Bentley Systems (BSY) Q3 2025: Subscription Revenue Hits 92% as AI-Driven Platform Shift Accelerates
Bentley Systems delivered Q3 results in line with expectations, as the company’s platform transition and AI-enabled offerings began to reshape both customer engagement and future business model potential. Robust subscription growth, rising AI investment among AEC clients, and the launch of new cloud-native capabilities highlight a strategic pivot toward higher-margin, recurring revenue streams and deeper integration into client workflows. Management’s confidence in Q4 and beyond is anchored by a strong renewal pipeline and expanding asset analytics opportunities, positioning BSY as a key enabler of infrastructure digital transformation.
Summary
- Subscription Model Dominance: Recurring revenue now defines the business, with 92% of total revenue from subscriptions.
- AI Integration and Client Co-Innovation: Bentley is embedding AI across its platform and collaborating directly with clients to shape next-gen workflows.
- Asset Analytics and Cloud Connect: New offerings and API monetization set the stage for future growth beyond traditional usage models.
Performance Analysis
Bentley’s Q3 results reflected a steady transition to a recurring revenue model, with subscription revenue up double digits and now accounting for 92% of total revenue, a two-point increase year over year. This shift is improving both revenue quality and margin consistency, as perpetual licenses shrink to just 3% of the mix and professional services decline to 5%. The company’s net revenue retention remained robust at 109%, powered by the E365, enterprise consumption-based commercial model, and healthy renewal escalators averaging 10% annually.
While the sequential ARR growth rate moderated compared to Q2, management attributed this to timing of asset analytics deals and M&A, with expectations for a stronger Q4 driven by a significant renewal period and potential large asset analytics contracts. SMB momentum continued, with 600+ new logos added for the fifteenth consecutive quarter, and sector performance was led by Resources and Public Works/Utilities, reflecting infrastructure investment tailwinds globally. Margin expansion of 100 basis points year over year and strong free cash flow further underscore the business’s financial resilience.
- Recurring Revenue Engine: Subscription revenues up 14% YoY, now 92% of total, driving improved visibility and margins.
- SMB and New Logo Growth: Consistent new customer additions and high retention signal broadening market penetration.
- Asset Analytics Lumpiness: Large deals remain volatile, but management expects critical mass and more predictable growth as adoption scales.
Overall, Bentley’s performance is increasingly decoupled from legacy licensing and professional services volatility, with high-quality recurring revenue and disciplined cost management supporting a positive long-term outlook.
Executive Commentary
"AEC firms are now literally engineering the infrastructure for AI...the surveyed firms together perform most of the contracted infrastructure engineering outside Asia, with the distribution of their revenues by sector rated, like ours, in favor of public works/utilities and resources."
Greg Bentley, Executive Chair
"At YII, the Going Digital Awards finalists once again showcase how Bentley's software helped them achieve meaningful productivity gains...That step change is just beginning to take shape and it's AI."
Nicholas Cummins, CEO
Strategic Positioning
1. Platform Shift: Subscription and Consumption Models
Bentley’s transition to a subscription-centric business model, anchored by the E365 consumption-based agreement, is now the dominant revenue engine. This model charges clients based on actual usage, with negotiated floors and ceilings that typically escalate by 10% per year. This shift improves revenue predictability and aligns value capture with client adoption of new capabilities, especially as API and AI-driven workflows expand.
2. AI as Productivity Catalyst and Revenue Accelerator
AI adoption among AEC clients is accelerating, with survey data showing technology spending as a percentage of revenue up 40% over six years, and AI implementation spend projected to quadruple in three years. Bentley is embedding AI across its applications, launching new products like Open Site Plus and Substation Plus with built-in AI assistants (Bentley Copilot), and enabling clients to leverage engineering data for AI-driven design and analytics. The Infrastructure AI Co-Innovation Initiative invites customers to shape both technical and commercial evolution, ensuring Bentley’s offerings remain tightly coupled to real-world use cases.
3. Asset Analytics and API Monetization
Asset analytics is emerging as a high-value, albeit lumpy, growth lever. Large seven- and eight-figure deals are increasingly possible as clients seek data-driven insights for infrastructure operations and maintenance. The move to API-based consumption models, where clients access Bentley’s engineering engines programmatically, sets the stage for new monetization streams and deeper integration into client environments. Management expects this hybrid attended/API/asset consumption approach to become a mainstay of future revenue growth.
