Q4 2021 Bentley Systems Inc Earnings Call

I'm precedented consensus.

P J priorities for mobility environment and grid.

Our total business discussions to date have centered around the contrast, and coexistence between the still cyclically curtailed capital projects in the industrial resources infrastructure sector on one hand, and the relatively impervious momentum in our mainstay public works utilities infrastructure sector on the other hand.

Particularly as we have so much to cover today get Fortunately simply suffices. This quarter to report that nothing has changed appreciably by sector. The EPC firms application usage has not yet turned upward but has ceased to get any worse has they're essentially all on our <unk> hundred 65 daily.

Consumption program, they and we will benefit as soon as higher energy prices spark net new capex starts including for renewables and storage.

<unk> with operating results reporting for the quarters of 2022, we will break out from the traditional industrial infrastructure sector. Our revenue apportionment for a separated resources sector, where in addition to this renewable energy upside sequent is gaining vigorously at a pace unprecedented for us and the robust.

For going digital and mining to meet the same energy transition to me.

I think the most informative view of our overall business tone comes through tracking our book of subscription growth and net retention here is a view from the floor and through the pandemic of our reported.

RMR growth and of our reported <unk>, which as a comparison to a full year earlier naturally lags.

<unk> growth and is lowered by about 2% of AOR growth, which comes from new names each year.

Our growth suffered starting with the first quarter of 2020 as project stops and where capacity disruptions immediately affected our daily and monthly reset subscribers, including EPC and that dip in AUR growth, which lasted several quarters in 2020.

Inversely echoed in the subsequent sequence of consequently, higher IRR growth rates. That's all users went back to full time work.

Seems a natural semis that lagging and are and will likely continue to increase.

So look inside these numbers here again is the 'twenty, one Q3 breakdown of IRR by consumption loan in.

In 'twenty, one Q4 are <unk> hundred 65 grew steadily.

And the proportion shown here, including as we upgraded further accounts $53 65 to reach this breakdown of <unk> at the end of 2021 and.

In highlighting our SMB accounts.

Our definition spending less than 100 K with us.

Andrew.

All others are at least eventual prospects for <unk> hundred 65 for years to comment our measured pace of such upgrades, we offer <unk> hundred 65 upgrades by invitation to selected accounts upon their annual renewals. So that we can assure that we continue to have sufficient and appropriate enterprise success resources to deliver the <unk>.

<unk> success service.

And substantiate why these services <unk> hundred 65, so important to be soi into our accounts.

We'll cycle, our annual measurement within our growth and IRR.

Application mix accretion we.

We have tended to assess the pandemic affected tone of business in terms of days of usage of any and all of our applications.

But we grow <unk> as.

As we add more value when a user upgrades <unk> application usage to a more specialized PSY application in order to improve the quality and productivity of their work.

We annually calculate this application mix accretion as the average daily usage value abstracting from any price changes across vault application usage during the year as.

As we continuously develop and acquire more specialized applications for our comprehensive platform.

To lead this advancement opportunity will be an endless progression for instance, a civil engineer and user of Microstation who's working on roadway projects will be much more productive upon upgrading to open roads, which more than doubles, our IRR for such application usage.

The same civil engineer May remain a prospect to subsequently upgrade to our yet more specialized forthcoming opened tunnel application.

While wind farm designer, who had been using microstation and the absence of a specialized modeling product should advantageously upgrade to our new open wind power application.

Increasing our <unk> per such they have application usage by a factor of about 30.

A structural engineer at an EPC firm now working on an offshore wind platform should upgrade from our general purpose structural analysis application stead to our specialized shacks offshore structural application to incorporate the analysis of wavelengths.

Increasing our AOR for such application uses day by a factor of over $1 five.

During 2020, our application mix accretion was about two 5%.

Now I'm pleased to say that for 2021, <unk> application mix accretion increased to over three 5% a significant component of our increased AUR growth.

My credit this to our user success organizations expansion throughout 2021, our user success colleagues can apply analytics to our cloud based functional logging of all applications usage to identify these individual upgrade opportunities to bring that to the attention of the appropriate existing users of our less specialized applications and to <unk>.

Help them to take full advantage.

Are they early growth in our user success for US was as a result of transferring and consolidated from various other supporting functions, our colleagues with substantive infrastructure engineering experience and credentials.

Continued further expansion is afforded by this so purpose upgraded <unk> implicit in <unk> hundred 65 daily application pricing and therefore, <unk> hundred 65 accounts for most intensively served by our enterprise success team.

