Bentley Systems Delivers Strong Q1 as Infrastructure Demand Drives Growth

Bentley Systems (BSY) has emerged as a standout performer in the infrastructure software sector, posting robust financial results for its first quarter of fiscal 2025. The company’s Q1 adjusted earnings and revenue growth signal a resilient business model, with recurring revenue streams and operational efficiency driving profitability amid global economic headwinds.

Revenue Growth and Subscription Dominance

Total revenue surged to $370.5 million in Q1, a 9.7% year-over-year increase, with subscription revenue accounting for 92% of the total. Subscription revenues hit $342.3 million, up 11.5%, reflecting the strength of Bentley’s recurring revenue model. This model, which now generates 95% of total revenue, is a critical advantage in an industry where predictability and long-term contracts are prized.

The company’s Annualized Recurring Revenues (ARR) grew to $1.319 billion—a 12% increase in constant currency—driven by a dollar-based net retention rate of 110%. This metric, which measures how much existing customers are expanding their spending with Bentley, highlights strong customer loyalty and cross-selling opportunities.

Margin Expansion and Cash Flow Strength

Bentley’s focus on operational efficiency is paying off. Adjusted EPS rose to $0.35 from $0.31 in the prior-year period, while operating income margins expanded to 31.1% from 27.2%. Adjusted EBITDA increased 9% to $148.1 million, underscoring improved profitability.

Cash flow metrics also look healthy: cash from operations reached $219.4 million, a 7% increase, while free cash flow rose 7.5% to $216.4 million. This liquidity provides flexibility for share buybacks, dividends, and strategic investments. CEO Nicholas Cumins emphasized the company’s “cautiously optimistic” outlook, citing infrastructure investment priorities globally.

Strategic Drivers and Risks

Bentley’s success hinges on its position as a leader in digital twin solutions, which help engineers design and manage complex infrastructure projects. With governments and corporations prioritizing resilient, sustainable infrastructure, demand for Bentley’s tools is rising. The company also benefits from labor shortages in engineering fields, as its software helps automate tasks and reduce project backlogs.

However, risks persist. Geopolitical tensions and economic volatility could slow infrastructure spending, while competitors like Autodesk and Trimble are aggressively innovating. CFO Werner Andre noted that Bentley’s diversified geographic footprint—spanning North America, Europe, and Asia-Pacific—helps mitigate regional risks.

Conclusion: A Solid Bet on Infrastructure’s Future?

Bentley’s Q1 results are a compelling case for investors looking to capitalize on long-term infrastructure trends. With ARR growing at 12%, a net retention rate above 100%, and free cash flow up 7.5%, the company is delivering on its financial targets. Its recurring revenue model and digital twin expertise position it to capitalize on a global push for modernized infrastructure, from smart cities to renewable energy grids.

While macroeconomic uncertainties remain, Bentley’s strong cash flow and margin improvements suggest it can navigate these challenges. For investors, the stock’s valuation—currently trading at about 15x forward adjusted EPS—appears reasonable given its growth trajectory. If global infrastructure spending continues its upward trend, Bentley’s Q1 performance could be the start of a sustained outperformance phase.

In short, Bentley Systems is not just surviving the current environment—it’s using it to build a more resilient, profitable business. For those betting on infrastructure’s role in the 21st century economy, this quarter’s results are a strong signal to keep watching.