What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-26 · 116 added, 101 removed, 443 unchanged (33% of the section changed)

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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.

Our mission is to reshape how infrastructure systems and critical resources are delivered and optimized.

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.

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• Subscriptions revenues were $1,376,696 for the year ended December 31, 2025, up 12.5% or 11.7% on a constant currency basis (1) compared to the prior year;

• ARR (2) was $1,283,256 as of December 31, 2024, compared to $1,174,774 as of December 31, 2023, representing a constant currency (1) ARR growth rate (2) of 12%;

• ARR (2) was $1,462,145 as of December 31, 2025, compared to $1,283,256 as of December 31, 2024;

Constant currency (1) ARR growth rate (2) was 11.5%;

• Last twelve-month recurring revenues dollar-based net retention rate (2) was 109% as of December 31, 2025, compared to 110% as of December 31, 2024;

• Operating income was $362,621 for the year ended December 31, 2025, compared to $302,150 for the prior year;

• Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) (1) was $372,222 for the year ended December 31, 2024, compared to $324,677 for the prior year;

• Cash flows from operations was $435,292 for the year ended December 31, 2024, compared to $416,696 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.

• Adjusted operating income less stock-based compensation expense (“AOI less SBC”) (previously titled Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”)) (1) was $429,917 for the year ended December 31, 2025, compared to $372,222 for the prior year;

• Cash flows from operating activities were $538,464 for the year ended December 31, 2025, compared to $435,292 for the prior year.

(1) Constant currency and AOI less 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 AOI less 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.

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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.

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

Additionally, because we have operations in, and derive revenue from, geographies around the world, we will continue to monitor the impact of tariffs and other trade policies on our business and the businesses of our accounts, as well as on our financial condition, results of operations, and/or cash flows.

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.

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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, primarily 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.

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

The majority of our revenue growth, excluding the impact from acquisitions, is driven by additional subscriptions revenues from existing accounts using the same products.

To a lesser extent, our revenue growth is attributable to subscriptions revenues from new accounts and subscriptions revenues from existing accounts using new products.

We believe that we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2025, 2024, and 2023 generated from organizations that have been our accounts for over ten years.

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

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Consolidated Revenues

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(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, 2024 was driven by an increase in subscriptions revenues, partially offset by decreases in services revenues.

Refer to the “Non‑GAAP Financial Measures” section for additional information, including our 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, 2025 was primarily driven by an increase in subscriptions revenues, partially offset by a decrease in services revenues.

Subscriptions .

For the year ended December 31, 2024, the increase in subscriptions revenues was primarily driven by improvements in our business performance of $143,055 ($144,846 on a constant currency basis).

For the year ended December 31, 2025, the increase in subscriptions revenues was driven by improvements in our business performance of $153,334 ($142,592 on a constant currency basis).

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

For the year ended December 31, 2025, the improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 2.5% attributable to new accounts, most notably small- and medium-sized accounts.

Improvements in business performance for the year ended December 31, 2024 were led by our engineering applications, followed by Seequent geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.

Improvements in business performance for the year ended December 31, 2025 were led by Bentley Open Applications , followed by Seequent applications, and Bentley Infrastructure Cloud .

Perpetual licenses .

For the year ended December 31, 2025, perpetual licenses revenues were flat compared to the prior year.

For the year ended December 31, 2024, the decrease in services revenues was driven by a decline in our business performance of $18,296 ($18,526 on a constant currency basis), driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.

For the year ended December 31, 2025, the decrease in services revenues was driven by a decline in our business performance of $4,869 ($5,548 on a constant currency basis), primarily due to the winding down of a large services project in the beginning of 2025.

Revenues by Geographic Region

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(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.

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

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For the year ended December 31, 2025, the increase in revenues from the Americas was primarily driven by improvements in our business performance of $73,493 ($74,816 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S., partially offset by a decline in services revenues.

The improvements in business performance for the year ended December 31, 2025 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S., as well as increases in our subscriptions revenues from new accounts.

For the year ended December 31, 2025, the increase in revenues from EMEA was primarily driven by improvements in our business performance of $48,444 ($35,754 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”), the Middle East, and Africa, partially offset by a decline in services revenues.

