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Item 7. Management’s Discussion and Analysis

2024-02-27 compared with 2023-02-28 · 484 added, 785 removed, 167 unchanged (88% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto appearing in Part II, Item 8 of this Annual Report on Form 10‑K.

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10‑K.

In addition to historical information, this discussion contains forward‑looking statements that involve risks, uncertainties, and assumptions that could cause actual results to differ materially from management’s expectations.

3 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10‑K for management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.

During the fourth quarter of 2023, we changed our definitions of constant currency and constant currency growth rates.

In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results on a transactional basis to our reporting currency using prior period average foreign currency exchange rates in which the transactions occurred.

Our prior definition of constant currency calculated the effects of foreign currency fluctuations and constant currency information by translating current period results of our subsidiaries from their functional currencies to our reporting currency by using prior period average foreign currency exchange rates in reporting period‑over‑period results.

Prior period amounts have been revised to conform to the current period presentation using the updated constant currency and constant currency growth rates definitions.

We are providing what our constant currency and constant currency growth rates results would have been pursuant to the prior definition for the applicable periods so that investors and potential investors that have analyzed these non-GAAP financial measures historically using our prior definitions can compare our historical results to our current results with respect to these non-GAAP financial measures using the prior definitions.

Refer to the section titled “Non‑GAAP Financial measures” for reconciliations of constant currency non‑GAAP financial measures and their most directly comparable GAAP financial measures under the current and prior definitions.

All amounts presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, except share and per share amounts, are presented in thousands.

Additionally, many of the amounts and percentages have been rounded for convenience of presentation.

We enable infrastructure professionals and their organizations, by “going digital” through our software and cloud services offerings, to better design, build, and operate better infrastructure.

We were founded in 1984 by the Bentley brothers and on September 25, 2020, we completed our IPO.

Our enduring commitment is to develop and support the most comprehensive portfolio of integrated software offerings across professional disciplines, project and asset lifecycles, infrastructure sectors, and geographies.

Our software enables digital workflows across engineering disciplines, across distributed project teams, and from offices to the field.

Moreover, we believe that our offerings, in particular our infrastructure digital twin solutions, empower the achievement of sustainable development goals by helping our users – infrastructure professionals – realize outcomes that are more sustainable and resilient.

We deliver our solutions via on‑premises, cloud, and hybrid environments.

Our users engineer, construct, and operate projects and assets across the following infrastructure sectors:

• public works (including roads, rail, bridges, tunnels, airports, ports, and federal, state, and municipal agencies)/ utilities (including networks for electricity, gas, communications, and water, wastewater, and drainage).

We estimate that this sector represents 49% of the net infrastructure asset value of the global top 500 infrastructure owners based on the 2022 edition of the Bentley Infrastructure 500 Top Owners , our annual compilation of the world’s largest infrastructure owners ranked by net depreciated value of their tangible fixed assets;

• resources (including mining, oil and gas “upstream,” offshore, pipelines, environmental management, and renewable energy).

We estimate that this sector represents 21% of the global top 500 infrastructure owners’ net infrastructure asset value;

• industrial (including discrete and process manufacturing, oil and gas “downstream,” and power generation).

We estimate that this sector represents 18% of the global top 500 infrastructure owners’ net infrastructure asset value;

• commercial/facilities (including office buildings, retail facilities, hospitals, and campuses).

We estimate that this sector represents 12% of the global top 500 infrastructure owners’ net infrastructure asset value.

We offer solutions for enterprises and professionals across the infrastructure lifecycle.

Our engineering applications and geoprofessional applications support the breadth of engineering and geoprofessional disciplines and are primarily desktop applications for professional practitioners.

Our project delivery and asset performance Enterprise Systems are provided via cloud and hybrid environments, developed respectively to extend enterprise collaboration during project delivery, and to manage and leverage engineering information during operations and maintenance.

Our Industry Solutions solve domain‑specific problems for owners of infrastructure assets, and the project delivery ecosystems that support these owners.

Our cloud-native iTwin Platform solutions enable digital twin workflows, which can span project and asset lifecycles.

We continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions.

Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings.

Our allocation of research and development resources is guided by management‑established priorities, input from product managers, and user and sales force feedback.

We bring our offerings to market primarily through direct sales channels that generated approximately 92% of our 2022 total revenues.

Since its founding, Bentley Systems has remained focused on our mission to provide software in support of the professional needs of those responsible for creating and managing the world’s infrastructure.

We have methodically grown through periods of global expansion, periods of expansion in our portfolio of solutions, and periods of rapid technological change.

The following provides key corporate milestones over our 38‑year history:

Minor differences in totals and percentage calculations may exist due to rounding.

Bentley Systems is the infrastructure engineering software company.

Our purpose is to advance the world’s infrastructure for better quality of life.

We empower people to design, build, and operate better and more resilient infrastructure through the adoption of our intelligent digital twin solutions.

We manage our business globally within one reportable segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker (“CODM”) reviews and manages our business.

Executive Summary:

• Total revenues were $1,228,413 for the year ended December 31, 2023, up 11.8% or 11.9% on a constant currency basis (1) compared to the prior year;

• Subscriptions revenues were $1,080,307 for the year ended December 31, 2023, up 12.5% or 12.5% on a constant currency basis (1) compared to the prior year;

• ARR (2) was $1,174,774 as of December 31, 2023, compared to $1,036,548 as of December 31, 2022, representing a constant currency ARR growth rate (2) of 12.5%;

• Last twelve-month recurring revenues dollar-based net retention rate (2) was 109% as of the year ended December 31, 2023, compared to 110% as of December 31, 2022;

• Operating income was $230,542 for the year ended December 31, 2023, compared to $208,612 for the prior year;

• Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) (1) was $324,677 for the year ended December 31, 2023, compared to $273,929 for the prior year;

• Cash flow from operations was $416,696 for the year ended December 31, 2023, compared to $274,324 for the prior year.

(1) Constant currency and Adjusted OI w/SBC are non‑GAAP financial measures.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definitions and our uses of constant currency and Adjusted OI w/SBC.

(2) Refer to the “Key Business Metrics” section for additional information, including our definitions and our uses of ARR, ARR growth rate, and recurring revenues dollar-based net retention rate.

(3) Adjusted OI w/SBC is a non‑GAAP financial measure.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of Adjusted OI w/SBC.

Results of Operations:

Impact of Foreign Currency

Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates.

For the years ended December 31, 2023, 2022, and 2021, approximately 35%, 36%, and 47%, respectively, of our total revenues and 45%, 46%, and 42%, respectively, of our total operating expenses were denominated in foreign currencies from outside the U.S.

including most significantly:

euros, British pounds, Canadian dollars, Australian dollars, Chinese yuan renminbi, and New Zealand dollars.

Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.

We identify the effects of foreign currency on our operations and present constant currency growth rates and fluctuations because we believe exchange rates are an important factor in understanding period‑over‑period comparisons and enhance the understanding of our results and evaluation of our performance.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

We generate revenues from subscriptions, perpetual licenses, and services.

Our total revenues are diversified by account type, size, and geography.

Our sources of revenue growth, excluding the impact from acquisitions, come from additional subscriptions revenues from existing accounts using the same products and represent the majority of our revenue growth, additional subscriptions revenues from existing accounts using new products, and subscriptions revenues from new accounts.

For the year ended December 31, 2022, subscriptions represented 87% of our total revenues, and together with certain services revenues that are recurring in nature and represented 2% of our total revenues, brought the proportion of our recurring revenues to 89% of our total revenues.

The remaining 11% of our revenues were generated from the sale of perpetual licenses and the delivery of non‑recurring services.

We have a highly‑diversified account base, with our largest account representing no more than 2% of our total revenues in 2022.

Our 2022 total revenues were also diversified by account type, size, and geography.

Additionally, we believe that we have a loyal account base, with over 70% of our 2022 total revenues from organizations that have been our accounts for over ten years.

Our Commercial Offerings:

Our solutions are made available to our accounts in a broad range of commercial offerings designed to accommodate the diverse preferences of our accounts, which range from owned versus subscribed, short‑term subscriptions versus annual subscriptions, and fee‑certain arrangements versus variable or consumption‑based arrangements with consumption measurement durations of less than one year.

We contract our commercial offerings under a single form of standard contract, which includes liability and other risk protections in our favor, and appropriate standard addendums to the primary contract, which specifically address the commercial offerings provided.

Our standard commercial offerings are summarized in the table below, with further descriptions following the table:

Enterprise Subscriptions.

Our enterprise subscription offerings provide our enterprise accounts with complete and unlimited global access to our comprehensive portfolio of solutions.

• Enterprise 365 (“E365”) Subscriptions.

Under our E365 subscription, accounts are charged primarily based upon daily usage.

E365 subscriptions can contain quarterly usage floors or collars.

The daily usage fee includes a term license component, SELECT maintenance and support, hosting, and Success Blueprints, which are designed to achieve business outcomes through more efficient and effective use of our software.

• Enterprise License Subscriptions (“ELS”).

Under our ELS offering, accounts are charged based upon a fixed annual fee.

Subsequent annual renewals are based on the account’s usage of software in the preceding year, effectively resulting in a fee‑certain annual consumption‑based arrangement.

We are completing efforts to transition ELS subscribers to E365 subscriptions, primarily to simplify pricing, more closely align consumption to monetization, and to establish Success Blueprints as recurring to ensure better business outcomes for our users.

In transitioning subscribers to E365, we recognize a greater proportion of our revenues on a quarterly basis rather than substantially upfront.

SELECT Subscriptions.

Our SELECT subscription is a prepaid annual recurring subscription that accompanies a new or previously purchased perpetual license.

We believe that the SELECT benefits summarized below support our favorable rates of account retention and growth:

• Software upgrades;

• Comprehensive technical support;

• License pooling providing accounts with efficiency advantages;

• Portfolio balancing providing accounts the opportunity to exchange unused or under used licenses with other of our license offerings;

• Learning benefits, Azure‑based cloud collaboration services, and mobility advantages;

• Access to our entire application portfolio with usage of licenses not previously purchased monetized quarterly in arrears based on consumption.

See the section titled “ — Term License Subscriptions” below.

Term License Subscriptions

Annual Term Licenses (“ATL”) Subscription.

Annual term licenses are generally prepaid annually for named user access to specific products and include our Virtuoso subscriptions sold via our Virtuosity eStore for practitioner licenses.

Virtuoso subscriptions are bundles with customizable training and expert consultation administered through “keys” or credits.

ATL are also used to monetize site or enterprise wide access for certain of our AssetWise solutions within given usage bands.

Quarterly Term License (“QTL”) Subscription.

Through quarterly term licenses, accounts pay quarterly in arrears for licenses they have used representing usage beyond their contracted quantities.

Much like our enterprise subscription programs, a QTL allows smaller- and medium‑sized accounts to match usage to ongoing project requirements.

Monthly Term License (“MTL”) Subscription.

Monthly term licenses are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized.

MTL subscriptions require a Cloud Services Subscription, which is discussed below.

Visas are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles our users to certain functionality of our ProjectWise and AssetWise systems.

Generally, a Visa provides desktop, web, and mobile application access to project information and certain functions, plus added functionality depending upon the product to which the Visa is aligned.

While certain legacy arrangements are supported, our standard offering requires Visas to be fulfilled and contracted via a CSS, which is discussed below.

Cloud Services Subscription (“CSS”) .

CSS is designed to streamline the procurement, administration, and payment process for us and our accounts.

A CSS requires an upfront annual estimation of MTL, Visa consumption, and any Success Services expected for the upcoming year.

A deposit for the annual estimated consumption is submitted in advance.

Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis.

Accounts are charged only for what gets used and deposited amounts never expire.

We believe that we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2023, 2022, and 2021 generated from organizations that have been our accounts for over ten years.

In addition to our results of operations discussed below, the following is supplemental data of our revenues:

Year Ended December 31,

(as a percentage of total revenues) 2023 2022 2021

Revenues from:

Direct sales channels 92 % 92 % 92 %

Indirect channel partners 8 % 8 % 8 %

Revenues from:

Subscriptions 88 % 87 % 84 %

Recurring services 1 % 2 % 2 %

Total recurring revenues 89 % 89 % 86 %

Perpetual licenses and other services 11 % 11 % 14 %

Largest account represents no more than 2.0 % 2.0 % 2.5 %

The volume, mix, and duration of contract types starting or renewing in any given period may have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period-over-period.

Our subscriptions, perpetual licenses, and services offerings are recognized pursuant to applicable GAAP guidance.

See Note 3 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information on our revenues.

We believe that subscription revenues will continue to comprise a majority of our total revenues.

Consolidated Revenues

Current Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Subscriptions $ 1,080,307 $ 960,220 $ 812,807 12.5 % 12.5 % 18.1 % 22.0 %

Perpetual licenses 46,038 43,377 53,080 6.1 % 7.3 % (18.3 %) (14.1 %)

We historically have sold perpetual licenses and continue to offer them to our accounts as an available option for most of our applications.

Perpetual licenses are available for accounts that prefer to own their software licenses and may be sold with or without attaching a SELECT subscription.

Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription.

We provide professional services, including training, implementation, configuration, customization, and strategic consulting services.

We perform projects on both a time and materials and a fixed fee basis.

Certain of our fixed‑fee arrangements, including our Success Services offerings, are structured as subscription‑like, packaged offerings that are annually recurring in nature.

Success Services are standard service offerings that provide a level of dedicated professional services above the standard technical support offered to all accounts as part of their SELECT or enterprise agreement.

Subscriptions and licenses 1,126,345 1,003,597 865,887 12.2 % 12.3 % 15.9 % 19.8 %

Services 102,068 95,485 99,159 6.9 % 7.5 % (3.7 %) (0.1 %)

Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.9 % 13.9 % 17.7 %

(1) Constant currency is a non‑GAAP financial measure.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our current definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Prior Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Subscriptions $ 1,080,307 $ 960,220 $ 812,807 12.5 % 11.7 % 18.1 % 24.3 %

Perpetual licenses 46,038 43,377 53,080 6.1 % 5.9 % (18.3 %) (12.1 %)

Subscriptions and licenses 1,126,345 1,003,597 865,887 12.2 % 11.4 % 15.9 % 22.1 %

Services 102,068 95,485 99,159 6.9 % 7.5 % (3.7 %) 0.4 %

Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.1 % 13.9 % 19.8 %

(1) Constant currency is a non‑GAAP financial measure.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

The increase in total revenues for the year ended December 31, 2023 was primarily driven by increases in subscriptions revenues, and to a lesser extent, services and perpetual licenses revenues.

