BENTLEY SYSTEMS INC
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
BSY$44.65-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001031308-24-000002
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001031308-25-000002
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 180 previous paragraphs and 170 current paragraphs.
90 unchanged; 62 reworded; 17 added; 27 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 30 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Perpetual licenses. For the year ended December 31, 2024, perpetual licenses revenues were flat compared to the prior year.
Current report
The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia, Southeast Asia, and India, partially offset by declines of our subscriptions revenues from existing accounts in China.
Current report
Operating Expenses
Current report
Percentage changes that are considered not meaningful are denoted with NM.
Current report
For the year ended December 31, 2024, our research and development headcount‑related costs reflect run‑rate savings associated with the 2023 Program, which we initiated during the fourth quarter of 2023. While most of the realignment actions were completed at the beginning of 2024, our reinvestment of these run‑rate savings into priority investment areas, such as AI in product development, was not fully realized until the third quarter of 2024.
Current report
Percentage changes that are considered not meaningful are denoted with NM.
Current report
For the year ended December 31, 2024, interest expense, net decreased primarily due to lower weighted average debt outstanding, as compared to the prior year, mainly related to the continued pay down of our revolving loan borrowings, and repayments of our senior secured term loan during 2024 under our amended and restated credit agreement, entered into on December 19, 2017 (the “2017 Credit Facility”).
Current report
Other Income (Expense), Net
Current report
Provision (Benefit) for Income Taxes
Current report
Reconciliation of operating expenses to operating expenses in constant currency:
Current report
Cash Flows Activity
Current report
Net cash used in investing activities was higher by $82,763 for the year ended December 31, 2024, compared to the prior year, primarily due to higher acquisition related payments of $104,384, partially offset by lower purchases of property and equipment and investment in capitalized software of $10,956 and lower purchases of investments of $10,167. We used available cash and borrowings under our 2017 Credit Facility to fund an acquisition in September 2024.
Current report
Net cash used in financing activities was lower by $69,224 for the year ended December 31, 2024, compared to the prior year, primarily due to lower net paydowns of the credit facilities of $111,856, partially offset by higher payments for shares acquired of $17,926, including shares repurchased under the BSY Stock Repurchase Program (the “Repurchase Program”), and higher dividend payments of $13,359, primarily due to an increase in our quarterly dividend per share to $0.06 in 2024 from $0.05 in 2023.
Current report
On October 18, 2024, we entered into the Credit Facility, which provides us with a $1,300,000 revolving credit facility, including a $125,000 swingline loan and $125,000 in letters of credit. The Credit Facility also provides us with a $500,000 “accordion” feature to increase the facility in the form of both revolving indebtedness and/or incremental term loans. On October 18, 2024, we used borrowings under the Credit Facility to repay all indebtedness outstanding under the 2017 Credit Facility, including the outstanding senior secured term loan.
Current report
Goodwill
Current report
Other Intangible Assets
Current report
In testing intangible assets other than goodwill for impairment, we may first qualitatively assess whether it is more likely than not (a likelihood of more than 50 percent) that an intangible asset impairment exists. If it is determined that a quantitative assessment is required, we will evaluate the cash flows generated by the underlying asset, including estimated future operation results, trends, or other determinants of fair value. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset, we would recognize an impairment charge to the extent the carrying amount of the asset exceeded its estimated fair value. There was no impairment of intangible assets for the years ended December 31, 2024, 2023, or 2022.
Removed paragraphs (27)
Previous report
Prior period amounts have been revised to conform to the current period presentation using the updated constant currency and constant currency growth rates definitions. We are providing what our constant currency and constant currency growth rates results would have been pursuant to the prior definition for the applicable periods so that investors and potential investors that have analyzed these non-GAAP financial measures historically using our prior definitions can compare our historical results to our current results with respect to these non-GAAP financial measures using the prior definitions. Refer to the section titled “Non‑GAAP Financial measures” for reconciliations of constant currency non‑GAAP financial measures and their most directly comparable GAAP financial measures under the current and prior definitions.
Previous report
(3)Adjusted OI w/SBC is a non‑GAAP financial measure. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of Adjusted OI w/SBC.
Previous report
(1)Constant currency is a non‑GAAP financial measure. Refer 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.
Previous report
Perpetual licenses. For the year ended December 31, 2023, the increase in perpetual licenses revenues was primarily driven by improvements in business performance of approximately $2,661 ($3,181 on a constant currency basis).
Previous report
For the year ended December 31, 2023, the improvements in business performance were primarily driven by contributions from Cohesive digital integrator services of approximately $8,684 ($8,834 on a constant currency basis).