4. Cloud Connect and Data Federation
The launch of Cloud Connect, a foundational layer for Bentley Infrastructure Cloud, delivers a unified data environment for projects and assets, improving collaboration and enabling AI-powered analytics. This positions Bentley as a critical data steward and workflow orchestrator, differentiating its platform from point-solution competitors and supporting both enterprise and SMB adoption.
5. Global Sector and Geographic Diversification
Bentley’s sector exposure is balanced, with Resources, Public Works, and Utilities leading growth, while Industrial and Facilities remain more modest. Geographically, strength in Asia-Pacific, the Americas, and EMEA is offsetting softness in China (just 2% of ARR) and Australia. Regulatory and permitting reforms, particularly in the US and Europe, are potential catalysts for future infrastructure investment and software demand.
Key Considerations
This quarter marks a strategic inflection for Bentley, as the company’s platform and business model evolution align with accelerating digital transformation across infrastructure engineering.
Key Considerations:
- AI-Driven Productivity Gains: Early adopter projects report 15–25%+ productivity improvements, but scaling these gains industry-wide is a significant opportunity and challenge.
- Data Stewardship and Trust: Bentley’s explicit data governance—users control their data for AI training—differentiates it from competitors and addresses a top client concern.
- Asset Analytics Volatility: Large, project-based deals can create quarterly variability, but critical mass is approaching as adoption broadens.
- SMB Expansion: Consistent online store growth and high retention in the SMB segment diversify revenue and reduce reliance on large enterprise deals.
Risks
Key risks include the timing and scale of asset analytics deals, which remain volatile and can impact quarterly ARR growth. Macroeconomic uncertainty, regulatory delays (e.g., permitting reform), and potential disruptions from government shutdowns or policy shifts could affect infrastructure investment and client spending. Competitive threats from alternative platforms, especially those with less stringent data policies, may also challenge Bentley’s differentiation if data stewardship is not valued by all clients.
Forward Outlook
For Q4 2025, Bentley guided to:
- Higher year-over-year ARR growth compared to Q3, driven by a large renewal cycle and potential asset analytics/M&A contributions.
- Adjusted operating income margin improvement of more than 100 basis points versus Q4 2024.
For full-year 2025, management maintained guidance:
- Free cash flow of $430–$470 million, with strong balance sheet flexibility and no reliance on incremental debt.
Management highlighted:
- Confidence in achieving financial targets, anchored by robust renewal pipeline and continued sector demand.
- Potential upside from asset analytics and programmatic M&A, though not required to meet baseline outlook.
Takeaways
Bentley’s Q3 underscores a business in transition, leveraging its platform and AI investments to capture a rising share of client technology spend and position for long-term, high-margin growth.
- Business Model Evolution: The shift to recurring, consumption-based revenue is now entrenched, with subscription ARR and net retention rates supporting durable cash flow and margin expansion.
- AI and Platform Differentiation: Bentley’s integrated data environment and explicit data governance are resonating with clients, while co-innovation and API strategies set the stage for future monetization.
- Asset Analytics Scalability: Investors should watch for the transition from lumpy, project-based deals to more predictable, platform-driven asset analytics revenue as adoption scales.
Conclusion
Bentley Systems delivered on expectations in Q3, with its platform and AI strategy driving both financial and strategic momentum. The company’s focus on recurring revenue, client co-innovation, and asset analytics positions it as a pivotal enabler of the infrastructure sector’s digital transformation.
Industry Read-Through
Bentley’s results and commentary signal accelerating digital transformation across the infrastructure engineering sector. The rapid rise in AI investment, coupled with growing demand for unified data environments and outcome-based contracting, suggests a broader industry pivot away from legacy licensing toward platform, API, and analytics-driven models. Competitors lacking integrated data architectures or clear data governance may struggle to keep pace, while firms with strong recurring revenue and co-innovation capabilities are best positioned to capture the next wave of infrastructure technology spend. Regulatory reform and energy transition themes remain key catalysts for sector-wide software adoption, particularly as asset analytics and grid modernization projects scale globally.