Subscriptions .

For the year ended December 31, 2023, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $115,786 ($116,406 on a constant currency basis) and the impact of our platform acquisition of approximately $4,301 ($4,111 on a constant currency basis).

Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

The platform acquisition impact relates to our acquisition of PLS and is inclusive of PLS’ organic performance.

The improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts.

Improvements in business performance for the year ended December 31, 2023 were led by our engineering applications, geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.

Perpetual licenses .

For the year ended December 31, 2023, the increase in perpetual licenses revenues was primarily driven by improvements in business performance of approximately $2,661 ($3,181 on a constant currency basis).

For the year ended December 31, 2023, the increase in services revenues was primarily driven by improvements in our business performance of approximately $6,583 ($7,138 on a constant currency basis).

For the year ended December 31, 2023, the improvements in business performance were primarily driven by contributions from Cohesive digital integrator services of approximately $8,684 ($8,834 on a constant currency basis).

Revenues by Geographic Region

Revenue from external customers is attributed to individual countries based upon the location of the customer.

Current Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Americas $ 650,926 $ 584,794 $ 483,087 11.3 % 11.4 % 21.1 % 21.2 %

EMEA 353,550 312,804 300,123 13.0 % 12.1 % 4.2 % 12.9 %

APAC 223,937 201,484 181,836 11.1 % 13.0 % 10.8 % 16.3 %

Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.9 % 13.9 % 17.7 %

(1) Constant currency is a non-GAAP financial measure.

Refer to the “Non-GAAP Financial Measures” section for additional information, including our current definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Prior Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Americas $ 650,926 $ 584,794 $ 483,087 11.3 % 11.0 % 21.1 % 22.1 %

EMEA 353,550 312,804 300,123 13.0 % 11.1 % 4.2 % 15.4 %

APAC 223,937 201,484 181,836 11.1 % 11.2 % 10.8 % 21.1 %

Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.1 % 13.9 % 19.8 %

(1) Constant currency is a non-GAAP financial measure.

Refer to the “Non-GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

For the year ended December 31, 2023, the increase in revenues from the Americas was primarily driven by improvements in our business performance of approximately $62,442 ($63,450 on a constant currency basis) and the impact from our platform acquisition of approximately $3,690 ($3,237 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S.

For the year ended December 31, 2023, the increase in revenues from EMEA was primarily driven by improvements in our business performance of approximately $40,297 ($37,345 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”), and the Middle East and Africa, partially offset by reductions in Russia due to exiting our operations beginning in the second quarter of 2022.

For the year ended December 31, 2023, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately $22,291 ($25,930 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in India, Australia, and Southeast Asia, partially offset by declines in China.

Total revenues in China for the year ended December 31, 2023 increased as compared to the same period in the prior year, primarily due to expansion of our perpetual licenses revenues.

The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.

Cost of Revenues and Operating Expense (Income)

Headcount-Related Costs

For the years ended December 31, 2023, 2022, and 2021, approximately 80% of our aggregate cost of revenues, research and development, selling and marketing, and general and administrative expenses were represented by what we refer to herein as “headcount‑related” costs.

These costs primarily include salaries, benefits, bonuses, stock‑based compensation expense, employment taxes, travel, training, and realignment of our colleagues, and third‑party personnel expenses and related overhead.

Our headcount‑related costs are variable in nature.

We actively manage these costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins.

During the fourth quarter of 2023, the Company approved a strategic realignment program to better serve our accounts and to better align resources with the strategy of the business, including reinvestment in go-to-market functions, as well as in AI product development.

The realignment program resulted in realignment costs of $12,579, which represent termination benefits for colleagues whose roles were impacted (less than five percent of total headcount).

See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information.

The realignment program activities have been broadly implemented across our various businesses with the intention that substantially all actions, including payment of the termination benefits, will be fully completed by mid‑2024.

The impact of the realignment program on headcount-related costs for the year ended December 31, 2023 is included in our discussion below.

Cost of Revenues

Current Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Cost of subscriptions and licenses $ 169,406 $ 147,578 $ 124,321 14.8 % 15.1 % 18.7 % 22.2 %

Cost of services 96,677 89,435 92,218 8.1 % 9.0 % (3.0 %) 2.0 %

Total cost of revenues $ 266,083 $ 237,013 $ 216,539 12.3 % 12.8 % 9.5 % 13.6 %

(1) Constant currency is a non-GAAP financial measure.

Prior Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Cost of subscriptions and licenses $ 169,406 $ 147,578 $ 124,321 14.8 % 14.7 % 18.7 % 24.5 %

Cost of services 96,677 89,435 92,218 8.1 % 9.0 % (3.0 %) 2.3 %

Total cost of revenues $ 266,083 $ 237,013 $ 216,539 12.3 % 12.5 % 9.5 % 15.1 %

(1) Constant currency is a non-GAAP financial measure.

Cost of subscriptions and licenses .

Cost of subscriptions and licenses expenses primarily include headcount‑related costs, as well as depreciation of property and equipment and amortization of capitalized software costs associated with servicing software subscriptions, amortization of intangible assets associated with acquired software and technology, channel partner compensation for providing sales coverage to users, as well as cloud‑related costs incurred for servicing our accounts using cloud provisioned solutions and our license administration platform.

For the year ended December 31, 2023, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in headcount‑related costs of approximately $14,407, mainly due to an increase in headcount and annual compensation costs, and an increase in cloud‑related costs of approximately $4,949.

Cost of services.

Cost of services expenses primarily include headcount‑related costs, as well as depreciation of property and equipment and amortization of capitalized software costs, used for providing training, implementation, configuration, and customization services to accounts.

For the year ended December 31, 2023, on a constant currency basis, cost of services increased primarily due to an increase in headcount‑related costs of approximately $7,991, mainly due to third‑party personnel costs, and to a lesser extent, increases in headcount and annual compensation costs, partially offset by lower acquisition-related retention incentives.

Operating Expense (Income)

Current Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Research and development $ 274,619 $ 257,856 $ 220,915 6.5 % 7.5 % 16.7 % 21.8 %

Selling and marketing 224,336 195,622 162,240 14.7 % 14.9 % 20.6 % 25.8 %

General and administrative 180,738 174,647 150,116 3.5 % 3.6 % 16.3 % 19.1 %

Deferred compensation plan 13,580 (15,782) 95,046 NM NM NM NM

Amortization of purchased intangibles 38,515 41,114 25,601 (6.3 %) (6.3 %) 60.6 % 67.5 %

Total operating expenses $ 731,788 $ 653,457 $ 653,918 12.0 % 12.5 % (0.1 %) 3.8 %

Percentage changes that are considered not meaningful are denoted with NM.

(1) Constant currency is a non-GAAP financial measure.

Prior Definition of Constant Currency:

% Change % Change

2022 to 2023 2021 to 2022

Constant Constant

Year Ended December 31, Currency Currency

2023 2022 2021 % % (1)

Research and development $ 274,619 $ 257,856 $ 220,915 6.5 % 7.5 % 16.7 % 22.1 %

Selling and marketing 224,336 195,622 162,240 14.7 % 15.0 % 20.6 % 26.3 %

General and administrative 180,738 174,647 150,116 3.5 % 3.5 % 16.3 % 19.7 %

Deferred compensation plan 13,580 (15,782) 95,046 NM NM NM NM

Amortization of purchased intangibles 38,515 41,114 25,601 (6.3 %) (6.1 %) 60.6 % 67.2 %

Total operating expenses $ 731,788 $ 653,457 $ 653,918 12.0 % 12.5 % (0.1 %) 4.2 %

Percentage changes that are considered not meaningful are denoted with NM.

(1) Constant currency is a non-GAAP financial measure.

Research and development.

Research and development expenses primarily include headcount‑related costs, as well as costs to develop software products or the software component of products to be sold, leased, or marketed to external accounts, before technological feasibility is reached, which is generally shortly before the release of such products.

Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings.

Our allocation of research and development resources is based on a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions.

We anticipate that we will continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions.

For the year ended December 31, 2023, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of approximately $18,730, mainly due to an increase in annual compensation costs and headcount, and to a lesser extent, realignment expenses, partially offset by a decrease in stock‑based compensation expense primarily related to the April 2023 retirement of founder and former Chief Technology Officer, Keith Bentley.

The retirement of Mr.

Bentley contributed to a deceleration of research and development expenses growth during 2023.

Selling and marketing.

Selling and marketing expenses primarily include headcount‑related costs, as well as the expense of online marketing, product marketing and other brand‑building activities, such as advertising, trade shows, and expositions, and various sales and promotional programs.

We anticipate that we will continue to make strategic investments in our global business systems and methods to enhance major account sales activities and to support our worldwide sales and marketing strategies, and the business in general.

For the year ended December 31, 2023, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of approximately $27,584, mainly due to an increase in headcount and annual compensation costs, and to a lesser extent, realignment expenses.

General and administrative .

General and administrative expenses primarily include headcount‑related costs for our finance, human resources, and legal functions, as well as professional fees for legal and accounting services.

General and administrative expenses also include acquisition costs, which consist of costs related to legal, accounting, valuation, insurance, and other consulting and transaction fees.

Additionally, acquisition costs will drive fluctuations in general and administrative expenses depending on the timing of business combinations.

For the year ended December 31, 2023, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of approximately $18,248, mainly due to an increase in headcount and annual compensation costs, and to a lesser extent, third‑party personnel costs.

Partially offsetting these increases were lower non‑income related taxes of approximately $6,001 and lower acquisition expenses of approximately $5,777.

Deferred compensation plan .

Deferred compensation plan reflects the expense (income) recorded related to changes in deferred compensation plan liabilities, which are marked to market at the end of each reporting period.

For the year ended December 31, 2023, deferred compensation plan expense (income) was attributable to the marked to market impact on deferred compensation plan liability balances period over period.

Amortization of purchased intangibles.

Amortization of purchased intangibles includes the amortization of acquired non‑product related intangible assets, primarily customer relationships, trademarks, and non‑compete agreements recorded in connection with completed acquisitions.

For the year ended December 31, 2023, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to the prior year.

Interest Expense, Net

Year Ended December 31, 2022 2021

2023 2022 2021 to 2023 to 2022

Interest expense $ (41,331) $ (35,056) $ (11,527) 17.9 % NM

Interest income 1,538 421 306 NM 37.6 %

Interest expense, net $ (39,793) $ (34,635) $ (11,221) 14.9 % NM

Percentage changes that are considered not meaningful are denoted with NM.

Interest expense, net primarily represents interest associated with the Credit Facility, the 2026 Notes, the 2027 Notes, amortization and write‑off of deferred debt issuance costs, and interest income from our investments in money market funds.

The majority of our debt is protected from rising interest rates, through either very low fixed coupon interest on our convertible notes or our $200,000 interest rate swap, which expires in 2030.

For the year ended December 31, 2023, interest expense, net increased primarily due to a higher weighted average interest rate on borrowings under the Credit Facility, partially offset by lower weighted average debt outstanding.

Other (Expense) Income, Net

Year Ended December 31,

2023 2022 2021

(Loss) gain from:

Change in fair value of interest rate swap $ (5,038) $ 27,083 $ 9,770

Foreign exchange (1)

2,497 (9,901) 827

Sale of aircraft — 2,029 —

Change in fair value of acquisition contingent consideration — 1,427 (550)

Receipts (payments) related to interest rate swap

8,803 1,947 (1,270)

Other (expense) income, net (2)

(13,484) 1,713 1,184

Total other (expense) income, net

$ (7,222) $ 24,298 $ 9,961

(1) Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived mainly from U.S.

dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.

Intercompany finance transactions primarily denominated in U.S.

dollars resulted in unrealized foreign exchange gains (losses) of $3,163, $(7,369), and $(779) for the years ended December 31, 2023, 2022, and 2021, respectively.

(2) Other (expense) income, net includes investment impairment and other charges of $(16,988), partially offset by gains on investments of $2,360 for the year ended December 31, 2023.

(Benefit) Provision for Income Taxes

Year Ended December 31,

2023 2022 2021

Income before income taxes

$ 183,527 $ 198,275 $ 93,329

(Benefit) provision for income taxes

$ (143,241) $ 21,283 $ (3,448)

Effective tax rate (78.0) % 10.7 % (3.7) %

(Benefit) provision for income taxes includes the aggregate consolidated income tax expense for U.S.

domestic and foreign income taxes.

For the year ended December 31, 2023, the effective tax rate was lower as compared to the year ended December 31, 2022 primarily due to the discrete tax benefit recognized as a result of the internal legal entity restructuring described below.

The benefit of the internal legal entity restructuring was partially offset by an increase in the effective tax rate impact of the Global Intangible Low‑Taxed Income (“GILTI”) inclusion due to the mandatory capitalization of research and development expenses for U.S.

tax purposes and a decrease in discrete tax benefits related to stock-based compensation, net of the impact from officer compensation limitation provisions, recognized during the current year.

For the years ended December 31, 2023 and 2022, we recorded discrete tax benefits of $14,648 and $20,501, respectively, associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

During the fourth quarter of 2023, we recognized a net discrete income tax benefit of $170,784 attributable to internal legal entity restructuring and related intra-entity transactions as part of our continuing efforts to align intellectual property ownership with our business operating model.

These transactions resulted in the recognition of deferred tax benefits arising from the net increase in deferred tax assets related to intangibles and goodwill of $171,622.

The deferred tax assets represent the undiscounted future anticipated cash tax impacts of basis differences, which are expected to be realized through tax amortization over the next 13 years.

See Note 16 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information.

Key Business Metrics:

We regularly review the following key metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.

In addition to our results of operations discussed above, we believe the following presentation of key business metrics provides additional useful information to investors regarding our results of operations.

To the extent material, we disclose below the additional purposes, if any, for which our management uses these key business metrics.

Our key business metrics may vary significantly from period to period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies.

2023 2022 2021

Annualized recurring revenues (“ARR”) $ 1,036,548 $ 921,218 $ 752,697

ARR $ 1,174,774 $ 1,036,548 $ 921,218

Last twelve-months recurring revenues $ 1,096,677 $ 978,024 $ 834,150

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Recurring revenues dollar-based net retention rate 109 % 110 % 109 %

Our ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates.

