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What changed in BENTLEY SYSTEMS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BENTLEY SYSTEMS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+358 added−699 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in BENTLEY SYSTEMS INC's 2023 10-K

358 paragraphs added · 699 removed · 232 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+33 added−199 removed7 unchanged
Biggest changeOur open modeling applications include: • MicroStation , for flexible 3D design and documentation providing the common modeling environment upon which our applications are built; • OpenRoads , for the planning, 3D design, and documentation of roads and highways; • OpenRail , for the planning, 3D design, and documentation of rail and transit systems; • OpenPlant , for the 2D and 3D design and documentation of process plants; • OpenBuildings , for the 3D design and documentation of buildings and their integrated structural, HVAC, electrical, and plumbing systems; • OpenBridge , for the 3D design and documentation of bridges; • OpenSite , for the optimal planning, 3D design, and documentation of building, residential development, and infrastructure sites; and • OpenFlows , for water, wastewater, and stormwater system planning, design, and operations, incorporating hydrological, hydraulic, and flood modeling.
Biggest changeOur open modeling applications include: • MicroStation , for flexible 3D design and documentation, providing the common modeling environment upon which our applications are built; • OpenBridge , for the 3D design and documentation of bridges; • OpenBuildings , for the 3D design and documentation of buildings and their integrated structural, HVAC, electrical, and plumbing systems; • OpenCities, for the design and visualization of cities and campuses; • OpenComms , for the planning, engineering, construction, and maintenance of fiber, coax, and hybrid fiber-coax networks; • OpenFlows , for the planning, design, and operation of water, wastewater, and stormwater systems, incorporating hydrological, hydraulic, and flood modeling; • OpenPlant , for the 2D and 3D design and documentation of process plants; • OpenRail , for the planning, 3D design, and documentation of rail and transit systems; • OpenRoads , for the planning, 3D design, and documentation of roads and highways; • OpenSite , for the planning, 3D design, and documentation of building, residential development, and infrastructure sites; • OpenTower , for the 3D design and analysis of communication towers; • OpenTunnel , for the 3D design and analysis of tunnels; • OpenUtilities , for the design and management of electric, gas, water, wastewater, and district energy networks; and • OpenWindPower , for the structural analysis and design of fixed and floating offshore wind turbines.
Each infrastructure project requires seamless and deep collaboration among professional disciplines, which can include civil, structural, geotechnical, subsurface engineers, and process engineers, architects, geospatial professionals, city and regional planners, contractors, fabricators, and operations and maintenance engineers. Our open modeling and open simulation applications facilitate iterative interactions between disciplines and coordination across project participants.
Each infrastructure project requires seamless and deep collaboration among professional disciplines, which can include civil, structural, geotechnical, subsurface, and process engineers; architects; geospatial professionals; city and regional planners; contractors; fabricators; and operations and maintenance engineers. Our open modeling and open simulation applications facilitate iterative interactions between disciplines and coordination across project participants.
While we consider our intellectual property rights to be valuable, we do not believe that our competitive position depends primarily on obtaining legal protection for our software solutions and technology. Instead, we believe that our competitive position depends primarily on our ability to maintain a leadership position by developing innovative proprietary software solutions, technology, information, processes, and know‑how.
While we consider our intellectual property rights to be valuable, we do not believe that our competitive position depends primarily on obtaining legal protection for our software and technology. Instead, we believe that our competitive position depends primarily on our ability to maintain a leadership position by developing innovative proprietary software, technology, information, processes, and know‑how.
Our Intellectual Property We believe that the success of our business depends more on the quality of our proprietary software solutions, technology, processes, and domain expertise than on copyrights, patents, trademarks, and trade secrets.
Our Intellectual Property We believe that the success of our business depends more on the quality of our proprietary software, technology, processes, and domain expertise than on copyrights, patents, trademarks, and trade secrets.
Over our company’s history, as computing capabilities have advanced, the scope of infrastructure engineering software has correspondingly increased. However, project and asset lifecycle software markets have developed independently from one another and connecting digital workflows have not been offered.
The Digital Twins Opportunity Over our company’s history, as computing capabilities have advanced, the scope of infrastructure engineering software has correspondingly increased. However, project and asset lifecycle software markets have developed independently from one another and connecting digital workflows have not been offered.
Outside the U.S., a small overall portion of our colleagues in certain countries are represented by a colleague representative organization, such as a union or colleague association. Our colleagues bring 67 languages to fulfill the needs of our globally dispersed accounts and users.
Outside the U.S., a small overall portion of our colleagues in certain countries are represented by a colleague representative organization, such as a union or colleague association. Our colleagues bring 66 languages to fulfill the needs of our globally dispersed accounts and users.
Our Research and Development We continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions. Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings.
Our Research and Development We make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions. Our research and development roadmap balances technological advances and new offerings with continuous enhancements to existing offerings.
We believe we compete favorably against our competitors based on the factors above and that we distinguish ourselves through our comprehensive software portfolio, our commitment to both integration and interoperability across the entire infrastructure lifecycle, our flexible commercial models, and our direct sales channels.
We believe we compete favorably against our competitors based on the factors above and that we distinguish ourselves through the comprehensiveness of our software portfolio, our commitment to both integration and interoperability across the entire infrastructure lifecycle, our flexible commercial models, and our direct sales channels.
Our revenues are balanced and diversified between engineering and construction contracting firms who work together to deliver the design and construction of capital projects (representing 50%, 56%, and 57% of our 2022, 2021, and 2020 total revenues, respectively), and their clients, the world’s public and private infrastructure asset owners and operators (representing 50%, 44%, and 43% of our 2022, 2021, and 2020 total revenues, respectively).
Our revenues are balanced and diversified between engineering and construction contracting firms who work together to deliver the design and construction of capital projects (representing 50%, 50%, and 56% of our 2023, 2022, and 2021 total revenues, respectively), and their clients, the world’s public and private infrastructure asset owners and operators (representing 50%, 50%, and 44% of our 2023, 2022, and 2021 total revenues, respectively).
Our Annual Report on Form 10-K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investor Relations portion of our website at www.bentley.com (or investors.bentley.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.
Our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the SEC’s website at www.sec.gov and on the Investor Relations portion of our website at www.bentley.com (or investors.bentley.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 16
While we do not believe that any competitor offers a portfolio as comprehensive as ours, we do face strong competition, varying by infrastructure lifecycle phase and sector: • our key competitors in public works/utilities applications include Autodesk, Inc., Trimble Inc., and Hexagon AB; • our key competitors in industrial applications include Hexagon AB, the AVEVA unit of Schneider Electric, and Dassault Systèmes; • our key competitors in resources applications include Hexagon AB, the AVEVA unit of Schneider Electric, and Dassault Systèmes; • our key competitors in commercial/facilities applications include Autodesk, Inc., Nemetschek SE, and Trimble Inc.; • our key competitors in project delivery systems include Autodesk, Inc. and Oracle Corporation; and 23 • our key competitors in asset performance systems include Aspen Technology, Inc., the AVEVA unit of Schneider Electric, Environmental Systems Research Institute, Inc., and General Electric Corp.
While we do not believe that any competitor offers a portfolio as comprehensive as ours, we do face strong competition, varying by infrastructure lifecycle phase and sector: • our key competitors in Public Works/Utilities applications include Autodesk, Inc., Trimble Inc., and Hexagon AB; • our key competitors in Resources applications include Hexagon AB, the AVEVA unit of Schneider Electric, and Dassault Systèmes; • our key competitors in Industrial applications include Hexagon AB, the AVEVA unit of Schneider Electric, and Dassault Systèmes; • our key competitors in Commercial/Facilities applications include Autodesk, Inc., Nemetschek SE, and Trimble Inc.; • our key competitors in project delivery systems include Autodesk, Inc. and Oracle Corporation; and • our key competitors in asset performance systems include Aspen Technology, Inc., the AVEVA unit of Schneider Electric, Esri, and General Electric Company.
Our applications include: • Leapfrog , for 3D implicit modeling designed to rapidly integrate, communicate, and interpret geological data; • AGS Workbench , for processing, inversion, and visualization of geophysical data; • GeoStudio , for integrated geotechnical analysis for analyzing slope stability, groundwater flow, and heat and mass transfer in soil and rock; • Imago , for the capture and management of drilling core images; • MX Deposit , cloud drill hole software for simplifying and controlling how drill and other field data is collected, managed, and shared throughout the lifecycle of an ore deposit from early exploration through to mine production; • Oasis montaj , for the quality control, correction, visualization, analysis, and interpretation of geophysical, geologic and geochemical data; • PLAXIS , for geotechnical analysis to solve common and complex geotechnical problems, including advanced analysis for excavations, foundations, tunnels, and other infrastructure projects; and • OpenGround , for geotechnical information management for collecting, reporting, managing, visualizing, analyzing, and accessing geotechnical data.
Our geoprofessional applications include: • AGS , for processing, inversion, and visualization of geophysical data; • Central , for geological model management, to visualize, track, integrate, and manage geoscience data from a centralized, auditable environment; • GeoStudio , for integrated geotechnical analysis of slope stability, groundwater flow, and heat and mass transfer in soil and rock; • Imago , for the capture and management of drilling core images; • Leapfrog , for 3D implicit modeling designed to rapidly integrate, communicate, and interpret geological data; • MX Deposit , cloud drill hole software for simplifying and controlling how drill and other field data is collected, managed, and shared throughout the lifecycle of an ore deposit from early exploration through to mine production; • Oasis montaj , for the quality control, correction, visualization, analysis, and interpretation of geophysical, geologic and geochemical data; • OpenGround , for geotechnical information management for collecting, reporting, managing, visualizing, analyzing, and accessing geotechnical data; and 7 • PLAXIS , for geotechnical analysis to solve common and complex geotechnical problems, including advanced analysis for excavations, foundations, tunnels, and other infrastructure projects.
Our iTwin Platform for infrastructure digital twin offerings, leveraging our infrastructure schemas, enables our users to create and curate cloud‑native 4D/5D digital representations of physical infrastructure assets, incorporating underlying engineering information, federated with operational data, and then to model, simulate, analyze, chronicle, and predict performance over time.
Our iTwin Platform for infrastructure digital twin solutions, leveraging our infrastructure schemas, enables users to create and curate cloud‑native 4D/5D digital representations of physical infrastructure assets, incorporating underlying engineering information federated with operational and enterprise data, and then to model, simulate, analyze, synchronize, track, and predict performance over time.
Using digital twins, our users can more fully extend digital workflows across project delivery and asset performance, increasing the value of infrastructure engineers’ work. Our iTwin Platform powers the Bentley Infrastructure Cloud to add digital twin capabilities to our project delivery, 4D construction, and asset performance offerings.
Using digital twins, our users can more fully extend digital workflows across the entire infrastructure lifecycle, increasing the value of infrastructure engineers’ work. Bentley iTwin Platform powers Bentley Infrastructure Cloud to add digital twin capabilities to our offerings for project delivery, construction, and asset operations.
As of December 31, 2022, we had approximately 5,000 full‑time colleagues globally, including approximately 2,000 in the Americas (the U.S., Canada, and Latin America (including the Caribbean)), approximately 1,400 in Europe, the Middle East, and Africa (“EMEA”), and approximately 1,600 in Asia‑Pacific (“APAC”). None of our full‑time U.S. colleagues are unionized.
As of December 31, 2023, we had approximately 5,200 full‑time colleagues globally, including approximately 2,000 in the Americas (the U.S., Canada, and Latin America, including the Caribbean); approximately 1,500 in Europe, the Middle East, and Africa (“EMEA”); and approximately 1,700 in Asia‑Pacific (“APAC”). None of our full‑time U.S. colleagues are unionized.
Our platform acquisitions have been: • Seequent (2021), and subsequent complementary programmatic acquisitions, to enable infrastructure digital twin capabilities to incorporate modeling and simulation of full subsurface depths, and advancing infrastructure resilience and sustainability by helping geoprofessionals to understand environmental conditions and to mitigate environmental risks; and • Power Line Systems (2022), to bring design, analysis, and management of overhead electric power transmission lines and structures to our grid digital twin solutions.
Our platform acquisitions have been: • Seequent Holdings Limited (“Seequent”) (2021), to enable infrastructure digital twin capabilities to incorporate modeling and simulation of full subsurface depths, and advancing infrastructure resilience and sustainability by helping geoprofessionals to understand environmental conditions and to mitigate environmental risks; and • PLS (2022), to bring design, analysis, and management of overhead electric power transmission lines and structures to our grid digital twin solutions.
We do not have material account concentration. No account, including any group of accounts under common control or accounts that are affiliates of each other, represented more than 2.0% of our total revenues in 2022, or more than 2.5% of our total revenues in 2021, or 2020.
No account, including any group of accounts under common control or accounts that are affiliates of each other, represented more than 2.0% of our total revenues in 2023 or 2022, or more than 2.5% of our total revenues in 2021.
We also plan to assess appropriate occasions for seeking patent and other intellectual property protections for aspects of our technology and solutions that we believe constitute innovations providing significant competitive advantages. We have registered 167 trademarks, including “Bentley,” “MicroStation,” “AssetWise,” and “ProjectWise,” with the U.S. Patent and Trademark Office and in several jurisdictions outside the U.S.
We also plan to assess appropriate occasions for seeking patent and other intellectual property protections for aspects of our technology and solutions that we believe constitute innovations providing significant competitive advantages. We have registered 171 trademarks, including “Bentley,” the Bentley logo, “AssetWise,” “Bentley Infrastructure Cloud,” “Bentley Open,” “iTwin,” “MicroStation,” “ProjectWise,” “Seequent,” “SYNCHRO,” and “Virtuosity,” with the U.S.
Our Competition The market for our software solutions is highly competitive and subject to change. We compete against large, global, publicly‑traded companies that have resources greater than our own, and also against small, new, or geographically‑focused firms that specialize in developing niche software offerings.
We compete against large, global, publicly‑traded companies that have resources greater than our own, and against small, new, or geographically‑focused firms that specialize in developing niche software offerings.