Validating our prioritization of <unk> hundred 65, and this associated enterprise success Resourcing, our 2021 application mix accretion.

Was almost twice as high within <unk> hundred 65 accounts as within non <unk> hundred 65 accounts.

And in terms of underlying overall application usage trends from 2019, so it's not to dwell on pandemic induced volatility.

<unk> hundred 65 accounts, excluding the uniquely impacted <unk> performance significantly directionally better.

Lastly, and working to establish a broad baseline for our enterprise accounts general sentiment among those surveyed in both 2020 in 2021.

The <unk> hundred 65 accounts skewed toward much stronger recommendations.

Favre.

This slide originally from our IPO deck highlighted that.

And that such accretion within our existing enterprise accounts could reach two thirds of this thing to the extent that we could grow each account to the <unk> run rate intensity, we had already achieved for the most <unk> run rate intensity accounts and each sized here within each of the project delivery.

Owner operator category.

So given these new initiatives in <unk> hundred 65, and enterprise success since IPO, how far are we had we progressed in this run rate intensity and enterprise accounts.

Starting with the top owners.

<unk> run rate intensity for each is calculated in relation to the net asset value of their fixed infrastructure assets.

Reflecting our efforts to strengthen our offerings lifecycle comprehensiveness across infrastructure operations.

From 2019 to 2021, the BS wide run rate intensity within the D. D. I 500 increase in constant currencies by 19%.

Next as to the project delivery accounts that are engineering news record global top design firms.

The <unk> run rate intensity for <unk> is calculated in relation to their design billings as reported to Eni.

Excluding Chinese firms, where the history isn't consistent.

From 2019 to 2021, <unk> run rate intensity increase in constant currencies, reflecting their rate of going digital MBS will have spending per dollar of their own design billings by 12%.

To conclude as to enterprise accounts, what I've covered or factors behind my belief that continued expansion of our <unk> hundred 65 program and the enterprise success activities that support it.

Relatively improve our growth rates.

But what about our potential growth within small and medium sized businesses, where our products are just as suitable but we need to go to market in ways that are new to us.

We commissioned market research firm Convention, who had recently updated our Tam study that starts by counting the world's infrastructure engineering professionals to help us quantify the SMB prospects.

Determined to consider only project delivery firms since owner operators of infrastructure given its capital intensity can hardly be SMB.

With that we next apply the typical <unk> run rate intensity for project delivery firms to translate our cut off of 100 K per year to correspond to approximately two firms with Atmos 50 infrastructure and engineering professionals.

What proportion of our potential market to such firms represent.

Given limitations on available data.

Can't actually you could answer this only for engineering and architecture firms and only for certain countries. So here are by bubble size. The proportion of these infrastructure professionals in SMB compared to larger firms in Germany.

In Japan.

In South Korea.

In the U K.

And in the U S.

As you see market structures evidently very so much that one can't safely generalize across the world, but for instance in our two largest markets the U S and the U K.

And in total for these five countries certainly representing much of the world. There are even more infrastructure professionals in SMB prospects van and enterprises.

These results encourage us to continue the priority we have placed on the SNB opportunities since the IPO increased our profile and led us to focus more on marketing. During this time, we have reallocated much of our pandemic caused cost savings in travel and events into SMB go to market conditions.

In particular see here, our 2021 quarterly progression of staffing levels for sales and fulfillment of our virtual <unk> subscriptions, which combined annual term licenses with expert availability and our targeted <unk> new business.

The results were reflected in this promising trend of virtual <unk>, new business growth by quarter during 2021.

Most encouraging is the improving ratio of new business growth to head count resources as we continue to climb the learning curve and reaching and converting SMB prospects to.

To summarize here's our resulting progress in total annual N V G for SMB accounts.

And selecting upwards to represent 41% of our overall NPG in 2021. This re enforces our belief that much more SMB upside.

Somebody is reachable.

For more operational perspectives on our go to market activities with those responsibilities having been added for 2022 to his product leadership roles.

Over to Nicholas.

Thank you Greg.

Our data and our product portfolio of reviewing the thank you report to reflect the important product advancements we made in 2021.

We continue to build on the foundation and extend the comprehensiveness of our product portfolio in particular entering applications with our modeling and simulation products for enduring practitioners.

Enterprise systems for engineering collaboration construction and asset performance supporting digital workflows across the entire infrastructure lifecycle.

Geo professional applications with a combination of sequent original bank nature of technical products and subsequent acquisitions for the subsidiary.