(1) Constant currency is a non-GAAP financial measure.

Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

Recurring Revenues

Recurring revenues are the basis for our other revenue-related key business metrics.

We believe this measure is useful in evaluating our ability to consistently retain and grow our revenues within our existing accounts.

Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.

ARR is a key business metric that we believe is useful in evaluating the scale and growth of our business as well as to assist in the evaluation of underlying trends in our business.

Furthermore, we believe ARR, considered in connection with our last twelve‑month recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth.

ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign currency exchange rates.

We believe that the last three months of recognized revenues, on an annualized basis, for our recurring software subscriptions with consumption measurement period durations of less than one year is a reasonable estimate of the annual revenues, given our consistently high retention rate and stability of usage under such subscriptions.

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 43%, 38%, and 36% as of December 31, 2022, 2021, and 2020, respectively.

Within our consumption‑measured ARR, the continuous uptake of our E365 subscription offering has increased daily consumption‑measured ARR, representing 35% of total ARR as of December 31, 2022.

We believe that ARR is an important metric indicating the scale and growth of our business.

Furthermore, we believe ARR, considered in connection with our recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth.

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 47%, 43%, and 38% as of December 31, 2023, 2022, and 2021, respectively, with our E365 subscription offering representing 41%, 35%, and 29% of total ARR as of December 31, 2023, 2022, and 2021, respectively.

In March 2022, in response to the Russia‑Ukraine war, we announced a pause of sales in Russia and Belarus, in addition to our strict compliance with applicable sanctions, regimes, and other regulatory restrictions on business activities in those countries.

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Accordingly, we made the decision to wind down business and exit the Russian market, which resulted in a further reduction in our ARR by $6,000.

Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis.

We believe that ARR growth is an important metric indicating the scale and growth of our business.

Our ARR growth rate was favorably impacted by the ARR onboarding from our platform acquisition of PLS by 2.5% for the year ended December 31, 2022.

Last Twelve‑Months Recurring Revenues

Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period.

We define recurring revenues as subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.

We believe that last twelve‑months recurring revenues is an important indicator of our performance during the immediately preceding twelve‑month time period.

Last twelve‑month recurring revenues is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues.

We believe that we will continue to experience favorable growth in recurring revenues primarily due to our strong account retention and recurring revenues dollar‑based net retention rates, as well as the addition of new accounts with recurring revenues.

The last twelve‑months recurring revenues for the periods ended December 31, 2022, 2021, and 2020 compared to the last twelve‑months of the preceding twelve‑month period increased by $143,874, $137,488, and $65,565, respectively.

This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions, including the favorable impact from our platform acquisitions of Power Line Systems and Seequent.

Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period.

The last twelve‑months recurring revenues for the periods ended December 31, 2023, 2022, and 2021 compared to the last twelve‑months of the comparative twelve‑month period increased by $118,653, $143,874, and $137,488, respectively.

For the twelve months ended December 31, 2023, 2022, and 2021, 89%, 89%, and 86%, respectively, of our revenues were recurring revenues.

Constant currency metrics .

In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates.

Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with U.S.

ARR growth rate.

Our ARR growth rate is the growth rate of our ARR, measured on a constant currency basis.

Our ARR growth rate was favorably impacted by the ARR onboarding from our platform acquisition of Power Line Systems by 2.5% for the year ended December 31, 2022 and by 13% for the year ended December 31, 2021 due to the ARR onboarding from our platform acquisition of Seequent.

We believe that ARR growth is an important metric indicating the scale and growth of our business.

Account Retention Rate

Our account retention rate for any given twelve-month period is calculated using the average currency exchange rates for the prior period, as follows:

the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period.

Our account retention rate is an important indicator that provides insight into the long‑term value of our account relationships and our ability to retain our account base.

Account retention rate is a key business metric that we believe is useful in evaluating the long‑term value of our account relationships and our ability to retain our account base.

We believe that our consistent and high account retention rates illustrate our ability to retain and cultivate long‑term relationships with our accounts.

Account retention rate for any given twelve-month period is calculated using the average foreign currency exchange rates for the prior period, as follows:

the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period.

Recurring Revenues Dollar‑Based Net Retention Rate

Our recurring revenues dollar‑based net retention rate is calculated using the average exchange rates for the prior period, as follows:

Recurring revenues dollar‑based net retention rate is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues.

Recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows:

the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period.

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This may cause variability in the comparison.

We believe our recurring revenues dollar‑based net retention rate is a key indicator of our success in growing our revenues within our existing accounts.

Given that recurring revenues represented 89% of our total revenues for the twelve months ended December 31, 2022, this metric helps explain our revenue performance, excluding the impact from acquisitions, as primarily growth into existing accounts.

We believe that our consistent and high recurring revenues dollar‑based net retention rate illustrates our ability to consistently retain accounts and grow them.

Our calculation of these metrics may not be comparable to other companies with similarly‑titled metrics.

Given that recurring revenues represented 89%, 89%, and 86% of our total revenues for the twelve months ended December 31, 2023, 2022, and 2021, respectively, this metric helps explain our revenue performance as primarily growth from existing accounts.

Non-GAAP Financial Measures:

In addition to our results determined in accordance with U.S.

GAAP, we also use the below non‑GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.

Year Ended December 31,

2022 2021 2020

Adjusted EBITDA $ 366,440 $ 324,948 $ 266,376

Adjusted Net Income 274,518 267,892 193,334

Adjusted EBITDA.

We define Adjusted EBITDA as net income adjusted for interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, expenses associated with IPO, other non‑operating (income) expense, net, and (income) loss from investments accounted for using the equity method, net of tax.

Adjusted Net Income .

We define Adjusted Net Income as net income adjusted for the following:

amortization of purchased intangibles, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, expenses associated with IPO, other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax.

The income tax effect of non‑GAAP adjustments was determined using the applicable rates in the taxing jurisdictions in which income or expense occurred, and represent both current and deferred income tax expense or benefit based on the nature of the non‑GAAP adjustments, including the tax effects of non‑cash stock‑based compensation expense.

Adjusted EBITDA and Adjusted Net Income are not presentations made in accordance with U.S.

GAAP, and our use of the terms Adjusted EBITDA and Adjusted Net Income may vary from the use of similarly titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

We believe the presentation of Adjusted EBITDA and Adjusted Net Income provides useful information to management and investors regarding financial and business trends related to our results of operations and that when non‑GAAP financial information is viewed with U.S.

GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

We also use Adjusted EBITDA and Adjusted Net Income to compare our results to those of our competitors and to consistently measure our performance from period to period.

Adjusted EBITDA and Adjusted Net Income should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with U.S.

GAAP as measures of operating performance.

Adjusted EBITDA and Adjusted Net Income have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S.

Reconciliation of net income to Adjusted EBITDA:

Year Ended December 31,

2022 2021 2020

$ 174,780 $ 93,192 $ 126,521

Interest expense, net 34,635 11,221 6,780

Provision (benefit) for income taxes

21,283 (3,448) 38,625

Depreciation and amortization

71,537 52,793 36,117

Stock-based compensation (2)

74,566 48,152 32,114

Deferred compensation plan (3)

(15,782) 95,046 177

Acquisition expenses (4)

25,398 34,368 11,666

Realignment expenses (5)

2,109 — 10,022

Expenses associated with IPO (6)

Other income, net (7)

(24,298) (9,961) (24,250)

Loss from investments accounted for using the equity method, net of tax

2,212 3,585 2,474

Adjusted EBITDA $ 366,440 $ 324,948 $ 266,376

Reconciliation of net income to Adjusted Net Income:

In addition to our results determined in accordance with GAAP discussed above, we believe the following presentation of financial measures not in accordance with GAAP provides useful information to investors regarding our results of operations.

To the extent material, we disclose below the additional purposes, if any, for which our management uses these non‑GAAP financial measures and provide reconciliations between these non‑GAAP financial measures and their most directly comparable GAAP financial measures.

Non‑GAAP financial information should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP, including operating income, or other measures of performance.

Our non‑GAAP financial measures may vary significantly from period to period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies.

Adjusted OI w/SBC

Adjusted OI w/SBC is a non-GAAP financial measure and is used to measure the operational strength and performance of our business, as well as to assist in the evaluation of underlying trends in our business.

Adjusted OI w/SBC is our primary performance measure, which excludes certain expenses and charges, including the non-cash amortization expense resulting from the acquisition of intangible assets, as we believe these may not be indicative of our core business operating results.

We intentionally include stock-based compensation expense in this measure as we believe it better captures the economic costs of our business.

Management uses this non-GAAP financial measure to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, to evaluate financial performance, and in our comparison of our financial results to those of other companies.

It is also a significant performance measure in certain of our executive incentive compensation programs.

Adjusted OI w/SBC is defined as operating income adjusted for the following:

amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods.

Adjusted Operating Income

Adjusted operating income is a non-GAAP financial measure that we believe is useful to investors in making comparisons to other companies, although this measure may not be directly comparable to similar measures used by other companies.

Adjusted operating income is defined as operating income adjusted for the following:

amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation expense, for the respective periods.

Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income:

Year Ended December 31,

2023 2022 2021

Operating income

$ 230,542 $ 208,612 $ 94,589

Non-GAAP adjustments, prior to income taxes:

Amortization of purchased intangibles (1)

51,219 53,592 34,001

Stock-based compensation (2)

74,566 48,152 32,114

Deferred compensation plan (2)

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11,470 2,109 —

Expenses associated with IPO (6)

Other income, net (7)

(24,298) (9,961) (24,250)

Total non-GAAP adjustments, prior to income taxes 115,585 201,606 76,580

Income tax effect of non-GAAP adjustments (18,059) (30,491) (12,241)

Loss from investments accounted for using the equity method, net of tax

Adjusted OI w/SBC 324,677 273,929 258,004

Stock-based compensation expense (5)

71,470 74,566 48,152

Adjusted Net Income $ 274,518 $ 267,892 $ 193,334

Further explanation of certain of our adjustments in arriving at Adjusted EBITDA and Adjusted Net Income are as follows:

Adjusted operating income $ 396,147 $ 348,495 $ 306,156

Further explanation of certain of our adjustments in arriving at Adjusted OI w/SBC and Adjusted operating income are as follows:

(1) Amortization of purchased intangibles .

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Amortization of purchased intangible assets will recur in future periods.

(2) Stock‑based compensation .

We exclude certain stock‑based compensation expenses from our non‑GAAP measures primarily because they are non‑cash expenses and management finds it useful to exclude certain non‑cash charges to assess the appropriate level of various operating expenses to assist in budgeting, planning, and forecasting future periods.

Moreover, because of the variety of award types and subjective assumptions made in recognizing stock‑based compensation expense, we believe excluding stock‑based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

(2) Deferred compensation plan .

In August 2021, our board of directors approved an amendment to the amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”), which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B Common Stock into other phantom investment funds.

The offer to reallocate was subject to a proration mechanism which adjusted the aggregate elections to a maximum of 1,500,000 phantom shares of the Company’s Class B Common Stock.

This one‑time reallocation opportunity was offered only to certain active executives (but not to Directors or Bentley family members) in order to encourage retention, as otherwise these executives could only have materially diversified their investments in Company equity (primarily held in the DCP) by voluntarily terminating employment to trigger DCP distributions.

These executives in aggregate accordingly diversified 24% of their phantom shares of the Company’s Class B Common Stock.

While DCP participants’ investments in phantom shares remain equity classified, as they will be settled in shares of Class B Common Stock upon eventual distribution, the amendment and elections resulted in a change to liability classification for the reallocated phantom investments, as they will be settled in cash upon eventual distribution.

As a result, during the year ended December 31, 2021, we recognized a one‑time compensation charge of $90,721 to Deferred compensation plan expenses in the consolidated statement of operations to record the reallocated deferred compensation plan liabilities at their fair value.

Deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.

We exclude Deferred compensation plan expense (income) when we evaluate our continuing operational performance because it is not reflective of our ongoing business and results of operation.

We believe it is useful for investors to understand the effects of this item on our total operating expenses.

(3) Acquisition expenses .

We incur expenses for professional services rendered in connection with business combinations, which are included in our U.S.

GAAP presentation of general and administrative expense (See Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K).

We incur expenses for professional services rendered in connection with business combinations, which are included in our GAAP presentation of general and administrative expense (see Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K).

Also included in our acquisition expenses are retention incentives paid to executives of the acquired companies.

For the year ended December 31, 2022, $9,804 of our acquisition expenses related to our platform acquisition of Power Line Systems.

For the year ended December 31, 2021, $16,557 and $1,644 of our acquisition expenses related to our platform acquisitions of Seequent and Power Line Systems, respectively.

We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations.

For the year ended December 31, 2022, $9,804 of our acquisition expenses related to our platform acquisition of PLS.

For the year ended December 31, 2021, $16,557 and $1,644 of our acquisition expenses related to our platform acquisitions of Seequent and PLS, respectively.

(4) Realignment expenses .

During 2022, the marked shifts in the Russian business environment and economic outlook led us to conclude it was no longer viable for us to continue operations in Russia.

Accordingly, we made the decision to wind down business and exit the Russian market.

As a result, we incurred exit costs, which were comprised of termination benefits for colleagues whose positions were eliminated and asset impairments.

During 2020, these expenses were associated with realigning our business strategies to better serve our accounts and to better align resources with the evolving needs of the business.

In connection with these actions, we recognized costs related to termination benefits for colleagues whose positions were eliminated.

We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations.

We believe it is useful for investors to understand the effects of these items on our total operating expenses.

In the ordinary course of operating our business, we incur severance expenses that are not included in this adjustment.

(6) Expenses associated with IPO .

These expenses include certain non-recurring costs relating to our IPO, consisting of the payment of underwriting discounts and commissions applicable to the sale of shares by the selling stockholders, professional fees, and other expenses.

We exclude these charges because they are not reflective of our ongoing business and results of operation.

We believe it is useful for investors to understand the effects of these items on our total operating expenses.

(7) Other income, net .

The table below contains the details of Other income, net .

We exclude these items because they are not reflective of our ongoing business and results of operations.

We believe it is useful for investors to understand the effects of these items on our results of operations.

