarter of 2026 at 13%, surpassed our annual outlook range. Our NRR, net revenue retention, for the quarter also reached a historical high of 110%. Thanks to Nicholas and our teams for stalwart global execution.

Being purposeful about programmatic acquisitions, we define our business performance ARR growth to include the generally rather minor ARR onboarded with these, the last of which had occurred back in Q4 2025. I am very enthusiastic about the substantive rationale for our just announced Q4 2026 acquisition of ELIIS, as Nicholas will further explain, by expanding both the scope and the reach of Seequent’s market-leading comprehensive subsurface modeling.

It is also accretive to our ongoing growth rate. Werner will quantify the business performance ARR growth impact of the acquisition and also pro forma excluding our Cohesive business, the divestment of which we’ve also just concluded. Although Cohesive will no longer be financially consolidated, I will make the case that its strategic significance for us, in support of our generational opportunity in infrastructure operations and maintenance, can become greater.

Last quarter I showed how we are uniquely well positioned for this operations lifecycle opportunity. In fact, among our enterprise accounts—those spending over $100,000 per year with us—more at each enterprise tier are spending more with BSY, our owner-operators, than our project delivery firms, their supply chain, who make up the other half of our business. As I also showed last quarter, 346 of our enterprise accounts are among the 457 ex-China Bentley Infrastructure 500 top owners in the world, ranked on their net infrastructure asset value.

To underscore the compelling magnitude of this O&M lifecycle opportunity, these existing enterprise accounts’ collective infrastructure asset value is $15.5 trillion. In our annual BI 500 reporting, we classify and analyze the top owners and their asset values informatively. A relevant question this quarter is whether the recent surge in government bond yields globally could materially impact infrastructure investment by encroaching on sovereign government budgets. The evidence dispels this potential concern. As you see, perhaps surprisingly and again ex-China, the proportion of the top owners’ collective infrastructure asset value that is owned privately is half again as large as the proportion owned publicly.

Drilling down to the public-private distribution of BSY’s revenue from the enterprise accounts, which represents over three-quarters of our total revenue, as shown here, underscores this resilience. While the largest infrastructure sector for BSY is public works/utilities, this includes the large investor-owned utilities, and half of our revenue in public works/utilities is from the private project delivery supply chain doing the capital project work.

All told, less than a quarter of our enterprise revenue is directly from any level of government, and within governments more of our enterprise revenue is from the combination of state, provincial, and local governments than from federal governments. Our revenue proportion directly from the U.S. federal government is less than 1%. Among public works at all levels of government, the bulk of infrastructure spending is financed through utility rates, user fees, motor fuel and vehicle taxes, and other dedicated sources rather than full faith and credit. The overriding objective observed everywhere is to avoid subjecting infrastructure investment—given its fundamental primacy to support all other economic, environmental, and social priorities—to the tightening constraints of public budgets and/or credit factors.

Greater stress in global sovereign credit quality and spending capacity accelerates private financing of infrastructure investment, both by necessity and choice, and increasingly through varied blended finance alternatives in addition to traditional P3 public-private partnerships. Auspiciously for BSY, private infrastructure financing is most often effectuated through design-build-operate concessions, incubating lifecycle engineering digital twins as the perfect prescription.

In magnitude by sector, our own digital twin opportunity in infrastructure operations corresponds closely to the BI 500 top owners’ distribution of asset value by their infrastructure sector classification. For owner-operators within the mainstream infrastructure sectors of public works, utilities, industrial, and resources, the compelling economic potential of engineering-grade digital twins during the operating lifecycle is to enable better maintenance decisions—performing only what, when, and how would be determined at the engineering level to be necessary and effective—planned in 3D while continuously monitoring in 4D and simulating throughput, resilience, and safety.

The ideal way to effectuate such improved maintenance would be in conjunction with an owner’s enterprise asset management system responsible for maintenance work orders and their history. In keeping with our long-standing determination to integrate with, rather than to replicate, the functionality of enterprise administrative systems—and so as not to handicap our sales force by contending against them—we undertook to partner with IBM Maximo, by far the EAM environment most prevalent among our owner-operator accounts and prospects, to explore and to learn how to introduce operating digital twins. Just before our IPO six years ago, we acquired the original Cohesive, a leading Maximo systems integration firm, and then combined several subsequent Maximo services acquisitions into our eponymous captive global digital integrator.

The enlarged Cohesive would go on to encounter sustained headwinds as Maximo customers responded slowly to IBM’s enforced migration from sunsetted on-premise Maximo to managed services. Cohesive utilization has since then improved substantially, but after the all-consuming distraction of the reluctant migrations, digital twin integration with Maximo remains nascent. During this fray, very capable PE-funded entrepreneurs recognized a compelling opportunity and founded UK-based Naviam by consolidating most of the world’s remaining Maximo business partners. Naviam’s breakthrough was to very successfully institutionalize provisioning comprehensive Maximo hosting plus ancillary cloud services. We are very pleased to have now joined forces by merging Cohesive into Naviam and, in exchange for becoming a significant minority investor in this fast-growing, profitable, recurring revenue business—now a fully scaled and credibly independent digital twin integrator.

Beyond financial investment returns, we will gain as Naviam adds Bentley Infrastructure Cloud and our iTwin technology to its Maximo-additive repertoire, with its services force now including our former Cohesive colleagues forward-deployed throughout the Maximo footprint. The distribution by sector here of Naviam’s business post-Cohesive reinforces this mutual synergy, while serving also as a representative proxy for the stronghold business mix of Maximo itself. Only about 10% is outside of infrastructure. Just as for BSY, the majority of Naviam’s all-Maximo-centered business is in public works/utilities, followed by the resources sector, then industrial.

