Q1 2024 Bentley Systems Inc Earnings Call

And it will be muted throughout the meeting.

Operator: I have joined the meeting as an attendee and will be muted throughout the meeting. Good morning.

Good morning, Thank you for joining Bally systems Q1, 'twenty 'twenty four results web.

Eric J. Boyer: Thank you for joining Bentley Systems' Q1 2024 results webcast. I'm Eric Boyer, Bentley's Investor Relations Officer. On the webcast today, we have Bentley Chief Executive Officer, Greg Bentley, Chief Operating Officer, Nicholas Cummins, and Chief Financial Officer, Werner Andre.

I'm, Eric Boyer Bentley's Investor Relations Officer.

Eric J. Boyer: On the webcast today with Bentley systems, Chief Executive Officer, Greg Bentley, Chief Operating Officer, Nicholas Cummins, and Chief Finance Officer of Burner Andre.

Eric J. Boyer: This webcast includes forward-looking statements made as of May 7, 2024, regarding the future results of operations and financial position, business strategy, and plans, and objectives for the future operations of Bentley Systems Incorporated. All such statements made in or contained during this webcast, other than statements of a historical fact, are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investorrelations.com, www.bentley.com, on May 7th, 2024.

Eric J. Boyer: This webcast includes forward looking statements made as of May seven 2024 regarding future results of operations and financial position business strategy and plans objectives for the future operations of Bentley systems incorporated.

Eric J. Boyer: All such statements made in ore contained during this webcast other than statements of historical fact are forward looking statements. This webcast will be available for replay on Bentley systems Investor Relations website at investors Dot Dot com on May seven 2024.

Eric J. Boyer: I would like to mention that the 2023 Infrastructure Yearbook, which explores the world's top infrastructure projects, is now available online at Bentley.com forward slash YII forward slash yearbook. You can also order a printed version from the same site.

Eric J. Boyer: I would like to mention that the 2023 infrastructure yearbook, which explores the world's top infrastructure projects is now available online at Bentley Dotcom forward Slash why I I forged slash. Your book you can also order a printed version from the same link.

Eric J. Boyer: Additionally, we have published our 2023 ESG report, which is available on our Investor Relations website.

After our presentation, we will conclude with Q&A and with that let me introduce the CEO of Bentley systems Greg.

Eric J. Boyer: Additionally, we have published our 2023 ESG report, which is available on our investor relations website. After our presentation, we will conclude with Q&A. And with that, let me introduce the CEO of Bentley Systems, Greg Bentley. Good morning, and as always, thanks to each of you for your continued interest in BSY. Eric, thanks for setting the stage for our focus today. For all that we characterize and think of Bentley Systems as a no drama company, we do realize that we've made news over the two plus months since we've last been together.

Eric J. Boyer: And, of course, I'm talking about our press release and announcement in London of our CEO transition plan. After this quarter, I will retire from CEO responsibilities to become Executive Chair, as I will continue to oversee investor relations.

Gregory S. Bentley: Good morning, and as always thanks to each of you for your continued interest in B S Y Eric Thanks for setting the stage for our focus today.

Gregory S. Bentley: For all that we characterize and think as Bentley systems as a no drama company. We do realize that we've made news over the two plus months since people I spent together and of course I'm talking about our press release and announcement in London of our CEO transition plan.

Gregory S. Bentley: After this quarter I will retire from CEO responsibilities to decon executive chair.

Gregory S. Bentley: As I will continue to oversee investor relations.

Gregory S. Bentley: I expect our quarterly operating results presentations to continue foreseeably with the same format and lineup as today. Given that I will turn 69 years old next week, I believe that my retirement as CEO has been reasonably anticipated. The timing purposely follows the completion of transitions throughout our senior executive ranks since the IPO in 2020 in favor of a literally rejuvenating new, and I consider improved, cohort of leaders. The generational improvement at my current position, handing the reins to a first-time CEO, is de-risked for everyone, I think, by virtue of an incoming executive chairperson. In that role, my priority will be to support Nicholas Cummins through and beyond the transition stage.

Gregory S. Bentley: I expect our quarterly operating results presentations to continue foreseeably with the same format and lineup as today.

Speaker Change: Given that I will turn 69 years old next week I believe that my retirement as CEO has been reasonably anticipated.

Speaker Change: The timing purposely follows the completion of transitions throughout our senior executive ranks since the IPO in 2020 in favor of a literally rejuvenating knew and I consider improved cohort of leaders.

Speaker Change: The generational improvement at my current position handing the reins to a first time CEO is derisked for everyone I think by virtue of an incoming executive chair.

Speaker Change: In that role my priority will be to support nicholas' comments through and beyond the transition stage.

Gregory S. Bentley: And, in addition to management of our board activities and investor relations, I will continue to be responsible for capital allocation decisions, including platform M&A. By way of capital allocation, for now, I am overseeing the Asset Analytics Initiative, which we introduced this year. A transition to executive chair is probably unsurprising upon the retirement of a founding tech company CEO, and most of you have heard me looking forward over the past few years to this change at BSY. But I find it interesting to see that this seems to be becoming the norm more generally.

Speaker Change: And in addition to management of our board activities and Investor Relations I will continue to be responsible for capital allocation decisions, including platform M&A.

Speaker Change: By way of capital allocation for now I am overseeing the asset analytics initiative, which we introduced this year.

Speaker Change: A transition to executive chair is probably unsurprising upon retirement of a founding Tech company CEO and most of you have heard me looking forward over the past few years to this change at P. S y.

Speaker Change: But I find it interesting to see that this seems to be becoming the norm more generally as reported by board level Authority Spencer Stuart.

Gregory S. Bentley: As reported by Board Level Authority, Spencer Stewart, of all CEO transitions in the S&P 500 last year, the average age of incoming CEOs increased to over 56. So by contrast, we at BSY, with Nicholas at age 47, have purposely prioritized the capacity to perpetuate our long-term continuity. But our CEO transition is otherwise in common with the S&P 500 norm, as 78% of incoming CEOs, like ours, had never been president of a public company. And 74% of them were internal promotions like ours.

Speaker Change: Of all CEO transitions in the S&P 500 last year.

Speaker Change: The average age of incoming Ceos increased to over 56. So by contrast, we at P. S Y with Nicholas at age 47 has purposely prioritized the capacity to perpetuate our long term continuity.

Speaker Change: But our CEO transition is otherwise in common with the S&P 500, norm has 78% of incoming Ceos like ours had never been CEO of a public company.

Speaker Change: And 74% were internal promotions like ours.

Gregory S. Bentley: And the former CEO became executive chairperson, as will occur in our case, and 41% of all S&P CEO transitions. Now, I should say that for our CEO selection, the Sustainability Committee of our board, over the past year, conducted a full assessment of candidates from first principal, including engaging top professional advisors. Although I'm not going to recount all of our criteria, of particular importance to me is the roundedness of our next CEO.

Speaker Change: And the former CEO became executive chair as will occur in our case and 41% of all S&P CEO transitions now I should say that for our CEO selection. The sustainability committee of our board over the past year conducted a full assessment of candidates from first principles, including <unk>.

Speaker Change: Engaging top professional advisors.

Speaker Change: Although I'm not going to recount all of our criteria of particular importance to me is the rounded miss of our next CEO.

Gregory S. Bentley: You may have heard me admit to wanting to upgrade, especially our marketing orientation, for a better balance with our established engineering DNA. Suffice it to say about Nicholas that his education was in law, although he correctly recognized the highest and best use of his talent and capabilities in software.

Speaker Change: You may have heard me at net to wanting to upgrade, especially our marketing orientation for better balance with our established engineering DNA.

Speaker Change: Suffice it to say about Nicholas that his education was in law, although he correctly recognize the highest and best use of his talent and capabilities and software.

Gregory S. Bentley: He left SAP for entrepreneurial opportunities in a couple of startups, including in programmatic advertising technology, before returning to SAP to lead its marketing cloud, including integrating major acquisitions. But those of you in our audiences today have by now come to know Nicholas in the capacity of Chief Operating Officer, to which he was promoted, on my part anticipating this subsequent transition at the beginning of 2022. And what you have come to know him for has been our consistent and continuing steady execution under Nicholas's leadership of our collaborative and effective operating council, from which I have absented myself since entrusting our operations to Nicholas and his team.

Speaker Change: Left S. P for entrepreneurial opportunities in a couple of start ups, including in programmatic advertising technology before returning to S. P to lead its marketing cloud, including integrating major acquisitions.

Speaker Change: But those of you in our audiences today has by now come to know Nicholas and the capacity of Chief operating officer to which he was promoted on my part anticipating this subsequent transition at the beginning of 2022.

And what you have come to know him four has been our consistent and continuing steady execution under Nicolas his leadership of our collaborative and effective operating council for which I have absented myself since and trusting our operations to Nicholas and his team.

Gregory S. Bentley: As Chief Operating Officer, our colleagues everywhere have already been reporting into Nicholas, except those in the corporate functions of finance and legal, who will do so beginning on July 1st. Consistent with the planned nature of our transition, Nicholas has already announced internally his pending organization structure as CEO. Beyond execution, Nicholas has also brought structure and rigor to our planning function, as we reprogramm each year to optimize growth subject to our institutionalized annual margin improvement.

Speaker Change: As Chief operating officer, our colleagues everywhere have already been reporting into Nicholas except those in the corporate functions of finance and legal who will do so beginning on July one.

Speaker Change: Consistent with the planned nature of our transition Nicholas has already announced internally his pending organization structure as CEO.

Speaker Change: Beyond execution Nikolas has also brought structure and rigor to our planning functions as we reprogram annually to optimize growth subject to our institutionalized annual margin improvement.

Gregory S. Bentley: Nicholas' remarkable capacities to learn and lead have been literally demonstrated in our coinciding track record as a public company, reflecting our global footprint now extending to a European CEO designated. We chose to announce the transition during the opening of our new office in London, the UK being our second largest country in revenue. In keeping with our post-pandemic strategy to create magnetic offices to convene collaboration among colleagues and for visitors, in London, we now occupy the top floor in one of the most significant new buildings in the city.

Speaker Change: Nicholas remarkable capacity to learn and lead has been literally demonstrated to our coinciding track record as a public company.

Speaker Change: Reflecting our global footprint now extending to our European CEO designate.

Speaker Change: We chose to announce the transition during the opening for our new office in London, the UK being our second largest country in revenues.

Speaker Change: In keeping with our post pandemic strategy to create magnetic offices to convene collaboration among colleagues and for visitors and London, We now occupy a top floor in one of the most significant new buildings in the city.

Gregory S. Bentley: The project managers of Builder Lendlease enthusiastically keynoted our opening event by explaining how our software made the construction of eight Bishopsgate successful. Despite the ambitious design and the construction challenges they noted here, they showed how our 4D construction modeling software Synchro within Bentley Infrastructure Cloud was uniquely instrumental to the project delivery of 8BishopsCade. Like construction itself, as you can see, 4D is about the interaction of space and time.

Speaker Change: The project managers of builder lend lease and Susie <unk> keynote at our opening event.

Speaker Change: By explaining how our software made the construction of eight bishopsgate successful despite the ambitious design and the construction challenges. They noted here they are.

Speaker Change: Showed here how are 40 construction modeling software synchro within Bentley infrastructure cloud was uniquely instrumental to the project delivery of eight bishopsgate.

Speaker Change: White construction itself as you can see four D is about the interaction of space and time with Synchro Bentley system strategy for going digital in construction and live ins infrastructure digital twins for their full potential from design through operations.

Gregory S. Bentley: With Synchro, Bentley Systems' strategy for going digital in construction enlivens infrastructure digital twins for their full potential from design through operation. Rather than regressing from 3D to 2D digital paper, we believe that adding intelligence from 3D to 4D, which we lead across infrastructure sectors globally, will steadily preempt and advance the future of digital construction. And Nicholas will have more to say about Synchro's momentum. Turning back now to 24

Speaker Change: Rather than regressing from three D to <unk> digital paper, we believe that adding intelligence from three D to four D, which we lead across infrastructure sectors globally will steadily preempt and advance the future of digital construction and Nicolas will have more to say about St gross momentum.

Speaker Change: Turning back now to 2000 for Q1.

Gregory S. Bentley: The quarter was quite consistent with our overall expectations for 2024, as Werner will detail further. Our profitability and cash flow are, for now, well ahead of that pace, with subscription revenues on track. When we were last together, I described our objectives for Cohesion, rather than growth per se of a professional services business as a means toward the end of validating the business model potential for an ecosystem of digital integrators to create and curate comprehensive infrastructure digital twins for owner-operators.

Speaker Change: The quarter was quite consistent with our overall expectations for 2024 <unk>.

Speaker Change: As Werner will further detail our profitability and cash flow are for now well ahead of that pace with subscription revenues on track.

Speaker Change: When we were last together I described our objectives for cohesive rather than growth per se of a professional services business as a means toward the end of validating the business model potential for an ecosystem of digital integrators to create and curate comprehensive infrastructure digital twins for owner operators.

Speaker Change: Yes.

Gregory S. Bentley: In fact, to the detriment of our overall revenue growth and owing to delays in the implementation of upgrades of IBM's Maximo, the incumbent enterprise asset management system for most infrastructure owner-operators, the cohesive digital integrator business is off to a slower start than in 2023, accordingly within our prevailing 2024 revenue growth outlook. Our revenue mix this year will be more subscription intensive, starting at 91% in 24Q1. Our key metric of year-over-year ARR growth merits a closer look in light of the factors we have planned to be different in 2024. Lower contributions from programmatic acquisitions, intentional cannibalization in China, and the glide path of pricing escalation with inflation subsiding, and indeed, N24Q1 year-over-year ARR, business performance, including acquisitions, ticked down to 11%.