The improvements in business performance for the year ended December 31, 2025 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”) and the Middle East, as well as increases in our subscriptions revenues from new accounts, partially offset by a decline in services revenues.

For the year ended December 31, 2025, the increase in revenues from APAC was primarily driven by improvements in our business performance of $26,747 ($26,524 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia, Southeast Asia, and India, partially offset by declines of our subscriptions revenues from existing accounts in China.

The improvements in business performance for the year ended December 31, 2025 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia and India, as well as increases in our subscriptions revenues from new accounts.

Additionally, for the year ended December 31, 2025, our revenues in China were essentially flat.

Our perpetual licenses revenues in China increased primarily due to expansion from new accounts, partially offset by a decline from existing accounts.

Our subscriptions revenues in China decreased primarily due to a decline from existing accounts, partially offset by an increase from new accounts.

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.

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For the years ended December 31, 2025, 2024, and 2023, 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.

These costs primarily include salaries, benefits, bonuses, stock‑based compensation expense, employment taxes, travel, training, and realignment and optimization 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 in product development (the “2023 Program”).

During the fourth quarter of 2023, we 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 in product development (the “2023 Program”).

The realignment program resulted in realignment costs of $847 and $12,579 for the years ended December 31, 2024 and 2023, respectively, 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, which were substantially completed by the end of the second quarter of 2024, and payment of termination benefits were completed as of December 31, 2024.

The impact of the realignment program on headcount-related costs for the year ended December 31, 2024 and 2023 is included in our discussion below.

The 2023 Program activities, including payments of termination benefits, were completed as of December 31, 2024.

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Cost of Revenues

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(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 cloud‑related costs incurred for servicing our accounts using cloud provisioned solutions and our license administration platform.

Cost of subscriptions and licenses expenses also include channel partner compensation for providing sales coverage to users, depreciation of property and equipment, amortization of capitalized software costs associated with servicing software subscriptions and our Accelerated Commercial Development Program (“ACDP”), and amortization of intangible assets associated with acquired software and technology.

For the year ended December 31, 2024, on a constant currency basis, cost of subscriptions and licenses expenses increased primarily due to an increase in cloud‑related costs of $10,859.

Partially offsetting this increase was lower amortization of capitalized costs under our ACDP of $3,983 as compared to the prior year and lower headcount‑related costs of $2,090 primarily due to lower stock‑based compensation expense.

For the year ended December 31, 2025, on a constant currency basis, cost of subscriptions and licenses expenses increased primarily due to an increase in headcount‑related costs of $15,149, mainly due to an increase in annual and other compensation costs, and an increase in cloud-related costs of $10,007.

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, 2024, on a constant currency basis, cost of services expenses decreased primarily due to a decrease in headcount‑related costs of $12,514, mainly due to a reduction in third‑party personnel costs.

For the year ended December 31, 2025, on a constant currency basis, cost of services expenses decreased primarily due to a decrease in headcount‑related costs of $6,718, mainly due to a reduction in third‑party personnel costs, and to a lesser extent, lower annual and other compensation costs.

Operating Expenses

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General and administrative 217,332 210,374 180,738 3.3 % 2.9 % 16.4 % 16.5 %

Deferred compensation plan 12,382 13,580 (15,782) (8.8 %) (8.8 %) NM NM

Deferred compensation plan 14,409 12,382 13,580 16.4 % 16.4 % (8.8 %) (8.8 %)

Amortization of purchased intangibles 32,768 33,998 38,515 (3.6 %) (3.8 %) (11.7 %) (11.8 %)

Total operating expenses $ 861,628 $ 793,178 $ 731,788 8.6 % 8.2 % 8.4 % 8.6 %

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

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

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Research and development.

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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, 2024, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of $9,513, mainly due to an increase in annual and other compensation costs.

Offsetting the increase in headcount‑related costs were $4,995 of realignment expenses related to the 2023 Program recorded during the year ended December 31, 2023.

For the year ended December 31, 2024, our research and development headcount‑related costs reflect run‑rate savings associated with the 2023 Program, which we initiated during the fourth quarter of 2023.

While most of the realignment actions were completed at the beginning of 2024, our reinvestment of these run‑rate savings into priority investment areas, such as AI in product development, was not fully realized until the third quarter of 2024.