Previous report
(1)Constant currency is a non-GAAP financial measure. Refer 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.
Previous report
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 India, Australia, and Southeast Asia, partially offset by declines in China.
Previous report
(1)Constant currency is a non-GAAP financial measure. Refer 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.
Previous report
Operating Expense (Income)
Previous report
(1)Constant currency is a non-GAAP financial measure. Refer 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.
Previous report
For the year ended December 31, 2023, interest expense, net increased primarily due to a higher weighted average interest rate on borrowings under the Credit Facility, partially offset by lower weighted average debt outstanding.
Previous report
Other (Expense) Income, Net
Previous report
(Benefit) Provision for Income Taxes
Previous report
We made this modification in order to better align with how we manage the business, to better reflect our performance during a reporting period, and to make the effects of foreign currency fluctuations and constant currency information more easily comparable on a period‑over‑period basis. Prior period amounts have been revised to conform to the current period presentation using the updated constant currency and constant currency growth rates definition. We are providing what our constant currency and constant currency growth rates results would have been pursuant to the prior definition for the applicable periods so that investors and potential investors that have analyzed these non-GAAP financial measures historically using our prior definitions can compare our historical results to our current results with respect to these non-GAAP financial measures using the prior definitions. Reconciliations of constant currency non‑GAAP financial measures and their most directly comparable GAAP financial measures under the current and prior definitions are included below.
Previous report
Reconciliation of operating expense (income) to operating expense (income) in constant currency:
Previous report
Cash Flow Activity
Previous report
In addition, we expect cash payments of approximately $12,500 for termination benefits to colleagues in connection with our fourth quarter of 2023 strategic realignment program by mid-2024. See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information related to realignment costs.
Previous report
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.
Previous report
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. Payments for shares acquired were lower during the year ended December 31, 2023 by $12,874, as compared to the prior year. The year ended December 31, 2022 payments for shares acquired includes $28,250 of share repurchases under the BSY Stock Repurchase Program (the “Repurchase Program”), whereas no repurchases were made under the Repurchase Program during 2023. Refer to the section titled “Stock Repurchases” below for further detail. Payments of dividends were higher during the year ended December 31, 2023 by $24,263 as compared to the prior year, primarily due to an increase in our quarterly dividend per share to $0.05 from $0.03.
Previous report
Business Combinations
Previous report
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. The purchase price allocation requires us to make significant estimates and assumptions, especially at the acquisition date, with respect to intangible assets.
Previous report
Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates used in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:
Previous report
•future expected cash flows from total revenues and acquired developed technologies;
Previous report
•the acquired company’s trade name and customer relationships as well as assumptions about the period of time the acquired trade name and customer relationships will continue to be used in our product portfolio;
Previous report
•expected costs to develop the in-process research and development into commercially viable software and estimated cash flows from the projects when completed; and
Previous report
•discount rates used to determine the present value of estimated future cash flows.
Previous report
These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that we have made. 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.
Reworded paragraphs (62)
Previous wording
Bentley Systems is theinfrastructure 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. 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.
Current wording
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. 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.
Previous wording
•Total revenues were $1,228,413 for the year ended December 31, 2023, up 11.8% or 11.9% on a constant currency basis(1) compared to the prior year;
Current wording
•Total revenues were $1,353,095 for the year ended December 31, 2024, up 10.1% or 10.3% on a constant currency basis(1) compared to the prior year;
Previous wording
•Subscriptions revenues were $1,080,307 for the year ended December 31, 2023, up 12.5% or 12.5% on a constant currency basis(1) compared to the prior year;
Current wording
•Subscriptions revenues were $1,223,362 for the year ended December 31, 2024, up 13.2% or 13.4% on a constant currency basis(1) compared to the prior year;
Previous wording
•ARR(2) was $1,174,774 as of December 31, 2023, compared to $1,036,548 as of December 31, 2022, representing a constant currency ARR growth rate(2) of 12.5%;
Current wording
•ARR(2) was $1,283,256 as of December 31, 2024, compared to $1,174,774 as of December 31, 2023, representing a constant currency(1) ARR growth rate(2) of 12%;
Previous wording
•Last twelve-month recurring revenues dollar-based net retention rate(2) was 109% as of the year ended December 31, 2023, compared to 110% as of December 31, 2022;
Current wording
•Last twelve-month recurring revenues dollar-based net retention rate(2) was 110% as of December 31, 2024, compared to 109% as of December 31, 2023;
Previous wording
•Operating income was $230,542 for the year ended December 31, 2023, compared to $208,612 for the prior year;
Current wording
•Operating income was $302,150 for the year ended December 31, 2024, compared to $230,542 for the prior year;
Previous wording
•Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”)(1) was $324,677 for the year ended December 31, 2023, compared to $273,929 for the prior year; and
Current wording
•Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”)(1) was $372,222 for the year ended December 31, 2024, compared to $324,677 for the prior year; and
Previous wording
•Cash flow from operations was $416,696 for the year ended December 31, 2023, compared to $274,324 for the prior year.