Speaker Change: In fact to the detriment of our overall revenue growth and owing to delays and accounts implementation of upgrades of Ibm's Maximo. He incumbent enterprise asset management system for most infrastructure owner operators.

Speaker Change: He says digital integrator business is off to a slower start than in 2023.

Speaker Change: Accordingly within our prevailing 2020 for revenue growth outlook, our revenue mix. This year will be more subscription intensive starting at 91% in 2000 for Q1.

Speaker Change: Our key metric of year over year AOR growth merits, a closer look in light of the factors we have planned to be different in 2024.

Speaker Change: Lower contributions from programmatic acquisitions intentional cannibalization in China, and the glide path of pricing escalation with inflation subsided.

Speaker Change: And indeed in 2000 for Q1 year over year, a or our growth business performance, including acquisition ticked down to 11%.

Gregory S. Bentley: Because over the trailing year, ARR onboarded with programmatic acquisitions has now become insignificant. The downtick in organic terms is of lesser importance, further excluding China's impact on ARR growth, likewise shows more sustained momentum in the other 97% of our ARR. And back to our reporting metric, business performance globally. Our 2024 outlook of 10.5% to 13% ARR growth takes into account the evolution of parameters now generally governing our E365 consumption subscription contracts. First, to report, as usual, on the quarter's growth in the scope and proportion of the E365 plurality of our ARR. Here, in green, is the incremental magnitude of E365 accretion and expansion.

Speaker Change: Because over the trailing year, a RR on boarded with programmatic acquisitions has now become insignificant.

Speaker Change: The downtick in organic terms is of lesser extent.

Speaker Change: Further excluding China's impact on <unk> growth.

Speaker Change: Likewise shows more sustained momentum in the other 97% of our a R. R.

Speaker Change: And back to our reporting metric business performance globally.

Speaker Change: Our 2024 outlook of 10, 5% to 13% AOR growth takes into account the evolution of parameters now generally governing our eastern 65 consumption subscription contracts.

Speaker Change: First to report as usual on the quarters growth in the scope and proportion of the <unk> hundred 65 paralysis of our a R. R.

Speaker Change: Here in Green is the incremental magnitude of <unk> hundred 65 accretion and expansion.

Gregory S. Bentley: Also, as usual, a relatively small portion of E365 growth was from select accounts upgrading, with the majority from accretion, or NRR, Net Revenue Retention, in E365 accounts. Last quarter, I observed that the 23 Q4 decline in our overall NRR from 110% to 109% would not have occurred, excluding China and Russia. In 24Q1, China and Russia again factored in to the same extent, but NRR declined to 108%. As with A.R.

Speaker Change: Also as usual a relatively small portion of the 365 growth was from select accounts upgrading with the majority from accretion or an IRR net revenue retention and <unk> hundred 65 accounts.

Speaker Change: Last quarter I observed that the 23 Q4 decline in our overall, an IRR from 110% to 109% would not have occurred excluding China and Russia.

Speaker Change: And 24, Q1, China, and Russia again factored into the same extent, but <unk> declined to one 8% as with <unk>. This is also influenced by the direction of inflation, which impacts not only our annual pricing escalation, but also the background.

Gregory S. Bentley: This is also influenced by the direction of inflation, which impacts not only our annual pricing escalation but also the background expectations, which mutually inform negotiations of the step-ups in E365 floors and ceilings that now often extend over multiple future years. Moreover, this year, a change in the seasonality of E365 consumption accretion particularly affected the first quarter. We alluded to this directionally last quarter, and I'd like to now illustrate this phenomenon more quantitatively.

Speaker Change: <unk>, which mutually inform negotiations of the step ups in <unk> hundred 65 floors and ceilings that now often extend over multiple future years.

Speaker Change: Moreover, this year a change in the seasonality of <unk> hundred 65 consumption accretion, particularly affected the first quarter, we alluded to this directionally last quarter and I'd like to now illustrate more quantitatively this phenomenon.

Gregory S. Bentley: Apart from any change in consumption, what we charge and recognize as revenue and ARR is increasingly attenuated by the ever greater magnitude of E365 ARR that has recently become subject to an annual floor. First, see here that in 2024, a greater proportion of our overall ARR is charged on consumption, E365, than in 2023. And the proportion of E365 ARR with no annual floor is now even smaller. Incidentally, where there is a floor, there is almost always a ceiling, as that's generally the incentive for the account to agree to a floor. And more or less institutionalizing floors and ceilings to reasonably share with accounts the risks of consumption extremes has been essentially neutral in its impact on our overall E365 revenues and ARR, as at any given time, there has For the small portion of E365 ARR without floors or ceilings, any and all increases in consumption will immediately increase ARR, not subject to reset seasonality.

Speaker Change: Apart from any change in consumption, what we charge and recognized as revenue in a or our growth is increasingly attenuated by the ever greater magnitude of E. 365, eight RR that has recently become subject to an annual floor.

Speaker Change: First see here that in 2020 for a greater proportion of our overall E. R. R is consumption charged <unk> hundred 65 than in 2023.

Speaker Change: And the proportion of <unk> hundred 65, <unk> with no annual floor is now even smaller incidentally.

Speaker Change: Incidentally, where there is a floor there is almost always a ceiling as that is generally the incentive for the account to agree to a floor.

Speaker Change: And more or less institutionalizing floors, and ceilings to reasonably share with accounts. The risks of consumption extremes has been essentially neutral and its impact on our overall <unk> hundred 65 revenues in a RR as at any given time, there has been relative symmetry between levels of <unk>.

Speaker Change: Sage below floors and levels of usage above ceilings.

Speaker Change: For the small portion of <unk> hundred 65 are are without floors or ceilings any and all increases in consumption will immediately increase our are not subject to reset seasonality.

Gregory S. Bentley: And while aggregate consumption tends to grow throughout the year, at an average trend rate consistent with our NRR, the floors and ceilings don't adjust quarterly but rather only once per year in advance, coinciding with annual renewal and resets, which tend to be clustered in certain quarters. So the skewing of ARR growth across the quarters of 2024 is affected by the increasing prevalence compared to 2023 and the reset timing of floors and ceilings. Here's the distribution of the floor-bounded E365 ARR entering each of 2023 on top and 2024 on the bottom by quarter of annual resource, for the darkest portions, which reset longest ago.

Speaker Change: And while aggregate consumption tends to grow throughout the year at an average trend rate consistent with our N. R. R.

Speaker Change: Floors, and ceilings don't adjust quarterly, but rather only once per year in advance coinciding with annual renewal and resets, which tend to be clustered in certain quarters.

Speaker Change: So the skewing of our our growth across the quarters of 2024 is affected by the increasing prevalence compared to 2023, and the reset timing of floors and ceilings.

Speaker Change: Here's the distribution of the floor bounded <unk> hundred 65.

Speaker Change: Entering each of 2023 on top in 2024 on the bottom by quarter of annual reset.

Speaker Change: For the darkest portions, which reset longest ago. It is most likely that typically growing consumption will be mined by now above the floor levels enhance will constitute a RR growth.

Gregory S. Bentley: It is most likely that typically growing consumption will be my buy now above the floor level and hence will constitute ARR growth. But that magnitude and proportion, as you see, is lower than last, more of the E365 ARR in 2024, and the lightest blue on the right has just reset and will not reset again until Q4 of this year. So, trending consumption growth under those will likely result in a concentration of ARR growth from rising above the annual floors later during this year. Moving now within ARR growth from existing accounts NRR to new logo, that would most naturally start within small and medium-sized businesses under our criteria, which classifies as SMB, those with ARR of less than 100,000 per year.

Speaker Change: But that magnitude in proportion as you say is lower than last year.

Speaker Change: More of the <unk> hundred 65, <unk> in 'twenty 'twenty four.

Speaker Change: And lightest blue on the right has just reset and will not reset again until Q4 of this year.

Speaker Change: So trending consumption growth under those contracts will likely result in a concentration of AOR growth.

Speaker Change: From rising above the annual floors later during this year.

Speaker Change: Moving now within AOR growth from existing accounts and our our two new logos that were most naturally start within small medium business under our criteria, which classifies as SMB those with <unk> of less than 100000 per year I'm pleased to report that the indicator.

Gregory S. Bentley: I'm pleased to report that the indicators which I attribute to our success in competitive displacement are distinctly headed up in 2024. After five straight quarters of contributing 3% in 24Q1, new logos for the first time contributed overall ARR growth of 4%. By the end of 2023, virtuoso subscriptions, targeted primarily at SMB through a direct digital experience, had captured over 600 new logos for eight straight quarters, and that count was steeply increased.

Speaker Change: <unk>, which I attribute to our success and competitive displacement are distinctly headed up in 2024.

Speaker Change: After five straight quarters of contributing 3% and.

Speaker Change: In 2000 for Q1, new logos for the first time contributed overall AOR growth of 4%.

Speaker Change: By the end of 2023 virtuoso subscriptions targeted primarily at S&P through direct digital experience had captured over 600, new logos for eight straight quarters in that count was steeply increasing.

Gregory S. Bentley: In 24Q1, the exponential growth of Virtuosa subscriptions continued, thanks to a record number of new logos, with the cumulative number of accounts with Virtuosa subscriptions almost all new over the last three years at now over 9,000. Finally, as to incremental growth, within our new asset analytics initiative that I previewed at length last time we were together, which is for instant on digital twins monetized per asset. It has been a quarter of steady behind the scenes progress in the technical portfolio and business development and towards a concerted marketing launch with significant announcements still to come.

Speaker Change: And 20 for Q1, the exponential growth of virtuoso subscriptions continued thanks to a record number of new logos with the cumulative number of accounts with virtuoso subscriptions almost all new over the last three years at now over 9000.

Speaker Change: Finally as to incremental growth within our new asset analytics initiative that I previewed at length last time, we were together, which is for instant on digital twins monetize per asset. It has been a quarter of steady behind the scenes progress in technical portfolio and business development and towards a concerted.

Speaker Change: Marketing launch with significant announcements still to come what you see here is a new lengthy offering to enable roadway owners to efficiently comply with new federal highway requirements effective in 2026 to continuously maintain sufficient lane striping retro reflects.

Gregory S. Bentley: What you see here is a new lengthy offering to enable roadway owners to efficiently comply with new federal highway requirements, effective in 2026, to continuously maintain sufficient lane striping, and retro reflective. For Asset Analytics, the largest new deal so far this year brings seven-digit ARR.

Speaker Change: <unk>.

Speaker Change: For asset analytics, the largest new deal so far this year brings seven digit <unk>.

Nicholas H. Cumins: You should expect to hear much more about growth and new investments in asset analysis throughout 2024. And now, for Operational Perspectives and our congratulations. Over to Nicholas.

Speaker Change: You should expect to hear throughout 2020 for much more about growth and new investments and asset analytics.

Speaker Change: And now for operational perspective, and our congratulations.

Speaker Change: Over to Nicholas Thank you.

Nicholas H. Cumins: Thank you, Greg. First, I want to thank again the Board of Directors for entrusting me with the responsibility to lead Bentley. I am deeply honored to follow in Greg's footsteps as CEO. Great leadership for more than 30 years has delivered remarkable success for Bentley Systems, positioning the company for continued growth as we help address the infrastructure sector's biggest challenges. I look forward to working with Greg as he transitions to Executive Chairman.

Nicholas Cummins: Thank you Greg.

Nicholas Cummins: First I want to thank again, the board of directors for Entrusting me with the responsibility to lead Bentley.

Nicholas Cummins: I am deeply honored to photo and Greg could steps as CEO.

Nicholas Cummins: Great leadership for more than 30 years as delivered remarkable successful vending systems.

Nicholas Cummins: <unk> the company for continued growth as we help address infrastructure sector as the biggest changes.

Nicholas Cummins: Look forward to working with Greg as he transitioned to executive chair.

Nicholas H. Cumins: Q1 was a continuation of the same strong and steady micro-trends that we discussed in Thought Last Year, the most notable being the ongoing Enduring Resources Capacity Gap, driven in part by high demand. In the most recent ACC quality survey, US engineering firms across all sectors once again highlighted lengthy project backlogs of one to two years, with expectations of higher backlogs 12 months from now.

Nicholas Cummins: Q1 was a continuation of the same strong and steady macro trends that we discussed throughout last year.

Nicholas Cummins: The most notable being the ongoing and doing resources capacity gap driven in part by high demand.

Nicholas Cummins: In the most recent ACC quarterly survey.

Nicholas Cummins: Engineering firms across all sectors. Once again highlighted xanthe project backlogs of one to two years with expectations of higher backlogs 12 months from now.

Nicholas H. Cumins: This optimism is supported by their increasingly positive views on the U.S. economy, the design and engineering sector, and their own firms' overall finances. However, higher backlogs and enduring resource constraints continue to dominate conversations around the world as well. In April, I attended the FITX Global Leadership Forum in Geneva, Switzerland. FEDEC, the International Federation of Consulting Engineers, represents over 40,000 firms globally. And the forum brought together an exclusive group of senior leaders from among these organizations.

Nicholas Cummins: This optimism is supported by their increasingly positive views on the U S economy, the design and engineering sector and their own firms overall finances.

