What changed in this filing

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Item 1A. Risk Factors

2024-02-27 compared with 2023-02-28 · 31 added, 72 removed, 323 unchanged (24% of the section changed)

6 unchanged sentences

(i) public works/utilities;

(ii) industrial;

(iii) resources;

(ii) resources;

(iii) industrial;

and (iv) commercial/facilities.

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If we overestimate the demand for our software solutions, we may incur additional expenses for which we would not have corresponding revenues, negatively impacting our results of operations.

The continuing impact of the COVID-19 pandemic is unpredictable and could materially and adversely affect our business.

The ongoing COVID-19 pandemic is unpredictable in nature and has adversely affected and may continue to adversely affect global economies, financial markets, and the overall macroeconomic environment in which we do business.

As a result, the extent to which our business will continue to be affected will depend on a variety of factors, many of which are outside of our control, including the persistence of the pandemic, impacts on economic activity, including infrastructure projects, and the possibility of recession or continued financial market instability.

Accordingly, our future results of operations and financial condition may not meet our expectations.

The majority of our revenues and an increasing percentage of our operations are attributable to operations outside the U.S., and our results of operations therefore may be materially affected by the legal, regulatory, social, political, economic, and other risks of foreign operations.

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will continue to comprise a majority of our total revenues for the foreseeable future.

Our international revenues, including from emerging economies, are subject to general economic and political conditions in foreign markets and our revenues are impacted by the relative geographical and country mix of our

revenues over time.

These factors could adversely impact our international revenues and, consequently, our business.

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Further, our operations outside the U.S.

are subject to legal, regulatory, social, political, economic, and other risks inherent in international business operations, including, without limitation, local product preference and product requirements, trade protection measures, sanctions, quotas, embargoes, import and export licensing requirements, duties, tariffs or surcharges and more stringent regulations relating to privacy and data security and access to, or use of, commercial and personal information, such as the General Data Protection Regulation (the “GDPR”) applicable in the European Union (“E.U.”), the Personal Information Protection Law (the “PIPL”) applicable in China, and Brazil’s General Data Protection Law (the “LGPD”).

are subject to legal, regulatory, social, political, economic, and other risks inherent in international business operations, including, without limitation, local product preference and product requirements, trade protection measures, sanctions, quotas, embargoes, import and export licensing requirements, duties, tariffs or surcharges and more stringent regulations relating to privacy and data security and access to, or use of, commercial and personal information, such as the General Data Protection Regulation (the “GDPR”) applicable in the European Union (the “E.U.”), the Personal Information Protection Law (the “PIPL”) applicable in China, and Brazil’s General Data Protection Law (the “LGPD”).

The occurrence of any one of these risks could negatively affect our international business and, consequently, our business, financial condition, and results of operations.

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Decreased investment by APAC, including China, may have a negative effect on our business.

Approximately 18% for the year ended December 31, 2022 and approximately 19% of our total revenues for the years ended December 31, 2021 and 2020 relate to infrastructure projects in APAC, including China.

Approximately 18%, 18%, and 19% of our total revenues for the years ended December 31, 2023, 2022, and 2021 relate to infrastructure projects in APAC, including China.

We cannot assure you that spending in these countries on infrastructure projects will continue at historical levels or increase in the future, or that demand for our software solutions in APAC in general will not be negatively affected by reductions in spending or other limitations.

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dollar weakens.

As a result, changes in currency exchange rates will affect our financial position, results of operations, and cash flows.

As a result, changes in currency exchange rates will affect our financial condition, results of operations, and cash flows.

In the event that there are economic declines in countries in which we conduct transactions, the resulting changes in currency exchange rates may affect our financial condition, results of operations, and cash flows.

We are most impacted by movements in and among the Euro, British Pound, Canadian Dollar, Australian Dollar, Chinese Yuan Renminbi, and New Zealand Dollars.

We are most impacted by movements in and among the euro, British pound, Canadian dollar, Australian dollar, Chinese yuan renminbi, and New Zealand dollar.

For example, the Chinese yuan renminbi has fluctuated against the U.S.

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Further, we cannot guarantee that all of our accounts are using the latest versions of our software solutions with enhanced security features and may be more vulnerable to cyber‑attacks.

accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects.

Allegations of unsatisfactory performance in any of these situations could damage our reputation in the market and our relationships with our accounts, cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting, or redesigning the software, cause us to lose accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects.

We may also be required to provide full replacements or refunds for such defective software.

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There are significant costs and restrictions associated with the repatriation of cash from our non-U.S.

Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 95% and 48% of those balances held outside of the U.S.

Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 95% of those balances held outside of the U.S.

as of December 31, 2023 and 2022.