We rely on specialist channel partners in geographic regions where we do not currently have a meaningful presence or where, for some of our offerings, direct sales efforts are less economically feasible. Channel partners accounted for approximately 8% of our 2022 total revenues. 24 Sales cycles for our applications tend to be relatively short, measured in weeks.
We also rely on specialist channel partners in geographic regions where we do not currently have a meaningful presence or where, for some of our offerings, direct sales efforts are less economically feasible. Channel partners accounted for approximately 8% of our 2023 total revenues. We do not have material account concentration.
Website Access to Reports Our internet address is www.bentley.com. The information posted on our website is not incorporated into this Annual Report on Form 10‑K.
Corporate Information Bentley Systems, Incorporated was incorporated in Delaware in 1987 and is headquartered in Exton, Pennsylvania. 15 Website Access to Reports Our internet address is www.bentley.com. The information posted on our website is not incorporated into this Annual Report on Form 10‑K.
It also supports an emerging ecosystem of third-party developers who can participate by using iTwin.js, an open‑source development library, to develop desktop, mobile, or web apps that leverage the iTwin Platform or that augment iTwin products from us or from other third parties.
It also supports an emerging ecosystem of third‑party developers who use iTwin.js, an open‑source development library, to develop desktop, mobile, or web apps that leverage the iTwin Platform or that augment our iTwin products or those from third parties. Some capabilities of the iTwin Platform are offered as discrete iTwin products.
Among other things, our patents address a broad range of issues in infrastructure domains from analyzing building energy usage and structural analysis, railway system maintenance, water network design and operation and augmented reality, as well as techniques for creating, storing, displaying, and processing infrastructure models.
Among other things, our patents address a broad range of issues in infrastructure domains from analyzing building energy usage and structural analysis, railway system maintenance, water network design and operation, and augmented reality, as well as techniques for creating, storing, displaying, and processing infrastructure models. 13 To innovate and increase our strategic position, our software developers are incentivized to alert our internal patent committee to innovations that might be patentable or of strategic value.
Our Asset Lifecycle solutions span the operating life of commissioned infrastructure assets, allowing our accounts to manage engineering changes for safety and compliance and to model performance and reliability to support operating and maintenance decisions. 4 Our Solutions We offer solutions for enterprises and professionals across the infrastructure lifecycle.
For assets, our software spans the operating life of commissioned infrastructure assets, allowing our accounts to manage engineering changes for safety and compliance and to model performance and reliability to support operations and maintenance decisions.
Working collaboratively with our accounts, User Success Specialists deliver Success Plans through structured engagements based on explicit and standardized “Success Blueprints” that include annual planning, virtual or in-person engagements with subject matter experts, and quarterly business reviews. Typically, our User Success colleagues engage with our accounts remotely.
Working collaboratively with our accounts, our User Success specialists, consisting of over 600 colleagues, most with domain experience and credentials in infrastructure engineering, deliver Success Plans through structured engagements based on explicit and standardized “Success Blueprints” that include virtual or in‑person engagements with subject matter experts.
User Success has enabled us to transition from traditional paradigms of on‑demand technical support, and episodically contracted professional services, to instead delivering proactive and continuous engagement with users and accounts through “Success Plans.” Success Plans are designed with our accounts’ business outcomes in mind ensuring that users and accounts maximize the value achieved from our solutions.
Success Plans and Services For enterprise accounts, we have transitioned from a traditional paradigm of on‑demand technical support, and professional services contracted episodically, to instead delivering proactive and continuous engagement with users and accounts through “Success Plans.” Success Plans are designed with business outcomes in mind, ensuring that accounts receive the best results from our software.
Human Capital Management We consider our colleagues a key success factor in driving our continued growth. Our overall talent strategy focuses on creating a meaningful experience for our colleagues through our inclusive and engaging culture in which our colleagues develop, collaborate, contribute, thrive, and ultimately make a positive impact through advancing the world’s infrastructure.
Human Capital Management Our colleagues are a key success factor in driving our continued growth. Our talent strategy focuses on creating an enriching colleague experience through an inclusive and engaging culture in which colleagues can develop their career while making a positive impact by advancing the world’s infrastructure.
Geoprofessional Applications . Our Geoprofessional Applications support modeling and simulation to help engineers and scientists develop a detailed understanding, and take full account of, near and deep subsurface conditions. Our acquisition of Seequent Holdings Limited (“Seequent”) added industry‑leading earth modeling, subsurface‑data management, and geoprofessional team collaboration software to our portfolio.
Geoprofessional Applications . Our geoprofessional applications support modeling and simulation to help engineers and scientists develop a detailed understanding, and take full account of, near and deep subsurface conditions.
Moreover, we believe that due to the comprehensiveness of our solutions across project and asset lifecycles, infrastructure digital twins and newly enabled digital workflows spanning design, construction, and operations, will most particularly benefit our users and enhance our competitiveness.
Moreover, we believe that due to the comprehensiveness of our offerings across project and asset lifecycles, infrastructure digital twins and newly enabled digital workflows spanning design, construction, and operations will most particularly benefit our users and enhance our competitiveness. 9 Our Commercial Offerings Licensing and Subscriptions We offer a variety of licensing and subscription options so that users can choose what works best for them, their project, and their organization.
As of December 31, 2022, we had 143 patents granted and 61 patents pending in the U.S., the first of which expires on January 3, 2023, and 27 patents granted and 59 patents pending internationally, the first of which expires on September 9, 2023.
As of December 31, 2023, we had 168 patents granted and 60 patents pending in the U.S., the first of which expires on June 28, 2024, and 33 patents granted and 59 patents pending internationally, the first of which expires on January 12, 2025.
We have held interactive sessions with our executives, emerging leaders, and talent acquisition in fostering DEI and eliminating unconscious bias, and have implemented training for hiring managers to ensure fairness in the interview process.
We have held interactive sessions with our executives, emerging leaders, and talent acquisition teams in fostering inclusion and belonging and eliminating unconscious bias, and have implemented training for hiring managers to ensure fairness in the interview process. Additional information on our diversity, equity, and inclusion programs can be found on our website at www.bentley.com/en/about-us/diversity-equity-inclusion.
Power Line Systems substantially completes the reach of our comprehensive portfolio for the lifecycle integration of grid infrastructure across electrical transmission, substation, and distribution assets, and communications towers. 22 Our relatively numerous and frequent programmatic acquisitions, which most often “fill white space” within our ecosystem and add their particular value principally by virtue of our existing platform comprehensiveness, and accordingly we consider this programmatic aspect of our growth as characteristically within our mainstream business performance (unlike platform acquisitions).
Our relatively numerous and frequent programmatic acquisitions, which most often “fill white space” within our ecosystem, add their value principally by enhancing our platform comprehensiveness, and accordingly we consider this programmatic aspect of our growth as characteristically within our mainstream business performance (unlike platform acquisitions).
Our open simulation applications include: • STAAD and RAM , for analysis and simulation respectively of infrastructure and building structural performance; • ADINA , for nonlinear simulation and analysis; • SACS , for analysis and simulation of offshore structural performance; • MOSES , for analysis and simulation of floating structures; • AutoPIPE , for analysis and simulation of pipe stress in industrial process plants; • SITEOPS , for simulation of compliant site layout, and optimization of earthworks, drainage, and parking; • CUBE , for multi-modal transportation network modeling and land-use modeling; • EMME , for multimodal urban, regional, and transport planning; and • LEGION , for pedestrian traffic simulation. 17 Geoprofessional Applications We undertake to provide comprehensive modeling and simulation of near and deep subsurface conditions.
Our open simulation applications include: • ADINA , for nonlinear simulation and analysis; 6 • AutoPIPE , for analysis and simulation of pipe stress in industrial process plants; • CUBE , for multi‑modal transportation network modeling and land‑use modeling; • DYNAMEQ , for traffic simulation and dynamic traffic analysis; • EMME , for multimodal urban, regional, and transport planning; • LEGION , for pedestrian traffic simulation; • Power Line Systems (“PLS”) , for analysis and simulation of overhead electric power transmission lines and their structures; • RAM , for analysis and simulation of building structural performance; • SACS , for analysis and simulation of offshore structural performance; • SPIDA , for analysis and simulation of utility poles and overhead assets; and • STAAD , for analysis and simulation of infrastructure.
We address both the project and asset lifecycle phases of infrastructure, each with applications and enterprise information systems. Our Project Lifecycle solutions encompass conception, planning, surveying, design, engineering, simulation, and construction, as well as the collaboration offerings required to coordinate and share the work of interdisciplinary and/or distributed project teams.
Our Products and Solutions We serve enterprises and professionals across the infrastructure lifecycle by improving project delivery and asset performance. For projects, our software encompasses conception, planning, surveying, design, engineering, and construction, as well as the collaboration required to coordinate and share the work of interdisciplinary and/or distributed project teams.
We are continuing to increase transparency aligned with our materiality assessment and look forward to publishing several new disclosures in our inaugural ESG report later this year. 27 To learn more, visit our ESG website at https://www.bentley.com/company/esg-overview/. The information posted on this website is not incorporated into this Annual Report on Form 10‑K.
We look forward to sharing updates for our full year 2023 performance in our next ESG report, scheduled to be published in the second quarter of 2024. To learn more, visit our ESG website at https://www.bentley.com/company/esg-overview/. The information posted on this website is not incorporated into this Annual Report on Form 10‑K.
Our Sales and Marketing We bring our offerings to market primarily through direct sales channels that generated approximately 92% of our 2022 total revenues. Our direct sales channel includes: • Account Managers, who are responsible for our largest accounts.
We bring our offerings to market primarily through direct sales channels, including through our account managers and our Virtuosity inside sales colleagues and e‑store, which generated approximately 92% of our 2023 total revenues.
Our average historical annualized recurring revenues growth rate from programmatic acquisitions over the last five years has been approximately 1.5% measured on a constant currency basis.
Our average historical ARR growth rate (1) from programmatic acquisitions over the past three years has been approximately 1% measured on a constant currency basis. Our Competition The market for our software is highly competitive and subject to change.
We believe that the new advancement of BIM and GIS to “evergreen” infrastructure digital twins will have the effect of merging what have to date been separate market spaces as well as enabling new use cases that were not possible or practical with previous technologies. 12 Period Project Lifecycle Software Asset Lifecycle Software 1985 – 1995 2D Drafting (Computer Aided Design or CAD): Workstations and then personal computers make possible interactive graphical applications to automate the creation of previously manually drafted 2D engineering drawings. 2D Mapping: Workstations and personal computers make possible interactive graphical applications to automate the creation of maps. 1996 – 2005 Collaboration: Networked personal computers and servers provide platforms for file-sharing and referencing.
We believe the advancement from siloed project-specific software including for computer-aided design (CAD) and building information modeling (BIM), and asset-specific software including for geographic information systems (GIS), to unified and “evergreen” infrastructure digital twins will have the effect of merging what have been to date separate market spaces as well as enabling new use cases that were not possible or practical with previous technologies.
Lifecycle Stages . Both project delivery enterprises and owner‑operators benefit from our solutions, which enable digital workflows to extend between project and asset lifecycles, from design to construction and ultimately asset management. This capability allows our users’ digital engineering models to be leveraged as the context for real-time condition monitoring to achieve better and safer operations and maintenance.
This capability allows our users’ digital engineering models to be leveraged as the context for real-time condition monitoring to achieve better and safer operations and maintenance. Infrastructure Sectors.
We provide our colleagues with various tools and opportunities to enhance their professional development and, as a result, the career potential of each individual. Our goal is to enable and empower colleagues with learning and development resources to support their continuous growth as individual contributors, team managers, or organization leaders. We offer: • Dedicated On-Demand Resources.
We empower colleagues with learning and development resources to support their continuous growth as individual contributors, team managers, or organization leaders. We offer live classroom learning, curated learning pathways, and open access to a powerful learning platform. We also focus on developing the personal and professional skills of our leaders.
New business from SMB accounts, including from hundreds of new “logos” each quarter, has become a substantial contributor to our overall Annualized Recurring Revenues (ARR) growth, and we are encouraged to continue and increase this Virtuosity investment; and 15 • Catalyzing the Infrastructure Digital Twin Ecosystem : BSY Investments.
We intend to continue to expand the reach of our E365 subscription within virtually all of our enterprise accounts; • Accretion in SMBs : New business from SMB accounts, including from hundreds of new “logos” each quarter, has become a substantial contributor to our overall ARR growth (1) , and we are encouraged to continue investment in our Virtuosity business and e‑store.
Our enduring commitment is to develop and support the most comprehensive portfolio of integrated software offerings across professional disciplines, project and asset lifecycles, infrastructure sectors, and geographies. Our software enables digital workflows across engineering disciplines, across distributed project teams, and from offices to the field.
We were founded in 1984 by the Bentley brothers and on September 25, 2020, we completed our initial public offering (“IPO”). Our enduring commitment is to develop and support the most comprehensive portfolio of integrated software offerings across professional disciplines, project and asset lifecycles, infrastructure sectors, and geographies.
This capability enables engineers, throughout their careers, to maintain continuity and compatibility with their preferred interfaces, formats, and methodologies, while advancing their work at the leading edge of innovation; • Better deliverables . Our applications share a common modeling environment to enable streamlined coordination and production of multi-discipline documentation; and • Better handoff .
Our engineering applications work together to improve infrastructure engineering quality and productivity, resulting in better project designs and deliverables. We take care to enable compatibility across successive generations of our applications, which enables engineers, throughout their careers, to maintain continuity with their preferred interfaces, formats, and methodologies, while advancing their work at the leading edge of innovation.
Our separate Technology office assesses the potential of new software technologies and sources. As part of our resource allocation process, we also conduct a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions.
Our allocation of research and development resources is guided by management‑established priorities, input from product managers, and feedback from various channels including users and user-facing teams. As part of our resource allocation process, we also conduct a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions.
Since the iModel schema is comprehensive across infrastructure engineering disciplines (and can be extended as needed), all project and asset data can be aligned semantically and spatially with all other relevant models and data, allowing all this information to be accessed and queried to maximize the digital twin’s values of reality, veracity, and fidelity. 14 We believe that the growing adoption of infrastructure digital twins will serve to overcome the factors that have held back the digital advancement of infrastructure engineering, and will facilitate the broader use of intelligent engineering data in the operation of infrastructure assets.
