Good morning and thank you for joining Bentley Systems' Q2 2024 Results Webcast. I'm Eric Boyer, Bentley's Investor Relations Officer. On the webcast today, we have Bentley Systems' Executive Chair, Greg Bentley; Chief Executive Officer, Nicholas Cumins and Chief Financial Officer, Werner Andre. This webcast includes forward-looking statements made as of August 6, 2024, regarding the future results of operations and financial position, business strategy and plans, and objectives for future operations of Bentley Systems Incorporated. All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentley.com on August 6, 2024. After our presentation, we will conclude with Q&A. And with that, let me introduce the executive chair of Bentley Systems, Greg Bentley.

Good morning, and thanks to each of you as always for your interest in BSY. In these first operating results reporting in new roles, our lineup will remain the same, but the format is updated to correspond to new responsibilities. In particular, I bequeath to Nicholas as CEO the charts to review our operating performance numbers, especially ARR growth as our key indicator, along with his expanded commentary on the underlying tone of business across all notable dimensions. As now Executive Chair, my perspective on directions and developments will, here and henceforth, be qualitative and comparatively succinct. While I think our ’24 Q2 operating results should be recognized as commendably robust on their face, my qualitative characterization of the quarter is even more favorable. In all around pace and balance, it seems to me, with now perhaps the benefit of a broader perspective in my new role, that everything has come together more so than ever. Hence some observations on our busyness directions in keeping with my new qualitative focus. For me, BSY business describes the unprecedented stride now being hit both in our infrastructure engineering end markets and in our own efficient execution which will be further detailed in turn by Nicholas and Werner. And speaking of quality, rarely if ever in my experience has our ARR growth shown as much balance, visibility and linearity as it has of late. In fact, I consider the fundamentals of our business to have further improved year-over-year as would be reflected in ARR growth net of subsiding inflation-based escalation, intentional commercial model changes in China and onboarding from programmatic acquisitions. Likewise, I think 2024 revenues have significantly grown in quality with recurring subscription revenues surpassing 90% of the total by virtue of mid-double-digit year-to-date growth in subscription revenue that is virtually all…

Thank you, Greg. Having completed my first months as CEO, I want to start my prepared remarks today by reiterating my enthusiasm for Bentley's role in the world of infrastructure and for the many opportunities that lie ahead of us. Infrastructure sectors have benefited greatly from the massive capital investments in projects and jobs post-pandemic. But much more remains to be done to make infrastructure more resilient from retrofitting aging infrastructure and mitigating the effects of climate change to closing the gap in engineering resources. Our collective ability to overcome those challenges will determine the quality of life for generations to come. Fortunately, a paradigm shift in software is reshaping the landscape. AI is going to be a major driver of our business moving forward, helping engineering services firms to increase their productivity and own operators to better understand the condition and improve the performance of their assets. The traction we are generating in the market with our AI based solutions for asset analytics is worth noting. The vast majority of costs are incurred during the operations phase of the infrastructure lifecycle, which represents a significant growth opportunity for us. With Asset Analytics, we can transform the way organizations monitor the connection of roads, bridges, dams, water networks and telecommunications towers. As Greg referenced in previous quarters, we are seeing increased adoption of our AI-based solution for roadway maintenance, and our AI-based offering for cell towers is also ramping up globally. Of course, this all builds on our broader strategy of bringing data to life, federating it, enriching it, reusing it through digital twins. Our first 40 years as a company were successful because we saw opportunity in paradigm shifts to the personal computer, to the cloud, to digital twins, and now to AI. The foundation laid over the last…

