BENTLEY SYSTEMS INC 10-K

Item 9A. Controls and Procedures Evaluation of Effectiveness of Disclosure Controls and Procedures Our management maintains disclosure controls and procedures as defined in Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure. We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Bentley Systems, Incorporated have been detected. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a‑15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). Our management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company acquired Seequent Holdings Limited (“Seequent”) in June 2021. As permitted by the U.S. Securities and Exchange Commission staff interpretative guidance for newly acquired businesses, the Company excluded Seequent from management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. Seequent’s total assets and total revenues represent approximately 1.8% and 5.6%, respectively, of the Company’s total assets and total revenues, as of and for the year ended December 31, 2021. Our independent registered public accounting firm, KPMG LLP, has issued an audit report on our internal control over financial reporting, which is included in Part II, Item 8 of this Annual Report on Form 10‑K. 94 Changes in Internal Control over Financial Reporting During the quarter ended December 31, 2021, management identified and remediated a material weakness in internal control over financial reporting related to user access controls to adequately restrict user and privileged access over certain information technology systems that support our financial reporting processes and to ensure appropriate segregation of duties. No misstatement arose as a result of this deficiency. Except for the foregoing, there was no change in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a or 15d of the Exchange Act that occurred during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 95 PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated by reference to our definitive proxy statement for our 2022 Annual Meeting of Stockholders (the “2022 Proxy Statement”), which will be filed with the SEC not later than 120 days subsequent to December 31, 2021. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following sets forth certain information as of March 1, 2022, regarding our executive officers. Name Age Position Gregory S. Bentley 66 Chief Executive Officer and President Keith A. Bentley 63 Chief Technology Officer Werner Andre 52 Chief Financial Officer and Chief Accounting Officer Gus Bergsma 59 Chief Revenue Officer Nicholas Cumins 45 Chief Operating Officer David J. Hollister 56 Chief Investment Officer David R. Shaman 56 Chief Legal Officer and Secretary Gregory S. Bentley has served as our President since June 1996 and Chief Executive Officer since August 2000. Prior to joining us in 1991, Mr. Bentley founded and served as chief executive officer of Devon Systems International, Inc., a provider of financial trading software, which was sold to SunGard Data Systems, Inc. in 1987. Mr. Bentley served as a director of SunGard and a member of its audit committee from 1991 through 2005. He holds a B.S. in Economics and an M.B.A. in Finance and Decision Sciences from the Wharton School, University of Pennsylvania. Keith A. Bentley co-founded our Company and has served as our Chief Technology Officer since 2000. Mr. Bentley previously served as our President from 1984 to 1995 and as the Chief Executive Officer from 1984 to 2000. Mr. Bentley is the principal architect of our technology directions and is the primary inventor on numerous Company patents. He holds a Bachelor’s degree in Electrical Engineering from the University of Delaware and an M.S. in Electrical Engineering from the University of Florida. Werner Andre has served as our Chief Financial Officer since January 1, 2022 and is responsible for all aspects of finance including worldwide accounting, financial planning and analysis, tax, and treasury. Mr. Andre joined us in 2015 as Global Corporate Controller and serves as our Chief Accounting Officer since 2020. Prior to joining us, Mr. Andre served as the assistant corporate controller, international accounting and reporting, for Rockwood Holdings, Inc. from 2010 to 2015, and held several roles with PricewaterhouseCoopers LLP from 1995 to 2010. He is a Certified Public Accountant in the state of Pennsylvania, and holds B.S. and M.B.A. degrees in Accounting and Financial Reporting from the University for Economics and Business Administration in Vienna. Gus Bergsma has served as our Chief Revenue Officer since 2016. Mr. Bergsma is responsible for our global accounts. Mr. Bergsma has held several executive management roles at the Company including global sales of structural and water applications, and all smaller- and medium-sized accounts. He holds a Bachelor’s degree and a Master’s degree in civil engineering from the University of California at Berkeley. 96 Nicholas Cumins has served as our Chief Operating Officer since January 1, 2022. Mr. Cumins is responsible for our sales and marketing, product, user success, and business operations globally. Mr. Cumins previously served as our Chief Product Officer since 2020. Prior to joining us, Mr. Cumins served as general manager of SAP Marketing Cloud, a comprehensive marketing automation platform, from 2018 to 2020. Mr. Cumins also served as chief product officer of Scytl, a platform for online voting, in Barcelona from 2016 to 2018, and senior vice president of product with OpenX, a pioneer in programmatic advertising, in Los Angeles from 2013 to 2016. He holds Masters degrees in Law and in Business from Paris II Panthéon-Assas University. David J. Hollister has served as our Chief Investment Officer since January 1, 2022. Mr. Hollister previously served as our Chief Financial Officer since 2007 and Chief Operations Advancement Officer since 2016. As Chief Investment Officer, Mr. Hollister is responsible for our acquisition and investment activities, including our iTwin Ventures corporate venture capital fund, our Cohesive Companies digital integrator business, and certain other Bentley Acceleration activities. Prior to joining us, Mr. Hollister was the chief financial officer and a member of the board of directors of Broder Bros., Co. from 2004 to 2007. Mr. Hollister previously served as a director in the M&A Transaction Services practice at PricewaterhouseCoopers LLP, where he specialized in international transactions. He holds a Bachelor’s degree in Business Administration from the University of Northern Colorado and an M.B.A. from the University of Michigan. David R. Shaman , our Chief Legal Officer, has led our legal team since 2015 and is responsible for legal, regulatory compliance, government relations, and license compliance activities. Mr. Shaman previously served as Deputy General Counsel from 2006 to 2015. Prior to joining us in 1998, Mr. Shaman was an associate at the law firm Covington & Burling LLP. Mr. Shaman’s international experience includes eight years leading our legal operations outside the United States, as well as tenures at the European Commission, Directorate-General for Informatics in Brussels and Harlequin Limited, a software company in Cambridge, United Kingdom. He holds a Bachelor’s degree in Mathematics from the University of Pennsylvania, a J.D. from Harvard Law School, and a Diploma in Mathematical Statistics from Cambridge University. Item 11. Executive Compensation The information required by this item is incorporated by reference to our 2022 Proxy Statement, which will be filed with the SEC not later than 120 days subsequent to December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to our 2022 Proxy Statement, which will be filed with the SEC not later than 120 days subsequent to December 31, 2021. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated by reference to our 2022 Proxy Statement, which will be filed with the SEC not later than 120 days subsequent to December 31, 2021. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to our 2022 Proxy Statement, which will be filed with the SEC not later than 120 days subsequent to December 31, 2021. 97 PART IV Item 15. Exhibit and Financial Statement Schedules (a) The following documents are filed as part of this report: 1. Financial Statements: Page Reports of Independent Registered Public Accounting Firm F- 1 Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 6 Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019 F- 7 Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020, and 2019 F- 8 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020, and 2019 F- 9 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019 F- 10 Notes to Consolidated Financial Statements F - 12 2. Financial Statement Schedules: Financial statement schedules have been omitted since they are either not required, not applicable, or the information is included in the consolidated financial statements or notes thereto. 3. Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of Bentley Systems, Incorporated (filed as Exhibit 3.1 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 3.2 Amended and Restated Bylaws of Bentley Systems, Incorporated (filed as Exhibit 3.2 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 4.1 Form of Bentley Systems, Incorporated Class B common stock certificate (filed as Exhibit 4.1 to our Registration Statement on Form S-1/A filed on September 18, 2020 (File No. 333-248246) and incorporated herein by reference) 4.2 Indenture, dated as of January 26, 2021, between Bentley Systems, Incorporated and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on January 26, 2021 (File No. 001-39548) and incorporated herein by reference) 4.3 Form of 0.125% Convertible Senior Note due 2026 (included as Exhibit A in Exhibit 4.1 to our Current Report on Form 8-K filed on January 26, 2021 (File No. 001-39548) and incorporated herein by reference) 4.4 Indenture, dated as of June 28, 2021, between Bentley Systems, Incorporated and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on June 29, 2021 (File No. 001-39548) and incorporated herein by reference) 4.5 Form of 0.375% Convertible Senior Note due 2027 (included as Exhibit A in Exhibit 4.1 to our Current Report on Form 8-K filed on June 29, 2021 (File No. 001-39548) and incorporated herein by reference) 4.6 Description of Bentley Systems, Incorporated Securities (filed as Exhibit 4.4 to our Annual Report on Form 10-K filed on March 2, 2021 (File No. 001-39548) and incorporated herein by reference) 98 Exhibit Number Description 10.1 Form of Capped Call Confirmation relating to the 0.125% Convertible Senior Note due 2026 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on January 26, 2021 (File No. 001-39548) and incorporated herein by reference) 10.2 Form of Capped Call Confirmation relating to the 0.375% Convertible Senior Note due 2027 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 29, 2021 (File No. 001-39548) and incorporated herein by reference) 10.3 Amended and Restated Credit Agreement, dated as of December 19, 2017, by and among Bentley Systems, Incorporated, PNC Bank, National Association, as administrative agent, and the lenders party thereto (filed as Exhibit 10.1 to our Registration Statement on Form S-1 filed on August 21, 2020 (File No. 333-248246) and incorporated herein by reference) 10.4 First Amendment to Amended and Restated Credit Agreement, dated as of September 2, 2020, (filed as Exhibit 10.10 to our Registration Statement on Form S-1/A filed on September 8, 2020 (File No. 333-248246) and incorporated herein by reference) 10.5 Second Amendment to Amended and Restated Credit Agreement, dated as of January 25, 2021 (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on January 26, 2021 (File No. 001-39548) and incorporated herein by reference) 10.6 Third Amendment to Amended and Restated Credit Agreement, dated as of June 22, 2021 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 22, 2021 (File No. 001-39548) and incorporated herein by reference) 10.7 Fourth Amendment to Amended and Restated Credit Agreement, dated as of December 22 , 2021 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on December 29 , 2021 (File No. 001-39548) and incorporated herein by reference) 10.8† Bentley Systems, Incorporated 2015 Equity Incentive Plan, as amended and restated effective as of May 29, 2018 (filed as Exhibit 10.6 to our Registration Statement on Form S-1 filed on August 21, 2020 (File No. 333-248246) and incorporated herein by reference) 10.9† Bentley Systems, Incorporated 2020 Omnibus Incentive Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 10.10†* Amendment No. 1 to the Bentley Systems, Incorporated 2020 Omnibus Incentive Plan 10.11† Bentley Systems, Incorporated Global Employee Stock Purchase Plan (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 10.12† Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan, as amended and restated effective as of September 22, 2020 (filed as Exhibit 10.3 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 10.13† Amendment No. 1 to the Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan, as amended and restated effective as of September 22, 2020 (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 9, 2021 (File No. 001-39548) and incorporated herein by reference) 10.14† Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan for Non-Employee Directors, as amended and restated effective as of January 1, 2015 (filed as Exhibit 10.7 to our Registration Statement on Form S-1/A filed on September 8, 2020 (File No. 333-248246) and incorporated herein by reference) 10.15† Bentley Systems, Incorporated Bonus Pool Plan, as amended and restated effective as of September 22, 2020 (filed as Exhibit 10.4 to our Current Report on Form 8-K filed on September 25, 2020 (File No. 001-39548) and incorporated herein by reference) 99 Exhibit Number Description 10.16 Common Stock Purchase Agreement, by and among Bentley Systems, Incorporated, Siemens AG, and the persons listed as “Key Holders” therein, dated September 23, 2016, as amended on October 28, 2016, and April 23, 2018 (filed as Exhibit 10.2 to our Registration Statement on Form S-1 filed on August 21, 2020 (File No. 333-248246) and incorporated herein by reference) 10.17 + Side Letter Agreement, dated as of March 11, 2021, by and among Bentley Systems, Incorporated, Seequent Holdings Limited and the Sellers named therein (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on May 11, 2021 (File No. 001-39548) and incorporated herein by reference) 10.18 Amendment to Side Letter Agreement, dated as of March 11, 2021, by and between Bentley Systems, Incorporated and Accel-KKR Capital Partners V, LP (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on May 11, 2021 (File No. 001-39548) and incorporated herein by reference) 21.1* List of Subsidiaries 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of CEO pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended 31.2* Certification of CFO pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended 32.1* Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover page formatted as Inline XBRL and contained in Exhibit 101 † Management contract or compensatory plan or arrangement. + Certain portions of this exhibit have been omitted. * Filed or furnished herewith. The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10‑K is not deemed filed with the U.S. Securities and Exchange Commission and is not to be incorporated by reference into any filing of Bentley Systems, Incorporated under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10‑K, irrespective of any general incorporation language contained in such filing. 100 (b) Exhibits: We hereby file the exhibits listed in the attached Exhibit Index. (c) Financial Statement Schedules: None. Item 16. Form 10–K Summary None. 101 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Bentley Systems, Incorporated Date: March 1, 2022 By: /s/ G REGORY S. B ENTLEY Gregory S. Bentley Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of March 1, 2022. Signature Title /s/ G REGORY S. B ENTLEY Chairman, Chief Executive Officer and President Gregory S. Bentley (Principal Executive Officer) /s/ W ERNER A NDRE Chief Financial Officer and Chief Accounting Officer Werner Andre (Principal Financial Officer and Principal Accounting Officer) /s/ K EITH A. B ENTLEY Director Keith A. Bentley /s/ B ARRY J. B ENTLEY Director Barry J. Bentley /s/ R AYMOND B. B ENTLEY Director Raymond B. Bentley /s/ K IRK B. G RISWOLD Director Kirk B. Griswold /s/ J ANET B. H AUGEN Director Janet B. Haugen /s/ B RIAN F. H UGHES Director Brian F. Hughes 102 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Bentley Systems, Incorporated: Opinion on Internal Control Over Financial Reporting We have audited Bentley Systems, Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated March 1, 2022 expressed an unqualified opinion on those consolidated financial statements. The Company acquired Seequent Holdings Limited during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Seequent Holdings Limited’s internal control over financial reporting associated with total assets and total revenues of approximately 1.8% and 5.6%, respectively of the Company’s total assets and revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Seequent Holdings Limited. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. F-1 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Philadelphia, Pennsylvania March 1, 2022 F-2 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Bentley Systems, Incorporated: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Bentley Systems, Incorporated and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Change in Accounting Principle As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2020 due to the adoption of Topic 842, Leases . Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-3 Evaluation of the fair value of certain customer relationships acquired through business combinations As discussed in Note 4 to the consolidated financial statements, the Company consummated 13 business combinations for total consideration of $1,269.8 million during the year ended December 31, 2021. These acquisitions were accounted for under the acquisition method of accounting for business combinations and the purchase prices were allocated to the assets acquired and liabilities assumed based on their respective fair values, which included a fair value allocated to the acquired customer relationships that totaled $158.6 million based on an income method of valuation. The determination of the acquisition date fair value of the acquired customer relationships required the Company to make assumptions regarding estimated future cash flows and discount rates. We identified the evaluation of the fair value of certain customer relationships acquired through business combinations as a critical audit matter. Specifically, a high degree of subjective auditor judgment was required to evaluate the estimated future revenues, future operating margins, and discount rates used to value these customer relationships due to their estimation uncertainty. Additionally, assessment of the discount rate assumptions required valuation professionals with specialized skills and knowledge. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition‑date valuation processes to value the acquired customer relationships, including controls related to the development of the assumptions related to estimated future revenues, future operating margins, and discount rates. We evaluated the reasonableness of management’s estimated future revenues and operating margins assumptions for certain acquired customer relationships by comparing the estimates to historical results and to information included in industry and analyst reports and selected peer company reports. We involved valuation professionals with specialized skills and knowledge for certain business combinations, who assisted in independently developing a range of discount rates based on publicly available market data for comparable entities and comparing them to the Company’s discount rates. Evaluation of the standalone selling price for certain term license subscriptions and portfolio balancing material rights As discussed in Note 3 to the consolidated financial statements, the Company recognized subscription revenue of $812.8 million for the year ended December 31, 2021, a portion of which relates to certain term license subscriptions and portfolio balancing material rights. The Company allocates the transaction price to each distinct performance obligation, including portfolio balancing material rights based upon their relative standalone selling prices (SSPs). In instances where a performance obligation or portfolio balancing material right does not have directly observable SSPs, the Company maximizes the use of other observable inputs to estimate SSPs. For the portfolio balancing material rights, the Company uses historical user elections to estimate future user elections, which are used to estimate the SSPs. We identified the evaluation of the SSPs for certain term license subscriptions and portfolio balancing material rights as a critical audit matter. Specifically, there was a high degree of subjective auditor judgment involved in assessing the nature and sufficiency of the evidence obtained to support the Company’s determination of SSPs for certain term licenses and the portfolio balancing material rights. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s revenue process, including controls over the development of SSPs. We obtained and inspected the Company’s SSP analysis for certain term licenses and compared the estimated SSPs to a selection of historical disaggregated sales data that reflected the discounts from list price. For certain term licenses, we also obtained the Company’s pricing policies and practices and compared them to the SSPs determined. We tested the historical user elections for the portfolio balancing material rights by sampling user elections and comparing them to signed revenue contracts. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature of such evidence. F-4 /s/ KPMG LLP We have served as the Company’s auditor since 2002. Philadelphia, Pennsylvania March 1, 2022 F-5 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 329,337 $ 122,006 Accounts receivable 241,807 195,782 Allowance for doubtful accounts ( 6,541 ) ( 5,759 ) Prepaid income taxes 16,880 3,535 Prepaid and other current assets 34,348 24,694 Total current assets 615,831 340,258 Property and equipment, net 31,823 28,414 Operating lease right-of-use assets 50,818 46,128 Intangible assets, net 245,834 45,627 Goodwill 1,588,477 581,174 Investments 6,438 5,691 Deferred income taxes 71,376 39,224 Other assets 48,646 39,519 Total assets $ 2,659,243 $ 1,126,035 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 16,483 $ 16,492 Accruals and other current liabilities 323,603 226,793 Deferred revenues 224,610 202,294 Operating lease liabilities 17,482 16,610 Income taxes payable 6,696 3,366 Current portion of long-term debt 5,000 — Total current liabilities 593,874 465,555 Long-term debt 1,430,992 246,000 Deferred compensation plan liabilities 94,890 2,422 Long-term operating lease liabilities 35,274 31,767 Deferred revenues 7,983 7,020 Deferred income taxes 65,014 10,849 Income taxes payable 7,725 7,883 Other liabilities 14,269 12,940 Total liabilities 2,250,021 784,436 Commitments and contingencies (Note 18) Stockholders’ equity: Preferred stock, $ 0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of December 31, 2021 and 2020 — — Class A Common Stock, $ 0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,601,757 shares as of December 31, 2021 and 2020, and Class B Common Stock, $ 0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 270,924,962 and 260,552,747 shares as of December 31, 2021 and 2020, respectively 2,825 2,722 Additional paid-in capital 937,805 741,113 Accumulated other comprehensive loss ( 91,774 ) ( 26,233 ) Accumulated deficit ( 439,634 ) ( 376,003 ) Total stockholders’ equity 409,222 341,599 Total liabilities and stockholders’ equity $ 2,659,243 $ 1,126,035 See accompanying notes to consolidated financial statements. F-6 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2021 2020 2019 Revenues: Subscriptions $ 812,807 $ 679,273 $ 608,300 Perpetual licenses 53,080 57,382 59,693 Subscriptions and licenses 865,887 736,655 667,993 Services 99,159 64,889 68,661 Total revenues 965,046 801,544 736,654 Cost of revenues: Cost of subscriptions and licenses 124,321 95,803 71,578 Cost of services 92,218 71,352 72,572 Total cost of revenues 216,539 167,155 144,150 Gross profit 748,507 634,389 592,504 Operating expenses: Research and development 220,915 185,515 183,552 Selling and marketing 162,240 143,791 155,294 General and administrative 150,116 113,274 97,172 Deferred compensation plan 95,046 177 408 Amortization of purchased intangibles 25,601 15,352 14,213 Expenses associated with initial public offering — 26,130 — Total operating expenses 653,918 484,239 450,639 Income from operations 94,589 150,150 141,865 Interest expense, net ( 12,491 ) ( 7,476 ) ( 8,199 ) Other income (expense), net 11,231 24,946 ( 5,557 ) Income before income taxes 93,329 167,620 128,109 Benefit (provision) for income taxes 3,448 ( 38,625 ) ( 23,738 ) Loss from investment accounted for using the equity method, net of tax ( 3,585 ) ( 2,474 ) ( 1,275 ) Net income 93,192 126,521 103,096 Less: Net income attributable to participating securities ( 9 ) ( 234 ) ( 8 ) Net income attributable to Class A and Class B common stockholders $ 93,183 $ 126,287 $ 103,088 Per share information: Net income per share, basic $ 0.30 $ 0.44 $ 0.36 Net income per share, diluted $ 0.30 $ 0.42 $ 0.35 Weighted average shares, basic 305,711,345 289,863,272 284,625,642 Weighted average shares, diluted 314,610,814 299,371,129 293,796,707 See accompanying notes to consolidated financial statements. F-7 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (in thousands) Year Ended December 31, 2021 2020 2019 Net income $ 93,192 $ 126,521 $ 103,096 Other comprehensive (loss) income, net of taxes: Foreign currency translation adjustments ( 65,648 ) ( 2,311 ) 5,959 Actuarial gain (loss) on retirement plan, net of tax effect of $( 44 ), $( 1 ), and $ 203 , respectively 107 5 ( 472 ) Total other comprehensive (loss) income, net of taxes ( 65,541 ) ( 2,306 ) 5,487 Comprehensive income $ 27,651 $ 124,215 $ 108,583 See accompanying notes to consolidated financial statements. F-8 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity (in thousands, except share data) Accumulated Class A and Class B Additional Other Total Common Stock Paid-in Comprehensive Accumulated Stockholders’ Shares Par Value Capital Loss Deficit Equity Balance, December 31, 2018 250,283,513 $ 2,502 $ 392,896 $ ( 29,414 ) $ ( 218,553 ) $ 147,431 Cumulative effect of accounting changes — — — — 107,822 107,822 Net income — — — — 103,096 103,096 Other comprehensive income — — — 5,487 — 5,487 Dividends declared — — — — ( 25,390 ) ( 25,390 ) Profit-sharing plan shares, net ( 318,203 ) ( 3 ) — — ( 2,414 ) ( 2,417 ) Shares issued in connection with deferred compensation plan, net 2,322,983 23 — — ( 5,632 ) ( 5,609 ) Deferred compensation plan elective participant deferrals and vesting of awards — — 3,586 — — 3,586 Payment of shareholder Put and Call rights ( 1,126,747 ) ( 11 ) — — ( 8,827 ) ( 8,838 ) Common Stock Purchase Agreement, net 64,509 — 466 — ( 48 ) 418 Stock option exercises, net 3,214,542 33 3,579 — ( 2,309 ) 1,303 Stock-based compensation expense — — 8,091 — — 8,091 Shares related to restricted stock, net 395,336 4 ( 4 ) — ( 399 ) ( 399 ) Other 7,016 — 53 — ( 15 ) 38 Balance, December 31, 2019 254,842,949 2,548 408,667 ( 23,927 ) ( 52,669 ) 334,619 Net income — — — — 126,521 126,521 Other comprehensive loss — — — ( 2,306 ) — ( 2,306 ) Class B Common Stock follow-on offering, net of expenses of $ 12,898 9,603,965 96 294,333 — — 294,429 Dividends declared — — — — ( 424,018 ) ( 424,018 ) Profit-sharing plan shares, net ( 549,834 ) ( 5 ) — — ( 6,965 ) ( 6,970 ) Shares issued in connection with deferred compensation plan, net 3,081,607 31 — — ( 4,656 ) ( 4,625 ) Deferred compensation plan elective participant deferrals — — 3,530 — — 3,530 Payment of shareholder Put and Call rights ( 128,007 ) ( 1 ) — — ( 1,453 ) ( 1,454 ) Common Stock Purchase Agreement, net — — — — ( 57 ) ( 57 ) Stock option exercises, net 4,060,839 41 9,070 — ( 4,755 ) 4,356 Shares issued for stock grants, net 21,956 — 319 — — 319 Stock-based compensation expense — — 25,194 — — 25,194 Shares related to restricted stock, net 1,221,029 12 — — ( 7,951 ) ( 7,939 ) Balance, December 31, 2020 272,154,504 2,722 741,113 ( 26,233 ) ( 376,003 ) 341,599 Net income — — — — 93,192 93,192 Other comprehensive loss — — — ( 65,541 ) — ( 65,541 ) Shares issued related to acquisition 3,141,342 31 182,359 — — 182,390 Purchase of capped call options, net of tax of $ 12,871 — — ( 38,734 ) — — ( 38,734 ) Dividends declared — — — — ( 33,537 ) ( 33,537 ) Shares issued in connection with deferred compensation plan, net 2,378,645 24 — — ( 69,031 ) ( 69,007 ) Deferred compensation plan elective participant deferrals — — 2,619 — — 2,619 Deferred compensation plan modification — — ( 4,739 ) — — ( 4,739 ) Shares issued in connection with Executive Bonus Plan, net 238,755 2 20,951 — ( 8,739 ) 12,214 Shares issued in connection with employee stock purchase plan, net 104,716 1 3,845 — ( 438 ) 3,408 Stock option exercises, net 4,587,053 46 5,559 — ( 37,785 ) ( 32,180 ) Shares issued for stock grants, net 7,824 — 450 — — 450 Stock-based compensation expense — — 24,382 — — 24,382 Shares related to restricted stock, net ( 86,120 ) ( 1 ) — — ( 7,293 ) ( 7,294 ) Balance, December 31, 2021 282,526,719 $ 2,825 $ 937,805 $ ( 91,774 ) $ ( 439,634 ) $ 409,222 See accompanying notes to consolidated financial statements. F-9 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2021 2020 2019 Cash flows from operating activities: Net income $ 93,192 $ 126,521 $ 103,096 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,793 36,117 32,160 Bad debt allowance (recovery) 1,203 ( 1,000 ) 862 Deferred income taxes ( 19,745 ) 16,246 732 Stock-based compensation expense 49,045 32,114 8,091 Amortization and write-off of deferred debt issuance costs 5,955 985 553 Change in fair value of derivative ( 9,770 ) ( 347 ) 159 Change in fair value of contingent consideration 550 ( 1,340 ) 62 Foreign currency remeasurement loss (gain) 64 ( 24,502 ) 5,311 Loss from investment accounted for using the equity method, net of tax 3,585 2,474 1,275 Changes in assets and liabilities, net of effect from acquisitions: Accounts receivable ( 35,519 ) 12,388 ( 21,152 ) Prepaid and other assets 14,260 11,705 ( 668 ) Accounts payable, accruals, and other liabilities 50,077 47,656 41,880 Deferred compensation plan liabilities 92,926 3,706 3,994 Deferred revenues 5,340 ( 565 ) ( 268 ) Income taxes payable, net of prepaid income taxes ( 15,932 ) ( 3,818 ) ( 5,314 ) Net cash provided by operating activities 288,024 258,340 170,773 Cash flows from investing activities: Purchases of property and equipment and investment in capitalized software ( 17,539 ) ( 16,447 ) ( 16,639 ) Acquisitions, net of cash acquired ( 1,034,983 ) ( 93,032 ) ( 34,054 ) Other investing activities ( 4,081 ) ( 7,854 ) ( 3,000 ) Net cash used in investing activities ( 1,056,603 ) ( 117,333 ) ( 53,693 ) Cash flows from financing activities: Proceeds from credit facilities 745,310 550,875 191,250 Payments of credit facilities ( 991,310 ) ( 538,625 ) ( 216,250 ) Proceeds from convertible senior notes, net of discounts and commissions 1,233,377 — — Payments of debt issuance costs ( 5,643 ) ( 432 ) — Purchase of capped call options ( 51,605 ) — — Proceeds from term loans 199,505 125,000 — Repayment of term loan — ( 125,000 ) — Payments of financing leases ( 197 ) ( 189 ) — Payments of acquisition debt and other consideration ( 2,371 ) ( 3,425 ) ( 11,029 ) Proceeds from Class B Common Stock follow-on offering, net of underwriters’ discounts and commissions — 295,802 — Payments of Class B Common Stock follow-on offering expenses — ( 1,373 ) — Payments of dividends ( 33,396 ) ( 422,646 ) ( 24,989 ) Payments for shares acquired including shares withheld for taxes ( 120,539 ) ( 83,975 ) ( 24,166 ) Proceeds from Common Stock Purchase Agreement — 58,349 4,510 Proceeds from stock purchases under employee stock purchase plan 3,846 — — Proceeds from exercise of stock options 5,605 9,128 3,626 Net cash provided by (used in) financing activities 982,582 ( 136,511 ) ( 77,048 ) Effect of exchange rate changes on cash and cash equivalents ( 6,672 ) ( 3,591 ) ( 114 ) Increase in cash and cash equivalents 207,331 905 39,918 Cash and cash equivalents, beginning of year 122,006 121,101 81,183 Cash and cash equivalents, end of year $ 329,337 $ 122,006 $ 121,101 F-10 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2021 2020 2019 Supplemental information: Cash paid for income taxes $ 40,203 $ 28,986 $ 27,907 Income tax refunds 9,372 3,863 1,752 Interest paid 4,631 8,012 9,221 Non-cash investing and financing activities: Shares issued related to acquisition 182,390 — — Contingent acquisition consideration 4,544 2,380 4,498 Deferred, non-contingent consideration, net 10,090 1,416 — Term loan expenses included in Accruals and other current liabilities 45 — — Share-settled Executive Bonus Plan awards 20,953 — — Deferred compensation plan elective participant deferrals 2,619 3,530 3,586 See accompanying notes to consolidated financial statements. F-11 BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (in thousands, except share and per share data) Note 1: Description of Business and Summary of Significant Accounting Policies Business and Operations — Bentley Systems, Incorporated (“Bentley” or the “Company”) is a Delaware corporation that was founded in 1984 and is headquartered in Exton, Pennsylvania. The Company, together with its subsidiaries, is a leading global provider of infrastructure engineering software solutions for professionals and organizations involved in the project delivery and operational performance of infrastructure assets. The Company is dedicated to advancing infrastructure through its comprehensive software solutions that span engineering disciplines, assets, and lifecycle processes. The Company’s integrated software platform encompasses both the design and construction of infrastructure, which the Company refers to as project delivery, and the operation of infrastructure assets, which the Company refers to as asset performance. The Company’s software solutions are designed to enable information mobility for a more complete flow of information among applications, across distributed project teams, from offices to the field, and throughout the infrastructure lifecycle. The Company believes its solutions extend the reach and scope of digital engineering models from the project delivery phase into the asset performance phase of the infrastructure lifecycle, which enables engineers to make infrastructure assets more intelligent and sustainable. Users of the Company’s solutions include engineers and construction professionals who collaborate on project delivery, and owner‑operators who maintain, adapt, and optimize the performance of infrastructure assets. Basis of Presentation and Consolidation — The consolidated financial statements and accompanying notes have been prepared in United States (“U.S.”) Dollars and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company is party to a joint venture, which is accounted for using the equity method. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates — The preparation of consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. In March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of the disease COVID‑19, caused by a novel strain of coronavirus, SARS‑CoV‑2. The COVID-19 pandemic has created and may continue to create significant uncertainty in the macroeconomic environment which, in addition to other unforeseen effects of this pandemic, may adversely impact our results of operations. As the COVID-19 pandemic continues to develop, many of our estimates could require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve our estimates may change materially in future periods. Examples of significant estimates and assumptions made by management include revenue recognition, the fair value of acquired assets and liabilities, the fair value of stock consideration in conjunction with business combinations, the fair value of deferred compensation plan liabilities, the fair value of derivative financial instruments, the fair value of common stock (prior to the Company’s initial public offering (“IPO”)), operating lease assets and liabilities, useful lives for depreciation and amortization, impairment of goodwill and intangible assets, valuation allowances for tax assets, and accruals for uncertain tax positions. F-12 Initial Public Offering — On September 25, 2020, the Company completed its IPO. The selling stockholders sold 12,360,991 shares of Class B Common Stock at a public offering price of $ 22.00 per share. The Company did not sell any shares in the IPO and did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders (see Notes 13 and 15). For the year ended December 31, 2020, the Company recorded $ 26,130 in Expenses associated with initial public offering in the consolidated statement of operations. These expenses included certain non‑recurring costs relating to the Company’s 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. Follow-On Public Offering — On November 17, 2020, the Company completed its follow‑on public offering of 11,500,000 shares of Class B Common Stock at a public offering price of $ 32.00 per share (the “Follow‑On Offering”). The Company sold 9,603,965 shares of Class B Common Stock (inclusive of 1,500,000 shares sold upon the exercise by the underwriters of their option to purchase additional shares of the Company’s Class B Common Stock). The selling stockholders sold 1,896,035 shares of Class B Common Stock. The Company received net proceeds of $ 294,429 after deducting expenses of $ 12,898 . The Company did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders. Expenses associated with the Follow‑On Offering included certain non‑recurring costs, consisting of the payment of underwriting discounts and commissions applicable to the sale of shares by the Company, professional fees, and other expenses. The Company agreed to pay certain expenses in connection with the Follow‑On Offering on behalf of the selling stockholders and made an accounting policy election to offset these expenses against the Follow‑On Offering proceeds (see Note 13). Convertible Senior Notes — On January 26, 2021, the Company completed a private offering of $ 690,000 of 0.125 % convertible senior notes due 2026 (the “2026 Notes”). The Company incurred $ 18,055 of expenses in connection with the 2026 Notes offering consisting of the payment of initial purchasers’ discounts and commissions, professional fees, and other expenses (“transaction costs”). In connection with the pricing of the 2026 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is 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 Company paid premiums of $ 25,530 in connection with the capped call options (see Note 10). On June 28, 2021, the Company completed a private offering of $ 575,000 of 0.375 % convertible senior notes due 2027 (the “2027 Notes”). The Company incurred $ 15,065 of expenses in connection with the 2027 Notes offering consisting of transaction costs. In connection with the pricing of the 2027 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2027 Notes and/or offset any cash payments the Company is 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 Company paid premiums of $ 25,875 in connection with the capped call options (see Note 10). Special Dividend — On August 28, 2020, the Company’s board of directors declared a special dividend of $ 1.50 per share of the Company’s common stock ($ 392,489 in the aggregate) (the “Special Dividend”), payable to all stockholders of record as of August 31, 2020, including dividends which accrue on certain unvested restricted stock and restricted stock units (“RSUs”). The Company used its bank credit facility to pay the Special Dividend (see Note 10). In connection with the Special Dividend declaration, an in kind adjustment was made to phantom shares issuable pursuant to the Company’s nonqualified deferred compensation plan (see Note 12) and the exercise price of all outstanding stock options at that time were reduced by $ 1.50 , but not lower than $ 0.01 (see Note 15). F-13 Segment — Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company defines its CODM to be its chief executive officer. The chief executive officer reviews the financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating the Company’s financial performance. Accordingly, the Company has determined it operates and manages its business in a single reportable operating segment, the development and marketing of computer software and related services. The Company markets its products and services through the Company’s offices in the U.S. and its wholly‑owned branches and subsidiaries internationally. Business Combinations — The Company allocates the purchase price for each acquisition to the net tangible and intangible assets acquired and liabilities assumed based on their estimated fair value at the respective acquisition date. Goodwill is measured as the excess of the purchase price over the value of net identifiable assets acquired. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date, as well as contingent and non‑contingent consideration, where applicable, the Company’s estimates are inherently uncertain and subject to refinement. Any adjustments to estimated fair value are recorded to goodwill, provided that the Company is within the measurement period (up to one year from the acquisition date) and that the Company continues to collect information to determine estimated fair value. Subsequent to the measurement period or the Company’s final determination of estimated fair value, whichever comes first, adjustments are recorded in the consolidated statements of operations. On June 17, 2021, the Company completed the acquisition of Seequent Holdings Limited (“Seequent”), a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $ 883,336 in cash, net of cash acquired, plus 3,141,342 shares of the Company’s Class B Common Stock (see Note 4). Revenue Recognition — Effective January 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014 ‑ 09, Revenue from Contracts with Customers , and related amendments (“Topic 606”) using the modified retrospective method. The Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. The Company generates revenues from subscriptions, perpetual licenses, and services (see Note 3). With the adoption of Topic 606, the Company also adopted Accounting Standards Codification (“ASC”) Topic 340‑40, Other Assets and Deferred Costs‑Contracts with Customers (“Topic 340‑40”). Under Topic 340‑40, the Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The contract costs are amortized based on the economic life of the goods and services to which the contract costs relate. The Company has determined that costs under certain sales incentive programs meet the requirements to be capitalized. The Company applies 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 the Company’s internal sales force compensation program and certain channel partner sales incentive programs for which the annual compensation is commensurate with annual sales activities. Cost of Revenues — 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 the Company’s customers using cloud deployed hosted solutions and those using the Company’s SELECT subscription offering. 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 customers. F-14 Software Development Costs — The Company’s 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, are included in Research and development in the consolidated statements of operations. Research and development expenses, which are generally expensed as incurred, primarily consist of personnel and related costs of the Company’s research and development staff, including colleagues’ salaries, incentives, and benefits, and costs of certain third‑party contractors, as well as allocated overhead costs. In general, technological feasibility is reached shortly before the release of such products and, as a result, development costs that meet the criteria for capitalization were not material for the periods presented. Under its Accelerated Commercial Development Program (“ACDP”) (the Company’s structured approach to an in‑house business incubator function), the Company capitalizes 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, the Company has 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 ). For the years ended December 31, 2021, 2020, and 2019, total costs capitalized under the ACDP were $ 6,608 , $ 7,809 , and $ 6,060 , respectively. Additionally, for the years ended December 31, 2021, 2020, and 2019, total ACDP related amortization recorded in Cost of subscriptions and licenses in the consolidated statements of operations was $ 7,020 , $ 4,699 , and $ 3,516 , respectively. Stock‑Based Compensation — The Company records all stock‑based compensation as an expense in the consolidated statements of operations measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. The fair value of stock option awards is determined using the Black‑Scholes option pricing model. For all other equity‑based arrangements, the stock‑based compensation expense is based on the share price at the grant date (see Note 15). Deferred Compensation — Under the amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”), certain officers and key employees may defer all or any part of their incentive compensation, and the Company may make discretionary awards on behalf of such participants. Elective participant deferrals and discretionary Company awards are received in the form of phantom shares of the Company’s Class B Common Stock, which are valued for tax and accounting purposes in the same manner as actual shares of Class B Common Stock, and are recorded as stock‑based compensation expense in the consolidated statements of operations (see Note 15). In August 2021, the Company’s 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 DCP 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 resulted in a reduction of 1,500,000 shares in both the basic and diluted count of Company shares. 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, the Company reclassified cumulative compensation cost of $ 4,739 from Additional paid-in capital to Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheet and recognized a compensation charge of $ 90,721 to Deferred compensation plan expenses in the consolidated statements of operations to record the reallocated deferred compensation plan liabilities at their fair value of $ 95,460 . 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 (see Note 12). Certain reclassifications of prior period amounts have been made to conform to the current period presentation. F-15 Advertising Expense — The Company expenses advertising costs as incurred. Advertising expense of $ 2,396 , $ 1,726 , and $ 1,579 is included in Selling and marketing in the consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, respectively. Derivative Arrangements — The Company records derivative instruments as an asset or liability measured at fair value and depending on the nature of the hedge, the corresponding changes in the fair value of these instruments are recorded in the consolidated statements of operations or comprehensive income. If the derivative is determined to be a hedge, changes in the fair value of the derivative are offset against the change in the fair value of the hedged assets or liabilities through the consolidated statements of operations or recognized in Other comprehensive income (loss), net of taxes until the hedged item is recognized in the consolidated statements of operations. The ineffective portion of a derivative’s change in fair value is recognized in earnings. Also, changes in the entire fair value of a derivative that is not designated as a hedge are recognized in earnings. On March 31, 2020, the Company entered into an interest rate swap with a notional amount of $ 200,000 and a ten‑year term to reduce the interest rate risk associated with the Company’s Credit Facility (see Note 10). The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability on the consolidated balance sheets and carries the derivative at fair value. Gains and losses from the change in fair value are recognized in Other income (expense), net and payments related to the interest rate swap are recognized in Interest expense, net in the consolidated statements of operations. The bank counterparty to the derivative potentially exposes the Company to credit-related losses in the event of nonperformance. To mitigate that risk, the Company only contracts with counterparties who meet the Company’s minimum requirements under its counterparty risk assessment process. The Company monitors counterparty risk on at least a quarterly basis and adjusts its exposure as necessary. The Company does not enter into derivative instrument transactions for trading or speculative purposes. Foreign Currency Translation — Gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are included in Other income (expense), net in the consolidated statements of operations. The assets and liabilities of foreign subsidiaries are translated from their respective functional currencies into U.S. Dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated at average rates during the period. Foreign currency translation adjustments are recorded as a component of Other comprehensive income (loss), net of taxes in the consolidated statements of comprehensive income. Income Taxes — The Company recognizes deferred income tax assets and liabilities for the expected future tax consequences of net operating loss carryforwards, credit carryforwards, and temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, using enacted tax rates in effect for the year in which the items are expected to reverse. The Company accounts for uncertain tax positions based on an evaluation as to whether it is more likely than not that a tax position will be sustained on audit, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the appropriate tax authorities have full knowledge of all relevant information concerning the tax position. The tax benefit recognized is based on the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. Interest expense and penalties are included in Provision for income taxes in the consolidated statements of operations. Net Income Per Share — Net income per share of Class A and Class B Common Stock amounts are computed using the two‑class method required for participating securities, using the treasury stock method for awards under the Company’s equity compensation plans and global employee stock purchase plan, and using the if‑converted method for the convertible senior notes in accordance with FASB ASU No. 2020‑06, Debt–Debt with Conversion and Other Options (Subtopic 470‑20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815‑40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020‑06”). In addition, the weighted average number of shares of the Company’s Class A and Class B Common Stock is inclusive of undistributed shares held in the DCP as phantom shares of the Company’s Class B Common Stock. F-16 Fair Value Measurements — The Company categorizes its assets and liabilities measured at fair value into a three‑level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Cash and Cash Equivalents — The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2021 and 2020, all of the Company’s cash and cash equivalents consisted of money market funds and cash held in checking accounts maintained at various financial institutions. Cash equivalents are recorded at cost, which approximates fair value. Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable represent receivables from customers for products and services invoiced by the Company for which payment is outstanding. Receivables are recorded at the invoiced amount and do not bear interest. The Company establishes an allowance for doubtful accounts for expected losses during the accounts receivable collection process. The allowance for doubtful accounts is presented separately in the consolidated balance sheets and reduces the accounts receivable balance to the net realizable value of the outstanding accounts and installment receivables. The development of the allowance for doubtful accounts is based on an expected loss model which considers historical write‑off and recovery experience, aging trends affecting specific accounts, and general operational factors affecting all accounts. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company considers current economic trends and takes into account reasonable and supportable forecasts of future conditions when evaluating the adequacy of the allowance for doubtful accounts. If circumstances relating to specific customers change or unanticipated changes occur in the general business environment, the Company’s estimate of the recoverability of receivables could be further adjusted. Activity related to the Company’s allowance for doubtful accounts was as follows: Year Ended December 31, 2021 2020 Balance, beginning of year $ 5,759 $ 7,274 Bad debt allowance (recovery) 1,203 ( 1,000 ) Write-offs ( 700 ) ( 812 ) Foreign currency translation adjustments 279 297 Balance, end of year $ 6,541 $ 5,759 F-17 Concentration of Credit Risk — Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of its cash and cash equivalents and receivables. To reduce credit risk, the Company performs ongoing credit evaluations of its customers and limits the amount of credit extended when deemed necessary. Generally, the Company requires no collateral from its customers. The Company maintains an allowance for potential credit losses, but historically has not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area. No single customer accounted for more than 2.5% of the Company’s revenue for the years ended December 31, 2021, 2020, or 2019. The Company’s cash and cash equivalents are deposited with financial institutions and invested in money market funds that the Company believes are of high credit quality. Property and Equipment — Property and equipment are recorded at cost less accumulated depreciation. Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which range from three to 25 years. Leasehold improvements are depreciated over the shorter of the estimated useful life of the leasehold improvements or the lease term. Land is not depreciated. Depreciation for equipment commences once it is placed in service and depreciation for buildings and leasehold improvements commences once they are ready for their intended use. Estimated useful lives of property and equipment are as follows: Useful Life Building and improvements 25 years Computer equipment and software 3 years Furniture, fixtures, and equipment 5 years Aircraft 6 years Automobiles 3 years Cost of maintenance and repairs is charged to expense as incurred. Upon retirement or other disposition, the cost of the asset and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Leases — The Company adopted FASB ASU No. 2016‑02 regarding FASB ASC Topic 842, Leases (“Topic 842”), as of January 1, 2020 using the modified retrospective method for all existing leases. Upon adoption, the Company recognized its lease assets and lease liabilities measured at the present value of all future fixed lease payments, discounted using the Company’s incremental borrowing rate. The Company elected the package of practical expedients as permitted under the transition guidance, which allows the Company: (1) to not reassess whether any existing contracts are leases or contain a lease; (2) to not reassess the lease classification of existing leases; and (3) to not reassess treatment of initial direct costs for existing leases. Additionally, the Company elected the practical expedients to combine lease and non-lease components for new leases post adoption and to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. Upon adoption of Topic 842, the Company recognized right‑of‑use assets of $ 45,850 and lease liabilities of $ 47,666 calculated based on the present value of the remaining minimum lease payments as of the adoption date. F-18 The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right‑of‑use assets, Operating lease liabilities , and Long‑term operating lease liabilities in the consolidated balance sheets. Operating lease right‑of‑use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right‑of‑use assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, if the Company’s leases do not provide an implicit rate, based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is determined based on the Company’s estimated credit rating, the term of the lease, economic environment where the asset resides, and full collateralization. The operating lease right‑of‑use assets also include any lease payments made and are reduced by any lease incentives. Options to extend or terminate the lease are considered in determining the lease term when it is reasonably certain that the option will be exercised. Lease expense for lease payments is recognized on a straight‑line basis over the lease term. The Company’s operating leases are primarily for office facilities, office equipment, and automobiles . The Company’s finance lease is included in Property and equipment, net , Accruals and other current liabilities , and Other liabilities in the consolidated balance sheets. 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, which range from three to ten years . Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations. Goodwill is not amortized, but instead is tested annually for impairment, or more frequently if events occur or circumstances change that would more likely than not reduce its fair value below its carrying amount. The Company operates as a single reporting unit. In testing for goodwill impairment, the Company 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, the Company 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. Based upon the Company’s most recent annual impairment assessment completed as of October 1, 2021, there were no indicators of impairment, and no impairment losses were recorded. There was no impairment of goodwill as a result of the Company’s annual impairment assessments conducted for the years ended December 31, 2021, 2020, and 2019. Long‑Lived Assets — The Company evaluates the recoverability of long‑lived assets, such as property and equipment, operating lease right‑of‑use assets, and amortizable intangible assets, in accordance with authoritative guidance on accounting for the impairment or disposal of long‑lived assets, which includes evaluating long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. If circumstances require a long‑lived asset to be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset to its carrying value. If the carrying value of the long‑lived 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. No impairment of long‑lived assets occurred for the years ended December 31, 2021, 2020, and 2019. F-19 Investments — The Company applies the cost method of accounting for its investment in which it does not have the ability to exercise significant influence over operating and financial policies. Under the cost method, the Company records the investment based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same investee. The Company’s share of income or loss of such companies is not included in the Company’s consolidated statements of operations. The Company applies the equity method of accounting for its investment in which it does have the ability to exercise significant influence over operating and financial policies. Under the equity method, the Company recognizes its initial investment at cost and updates the carrying value of its investment by its proportional share of income or losses from the investment. In addition, the Company decreases the carrying value by any dividends received from the investee. The Company does not otherwise adjust the carrying value to reflect changes to the fair market value of the investment. The Company tests its investments for impairment whenever circumstances indicate that the carrying value of the investment may not be recoverable. No impairment of investments occurred for the years ended December 31, 2021, 2020, and 2019. Guarantees — The Company’s software license agreements typically provide for indemnification of customers for intellectual property infringement claims. The Company also warrants to customers, when requested, that its software products operate substantially in accordance with standard specifications for a limited period of time. The Company has not incurred significant obligations under customer indemnification or warranty provisions historically and does not expect to incur significant obligations in the future. Accordingly, the Company does not maintain accruals for potential customer indemnification or warranty‑related obligations. Note 2: Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020‑04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020‑04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020‑04 applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform between March 12, 2020 and December 31, 2022. The expedients and exceptions provided by ASU 2020‑04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company had no transactions that were impacted by ASU 2020‑04 during the year ended December 31, 2021. Recently Adopted Accounting Guidance In January 2017, the FASB issued ASU No. 2017‑04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance is required to be applied on a prospective basis and as such, the Company used the simplified test in its annual fourth quarter testing. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018‑15, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018‑15”), which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal‑use software. The Company prospectively adopted the ASU effective January 1, 2021. Capitalized costs related to cloud computing arrangements for the year ended December 31, 2021, which are included in Prepaid and other current assets in the consolidated balance sheet, were not material. F-20 In August 2020, the FASB issued ASU 2020‑06, Debt–Debt with Conversion and Other Options (Subtopic 470‑20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815‑40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if‑converted method. The Company early adopted the ASU effective January 1, 2021 using the modified retrospective method of adoption (see Notes 10 and 23). In October 2021, the FASB issued ASU No. 2021‑08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021‑08”), which improves the comparability of accounting for acquired revenue contracts with customers in a business combination. The new guidance is meant to reduce diversity in practice and inconsistencies related to recognition of an acquired contract liability and revenue contract payment terms and their effect on subsequent revenue recognized by the acquirer. The Company early adopted the ASU effective January 1, 2021 using the modified retrospective method of adoption, which does not include retrospectively recasting prior periods presented in the consolidated financial statements. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. Note 3: Revenue from Contracts with Customers Nature of Products and Services The Company generates revenues from subscriptions, perpetual licenses, and services. Subscriptions SELECT subscriptions — The Company provides prepaid annual recurring subscriptions that accounts (which are based on distinct contractual and billing relationships with the Company, where affiliated entities of a single parent company may each have an independent account with the Company) can elect to add to 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. The performance obligations within the SELECT offering, outside of the portfolio balancing exchange right, are concurrently delivered and have the same pattern of recognition. These performance obligations are accounted for ratably over the term as a single performance obligation. Enterprise subscriptions — The Company also provides Enterprise subscription offerings, which provide its largest accounts with complete and unlimited global access to the Company’s comprehensive portfolio of solutions. Enterprise License Subscriptions (“ELS”) provide 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 SELECT maintenance and support benefits under ELS do not include a portfolio balancing performance obligation. Revenue is allocated to the various performance obligations based on their respective standalone selling price (“SSP”). Revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenues for the SELECT maintenance and support and the performance consulting days are recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. F-21 Enterprise 365 (“E365”) subscriptions provide unrestricted access to the Company’s comprehensive software portfolio, similar to ELS, however, the accounts are charged based upon daily usage. The daily usage fee also 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 the Company’s software. E365 revenues are recognized based upon usage incurred by the account. Usage is defined as distinct user access on a daily basis. E365 subscriptions can contain quarterly usage floors or collars as accounts transition to the usage model or for accounts within the public sector. The term of E365 subscriptions aligns with calendar quarters and revenue is recognized based on actual usage. Term license subscriptions — The Company provides annual, quarterly, and monthly term licenses for its software products. Term license subscriptions contain a term license component and SELECT maintenance and support. Revenue is allocated to the various performance obligations based on their SSP. Annual term licenses (“ATL”) are generally prepaid annually for named user access to specific products and include the Company’s Virtuoso subscriptions sold via the Company’s Virtuosity eStore for practitioner licenses. Virtuoso subscriptions are bundles with customizable training and expert consultation administered through “keys” or credits. Quarterly term license (“QTL”) subscriptions allow accounts to pay quarterly in arrears for license usage that is beyond their prepaid subscriptions. Monthly term license (“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 Cloud Services Subscription (“CSS”), which is described below. For ATL, revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenue for the SELECT maintenance and support is recognized as delivered over the subscription term. For Virtuoso keys, revenue is recognized as services are delivered. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. For usage‑based QTL and MTL subscriptions, revenues are recognized based upon usage incurred by the account. Usage is defined as peak usage over the respective terms. The terms of QTL and MTL subscriptions align with calendar quarters and calendar months, respectively, and revenue is recognized based on actual usage. Visas and Passports are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles users to certain functionality of the Company’s ProjectWise and AssetWise systems. The Company’s standard offerings are usage based with monetization through the Company’s CSS program as described below. 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. Services The Company provides professional services, including training, implementation, configuration, customization, and strategic consulting services. The Company performs projects on both a time and materials and a fixed fee basis. Certain of the Company’s fixed‑fee arrangements, including its 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. Revenues are recognized as services are performed. F-22 The Company primarily utilizes its direct internal sales force and also has arrangements through independent channel partners to promote and sell Bentley products and subscriptions to end‑users. Channel partners are authorized to promote the sale of an authorized set of Bentley products and subscriptions within an authorized geography under a Channel Partner Agreement. Significant Judgments and Estimates The Company’s contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation. When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, the Company accounts 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. Judgment is required to determine the SSP for each distinct performance obligation. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services. The Company’s SELECT agreement provides users with perpetual licenses a right to exchange software for other eligible perpetual licenses on an annual basis upon renewal. The Company refers to this option as portfolio balancing and has concluded that the portfolio balancing feature represents a material right resulting in the deferral of the associated revenue. Judgment is required to estimate the percentage of users who may elect to portfolio balance and considers inputs such as historical user elections. This feature is available once per term and must be exercised prior to the respective renewal term. The Company recognizes the associated revenue upon election or when the portfolio balancing right expires. This right is included in the initial and subsequent renewal terms and the Company reestablishes the revenue deferral for the material right upon the beginning of the renewal term. As of December 31, 2021 and 2020, the Company has deferred $ 18,020 and $ 18,166 , respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets. Contract Assets and Contract Liabilities December 31, 2021 2020 Contract assets $ 336 $ 446 Deferred revenues 232,593 209,314 As of December 31, 2021 and 2020, the Company’s contract assets relate to performance obligations completed in advance of the right to invoice and are included in Prepaid and other current assets in the consolidated balance sheets. Contract assets were no t impaired as of December 31, 2021 and 2020. Deferred revenues consist of billings made or payments received in advance of revenue recognition from subscriptions and services. The timing of revenue recognition may differ from the timing of billings to users. For the year ended December 31, 2021, $ 183,997 of revenues that were included in the December 31, 2020 deferred revenues balance were recognized. There were additional deferrals of $ 215,947 , which were primarily related to new billings and acquisitions (see Note 4). For the year ended December 31, 2020, $ 203,682 of revenues that were included in the December 31, 2019 deferred revenues balance were recognized. There were additional deferrals of $ 193,999 , which were primarily related to new billings. F-23 Remaining Performance Obligations The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of December 31, 2021, amounts allocated to these remaining performance obligations are $ 232,593 , of which the Company expects to recognize 96.6 % over the next 12 months with the remaining amount thereafter. Disaggregation of Revenues The following table details revenues: Year Ended December 31, 2021 2020 2019 Subscriptions: SELECT subscriptions $ 269,283 $ 270,749 $ 267,249 Enterprise subscriptions (1) 290,097 221,524 184,833 Term license subscriptions 253,427 187,000 156,218 Subscriptions 812,807 679,273 608,300 Perpetual licenses 53,080 57,382 59,693 Subscriptions and licenses 865,887 736,655 667,993 Services: Recurring 21,343 17,389 22,797 Other 77,816 47,500 45,864 Services 99,159 64,889 68,661 Total revenues $ 965,046 $ 801,544 $ 736,654 (1) Enterprise subscriptions includes revenue attributable to E365 subscriptions of $ 223,293 , $ 110,979 , and $ 24,668 for the years ended December 31, 2021, 2020, and 2019, respectively. The Company recognizes perpetual licenses and the term license component of subscriptions as revenue when either the licenses are delivered or at the start of the subscription term. For the years ended December 31, 2021, 2020, and 2019, the Company recognized $ 412,375 , $ 338,792 , and $ 311,689 of license related revenues, respectively, of which $ 359,295 , $ 281,410 , and $ 251,996 , respectively, were attributable to the term license component of the Company’s subscription based commercial offerings recorded in Subscriptions in the consolidated statements of operations. The Company derived 8 % of its total revenues through channel partners for the years ended December 31, 2021, 2020, and 2019. F-24 Revenue to external customers is attributed to individual countries based upon the location of the customer. Year Ended December 31, 2021 2020 2019 Revenues: Americas (1) $ 483,087 $ 395,746 $ 356,331 Europe, the Middle East, and Africa (“EMEA”) (2) 300,123 254,036 236,602 Asia-Pacific (“APAC”) 181,836 151,762 143,721 Total revenues $ 965,046 $ 801,544 $ 736,654 (1) Americas includes the U.S., Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $ 393,865 , $ 348,222 , and $ 306,493 for the years ended December 31, 2021, 2020, and 2019, respectively. (2) Revenue attributable to the United Kingdom (“U.K.”) totaled $ 85,656 , $ 64,433 , and $ 57,321 for the years ended December 31, 2021, 2020, and 2019, respectively. Note 4: Acquisitions For the years ended December 31, 2021, 2020, and 2019, the Company completed a number of acquisitions, for an aggregate purchase price of $ 1,269,844 , $ 102,094 , and $ 41,075 , respectively. On June 17, 2021, the Company completed the acquisition of Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $ 883,336 in cash, net of cash acquired, plus 3,141,342 shares of the Company’s Class B Common Stock. The operating results of the acquired businesses, except for Seequent, were not material, individually or in the aggregate, to the Company’s consolidated statements of operations and financial position. The aggregate details of the Company’s acquisition activity are as follows: Acquisitions Completed in Year Ended December 31, 2021 2020 2019 Number of acquisitions 13 6 4 Cash paid at closing (1) $ 1,072,820 $ 98,298 $ 36,577 Cash acquired ( 37,837 ) ( 5,266 ) ( 2,523 ) Net cash paid $ 1,034,983 $ 93,032 $ 34,054 (1) Of the cash paid at closing for the year ended December 31, 2021, $ 8,701 was deposited into an escrow account to secure any potential indemnification and other obligations of the seller. The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows: December 31, 2021 2020 Accruals and other current liabilities $ 5,382 $ 2,884 Other liabilities 1,231 1,415 Contingent consideration from acquisitions $ 6,613 $ 4,299 F-25 The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows: December 31, 2021 2020 Accruals and other current liabilities $ 4,751 $ 685 Other liabilities 6,177 1,774 Non-contingent consideration from acquisitions $ 10,928 $ 2,459 The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date. As discussed in Note 2, the Company early adopted ASU 2021‑08 effective January 1, 2021. In connection with the purchase price allocations related to the Company’s acquisitions that closed prior to 2021, the Company estimated the fair values of the support obligations assumed relative to acquired deferred revenues. The estimated fair values of the support obligations assumed were determined using a cost‑build‑up approach. The cost‑build‑up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. These fair value adjustments reduce the revenues recognizable over the remaining support contract term of the Company’s acquired contracts. For the years ended December 31, 2021, 2020, and 2019, the fair value adjustments to reduce revenue related to acquisitions that closed prior to 2021 were $ 32 , $ 599 , and $ 553 , respectively. The Company finalized the purchase accounting for acquisitions completed through the year ended December 31, 2021. Acquisition costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the years ended December 31, 2021, 2020, and 2019, the Company incurred acquisition expenses of $ 20,471 , $ 2,227 , and $ 950 , respectively, which include costs related to legal, accounting, valuation, insurance, general administrative, and other consulting fees. For the year ended December 31, 2021, $ 16,557 of the Company’s acquisition expenses related to the acquisition of Seequent. F-26 The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration): Acquisitions Completed in Year Ended December 31, 2021 2020 2019 Consideration: Cash paid at closing $ 1,072,820 $ 98,298 $ 36,577 Shares issued at closing (1)(2) 182,390 — — Contingent consideration 4,544 2,380 4,498 Deferred, non-contingent consideration, net 10,090 1,416 — Total consideration $ 1,269,844 $ 102,094 $ 41,075 Assets acquired and liabilities assumed: Cash $ 37,837 $ 5,266 $ 2,523 Accounts receivable and other current assets 24,174 8,701 1,782 Operating lease right-of-use assets 12,095 2,529 — Property and equipment 4,383 499 411 Other assets 874 36 84 Software and technology (weighted average useful life of 5 , 3 , and 3 years, respectively) 43,560 2,207 2,423 Customer relationships (weighted average useful life of 9 , 6 , and 7 years, respectively) 158,555 11,371 6,534 Trademarks (weighted average useful life of 10 , 7 and 5 years, respectively) 38,256 3,953 1,431 Non-compete agreement (useful life of 5 years) — 200 150 In-process research and development 3,700 — — Total identifiable assets acquired excluding goodwill 323,434 34,762 15,338 Accruals and other current liabilities ( 27,649 ) ( 4,991 ) ( 3,538 ) Deferred revenues ( 26,245 ) ( 5,351 ) ( 2,897 ) Operating lease liabilities ( 11,988 ) ( 2,529 ) — Deferred income taxes ( 53,342 ) ( 1,701 ) ( 1,869 ) Other liabilities ( 716 ) ( 86 ) — Total liabilities assumed ( 119,940 ) ( 14,658 ) ( 8,304 ) Net identifiable assets acquired excluding goodwill 203,494 20,104 7,034 Goodwill 1,066,350 81,990 34,041 Net assets acquired $ 1,269,844 $ 102,094 $ 41,075 (1) Of the total 3,141,342 shares issued at closing, 83,627 shares are subject to forfeiture if post‑closing employment service conditions are not met. Accordingly, $ 5,452 is being recorded as stock‑based compensation expense over the related forfeiture period of two years (see Note 15). (2) A fair value adjustment of $ 16,943 was applied to the stock consideration due to restrictions on the transfer of securities. F-27 The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date. As discussed above, the fair values of deferred revenues related to the Company’s acquisitions that closed prior to 2021 were determined using the cost‑build‑up approach. The fair values of deferred revenues related to the Company’s acquisitions that closed during 2021 were determined in accordance with Topic 606 (see Note 3). The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital. Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. Of the goodwill recorded as of December 31, 2021, $ 18,534 is expected to be deductible for tax purposes. Unaudited Pro Forma Financial Information Had the acquisition of Seequent been made at the beginning of 2020, unaudited pro forma total revenues for the years ended December 31, 2021 and 2020 would have been $ 1,017,975 and $ 877,584 , respectively. Net income, net income per share, basic, and net income per share, diluted for the years ended December 31, 2021 and 2020 would not have been materially different than the amounts reported primarily due to the pro forma adjustments to reflect the amortization of purchased intangibles and the cost to finance the transaction, net of the related tax effects. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2020. The unaudited pro forma financial information combines the historical results of the Company, the adjusted historical results of Seequent considering the date the Company completed the acquisition of Seequent, and the effects of the pro forma adjustments described above. Acquisition Subsequent to December 31, 2021 On January 31, 2022, the Company completed the acquisition of Power Line Systems, a leader in software for the design of overhead electric power transmission lines and their structures, for approximately $ 700,000 in cash, net of cash acquired, and subject to customary adjustments including for working capital. The Company used readily available cash and borrowings under its bank credit facility (see Note 10) to fund the transaction. The acquisition is not expected to be material to the Company’s consolidated statements of operations. The acquisition is expected to be material to the Company’s financial position and cash flows. F-28 Note 5: Property and Equipment, Net Property and equipment, net consist of the following: December 31, 2021 2020 Land $ 2,811 $ 2,811 Building and improvements 35,188 33,094 Computer equipment and software 47,651 44,369 Furniture, fixtures, and equipment 14,274 12,849 Aircraft 4,075 4,075 Other 61 58 Property and equipment, at cost 104,060 97,256 Less: Accumulated depreciation ( 72,237 ) ( 68,842 ) Total property and equipment, net $ 31,823 $ 28,414 Depreciation expense for the years ended December 31, 2021, 2020, and 2019 was $ 11,217 , $ 10,166 , and $ 9,813 , respectively. Related Party Equipment Sale Subsequent to December 31, 2021 In January 2022, the audit committee of the Company’s board of directors authorized the Company to sell 50 % of its interest in the Company’s aircraft at fair market value to an entity controlled by the Company’s Chief Executive Officer. The transaction was completed on February 1, 2022 for $ 2,380 and resulted in a gain of $ 2,029 . Ongoing operating and fixed costs of the aircraft will be shared on a proportional use basis subject to a cost-sharing agreement. Pursuant to FASB ASC Topic 850, Related Party Disclosures , the Company determined this transaction was to a related party. Note 6: Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are as follows: Balance, December 31, 2019 $ 480,065 Acquisitions 81,990 Foreign currency translation adjustments 19,195 Other adjustments ( 76 ) Balance, December 31, 2020 581,174 Acquisitions 1,066,350 Foreign currency translation adjustments ( 58,408 ) Other adjustments ( 639 ) Balance, December 31, 2021 $ 1,588,477 F-29 Details of intangible assets other than goodwill are as follows: December 31, 2021 December 31, 2020 Estimated Useful Life Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Intangible assets subject to amortization: Software and technology 3 - 5 years $ 101,588 $ ( 63,225 ) $ 38,363 $ 67,691 $ ( 63,046 ) $ 4,645 Customer relationships 3 - 10 years 245,325 ( 83,799 ) 161,526 97,008 ( 66,030 ) 30,978 Trademarks 3 - 10 years 63,080 ( 20,893 ) 42,187 26,610 ( 16,888 ) 9,722 Non-compete agreements 5 years 350 ( 139 ) 211 350 ( 68 ) 282 410,343 ( 168,056 ) 242,287 191,659 ( 146,032 ) 45,627 Intangible assets not subject to amortization: In-process research and development 3,547 — 3,547 — — — Total intangible assets $ 413,890 $ ( 168,056 ) $ 245,834 $ 191,659 $ ( 146,032 ) $ 45,627 The aggregate amortization expense for purchased intangible assets with finite lives was reflected in the Company’s consolidated statements of operations as follows: Year Ended December 31, 2021 2020 2019 Cost of subscriptions and licenses $ 8,125 $ 4,981 $ 3,795 Amortization of purchased intangibles 25,601 15,352 14,213 Total amortization expense $ 33,726 $ 20,333 $ 18,008 Amortization expense for the years following December 31, 2021 are estimated as follows: 2022 $ 43,782 2023 37,752 2024 31,568 2025 28,787 2026 22,693 Thereafter 77,705 $ 242,287 F-30 Note 7: Investments Investments consist of the following: December 31, 2021 2020 Cost method investments $ 6,438 $ 3,440 Equity method investment — 2,251 Total investments $ 6,438 $ 5,691 Through iTwin Ventures , the Company invests in technology development companies, generally in the form of equity interests or convertible notes. The Company recorded these investments under the cost method. For the years ended December 31, 2021 and 2020, the Company invested $ 2,781 and $ 3,440 in cost method investments, respectively. In June 2021, in connection with the acquisition of Seequent, the Company recorded an equity method investment arising from a pre‑existing investment made by Seequent. The investee offers a broad range of data and software related services with a focus on the mining and exploration industry. During the third quarter of 2021, the Company acquired the remaining interest in this investment and accounted for it as a business combination (see Note 4). In September 2019, the Company and Topcon Positioning Systems, Inc. (“Topcon”) formed Digital Construction Works, Inc. (“DCW”), a joint venture which operates as a digital integrator of software and cloud services for the construction industry, which the Company accounts for using the equity method. DCW’s focus is to transform the construction industry from its legacy document‑centric paradigm by simplifying and enabling digital automated workflows and processes, technology integration, and digital twinning services for infrastructure. The Company and Topcon each have a 50 % ownership in DCW. For the years ended December 31, 2021 and 2020, the Company invested $ 1,300 and $ 3,000 in DCW, respectively. Pursuant to FASB ASC Topic 850, Related Party Disclosures , the Company has determined that DCW is a related party. For the years ended December 31, 2021 and 2020, transactions between the Company and DCW were not material to the Company’s consolidated financial statements. Note 8: Leases The Company’s operating leases consist of office facilities, office equipment, and automobiles, and the Company’s finance lease consists of computer equipment. The finance lease is not material for the periods presented. As of December 31, 2021, the Company’s leases have remaining terms of less than one year to nine years , some of which include one or more options to renew, with renewal terms from one year to ten years and some of which include options to terminate the leases from less than one year to five years . For contracts with lease and non‑lease components, the Company has elected not to allocate the contract consideration, and account for the lease and non-lease components as a single lease component. Payments under the Company’s lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. Variable lease cost may include common area maintenance, property taxes, utilities, and fluctuations in rent due to a change in an index or rate. The Company has elected not to recognize a right‑of‑use asset or lease liability for short‑term leases (leases with a term of twelve months or less). Short‑term leases are recognized in the consolidated statements of operations on a straight‑line basis over the lease term. F-31 The components of operating lease cost reflected in the consolidated statements of operations were as follows: Year Ended December 31, 2021 2020 Operating lease cost (1) $ 19,425 $ 18,194 Variable lease cost 4,151 3,881 Short-term lease cost 21 399 Total operating lease cost $ 23,597 $ 22,474 (1) Operating lease cost includes rent cost related to operating leases for office facilities of $ 18,636 and $ 17,417 for the years ended December 31, 2021 and 2020, respectively. For the year ended December 31, 2019, total rent expense related to operating leases recognized on straight‑line basis over the life of the lease under the previous accounting guidance was $ 17,036 . Other information related to leases was as follows: Year Ended December 31, 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 19,636 $ 18,384 Right-of-use assets obtained in exchange for new operating lease liabilities (1) $ 12,842 $ 15,522 (1) Right‑of‑use assets obtained in exchange for new operating lease liabilities does not include the impact from acquisitions of $ 12,095 and $ 2,529 for the years ended December 31, 2021 and 2020, respectively. The weighted average remaining lease term for operating leases was 4.1 years and 3.7 years as of December 31, 2021 and 2020, respectively. The weighted average discount rate was 2.5 % and 2.1 % as of December 31, 2021 and 2020. Maturities of operating lease liabilities are as follows: December 31, 2021 2022 $ 18,411 2023 13,212 2024 8,645 2025 6,398 2026 3,972 Thereafter 5,262 Total future lease payments 55,900 Less: Imputed interest ( 3,144 ) Total operating lease liabilities $ 52,756 As of December 31, 2021, the Company had additional operating lease minimum lease payments of $ 1,383 for executed leases that have not yet commenced, primarily for office locations. F-32 Supplemental balance sheet information related to the financing lease was as follows: December 31, 2021 2020 Property and equipment $ 484 $ 572 Accumulated depreciation ( 453 ) ( 229 ) Property and equipment, net $ 31 $ 343 Accruals and other current liabilities $ 98 $ 197 Other liabilities — 99 Total financing lease liabilities $ 98 $ 296 Note 9: Accruals and Other Current Liabilities Accruals and other current liabilities consist of the following: December 31, 2021 2020 CSS deposits $ 162,046 $ 110,291 Accrued compensation 37,725 22,131 Accrued benefits 36,656 36,613 Due to customers 12,798 9,869 Accrued acquisition stay bonus 9,461 5,599 Accrued indirect taxes 7,520 6,361 Deferred compensation plan liabilities 7,309 169 Accrued professional fees 6,940 4,210 Accrued cloud provisioning costs 5,862 7,988 Contingent consideration from acquisitions 5,382 2,884 Employee stock purchase plan contributions 4,818 — Non-contingent consideration from acquisitions 4,751 685 Accrued facility costs 2,194 2,095 Accrued severance and realignment costs 664 7,209 Other accrued and current liabilities 19,477 10,689 Total accruals and other current liabilities $ 323,603 $ 226,793 F-33 Note 10: Long‑Term Debt Long‑term debt consists of the following: December 31, 2021 2020 Bank credit facility: Revolving loan facility $ — $ 246,000 Term loan: Principal 200,000 — Unamortized debt issuance costs ( 534 ) — Term loan net carrying value 199,466 — Bank credit facility net carrying value 199,466 246,000 2026 Notes: Principal 690,000 — Unamortized debt issuance costs ( 14,677 ) — 2026 Notes net carrying value 675,323 — 2027 Notes: Principal 575,000 — Unamortized debt issuance costs ( 13,797 ) — 2027 Notes net carrying value 561,203 — Total net carrying value 1,435,992 246,000 Less: Current portion of long-term debt ( 5,000 ) — Total long-term debt $ 1,430,992 $ 246,000 Bank Credit Facility On January 25, 2021, the Company entered into the Second Amendment to the Amended and Restated Credit Agreement dated December 19, 2017, which increased the senior secured revolving loan facility from $ 500,000 to $ 850,000 and extended the maturity date from December 18, 2022 to November 15, 2025 (the “Credit Facility”). In connection with the Second Amendment, certain lenders exited the Credit Facility. The Company 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 . Debt issuance costs are amortized to interest expense through the maturity date of November 15, 2025. On June 22, 2021, the Company entered into the Third Amendment to the Credit Facility, which increased the aggregate amount of approved convertible debt to permit the issuance and sale of additional convertible senior notes. See the section titled “—Convertible Senior Notes—2027 Notes” below. On December 22, 2021, the Company entered into the Fourth Amendment to the Credit Facility, which provided for a new $ 200,000 senior secured term loan with a maturity of November 15, 2025 (the “2021 Term Loan”) and included certain other 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, the Company is required to repay $ 1,250 per quarter. Beginning with March 31, 2024 and ending with the last such date prior to the maturity date, the Company is required to repay $ 2,500 per quarter. The Company incurred $ 540 of debt issuance costs related to the 2021 Term Loan. As of December 31, 2021, $ 45 of the transaction costs were recorded in Accruals and other current liabilities in the consolidated balance sheet. The Company used borrowings under the 2021 Term Loan to pay down borrowings under the swingline sub‑facility and revolving facility under the Credit Facility. F-34 Under the 2021 Term Loan, the Company 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 basis points (“bps”) to 200 bps as determined by the Company’s 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 the Company’s net leverage ratio. On September 2, 2020, the Company entered into the First Amendment to the Credit Facility, which provided a new term loan of $ 125,000 (the “2020 Term Loan”) with a maturity of December 18, 2022 and included certain other amendments, including the addition of a mandatory prepayment provision requiring the Company to prepay borrowings under the Credit Facility in an aggregate amount equal to the net proceeds from any underwritten public offering by the Company, which prepayment shall be applied, first, to the 2020 Term Loan and, second, to any borrowings outstanding under the revolving facility under the Credit Facility without reducing the revolving commitments thereof. The Company used borrowings under the 2020 Term Loan and under the revolving facility under the Credit Facility to pay the Special Dividend declared by the Company’s board of directors on August 28, 2020 (see Note 1). The Company incurred $ 432 of debt issuance costs related to the 2020 Term Loan. In November 2020, the Company used a portion of the net proceeds from the Follow‑On Offering to repay the 2020 Term Loan (see Note 13). In addition to the senior secured revolving loan facility, the Credit Facility also provides up to $ 50,000 of letters of credit and other incremental borrowings subject to availability, including a $ 85,000 U.S. Dollar swingline sub‑facility and a $ 200,000 incremental “accordion” sub‑facility. The Company had $ 150 of letters of credit and surety bonds outstanding as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, the Company had $ 849,850 and $ 253,850 available under the Credit Facility. Under the Credit Facility, the Company 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 bps to 225 bps as determined by the Company’s 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 the Company’s net leverage ratio. In addition, a commitment fee for the unused Credit Facility ranges from 20 bps to 30 bps as determined by the Company’s net leverage ratio. Borrowings under the Credit Facility are guaranteed by all of the Company’s first tier domestic subsidiaries and are secured by a first priority security interest in substantially all of the Company’s and the guarantors’ U.S. assets and 65 % of the stock of their directly owned foreign subsidiaries. The Credit Facility contains both affirmative and negative covenants, including maximum net leverage ratios. As of December 31, 2021 and 2020, the Company was in compliance with all covenants in its Credit Facility. The agreement governing the Credit Facility contains customary 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. Voluntary prepayments of amounts outstanding under the Credit Facility, in whole or in part, are permitted at any time, so long as the Company gives 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, the Company must pay customary breakage costs. F-35 Convertible Senior Notes 2026 Notes On January 26, 2021, the Company 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. The Company incurred $ 18,055 of expenses in connection with the 2026 Notes offering consisting of transaction costs. The Company 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. The Company 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 (see Note 4). 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 the Company’s 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 the Company’s 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 the Company’s Class B Common Stock, as described in the 2026 Indenture; and (4) if the Company calls 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 Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s Class B Common Stock or a combination of cash and shares of the Company’s Class B Common Stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate is 15.5925 shares of the Company’s 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 the Company will, in certain circumstances, increase the conversion rate for a specified period of time. The Company 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 40 th scheduled trading day immediately before the maturity date if the last reported sale price per share of the Company’s 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 the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends 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. F-36 Upon a fundamental change (as defined in the 2026 Indenture), holders may, subject to certain exceptions, require the Company 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), the Company 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. The Company 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 the Company 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 the Company, or the holders of the 2026 Notes of at least 25 % in principal amount of the outstanding 2026 Notes by notice to the Company 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 the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with reporting covenant in the 2026 Indenture consists exclusively of the right to receive additional interest on the 2026 Notes. As discussed in Note 2, the Company early adopted ASU 2020‑06 as of January 1, 2021 and concluded the 2026 Notes will be 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 sheet 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, 2021, none of the conditions of the 2026 Notes to early convert has been met. The 2026 Notes are the Company’s senior, unsecured obligations that rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated to the 2026 Notes, rank equally in right of payment with the Company’s existing and future senior unsecured indebtedness that is not so subordinated (including the Company’s 2027 Notes, see the section titled “—2027 Notes” below), effectively subordinated to the Company’s existing and future secured indebtedness (including obligations under the Company’s 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 the Company is not a holder thereof)) of the Company’s subsidiaries. The 2026 Notes contain both affirmative and negative covenants. As of December 31, 2021, the Company was in compliance with all covenants in the 2026 Notes. F-37 Capped Call Options — In connection with the pricing of the 2026 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The Company incurred $ 150 of expenses in connection with the capped call options. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is 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 the Company’s 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, the Company accounts for the capped call options separately from the 2026 Notes. The capped call options are indexed to the Company’s 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. 2027 Notes On June 28, 2021, the Company 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. The Company incurred $ 15,065 of expenses in connection with the 2027 Notes offering consisting of transaction costs. The Company 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 the Company’s 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 the Company’s 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 the Company’s Class B Common Stock, as described in the 2027 Indenture; and (4) if the Company calls 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. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s Class B Common Stock or a combination of cash and shares of the Company’s Class B Common Stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate is 12.0153 shares of the Company’s 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 the Company will, in certain circumstances, increase the conversion rate for a specified period of time. F-38 The Company 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 40 th scheduled trading day immediately before the maturity date if the last reported sale price per share of the Company’s 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 the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends 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 the Company 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), the Company 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. The Company 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 the Company 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 the Company, or the holders of the 2027 Notes of at least 25 % in principal amount of the outstanding 2027 Notes by notice to the Company 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 the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with reporting covenant in the 2027 Indenture consists exclusively of the right to receive additional interest on the 2027 Notes. As previously discussed, the Company early adopted ASU 2020‑06 as of January 1, 2021 and concluded the 2027 Notes will be 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 sheet 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, 2021, none of the conditions of the 2027 Notes to early convert has been met. The 2027 Notes are the Company’s senior, unsecured obligations that rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated to the 2027 Notes, rank equally in right of payment with the Company’s existing and future senior unsecured indebtedness that is not so subordinated (including the Company’s 2026 Notes), effectively subordinated to the Company’s existing and future secured indebtedness (including obligations under the Company’s 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 the Company is not a holder thereof)) of the Company’s subsidiaries. The 2027 Notes contain both affirmative and negative covenants. As of December 31, 2021, the Company was in compliance with all covenants in the 2027 Notes. F-39 Capped Call Options — In connection with the pricing of the 2027 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The Company incurred $ 50 of expenses in connection with the capped call options. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2027 Notes and/or offset any cash payments the Company is 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 the Company’s 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, the Company accounts for the capped call options separately from the 2027 Notes. The capped call options are indexed to the Company’s 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. Interest Expense Interest expense consists of the following: Year Ended December 31, 2021 2020 2019 Bank credit facility (1) : Revolving loan facility $ 3,448 $ 5,680 $ 8,971 Term loans 117 502 — Interest rate swap 1,270 696 — Amortization and write-off of deferred debt issuance costs 1,309 985 553 6,144 7,863 9,524 2026 Notes: 0.125 % Coupon interest 803 — — Amortization of deferred debt issuance costs 3,378 — — 4,181 — — 2027 Notes: 0.375 % Coupon interest 1,096 — — Amortization of deferred debt issuance costs 1,268 — — 2,364 — — Other obligations 108 50 207 Total interest expense $ 12,797 $ 7,913 $ 9,731 (1) The weighted average interest rate was 2.03 %, 1.92 %, and 3.47 % for the years ended December 31, 2021, 2020, and 2019, respectively. F-40 Interest rate risk associated with the Credit Facility is managed through an interest rate swap which the Company 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, the Company fixed its LIBOR borrowing rate at 0.73 % on a notional amount of $ 200,000 . The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability in the consolidated balance sheets and carries the derivative at fair value. Gains and losses from the change in fair value are recognized in Other income (expense), net in the consolidated statements of operations. As of December 31, 2021 and 2020, the Company recorded a swap related asset at fair value of $ 10,117 and $ 347 , respectively, in Other assets in the consolidated balance sheets. Scheduled maturities of long‑term debt are as follows: December 31, 2021 2022 $ 5,000 2023 5,000 2024 10,000 2025 180,000 2026 690,000 Thereafter 575,000 Total scheduled maturities of long-term debt $ 1,465,000 Note 11: Executive Bonus Plan Certain of the Company’s key employees, including its named executive officers, participate in the Bentley Systems, Incorporated Bonus Pool Plan, as amended and restated, effective as of September 22, 2020 (the “Bonus Plan”). Pursuant to the Bonus Plan, participants are eligible to receive incentive bonuses that are determined based on the Company’s adjusted Management Report Operating Income (“MROI”), as defined in the plan agreement and before deduction for such plan payments. For purposes of the Bonus Plan, the bonus pool thereunder may be funded with up to an aggregate of 20 % of the Company’s adjusted MROI, subject to approval by the board of directors, with payments made to plan participants based on each such participant’s allocated interest in the bonus pool. The plan permits the deduction of certain holdback amounts from the plan’s pool, from which amounts can then be allocated to fund items including equity and/or cash incentive compensation for non‑plan participants and participant charitable contributions. A participant may defer any portion, or all, of such participant’s incentive bonus payable pursuant to the Bonus Plan into the DCP (see Note 12). Prior to September 22, 2020, a participant’s non‑deferred incentive bonus was payable in cash. Effective September 22, 2020, the Bonus Plan provides, in part, that a participant may elect to receive any portion, or all, of such participant’s non‑deferred incentive bonus in the form of shares of fully vested Class B Common Stock issued under the Bentley Systems, Incorporated 2020 Omnibus Incentive Plan (the “2020 Incentive Award Plan”) beginning in the fourth quarter of 2020, subject to the limitation described below. The Company records the election of non‑deferred incentive bonus in the form of shares of fully vested Class B Common Stock as stock‑based compensation expense in the consolidated statements of operations (see Note 15). Such election must be made prior to the start of the applicable calendar quarter for which the incentive bonus is to be paid, and the number of shares of Class B Common Stock payable in respect of such elected amount is calculated using a volume-weighted average price of the Company’s Class B Common Stock for the period commencing on the ten th trading day prior to the end of the applicable calendar quarter and ending on the ten th trading day following the end of the applicable calendar quarter. Notwithstanding participants’ elections to receive shares of fully vested Class B Common Stock in respect of their non‑deferred incentive bonus payments, if, in any calendar quarter, the aggregate U.S. Dollar value of shares of fully vested Class B Common Stock payable in respect of the non‑deferred incentive bonuses exceeds $ 7,500 , the portion of each participant’s non‑deferred incentive bonus payable in shares of fully vested Class B Common Stock will be reduced pro rata such that the $ 7,500 limit is not exceeded, and, for each affected participant, the amount of such reduction will be payable in cash. F-41 For the years ended December 31, 2021, 2020, and 2019, the incentive compensation, including cash payments, election to receive shares of fully vested Class B Common Stock beginning in the fourth quarter of 2020, and deferred compensation to plan participants, recognized under this plan (net of all applicable holdbacks) was $ 33,454 , $ 34,340 , and $ 31,061 , respectively. Note 12: Retirement Plans Deferred Compensation Plan Under the Company’s unfunded DCP, certain officers and key employees may defer all or any part of their incentive compensation, and the Company may make discretionary awards on behalf of such participants. Elective participant deferrals and discretionary Company awards are received in the form of phantom shares of the Company’s Class B Common Stock, which are valued for tax and accounting purposes in the same manner as actual shares of Class B Common Stock, and are recorded as stock‑based compensation expense in the consolidated statements of operations (see Note 15). In August 2021, the Company’s 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 DCP 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 resulted in a reduction of 1,500,000 shares in both the basic and diluted count of Company shares. 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, the Company reclassified cumulative compensation cost of $ 4,739 from Additional paid-in capital to Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheet and recognized a compensation charge of $ 90,721 to Deferred compensation plan expenses in the consolidated statements of operations to record the reallocated deferred compensation plan liabilities at their fair value of $ 95,460 . 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. Amounts in the DCP attributable to certain non‑colleague participants are settled in cash and are classified as liabilities in either Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheets. The 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. Deferred compensation plan expense was $ 95,046 , $ 177 , and $ 408 for the years ended December 31, 2021, 2020, and 2019, respectively. For the years ended December 31, 2021, 2020, and 2019, DCP elective participant deferrals were $ 2,619 , $ 3,530 , and $ 3,586 , respectively. No discretionary contributions were made to the DCP during the years ended December 31, 2021, 2020, and 2019. Pursuant to the terms of the DCP, in connection with the Special Dividend (see Note 1) declared on August 28, 2020, participants received 2,709,851 phantom shares in lieu of the Special Dividend. As of December 31, 2021 and 2020, phantom shares of the Company’s Class B Common Stock issuable by the DCP were 25,384,449 and 30,590,955 , respectively. F-42 The total liabilities related to the DCP is included in the consolidated balance sheets as follows: December 31, 2021 2020 Accruals and other current liabilities $ 7,309 $ 169 Deferred compensation plan liabilities 94,890 2,422 Total DCP liabilities $ 102,199 $ 2,591 Other Plans The Company maintains a qualified 401(k) profit‑sharing plan (the “401(k) Plan”) for the benefit of substantially all U.S.‑based full‑time colleagues. The Company may make discretionary profit‑sharing contributions to the 401(k) Plan. The Company matches 50 %, up to a maximum of 5 % of “qualified cash compensation” for each eligible participating colleague. The Company’s matching contributions to the 401(k) Plan were $ 4,114 , $ 3,583 , and $ 3,311 , for the years ended December 31, 2021, 2020, and 2019, respectively. Effective January 1, 2022, the Company will match 50 %, up to a maximum of 6 % of “qualified cash compensation” for each eligible participating colleague. The Company also maintains various retirement benefit plans (primarily defined contribution plans) for colleagues of its international subsidiaries. The Company’s contributions to these plans were $ 10,729 , $ 7,347 , and $ 8,070 , for the years ended December 31, 2021, 2020, and 2019, respectively. Note 13: Preferred and Common Stock Initial Public Offering On September 25, 2020, the Company completed its IPO. The selling stockholders sold 12,360,991 shares of Class B Common Stock at a public offering price of $ 22.00 per share. The Company did not sell any shares in the IPO and did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders. For the year ended December 31, 2020, the Company recorded $ 26,130 in Expenses associated with initial public offering in the consolidated statement of operations. These expenses included certain non‑recurring costs relating to the Company’s 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. In connection with the IPO, the Company’s amended and restated Certificate of Incorporation authorizes shares of undesignated preferred stock. See below for further detail. Follow-On Public Offering On November 17, 2020, the Company completed its Follow‑On Offering of 11,500,000 shares of Class B Common Stock at a public offering price of $ 32.00 per share. The Company sold 9,603,965 shares of Class B Common Stock (inclusive of 1,500,000 shares sold upon the exercise by the underwriters of their option to purchase additional shares of the Company’s Class B Common Stock). The selling stockholders sold 1,896,035 shares of Class B Common Stock. The Company received net proceeds of $ 294,429 after deducting expenses of $ 12,898 . The Company did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders. Expenses associated with the Follow‑On Offering included certain non‑recurring costs, consisting of the payment of underwriting discounts and commissions applicable to the sale of shares by the Company, professional fees, and other expenses. The Company agreed to pay certain expenses in connection with the Follow‑On Offering on behalf of the selling stockholders and made an accounting policy election to offset these expenses against the Follow‑On Offering proceeds. The Follow‑On Offering net proceeds were used to repay outstanding borrowings under the 2020 Term Loan and revolving facility of the Company’s Credit Facility (see Note 10). F-43 Preferred Stock Authorized and Selected Terms Upon the closing of the IPO, the Company’s amended and restated Certificate of Incorporation authorizes the Company to issue up to 100,000,000 shares of preferred stock. Preferred stock has rights, preferences, and privileges which may be designated from time to time by the Company’s board of directors. Common Stock Authorized and Selected Terms Upon the closing of the IPO, the Company’s amended and restated Certificate of Incorporation authorizes the Company to issue up to 100,000,000 shares of Class A Common Stock and up to 1,800,000,000 shares of Class B Common Stock. Prior to the IPO, the Company amended and restated its Certificate of Incorporation on April 20, 2018 to authorize 320,000,000 shares of Class A Common Stock and 600,000,000 shares of Class B Common Stock. Upon the closing of the IPO, the rights of the holders of Class A Common Stock and Class B Common Stock are identical, except with respect to voting and conversion rights. Each share of Class B Common Stock is entitled to one vote per share, while each share of Class A Common Stock is entitled to 29 votes per share and is convertible at any time into one share of Class B Common Stock. Class A Common Stock will automatically convert into Class B Common Stock upon certain transfers, and its votes per share will be reduced to 11 in the event none of the Bentleys (Barry J. Bentley, Gregory S. Bentley, Keith A. Bentley, Raymond B. Bentley, and Richard P. Bentley, collectively) serves as a Company director or executive officer. Class A Common Stock also will automatically convert into shares of Class B Common Stock upon the affirmative vote of at least 90 % of the then outstanding shares of Class A Common Stock or such time that the Bentley family (the Bentleys, certain other family members and trusts and other entities controlled by or primarily for the benefit of the Bentleys and their families, collectively) directly or indirectly, own less than 20 % of the issued and outstanding Class B Common Stock on a fully-diluted basis (assuming the conversion of all issued and outstanding Class A Common Stock). Pursuant to the terms of the Company’s amended and restated Certificate of Incorporation in effect prior to the IPO, each share of Class B Common Stock had the same rights and privileges as each share of Class A Common Stock, except that the holders of outstanding shares of Class B Common Stock did not have any right to vote on, or consent with respect to, any matters to be voted on or consented to by the stockholders of the Company except as was required by law, and the shares of Class B Common Stock were not included in determining the number of shares voting or entitled to vote on any such matters. Common Stock Issuances, Sales, and Repurchases On June 17, 2021, the Company issued 3,141,342 shares of the Company’s Class B Common Stock pursuant to the acquisition of Seequent (see Note 4). The Company has a Class B Common Stock Purchase Agreement with a strategic investor (the “Common Stock Purchase Agreement”), pursuant to which the investor could acquire in a series of transactions up to $ 250,000 of the Company’s Class B Common Stock at the then prevailing fair market value, either directly from selling stockholders, in which case the Company would act as pass through agent, or by funding the Company’s repurchase and subsequent sale to the investor of shares acquired by the Company from existing Company stockholders. The Company had the right to retain a portion of the shares that would otherwise be sold to the investor. As of December 31, 2020, the investor reached the maximum purchase amount of $ 250,000 . The Common Stock Purchase Agreement grants to the strategic investor certain informational and protective rights, including, for so long as the Company remains party to a long-term strategic collaboration agreement with the investor the right to participate in any sale process the Company may undertake. The Common Stock Purchase Agreement expires in 2030. F-44 During the year ended December 31, 2020, the investor purchased 4,574,399 shares under the Common Stock Purchase Agreement, with 3,769,346 of such shares having been repurchased by the Company and re-sold to the investor for consideration of $ 58,349 and 805,053 shares acquired directly by the investor for consideration of $ 12,462 . During the year ended December 31, 2019, the investor purchased 791,873 shares under the Common Stock Purchase Agreement, with 622,873 of such shares having been repurchased by the Company and re-sold to the investor for consideration of $ 4,510 and 169,000 shares acquired directly by the investor for consideration of $ 1,224 . For the year ended December 31, 2021, the Company issued 4,587,053 shares of Class B Common Stock to colleagues who exercised their stock options, net of 1,066,498 shares withheld at exercise to pay for the cost of the stock options, as well as for $ 37,785 of applicable income tax withholdings. The Company received $ 5,605 in proceeds from the exercise of stock options. For the year ended December 31, 2020, the Company issued 4,060,839 shares of Class B Common Stock to colleagues who exercised their stock options, net of 1,425,352 shares withheld at exercise to pay for the cost of the stock options, as well as for $ 4,755 of applicable income tax withholdings. The Company received $ 9,128 in proceeds from the exercise of stock options. For the year ended December 31, 2020, the Company paid $ 1,454 for 128,007 shares sold back to the Company upon exercise of the Put and Call provisions under its applicable equity incentive plans (see Note 15). For the year ended December 31, 2019, the Company issued 3,214,542 shares of Class B Common Stock to colleagues who exercised their stock options, net of 1,516,616 shares withheld at exercise to pay for the cost of the stock options, as well as for $ 2,324 of applicable income tax withholdings. The Company received $ 3,627 in proceeds from the exercise of stock options. For the year ended December 31, 2019, the Company paid $ 8,838 for 1,126,747 shares sold back to the Company upon exercise of the Put and Call provisions under its applicable equity incentive plans (see Note 15). Upon the completion of the IPO, the Put and Call provisions of the Company’s Amended and Restated 2015 Equity Incentive Plan (the “2015 Equity Incentive Plan”) terminated automatically. For the year ended December 31, 2021, the Company issued 238,755 shares of Class B Common Stock in connection with Bonus Plan incentive compensation, net of shares withheld. Of the total 407,473 shares awarded, 168,718 shares were sold back to the Company to pay for applicable income tax withholdings of $ 8,739 . For the years ended December 31, 2021, 2020, and 2019, the Company issued 2,378,645 , 3,081,607 , and 2,322,983 shares of Class B Common Stock to DCP participants in connection with distributions from the plan. The distribution in shares for the year ended December 31, 2021 totaled 3,820,099 shares of which 1,441,454 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $ 69,007 . The distribution in shares for the year ended December 31, 2020 totaled 3,352,931 shares of which 271,324 shares were sold back to the Company to pay for the cost of applicable income tax withholding of $ 4,625 . The