Current wording
•Cash flows from operations was $435,292 for the year ended December 31, 2024, compared to $416,696 for the prior year.
Previous wording
Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange 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. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.
Current wording
Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates. For the years ended December 31, 2024, 2023, and 2022, approximately 34%, 35%, and 36%, respectively, of our total revenues and 42%, 45%, and 46%, respectively, of our total operating expenses were denominated in a currency other than the U.S. dollar including most significantly: euros, British pounds, Canadian dollars, Australian dollars, Chinese yuan renminbi, and New Zealand dollars. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.
Previous wording
We generate revenues from subscriptions, perpetual licenses, and services. Our total revenues are diversified by account type, size, and geography. 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 we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2023, 2022, and 2021 generated from organizations that have been our accounts for over ten years.
Current wording
We generate revenues from subscriptions, perpetual licenses, and services. Our total revenues are diversified by account type, size, and geography. Our sources of revenue growth, excluding the impact from acquisitions, primarily 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 we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2024, 2023, and 2022 generated from organizations that have been our accounts for over ten years.
Previous wording
The increase in total revenues for the year ended December 31, 2023 was primarily driven by increases in subscriptions revenues, and to a lesser extent, services and perpetual licenses revenues.
Current wording
The increase in total revenues for the year ended December 31, 2024 was driven by an increase in subscriptions revenues, partially offset by decreases in services revenues.
Previous wording
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). 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.
Current wording
Subscriptions. For the year ended December 31, 2024, the increase in subscriptions revenues was primarily driven by improvements in our business performance of $143,055 ($144,846 on a constant currency basis). Our business performance includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.
Previous wording
The improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the year ended December 31, 2023 were led by our engineering applications, geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.
Current wording
For the year ended December 31, 2024, the improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the year ended December 31, 2024 were led by our engineering applications, followed by Seequent geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.
Previous wording
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).
Current wording
Services. For the year ended December 31, 2024, the decrease in services revenues was driven by a decline in our business performance of $18,296 ($18,526 on a constant currency basis), driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.
Previous wording
Americas. 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).
Current wording
Americas. For the year ended December 31, 2024, the increase in revenues from the Americas was primarily driven by improvements in our business performance of $66,076 ($68,067 on a constant currency basis).
Previous wording
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.
Current wording
The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S., partially offset by a decline in services revenues.
Previous wording
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).
Current wording
EMEA. For the year ended December 31, 2024, the increase in revenues from EMEA was primarily driven by improvements in our business performance of $34,834 ($32,195 on a constant currency basis).
Previous wording
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.
Current wording
The improvements in business performance for the year ended December 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”), the Middle East, and Africa, partially offset by a decline in services revenues.
Previous wording
APAC. For the year ended December 31, 2023, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately $22,291 ($25,930 on a constant currency basis).
Current wording
APAC. For the year ended December 31, 2024, the increase in revenues from APAC was primarily driven by improvements in our business performance of $23,772 ($26,308 on a constant currency basis).
Previous wording
Total revenues in China for the year ended December 31, 2023 increased as compared to the same period in the prior year, primarily due to expansion of our perpetual licenses revenues. The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.
Current wording
The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.
Previous wording
Cost of Revenues and Operating Expense (Income)
Current wording
Cost of Revenues and Operating Expenses
Previous wording
During the fourth quarter of 2023, the Company approved a strategic realignment program to better serve our accounts and to better align resources with the strategy of the business, including reinvestment in go-to-market functions, as well as in AI product development. The realignment program resulted in realignment costs of $12,579, which represent termination benefits for colleagues whose roles were impacted (less than five percent of total headcount). See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information. The realignment program activities have been broadly implemented across our various businesses with the intention that substantially all actions, including payment of the termination benefits, will be fully completed by mid‑2024. The impact of the realignment program on headcount-related costs for the year ended December 31, 2023 is included in our discussion below.