Year Ended December 31,

2022 2021 2020

(Gain) loss from:

Change in fair value of interest rate swap $ (27,083) $ (9,770) $ (347)

Foreign exchange (a)

9,901 (827) (22,919)

Sale of aircraft (2,029) — —

Change in fair value of acquisition contingent consideration (1,427) 550 (1,340)

Payments related to interest rate swap (1,947) 1,270 696

Other income, net

(1,713) (1,184) (340)

Total other income, net

$ (24,298) $ (9,961) $ (24,250)

(a) Foreign exchange loss (gain) is primarily attributable to foreign currency translation derived mainly from U.S.

Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.

Intercompany finance transactions primarily denominated in U.S.

Dollars resulted in unrealized foreign exchange losses (gains) of $7,369, $779, and $(22,310) for the years ended December 31, 2022, 2021, and 2020, respectively.

Key Factors Impacting Comparability and Performance:

In addition to our performance previously discussed in “—Key Business Metrics” and “—Non-GAAP Financial Measures,” and as discussed further below in “—Results of Operations” and “—Liquidity and Capital Resources,” our consolidated financial statements were impacted by the following:

Acquisitions.

Since our founding, we have purposefully pursued a strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses.

As a public company, we have been able to make platform acquisitions which appreciably increase our scale and/or the scope of our platform capabilities.

Our relatively numerous and frequent programmatic acquisitions, which most often “fill white space” within our ecosystem and add their particular value principally by virtue of our existing platform comprehensiveness, and accordingly we consider this programmatic aspect of our growth as characteristically within our mainstream business performance (unlike platform acquisitions).

We completed 6, 13, and 6 acquisitions for the years ended December 31, 2022, 2021, and 2020, respectively.

Our year ended December 31, 2022 consolidated financial statements were meaningfully impacted by our platform acquisition of Power Line Systems, which was completed on January 31, 2022 for $695,968 in cash, net of cash acquired.

Our year ended December 31, 2022 and 2021 consolidated financial statements were meaningfully impacted by our platform acquisition of Seequent, which was completed on June 17, 2021 for $883,336 in cash, net of cash acquired, plus 3,141,342 shares of our Class B Common Stock.

For the year ended December 31, 2022, $9,804 of our acquisition expenses related to the acquisition of Power Line Systems.

For the year ended December 31, 2021, $16,557 and $1,644 of our acquisition expenses related to the acquisitions of Seequent and Power Line Systems, respectively.

DCP Amendment .

In August 2021, our board of directors approved an amendment to the DCP, which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of our Class B Common Stock into other phantom investment funds.

The offer to reallocate was subject to a proration mechanism which adjusted the aggregate elections to a maximum of 1,500,000 phantom shares of the Company’s Class B Common Stock.

These executives in aggregate accordingly diversified 24% of their phantom shares of the Company’s Class B Common Stock.

Subsequent to the one‑time reallocation, these diversified deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.

BSY Stock Repurchase Program .

On May 11, 2022, we announced that our board of directors approved the BSY Stock Repurchase Program (the “Repurchase Program”) authorizing us to repurchase up to $ 200,000 of our Class B Common Stock through June 30, 2024.

On December 14, 2022, our board of directors amended the Repurchase Program to allow us also to repurchase its outstanding convertible senior notes.

This additional authorization did not increase the overall dollar limit of the Repurchase Program.

For the year ended December 31, 2022, we repurchased 896,126 shares for $ 28,250 , and $ 2,170 aggregate principal amount of our outstanding 2026 Notes for $ 1,998 .

Impact of foreign currency .

A portion of our total revenues and operating expenses were derived from outside the U.S.

and, as such, were denominated in various foreign currencies, including most significantly:

Euros, British Pounds, Canadian Dollars, Australian Dollars, Chinese Yuan Renminbi, and New Zealand Dollars.

Our financial results are therefore affected by changes in foreign currency rates.

For the years ended December 31, 2022, 2021, and 2020, 36%, 47%, and 43%, respectively, of our total revenues were denominated in various foreign currencies.

Correspondingly, for the years ended December 31, 2022, 2021, and 2020, 46%, 42%, and 46%, respectively, of our total operating expenses were denominated in various foreign currencies.

Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.

Accordingly, our results of operations have been, and in the future will be, affected by changes in foreign exchange rates.

In reporting period-over-period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates.

Components of Results of Operations:

We manage our business globally within one operating segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker reviews and manages our business.

We generate revenues from subscriptions, perpetual licenses, and services.

Subscriptions

Enterprise subscriptions .

We provide enterprise subscription offerings, which provide our enterprise accounts with complete and unlimited global access to our comprehensive portfolio of solutions.

Our E365 subscriptions are charged to accounts primarily based upon daily usage.

E365 subscriptions can contain quarterly usage floors or collars.

Alternatively, ELS provides access for a prepaid fee, which is based on the account’s usage of software in the preceding year, to effectively create a fee‑certain consumption‑based arrangement.

ELS contain a term license component, SELECT maintenance and support, and performance consulting days.

The E365 and ELS offerings both contain a distinct term license component.

E365 revenues are recognized based upon usage incurred by the account.

ELS revenues are recognized as the distinct performance obligations are satisfied.

SELECT subscriptions .

We provide prepaid annual recurring subscriptions that accompanies a new or previously purchased perpetual license.

SELECT provides accounts with benefits, including upgrades, comprehensive technical support, pooled licensing benefits, annual portfolio balancing exchange rights, learning benefits, certain Azure‑based cloud collaboration services, mobility advantages, and access to other available benefits.

SELECT subscriptions revenues are recognized as distinct performance obligations are satisfied.

Term license subscriptions .

We provide annual, quarterly, and monthly term licenses for our software products.

ATL subscriptions are generally prepaid annually for named user access to specific products and include our Virtuoso subscriptions sold via our Virtuosity eStore for practitioner licenses.

Virtuoso subscriptions are bundles with customizable training and expert consultation administered through “keys” or credits.

QTL subscriptions allow accounts to pay quarterly in arrears for license usage that is beyond their contracted quantities.

MTL subscriptions are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized.

MTL subscriptions require a CSS, which is described below.

Visas are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles users to certain functionality of our ProjectWise and AssetWise systems.

Our standard offerings are usage based with monetization through our CSS program as described below.

Annual, quarterly, and monthly term licenses revenues are recognized as the distinct performance obligations for each are satisfied.

Billings in advance are recorded as Deferred revenues in the consolidated balance sheets.

QTL, MTL, and Visas subscriptions are recognized based upon usage incurred by the account.

CSS is a program designed to streamline the procurement, administration, and payment process.

The program requires an estimation of annual usage for CSS eligible offerings and a deposit of funds in advance Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis.

CSS balances not utilized for eligible products or services may roll over to future periods or are refundable.

Paid and unconsumed CSS balances are recorded in Accruals and other current liabilities in the consolidated balance sheets.

Software and services consumed under CSS are recognized pursuant to the applicable revenue recognition guidance for the respective software or service and classified as subscriptions or services based on their respective nature.

Perpetual licenses

Perpetual licenses may be sold with or without attaching a SELECT subscription.

Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription discussed above.

Perpetual licenses revenues are recognized upon delivery of the license to the user.

We provide professional services, including training, implementation, configuration, customization, and strategic consulting services.

We perform projects on both a time and materials and a fixed fee basis.

Certain of our fixed‑fee arrangements, including our Success Services offerings, are structured as subscription‑like, packaged offerings that are annually recurring in nature.

Revenues are recognized as services are performed.

Headcount-related costs

For the years ended December 31, 2022, 2021, and 2020, approximately 80% of our aggregate cost of revenues, research and development, selling and marketing, and general and administrative expenses were represented by what we refer to herein as “headcount-related” costs.

These costs primarily include salaries, incentives, benefits, employment taxes, travel, and realignment of our colleagues, and third‑party personnel and related overhead.

Our headcount‑related costs are variable in nature.

We actively manage these costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins.

Cost of subscriptions, licenses, and services

Cost of subscriptions and licenses.

Cost of subscriptions and licenses includes salaries and other related costs, including the depreciation of property and equipment and the amortization of capitalized software costs associated with servicing software subscriptions, the amortization of intangible assets associated with acquired software and technology, channel partner compensation for providing sales coverage to subscribers, as well as cloud‑related costs incurred for servicing our accounts using cloud provisioned solutions and our license administration platform.

Cost of services .

Cost of services includes salaries for internal and third‑party personnel and related overhead costs, including depreciation of property and equipment and amortization of capitalized software costs, for providing training, implementation, configuration, and customization services to accounts.

Operating expense (income)

Research and development.

Research and development expenses, which are generally expensed as incurred, primarily consist of personnel and related costs of our research and development staff, including salaries, incentives, and benefits, and costs of certain third‑party contractors, as well as allocated overhead costs.

We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external accounts, before technological feasibility is reached.

In general, technological feasibility is reached shortly before the release of such products.

Under our Accelerated Commercial Development Program (“ACDP”) (our structured approach to an in‑house business incubator function), we capitalize certain development costs related to certain projects once technological feasibility is established.

Technological feasibility is established when a detailed program design has been completed and documented;

we have established that the necessary skills, hardware, and software technology are available to produce the product;

and there are no unresolved high‑risk development issues.

Once the software is ready for its intended use, amortization is recorded over the software’s estimated useful life (generally three years).

Total costs capitalized under the ACDP were $7,060, $6,608, and $7,809 for the years ended December 31, 2022, 2021, and 2020, respectively.

Additionally, total ACDP related amortization recorded in Costs of subscriptions and licenses was $6,626, $7,020, and $4,699 for the years ended December 31, 2022, 2021, and 2020, respectively.

Selling and marketing.

Selling and marketing expenses include salaries, benefits, bonuses, and stock‑based compensation expense for our selling and marketing colleagues, the expense of travel, entertainment, and training for such personnel, online marketing, product marketing and other brand‑building activities, such as advertising, trade shows, and expositions, various sales and promotional programs, and costs of computer equipment and facilities used in selling and marketing activities.

We capitalize certain incremental costs of obtaining a contract and recognize these expenses over the period of benefit associated with these costs, resulting in a deferral of certain contract costs each period.

The contract costs are amortized based on the economic life of the goods and services to which the contract costs relate.

We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less.

These costs include our internal sales force compensation program and certain channel partner sales incentive programs for which the annual compensation is commensurate with annual sales activities.

General and administrative .

General and administrative expenses include salaries, bonuses, benefits, and stock‑based compensation expense for our finance, human resources, and legal colleagues, the expense of travel, entertainment, and training for such personnel, professional fees for legal and accounting services, and costs of computer equipment and facilities used in general and administrative activities.

Following the completion of the IPO, we continued to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a U.S.

securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC.

In addition, as a public company, we incur increased expenses in the areas of insurance, investor relations, and professional services.

As a result, we expect the dollar amount of our general and administrative expenses to increase for the foreseeable future.

We expect, however, that our general and administrative expenses will decrease as a percentage of our total revenues over time, although the percentage may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our general and administrative expenses.

Deferred compensation plan .

In August 2021, our board of directors approved an amendment to the DCP, which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B Common Stock into other phantom investment funds.

The offer to reallocate was subject to a proration mechanism which adjusted the aggregate elections to a maximum of 1,500,000 phantom shares of the Company’s Class B Common Stock.

These executives in aggregate accordingly diversified 24% of their phantom shares of the Company’s Class B Common Stock.

Amortization of purchased intangibles.

Expenses associated with initial public offering.

Expenses associated with IPO include certain non-recurring costs relating to our IPO, consisting of the payment of underwriting discounts and commissions applicable to the sale of shares by the selling stockholders, professional fees, and other expenses.

We completed our IPO on September 25, 2020.

These fees were expensed in the period incurred.

Interest expense, net

Other income (expense), net

Other income (expense), net primarily consists of foreign currency translation results derived primarily from U.S.

Dollar denominated cash and cash equivalents, accounts receivable, and intercompany balances held by foreign subsidiaries with non‑U.S.

Dollar functional currencies.

Other income (expense), net also includes the fair value valuation result of our interest rate swap, payments related to our interest rate swap, the gain on the sale of 50% of our interest in our aircraft recorded during the year ended December 31, 2022, gain on extinguishment of debt, and changes in fair value of acquisition contingent consideration.

(Provision) benefit for income taxes

(Provision) benefit for income taxes includes the aggregate consolidated income tax expense for U.S.

domestic and foreign income taxes.

Loss from investments accounted for using the equity method, net of tax

Loss from investments accounted for using the equity method includes our proportional share of loss in our joint ventures.

Results of Operations:

Our selected consolidated statements of operations data for each of the periods indicated are as follows:

Year Ended December 31,

2022 2021 2020

For the year ended December 31, 2023, Realignment expenses were primarily associated with a strategic realignment program to better serve our accounts and to better align resources with the strategy of the business during the fourth quarter of 2023.

In connection with these actions, we recognized $12,579 of realignment costs related to termination benefits for colleagues whose roles were impacted (see Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K).

Partially offsetting these costs was income associated with the continued wind down of our Russian entities.

For the year ended December 31, 2022, Realignment expenses were comprised of asset impairments and termination benefits as a result of our decision to wind down business and exit the Russian market beginning in the second quarter of 2022.

(5) Stock‑based compensation expense .

We exclude non-cash stock‑based compensation expenses from certain of our non‑GAAP measures because we believe this is useful to investors in making comparisons to other companies.

Constant Currency

Constant currency and constant currency growth rates are non-GAAP financial measures that present our results of operations excluding the estimated effects of foreign currency exchange rate fluctuations.

A significant amount of our operations is conducted in foreign currencies.

As a result, the comparability of the financial results reported in U.S.

dollars is affected by changes in foreign currency exchange rates.

We use constant currency and constant currency growth rates to evaluate the underlying performance of the business, and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance.

During the fourth quarter of 2023, we changed our definitions of constant currency and constant currency growth rates.

We made this modification in order to better align with how we manage the business, to better reflect our performance during a reporting period, and to make the effects of foreign currency fluctuations and constant currency information more easily comparable on a period‑over‑period basis.

Prior period amounts have been revised to conform to the current period presentation using the updated constant currency and constant currency growth rates definition.