Nicholas Cummins: Higher backlogs and entering resource constraints continue to dominate conversations around the world as well.

Nicholas Cummins: In April I attended predicts global leadership Forum in Geneva, Switzerland.

Nicholas Cummins: The International Federation of consulting engineers represents over 40000 firms globally and the forum brought together an exclusive group of senior leaders from among these organizations.

Nicholas H. Cumins: The resource capacity gap remains an underlying theme, with a majority of major firms commenting that the problem is getting worse, reinforcing the need and opportunity for digital solutions. Moving to our performance in Q1, it remains very consistent with last year. Starting with our infrastructure sectors, once again, public works and utilities, our largest sector, was the main growth driver for the company. We continue to benefit from strong global infrastructure spending across transportation, water utilities, and the electric grid.

Nicholas Cummins: The resource capacity that remains an underlying theme with a sea of one major firm, commenting the department's getting worse reinforcing the need and opportunity for digital solutions.

Nicholas Cummins: Moving to our performance in Q1, it remains very consistent with last year, starting with our infrastructure sectors. Once again public works and utilities, our largest sector was the main growth driver for the company.

Nicholas Cummins: We continue to benefit from strong global infrastructure spending across transportation water utilities and electric grid.

Nicholas H. Cumins: In terms of resources, we are also seeing trends consistent with last quarter. Sequent performed as expected given the slowdown of new mine investments, but long-term mining sentiment remains strong. We continue to invest in new products and capabilities, especially in mining operations. This will further differentiate us from our competition and help users become more efficient, which is critical given the marginal pressures they face. As I highlighted last quarter, we are very excited about the growth opportunities for Sequent and Seville.

Nicholas Cummins: In terms of resources, we are also seeing trends consistent with last quarter.

Nicholas Cummins: Sequent performed as expected given the slowdown of new mine investments, but long term mining sentiment remains strong.

Nicholas Cummins: We continue to invest in new products and capabilities, especially in mining operations.

Nicholas Cummins: This will further differentiate us from our competition and help users become more efficient which is critical given the margin pressures the face.

Nicholas Cummins: As I highlighted last quarter, we are very excited about the growth opportunities for sequent in cereal as well and we saw continued strength in Q1, including our first seven digit deal for leapfrog works with a major civil engineering firm.

Nicholas H. Cumins: And we saw continuous strength in Q1, including our first seven-digit deal for LeapFrog Works with a major civil engineering firm. However, the industrial sector remains mixed, and the commercial and facility sectors remain relatively flat. Moving on to regions, North America continued its steady performance with market sentiment nothing but positive.

Nicholas Cummins: Industrial remains mixed and the commercial and <unk> sectors remained relatively flat.

Nicholas Cummins: Moving onto regions North America continued its steady performance with market sentiment nothing but positive.

Nicholas H. Cumins: As Greg mentioned, consumption growth was impacted by the recess in Q4, but we expect it to strengthen in Q2. Transportation continues to experience strong momentum from IJA and also from state spending more. We have momentum with U.S. DOTs adopting our software for digital delivery across design, construction, and operations. This includes Synchro, which I will discuss in more detail shortly. Beyond transportation, there was movement in the U.S. with electrical transmission permitting reform. The Department of Energy will work to consolidate environmental reviews for energy transmission projects within a standard two-year schedule.

Nicholas Cummins: As Greg mentioned consumption growth was impacted by resets in Q4, but we expect it to strengthen in Q2.

Nicholas Cummins: Transportation continues to experience strong momentum from <unk> and also from state spending more.

Nicholas Cummins: We have momentum with USB ots, adopting our software for digital delivery across design construction and into operations.

Nicholas Cummins: This increased syncrude, which I will discuss in more detail shortly.

Nicholas Cummins: Beyond transportation there was movement in the U S with electrical transmission permitting reform.

Nicholas Cummins: Department of energy will work to consolidate environmental reviews for energy transmission projects within our standard two year schedule.

Nicholas H. Cumins: We are cautiously optimistic that this could help facilitate faster build-out of new electrical transmission infrastructure within the U.S. over the long term, which our pilot system business is uniquely qualified to support. EMEA had a good start to the year, especially in Northern Europe, and was led by a particularly strong quarter in resources followed by public works. We see continued investment in infrastructure across Europe, and there are calls for even more in the face of climate change.

Nicholas Cummins: We are cautiously optimistic that this will help facilitate faster build out of new electrical transmission infrastructure within the U S over the long term.

Nicholas Cummins: Which are permanent system business is uniquely qualified to support.

Nicholas Cummins: EMEA had a good start to the year, especially in northern Europe and was led by a particularly strong quarter in resources followed by public works.

Nicholas Cummins: We see continued investments in infrastructure across Europe, and there are calls for even more in the face of climate change.

Nicholas H. Cumins: In Asia-Pacific, India was once again the main growth driver with continuous momentum in water, now expanding from product delivery into operations with digital twins of the water network. The rest of the region experienced steady growth. China's performance was consistent with Q4.

Nicholas Cummins: In Asia Pacific India was once again the main growth driver with continued momentum in water now spending from product delivery into operations with digital twins of the water networks.

Nicholas Cummins: The rest of the region experienced steady growth.

Nicholas Cummins: <unk> performance was consistent with Q4.

Nicholas H. Cumins: The headwinds remain the same, with difficult economic conditions and continued geopolitical tension. However, we did see renewal rates improving, which is encouraging. Back to Synchro, which is part of Bentley Infrastructure Cloud. As an open, collaborative, and data-centric environment, Bentley Fast Factor Cloud is the key to digital product delivery, unlocking digital workflows that help firms increase efficiency and productivity, from design through construction and handoff. Our focus in construction is on digital delivery versus general construction management software. That is, leveraging a digital twin to sequence and digitally rehearse every step of the construction process.

Nicholas Cummins: The headwinds remain the same with difficult economic conditions and continued geopolitical tensions.

Nicholas Cummins: However, we did see renewal rates, improving which is encouraging.

Nicholas Cummins: Back to Syncrude, which is part of infrastructure cloud.

Nicholas Cummins: As a notebook collaborative and data centric environments benefactor to cloud is the key to digital product delivery.

Nicholas Cummins: Unlocking digital workflows that help firms increase efficiency and productivity from design through construction and hand off.

Nicholas Cummins: Our focus in construction is on digital a bit eerie versus a general construction management software.

Nicholas Cummins: That is leveraging a digital twin to sequence and digitally rehearse every step of the construction process.

Nicholas H. Cumins: This includes enriching the digital twin through the SADA process, so that it accurately reflects the as-built asset when handed over to operations. One reason for this focus is a clear ROI it can deliver for users. A recent standout project is EcoWater, a large wastewater treatment facility in California.

Nicholas Cummins: This includes enriching the digital twin throughout that process.

Nicholas Cummins: So that it accurately reflects the asset build assets when handed over into operations. One reason for this focus is a clear ROI can deliver for users.

Nicholas Cummins: Since then our project is equal water, a large wastewater treatment facility in California.

Nicholas H. Cumins: Engineering Firm Product Controls Cube leveraged Synchro to develop a digital twin to manage 22 engineering projects across the facility. Various users, from designers to contractors, leverage the digital twin, working in real-time, to prepare for and carry out all activities. The Digital Twins streamline coordination and optimize construction sequence.

Nicholas Cummins: Engineering firm product controls Q leverage syncrude to develop a digital twin to manage 22 entering projects across the facility.

Nicholas Cummins: Various users from designers, who contractures leverage the digital twin.

Nicholas Cummins: Working in real time to prepare for and carry out all activities.

Nicholas Cummins: The digital twin streamline coordination and optimize construction sequencing.

Nicholas H. Cumins: Reducing overall program costs by an astounding $400 million. As the planning director said, it was an overwhelming success and really proved to everyone the power of Bentley's digital construction platform. Results like this will further drive the uptake of Bentley Infrastructure Cloud, especially as the silos between design and construction break down, and engineering and construction teams unite in a collaborative digital twin environment. As users add model-based workflows to their traditional file-based workflows, they will increasingly benefit from digital delivery and gain a competitive advantage in delivering higher-quality, sustainable products.

Nicholas Cummins: Reducing overall program costs by an astounding $400 million.

Nicholas Cummins: As the planning Derek just said it was an overwhelming success and really prove to everyone. The power of <unk> digital construction platform.

Nicholas Cummins: Results like this will further drive the uptake of any faster to cloud, especially as the silos between design and construction breakdown and engineering and construction teams unite collaborative digital twin environments.

Nicholas Cummins: As users AD model based workflows to their traditional file based workflows that will increasingly benefit from digital delivery and gain a competitive advantage in data ring higher quality sustainable projects.

Nicholas H. Cumins: Before I hand over to Werner, I want to thank my Bentley colleagues for a strong start to the year. Thanks to their efforts, we are well positioned to take advantage of the many infrastructure opportunities before us in 2025. Over to you, Werner. Thank you, Nicholas.

Speaker Change: Before I hand over to Dan I want to thank <unk> for a strong start to the year.

Dan: Thanks to their efforts, we are well positioned to take advantage of the many infrastructure opportunities before us in 2024.

Dan: Over to you about it.

Werner Andre: We are pleased with the strong start to the year, which puts us in a good position to achieve our full-year outlook. Total revenues for the first quarter were $338 million, up 7% year-over-year in reported and constant currency. Subscription revenues for the quarter grew 11% year-over-year, or 10% in constant currency, in line with our expectations, representing 91% of our total revenues, up from 89% in 23Q1. Our E365 and SMB initiatives continue to be solid contributors to our subscription revenue growth.

Dan: Thank you Nicholas we're pleased with the strong start to the year, which puts us in a good position to achieve our full year outlook.

Speaker Change: Total revenues for the first quarter reps were younger $38 million up 7% year over year in reported and constant currency.

Dan: Subscription revenues political article, 11% year over year or 10% in constant currency.

Dan: In line with our expectations.

Dan: <unk>, 91% of our total revenues up from 89% and 23 Q1.

Dan: Our <unk> hundred 65 from the SMB initiatives continue to be solid contributors to our subscription revenue growth.

Werner Andre: Perpetual license revenues for the quarter reflected year-over-year or up 1% in constant currency. Perpetual licensees make up only 3% of total revenues and will remain small relative to our recurring revenues. Our professional services revenues for the quarter declined by $6 million, or 22% year-over-year, in reported and constant currency, driven primarily by weakness in Maximo-related work within our digital integrator cohesion.

Dan: Perpetual license revenues for the quarter, reflecting year over year or up 1% in constant currency.

Dan: Perpetual license sales make up only 3% of total revenues and will remains small relative to our recurring revenues.

Dan: Our professional services revenues for the quarter declined by $6 million, what's one or 2% year over year in reported and constant currency driven primarily by weakness in maximal related to work within our digital integrated cohesive.

Werner Andre: First, 23Q1 was a difficult comparison due to a particularly large Maximo implementation contract in the year-ago quarter. And second, during the first quarter of 2024, our Maximo-related implementation work was negatively impacted by delays in Maximo version upgrade work, with such delays now likely to continue through the second quarter before the pace of upgrade projects is expected to increase early in the second half of the year. And the advantage of later upgrades is that we will be better positioned to offer, at the same time, the transition from on-premise to our hosting managed services for Maximo, facilitating eventual integration with our ITWIN environment.

Dan: First 23, Q1 was a difficult comparison.

Dan: We are particularly large maximal implementation contract in the year ago quarter.

Dan: Second during the first quarter of 2024 hour maximum related implementation Burke was negatively impacted by delays in maximal Russian upgrade work with such delays not likely to continue for the second quarter before the pace of upgrade projects is expected to increase early in the second half of the year.

Dan: Sure.

Dan: An advantage of later upgrades is that we will be better positioned to offer at the same time the transition from on premise hosting managed services for maximal facilitating eventual integration.

Dan: The <unk> environment.

Werner Andre: On a positive note, we are pleased that our Bentley software-related services grew modestly as expected. Moving on to our recurring revenue performance, Our last 12 months' recurring revenues increased by 11% year-over-year in reported and 10% in constant currency and represent 90% of our total last 12 months' revenue. Our last 12 months' constant currency account retention rate is up at 99%, and our constant currency recurring revenues net retention rate was 108%. Our net revenue retention is led by continued accretion within our E365 consumption-based commercial model. Ex-China and Russia, our NRR was 109. We ended Q1 with an ARR of $1,186,000,000 at quarter and spot rate.

Dan: On a positive note. We are pleased that Bentley software related services grew modestly as expected.

Dan: Moving onto our recurring revenue performance.

Dan: Our last 12 months' recurring revenues increased by 11% year over year and reported and 10% in constant currency and.

Dan: <unk> represent 90% of our total last 12 months' revenues.

Dan: Our last 12 months constant currency account retention rate is up at 99%.

Dan: And our constant currency recurring revenues net retention rate was 108%.

Dan: Our net revenue retention is led by continued accretion within our <unk> hundred 65 consumption based commercial model.

Dan: Ex China and Russia.

Dan: 109%.

Dan: The end of Q1 with <unk> of $1 billion 186 million at quarter end spot rates.

Werner Andre: With our E365 and S&B growth initiatives remaining the key growth drivers, our constant currency ARR goal for it was 11% year over year or 11.5% excluding China. On a sequential quarterly basis, our constant current growth rate was 2.2% and was fully in line with our expectation.

Dan: <unk> hundred 65, some SMB growth initiatives remaining to key growth drivers.