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Sales through our global network of independent regional channel partners accounted for 8% of our total revenues for the years ended December 31, 2023, 2022, and 2021.

These channel partners sell our software solutions to smaller-sized accounts, in geographic regions where we do not have a meaningful presence, and in niche markets where they have specialized industry and technical knowledge.

These channel partners sell our software solutions in geographic regions where we do not have a meaningful presence, and in niche markets where they have specialized industry and technical knowledge.

Where we rely on channel partners, we may have reduced contact with ultimate users that purchase through such channel partners, thereby making it more difficult to establish brand awareness, ensure proper installation, service ongoing requirements, estimate demand, and respond to the evolving needs of an account.

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Any disruption in service may damage our reputation and business.

In addition, our channel partners may be unable to meet their payment obligations to us, which would have a negative impact on our results of operations and

In addition, our channel partners may be unable to meet their payment obligations to us, which would have a negative impact on our results of operations and revenues.

Our channel partners may also not have loyalty to our brand and therefore may not be particularly motivated to sell our software solutions or services.

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Such actions may impact our ability to distribute our software solutions into certain regions and markets, and may have an adverse effect on our results of operations and cash flows.

Risks Related to Information Technology Systems and Intellectual Property

Risks Related to Information Technology (“IT”) Systems and Intellectual Property

Interruptions in the availability of server systems or communications with Internet, third‑party hosting facilities or cloud‑based services, or failure to maintain the security, confidentiality, accessibility, or integrity of data stored on such systems, could harm our business or impair the delivery of our managed services.

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These threats include but are not limited to identity theft, unauthorized access, domain name system attacks, wireless network attacks, viruses and worms, advanced persistent threat, application centric attacks, peer-to-peer attacks, phishing, backdoor trojans, and distributed denial of service attacks.

Any of the foregoing could attack our accounts’ data (including their employees’ personal data), our data (including colleagues’ personal data), or our IT systems.

Any of the foregoing could attack our accounts’ data (including their employees’ personal data), our data (including colleagues’ personal data), our IT systems or those of our accounts and/or critical vendors.

It is virtually impossible for us to entirely eliminate this risk.

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Further, our expectation is that there will continue to be new laws, regulations, and industry standards applicable to our collection, processing, storage, sharing, transmission, and use of data generally.

Globally, laws such as the GDPR in the European Economic Area (the “EEA”), the LGPD in Brazil, and the PIPL in China, impose obligations directly on us as both a data controller and a data processor, as well as on many of our users.

Further, new, and emerging domestic privacy legislation, such as the California Consumer Privacy Act (the “CCPA”), the California Privacy Rights Act (the “CPRA”), which will amend the CCPA in January 2023, the Virginia Consumer Data Protection Act, which also goes into effect in January 2023, the Colorado Privacy Act, which goes into effect in July 2023, and the Utah Consumer Privacy Act, which goes into effect December 2023, similarly impose new

obligations on us and many of our users, potentially as both businesses and service providers.

As these laws, regulations, and legislative proposals continue to evolve, and as various states introduce similar proposals, we and our users may be exposed to additional burdens associated with operating in an increasingly complex regulatory landscape.

In addition, laws, and legislative proposals such as the E.U.’s proposed e‑Privacy Regulation are increasingly aimed at the use of personal data for marketing and advertising purposes which could impact our marketing and advertising efforts.

Further, evolving definitions of what constitutes personal data, personal information, and covered data in the E.U., the U.S., and other jurisdictions, especially in relation to the classification of IP addresses, machine or device information, location data, and other information, further enhance the complexity of the global regulatory landscape.

These laws may require us to make additional changes to our practices and services to enable us or our users to meet the new requirements and may also increase our potential liability exposure through new or higher potential penalties for non‑compliance, including as a result of penalties, fines, and lawsuits related to data breaches.

For example, in the EEA the GDPR provides for penalties of up to €20 million or 4% of global turnover for the preceding year, whichever is greater.

Similarly, the PIPL provides for penalties of up to 50 million renminbi or 5% of global turnover for the preceding year, and/or disgorgement of all illegal gains, whichever is greater.

Domestically, privacy legislation such as the CCPA provides for penalties of up to $7,500 per violation and the CPRA has created a new agency to implement and enforce the law in California.

Globally, laws such as the GDPR in the European Economic Area, the LGPD in Brazil, and the PIPL in China, impose obligations directly on us as both a data controller and a data processor, as well as on many of our users.

In addition, new and emerging state laws in the U.S.

governing privacy, data protection, and information security, such as the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Utah Consumer Privacy Act, and Connecticut’s Act Concerning

Personal Data Privacy and Online Monitoring have been enacted.

These laws and regulations, as well as industry self-regulatory codes, create new compliance obligations and substantially expand the scope of potential liability and provide greater penalties for non-compliance.

