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Introduction & Market Context
Bentley Systems (NASDAQ:BSY) reported its third-quarter 2025 earnings on November 5, 2025, with results that exceeded revenue expectations and met earnings per share forecasts. The infrastructure engineering software company posted $376 million in revenue, up 12% year-over-year and ahead of the anticipated $369.73 million, while matching the expected EPS of $0.27.
Following the earnings announcement, Bentley's stock price rose by 2.55% in pre-market trading to $49.85, reflecting investor optimism about the company's financial health and strategic initiatives, particularly its expanding focus on artificial intelligence across its product portfolio.
Quarterly Performance Highlights
Bentley's Q3 2025 results demonstrated consistent growth in Annual Recurring Revenue (ARR), which reached $1.405 million, representing a 10.5% increase year-over-year. The company noted that ARR growth was in line with expectations despite an unfavorable comparison with Cesium's performance in the prior year.
As shown in the following chart of year-over-year ARR growth trends:
The company's adjusted operating income increased by 16% year-over-year to $104 million, with margin expansion of 100 basis points to 27.7%. Free cash flow was strong at $111 million for Q3 and $384 million year-to-date, providing Bentley with significant financial flexibility for potential programmatic acquisitions and continued investment in AI and cloud services.
The recurring revenue retention rate has remained consistently strong, as illustrated in this chart:
Geographically, Bentley reported that the Asia-Pacific region had a particularly strong quarter, while the Resources sector was the fastest-growing vertical followed by Public Works. The following chart illustrates the tone of business by infrastructure sector:
Strategic Initiatives
A central theme of Bentley's Q3 presentation was the company's accelerating focus on artificial intelligence across its infrastructure software portfolio. CEO Greg Bentley emphasized during the earnings call that "AI is not replacing infrastructure engineers, but making them more productive," highlighting the company's approach to augmenting rather than replacing human expertise.
Bentley announced several new AI-powered applications during the quarter, including OpenSite+, Substation+, and SYNCHRO+, which leverage generative AI to improve productivity in civil site design, substation engineering, and construction planning, respectively.
The company also launched the Bentley Infrastructure AI Co-Innovation Initiative, aimed at collaborating with industry partners to develop AI solutions specifically tailored for infrastructure engineering challenges. This initiative addresses the growing concern among engineering firms about falling behind competitors in AI adoption.
As shown in the following chart, companies are most concerned about competitors surpassing them in innovation and new services (27.9%) and project delivery speed and quality (26.3%) if they lag in AI implementation:
Industry Trends & Market Position
Bentley's presentation included significant data on broader industry trends that inform its strategic direction. One notable shift is the dramatic increase in data center construction spending, which has grown 184% since December 2022, while general office construction spending has decreased 36% during the same period.
The following chart illustrates this trend, suggesting a fundamental shift in construction priorities that Bentley is positioned to address:
The AEC (Architecture, Engineering, and Construction) industry continues to show strong real organic growth compared to GDP, positioning Bentley well within a growing market. However, the presentation also noted that profit margins in the industry are rising while organic growth is slowly declining, indicating potential market maturation and increased competition.
This chart shows the profit margin and organic growth trends in the AEC industry:
Bentley's customer success stories highlighted significant productivity gains from its software implementations, including a 75% reduction in modeling time for Aquawolf using PLS CADD, a 70% reduction in micropile usage for GeoStuXer using PLAXIS, and a 50% improvement in design efficiency for SIDRI using SACS.
The company's market position is strengthened by its comprehensive understanding of the AEC industry revenue breakdown, as shown in this chart:
Forward-Looking Statements
Looking ahead, Bentley Systems expects stronger ARR growth in Q4 2025 compared to Q3, maintaining confidence in its full-year outlook. The company anticipates continued expansion of its AI capabilities and cloud services, with a particular focus on asset analytics.
The presentation highlighted that AI implementation spending is expected to grow significantly over the next three years, with the median spending as a percentage of gross revenue projected to increase from 0.19% currently to 0.71% in three years.
The impact of AI on current business models is substantial, with 64% of survey respondents indicating that AI is affecting their business model "to a significant extent" or as "a major consideration" requiring active adaptation:
Support function costs have evolved significantly since 2019, with notable increases in technology, finance, HR, and risk management spending, while real estate costs have declined. This shift in cost structure reflects the changing nature of work and technology priorities in the infrastructure sector:
Bentley's full-year 2025 financial outlook remains positive, with the company reaffirming its guidance for total revenues and subscription revenues growth. The company's strong cash position and relatively low leverage provide flexibility for strategic investments and potential acquisitions as it continues to expand its infrastructure software portfolio.
Full presentation:
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