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 software.

For the year ended December 31, 2025, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of $25,665, mainly due to increases in headcount, and annual and other compensation costs, and to a lesser extent, higher colleague separation costs.

Headcount‑related costs for the year ended December 31, 2024 were lower due to run‑rate savings as a result of the 2023 Program.

Selling and marketing.

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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, 2024, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $23,408, mainly due to an increase in annual and other compensation costs, and an increase in third-party personnel costs primarily related to our marketing activities.

Additionally, selling and marketing expenses further increased due to an increase in promotional costs of $5,449.

For the year ended December 31, 2025, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $24,174, mainly due to increases in headcount, and annual and other compensation costs, and an increase in promotional costs of $6,216.

Headcount‑related costs for the year ended December 31, 2024 were lower due to run‑rate savings as a result of the 2023 Program.

General and administrative .

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Acquisition costs may drive fluctuations in general and administrative expenses depending on the timing of business combinations.

For the year ended December 31, 2024, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of $11,048, mainly due to an increase in annual and other compensation costs, and to a lesser extent, higher charitable contributions focusing on education and sustainability of $4,143 and higher expense associated with non‑income related taxes of $3,585.

Additionally, during the year ended December 31, 2024, we recognized approximately $10,300 of costs associated with our internal-use software implementations, as well as approximately $2,200 of other corporate initiatives expenses.

Partially offsetting these increases were lower acquisition costs of $4,276.

Starting in 2026, we expect general and administrative expenses to include amortization of internal-use software implementation costs, which represents amortization of deferred costs primarily related to the implementation of our new enterprise-wide administrative and business management platforms which are planned to complete going live in 2026.

For the year ended December 31, 2025, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of $4,412, mainly due to increases in headcount, and annual and other compensation costs, partially offset by lower incentive compensation expense related to the reduction in Gregory S.

Bentley’s fractional interest under the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) as part of Mr.

Bentley’s transition to the role of Executive Chair effective July 1, 2024.

Additionally, during the year ended December 31, 2024, we recognized approximately $2,200 of other corporate initiatives expenses, which did not recur in the current year.

Deferred compensation plan .

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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.

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For the year ended December 31, 2025, 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 prior years.

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Interest expense $ (15,322) $ (24,774) $ (41,331) (38.2 %) (40.1 %)

Interest income 2,730 1,538 421 77.5 % NM

Interest income 2,887 2,730 1,538 5.8 % 77.5 %

Interest expense, net $ (12,435) $ (22,044) $ (39,793) (43.6 %) (44.6 %)

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

Interest expense, net primarily represents interest associated with credit facility borrowings, the 2026 Notes, the 2027 Notes, amortization of deferred debt issuance costs, and interest income from our investments in money market funds.

Interest expense, net primarily represents interest expense on our credit facility borrowings and outstanding convertible senior notes, amortization 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, 2024, interest expense, net decreased primarily due to lower weighted average debt outstanding, as compared to the prior year, mainly related to the continued pay down of our revolving loan borrowings, and repayments of our senior secured term loan during 2024 under our amended and restated credit agreement, entered into on December 19, 2017 (the “2017 Credit Facility”).

For the year ended December 31, 2025, interest expense, net decreased primarily due to lower weighted average debt outstanding under the credit facilities as compared to the prior year.

Other Income (Expense), Net

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2025 2024 2023

Gain (loss) from:

(Loss) gain from:

Change in fair value of interest rate swap $ (10,238) $ 10 $ (5,038)

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2,578 939 2,497

Sale of aircraft — — 2,029

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

Receipts related to interest rate swap

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$ 547 $ 12,949 $ (7,222)

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

(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.

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

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

Provision (Benefit) for Income Taxes

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domestic and foreign income taxes.

For the year ended December 31, 2024, the effective tax rate was higher as compared to the year ended December 31, 2023 primarily due to the discrete tax benefit recognized as a result of the internal legal entity restructuring during the fourth quarter of 2023 described below, as well as a decrease in discrete tax benefits related to stock‑based compensation, net of the impact from officer compensation limitation provisions, partially offset by the decrease in the adverse effective tax rate impact of the net tax on foreign earnings.