For example, the GDPR provides for penalties of up to €20 million or 4% of a company’s annual global revenue, whichever is greater, the PIPL provides for penalties of up to 50 million renminbi or 5% of a company's annual revenue and disgorgement of all illegal gains, whichever is greater, and the CCPA provides for penalties of up to $7,500 per violation.

Although, we monitor the regulatory environment and have invested in addressing these developments, operating in an increasingly complex regulatory landscape may impact our innovation and business drivers in developing new and emerging technologies (e.g., artificial intelligence and machine learning).

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Around the world, there is continued uncertainty in relation to the legal mechanisms supporting cross‑border data flows which are subject to evolving guidance, active litigation, and enforcement proceedings in a number of jurisdictions.

For example, in the EEA following the invalidation of the E.U.‑U.S.

Privacy Shield Framework, the European Commission introduced a new set of modular standard contractual clauses (“SCCs”) providing for an 18‑month implementation period which concluded December 27, 2022.

The SCCs impose new obligations relating to personal data transfers including the obligation to conduct transfer impact assessment, adopt additional information security measures, and update organizational controls and practices.

Further, following the United Kingdom’s (“U.K.”) exit from the E.U., the U.K.’s Information Commissioner’s Office has issued new standard contractual clauses which are compatible with the SCCs to support data transfers out of the U.K.

Data transfers from the EEA to the U.K.

are covered by a European Commission adequacy decision issued on June 28, 2021;

however, this decision is subject to regular review by the European Commission and may be revoked if the U.K.

diverges from its current data protection laws.

Complying with both the SCCs and U.K.

SCCs increases our compliance burden and increases the demand from users for data localization.

A number of countries including China, Australia, New Zealand, Brazil, and Japan have established specific requirements for cross‑border data transfers.

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Recent and potential tariffs imposed by the U.S.

government or a global trade war could increase the cost of our products and services and the cost of conducting our business, which could harm our business, financial condition, and

results of operations.

government or a global trade war could increase the cost of our products and services and the cost of conducting our business, which could harm our business, financial condition, and results of operations.

government has threatened substantial changes to trade agreements and has raised the possibility of imposing significant increases on tariffs on goods imported into the U.S., particularly from China.

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could result in the adoption of tariffs by other countries, leading to a global trade war.

In addition, certain of these risks may be heightened as a result of changing political climates, which may also be exacerbated as a result of the COVID‑19 pandemic.

For example, throughout 2018 and 2019, the U.S.

In addition, certain of these risks may be heightened as a result of changing political climates.

For example, the U.S.

and China have been levying tariffs on their respective imports.

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assets and 65% of the stock of our foreign subsidiaries owned by a party to the agreement governing the Credit Facility.

Further, if the Bentley Family ceases to collectively own equity interests in us representing at least 20% of the aggregate voting power of the Company, then such change in ownership will be an event of default under the agreement governing the Credit Facility and, among other things, the commitments under the Credit Facility may be

terminated immediately and the outstanding loans and accrued interest may become due and payable immediately.

In addition, there is no guarantee that we will be able to generate sufficient cash flow or revenues to meet these financial covenants or pay the principal and interest on any debt.

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Any inability to make scheduled payments or meet the financial covenants in the agreement governing the Credit Facility would adversely affect our business.

The phase‑out of London Interbank Offered Rate (“LIBOR”) could affect interest rates under our Credit Facility.

In July 2017, the Financial Conduct Authority (“FCA”) (the authority that regulates LIBOR) announced it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021.

Further, on November 30, 2020, the ICE Benchmark Administration Limited (“ICE”) announced its plan to extend the date that most U.S.

Dollar‑LIBOR values would cease being computed to June 30, 2023.

The Alternative Reference Rates Committee (“ARRC”) and the International Swaps and Derivatives Association (“ISDA”) have identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for U.S.

Dollar‑LIBOR in debt, derivatives, and other financial contracts.

LIBOR is used as the reference rate for Euro currency borrowings under our Credit Facility and as one of the alternatives for U.S.

Dollar borrowings under our Credit Facility.

If LIBOR ceases to exist, the administration agent under our Credit Facility has the authority to select a benchmark replacement index and adjustment margins and, as such, the interest rate on Euro currency borrowings under our Credit Facility may change.

The new rate may not be as favorable as those in effect prior to any LIBOR phase‑out.

Furthermore, the transition process may result in delays in funding, higher interest expense, additional expenses, and increased volatility in markets for instruments that currently rely on LIBOR, all of which could negatively impact our interest expense, results of operations, and cash flow.

