Good morning, everyone, and thank you for joining us for Bentley Systems Q4 2020 and Full Year 2020 Earnings Webcast. I'm Carey Mann, Bentley's VP of Investor Relations. On the webcast today we have Bentley Systems' Chief Executive Officer, Greg Bentley; and Chief Financial Officer, David Hollister. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This webcast, including the question-and-answer portion of the webcast, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release and supplemental slide presentation. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentley.com. Today, Greg will begin by reviewing business developments and our progress over the last quarter and in 2020. David will then take you through a review of the financial results and our outlook for 2021. And with that, I'll turn the call over to Greg.

Greetings and thanks to each of you for your attention. We were together for this purpose for the first time in mid November last year and I began then by reprising our roadshow introduction from our September IPO and subsequent follow on equity offering. We have since then been back in the capital markets yet again for our convertible debt offerings last month. So I certainly don't need to spend our time today as we did last time on introductions to the BSY. Also when last we met on November 11, our annual year and infrastructure conference had just concluded. So I fully described that at the time. Our 2020 infrastructure yearbook had just been published and I highly recommend that you visit our website to review the work of our users in advancing infrastructure by going digital. We would also be glad to send you a physical yearbook on request to our Investor Relations. The yearbook brings together hundreds of what are effectively case studies organized by categories of users nominations and includes for each the playbook of Bentley Systems software, which enabled their advancements. Along with the winners and finalists selected by the juries, there are special recognition awards, including for Digital Twin Distinction and for Exemplary Sustainability. Among other purposes, this would especially inform your likely interest in Bentley Systems handprint for what I call ESDG, enabling sustainable development goals. So first by way of corporate developments, we issued convertible debt maturing in five years, which met with a satisfactory reception in the capital markets. The offering was up-sized from $500 million to $600 million. In addition to which the 15% over allotment was promptly exercised for gross proceeds of $690 million. We secured a coupon of 0.125% for a conversion price of initially $64.13 per share.…

Thanks, Greg, and good morning everyone. I'm first going to discuss our fourth quarter and full year 2020 results, and then I'll provide our financial outlook for our full year 2021. I'll also comment briefly on our liquidity and the significant capital structure transactions Greg mentioned. I'll also close with a few thoughts on our long-term financial targets before getting to Q&A. I'll begin with revenue performance. Our fourth quarter revenues grew 8.2% year-over-year to reach $220 million, bringing total revenues for the year to $801.5 million, growth of 8.8% for the year. Breaking that down further subscription revenues, which are 85% of our total revenues, grew 9.4% year-over-year for the fourth quarter and 11.7% for the full year with strong organic growth across all the regions lead by the Americas and APAC. Obviously that growth is stronger for the year then for the fourth quarter. With the impact of E365 consumption-based short-term subscriptions still temporary a raw growth and some momentum there. And again, this is disproportionately manifested in users with industrial and resources end market exposure. Our perpetual license sales improved during Q4 to be flat to the same quarter last year and bringing total year-to-date license sales to $57.4 million, down $2.4 million or 3.9% for the year. Professional services, while only about 8% of our total revenues is still our most volatile revenue source. Professional services grew 7.7% during the quarter, but remained down 5.5% for the year. Professional services in particular benefited from the 2020 cohesive solutions acquisition and the PCSG acquisition and the SRO solutions acquisition. Each of these are professional consulting businesses added to our digital integrator portfolio. That's the benefit of acquisitions, our professional services declined by $20.8 million in 2019 relative to 2019. The organic declined is twofold. Firstly, other than…

Thanks, David and Greg. We'll take the first question from KeyBank, Jason Celino.

Hello. Can you hear me?

Hi Jason.

Great. So I guess first question the uptick on the growth guidance to 10%, what gives you the confidence to raise the outlook, this soon after maybe sending the initial targets?

David its Greg. If you can hear me, I'm working on starting my camera, but go ahead if you want to take the first part.

Sure. Well, so the long-term guidance inflecting upwards from our historical 8% average growth which you could see is the compound annual growth rate over the last five years, 10 years, 15 years, however, you wanted to measure it, it's pretty steady at 8%. The confidence to raise it to 10% just giving long-term guidance to our long-term expectations comes from again an increased pace from acquisitions in terms of number of them which I can see in our pipeline, as well as the scale of them which we’re prepared to be begin investing in larger scale acquisitions relative to our and several of our tuck-ins. So that's part of it. The other part of it is we're just going to get some momentum from these very specific growth initiatives that Greg articulated during his session.