Reconciliations of constant currency non‑GAAP financial measures and their most directly comparable GAAP financial measures under the current and prior definitions are included below.

Reconciliation of consolidated revenues to consolidated revenues in constant currency:

Current definition:

Constant Currency % Change 2022 to 2023:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange at 2022 Rates Constant Currency Actual Impact of Foreign Exchange at 2022 Rates Constant Currency

Subscriptions $ 1,080,307 $ 1,239 $ 1,081,546 $ 960,220 $ 809 $ 961,029

3 unchanged sentences

Total revenues $ 1,228,413 $ 2,486 $ 1,230,899 $ 1,099,082 $ 981 $ 1,100,063

Cost of revenues:

Cost of subscriptions and licenses 147,578 124,321 95,803

Cost of services 89,435 92,218 71,352

Total cost of revenues 237,013 216,539 167,155

Gross profit 862,069 748,507 634,389

Operating expense (income):

Research and development 257,856 220,915 185,515

Selling and marketing 195,622 162,240 143,791

General and administrative 174,647 150,116 113,274

Deferred compensation plan (15,782) 95,046 177

Amortization of purchased intangibles 41,114 25,601 15,352

Expenses associated with initial public offering

Total operating expenses 653,457 653,918 484,239

Income from operations

208,612 94,589 150,150

Interest expense, net (34,635) (11,221) (6,780)

Other income, net

24,298 9,961 24,250

Income before income taxes

198,275 93,329 167,620

(Provision) benefit for income taxes

(21,283) 3,448 (38,625)

Loss from investments accounted for using the equity method, net of tax

(2,212) (3,585) (2,474)

174,780 93,192 126,521

Net income attributable to participating securities

(42) (9) (234)

Net income attributable to Class A and Class B common stockholders

$ 174,738 $ 93,183 $ 126,287

Per share information:

Net income per share, basic

$ 0.57 $ 0.30 $ 0.44

Net income per share, diluted

$ 0.55 $ 0.30 $ 0.42

Weighted average shares, basic 309,226,677 305,711,345 289,863,272

Weighted average shares, diluted 331,765,158 314,610,814 299,371,129

In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates.

Comparison of the Years Ended December 31, 2022 and 2021

Year Ended Constant

December 31, Currency

2022 2021 Amount % %

Constant Currency % Change 2021 to 2022:

Year Ended December 31, 2022 Year Ended December 31, 2021

Actual Impact of Foreign Exchange at 2021 Rates Constant Currency Actual Impact of Foreign Exchange at 2021 Rates Constant Currency

Subscriptions $ 960,220 $ 31,064 $ 991,284 $ 812,807 $ (19) $ 812,788

3 unchanged sentences

Total revenues $ 1,099,082 $ 36,829 $ 1,135,911 $ 965,046 $ (32) $ 965,014

The increase in total revenues for the year ended December 31, 2022 was primarily driven by improvements in our business performance and the impact from our platform acquisitions in subscriptions revenues, partially offset by the overall negative foreign currency effects due to a stronger U.S.

Dollar relative to our other currencies.

Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

Prior definition:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange Constant Currency Actual Impact of Foreign Exchange Constant Currency

Subscriptions $ 1,080,307 $ (8,095) $ 1,072,212 $ 960,220 $ 50,030 $ 1,010,250

For the year ended December 31, 2022, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $54,500, or approximately $101,700 on a constant currency basis, and the impact from our platform acquisitions of approximately $92,900, or approximately $95,800 on a constant currency basis.

For the year ended December 31, 2022, the acquisition impact relates to our platform acquisitions of Seequent and Power Line Systems and is inclusive of their respective organic performance.

The improvements in business performance, on a constant currency basis, were primarily driven by expansion within our existing accounts, and growth of 2% attributable to new accounts exclusive of platform acquisitions, most notability smaller- and medium-sized accounts.

Improvements in business performance for the year ended December 31, 2022 were led by our structural and civil engineering applications and our Enterprise Systems for project delivery.

Perpetual licenses 46,038 (107) 45,931 43,377 3,269 46,646

For the year ended December 31, 2022, perpetual licenses revenues were impacted by a reduction in business performance of approximately $11,500, or approximately $8,300 on a constant currency basis, partially offset by our Seequent platform acquisition of approximately $1,800, or approximately $1,900 on a constant currency basis.

For the year ended December 31, 2022, services revenues were impacted by our Seequent and Power Line Systems platform acquisitions by approximately $1,300, or approximately $1,400 on a constant currency basis, partially offset by a reduction in business performance of approximately $5,000, or approximately $1,000 on a constant currency basis.

For the year ended December 31, 2022, the reduction in business performance, on a constant currency basis, was impacted by the ongoing transition of historically classified services revenues into subscriptions revenues for accounts converting to our E365 subscription offering with embedded Success Services, partially offset by favorable contributions from Cohesive digital integrator services of approximately $3,800, or approximately $6,300 on a constant currency basis.

Revenues by Geographic Region

Revenue to external customers is attributed to individual countries based upon the location of the customer.

Revenues by geographic region are as follows:

Year Ended Constant

December 31, Currency

2022 2021 Amount % %

Subscriptions and licenses 1,126,345 (8,202) 1,118,143 1,003,597 53,299 1,056,896

Services 102,068 538 102,606 95,485 4,102 99,587

Total revenues $ 1,228,413 $ (7,664) $ 1,220,749 $ 1,099,082 $ 57,401 $ 1,156,483

Reconciliation of revenues by geographic region to revenues by geographic region in constant currency:

Current definition:

Constant Currency % Change 2022 to 2023:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange at 2022 Rates Constant Currency Actual Impact of Foreign Exchange at 2022 Rates Constant Currency

Americas $ 650,926 $ 242 $ 651,168 $ 584,794 $ (313) $ 584,481

2 unchanged sentences

Total revenues $ 1,228,413 $ 2,486 $ 1,230,899 $ 1,099,082 $ 981 $ 1,100,063

For the year ended December 31, 2022, the increase in revenues from the Americas was primarily driven by an increase in subscriptions revenues from our Seequent and Power Line Systems platform acquisitions of approximately $56,700, or approximately $57,200 on a constant currency basis, and improvements in our business performance of approximately $43,300, or approximately $48,000 on a constant currency basis.

For the year ended December 31, 2022, the increase in revenues from EMEA was primarily driven by the impact of our acquisitions of approximately $20,700, partially offset by a reduction in business performance of approximately $8,700.

On a constant currency basis, revenues from EMEA increased due to improvements in our business performance of approximately $23,700 and the impact of our acquisitions of approximately $21,800.

The increase from acquisitions was primarily due to an increase in subscriptions revenues from our Seequent and Power Line Systems platform acquisitions.

The improvements in business performance, on a constant currency basis, for the year ended December 31, 2022 were primarily due to expansion of our subscriptions revenues from existing accounts in Central Europe, the U.K., the Middle East, and Africa, partially offset by reductions in Russia.

For the year ended December 31, 2022, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately $3,400, or approximately $20,700 on a constant currency basis, and an increase in subscriptions revenues from our Seequent and Power Line Systems platform acquisitions of approximately $15,500, or approximately $16,800 on a constant currency basis.

The improvements in business performance for the year ended December 31, 2022 were primarily due to expansion of our recurring subscriptions revenues of approximately $13,600, or approximately $22,200 on a constant currency basis, in India, Australia, and Southeast Asia, partially offset by reductions of approximately $4,700, or approximately $3,700 on a constant currency basis, in China resulting from a confluence of events comprised of continued geopolitical challenges, the ongoing preference for locally developed, on premise software versus cloud-deployed, and additional impacts from COVID‑19, which may continue for the foreseeable future.

Cost of Revenues

Year Ended Constant

December 31, Currency

2022 2021 Amount % %

Constant Currency % Change 2021 to 2022:

Year Ended December 31, 2022 Year Ended December 31, 2021

Actual Impact of Foreign Exchange at 2021 Rates Constant Currency Actual Impact of Foreign Exchange at 2021 Rates Constant Currency

Americas $ 584,794 $ 860 $ 585,654 $ 483,087 $ 115 $ 483,202

EMEA 312,804 25,696 338,500 300,123 (348) 299,775

APAC 201,484 10,273 211,757 181,836 201 182,037

Total revenues $ 1,099,082 $ 36,829 $ 1,135,911 $ 965,046 $ (32) $ 965,014

Prior definition:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange Constant Currency Actual Impact of Foreign Exchange Constant Currency

Americas $ 650,926 $ (1,594) $ 649,332 $ 584,794 $ 5,218 $ 590,012

EMEA 353,550 (6,099) 347,451 312,804 33,524 346,328

APAC 223,937 29 223,966 201,484 18,659 220,143

Total revenues $ 1,228,413 $ (7,664) $ 1,220,749 $ 1,099,082 $ 57,401 $ 1,156,483

Reconciliation of cost of revenues to cost of revenues in constant currency:

Current definition:

Constant Currency % Change 2022 to 2023:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange at 2022 Rates Constant Currency Actual Impact of Foreign Exchange at 2022 Rates Constant Currency

Cost of subscriptions and licenses $ 169,406 $ 382 $ 169,788 $ 147,578 $ (45) $ 147,533

1 unchanged sentence

Total cost of revenues $ 266,083 $ 1,154 $ 267,237 $ 237,013 $ (98) $ 236,915

Constant Currency % Change 2021 to 2022:

Year Ended December 31, 2022 Year Ended December 31, 2021

Actual Impact of Foreign Exchange at 2021 Rates Constant Currency Actual Impact of Foreign Exchange at 2021 Rates Constant Currency

Cost of subscriptions and licenses $ 147,578 $ 4,246 $ 151,824 $ 124,321 $ (47) $ 124,274

For the year ended December 31, 2022, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in headcount‑related costs of approximately $13,100, mainly due to our platform acquisition of Seequent and annual salary adjustments, an increase in channel partner compensation and royalties of approximately $5,500, an increase in cloud‑related costs of approximately $4,900, and an increase in amortization expense for software and technology of approximately $4,700.

Cost of services 89,435 4,635 94,070 92,218 (9) 92,209

For the year ended December 31, 2022, on a constant currency basis, cost of services increased primarily due to an increase in headcount-related costs of approximately $3,600, mainly due to digital integrator business acquisitions and annual salary adjustments, partially offset by a decrease in facilities costs of approximately $1,100.

Operating Expense (Income)

Year Ended Constant

December 31, Currency

2022 2021 Amount % %

Total cost of revenues $ 237,013 $ 8,881 $ 245,894 $ 216,539 $ (56) $ 216,483

Prior definition:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange Constant Currency Actual Impact of Foreign Exchange Constant Currency

Cost of subscriptions and licenses $ 169,406 $ (149) $ 169,257 $ 147,578 $ 7,253 $ 154,831

Cost of services 96,677 823 97,500 89,435 4,932 94,367

Total cost of revenues $ 266,083 $ 674 $ 266,757 $ 237,013 $ 12,185 $ 249,198

Reconciliation of operating expense (income) to operating expense (income) in constant currency:

Current definition:

Constant Currency % Change 2022 to 2023:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange at 2022 Rates Constant Currency Actual Impact of Foreign Exchange at 2022 Rates Constant Currency

Research and development $ 274,619 $ 2,592 $ 277,211 $ 257,856 $ (36) $ 257,820

4 unchanged sentences

Total operating expenses $ 731,788 $ 3,289 $ 735,077 $ 653,457 $ (22) $ 653,435

* Not meaningful

Constant Currency % Change 2021 to 2022:

Year Ended December 31, 2022 Year Ended December 31, 2021

Actual Impact of Foreign Exchange at 2021 Rates Constant Currency Actual Impact of Foreign Exchange at 2021 Rates Constant Currency

Research and development $ 257,856 $ 11,118 $ 268,974 $ 220,915 $ (15) $ 220,900

For the year ended December 31, 2022, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount-related costs of approximately $46,400.

The increase in headcount-related costs was primarily comprised of approximately $33,600 of increases in salaries, mainly due to our platform acquisition of Seequent and annual salary adjustments, as well as an increase in stock-based compensation expense of approximately $8,100.

Selling and marketing 195,622 8,407 204,029 162,240 (9) 162,231

For the year ended December 31, 2022, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount-related costs of approximately $34,200 and an increase in promotional costs of approximately $6,700.

The increase in headcount-related costs was primarily comprised of an increase in salaries and variable compensation costs of approximately $25,800, mainly due to our platform acquisition of Seequent and annual salary adjustments, an increase in travel-related costs of approximately $5,100, and an increase in stock-based compensation expense of approximately $3,300.

General and administrative 174,647 4,190 178,837 150,116 (8) 150,108

For the year ended December 31, 2022, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount-related costs of approximately $31,000 and an increase in facilities costs of approximately $3,300.

The increase in headcount-related costs was primarily comprised of an increase in salaries costs of approximately $17,400, mainly due to our platform acquisition of Seequent and annual salary adjustments, and an increase in stock‑based compensation expense of approximately $14,300.

Partially offsetting these increases were lower acquisition expenses of approximately $8,600, primarily due to expenses of $9,804 related to the acquisition of Power Line Systems for the year ended December 31, 2022 as compared to expenses of $16,557 related to the acquisition of Seequent for the year ended December 31, 2021.

Deferred compensation plan (15,782) — (15,782) 95,046 — 95,046

For the year ended December 31, 2022, deferred compensation plan income was $15,782, which was attributable to the marked to market impact on deferred compensation plan liability balances period-over-period.

For the year ended December 31, 2021, deferred compensation plan expense was $95,046.

This amount was primarily attributable to a one‑time compensation charge of $90,721 as discussed in “—Key Factors Impacting Comparability and Performance,” and the marked to market impact on deferred compensation plan liability balances period-over-period.

Amortization of purchased intangibles 41,114 1,758 42,872 25,601 — 25,601

For the year ended December 31, 2022, on a constant currency basis, amortization of purchased intangibles increased primarily due to amortization from recently acquired purchased intangibles.

Interest Expense, Net

Interest expense $ (35,056) $ (11,527)

Interest income 421 306

Interest expense, net $ (34,635) $ (11,221)

Revolving loan facility $ (15,798) $ (3,448)

Term loans (7,413) (117)

Convertible senior notes, coupon interest (3,064) (1,899)

Amortization and write-off of deferred debt issuance costs (7,291) (5,955)

Other, net (1,069) 198

Interest expense, net $ (34,635) $ (11,221)

For the year ended December 31, 2022, interest expense, net increased primarily due to a higher outstanding average balance combined with a higher average interest rate under the revolving loan facility, and interest expense on the term loan, which we entered into on December 22, 2021.