Among our owner-operator accounts, we remain on the cusp of advancing engineering software and AI throughout the full infrastructure lifecycle. A case in point are the 346 ex-China BI 500 top owners who, as BSY accounts, already spend on average almost a million dollars annually with us each, but so far—corresponding to where we started and our direction of progress as a company—that’s mainly for CapEx project delivery, not OpEx asset performance, leaving a big opportunity cost for them and an emerging opportunity for us.

On average, these 346 accounts subscribe to six brands—on average, three of our top 10 brands—across our portfolio, thus generally including both modeling and simulation functionality within our portfolio of Bentley Open applications. As I mentioned last quarter, almost half already leverage Bentley Infrastructure Cloud as a system of record for at least the portion of their infrastructure engineering performed with our applications. Most of this usage is of ProjectWise.

A small minority to date do use AssetWise for asset information management, thus sharing the same Bentley Infrastructure Cloud schema for OpEx and CapEx, but so far only rarely throughout the full infrastructure lifecycle. But now, enabled and empowered by AI, asset analytics can be considered the keystone of our strategy to finally close the loop between our CapEx point of departure and our OpEx opportunity for ultimately every infrastructure asset. Instant-on digital twins are becoming feasible by leveraging AI through our Reality Capture software and continuous surveying, including autonomously, to inspect as-operated conditions of the infrastructure asset, updating and 4D monitoring its engineering-grade digital twin in Bentley Infrastructure Cloud.

The differentiating payoff is that asset analytics then closes the lifecycle loop by agentically invoking our pertinent modeling and simulation capabilities to intrinsically calibrate and simulate the ongoing capacity, resilience, and safety—supporting asset performance management algorithms to optimize maintenance strategies and scheduling, uptime, and throughput. Our exemplary use cases so far are for integrated grid structural resilience, ranging from cell towers to distribution poles.

Our imperative is to extend our asset analytics platform across our application portfolio and across all accounts, with AI appropriate to create, curate, and leverage operating digital twins for every infrastructure asset. By rights, AI-enabled asset analytics for infrastructure operations—although more volatile along the way by virtue of its less predictable sales cycles for major procurements—should become increasingly material eventually within our overall business proportions, but first within our incremental growth.

And, as it happens, asset analytics was among the converging factors behind unsurpassed business performance ARR growth in Q3 2026. For the fuller picture of all those factors, now over to Nicholas. Thank you.

Nicholas Cumins (Chief Executive Officer)

Thank you, Greg. Last month in Singapore we hosted our 2023 Year in Infrastructure event, now focused on our global Awards competition. I encourage everyone to explore our website to learn more about this year’s finalists, winners, and Founders’ Honorees, and to watch the event’s recordings, including my own reflections on the practical progress made with AI. Shortly before and after Singapore, two important industry publications were released. The American Society of Civil Engineers published its first AI Roadmap for Civil Engineering; AEC Advisors issued their comprehensive State of the AEC Industry report. Together, these developments capture where the infrastructure industry stands today with AI and where it is heading.

The ASCE Roadmap points out that civil engineers are not only users of AI; they are the enablers of the physical infrastructure AI requires to exist. Every AI inference ultimately depends on physical fiber backbones, power generation, high‑voltage transmission lines, substation interconnections, and water cooling networks. That enabling infrastructure must be planned, designed, built, and maintained by engineers. At the very same time, global demand for new and better infrastructure is vastly outpacing available engineering capacity.

The only way to bridge this gap between supply and demand is by empowering engineers with AI. The AEC Advisors report confirms that engineering firms understand this clearly. Faced with severe talent shortages, 70% of AEC firms expect workflow automation to help them most over the next 18 to 24 months, automating repetitive tasks such as routine drafting and documentation to free up engineering capacity. The report also shows that the larger the firm, the more likely they will use AI to generate and evaluate design alternatives faster—what is called optioneering.

We saw this exact transition play out in our Year in Infrastructure Awards, where more than 25% of all submissions and close to 70% of all finalists use AI in their projects. The greatest economic leverage remains in design, where early engineering decisions have an outsized impact on an asset’s total life‑cycle cost and long‑term performance. Take Ayesa, the winner in our Bridges and Tunnels category for the Porto Metro expansion in Portugal. Traditionally, geotechnical modeling is so labor‑intensive that engineering teams can only evaluate a handful of viable scenarios before project deadlines force them to stop. AI changes that dynamic entirely. Ayesa deployed AI agents to evaluate massive simulation outputs from our geotechnical solver PLAXIS and ran more than 100 simulations instead of just a handful.

The result was not just a 30% reduction in design cost, but a significantly superior design that saved 4,500 cubic meters of concrete. What is remarkable about our YII submissions is that because award entries reflect completed project milestones, they were based on technology that existed six, 12, or 18 months ago. When you consider the accelerating pace of AI development, that is a very long time. Back then, teams like Ayesa had to write extensive custom code to connect AI to our solvers, a capability out of reach for most firms. At YII, I used my keynote to show what is possible here and now when you use AI with our engineering applications at machine speed via MCP servers.