Okay.

But the guidance for 2021 is more specific and that's informed by where we left 2020 in IRR. And again, we're getting some tailwinds just from currency in 2021 and there's some higher-than-normal tailwind also in 2021 from the acquisitions that we completed.

Okay. And then maybe for my second question, and then I'll pass it on. I know you've talked at length that infrastructure cost, the country is aging and needs replacing, and it became pretty real last month with all the power outages and one water issues across the country. How is Bentley positioned to help here? And then maybe what does it do for near-term demand trends?

So, it's Greg I’ll jump in. It highlights the contributions that digital twins could make. The digital twins are continuously surveyed, they are evergreen, they are always up to date. To the extent they can represent the existing conditions and the record of changes, and for instance, our grid, our water resources, and what's vulnerable to flooding and weather and so forth, the decisions one can make about maintenance, and remediation and adaptation are better decisions. I think the case in point of PG&E in California in our annual year and infrastructure they've been submitters of many nominations that show their reaction to problems in their grid with applying innovations, we could say digital twin innovations to continuously survey, drone survey, and so forth what they are doing and make better decisions. As to immediate demand we are prepared to offer quality assurance services for – in our open utilities and asset and network performance. But in general, increased awareness precedes increased demand. But everyone can be better off. And digital twins are the way to think about how to be better prepared and make better decisions to avoid these problems.

Great. Thank you.

Well, let’s take RBC, Matt Hedberg.

Okay, thanks guys for the questions. And I appreciate all the color here. Maybe following up on that question, David, you said that digital twins exit the year at an eight-figure run rate. I believe it had been doubling previously. Can you kind of give us a sense for what your expectations are for digital twin embedded in that 8% to 10% ARR guide this year?

So, can I take that Matt? We've been discussing whether to have an explicit, new business growth consistent with the sort of the doubling we've been talking about. And I'm not sure that we are going to be as explicit as that, because our objective in 2021, we say, its wind powered, we want more and more of our offerings to be based on underlying iTwin technology like SYNCHRO, and the asset and network performance offerings, and so forth. In which case it may be with the bundling a little harder to break it out. But Inspirit we're confident about that. And yes, a portion both of our financial outlook revenue growth here and it's increase has to do with the take-up of iTwin services, not only as a platform in isolation though, but underlying the advances in all of our products at this point.

That's great. Maybe just one more quick one for David, your long-term outlook always assumes some level of M&A; I believe one to two points historically. I just want to be clear though, in your 8% to 10%, ARR guide this year that is an organic guide. In other words, anything M&A related could effectively raise that level.

So, again, the guide for 2021 is actually higher than 10%. And there's an organic assumption in there of 7%. There's an acquisition assumption. Just from acquisitions, we did last year of about 3%. And there's a currency assumption between 2% and 3% just because the dollar is weaker now than it was last year. So, there's 7% organic in that 2021 guide.

Got it. Thank you. Well done.

We’ll next go to Baird, Joe Vruwink.

Hey, everyone thanks for the presentation today. Greg, if I followed the Bentley annual reports accurately going back to the 2000, I think, the mid-to-late-2000s was the last time there was reliably higher infrastructure spending in the U.S. And that also was a time Bentley all in, not organic, but all in was rolling out, I think, a low-to-mid teens revenue pace. And so, the question is, as you look ahead, what is the likelihood we're about to return to that environment? And how is it going to be different this time for Bentley? Or is that the right rate of growth to contemplate?

Well, all of us in the U.S. of course, are paying attention. It doesn't seem finally as if there's a question whether there will be a focus on federal spending on infrastructure that seems to be for sure, but what we'll make it up. Certainly, it's going to be more fundamental this time. What's especially interesting about it is the emphasis on, as I say, energy transitions on spending differently on things that are going to keep infrastructure engineers occupied and creating their mix of specialized software for, as I mentioned, the example of wind power, and metros, and so forth, that is different than has ever been the case. However, it more so resembles the rest of the world, if you would like, and especially Asia-Pacific, where this is already underway and our growth rates are already higher. So, we're not in the business of political suiciding. But the fact you have this concerted resolve to make our infrastructure greener and smarter. It has made infrastructure engineering organizations more confident and resolute about going digital. Now that doesn't benefit us until they actually increased the consumption of our products, but we are well positioned to take advantage of their enthusiasm and we share it.