Industry solutions with industry specific capability to advanced infrastructure comorbidity environment and grid.

And the defense of our portfolio, our infrastructure digital twin platform powering an increasing number of Bentley and third party products.

I would like to highlight the performance of <unk> in Q4, and <unk> 2021.

Syncrude is our construction management solution, which we have extended to be uniquely suited for heavy civil projects.

As you might recall from Greg's comment during the Q3 operating results with Syncrude, we're thinking a distinct approach for construction.

We have some of our peers are focusing on automating <unk> workflows, our focus with <unk> is on helping the industry advances for D by leveraging digital twin.

The industry has validated our approach with accelerated growth in 2021 across the spectrum of construction organization, including SMB.

Syncrude has been adopted so far by 58 of the <unk> Global 100, Taco Crunchers and by 77 of the top 100 contractors outside of China.

Now, let me take a moment to explain what we mean by for the.

Syncrude powered by twin allows construction teams to create a for the construction model by leveraging three D models from the design phase and I think time the fourth dimension.

It is used for construction planning and scheduling to communicate with key stakeholders and collaborate with trade partners. It is also used in project execution to track progress as well in park construction teams with information in the context of the need to make informed decisions.

Syncrude featured prominently at the year in infrastructure in 2021 with many winners of the growing digital rewards crediting syncrude.

I would like to highlight one winner.

Replacing the aging bridge on 138 Street in New York City May seem uncomplicated or personnel.

But located one mile sulfur Yankee Stadium.

A highly congested area and the management of traffic during construction is a significant quality of life issue to the local community.

The New York State Department of Transportation, the owner of the bridge opted for a digital twin solution to manage the complex sequence of traffic Lane closures.

They used <unk> to create a four day construction sequencing modal and engage with stakeholders to take important decisions without having towards maturity through more than 200 planned sheet.

This project set a new standard for what can be accomplished by beauty by growing digital you can read more about this project in the 2021 infrastructure yearbook.

From a regional standpoint, our new business growth continued to accelerate in Latin America, primarily driven by additional usage in our.

Private accounts in particular of open flows or product line for the water infrastructure.

The new business growth also accelerated in immediately benefiting from renewed investment in infrastructure, including industrial and resources.

As expected, Australia, New Zealand bounce back in Q4 benefiting from renewed investment in both public works and in industrial.

2021 began as a difficult year in China as mentioned by Greg <unk> cruise calls.

We confirm its strong rebound of new business growth in Q4, but not enough to close the gap for the full year.

We take the long view in China. It remains an important growth opportunity for Bentley given its massive investments in infrastructure.

And the biggest project in China continue to leverage our technology to innovate.

Of 19, winning project of the growing digital rewards and infrastructure were from China.

A few words about sequent, now, which had a great Q4, and a great year 2021.

Sequent at strong performance across all regions.

The fastest growing region over this quarter was Asia Pacific.

South America with its second fastest growing region, followed by Europe , Middle East Africa, and North America.

In all these regions sequent benefited from continued investment in mining required to support the worlds energy transition.

In addition to mining sequence growth remained strong in civil we expect that growth to accelerate over time as we continue to drive synergies with the rest of Bentley.

With sequent, we're offering the most comprehensive product portfolio for Geo professionals. We competed for additional acquisitions in 2021 to complement that portfolio. The most recent one being ear to tech in December for Geo statistics official data analysis.

Leapfrog the original product of sequent used to model the subsurface led the growth in Q4.

You can think of leapfrog as a foundation product for Geo professionals on top of which we offer additional products to provide a better understanding of the subsurface.

Case in point, we doubled the revenue for two acquisitions made in 2021 EMEA go to capture and process digital images of drill cores and chips and amex deposit to manage drill hole and other field data.

In order to illustrate how these products come together I would like to highlight first majestic.

First Majestic is a Canadian company, which owns and operates four mines in Mexico and the UAE.

First majestic use of sequence leapfrogged <unk> developed a realistic representation of the geology at each site and leapfrog age to read to aid resource estimation and when geological models are changed resource estimate also changed that.

Sequence Central allows the company to publish models and resource estimate so they are available to everyone in real time on site or remotely, including resource geology is based in Canada.

First Majestic recently implemented imago integrated with leapfrog yield to make more confident profitable exploration and mining decisions based on digital images of drill cores and chips.

There are also using <unk> to evaluate the slope stability, obtaining downs and filter catering as well as flagship for deep excavation and commenting on that.

This is just one of many situations that underscores the potential for portfolio expansions and synergies subsurface.