The decrease in net tax on foreign earnings is primarily related to increased foreign creditable taxes available to reduce the net impact of the U.S.

Global Intangible Low‑Taxed Income (“GILTI”) inclusion.

For the years ended December 31, 2024 and 2023, we recorded discrete tax benefits of $5,583 and $14,648, 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.

As of December 31, 2023, the deferred tax assets represented the undiscounted future anticipated cash tax impacts of basis differences, which were expected to be realized through tax amortization over the next 13 years, beginning in 2024.

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.

For the year ended December 31, 2025, the effective tax rate was higher as compared to the year ended December 31, 2024 primarily due to the decrease in tax benefits related to stock‑based compensation, net of the impact from officer compensation limitation provisions, recognized in the current year.

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On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA includes the permanent extension of certain expiring provisions of the U.S.

Tax Cuts and Jobs Act (the “JOBS Act”), modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates.

The OBBBA had a favorable impact on our cash paid for income taxes in 2025, with continued cash tax favorability expected in 2026, primarily attributable to the change in restoring immediate U.S.

tax deductions for domestic research and development expenses.

The OBBBA did not have a material impact on the effective tax rate for the year ended December 31, 2025.

Key Business Metrics:

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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.

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ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 51%, 50%, and 47% as of December 31, 2025, 2024, and 2023, respectively, with our E365 subscription offering representing 46%, 45%, and 41% of total ARR as of December 31, 2025, 2024, and 2023, 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.

As a result of the conflict, we deemed our overall business recurrence in the affected countries to have been reduced by approximately 50%, and accordingly, reduced our related ARR by $5,190 as of March 31, 2022.

During the second quarter of 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, 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.

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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

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The last twelve‑months recurring revenues for the periods ended December 31, 2025, 2024, and 2023 compared to the last twelve‑months of the comparative twelve‑month period increased by $153,346, $141,327, and $118,653, 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 PLS and Seequent.

For the twelve months ended December 31, 2025, 2024, and 2023, 93%, 91%, and 89%, respectively, of our revenues were recurring revenues.

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Given that recurring revenues represented 93%, 91%, and 89% of our total revenues for the twelve months ended December 31, 2025, 2024, and 2023, respectively, this metric helps explain our revenue performance as primarily growth from existing accounts.

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Non-GAAP Financial Measures:

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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.

Adjusted Operating Income Less Stock-Based Compensation Expense (“AOI less SBC”)

AOI less 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.

AOI less SBC is defined as operating income adjusted for the following:

amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses (inclusive of cash‑settled retention incentives provided to key employees of acquired companies), and realignment expenses (income), for the respective periods.

AOI less 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.

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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 (“AOI”)

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:

amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses (inclusive of cash‑settled retention incentives provided to key employees of acquired companies), realignment expenses (income), and stock‑based compensation expense, for the respective periods.

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Reconciliation of operating income to AOI less SBC and to Adjusted operating income:

Year Ended December 31,

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Realignment expenses (4)

789 11,470 2,109

Adjusted OI w/SBC 372,222 324,677 273,929

AOI less SBC 429,917 372,222 324,677

Stock-based compensation expense (5)

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Adjusted operating income $ 501,866 $ 445,727 $ 396,147

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

Further explanation of certain of our adjustments in arriving at AOI less SBC and Adjusted operating income are as follows:

(1) Amortization of purchased intangibles .

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(2) Deferred compensation plan .

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 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 operations.

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

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We incur expenses for professional services rendered in connection with business combinations, which are included in our GAAP presentation of general and administrative expense.

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

Also included in our acquisition expenses are cash‑settled retention incentives provided to key employees of the acquired companies.

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.

(4) Realignment expenses .

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For the years ended December 31, 2024 and 2023, we recognized realignment costs related to the aforementioned program of $847 and $12,579, respectively, which represent 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).

For the year ended December 31, 2023, Realignment expenses were partially offset by 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.

For the year ended December 31, 2023, realignment expenses were partially offset by income associated with the continued wind down of our Russian entities following our decision to exit the Russian market beginning in the second quarter of 2022.

(5) Stock‑based compensation expense .

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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.