We believe that the growing adoption of infrastructure digital twins will serve to overcome the factors that have held back the digital advancement of infrastructure engineering and will facilitate the broader use of engineering data in the operation of infrastructure assets.
Enterprise Systems Our Enterprise Systems, which include solutions for both project delivery and asset performance, are powered by our iTwin Platform and infrastructure schemas, and integrate with our engineering applications to enable better creation, delivery, and ongoing operation of better infrastructure, through complete and evergreen digital twins.
Powered by the iTwin Platform and Bentley’s infrastructure schemas and thus seamlessly integrating with Bentley Open applications, Bentley Infrastructure Cloud enables better creation, delivery, and ongoing operation of better infrastructure, through complete and evergreen digital twins. Bentley iTwin Platform.
The integration of these sophisticated technologies in combination with our existing geotechnical products, supplements visible built asset representations above ground with more probabilistic modeling of invisible subsurface conditions – deepening the potential of infrastructure digital twins. Benefits of our geoprofessional applications to infrastructure professionals include: • Delivering a clearer picture of what lies beneath .
These include industry‑leading earth modeling, subsurface‑data management, and geoprofessional team collaboration software and geotechnical products that supplement visible built-asset representations above ground with more probabilistic modeling of subsurface conditions – deepening the potential of infrastructure digital twins.
To innovate and increase our strategic position, our software developers are incentivized to alert our internal patent committee to innovations that might be patentable or of strategic value. In 2022, our patent committee reviewed 26 invention disclosures submitted by our software developers, and filed 26 U.S. and two foreign patent applications, while 17 U.S. and four foreign patents were granted.
In 2023, our patent committee reviewed 16 invention disclosures submitted by our software developers, and filed 15 U.S. and 12 foreign patent applications, while 14 U.S. and six foreign patents were granted.
In 2022, we continued to build upon our strong commitment to sustainability with an emphasis on strategy, governance, and transparency. ESG Strategy In our second year of formal ESG strategy, we wanted to engage our stakeholders to assess our current performance and ensure that our priorities are aligned with their needs.
Environmental, Social, and Governance In 2023, we continued to build upon our strong commitment to sustainability with an emphasis on goal setting aligned with leading standards and continually improving our reporting. In the third year of our formal Environmental, Social, and Governance (“ESG”) strategy, we continued our regular engagement with stakeholders to solicit feedback on our ESG report.
Our colleagues are highly qualified with an average of six years of total service with the Company and advanced academic credentials, including over 130 doctoral degrees and over 1,300 master’s‑level degrees. We believe our enriching experience, culture of belonging, and core values are key drivers for attracting, developing, and retaining successful colleagues.
Our colleagues are highly qualified with an average of seven years of total service and advanced academic credentials, including nearly 130 doctoral degrees and over 1,300 master’s‑level degrees. 14 Colleague Experience We take a colleague‑centric approach in all that we do. We achieve a strong sense of belonging through focused efforts to build trust and enhance personal and organizational experiences.
Our Primary Growth Initiatives Incremental to our long-standing programmatic acquisition strategy, since 2020 we have determinedly invested internal resources to augment our organic growth rate, with increasing success, through the following primary growth initiatives: • For Accretion in Enterprise Accounts : E365 Success Teams.
(1) Refer to the section titled “Key Business Metrics” included in Part II, Item 7 of this Annual Report on Form 10‑K for additional information, including our definition and our use of ARR. 10 Our Primary Growth Initiatives Incremental to our long‑standing programmatic acquisition strategy, since 2020 we have determinedly invested internal resources to accelerate organic growth, with increasing success, through the following primary growth initiatives: • Accretion in Enterprise Accounts : We have established that E365 helps our accounts implement, propagate, and upgrade our solutions more quickly, encouraging greater consumption of our software and stronger account relationships.
Our Infrastructure Empowered Workforce Plan (“IEWP”) is our intentional approach which is meant, through productive and enjoyable facilities, to attract colleagues to take advantage of our evolving physical offices for necessary in-person collaboration, while institutionalizing the flexibility to work remotely otherwise, fully enabled by appropriate technologies.
IEWP is a global strategy that empowers colleagues to take advantage of our physical offices for necessary in-person collaboration, while institutionalizing the flexibility to work remotely otherwise, fully enabled by technology. IEWP allows our colleagues to make the best of remote and in‑office work to perform at a higher level and enhances team and business productivity.
Our Acquisitions Since our founding, we have purposefully pursued a strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, including 36 acquisitions over the past five years. As a public company, we have been able to make platform acquisitions which appreciably increase our scale and/or the scope of our platform capabilities.
Most acquired products had already been interfacing with our platform prior to acquisition, and our acquisition purpose is typically to improve their technical and commercial integration. As a public company, we have been able to make platform acquisitions which appreciably increase our scale and/or the scope of our platform capabilities.
Our users engineer, construct, and operate projects and assets across the following infrastructure sectors: • public works (including roads, rail, bridges, tunnels, airports, ports, and federal, state, and municipal agencies)/ utilities (including networks for electricity, gas, communications, and water, wastewater, and drainage).
Our users design, build, and operate projects and assets across the following infrastructure sectors: • Public Works/Utilities , which represents approximately 58% of our sector-attributable annualized recurring revenues (“ARR”) (1)(2) , includes roads, rail, bridges, tunnels, airports, and ports; federal, state, and municipal agencies; and networks for electricity, gas, water, wastewater, and communications; • Resources , which represents approximately 26% of our sector-attributable ARR (1)(2) , includes mining, oil and gas “upstream,” offshore, pipelines, environmental management, and renewable energy; • Industrial , which represents approximately 10% of our sector-attributable ARR (1)(2) , includes process and discrete manufacturing, oil and gas “downstream,” and power generation; and • Commercial/Facilities , which represents approximately 6% of our sector-attributable ARR (1)(2) , includes campuses, office buildings, retail facilities, and hospitals.
Diversity, Equity, and Inclusion As a global company with colleagues of different cultures, backgrounds, and perspectives based in more than 40 countries worldwide, our diversity is what makes us successful. We are committed to fostering and continuing to build programs to promote DEI so all colleagues can reach their highest performance and potential.
Our Leadership Excellence and Development (LEAD) Essentials program strives to equip leaders to guide their teams while leveraging Bentley core competencies and a “One Bentley” mindset. Inclusion and Belonging We are a global company with colleagues of different cultures, backgrounds, and perspectives based in more than 40 countries worldwide.
Hence, Cohesive represents our own investment to create a captive global “digital integrator.” Its charter is to adopt and prove successful commercial models that we can subsequently demonstrate and impart to engineering firms, who could together provide at scale these valuable digital integrator services to all infrastructure owner operators, accelerating infrastructure digital twins.
Cohesive represents our own investment to create a captive “digital integrator” to prove business models that we can subsequently impart to engineering services firms, accelerating the adoption of intelligent digital twin solutions. Our Accounts We provide our software solutions to over 41,000 accounts in 194 countries worldwide.
Moreover, we believe that our offerings, in particular our infrastructure digital twin solutions, empower the achievement of sustainable development goals (“SDGs”) by helping our users – infrastructure professionals – realize outcomes that are more sustainable and resilient. We deliver our solutions via on‑premises, cloud, and hybrid environments.
Our software enables digital workflows across engineering disciplines, across distributed project teams, and from offices to the field. Moreover, our intelligent digital twin solutions empower our users to achieve sustainable development goals (“SDGs”) by realizing outcomes that are more sustainable and resilient.
Additionally, we believe our collaboration systems lead the market in managing infrastructure engineering firms’ preferred work-in-progress workflows. For example, to illustrate the benefits of interdisciplinary digital workflows in roadway design, our offerings’ comprehensiveness can enhance both safety and economics by enriching the interfaces between geotechnical (earthworks) and structural analyses to share full 3D modeling details.
Additionally, we believe our collaboration systems lead the market in managing infrastructure engineering firms’ preferred work-in-progress workflows. Lifecycle Stages. Both project delivery enterprises and owner‑operators benefit from our software, which enables digital workflows to extend between project and asset lifecycles, from design to construction and ultimately asset management.
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Item 1. Business Bentley Systems: The Infrastructure Engineering Software Company We enable infrastructure professionals and their organizations, by “going digital” through our software and cloud services offerings, to better design, build, and operate better infrastructure. We were founded in 1984 by the Bentley brothers and on September 25, 2020, we completed our initial public offering (“IPO”).
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Item 1. Business Our Business Bentley Systems is the infrastructure engineering software company. Our purpose is to advance the world’s infrastructure for better quality of life. We empower people to design, build, and operate better and more resilient infrastructure through the adoption of our intelligent digital twin solutions.
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We estimate that this sector represents 49% of the net infrastructure asset value of the global top 500 infrastructure owners based on the 2022 edition of the Bentley Infrastructure 500 Top Owners , our annual compilation of the world’s largest infrastructure owners ranked by net depreciated value of their tangible fixed assets; • resources (including mining, oil and gas “upstream,” offshore, pipelines, environmental management, and renewable energy).
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(1) Refer to the section titled “Key Business Metrics” included in Part II, Item 7 of this Annual Report on Form 10‑K for additional information, including our definition and our use of ARR.
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We estimate that this sector represents 21% of the global top 500 infrastructure owners’ net infrastructure asset value; • industrial (including discrete and process manufacturing, oil and gas “downstream,” and power generation).
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(2) Sector-attributable ARR refers to the proportion of our ARR which can be attributed either based on the sector-specific classification of the account and/or the sector-specific classification of the product giving rise to the ARR.
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We estimate that this sector represents 18% of the global top 500 infrastructure owners’ net infrastructure asset value; and • commercial/facilities (including office buildings, retail facilities, hospitals, and campuses). We estimate that this sector represents 12% of the global top 500 infrastructure owners’ net infrastructure asset value.
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The portions of our ARR which cannot be sector-attributed consist generally of ARR within accounts that are diversified engineering firms which work in multiple sectors, and as to that portion of their ARR which are for products that are not sector-specific, such as MicroStation, and structural or geotechnical modeling and simulation applications, and ProjectWise, which are used across any and all sectors. 4 Our engineering and geoprofessional applications are primarily cloud-connected desktop modeling and simulation applications that support the breadth of engineering and geoprofessional disciplines.
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Our Engineering Applications and Geoprofessional Applications support the breadth of engineering and geoprofessional disciplines and are primarily desktop applications for professional practitioners. Our project delivery and asset performance Enterprise Systems are provided via cloud and hybrid environments, developed respectively to extend enterprise collaboration during project delivery, and to manage and leverage engineering information during operations and maintenance.
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Bentley Infrastructure Cloud , provided via cloud and hybrid environments, extends enterprise collaboration during project delivery, and helps manage engineering information during operations and maintenance. Powering these products and solutions is iTwin Platform , our cloud‑native technology platform to create, curate, and leverage infrastructure digital twins.
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Our Industry Solutions solve domain‑specific problems for owners of infrastructure assets, and the project delivery ecosystems that support these owners. Our cloud-native iTwin Platform solutions enable digital twin workflows, which can span project and asset lifecycles.
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The proportions of our revenue generated respectively from engineering and geoprofessional applications for modeling and simulation, and from Bentley Infrastructure Cloud and its principal offerings, are referenced in the diagram below. 5 Our comprehensive portfolio of integrated software offerings comprises: Engineering Applications .
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Our comprehensive solutions for the entire project delivery and asset performance lifecycle—spanning conception, planning, surveying, subsurface, design, simulation, construction, and operations—include Engineering Applications , Geoprofessional Applications , Enterprise Systems , Industry Solutions , and our iTwin Platform for infrastructure digital twins. Engineering Applications . Our Engineering Applications are for modeling and simulation.
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We offer an open modeling environment comprising domain‑specific authoring applications and an open simulation environment comprising applications to analyze the functional performance of designs that work together to improve engineering quality, streamline production of multi-discipline documentation, and reduce rework.
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Our modeling applications are domain-specific authoring tools used by professionals for the 3D design and documentation of infrastructure assets.
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These Bentley Open applications for modeling and simulation support a wide variety of file formats – both Bentley and third‑party – and industry standards and design codes, enabling digital workflows across design, simulation, and analysis, and ensuring engineering data is not locked in, but remains open and accessible.
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Our simulation applications enable engineers to analyze the functional performance of the designs created with our modeling applications (or those of competitive vendors), preferably in iterative digital workflows, to improve engineering outcomes and to ensure compliance with design codes. 5 Benefits of our Engineering Applications to infrastructure engineers include: • Better designs .
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Bentley Infrastructure Cloud . Our enterprise information systems span the end‑to‑end lifecycle and value chain of the world’s infrastructure, helping engineers to produce higher quality deliverables, contractors to execute better with their supply chain, and owners to have a complete picture of their asset as early as possible.
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Our modeling and simulation applications work together to improve infrastructure engineering quality, for instance to enable users to participate in data-centric workflows, including for integration, validation of design intent, rules checking, clash detection, component queries and reuse, quality assurance, and digital-twin deliverables creation.
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Bentley Infrastructure Cloud encompasses: • ProjectWise , for project delivery, supporting information and document management, and engineering‑specific collaboration and work‑sharing for distributed project teams and enterprises; • SYNCHRO , for construction, spatially and temporally integrating a project’s 3D engineering models into its construction schedules to visualize and assess sequencing strategies; and • AssetWise , for asset operations, capturing and managing changes to engineering models and enterprise information for compliance and safety, and to model performance and reliability.
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Each application is for a specific purpose (asset-type or discipline; for example, OpenRoads for roadway design), and supports corresponding asset-specific engineering workflows (for example, the workflow a civil engineer would use in designing a road) by virtue of: • Better engineering productivity .