Yet with all that generative power comes great responsibility. In infrastructure, engineering decisions carry real physical consequences. Precision is mandatory and the margin for error is zero. There is no room for AI sloppiness in our space. That is why we have to establish a clear division of labor. Optimization is the domain of the machine. Navigating the trade‑offs and holding professional judgment remains the domain of the engineer. This principle is fully aligned with the AI Roadmap for Civil Engineering.

In their human‑AI boundary matrix, ASCE drew strict red lines. Accountability is never delegated, and AI outputs in sealed work must always be verified by a licensed professional. Our deterministic solvers are precisely the computational engines that engineers and AI agents rely upon through optioneering, iterating across thousands of physics‑based simulations to converge on the better design. Finally, as our technology becomes increasingly operated at machine speed, business models must evolve to match. With so much productivity being unlocked, engineering firms recognize that their own commercial models have to adapt. The AEC Advisors report shows that 63% of the largest engineering firms expect a significant move away from time‑and‑materials billing over the next three to five years toward fixed‑fee and value‑based pricing to capture the economic dividends of AI‑powered optimization.

And in our discussions with accounts, they recognize that as their own business models evolve, our commercial model will evolve as well. For now, our focus remains on driving adoption and validating these new agency workflows. Monetization will come next. Seeing the immense potential firsthand, the sheer power of using our applications at machine speed, and the profound value that will unlock across the entire infrastructure lifecycle, you can count Bentley Systems firmly in the AI optimist camp.

We are convinced that artificial intelligence will usher in a new era for infrastructure engineering, one where the capacity and capability of the profession will expand significantly to deliver safer, more resilient, and higher‑quality infrastructure more efficiently. Now turning to our business highlights for the third quarter, our year‑over‑year ARR growth further accelerated to 13% driven by broad‑based demand across our core sectors and disciplined execution across all regions. Our net revenue retention rate reached 110%, underscoring steady expansion across existing accounts. Our renewal performance with E365 accounts also remains strong even though Q3 is a small quarter for renewals, driven by solid floor uplifts.

As accounts commit to expanding their engineering capacity with Bentley Systems, new logos contributed about 300 basis points of ARR growth, once again primarily through our SMB business. Through Virtuoso, our flagship commercial program for SMB accounts, we added over 600 new logos. The underlying sentiment across SMB accounts remains resilient with healthy project backlogs. SMB accounts are also showing increased interest in AI and want to engage with us on it.

Turning to our tone of business by infrastructure sector, Resources was once again our fastest‑growing sector overall. Seequent delivered another standout quarter driven by sustained strength in mining. Mining companies continue to prioritize brownfield optimization and expansion to meet the urgent global demand for critical minerals supporting electrification, supply‑chain security, and the rapid build‑out of AI data centers. We recently announced an acquisition to expand the Seequent portfolio in Resources, and we’ll come back to that in a few minutes.

Our largest sector, Public Works and Utilities, delivered another quarter of strong growth fueled by sustained global infrastructure spend and grid modernization. The growth of PLS continues to stand out, driven by the global imperative to strengthen and expand the transmission grid. Our asset analytics business also showed strong performance, securing strategic enterprise expansions in telecommunications, tower installation, and transportation infrastructure.

ARR growth in the Industrial sector remains solid, in particular in power generation, while commercial facilities remain relatively flat, consistent with recent quarters. Turning to our tone of business by geographic region, in the Americas, our largest region, growth further accelerated across both North America and Latin America. In the United States, the macro environment remains very healthy. Our engineering accounts continue to operate at capacity with robust backlogs sustained by continued federal and state public funding alongside substantial private capital deployments. Departments of Transportation continue to be a growth engine as they advance their digital delivery initiatives.

The scale of private investment in AI data centers continues to generate tailwinds across our portfolio. Latin America delivered an exceptional quarter led by mining and momentum across water infrastructure. EMEA delivered solid performance supported by sustained infrastructure commitments and strong renewal execution across major accounts. Growth was once again led by the Middle East despite the ongoing conflict, with strong execution in the UAE and Saudi Arabia as major airport and transportation programs continue to move forward. In the U.K., growth remained solid, driven by major ongoing national programs including Sizewell C, National Highways, and HS2.

In continental Europe, despite a traditionally slow quarter, we’re encouraged by early signs of infrastructure funding deployment in Germany, where major rail and highway tenders are beginning to move forward. We also saw major European consultancies shift more engineering work to their delivery centers in India, moderating our consumption growth in Europe but helping fuel our acceleration in Asia Pacific. And in fact, Asia Pacific was our fastest‑growing region this quarter. India delivered very strong growth driven by both massive domestic investments in water, grid, and offshore energy infrastructure and by its role as the global engineering hub for multinational firms. Australia and New Zealand delivered strong growth underpinned by the broader Resources sector and notable expansions from key mining accounts. In Southeast Asia, demand across regional civil projects and power networks drove strong growth as well.

China, which represents less than 2% of our ARR, continues to suffer from geopolitical and macroeconomic headwinds that we expect to persist in the foreseeable future. The strength across the remainder of Asia Pacific more than offsets these headwinds. Finally, today I want to briefly highlight our recent acquisition of Eliis, now part of Seequent, our subsurface company. Seequent is dedicated to helping organizations understand the underground, and to understand the subsurface, geoscience relies on a variety of data collection methods, from drilling boreholes and analyzing physical rock cores to measuring acoustic, magnetic, gravity signals from the surface. With Eliis, we are adding another important signal to our portfolio.