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In reporting period‑over‑period results, except for ARR as discussed above in “Key Business Metrics” section, we calculate the effects of foreign currency fluctuations and constant currency information by translating current and prior period results on a transactional basis to our reporting currency using prior period average foreign currency exchange rates in which the transactions occurred.

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Total revenues $ 1,501,779 $ (12,387) $ 1,489,392 $ 1,353,095 $ (797) $ 1,352,298

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Constant Currency Change 2023 to 2024:

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Total operating expenses $ 861,628 $ (3,295) $ 858,333 $ 793,178 $ (57) $ 793,121

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Constant Currency Change 2023 to 2024:

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Such debt instruments also could introduce new or modified covenants that might restrict our operations and/or our ability to pay dividends,

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consummate acquisitions, or otherwise pursue our business strategies.

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Operating Activities

For the year ended December 31, 2024, compared to the prior year, net cash provided by operating activities was higher by $18,596 due to a net increase in non‑cash adjustments of $185,856, partially offset by a decrease in net income of $92,354 and a decrease in net cash flows from the change in operating assets and liabilities of $74,906.

Both the decrease in net income and the net increase 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 for the year ended December 31, 2023.

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 decrease in net cash flows from the change in operating assets and liabilities was primarily due to the timing of collections on our receivables, the overall timing of tax payments year over year, and a decrease in deferred revenues.

For the year ended December 31, 2025, compared to the prior year, net cash provided by operating activities was higher by $103,172 due to an increase in net income of $43,361, an increase in net cash flows from the change in operating assets and liabilities of $36,777, and a net increase in non‑cash adjustments of $23,034.

The increase in net cash flows from the change in operating assets and liabilities year over year was primarily due to higher deferred revenues, timing of collections on our receivables, higher accounts payable, lower capitalized internal-use software implementation costs, as well as the overall timing of payments for software maintenance contracts.

Offsetting these increases were lower period over period Cloud Services Subscription deposits and lower accruals and other current liabilities.

Investing Activities

Net cash used in investing activities was higher by $82,763 for the year ended December 31, 2024, compared to the prior year, primarily due to higher acquisition related payments of $104,384, partially offset by lower purchases of property and equipment and investment in capitalized software of $10,956 and lower purchases of investments of $10,167.

We used available cash and borrowings under our 2017 Credit Facility to fund an acquisition in September 2024.

Net cash used in investing activities was lower by $30,958 for the year ended December 31, 2025, compared to the prior year, primarily due to lower acquisition related payments of $37,155.

We used available cash and borrowings under our credit facilities to fund our acquisitions.

Financing Activities

Net cash used in financing activities was lower by $69,224 for the year ended December 31, 2024, compared to the prior year, primarily due to lower net paydowns of the credit facilities of $111,856, partially offset by higher payments for shares acquired of $17,926, including shares repurchased under the BSY Stock Repurchase Program (the “Repurchase Program”), and higher dividend payments of $13,359, primarily due to an increase in our quarterly dividend per share to $0.06 in 2024 from $0.05 in 2023.

Net cash used in financing activities was higher by $86,448 for the year ended December 31, 2025, compared to the prior year, primarily due to higher payments for shares acquired of $80,381, including shares repurchased under the BSY Stock Repurchase Program (the “Repurchase Program”) and higher dividend payments of $12,848, primarily due to an increase in our quarterly dividend per share to $0.07 in 2025 from $0.06 in 2024, partially offset by lower net paydowns of the credit facilities of $11,398.

Additionally, we paid $9,797 in cash to repurchase $10,000 aggregate principal amount of our outstanding 2026 Notes during the first quarter of 2025.

Long-Term Debt

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On October 18, 2024, we used borrowings under the Credit Facility to repay all indebtedness outstanding under the 2017 Credit Facility, including the outstanding senior secured term loan.

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As of December 31, 2025, we had $1,299,850 available under the Credit Facility, and we were in compliance with all covenants under the Credit Facility, the 2026 Notes, and the 2027 Notes.

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.

As of December 31, 2025, the 2026 Notes were classified as long‑term in the consolidated balance sheets as we had the ability and intent to refinance them on a long‑term basis through available capacity under the Credit Facility.

The 2026 Notes matured on January 15, 2026.

