Bentley Systems (BSY) Stock Forecast & Price Target

Bentley Systems reported Q3 Subscription revenue of $344.3 million, reflecting a 14% year-over-year increase, which signals ongoing strong global infrastructure project activity and a rising adoption of engineering productivity tools. The company's Annualized Recurring Revenue (ARR) reached $1.405 billion, growing 10.5% year-over-year in constant currency, driven by robust demand in the public works and utilities sector as well as successful implementation of the E365 subscription program. Additionally, Bentley's revenue growth of 12% to $375.5 million, accompanied by improved EBITDA margins at 27.7%, highlights the company's effective management of costs and operational efficiencies amid a favorable market environment.

Bentley Systems has demonstrated pronounced weaknesses in its services revenue, which remained flat quarter-over-quarter and was $5 million lower than previously guided, reflecting ongoing challenges, particularly in its IBM Maximo-related work. Furthermore, while Q3 revenue exceeded estimates at $375.5 million with solid EBITDA margins of approximately 35%, the concerning decline in perpetual licenses and the lowered revenue expectations suggest potential future instability in earnings growth. The reliance on the public works and utilities sector, which constitutes two-thirds of its revenue, may expose the company to sector-specific risks that can adversely impact its financial performance moving forward.