distribution in shares for the year ended December 31, 2019 totaled 3,082,607 shares of which 759,624 shares were sold back to the Company to pay for the cost of applicable income tax withholding of $ 5,609 . For the year ended December 31, 2021, the Company did no t repurchase shares from its profit‑sharing plan. The Company repurchased 549,834 and 318,203 shares from its profit‑sharing plan for $ 6,970 and $ 2,417 for the years ended December 31, 2020 and 2019, respectively. F-45 Dividends The Company declared cash dividends during the periods presented as follows: Dividend Per Share Amount 2021: Fourth quarter $ 0.030 $ 8,461 Third quarter 0.030 8,485 Second quarter 0.030 8,372 First quarter 0.030 8,219 Total $ 0.120 $ 33,537 2020: Fourth quarter $ 0.030 $ 8,270 Third quarter (1) 1.530 400,311 Second quarter 0.030 7,771 First quarter 0.030 7,666 Total $ 1.620 $ 424,018 2019: Fourth quarter $ 0.025 $ 6,367 Third quarter 0.025 6,380 Second quarter 0.025 6,375 First quarter 0.025 6,268 Total $ 0.100 $ 25,390 (1) As discussed in Note 1, on August 28, 2020, the Company’s board of directors declared a Special Dividend of $ 1.50 per share of the Company’s common stock ($ 392,489 in the aggregate). Global Employee Stock Purchase Plan Effective September 22, 2020, the Company’s board of directors and its stockholders adopted and approved the Bentley Systems, Incorporated Global Employee Stock Purchase Plan (the “ESPP”). The ESPP provides eligible colleagues of the Company with an opportunity to contribute up to 15 % of their eligible compensation toward the purchase of the Company’s Class B Common Stock at a discounted price, up to a maximum of $ 25 per year and subject to any other plan limitations. The ESPP has 25,000,000 shares of Class B Common Stock reserved for issuance. The ESPP has been implemented by means of consecutive offering periods, with the first offering period commencing on the first trading day on or after January 1, 2021 and ending on the last trading day on or before June 30, 2021. Unless otherwise determined by the board of directors, offering periods will run from January 1st (or the first trading day thereafter) through June 30th (or the first trading day prior to such date), and from July 1st (or the first trading day thereafter) through December 31st (or the first trading day prior to such date). The purchase price per share at which shares of Class B Common Stock are sold in an offering period under the ESPP will be equal to the lesser of 85 % of the fair market value of a share of Class B Common Stock (i) on the first trading day of the offering period, or (ii) on the purchase date (i.e., the last trading day of the purchase period). During the year ended December 31, 2021, colleagues who elected to participate in the ESPP purchased a total of 104,716 shares of Class B Common Stock, net of shares withheld, resulting in cash proceeds to the Company of $ 3,846 . Of the total 111,486 shares purchased, 6,770 shares were sold back to the Company to pay for applicable income tax withholdings of $ 438 . During the year ended December 31, 2020, no shares were issued under the ESPP. As of December 31, 2021, $ 4,818 of ESPP withholding via colleague payroll deduction were recorded in Accruals and other current liabilities in the consolidated balance sheet. As of December 31, 2020, there was no ESPP withholding via colleague payroll deduction. F-46 Note 14: Accumulated Other Comprehensive Loss Accumulated other comprehensive loss consists of the following: Foreign Actuarial (Loss) Currency Gain on Translation Retirement Plan Total Balance, December 31, 2018 $ ( 28,867 ) $ ( 547 ) $ ( 29,414 ) Other comprehensive income (loss), before taxes 5,959 ( 675 ) 5,284 Tax benefit — 203 203 Other comprehensive income (loss), net of taxes 5,959 ( 472 ) 5,487 Balance, December 31, 2019 ( 22,908 ) ( 1,019 ) ( 23,927 ) Other comprehensive (loss) income, before taxes ( 2,311 ) 6 ( 2,305 ) Tax expense — ( 1 ) ( 1 ) Other comprehensive (loss) income, net of taxes ( 2,311 ) 5 ( 2,306 ) Balance, December 31, 2020 ( 25,219 ) ( 1,014 ) ( 26,233 ) Other comprehensive (loss) income, before taxes ( 65,648 ) 151 ( 65,497 ) Tax expense — ( 44 ) ( 44 ) Other comprehensive (loss) income, net of taxes ( 65,648 ) 107 ( 65,541 ) Balance, December 31, 2021 $ ( 90,867 ) $ ( 907 ) $ ( 91,774 ) Note 15: Equity Awards and Instruments Effective September 22, 2020, the Company adopted and approved the 2020 Incentive Award Plan. The 2020 Incentive Award Plan provides for the granting of stock, stock options, restricted stock, RSUs, and other stock‑based or performance‑based awards to certain directors, officers, colleagues, consultants, and advisors of the Company. The 2020 Incentive Award Plan provides that the total number of shares of Class B Common Stock that may be issued under the 2020 Incentive Award Plan is 25,000,000 (the “Absolute Share Limit”). Effective December 31, 2021, the board of directors amended the 2020 Incentive Award Plan to eliminate a provision that automatically increased the Absolute Share Limit on the first day of each fiscal year in an amount equal to the lower of 1 % of the total number of shares of Class B Common Stock outstanding on the last day of the immediately preceding fiscal year and a lower number of shares of Class B Common Stock as determined by the Company’s board of directors. For fiscal year 2021, the board of directors determined that the increase to the Absolute Share Limit would be set at zero. The 2020 Incentive Award Plan terminates in September 2030. Equity awards that are expired, canceled, forfeited, or terminated for any reason will be available for future grant under the 2020 Incentive Award Plan. As of December 31, 2021, equity awards available for future grants under the 2020 Incentive Award Plan were 24,073,298 . The Company also has equity awards outstanding under its 2015 Equity Incentive Plan, which provided for the granting of awards in the form of stock options, stock appreciation rights, dividend equivalent rights, restricted stock, RSUs, and stock grants. The 2015 Equity Incentive Plan had 50,000,000 shares of Class B Common Stock reserved for issuance and terminates in November 2024. Following the completion of the IPO, no further awards may be granted under the 2015 Equity Incentive Plan. F-47 Equity Awards Stock Options Stock options generally vest ratably on each of the first four anniversaries of the grant date. Prior to the IPO, stock options granted under the 2015 Equity Incentive Plan included Put and Call provisions that allowed colleagues who have exercised an option to sell all or part of their shares acquired upon such exercise to the Company at the fair market value at the time of the sale. The exercise period for the Put right began on the second day after the six‑month anniversary of the date the option was exercised and ended after an additional 30 days. The Call right provision allowed the Company to purchase all or a part of the shares acquired by a colleague upon exercise of an option, at the fair market value at the time of such purchase. The Company could exercise the Call right at any time within seven months of the later of i) the optionee’s termination of service with the Company, or ii) the optionee’s (or his or her beneficiary’s) exercise of such option after a termination of service. These Put and Call rights terminated upon the completion of the IPO. In accordance with the terms of the 2015 Equity Incentive Plan, in connection with the payment of the Special Dividend of $ 1.50 per share of the Company’s common stock on September 2, 2020, the Company equitably reduced the exercise price of each outstanding stock option granted under the 2015 Equity Incentive Plan by $ 1.50 , but not lower than $ 0.01 (see Note 1). Stock Grants Under the equity incentive plans, the Company may grant unrestricted, fully vested shares of Class B Common Stock to eligible colleagues. Prior to the IPO, any such shares awarded had Put and Call rights similar to those described above with respect to stock options, which terminated upon the completion of the IPO . Restricted Stock and RSUs Under the equity incentive plans, the Company may grant both time‑based and performance‑based shares of restricted Class B Common Stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business profitability and growth targets, which include growth in annualized recurring revenues, as well as actual bookings for perpetual licenses and non‑recurring services, and certain non‑financial performance targets. Performance targets are set for annual performance periods. Shares of restricted stock have voting rights and, subject to the terms of the award agreements, the time‑based restricted stock awards generally accrue declared dividends which are paid upon vesting. RSUs, which may be cash or share‑settled depending on the award, do not have voting rights, but, subject to the terms of the award agreements, generally accrue declared dividends which are paid upon vesting. Beginning with the April 2021 grant, time‑based RSUs have dividend equivalent rights and do not accrue cash dividends. Certain historical RSUs granted in 2016 under the Company’s 2015 Equity Incentive Plan have dividend equivalent rights and do not accrue cash dividends. Recipients of the Company’s outstanding performance‑based restricted stock awards and RSUs are paid dividends prior to vesting. F-48 Stock-Based Compensation Expense Total stock‑based compensation expense was as follows: Year Ended December 31, 2021 2020 2019 Bonus Plan expense (see Note 11) $ 23,121 $ 6,524 $ — Restricted stock and RSUs expense (1) 19,917 4,248 1,749 Stock option expense 3,271 6,858 6,342 ESPP expense (see Note 13) 2,118 — — Stock grants expense 445 319 — DCP elective participant deferrals expense (2) (see Note 12) 173 — — IPO vested restricted stock and RSU expense — 15,102 — Total stock-based compensation expense (3) $ 49,045 $ 33,051 $ 8,091 (1) Includes acquisition‑related shares (see Note 4). (2) DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan. (3) As of December 31, 2021 and 2020, $ 6,749 and $ 6,835 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively. Total stock‑based compensation expense is included in the consolidated statements of operations as follows: Year Ended December 31, 2021 2020 2019 Cost of subscriptions and licenses $ 1,442 $ 960 $ 115 Cost of services 1,257 2,939 522 Research and development 19,740 12,105 3,107 Selling and marketing 5,980 6,692 2,210 General and administrative 20,626 10,355 2,137 Total stock-based compensation expense $ 49,045 $ 33,051 $ 8,091 Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. The Company accounts for forfeitures of equity awards as those forfeitures occur. The fair value of the common stock during periods prior to the IPO was determined by the board of directors at each award grant date based upon a variety of factors, including the results obtained from independent third‑party valuations, the Company’s financial position, and historical financial performance. F-49 Stock Options The fair value of each stock option award was estimated on the date of grant using the Black‑Scholes option pricing model. The determination of the fair value of share‑based payment awards using an option pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables, which are estimated as follows: Expected volatility . The expected stock price volatility for the Company’s common stock was estimated by using the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock share price becomes available. Expected dividend yield . The expected dividend yield is calculated by dividing the Company’s annual dividend, based on the most recent quarterly dividend rate, by the Company’s common stock price (as described above) on the grant date. Risk‑free interest rate . The risk‑free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the stock options at the time of grant. Expected term . The expected term represents the period that the Company’s stock‑based awards are expected to be outstanding. The expected term is based on the simplified method, which represents the average period from vesting to the expiration of the award. The following weighted average assumptions were used in the Black‑Scholes option pricing model to estimate the fair values of stock options granted during the years ended December 31, 2020 and 2019. The Company did not grant stock options during the year ended December 31, 2021. Year Ended December 31, 2020 2019 Expected volatility 31.04 % 29.57 % Expected dividend yield 1.11 % 1.38 % Risk-free interest rate 1.31 % 2.48 % Expected term (in years) 3.75 3.75 Weighted average grant date fair value of stock options issued $ 2.49 $ 1.66 The following is a summary of stock option activity and related information under the Company’s applicable equity incentive plans: Weighted Weighted Average Average Remaining Aggregate Stock Exercise Price Contractual Intrinsic Options Per Share Life (in years) Value Outstanding, December 31, 2020 12,842,226 $ 4.87 Exercised ( 5,653,551 ) 4.36 Forfeited ( 270,750 ) 5.56 Outstanding, December 31, 2021 6,917,925 $ 5.26 1.57 $ 297,933 Exercisable, December 31, 2021 3,837,800 $ 5.00 1.26 $ 166,305 F-50 For the years ended December 31, 2021, 2020, and 2019, the Company received cash proceeds of $ 5,605 , $ 9,128 , and $ 3,612 , respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the years ended December 31, 2021, 2020, and 2019 was $ 270,614 , $ 72,275 , and $ 22,914 , respectively. As of December 31, 2021, there was $ 2,668 of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of approximately 0.9 years. Acquisition Options — In addition to stock options granted under the Company’s equity incentive plans, in connection with an acquisition completed in March 2018, the Company issued to certain selling shareholder entities options to acquire an aggregate of up to 900,000 shares of Class B Common Stock. The options have a five‑year term, are exercisable on the fourth anniversary of the closing of the acquisition, and have an initial exercise price of $ 6.805 per share. The options had a four‑year service condition, which was incorporated into the Company’s Call rights. The exercise price of the options is subject to a cap and collar adjustment mechanism that automatically reduces (but not to less than $ 0.01 ) or increases the exercise price based on the difference between the exercise price and the fair market value of the Company’s Class B Common Stock on the exercise date. The fair value of the awards was estimated on the date of grant using the Black‑Scholes option pricing model. The grant date fair value of each option was $ 3.44 . Any shares of Class B Common Stock acquired upon exercise of the options were generally entitled to the Put and Call rights summarized above under “Stock Options,” and the options contain customary adjustment provisions in case of stock splits, stock dividends, or other corporate transactions. Upon the completion of the IPO, the Put and Call provisions, as well as the incorporated service condition, of the Company’s acquisition options terminated automatically and as such, the Company accelerated $ 1,548 of previously unrecognized stock‑based compensation associated with these options for the year ended December 31, 2020. The Company recorded a total of $ 2,012 of stock‑based compensation expense associated with these options for the year ended December 31, 2020. As of December 31, 2021, all options to acquire 900,000 shares remain outstanding. As of December 31, 2021, these options are non‑exercisable and have an aggregate intrinsic value of $ 7,992 . F-51 Restricted Stock and RSUs The fair value of restricted stock and RSUs is determined by the product of the number of shares granted and the Company’s common stock price (as described above) on the grant date. The following is a summary of unvested restricted stock and RSU activity and related information under the Company’s applicable equity incentive plans: Time- Performance- Based Based Time- Performance- Weighted Weighted Total Based Based Average Average Restricted Restricted Restricted Grant Date Grant Date Stock Stock Stock Fair Value Fair Value and RSUs and RSUs and RSUs Per Share Per Share Unvested, December 31, 2020 1,423,715 1,263,193 160,522 (3) $ 16.38 $ 16.62 Granted 894,595 (1) 794,787 99,808 (4) 52.80 49.93 Vested ( 399,893 ) ( 364,963 ) ( 34,930 ) (3) 21.95 17.53 Forfeited ( 209,872 ) ( 81,155 ) ( 128,717 ) 22.00 17.18 Unvested, December 31, 2021 1,708,545 (2) 1,611,862 96,683 (5) $ 32.81 $ 49.93 (1) For the year ended December 31, 2021, the Company granted RSUs only. (2) Includes 48,927 RSUs which are expected to be settled in cash. (3) Relates to the 2020 annual performance period. Total stock‑based compensation expense associated with these awards was fully recognized as of December 31, 2020. (4) Relates to the 2021 annual performance period. (5) Relates to the 2021 annual performance period. Total stock‑based compensation expense associated with these awards was fully recognized as of December 31, 2021. In 2016, the Company granted RSUs subject to performance‑based vesting as determined by the achievement of certain business growth targets. Certain colleagues elected to defer delivery of such shares upon vesting. During the years ended December 31, 2021 and 2020, 10,864 and 9,831 shares, respectively, were delivered to colleagues, and 45 and 3,030 additional shares, respectively, were earned as a result of dividends. As of December 31, 2021 and 2020, 20,221 and 31,040 shares, respectively, of these vested and deferred RSUs remained outstanding. The weighted average grant date fair values of restricted stock and RSUs granted were $ 52.48 , $ 16.03 , and $ 7.24 , for the years ended December 31, 2021, 2020, and 2019, respectively. For the years ended December 31, 2021, 2020, and 2019, restricted stock and RSUs were issued net of 125,825 , 339,833 , and 54,418 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $ 7,293 , $ 7,951 , and $ 399 , respectively. As of December 31, 2021, there was $ 46,271 of unrecognized compensation expense related to unvested time‑based restricted stock and RSUs, which is expected to be recognized over a weighted average period of approximately 2.0 years. There was no remaining unrecognized compensation expense related to unvested performance‑based restricted stock and RSUs. F-52 Stock Grants The fair value of stock grants is determined by the product of the number of fully vested Class B Common Stock granted and the Company’s common stock price (as described above) on the grant date. The total expense related to stock grants is recognized on the grant date as the issued award is fully vested. For the years ended December 31, 2021 and 2020, the Company granted 7,824 and 21,956 fully vested shares of Class B Common Stock, respectively, with a fair value of $ 450 and $ 319 , respectively. The Company did no t grant fully vested shares of Class B Common Stock during 2019. ESPP In accordance with the guidance in FASB ASC Topic 718-50, Compensation — Stock Compensation - Employee Share Purchase Plans , the ability to purchase shares of the Company’s Class B Common Stock for 85 % of the lower of the price of the first day of the offering period or the last day of the offering period (i.e., the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance. The fair value of each purchase right under the ESPP was calculated as the sum of its components, which includes the discount, a six‑month call option, and a six‑month put option. The call and put options were valued using the Black‑Scholes option pricing model. Stock‑based compensation expense is recognized ratably over the respective offering period. Note 16: Income Taxes The components of income before income taxes consist of the following: Year Ended December 31, 2021 2020 2019 Domestic $ ( 14,544 ) $ 61,470 $ 61,691 International 107,873 106,150 66,418 Income before income taxes $ 93,329 $ 167,620 $ 128,109 The (provision) benefit for income taxes consists of the following: Year Ended December 31, 2021 2020 2019 Current: Federal $ 770 $ ( 11,094 ) $ ( 7,696 ) State 163 ( 3,597 ) ( 2,486 ) Foreign ( 17,230 ) ( 7,688 ) ( 12,824 ) ( 16,297 ) ( 22,379 ) ( 