Dan: Our constant currency growth rate was 11% year over year or 11, 5% excluding China.

Dan: On a sequential quarterly basis, our constant currency growth rate was two 2% and was fully in line with our expectations.

Werner Andre: As I mentioned during last quarter's call, we expected our ARR growth rate for Q1 to be lower than last year's sequential 3.1% growth rate for two primary reasons. First, our last programmatic acquisition with an appreciable ARR contribution, which was 50 basis points, was EasyPower in 23Q1. And second, as Greg's slide showed, we have an increasing percentage of our E365 accounts on consumption floors and ceilings, which impacts our quarterly ARR seasonality. With the fourth quarter being our biggest contract renewal quarter, many of these floors and ceilings have just reset at the end of Q4.

Dan: As I mentioned during last quarters call, we expected our alcohol free for Q1 to be lower than last year's sequential three 1% coal freight.

Dan: Primary reasons.

Dan: First our lost broker Magic acquisition, if appreciable contribution, which was 50 basis points plus easy power in 23 Q1.

Dan: And second as Greg Slide shows we have an increasing percentage of our <unk> hundred 65 accounts on Consumptions, lewisohn ceilings, which impacts our quarterly.

Dan: Seasonality.

Dan: Mr fourth quarter being our biggest contract renewal quarter. Many of these floors and ceilings I've just reset at the end of Q4.

Werner Andre: These resets consider consumption growth expectations over the next year. As such, floor resets can be and often are above the consumption level at the beginning of the renewal period, with accounts growing into and above the floors over the renewal term.

Dan: These resets consider consumption growth expectations over the next year.

Dan: As such floor resets can be and Austin.

Dan: The consumption level at the beginning of the renewal period.

Dan: Mr Comscore into in the past if loss over the renewal term.

Werner Andre: Allow practices to recognize revenue from E365 consumption and associated growth based on annualized quarterly consumption. If a consumption floor, which reflects the minimum contract value, resets at a higher level than current consumption, we recognize revenue at the new floor level at the time of contract renewal. As such, the higher prevalence of floors and ceilings tends to align an increasing portion of our E365 consumption growth with the contract renewal timing, which is heavily weighted towards H2 and Q4.

Dan: While our practice is to recognize from <unk> hundred 65 consumption and associated growth based on the annualized quarterly consumption is a key.

Dan: Consumption, Florida, which reflects the minimum contract value.

Dan: That's at the higher levels than current consumption via recognized at the new floor level at the time of contract renewal.

Dan: As such to higher prevailing floors and ceilings tends to align an increasing portion of our <unk> hundred 65 consumption growth Mr contract renewal timing, which is heavily weighted towards each tool in Q4.

Werner Andre: Lastly, we continue to be impacted by ARR headwinds in China and the greater preference there for perpetual life. China represents 3% of our ER. Now moving to profitability performance, our GAAP operating income was $92 million for the first quarter.

Dan: Lastly, we continue to be impacted by headwinds in China, and the greater pressure on steel for perpetual licenses.

Dan: China represents 3% of our.

Dan: Yeah.

Speaker Change: Now moving to profitability performance.

Speaker Change: Our GAAP operating income was 92 million for the first quarter. We have previously explained the impact on our GAAP operating results from amortization of purchased intangibles deferred compensation plan liability revaluations and.

Werner Andre: We have previously explained the impact on our GAAP operating results from amortization of purchased intangibles, Deferred Compensation Plan Liability Revaluations, and Acquisition Expenses. Moving on to Adjusted Operating Income with Stock-Based Compensation Expense, our Primary Profitability and Margin Performance Measure. Adjusted operating income with stock-based compensation expense was $112 million for the quarter, up $22 million, or 24% year-over-year, with a margin of 33.3%, up 450 basis points. During the fourth quarter of 2023, we initiated a strategic realignment program to better align our resources with our Most of the realignment actions were completed at the beginning of 2024.

Speaker Change: Acquisition expenses.

Dan: Moving on to adjusted operating income to stock based compensation expense, our primary profitability margin performance measure.

Dan: Adjusted operating income with stock based compensation expense was $112 million for the quarter up $22 million up 24% year over year.

Dan: A margin of 33, 3% up 450 basis points.

Dan: During the fourth quarter of 2023.

Dan: We initiated a strategic realignment program to better align our resources with our strategy address market opportunities and to support that Michael.

Dan: Most of the realignment action got completed at the beginning of 2024.

Werner Andre: Our first quarter profitability benefited from these run rate savings, which we expect to fully reinvest into priority areas throughout the rest of the year. As we previously discussed, our priority investment areas are AI in product development and marketing. As a reminder, we calibrate our business to achieve our annual operating margin improvement objective by investing in long-term initiatives rather than maximizing short-term profitability. I will now briefly comment on our services gross margin.

Dan: Our first quarter profitability benefited from these run rate savings, which we expect to fully reinvest into priority areas throughout the rest of the year.

Dan: As we previously discussed are a priority investment areas.

Dan: In product development and marketing.

Dan: As a reminder, we calibrate our business to achieve.

Dan: Operating margin improvement objective by investing in long term initiatives, rather than maximizing short term profitability.

Dan: I will now briefly comment on our services gross margin.

Werner Andre: Well, our services revenues declined year by year by 22% for the reasons we discussed. We pay close attention to our services delivery cost structure to adjust for volatility in episodic services. The net year-over-year services gross profit impact for the quarter was a decline of only one million.

Dan: While our services revenues declined year over year by 22% for the reasons we discussed.

Dan: Pay close attention to all its services delivery cost structure too.

Dan: Just a couple of utility and episodic services truck.

Dan: The net year over year services gross profit impact, but it was a decline of only $1 million.

Werner Andre: Moving back to Adjusted Operating Income with Stock-Based Compensation, our Q1 operating margin is typically a higher margin quarter for us due to OPEX seasonality. And I do want to remind you of our seasonal pattern of expenses. We concentrate our annual races for colleagues to occur as of April 1st of each year.

Dan: Moving back to adjusted operating income with stock based compensation.

Dan: Our Q1 operating margin is typically a higher margin quarter for us due to opex seasonality.

Dan: And I do want to remind you of our seasonal pack one off expenses.

Dan: Concentrate our annual raises broke leaks.

Dan: As of April of each year.

Werner Andre: Since approximately 80% of our cost structure is headcount and related support costs, annual raises have a significant impact on our operating expenses in Q2, Q3 and Q4 relative to Q1. This is further compounded by our larger promotional and event-related costs, which are historically highest in the second half of the year with respect to liquidity. Our operating cash flow was $205 million for the quarter, up $29 million or 16% and benefited from the strong profitability of the quarter.

Dan: And since approximately 80% of our cost structure is headcount and related support costs.

Dan: Annual raises have a significant impact on our operating expenses in Q2, Q3, and Q4 relative to Q1.

Dan: This is further compounded by our larger promotional event related costs, which are historically highest in the second half of the year.

Dan: With respect to liquidity.

Dan: Our operating cash flow was $205 million for the quarter up $29 million or 16%.

Dan: <unk> benefited from the strong profitability of the quarter.

Werner Andre: For 2024, we continue to expect that our conversion rate of adjusted EBITDA to cash flow from operations will be in the range of 80%, based on the expected seasonality of collections and expenditures. We expect that 65 to 70% of our cash flow from operations will be generated during the first half of 2024, up from our previous estimate of 55 to 60. With regard to capital allocation, in the quarter, along with providing sufficiently for our growth initiatives, we deployed $95 million in paying down bank debt, and we have now fully paid down our revolving credit facility. $18 million in dividends, and $23 million in share repurchases to offset dilution from stock-based compensation. As of the end of Q1, our net senior debt leverage was 0.1 times.

Dan: For 2024, we continue to expect that our conversion rate of adjusted EBITDA to cash flow from operations will be in the range of 80%.

Dan: Based on the expected seasonality of collections on expenditures we.

Dan: We expect that 65% to 70% of our cash flow from operations will be generated during the first half of 2024.

Dan: Up from our previous estimate of 55% to 60%.

Dan: With regards to capital allocation in the quarter, along with providing sufficiently for our core initiatives. We deployed 95 million paying down bank debt and we have not fully paid down our revolving credit facility.

Dan: $18 million in dividends.

Dan: $23 million in share repurchases to offset dilution from stock based compensation.

Dan: As of the end of Q1, our net senior debt leverage was.

Dan: One times and including our 2026 and 2027 convertible notes fully aspect our.

Werner Andre: And including our 2026 and 2027 convertible notes fully as debt, our net debt leverage was three times. We continued our deleveraging trajectory, delevering 0.5 times at Shasta Libidhar in the quarter and 1.7 times at Shasta Libidhar since the beginning of 2023. With our strong free cash flow generation profile, we have deleverred and increased our balance sheet strength, and in April, we have now started to pay down our term limits. Rather than increasing it, I would leave it down.

Dan: Our net debt leverage was three times.

Dan: We continued our deleveraging trajectory.

Dan: Levering 0.5 times adjusted EBITDA in the quarter and one seven times adjusted EBITDA since the beginning of 2023.

Dan: With our strong free cash flow generation profile, we have de Levered and increased our balance sheet strength.

Dan: And in April we have not started to pay down our term loan.

Dan: While increasing our dividend.

Werner Andre: Continuing sufficient share repurchases to offset dilution from stock-based compensation and maintaining our pro-chromatic M&A right. From a rate exposure perspective, now that we have fully repaid our evolving line of credit, all of our remaining debt is protected from high or rising interest rates through either very low fixed coupon interest on our convertible notes or 200 million interest rates were expiring in 2013. We're very comfortable with our capital structure in terms of leverage, maturities, and especially interest rate exposure, and we have the flexibility to optimize as conditions change.

Dan: <unk> sufficient share repurchases to offset dilution from stock based compensation.

Dan: Maintaining our programmatic M&A readiness.

Dan: From a rate exposure perspective, now that we have fully repaid our revolving line of credit.

Dan: All of our remaining debt is protected from high of rising interest rates.

Dan: <unk> fixed coupon interest on our convertible notes.

Dan: $200 million interest rate swap expiring in 2000 and throughout the year.

Dan: We're very comfortable with our capital structure in terms of leverage maturities and especially interest rate exposure.

Dan: We have flexibility to optimize as conditions change.

Werner Andre: And finally, we remain comfortable with the outlook we provided just over two months ago on our Q4 call with regard to foreign exchange rates. For the first quarter, the U.S. dollar weakened slightly relative to the exchange rates assumed in our 2024 annual financial outlook, resulting in less than one billion of incremental revenues from current. Based on the most recent rates that the U.S. dollar strengthened, if end-of-April exchange rates would prevail throughout the remainder of the year, our Q2 to Q4 gap revenues would be negatively impacted by approximately $6 million relative to the exchange rates assumed in our 20 And with that, we are ready for Q&A. Over to Eric. Thank you.

Dan: And finally, we remain comfortable with the outlook, we provided just over two months ago on our Q4 call.

Dan: With regards to foreign exchange rates.

Dan: The first quarter. The U S. Dollar has weakened slightly relative to the exchange rates assumed in our 2024 annual financial outlook, resulting in less than $1 billion of incremental revenues from currency.

Dan: Based on the most recent rates, but the U S dollar have strengthened.

Dan: With April exchange rates prevail throughout the remainder of the year. Our Q2 to Q4 GAAP revenues will be negatively impacted by approximately $6 million relative to the exchange rates assumed in our 2024 financial outlook.

Speaker Change: And we expect we are ready for Q&A operator, Eric Thank you.

Eric J. Boyer: Thanks, Werner. Before we begin with Q&A, I want to remind everyone that Bentley issued a press release on April 19th regarding its policy of not publicly commenting on market rumors or speculation. We will not be commenting on any such matters.

Eric J. Boyer: Thanks, Bernard before we begin the Q&A I'd like to remind everyone that we issued a press release on April 19th regarding buttons policy of not publicly commenting on market rumors or speculation.

Eric J. Boyer: Please keep your questions focused on our Q1 results and strategic progress. We also ask that you limit yourselves to one question so we can get through the queue. And with that, our first question will be from Matt Hedberg from RBC. Great, can you hear me okay?

Eric J. Boyer: Currently we will not be commenting on any flex matters. Please keep your questions focused on our Q1 results and strategic progress. We also ask that you limit yourself to one question. So we can get through the queue and with that our first question will be from Matt Hedberg from RBC.

Eric J. Boyer: Great.

Eric J. Boyer: Okay.

Matthew George Hedberg: Hey, good morning. Congratulations on the results and actually also congrats, Greg, on your run as CEO and Nicholas on this next phase of growth. I guess, you know, for you, Nicholas, you know, we've known you for a while. You're a big part of the Bentley fabric.

Eric J. Boyer: Yes.

Matthew George Hedberg: Hey, good morning.

Matthew George Hedberg: Congrats on.

Matthew George Hedberg: The results actually also congrats Greg.

Matthew George Hedberg: Ron Nicolas to this next phase.

Matthew George Hedberg: I guess for unit.

Matthew George Hedberg: We've known them for a while.

Matthew George Hedberg: Perfect part of the value.

Matthew George Hedberg: As we enter this next phase of growth you've seen.

Nicholas H. Cumins: You know, as we enter this next phase of growth, do you see any change in your philosophy in terms of where you might look for some additional growth? Unknown Executive, Jay Vleeschhouwer, Sitikantha Panigrahi, Werner Andre, Dylan Becker, Gregory, Well, as you said, I've been the CEO for a bit more than two years now, and before that, I was a CPO.