Seismic interpretation provides the highest resolution and the deepest geophysical picture of the subsurface. Historically, seismic methods have been at the forefront of oil and gas exploration, where Eliis established its leadership. Yet as seismic data acquisition costs decline and resolution increases, this method is proving increasingly essential across the broader Resources sector. It is already opening new frontiers in energy, such as identifying reservoirs for low‑temperature geothermal energy and carbon capture, and helping mining companies detect deeper critical mineral deposits.

Seismic interpretation also has direct applicability in civil infrastructure, where high‑resolution imaging de‑risk large transport corridors, complex tunneling projects, offshore wind farm foundations, and other critical assets. By bringing seismic data directly into Leapfrog’s 3D implicit modeling, we are giving geoscientists and engineers a far more complete, connected picture of the subsurface. This acquisition advances our mission to reshape how infrastructure and critical resources are delivered and optimized globally.

And with that, over to you, Werner.

Werner Andre (Chief Financial Officer)

Thank you, Nicholas. We are pleased with our performance so far this year. Our third quarter results extend the momentum of the first half, with ARR growth accelerating once again and subscription revenues and profitability ahead of our expectations both in the quarter and year to date. Total revenues for the third quarter were 422 million, growing 12.2% year over year and 12.7% in constant currency. Year to date, total revenues increased 13.2%, or 12.3% in constant currency.

Our performance continues to be led by our mainstay subscription revenues, which represented 92% of total revenues during the quarter. Subscription revenues increased 12.4% year over year, or 12.9% in constant currency, reflecting continued strength across both our E365 and SMB initiatives. Year to date, subscription revenues increased 13.5%, or 12.7% in constant currency. In our smaller and less predictive revenue streams, perpetual license revenues for the quarter were approximately 13 million, up roughly 2 million year over year, and approximately 31 million year to date, down about half a million and representing approximately 2% of total revenues. Services revenues increased 8.4%, or 8.8% in constant currency, driven by managed services within Cohesive. Year to date, services revenues increased 15.2%, or 13.8% in constant currency.

As Greg described, we completed the divestiture of Cohesive on October 13th. Year to date, Cohesive represents approximately 50% of our services revenues and approximately 3.5% of total revenues. Beginning in the fourth quarter, we therefore expect services revenues to decline year over year through 2027 and to represent less than 3% of total revenues compared with approximately 5% year to date. While Cohesive’s departure reduces our revenues, what remains is of higher quality.

Subscriptions will represent approximately 95% of our total revenues, up from 92%, making our revenues even more recurring and predictable. As of September 30, our last 12 months recurring revenues were 1,528,000,000, an increase of 13.2% year over year or 12% in constant currency, representing 93% of total revenues. Our last 12 months constant currency account retention rate remained consistent at 99% and our constant currency net revenue retention rate increased to 110%. The combination of our high retention rates and new business momentum gives us confidence in the continued durability of our recurring revenue growth.

Now turning to ARR, we ended the third quarter with ARR of 1,583,000,000 at quarter-end spot rates. On a constant currency basis, our year over year ARR growth rate accelerated to 13%, ahead of our expectations and above the high end of our annual outlook range, marking the second consecutive quarter of acceleration this year. Year over year growth included approximately 40 basis points from our Talon acquisition, unchanged from the prior two quarters.

Sequential constant currency growth in the quarter was 3.1%, all organic, compared with 2.2% in the third quarter of last year, and has exceeded the prior year quarter in each quarter of 2026. Asset analytics contributed meaningfully to both our year over year and sequential growth, with large contract expansions from existing accounts accounting for approximately half of the improvement in sequential growth over last year. Our GAAP operating income was 123 million for the third quarter and 337 million year to date. As I have discussed previously, our GAAP results can be impacted by deferred compensation plan revaluations and other acquisition-related items. Moving to adjusted operating income less operating stock-based compensation, which was 135 million for the quarter with a margin of 32.1% compared to 28.1% a year ago, and 392 million year to date with a margin of 31.2% compared to 30.7% a year ago.

As planned, we invested earlier in the year than in 2025, so our first half margin trailed the prior year and our second half margin improvement is correspondingly higher. Beyond this planned pattern, our results were ahead of our expectations, reflecting a mix shift towards higher-quality subscription revenues compared to our original plan, along with disciplined cost control. Our year to date G&A also reflects investments in our new enterprise-wide finance and quote-to-cash platforms, which went live during the second quarter, driving a step-up in costs around the go-live that was contemplated in our outlook.

G&A growth moderated to 14% in the third quarter from 27% in the first half. Notably, we did not adjust these costs out of our profitability. We absorbed them within our margin commitment, underscoring the quality of our year to date performance while positioning us for greater efficiency and operating leverage. We remain well positioned to deliver on our AOI less operating SBC outlook, including our annual constant currency margin improvement. Our free cash flow for the quarter was 101 million, reflecting working capital timing, with the year weighted towards a stronger fourth quarter. On a last 12 months basis, free cash flow was 489 million, up 6% year over year. Year to date free cash flow was 353 million, down 8%, reflecting two factors: we had exceptionally strong collections at the end of 2025, which created a tougher comparison, and our plan to invest earlier in the year. Thank you.