23,006 ) Deferred: Federal 15,182 ( 5,194 ) ( 2,389 ) State 3,660 ( 1,272 ) ( 412 ) Foreign 903 ( 9,780 ) 2,069 19,745 ( 16,246 ) ( 732 ) Benefit (provision) for income taxes $ 3,448 $ ( 38,625 ) $ ( 23,738 ) F-53 A reconciliation of the U.S. statutory federal income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2021 2020 2019 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit ( 2.7 ) 2.9 2.0 Stock-based compensation ( 52.5 ) ( 5.2 ) ( 2.3 ) Non-deductible officer compensation 36.6 4.6 — Tax credits ( 6.1 ) ( 2.1 ) ( 3.6 ) Transaction costs 3.9 — — Foreign tax rate differential ( 1.1 ) ( 2.0 ) ( 2.8 ) Permanent book/tax differences ( 1.0 ) ( 0.6 ) 0.2 Income tax reserves 0.1 ( 0.5 ) 0.9 Expenses associated with IPO — 3.3 — Net tax on foreign earnings (GILTI/FDII/FTC) — 0.5 6.1 Other ( 1.9 ) 1.1 ( 3.0 ) Effective income tax rate ( 3.7 ) % 23.0 % 18.5 % The following is a summary of the significant components of the Company’s deferred tax assets and liabilities: December 31, 2021 2020 Deferred tax assets: Accrued compensation $ 39,125 $ 31,580 Net operating loss (“NOL”) and credit carryforwards 28,698 7,573 Intangible assets 19,942 283 Capped call options and 163(j) interest disallowance 15,682 — Lease liabilities 10,540 10,466 Other accruals not currently deductible 2,006 346 Allowance for doubtful accounts 918 382 Other comprehensive income 354 431 Other 1,497 138 Total deferred tax assets 118,762 51,199 Less: Valuation allowance ( 1,899 ) ( 1,207 ) Net deferred tax assets 116,863 49,992 Deferred tax liabilities: Intangible assets including goodwill ( 90,258 ) — Operating lease right-of-use assets ( 10,196 ) ( 10,070 ) Deferred revenues ( 3,421 ) ( 7,257 ) Prepaid expenses ( 2,739 ) ( 2,301 ) Unrealized gains and losses ( 2,387 ) — Property and equipment ( 1,500 ) ( 1,989 ) Total deferred tax liabilities ( 110,501 ) ( 21,617 ) Net deferred tax assets (liabilities) $ 6,362 $ 28,375 F-54 As of December 31, 2021, the U.S. federal NOL carryforwards with a future benefit of $ 8,518 can be carried forward indefinitely and the remaining U.S. federal NOL of $ 19 expires in 2037. The U.S. federal credit carryforward of $ 2,974 expires in 2041. The foreign tax credit carryforward of $ 224 expires in 2031. The Company’s state NOL carryforwards and state credit carryforwards with a future benefit of $ 1,934 expire in 2026 through 2041. The remaining state NOL carryforward of $ 208 have indefinite expirations. In addition, the Company has foreign NOL carryforwards with a future benefit of $ 12,788 (net of a $ 67 valuation allowance), which predominately have indefinite expirations. The Canadian credit carryforward of $ 2,033 expires in 2030 through 2040. Some transactions can change the aggregate ownership of certain stockholders, which could cause a shift in the ownership of the Company, which pursuant to Internal Revenue Code (“IRC”) Section 382 could then limit on an annual basis the Company’s ability to utilize its U.S. federal NOL carryforwards (and possibly its state NOL carryforwards as well). If that occurred, the Company’s NOL carryforwards would continue to be available to offset taxable income and tax liabilities in future years (until such NOL carryforwards are either used or expire) subject to any IRC Section 382 annual limitation. The Company regularly assesses the need for a valuation allowance against its deferred tax assets by considering both positive and negative evidence related to whether it is more likely than not that the deferred tax assets will be realized. In evaluating the need for a valuation allowance, the Company considers a cumulative loss in recent years as a significant piece of negative evidence. As of December 31, 2021 and 2020, the Company has recorded a valuation allowance against its net deferred tax assets of $ 1,899 and $ 1,207 , respectively. The valuation allowance is principally related to the losses from a joint venture for which the Company has determined that realization is not more likely than not. On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “JOBS Act”) was enacted. The JOBS Act requires certain Global Intangible Low‑Taxed Income (“GILTI”) earned by a controlled foreign corporation (“CFC”) to be included in the gross income of the CFC’s U.S. shareholder. The Company has elected the “period cost method” and treats taxes due on future U.S. inclusions in taxable income related to GILTI as a current‑period expense when incurred. The JOBS Act allows a U.S. corporation a deduction equal to a certain percentage of its foreign‑derived intangible income (“FDII”). The Company estimated the impact of the GILTI tax and FDII deduction in determining its 2019 annual effective tax rate that is reflected in its provision for income taxes for the year ended December 31, 2019. As of December 31, 2021, the Company has accumulated undistributed earnings generated by its foreign subsidiaries of approximately $ 440,838 , of which $ 272,242 was subject to the one‑time transition tax on foreign earnings required by the JOBS Act and the tax on GILTI. Subsequent to December 31, 2021, the Company repatriated $ 100,000 and intends to repatriate an additional $ 50,000 of undistributed previously taxed earnings generated by its foreign subsidiaries as of December 31, 2021, to the U.S. The repatriation will be used to fund a portion of the acquisition of Power Line Systems (see Note 4). The Company expects future U.S. cash generation will be sufficient to meet future U.S. cash needs. The Company intends to indefinitely reinvest the remaining undistributed earnings, as well as future earnings from its foreign subsidiaries, in order to fund its international operations and acquisitions. The Company has not provided for any additional outside basis difference inherent in its foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. In accordance with the indefinite reversal criteria, the foreign currency translation adjustments recorded in other comprehensive (loss) income related to the foreign currency translations have not been tax effected. F-55 The following is a reconciliation of the total amounts of unrecognized tax benefits: Year Ended December 31, 2021 2020 2019 Unrecognized tax benefit, beginning of year $ 1,223 $ 1,763 $ 638 Tax positions related to prior years: Additions 160 1,436 1,222 Reductions ( 42 ) ( 1,723 ) ( 86 ) Lapse of statute of limitations ( 10 ) ( 253 ) ( 11 ) Unrecognized tax benefit, end of year $ 1,331 $ 1,223 $ 1,763 The amount of unrecognized tax benefits as of December 31, 2021, 2020, and 2019 was $ 1,331 , $ 1,223 , and $ 1,763 , respectively, of which $ 1,273 , $ 1,175 , and $ 1,733 , respectively, would impact the Company’s effective tax rate if recognized. Interest expense and penalties related to income taxes resulted in an increase (decrease) of income tax expense of $ 101 , $( 20 ), and $ 101 for the year ended December 31, 2021, 2020, and 2019, respectively. Interest expense and penalties are included in Benefit (provision) for income taxes in the consolidated statements of operations. Accrued interest and penalties as of December 31, 2021 and 2020 totaled $ 373 and $ 272 , respectively. The Company records the amount of uncertain taxes expected to be paid in the next 12 months as a current liability and records the remaining amount in Other liabilities in the consolidated balance sheets. The Company is subject to income tax in the U.S., as well as numerous state and foreign jurisdictions. The Company’s U.S. consolidated federal income tax returns for years 2018 through 2021 remain subject to examination by the Internal Revenue Service. The Company is currently under audit in the U.K. for 2018. The Company’s 2018 through 2021 tax years remain subject to examination by the Irish Revenue Commissioners for Irish tax purposes. In addition, the Company is under audit in various other foreign taxing jurisdictions that are not material to the consolidated financial statements. Note 17: Fair Value of Financial Instruments Derivatives Not Designated As Hedging Instrument On March 31, 2020, the Company entered into an interest rate swap with a notional amount of $ 200,000 and a ten‑year term to reduce the interest rate risk associated with the Company’s Credit Facility. The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability in the consolidated balance sheets and carries the derivative at fair value. The following is a summary of the interest rate swap activity: Year Ended December 31, Recognized in Consolidated 2021 2020 Statements of Operations Interest rate swap: Gain from change in fair value $ 9,770 $ 347 Other income (expense), net Payments 1,270 696 Interest expense, net F-56 Fair Value The Company applies the provisions of FASB ASC Topic 820, Fair Value Measurement , for fair value measurements of financial assets and financial liabilities and for fair value measurements of non‑financial items that are recognized or disclosed at fair value in the consolidated financial statements. The Company’s financial instruments include cash equivalents, account receivables, certain other assets, accounts payable, accruals, certain other current and long‑term liabilities, and long‑term debt. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments as of December 31, 2021 and 2020: Current assets and current liabilities — In general, the carrying amounts reported on the Company’s consolidated balance sheets for current assets and current liabilities approximate their fair values due to the short‑term nature of those instruments. Acquisition contingent consideration — The fair value of these liabilities is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. Interest rate swap — The fair value of the Company’s interest rate swap is measured based on the implied forward rates from the U.S. Dollar one‑month LIBOR yield curve and are classified as Level 2 within the fair value hierarchy. Long-term debt — The fair value of the Company’s borrowings under its Credit Facility approximated its carrying value based upon discounted cash flows at current market rates for instruments with similar remaining terms. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy. The estimated fair value of the 2026 Notes and 2027 Notes was $ 720,284 and $ 531,915 , respectively, as of December 31, 2021 based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop estimates of fair values. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold, or settled. Deferred compensation plan liabilities — The fair value of deferred compensation plan liabilities, including the liability classified phantom investments in the DCP, are marked to market at the end of each reporting period. A financial asset or liability classification is determined based on the lowest level input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. F-57 The following tables provide the financial assets and financial liabilities carried at fair value measured on a recurring basis: December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 21 $ — $ — $ 21 Interest rate swap (2) — 10,117 — 10,117 Total assets $ 21 $ 10,117 $ — $ 10,138 Liabilities: Acquisition contingent consideration (3) $ — $ — $ 6,613 $ 6,613 Deferred compensation plan liabilities (4) 102,199 — — 102,199 Cash-settled equity awards (5) 353 — — 353 Total liabilities $ 102,552 $ — $ 6,613 $ 109,165 December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 34,696 $ — $ — $ 34,696 Interest rate swap (2) — 347 — 347 Total assets $ 34,696 $ 347 $ — $ 35,043 Liabilities: Acquisition contingent consideration (3) $ — $ — $ 4,299 $ 4,299 Deferred compensation plan liabilities (4) 2,591 — — 2,591 Cash-settled equity awards (5) 195 — — 195 Total liabilities $ 2,786 $ — $ 4,299 $ 7,085 (1) Included in Cash and cash equivalents in the consolidated balance sheets. (2) Included in Other assets in the consolidated balance sheets. (3) Included in Other liabilities , except for current liabilities of $ 5,382 and $ 2,884 as of December 31, 2021 and 2020, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets. Acquisition contingent consideration liability is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. (4) Included in Deferred compensation plan liabilities , except for current liabilities of $ 7,309 and $ 169 as of December 31, 2021 and 2020, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets. (5) Included in Accruals and other current liabilities in the consolidated balance sheets. F-58 The following table is a reconciliation of the changes in fair value of the Company’s financial liabilities which have been classified as Level 3 in the fair value hierarchy: Year Ended December 31, 2021 2020 Balance, beginning of year $ 4,299 $ 6,599 Payments ( 2,371 ) ( 3,425 ) Addition 4,544 2,380 Change in fair value 294 ( 1,340 ) Foreign currency translation adjustments ( 153 ) 85 Balance, end of period $ 6,613 $ 4,299 The Company did not have any transfers between levels within the fair value hierarchy. Note 18: Commitments and Contingencies Purchase Commitment — In the normal course of business, the Company enters into various purchase commitments for goods and services. As of December 31, 2021, the non‑cancelable future cash purchase commitment for services related to the cloud provisioning of the Company’s software solutions was $ 50,329 through May 2023. The Company expects to fully consume its contractual commitment in the ordinary course of operations. Operating Leases — The Company leases certain office facilities, office equipment, and automobiles under operating leases having initial or remaining non‑cancelable terms in excess of one year (see Note 8). Litigation — From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcome of such actions is not expected to have a material adverse effect on the Company’s future financial position, results of operations, or cash flows. Note 19: Geographic Data Revenues by geographic area are presented in Note 3. The following table presents the Company’s long‑lived assets (other than goodwill), net of depreciation and amortization by geographic region (see Notes 5, 6, and 8): December 31, 2021 2020 Long-lived assets: Americas (1) $ 99,500 $ 50,306 EMEA 44,730 56,322 APAC 184,245 13,541 Total long-lived assets $ 328,475 $ 120,169 (1) Americas includes the U.S., Canada, and Latin America (including the Caribbean). F-59 Note 20: Interest Expense, Net Interest expense, net is comprised of the following: Year Ended December 31, 2021 2020 2019 Interest expense (see Note 10) $ ( 12,797 ) $ ( 7,913 ) $ ( 9,731 ) Interest income 306 437 1,532 Interest expense, net $ ( 12,491 ) $ ( 7,476 ) $ ( 8,199 ) Note 21: Other Income (Expense), Net Other income (expense), net is comprised of the following: Year Ended December 31, 2021 2020 2019 Foreign exchange gain (loss) (1) $ 827 $ 22,919 $ ( 5,591 ) Other income, net (2) 10,404 2,027 34 Total other income (expense), net $ 11,231 $ 24,946 $ ( 5,557 ) (1) Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived primarily from U.S. Dollar denominated cash and cash equivalents, account receivables, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions denominated in U.S. Dollars resulted in unrealized foreign exchange (losses) gains of $( 779 ), $ 22,310 , and $( 5,270 ) for the years ended December 31, 2021, 2020, and 2019, respectively. (2) For the year ended December 31, 2021, other income, net includes a gain from the change in fair value of the Company’s interest rate swap of $ 9,770 (see Note 17). For the year ended December 31, 2020, other income, net includes a gain from the change in fair value of the Company’s interest rate swap of $ 347 (see Note 17) and a gain from the change in fair value of acquisition contingent consideration of $ 1,340 . F-60 Note 22: Realignment Costs During the third quarter of 2020, the Company initiated a strategic realignment program in order to better serve the Company’s users and to better align resources with the evolving needs of the business (the “2020 Program”). The Company incurred realignment costs of $ 10,046 for the year ended December 31, 2020 related to the aforementioned program, which represents termination benefits for colleagues whose positions were eliminated. The 2020 Program activities have been broadly implemented across the Company’s various businesses with substantially all actions completed in mid‑2021. Accruals and other current liabilities in the consolidated balance sheets included amounts related to the realignment activities as follows: Balance, December 31, 2019 $ 491 Realignment costs 10,022 Payments ( 4,542 ) Adjustments (1) 269 Balance, December 31, 2020 6,240 Payments ( 5,814 ) Adjustments (1) ( 291 ) Balance, December 31, 2021 $ 135 (1) Adjustments includes foreign currency translation. Realignment costs by expense classification were as follows: Year Ended December 31, 2020 Cost of revenues: Cost of subscriptions and licenses $ 42 Cost of services 1,422 Total cost of revenues 1,464 Operating expenses: Research and development 848 Selling and marketing 5,945 General and administrative 1,765 Total operating expenses 8,558 Total realignment costs $ 10,022 F-61 Note 23: Net Income Per Share The Company issues certain performance-based RSUs determined to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of the Company’s declaration of a dividend for common shares. As of December 31, 2021, 2020, and 2019, there were 96,683 , 149,754 , and 321,126 participating securities outstanding, respectively. Undistributed net income allocated to participating securities are subtracted from net income in determining basic net income attributable to common stockholders. Basic net income per share is computed by dividing basic net income attributable to common stockholders by the weighted average number of shares, inclusive of undistributed shares held in the DCP as phantom shares of the Company’s Class B Common Stock. For the Company’s diluted net income per share numerator, interest expense, net of tax, attributable to the conversion of the convertible senior notes is added back to basic net income attributable to common stockholders. For the Company’s diluted net income per share denominator, the basic weighted average number of shares is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans and ESPP, and by the dilutive effect of the assumed conversion of the convertible senior notes. Diluted net income per share attributable to common stockholders is computed by dividing diluted net income attributable to common stockholders by the weighted average number of fully diluted common shares. Except with respect to voting and conversion, the rights of the holders of the Company’s Class A Common Stock and the Company’s Class B Common Stock are identical. Each class of shares has the same rights to dividends and allocation of income (loss) and, therefore, net income per share would not differ under the two‑class method. The details of basic and diluted net income per share are as follows : Year Ended December 31, 2021 2020 2019 Numerator: Net income $ 93,192 $ 126,521 $ 103,096 Less: Net income attributable to participating securities ( 9 ) ( 234 ) ( 8 ) Net income attributable to Class A and Class B common stockholders, basic 93,183 126,287 103,088 Add: Interest expense, net of tax, attributable to assumed conversion of convertible senior notes — — — Net income attributable to Class A and Class B common stockholders, diluted $ 93,183 $ 126,287 $ 103,088 Denominator: Weighted average shares, basic 305,711,345 289,863,272 284,625,642 Dilutive effect of stock options, restricted stock, and RSUs 8,791,084 9,507,857 9,171,065 Dilutive effect of ESPP 108,385 — — Dilutive effect of assumed conversion of convertible senior notes — — — Weighted average shares, diluted 314,610,814 299,371,129 293,796,707 Net income per share, basic $ 0.30 $ 0.44 $ 0.36 Net income per share, diluted $ 0.30 $ 0.42 $ 0.35 F-62 The following potential common shares were excluded from the calculation of diluted net income per share attributable to common stockholders because their effect would have been anti‑dilutive for the periods presented: Year Ended December 31, 2021 2020 2019 Stock options, restricted stock, and RSUs 150,017 — — Convertible senior notes 13,474,580 — — Total anti-dilutive securities 13,624,597 — — F-63