I would like to hand back to Greg to talk about corporate governments.

Many thanks, Nicolas and now onto corporate development, where I would also like to step back for the Big picture.

First priorities, we all share in each of track.

Environment, social and governance goals are.

New state of the art website here. It brings together everything you would like to know in one place.

But our ESG website emphasizes that at <unk>, we are almost uniquely able and motivated to go beyond what is conventionally reported.

Howard Greater contribution is to empower infrastructure engineering through going digital to profoundly advance the UN sustainable development goals, which we also share.

My way of keeping this in front of mind for US for my colleagues is to instead think in terms of Eas D. G.

Infrastructure engineering is literally the limiting factor in achieving especially.

<unk> highlighted here.

So <unk>, we can assess our corporate development in relation to three <unk> priority.

Our business, our investments and our current initiatives closely aligned with the advancement through billing digital both the world mobility environment and bridge infrastructure by our users.

So the most effective way to understand our Es DG.

Is to review our infrastructure year book, which annually presents our users nominations from growing digital orders.

The finalists and winners judged by international expert jewelry and our own founders honorees.

Physical 2021 year books will be with you shortly but here online you can now search for instance by each of these SPG priorities and interactively view these multi media case studies.

The mobility priority.

Hasn't been our sweet spot, representing the largest proportion of <unk> revenues for roads, and bridges rail and transit and municipal engineering.

But also within the Green Capex funding needs that we have referenced in this way since last quarter mobility is also the largest private equity as it is within the actual funding allocation.

Of the U S infrastructure investment and jobs Act phenylalanine, JA, which we also referenced in this way last quarter, and which is generally representative of the new government infrastructure investment commitments everywhere in the world.

Here are the going digital award winners and mobility categories.

And here are the additional projects honored by our founders within the mobility priority.

Please note there globally diverse.

Turning now to the environment.

D J priority.

This also represents a very significant portion of our business, including along with water and wastewater renewable energy generation and sequence foundation for mining and for environmental modeling and monitoring.

And within Green Capex.

The direct environment <unk> priority.

Significant.

As.

Within the relevant segments.

Within the JV.

Here are the building digital award winners and environment categories.

And here are the projects honored by our founders relating to the environmental playoff.

Priority.

Now in addition to these awards from <unk> I would like to highlight the project that resulted in adjusted announced awards to BS VI as the Microsoft Asia Pacific region, Social impact sustainability change maker partner of the year.

Award recognizes the role of our <unk> platform applied with Microsoft Azure, Iot services, and deploying digital twins to improve the operations in offshore wind farms in South Korea.

This work was done for Tucson, the company, which developed not only the wind farms, but also the turbines themselves.

As usual, we think the credit should go to do sung <unk>.

Microsoft we are found to manpower and sustainable development.

Lastly for the Grinch STG priority.

This has already represented.

A portion of our business shown here prior to the just closed acquisition of <unk> systems.

Yes.

And within Green Capex.

Rich SPG priority is acknowledged.

As requiring very substantial new investment.

<unk> funded this significant extent within <unk>.

Here are undergoing digital award winners in great categories.

And here are the additional projects honored by our founders relating to the grids STG.

D G.

Right.

I would like to reprise <unk> corporate development as a public company by updating these self descriptive titles that we've used in every introductory presentation, starting with our IPO roadshow.

So <unk> has now Julien very Bentley and retirement after 38 years during which May never took a 6%.

Our founders all remain board members and very enthused Physiatrics shareholders as you can see from our control groups SEC filings.

Our platform DNA has enabled our integrated comprehensive.

Starting with Microstation as the foundation for our modeling and simulation applications, followed by project lines and asset class systems, respectively for project delivery and enhance our performance and now the <unk> platform for digital Twins cloud services.

Which has led to what I regard as conclusive market leadership and infrastructure engineering software for mobility.

But for the overall environment SPG priority, there had not been a conclusive such market leader.

Okay.

Until last year, when our awareness as a public company enabled us to leapfrog into this tremendous opportunity through our platform acquisition of sequined, enabling the integration of subsurface modeling in infrastructure Iot monitoring including for water.

Flood geotechnical and seismic environmental resilience across mining and all other infrastructure assets.

Momentum and potential are both unprecedented.

Our experience.

But the <unk> integration opportunity is by consensus the most urgent for the world to address energy reliability, and the constraining bottlenecks and renewable generation storage electrification and communication that jeopardized economies and quality of life.

And here our platform acquisition of <unk> systems.

Also only possible as a public company completes our existing platforms reach from transmission through substations to distribution and communications.

This unparalleled constellation of our comprehensive portfolio for going digital across infrastructure engineering and now across all of the world's SPG priorities supports our unprecedented confidence for 2022 and then beyond.

I, just don't see how we could be better positioned.

And we are now.

Despite.

<unk> ebbs and flows of geopolitical and regional economic concerns.

Our geographic diversification and balance.

Especially strengthened by sequence complementary footprint in parts more resilient than ever.

Not only did we demonstrate dependable growth even through the pandemic.

But we used resulting savings for the initiatives I've mentioned that are already increasing our rate of growth, including our 2022 outlook.

We saw that early pandemic disruptions in our users work capacity somewhat reduce their consumption during 2020 with a knock on effect of making 2021 year over year comparison appear relatively more favorable <unk>.

Our outlook for 2022 is to accelerate growth from the compounded levels since pre pandemic and in fact from 2020 to 2022.

We will add more than a digit we expect over 40% to our annual revenues, mostly attributable to business performance.

While also increasing recurring proportionate.

And covering our tone of business like.

<unk> quantified the increasing <unk> spending intensity, we're achieving an enterprise accounts at the same time as our new business focus on the ultimately, perhaps even larger SMB opportunity.

Now a company can presumably grow faster by spending more to go to market at the expense of its operating margins FBS lie or perhaps simplistic approach to this treadmill, Mr internally commit to one margin percent per year of expansion in our sustainable margins normalized for nonrecurring savings in excess of <unk>.

<unk> is in this pandemic.

Subject to this operating margin constraints at 33% for 2022, we will continue expanding the initiatives, which we have concluded an experienced I cited are serving to increase our long term growth.

In April . This includes continued expansion of our user success resources, especially to support expansion of <unk> hundred 65 for faster accretion and enterprise accounts and also continued expansion of our <unk> dedicated resources.

Supplemented by significantly increased SaaS and development expenditures now that we're through our initial sarbanes Oxley systems for use on a new digital experience for the E Commerce self service SMB engineered prospects and users greatly pressure.

By putting that altogether.

I now ask David to introduce our <unk> investment organization and activities and then to introduce Werner.

<unk> successor to go over our financial performance for 2021 and for our 2022 outlook.

Thanks.

Thank you Greg I do plan to shine a spotlight on our recent power line systems transaction and our immediate priorities for Pls.

As a lead into that let me quickly Orient you to our BSI investments group and how we complement our core software business.

Firstly, we continue to be quite active with our acquisition activities often those acquisition activities surface or onboard businesses that are right to be initially incubated and or accelerated outside of our core software business or as a complement to our core software business.

And we call it as acceleration initiatives, our <unk> investment group also oversees <unk> ventures.

Our corporate venture capital fund focused on stimulating an ecosystem of infrastructure digital twin applications. We also believe.

The digital twin adoption can be better enabled by an ecosystem of digital integrators and through our own cohesive group and our digital construction works digital integrators.

I'll go a little deeper starting with acquisitions, where I show here. The chronology of the busy last 12 months in terms of acquisition activity, our programmatic operating cadence of build versus buy.

Yielded a robust pipeline of opportunities and continues to do so we successfully closed 14 acquisitions during this period.

Of which 12 of them were of the programmatic nature of the smaller tuck in deals that are a part of that operational rhythm I've described and it was also a year, where we successfully closed on two particularly noteworthy acquisitions, which for us represents a new platform and or are of a uniquely large scale is to be differentiated from our.

Normal programmatic acquisition activities.

Specifically that would of course be sequent, which continues to perform very well as you heard from Nicholas and we'll hear from vendor and powerline systems as Greg just discussed.

You will have also heard Greg describe our perspective on what he calls the es DG in each of our 2021 acquisition is consistent with our key ESG growth themes, either mobility environment or grid.

The scope of our investment ambitions starts early and extends through maturity in the lifecycle of the business with our open source <unk> platform, we offer developer tools support and partner programs to entrepreneurs and businesses at all lifecycle stages.

As mentioned at the end of 2020, we inaugurated <unk> ventures, our corporate venture capital initiatives, whereby we are committed to invest up to $100 million.

Help stimulate an ecosystem of applications leveraging infrastructure digital twin technologies.

<unk> been a busy and successful initial year for ice when ventures, and we've made several investments in early growth in seed stage businesses with promising digital twin solutions.

We've also seen significant opportunity to invest in seed and even precede opportunities in support of this <unk> ventures has sponsored our ecosystem sponsorship program that brings specific <unk> platform adoption commitments with the funding and support we provide.

At the more mature ended the entrepreneurial business lifecycle is where we find acquisition opportunities certain of these acquisitions, we incubate further or accelerate with particular focus the portfolio building an integrated business systems.

Examples of this are our 2021 acquisitions and <unk> metrics and Vista data vision, where the integration to prevent seamlessly available Iot data to the <unk> platform is relatively significant.

Power line systems acquisition is another example of a more mature business that we're operating inside of our <unk> investments acceleration team.

So that's the power line systems. We previously shared those expected details. These expected details when we announced our agreement back in November 2020.

By way of a reminder of our update we did indeed pay $700 million and.

And we did indeed secure and unique structure that provides a tax deductible step up in basis that we present value to be worth $90 million.

We did exercise our option to pay all cash for the acquisition, which we funded with our senior secured credit facility and Werner will speak further on this we expect.

To close at the end of 2021, but the HSR process took an extra 30 days, resulting in our deal not closing until the end of January 2022.

The delay will have an approximately proportional effect on our expected revenues from Pls for 2022.

In terms of our immediate 2010 2022 priorities for grid, Greg Teed. This up nicely the intersection of the need to harden electrical grid infrastructure needs.

And the need to extend its reach the need to improve it to accommodate alternative energy sources and the availability of both private and public funding comes together as a ripe opportunity worthy of particular acceleration in.

In 2022, we intend to increase the pace and scale of sales and marketing activities and invest for more significant geographic expansion. We will also introduce a structural digital twin for utilities, and we will consolidate our structural communications and grid offerings into one group in recognition of an increasing opportunity for co location of telecom equipment with high voltage power.

Structures hence.

Hence pls Spider and our hope and tower businesses are combined what we call our grid integration group.

I'd like to close with a brief discussion about cohesive our digital integrator business for which we have two primary ambitions personally as an infrastructure lifecycle digital integrator, we aim to demonstrate a growing and healthy business model in hopes of stimulating a broader ecosystem such digital integrator businesses.

<unk> amongst our current user base of engineering firms.

Next we ultimately seek to create stronger Bentley systems software product pull through and digital twin adoption.

We launched cohesive starting in May 2020, with the acquisition of cohesive solutions, a professional consultancy firm organized around leveraging IBM maximo for transformational outcomes.

We followed this up by adding four more acquisitions of professional services consulting firms and integrating a sixth existing billing systems asset performance consulting business.

After a successful integration push to integrate and align these businesses a project we internally called one cohesive, we're seeing scale leverage efficiencies and a healthy and growing backlog of new business.

Just a couple of recent new business wins include averaging where we leveraged our existing relationship to secure a new eight figure contract for the design and delivery of additional maximum solutions.

As well as the collaboration with policy for.

<unk> solutions for the Canadian government.

Infrastructure asset operations and optimizing has built infrastructure assets is an ideal vector for introducing infrastructure digital twins and clean technology pull through.

I highlight here are two examples where our cohesive team is deeply embedded and delivering solutions for some of the largest infrastructure projects in Europe . The UK National Highway Smart Motorways program and the Hs to high speed rail project from London to Manchester.

So that's what we're up to <unk> investments and Werner we'll next take us through our 2021 operating results and our outlook for 2022.

Thank you David I'll start with our revenue performance.

Our fourth quarter revenues of $267 7 million grew 21, 9% over the same quarter last year most of that growth comes from subscriptions, which grew 25, 2% over the prior year.

We attribute the acquisition of <unk> <unk> with Suntrust on a 15% foreign currency headwinds offset sales down 2% and therefore, our business performance comprises just over 14% of growth on a constant currency basis.

All right.

Petrol licenses revenues are down again by $2 million for the quarter relative to the prior year and represent approximately 7% of total revenues.

Professional services revenues and 9% of our total revenues and increased $5 million over the same quarter last year, representing a growth of 25%.

Continued growth in our services business is attributed to our investments in people to compete with digital integrate the businesses, which David just discussed.

Full year revenues of $965 million and improved 24% over the prior year.

Subscription revenues improved by 19, 7% over the prior year at about 2% coming from currency and 6% from sequence and transform a 12% core business performance.

The license is about $4 3 million for the full year, reflecting preferences for subscriptions and professional services are occupy 53% for the full year reflective of cohesive.

Moving onto recurring revenue performance, our last 12 months recurring revenues increased by 19, 7%.

The midyear Onboarding of sequent contributed about six percentage points of this improvement.

Our deep and long standing relationships with our accounts like <unk> hundred online to 8% account retention rate.

On a constant currency recurring revenues net retention rate not increasing to 109%.

Our <unk> is up 26% at the same point in time last year as mentioned in prior quarters sequent onboard at 13% of that growth and since this is a constant constant metric business performance accounts for the remaining 13%, which includes the new business growth from our focused S&P initiatives.

I do want to caution with our growth in 2021.

The pandemic and EPC and fuel in 2020.

To illustrate this product we are showing here our <unk> performance since 2017 in relation to an accelerating trend line the.

A significant dip in 2020 is setting a lower comparative basis.

By increasing our Aqua in 2021, which otherwise would have been closer to the trend line.

Also sequence, which is about 10% of our business, which continues to grow at least twice as pastas patently contributed 10, Oclock and snack Chang starting with its acquisition in mid 2021.

I'm showing here, our 2022 outlook with a projected constant currency ADR growth between 14, and 16%, which includes two 5% for the Onboarding of polymer systems and cohort 11 five.

5% from business performance, including sequence.

Our GAAP operating income was $43 3 million for Q4 2021 from $11 million.

And $94 6 million for the full year 2021 from $55 6 million from the prior year.

These GAAP results reflect substantial incremental charges for acquisition related expenses, primarily sequel incremental amortization from purchase intangibles also primarily relating to the steepened acquisition noncash stock based compensation and the one time accounting charge of $91 million related to the modification of our proportionate.

Our nonqualified deferred compensation plan from an equity type of arrangement to interventional make cash type of arrangement.

On the right, our adjusted EBITDA metric normalizes plus option activities.

Fourth quarter improvement in adjusted EBITDA, 13, 9% and for the full year at trough with EBITDA of $324 9 million is an improvement of 22% relative to 2020.

Even within our adjusted EBITDA metric, that's more of our margin performance over time that needs to be honest with you.

<unk> as a public company and our second year of the pandemic.

As you have Greg and David commented on before ending the complex our historic margin performance.

Muted to an annual expansion of our adjusted operating margins of about 100 basis points.

David previously explained the shape of our compensation structure first of all the top executives from only a cash based compensation pre IPO to cash and stock based compensation post IPO.

Based compensation being an add back this favorably impacted our margin performance starting in the fourth quarter of 2020.

Begin normalize our EBITA margin as if the post IPO compensation structure would have been in place from the beginning of 2019.

David also discussed quite sizeable containment related cost savings quantified at $42 million, which benefited our cost structure in 2020.

For 2021, we didn't expect these costs to fully returning to our cost structure and therefore, we edit them on a pro forma basis and normalizing our 2020 margin performance.

Therefore on a pro forma basis, we show a normalized adjusted EBITDA margin of approximately 30% in 2019, 31% in 2020 and the guided towards 32% for 2021.

Now for our 2021 actual performance our operating cost structure again benefited from reduced travel and life events, but with much less I think readout in 2020.

We quantify these cost benefits of $13 million relative to what we expected to incur as a post pandemic rumbling and we again normalize for such savings to provide provide you with a normalized period over period marching performance comparison.

I also happen towards the end of 2021 and going into 2022, vlccs such costs much more in line with our expected post pantechnicon right and that our incremental public company operating costs.

Also fully absorbed in our cost structure.

With an actual the chop with EBITDA margin of 33, 7% and the normalized the chocolate EBITA margin of 32, 3% with fully delivered on our adjusted EBITDA margin commitment of approximately 32% for 2021.

For 2022, we see significant opportunities to invest into topline call. We therefore purposefully set of our margin expansion pocket and approximately 33% to be 100 basis points of Bahar normalized 2021 margins.

Our outlook is obviously informed by our current sense of tone of business and our outlook assumes that the foreign currency exchange rates.

Does not contemplate any platform acquisitions Mark already concluded.

Therefore, contemplate acquisition a power line systems.

Accordingly, we expect revenues between one.

$110 million to $1 billion $140 million.

Presenting growth over 2021 revenues of 15 to 18, 1%.

This expected growth, partly offset by foreign exchange headwinds, which we estimate at $18 5 million, notably from a stronger U S dollar to date than last year.

Murphy and the effective natural hedge the FX impact on margins and significantly mitigated.

As I mentioned before we project constant currency Cogs to be between 14 and 16%.

And we expect adjusted EBITDA to be between 370 and $380 million.

<unk> up 33% of the charter with EBITDA margin.

I also include some additional explanations on interest taxes, Capex outstanding shares and dividends.

With respect to liquidity, our Q4 GAAP operating cash flows of $80 6 million and decreased two 1%, while our full year operating cash flow of $288 million increased by 11, 5% over the comparative period in 2020.

We expect that on average our business efficiently generate cash flows from operations at the ratio of 85% to 90% of adjusted EBITA.

Both our Q4 operating cash flow and our full year 2021 operating cash flow at the high end of this range cash conversion ratio of 90, 189% respectively.

In December we entered under very attractive terms and a new $200 million senior secured term loan which will mature in November 2025, corresponding to the maturity of our $850 million revolving credit facility.

We used the funds from the term loan together with cash on hand, and availability from our Undrawn revolving credit facility to fund the acquisition of polymer systems, which closed at the end of January 2022 point, all cash consideration of approximately $700 million.

In 2021, we spend approximately $121 million for the effect of share repurchases associated with stock based compensation.

For 2022, we plan to significantly reduce our cash spend for searching our pipelines are distributing she has to participants on the cost basis.

Will you Mark the cash savings to fund programmatic acquisitions and to pay down debt.

I also remind you that during the first and second quarter of 2021, the execute the placement of our 2026 and 2027 congrats on remote Phy combined principal of $1 2 billion in annual cash interest obligation of only $3 million.

His notes, which are unsecured if attractive congressional strike prices. We consider these notes would be a more permanent part of our capital structure and if you apply the majority of the proceeds to fund the approximately 900 million cash consideration for our acquisition of CCAR.

As of the end of December and up on concentration of pro forma adjustments to reflect the financing of the 700 million cash purchase price consideration.

Additional power lines for instance, our pro forma net senior leverage was one six times.

Pro forma availability.

The revolving credit facility was $358 million.

Including the convertible notes as effectiveness, our pro forma net debt leverage was five times as of the end of December .

Our business with its predictable and visible cash flows can respect well our capital structure is very numerical shape and able to support continued growth initiatives and programmatic acquisitions between Teng.

And with that I think we are ready for Q&A. Thank you.

Okay.

Okay.

Okay.

Okay.

Hey, Kerry or are you going to.

Organize the Q&A.

Carey you might be muted.

I needed to get a muted sorry about that we'll begin with Jason <unk> from Keybanc.

Okay.

Yeah.

Yeah.

Okay.

Great can you hear me yes.

Perfect can't seem to get them out of anyone I guess that's okay.

So you know Greg now the comments on SMB.

Very nice to see.

Continuing all throughout the year, but what modules are you seeing the most uplift in <unk>.

At this point are you seeing these SMB customers supplementing their design and modeling processes with Ali.

Or are they.

Replacing their existing solutions.

Okay.

Well I think the majority of it would be replacing existing solutions. Many of them had not been aware of us.

Reaching them with social.

Social media marketing and so forth.

But there is a significant minority.

Theyre, starting with specialized products the more expensive.

<unk>.

Again.

Find us through querying and we convert those sales, but I think the majority of it is a competitive game.

Okay.

Drifting.

And then maybe one quick one on <unk>.

The acquisition now before you guys bought them.

It was running at EBITDA margins have doubled.

But based on kind of the guidance outlook it looks like not only reinvesting that difference in the loss of organization. So does the 2022 revenue than any of our guidance does assume a loss.

Continues to grow up the historical level.

And then I guess could we see upside.

Great.

With the investments and.

Ramp up well.

Well, we expect to grow faster, which is the reason to spend relatively more of course it was in private equity ownership, which seem to act as if it wanted to to maximize current period profitability, but that's not how we do things we want to benefit the future and as much as we can so what we wanted to get.

The next several years of development plans on Tls part done as soon as we as soon as the end one year.

And especially to.

Globalize, the offering and bring together thats great integration. So we're just salivating and all these directions, because there's never been a more auspicious.

Market opportunity than now for <unk>.

Transmission grid and integrated grid.

So this is the reason we are operating at not business as usual, but within our acceleration group, where we can put all of this impetus together and.

Spend more and accomplish more than in the past they were on so it is not business as usual for us with more business as usual for Pls and the integrated group now, including Spider and hour.

Tower business together do you want to add more on that David Haughton.

Yeah.

No.

We are indeed investing.

Some of that margin windfall, if you will Jason and we expect.

We expect gross returns as a result.

Okay, perfect I'll get back in queue. Thank you.

Well next go to Matthew Broome from Mizuho.

Okay great.

You can all hear me.