And then maybe just a follow-up, the idea of going digital there's clearly going to be, however, the stimulus unfolds. There's going to be some new considerations. You're already seeing civil project owners, whether they are public or private stipulate, digital handover. You are also, I thought the mix of accretion variable, you outlined, that's going to be a bigger factor to your revenue growth going forward. And so, when you just think about the environment unfolding, again, kind of working with history, in this type of environment, it has meant this for Bentley Systems. Is there going to be a natural, organic growth uplift? I know we're talking about your long-term targets being a bit higher than this 8% compound rate you've done historically. But any sense of how much better it potentially could be, just because of the digital aspect?

Well, I am informed by our TAM analysis, which showed how much, is spent per engineer – on product and part engineering software already. And the engineers cost the same. So, I believe there is that headroom to spend more. I believe the path to it involves more specialized software for specialized functions. The infrastructure engineering is behind on that. I think it's been stimulated by the environment in 2020. And as I say, the organizations are not R&D organizations, that's the difference from those that do product and in parts. In effect, we are the R&D organization, but increasing the emphasis on digital twin, and raising the aspirations, for instance, to improve resilience against weather and climate, and so forth, that's all part of raising the ambitions that, I think, will slowly gravitate to increase what's spent here. Certainly, it's well worthwhile for all of us, but that's why we have to discuss the long, the long-term because of the conservative history of civil and structural engineers and digital twins. We're excited to see, for instance, Autodesk validate the concept of digital twins. They announced their first offering. We don't see it yet in this respect at they're Autodesk university, but we have all very much to gain by site being set higher to what would not create deliverables for one purpose, but rather this evergreen digital twin that can keep infrastructure more fit-for-purpose, better adapting and safer and longer lasting.

Thank you very much.

Well, next go to Bank of America, Brad Sills.

Hi, Brad.

Brad are you there? We’ll come back to Brad. We’ll go to Goldman Sachs, Brian Essex.

Hi good morning. And thank you for taking the question. Greg you noted in one of the prior responses you mentioned in APAC. And I was just wondering maybe if you could give a little bit of color in terms of what you are seeing in that region with regard to projects duration and pipeline development? And how that might be changing from what we saw over the past few years?

In which region Brian?

In APAC.

Yes, so APAC isn't all strong. India was in particular hit hard with not being ready, I guess, to virtualize. But as I say China at the other extreme literally led the way again by virtue of a strong fourth quarter here. And since it went back to physical business sooner, it gives us some encouragement as to what can happen when the rest of us go back to a physical business. But there's sort of the story for 2020 is kind of uninteresting region to region because everyone was kind of in the middle, except the examples I mentioned. But where there are the strongest commitments to leaping ahead to digital twins, it turns out to be Asia Pacific. If I can, I'd like to do a commercial for our infrastructure yearbook. I've had some examples here, but any of you will find it worthwhile you can index by – country index by project category and so forth, search by digital twins, by sustainability and so forth. Often the exemplary projects are in Asia Pacific, and we will be here in the U.S. advocating that when we focus on infrastructure as a country now, we focus on going digital and infrastructure to achieve the same breakthroughs they're doing there.

All right. That's helpful. And maybe to follow-up for David. Any progress you can illustrate with regard to migrating ELS E365 and what your expectations would be for contribution perhaps for enabling greater application usage on a platform with that migration in 2021?

Yes, we are not even halfway through the potential large ELS book of business that we consider a potential candidate for migration from ELS to E365. So we're less than halfway through. We won't do the rest of it in 2021, but we will continue to migrate. As Greg mentioned, when we do that, we're being a little more cautious now and we're putting some guardrails around unanticipated outcomes for both us and the user. So there's still some incentive within the guardrails to inflect usage upwards for us and we're going to be working hard to do that. And the success teams that we put into play every time we secure one of these E365 opportunities is all that much more opportunity to grow and inflect upwards. We just have to overcome the drag if you will that we've been pretty transparent about. On the E365 intersection where the industrial resources sectors, which is some pretty big ones. We have to weather that drag for them and overcome it with the others and we're confident in our guidance that we could be there.