We continue to execute a disciplined and balanced approach to capital allocation. Year to date we reduced net debt by 88 million while returning capital to shareholders through 168 million of share repurchases, up meaningfully from the prior year, and 64 million of dividends. Our balance sheet supports significant strategic flexibility. We ended the quarter with cash of approximately 150 million and 1,260,000,000 of availability in our revolving credit facility, and our net debt leverage was 1.7 times adjusted EBITDA, down from 1.9 times in the prior quarter, with our cash interest exposure mitigated by the low fixed coupon on our convertible notes and our 200 million interest rate swap expiring in 2030. This provides ample capacity to support our strategic priorities, including programmatic acquisitions such as Eliis, addressing our mid-2027 convertible notes at maturity, ongoing share repurchases, and dividends.

Moving to our outlook, as discussed, year to date we have been exceeding our expectation in constant currency ARR growth, subscription revenues growth, and profitability. Our original outlook did not contemplate the divestiture of Cohesive. In order to provide a like-for-like comparison, we are presenting our updated 2026 ARR growth outlook excluding the impact of the divestiture of Cohesive. On this basis, given our year to date performance, expected continued momentum, and the programmatic acquisition of Eliis, which we expect to contribute approximately 100 basis points, we are raising our outlook to 12.5% to 13.5%, above the high end of our original range of 10.5% to 12.5%. Including the impact from the divestiture, we expect reported ARR growth to be approximately 100 basis points lower. We are also updating our revenue outlook for the divestiture of Cohesive, which we expect to reduce fourth quarter revenues by approximately 12 million, about three-quarters of it in services.

Our updated outlook for total revenues at the exchange rates assumed in our 2026 outlook is 1,673,000,000 to 1,703,000,000. With this, we now expect our constant currency subscription revenues growth towards the high end of our 11% to 13% outlook range, and constant currency perpetual licenses and services revenues to remain approximately flat. Reflecting the divestiture, we are maintaining our AOI less operating SBC outlook range of 495 to 510 million, and we continue to expect free cash flow within our outlook range of 500 to 570 million, including the impact of higher cash taxes related to the Cohesive transaction.

As in prior years, our fourth quarter free cash flow will depend on the timing of year-end collections relative to our January 1st renewal cycle. For modeling purposes, we now expect cash taxes of approximately 55 to 60 million and weighted average diluted shares of approximately 319 million, reflecting our higher share repurchases. And also for modeling purposes, year to date through September 30th, Cohesive contributed approximately 35 million of services revenues and approximately 10 million of subscription revenues.

With regards to foreign exchange rates, through the third quarter the US dollar strengthened relative to the exchange rates assumed in our 2026 annual financial outlook, resulting in approximately 8 million less revenues from currency. If end-of-October exchange rates were to prevail throughout the fourth quarter, our revenues would be negatively impacted by an incremental 5 million relative to the exchange rates assumed in our 2026 outlook. And with that, over to Eric for Q&A. Thank you.

Eric Boyer (Investor Relations Officer)

Thanks, Werner. Just a quick point of note: next quarter the Q&A portion of the call will be audio only. And as always, please limit your questions today to just one. The first question comes from Joe Vruwink from Robert W. Baird.

Joe Vruwink (Analyst at Robert W. Baird)

Great, thanks very much for the time. Today I wanted to ask about some of the acquisition activity in the mining space. Of course you talked about your recent activity, but I think there’s been three acquisitions now since 2025 of some of the more platform companies, and I’m curious what you make of this. Obviously you saw this coming because Seequent was way back in 2021. But in terms of the recent M&A activity, what does that maybe signal about a desire of operators to have more software exposure, or what AI might ultimately end up meaning to this specific product portfolio?

Gregory S Bentley (Chairman)

Nicholas, maybe you’ll want to speak more to this, but my observation would be, once again, as in the case of EAM, there are ERP systems for mining, in effect, that involve more administrative activities, and we don’t covet being in that space. It’s the 3D engineering where we have most to add in the geosciences aspect, and otherwise the competitors are formidable there. But the 3D modeling is unique in mining in that every scoop of earth or substrate gives you new information that you can incorporate right away, and that is our contributing differentiator in mining.

Nicholas Cumins (Chief Executive Officer)

Yeah, Joe, I will add that no surprise, there is so much activity going on because mining is very strong now. Depending on which acquisitions you’re referring to, the way we are expanding our portfolio in mining with Seequent is, as you could tell since the time of the acquisition more than five years ago now, by adding more capabilities that help better understand what’s in the ground. So we’ve added capabilities to process signals like magnetic signals, for example, or electrical.

And with the acquisition of Eliis, now it’s seismic interpretation. So we have a pretty broad and deep portfolio now of capabilities to help better understand what’s going on in the ground, which is of critical importance for mining for sure. But it is also a platform for us to grow beyond mining and resources. Eliis, as I mentioned in my prepared remarks, is very strong in oil and gas, and those capabilities of Eliis seismic interpretation are necessary for us to grow beyond high-temperature geothermal energy production into low temperature.

But those capabilities are also very relevant for civil, and that’s what makes us quite distinct as well, which is we take all of the Seequent-type capabilities to understand the underground and make them available in civil workflows right now in order to de-risk project delivery and ensure long-term resilience of infrastructure assets.

Eric Boyer (Investor Relations Officer)

Thanks, Joe. Next question comes from Matt Hedberg from RBC Capital Markets.

Matt Hedberg (Analyst at RBC Capital Markets)

Thanks, Eric. First of all, congrats on the results, guys. Really great to see, I guess. I’m curious, you know, there was a lot of commentary. I think most of it was from Nicholas on AI. It really does seem like you guys have continued to lean into that from a functionality perspective and it’s resonating with clients and I guess, you know, from a monetization perspective, I think, Nicholas, you said it’s going to eventually come, it’s going to take time.