Thank you, Nicholas. We are pleased with another consistent and strong quarter. Total revenues for the second quarter were $330 million up 11% year-over-year and 12% in constant currency. Year-to-date, total revenues grew 9% on a reported and constant currency basis. Subscription revenues for the quarter grew 15% year-over-year in reported and constant currency, representing 90% of our total revenues, up from 87% in 23 Q2. Q2 has historically been our lowest subscription revenues quarter when compared to other quarters and particularly Q1 due to a lower proportion of contract renewals with any degree of upfront revenue recognition. But the continued expansion of our consumption-based E365 program yields more ratable revenue recognition throughout the year, benefiting Q2. For the first half, more normalized for mix and timing, subscription revenues grew 13% on a reported and constant currency basis. Our E365 and SMB initiatives continue to be solid contributors to our subscription revenue growth. Perpetual license revenues for the quarter were $11 million down $1 million, year-over-year. Perpetual license sales make up only 3% of total revenues and will remain small relative to our recurring revenues. Our professional services revenues for the quarter declined by $4 million down 15% year-over-year or 40% in constant currency, driven primarily by the expected delays in IBM Maximo-related implementation and upgrade work within our digital integrator, Cohesive. Such delays are now likely to continue through the third quarter before the pace of upgrade projects is expected to increase during the fourth quarter of 2024. On a positive note, our professional services related to Bentley software continue to grow modestly as expected. Moving on to our recurring revenue performance. Our last 12 months recurring revenues increased by 12% year-over-year in reported and 11% in constant currency and represent 90% of our total last 12 months revenues.…

Thanks, Werner. Before we begin, I just want to remind you that please limit your questions to one so that we can get to everybody. First question comes from Matt Hedberg of RBC.

Great. Matt, -- yeah. Still here. Yeah. I was trying to get my video. There we go. Good morning, guys. All right. Hey. Good to see you guys. One question. Okay. Let's see. I think, thinking about the second half, it's great to hear that all your ARR is on target. And I think it sounds like, Nicholas, you were talking about second half E365 renewals more so 4Q, weighted. I guess could you talk to us about the confidence around some of those deals? Obviously, you guys are delivering good results, but it feels like the broader macro environment seems like it's, a bit uneasy now. Hearing some other companies talk about elongated deal cycles, extra signatures. Just kind of walk us through sort of the confidence level in that second half, E365 renewal base and which obviously predicates sort of the full-year guide.

Yeah. I'm going to let Nicholas talk about the observations on the ground, but just structurally, of course, sentiment matters, but the sentiment among infrastructure engineering organizations, their concern is capacity, not demand. And their backlogs are strong and their visibility is long at this point. But it should be remembered that most of our ARR growth comes, atomically from consumption, and consumption is not a matter of enterprise decisions. It's a matter -- our software is a factor of production in the throughput of infrastructure engineering organizations, and the consumption occurs as a matter of course. Now we do have some competitive procurements for project wise and asset wise. New project wise and asset wise implementations do occur and are a matter of RFPs are subject to decisions that you're talking about. But that's a very dilute portion of our ARR growth. In many case, Golden Digital is the priority for our users. So, I'm saying, structurally, we do not rely much on, enterprise decisions, and even there, the sentiment in our in markets is concerned about capacity, not demand. But, Nicholas, you're better and much able to speak about the observations on the ground.

The sentiment in the in, end markets is indeed very positive. The bulk of our businesses with Public Works Utilities, our accounts are busier than ever. Nothing has changed, from that standpoint. The demand is still very high. The biggest challenge is just they don't have enough resources, which for us is a fantastic opportunity. Right? We are right there to help them in getting more productivity from the engineering resources that they already have. Yeah. So, the market sentiment is positive. And based on this, by the way, and the momentum that we have also with our own program, E365 and SMB, we are confident with what Werner has shared, which is we are -- we're going to be solidly within our ARR range.

Great. Thanks. Congrats, guys, and congrats to both, Greg and Nicholas to new roles.

Thank you.

Thanks, Matt. Next question comes from Joe Vruwink from Robert Baird.