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By unifying data between engineering applications and enterprise systems, Bentley Infrastructure Cloud helps organizations manage their data in a single environment, enabling integrated workflows, improved collaboration, and increased productivity. Data also can be easily enriched throughout the lifecycle.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe license third‑party technologies for the development of certain of our software solutions, and, in some instances, we incorporate third‑party technologies, including open source software, into our software solutions. If we fail to maintain these licenses or are unable to secure alternative licenses on reasonable terms, our business could be adversely affected.
Biggest changeIf we fail to maintain these licenses or are unable to secure alternative licenses on reasonable terms, our business could be adversely affected. We license third-party technologies to develop certain of our products, and, in some cases, we incorporate third‑party technologies into our own software solutions, including technologies owned by our competitors.
Our sales are based significantly on accounts’ demand for software solutions in the following infrastructure sectors: (i) public works/utilities; (ii) industrial; (iii) resources; and (iv) commercial/facilities. Although these sectors are typically countercyclical to one another in nature, each periodically experiences economic declines and may be exacerbated by other economic factors.
Our sales are based significantly on accounts’ demand for software solutions in the following infrastructure sectors: (i) public works/utilities; (ii) resources; (iii) industrial; and (iv) commercial/facilities. Although these sectors are typically countercyclical to one another in nature, each periodically experiences economic declines and may be exacerbated by other economic factors.
Allegations of unsatisfactory performance in any of these situations could damage our reputation in the market and our relationships with our accounts, cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting, or redesigning the software, cause us to lose 35 accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects.
Allegations of unsatisfactory performance in any of these situations could damage our reputation in the market and our relationships with our accounts, cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting, or redesigning the software, cause us to lose accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects.
Further, if the Bentley Family ceases to collectively own equity interests in us representing at least 20% of the aggregate voting power of the Company, then such change in ownership will be an event of default under the agreement governing the Credit Facility and, among other things, the commitments under the Credit Facility may be 42 terminated immediately and the outstanding loans and accrued interest may become due and payable immediately.
Further, if the Bentley Family ceases to collectively own equity interests in us representing at least 20% of the aggregate voting power of the Company, then such change in ownership will be an event of default under the agreement governing the Credit Facility and, among other things, the commitments under the Credit Facility may be terminated immediately and the outstanding loans and accrued interest may become due and payable immediately.
Other consequences include negative publicity and harm to business reputation, increased government scrutiny (including intrusive audits, and increased difficulty obtaining government licenses and approvals), and/or remedial compliance measures as a condition of settling government charges. We may face exposure to product or professional liability claims that could cause us to be liable for damages.
Other consequences include negative publicity and harm to business reputation, increased government scrutiny (including intrusive audits, and increased difficulty obtaining government licenses and approvals), and/or remedial compliance measures as a condition of settling government charges. 25 We may face exposure to product or professional liability claims that could cause us to be liable for damages.
In the event that there are economic declines in countries in which we conduct transactions, the resulting changes in currency exchange rates may affect our financial condition, results of operations, and cash flows. We are most impacted by movements in and among the Euro, British Pound, Canadian Dollar, Australian Dollar, Chinese Yuan Renminbi, and New Zealand Dollars.
In the event that there are economic declines in countries in which we conduct transactions, the resulting changes in currency exchange rates may affect our financial condition, results of operations, and cash flows. We are most impacted by movements in and among the euro, British pound, Canadian dollar, Australian dollar, Chinese yuan renminbi, and New Zealand dollar.
Risks Related to Information Technology Systems and Intellectual Property Interruptions in the availability of server systems or communications with Internet, third‑party hosting facilities or cloud‑based services, or failure to maintain the security, confidentiality, accessibility, or integrity of data stored on such systems, could harm our business or impair the delivery of our managed services.
Risks Related to Information Technology (“IT”) Systems and Intellectual Property Interruptions in the availability of server systems or communications with Internet, third‑party hosting facilities or cloud‑based services, or failure to maintain the security, confidentiality, accessibility, or integrity of data stored on such systems, could harm our business or impair the delivery of our managed services.
If our accounts do not renew their subscriptions or if they renew on less favorable terms, our revenues may decline, which could harm our business, financial condition, and results of operations. Consolidation among our accounts and other enterprises in the markets in which we operate may result in a loss of business.
If our accounts do not renew their subscriptions or if they renew on less favorable terms, our revenues may decline, which could harm our business, financial condition, and results of operations. 18 Consolidation among our accounts and other enterprises in the markets in which we operate may result in a loss of business.
We may also be required to provide full replacements or refunds for such defective software. We cannot assure you that such remediation would not harm our business, financial condition, results of operations, and prospects. Our business, financial condition, results of operations, and prospects may be harmed if we are unable to cross‑sell our solutions.
We may also be required to provide full replacements or refunds for such defective software. We cannot assure you that such remediation would not harm our business, financial condition, results of operations, and prospects. 19 Our business, financial condition, results of operations, and prospects may be harmed if we are unable to cross‑sell our solutions.
Our international revenues, including from emerging economies, are subject to general economic and political conditions in foreign markets and our revenues are impacted by the relative geographical and country mix of our 33 revenues over time. These factors could adversely impact our international revenues and, consequently, our business.
Our international revenues, including from emerging economies, are subject to general economic and political conditions in foreign markets and our revenues are impacted by the relative geographical and country mix of our revenues over time. These factors could adversely impact our international revenues and, consequently, our business.
Any disruption in service may damage our reputation and business. In addition, our channel partners may be unable to meet their payment obligations to us, which would have a negative impact on our results of operations and 36 revenues.
Any disruption in service may damage our reputation and business. In addition, our channel partners may be unable to meet their payment obligations to us, which would have a negative impact on our results of operations and revenues.
Globally, laws such as the GDPR in the European Economic Area (the “EEA”), the LGPD in Brazil, and the PIPL in China, impose obligations directly on us as both a data controller and a data processor, as well as on many of our users.
Globally, laws such as the GDPR in the European Economic Area, the LGPD in Brazil, and the PIPL in China, impose obligations directly on us as both a data controller and a data processor, as well as on many of our users.
Recent and potential tariffs imposed by the U.S. government or a global trade war could increase the cost of our products and services and the cost of conducting our business, which could harm our business, financial condition, and 40 results of operations.
Recent and potential tariffs imposed by the U.S. government or a global trade war could increase the cost of our products and services and the cost of conducting our business, which could harm our business, financial condition, and results of operations.
As of December 31, 2022, without giving effect to any potential adjustments to the conversion rate set forth in the indenture or any limits on conversion, and assuming our Class B Common Stock is trading at or above $64.13 per share for the 2026 Notes and $83.23 per share for the 2027 Notes, 10,725,557 and 6,908,567 shares of our Class B Common Stock would be issuable upon a full conversion of the 2026 Notes and 2027 Notes, respectively.
As of December 31, 2023, without giving effect to any potential adjustments to the conversion rate set forth in the indenture or any limits on conversion, and assuming our Class B common stock is trading at or above $64.13 per share for the 2026 Notes and $83.23 per share for the 2027 Notes, 10,725,557 and 6,908,567 shares of our Class B common stock would be issuable upon a full conversion of the 2026 Notes and 2027 Notes, respectively.
The impact of cyber‑attacks could disrupt the proper functioning of our software solutions or services, cause errors in the output of our accounts’ work, allow unauthorized access to sensitive, proprietary, or confidential information of ours or our accounts, and other destructive outcomes. 37 Additionally, third parties may attempt to fraudulently induce colleagues or accounts into disclosing sensitive information such as user names, passwords, or other information in order to gain access to our accounts’ data, our data, or our IT systems.
The impact of cyber‑attacks could disrupt the proper functioning of our software solutions or services, cause errors in the output of our accounts’ work, allow unauthorized access to sensitive, proprietary, or confidential information of ours or our accounts, and other destructive outcomes. 21 Additionally, third parties may attempt to fraudulently induce colleagues or accounts into disclosing sensitive information such as user names, passwords, or other information in order to gain access to our accounts’ data, our data, or our IT systems.
General Risk Factors Global economic conditions may negatively impact our business, financial condition, and results of operations. Our operations and performance depend significantly on foreign and domestic economic conditions.
General Risk Factors Global economic and political conditions may negatively impact our business, financial condition, and results of operations. Our operations and performance depend significantly on foreign and domestic economic and political conditions.
Depending on the results of our assessment, we could be required to record a significant impairment charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets was determined, negatively impacting our results of operations. 47 Item 1B. Unresolved Staff Comments None.
Depending on the results of our assessment, we could be required to record a significant impairment charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets was determined, negatively impacting our results of operations. 30 Item 1B. Unresolved Staff Comments None.
A portion of our revenues are from sales by our channel partners and we could be subject to loss or liability based on their actions. Sales through our global network of independent regional channel partners accounted for 8% of our total revenues for the years ended December 31, 2022, 2021, and 2020.
A portion of our revenues are from sales by our channel partners and we could be subject to loss or liability based on their actions. Sales through our global network of independent regional channel partners accounted for 8% of our total revenues for the years ended December 31, 2023, 2022, and 2021.
The accounting method for reflecting the 2026 Notes and 2027 Notes on our consolidated balance sheet and reflecting the underlying shares of our Class B Common Stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
The accounting method for reflecting the 2026 Notes and 2027 Notes on our consolidated balance sheets and reflecting the underlying shares of our Class B common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
Approximately 58%, 59%, and 57% of our total revenues were from outside the U.S. for the years ended December 31, 2022, 2021, and 2020, respectively. As we continue to expand our presence in international regions, the portion of our revenues, expenses, cash, accounts receivable, and payment obligations denominated in foreign currencies continues to increase.
Approximately 58%, 58%, and 59% of our total revenues were from outside the U.S. for the years ended December 31, 2023, 2022, and 2021, respectively. As we continue to expand our presence in international regions, the portion of our revenues, expenses, cash, accounts receivable, and payment obligations denominated in foreign currencies continues to increase.
There are significant costs and restrictions associated with the repatriation of cash from our non-U.S. operations. Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 95% and 48% of those balances held outside of the U.S. as of December 31, 2022 and 2021.
There are significant costs and restrictions associated with the repatriation of cash from our non-U.S. operations. Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 95% of those balances held outside of the U.S. as of December 31, 2023 and 2022.
Approximately 58%, 59%, and 57% of our total revenues were from outside the U.S. for the years ended December 31, 2022, 2021, and 2020, respectively. We anticipate that revenues from accounts outside the U.S. will continue to comprise a majority of our total revenues for the foreseeable future.
Approximately 58%, 58%, and 59% of our total revenues were from outside the U.S. for the years ended December 31, 2023, 2022, and 2021, respectively. We anticipate that revenues from accounts outside the U.S. will continue to comprise a majority of our total revenues for the foreseeable future.
Under the if‑converted method, diluted earnings per share will be calculated assuming that all the 2026 Notes and 2027 Notes are converted solely into shares of Class B Common Stock at the beginning of the reporting period, unless the result would be anti‑dilutive. The application of the if‑converted method will reduce our reported diluted earnings per share.
Under the if‑converted method, diluted earnings per share will be calculated assuming that all the 2026 Notes and 2027 Notes are converted solely into shares of Class B common stock at the beginning of the reporting period, unless the result would be anti‑dilutive.
Dollar strengthens relative to other currencies and are positively affected when the U.S. Dollar weakens. As a result, changes in currency exchange rates will affect our financial position, results of operations, and cash flows.
Our revenues and results of operations are adversely affected when the U.S. dollar strengthens relative to other currencies and are positively affected when the U.S. dollar weakens. As a result, changes in currency exchange rates will affect our financial condition, results of operations, and cash flows.
Any of the foregoing could attack our accounts’ data (including their employees’ personal data), our data (including colleagues’ personal data), or our IT systems. It is virtually impossible for us to entirely eliminate this risk. Like all software, our software is vulnerable to cyber‑attacks.
Any of the foregoing could attack our accounts’ data (including their employees’ personal data), our data (including colleagues’ personal data), our IT systems or those of our accounts and/or critical vendors. It is virtually impossible for us to entirely eliminate this risk. Like all software, our software is vulnerable to cyber‑attacks.
These channel partners sell our software solutions to smaller-sized accounts, in geographic regions where we do not have a meaningful presence, and in niche markets where they have specialized industry and technical knowledge.
These channel partners sell our software solutions in geographic regions where we do not have a meaningful presence, and in niche markets where they have specialized industry and technical knowledge.
Uncertainty regarding economic conditions may negatively impact us as accounts defer spending or postpone infrastructure projects in response to tighter credit, higher unemployment, higher interest rates, higher inflation, financial market volatility, government austerity programs, negative financial news, escalations of hostilities or the threat of hostilities, pandemics, declining valuations of investments, and other factors.
Uncertainty regarding economic and political conditions may negatively impact us as accounts defer spending or postpone infrastructure projects in response to tighter credit, higher unemployment, higher interest rates, higher inflation, financial market volatility, government austerity programs, negative financial news, declining 29 valuations of investments, and other factors.
Further, our operations outside the U.S. are subject to legal, regulatory, social, political, economic, and other risks inherent in international business operations, including, without limitation, local product preference and product requirements, trade protection measures, sanctions, quotas, embargoes, import and export licensing requirements, duties, tariffs or surcharges and more stringent regulations relating to privacy and data security and access to, or use of, commercial and personal information, such as the General Data Protection Regulation (the “GDPR”) applicable in the European Union (“E.U.”), the Personal Information Protection Law (the “PIPL”) applicable in China, and Brazil’s General Data Protection Law (the “LGPD”).
Further, our operations outside the U.S. are subject to legal, regulatory, social, political, economic, and other risks inherent in international business operations, including, without limitation, local product preference and product requirements, trade protection measures, sanctions, quotas, embargoes, import and export licensing requirements, duties, tariffs or surcharges and more stringent regulations relating to privacy and data security and access to, or use of, commercial and personal information, such as the General Data Protection Regulation (the “GDPR”) applicable in the European Union (the “E.U.”), the Personal Information Protection Law (the “PIPL”) applicable in China, and Brazil’s General Data Protection Law (the “LGPD”). 17 The occurrence of any one of these risks could negatively affect our international business and, consequently, our business, financial condition, and results of operations.