But I’m just kind of curious with good results here and it’s not like asset analytics is the real star of the quarter. Are you seeing any indication that AI is positively becoming a tailwind to growth today? And just as we start to think about the next few years, how should we think about AI monetization? Kind of feathering into growth.

Nicholas Cumins (Chief Executive Officer)

Thank you, Matt. Yes. So AI in terms of monetization, this is already happening indeed with asset analytics. As you pointed out, our asset offering is leveraging AI to help owner-operators better understand the physical conditions of their infrastructure assets. And Q3 was a great quarter for asset analytics. We did a number of deals with existing accounts, both for telecommunication tower inspection and for road monitoring. So monetization for AI is already happening there.

That really reflects, by the way, where we are with AI overall in the infrastructure ecosystem. The first use case started many years back in operations and maintenance, and that became the angle that we took with asset analytics. Now when it comes to AI in design, this is still very early stage and we are really focusing right now on adoption, exploration, validation. We are making sure that from a technical standpoint, we will be able to start monetization in 2027. However, as we said before, we don’t expect monetization of AI in design to be a material growth driver in 2027. It will be the year where we start. The decision to start will be really based on whether accounts are moving now from exploration to production, number one.

And number two is how fast are they going to adopt our new applications that have these MCP servers in order to be able to use these applications at machine speed with AI. So that’s where we are. Our focus again is all about adoption. The feedback that we’re getting from the accounts, as you said, is very positive. When they understand, they realize the potential here, which is unlocked, they’re truly excited and so are we.

Eric Boyer (Investor Relations Officer)

Thanks, Matt. Next question comes from Jason Salino from KeyBanc Capital Markets.

Jason Salino (Analyst at KeyBanc Capital Markets)

Hey, gentlemen. So I wanted to ask about the acquisition. Nicholas, you know, I know Seequent has been growing I think 2x your corporate average. Maybe can you share some financial profile metrics of the acquisition, if there’s any customer overlap with Seequent or yourselves, you know, so any color there would be helpful.

Nicholas Cumins (Chief Executive Officer)

So the core business of EDIS is oil and gas. So there is overlap actually with traditional accounts of Bentley more than of Seequent. From a financial standpoint, it is accretive to our growth and it’s roughly in line with us from a margin standpoint. So it really is a very high-quality asset that we were able to acquire here.

James Lee (Chief Operating Officer)

Okay, great. I’ll add that it’s accretive to our revenue multiple as well, reasonable from that standpoint. And then in terms of overlap, it happens that the oil and gas owner-operators, as we think of them, are now all-of-the-above energy operators and they are interested in applying Seequent modalities beyond seismic to opportunities such as geothermal and carbon capture. So we have now the account access to go beyond pilots into scaled offerings for the oil and gas energy, diversified energy providers as they diversify into other underground sources.

Eric Boyer (Investor Relations Officer)

Thanks, James.

Jason Salino (Analyst at KeyBanc Capital Markets)

Thank you.

Eric Boyer (Investor Relations Officer)

Yeah. The next question comes from Daniel Jester from BMO.

Daniel Jester (Analyst at BMO Capital Markets)

All right, good morning everyone and thank you for taking my question. I wanted to go back to the slide in the presentation that talked about sort of how different companies by size expect the change in their business models. And it looked like there was a lot of diversity in terms of expectations. You know, enterprise, I think 60% expect a big change and SMBs less so. So I have a two-part question, I guess. Number one, any hypothesis as to why there’s such diversity in terms of expectations for how those business models may change?

And then two, as your enterprise customers do change their business models, how may you have to change yours to meet their future needs? Thank you.

Nicholas Cumins (Chief Executive Officer)

Great question, Daniel. So on the first one, the way I would interpret that difference is that the larger the firm, that was another slide, the larger the firm, the more likely they’re going to be starting to use AI in design to not just automate but to optimize designs. And my read on this and also talking to larger accounts is that as they do this, then they really realize the potential. And based on this they also realize that a business model which is primarily based on time and material is probably not right for them to capture their fair share of the value that’s going to be created, that the conversation has to shift to value and outcomes.

And so the incentives are perfectly aligned with what ultimately is good for the owner-operators, which is optimal designs. Yeah, so that’s that. Then on the second one, as a council are saying, yes, they’re going to have to shift to something which is maybe fixed price or indeed outcome-based, et cetera. There’s not necessarily an implication that our business model will have to change to accommodate for that. I think that these two things are actually quite compatible.

The realization, however, it’s a little bit the same for us, which is if our commercial models are somewhat user-centric and somewhat based on how much time users are spending with their applications, then going forward this might not be the right way for us to capture also a fair share of the value that’s going to be created and we have to shift to something else. It’s actually very interesting in this conversation with the accounts because there’s a lot of reciprocity.

Right. They realize that they have to evolve their business model. And based on this they also understand that we also have to evolve our business model, that especially with E365 as a program, application days, it is a proxy for how much time, in a way, engineers are spending with our software. And if they start to use our application at machine speed, then on top of that there should be another price.

Daniel Jester (Analyst at BMO Capital Markets)

Great. Thank you very much.

Eric Boyer (Investor Relations Officer)

Thank you. Next question comes from Siti from Mizuho.