Current wording
During the fourth quarter of 2023, the Company approved a strategic realignment program to better serve our accounts and to better align resources with the strategy of the business, including reinvestment in go-to-market functions, as well as in AI in product development (the “2023 Program”). The realignment program resulted in realignment costs of $847 and $12,579 for the years ended December 31, 2024 and 2023, respectively, which represent termination benefits for colleagues whose roles were impacted (less than five percent of total headcount). See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information. The realignment program activities have been broadly implemented across our various businesses, which were substantially completed by the end of the second quarter of 2024, and payment of termination benefits were completed as of December 31, 2024. The impact of the realignment program on headcount-related costs for the year ended December 31, 2024 and 2023 is included in our discussion below.
Previous wording
Cost of subscriptions and licenses. 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.
Current wording
Cost of subscriptions and licenses. Cost of subscriptions and licenses expenses primarily include headcount‑related costs, 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 also include channel partner compensation for providing sales coverage to users, depreciation of property and equipment, amortization of capitalized software costs associated with servicing software subscriptions and our Accelerated Commercial Development Program (“ACDP”), and amortization of intangible assets associated with acquired software and technology.
Previous wording
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.
Current wording
For the year ended December 31, 2024, on a constant currency basis, cost of subscriptions and licenses expenses increased primarily due to an increase in cloud‑related costs of $10,859. Partially offsetting this increase was lower amortization of capitalized costs under our ACDP of $3,983 as compared to the prior year and lower headcount‑related costs of $2,090 primarily due to lower stock‑based compensation expense.
Previous wording
For the year ended December 31, 2023, on a constant currency basis, cost of services increased primarily due to an increase in headcount‑related costs of approximately $7,991, mainly due to third‑party personnel costs, and to a lesser extent, increases in headcount and annual compensation costs, partially offset by lower acquisition-related retention incentives.
Current wording
For the year ended December 31, 2024, on a constant currency basis, cost of services expenses decreased primarily due to a decrease in headcount‑related costs of $12,514, mainly due to a reduction in third‑party personnel costs.
Previous wording
Research and development. 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. Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings. Our allocation of research and development resources is based on a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions. We anticipate that we will 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.
Current wording
Research and development. Research and development expenses primarily consist of headcount‑related 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, which is generally shortly before the release of such products. Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings. Our allocation of research and development resources is based on a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions. We anticipate that we will 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.
Previous wording
For the year ended December 31, 2023, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of approximately $18,730, mainly due to an increase in annual compensation costs and headcount, and to a lesser extent, realignment expenses, partially offset by a decrease in stock‑based compensation expense primarily related to the April 2023 retirement of founder and former Chief Technology Officer, Keith Bentley. The retirement of Mr. Bentley contributed to a deceleration of research and development expenses growth during 2023.
Current wording
For the year ended December 31, 2024, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of $9,513, mainly due to an increase in annual and other compensation costs. Offsetting the increase in headcount‑related costs were $4,995 of realignment expenses related to the 2023 Program recorded during the year ended December 31, 2023.
Previous wording
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.
Current wording
For the year ended December 31, 2024, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $23,408, mainly due to an increase in annual and other compensation costs, and an increase in third-party personnel costs primarily related to our marketing activities. Additionally, selling and marketing expenses further increased due to an increase in promotional costs of $5,449.
Previous wording
General and administrative. General and administrative expenses primarily include headcount‑related costs for our finance, human resources, and legal functions, as well as professional fees for legal and accounting services. General and administrative expenses also include acquisition costs, which consist of costs related to legal, accounting, valuation, insurance, and other consulting and transaction fees. Additionally, acquisition costs will drive fluctuations in general and administrative expenses depending on the timing of business combinations.
Current wording
General and administrative. General and administrative expenses primarily include headcount‑related costs for our finance, human resources, and legal functions, as well as professional fees for legal and accounting services. General and administrative expenses also include acquisition costs, which consist of costs related to legal, accounting, valuation, insurance, and other consulting and transaction fees. Acquisition costs may drive fluctuations in general and administrative expenses depending on the timing of business combinations.
Previous wording
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. Partially offsetting these increases were lower non‑income related taxes of approximately $6,001 and lower acquisition expenses of approximately $5,777.
Current wording
For the year ended December 31, 2024, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of $11,048, mainly due to an increase in annual and other compensation costs, and to a lesser extent, higher charitable contributions focusing on education and sustainability of $4,143 and higher expense associated with non‑income related taxes of $3,585. Additionally, during the year ended December 31, 2024, we recognized approximately $10,300 of costs associated with our internal-use software implementations, as well as approximately $2,200 of other corporate initiatives expenses. Partially offsetting these increases were lower acquisition costs of $4,276.
Previous wording
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.
Current wording
For the year ended December 31, 2024, deferred compensation plan expense was attributable to the marked to market impact on deferred compensation plan liability balances period over period.
Previous wording
For the year ended December 31, 2023, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to the prior year.