Yeah. Great. Thanks for taking my question this morning. Staying on the, infrastructure and IGA funding topic, so still very early as you noted earlier. I think it's also well appreciated that project starts have been a bit uneven to date. Does this extended timeline, maybe this is, in an ironic way, provide better opportunities for Bentley to grow at enterprise accounts since you get a bit of a flavor of the opportunity ahead, but you still have time to engage with a key software vendor like yourselves, and you can strategize around future improvement. And I'm wondering if maybe that explains Ben DOT and some of the decisions they're making, which, as you said, is leading to a good step up in in spend there.

Yeah. Well, I definitely think higher for longer is the consensus, in the U.S., but it's interesting that states are stepping up their spending also. And Nicholas maybe had more commentary on it.

Yeah. It does mean indeed that the momentum we've seen from IIJA is just going to last longer. So, this is positive in that sense. It's sustained momentum from IIJA. It is true that most of the funding that has been announced has been for transportation. So, this is with the DOTs. The DOTs are typically better equipped. They have more experience to apply for grants and then to execute on those grants. And, and we are -- we have a solid position with, with those DOTs. But I think, whether it's the DOTs themselves, or their supply chain, which are struggling with, enduring capacity. The fact that the funding is being announced over time is actually, I guess, good news for the whole supply chain to be able to deliver on that funding over time.

Thank you.

So, the next question comes from Jason Celino from KeyBanc.

Great. Thanks for taking our question. The performance in SMB continues to be quite strong. Wanted to get an update on how retention is in that segment. I know you've talked about 80% retention previously, and I'm just curious how it's been trending.

Well, we don't we don't quantify it, each quarter, but we're happy with how it's tracking. We're working on automating it more and more so and allocating resources between the digital experience upgrades to do that. That's what we spend capital on now and, the mix of people working on that versus new subscriptions and so forth, we're experimenting with. But we'll have a quantitative update of that, within the year as well, I think. Nicolas, anything more to add?

Yeah. The SMB is, is a cross buyer for the company, and it's really around the world, by the way. It is with new accounts. That's what I mentioned in the prepared remarks, but it is also with the existing accounts. Overall the retention is high in a market where the firms would potentially use the software for a project within the term of their subscription, which is what we're seeing here is that, no, they use a software beyond that term, so maybe because the project goes beyond 1 year or they start to use the software across the projects. But in general, it's -- I mentioned that actually in the last call already, the retention we see in SMB is definitely higher than what we were expecting when we started the initiative many years ago.

Next question comes from Clarke Jeffries from Piper Sandler.

Thanks for taking my question. Nicholas, I -- one thing that stood out to me was the mention of AI being of increasing importance to the [indiscernible] operating of the company. Could you talk about what will be the nearest term effect on the traditional portfolio based off this increased disposition? Are you rethinking monetization opportunities? Are there things that stand out from asset analytics that you think you could port over to the traditional portfolio sooner rather than later?

There are two, let's say, two areas of investments for AI right now. The one which is ready and in the market is around asset analytics. That's what I was commenting on, saying we're generating quite a bit of traction with this AI-based asset analytics solutions. It's in the U.S. and globally, there was one account that use our solution OpenTower IQ to create digital twins for tens of thousands of towers just in the U.S. And we believe that usage of Digital Twin technology and AI at that scale, it's quite unprecedented. And we also see traction with our solution for rolled maintenance called Blyncsy, the acquisition we did a year ago. We see that with DOTs across the U.S., and we're getting a lot of interest from transportation authorities around the world to the extent that we're exploring in our rolling it out to other geographies, right? Now the business model around asset analytics is completely incremental to the core business because the pricing is based on assets which can be a number of towers or it can be the length of the roadway network. So, it's all on top. And by the way, all of that revenue that we're realizing right now and the growth opening going forward is on top of the total addressable market we've been discussing for years, which was all around the number of engineers and how much more engineering software value we can create with them. Now there's another area of AI, which is quite interesting, and it's around design. This is more in development right now, and we're getting great traction from representative accounts, who we see a huge potential in leveraging AI, again, to get more from less to get more from the existing resources that they have, automating mundane task if need be, for example, drawing production, are simply allowing the engineers to be more effective by acting truly as a Co-Pilot, right? The monetization there will have to be potentially different from some of those capabilities. If we're talking about automation, then a user base pricing, obviously, is not totally adequate, right? You can be sure that whatever efficiency gains we generate, we will capture a fair share of that value.