The beneficial owners of our Class A Common Stock together hold approximately 54.8% of the voting power of our outstanding common stock as of December 31, 2022.
The beneficial owners of our Class A common stock together hold approximately 54.0% of the voting power of our outstanding common stock as of December 31, 2023.
Accordingly, our future results of operations and financial condition may not meet our expectations. The majority of our revenues and an increasing percentage of our operations are attributable to operations outside the U.S., and our results of operations therefore may be materially affected by the legal, regulatory, social, political, economic, and other risks of foreign operations.
The majority of our revenues and an increasing percentage of our operations are attributable to operations outside the U.S., and our results of operations therefore may be materially affected by the legal, regulatory, social, political, economic, and other risks of foreign operations.
For the years ended December 31, 2022, 2021, and 2020, 36%, 47%, and 43%, respectively, of our total revenues were denominated in a currency other than the U.S. Dollar. As a result, we are subject to currency exchange risk. Our revenues and results of operations are adversely affected when the U.S.
For the years ended December 31, 2023, 2022, and 2021, 35%, 36%, and 47%, respectively, of our total revenues were denominated in a currency other than the U.S. dollar. As a result, we are subject to currency exchange risk.
We are subject to legal proceedings and regulatory inquiries, and we may be named in additional legal proceedings or become involved in regulatory inquiries in the future, any of which may be costly, distracting to our core business and could result in an unfavorable outcome, or harm on our business, financial condition, results of operations, cash flows, or the trading price for our securities.
If we fail to manage these dynamics successfully, our gross margins and profitability could be adversely affected. 24 We are subject to legal proceedings and regulatory inquiries, and we may be named in additional legal proceedings or become involved in regulatory inquiries in the future, any of which may be costly, distracting to our core business and could result in an unfavorable outcome, or harm on our business, financial condition, results of operations, cash flows, or the trading price for our securities.
The use of channel partners could also subject us to lawsuits, potential liability, and reputational harm if, for example, any channel partners misrepresent the functionality of our software solutions or services to accounts, fail to comply with their contractual obligations, or violate laws or our corporate policies.
Our channel partners may also not have loyalty to our brand and therefore may not be particularly motivated to sell our software solutions or services. 20 The use of channel partners could also subject us to lawsuits, potential liability, and reputational harm if, for example, any channel partners misrepresent the functionality of our software solutions or services to accounts, fail to comply with their contractual obligations, or violate laws or our corporate policies.
The dual class structure of our common stock has the effect of concentrating voting control with the Bentley Control Group (the Bentleys and certain of their family members, trusts or other permitted transferees, as well as all other holders of our Class A Common Stock in respect of such shares of Class A Common Stock, who collectively are acting as a group).
This activity could cause or avoid an increase or a decrease in the market price of our Class B common stock. 28 The dual class structure of our common stock has the effect of concentrating voting control with the Bentley Control Group (the Bentleys and certain of their family members, trusts or other permitted transferees, as well as all other holders of our Class A common stock in respect of such shares of Class A common stock, who collectively are acting as a group).
If our goodwill or amortizable intangible assets become impaired, then we could be required to record a significant charge to earnings. Accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to test for goodwill impairment at least annually.
If our goodwill or amortizable intangible assets become impaired, then we could be required to record a significant charge to earnings. U.S. generally accepted accounting principles (“GAAP”) requires us to test for goodwill impairment at least annually.
Furthermore, if any of the conditions to the convertibility of the 2026 Notes and/or the 2027 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability.
The application of the if‑converted method will reduce our reported diluted earnings per share. 27 Furthermore, if any of the conditions to the convertibility of the 2026 Notes and/or the 2027 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full. 43 Risks Related to Our Class B Common Stock We issued convertible notes that have rights senior to our Class B Common Stock.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
In addition, even if holders do not elect to convert their 2026 Notes and/or their 2027 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability, which would result in a material reduction of our net working capital. 44 Conversion of the 2026 Notes and/or the 2027 Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their 2026 Notes and/or their 2027 Notes, or may otherwise depress the price of our Class B Common Stock.
In addition, even if holders do not elect to convert their 2026 Notes and/or their 2027 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability, which would result in a material reduction of our net working capital.
We may not be able to increase demand for our subscription‑based services in line with our growth strategy. Our accounts are not obligated to renew their subscriptions for our offerings, and they may elect not to renew. We cannot assure renewal rates or the mix of subscriptions renewals.
Our accounts are not obligated to renew their subscriptions for our offerings, and they may elect not to renew. We cannot assure renewal rates or the mix of subscriptions renewals.
If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain accounts and could harm our business.
Our accounts expect us to meet voluntary certification or other standards established by third parties or imposed by the accounts themselves. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain accounts and could harm our business.
We may incur substantial additional debt, which could exacerbate the risks described above. We may incur additional debt in the future. Although the agreement governing the Credit Facility contains restrictions on our ability to incur indebtedness, those restrictions are subject to a number of exceptions which permit us and our subsidiaries to incur substantial debt.
Although the agreement governing the Credit Facility contains restrictions on our ability to incur indebtedness, those restrictions are subject to a number of exceptions which permit us and our subsidiaries to incur substantial debt. Adding new debt to current debt levels could intensify the related risks that we and our subsidiaries now face.
In addition, certain of these risks may be heightened as a result of changing political climates, which may also be exacerbated as a result of the COVID‑19 pandemic. For example, throughout 2018 and 2019, the U.S. and China have been levying tariffs on their respective imports.
In addition, certain of these risks may be heightened as a result of changing political climates. For example, the U.S. and China have been levying tariffs on their respective imports. Such tariffs could have a significant impact on our business and the business of our accounts.
Decreased investment by APAC, including China, may have a negative effect on our business. Approximately 18% for the year ended December 31, 2022 and approximately 19% of our total revenues for the years ended December 31, 2021 and 2020 relate to infrastructure projects in APAC, including China.
Approximately 18%, 18%, and 19% of our total revenues for the years ended December 31, 2023, 2022, and 2021 relate to infrastructure projects in APAC, including China.
For example, in the EEA the GDPR provides for penalties of up to €20 million or 4% of global turnover for the preceding year, whichever is greater. Similarly, the PIPL provides for penalties of up to 50 million renminbi or 5% of global turnover for the preceding year, and/or disgorgement of all illegal gains, whichever is greater.
For example, the GDPR provides for penalties of up to €20 million or 4% of a company’s annual global revenue, whichever is greater, the PIPL provides for penalties of up to 50 million renminbi or 5% of a company's annual revenue and disgorgement of all illegal gains, whichever is greater, and the CCPA provides for penalties of up to $7,500 per violation.
Even the perception that the privacy of data is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our software solutions or services, and could limit adoption of our cloud‑based solutions.
Even the perception that the privacy of data is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our software solutions or services, and could limit adoption of our cloud‑based solutions. 23 We license third‑party technologies for the development of certain of our software solutions, and, in some instances, we incorporate third‑party technologies, including open source software, into our software solutions.
Around the world, there is continued uncertainty in relation to the legal mechanisms supporting cross‑border data flows which are subject to evolving guidance, active litigation, and enforcement proceedings in a number of jurisdictions. For example, in the EEA following the invalidation of the E.U.‑U.S.
Around the world, there is continued uncertainty in relation to the legal mechanisms supporting cross‑border data flows which are subject to evolving guidance, active litigation, and enforcement proceedings in a number of jurisdictions. A number of countries including China, Australia, New Zealand, Brazil, and Japan have established specific requirements for cross‑border data transfers.
The occurrence of any one of these risks could negatively affect our international business and, consequently, our business, financial condition, and results of operations. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability.
Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability. Decreased investment by APAC, including China, may have a negative effect on our business.
In addition, the fluctuation and volatility of currencies, even when it increases our revenues or decreases our expenses, impacts our ability to accurately predict our future results and earnings. 34 We may not be able to increase the number of new subscription‑based accounts or cause existing accounts to renew their subscriptions, which could have a negative impact on our future revenues and results of operations.
We may not be able to increase the number of new subscription‑based accounts or cause existing accounts to renew their subscriptions, which could have a negative impact on our future revenues and results of operations. We may not be able to increase demand for our subscription‑based services in line with our growth strategy.
Such tariffs could have a significant impact on our business and the business of our accounts. While we may attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective.
While we may attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective. We might also consider increasing prices to the end consumer; however, this could reduce the competitiveness of our products and services and adversely affect revenue.
The Bentley Control Group may also have interests that differ from those of other stockholders and may vote in a way with which other stockholders disagree and which may be adverse to such other stockholders’ interests. 45 In addition, we are a “controlled company” for the purposes of Nasdaq Listing Rules, which provides us with exemptions from certain of the corporate governance standards imposed by the rules of The Nasdaq Global Select Market.
In addition, we are a “controlled company” for the purposes of Nasdaq Listing Rules, which provides us with exemptions from certain of the corporate governance standards imposed by the rules of The Nasdaq Global Select Market.
Such acquisitions may require substantial time and resources to integrate the acquired company into our compliance processes, to correct potential compliance gaps, and to remediate past potential violations by the acquired company, including through our own internal actions, voluntary self‑disclosures, or other measures. 41 Further, if our channel partners fail to obtain appropriate import, export, or re‑export licenses or permits, we may also be adversely affected, for example, through reputational harm, as well as other negative consequences including government investigations and penalties.
Further, if our channel partners fail to obtain appropriate import, export, or re‑export licenses or permits, we may also be adversely affected, for example, through reputational harm, as well as other negative consequences including government investigations and penalties.
Political instability or adverse political developments, including, without limitation, as a result of or in connection with trade relations between the U.S. and China, in any of the countries in which we do business could harm our business, financial condition, and results of operations. 46 Changes in existing financial accounting standards or practices, or taxation rules or practices may adversely affect our results of operations.
Political instability or adverse political developments, including, without limitation, as a result of or in connection with trade relations between the U.S. and China, as well as terrorist attacks, cyber events, armed conflicts (or the threat or escalation thereof), bank failures, civil unrest, espionage, natural disasters, epidemics, and pandemics in any of the countries in which we do business could harm our business, financial condition, and results of operations.
If those lawsuits are successful, it could increase the likelihood that we may be exposed to liability for our own policies and practices concerning the processing of personal data and could hurt our business. 39 Our accounts expect us to meet voluntary certification or other standards established by third parties or imposed by the accounts themselves.
Around the world, there are numerous lawsuits in process against various technology companies that process personal data. If those lawsuits are successful, it could increase the likelihood that we may be exposed to liability for our own policies and practices concerning the processing of personal data and could hurt our business.
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Refer to the section titled “Liquidity and Capital Resources” included in Part II, Item 7 of this Annual Report on Form 10‑K. Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Any inability to make scheduled payments or meet the financial covenants in the agreement governing the Credit Facility would adversely affect our business. The phase‑out of London Interbank Offered Rate (“LIBOR”) could affect interest rates under our Credit Facility.
Any inability to make scheduled payments or meet the financial covenants in the agreement governing the Credit Facility would adversely affect our business. 26 We may incur substantial additional debt, which could exacerbate the risks described above. We may incur additional debt in the future.
We cannot predict the impact of foreign currency fluctuations and we may not be successful in minimizing the risks of these fluctuations.
We cannot predict the impact of foreign currency fluctuations and we may not be successful in minimizing the risks of these fluctuations. In addition, the fluctuation and volatility of currencies, even when it increases our revenues or decreases our expenses, impacts our ability to accurately predict our future results and earnings.
Removed
The continuing impact of the COVID-19 pandemic is unpredictable and could materially and adversely affect our business. The ongoing COVID-19 pandemic is unpredictable in nature and has adversely affected and may continue to adversely affect global economies, financial markets, and the overall macroeconomic environment in which we do business.
Added
In addition, new and emerging state laws in the U.S. governing privacy, data protection, and information security, such as the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Utah Consumer Privacy Act, and Connecticut’s Act Concerning 22 Personal Data Privacy and Online Monitoring have been enacted.
Removed
As a result, the extent to which our business will continue to be affected will depend on a variety of factors, many of which are outside of our control, including the persistence of the pandemic, impacts on economic activity, including infrastructure projects, and the possibility of recession or continued financial market instability.
Added
These laws and regulations, as well as industry self-regulatory codes, create new compliance obligations and substantially expand the scope of potential liability and provide greater penalties for non-compliance.
Removed
Our channel partners may also not have loyalty to our brand and therefore may not be particularly motivated to sell our software solutions or services.
Added
Such acquisitions may require substantial time and resources to integrate the acquired company into our compliance processes, to correct potential compliance gaps, and to remediate past potential violations by the acquired company, including through our own internal actions, voluntary self‑disclosures, or other measures.
Removed
Further, new, and emerging domestic privacy legislation, such as the California Consumer Privacy Act (the “CCPA”), the California Privacy Rights Act (the “CPRA”), which will amend the CCPA in January 2023, the Virginia Consumer Data Protection Act, which also goes into effect in January 2023, the Colorado Privacy Act, which goes into effect in July 2023, and the Utah Consumer Privacy Act, which goes into effect December 2023, similarly impose new 38 obligations on us and many of our users, potentially as both businesses and service providers.
Added
Risks Related to Our Class B Common Stock We issued convertible notes that have rights senior to our Class B common stock.
Removed
As these laws, regulations, and legislative proposals continue to evolve, and as various states introduce similar proposals, we and our users may be exposed to additional burdens associated with operating in an increasingly complex regulatory landscape.
Added
Conversion of the 2026 Notes and/or the 2027 Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their 2026 Notes and/or their 2027 Notes, or may otherwise depress the price of our Class B common stock.
Removed
In addition, laws, and legislative proposals such as the E.U.’s proposed e‑Privacy Regulation are increasingly aimed at the use of personal data for marketing and advertising purposes which could impact our marketing and advertising efforts.
Added
The Bentley Control Group may also have interests that differ from those of other stockholders and may vote in a way with which other stockholders disagree and which may be adverse to such other stockholders’ interests.
Removed
Further, evolving definitions of what constitutes personal data, personal information, and covered data in the E.U., the U.S., and other jurisdictions, especially in relation to the classification of IP addresses, machine or device information, location data, and other information, further enhance the complexity of the global regulatory landscape.