Okay, helpful color. Thank you very much.

I might just add what's heartening about the E365 migration is that the accounts are enthusiastic about the success plans. They – the fact that we embed our subject matter experts to help them with digital workflows, that's more so than ever what they want out of it at this point in time. They have made it their own priority. And this has turned out to be an effective way for us to work together.

Got it. Very helpful. Thank you.

Brad and I think you've been able to figure out your video.

Great. Could you guys hear me okay?

Yes. Hi, Brad.

Okay, perfect. Excellent. Sorry about that. Well, thanks so much guys. I wanted to ask about China, you called that out as an area of strength for this quarter and for the year. Is there any color you can provide on kind of where you're seeing strength there? Are there any particular segments of the business that you're seeing some strength, whether it's commercial, industrial, or public? And is this the result of some of the investments you've been making there? Just if you could just comment on the environment and the results you're seeing in China. That'd be great. Thank you so much.

Well, good. So China is strong across the board and of course you might recall. I said after Q3 hadn't turned out to be the case as it usually is every year that China roar is on and becomes our second biggest source of new business growth. It concluded the year on exactly that footing and tone and it's kind of across the board. We're strong in China in electrical grid. We're strong in increasingly in water and wastewater large-scale projects, but again you'll find the Chinese projects, well – sorry representative here, wind power especially trash to waste, huge important groundbreaking projects. And the business in China is chunky and constant. A difference as we work more so with the channel in China than elsewhere in the world, but there is a lot of momentum. China is a place where digital twins are literally the ambition and every project starts with the reality modeling survey of existing condition that digital context and is maintained evergreen throughout the project. It's just exciting to be meeting the needs in China and to see that we're just scratching the surface.

That's great. Thanks, Greg. And then one more, if I may, for you, David, please embedded in your guidance for the year it sounds like it's a 7% organic growth assumption. Your net revenue retention is still tracking to that 108, very, very solid healthy levels there at 108. So it would seem that there is a pretty conservative assumption for new business. I'm sure that it's your guidance reflects conservatism across new and expansion activity, but where could you see upside potential if you look at those two areas of growth? Could it be more on the upsell, perhaps there is a product cycle that we could see that could generate some upside there more so? Or is there a region particular maybe it's China where perhaps new business could surprise to the upside. Thank you.

Yes, I'll give my view, but Greg feel free to add what you see. My view of the upside is more the macro, how quickly does the world open up and the projects and users return to normal. So I see more of the upside on just usage of our applications than specific new opportunities. Those are going to be there obviously as they historically have been, but the upside to my guidance of our outlook, I think, is more in the macro conditions that we don't have a lot of control over. But we'll certainly be there to take advantage of it. It happens faster than we anticipate.

And I don't think it breaks down so much by region in our view of it now all of our regional territory executives are cautiously optimistic about 2021. I would call out our new focus on SMB; we are already seeing a faster growth there with the 100 people in inside sales focused on it. Sort of the picture in my mind is that with this magnet of increased spending on infrastructure, roadways, railways, metros smart adaptation, resilience, flood resistance, and so forth that that more firms change their growth plans in favor of that and that tends to favor their increasing of their use and interest in our portfolio versus Autodesk and other providers. Hopefully and likely that compounds itself over the course of this year, because I don't think people are acting on that yet, but we have the chance for that certainly this year.

Understood.

So I would also add that you might ask does the potential for an infrastructure spending bill add to our upside. And obviously that would be a good thing for us, but in my experience, that's more of an indirect longer-term effect. So I don't know that you would see any dramatic uptick to our 2021 – as a results of that.

Understood. Thanks, Greg. Thanks, David.

We'll next go to Berenberg, Gal Munda.

Yes. Hi. I hope you can see me, okay.

Yes.

