Bentley Systems’ Performance for 2011

Bentley Systems CEO Greg Bentley gave Bentley Systems’ second annual Corporate Update in a conference call last week.

“Bentley Systems’ revenue on an historical gap basis grew 10% to a record $523 million,” said Bentley. Asia was a major driver of this growth, increasing to comprise 19% of total revenue from 16% in 2010.

The software subscription business model accounts for 17% of revenues in 2011. The company’s resilient subscription revenues have enabled them to fully recover from the downturn faster than their competitors and software peers with less volatility and with greater visibility into this coming year.

The subscription business model also benefits the user organization that had invested in their future reuse of infrastructure information modeling through Bentley software. The relative lack of volatility in Bentley Systems’ revenues is good for the company’s stability and reliability and that is, along with subscription elimination of cost barriers for technology adoption and improvement, is good for user organizations.

Bentley said he believes this advantage has been proven out by the downtown and now the resumption of their revenue advancement from the prior peak. “For Bentley Systems overall the economic recovery will continue,’ said Bentley. “We are modestly optimistic about a new normal of consistent organic growth.”

2012 has already started stronger during the first quarter to date than did either 2010 or 2009.

AEC and infrastructure has been characterized by steadily increasing utilization rates of infrastructure professionals. While overall building and plant work being primarily private sector funded, continues to advance, similar geospatial work that is largely public funded, remains relatively stagnant in the developed world where Bentley had a predominant footprint.

“So for 2012, Bentley Systems is conservatively budgeting for 6% organic revenue growth approaching our multi-year expectation target for this new normal,” said Bentley. “Among Bentley growth drivers, growing consistently every year and usually in double digits, are ProjectWise, STAAD, Bentley Map, ProSteel and AutoPipe along with the overall domains of structural bridge, and electrical engineering.”

Bentley referenced tracking revenues through the FCC for Autodesk for its architecture, engineering and construction AEC segment

Bentley holds its position as “advancing #2 in revenues and comparing its 2011 $523 million to the total reported by Autodesk for its fiscal year that ended January at $626 million.

“Also in contrast to Autodesk, we have fully invested in direct sales and professional services throughout the world which is primarily why 2/3 of Bentley’s colleagues work outside the U.S.,” noted Bentley. “To augment our direct resources, during 2011 we invested in channel partner initiatives, first to recruit and empower specialist firms for incremental resources in the developed world, to assist in selling and deploying our water and wastewater modeling products in Saudi, and next to resell Bentley offerings to regional versus corporate accounts in developing economies including China. In 2011, 30% of our new license sales were attributed to channel partners.  2011 was a record year for Bentley in both R&D expenditures and we remain committed to reinvesting 20% of revenues and for total investment including acquisitions.

“Our total investment in R&D and acquisitions since the beginning of 2003 exceeds $1 billion and the main financed through internal cash flows.  Along with appealing to our users and shareholders, our predictable subscription business model is attractive to lenders as well, signified by a major commercial milestone to now report.”

Bentley reported that ProjectWise is embracing a hybrid Cloud approach using Microsoft’s Azure platform. The plan is to make ProjectWise more mobile, by employing mobile apps as well as sensors and scanners.

Another important announcement which has garnered great interest from readers in the past has been the status of stock shares that were once held by Intergraph from the days when they owned half of Bentley’s MicroStation flagship product.  Intergraph is now owned by Hexagon. This ended a long running litigation with Intergraph.

“At the beginning of 2011 financed the $200 million purchase of our stock from outside holders. During the course of the year since then our company repurchased about another $40 million of our stock, representing the balance of the block once owned by Intergraph and then by the private equity firms that took it private and sold it to Hexagon,” Bentley explained. “At this point the Bentley family, colleagues and former colleagues including Bentley family own 92% of the company’s equity. Last month we took advantage of a receptive bank market to complete a refinancing transaction that instituted our new $350 million credit facility through a syndicate of 11 world class banks …. By well qualifying for $100 percent bank financing rather than needing other resources, we have thus been able to reduce our financing costs with interest rates and costs locked in on the order of only 3% for the foreseeable future.”

Bentley also noted that the company has gotten back lapsed subscribers at a greater rate than ever before.

Overall, Asia was the star performing geographic region for the year, specifically China.  Asia now represents 19% of overall revenue, with China’s revenue doubling every two years, whereas it was doubling every three years. China may eventually become Bentley Systems’ largest market, as it continues to spend on infrastructure for both new building as well as environmental advancements. Bentley will hold a board meeting there this year.

Europe is doing better than the U.S. market, according to Bentley. Commercial spending trends are stronger than those in the public sector, particularly in the U.S.

Tags: 2011, AEC, Autodesk, Bentley Systems, corporate update, environmental, geospatial, GIS, Greg Bentley, Hexagon, Infrastructure, Intergraph, sensors

Categories: Autodesk, Bentley, Hexagon, Intergraph

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