Added
Changes in existing financial accounting standards or practices, or taxation rules or practices may adversely affect our results of operations.
Removed
These laws may require us to make additional changes to our practices and services to enable us or our users to meet the new requirements and may also increase our potential liability exposure through new or higher potential penalties for non‑compliance, including as a result of penalties, fines, and lawsuits related to data breaches.
Removed
Domestically, privacy legislation such as the CCPA provides for penalties of up to $7,500 per violation and the CPRA has created a new agency to implement and enforce the law in California.
Removed
Privacy Shield Framework, the European Commission introduced a new set of modular standard contractual clauses (“SCCs”) providing for an 18‑month implementation period which concluded December 27, 2022. The SCCs impose new obligations relating to personal data transfers including the obligation to conduct transfer impact assessment, adopt additional information security measures, and update organizational controls and practices.
Removed
Further, following the United Kingdom’s (“U.K.”) exit from the E.U., the U.K.’s Information Commissioner’s Office has issued new standard contractual clauses which are compatible with the SCCs to support data transfers out of the U.K. (“U.K. SCCs”).
Removed
Data transfers from the EEA to the U.K. are covered by a European Commission adequacy decision issued on June 28, 2021; however, this decision is subject to regular review by the European Commission and may be revoked if the U.K. diverges from its current data protection laws. Complying with both the SCCs and U.K.
Removed
SCCs increases our compliance burden and increases the demand from users for data localization. A number of countries including China, Australia, New Zealand, Brazil, and Japan have established specific requirements for cross‑border data transfers.
Removed
Around the world, there are numerous lawsuits in process against various technology companies that process personal data.
Removed
We license third-party technologies to develop certain of our products, and, in some cases, we incorporate third‑party technologies into our own software solutions, including technologies owned by our competitors.
Removed
We might also consider increasing prices to the end consumer; however, this could reduce the competitiveness of our products and services and adversely affect revenue. If we fail to manage these dynamics successfully, our gross margins and profitability could be adversely affected.
Removed
In July 2017, the Financial Conduct Authority (“FCA”) (the authority that regulates LIBOR) announced it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021. Further, on November 30, 2020, the ICE Benchmark Administration Limited (“ICE”) announced its plan to extend the date that most U.S.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our headquarters, we own one other location in India, which is used for office space, for an aggregate total, including our headquarters, of approximately 107,000 square feet of real property owned by us.
Biggest changeOur headquarters accommodates our principal software engineering, sales, marketing professional services, and administrative activities. In addition to our headquarters, we own one other location in India, which is used for office space, that consists of approximately 31,000 square feet. We lease facilities in an additional 111 locations in the U.S. and internationally through our foreign subsidiaries.
We believe that our current facilities are suitable and adequate to meet our current needs and that suitable additional or substitute space will be available as needed in the future to accommodate our operations.
We believe that our current facilities are suitable and adequate to meet our current needs and that suitable additional or substitute space will be available as needed in the future to accommodate our operations. 31
Item 2. Properties Our corporate headquarters are located in Exton, Pennsylvania and consist of approximately 107,000 square feet of office space, of which we own approximately 76,000 square feet. Our lease for the remainder expires in 2025. Our headquarters accommodates our principal software engineering, sales, marketing professional services, and administrative activities.
Item 2. Properties Our corporate headquarters are located in Exton, Pennsylvania and consist of approximately 107,000 square feet of office space, of which we own approximately 76,000 square feet. We lease the remaining approximate 31,000 square feet of headquarters space with expiration dates occurring in 2024 and 2025.
Removed
See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for more information about our properties. We lease facilities in an additional 115 locations in the U.S. and internationally through our foreign subsidiaries.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 48 PART II
Biggest changeMine Safety Disclosures Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−2 removed3 unchanged
Biggest changeIn addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay. Recent Sales of Unregistered Equity Securities From October 1, 2022 to December 31, 2022, we issued 17,989 shares of our Class B Common Stock in connection with distributions from our amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan.
Biggest changeRecent Sales of Unregistered Equity Securities From October 1, 2023 to December 31, 2023, we issued 564,558 shares of our Class B common stock in connection with distributions from our amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”). None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.
All recipients had adequate access, through their relationships with us, to information about us. The issuance of these securities were made without any general solicitation or advertising. Item 6. [Reserved] 49
All recipients had adequate access, through their relationships with us, to information about us. The issuance of these securities were made without any general solicitation or advertising. Item 6. [Reserved] 33
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class B Common Stock is traded on the Nasdaq Stock Market LLC under the symbol BSY.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class B common stock is traded on the Nasdaq Stock Market LLC under the symbol BSY. There is no established public trading market for our Class A common stock.
We paid quarterly dividends of $0.03 per share of common stock during the years ended December 31, 2022, 2021, and 2020. In addition, we paid a special dividend of $1.50 per share of common stock on September 2, 2020.
We paid quarterly dividends of $0.05 per share of common stock during the year ended December 31, 2023 and $0.03 per share of common stock during the years ended December 31, 2022 and 2021.
Removed
Stockholders As of January 31, 2023, there were 17 holders of record of our Class A Common Stock and 2,583 holders of record of our Class B Common Stock.
Added
See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for more information about the terms of our common stock. Stockholders As of January 31, 2024, there were 15 holders of record of our Class A common stock and 2,199 holders of record of our Class B common stock.
Removed
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.
Added
In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay. Securities Authorized for Issuance Under Equity Compensation Plans Refer to Part III, Item 12 of this Annual Report on Form 10‑K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+81 added−237 removed28 unchanged
Biggest changeComparison of the Years Ended December 31, 2022 and 2021 Revenues Comparison Year Ended Constant December 31, Currency 2022 2021 Amount % % Subscriptions $ 960,220 $ 812,807 $ 147,413 18.1 % 24.3 % Perpetual licenses 43,377 53,080 (9,703) (18.3 %) (12.1 %) Subscriptions and licenses 1,003,597 865,887 137,710 15.9 % 22.1 % Services 95,485 99,159 (3,674) (3.7 %) 0.4 % Total revenues $ 1,099,082 $ 965,046 $ 134,036 13.9 % 19.8 % The increase in total revenues for the year ended December 31, 2022 was primarily driven by improvements in our business performance and the impact from our platform acquisitions in subscriptions revenues, partially offset by the overall negative foreign currency effects due to a stronger U.S.
Biggest changeRefer to the “Non‑GAAP Financial Measures” section for additional information, including our current definition and our use of constant currency, and for a reconciliation of constant currency growth rates. 36 Prior Definition of Constant Currency: % Change % Change 2022 to 2023 2021 to 2022 Constant Constant Year Ended December 31, Currency Currency 2023 2022 2021 % % (1) % % (1) Subscriptions $ 1,080,307 $ 960,220 $ 812,807 12.5 % 11.7 % 18.1 % 24.3 % Perpetual licenses 46,038 43,377 53,080 6.1 % 5.9 % (18.3 %) (12.1 %) Subscriptions and licenses 1,126,345 1,003,597 865,887 12.2 % 11.4 % 15.9 % 22.1 % Services 102,068 95,485 99,159 6.9 % 7.5 % (3.7 %) 0.4 % Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.1 % 13.9 % 19.8 % (1) Constant currency is a non‑GAAP financial measure.
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
The timing, as well as the number and value of shares and/or notes repurchased under the Repurchase Program, will be determined at our discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of our shares, the market price of our Class B Common Stock and outstanding notes, general market and economic conditions, available liquidity, compliance with our debt and other agreements, and applicable legal requirements.
The timing, as well as the number and value of shares and/or notes repurchased under the Repurchase Program, will be determined at our discretion and will depend on a variety of factors, including our assessment of the intrinsic value of our shares, the market price of our Class B common stock and outstanding notes, general market and economic conditions, available liquidity, compliance with our debt and other agreements, and applicable legal requirements.
Our ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates.
ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign currency exchange rates.
Intangible assets, other than goodwill and in‑process research and development, are amortized on a straight‑line basis over their estimated useful lives, which range from three to ten years. 84 Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations.
Intangible assets, other than goodwill and in‑process research and development, are amortized on a straight‑line basis over their estimated useful lives, which range from three to ten years. Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations.
Our recurring revenues dollar‑based net retention rate is calculated using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period.
Recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period.
Under this method, deferred tax assets and liabilities are determined based on net operating loss carryforwards, credit carryforwards, and temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the items are expected to reverse.
Under this method, deferred tax assets and liabilities are determined based on net operating loss (“NOL”) carryforwards, credit carryforwards, and temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the items are expected to reverse.
Any adjustments to these estimates will generally be recorded as an income tax expense or benefit in the period the adjustment is determined. We are subject to income taxes in the U.S. and in numerous foreign jurisdictions.
Any adjustments to these estimates will generally be recorded as an income tax expense or benefit in the period the adjustment is determined. 58 We are subject to income taxes in the U.S. and in numerous foreign jurisdictions.
We incur expenses for professional services rendered in connection with business combinations, which are included in our U.S. GAAP presentation of general and administrative expense (See Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K).
We incur expenses for professional services rendered in connection with business combinations, which are included in our GAAP presentation of general and administrative expense (see Note 4 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K).
We allocate the fair value of the consideration transferred to the assets acquired and liabilities assumed, including trademarks, customer relationships, in‑process research and development, and acquired software and technology, based on their estimated fair values at the acquisition date. Any residual purchase price is recorded as goodwill.
Business Combinations We allocate the fair value of the consideration transferred to the assets acquired and liabilities assumed, including trademarks, customer relationships, in‑process research and development, and acquired software and technology, based on their estimated fair values at the acquisition date. Any residual purchase price is recorded as goodwill.
We exclude Deferred compensation plan expense (income) when we evaluate our continuing operational performance because it is not reflective of our ongoing business and results of operation. We believe it is useful for investors to understand the effects of this item on our total operating expenses. (4) Acquisition expenses .
We exclude Deferred compensation plan expense (income) when we evaluate our continuing operational performance because it is not reflective of our ongoing business and results of operation. We believe it is useful for investors to understand the effects of this item on our total operating expenses.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto appearing in Part II, Item 8 of this Annual Report on Form 10‑K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10‑K.
Our account retention rate for any given twelve-month period is calculated using the average currency exchange rates for the prior period, as follows: the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period.
Account retention rate for any given twelve-month period is calculated using the average foreign currency exchange rates for the prior period, as follows: the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period.
This right is included in the initial and subsequent renewal terms and we reestablish the revenue deferral for the material right upon the beginning of the renewal term. Portfolio balancing exchange rights are included in Deferred revenues in the consolidated balance sheets. Business combinations .
This right is included in the initial and subsequent renewal terms and we reestablish the revenue deferral for the material right upon the beginning of the renewal term. Portfolio balancing exchange rights are included in Deferred revenues in the consolidated balance sheets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10 ‑ K for management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10‑K for management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
However, our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, our rate of revenue growth, the timing and extent of spending on research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, competitive factors, our discretionary payments of dividends or repurchases of our Class B Common Stock, currency fluctuations, and overall economic conditions, globally.
Our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, our rate of revenue growth, the timing and extent of spending on research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, competitive factors, our discretionary payments of dividends or repurchases of our Class B common stock and convertible debt, fund of our purchase commitments, currency fluctuations, and overall economic conditions, globally.
This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions, including the favorable impact from our platform acquisitions of Power Line Systems and Seequent.
This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions, including the favorable impact from our platform acquisitions of PLS and Seequent.
Headcount-related costs For the years ended December 31, 2022, 2021, and 2020, approximately 80% of our aggregate cost of revenues, research and development, selling and marketing, and general and administrative expenses were represented by what we refer to herein as “headcount-related” costs.
Cost of Revenues and Operating Expense (Income) Headcount-Related Costs For the years ended December 31, 2023, 2022, and 2021, approximately 80% of our aggregate cost of revenues, research and development, selling and marketing, and general and administrative expenses were represented by what we refer to herein as “headcount‑related” costs.
Deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.
Deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations. 47 (3) Acquisition expenses .
The use of intangible assets contributed to our revenues earned during the periods presented and will also contribute to our revenues in future periods. Amortization of purchased intangible assets will recur in future periods. (2) Stock‑based compensation .
The use of intangible assets contributed to our revenues earned during the periods presented and will also contribute to our revenues in future periods. Amortization of purchased intangible assets will recur in future periods. (2) Deferred compensation plan .
We actively manage these costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins. 62 Cost of subscriptions, licenses, and services Cost of subscriptions and licenses.
We actively manage these costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins.
For the years ended December 31, 2022 and 2021, we recognized tax benefits of $20,501 and $14,890, respectively, associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.
For the years ended December 31, 2023 and 2022, we recorded discrete tax benefits of $14,648 and $20,501, respectively, associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.
We believe that existing cash and cash equivalent balances, together with cash generated from operations, and liquidity under the Credit Facility, will be sufficient to meet our domestic and international working capital and capital expenditure requirements through the next twelve months.
We believe that cash generated from operations, together with existing cash and cash equivalent balances, and external borrowings including available liquidity under the Credit Facility, will be sufficient to meet our domestic and international working capital and capital expenditure requirements.
Judgment is required to determine the SSP for each distinct performance obligation. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs.
In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs.
Cost of subscriptions and licenses includes salaries and other related costs, including the depreciation of property and equipment and the amortization of capitalized software costs associated with servicing software subscriptions, the amortization of intangible assets associated with acquired software and technology, channel partner compensation for providing sales coverage to subscribers, as well as cloud‑related costs incurred for servicing our accounts using cloud provisioned solutions and our license administration platform.
Cost of subscriptions and licenses expenses primarily include headcount‑related costs, as well as depreciation of property and equipment and amortization of capitalized software costs associated with servicing software subscriptions, amortization of intangible assets associated with acquired software and technology, channel partner compensation for providing sales coverage to users, as well as cloud‑related costs incurred for servicing our accounts using cloud provisioned solutions and our license administration platform.