Other Income, Net

Gain (loss) from:

Change in fair value of interest rate swap $ 27,083 $ 9,770

Foreign exchange (1)

Sale of aircraft 2,029 —

Change in fair value of acquisition contingent consideration 1,427 (550)

Payments related to interest rate swap 1,947 (1,270)

Other income, net

Total other income, net

$ 24,298 $ 9,961

(1) Foreign exchange (loss) gain is primarily attributable to foreign currency translation derived mainly from U.S.

Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.

Intercompany finance transactions primarily denominated in U.S.

Dollars resulted in unrealized foreign exchange losses of $7,369 and $779 for the years ended December 31, 2022 and 2021, respectively.

Provision (Benefit) for Income Taxes

Income before income taxes

$ 198,275 $ 93,329

Provision (benefit) for income taxes

$ 21,283 $ (3,448)

Effective tax rate 10.7 % (3.7) %

For the year ended December 31, 2022, the effective tax rate was higher as compared to the year ended December 31, 2021, primarily due to the 2021 effective tax rate impact, net of officer compensation limitation provisions, related to the 2021 compensation charge of $90,721 to Deferred compensation plan expenses to record reallocated deferred compensation plan liabilities at fair value.

For the years ended December 31, 2022 and 2021, we recognized tax benefits of $20,501 and $14,890, respectively, associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

$ 174,780 $ 93,192

For the year ended December 31, 2022, net income increased by $81,588, or 87.5%, compared to the year ended December 31, 2021.

Net income as a percentage of total revenues was 15.9% and 9.7% for the year ended December 31, 2022 and 2021, respectively.

The changes are due to the factors described above.

Adjusted EBITDA and Adjusted Net Income

Adjusted EBITDA $ 366,440 $ 324,948

Adjusted Net Income $ 274,518 $ 267,892

For the year ended December 31, 2022, Adjusted EBITDA increased by $41,492 compared to the year ended December 31, 2021.

For the years ended December 31, 2022 and 2021, Adjusted EBITDA as a percentage of total revenues was 33.3% and 33.7%, respectively.

For the year ended December 31, 2022, Adjusted Net Income increased by $6,626 compared to the year ended December 31, 2021.

For the years ended December 31, 2022 and 2021, Adjusted Net Income as a percentage of total revenues was 25.0% and 27.8%, respectively.

For additional information, including the limitations of using non‑GAAP financial measures, and reconciliations of the non‑GAAP financial measures to the most directly comparable financial measures stated in accordance with U.S.

GAAP, see the section titled “—Non‑GAAP Financial Measures.”

Comparison of the Years Ended December 31, 2021 and 2020

Refer to Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10‑K.

Year Ended Constant

December 31, Currency

2021 2020 Amount % %

Subscriptions $ 812,807 $ 679,273 $ 133,534 19.7 % 17.6 %

Perpetual licenses 53,080 57,382 (4,302) (7.5 %) (8.9 %)

Subscriptions and licenses 865,887 736,655 129,232 17.5 % 15.6 %

Services 99,159 64,889 34,270 52.8 % 48.6 %

Total revenues $ 965,046 $ 801,544 $ 163,502 20.4 % 18.2 %

Revenues by Geographic Region

Revenue from external customers is attributed to individual countries based upon the location of the customer.

Revenues by geographic region are as follows:

Year Ended Constant

December 31, Currency

2021 2020 Amount % %

Americas $ 483,087 $ 395,746 $ 87,341 22.1 % 21.4 %

EMEA 300,123 254,036 46,087 18.1 % 14.2 %

APAC 181,836 151,762 30,074 19.8 % 16.8 %

Total revenues $ 965,046 $ 801,544 $ 163,502 20.4 % 18.2 %

Cost of Revenues

Year Ended Constant

December 31, Currency

2021 2020 Amount % %

Cost of subscriptions and licenses $ 124,321 $ 95,803 $ 28,518 29.8 % 27.3 %

Cost of services 92,218 71,352 20,866 29.2 % 24.4 %

Total cost of revenues $ 216,539 $ 167,155 $ 49,384 29.5 % 26.1 %

Operating Expenses

Year Ended Constant

December 31, Currency

2021 2020 Amount % %

Total operating expenses $ 653,457 $ 25,473 $ 678,930 $ 653,918 $ (32) $ 653,886

Prior definition:

Year Ended December 31, 2023 Year Ended December 31, 2022

Actual Impact of Foreign Exchange Constant Currency Actual Impact of Foreign Exchange Constant Currency

Research and development $ 274,619 $ 2,491 $ 277,110 $ 257,856 $ 11,791 $ 269,647

3 unchanged sentences

Amortization of purchased intangibles 38,515 95 38,610 41,114 1,680 42,794

Expenses associated with initial public offering — 26,130 (26,130) * *

Total operating expenses $ 731,788 $ 3,190 $ 734,978 $ 653,457 $ 27,724 $ 681,181

* Not meaningful

Interest Expense, Net

Interest expense $ (11,527) $ (7,217)

Interest income 306 437

Interest expense, net $ (11,221) $ (6,780)

Revolving loan facility $ (3,448) $ (5,680)

Term loans (117) (502)

Convertible senior notes, coupon interest (1,899) —

Amortization and write-off of deferred debt issuance costs

(5,955) (985)

Other, net 198 387

Interest expense, net $ (11,221) $ (6,780)

Other Income, Net

Gain (loss) from:

Change in fair value of interest rate swap $ 9,770 $ 347

Foreign exchange (1)

Change in fair value of acquisition contingent consideration (550) 1,340

Payments related to interest rate swap

(1,270) (696)

Other income, net

Total other income, net

$ 9,961 $ 24,250

(1) Foreign exchange gain is primarily attributable to foreign currency translation derived mainly from U.S.

Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.

Intercompany finance transactions primarily denominated in U.S.

Dollars resulted in unrealized foreign exchange (losses) gains of $(779) and $22,310 for the years ended December 31, 2021 and 2020, respectively.

(Benefit) Provision for Income Taxes

Income before income taxes $ 93,329 $ 167,620

(Benefit) provision for income taxes $ (3,448) $ 38,625

Effective tax rate (3.7) % 23.0 %

Net income $ 93,192 $ 126,521

Adjusted EBITDA and Adjusted Net Income

Adjusted EBITDA $ 324,948 $ 266,376

Adjusted Net Income $ 267,892 $ 193,334

GAAP, see the section titled “—Non‑GAAP Financial Measures.”

Liquidity and Capital Resources:

Our primary source of operating cash is from the sale of subscriptions, perpetual licenses, and services.

Our primary use of cash is payment of our operating costs, which consist primarily of headcount‑related costs.

In addition to operating expenses, we also use cash to service our debt obligations, to pay quarterly dividends, to repurchase our Class B Common Stock and subordinated indebtedness (discussed further below), and for capital expenditures in support of our operations.

We also use cash to fund our acquisitions of software assets and businesses, and other investment activities, including our iTwin Ventures initiative for which, over a period of approximately 5 years, we expect to invest up to $100 million of corporate venture capital funding for seed, early, and growth stage technology companies with promising and emerging opportunities for infrastructure digital twin solutions strategically relevant to our business.

In connection with the acquisition of Power Line Systems in January 2022, we used available cash and borrowings under our Credit Facility to fund the transaction.

In connection with the acquisition of Seequent in June 2021, we used available cash, including a portion of the net proceeds from the 2026 Notes, and borrowings under our Credit Facility to fund the cash component of the transaction.

As described further below, we used $25,875 of the net proceeds from the sale of the 2027 Notes to pay the premiums of the capped call options, and $536,062 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses.

We used $25,530 of the net proceeds from the sale of the 2026 Notes to pay the premiums of the capped call options, and approximately $250,500 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses.

We used the remainder of the net proceeds from the sale of the 2026 Notes for general corporate purposes and towards funding certain acquisitions, including Seequent.

On May 11, 2022, we announced that our board of directors approved the Repurchase Program authorizing us to repurchase up to $200,000 of our Class B Common Stock through June 30, 2024.

On December 14, 2022, our board of directors amended the Repurchase Program to allow us also to repurchase its outstanding convertible senior notes.

This additional authorization did not increase the overall dollar limit of the Repurchase Program.

The shares and notes proposed to be acquired in the Repurchase Program may be repurchased from time to time in open market transactions, through privately negotiated transactions, or by other means in accordance with federal securities laws.

We intend to fund repurchases from available working capital and cash provided by operating activities.

The timing, as well as the number and value of shares and/or notes repurchased under the Repurchase Program, will be determined at our discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of our shares, the market price of our Class B Common Stock and outstanding notes, general market and economic conditions, available liquidity, compliance with our debt and other agreements, and applicable legal requirements.

The exact number of shares and/or notes to be repurchased by us is not guaranteed, and the Repurchase Program may be suspended, modified, or discontinued at any time without prior notice.

For the year ended December 31, 2022, we repurchased 896,126 shares for $28,250, and $2,170 aggregate principal amount of our outstanding 2026 Notes for $1,998.

Additionally, during the second, third, and fourth quarters of 2022, we exercised our right to require that certain equity awardees receive gross quantities of shares of our Class B Common Stock, most meaningfully for the issuance of shares in connection with our Executive Bonus Plan incentive compensation and distributions from the DCP, and promptly reimburse to us the cash required for their tax withholding amounts.

Historically, these shares were issuable on a net basis, holding back shares in consideration of remitting withholding taxes on behalf of equity awardees, thereby requiring us to remit cash for the tax withholdings.

We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

Our cash and cash equivalent balances are concentrated in a few locations around the world, with substantial amounts held outside of the U.S.

As of December 31, 2022 and 2021, 95% and 48%, respectively, of our total cash and cash equivalents were located outside of the U.S.

During the year ended December 31, 2022, we repatriated $150,000 of undistributed previously taxed earnings generated by our foreign subsidiaries to the U.S.

The repatriations were used to fund the acquisition of Power Line Systems.

We have provided for any applicable income taxes associated with current year distributions, as well as any earnings that are expected to be distributed in the future, in the calculation of the income tax provision.

No additional provision has been made for U.S.

income taxes on the undistributed earnings of subsidiaries as that cash is expected to be indefinitely reinvested.

We expect to meet our U.S.

liquidity needs through ongoing cash flows or external borrowings including available liquidity under the Credit Facility.

We regularly review our capital structure and consider a variety of potential financing alternatives and planning strategies to ensure that we have the proper liquidity available in the locations in which it is needed and to fund our operations and growth investments with cash that has not been permanently reinvested outside the U.S.

We believe that existing cash and cash equivalent balances, together with cash generated from operations, and liquidity under the Credit Facility, will be sufficient to meet our domestic and international working capital and capital expenditure requirements through the next twelve months.

However, our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, our rate of revenue growth, the timing and extent of spending on research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, competitive factors, our discretionary payments of dividends or repurchases of our Class B Common Stock, currency fluctuations, and overall economic conditions, globally.

To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.

The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing, including convertible debt, would result in debt service obligations.

Such debt instruments also could introduce covenants that might restrict our operations.

We cannot provide assurance that we could obtain additional financing on favorable terms or at all.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Our cash and cash equivalents consisted of cash held in checking accounts and money market funds maintained at various financial institutions.

Our domestic and foreign holdings of cash and cash equivalents are as follows:

Cash and cash equivalents held domestically $ 3,693 $ 3,883

1 unchanged sentence

Total cash and cash equivalents $ 68,412 $ 71,684

The amount of cash and cash equivalents held by foreign subsidiaries is subject to translation adjustments caused by changes in foreign currency exchange rates as of the end of each respective reporting period, the offset to which is recorded in Accumulated other comprehensive loss on our consolidated balance sheets.

Bank Credit Facility

We are party to a Credit Agreement dated December 19, 2017, (as amended from time to time) which provides for an $850,000 senior secured revolving loan facility that matures on November 15, 2025.

Debt issuance costs are amortized to interest expense through the maturity date.

When we amended the Credit Facility on January 25, 2021, to increase the senior secured revolving loan facility and extend the maturity date, we performed an extinguishment versus modification assessment on a lender‑by‑lender basis resulting in the write‑off of unamortized debt issuance costs of $353 and the capitalization of fees paid to lenders and third parties of $3,577.

The Credit Facility also provides up to $50,000 of letters of credit and other borrowings subject to availability, including an $85,000 U.S.

Dollar swingline sub‑facility and a $200,000 incremental “accordion” sub‑facility.

We had $150 of letters of credit and surety bonds outstanding as of December 31, 2022 and 2021.

As of December 31, 2022 and 2021, we had $504,253 and $849,850, respectively, available under the Credit Facility.

Under the Credit Facility, we may make either Euro currency or non‑Euro currency interest rate elections.

Interest on the Euro currency borrowings bear a base interest rate of LIBOR plus a spread ranging from 125 basis points (“bps”) to 225 bps as determined by our net leverage ratio.

Under the non‑Euro currency elections, Credit Facility borrowings bear a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) LIBOR plus 100 bps, plus a spread ranging from 25 bps to 125 bps as determined by our net leverage ratio.

In addition, a commitment fee for the unused Credit Facility ranges from 20 bps to 30 bps as determined by our net leverage ratio.

Borrowings under the Credit Facility are guaranteed by all of our material first tier domestic subsidiaries and are secured by a first priority security interest in substantially all of our and the guarantors’ U.S.

assets and 65% of the stock of their directly owned foreign subsidiaries.

The agreement governing the Credit Facility contains customary positive and negative covenants, including restrictions on our ability to pay dividends and make other restricted payments, as well as events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenants defaults, cross-defaults to certain other indebtedness in excess of $50,000, certain events of bankruptcy and insolvency, judgment defaults in excess of $10,000, failure of any security document supporting the Credit Facility to be in full force and effect, and a change of control.

The Credit Facility also contains customary financial covenants, including maximum net leverage ratios.

As of December 31, 2022 and 2021, we were in compliance with all covenants in our Credit Facility.

