Infrastructure design software provider Bentley Systems (NASDAQ:BSY) beat analysts' expectations in Q3 FY2023, with revenue up 14.3% year on year to $306.6 million. Turning to EPS, Bentley made a GAAP profit of $0.16 per share, improving from its profit of $0.12 per share in the same quarter last year.
Is now the time to buy Bentley? Find out by reading the original article on StockStory.
Bentley (BSY) Q3 FY2023 Highlights:
- Revenue: $306.6 million vs analyst estimates of $299.6 million (ARR or annual recurring revenue also beat)
- EPS (non-GAAP): $0.22 vs analyst estimates of $0.19 (14% beat)
- Free Cash Flow of $65.2 million, down 11.5% from the previous quarter
- Net Revenue Retention Rate: 110%, in line with the previous quarter (slight beat vs. expectations of 109%)
- Gross Margin (GAAP): 78.9%, up from 77.9% in the same quarter last year
Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.
Vertical Software Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.
Sales GrowthAs you can see below, Bentley's revenue growth has been mediocre over the last two years, growing from $251.4 million in Q3 FY2021 to $306.6 million this quarter.
This quarter, Bentley's quarterly revenue was once again up 14.3% year on year. On top of that, its revenue increased $9.9 million quarter on quarter, a strong improvement from the $17.7 million decrease in Q2 2023. This is a sign of acceleration of growth and very nice to see indeed.
Looking ahead, analysts covering the company were expecting sales to grow 10% over the next 12 months before the earnings results announcement.
Product SuccessOne of the best parts about the software-as-a-service business model (and a reason why SaaS companies trade at such high valuation multiples) is that customers typically spend more on a company's products and services over time.
Bentley's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 110% in Q3. This means that even if Bentley didn't win any new customers over the last 12 months, it would've grown its revenue by 10%.
Bentley has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.
Key Takeaways from Bentley's Q3 Results Sporting a market capitalization of $15 billion, more than $67 million in cash on hand, and positive free cash flow over the last 12 months, we believe that Bentley is attractively positioned to invest in growth.
It was good to see Bentley beat analysts' revenue expectations this quarter, driven by an ARR (annual recurring revenue) beat. We were also glad its gross margin improved and adjusted operating income beat. Overall, this quarter's results were solid and shareholders should feel optimistic, although no financial outlook was given in the release. The stock is flat after reporting and currently trades at $47.98 per share.
The author has no position in any of the stocks mentioned in this report.
