Third-quarter earnings call, November 5, 2026
Bentley Systems reported year-over-year ARR growth of 13% in constant currency for the third quarter, the second consecutive quarter of acceleration and above the top end of its original 2026 outlook range. Net revenue retention reached a record 110%. The more important detail is where the upside came from. Chief Financial Officer Werner Andre said Asset Analytics, the AI-enabled inspection and monitoring business acquired through Talon, accounted for roughly half of the improvement in sequential ARR growth versus last year. That is the first clear evidence that AI is producing measurable ARR growth at Bentley, even though design-side AI monetization has not begun.
Asset Analytics Moves From Concept to Contributor
Sequential constant currency ARR growth was 3.1%, all organic, compared with 2.2% in the third quarter of 2025, and it has exceeded the prior-year quarter in every quarter of 2026. Management attributed the gain to large expansions from existing accounts, in particular telecommunications tower inspection, including equipment manufacturers, and road monitoring for departments of transportation. Of the 150 basis point raise to the outlook, Andre said about two-thirds reflects better underlying performance, led by Resources, grid-related work and Asset Analytics, and the remainder reflects the Eliis acquisition.
Executive Chair Greg Bentley called Asset Analytics "the keystone of our strategy to finally close the loop between our CapEx point of departure and our OpEx opportunity." The logic is that the business captures the as-operated condition of an asset using AI and reality capture, then feeds it back into Bentley's modeling and simulation tools to test whether the asset remains safe and resilient and what maintenance is warranted. Owners have already paid for those models during design but have rarely used them in operation. Bentley said the 346 ex-China top infrastructure owners among its accounts spend almost $1 million a year each with the company, but mostly on capital project delivery rather than operations.
The commercial model differs from the core business. Asset Analytics is priced per asset per year rather than per user per day, it is run as a separate group with its own sales team, and its competitors tend to be hardware-oriented. Bentley expects revenue per asset to eventually be comparable to revenue per user. The caveat, which management stated plainly, is that sales cycles for major procurements are less predictable. Bentley said the business will be "more volatile along the way," and Andre noted that Asset Analytics had an unusually strong fourth quarter last year, a tougher comparison. Management declined to update the roughly $50 million run-rate figure given at the Talon acquisition, noting it was not all ARR.
Raised Outlook, With Eliis Doing Part of the Work
Bentley raised its 2026 ARR growth outlook to 12.5% to 13.5%, excluding the impact of the Cohesive divestiture, from 10.5% to 12.5%. Including the divestiture, reported ARR growth would be about 100 basis points lower. The acquisition of Eliis, a seismic interpretation software provider, is expected to add about 100 basis points in the fourth quarter, against a 40 to 70 basis point allowance for programmatic M&A in the original plan. Andre said Eliis therefore accounts for about one-third of the year-to-date overperformance. Reaching the high end of the new range, he said, requires strong fourth-quarter renewals, continued strength in Resources, public works and utilities, and large Asset Analytics deals.
Total revenue guidance is now $1.673 billion to $1.703 billion at the exchange rates assumed in the original outlook. The company expects constant currency subscription revenue growth toward the high end of its 11% to 13% range. The adjusted operating income less operating stock-based compensation outlook of $495 million to $510 million and the free cash flow outlook of $500 million to $570 million were both maintained. Free cash flow absorbs higher cash taxes tied to the Cohesive transaction. Third-quarter free cash flow of $101 million and year-to-date free cash flow of $353 million, down 8%, reflect a tough comparison with strong collections at the end of 2025 and earlier investment this year. Management said the year is weighted to the fourth quarter. The fourth quarter also depends on the timing of year-end collections against the January 1 renewal cycle, so free cash flow carries some timing risk.
Third-quarter revenue was $422 million, up 12.2%, or 12.7% in constant currency. Adjusted operating income less operating stock-based compensation was $135 million, a 32.1% margin versus 28.1% a year ago. Management attributed the beat to mix shift toward subscriptions and cost control, and noted that the new finance and quote-to-cash platforms were absorbed within the margin commitment rather than adjusted out. G&A growth moderated to 14% from 27% in the first half. Net debt leverage fell to 1.7x adjusted EBITDA, and year-to-date buybacks reached $168 million. Diluted shares are now expected at about 319 million. The mid-2027 convertible notes remain a capital allocation item to address.
Cohesive Exit Reshapes the Revenue Mix
Bentley completed the divestiture of Cohesive on October 13, merging the Maximo systems integrator into Naviam in exchange for a significant minority stake in the UK-based, PE-backed Maximo partner. Greg Bentley was candid about the history. Bentley bought the original Cohesive just before its 2020 IPO to learn how to introduce operating digital twins, but the business "would go on to encounter sustained headwinds as Maximo customers responded slowly to IBM's enforced migration" from on-premise Maximo to managed services, and digital twin integration with Maximo "remains nascent." Bentley will sit on Naviam's board and wants it to add Bentley Infrastructure Cloud and iTwin to its Maximo offering. Bentley described that as "more of a long-term opportunity."