Siti Panigrahi (Analyst at Mizuho)

Great, thank you. Congrats on the quarter. So if I ask the ARR growth, you know, that reached almost… that reached 13% and about half of that better sequential growth came from large expansion in existing accounts with asset analytics contributing to that. So for this year the question is how much of that momentum is already locked into Q4 given your outlook now implied 11.5 to 12.5 ex this? And for 2027, how do you rank the growth drivers like uplift in renewals, new logo, and asset analytics?

And now even, Nicholas, you talked about AI-related consumption. So which of them do you expect to add growth versus just sustain it heading into 2027?

Nicholas Cumins (Chief Executive Officer)

So Siti, first of all, you definitely have a lot of momentum. And our results in Q3, 13%. This was really based on strength in resources, strength in public works, utilities, and large enterprise deals in asset analytics. And that was all organic, no acquisition, and we had 13%. So for the remainder of the year, in the updated outlook that we gave, this does factor in already then the acquisition of EDIS. And for us now to be able to get to the top end of that range, we will need to continue to do very well in resources and public works and utilities.

We’ll have to do very well with our renewals. And you know that Q4 is our biggest quarter for 365 renewals. And we’ll have to bring again important enterprise deals for asset analytics. Yeah. So obviously this is not the time for us to talk about our outlook for 2027. This will be the focus of our call when we review our Q4 results. But we don’t see at this point, given the strengths of end markets and the strengths of us as a company, our competitive strengths, we don’t see why we should go away from our long-term financial framework, you know, and that we’ve used in all the past few years.

Siti Panigrahi (Analyst at Mizuho)

Okay, thank you.

Eric Boyer (Investor Relations Officer)

Thanks. The next question comes from Julie Schauer from Griffin Securities. Thank you. Good morning.

Julie Schauer (Analyst at Griffin Securities)

The prepared remarks you made some reference to Bentley Infrastructure Cloud adoption, I believe among some of your largest customers. Could you speak more broadly about infrastructure cloud adoption across all or most of your cohorts and the adoption dynamics? In other words, is it the case that Bentley Infrastructure Cloud helps to induce more applications adoption? Is it really more the reverse where customers buy enough applications, then they adopt infrastructure cloud?

And then secondly, you refer to the Navion relationship as representing not just cohesive but some of your apps. Is that going to be a significant enough channel partner relationship that your percentage of revenue from the channel could finally start to increase more meaningfully?

Nicholas Cumins (Chief Executive Officer)

On the first question—maybe Greg will address the second one. So on the first question, Bentley Infrastructure Cloud, the reason why we grow with Bentley Infrastructure Cloud is, number one, our openness, the fact that we actually work great with Bentley and non-Bentley applications. We work even better with Bentley applications, but we work great with non-Bentley applications. And so Bentley Infrastructure Cloud is just a fantastic platform for collaboration and data exchange for entire infrastructure value chains across engineering disciplines, across engineering organization because of the strength of that openness.

And the other reason why we are winning more and more is because of the strong stance that we took when it comes to data, where we said that the data that is embedded in Bentley Infrastructure Cloud is our users’ data always. So we don’t use it to train our own AI models, we don’t use it to train AI unless there is explicit direction from the accounts. And that makes us quite distinct from other platforms out there as we discussed in previous quarters.

Gregory S Bentley (Chairman)

And I’ll say that my reason to bring up Bentley Infrastructure Cloud in particular as to the footprint of our owner-operator accounts, that half of our business. It’s mostly ProjectWise. In those accounts they have a Bentley Infrastructure Cloud schema that they can interrogate and query, including autonomously, to utilize and maintain their assets during operations and maintenance. But until now they don’t. But they’re just one step away from it.

And my point is that asset analytics provides the keystone—that one step—where they can have an as-operated physical condition of their asset to feed back into re-simulating and re-modeling based on the design information they have already. So it’s become possible now to have instant-on digital twins for these owner-operators with AI and asset analytics. In the case of Navion and Maximo, of course, as we’ve learned it’s anything but instant-on when you’re adapting an enterprise system to expand from maintenance information to engineering information to inform the maintenance. Navion is a really impressive outfit run by entrepreneurs who are looking to make more of Maximo and it’s early in the relationship—obviously the divestment just closed—and we’re going to be on their board and encouraging their brief to include digital twin, as I say a digital twin integrator, as well.

There really is an opportunity for that, but it’s more of a long-term opportunity, I acknowledge.

Eric Boyer (Investor Relations Officer)

Thank you. Thanks. The next question comes from Andrea D. Gasparis from BNP Paribas.

Andrea D. Gasparis (Analyst)

Thanks for taking my question. So I wanted to touch on a bit in terms of your strength in the Americas, and I think you mentioned that data centers indirectly benefited that region. Obviously there’s been a change since Tuesday in terms of at least the high-level headlines, particularly in certain geographies of the US like Texas. And there’s some concern about slowdowns and project delays with regards to data centers. So just curious to know what you make of that in terms of what is your exposure there. Do you think there could be, in terms of at least where your products are deployed, there could be some impact? And maybe given you’ve been around for 40 years, I’m sure you’ve seen these type of cycles before. Just curious to know what we could expect in terms of that in the future.

Gregory S Bentley (Chairman)

Let me address the election generally, and of course we’re familiar with divided government in the US, but it’s about to thoroughly take place after this lame-duck session. What we think is that infrastructure investment is where there’s likely to be bipartisan concurrence. Of course, the IIJA ended after five years at the end of September. The projects in process, of course, will be completed. It’s been extended—its spending has been extended—until December 11, most of that spending, and that could go on further.