The next question comes from Warren Myers from [indiscernible] Securities.

Good morning, everybody. Thank you. Just, I guess, one question. What is the status of what, I guess, Bentley is called Phase 2 of your products and platform development? And when do you foresee a meaningful commercial impact in terms of deliverables?

So, what you're referring to -- for those in the audience who are not fully aware is the adoption of our digital twin technology across the portfolio. Phase 1 was the development of iTwin itself as a platform. Phase 2 is leveraging iTwin capabilities to complement existing applications. Phase 3, by the way, will be totally native digital twin applications that we're working on. So, we actually just released a new version of MicroStation and as promised, it does include capalities that are truly powered by iTwin to enable ad hoc collaboration -- unstructured collaboration, if you want. We just released it. So, this is in tech preview and then we'll keep iterating on it together with our users to make sure that it is as fully fit for purpose. Now in parallel, the phasing can be a bit misleading because you might think we're to Phase 2 and then move the Phase 3 [indiscernible]. But actually, we're working on applications that are truly Phase 3. The application I was referring to, the investments we're doing for an AI-based solution. Actually, the use case is site engineering, it truly is a next-generation engineering application for site engineering, which will be native digital twin, leveraging AI capability, and we expect to launch it at YIA this year at our annual conference.

Next question comes from Kristen Owen from Oppenheimer.

Good morning. Thank you for taking my question. Nicholas, I wanted to come back to the permitting reform legislation that you discussed in the prepared remarks. You've previously talked about power line systems really sort of sitting on a launch pad, I think, is how you described it, waiting for that permitting bottle next to clear. I'm just wondering, can you speak to the PLS fundamentals today and how you would assess that opportunity unlock? I understand there's a little bit of lag from when the legislation is signed to when we see those bottlenecks clear.

So, the growth of PLS, without the permitting reform having all of its impact yet is already very strong. There is very strong growth of PLS, still in the U.S., but very strong as well in Canada, very strong in EMEA. And this is all, again, before the permitting reform is having impact, and we see the long-term of potential expansion projects going on, right? And the reason is because of the existing infrastructure, which needs to be able to support the increase because one thing which is not waiting is the increase of demand in electricity. In the U.S., by the way, with the reshoring of companies, with all the incentives for companies to move on from fossil fuel to maybe cleaner sources of energy with electricity. And by the way, all of these data centers, we were talking about AI, data centers that are being created in order to support the usage of AI generated -- AI in particular, which are extremely consuming in terms of electricity. So, it's all about making the most of the existing electric grid, and this is where we see the growth with PLS right now. So now as the permitting reform has impact, and it will take a while, right, for -- in the last quarter, I talked about the federal rule, which was to meet all the environmental reviews, I think within a 2-year schedule, well, they will still take 2 years for these environmental reviews to take place to permitting to be done and then you see the impact on those products moving forward and our software to be used. So, from a PLS standpoint, it means that -- we -- again the full expansion of the electric grid, very strong growth already just by meeting the existing grid be able to support the increase of demand in electricity.

The next question comes from Michael Funk from Bank of America.

A quick question on the ARR growth guidance for the year. Good to see that you're coming within the range that you guided to. And I heard the comments about some of the seasonality in the second half of the year. But maybe just to focus on what you had baked into the high end of the range, [indiscernible] more optimistic scenarios you have baked in that might be driving you below the high end for 2024?