The financial effect is a cleaner revenue stream. Cohesive represented about 50% of services revenue and 3.5% of total revenue year to date. Through the first nine months it contributed about $35 million of services revenue and $10 million of subscription revenue. The divestiture is expected to reduce fourth-quarter revenue by about $12 million, roughly three-quarters of it in services. Services should fall below 3% of total revenue from about 5% and decline year over year through 2027. Subscriptions should rise to about 95% of revenue from 92%.
Design-Side AI: Monetization Starts in 2027, but Not as a Growth Driver
CEO Nicholas Cumins set clear expectations for AI in design. Bentley's focus is adoption and validation, and it expects to begin monetizing in 2027 once customers move from exploration to production and adopt new application versions with MCP servers, which let AI agents drive Bentley solvers at machine speed. "We don't expect monetization of AI in design to be a material growth driver in 2027," he said. "It will be the year where we start." Asked about customer readiness, he pointed to education, with forward-deployed solution engineers working directly with accounts, and to the pace of upgrades to the new versions.
The pricing discussion was the most substantive strategic exchange. Citing an AEC Advisors report, Cumins said 63% of the largest engineering firms expect a significant shift from time-and-materials billing to fixed-fee and value-based pricing within three to five years. Bentley sees a link between that shift and AI use: accounts that have already moved to fixed-price or outcome-based models "lean on AI much harder than others." Cumins acknowledged that Bentley's own model, in which E365 application days act as a proxy for engineer time in the software, may not capture value when engineers work at machine speed. He said, "if they start to use our application at machine speed, then on top of that, there should be another price." Greg Bentley tempered the timeline, saying outcome-based pricing "is hard and may take longer," while fixed price is "a way station that's relatively easy."
Cumins illustrated the productivity case with AYESA's Porto Metro expansion. AI agents evaluating PLAXIS geotechnical simulation outputs ran more than 100 simulations instead of a handful, cutting design cost by 30% and saving 4,500 cubic meters of concrete. He stressed that deterministic solvers remain the computational core and that professional accountability does not transfer to machines. "There is no room for AI sloppiness in our space," he said. On architecture, Bentley said it will support its own copilots, third-party models and customers' own AI harnesses, and that data in Bentley Infrastructure Cloud is never used to train models without explicit customer direction.
Eliis Extends Seequent Into Seismic and Energy
Eliis adds seismic interpretation to Seequent's subsurface portfolio and will be integrated into Leapfrog's 3D implicit modeling. Its core business is oil and gas, and management said it overlaps more with traditional Bentley accounts than with Seequent's. Cumins said it is accretive to ARR growth and roughly in line with Bentley on margin. Greg Bentley added that it is accretive to Bentley's revenue multiple, though no purchase price or Eliis ARR was disclosed. Management ranked the opportunities as energy first, including geothermal and carbon capture as oil and gas operators diversify, then mining, where seismic can detect deeper deposits at higher resolution, and then civil, where cheaper acquisition equipment makes the method viable for tunneling and offshore wind foundations.
Regional and Sector Demand
Resources was again the fastest-growing sector, led by Seequent and mining, while public works and utilities benefited from grid investment, with PLS (the power line systems business) singled out. Commercial and facilities remained flat. Asia Pacific was the fastest-growing region, with India very strong. European consultancies are shifting engineering work to Indian delivery centers, which moderated consumption growth in Europe while boosting Asia Pacific. Latin America had an exceptional quarter, the Middle East led EMEA growth despite the ongoing conflict, and China, under 2% of ARR, remains a persistent headwind. New logos contributed about 300 basis points of ARR growth, with more than 600 added through the Virtuoso program for SMB accounts.
Policy and Sovereign Budget Exposure
Management argued that its revenue is insulated from stress in government budgets. Less than a quarter of enterprise revenue comes directly from any level of government, and less than 1% from the US federal government. Outside China, privately owned assets account for about 1.5 times the share of the top owners' infrastructure asset value held publicly. Greg Bentley said sovereign credit stress tends to accelerate private financing, often through design-build-operate concessions that favor digital twins. On US politics after the election, he pointed to a likely bipartisan consensus on infrastructure, with spending from the expired IIJA extended to December 11, the Build America 250 bill advancing from House committee on a 62-2 vote, and a Senate permitting reform vote scheduled for next Monday. He said the water bill is set to include funding for digital twins for the first time. On data center pushback, he saw environmental scrutiny as an opportunity for infrastructure digital twins in site planning rather than a threat.
Management did not give a 2027 outlook, saying it will come with fourth-quarter results. Cumins said, "we don't see why we should go away from our long-term financial framework." Bentley's go-to-market is not expected to change under new Chief Revenue Officer Andy, the former head of solution engineering, appointed in August. The company said the fourth-quarter Q&A will be audio only.