Upon maturity, we repaid $678,254, which consisted of the remaining outstanding principal balance and accrued interest on the 2026 Notes using borrowings under the Credit Facility and available cash on hand.

Our credit facilities, 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.

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In March 2024, our Board of Directors approved an extension to the Repurchase Program authorizing us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes from June 30, 2024 through June 30, 2026.

In November 2025, our Board of Directors approved an extension to the Repurchase Program authorizing us to repurchase up to $500,000 of our Class B common stock and/or outstanding convertible senior notes from November 21, 2025 through December 31, 2028.

This updated authorization supersedes our prior authorization, which was set to expire on June 30, 2026.

We may use available working capital, cash provided by operating activities, and/or external borrowings including available liquidity under our Credit Facility to make repurchases.

During the year ended December 31, 2025, we repurchased 2,887,224 shares for $125,057, and $10,000 aggregate principal amount of our outstanding 2026 Notes for $9,797 under the Repurchase Program.

During the year ended December 31, 2024, we repurchased 1,292,733 shares for $64,359 under the Repurchase Program.

During the year ended December 31, 2023, we did not make repurchases under the Repurchase Program.

The timing, as well as the number and value of shares and/or outstanding convertible senior 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 convertible senior 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 distributions from the DCP and share issuances under the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”).

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.

We exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock during the first quarter of 2025, but we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock during the second, third, and fourth quarters of 2025.

During the year ended December 31, 2024, we exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock.

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.

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.

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Dividend Payments

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The following table summarizes our most significant contractual obligations as of December 31, 2025:

Total Short-Term Long-Term

Total Due within 12 months Due after 12 months

Debt Obligations (1)

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Our largest contractual obligations relate to our outstanding debt, which include convertible notes due in 2026 and 2027.

We repaid the 2026 Notes upon maturity on January 15, 2026.

Our Credit Facility matures on October 18, 2029, subject to a “revolving maturity date” on the date that is 91 days prior to the maturity date of our outstanding convertible debt, unless on such date we meet certain liquidity requirements.

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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 cloud provisioning of our software solutions and for internal‑use software costs.

We have non‑cancelable future cash purchase commitments for services related to cloud provisioning of our software and for internal‑use software costs.

Our purchase obligations are in addition to amounts included in our consolidated balance sheets.

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

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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.

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates that affect the reported amounts of assets, liabilities, revenues, 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.

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Goodwill and Other Intangible Assets

Intangible assets arise from acquisitions and principally consist of goodwill, trademarks, customer relationships, in‑process research and development, and acquired software and technology.

Intangible assets, other than goodwill and in‑process research and development, are amortized on a straight‑line basis over their estimated useful lives.

Intangible assets primarily arise from acquisitions and principally consist of goodwill, acquired software and technology, customer relationships, and trademarks.

Finite-lived intangible assets are amortized on a straight‑line basis over their estimated useful lives.

Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations.

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We allocate goodwill to reporting units on a relative fair value basis.

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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.

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Other Intangible Assets

Intangible assets other than goodwill are tested annually for impairment on October 1, or more frequently if events occur or circumstances change that would more likely than not reduce its fair value below its carrying amount.

In testing intangible assets other than goodwill for impairment, we may first qualitatively assess whether it is more likely than not (a likelihood of more than 50 percent) that an intangible asset impairment exists.

If it is determined that a quantitative assessment is required, we will evaluate the cash flows generated by the underlying asset, including estimated future operation results, trends, or other determinants of fair value.

If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset, we would recognize an impairment charge to the extent the carrying amount of the asset exceeded its estimated fair value.

There was no impairment of intangible assets for the years ended December 31, 2024, 2023, or 2022.

We evaluate intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that useful lives of those assets are no longer appropriate.

If circumstances require an asset to be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that asset to its carrying value.

If the carrying value of the asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.

The process of evaluating the potential impairment of intangible assets is subjective and requires significant judgment at many points in the process.

There was no impairment of intangible assets subject to amortization for the years ended December 31, 2025, 2024, or 2023.

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.

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Any adjustments to these estimates will generally be recorded as an income tax expense or benefit in the period the adjustment is determined.

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We are subject to income taxes in the U.S.

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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