Well, one of -- I'll remind you that we widened our range from our traditional 2 percentage points to 2.5 percentage points, I think, this year, because asset analytics, the incremental opportunity is mean considerable, and I mentioned that we're on the track to the eight digits of ARR growth from asset analytics alone, but the tier is by the tail, and that could inflect up considerably, and we're in competition for very large procurements, and it is a significant part of top end of ARR growth forecasts to or range to as that come true. But so far in the year, it has come true. And we're very hopeful. I'm just sticking to that aspect.

And is the timing difficulty, is that more a geopolitical or is that more macro based, do you think, Greg or Nicholas, I don't know who has the best view on that?

I think geopolitical exists only in China for us. In the countries of electoral regime change, we think infrastructure investments -- for instance, in the U.K. continues to be a priority in India. I guess that wasn't the regime change, but continues to be a priority. So, the word geocritical for us -- we only use in China, for anti-American concerns. And those continue -- however, are not the only problem in China, with general softness [indiscernible]. And as we say, that China ARR is down to 2.5%. It was 2 -- a little bit more than 2 years ago it was 5%. So that's been a drag on overall ARR growth and hasn't -- is likely to continue. There's 2.5% more [indiscernible]. Nicholas, over to you.

Indeed, there are no geopolitical concerns. I did mention that there was an expected slowdown in India, which remain solid, nevertheless, because of the elections in Q2, but the government of Modi -- President Modi is quite clear that they want to immediately resume the investments in infrastructure. So that's all very good. There were lots of elections in Europe at the European Union level, we expect continuity. The President rsula von der Leyen has been reconfirmed reelected as the President of the EU Commission. Changes of governments in the U.K., changes of governments in France, but we don't expect any major implication in terms of investment priorities. So indeed, the only area, the only country where for geopolitical reasons, more than political, there are some changes, that's China.

And we emphasized that the U.S. legislation has been the only place the word bipartisan appears in the U.S. is attached to infrastructure legislation, I am exaggerating a little bit, but we think that's not up for [indiscernible] change.

Next question comes from Dylan Becker from William Blair.

A nice job here. Maybe, Nicholas, sticking with the energy reform theme to a certain extent. I think, right, people think of infrastructure as public investments. If that gets pulled forward in some capacity, how are you guys thinking about the opportunity for private capital to start flowing into the ecosystem? And maybe what that can mean around kind of like broader investment opportunities?

The -- I think all boats will rise across public and private for the whole supply chain, including us as software providers there's more investment going into the electric grid beyond maintaining this in grid to expand it. And we know that this is -- we all know it is needed. We must be able to expand electric grid to support the rise of demand in electricity but also to be able to go and take into these renewable sources of energy, which are typically far, far away from where the energy is actually needed, if you think of water, for example, or you think of a solar or you think of geothermal, et cetera, yes? So, the expansion of the grid is needed, and we know that this is indeed going to be benefiting everyone in the supply chain. I wouldn't be surprised if there are some private investments going along the way in order to support.

So, the next question comes from Matt Martino from Goldman Sachs.

Nicholas, just wanted to get an update as well from Werner on just kind of the prospects of your growth algorithm as the year progresses for ARR growth, especially as we get in the back half of the year? Just trying to understand the dynamics between kind of the extent to which renewals, application mix accretion and pricing escalators will factor into the remainder of your growth as we think through the back half of the year. Thank you.

Is that a question you want to tackle Werner?

Yes, happy to do. So, we expect, as mentioned in the prepared remarks that our ARR will tick up in the second half of the year there. It is the renewal timing of E365 and the dynamics around floors and ceilings we discussed in the last quarter. It's the ramp of asset analytics deals that we previously discussed, which started to have more traction in Q2, and there's a deal pipeline into the second half of the year that we are positive about that, that will be currently ARR year-over-year growth has a negligible impact from programmatic acquisitions as we go into the second half. We also would expect that there's a little bit more pickup. So that's on timing. With regards to the underlying growth factors we mentioned before, like earlier annual escalations, escalations will be for this year, a little bit of a headwind. So, we expect escalations to come in slightly below the last year is still in the mid-single-digit range we -- we believe we are very reasonable about these collisions and it's predominantly to pass on our own inflation, which is inflation around colleague compensation, our own cloud cost, our one software internal use inflation and so forth. So, pricing is a key component and application mix is, I think also, as we mentioned before, it is a key growth driver for us. It is within the range that we expect. We don't expect like significant changes between H1 and H2 on the application mix the developed as expected. And then new logos also continues to be very strong. We have year-to-date new logo growth at 4%. And -- that is at a historical high for us. It has been high over the last six quarters with 3% to 4%. And so, we will continue to expect that new logos will be strong contributors as we go forward the year.