But in the interim there’s been something called the Build America 250 bill, which in its committee in the House was approved by a 62 to 2 vote. So it’s a bipartisan opportunity. Now, we don’t think that’s going to be acted on in the lame-duck session. When it comes to next year in the new Congress, it’s likely that the already adequate spending for surface transportation—roads and bridges—will probably be added to now rail and transit spending as well.

And in general, the Democratic-led Congresses have tended to fund infrastructure at greater degrees, so that probably lies ahead. What’s very interesting is permitting reform, which is important to a lot of what we do. And that has finally come so far that a bipartisan bill, again, has been reported out of all the applicable committees in the Senate, and it’s actually scheduled for a vote next Monday to bring it to debate on the full floor. And it’s not out of the question that that could be enacted because it is a bipartisan priority even during this year still, because it’s thought by—although there are some environmental groups in opposition—it’s thought to be about the best that’s going to be achieved by many who have to make that decision in Congress.

Also is the biennial water bill that has bipartisan support and will, for the first time, include funding for digital initiatives, including digital twins. And then finally back to your question about data centers. It’s likely that, as you say, across the country and in various jurisdictions there’ll be more scrutiny of the environmental impacts. These are impacts having to do with energy provision, with water provision, the surrounding infrastructure. That’s where our software is utilized, and we can imagine site plans for data centers now needing to include infrastructure digital twins. And we actually see that as an opportunity.

OPERATOR

Thanks. The next question comes from Kristen Oden from Oppenheimer.

Kristen Oden (Analyst at Oppenheimer)

Hi, good morning. Congratulations on the nice results. And Nicholas, appreciate the Spider-Man reference that you gave us. You talked about this in some of your prior questions, but I want to put a finer point on it. Just help us understand with the Elise acquisition where that creates the most immediate commercial opportunity. Is it selling into Seequent’s existing tools, selling Seequent into those existing Elise customers? Is it bringing that seismic interpretation into your mining customer base?

And how do you think about those synergy opportunities contributing to incremental ARR growth?

Chris

Thank you, Kristen. I’m going to jump in to say that what I learned about seismic interpretation is that, of course, you make the earth rumble and listen to what happens. It used to require a tractor-trailer and a big rig to generate these waves. Now it’s down to something that can be towed behind a golf cart. So it’s applicable to civil projects in general, and probably that lower cost of acquisition will continue to be more advantageous. To me, the big opportunity is applying it where it’s been prohibitive in the past.

There are many other such modalities where that’s been the case. But over the life cycle of Seequent—sorry, Nicholas—I just had to say I’m imagining creating a seismic wave with a golf cart-sized machine as something that sticks in my head.

Nicholas Cumins (Chief Executive Officer)

All good, Chris. And I will say energy, first of all, because ELISE is already strong there and there’s so much more to do. As I said, this company on its own already growing quite fast and will be accretive to our ARR growth. So there’s more in energy—traditional energy sources, but new sources of energy as well. I will probably say mining second, because seismic allows you to find minerals at a much deeper, deeper level and with a much higher resolution than is possible with traditional methods or other methods.

And then, and then civil.

OPERATOR

Great, thanks. Next question comes from Alexei Gogola from JP Morgan. Actually, I’m sorry, I think it’s Faith Bruner from William Blair.

Faith Bruner (Analyst at William Blair)

Guys, good morning. Can you hear me okay? Okay. I wanted to make sure everything switched over. Just wanted to double-click on some of the conversations you guys are having with your design customers in regard to AI. It does seem like there’s a lot of interest, there’s a lot of excitement about the opportunity. But is there anything that’s maybe driving a wedge between willingness and readiness, in the sense of—you talked to how business models may have to change around material and time and different optimization.

But is there anything else maybe on the customer end from a change management perspective that we should be aware of that might add some time between initial interactions and a more scaled adoption of these AI solutions?

Nicholas Cumins (Chief Executive Officer)

Well, I will say two things. First one is education—and I mean it with a ton of respect—but education on what’s really possible here and now. And this is a big priority for us with our marketing team. It’s also a big priority with our solution engineering team. Those are what you could consider field-deployed engineers who are working hand in hand with our accounts to show them what’s possible right now. Then the second thing is what I indeed touched on earlier when we talked about AI monetization and API monetization. Going forward, we’re going to be dependent on how fast they adopt the new applications, the new versions that have these APIs that are instrumented and that have these MCP servers. I think as they realize the potential, they will have a big incentive to move faster to these new versions than they have done in the past.

OPERATOR

Thanks. Next question now comes from Alexei Gogola from JP Morgan.

Alexei Gogola (Analyst at J.P. Morgan)

Hello everyone. Thank you. Thank you, Eric. So you described asset analytics as the keystone to close the CapEx to OpEx loop. So strategically, do you see asset analytics becoming a standalone platform category inside Bentley or remaining a capability layer distributed across each domain portfolio?

Gregory S Bentley (Chairman)

Well, we’re managing it as an asset analytics group at the moment so that they can move quickly. And as you know, we’ve grown by acquisition in asset analytics because we don’t want to start from scratch where we don’t have to with the particular AI for particular asset types, like Talon brought us distribution poles and so forth. And I think that will remain the case for a while. It’s different in that we charge per asset per year, not per user per day.

At the enterprise level it’s incremental in that respect, and the competitive set is different. It tends to be hardware-oriented competitors at the present time. Again, what’s our differenti