Awesome. Well, thank you for taking my questions. This first one, Greg, maybe just I found it really helpful for you to break down the performance really between the incumbent products, incremental products and then the new accounts, how they stack up. Considering the fact that you ended the year pretty much close to the budget on the quotas, how are you see – how did you see performance against the quota in each of those segments if that makes sense in terms of the expansions in the new neo accounts. I would have imagined that it was a hard year to kind of grab new accounts and that's maybe something that's just likely to kind of perform better in 2021.

So new accounts for us tend to occur with AssetWise and ProjectWise, AssetWise in owner-operators with the potential for digital twins, it's rather unpenetrated and our proportion of all owner-operators, the top 500 that we track in our own top owners. We're – there are more to go than where we are now. But those are procurements. Those are enterprise procurements with RFPs, and typically outside sales. And those cycles in most of the world did slowdown in 2020 when I ask our sales folks are – are they able to be as effective in those opportunities? They say they can be even with lockdown conditions, but I think there are fewer such opportunities. On the project delivery side, there are not new name opportunities because we're in all of those accounts, but there are opportunities to expand ProjectWise and for ProjectWise to become the standard throughout an organization rather than only for portions of it. And I think that does continue to be a good opportunity, but that wouldn't show up as a new name opportunity. Hopefully 2021 is a better new name year. I think everyone in enterprise software would expect that.

So, hi, Gal. I would also add that one of our key growth initiatives is the digital approach small and medium sized businesses. This tends to be – we start things here in the U S with that that's been our focus in North America. So I would expect as that takes traction, you'll see the benefit in the U.S. earlier than elsewhere. So we're hopeful to see some upside there.

That's very helpful. Thank you. And then just as a follow-up maybe a little bit of an expanding on that, what you said in your prepared remarks, I found very interesting about the potential of iTwin to really penetrate your own CAD base, but then at the same time competitors like Autodesk, so effectively to become the common data environment around those – the center of the workflow management. What is the penetration within the – maybe the current CAD? And then most specifically, is there any penetration within the competitive CAD solutions today from iTwin and it's all that – is it all pretty much a Greenfield for you?

Well, so I'll start with ProjectWise. So, it's the case that it's still a minority of our own application users whose organizations use ProjectWise for their work sharing. And so there's upside there, but ProjectWise, the use of ProjectWise includes Autodesk applications, and we've done pretty well there. The opportunity with adding iTwins is to federate and aggregate across projects, across domains, across separate software tools so that if the organization cares about what the quality of the projects they deliver, how many – how much concrete do they use per whatever mile or bridge abutment or whatever with iTwins, you can measure that. You can introduce analytics, everything can be rectified, changed, managed, aligned. What previously were separate opaque objects created by the design tools can now be aggregated and open to analytics. So the opportunity to extend to the enterprise for sake of this machine learning and analytics is one that will be important for ProjectWise going forward as something that can be added even where there is a mix of different design tools.

So, thank you so much. Congrats again and excellent.

For our final question we'll go to Mizuho, Matt Broome.

Thanks very much. So, I guess, firstly, definitely appreciate the additional color on the 2021 outlook. But just for comparison purposes, how much of 2020 revenue growth was organic?

About half, about half of our growth.

Okay. Okay, thanks. And then on 2021 guidance, so I know you don't provide quarterly guidance but how should we be thinking about the sort of linearity of that that sort of acceleration that's implied there? Is it likely to be a, I guess, more back-end loaded as the comps get easier and your growth initiatives gain traction or given that usage has already picked up, is the growth likely to be more sort of consistent through the year?

I think it's mostly seasonality, but I'll let David to break that up. You can.

Yes. So – it's multiple things to bring together there. There is some seasonality and we're going to be as we have historically been leading up 2020 stronger in the last half than the first half. So that's probably…

Which is because of renewal cycles, not – it's just that's when the annual contracts turn over.

Yes. So there's also the acquisition effect in the outlook which again the acquisition tailwinds are going to benefit the first half more than the last half. Of course, to the extent that we have new acquisitions in 2021, those are going to be benefiting last half more than first half. So then there's the pandemic effect. It's also informing the outlook, which is indeed look we are where we are in the first half and we do expect more – a pace of recovery as move through the year and the last half, as a result of that be stronger than the first half.

Right, yes, that makes sense. All right, that's very helpful. Thanks very much.

Well, thank you everybody. That concludes our call for today and thank you.