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Bentley Systems (BSY) has filed to raise $100 million in gross proceeds from an IPO of its Class B common stock, although the final amount may be as high as $800 million, according to an S-1 registration statement.

The firm provides construction and infrastructure software and related services to construction project engineers, managers and builders worldwide.

BSY continues to grow revenue and produce impressive financial and operating results even in the face of the Covid-19 pandemic.

Exton, Pennsylvania-based Bentley was founded to develop workflow software for infrastructure engineering for public works, industrial and commercial facilities globally.

Management is headed by president, Chairman and CEO Mr. Gregory Bentley, who has been with the firm since August 2000 and was previously founder and CEO of Devon Systems.

In addition, the firm was co-founded by Chief Technology Officer/EVP Keith Bentley and Director and EVP Barry Bentley.

Below is a brief overview video of an infrastructure 'Digital Twin:'

Source: Bentley Systems

Bentley is investing in a 'digital twin ecosystem' that can work to improve the performance of infrastructure assets.

The company’s primary offerings include:

  • Project Delivery - ProjectWise
  • Asset and Network Performance - AssetWise
  • Design Integration
  • Digital Cities

The graphic below shows the firm's systems and applications breakdown:

Source: S-1 Filing

Source: S-1 Filing

Bentley has received at least $415 million from investors including Richard Bentley and Siemens Corp (SIEGY).

The firm sells primarily through direct sales channels, generating approximately 92% of its 2019 revenues.

In geographic regions where it does not have a physical presence, BSY relies upon local specialist channel partners.

Below is a chart showing the firm's growth rate history:

Source: S-1 Filing

Source: S-1 Filing

Selling & Marketing expenses as a percentage of total revenue have been dropping as revenues have increased.

The Selling & Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Selling & Marketing spend, rose to 0.5x in the most recent reporting period.

The Rule of 40 is a software industry rule of thumb that says that as long as the combined revenue growth rate and EBITDA percentage rate equal or exceed 40%, the firm is on an acceptable growth trajectory. BSY’s most recent calculation was 37% as of the year ended December 31, 2019, so the firm is close to reaching this hurdle rate.

Bentley’s dollar-based revenue retention rate was 110% in the most recent period. A figure above 100% indicates the firm is generating more revenue from an existing cohort of customers and indicates good product market fit as well as sales & marketing efficiency.

According to a 2018 market research report by The Business Research Company, the global market for infrastructure software was estimated at $231 billion in 2017, with Western Europe as the largest region accounting for $83 billion (36%) and the U.S. representing $49 billion (21.4%) of global demand.

The main drivers for this expected growth are continued development of infrastructure in both the developed and developing regions of the world.

Also, the delivery of software through cloud, whether public, private or hybrid has gained acceptance from customers

Major competitive or other industry participants include:

  • Autodesk (ADSK)
  • Trimble (TRMB)
  • Hexagon (HXGBF)
  • Dassault Systemes (DASTY)
  • AVEVA Group (AVEVF)
  • Nemetschek (NEMTF)
  • Oracle (ORCL)
  • Aspen Technology (AZPN)
  • Environmental Systems Research Institute
  • General Electric (GE)

Bentley’s recent financial results can be summarized as follows:

  • Increasing topline revenue
  • Growing gross profit and gross margin
  • Increasing operating profit and operating margin
  • Growing cash flow from operations

Below are relevant financial results derived from the firm’s registration statement:


Source: Company registration statement

As of June 30, 2020, Bentley had $125.5 million in cash and $679.4 million in total liabilities.

Free cash flow during the twelve months ended June 30, 2020, was $206.1 million.

Bentley intends to raise $100 million in gross proceeds from an IPO of its Class B common stock, although the final amount may be as high as $800 million.

Class B common stockholders will be entitled to one vote per share and Class A shareholders will receive 29 votes per share.

Only selling shareholders will be selling shares in the IPO.

Of the IPO proceeds, management says:

The selling stockholders will receive all of the proceeds from the sale of shares of our Class B common stock in this offering. We will not receive any proceeds from the sale of shares by the selling stockholders.

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are Goldman Sachs, BofA Securities, RBC Capital Markets, Baird, KeyBanc Capital Markets and Mizuho Securities.


Bentley is seeking public capital for its selling shareholders, which appear to be one of the founders and strategic investor Siemens.

The company’s financials show accelerating if moderate growth despite the Covid-19 pandemic, which is quite impressive.

Selling & Marketing expenses as a percentage of total revenue have dropped; its Selling & Marketing efficiency rate has increased to 0.5x, both positive signals, especially through the Covid-19 pandemic.

The market opportunity for infrastructure software is extremely large but the firm faces competition from well-capitalized competitors who have been in its various market spaces for some time.

Goldman Sachs is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 82.1% since their IPO. This is a top-tier performance for all major underwriters during the period.

BSY’s major financial and operating metrics indicate the firm is growing at an efficient rate, retaining customers, producing negative net churn and generating increasing cash flow from operations as well as free cash flow.

I’m very impressed with BSY’s results despite the firm not expecting to receive any IPO proceeds for its growth plans. As long as management seeks a reasonable valuation, the IPO should be intriguing.

When we learn more IPO details, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)


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