Matthew George Hedberg: Duffy.

Matthew George Hedberg: Where you might look for some growth.

Matthew George Hedberg: Synergies that there might be a little bit different than the brake.

Matthew George Hedberg: Price basis.

Nicholas H. Cumins: So you shouldn't expect any major change, either from a strategic or an operational standpoint. And our priorities remain the same. When it comes to growth, e365, SMB, and digital twins, from a product standpoint, the priorities remain the same as well. As we move from Firebase to data-centric workflows using digital twin technology, using them for data, leveraging data for AI purposes, etc. So no, no major change either in strategy and operations. The key word here is continuation. Got it. Thanks a lot.

Duffy: Well as you said I've been the CEO, Florida, one in three years now and before that it was a CTO. So you shouldn't expect any major change either from a strategic or operational standpoint.

Matthew George Hedberg: Our prices remain the same.

Matthew George Hedberg: When it comes to growth interest defy F&B digital twins from a product standpoint, a practice remains the same as well as we move from from a base of data centric workflows using digital twin technology.

Matthew George Hedberg: Using therefore data leveraging data for AI purposes, So no no major change either in striking integrations. The keyword here is continuation.

Gregory S. Bentley: Congratulations, Greg, to you too. Thank you. Our next question comes from Joe Vruwink on behalf of Robert R. W. Baird. Hello, can you hear me?

Speaker Change: Got it thanks, a lot congrats breakthrough.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Joe <unk> from Robert W. Baird.

Joseph D. Vruwink: Yes, Joe, go ahead. Okay, great. Hi everyone. Just on the new logo growth in the corridor, I was wondering how much of that is specifically in the U.S. and you would say is related to this expanding ecosystem around safety OTs that's happening just as more engineering firms want to participate in infrastructure work. And related to the question, I think in the past, when you talked about a new logo contribution within your growth algorithm, you would typically hedge that a little bit just because smaller accounts might have a propensity to churn a bit more.

Speaker Change: Hello can you hear me, yes, Joe go ahead, okay, Great Hi, everyone.

Joe: Just on the new logo growth.

Joe: Florida I was wondering how much of that is specifically in the U S. And you would say is related to this expanding ecosystem.

Joe: Is that happening just us more engineering firms want to participate in infrastructure work and I guess related to the question I think in the past when you talked about a new logo contribution within your growth algorithm you had typically hedge that a little bit just because smaller accounts might have.

Joseph D. Vruwink: But if the new logo growth is lining up to support infrastructure activity, and the outlays for that are going to be higher each year for the next several years, do you think new logos have just become a more reliable contributor to the model? I want to ask Nicholas if he has a sense of the quantitative makeup of all those, including the geographic distribution. I know that qualitatively that phenomenon you mentioned of smaller firms, especially getting into linear infrastructure work in the U.S., is significant, but I don't have a feel for the relative magnitude of it. Nicholas?

Joe: <unk> the term.

Joe: But if the new logo growth is lining up the support infrastructure activity and the outlays for that are going to be higher each year for the next several years do you think new logos as the EMR.

Joe: Our reliable contributor to the model.

Joe: I'm going to ask Nicolas if he has a.

Joe: Thanks.

Nicolas: Quantitative makeup.

Nicolas: So all of those including the geographic distribution.

Nicolas: Right.

Nicolas: Qualitatively that phenomenon you mentioned node.

Nicolas: While our phones, especially getting into linear infrastructure work in the U S is significant.

Speaker Change: Don't have a feel for the relative magnitude of it Nicholas.

Nicholas H. Cumins: Our momentum in S&P is really around the world. It's not specific to North America. And, in fact, in America, we have strong growth in Latin America, and the main driver there was S&P. So, we really see momentum with S&P around the world. We think it's because of the flexibility that we offer in terms of commercial terms between subscription with virtuosity or perpetual licenses with select.

Speaker Change: Our momentum in SMB, it's really around the world, it's not specific to North America and in fact in America.

Speaker Change: We had strong growth in Latin America, and the main driver there was SMB. So we really see.

Speaker Change: Momentum with SMB around.

Speaker Change: World.

Speaker Change: We think we think it's because of the flexibility that we offer into the commercial terms between subscription with virtuosity or.

Nicholas H. Cumins: We also hear from the accounts that they welcome an alternative to whatever they were using until now. So, we see momentum now. That momentum, we've seen it again and again and again.

Speaker Change: Or perpetual licenses with select.

Speaker Change: We also hear from the accounts that they welcome an alternative to <unk>.

Speaker Change: Whatever they were using until now so we see momentum now.

Speaker Change: I mentioned, we've seen it again and again and again, we've had more than 600 logos for so many quarters.

Nicholas H. Cumins: We've had more than 600 logos for so many quarters, as Greg said during the prepared remarks, and Q1 was even more than we've ever had in SMB. And what we can see is that, on the one hand, it's quite predictable now for us as a line of business in SMB to see that level of momentum around the world. The other thing we're looking into is retention, and retention is quite high, much higher than what we expected very, very initially at the beginning of the SMB program, which means this is, yeah, this helps a lot with productivity, and it helps a lot with linearity as well. Great, thank you very much.

Speaker Change: Meg said during the prepared remarks.

Speaker Change: And Q1 was even more than that.

Speaker Change: We've ever had in.

Speaker Change: In SMB.

Speaker Change: And what we can see is that on one hand, it's quite predictable now for us as a line of business and SMB to see that level of momentum around the world.

Speaker Change: The thing we are looking into is retention our retention is quite high much higher than we have expected very very initially at the beginning of the SMB program.

Speaker Change: Which means this is yes.

Speaker Change: This helps a lot in the productivity and it helps alot linearity as well.

Speaker Change: Alright, Thank you very much.

Jason Vincent Celino: Our next question comes from Jason Celino from Key Bank. Great. Good morning, Greg, and Nicholas. Congratulations. It's nice to see the continuity here. My question is actually for Werner.

Speaker Change: Our next question comes from Jason <unk> from Keybanc.

Speaker Change: Yes.

Jason: Great Good morning, Greg Nicolas Congrats with feed.

Jason: <unk> continually here.

Jason: So my question is actually for Werner.

Jason: The explanation of the resets in the mix for the year was really helpful.

Werner Andre: The explanation of the resets and the mix of the year was really helpful. But as we think about the sequential error guidance, you know, what does that look like for 2Q and, you know, the rest? Here's our... Our growth in ARR sequentially now aligns a little bit more with the contract renewal timing, uh, we previously gave guidance on what the contract renewal timing is throughout the year, so we said now that the correlation of the AR group is more like 20%, 25, 20 and 35% throughout the year. You would expect, so we would expect that for uh Q2, the sequential quarterly air outflow is picking up again, and as we look There is still growth opportunity from our asset analytics business that's working on bigger deal opportunities. There are still growth opportunities from acquisitions. We expect acquisitions to be somewhat lower than they were in the historic past.

Jason: But as we think about the sequential era.

Werner: What does that look like for <unk>.

Werner: Yes.

Werner: Sure.

Speaker Change: Our growth.

Werner: Sequentially, our lines, a little bit more of it.

Werner: Contract renewal timing.

Werner: We previously.

Werner: Guidance on what the contract renewal timing is for the year.

Werner: No.

Werner: Yes.

Werner: That correlation will be off work as more like 20%, 25% to 135% throughout the year.

Werner: Yeah.

Werner: Expect so we would expect that for Q2.

Werner: The sequential quarterly Applebee's is picking up again.

Speaker Change: And Thats a look into that.

Werner: Our guidance for the remainder of the year.

Werner: It is more comfortable with it as we as we discussed last time, our expectations did not change it's still a growth opportunity from our asset analytics based months Thats wrapping on Zika, because a lot of communities still growth.

Werner: But some of it is from acquisitions, we expect acquisitions to be somewhat lower than advancing the.

Gregory S. Bentley: There's a little bit of a shift in acquisitions, more to earlier stage companies, but throughout the rest of the year, there's still that tailing from asset analytics and acquisitions coming in, and then the expectation is that we move back to that, to the mid-range of the guidance as we move through the year. I was hoping that Werner would indeed mention our asset analytics. Initiative. All of that business is ARR. And we're working on, as I mentioned, significant opportunities.

Werner: Historic past.

Werner: She has been the acquisition.

Werner: On the stage companies, but.

Werner: Throughout the rest of the year.

Werner: Hey, maybe from asset analytics.

Werner: And acquisitions coming in at that expectation is that the move back to that.

Werner: With the mid range of.

Werner: The guidance as we move through the year.

Werner: I was hoping that Werner would indeed mentioned.

Werner: Sure.

Werner: Asset analytics initiative.

Werner: All of that business as IRR.

Werner: And we are working on.

Werner: I've mentioned significant opportunities.

Gregory S. Bentley: It will be lumpy when they occur during the year and won't have any relationship to our established renewals, and seasonality is sort of the overlay on that, but I do expect to be moving the needle with that by the time the year is out. Perfect. Thank you. Our next question comes from Siti Panigrahi from Mizzou. Hi, guys. Congratulations, Nicholas and Greg.

Werner: Will it be lumpy when they occur during the year and won't have any are there any relationship to our established.

Werner: And seasonality is sort of the overlaid on that but I do expect to be.

Werner: Moving the needle with that by the time of year.

Speaker Change: Alright, thank you.

Citibank Ravi: Our next question comes from Citibank Ravi from Mizuho.

Citibank Ravi: Okay.

Sitikantha Panigrahi: Great quarter. But can you comment on the trends in international business, which is close to 58% now? So what segments are more robust than others? And also, in terms of geography, how is Western Europe doing specifically?

Ravi: Hey, guys.

Ravi: Congratulation Nicolas and Greg.

Ravi: Great quarter.

Citibank Ravi: Can you comment on the trains and the international business was close to about 58%. So what segments are more robust than others and also in terms of geography, how specific poorly like western Europe doing and how do you see this election in different countries is going to impact their business like India is almost wrapping.

Ravi: Relax and how should we expect post election and in the U S. As you had heading into the Alexa.

Nicholas H. Cumins: And how do you see this election in different countries going to impact your business? Like India is almost wrapping up its election. What should we expect post-election? And in the US, as you are heading into the election? I'm going to ask Nicholas to take that, but I myself wonder the same thing.

Ravi: I'm going to ask Nicolas to take that.

Ravi: Myself.

Nicolas: Under the same thing India had led the.

Nicolas: The world and growth rate.

Nicolas: Through most of last year and then.

Nicholas H. Cumins: India led the world in growth rate through most of last year and then declined for a while and is now roaring back. And I don't know if that has to do with the political situation there. Nicholas, what do you think?

Nicolas: Decline for a while and now is roaring back and I don't know that that has to do with political situation. There Nicholas slightly then.

Nicholas H. Cumins: Yeah, to the first question, I will simply refer back to the prepared remarks in terms of where we see growth by sector and then by region, specifically in India. India was and is again a major growth driver in Asia Pacific, even though it had normalized towards the end of 2023. We saw it picking up momentum again. And to the earlier question, by the way, R&D played a big part there.

Nicolas: Yes.

Speaker Change: The first question Peter I will simply refer back to the prepared remarks in terms of where we see growth.

Speaker Change: By sector, and then by by region.

Speaker Change: Difficult to India, India did.

Nicholas Cummins: It was again, a major growth driver in Asia Pacific, even though at that normalized towards the end of 2023, we saw it taking.

Nicholas Cummins: Picking momentum again.

Nicholas Cummins: And to the earlier question by the way a sandy played a big part of their.

Nicholas Cummins: A.

Nicholas Cummins: A lot of investments still in the water infrastructure and I saw the full ecosystem.

Nicholas H. Cumins: A lot of investment is still in the water infrastructure, and that's for the full ecosystem, and not just the local authorities. And, you know, there might be a pause, obviously, because of the elections on some new projects to be awarded, but it should be a momentary pause. Yeah, the good thing is that our growth in India is really based on full ecosystems, all consistent, including the smaller firms. So we, we, we expect the growth to remain strong in India for the remainder of the year.

Nicholas Cummins: Non interest fee the.

Nicholas Cummins: The local authorities.

Nicholas Cummins: And there might be.

Nicholas Cummins: <unk>, obviously because of the elections on some new projects to be a to b.

Nicholas Cummins: To be awarded better should be amendments.

Nicholas Cummins: Yes.

Nicholas Cummins: Good thing is our growth in India is really based on full ecosystems.

Nicholas Cummins: Including the smaller firms.

Nicholas Cummins: So we.

Nicholas Cummins: We expect the growth to remains to remains strong in India for the remainder of the year.

Nicholas H. Cumins: I guess something else to add about India is that, benefited not only from its own indigenous investment program but also from the resource capacity constraints elsewhere, India continues to produce more qualified civil and structural engineers, especially, and more of the work gravitates to India, thanks to our project-wise environment. That tends to be, however, Overflow would not be quite the right word, but that does fluctuate with workloads in the industrial sector, especially as we've observed it.

Nicholas Cummins: Something else to add about India is that.

Nicholas Cummins: India benefited not only from its own indigenous investment program, but also.

Nicholas Cummins: From the resource capacity constraints elsewhere.

Nicholas Cummins: India continues to produce more qualified.

Nicholas Cummins: Civil and structural engineers, especially and more of the work gravitate to India. Thanks to our project wise environment.

Nicholas Cummins: That tends to be however.