Just on escalation, I will remind you about that, we set that once per year. It isn't subject to the termination between the annual setting and it occurred at the beginning of last quarter, I believe -- and that's on the order of a percent or a lower than was the previous year.

Next question comes from Siti Panigrahi from Mizuho.

Thanks for taking my question. Greg and Nicholas, congratulations on your new roles. I want to ask about the current macro environment and potential lower interest rate and U.S. election, how does that impact your business? And could you talk about the train and IIJA spending heading into 2025?

Yes, I'm happy to -- but do you want to start, Greg or?

[indiscernible].

Okay. So again, from a political standpoint, when it comes to the U.S. elections, I think this is what you're referring to. Infrastructure is a very bipartisan topic. And you heard it in my prepared remarks, when you see the President that signed the Advance Act, which was a bipartisan nuclear energy bill when all of the Senate that has proposed a new bill, which is also bipartisan. It is a topic which reconciles -- everyone, everybody agrees, we need to invest into infrastructure. So, we don't expect that to slow down to change with whatever is the outcome of the elections in the U.S., yes. Overall, as we commented earlier in this Q&A session, the market sentiment is very positive for infrastructure investments in where we operate. Remember that the bulk of our business is with public works utilities. There are parts of our business that are private firms where they may need to raise money, for example, to explore new mines when it comes to mining companies that yes, this has been impacted by the very high interest rates. It has been impacted by the difficulty to be able to raise money to mobilize capital. And this has caused that part of our business to not be as strong as it was maybe just three years ago. But the bulk of our business is really public works utilities. The bulk of our business is coming from public investments. And we don't see any slowdown there. And then IIJA -- with respect to IIJA, again only 38% has been announced. Remember that announced also -- it doesn't mean that it's awarded, that's the next step, and it can take, I don't know, six months, 12 months depending on the projects. Once it's awarded, then the money starts to flow to the extent that the receiving entity is able to start the work. And at that point, then it becomes additional usage of our software, and it becomes a growth opportunity for us. But it means we're still, from that standpoint, early on in the IIJA funding as a tailwind. The still many...

If I could just summarize the tone for us from the perspective of the four years now that we've been public. Really the resilience of road and rail and water and grid in the world, the resilience of all those networks has just become recognized as a long-term necessity. It's not a discretionary aspect of public policy. It's the most important thing that governments are responsible for. And we don't think it's subject to sentiment or even politics very much at the moment, it's a consensus priority that's keeping civil-led structural and geopolitical engineers busier than ever they have been with a big backlog of more of the same.

Next question comes from Josh Tilton from Wolfe Securities -- Wolfe Research, sorry.

Can you hear me?

Yes.

Well, congrats on the quarter, and I [indiscernible] my congratulations to Nicholas and Greg. This question is for either of you guys, qualitative and quantitative. So, I guess just, how do you guys think about the durability of double-digit ARR growth in the context of the NRRs kind of tracking in that single-digit range. And as you mentioned, a lot of the new growth is coming from smaller customers. Like -- how do we, as investors, get confidence and conviction in the ability to see that durable double-digit growth rate that we love so much continue from here into the future?

