Infrastructure design software provider Bentley Systems (NASDAQ: BSY) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 10.2% year on year to $364.1 million. Its non-GAAP profit of $0.32 per share was 12% above analysts’ consensus estimates.

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StockStory’s Take

Bentley’s second quarter results met Wall Street’s revenue expectations but drew a negative market response, with management pointing to sector-specific dynamics and evolving customer demand. CEO Nicholas Cumins highlighted continued strength in infrastructure investment, particularly in public works and utilities, but noted ongoing challenges like capacity constraints in engineering talent. The company saw consistent demand across both large enterprise and SMB segments, while growth in professional services and perpetual license revenues remained subdued. Cumins stated, “There’s really no problem with the demand, there’s a problem with the capacity. They just don’t have enough engineers.”

Looking ahead, management is focusing on expanding AI capabilities and integrating the Cesium platform to address engineering productivity challenges. The company aims to leverage these technologies to support clients coping with a global shortage of engineering talent. Cumins emphasized, “AI comes up in every CEO conversation I have with engineering services firms… We are very well positioned to support because—many of them and we would like all of them—are leveraging Bentley Infrastructure Cloud.” Management also sees opportunities in asset analytics and potential pricing model evolution as AI-driven productivity gains reshape customer workflows.

Key Insights from Management’s Remarks

Management attributed quarterly performance to solid recurring revenue growth, product adoption in key verticals, and customer willingness to commit to higher contract floors, while highlighting AI and infrastructure investment as ongoing drivers.

• Recurring revenue strength: Subscription revenues grew robustly, now representing 92% of total sales, which improved revenue visibility and reduced exposure to cyclical fluctuations in professional services.
• SMB and E365 momentum: The company added over 600 new SMB logos for the 14th consecutive quarter, with MicroStation serving as a key entry point and E365 driving higher customer commitment through flexible usage-based contracts.
• Sector highlights: Resources, especially mining via Seequent, was the fastest-growing sector, while public works and utilities remained steady. Management noted that grid resilience and infrastructure investment continue to benefit Power Line Systems.
• Geographic trends: The Americas and EMEA regions, particularly Latin America and the Middle East, outperformed, while China remained a small contributor due to ongoing headwinds. Australia’s ANZ region saw softness, but large projects tied to the Brisbane Olympics are expected to ramp up.
• Product integration and AI focus: The integration of Cesium’s 3D geospatial platform with iTwin and the launch of AI-driven applications, such as OpenSite+, were highlighted as strategic priorities to boost customer productivity and long-term value.

Drivers of Future Performance

Management’s outlook is shaped by sustained infrastructure spending, accelerating AI adoption, and expanding opportunities in asset analytics, balanced against sector-specific volatility and hiring constraints.

• AI and productivity gains: The company is prioritizing investment in AI to address the global shortage of engineers, rolling out products like OpenSite+ and integrating agentic AI to automate routine engineering tasks. Management expects these advances to change customer workflows and potentially lead to new pricing models.
• Asset analytics expansion: Bentley is targeting growth in asset analytics for sectors like cell towers and road monitoring. Management acknowledged volatility in this business line, but expects a shift from equipment manufacturers to owner-operators will improve revenue consistency over time.
• Regulatory and funding environment: Anticipated permitting reforms in the U.S. and long-term infrastructure funding proposals in the U.K. and EU are seen as supportive of demand, especially for power grid, transportation, and water projects. However, timing and policy execution remain key variables.

Catalysts in Upcoming Quarters

Our analyst team will be closely monitoring (1) the pace of AI integration across Bentley’s core product lines, particularly the rollout and customer adoption of OpenSite+ and Cesium platform enhancements; (2) expansion of asset analytics into new sectors, with a focus on reducing revenue volatility through larger owner-operator contracts; and (3) legislative and regulatory developments related to infrastructure funding and permitting reform in the U.S., U.K., and EU. Execution on these priorities will provide key indicators of Bentley’s ability to sustain growth and adapt to evolving industry needs.

Bentley currently trades at $53.45, down from $57.03 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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