If it is determined that a quantitative assessment is required, we will recognize goodwill impairment as the difference between the carrying amount of the reporting unit and it’s fair value, but not to exceed the carrying amount of goodwill within the reporting unit.
If it is determined that a quantitative assessment is required and the carrying amount exceeds its fair value, we will recognize goodwill impairment in the amount in which the carrying amount of the reporting unit exceeds its fair value, but not to exceed the carrying amount of goodwill within the reporting unit.
There was no impairment of goodwill as a result of our annual impairment assessments conducted for the years ended December 31, 2022, 2021, and 2020. Income taxes .
There was no impairment of goodwill as a result of our annual impairment assessments conducted for the years ended December 31, 2023, 2022, or 2021.
Interest expense, net Interest expense, net primarily represents interest associated with the Credit Facility, the 2026 Notes, the 2027 Notes, amortization and write‑off of deferred debt issuance costs, and interest income from our investments in money market funds. Other income (expense), net Other income (expense), net primarily consists of foreign currency translation results derived primarily from U.S.
Interest expense, net primarily represents interest associated with the Credit Facility, the 2026 Notes, the 2027 Notes, amortization and write‑off of deferred debt issuance costs, and interest income from our investments in money market funds.
These costs primarily include salaries, incentives, benefits, employment taxes, travel, and realignment of our colleagues, and third‑party personnel and related overhead. Our headcount‑related costs are variable in nature.
These costs primarily include salaries, benefits, bonuses, stock‑based compensation expense, employment taxes, travel, training, and realignment of our colleagues, and third‑party personnel expenses and related overhead. Our headcount‑related costs are variable in nature.
In addition, unanticipated events and circumstances may occur, which may affect the accuracy or validity of such estimates, and, if such events occur, we may be required to record a charge against the value ascribed to an acquired asset or an increase in the amounts recorded for assumed liabilities. Goodwill and other intangible assets .
In addition, unanticipated events and circumstances may occur, which may affect the accuracy or validity of such estimates, and, if such events occur, we may be required to record a charge against the value ascribed to an acquired asset or an increase in the amounts recorded for assumed liabilities. 57 Goodwill and Other Intangible Assets Intangible assets arise from acquisitions and principally consist of goodwill, trademarks, customer relationships, in‑process research and development, and acquired software and technology.
The improvements in business performance, on a constant currency basis, for the year ended December 31, 2022 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S. • EMEA.
The improvements in business performance for the year ended December 31, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S. EMEA . For the year ended December 31, 2023, the increase in revenues from EMEA was primarily driven by improvements in our business performance of approximately $40,297 ($37,345 on a constant currency basis).
For the year ended December 31, 2022, $9,804 of our acquisition expenses related to the acquisition of Power Line Systems. For the year ended December 31, 2021, $16,557 and $1,644 of our acquisition expenses related to the acquisitions of Seequent and Power Line Systems, respectively. DCP Amendment .
For the year ended December 31, 2022, $9,804 of our acquisition expenses related to our platform acquisition of PLS. For the year ended December 31, 2021, $16,557 and $1,644 of our acquisition expenses related to our platform acquisitions of Seequent and PLS, respectively. (4) Realignment expenses .
In reporting period-over-period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates.
In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results on a transactional basis to our reporting currency using prior period average foreign currency exchange rates in which the transactions occurred.
ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 43%, 38%, and 36% as of December 31, 2022, 2021, and 2020, respectively.
ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 47%, 43%, and 38% as of December 31, 2023, 2022, and 2021, respectively, with our E365 subscription offering representing 41%, 35%, and 29% of total ARR as of December 31, 2023, 2022, and 2021, respectively.
This additional authorization did not increase the overall dollar limit of the Repurchase Program. For the year ended December 31, 2022, we repurchased 896,126 shares for $28,250, and $2,170 aggregate principal amount of our outstanding 2026 Notes for $1,998. 60 Impact of foreign currency .
For the year ended December 31, 2023, we did not repurchase shares under the Repurchase Program. For the year ended December 31, 2022, we repurchased 896,126 shares for $28,250, and $2,170 aggregate principal amount of our outstanding 2026 Notes for $1,998.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing, including convertible debt, would result in debt service obligations.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.
The following provides key corporate milestones over our 38‑year history: 51 Our sources of revenue growth, excluding the impact from acquisitions, come from additional subscriptions revenues from existing accounts using the same products and represent the majority of our revenue growth, additional subscriptions revenues from existing accounts using new products, and subscriptions revenues from new accounts.
Our sources of revenue growth, excluding the impact from acquisitions, come from additional subscriptions revenues from existing accounts using the same products and represent the majority of our revenue growth, additional subscriptions revenues from existing accounts using new products, and subscriptions revenues from new accounts.
We believe that last twelve‑months recurring revenues is an important indicator of our performance during the immediately preceding twelve‑month time period. We believe that we will continue to experience favorable growth in recurring revenues primarily due to our strong account retention and recurring revenues dollar‑based net retention rates, as well as the addition of new accounts with recurring revenues.
We believe that we will continue to experience favorable growth in recurring revenues primarily due to our strong account retention and recurring revenues dollar‑based net retention rates, as well as the addition of new accounts with recurring revenues.
We generate revenues from subscriptions, perpetual licenses, and services. 83 Our contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation.
Actual results may differ from these estimates under different assumptions or conditions. 56 Revenue Recognition Our contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation.
Last twelve‑months recurring revenues. Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period. We define recurring revenues as subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.
Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.
The last twelve‑months recurring revenues for the periods ended December 31, 2022, 2021, and 2020 compared to the last twelve‑months of the preceding twelve‑month period increased by $143,874, $137,488, and $65,565, respectively.
Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period. 45 The last twelve‑months recurring revenues for the periods ended December 31, 2023, 2022, and 2021 compared to the last twelve‑months of the comparative twelve‑month period increased by $118,653, $143,874, and $137,488, respectively.
We also use cash to fund our acquisitions of software assets and businesses, and other investment activities, including our iTwin Ventures initiative for which, over a period of approximately 5 years, we expect to invest up to $100 million of corporate venture capital funding for seed, early, and growth stage technology companies with promising and emerging opportunities for infrastructure digital twin solutions strategically relevant to our business.
We also use cash to fund our acquisitions of software assets and businesses, and other investment activities, including our iTwin Ventures initiative which makes seed, early, and growth stage investments in technology companies with promising and emerging opportunities for infrastructure digital twin solutions potentially relevant to our business.
The improvements in business performance, on a constant currency basis, for the year ended December 31, 2022 were primarily due to expansion of our subscriptions revenues from existing accounts in Central Europe, the U.K., the Middle East, and Africa, partially offset by reductions in Russia. • APAC.
The improvements in business performance for the year ended December 31, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”), and the Middle East and Africa, partially offset by reductions in Russia due to exiting our operations beginning in the second quarter of 2022. APAC.
Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. Dollars resulted in unrealized foreign exchange losses of $7,369 and $779 for the years ended December 31, 2022 and 2021, respectively.
Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange gains (losses) of $3,163, $(7,369), and $(779) for the years ended December 31, 2023, 2022, and 2021, respectively.
In addition to operating expenses, we also use cash to service our debt obligations, to pay quarterly dividends, to repurchase our Class B Common Stock and subordinated indebtedness (discussed further below), and for capital expenditures in support of our operations.
Our primary use of cash is payment of our operating costs, which consist mainly of headcount‑related costs. In addition to operating expenses, we also use cash to service our debt obligations, to pay quarterly dividends, to repurchase our Class B common stock and convertible debt, and for capital expenditures in support of our operations.
We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations. 58 (5) Realignment expenses .
Also included in our acquisition expenses are retention incentives paid to executives of the acquired companies. We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations.
Furthermore, we believe ARR, considered in connection with our recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth. 54 In March 2022, in response to the Russia‑Ukraine war, we announced a pause of sales in Russia and Belarus, in addition to our strict compliance with applicable sanctions, regimes, and other regulatory restrictions on business activities in those countries.
In March 2022, in response to the Russia‑Ukraine war, we announced a pause of sales in Russia and Belarus, in addition to our strict compliance with applicable sanctions, regimes, and other regulatory restrictions on business activities in those countries.
In connection with the acquisition of Power Line Systems in January 2022, we used available cash and borrowings under our Credit Facility to fund the transaction.
In 2022, the repatriations, along with available cash and borrowings under our Credit Facility, were used to fund the acquisition of PLS in January 2022.
We believe it is useful for investors to understand the effects of these items on our total operating expenses. (7) Other income, net . The table below contains the details of Other income, net . We exclude these items because they are not reflective of our ongoing business and results of operations.
We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses.
Dollar relative to our other currencies. Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate. • Subscriptions .
Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate. The platform acquisition impact relates to our acquisition of PLS and is inclusive of PLS’ organic performance.
Year Ended December 31, 2022 2021 2020 (Gain) loss from: Change in fair value of interest rate swap $ (27,083) $ (9,770) $ (347) Foreign exchange (a) 9,901 (827) (22,919) Sale of aircraft (2,029) — — Change in fair value of acquisition contingent consideration (1,427) 550 (1,340) Payments related to interest rate swap (1,947) 1,270 696 Other income, net (1,713) (1,184) (340) Total other income, net $ (24,298) $ (9,961) $ (24,250) (a) Foreign exchange loss (gain) is primarily attributable to foreign currency translation derived mainly from U.S.
Other (Expense) Income, Net Year Ended December 31, 2023 2022 2021 (Loss) gain from: Change in fair value of interest rate swap $ (5,038) $ 27,083 $ 9,770 Foreign exchange (1) 2,497 (9,901) 827 Sale of aircraft — 2,029 — Change in fair value of acquisition contingent consideration — 1,427 (550) Receipts (payments) related to interest rate swap 8,803 1,947 (1,270) Other (expense) income, net (2) (13,484) 1,713 1,184 Total other (expense) income, net $ (7,222) $ 24,298 $ 9,961 (1) Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.
For the year ended December 31, 2022, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount-related costs of approximately $31,000 and an increase in facilities costs of approximately $3,300.
For the year ended December 31, 2023, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of approximately $27,584, mainly due to an increase in headcount and annual compensation costs, and to a lesser extent, realignment expenses. General and administrative .
When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, we account for those performance obligations as a single performance obligation. For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative SSP of each obligation.
When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, we account for those performance obligations as a single performance obligation.
December 31, 2022 2021 2020 Annualized recurring revenues (“ARR”) $ 1,036,548 $ 921,218 $ 752,697 Last twelve-months recurring revenues $ 978,024 $ 834,150 $ 696,662 Twelve-months ended constant currency: ARR growth rate 15 % 26 % 8 % Account retention rate 98 % 98 % 98 % Recurring revenues dollar-based net retention rate 110 % 109 % 107 % ARR.
December 31, 2023 2022 2021 ARR $ 1,174,774 $ 1,036,548 $ 921,218 Last twelve-months recurring revenues $ 1,096,677 $ 978,024 $ 834,150 Twelve-months ended constant currency (1) : ARR growth rate 12.5 % 15 % 26 % Account retention rate 98 % 98 % 98 % Recurring revenues dollar-based net retention rate 109 % 110 % 109 % (1) Constant currency is a non-GAAP financial measure.
Operating Expense (Income) Comparison Year Ended Constant December 31, Currency 2022 2021 Amount % % Research and development $ 257,856 $ 220,915 $ 36,941 16.7 % 22.1 % Selling and marketing 195,622 162,240 33,382 20.6 % 26.3 % General and administrative 174,647 150,116 24,531 16.3 % 19.7 % Deferred compensation plan (15,782) 95,046 (110,828) * * Amortization of purchased intangibles 41,114 25,601 15,513 60.6 % 67.2 % Total operating expenses $ 653,457 $ 653,918 $ (461) (0.1 %) 4.2 % * Not meaningful Research and development.
Prior Definition of Constant Currency: % Change % Change 2022 to 2023 2021 to 2022 Constant Constant Year Ended December 31, Currency Currency 2023 2022 2021 % % (1) % % (1) Research and development $ 274,619 $ 257,856 $ 220,915 6.5 % 7.5 % 16.7 % 22.1 % Selling and marketing 224,336 195,622 162,240 14.7 % 15.0 % 20.6 % 26.3 % General and administrative 180,738 174,647 150,116 3.5 % 3.5 % 16.3 % 19.7 % Deferred compensation plan 13,580 (15,782) 95,046 NM NM NM NM Amortization of purchased intangibles 38,515 41,114 25,601 (6.3 %) (6.1 %) 60.6 % 67.2 % Total operating expenses $ 731,788 $ 653,457 $ 653,918 12.0 % 12.5 % (0.1 %) 4.2 % Percentage changes that are considered not meaningful are denoted with NM.
We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external accounts, before technological feasibility is reached. In general, technological feasibility is reached shortly before the release of such products.
Research and development expenses primarily include headcount‑related costs, as well as costs to develop software products or the software component of products to be sold, leased, or marketed to external accounts, before technological feasibility is reached, which is generally shortly before the release of such products.
Recent Accounting Pronouncements: For information regarding recent accounting guidance and the impact of this guidance on our consolidated financial statements, see Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K. 87
For information about those obligations, see the above referenced notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.
Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure. Accordingly, our results of operations have been, and in the future will be, affected by changes in foreign exchange rates.
Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.
For the year ended December 31, 2022, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount-related costs of approximately $46,400.
For the year ended December 31, 2023, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of approximately $18,248, mainly due to an increase in headcount and annual compensation costs, and to a lesser extent, third‑party personnel costs.
For the year ended December 31, 2022, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $54,500, or approximately $101,700 on a constant currency basis, and the impact from our platform acquisitions of approximately $92,900, or approximately $95,800 on a constant currency basis.
Subscriptions . For the year ended December 31, 2023, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $115,786 ($116,406 on a constant currency basis) and the impact of our platform acquisition of approximately $4,301 ($4,111 on a constant currency basis).
For the year ended December 31, 2022, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in headcount‑related costs of approximately $13,100, mainly due to our platform acquisition of Seequent and annual salary adjustments, an increase in channel partner compensation and royalties of approximately $5,500, an increase in cloud‑related costs of approximately $4,900, and an increase in amortization expense for software and technology of approximately $4,700.