Well, I have been on to say for a while if you want to ask about future ARR growth rate, please tell me what assumptions to make about inflation because the escalation, which is one of the layers of it is strictly reactive to the market inflation. And that will tend to normalize. What we think is that the demand environment in unit terms or real terms, the demand environment is not very subject to macro cycles. We used to say, of course, that arguably public spending is even countercyclical. I think that's may be dampened down a bit now because it's as high as it already is. And public finances are concerned, a question earlier about public-private partnerships and private funding, I think even a new government like the labor government in the U.K. is open to greater private financing of infrastructure, I definitely think that lies in the future. So concern wouldn't be demand as far as the durability of our SMB growth and the 4 percentage now of ARR growth that comes there, it's proven to be rather sustained already as we emphasize for multiple years and the engineering firm sentiment, for instance, that Nicholas Cumins reports on is -- includes the sentiments of the smaller firms as well, whom are increasingly being invited to participate in more of network, for instance, of roadway and highway projects, as we mentioned, with PennDOT. So those are reasons to be -- I do agree that for double digits, we need to have both of those things going on. It seems to be subject to the inflation component, the escalation component seems to be rather higher for longer in our perspective.

And our last question comes from Blair Abernethy from Rosenblatt Securities.

Just to follow up on the roadway maintenance business. Can you -- now that you've had a couple of quarters under your belt with this, what sort of the selling cycle looking like now in terms of timing? How long does it take you to introduce pilot and sort of get this thing get the revenue ramp coming up for Bentley?

Well, the full state that has most recently come up, started with a that -- that went for three months. So, it was a [indiscernible]. So, I think it's like that, it's a matter of quarters, but the great thing about selling to departments of transportation, for instance, and the highway maintenance is not applicable along with the states, but also at the county and municipal level and so forth. It is -- they're not competitive with one another. They eagerly their innovation and birds of the feather, and they're closely looking at the successes that they're all now also subject to a federal requirement, which hasn't yet become [indiscernible] to report on and maintain the [indiscernible], which is a particularly good application for our buying in the asset analytics. So that doesn't need to take on, and that is part of the enthusiasm we have for exiting this year with a very steep slope in asset analytics. And the question we had earlier with AI, are we folding that into existing products that had been our direction with in platform, but asset analytics as Nicholas said, is entirely incremental, charging per accident. And generally, Nicholas -- insight new bills -- new executive group way of looking at things is the asset operations is this biggest next generational opportunity for us in asset analytics -- kicks that off, and it doesn't need to take long for it to become literally significant, and I think it can be significant in AI -- excuse me, ARR growth rate by the end of the year. Nicholas last word to you?

It's a very easy so, because it's a very easy solution to deploy. It's very easy to show the impact of it because it generates insights so quickly from dashcam data, et cetera. Overall, as Greg said, asset analytics is usually exciting because it does tie to the much bigger growth opportunity we have with asset operations, which, by the way, is also a massive growth opportunity for the engineering services firms that we serve that many of them as busy as they are right now, on the projects, many of them are expanding their business or want to expand their business, nevertheless, beyond the Hannibal [ph] points of the infrastructure assets, they want to have a more recurring business, if you want, with owner operators to help them for maintenance, and we happen to have software to help them do exactly that. So, it's a hugely exciting growth opportunity for us at many levels.

Maybe I can just say that that's what I referred to in my quote where I would say that the -- even though we work hard and do well in this particular quarter is one that really impressed me in terms of balance, visibility, linearity and so forth. But the focus on the long term and especially the asset operations opportunity is really what we're interesting on next increment in TAM and growth to get back to your question about that. Now I think it's in great hands with our [indiscernible] focusing there. You can see, we had we're way ahead on profitability this year so far. But that's not what we want. We want to have a predictable 100 basis points increment in our efficiency and margins every year and otherwise invest everything we can into long-term futures. And that's what asset analytics, the asset operations, we will have some return to programmatic acquisitions in these areas iterating.

Thanks. So, that concludes our call today. We thank you for your interest in time in Bentley Systems. Please reach out to Investor Relations with further questions and follow-up, and we look forward to updating you on our performance in coming quarters.