Current wording
For the year ended December 31, 2024, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to prior years.
Previous wording
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. The majority of our debt is protected from rising interest rates, through either very low fixed coupon interest on our convertible notes or our $200,000 interest rate swap, which expires in 2030.
Current wording
Interest expense, net primarily represents interest associated with credit facility borrowings, the 2026 Notes, the 2027 Notes, amortization of deferred debt issuance costs, and interest income from our investments in money market funds. The majority of our debt is protected from rising interest rates, through either very low fixed coupon interest on our convertible notes or our $200,000 interest rate swap, which expires in 2030.
Previous wording
(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. 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.
Current wording
(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.
Previous wording
(2)Other (expense) income, net includes investment impairment and other charges of $(16,988), partially offset by gains on investments of $2,360 for the year ended December 31, 2023.
Current wording
(2)Other income (expense), net for the year ended December 31, 2023 includes investment impairment and other charges of $(16,988), partially offset by gains on investments of $2,360.
Previous wording
(Benefit) provision for income taxes includes the aggregate consolidated income tax expense for U.S. domestic and foreign income taxes.
Current wording
Provision (benefit) for income taxes includes the aggregate consolidated income tax expense for U.S. domestic and foreign income taxes.
Previous wording
For the year ended December 31, 2023, the effective tax rate was lower as compared to the year ended December 31, 2022 primarily due to the discrete tax benefit recognized as a result of the internal legal entity restructuring described below. The benefit of the internal legal entity restructuring was partially offset by an increase in the effective tax rate impact of the Global Intangible Low‑Taxed Income (“GILTI”) inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes and a decrease in discrete tax benefits related to stock-based compensation, net of the impact from officer compensation limitation provisions, recognized during the current year. 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.
Current wording
For the year ended December 31, 2024, the effective tax rate was higher as compared to the year ended December 31, 2023 primarily due to the discrete tax benefit recognized as a result of the internal legal entity restructuring during the fourth quarter of 2023 described below, as well as a decrease in discrete tax benefits related to stock‑based compensation, net of the impact from officer compensation limitation provisions, partially offset by the decrease in the adverse effective tax rate impact of the net tax on foreign earnings. The decrease in net tax on foreign earnings is primarily related to increased foreign creditable taxes available to reduce the net impact of the U.S. Global Intangible Low‑Taxed Income (“GILTI”) inclusion. For the years ended December 31, 2024 and 2023, we recorded discrete tax benefits of $5,583 and $14,648, respectively, associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.
Previous wording
During the fourth quarter of 2023, we recognized a net discrete income tax benefit of $170,784 attributable to internal legal entity restructuring and related intra-entity transactions as part of our continuing efforts to align intellectual property ownership with our business operating model. These transactions resulted in the recognition of deferred tax benefits arising from the net increase in deferred tax assets related to intangibles and goodwill of $171,622. The deferred tax assets represent the undiscounted future anticipated cash tax impacts of basis differences, which are expected to be realized through tax amortization over the next 13 years. See Note 16 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information.
Current wording
During the fourth quarter of 2023, we recognized a net discrete income tax benefit of $170,784 attributable to internal legal entity restructuring and related intra-entity transactions as part of our continuing efforts to align intellectual property ownership with our business operating model. These transactions resulted in the recognition of deferred tax benefits arising from the net increase in deferred tax assets related to intangibles and goodwill of $171,622. As of December 31, 2023, the deferred tax assets represented the undiscounted future anticipated cash tax impacts of basis differences, which were expected to be realized through tax amortization over the next 13 years, beginning in 2024. See Note 16 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information.
Previous wording
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.
Current wording
ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 50%, 47%, and 43% as of December 31, 2024, 2023, and 2022, respectively, with our E365 subscription offering representing 45%, 41%, and 35% of total ARR as of December 31, 2024, 2023, and 2022, respectively.
Previous wording
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.
Current wording
Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. In reporting period-over-period ARR growth rates in constant currency, we calculate constant currency growth rates by translating current and prior period ARR on a transactional basis to our reporting currency using current year budget exchange rates. We believe that ARR growth is an important metric indicating the scale and growth of our business.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Intangible assets other than goodwill are tested annually for impairment on October 1, or more frequently if events occur or circumstances change that would more likely than not reduce its fair value below its carrying amount.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the fourth quarter of 2023, we changed our definitions of constant currency and constant currency growth 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. Our prior definition of constant currency calculated the effects of foreign currency fluctuations and constant currency information by translating current period results of our subsidiaries from their functional currencies to our reporting currency by using prior period average foreign currency exchange rates in reporting period‑over‑period results.