For the year ended December 31, 2023, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in headcount‑related costs of approximately $14,407, mainly due to an increase in headcount and annual compensation costs, and an increase in cloud‑related costs of approximately $4,949. Cost of services.
We believe our recurring revenues dollar‑based net retention rate is a key indicator of our success in growing our revenues within our existing accounts. Given that recurring revenues represented 89% of our total revenues for the twelve months ended December 31, 2022, this metric helps explain our revenue performance, excluding the impact from acquisitions, as primarily growth into existing accounts.
Given that recurring revenues represented 89%, 89%, and 86% of our total revenues for the twelve months ended December 31, 2023, 2022, and 2021, respectively, this metric helps explain our revenue performance as primarily growth from existing accounts.
Cost of Revenues Comparison Year Ended Constant December 31, Currency 2022 2021 Amount % % Cost of subscriptions and licenses $ 147,578 $ 124,321 $ 23,257 18.7 % 24.5 % Cost of services 89,435 92,218 (2,783) (3.0 %) 2.3 % Total cost of revenues $ 237,013 $ 216,539 $ 20,474 9.5 % 15.1 % Cost of subscriptions and licenses.
Cost of Revenues Current Definition of Constant Currency: % Change % Change 2022 to 2023 2021 to 2022 Constant Constant Year Ended December 31, Currency Currency 2023 2022 2021 % % (1) % % (1) Cost of subscriptions and licenses $ 169,406 $ 147,578 $ 124,321 14.8 % 15.1 % 18.7 % 22.2 % Cost of services 96,677 89,435 92,218 8.1 % 9.0 % (3.0 %) 2.0 % Total cost of revenues $ 266,083 $ 237,013 $ 216,539 12.3 % 12.8 % 9.5 % 13.6 % (1) Constant currency is a non-GAAP financial measure.
Our account retention rate is an important indicator that provides insight into the long‑term value of our account relationships and our ability to retain our account base. We believe that our consistent and high account retention rates illustrate our ability to retain and cultivate long‑term relationships with our accounts. 55 Recurring revenues dollar‑based net retention rate.
We believe that our consistent and high account retention rates illustrate our ability to retain and cultivate long‑term relationships with our accounts.
Revenues by geographic region are as follows: Comparison Year Ended Constant December 31, Currency 2022 2021 Amount % % Americas $ 584,794 $ 483,087 $ 101,707 21.1 % 22.1 % EMEA 312,804 300,123 12,681 4.2 % 15.4 % APAC 201,484 181,836 19,648 10.8 % 21.1 % Total revenues $ 1,099,082 $ 965,046 $ 134,036 13.9 % 19.8 % • Americas.
Prior Definition of Constant Currency: % Change % Change 2022 to 2023 2021 to 2022 Constant Constant Year Ended December 31, Currency Currency 2023 2022 2021 % % (1) % % (1) Americas $ 650,926 $ 584,794 $ 483,087 11.3 % 11.0 % 21.1 % 22.1 % EMEA 353,550 312,804 300,123 13.0 % 11.1 % 4.2 % 15.4 % APAC 223,937 201,484 181,836 11.1 % 11.2 % 10.8 % 21.1 % Total revenues $ 1,228,413 $ 1,099,082 $ 965,046 11.8 % 11.1 % 13.9 % 19.8 % (1) Constant currency is a non-GAAP financial measure.
We define Adjusted Net Income as net income adjusted for the following: amortization of purchased intangibles, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, expenses associated with IPO, other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax.
Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation expense, for the respective periods.
For the year ended December 31, 2022, the increase in revenues from the Americas was primarily driven by an increase in subscriptions revenues from our Seequent and Power Line Systems platform acquisitions of approximately $56,700, or approximately $57,200 on a constant currency basis, and improvements in our business performance of approximately $43,300, or approximately $48,000 on a constant currency basis.
For the year ended December 31, 2023, the increase in revenues from the Americas was primarily driven by improvements in our business performance of approximately $62,442 ($63,450 on a constant currency basis) and the impact from our platform acquisition of approximately $3,690 ($3,237 on a constant currency basis).
A portion of our total revenues and operating expenses were derived from outside the U.S. and, as such, were denominated in various foreign currencies, including most significantly: Euros, British Pounds, Canadian Dollars, Australian Dollars, Chinese Yuan Renminbi, and New Zealand Dollars. Our financial results are therefore affected by changes in foreign currency rates.
For the years ended December 31, 2023, 2022, and 2021, approximately 35%, 36%, and 47%, respectively, of our total revenues and 45%, 46%, and 42%, respectively, of our total operating expenses were denominated in foreign currencies from outside the U.S. including most significantly: euros, British pounds, Canadian dollars, Australian dollars, Chinese yuan renminbi, and New Zealand dollars.
Components of Results of Operations: We manage our business globally within one operating segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker reviews and manages our business. Revenues We generate revenues from subscriptions, perpetual licenses, and services. Subscriptions Enterprise subscriptions .
We empower people to design, build, and operate better and more resilient infrastructure through the adoption of our intelligent digital twin solutions. We manage our business globally within one reportable segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker (“CODM”) reviews and manages our business.
Cost of services . Cost of services includes salaries for internal and third‑party personnel and related overhead costs, including depreciation of property and equipment and amortization of capitalized software costs, for providing training, implementation, configuration, and customization services to accounts. Operating expense (income) Research and development.
Cost of services expenses primarily include headcount‑related costs, as well as depreciation of property and equipment and amortization of capitalized software costs, used for providing training, implementation, configuration, and customization services to accounts.
The 2027 Notes contain both affirmative and negative covenants. As of December 31, 2022 and 2021, we were in compliance with all covenants in the 2027 Notes. 79 Capped Call Options.
We were in compliance with all covenants in its Credit Facility, the 2026 Notes, and the 2027 Notes as of December 31, 2023.
Investing activities Net cash used in investing activities was $770,127 for the year ended December 31, 2022 primarily due to $743,007 in acquisition related payments, net of cash acquired, to complete six acquisitions.
Investing Activities Net cash used in investing activities was lower by $709,623 for the year ended December 31, 2023, compared to the prior year, primarily due to lower acquisition related payments, as three acquisitions were completed in 2023 compared to six acquisitions, including our platform acquisition of PLS for $695,968 in 2022.
Purchase obligations include the non‑cancelable future cash purchase commitment for services related to the provisioning of our hosted software solutions. Our purchase obligations are in addition to amounts included in current liabilities and prepaid expenses in our consolidated balance sheet. Critical Accounting Policies and Estimates: Our consolidated financial statements are prepared in conformity with U.S. GAAP.
We have non‑cancelable future cash purchase commitments for services related to the provisioning of our hosted software solutions and for other software costs. Our purchase obligations are in addition to amounts included in our consolidated balance sheets.
We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees. 75 Our cash and cash equivalent balances are concentrated in a few locations around the world, with substantial amounts held outside of the U.S.
We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees. 55 Dividend Payments The declaration and payment of dividends is within the discretion of our Board of Directors.
Amortization of purchased intangibles includes the amortization of acquired non‑product related intangible assets, primarily customer relationships, trademarks, and non‑compete agreements recorded in connection with completed acquisitions. Expenses associated with initial public offering.
For the year ended December 31, 2023, deferred compensation plan expense (income) was attributable to the marked to market impact on deferred compensation plan liability balances period over period. Amortization of purchased intangibles. Amortization of purchased intangibles includes the amortization of acquired non‑product related intangible assets, primarily customer relationships, trademarks, and non‑compete agreements recorded in connection with completed acquisitions.
Our ARR growth rate was favorably impacted by the ARR onboarding from our platform acquisition of Power Line Systems by 2.5% for the year ended December 31, 2022 and by 13% for the year ended December 31, 2021 due to the ARR onboarding from our platform acquisition of Seequent.
Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. We believe that ARR growth is an important metric indicating the scale and growth of our business. Our ARR growth rate was favorably impacted by the ARR onboarding from our platform acquisition of PLS by 2.5% for the year ended December 31, 2022.
In November 2020, we used a portion of the net proceeds from our follow‑on public offering to repay the 2020 Term Loan. See Notes 10 and 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K. Bank Credit Facility Interest .
Our Credit Facility, 2026 Notes, and 2027 Notes are described in Note 10 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K.
On May 11, 2022, we announced that our board of directors approved the BSY Stock Repurchase Program (the “Repurchase Program”) authorizing us to repurchase up to $200,000 of our Class B Common Stock through June 30, 2024. On December 14, 2022, our board of directors amended the Repurchase Program to allow us also to repurchase its outstanding convertible senior notes.
Stock Repurchases BSY Stock Repurchase Program Our Board of Directors has authorized us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes through June 30, 2024 under the Repurchase Program. We may use available working capital and cash provided by operations to make repurchases.
For the year ended December 31, 2022, the increase in revenues from EMEA was primarily driven by the impact of our acquisitions of approximately $20,700, partially offset by a reduction in business performance of approximately $8,700.
Services. For the year ended December 31, 2023, the increase in services revenues was primarily driven by improvements in our business performance of approximately $6,583 ($7,138 on a constant currency basis).
For the year ended December 31, 2021, net cash used in investing activities was $1,056,603 primarily due to $1,034,983 in acquisition related payments, net of cash acquired, to complete 13 acquisitions. 82 Financing activities Net cash provided by financing activities was $243,034 for the year ended December 31, 2022 primarily due to an increase in net borrowings under the Credit Facility of $340,598, partially offset by net payments for shares acquired of $71,811, including shares repurchased under the Repurchase Program, and payments of dividends of $34,493.
Financing Activities Net cash used in financing activities was $359,074 for the year ended December 31, 2023, as compared to net cash provided by financing activities of $243,034 for the year ended December 31, 2022, primarily due to the net paydown of the Credit Facility of $258,569 in 2023 as compared to an increase in net borrowings under the Credit Facility of $340,598 in 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest rate risk associated with the Credit Facility is managed through an interest rate swap which we executed on March 31, 2020. Under the terms of the interest rate swap, we fixed our LIBOR borrowing rate at 0.73% on a notional amount of $200.0 million and for a period of ten years.
Biggest changeEffective on April 2, 2020, we entered into an interest rate swap with a notional amount of $200.0 million and a ten‑year term to reduce the interest rate risk associated with our Credit Facility.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency rates, although we also have exposure due to potential changes in interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk represents the risk of loss that may impact our financial condition due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency rates, although we also have exposure due to potential changes in interest rates.
Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements. Inflation risk.
Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.
The interest and market value changes affect the fair value of the 2026 Notes and 2027 Notes, but do not impact our financial position, results of operations, or cash flows due to the fixed nature of the debt obligation.
The interest and market value changes affect the fair value of the 2026 Notes and 2027 Notes, but do not impact our financial condition, results of operations, or cash flows due to the fixed nature of the debt obligation.
The interest rates on our Credit Facility also fluctuate based on various market conditions that affect LIBOR, the prime rate, or the overnight bank funding effective rate. The cost of borrowing thereunder may be impacted as a result of our interest rate risk exposure.
The interest rates on our Credit Facility also fluctuate based on various market conditions that affect the Secured Overnight Financing Rate (“SOFR”), the prime rate, or the overnight bank funding effective rate. The cost of borrowing thereunder may be impacted as a result of our interest rate risk exposure.
We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. 88 Item 8. Financial Statements and Supplementary Data The information required by this item is included at the end of this report beginning on page F‑1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.
Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. Item 8. Financial Statements and Supplementary Data The information required by this item is included at the end of this report beginning on page F‑1. Item 9.
Dollar versus our other currencies would have lowered our 2022 annual operating income by approximately $1.3 million. Interest rate risk. We had cash and cash equivalents of $71.7 million and $329.3 million as of December 31, 2022 and 2021, respectively, which consisted of bank deposits and money market funds maintained at various financial institutions.
We estimate that a 10% strengthening of the U.S. dollar versus our other currencies would have lowered our 2023 annual operating income by approximately $1.5 million. 59 Interest Rate Risk We had cash and cash equivalents of $68.4 million and $71.7 million as of December 31, 2023 and 2022, respectively, which consisted of bank deposits and money market funds maintained at various financial institutions.
For the year ended December 31, 2022, approximately 58% of our total revenues are derived from outside of the U.S. and approximately 36% of our revenues are denominated in foreign currencies. In 2022, 64%, 10%, 6%, 4%, and 16% of our total revenues were denominated in U.S.
For the year ended December 31, 2023, approximately 58% of our total revenues are derived from outside of the U.S. and approximately 35% of our revenues are denominated in foreign currencies.
We do not enter into investments or derivative instruments for trading or speculative purposes. The fair value of our 2026 Notes and 2027 Notes is subject to interest rate risk, market risk, and other factors due to the conversion feature.
The fair value of our 2026 Notes and 2027 Notes is subject to interest rate risk, market risk, and other factors due to the conversion feature.
Dollars, Euros, British Pounds, Canadian Dollars, and other currencies, respectively, and 54%, 11%, 8%, 8%, and 19% of our aggregate cost of revenues and operating expenses were denominated in U.S. Dollars, Euros, British Pounds, Canadian Dollars, and other currencies, respectively. Financial results therefore are affected by changes in foreign currency rates. We estimate that a 10% strengthening of the U.S.
In 2023, 65%, 10%, 6%, 4%, and 15% of our total revenues were denominated in U.S. dollars, euros, British pounds, Canadian dollars, and other currencies, respectively, and 55%, 12%, 8%, 7%, and 18% of our aggregate cost of revenues and operating expenses were denominated in U.S. dollars, euros, British pounds, Canadian dollars, and other currencies, respectively.
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Financial results therefore are affected by changes in foreign currency rates.
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Under the terms of the interest rate swap, we pay a fixed interest rate of 72.9 basis points (“bps”), and will receive a floating interest rate equal to daily SOFR plus an Alternative Reference Rates Committee (“ARRC”) spread adjustment of 11.448 bps. We do not enter into investments or derivative instruments for trading or speculative purposes.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. 60

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