Nicholas Cummins: Overflow would not be quite the right word but that does fluctuate with.

Nicholas Cummins: Workloads in the industrial sector, especially as we observe it so superimposed on a steady.

Nicholas H. Cumins: So that superimposed on a steady domestic demand in India is a more cyclical international sourcing to India. And it's good to see it benefiting from both. Again, Michigan. Great congratulations on the quarter and very impressive margin in the cash flow. Thank you. Thanks, Sadie. The next question comes from Clark Jeffries from Piper Sandler. Hello, can you hear me?

Nicholas Cummins: Domestic demand in India is a more.

Nicholas Cummins: Cyclical.

Nicholas Cummins: International sourcing.

Nicholas Cummins: India is good to see.

Nicholas Cummins: We are benefiting from both apparently again, Michigan.

Speaker Change: Great Congrats on the quarter and very impressive margin cash flow. Thank you.

Speaker Change: Hopefully the next question comes from Clarke Jeffries from Piper Sandler.

Speaker Change: Okay.

William Clarke Jeffries: Hello can you hear me.

William Clarke Jeffries: Thank you for taking the question. You know, Greg, I noticed that, you know, you mentioned you'd be overseeing the asset analytics opportunity. And in the prior question, you mentioned moving the needle with some of these opportunities, even if they will be lumpy. You know, I just wanted to ask, are there any other near-term 2024 opportunities? And specifically, do you plan to accelerate the industrial or vertical coverage for asset analytics as a business model? Any preview of expansions beyond Lynxsea and cell towers that we've already talked about?

William Clarke Jeffries: Sure.

William Clarke Jeffries: Thank you for taking the question.

William Clarke Jeffries: Greg.

Greg: I noticed that you mentioned youll be overseen asset analytics opportunity in the prior question you mentioned moving the needle with some of these opportunities and if they will be lumpy.

Greg: I just wanted to ask are there any other near term 2020 for opportunities I think.

Speaker Change: Specifically do you plan to accelerate the industrial or vertical coverage for asset analytics is the business model any preview of expansion beyond lengthy and cell towers that we've already talked about well we have said that our.

Gregory S. Bentley: Well, we have said that our Programmatic Acquisition Priorities this year will be in this Asset Analytics space. We're working on consolidating our offerings there so that we can leverage and share platform capabilities, including the processing economics of AI in Inspection and to produce insights. And we're going to get very, very good at how Reliable, fast, and efficient is our process, and it's our way of participating in the AI workloads, if you like, the compute loads. And we want to have multiple vertical offerings, where we have, as you say, only towers and BlinkSeq so far.

Greg: Programmatic acquisition priorities this year will be in this asset analytics.

Greg: Pace, we have.

Greg: We're working on consumer.

Greg: Consolidating our offerings there so that we can.

Greg: Leverage and share platform capabilities, including the processing economics.

Greg: AI and inspection and.

Greg: To produce <unk>.

Greg: Right.

Greg: And we're going to get very very good.

Greg: Reliable and fast and efficient as our processing with our way of participating in the AI workloads, if you like the compute load.

Greg: Want to have multiple vertical offering.

Gregory S. Bentley: We'll target others, for instance, transmission and distribution infrastructure. And we know there are the types of small companies that we had previously been participating in through our iTwin Venture Fund in small investments. We're more interested now in outright acquisitions, as in the case of BlinkSeq, and incorporating them to take advantage of these economies of scale. One of the other aspects of economies of scale and asset analytics is offering to the engineering firms who are half of our business that they should be in the asset analytics business with their own proprietary analytics laid onto the processes that produce the instantaneous digital twin insights where they can add their knowledge of particular assets and their services We want to help get them quickly into a business where they don't have to set up their own back office to do the processing and learn the technology of the AI.

Greg: As we say only towers and lengthy so far.

Greg: We will target others for instance, transmission and distribution infrastructure.

Greg: And we imagine we know there are.

Greg: The types of small companies that we had previously been participating in through our <unk> joint venture fund in small investments who are more interested now in outright acquisitions as in the case of lengthy and incorporating them to take advantage of these economies of scale one of the other aspects of economies of scale.

Greg: Asset analytics is.

Greg: Offering to the engineering firms, who are half of our business the base should be in the asset analytics business with our own proprietary analytics laid onto the.

Greg: Processes that produce the.

Greg: Instant on.

Greg: Clean insights, where they can add their knowledge of particular assets and their services to interpret and prescribe and perhaps even design and construct the resulting improvements in operations and maintenance to be able to offer them a full menu.

Greg: For any asset type, where they may be the incumbent to engineers serving the.

Greg: We want to help get them quickly into the business, where they don't have to set up their own back office to do that.

Greg: Processing and learn the technology.

Greg: But ultimately.

Greg: Those go to market.

Gregory S. Bentley: Ultimately, those go to market and are leveraged in that respect, and the technology back office in the other respect. So we have big eyes and you might say a big appetite to make some more investment, including acquisitions, but we will also make as well as buy in the apps and analytics area. We see it as all upside, and we have a good head start that has really reinforced our intention to invest there, but investing corresponding with the ARR growth we gained from the offerings we have already. So yeah, shared infrastructure investments this year, but definitely an ARR opportunity as well alongside it. Thank you very much.

Greg: Leveraged in that respect.

Greg: Technology back office and the other risk factors, we have big Guy.

Greg: You might say big appetite too.

Greg: To accomplish some more investments including acquisition, but we will also make us well inspiring and the asset analytics area, we see it as all upside and we have a good head start.

Speaker Change: That is really.

Speaker Change: Oh.

Speaker Change: Reinforce our.

Speaker Change: Intention to invest there.

Speaker Change: But investing corresponding with the IRR growth we gained from from the offerings, we have all of them.

Speaker Change: Yeah sure it infrastructure investments this year, but definitely IRR opportunity as well alongside it. Thank you very much.

Kristen E. Owen: Thanks, Clark. The next question comes from Kristen Owen from Oppenheimer. Great, thank you for taking the question and good morning. Congratulations, both Greg and Nicholas.

Speaker Change: Thanks, Karl next question comes from Christopher <unk> from Oppenheimer.

Christopher: Alright. Thank you for taking my question and good morning, Congratulations both Greg and Nicolas.

Nicholas H. Cumins: I wanted to ask about resource growth and ask you to maybe double-click on that. Help us understand how much of that portfolio today is CapEx versus OpEx activity and any updates that you could share on cross-selling synergies for Sequent across the broader portfolio. Yeah, the majority of our business in resources is mining. The rest of the resources sector performed as in previous quarters. But in fact, mining also performed as in the previous quarter, which is that there is still a slowdown in investments in new mines or major expansion of existing mines.

Christopher: Wanted to ask about the resources growth and ask you to maybe double click on that help us understand how much of that portfolio today is capex versus opex activity and any updates that you could share on cross selling synergies for sequence across the broader portfolio.

Speaker Change: Thank you.

Speaker Change: Yes, the majority of our business in our resources is is mining.

Speaker Change: The rest of the resources sector performed as in previous quarters.

Speaker Change: In fact mining also performed as in the previous quarter, which is there is still a slowdown in investments in.

Nicholas H. Cumins: Now, the interesting thing is, even with that slowdown, sequential in mining is still growing faster than the company average. So it's still actually a growth driver for us, even in that environment. And that's because sequential is not just used for the exploration of new mines or major expansions of existing mines but throughout that mine operation.

Speaker Change: In new mines are major expensing of existing mine now the interesting thing is even with that slowdown.

Speaker Change: In mining is still growing faster than the company average.

Speaker Change: Still actually a growth driver for us even in that environment and ethical sequence is not just used for exploration of new mines are major expansions of existing mines, but 2009 operations and in fact, we are a bit.

Nicholas H. Cumins: And in fact, we are a bit taking advantage, so to speak, of the slowdown to strengthen our position with existing accounts. There's such a pressure to be more efficient that it's, you know, fantastic for the incumbents to strengthen their position. And we are overlaying this with more investments from a product standpoint, specifically for mining operations. Now, within Sequence, so the majority of the revenue of Sequence is also in mining. But the fastest-growing part is actually Seville, as I commented in my prepared remarks.

Speaker Change: Taking advantage so to speak of the slowdown to strengthen our position with existing accounts like such a pressure to be more efficient that's fantastic for incumbents and two to strengthen the position and we are overlaying this with more investments from a product standpoint.

Speaker Change: In our specific for it for mining operations.

Speaker Change: Now we didn't sequence. So the majority of the revenue of sequent as also in mining.

Speaker Change: But the fastest growth part is actually stable as I commented in the prepared remarks, and Thats also a continuation of what we've seen in Q4, what's very interesting here is that.

Nicholas H. Cumins: And that's also a continuation of what we've seen in Q4. What's very interesting here is that not only is the geotechnical part of that business growing, and you could argue, well, that was the historical business that Bentley had for the subsurface that we transferred to Sequence. But what's more interesting, I think, is the geomodeling piece of Seville is growing very fast. It's called Leapfrog Works, which I mentioned earlier.

Speaker Change: Not only is the geotechnical private business growing and you could argue well that was the historical business that Bentley had for the subsurface that we transferred to sequence, but what's more interesting I think is the geo modeling piece of CBL is growing very fast leapfrog works, which I referred to this as the adapter.

Nicholas H. Cumins: This is the adaptation of the core product of Sequence, called Leapfrog, for the civil industry. And here, we're literally creating a market. And the value proposition we have is just very unique and very strong. It's because of a better understanding of the subsurface.

Speaker Change: <unk> of the core product.

Speaker Change: Sequent Colby.

Speaker Change: For the civil industry and here, we literally creating a market.

Speaker Change: Alright, and the value proposition, we have a very unique and very strong it's because of the better understanding of the subsurface we can reduce the financial risk we can use the reduce of technical risks.

Nicholas H. Cumins: We can reduce the financial risk. We can also reduce the technical risk of product delivery. We can also improve the carbon footprint. And then the other part of the subsequent business is in energy, the energy transition in particular. Almost two years ago, I commented on subsequent software being used for geothermal, and that's a strong part of the business. But sequential software is used more and more for offshore wind platforms as well, to have a better understanding of the subsea, subsurface conditions if you're going to do fixed foundations for these offshore platforms.

Speaker Change: Perfect delivery, we can also improve the carbon footprint.

Speaker Change: And then the other part of the Sequent the business is in energy energy transition in particular.

Mr. Dean: Mr. Dean almost two years ago I commented on sequence software being used for geothermal.

Mr. Dean: And that's a strong part of the business, but frequent software is used more and more for offshore wind platforms as well to have a better understanding of the subsea subsurface conditions, if you're going to do fix foundations for these offshore offshore platforms, yeah, so tremendous growth opportunities.

Nicholas H. Cumins: So tremendous growth opportunities beyond mining with civil and with energy, but mining itself, even in the context of a slowdown, we're going very well. Thanks, Kristen. The next question comes from Jay Vleeschhouwer from Reckon Securities. Oh, you're on mute, sir.

Mr. Dean: Mining with <unk> and with energy, but mining itself, even in the context of a slowdown we're growing we're growing.

Speaker Change: Very well.

Jay Vleeschhouwer: Oh, sorry. No, no more. I hope we'll hear from you. All right, sorry about that.

Speaker Change: Thanks Kristen.

Speaker Change: Next question comes from Jay <unk> from <unk> Securities.

Speaker Change: Yeah.

Jay: Youre on mute.

Jay: Sorry.

Jay: No.

Jay: Sure.

Jay: Now look we hear you.

Jay Vleeschhouwer: So, I'd like to ask you a question about portfolio management. Last fall, you spoke at the Infrastructure Conference about a number of new industry solutions. I believe the number was eight at the time.

Speaker Change: Alright, sorry about that.

Jay: So I'd like to ask a question about portfolio management last fall.

Jay: We spoke at the infrastructure conference about a number of new industry solutions I believe the number was eight at the time.

Jay: Broadly over the last year or so we've spoken Nikolas you and I.

Nicholas H. Cumins: More broadly, over the last year or so, we've spoken, Nicholas, you and I, of your intent to simplify the portfolio, particularly with respect to the number of open modules you have, trying to improve the salability, for example, through the channel. The question, therefore, is, can you update us on how the progress of portfolio simplification or reconfiguration is progressing? And as that occurs, do you think that could play into some effects on consumption? Or, to say, might simplification improve consumption over time?

Jay: Your intent to simplify the portfolio, particularly with respect to the number of open modules you have.

Jay: Peter.

Jay: Trying to approve the sale ability for example through the channel.

Jay: Therefore, it is can you update us on how the progress of portfolio simplification of reconfiguration is progressing and as that occurs do you think that could play into some effects on consumption or that is to say, Mike the simplification improved consumption over time.

Nicholas H. Cumins: Absolutely, because as we simplify the portfolio, we simplify the way our accounts for users can discover new capabilities that they can benefit from. So we remove friction in that discovery process. We make it as easy as possible for them to understand how else Bentley can help.

Jay: Absolutely.

Jay: Because as we simplify the portfolio, we simplified the way our accounts where users can discover new capabilities.

Jay: Can benefit from so we remove friction in that discovery process, we make it as easy as possible for them to understand how Els Bentley Billy can help so thats one in India. One of the main reasons for the simplification of the portfolio and simplification of the buffer interest to make it clear to the others were not part of that conversation that we had done.

Nicholas H. Cumins: So that's one of the main reasons for the simplification of the portfolio. And simplification of the portfolio, just to make it clear to the others, we're not part of that conversation that we had, Jay. It doesn't mean that we are reducing our coverage, our comprehensiveness, not at all, right? Our portfolio comprehensiveness is what makes us very distinct. What we mean by portfolio simplification is, just how can we make it easier to discover the breadth and depth of capabilities that Bentley has to offer?

Jay: It means that we are reducing our coverage our comprehensive and that's not at all right our.

Jay: Portfolio can precedent, that's what makes us very distinct what we mean by portfolio simplification is.

Jay: How can we make it easier to discover the breadth.

Jay: Depth of capabilities that <unk> has to offer and it is true that the main mechanism that we use in order to simplify that portfolio is the industry and it bodes a lens that were using from a go to market standpoint. So it's easier for you to discover for it given industry such size I don't know electric utilities of water utilities, where they may have.

Nicholas H. Cumins: And it's true that the main mechanism that we use in order to simplify that portfolio is the industry lens. And it's both a lens that we use from a go-to-market standpoint, so it's easier for you to discover what Bentley has to offer in a given industry, such as, I don't know, electric UTTs or water UTTs. But we also use it from a product standpoint to make sure that our products integrate great with non-Bentley software, but they integrate even better with Bentley software.

Jay: To offer but we also use it from a product standpoint to make sure that our products integrate great with non <unk> software, but they integrate even better with mainly software.

Nicholas H. Cumins: And that's when we come to industry solutions specifically. The aid that you were referring to, Jay, there's another one that we launched just a couple of months ago called electric distribution design. We did that at Distributech.

Jay: That's where we come into industry solutions, specifically the eight that you were referring to Jay there is another one that we launched just a couple of months ago called electric distribution design, we did distribute tech and this is a bit of an abstraction. If youll open on top of many capabilities that we have where we test the integration and we should have.

Nicholas H. Cumins: And this is a bit of an abstraction, if you will, on top of many capabilities that we have, where we test the integration, and we ensure the true synergies between our product capabilities to help solve a given industry business problem. I'll just do a little commercial for my asset analytics. I say mine because I'm going to be hanging on to that for a bit after the CEO transition, that the idea there is that we have had a broad set of offerings.

Jay: True synergies between our product capabilities to help solve given industry business problem.

Jay: I'll, just do a little commercial for.

Jay: My asset analytics.

Jay: I would say mind because.

Jay: So it'd be hanging on to that for a bit after the CEO transition that the idea. There is where we have had a broad set of offerings for instance, we talked about the solutions for dam safety.

Nicholas H. Cumins: For instance, we talked about solutions for dam safety, let us say, for those asset types, where we can package them up to a standard price per asset to generate AI insights. And we've done that with communication towers, obviously, and now with miles of roadway where, for instance, the new offering we were talking about here is crowdsourced imagery to identify the reflectivity of the lines and how often they need to be repainted. Where it can be boiled down to something which can be programmatically delivered on a standard menu at a standard price, we can package that up into asset analytics and have it be instantaneous for any So we're trying to find that which can be most digestible.

Jay: Hey.

Jay: For those assets.

Jay: Asset types, where we can package it up to a standard price per asset to.

Jay: To generate the AI insights and we so far has done that with communication towers, obviously and now with.

Jay: Miles of roadway where for instance, the new offering we were talking about here is.

Jay: Sure.

Jay: Crowd source imagery to identify the reflective of any of the lines that how often that ADP repayment, where it can be boiled down to something which can be.

Jay: Programmatically delivered.

Jay: On a.

Jay: Standard menu at a standard price, we can package that up into asset analytics inhabit the incident on for any engineering firm that wants to add that.

Gregory S. Bentley: And there's a lot more in common with communication towers from one to the next and roadway miles from one to the next than there is for dance. So we're imagining we can add more asset types to the asset analytics menu, the instant on menu, yet try more so to shorten the sales cycle and increase the pace of monetization. But that's in addition to what Nicholas has described on the industry solutions side. Thank you very much.

Jay: Offer that plus more to their own account. So we're trying to find that which can be most digestible and theres a lot more in common with communication towers from one to the next and roadway miles from one onex than there is for Dan So.

Jay: Imagining we can add more asset tied to the asset analytics menu the instant on menu yet try more so to shorten the sales cycle.

Jay: Increase the pace of monetization.

Jay: But that's in addition to what Nicolas has described on the industry solutions.

Nicolas: Thank you very much. Thanks Jami next question comes from Michael Bump from Bank of America.

Jay Vleeschhouwer: Thanks, Jay. The next question comes from Michael Funk from Bank of America. Hey, good morning, guys. Thank you again for your time.

Michael J. Funk: And Greg, thank you so much for coming to us over the years and congratulations to you. And you, you, and Nicholas. So Greg, earlier, you mentioned, you know, a greater focus on marketing is one thing Nicholas has brought to Bentley. So to put it another way, I guess, you know, where do you believe there have been deficiencies in marketing? And how can you improve it?

Michael J. Funk: Hey, good morning, guys. Thank you again for the time and Greg. Thank you so much for Tommy but I'll start with a year of Fem Doc congratulations to you.

Michael J. Funk: And in U S well, here's along that question so.

Michael J. Funk: Greg earlier, you mentioned greater focus on marketing and its one thing Nicholson has brought to bet way so to put it another way I guess, where do you believe there've been deficiencies and marketing and how can you improve.

Gregory S. Bentley: Well, um... Nicholas is a particularly good choice for our company because we recruited him as chief product officer, and he has a real zeal for product management. You've been hearing some of that, the chops and so forth that make a difference in how you fit into a company of engineers for engineers. But prior to being a public company, we felt more entitled to stay in our comfort zone. And, for instance, we never tried an SMB.

Michael J. Funk: Well.

Michael J. Funk: <unk>.

Michael J. Funk: Nicolas is a particularly good.

Michael J. Funk: Third for our company because.

Michael J. Funk: We recruited him as chief product Officer and Anne.

Michael J. Funk: And is he has a real zeal for product management, we've been hearing some of that the chops and so forth.

Michael J. Funk: Make a difference in how you fit into the company of engineers for engineered bar.

Michael J. Funk: Prior to being a public company.

Michael J. Funk: We felt more entitled to stay in our comfort zone.

Michael J. Funk: And for instance.

Gregory S. Bentley: We, as you know, never had any e-commerce transaction ever until we were a public company at 36 years of age. Uh, so, what's important going forward is that we identify what opportunities we haven't taken advantage of and be sure we configure ourselves to be able to be competitively superior there as well. And we've got to start on that with Nicholas and with the excellent new marketing resources we just announced at our company.

Michael J. Funk: We never tried in SMB, we as you know we.

Michael J. Funk: Never had any e-commerce transaction ever until we were a public company at 36 years of age.

Michael J. Funk: So.

Michael J. Funk: What's in what's important going forward is that we.

Michael J. Funk: Identify what opportunities we haven't taken advantage of and be sure, we configure ourselves to be able to be competitively.

Michael J. Funk: Superior there as well.

Michael J. Funk: And we've got to start on that with.

Nicholas Cummins: Nicholas with excellent.

Michael J. Funk: New marketing.

Gregory S. Bentley: I have to smile when I say this; we have a wonderful new Chief Storyteller who comes to us from Amazon, and prior to that, GE, and I know Eric mentioned our infrastructure yearbook was just published in hard copy. I hope everyone will take a look at that and read stories like that, echo Projecting Water and others with Synco and so forth that are ready to tell, that are the reason that infrastructure improves our economy and environment at the same time. And we want to take the part of infrastructure engineers in telling those stories. So I think it's all green light.

Michael J. Funk: Resources, we just announced in our company.

Michael J. Funk: The smile when I say that we have a wonderful new.

Michael J. Funk: Keith Storytellers, who comes to us from Amazon and prior to that.

Michael J. Funk: GE and I know.

Michael J. Funk: Eric mentioned, our infrastructure yearbook, Justin just published in hard copy I hope everyone will take a look at that and read stories like that.

Michael J. Funk: Echo project in water and others with <unk> and so forth.

Michael J. Funk: That are ready.

Michael J. Funk: Ready to tell that are the reason that infrastructure improves our economy and environment at the same time.

Michael J. Funk: And we want to take the part of infrastructure engineers and telling those stories so.

Michael J. Funk: I think its all all green light oil.

Michael J. Funk: Yes.

Michael J. Funk: So.

Gregory S. Bentley: We're so pleased by the return on investment in S&P. It's just symbolic of something that we couldn't be bothered with at one point in time that's helping balance the business. And balance and roundedness and both sides of a brain are what I'm expecting from your team, Nicholas. I'm pointing to you here on the screen.

Michael J. Funk: Please by the return on investment and F&B, It's just symbolic thats something that.

Michael J. Funk: We couldnt be bothered with at one point in time, that's helping balance the business and balance and round business.

Michael J. Funk: And both sides of a brand or what.

Michael J. Funk: That thing from your team Nicholas I'm pointing to you here.

Nicholas Cummins: Thank you very much.

Gregory S. Bentley: Thank you very much. Great. Thank you, Greg. And congratulations again to you. Soon enough, I'm still in. I'm still in. Still in my CEO seat for another two months. Of course you are.

Nicholas Cummins: Great. Thank you Greg Congratulations again to you.

Michael J. Funk: So.

Michael J. Funk: Still I'm still in.

Speaker Change: Still in my CEOC for another two months of course, you are okay take care.

Michael J. Funk: Okay, take care. The next question comes from Dylan Becker from William Blair. Great. Thanks, guys. Congratulations, Greg. Congratulations, Nicholas. And maybe first for the happy early birthday, Greg.

Michael J. Funk: Next question comes from Dawn Becker from William Blair.

Michael J. Funk: Great.

Dylan Tyler Becker: Thanks, guys, Congrats Greg Congrats Nicholas and maybe first for the happy early birthday Greg.

Dylan Tyler Becker: Nicholas, you called out some of the U.S. transmission reform that's potentially accelerating investment on the energy side. I wonder how you kind of paired that because I think that was kind of somewhat of a gatekeeper of incremental new spend with some of the sustainability initiatives and maybe how that can kind of pair with asset analytics from your perspective, Greg, around things like reliability, resiliency, intermittency, and things of the like, given that always-on is maybe now more readily available or readily addressable, if that makes sense.

Dylan Tyler Becker: Nicolas you called out.

Dylan Tyler Becker: Some of the U S transmission reform potentially accelerating investment on the energy side I Wonder, how you're kind of pair that because I think that was kind of somewhat of a gatekeeper of incremental new spend with some of the sustainability initiatives.

Dylan Tyler Becker: Maybe how that can kind of pair with asset analytics from your perspective, Greg around things like reliability, resiliency intermittency and things of the like.

Dylan Tyler Becker: Given that always honest, maybe now more readily available readily addressable that makes sense.

Dylan Tyler Becker: Well, I'll get started and and, So we're starting to see some announcements around IHA funding for the electric grid, all related to expanding the grid. And we do need to expand the grid, especially to go and tap into renewable sources of energy, which are typically quite far away from the points of consumption.

Speaker Change: I'll get started.

Speaker Change: <unk>.

Speaker Change: Got it.

Greg: So we're starting to two two for the past few quarters, we start to see some.

Speaker Change: It's announcements around IHA funding for the electric grid are all related to.

Speaker Change: Expanding the grid and we do need to expand the grid, especially to go and tap into renewable source of energy, which are typically quite far away from the points of consumption.

Nicholas H. Cumins: And I think the estimate is that we need to expand it by two-thirds by 2035 in order to meet our clean energy targets in the U.S. And indeed, the biggest issue we see, the limiting factor for the expansion of the grid, is permitting. So we saw some good news from the White House, but we are really cautiously optimistic. They're basically saying that within a standard two-year schedule, all the environmental reviews will happen on the projects.

Speaker Change: And I think the estimate is that we need to expanded by two third by 2035 in order to meet our.

Speaker Change: Our clean.

Speaker Change: Clean energy targets in the U S.

Speaker Change: And indeed, the biggest issue we see the limiting factor for the expansion of the grid is permitting so we saw some good news from the White house, but we are really cautiously optimistic right now.

Speaker Change: They're basically saying that with an extended three year schedule all.

Speaker Change: All the environmental reviews will happen for the projects that is primarily actually for the clean energy projects and that should be a gain of 50% in review time.

Nicholas H. Cumins: That is primarily for clean energy projects, and that should be a gain of 50% in review time. We're cautiously optimistic. We need to see exactly how that translates. In the meantime, however, we're already quite busy. Our users are already quite busy using PLS, or Parallel System Tools, in order to take care of the existing grid.

Speaker Change: We see optimistic we need to see exactly how does that translate.

Speaker Change: In the meantime, however, we already quite busy our users are already quite busy using prs are partnering system.

Nicholas H. Cumins: And our existing grid is old, and it's a potential issue with climate change, with extreme weather events, etc. So we still see PLS growing quite fast, even before we're talking about the expansion of the electric grid actually happening. Great, thank you. Thanks Dylan.

Speaker Change: In order to take care of the existing grid and our existing grid at all.

Speaker Change: And it's.

Speaker Change: Potential issue with climate change with extreme weather events et cetera.

Speaker Change: So we still see growing quite fast even before we're talking about the expansion of.

Speaker Change: Electric rate actually happening.

Speaker Change: Great.

Dylan Tyler Becker: The next question comes from Arsene Hay, a topic from Wolf Research. Hi, thanks for taking the question. This is Arsani Madhavich on behalf of Josh Tilton.