Voluntary prepayments of amounts outstanding under the Credit Facility, in whole or in part, are permitted at any time, so long as we give notice as required by the Credit Facility.

However, if prepayment is made with respect to a LIBOR‑based loan and the prepayment is made on a date other than an interest payment date, we must pay customary breakage costs.

On December 22, 2021, we amended the Credit Facility to provide for a $200,000 senior secured term loan with a maturity of November 15, 2025 (the “2021 Term Loan”) and included certain other conforming amendments.

The 2021 Term Loan requires principal repayment at the end of each calendar quarter.

Beginning with March 31, 2022 and ending with December 31, 2023, we are required to repay $1,250 per quarter.

Beginning with March 31, 2024 and ending with the last such date prior to the maturity date, we are required to repay $2,500 per quarter.

We incurred $540 of debt issuance costs related to the 2021 Term Loan.

We used borrowings under the 2021 Term Loan to pay down borrowings under the swingline sub‑facility and revolving loan facility under the Credit Facility.

Under the 2021 Term Loan, we may make either Euro currency or non-Euro currency interest rate elections.

Interest on the Euro currency borrowings bear a base interest rate of LIBOR, plus a spread ranging from 100 bps to 200 bps as determined by our net leverage ratio.

Under the non-Euro currency elections, the 2021 Term Loan bears a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) LIBOR plus 100 bps, plus a spread ranging from 0 bps to 100 bps as determined by our net leverage ratio.

Prior to the IPO, on September 2, 2020, we amended the Credit Facility to incur a term loan of $125,000 (the “2020 Term Loan”) with a maturity of December 18, 2022.

We used the proceeds from the 2020 Term Loan and borrowings under the revolving loan facility under the Credit Facility to pay a special dividend declared by our board of directors on August 28, 2020.

We incurred $432 of debt issuance costs related to the 2020 Term Loan.

In November 2020, we used a portion of the net proceeds from our follow‑on public offering to repay the 2020 Term Loan.

See Notes 10 and 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

Bank Credit Facility Interest .

The revolving loan facility and term loans weighted average interest rate was 3.84%, 2.03%, and 1.92% for the years ended December 31, 2022, 2021, and 2020, respectively.

Interest rate risk associated with the Credit Facility is managed through an interest rate swap which we executed on March 31, 2020.

The interest rate swap has an effective date of April 2, 2020 and a termination date of April 2, 2030.

Under the terms of the interest rate swap, we fixed our LIBOR borrowing rate at 0.73% on a notional amount of $200,000.

Convertible Senior Notes

On June 28, 2021, we completed a private offering of $575,000 of 0.375% convertible senior notes due 2027.

The 2027 Notes were issued pursuant to an indenture, dated as of June 28, 2021, between the Company and Wilmington Trust, National Association, as trustee (the “2027 Trustee”) (the “2027 Indenture”).

Interest will accrue from June 28, 2021 and will be payable semi‑annually in arrears in cash on January 1 and July 1 of each year, with the first payment due on January 1, 2022.

The 2027 Notes will mature on July 1, 2027, unless earlier converted, redeemed or repurchased.

We incurred $15,065 of expenses in connection with the 2027 Notes offering consisting of the payment of initial purchasers’ discounts and commissions, professional fees, and other expenses (“transaction costs”).

We used $25,875 of the net proceeds from the sale of the 2027 Notes to pay the premiums of the capped call options described further below, and $536,062 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses.

Prior to April 1, 2027, the 2027 Notes will be convertible at the option of the holder only under the following circumstances:

(1) during any calendar quarter (and only during such quarter) commencing after the calendar quarter ending on September 30, 2021, if the last reported sale price per share of our Class B Common Stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our Class B Common Stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on our Class B Common Stock, as described in the 2027 Indenture;

and (4) if we call the 2027 Notes for redemption.

On or after April 1, 2027 until 5:00 p.m., New York City time, on the second scheduled trading day immediately before the maturity date, the 2027 Notes will be convertible at the option of the holder at any time.

We will settle conversions by paying or delivering, as applicable, cash, shares of our Class B Common Stock or a combination of cash and shares of our Class B Common Stock, at our election, based on the applicable conversion rate.

The initial conversion rate is 12.0153 shares of our Class B Common Stock per $1 principal amount of 2027 Notes, which represents an initial conversion price of approximately $83.23 per share, and is subject to adjustment as described in the 2027 Indenture.

If a “make-whole fundamental change” (as defined in the 2027 Indenture) occurs, then we will, in certain circumstances, increase the conversion rate for a specified period of time.

We will have the option to redeem the 2027 Notes in whole or in part at any time on or after July 5, 2024 and on or before the 40th scheduled trading day immediately before the maturity date if the last reported sale price per share of our Class B common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during any 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice;

and (2) the trading day immediately before the date we send such notice.

The redemption price will be equal to the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Upon a fundamental change (as defined in the 2027 Indenture), holders may, subject to certain exceptions, require us to purchase their 2027 Notes in whole or in part for cash at a price equal to the principal amount of the 2027 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date (as defined in the 2027 Indenture).

In addition, upon a Make‑Whole Fundamental Change (as defined in the 2027 Indenture), we will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its 2027 Notes in connection with such Make‑Whole Fundamental Change.

No adjustment to the conversion rate will be made if the stock price in such Make‑Whole Fundamental Change is either less than $61.65 per share or greater than $325.00 per share.

We will not increase the conversion rate to an amount that exceeds 16.2206 shares per $1 principal amount of 2027 Notes, subject to adjustment.

The 2027 Indenture also contains a customary merger covenant.

Under the 2027 Indenture, the 2027 Notes may be accelerated upon the occurrence of certain customary events of default.

If certain bankruptcy and insolvency‑related events of default with respect to us occur, the principal of, and accrued and unpaid interest on, all of the then outstanding 2027 Notes shall automatically become due and payable.

If any other event of default occurs and is continuing, the 2027 Trustee by notice to us, or the holders of the 2027 Notes of at least 25% in principal amount of the outstanding 2027 Notes by notice to us and the 2027 Trustee, may declare the principal of, and accrued and unpaid interest on, all of the then outstanding 2027 Notes to be due and payable.

Notwithstanding the foregoing, the 2027 Indenture provides that, to the extent we elect, the sole remedy for an event of default relating to certain failures by us to comply with reporting covenant in the 2027 Indenture consists exclusively of the right to receive additional interest on the 2027 Notes.

The 2027 Notes were accounted for as debt, with no bifurcation of the embedded conversion feature.

Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheets and are amortized to interest expense over the term of the 2027 Notes.

The effective interest rate for the 2027 Notes is 0.864%.

As of December 31, 2022, none of the conditions of the 2027 Notes to early convert has been met.

The 2027 Notes are our senior, unsecured obligations that rank senior in right of payment to our future indebtedness that is expressly subordinated to the 2027 Notes, rank equally in right of payment with our existing and future senior unsecured indebtedness that is not so subordinated (including our 2026 Notes), effectively subordinated to our existing and future secured indebtedness (including obligations under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables and preferred equity (to the extent we are not a holder thereof)) of our subsidiaries.

The 2027 Notes contain both affirmative and negative covenants.

As of December 31, 2022 and 2021, we were in compliance with all covenants in the 2027 Notes.

Capped Call Options.

In connection with the pricing of the 2027 Notes, we entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions.

We incurred $50 of expenses in connection with the capped call options.

The capped call options are expected to reduce potential dilution to our Class B Common Stock upon any conversion of 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the capped call options is initially $95.5575 per share, which represents a premium of 55% above the last reported sale price per share of our Class B Common Stock on the Nasdaq Global Select Market on June 23, 2021 and is subject to customary adjustments under the terms of the capped call options.

The capped call options were entered into in conjunction with the issuance of the 2027 Notes, however, they are legally separate agreements that can be separately exercised, with the receipt of shares under the capped call options having no effect on the 2027 Notes, and are legally detachable.

As the capped call options are both legally detachable and separately exercisable from the 2027 Notes, we account for the capped call options separately from the 2027 Notes.

The capped call options are indexed to our own common stock and classified in stockholders’ equity.

As such, the premiums paid for the capped call options have been included as a net reduction to Additional paid-in capital in the consolidated balance sheet.

On January 26, 2021, we completed a private offering of $690,000 of 0.125% convertible senior notes due 2026.

The 2026 Notes were issued pursuant to an indenture, dated as of January 26, 2021, between the Company and Wilmington Trust, National Association, as trustee (the “2026 Trustee”) (the “2026 Indenture”).

Interest will accrue from January 26, 2021 and will be payable semi‑annually in arrears in cash on January 15 and July 15 of each year, with the first payment due on July 15, 2021.

The 2026 Notes will mature on January 15, 2026, unless earlier converted, redeemed or repurchased.

We incurred $18,055 of expenses in connection with the 2026 Notes offering consisting of transaction costs.

We used $25,530 of the net proceeds from the sale of the 2026 Notes to pay the premiums of the capped call options described further below, and approximately $250,500 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses.

We used the remainder of the net proceeds from the sale of the 2026 Notes for general corporate purposes and towards funding certain acquisitions, including Seequent.

During the fourth quarter of 2022, we paid $1,998 in cash to repurchase $2,170 aggregate principal amount of our outstanding 2026 Notes through open market transactions resulting in an insignificant gain, which was recorded in Other income, net in the consolidated statement of operations for the year ended December 31, 2022.

The 2026 Notes were repurchased under our Repurchase Program authorization.

Prior to October 15, 2025, the 2026 Notes will be convertible at the option of the holder only under the following circumstances:

(1) during any calendar quarter (and only during such quarter) commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of our Class B Common Stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our Class B Common Stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on our Class B Common Stock, as described in the 2026 Indenture;

and (4) if we call the 2026 Notes for redemption.

On or after October 15, 2025 until 5:00 p.m., New York City time, on the second scheduled trading day immediately before the maturity date, the 2026 Notes will be convertible at the option of the holder at any time.

The initial conversion rate is 15.5925 shares of our Class B Common Stock per $1 principal amount of 2026 Notes, which represents an initial conversion price of approximately $64.13 per share, and is subject to adjustment as described in the 2026 Indenture.

If a “make-whole fundamental change” (as defined in the 2026 Indenture) occurs, then we will, in certain circumstances, increase the conversion rate for a specified period of time.

We will have the option to redeem the 2026 Notes in whole or in part at any time on or after January 20, 2024 and on or before the 40th scheduled trading day immediately before the maturity date if the last reported sale price per share of our Class B common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during any 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice;

and (2) the trading day immediately before the date we send such notice.

The redemption price will be equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Upon a fundamental change (as defined in the 2026 Indenture), holders may, subject to certain exceptions, require us to purchase their 2026 Notes in whole or in part for cash at a price equal to the principal amount of the 2026 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date (as defined in the 2026 Indenture).

In addition, upon a Make‑Whole Fundamental Change (as defined in the 2026 Indenture), we will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its 2026 Notes in connection with such Make‑Whole Fundamental Change.

No adjustment to the conversion rate will be made if the stock price in such Make‑Whole Fundamental Change is either less than $44.23 per share or greater than $210.00 per share.

We will not increase the conversion rate to an amount that exceeds 22.6090 shares per $1 principal amount of 2026 Notes, subject to adjustment.

The 2026 Indenture also contains a customary merger covenant.

Under the 2026 Indenture, the 2026 Notes may be accelerated upon the occurrence of certain customary events of default.

If certain bankruptcy and insolvency‑related events of default with respect to us occur, the principal of, and accrued and unpaid interest on, all of the then outstanding 2026 Notes shall automatically become due and payable.

If any other event of default occurs and is continuing, the 2026 Trustee by notice to us, or the holders of the 2026 Notes of at least 25% in principal amount of the outstanding 2026 Notes by notice to us and the 2026 Trustee, may declare the principal of, and accrued and unpaid interest on, all of the then outstanding 2026 Notes to be due and payable.

Notwithstanding the foregoing, the 2026 Indenture provides that, to the extent we elect, the sole remedy for an event of default relating to certain failures by us to comply with reporting covenant in the 2026 Indenture consists exclusively of the right to receive additional interest on the 2026 Notes.

The 2026 Notes were accounted for as debt, with no bifurcation of the embedded conversion feature.

Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheets and are amortized to interest expense over the term of the 2026 Notes.

The effective interest rate for the 2026 Notes is 0.658%.

As of December 31, 2022, none of the conditions of the 2026 Notes to early convert has been met.

The 2026 Notes are our senior, unsecured obligations that rank senior in right of payment to our future indebtedness that is expressly subordinated to the 2026 Notes, rank equally in right of payment with our existing and future senior unsecured indebtedness that is not so subordinated (including our 2027 Notes, see the section titled “—2027 Notes” below), effectively subordinated to our existing and future secured indebtedness (including obligations under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables and preferred equity (to the extent we are not a holder thereof)) of our subsidiaries.

The 2026 Notes contain both affirmative and negative covenants.

As of December 31, 2022 and 2021, we were in compliance with all covenants in the 2026 Notes.

Capped Call Options .

In connection with the pricing of the 2026 Notes, we entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions.

We incurred $150 of expenses in connection with the capped call options.

The capped call options are expected to reduce potential dilution to our Class B Common Stock upon any conversion of 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the capped call options is initially $72.9795 per share, which represents a premium of 65% above the last reported sale price per share of our Class B Common Stock on the Nasdaq Global Select Market on January 21, 2021 and is subject to customary adjustments under the terms of the capped call options.

The capped call options were entered into in conjunction with the issuance of the 2026 Notes, however, they are legally separate agreements that can be separately exercised, with the receipt of shares under the capped call options having no effect on the 2026 Notes, and are legally detachable.

As the capped call options are both legally detachable and separately exercisable from the 2026 Notes, we account for the capped call options separately from the 2026 Notes.

The capped call options are indexed to our own common stock and classified in stockholders’ equity.

As such, the premiums paid for the capped call options have been included as a net reduction to Additional paid-in capital in the consolidated balance sheet.

Comparison of the Year Ended December 31, 2022 and 2021

Our cash flow activities for the years ended December 31, 2022 and 2021 consist of the following:

Our primary source of operating cash is from the sale of our subscriptions, perpetual licenses, and services.

Our primary use of cash is payment of our operating costs, which consist mainly of headcount‑related costs.