Even if financial instruments are transitioned to alternative benchmarks, such as SOFR, successfully, the new benchmarks are likely to differ from LIBOR, and our interest expense associated with our outstanding indebtedness or any future indebtedness we incur may increase.

Further, transitioning to an alternative benchmark rate, such as SOFR, may result in us incurring significant expense and legal risks, as renegotiation and changes to documentation may be required in effecting the transition.

Any alternative benchmark rate may be calculated differently than LIBOR and may increase the interest expense associated with our existing or future indebtedness.

We may incur substantial additional debt, which could exacerbate the risks described above.

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Adding new debt to current debt levels could intensify the related risks that we and our subsidiaries now face.

See the section titled “Liquidity and Capital Resources” included in Part II, Item 7 of this Annual Report on Form 10‑K.

Refer to the section titled “Liquidity and Capital Resources” included in Part II, Item 7 of this Annual Report on Form 10‑K.

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

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The accounting method for convertible debt securities that may be settled in cash, such as the 2026 Notes and 2027 Notes, could have a material effect on our reported financial condition and results.

The accounting method for reflecting the 2026 Notes and 2027 Notes on our consolidated balance sheet and reflecting the underlying shares of our Class B Common Stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

The accounting method for reflecting the 2026 Notes and 2027 Notes on our consolidated balance sheets and reflecting the underlying shares of our Class B common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

Under the if‑converted method, diluted earnings per share will be calculated assuming that all the 2026 Notes and 2027 Notes are converted solely into shares of Class B common stock at the beginning of the reporting period, unless the result would be anti‑dilutive.

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General Risk Factors

Global economic conditions may negatively impact our business, financial condition, and results of operations.

Our operations and performance depend significantly on foreign and domestic economic conditions.

Uncertainty regarding economic conditions may negatively impact us as accounts defer spending or postpone infrastructure projects in response to tighter credit, higher unemployment, higher interest rates, higher inflation, financial market volatility, government austerity programs, negative financial news, escalations of hostilities or the threat of hostilities, pandemics, declining valuations of investments, and other factors.

Global economic and political conditions may negatively impact our business, financial condition, and results of operations.

Our operations and performance depend significantly on foreign and domestic economic and political conditions.

Uncertainty regarding economic and political conditions may negatively impact us as accounts defer spending or postpone infrastructure projects in response to tighter credit, higher unemployment, higher interest rates, higher inflation, financial market volatility, government austerity programs, negative financial news, declining

valuations of investments, and other factors.

In addition, certain of our accounts’ budgets may be constrained and they may be unable to procure our solutions at the same level as in prior periods.

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Political instability or adverse political developments, including, without limitation, as a result of or in connection with trade relations between the U.S.

and China, in any of the countries in which we do business could harm our business, financial condition, and results of operations.

and China, as well as terrorist attacks, cyber events, armed conflicts (or the threat or escalation thereof), bank failures, civil unrest, espionage, natural disasters, epidemics, and pandemics in any of the countries in which we do business could harm our business, financial condition, and results of operations.

Changes in existing financial accounting standards or practices, or taxation rules or practices may adversely affect our results of operations.

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If our management or independent registered public accounting firm identifies one or more material weaknesses in our internal control over financial reporting, we are unable to assert that our internal control over financial reporting is effective, or our independent registered public accounting firm is unable to express an opinion that our internal controls are effective, investors could lose confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our business and stock price.

In preparing our financial statements, we make certain estimates and assumptions that affect amounts reported in our consolidated financial statements which, if not accurate, may significantly impact our financial results.

We make estimates and assumptions for a number of items, including revenue recognition, the fair value of acquired assets and liabilities, the fair value of stock consideration in conjunction with business combinations, the fair value of deferred compensation plan liabilities, the fair value of derivative financial instruments, the fair value of common stock (prior to our IPO), operating lease assets and liabilities, useful lives for depreciation and amortization, impairment of goodwill and intangible assets, valuation allowances for tax assets, and accruals for uncertain tax positions.

These estimates and assumptions are drawn from historical experience and various other factors that we believe are reasonable under the circumstances as of the date of the consolidated financial statements.

Actual results could differ materially from our estimates and such differences could significantly impact our financial results.

If our goodwill or amortizable intangible assets become impaired, then we could be required to record a significant charge to earnings.

Accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires us to test for goodwill impairment at least annually.

generally accepted accounting principles (“GAAP”) requires us to test for goodwill impairment at least annually.

In addition, we assess our goodwill and amortizable intangible assets for impairment if events occur or circumstances change that would more likely than not reduce its fair value below its carrying value, including declines in stock price, market capitalization, or cash flows, and slower growth rates in our industry.

Depending on the results of our assessment, we could be required to record a significant impairment charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets was determined, negatively impacting our results of operations.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors