Q3 2023 Bentley Systems Inc Earnings Call

Speaker 1: Good morning and thank you for joining Bentley Systems Q3 2023 operating results. I'm Eric Boyer, Bentley's Invest Relations Officer. On the webcast today, we have Bentley Systems Chief Executive Officer Greg Bentley, Chief Operating Officer Nicholas Cummins, and Chief Financial Officer Werner Andrei. This webcast includes forward-looking statements made as of November 7, 2023, regarding the future results of operations and financial position, business strategy, and plans, objectives for the future operations of Bentley Systems, incorporated.

Good morning, and thank you for joining Bentley systems, Q3, 2023 operating results I'm, Eric Boyer Chief Investor Relations Officer.

Webcast today.

<unk>, Chief Executive Officer, Gregg Beloff, Chief operating officer.

And Chief Financial Officer Andre. This webcast includes forward looking statements made as of November seven 2023 regarding future results of operations and financial position business strategy and plans objectives for the future operations of Bentley systems incorporated all.

Speaker 1: All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements

All such statements made are contained during this webcast other than statements of historical fact are forward looking statements. This webcast will be available for replay on battery systems Investor Relations website at investors.

Speaker 1: This webcast will be available for replay on Bentley Systems Investor Relations website at investors.bentley.com on November 8th, 2023. After our presentation, we'll conclude with Q&A. And with that, let me introduce the CEO of Bentley Systems, Greg Bentley.

On November eight 2023 after our presentation will conclude with Q&A now with that let me introduce the CEO of Bentley systems quite badly.

Speaker 2: Good morning and of course thanks to each of you for your interest and investment in Bsy

Good morning, and of course, thanks to <unk>.

Each of you for your interest and investment in D. S y <unk>.

Speaker 2: In our agenda, I start by interpreting directions within our quarterly operating.

In our agenda I start by interpreting directions within our quarterly operating results.

Speaker 2: Each quarter, a natural KPI headline, is our ARR Grove, year-over-year business performance.

Each quarter, a natural K P I.

Is our AOR growth year over year business performance.

Speaker 2: While in 23 Q3 that nominally ticked down to the 12.5% midpoint of our financial outlook for the year.

While in 'twenty, three Q3 that nominally kicked down 12, 5% midpoint of our financial outlook for the year.

Speaker 2: This nonetheless represents continuity in our strong growth momentum given puts and takes specific to this quarter, which I will explain. And we are likewise steadily tracking to our planned annual gains in operating margins and cash flows.

It Nonetheless represents continuity and our strong growth momentum.

Given puts and takes specific to this quarter, which I will explain.

And we are likewise steadily tracking to our planned annual gains in operating margin and cash flow.

Speaker 2: Leading the way, even among more broadly strong market conditions this quarter, is the public works slash utilities infrastructure sector in the U.S.

Leading the way even among more broadly strong market condition. This quarter is the public works slash utilities infrastructure sector in the U S.

Speaker 2: With almost half of our ARR here, this mainstay in effect serves as the governor on our underlying flywheel.

With almost half of our <unk> here.

This mainstay in effect serves as the governing our underlying flywheel.

Speaker 2: US public works slash utilities continues to benefit from the fundamental expansion emerging finally beyond transportation of infrastructure investment and job...

U S public works Slash utilities continues to benefit from the fundamental expansion emerging finally beyond transportation.

With infrastructure investment and jobs Act funding.

Speaker 2: This quarter's ACEC survey of US engineering firms across all sectors reports a medium current backlog of 11 months reflecting an engineering resource capacity gap.

This quarter's AC E C survey of U S engineering firms across all sectors reports a medium current backlog of 11 months.

Reflecting an engineering resource capacity gap.

Even more pertinent for digital workflow investment.

Speaker 2: Expectations for a year from now across economic sentiment anticipate an even stronger market for engineering firms throughout next year. That will result.

Expectations for a year from now across economic sentiment anticipate uneven stronger market for engineering firms to add next year.

That will result in yet higher backhaul.

Speaker 2: When ACEC asked this time about the lack of qualified workers.

When a C E C ask this time about the lack of qualified workers.

Speaker 2: You see there was strong agreement that an engineering resource capacity gap is already constraining engineering firms from growing to meet this backlog of work.

You see there was strong agreement that an engineering resource capacity gap is already constraining engineering firms from growing to meet this backlog of work.

Speaker 2: Another indicator of this engineering resource capacity gap is that the average duration that our applications are used in a workday has continually increased now by 23 minutes per day since before the pandemic. We will shortly come back to count these workdays.

Another indicator of this engineering resource capacity gap is that the average duration that our applications are used in a workday has continually increased now by 23 minutes per day since before the pandemic it.

We will shortly come back to count these factories.

As Nicholas will report firsthand.

Speaker 2: The capacity gap is motivating infrastructure engineering organizations everywhere to more than ever prioritize going digital.

The capacity gap is motivating infrastructure engineering organizations everywhere to more than ever prioritize going digital.

Speaker 2: and with the resulting demand broadly pervasive across infrastructure sectors and global regions.

And with the resulting demand broadly pervasive across infrastructure sectors and global regions. Our net revenue retention the trailing indicators for growth in existing accounts remains added sustained high level.

Speaker 2: Our net revenue retention, the trailing indicator for growth in existing accounts, remains at its

Speaker 2: So then, what's up or rather down with year over year ARR growth as of this most recent quarter?

So van what's up but rather down with year over year AOR growth as of this most recent quarter end.

Speaker 2: Well, a plurality of ARR is now under our E365 program for our largest accounts.

Well, a plurality of AUR or is now under our <unk> hundred 65 program for our largest accounts.

And in Q3 23.

Speaker 2: This E365 proportion, of course, continued to grow.

<unk> hundred 65 proportion of course continued to grow both through accretion within existing <unk> hundred 65 accounts.

Speaker 2: both through accretion within existing E365.

Speaker 2: And by account, the spend over 100 K per year in a R. R. Hence, we consider to be 365 prospects rather than S. M. D. upgrading to 365 from our select subscription.

And by account.

Our spend over 100 K per year in a R. R. Hence we consider to be <unk> hundred 65 prospects rather than S. M D upgrading to <unk> hundred 65 from our select subscription program.

Speaker 2: Under E365, we charge accounts for our project-wise and asset-wise enterprise collaboration systems based on the total number of users or assets respectively in the quarter. But the majority of our E365 charges are for daily consumption of our applications.

Under a 365, we charge accounts for our project wise and asset Wise enterprise collaboration systems based on the total number of users or assets, respectively in the quarter.

But the majority of our <unk> hundred 65 charges are for daily consumption of our applications.

Speaker 2: which consumption occurs substantially on the weekday workdays during a quarter.

Which consumption occurs substantially on the weekday workdays during a quarter.

Speaker 2: A year ago, 22Q3 had a calendar with 66 weekdays. But 23Q3 had a calendar with 66 weekdays.

A year ago, 22, Q3 had a calendar with 66 weekdays.

But 23 Q3's calendar.

Speaker 2: ended with a weekend day and began with two weekend days that were followed by effectively two holidays in the US rather than one holiday last.

Ended with a weekend day and began with two weekend days that were followed by effectively two holidays in the U S rather than one holiday last year.

Speaker 2: Now, even though half of our businesses in the US, holidays aren't universal. So even setting aside the comparative effect of that four-day weekend, if we just count all weekdays as workdays, 23 Q3s, E365 consumption year over year comparison suffers as a result of having had one last weekday, slash workday, than 22 Q2.

Now, even though half of our business is in the U S holidays arent universal so even setting aside the comparative effect of that four day weekend. If we just count all weekdays as workdays twenty-three Q3's E 365 consumption year over year comparison suffers.

As a result of having had one less weekday slash workday.

Jan 'twenty two to Q3.

Speaker 2: Moreover, because we annualize E365AR by multiplying the trailing quarters consumption by 4,

Moreover, because we annualize <unk> hundred 65, a R. R by multiplying the trailing quarters consumption by 420.

Speaker 2: 23 Q3s year-over-year ARR growth was negatively impacted by effectively losing four weekday work days of E365 consumption.

23, Q3's year over year, a or our growth was negatively impacted by effectively losing four weekday work days of E 365 consumption.

Speaker 2: But as you can also see here, this phenomenon will normalize here during 23Q4 as both years, fourth quarters, and the full years have the same weekday.

But as you can also see here. This phenomenon will normalize here during twenty-three Q4 has both years' fourth quarters and full years have the same weekday Ken.

Speaker 2: Now our overall ARR growth of course comes not only from net retention and accretion for our existing accounts, increasingly through E365 as we have been discussing, but also from new logos.

Now our overall AOR growth of course comes not only from net retention and accretion for our existing accounts increasingly through E. 365, as we have been discussing but also from new logos, which for twenty-three Q3 again accounted for 3% of our.

Speaker 2: which for 23 Q3 again accounted for 3% of our ARR.

Our our growth.

Speaker 2: New logos, of course, tend to start as SMB.

New logos of course tend to start as S. M D.

Speaker 2: We have become confident in being able to grow our SND business, at least as fast as we grow E365 for our enterprise accounts. And in 23Q3, SND growth was fast.

We have become confident in being able to grow our SMB business at least as fast as we grow E. <unk> hundred 65 for our enterprise account and.

And in twenty-three Q3 S N V growth was faster.

Speaker 2: By virtue of our own investments in going digital, our virtualosity inside sales group focused on SMD is continually getting better at digital engagement.

By virtue of our own investments and going digital.

We're virtually city inside sales group focused on S. N D is continually getting better at digital engagement.

Speaker 2: The Net Portally ARR editions from our Virtuosive subscriptions continue to come out.

The net quarterly AOR additions from our virtuoso subscriptions continue to compound.

Speaker 2: In 23Q3, Virtueoso subscriptions again attracted over 700 further new laws.

And 23 Q3 virtuoso subscriptions again attracted over 700 further in new logos.

Speaker 2: But in addition to subscriptions, our SMB sales group also offers perpetual license.

But in addition to subscriptions our SMB sales group also offers perpetual licenses.

Speaker 2: largely for differentiation and appealing to prospects who don't have that choice from our principal competitor. Distrib-

Largely for differentiation and appealing to prospects, who don't have that choice from our principal competitor.

This strategy is succeeding.

Speaker 2: Doring 2323, we added almost 300 incremental new logos through perpetualize.

During twenty-three Q3, we added almost 300 incremental new logos to perpetual license sales.

Speaker 2: And as you see, overall we saw in 23Q3 an unprecedented year over year upsurge in purchasers who chose perpetual licenses rather than impressive responsibility.

And as you say overall, we saw in twenty-three Q3, an unprecedented year over year upsurge in purchasers, who chose perpetual licenses rather than subscription.

Speaker 2: We have generally expected this in China, here broken out, as we pivot there intentionally towards localization.

We have generally expected this in China here broken out as we pivot there intentionally towards localization.

Speaker 2: as a result, while our overall new business and revenue in China did increase sequentially and year over year, ARR there continued its expected result in decline.

As a result, while our overall new business and revenue in China did increase sequentially and year over year.

Or are there continued its expected result in decline.

In fact, the <unk>.

Speaker 2: The 97% of our business excluding China did maintain its highest level of year over year AR.

97% of our business, excluding China did maintain its highest level of year over year AOR growth.

Speaker 2: to summarize the business directions of 2323 in light of these puts and takes.

To summarize the business directions of twenty-three Q3 in light of these puts and takes I was pleased with our strong year over year, a or our growth rate notwithstanding a slight decline compared to last quarter in light of the combination of <unk> hundred 65 consumption workday.

Speaker 2: I was pleased with our strong year over year ARR road rate, notwithstanding its slight decline compared to last quarter in light of the combination of the E365 consumption workday anomaly and the observed transition to licensed purchases.

Early and the observed transition to license purchases.

For significant corporate development I start with our annual year in infrastructure conference, where I entitled My keynote presentation going digital towards infrastructure intelligence.

Speaker 2: Start with our annual year in infrastructure conference where I entitled my keynote presentation, going digital towards infrastructure and tele...

Speaker 2: We gathered physically in Singapore last month with our Going Digital Awards Competition final.

We gathered physically in Singapore last month, with our going Digital awards competition finally.

Speaker 2: chosen by juries of independence professionals. And we had there over 120 members of the world's infrastructure media, and we live streamed from...

Chosen by jewelry ease of independent professionals, and we had there over 120 members of the world's infrastructure media and we live streamed from there.

Speaker 2: I think here an infrastructure is the best available means to understand the fundamental of our business on the ground. But the time zone made even

I think here in infrastructure is the best available means to understand the fundamentals of our business on the ground.

But the time zone made even virtual attendance difficult So investor Relations Officer, Eric Boyer attended and has compiled a video of the two edited keynotes in other conference highlights, which is now available for you on our Investor Relations website.

Speaker 2: So Investor Relations Officer Eric Boyer attended and has compiled a video of the two edited keynote and other conference highlights which is now available for you on our Investor Relations Web.

Speaker 2: The global nature of the year and infrastructure was signified by the provenance of the 36 finalists chosen from the 300 plus nominees in 51 countries.

The global nature of a year in infrastructure with signify by the prevalence of the 36 finalists chosen from the 300 plus nominees in 51 countries.

Speaker 2: Once again this year, the region with the most finalists was Asia-X China with a prolific concentration of digital events.

Once again this year the region with the most finalists was Asia ex China with a prolific concentration of digital advancements.

Speaker 2: I've referenced many examples from our host country, Singapore, leading away to infrastructure and tele.

I referenced many examples from our host country, Singapore, leading away to infrastructure intelligence.

Speaker 2: in a world with a widening infrastructure engineering resource capacity.

In a world with a widening infrastructure engineering resource capacity gap.

Speaker 2: To me, the most significant headline comes from our having asked each nominee this year for the first time to quantify their project engineering savings from going digit.

To me the most significant headline comes from our having asked each nominee this year for the first time to quantify their project engineering savings from going digital.

Speaker 2: For those finalists where this could be calculated as a percentage, the median was...

For those fine lists where this could be calculated as a percentage of.

Median was 18%.

Speaker 2: This underscores the importance and potential of our DSY busy work and other year an infrastructure conference to help promulgate these digital workflow advancements which can make a different of such

This underscores the importance and potential of our B S Y busy work.

And all of the year and infrastructure conference to help promulgate. These digital workflow advancement, which can make a difference of such magnitude.

Speaker 2: As an indication of good traction from such efforts toward making all projects as good as the best product,

As an indication of good traction from such efforts toward making oil projects as good as the best projects while in the past we have reported on digital twin progress among the finalists only.

Speaker 2: While in the past, we have reported on digital twin progress among the finalists only. I find it encouraging that this year, among all the 300 plus nominated projects.

I find it encouraging that this year among all of the 300 plus nominated projects fully 28% credit reality modeling.

Speaker 2: Fully 28% credit reality modeling are I twin capture software for creating engineering grade as operated 3D model, generally from drone surveying as the context for digital twin.

My twin capture software for creating engineering grade as operated three D models generally from drone surveying is the context for digital twins.

Speaker 2: And likewise, our SYNCH RO4D construction modeling is now credited by fully 17% of all 300 plus nominated projects.

And likewise, our sink grow four D. Construction modeling is now credited by fully 17% of all 300 plus nominated projects.

Speaker 2: Given that virtually all design modeling and simulation is already performed in 3D, we believe that seamlessly incorporating four-d simulation inevitably underlies the future of construction, while also delivering the digital twin building blocks for infrastructure intelligence during the lifecycle of resilient asset operations.

Given that virtually all design modeling and simulation is already performed in three D. We believe that seamlessly incorporating four day simulation inevitably underlies the future of construction, while also delivering the digital twin building blocks for infrastructure intelligence.

The lifecycle of resilient asset operations.

Speaker 2: And while it is encouraging that this year, 64% of finalists credit our I-Twin platform for any or all of such digital twin events.

And while it is encouraging that this year, 64% of finalist credit our <unk> platform for.

For any or all of such digital twin advancement.

Speaker 2: I think it's even more significant for I-Twin now to be credited by fully 35% of all 300 plots nominated.

I think it's even more significant for eye twin now to be credited by fully 35% of all 300 plus nominated projects.

Speaker 2: Indeed, the I-Twin platform and Schema commonality across our Bentley infrastructure cloud enables infrastructure engineering data to compound in value throughout project and asset life cycles. As to the extent...

Indeed, the <unk> platform and scheme of commonality across our bently infrastructure cloud enabled infrastructure engineering data to compound in value throughout project and asset lifecycle.

As to the extent of this potential value.

Speaker 2: We estimate that our project-wise users are currently accumulating over 100 million new unique digital components per month for their future benefits.

We estimate that our project wise users are currently accumulating over 100 million new unique digital components per month for their future benefit.

Speaker 2: While Nicholas will next talk about how generative AI will yet further compound the value for an account of their data in ProjectWise, for instance, through co-pilot training and reuse of their data across their new projects,

While Nicholas will next talk about how generative AI will yet further compound the value for an account of their data in project Wise for instance through co pilot training and reuse of their data across their new projects at.

Speaker 2: At Year-An Infrastructure, I highlighted several infrastructure intelligence strategies already being showcased by finalists.

At year of infrastructure I highlighted several infrastructure intelligence strategies already being showcased by finalists there.

Speaker 2: And the forefront of compounding value from accumulating data is BP, subject of this press release last week.

In the forefront of compounding value from accumulating data is b P subs.

Subject of disc press release last week too.

Speaker 2: To our knowledge, BP's deployment of AssetWise Asset Lifecycle Information Manager

To our knowledge P. Pes deployment of asset wise asset lifecycle information management now underway globally. After its 2019 implementation in the North Sea.

Speaker 2: Now underway globally after its 2019 implementation in the North Sea.

Speaker 2: becomes the industrial infrastructure sector's only initiative to leverage the same cloud-based central information store across all projects and operations.

Becomes the industrial infrastructure sectors only initiative to leverage the same cloud based central information store across all projects and operations.

Speaker 2: Where otherwise the unfortunate norm is for separate enterprise systems to remain disconnected.

Where otherwise I see unfortunate norm is for a separate enterprise systems to remain disconnected.

Speaker 2: BP's infrastructure engineering data can compound in value from projects through operations.

<unk> PS infrastructure engineering data can compound in value from projects through operations with asset wise reliability working to optimize inspections minimize maintenance costs increase availability and to improve safety and risk management.

Speaker 2: with asset-wise reliability working to optimize inspections, minimize maintenance costs, increase availability, and to improve safety and risk management.

Speaker 2: At $106 billion of net infrastructure value, BP is number 33 among the just released 2023 Bentley Infrastructure 500 top owners rankings available at the link here.

At $106 billion of net infrastructure value.

P is number 33, among the just released 2023 Bentley infrastructure 500 top owners rankings available at building here.

Speaker 2: As I believe our greatest ongoing growth opportunities are in digital twin advancements for operations and maintenance.

As I believe our greatest ongoing growth opportunities are in digital twin advancements for operations and maintenance it.

Speaker 2: It is gratifying three port that our current revenue run rate from serving 359 of these 500, 2,023 top owners, increased by over 20% from the comparable revenue run rate for 2022.

It is gratifying to report that our current revenue run rate from serving 359 of these 502023 top owners increased by over 20% from the comparable revenue run rate for 2022.

Speaker 2: And while fully half of our revenue run rate is now from infrastructure owner operators in general, our revenue run rate from just these 500 top owners who like BP have the most again from compounding the value of their engineering data through infrastructure digital twins, now exceeds 20% of our overall total.

And while fully half of our revenue run rate is now from infrastructure owner operators in general our revenue run rate from just these 500 top owners.

Who would like a V P have the most to gain from compounding the value of their engineering data through infrastructure digital twins now exceeds 20% of our overall tone.

Speaker 2: Speaking of rankings, the annual ARC Bigtable for Engineering Design Tools, this year acknowledged BS-wise number one leadership, not only in these infrastructure sub-sectors which they track individually, but now also for owner-

Speaking of ranking the annual Arc League tables for engineering design tools. This year acknowledged B S wise number one leadership.

Not only in these infrastructure subsectors, which they track individually.

But now also for owner operators in total.

Speaker 2: To me, that means we're on the right track towards ROI from infrastructure.

To me that means we are on the right track towards ROI from infrastructure intelligence.

Speaker 2: Finally, I am glad to report since last quarter, two programmatic acquisitions.

Finally, I am glad to report since last quarter to programmatic acquisitions.

Speaker 2: Well, even more immaterial financially than most others, each of these is significant strategic.

While even more immaterial financially than most others. Each of these is significant strategically.

Speaker 2: Our I-Twin Ventures approach has adapted to view the changed venture capital valuation environment opportunists.

Our twin ventures approach has adapted to view the changed venture capital valuation environment Opportunistically.

Speaker 2: rather than a typical DC multitude of small states.

Rather than a typical VC multitude of small stakes. We are now open to outright acquisitions of earlier stage companies that can become significant within our digital twin ecosystem.

Speaker 2: We are now open to outright acquisitions of earlier stage companies that can become significant within our digital twin ecosystem.

Blake see.

Speaker 2: Our first acquisition in what I call asset analytics applies AI to crowdsource data to detect for roadway operators immediate maintenance conditions such as obstruction.

Our first acquisition in what I call asset analytics applies AI to crowd source data to detect for roadway operators immediate maintenance conditions such as obstructions.

Speaker 2: Quality of Lane divider paint and or actual versus planned construction.

Polity of lane divider paint <unk> actual versus planned construction zones.

Speaker 2: We will have more to say next year about consolidating asset analytics opportunities. To go beyond our primary current business model, which charges primarily per user.

We will have more to say next year about consolidating asset analytics opportunities to.

To go beyond our primary current business model, which charges primarily per user.

Speaker 2: incrementally monetized digital twin subscriptions per asset and for instance per mile.

To incrementally monetize digital twin subscriptions per asset.

And for instance per mile as does <unk>.

Speaker 2: Last quarter I discussed this year's capital market induced slowdown in exploration for new minds. And it's.

Last quarter I discussed this year's capital market induced slowdown in exploration for new mines and.

And its impact on sequencing.

Speaker 2: While this pause in new minds continued during 23Q3, Seekplint, which depends more on continuous operating and expansion of existing minds, is still growing faster than BSI as a whole.

While this pause in new mines continued during twenty-three Q3 seek plant, which depends more on continuous operating and expansion of existing mines is still growing faster than b S y as a whole.

Speaker 2: So less fast now than our other platform acquisition power line.

So less fast now than our other platform acquisition power line systems.

Speaker 2: A source of greater balance and resilience for Seekland is our comprehensive agenda to expand the role of subsurface modeling for civil and environmental infrastructure, which for Seekland is now growing as fast as their mining.

A source of greater balance and resilient for seed plant is our comprehensive agenda to expand the role of subsurface modeling for civil and environmental infrastructure, which for sequel is now growing as fast as their mining mainstay.

Speaker 2: To further this, we announced that you're an infrastructure the pending acquisition of flow state solution.

To further this we announced at year on infrastructure, the pending acquisition of flow state solutions, extending seek plant market, leading geothermal comprehensiveness to the simulation of geothermal reservoirs, well bores and surface networks.

Speaker 2: extending seek plants, market leading geothermal comprehensiveness to the simulation of geothermal reservoirs, well-bores, and surface.

Speaker 2: Like C-Plan itself, flow state solutions is based in New Zealand, where geothermal already account for almost 20%.

Legacy point itself flow State solutions is based in New Zealand, where geothermal already account for almost 20% of.

Power production.

Speaker 2: And now from these quarterly directions and developments, over to Nicholas for a more complete operational perspective on 23Q3.

And now from these quarterly directions and development.

Over to Nicholas for a more complete operational perspective on 23 Q3. Thanks.

Thank you Greg.

Speaker 3: The Endering Resource Capacity Gap is indeed top of mine.

The injury resource capacity gap is indeed top of mind.

Speaker 3: Two weeks ago, I attended a COSIMMET for top-endring firms organized by AC advisors. There were two takeer ways, when...

Two weeks ago I attended a few summit for top entering firms organized by <unk> advisors.

There were two takeaways relevant for this conversation.

Speaker 3: First, firms recognize their role in solving the world's biggest problem.

First turning to recognize their role in solving the world's biggest problems.

Speaker 3: Infrastructure is key to support economic growth, ensure energy security and address climate change.

Infrastructure is key to support economy growth and energy security and address climate change.

Speaker 3: Second, firms cannot find enough engineers to do this important work. And they are looking for solutions.

Second firms cannot find enough engineers to do this important work and they are looking for solutions.

Speaker 3: Software is how they will drive efficiency as one engineering firm CEO said during a panel conversation

Software is how they will drive efficiency as one engineering firm CEO said doing a panel conversation.

Speaker 3: This is a great summary of our current market condition.

This is a great summary of our current market conditions.

Speaker 3: Let's start with infrastructure sectors. The trends remain broad in line with Q2.

Let's start with infrastructure sectors, the trends remain broadly in line with Q2.

Speaker 3: AR Growth was once again led by public works and utility

Our growth was once again led by public works and utilities.

Speaker 3: The sector continues to benefit from large infrastructure investments around the world. And we expect this to be the case for years to come.

The sector continues to benefit from large infrastructure investments around the world and we expect this to be the case for years to come.

Speaker 3: AR Growth and Resources remain above company average.

ER growth in resources remain above company average.

Speaker 3: Equate with its core business in mining, performed as expected. As discussed last quarter, we see less funding available to finance new exploration projects.

Sequent with its core business in mining performed as expected.

As discussed last quarter, we see less funding available to finance new exploration projects.

Speaker 3: However, the sequence is used through the mining value chain. And as well, position 12 mining companies be more efficient when under margin pressure.

Sequent as use profiled the mining value chain and is well positioned to help mining companies be more efficient when under margin pressure.

Speaker 3: AR growth in industrial soft and somewhat. In particular with EPCs in India and Southeast Asia, focus on energy projects after many quarters of rapid expansion. The commercial and fast.

ER growth in industrial softened somewhat in particular with Epc's in India, and Southeast Asia focus on energy projects. After many quarters of rapid expansion.

The commercial and facility sector remained flat.

Speaker 3: Moving on to regions, America has performed well once again led by North America, with more federal money from IITA being spent on a greater variety of infrastructure in the US, and given a strong momentum with the state departments of transportation.

Moving onto regions America performed well once again led by North America with more federal money from IAG being spent on a greater various give infrastructure in the U S and given our strong momentum with the state departments of transportation.

Speaker 3: or growth rates with DOTs has increased by 50% year over year.

Our growth rate with <unk> has increased by 50% year over year.

Speaker 3: All the more impressive given that these departments increasingly outsource work to their ecosystem of end-earing services firms.

All of the more impressive given that these departments increasingly outsource work to their ecosystem of engineering services firms.

Speaker 3: EMEA's growth continues to benefit from public funding for projects across transportation, water and energy. Some of these projects were...

Emea's growth continued to benefit from public funding for projects across transportation water and energy.

Some of these projects were financed at <unk> infrastructure.

Speaker 3: We are also growing with entering firms who are expanding their reach outside their home country, due to the strong demand environment in the broader region.

We are also growing with engineering firms, who are expanding their reach outside their home country due to the strong demand environment in the broader region.

Speaker 3: In Asia Pacific, the main group of drivers were Australia and India.

In Asia Pacific The main growth drivers were Australia and India.

Speaker 3: In the region transportation water continues to be strong performed.

In the region transportation water continued to be strong performance.

Speaker 3: China continues to wait down broader AR growth, given the preference there for perpetual licenses. Returning to the...

China continued to weigh down broader AOR growth given the preference there for perpetual licenses.

Returning to the departments of transportation in the U S.

Speaker 3: We are partnering with the DOTs in new ways, both to help them secure funding and help them in going digital across their respective ecosystem.

We are partnering with the duties and new ways, both to help them secure funding and have been in growing digital across their respective ecosystems.

Speaker 3: We are squarely in year two of the IIG's implementation and new and increased funding streams are available for DOTs to take advantage of.

We are squarely in year two of the <unk> implementation and new and increased funding streams are available for the Ot to take advantage off.

Speaker 3: For example, we help 13 departments apply for federal advanced digital construction management systems grants, which can fund software purchase.

For example, we have 13 departments apply for federal advanced digital construction management systems grants, which can fund software purchases.

Speaker 3: We believe these efforts will help strengthen or momentum make sure that these grants get awarded.

We believe these efforts will help strengthen our momentum next year as these grants get awarded.

Speaker 3: Despite the new funding, the DOTs are also impacted by engine resource capacity constraints, which create an exciting opportunity for us to help them drive efficient.

Despite the new funding the duties are also impacted by engineering resource capacity constraints, which creates an exciting opportunity for us to help them drive efficiency.

Speaker 3: For example, we partnered with Ashtow, a nonprofit organization of all US state DOTs, to support digital delivery across their value chain, including streamlined design to construction processes.

For example, we partnered with Astro and nonprofit organizations, all USD dot's to support digital delivery across their value chain, including streamline design to construction processes.

Speaker 3: Overall, we are excited about the expanding opportunities with the DOTs and our increasing role as a trusted part.

Overall, we are excited about expanding opportunities with the duties and are increasing role as a trusted partner.

Speaker 3: Regarding products, the main growth drivers are also in line with a previous quarter. We had noticeable growth with our civil and engineering applications open rows and open bridge. Our structural and engineering applications, staff and staff, as well as PLS for electrical transmission structure.

Regarding products. The main growth drivers are also in line with the previous quarter, we had noticeable growth with our civil engineering applications open roads and bridge, our structural engineering application stat, and Saks as well as Q&A for electrical transmission structures. We're also seeing continued success with open flows water motoring.

Speaker 3: We also see continued success with the open flow's water modeling application, which is becoming a go-to product for water infrastructure around the world.

Application, which is becoming a go to product for water infrastructure around the world.

Speaker 3: As Greg mentioned, 2023 was a groundbreaking year for infrastructure intelligence.

As Greg mentioned 2023 was a groundbreaking year for infrastructure intelligence.

Speaker 3: We have been impressed by the progress made by infrastructure organizations in leveraging data to improve product delivery and asset performance. As exemplified by the going digital awards finance.

We have been impressed by the progress made by infrastructure organizations in leveraging data to improve project delivery and asset performance as exemplified by the growing Digital award finalist.

Speaker 3: If data is the obvious foundation of infrastructure intelligence, digital twins of the building blocks.

If data is the obvious foundation of infrastructure intelligence digital twins are the building blocks.

Speaker 3: Digital twins are used to unlock and during data from far so that it can be analyzed, reuse across projects, enrich with operational and enterprise data, and mobilize across infrastructure life sectors.

Digital twins are used to unlock engineering data from fast so that it can be analyzed reuse across projects enriched with operational and enterprise data and mobilize across infrastructure lifecycle.

Speaker 3: Because of the power of digital twins, we are evolving our entire product portfolio to leverage I twin or digital twin platform to accelerate infrastructure intelligence.

Because of the power of digital twins, we're evolving our entire product portfolio to leverage <unk>, our digital twin platform to accelerate infrastructure intelligence.

Speaker 3: At Year-In-Interest, to last year, we launched Ben Interest at Cloud, including product-wide part by I-Twin.

At year end infrastructure last year, we launched spending faster to cloud, including product wise powered by twin.

Speaker 3: This year, we announced that we're bringing our twin to badly open applications, starting with the next release of a orchestration for systematic use of digital twins and the design stays of the infrastructure life cycle.

This year, we announced that we are bringing a twin to bend the open applications starting with the next release of Microstation for systematic use of digital twins in the design phase of the infrastructure lifecycle.

Speaker 3: This will enable users to collaborate in real time, evaluate the impact of changes more seamlessly, and significantly reduce rework and errors, resulting in better designs faster.

This will enable users to collaborate in real time evaluate the impact of changes more seamlessly and significantly reduce rework and errors, resulting in better designed faster.

Speaker 3: When we talk about infrastructure intelligence, we of course think about this significant role that artificial intelligence can play in improving product delivery and asset performance.

When we talk about infrastructure intelligence, we of course think about the significant role that artificial intelligence can play in improving product delivery and asset performance.

Speaker 3: AI was an important topic at the infrastructure, and it was top of mind for the injury from fields I met two weeks ago.

AI was an important topic idea in infrastructure and it was top of mind for the injury from Ceos I met two weeks ago.

Speaker 3: desic opportunities to use AI to increase exponentially the efficiency and effectiveness of the engineer.

They seek opportunities to use AI to increase exponentially the efficiency and effectiveness of the engineers.

Speaker 3: As I mentioned last quarter, Bentley is not new to AI. We already used AI in our software for a set monitoring and we see huge potential for generative AI during the design phase of infrastructure life.

As I mentioned last quarter Bentley is not new to AI, we already use AI in our software for asset monitoring and we see huge potential for generative AI during the design phase of the infrastructure lifecycle.

We believe generative AI will empower not replace infrastructure engineers.

Speaker 3: Consider our own software engineers use GitHub Copilot, a generative AI tool to assist with development by generating routine or basic code, documentation, automated test cases, and more.

Consider our own software engineers use Github copilot.

AI tool to assist with development by generating routine or basic code documentation automated test cases and more.

Speaker 3: We envision a comparable copilot for infrastructure engineers, which can take on mundane and time-consuming tasks during the design process, so that engineers can focus on higher-value activity.

We envision a comparable copilot for infrastructure engineers, which can take call mundane and time consuming task during the design process. So that engineers can focus on higher value activities.

Speaker 3: At UN infrastructure, we presented our approach to the AI for infrastructure engineering.

At <unk> infrastructure, we presented our approach to generate that AI for infrastructure engineering.

Speaker 3: beginning with an AI agent that assists engineers in further optimizing site layouts by leveraging designs and data from their previous project.

Beginning with an AI engine that assist engineers in further optimizing slightly house by leveraging designs and data from their previous projects.

Speaker 3: We also showed how GERN TDI can be applied to minimize time spent on product documentation by automating drawing production with fit for purpose and rotation.

We also showed how generative AI can be applied to minimize time spent on current documentation by automating joined production with fit for purpose limitations.

Speaker 3: Capabilities like this can improve engineers productivity and their overall work experience. Both being essential in light of the engineering resource capacity.

Capabilities like these can improve engineers productivity and their overall work experience.

<unk> being essential in light of the engineering resource capacity gap.

Speaker 3: Of course, to train GTI models, you need data. And we have a responsibility to our users to be very explicit about our approach to their data.

Of course to train generative AI models, you need data and.

And we have a responsibility to our users to be very explicit about our approach to their data.

Speaker 3: We presented our commitments to data stewardship at the University of California.

We presented our commitment to data stewardship at year and infrastructure.

Speaker 3: While we are committed to help our users derive even more value from the engineering data that secure in Ben and Fassocto Cloud, including maximizing its potential for generative AI, we are also clear that they retain all access and control over it. Our user's data is

While we are committed to help our users derive more value from the engineering data the secure embedded infrastructure cloud, including maximizing its potential for generic <unk> AI.

We are also clear that they retain all access and control over it.

Or uses data is their data.

Speaker 3: They get to decide how to use it to train your eyes for their benefit.

Ways that get to decide how to use it to train AI for their benefit.

Speaker 3: One last stop. For infrastructure engineering, as proven by our software engineering experience, the resource will be better, not weaker, from accounts for use of their own product data, rather than the least common denominator of unknown engineering data that will be somehow aggregated.

One last thought for infrastructure engineering as proven by our suffering viewing experience the results will be better not weaker from accounts for use of their own product data rather than the least common denominator.

Entering data that will be somehow aggregated.

Speaker 3: With that said, I will now hand over to VANN for details or financial results. Thank you, Nikola.

With that said I will now hand over to <unk> for details of our financial results.

Thank you Nikolas.

We are pleased with another strong quarter.

Speaker 4: Total revenues for the third quarter, were 307 million, up 14% over year, or 11% in constant.

Total revenues for the first quarter of our $307 million up 14% year over year or 11% in constant currency.

Speaker 4: year-to-date total revenue school 13% on their reported and constant

Year to date total revenues grew 13% on a reported and constant currency basis.

Speaker 4: Subscription revenues for the quadricle, will 15% here a year, what's 12% in constant currency, and represented 80% of all our total revenues.

Subscription revenues for the quarter grew 15% year over year, 12% in constant currency and represented 80% of our total revenues.

Speaker 4: The year-to-date subscription revenues grow 14% on the reported and constant current.

Year to date subscription revenues grew 14% on a reported and constant currency basis.

Speaker 4: The onboarding of power and system at the end of January 2022 accounts for approximately half a percentage point of this year's adating.

The Onboarding of power line systems at the end of January 2020 tool the comscore approximately half a percentage point of this year to date improvement.

Speaker 4: Our E365 and SMB initiatives continue to be solid contributors to our subscription rating.

Our <unk> hundred 65 in SMB initiatives continue to be solid contributors to our subscription revenue growth.

Speaker 4: The petrol license revenues for the third quarter group 26% but 23% in constant current.

Perpetual license revenues for the third quarter grew 26% from 23% in constant currency.

Speaker 4: You debate perpetual license revenues grow 6% on the reported and constant currency base.

Year to date perpetual license revenues grew 6% on a reported and constant currency basis.

Speaker 4: Even though perpetual license sales make up only 4% of total revenue.

Even though perpetual license sales make up only 4% of total revenues and we will certainly remains small relative to our recurring revenues they are likely to become more significant to us as stated in 'twenty three Q3.

Speaker 4: and will certainly remain small relative to our recurring revenues. They are likely to become more significant to us.

Speaker 4: This is particularly true for SMB, where the service is competitive differentiator, helping us to attract new logos, and in China, due to local preference.

This is particularly true for SMB ready to serve as a competitive differentiator, helping us to attract new logos and in China due to local preferences.

Speaker 4: Our professional services revenues remain essentially flat for it.

Our professional services revenues remained essentially flat for the quarter.

Speaker 4: Year-to-date services revenues cross 6% or 8% in constant transit and benefited from the acquisition of the policy, which we acquired within our cohesive digital integrated group in 2012 Q4.

Year to date services revenues grew 6% or 8% in constant currency and benefited from the acquisition of a policy, which requires within our cohesive digital integrate accrual in 'twenty to Q4.

Moving onto our recurring revenue performance.

Speaker 4: Our last 12 months recurring revenues increased by 13% here a year, or by 14% in constant current.

Our last 12 months recurring revenues increased by 13% year over year.

Or by 14% in constant currency.

Speaker 4: the acquisition of power and systems contributed by the 1%.

The acquisition of Polygon systems contributed about one percentage point.

Speaker 4: Our last 12 months constant currency account retention rate rounded down to 97% from 98%.

Our last 12 months constant currency comps retention rates rounded down to 97% from 98% as a result of exiting Russia mid 2022.

Speaker 4: as a result of exiting Russia mid 2020.

Speaker 4: Our constant currency recurring revenues, net retention rates, remained at 110%.

Our constant currency recurring revenues net retention rates remained at 110%.

Speaker 4: led by continued aggression within our E365 consumption based commercial.

Led by continued accretion within our <unk> hundred 65 consumption based commercial model.

Speaker 4: The ended Q3 with ARR of 1,125 million at Cooper and Spot.

We ended Q3 with <unk> of $1 billion 125 million at quarter end spot rates.

Speaker 4: As discussed, vernicholas, our AR growth trends by infrastructure sectors remained broadly in line with the previous

As discussed by Nicolas our Aif, Ralph trends by infrastructure sectors remained broadly in line with the previous quarter lifespan.

Speaker 4: Let's buy public rocks and utilities. Resources perform trust above the company overall.

Lifestyle public Roxanne utilities resources performed above the company overall.

Speaker 4: industrial growth softened somewhat and commercial and facilities remain.

Industrial growth soften somewhat.

And commercial and facilities remained flat.

Speaker 4: Our E365 and S&B group initiatives remained the key growth countries.

Our <unk> hundred 65, and SMB growth initiatives remains a key growth contributors.

Speaker 4: On a constant transit basis, our training 12 months here, our growth rate was 12.5% year by year, and 2.6% on a sequential quarterly basis.

On a constant currency basis, our trailing 12 months our growth rate was 12, 5% year over year and two 6% on a sequential quarterly basis.

Speaker 4: when compared to the first world of the last year, and when compared to historic seasonality, 23Q3 was impacted by one last week.

When compared to the first quarter last year, and when compared to historic seasonality 2006.

Q3 was impacted by one less week there.

Speaker 4: This negatively impacted the annualization of our consumption based E365.

This negatively impacted the annual Lusatian of all consumption based <unk> hundred 65 revenues, which is based on the current quarter's consumption times four.

Speaker 4: which is based on the current of this consumption times four.

Speaker 4: As the fourth world and the full year 2022 and 2023 have the same number of leak days, there will be no impact from this on our full year AR.

As the fourth quarter and full year 2022, and 2023 has the same number of weeks days there will be no impact from this on a full year outgrowth.

Speaker 4: But this calendar anomaly has caused 23Q3 AR growth to be slightly lower in proportion to the full year when compared to our historic season.

But this calendar anomaly is caused 23 Q3 growth to be slightly lower in proportion to the full year when compared to our historic seasonality.

Speaker 4: The global was also impacted by continued headlines in China and the greater preference there, but also in SMB elsewhere, for perpetual life.

The growth was also impacted by continued headwinds in China.

And a greater preference data, but also in SMB elsewhere for perpetual licenses.

Speaker 4: As a reminder, Q4 remains for us the biggest contractor new water of the year. And the API represents the water of our biggest ARR profile.

As a reminder, Q4 remains for us the biggest contract renewal quarter of the year, and thereby representing a quarter of our biggest growth opportunity.

Speaker 4: Our gap operating income was 74 million for the first water and 133 million years.

Our GAAP operating income was $74 million for the first quarter and $193 million year to date.

Speaker 4: We have previously explained the impact on our gap operating results from amodization of purchased intangibles.

We have previously explained the impact on our GAAP operating results from amortization of purchased intangibles.

Speaker 4: for up compensation plan liability, re-evaluations and acquisition.

Deferred compensation plan liability revaluations and acquisition expenses.

Speaker 4: Moving on to a trusted operating income with stock based compensation expense, our primary profitability and margin performance measures starting this year.

Moving on to adjusted operating income with stock based compensation expense, our primary profitability marching performance measures starting this year.

Speaker 4: The trusted operating income risk stock based compensation expense was 86 million for Q3 up 19 million what's 19% year

Adjusted operating income with stock based compensation expense was 86 million for Q3 up $19 million up 29% year over year.

Speaker 4: with a margin of 28.2% up 330b.

With a margin of 28, 2% up 330 basis points.

Speaker 4: Year to date, our trusted operating income with stock based compensation expense was $250 million, up 41 million, for 19.

Year to date, our adjusted operating income with stock based compensation expense was $260 million.

$41 million or 19%.

Speaker 4: with a margin of 27.2% up 140 basis points.

With a margin of 27, 2% up 140 basis points.

Q3 was a strong margin quarter for us.

Speaker 4: In Q4, we expect to see relatively higher OPEX compared to Q3, mainly caused by incremental promotional activities and IT system implementation costs associated with our earpieces.

In Q4, we expect to see relatively higher opex compared to Q3, mainly cost per incremental promotional activities and it system implementation costs associated with our ERP system.

Speaker 4: We remain on track to deliver our full year March outlook of approximately 20.

We remain on track to deliver on our full year margin outlook of approximately 26%.

Speaker 4: With respect to liquidity, our operating cash flow was 73 million for the quarter and 330 million year to date up 92 million for 38%

With respect to liquidity.

Our operating cash flow was 73 million for the quarter and 330 million year to date.

$92 million.

8%.

Speaker 4: Year-to-date operating cash flows benefited from an increased focus on working capital management as well as time.

Year to date operating cash flows benefited from an increased focus on working capital management.

As well as timing.

Speaker 4: Due to these factors, we expect these years cash flow from operations to convert from a chance to the bidar at the rate of 85 to 90 percent up from our previous estimate of approximately 80.

These factors, we expect this year's cash flow from operations to convert from adjusted EBITDA at the rate of 85% to 90%.

Up from our previous estimate of approximately 80%.

Speaker 4: As previously discussed, our business model produce is reliable and efficient cash flows over training 12 months period. But with some variability between waters due to time.

As previously discussed our business model produces reliable and efficient cash flows over trailing 12 months' period.

But with some variability between quarters due to timing.

Speaker 4: Prospectively, we estimated our conversion rate of adjusted EBITDA to cash flow from operations will be approximately 80% over future trailing 12-month period.

Prospectively, we estimate that our conversion rate of adjusted EBITDA to cash flow from operations will be approximately 8% over future trailing 12 months periods.

Speaker 4: year-to-date through Q3, along with providing sufficient with our growth initiatives. We paid $44.

Year to date through Q3, along with providing sufficiently for our growth initiatives.

Page $44 million and David as.

Speaker 4: We spend about $58 million on de facto share repurchases to offset dilution from stock-based compensation. And we repaid $196 million of bank debt.

We spend about $58 million on the effects of share repurchases to offset dilution from stock based compensation and we repaid $196 million of bank debt.

Speaker 4: As of the end of Q3, our net senior that leverage was 0.7 times.

As of the end of Q3, our net senior debt leverage was <unk> seven times and including our 2026 and 2027 congrats at Windows fully staff, our net debt leverage was three seven times.

Speaker 4: And including our 2026 and 2027 convertible notes fully as debt, our net debt leverage was 3.7%.

Speaker 4: We are very comfortable with our capital structure as it stands today.

We are very comfortable with our capital structure as it stands today.

Speaker 4: The continued was strong, the leveraging trajectory this quarter, the leveraging one-point zero times a chastity bit are since the beginning of the year.

We continued our strong deleveraging trajectory this quarter Delevering 1.0 times adjusted EBITDA since the beginning of the year.

Speaker 4: With no debt maturing over the next two years, and our strong free cash flow generation profile, we expect to organically deliver and to increase our balance sheet strength over this period. All while maintaining our problematic amundate cadence, our dividend and share reproaches to offset the illusion from stock-based company.

With no debt maturing over the next two years and our strong free cash flow generation profile, we expect to organically delever and to increase our balance sheet strength over this period.

All while maintaining our programmatic M&A cadence our dividend.

And share repurchases to offset dilution from stock based compensation.

Speaker 4: And from a rates exposure perspective, approximately 90% of our debt is protected from rising interest rates.

And from your rates exposure perspective, approximately 90% of our debt is protected from rising interest rates for either very low fixed coupon interest on our convertible notes.

Speaker 4: for either very low fixed coupon interest on our convertible notes, or our 200 million interest rates for expiring in 2002.

Our 200 million interest rate swap expiring in 2013.

Speaker 4: So the key messages, we are very comfortable with our current leverage, maturity profile and interest rate exposure.

So the key message is we're very comfortable with our current leverage.

Sure the profile and interest rate exposure.

Speaker 4: But of course, we continually evaluate ways to optimize as conditions change.

But of course, we continually evaluate ways to optimize as conditions change.

Speaker 4: Give me a strong either date and considerations for Q4. We are not changing our financial out.

Given our strong year to date and considerations for Q4, we are not changing our financial outlook.

Speaker 4: We are increasing the range for this year's cash flow from operations, as mentioned before.

We are increasing the range for this year's cash flow from operations as mentioned before.

With regards to foreign exchange rates.

Speaker 4: On a year-to-date basis, the U.S. dollar has weakened relative to the exchange rates assumed in our 2023 annual financial outlook.

On a year to date basis. The U S. Dollar has weakened relative to the exchange rates assumed in our 2023 annual financial outlook.

Salting and approximately $6 million of incremental revenues from currency.

Speaker 4: Based on the most recent USD strength, if end of October exchange rates would prevail throughout the remainder of the year, our Q4 gap revenues would be negatively impacted by approximately 1 million.

Based on the most recent USD strength, if end of October exchange rates would prevail throughout the remainder of the year. Our Q4, GAAP revenues will be negatively impacted by approximately $1 million.

Speaker 4: Relatives to the exchange rate assumed in our 2023 final.

Relative to the exchange rates assumed in our 2023 financial outlook.

Speaker 4: And with that, I think we are ready for Q&A. Over to our...

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

Speaker 5: Thanks, Werner. In order to get to everyone's questions today, we ask that you limit yourselves to just one. Our first question comes from Matthew Hedberg from RBC. David.

Thanks burner in order to get to everyone's questions. Today, we ask that you limit yourselves to just one our first question comes from Matthew Hedberg from RBC.

Alright. Thanks, guys. Thank you can hear me okay.

Speaker 1: Yeah. Thanks for thanks for all the commentary on the call. You know, I was just kind of curious. You know, it sounds like, you know, it's just an outlook this year. I know there's a lot of investors that are kind of wondering about, you know, some of the major trends, including IJ a.

Yes.

Thanks for thanks for all the commentary on the call.

I was just kind of curious it sounds like a consistent outlook. This year I know, there's a lot of investors that are kind of wondering about some of the major trends, including J a.

Speaker 1: It's probably too early to kind of think about next year, but if you were kind of helping us with some of the major building blocks for the girls next year, you know, is it consistent with kind of 23? Are there things that you're kind of particularly excited about maybe, you know, trying to join ventures ramping? Just sort of any help you can kind of think about next year would be certainly helpful. Thanks guys.

It's probably too early to kind of think about next year, but if you were kind of helping us with some of the major building blocks for growth next year.

Is it consistent with kind of 'twenty three are there things that you are kind of particularly excited about maybe.

China Joint ventures ramping just sort of any help you can kind of think about next year would be would be certainly helpful. Thanks guys.

Speaker 2: Well, the fourth quarter is going to inform our view of next year and of course we'll have our annual outlook guidance after the fourth quarter. What happens for us in the fourth quarter is

Well in the fourth quarter is going to inform our view of next year.

Our annual guidance after the first quarter of after the fourth quarter, what's happened for us in the fourth quarter.

Speaker 2: It's been almost three-eighths of our ARR renews, and even on E-365, there are negotiations about floors and caps, especially that, that

It's been almost three eighths of our ALR renews and even on <unk> hundred 65, there are negotiations about floors and caps and special factor.

Speaker 2: Consume the quarter we're in just now, but generally thinking of next year.

So in the quarter, we're in just now.

Generally thinking of next year.

Speaker 2: Our business at large is not that volatile and there is considerable visibility in what we do. I suppose the exception that proves that rule is new mining exploration which this year has.

Our business at large is not that volatile.

And there is considerable visibility in what we do and I suppose the exception that proves that rule as new mining exploration, which this year has had a downturn, but it is.

Speaker 2: at a downturn, but it is a minority of what we do even in mining. Things to be excited about for next year include the continued expansion of IIA, A, it's now in water and also there's been grid funding. Now for grid improvements, there also needs to be permitting. That is yet to happen. But.

Minority of what we do even in mining.

Thanks to be excited about for next year include the continued expansion of <unk>. It's now in water and also there has been grid funding now for grid improvements there also needs to be permanent that is yet to happen.

Sure.

But.

Speaker 2: But it will happen. We think during the coming year, those are things to be excited about. Things that are complicated are China. So much of that new business happens in a fourth quarter.

But it will happen we think during the coming year those are things to be excited about things that are complicated our China.

So much of that new business happens in the fourth quarter.

Speaker 2: And the joint ventures are slowly coming on, but more significantly, we continue to have E365, or excuse me, to continue to have ARR, Cretian in China, but sometimes it's now in favor of perpetual licenses. So we're gonna have to balance that out and maybe that looking at next year, we have to factor in that not all new businesses are going to be new ARR subscriptions. But generally,

And.

And the joint ventures are slowly coming on but more significantly we continue to have it.

365 to continue to have <unk> accretion in China, but sometimes it's now in favor of perpetual licenses that were going to have to balance that out and maybe that.

Looking at next year, we have to.

Factor in that not all new business is going to be new subscription.

Subscriptions, but generally.

Speaker 5: That which we depend most upon doesn't change very fast and is as rather favorable momentum more so now than ever. Thanks Matt. Next question comes from Joe Brewing from Robert Baird.

Sure.

That which we.

We depend most upon.

It doesn't change very fast and is.

Rather favorable momentum more so now than ever.

Thanks, Matt.

Next question comes from Jeff <unk> from Robert Baird.

Yeah.

Greg can you hear me.

Yes.

Thank you for the time today.

Speaker 6: Two related questions on ARR performance in the quarter. Do you have a sense of where ARR grows and never retention would be? If you just applied this quarter's application usage rates across a normal amount of working days and then part B of the question, I wanna make sure I heard this right. So.

Two related questions on our performance in the quarter.

Do you have a sense of where <unk> gross and net retention would be.

If you just apply this corridors application usage rates across a normal amount of working days and then.

B of the question I wanted to make sure I heard this right. So.

Speaker 6: ARR growth outside of China remained at year-to-date highs. It sounds like industrial markets may be softened relative to the trend. So is the correct interpretation that public works and the Americas actually improved a bit sequentially?

<unk> growth outside of China remained at year to date high is it sounds like industrial markets, maybe softened relative to the trend. So is the correct interpretation that public works and the Americas actually improved a bit sequentially.

Speaker 2: I think that is the correct interpretation. And as to...

I think that is the correct interpretation.

And as to.

Speaker 2: Industrial, those are very large EPCs on very large projects that are very production oriented and maybe especially sensitive to this calendar phenomenon. And to go back to that.

Industrial those are very large EPC on very large projects that are very production oriented at navy, especially sensitive to this calendar phenomenon and to go back to that there isn't quite as simple calculations answer your questions.

Speaker 2: There isn't quite a simple calculation to answer your questions and to explain.

To explain.

Speaker 2: On the one hand under E365 project lines, which is our single largest dollar of program.

On the one hand under <unk> hundred 65 project life, which is our single largest dollar programs.

Speaker 2: It is not counted on usage days. It's any usage in the quarter creates a charge for project-wise, it's already been always been that way. Asset-wise is based on asset count. And then even for the application.

It is not counted on usage days at any usage in the quarter creates a charge for project Thats already been always been that way asset wise is based on asset count.

And then even for the applications.

Speaker 2: There are a lot of floors and caps that are binding at any point in time, and the calendar volatility can cause the caps and floors to come into play in a dynamic way, and then we have some

There are a lot of floors and caps that are binding at any point in time and the calendar of volatility can cause the caps and floors to come into play in a dynamic way and then we have some contracts where the usage based pricing as a ban so we do that for government contracts.

Speaker 2: where the usage based pricing is in dams. We do that for government contracting and so forth. So for all these reasons, it isn't quite as simple a calculation as you might think it could be. But we can say that without the change and without having one fewer day than last year, without having the...

And so forth. So for all these reasons that isn't quite as simple calculation as you might think it could be.

But we can say that.

Without.

Without the change in without having one fewer day than last year than last year without having without having the.

Speaker 2: bulge in perpetual licenses instead they'd been the usual mix and without the attrition in China if we didn't have any of those three things then there wouldn't have been a reduction in our indicated ARR growth for the border.

Bulge in perpetual licenses instead, they've been the usual mix and without the attrition in China. If we didn't have any of those three things then there wouldn't have been a reduction in our.

Indicated.

<unk> growth for the quarter.

Speaker 5: Thanks Joe. Next question comes from Kristen Owen from Oppenheimer.

Thanks, Joe next.

Our next question comes from Christopher <unk> from Oppenheimer.

Speaker 7: Great, thank you for taking the question. I wanted to ask specifically about the CP announcement the the asset wise project, how we should think about that as a as a blueprint for this migration or increased penetration with asset owners and those owner versus sort of the capex cycle. Just help us unpack, you know, the remote asset moderate opportunity recurring revenue sources and the development of that type of agreement. Thank you. I think you have that.

Great. Thank you for taking my question.

Wanted to ask specifically about the CPE announcement, the asset Wise project, how we should think about that.

As a blueprint for this migration or increased penetration with asset owners and those owner operators versus sort of the capex cycle, just help us unpack the remote asset moderate opportunity recurring revenue sources.

And the development of that type of agreement. Thank you.

I think you have that exactly right.

Speaker 2: Imagine how important it is for DP.

Imagine how important that is for PDP.

Speaker 2: its history to get right the access to engineering information over the operations life cycle of assets. So very smart people and very smart data scientists made very good long-term decisions about their approach to this over time.

That history to get right. The access the engineering information over the operations of the lifecycle of assets. So very smart people and very smart data science has made very good long term decisions about their approach to this over time.

Speaker 2: And it really is unique that they have agreed on a system and a data model and a schema that they can use both during their CapEx, and they have a huge CapEx program, and their operations, it really is unique to share that data model for engineering information, and it has enabled AssetWise to be extended to AssetWise reliability for, as you say, inspection, corrosion management, and so forth.

We only is you need that they have agreed on a system and a data model and schema that they can use both storing their capex and they have a huge capex program and their operation. It really is unique to share that data model for engineering information and it has enabled.

Asset lives to be extended.

<unk> asset wide reliability for as you say, an infection corrosion management and so forth I think it's more important than any loans at BP and they have as you know in industrial we do not have the footprint we have.

Speaker 2: I think it's more important than anyone to BP and and they have, as you know, in industrial, we do not have.

Speaker 2: the footprint we have elsewhere. So I think it's really important that DP is leading away and what we call infrastructure intelligence, using the engineering information for...

Elsewhere, So I think it's really important that.

The Pea is leading the way, but we call infrastructure intelligence using the engineering information for.

Speaker 2: not only safety but reliability uptime and so forth. It's a down-to-earth application of that that is now propounded throughout BP and really is a model generally in dust-reels that are ahead of public works and utilities and I think this is a respect of it that you're seeing with this BP and action. Thanks Kristen. The next question comes.

Not only safety reliability uptime and so forth.

Down to Earth application of that that is now compounded throughout.

And really as a model generally industrials at or ahead of public works and utilities and I think this is a respected that youre seeing with the CP in Ashland.

Thanks, Kristen next question comes from Jason pointed out with Keybanc.

Speaker 8: Hey, guys, can you hear me or see me? Yeah, yeah, perfect. You know, one of your competitors has been pretty vocal about the studies and partnerships they've been doing with different DOTs. Greg or Nicholas, can you tell us about this partnership with AASHTO? I think they say, you know, is there any revenue opportunity or is it more about influence?

Hey, guys can you hear me or Damian, yes, yes perfect.

One of your competitors has been pretty vocal about the studies and partnerships they've been doing with different parties.

Greg on Iqos can you tell us about this partnership with <unk>.

Is there any revenue opportunity or is it more about endpoints.

Speaker 3: AASHTO is a non-profit organization working with all the DOTs in the U.S. The partnership we're doing with them goes beyond a study. It is about integration of our software with a software that they own actually called AASHTOware, which is managed by Infotech.

As to.

Nonprofit organization.

Working with all the <unk> in the U S.

The partnership we're doing with them goes beyond the study.

It is about integration of our software with software that they all actually coal ash to wear which is managed by <unk>.

Speaker 3: in order to enable true digital delivery meaning

And in order to enable true digital delivery, meaning.

Speaker 3: data flowing freely from one system to another, from ash to wear, from open roads, from product wise, from synchro, and from one phase of the infrastructure lifecycle to the next, from design to construction, which is usually exciting because we see that as a big growth opportunity for Bentley going forward. We're very strong when it comes to design. We're going into construction with the DOTs in particular, as they're embracing digital delivery across design and construction. This will have a varying on.

Data flowing freely from one system to another from Astra, where from Oakland roads from product wise from Syncrude and from one phase of the prospect of lifecycle to the next from from design to construction, which is usually frankly, because we see that as a big.

Big growth opportunity for <unk> going forward were very strong when it comes to design, we're going into construction with the Dot's in particular as embracing due to digital delivery across design and construction.

This will have a bearing on most projects.

Speaker 5: Okay. Great. Thank you. Next question, answer my both thumbs from Bank of America.

Okay, great. Thank you.

Next question comes from Michael Funk from Bank of America.

Hey, guys. Good morning, how are you.

Michael.

Speaker 8: Yeah, I've kind of trouble with the mute button there. I apologize. So Greg, you mentioned a bit about IJA, some of the funding starting to flow through. I think specifically you mentioned, now in water.

Yes from a drug with a new partner or I apologize. So so Greg you mentioned a bit about <unk> some of the funding starting to flow through I think specifically you mentioned now in water.

Speaker 8: grid funding, you know, still not permitting in that area. But, you know, can you help us quantify this, you know, based on the amount of funds for different projects where you feel you have relative strength, obviously in those two areas you do. And the modeling you've done at potential

Grid funding still not still not permitting.

That area, but can you help us quantify that based on the amount of bonds for different projects, where you feel you have relative strength. Obviously most of the two areas you do and the modeling you've done a potential uplift to <unk> projects coming online during 2024 and 2025.

Speaker 8: to ARR from those projects coming online during 2024 and 2025. And then related questions, you also spoke a lot about I-Twin. It's my call. I appreciate the commentary there.

And then related question you also spoke a lot about it.

My call I appreciate the commentary there.

Speaker 8: How much potential lift to ARR do you believe that I twins could provide an

How much potential west <unk> do you believe that <unk> could provide the next 12 months.

Speaker 2: Well, first on IIJA, of course, the transportation funding had been flowing. It doesn't increase, it just continues to flow for the next three and four years.

Well first on J a of course, the transportation funding had been flowing it doesn't increase it just continues to flow for the next three to four years.

On the other programs had to be put in place and that is still not complete but it is finally for water for grid, it's kind of mess, but some of it has begun subject. However, the permitting for you don't need just money, but also permits us to do new transmission capacity so that is.

Yet to happen as far as quantifying the grid opportunity.

Speaker 2: International Energy Association has done a good paper during the past quarter that estimates that what's spent on

The International Energy Association has done a good paper during the past quarter that estimates that was spent on.

Speaker 2: transmission and distribution needs to double over a period of time globally to accomplish everything that's required for electrification. I don't know that I don't mean to say that I predicted will necessarily double, but it will grow a lot. And that is the reason to say that our opportunity and grid especially can multiply. But generally, there is the capacity constraints at the same time. And so...

Transmission and distribution needs to double over a period of time globally to accomplish everything thats required for electrification.

No I don't mean to say that I predict it will necessarily double but it will grow a lot and that is the reason to say that our opportunity in great, especially can can multiply.

But generally.

There is the the capacity constraints at the same time so.

Speaker 2: I believe it will be a continued ramp in the right direction and we saw that this quarter in a year so far in North America.

I believe that will be a continued ramp in the right direction and we saw that this quarter and year so far.

<unk>.

And in North America.

Speaker 2: for country mine and

<unk>, let me ask Nicolas yes.

Speaker 3: Yeah, iTwin is our platform for digital twins, infrastructure digital twins. And as a platform, it is leveraged more and more across our product portfolio.

<unk> is our platform for digital twins infrastructure digital twins as a platform.

Is leverage more and more across our product portfolio.

Speaker 3: This should assume a more fundamental revolution going on where we as a industry overall, if you want, we're going from Firebase to the central workflows, the technology we're using to do this is digital twin. What it means is all of our products over time will adopt I twin as a platform.

This relates to and more fundamentally good issue going on where we as the industry. Overall, if you want we going from followed basically the last country Brookfield. The technology, we're using to do this is digital twins. What it mean is all of our products overtime will adopt <unk> as a platform last year, we announced pending faster to cloud, which is a credential chronic by syncrude asset.

To be powered by twin and this year, we announced that our open applications. The first one being macro station. We got to also leverage <unk> going forward. What I mean by this is <unk> is not a discrete parts category. If youre trying to put the EUR number twin it's actually our overall growth as a company, which will which will be.

Speaker 9: by this is iTwin is not a discrete product category. If you're trying to put a AR number to it, it's actually our overall growth as a company, which will be based on iTwin, as our entire product portfolio is more and more powered by iTwin. Great. Thank you for that. Yep. Our next question comes from Matthew Broom from Zulo. All right. Hi. Hi, everyone.

Dave <unk> as our entire product portfolio is more and more powered by <unk>.

Speaker 5: Great. Thank you. Yep. Our next question comes from Matthew Broome from Zulu.

Great. Thank you Scott.

Our next question comes from Matthew Broome from Mizuho.

Speaker 4: All right. Hi. Hi, everyone. So, Greg, you mentioned a positive survey results, but could you maybe talk about how you found customer sentiment in recent months based on your conversations? What are their concerns and their main pain points?

Alright, Hi, hi, everyone.

So Greg you mentioned a positive survey results.

But could you maybe talk about how you found customer sentiment in recent months based on your conversations one of their concerns and that mean pinpoints.

Speaker 2: Well, Nicholas has just been with the CEOs at the conference he described. I might ask him, he's had those first hand meetings. In general, they are very excited and enticed by the possibilities of generative AI in helping to enable us to be able to

Well Nicholas has just been with the Ceos and.

Uh huh.

At the conference you described I might I might ask him he's had those.

Firsthand meetings in general.

Sorry.

Cited and enticed by the possibilities of generative AI and.

Helping too.

<unk>.

To enable their work to get more.

Speaker 2: But they're very aware that there have valuable data at stake there and that they never fail to bring that up and it's appropriately so I think What we're saying is their data should benefit only them, but that that will be sufficient and is what they really want but Nicholas over to you perhaps to help

But they are very aware that there have valuable data and stay there and they never fail to bring that up and it's appropriately so I think.

What we're saying is there data should benefit only them, but that will be sufficient and if what they really want that nicolas over to you, perhaps Hal you need great proof of mine is on their side, how much demand there is for infrastructure.

Speaker 3: What is in the very top of mind is, on their side, how much demand there is for infrastructure, and how important is their role, by the way, in designing, building, delivering that infrastructure to address so many of the world's problems, but at the same time, how much constraint they are in terms of engineering resource capacity.

And how important is the rule by the way in in designing building and delivering that infrastructure to address so many of the world's problems, but at the same time, how much constrained. They are in terms of engineering resource capacity.

Speaker 3: Finally, we heard it from the CEO of the top engineering front we met a couple of weeks ago in Arizona, but we hear it's across the regions. The Endangering Resource Capacity gap is just getting deeper.

Finally, we heard it from the CEO of the top engineering front, we met a couple of weeks ago in Arizona, but we hear it across the regions.

The engineering resource capacity gap is just getting deeper.

Speaker 3: I heard that, for example, in India now, we're starting to be constrained in terms of engineering capacity when it comes to very advanced engineering for offshore platforms, for example, or high-speed rail.

I heard that for example in India now referring to be constrained in terms of engineering capacity when it comes to very advanced engineering for.

Offshore platform for example, our high speed round.

Speaker 3: So this is a global problem and they all understand that their way for them to be able to bridge the capacity gap is by going digital.

So this is the this is a global problem and and they all understand that the way for them to be able to bridge the capacity gap is by doing digital.

Speaker 3: So of course, software plays a big role. Any that context indeed, there is very interesting AI. I was surprised at every conversation we had with infrastructure engineering firms, COs, two weeks ago, AI came up as a topic, every conversation. So it is very much top of mind. They're looking at it as an open entity to increase the productivity, the efficiency, the effectiveness of their engineers as a step function.

So of course software plays a big role and in that context. Indeed, there is very interesting I was surprised and in every conversation we had with infrastructure.

In terms of Ceos, two weeks ago AI.

I'll begin every conversation.

It is very much top of mind, they're looking at it as a opportunity to.

Increase the productivity the efficiency the effectiveness of their engineers as a step function.

Thanks, Brian.

Speaker 5: The next question comes from Joshua Tilton from Wolfe Research.

The next question comes from Joshua Joshua Tilton from Wolfe Research.

Hey, guys can you hear me.

Speaker 10: All right, great. I actually want to just kind of sneak in a two-parter on the infrastructure bill funding. The first is kind of a follow-up to an earlier question. And it...

Alright, great.

Wanted to just kind of sneak in a two parter on the infrastructure build buttoning.

The first is kind of a follow up to an earlier question.

Speaker 10: You talked about funding for a wider array of projects that's coming online. Like, we had transportation. Now we're going to have water and other things coming. So, the question is, is it fair to assume that the tailwind to growth from the infrastructure bill will just be greater next year than it was this year because you have more projects.

And as you talked about funding for a wider array of projects coming online like we had transportation now we're going to have water and other things coming.

So the question is is it fair to assume that the tailwind to growth broken the infrastructure Bill will just be greater next year than it was this year because you have more projects.

Speaker 10: And the 2nd, part is on the other side of that. Are you guys may be seeing a dynamic where the current interest rate environment is maybe eating away at some of the excitement around the infrastructure bill relative to when it was passed initially.

And the second part is on the other side of that are you guys may be seeing a dynamic where the current interest rate environment as maybe eating away at some of the excitement around the infrastructure bill relative to when it was passed.

Initially.

Speaker 2: Well, I think it is the case that there not only is the expansion of

Well.

I think it is the case theyre not only is the expansion of.

Speaker 2: the IJH, the other areas beyond transportation.

VII, Jamie to the other areas beyond transportation.

Speaker 2: grid and broadband and water. There also are now a variety of these grant programs. Nicholas mentioned one of them, which is another vehicle to get some funding. But the baseload in transportation is going to continue and these others will come on.

And broadband and water. There also are now a variety of these grant programs Nicholas mentioned, one of them, which is another vehicle to get to get some funding.

But the base load and transportation is going to continue and these other as well will well.

Come on.

<unk>.

Speaker 2: I want to go to the interest rate question because fundamentally, while not much of our work and the scheme of things is privately financed, that is the case with new mine exploration, does turn out to be sensitive to capital market constraints to do with interest rates and other aspects. And that has...

I want to go to the interest rate question because fundamentally.

Not much of our work in the scheme of things is a privately financed.

That is the case with new mine exploration and new mine exploration does turn out to be sensitive to the capital market constraints to do with interest rates and other aspects and that has.

Speaker 2: turned down enduring this year in a way that couldn't have been.

Turning down.

And during this year and in a way that couldn't have been.

Speaker 2: anticipated. The thing is that on the other hand, existing minds.

We anticipated the thing is that on the other hand existing mines.

Speaker 2: need to run at full capacity. There's no lack of demand for

Need to run at full capacity there as there is no. There is no lack of demand for for that and where the costs are for the new infrastructure and so forth. It makes economic sense to go full tilt there and we have a lot to help with respect.

Speaker 2: for that and where the cost or sunk for the new infrastructure and so forth, it makes economic sense to go full tilt there and we have a lot to help with in respect of that. I'll mention also in terms of private funding.

In respect of that I'll mention also.

Terms of private funding.

Speaker 2: It's industrial sector and we do talk about that having gotten a little softer. But again, I don't I think we can't say that that's a trend because it might have to do with the number of days of the quarter and the consumption Aspect of that which by the way is even more pronounced in India where they had more holidays during the

The industrial sector.

And we do talk about that having gotten a little softer, but again I don't I think we can't say that that's a trend because it might have to do with the number of days in the quarter and the consumption aspect of that which by the way is even more pronounced in India, where the head more holidays during may.

Speaker 2: during Q3. So we're not calling that a trend yet necessarily. Something very interesting that isn't quite to do with interest rates, but is purchasing behavior we're monitoring is.

During Q3, so we're not calling that a trend yet necessarily.

Something very interesting.

Is it quite to do with interest rates, but is purchasing behavior. We're monitoring is key.

Speaker 2: preference for perpetual licenses, he would say, how does that make sense to lay out money up front when interest rates are higher?

Preference for perpetual licenses, they would say how does that make sense to lay out money upfront when interest rates are higher.

Speaker 2: Well, there could be concern about future economic conditions and some SMB businesses apparently anecdotally say, while things are going well and we can fund it, let's buy the perpetual license. In China, I'm afraid it's a different phenomenon. It probably is geopolitical anxiety that's leading to some bigger deals than we've seen ever before become perpetual license deals because they don't want to take a chance with continued subscriptions, perhaps under

There could be concern about future economic conditions in some SMB businesses, apparently anecdotally say, while the things are going well and we can fund it led by the perpetual license in China.

Different phenomenon, it probably as geopolitical anxiety, that's leading to some bigger deals than we've seen ever before become perpetual license sales because they don't want to take a chance with continuing subscriptions, perhaps under threat possible sanctions complicated world in that in that respect. So we see on the margin. These impac.

Speaker 2: directs of possible sanctions. So it's a complicated world in that respect. So we see on the margin these impacts of interest rates, but it doesn't affect very much public works and utilities and our other.

And interest rates, but it doesn't the fact very much public works and utilities and our other demand.

Speaker 5: Thanks for the question. Next question comes from Warren Myers from Griffin Securities.

Thanks for the question next question comes from Lauren Myers from referenced Securities.

Speaker 11: Hello, can you hear me now? We can hear you. Sure. Thank you, guys. Thank you guys for having me. I'm obviously in for Jay. Just a quick one. With respect to the multiple industry solutions, you announced a recent infrastructure conference. How would you rank those in terms of potential material out, excuse me, materiality, to product and or services, revenues or margins?

Hello can you hear me now.

Are you sure. Thank you. Thank you guys for having me I'm, obviously in for Jay.

Just a quick one with respect to the multiple industry solutions, you announced at your recent infrastructure conference.

How would you rank those in terms of potential material out excuse me, a materiality to product <unk> services revenues or margins.

Speaker 2: in 2024 and beyond kind of a multi part long question there. I'm going to ask, I'm sorry, go ahead, you have another part to it, go ahead. No, no, no, that's basically it. Well, I'm going to ask Nicholas to help quantify, but this notion that the bulk of our opportunity is during opera is for operations and maintenance, the infrastructure and the telecom pending the value. That is where the economic value occurs and the opportunity for

In 2024, and beyond kind of a multi part one question there.

I'm going to ask I'm. Sorry go ahead, you had another part to go ahead no no no that's fair.

Well I'm going to ask Nicolas to help quantify but this notion that the bulk of our opportunity is during opera is for operations in may and maintenance infrastructure intelligence compounding a value that is where the economic value occurs and the opportunity for.

Speaker 2: analytics for AI generally.

Analytics for.

For AI generally.

Speaker 2: And one of the earlier questions referred to that is what BP is doing. So we're that up. So go ahead, Nicholas. Yes.

And one of the earlier questions, we referred to that yes.

What BP is doing.

So we are right now.

So go ahead Nicholas.

Yeah.

Speaker 3: Yes, the, as you know, our business is roughly half half between engineering firms or not-creators.

Yes.

As you know our business is roughly half half between engineering firms owner operators.

Speaker 3: But when we look at what owner of breeders are using, for the most part, it is also software related to the design phase of the infrastructure life cycle. So we think one of the big growth opportunities for the company is the software for the operations phase of the infrastructure life cycle. And this is indeed what these industry solutions are all about. Now, they're a bit of a dimension that cuts across because what we're doing with these industry solutions is combining different products that we already have and then adding some additional capabilities when it's B.

When we look at what owner operators are using for the most part. It is also software related to the design phase of the infrastructure lifecycle. So.

So we think one of the big growth opportunities for the company is to software for the operation space of infrastructure lifecycle and this is anywhere. These industry solutions are all about now there a bit of a dimension that cuts across because what we're doing with these industry solutions is combining different products that we already have and then adding some additional capabilities when it's deep.

Speaker 3: For the most part, these institutions are focused on giving more intelligence around infrastructure assets themselves. So being able to inspect remotely, being able to sense to IoT devices, if anything is wrong with that infrastructure asset, the intriguering some, some pre-antive actions that's necessary.

For the most part these industry solutions are focused on giving more intelligence around infrastructure investments themselves, so being able to.

Inspect remotely being able to sense to Iot devices at anything is wrong with that infrastructure asset and.

And triggering some some preemptive actions if necessary.

Speaker 3: Obviously, this is also a good use case for AI. This is where we're already using quite a bit of AI capabilities for asset analysis. So this is not a.

Obviously this is also a great use case for our 40 <unk>. This is where we are already using quite a bit of data capabilities.

For for 90 days.

So this is not a.

Speaker 3: discrete product opportunity if you want. It's more of a long-term growth opportunity for Bentley. Okay.

Discrete products opportunity if you want.

It's more of a.

Long term growth opportunity for Bentley.

Okay.

Thank you for that.

Speaker 12: Great, thank you. Our next question comes from Blair Abernethy from Rosenblatt surgeries.

Alright. Thank you. Our next question comes from Blair Abernethy from Rosenblatt Securities.

Thank you good morning, just trying to get the mute button off there.

Speaker 10: Just want to follow up on some of Nicholas's comments, and maybe maybe partially for one or two, the concept of co-pilots as a way to help increase the productivity of design, infrastructure design engineers, where do you see yourselves sort of first implementing that? What kind of

Just wanted to follow up.

So Nicolas his comments and maybe partially for one or two.

The concept of co pilots.

As a way to help increase the productivity of designs infrastructure design engineers.

Where do you see yourselves sort of first implementing that.

Speaker 6: monetization schemes, are you considering it? And so what's the timing of this? Is this a you win pre-production at this stage?

What kind of.

Monetization schemes are you considering and sort of what's the timing of this is this.

Pre production at this stage.

Speaker 6: or private previews or is this a year or two? I'll just give you a sense of when you can see this in the...

Or or private previews or is this a year or two I would just give us a sense of when you can sort of.

See this in the market.

Speaker 3: We are already with AI when it comes to asset operations, as I just explained. We've had capital keys there for a couple of years now, which is also made a acquisition of Blinsey, which is also leveraging AI to detect what's going on around the transportation network. We are absolutely excited about the potential of AI when it comes to helping engineers in the design trade.

We are already with AI when it comes to asset operations as I've, just explained and we've had to kind of keep therefore for a couple of years now we just I also made the acquisition of <unk>, which is also leveraging AI in order to.

You did take what's going on around the transportation network.

We are absolutely excited about the potential of AI when it comes to helping engineers in the design phase. This is very early stage as an industry overall.

Speaker 3: This is very early stage as an industry overall. We are in exploration phase. And I will preview what we're working on, which is when relevant for some of the engineering firms leveraging AI as a co-pilot when it comes to evaluating different site layouts options and leveraging AI in order to automate some production of drawings. That is really just a think of time for them right now.

We are in the exploration phase and why I, we previewed when we're working on.

Which is when relevant.

Some of the engineering firms and leveraging AI as the coupon notes when it comes to evaluating different site layouts, and auctions and leveraging AI in order to automate some production of drawings that is really just a.

Think of time.

And then right now.

Speaker 3: The overall vision we have is AI to empower the engineers, not replace them. And we use our own.

The overall vision, we have is AI to empower.

The engineers not replacing.

And we use our own.

Speaker 3: experience actually, as an analogy, our own engineers are leveraging GitHub Copilot to be much more productive. GitHub Copilot, as I explained in the prepared remarks, is taking over all the mundane tasks so they can really focus on high value tasks. So we see exactly the same for infrastructure engineers.

Parents actually as an analogy our own engineers are leveraging data providers to be much more productive.

And a component as I explained in the prepared remarks is sticking.

Overall, the mundane tasks that they can really focus on high value tasks. So we see exactly the same for infrastructure engineers.

Speaker 3: And we, the potential is huge as I mentioned two weeks ago.

And.

The potential is used as I mentioned two weeks ago.

Speaker 3: Every conversation with infrastructure, engineering firms, CEOs, AI came up. So the potential is huge for sure. We all see.

<unk> with infrastructure engineering firm Ceos EIA came up so the potential is huge for sure. We all see the same.

Speaker 3: Our approach is going to be leveraging our own engineering applications.

R R.

<unk> is going to be leveraging our own engine applications to train DAA agents not the data of our users which is different from.

Speaker 3: to train the AI agents, not the data of our users, which is different from an approach that other companies may take. So we will train the AI agents with our own engineering applications so that they can learn from engineering applications whether the engineering rules.

Other companies May take.

So we will train the AI agents with our own mentioning applications. So that they can learn from monitoring applications, whether the engineering rules.

Speaker 3: And based on this, we'll be able then to suggest site layouts or components of designs of infrastructure, et cetera, going forward. And what we envision is our users will then leverage their data to fine tune those models, those AI agents, this co-pilot that we'll give to them. So it's a quite distinct approach from what you may see in other industries.

And based on this we'll be able then to suggest slightly house or components of designs of infrastructure going forward.

And what we envision is our users will then leverage their data to fine tune those models. Those AI agent. This comparison will give to them since then.

Quite distinct approach from from what you may see in other industries.

Speaker 3: very adapted to our industry infrastructure and very much resonating. The idea of the AI is the co-pilot, the idea that we train it with our own engineering applications, that we let the users decide when and if they want to use their own data to fine tune. This is what's really resonating. When exploration right now with a number of engineering firms getting a feedback, the Thailand Force to deliver those capabilities will depend on that feedback.

Very adapted to our industry.

Sure and very much resonating the idea of it.

AI co pilot the idea that we training we don't want entering application that we let the users decide when and if they want to use their own data to fine tune. This is what's really resonating when exploration right now with a number of engineering firms gave us feedback the timeline for us to deliver those capabilities will depend on the feedback.

Speaker 2: Blair, on monetization, I will point out indirectly when engineering firms and owners recognize the value of the data for ways in which they didn't even anticipate it could compound in value in the future, for instance, with generative AI training their own.

Layer on monetization.

I will point out indirectly when engineering firms and owners recognize the value of the data for ways in which they didnt, even anticipate input compounding value in the future for instance, with January with AI training their own tools.

Speaker 2: Project-wise has become our single largest product just now. And the advantage of Project-wise is a common schema where this data can be understood and comprehended, understood and...

Project wide has become our single largest product just now.

The advantage of project Wise is a common schema, where this data can be understood and comprehensive.

Understood and.

Speaker 2: comprehensively more valuable. So there are ways for us to implicitly

Comprehensive lean more valuable so there are ways for us to implicitly monetize on the value.

Speaker 2: monetize on the value of engineering data without yet working out how the

Engineering data without yet working out how the whether there will be new products or enhanced products as far as monetization.

Speaker 2: whether there will be new products or enhanced products as far as long as they should.

Speaker 5: Our next question comes from Clark Jeffries from Piper Sandler.

Our next question comes from Clarke Jeffries from Piper Sandler.

Speaker 8: Hello, thank you for taking the question. Good to see you. So, I wanted to follow up on a prior question, it made me reflect on

Hello, Thank you for taking the question.

Good for you.

I wanted to follow up on a prior question made me reflect.

Speaker 6: You know, I think there are some murmurings of some of the civil construction project being positive that the shovel ready stage, and I think that there has been discussion of that before, so I wanted to pose the question like this.

I think there are some murmurings.

Some of the civil construction project seen positive that the shovel ready stage and I think that there has been discussion of that before.

Wanted to pose the question like this.

Speaker 10: You know how much of the engineering design work will be done entirely pre shovel ready on the construction and how much you know continued engineering design work could be available after it moves to that final stage when you know construction on site starts to happen and then.

How much of the engineering design work will be done entirely pre shovel ready on the construction and how much continued engineering design work could be available after it moved to that final stage when construction.

I would start to happen and then.

Speaker 5: As a follow up, when can the sale to the owner operator occur when it's entirely at the sort of specialty contractor or engineering consultant stage or somewhere during the project? Well, what are the interesting questions, Anne?

As a follow up when can the sale to the owner operator occur.

When it's entirely yet.

The sort of specialty contractor or engineering consultant stage or somewhere during the project.

But what an interesting question and.

Speaker 2: Yes, it could be that in staging of projects, even those funded under IIA, J.A.

Yes, it could be that in staging of projects, even those funded under II JA sunlight ways for materials costs, and labor costs, and so forth the balance out rather than bulge up but that wont have in general the impact on the design getting the project to being a shovel ready. However, we're just back from year on infra.

Speaker 2: Some might wait for materials costs and labor costs and so forth to balance out rather than bulge up. But that won't have in general the impact on the design, getting the project to being in shovel ready. However, we're just back from year and infrastructure the last month and we're all reminded that in Asia, which leads in so much in the world and Singapore are a case in point of that. If you get a chance to watch some of the...

Restructuring last month, and we're all reminded that in Asia, which leads and so much in the world in Singapore, a case in point of that if you get a chance to watch some of the.

Keynote.

Speaker 2: Things have moved very far towards design build. And very often, major projects in Asia, the owner from the start has a digital twin in mind. And it isn't something that comes along after the fact and it really is interesting. And it is leading the way, we say, they're leapfrogging ahead, not being constrained by traditional contracting strictures.

Thanks.

Moved very far toward design build and very often major projects in Asia. The owner from the Saar has a digital twin and mind.

And it isn't something that comes along after the fact that it really is interesting and it is leading the way. We say there are there are leapfrogging ahead, not being constrained by a traditional contracting structures and so forth. So I think you'll see some examples of that in.

Speaker 2: and so forth. So I think you'll see some examples of that in the going digital award finalists and winner winning projects in Asia. And that's why we remarked that to me it's a pleasant surprise to see that 17% of all of these 300 plus nominated projects this year

And going Digital award.

Finalists and winner winning projects in <unk>.

In Asia, and and that's why we remark that to me, it's a pleasant surprise to see that 17% of all of these 300 plus nominated projects this year.

Speaker 2: use Synchro. So there are incorporates of six of them, incorporating 4D modeling of the construction process during the design. And it's just an indication of the progress of design build and constructability ultimately to improve civil project execution and take out risk and variability.

Using crop so theyre in corporate <unk> incorporating.

For the modeling.

The construction process during the design and it's just an indication of the progress of design build and construct the ability ultimately to improve.

Silver project execution takeout risks.

And the variability.

Alright, Thanks, Mark Thank you Eric.

Speaker 5: That concludes our call today. We thank each of you for your interest in time and family systems, and look forward to updating you on our progress in coming quarters. Thank you.

That concludes our call today and we thank each of you for your interest and time and families systems and look forward to updating you on our progress in coming quarters.

Thank you.

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Goodbye.