In addition to operating expenses, we also use cash to service our debt obligations, to pay quarterly dividends, to repurchase our Class B common stock and convertible debt, and for capital expenditures in support of our operations.

We also use cash to fund our acquisitions of software assets and businesses, and other investment activities, including our iTwin Ventures initiative which makes seed, early, and growth stage investments in technology companies with promising and emerging opportunities for infrastructure digital twin solutions potentially relevant to our business.

During the years ended December 31, 2023 and 2022, we made cash repatriations to the U.S.

of approximately $93,000 and $150,000, respectively, from earnings generated by our foreign subsidiaries.

In 2023, the repatriations were used to supplement our domestic working capital requirements and to pay down our Credit Facility.

In 2022, the repatriations, along with available cash and borrowings under our Credit Facility, were used to fund the acquisition of PLS in January 2022.

We believe that cash generated from operations, together with existing cash and cash equivalent balances, and external borrowings including available liquidity under the Credit Facility, will be sufficient to meet our domestic and international working capital and capital expenditure requirements.

Our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, our rate of revenue growth, the timing and extent of spending on research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, competitive factors, our discretionary payments of dividends or repurchases of our Class B common stock and convertible debt, fund of our purchase commitments, currency fluctuations, and overall economic conditions, globally.

The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of additional debt financing, including convertible debt, would result in additional debt service obligations.

Such debt instruments also could introduce new or modified covenants that might restrict our operations and/or our ability to pay dividends, consummate acquisitions, or otherwise pursue our business strategies.

We cannot provide assurance that we could obtain additional financing on favorable terms or at all.

Cash Flow Activity

Year Ended December 31,

2023 2022 2021

Net cash provided by (used in):

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Operating Activities

Net cash provided by operating activities was $274,324 for the year ended December 31, 2022.

Compared to the prior year, net cash provided by operating activities was lower by $13,700 due to a net decrease in non‑cash adjustments of $64,090 and a net decrease in net cash flows from the change in operating assets and liabilities of $31,198, partially offset by an increase in net income of $81,588.

Both the increase in net income and the net decrease in non‑cash adjustments were impacted by the one‑time, non‑cash compensation charge of $90,721 to Deferred compensation plan expenses during the year ended December 31, 2021 to record reallocated deferred compensation plan liabilities at fair value as previously discussed.

The net decrease in cash flows from the change in operating assets and liabilities was primarily due to the timing of renewals and associated billings of certain annual contracts, and increased interest payments.

For the year ended December 31, 2021, net cash provided by operating activities was $288,024 due to net income of $93,192 increased by $178,726 of non‑cash adjustments and $16,106 from changes in operating assets and liabilities.

For the year ended December 31, 2023, compared to the prior year, net cash provided by operating activities was higher by $142,372 due to an increase in net income of $152,007 and an increase in net cash flows from the change in operating assets and liabilities of $112,542, partially offset by a net decrease in non‑cash adjustments of $122,177.

Both the increase in net income and the net decrease in non‑cash adjustments were impacted by the fourth quarter of 2023 internal legal entity restructuring and related intra-entity transactions as part of our continuing efforts to align intellectual property ownership with our business operating model.

The net impact of the internal legal entity restructuring was a net discrete tax benefit of $170,784.

See Note 16 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information.

The increase in cash flows from the change in operating assets and liabilities was primarily due to changes in accounts receivable period over period due to timing of collections from customers, higher CSS deposits, and an increase in deferred revenues period over period.

In addition, we expect cash payments of approximately $12,500 for termination benefits to colleagues in connection with our fourth quarter of 2023 strategic realignment program by mid-2024.

See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information related to realignment costs.

Investing Activities

Net cash used in investing activities was $770,127 for the year ended December 31, 2022 primarily due to $743,007 in acquisition related payments, net of cash acquired, to complete six acquisitions.

For the year ended December 31, 2021, net cash used in investing activities was $1,056,603 primarily due to $1,034,983 in acquisition related payments, net of cash acquired, to complete 13 acquisitions.

Net cash used in investing activities was lower by $709,623 for the year ended December 31, 2023, compared to the prior year, primarily due to lower acquisition related payments, as three acquisitions were completed in 2023 compared to six acquisitions, including our platform acquisition of PLS for $695,968 in 2022.

Financing Activities

Net cash provided by financing activities was $243,034 for the year ended December 31, 2022 primarily due to an increase in net borrowings under the Credit Facility of $340,598, partially offset by net payments for shares acquired of $71,811, including shares repurchased under the Repurchase Program, and payments of dividends of $34,493.

For the year ended December 31, 2021, net cash provided by financing activities was $982,582 primarily due to the net proceeds from the convertible senior notes of $1,233,377, partially offset by net payments for shares acquired of $120,539 and the purchase of capped call options of $51,605.

Net cash used in financing activities was $359,074 for the year ended December 31, 2023, as compared to net cash provided by financing activities of $243,034 for the year ended December 31, 2022, primarily due to the net paydown of the Credit Facility of $258,569 in 2023 as compared to an increase in net borrowings under the Credit Facility of $340,598 in 2022.

Payments for shares acquired were lower during the year ended December 31, 2023 by $12,874, as compared to the prior year.

The year ended December 31, 2022 payments for shares acquired includes $28,250 of share repurchases under the BSY Stock Repurchase Program (the “Repurchase Program”), whereas no repurchases were made under the Repurchase Program during 2023.

Refer to the section titled “Stock Repurchases” below for further detail.

Payments of dividends were higher during the year ended December 31, 2023 by $24,263 as compared to the prior year, primarily due to an increase in our quarterly dividend per share to $0.05 from $0.03.

Long-Term Debt

Current portion of long-term debt $ 10,000 $ 5,000

Long-term debt 1,518,403 1,775,696

Total debt $ 1,528,403 $ 1,780,696

As of December 31, 2023, we had $757,822 available under the Credit Facility.

We were in compliance with all covenants in its Credit Facility, the 2026 Notes, and the 2027 Notes as of December 31, 2023.

Any failure to comply with such covenants under the Credit Facility would prevent us from being able to borrow additional funds under the Credit Facility, and, as with any failure to comply with such covenants under the 2026 Notes and the 2027 Notes, could constitute a default that may cause all amounts outstanding to become due and immediately payable in full.

Our Credit Facility, 2026 Notes, and 2027 Notes are described in Note 10 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

Stock Repurchases

BSY Stock Repurchase Program

Our Board of Directors has authorized us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes through June 30, 2024 under the Repurchase Program.

We may use available working capital and cash provided by operations to make repurchases.

For the year ended December 31, 2023, we did not repurchase shares under the Repurchase Program.

For the year ended December 31, 2022, we repurchased 896,126 shares for $28,250, and $2,170 aggregate principal amount of our outstanding 2026 Notes for $1,998.

The timing, as well as the number and value of shares and/or notes repurchased under the Repurchase Program, will be determined at our discretion and will depend on a variety of factors, including our assessment of the intrinsic value of our shares, the market price of our Class B common stock and outstanding notes, general market and economic conditions, available liquidity, compliance with our debt and other agreements, and applicable legal requirements.

Withholding Taxes on Certain Equity Awards

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B Common Stock, including in connection with share issuances under the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) and distributions from the DCP.

In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts.

Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings.

During the year ended December 31, 2023, we allowed impacted equity awardees the option to receive net quantities of shares of our Class B common stock during the first, second, and third quarters, but exercised our right to require that these awardees receive gross quantities of our Class B common stock during the fourth quarter.

During the year ended December 31, 2022, we permitted impacted awardees to elect to receive net quantities of shares of our Class B common stock in the first quarter, but exercised our right to require that these awardees receive gross quantities of our Class B common stock during the second, third, and fourth quarters.

We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

Dividend Payments

The declaration and payment of dividends is within the discretion of our Board of Directors.

We paid quarterly dividends of $0.05 per share of common stock during the year ended December 31, 2023 and $0.03 per share of common stock during the year ended December 31, 2022.

While we intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our Board of Directors and will be dependent on a number of factors, including our results of operations, capital requirements, restrictions under Delaware law, and overall financial condition, as well as any other factors our Board of Directors considers relevant.

In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay.

Contractual Obligations and Other Commitments:

As of December 31, 2022, our future contractual obligations were related to debt (see Note 10), leases (see Note 8), purchase obligations (see Note 18), deferred compensation plan liabilities (see Note 12), and contingent and non‑contingent consideration from acquisitions (see Note 4).

For information about those obligations, see the above referenced notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K, which are incorporated by reference into this section.

As of December 31, 2022, our purchase obligations were $14,981, which is expected to be paid within one year.

Purchase obligations include the non‑cancelable future cash purchase commitment for services related to the provisioning of our hosted software solutions.

Our purchase obligations are in addition to amounts included in current liabilities and prepaid expenses in our consolidated balance sheet.

Critical Accounting Policies and Estimates:

Our consolidated financial statements are prepared in conformity with U.S.

In preparing our consolidated financial statements, we make assumptions, judgments, and estimates that can have a significant impact on amounts reported in the consolidated financial statements.

We base our assumptions, judgments, and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances.

Actual results could differ materially from these estimates under different assumptions or conditions.

We regularly reevaluate our assumptions, judgments, and estimates.

Our significant accounting policies are described in Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements.

We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

The following table summarizes our most significant contractual obligations as of December 31, 2023:

Total Short-Term Long-Term

Debt Obligations (1)

$ 1,544,858 $ 10,000 $ 1,534,858

Purchase Obligations 127,000 50,000 77,000

DCP Obligations 90,536 2,355 88,181

(1) Amounts represent the face value of debt and exclude interest payments.

Our largest contractual obligations relate to our outstanding debt, which include convertible notes due in 2026 and 2027.

We typically fund and expect to continue to fund debt maturities and interest payments with cash flows generated from operations, existing cash and cash equivalents, or proceeds from additional financing.

If an early conversion notice is received, we have the option to pay cash, deliver shares of our Class B common stock, or a combination thereof.

See Note 10 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information on our debt obligations.

We have non‑cancelable future cash purchase commitments for services related to the provisioning of our hosted software solutions and for other software costs.

Our purchase obligations are in addition to amounts included in our consolidated balance sheets.

We have funded and expect to continue to be able to fund our purchase obligations with cash flows generated from operations or existing cash and cash equivalents.

See Note 18 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information on our purchase obligations.

Our DCP obligations represent DCP participants’ holdings in phantom investment funds, which are classified as liabilities as they will be settled in cash upon eventual distribution.

We have funded and expect to continue to be able to fund our DCP obligations with cash flows generated from operations or existing cash and cash equivalents.

See Note 12 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information on our DCP obligations.

Our other future contractual obligations were related to leases (see Note 8), and contingent and non‑contingent consideration from acquisitions (see Note 4).

For information about those obligations, see the above referenced notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

Critical Accounting Estimates:

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and contingent liabilities.

We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

For a full description of our revenue accounting policy, see Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

We generate revenues from subscriptions, perpetual licenses, and services.

Our contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user.

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When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, we account for those performance obligations as a single performance obligation.

For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative SSP of each obligation.

For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative standalone selling price (“SSP”) of each obligation.

Judgment is required to determine the SSP for each distinct performance obligation.

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In testing for goodwill impairment, we may first qualitatively assess whether it is more likely than not (a likelihood of more than 50 percent) that a goodwill impairment exists.

If it is determined that a quantitative assessment is required, we will recognize goodwill impairment as the difference between the carrying amount of the reporting unit and it’s fair value, but not to exceed the carrying amount of goodwill within the reporting unit.

There was no impairment of goodwill as a result of our annual impairment assessments conducted for the years ended December 31, 2022, 2021, and 2020.

Income taxes .

If it is determined that a quantitative assessment is required and the carrying amount exceeds its fair value, we will recognize goodwill impairment in the amount in which the carrying amount of the reporting unit exceeds its fair value, but not to exceed the carrying amount of goodwill within the reporting unit.

There was no impairment of goodwill as a result of our annual impairment assessments conducted for the years ended December 31, 2023, 2022, or 2021.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

Under this method, deferred tax assets and liabilities are determined based on net operating loss carryforwards, credit carryforwards, and temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the items are expected to reverse.

Under this method, deferred tax assets and liabilities are determined based on net operating loss (“NOL”) carryforwards, credit carryforwards, and temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the items are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date.

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Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

Fair value of common stock prior to IPO .

We were a privately held company with no active public market of our common stock prior to our IPO.

Therefore, the estimated fair value of the common stock underlying our stock‑based awards granted prior to our IPO was determined by our board of directors, with input from management and contemporaneous third‑party valuations.

We believe that our board of directors had the relevant experience and expertise to determine the fair value of our common stock prior to our IPO.

Prior to the IPO, and given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants practice guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock, including:

• contemporaneous independent valuations performed by an unrelated third-party valuation specialist;

• the nature of our business and its history;

• our operating and financial performance and forecast;

• present value of estimated future cash flows;

• the likelihood of achieving a liquidity event, such as an initial public offering, listing, or sale of our Company, given prevailing market condition and the nature and history of our business;

• any adjustment necessary to recognize a lack of marketability for our common stock;

• the market performance of comparable publicly traded companies;

and global capital market conditions.

In valuing our common stock, our board of directors determined the equity value of our business generally using the income approach and the market comparable approach valuation methods.

The income approach estimates value based on the expectation of future cash flows that a company will generate such as cash earnings, cost savings, tax deductions, and proceeds from disposition.

These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of capital of comparable publicly traded companies in our industry or similar lines of business as of each valuation date and is adjusted to reflect the risks inherent in our cash flows.

The market comparable approach estimates value based on a comparison of the Company to comparable public companies in a similar line of business.

To determine our peer group of companies, we considered public enterprises with similar operations and selected those that are similar to our size, stage of life cycle, and financial leverage.

From the comparable companies, a representative market value multiple is determined and applied to our results of operations to estimate the value of the Company.

Application of these approaches involved the use of estimates, judgments, and assumptions that are highly complex and subjective, such as those regarding our expected future cash flows, cost savings and expenses, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events.

Off-Balance Sheet Arrangements:

We do not have any off‑balance sheet arrangements, as defined by applicable SEC regulations.

Recent Accounting Pronouncements:

For information regarding recent accounting guidance and the impact of this guidance on our consolidated financial statements, see Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.

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 7. Management’s Discussion and Analysis