Speaker Change: Thanks, John.

Todd: Question comes from Todd.

Todd: Topic from Wolfe research.

Arsene Hay: Congratulations, Nicholas, and congratulations, Greg, for your successful tenure as CEO. I wanted to ask about digital twin revenue from iTwin. I think the last time you had a target was for eight figures of ARR, which you met exiting the fourth quarter of 2020. Where are we today?

Todd: Alright, Thanks for taking the question. This is sandy amount of it John for Josh Tilton, Congratulations Nicholas and congratulations Greg for his successful tenure as CEO I wanted to ask on digital twin revenue from <unk> I think the last time you had a target was for eight figures the IRR, which you met exiting the fourth quarter of 2020, where are we today.

Nicholas H. Cumins: Has that doubled? And how accretive has it been to overall ARR growth? And then just a brief follow-up to make sure that we understand the comment on ARR regarding the floor and ceiling dynamic of E365 renewals. So in this scenario, where in the fourth quarter, a renewal was made with the floor and ceiling reset. And in the following first quarter, the consumption of E365 was below the floor set in the fourth quarter.

Sandy: Doubled and how accretive hasnt been to overall growth and then just a brief follow up to make sure that we understand the comment on <unk> regarding the floor and ceiling dynamic of <unk> hundred six five renewals. So in the scenario where in the fourth quarter of renewal was made with the floor and ceiling reset and in the following first quarter the.

Sandy: <unk> of <unk> hundred six five was below the floor set in the fourth quarter. The <unk> contribution in that first quarter is based on the floor for consumption in the fourth quarter and not based on the consumption in the first quarter.

Werner Andre: The ARR contribution in that first quarter is based on the floor for consumption set in the fourth quarter and not based on consumption in the first quarter. Thank you. Yes, I'll answer that last one first since it's on our minds.

Werner Andre: The ARR growth for the first quarter was zero because consumption occurred, but it didn't get up to the level of the floor. The level of the floor is going to be reached sometime during the year. Hopefully, the level of the ceiling would also be reached during the year. But we don't know that. But there's ARR equal to the floor, but the ARR growth is none for such a, and that is rather representative.

Speaker Change: Yes, I'll answer that last one first since it's in our mind.

Sandy: <unk> growth for the first quarter with <unk> because.

Sandy: The consumption occurred, but it but it didn't get you up to the level of floor. The level of a floor kind of gap is kind of be reached sometime during the year hopefully the level of the sealing would also be reached during the year. We don't we don't know that but.

Nicholas H. Cumins: No, the phenomenon we remarked on last time is that the accounts are, asking for multiple year contracts asking for floors and ceilings to kind of put a gate around they know going digital is really important and is their top priority but they would like to have boundaries around what they're going to be spending on that but they're willing to commit to increases step ups and floors and ceilings we just don't go to the science of having them step up every quarter that's that's too hard so they only step up once per year and that's the reason for the phenomenon becoming more important along with more and more of the overall ARR is under A365 and I'm going to let Nicholas address the first question. Yeah, the reason we haven't given a number in terms of digital twin AR for quite a while is because it's almost impossible now to separate it from the growth of our products, because more and more of our products are leveraging digital twin or leveraging iTwin to support new capabilities.

Speaker Change: Got it.

Speaker Change: There are equal to the floor, but the IRR growth is none.

Speaker Change: Such a and that is a rather representative.

Speaker Change: Phenomenon, we remarked on last time is that.

Speaker Change: The account are.

Speaker Change: Asking for multiple year contracts asking for floors and ceilings to kind of put a data around they know going digital is really important and as their top priority, but I would like to have boundaries around what theyre going to be spending on.

Speaker Change: But they are willing to commit to increase and step ups and floors and ceilings. We just don't go to the science of having them step up every quarter.

Speaker Change: Too hard so they only step up once per year and Thats. The reason for the phenomenon, becoming more important along with more and more of the overall IRR is under.

Speaker Change: Sure.

Speaker Change: <unk> hundred 65, and im going to let.

Nicholas Cummins: Nicholas address the purchase.

Nicholas H. Cumins: And so you could argue iTwin is a reason why we see momentum with benefits of the cloud, including product-wise, powering new capabilities such as field design validation or advanced design review, or even the 4D modeling piece of Synchronous is also powered by iTwin. So we cannot really separate them, you know, and then asset analytics, by the way, will also then can be considered digital twin revenue because we actually create digital twins of the cell towers; we create a digital twin of the road network as we use Open Tower or blinks.

Nicholas Cummins: Yes. The reason we haven't given a number in terms of digital twin AOR for quite a while it's because it's almost impossible now to separate it.

Nicholas Cummins: From the growth of our products, because more and more of our products are leveraging.

Nicholas Cummins: Digital twin or division <unk>.

Nicholas Cummins: To support our new capabilities.

Nicholas Cummins: And so that you could argue <unk> E.

Nicholas Cummins: The reason why we see momentum with Ben infrastructure cloud, including product wise.

Nicholas Cummins: Any new capex such as that.

Nicholas Cummins: Field design validation or advanced design review or even the 40 modeling piece of synchronous is also powered by <unk>. So we cannot really separate it out and then asset analytics.

Nicholas Cummins: By the way will also.

Nicholas Cummins: Can be considered as digital twin revenue, because we actually create digital twins of the cell towers, we create a digital twin of the road network as we use open to our buildings.

Gregory S. Bentley: And we will break out the asset analytics, ARR Curve. You know, we're preparing a lot of marketing launch materials... Materials is going to have a proper name, you know, like, cohesive does and sequent does and so forth. And we'll provide a lot of visibility into that, that that's entirely owing to the iTwin platform, along with the other AI we incorporate in it, but we've sort of imbued the iTwin platform in everything now as a preference, not only financially, but to get it fully taken up, you know, so that we don't have an evangelism barrier in each account to something explicit for digital trends.

Nicholas Cummins: And.

Nicholas Cummins: We will break out the asset analytics.

Nicholas H. Cumins: Thanks. The next question comes from Blair Abernethy from Risenblatt Securities. You're on, Blair. Okay, there we go. Sorry about that.

Nicholas Cummins: Our curve.

Nicholas Cummins: We're preparing a lot of marketing launch materials is going to have a proper name like.

Nicholas Cummins: Cohesive does and sequent does and so forth.

Nicholas Cummins: And we will provide a lot of visibility into that that's entirely owing to the <unk> platform along with the other AI, we incorporate in it but we started in viewed <unk> platform and everything now is it preference not only financially but to get it fully taken up.

Nicholas Cummins: So that we don't have an advantage of wisdom.

Nicholas Cummins: Barrier.

Nicholas Cummins: In each account is something explicit for digital twins, we'd like digital claims to be implicit.

Nicholas Cummins: To start with.

Nicholas Cummins: Thanks. The next question comes from Blair Abernethy from Rosenblatt Securities.

Blair Harold Abernethy: Congrats to Greg and Nick, as well as to me. Just a quick one. Can you give us an update on the IIJA funding programs? How are you seeing where you're at there, particularly on the roadside? And secondly, Greg, just Blasey, what's the go-to-market program look like there over the next couple of years? Is it, you know, embedded with your core go-to market, or because it's more of a specialized solution? Is it something you're going to do separately?

Blair Harold Abernethy: <unk>, Okay. There, we go sorry, but congrats.

Blair Harold Abernethy: Greg and Nick as well from me.

Blair Harold Abernethy: Just a quick one can you give us an update on the <unk>.

Blair Harold Abernethy: A funding programs how are you seeing.

Blair Harold Abernethy: You are asked there, particularly.

Blair Harold Abernethy: Particularly on the on the roadside and secondly.

Blair Harold Abernethy: Greg.

Greg: Let's see what's the go to market program looks like with air over the next couple of years is it.

Blair Harold Abernethy: Embedded with your core go to market or because its a more of a specialized solution is it something youre going to do separately.

Gregory S. Bentley: It's not so specialized that it can't come through our account managers covering the transportation agencies. However, a lot of the opportunity is with smaller municipalities and counties and metropolitan planning organizations, for instance, and they have an engineer of record, and we would like to work with that engineer to enable them to bring lengthy offerings to all of their clients. So that's what we're working on ramping up now. In the meantime, we're meeting with now I mentioned the seven-figure ARR deal that was with a state DOT, and there will be many others of that magnitude, but we want to reach every roadway owner, and we'll do that through our engineering firms.

Greg: It's not so specialized that can't come through our account managers covering the.

Greg: Transportation agencies, however, a lot of the opportunity is with.

Greg: Smaller municipalities and counties.

Blair Harold Abernethy: And Metropolitan planning organizations for instance, and they have an engineer of record than we would like to work with that engineer to enable them to bring.

Blair Harold Abernethy: Lengthy offerings to all of their funds.

Blair Harold Abernethy: That's what we're working on ramping up now and in the meantime.

Blair Harold Abernethy: We're meeting with now I mentioned the seven figure.

Blair Harold Abernethy: A deal that was with a state.

Blair Harold Abernethy: And there will be many others.

Blair Harold Abernethy: Of that magnitude, but we want to reach.

Blair Harold Abernethy: Every.

Blair Harold Abernethy: Roadway owner.

Blair Harold Abernethy: Do that through our engineering income.

Blair Harold Abernethy: Plan.

Gregory S. Bentley: And then on IAJ, now 37% of the funding has been announced, and as we commented in the last quarter, there's a time gap between being announced and then being awarded. So you can consider IAJ as a strong tailwind that we have in the U.S., and it's going to just sustain our momentum. What's interesting is that the bulk of it is indeed in transportation, as you were alluding to, Blair. Now what is interesting is that the states themselves are layering on top of that their own investments in their own infrastructure.

Blair Harold Abernethy: Yeah, Yeah, and then on IHA and a 47% of the funding has been announced and as we commented in the.

Blair Harold Abernethy: Last quarter, there is a time gap between being announced and then being awarded.

Blair Harold Abernethy: So you can consider Ajay is still a strong tailwind that we have in the U S is going to sustain our momentum what's interesting is and the bulk of it is indeed in transportation as we were exiting two Blair nowadays.

Blair Harold Abernethy: What is interesting is that the states themselves are layering on top of that their own investments for their own infrastructure.

Gregory S. Bentley: So we saw the budget for transportation for the different states increase by, I think, 11% year over year. And there were even voters who decided that indeed we should increase investment in infrastructure in 15 states. So there were measures on the ballot in 15 states asking voters whether yes or no, we need to increase investment infrastructure. So there's clearly momentum there, at the federal level and at the state level. And at the federal level, believe it or not, in the U.S. I think you're there in Canada.

Blair Harold Abernethy: So we saw the budget of transportation.

Blair Harold Abernethy: For the different states increased by.

Blair Harold Abernethy: I think 11%.

Blair Harold Abernethy: Year over year.

Blair Harold Abernethy: And there was even.

Blair Harold Abernethy: Floaters, who had.

Blair Harold Abernethy: Decided that indeed, we should increase investment infrastructure in 15 states that measures on barrels in 15 states asking voters, whether yes, or no we need to increase investment infrastructure. So there is clearly clearly momentum there.

Blair Harold Abernethy: And at the state level.

Blair Harold Abernethy: At the federal level believe it or not in the U S.

Nicholas H. Cumins: The airport funding is controversial, yet it just passed the Houses of Congress and is about to become law. This bill is the best yet in explicitly allowing advanced digital construction management systems to qualify for federal funding and having explicit funding for drone inspection programs that will really lead the way and raise the bar for infrastructure engineering in the U.S. Before we conclude, Bernie, would you like to touch upon revenue seasonality real quick?

Blair Harold Abernethy: So I think youre there in Canada.

Blair Harold Abernethy: The airport funding is controversial yet it just passed.

Blair Harold Abernethy: Houses of Congress has not become law. This bill is the best yet and explicitly allowing advanced digital construction management systems to qualify for federal funding and have an explicit funding for drone inspection programs that we will really lead the way in.

Blair Harold Abernethy: <unk> raised the game for infrastructure engineering and the U S.

Blair Harold Abernethy: Great.

Speaker Change: Yes, Thanks Blair before we conclude Bernie you want to touch upon revenue seasonality real fine yeah.

Nicholas H. Cumins: Yeah. So, as I mentioned in the prepared remarks, we expect that our maximum upgrade work in Q2 remains at Q1 levels before it's going to pick up again. It's expected to pick up again early in the second half. So we expect that our services revenues in Q2 will remain essentially at Q1 levels, so that means that our revenues will be more concentrated on subscriptions in Q2.

Speaker Change: That's why I mentioned in the prepared remarks, so we expect that our <unk>.

Speaker Change: <unk> operating loss in Q2 remains.

Bernie: At Q1 levels before it's going to pick up again.

Bernie: It to pick up again in the second half.

Bernie: So we expect that our services revenues in Q2 remain essentially at Q1 at Q1 levels. So that means that.

Bernie: Our revenues will be more.

Bernie: Concentrated on subscriptions in Q2.

Bernie: Alright.

Bernie: So that concludes our call today. We thank each of you for your interest in time and Bentley Systems. We look forward to updating you on our progress in the coming quarters. Thank you. Thank you. Goodbye.

Speaker Change: So that concludes our call today, we thank each of you for your interest and time and Bentley systems. We look forward to updating you on our progress in coming quarters.

Speaker Change: Thank you. Thank you.

Speaker Change: Goodbye.