Bentley Systems, Incorporated (NASDAQ:BSY) ("Bentley Systems" or the "Company"), the infrastructure engineering software company, today announced operating results for its fourth quarter and full year ended December 31, 2022, and its financial outlook for 2023.

Fourth Quarter 2022 Financial Results

Total revenues were $286.9 million, up 7.2% or 12.7% on a constant currency basis, year-over-year;
Subscriptions revenues were $251.5 million, up 12.7% or 18.3% on a constant currency basis, year-over-year;
Annualized Recurring Revenues ("ARR") was $1,036.5 million as of December 31, 2022, representing a constant currency ARR growth rate of 15% from December 31, 2021, or 12.5% ARR growth from business performance, excluding acquired ARR from our 22Q1 platform acquisition of Power Line Systems;
Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the preceding quarter;
Operating income was $40.8 million, compared to $43.3 million for the same period last year;
Adjusted operating income was $88.1 million, compared to $83.3 million for the same period last year;
Net income was $25.7 million, compared to $38.6 million for the same period last year. Net income per diluted share was $0.08, compared to $0.12 for the same period last year; Net income margin was 9.0%, compared to 14.4% for the same period last year;
Adjusted net income was $59.7 million, compared to $72.2 million for the same period last year. Adjusted net income per diluted share ("Adjusted EPS") was $0.19 compared to $0.22 for the same period last year;
Adjusted EBITDA was $92.6 million, compared to $88.2 million for the same period last year. Adjusted EBITDA margin was 32.3%, compared to 32.9% for the same period last year; and
Cash flow from operations was $36.1 million, compared to $80.6 million for the same period last year, with the decrease mainly due to the timing of renewals and associated billings of certain annual contracts, and the timing of certain vendor payments.

Full Year 2022 Financial Results

Total revenues were $1,099.1 million, up 13.9% or 19.8% on a constant currency basis over 2021;
Subscriptions revenues were $960.2 million, up 18.1% or 24.3% on a constant currency basis over 2021;
Operating income was $208.6 million, compared to $94.6 million for 2021. Operating income for 2021 includes a one-time compensation charge of $90.7 million resulting from a modification of our deferred compensation plan;
Adjusted operating income was $348.5 million, compared to $306.2 million for 2021;
Adjusted operating income inclusive of stock-based compensation ("Adjusted OI w/SBC") was $273.9 million, compared to $258.0 million for 2021;
Net income was $174.8 million, compared to $93.2 million for 2021. Net income per diluted share was $0.55, compared to $0.30 for 2021. Net income for 2021 includes a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of our deferred compensation plan. Net income margin was 15.9%, compared to 9.7% for 2021;
Adjusted net income was $274.5 million, compared to $267.9 million for 2021. Adjusted EPS was $0.85 compared to $0.83 for 2021;
Adjusted EBITDA was $366.4 million, compared to $324.9 million for 2021. Adjusted EBITDA margin was 33.3%, compared to 33.7% for 2021; and
Cash flow from operations was $274.3 million, compared to $288.0 million for 2021, with the decrease primarily due to the timing of renewals and associated billings of certain annual contracts, and increased interest payments.

Definitions of the non‑GAAP financial measures used in this press release and reconciliations of such measures to the most comparable GAAP financial measures are included below under the heading "Use and Reconciliation of Non‑GAAP Financial Measures."

CEO Greg Bentley said, "The fourth quarter and thus full-year 2022 operating results quite successfully met the expectations we maintained throughout the year, notwithstanding the loss of Russia and pandemic-compounded headwinds in China. Our operating team colleagues, led by COO Nicholas Cumins, delivered what I consider our best year ever, operationally and financially. Our E365 and SMB growth initiatives hit a new stride, our Seequent and Power Line Systems platform acquisitions continued their breakout new business velocity, and every region throughout the world, other than China, continues to perform and grow at full pace. The stage is set for relatively favorable visibility into comparable growth during 2023, as our accounts and prospects are necessarily prioritizing going digital in order to meet accelerated demand for infrastructure engineering.

Our 2023 annual financial outlook must nonetheless factor in a cautious approach to China, where we are appropriately adapting to improve our long-term prospects under the assumption of continued geopolitical challenges. Our enduring annual commitment to margin improvement is now expressed in terms of Adjusted operating income inclusive of stock-based compensation (rather than Adjusted EBITDA) to align our external reporting with executive incentives that incorporate accountability for the full economic costs of equity awards and of operating capex. We are also announcing further generational management succession, as we round out our expected wave of post‑IPO executive retirements with, characteristically, ‘no drama.'"

CFO Werner Andre said, "In Q4, as throughout 2022, sustained favorable operating momentum enabled us to achieve our strong results despite the year's challenges in Russia and China. Our Q4 decrease in cash flow from operations stemmed largely from timing and has been fully offset by resulting extraordinary collections in early 2023.

Our 2023 financial outlook reflects our confidence in continued strong market demand for infrastructure engineering going digital—led by our E365 program, SMB initiatives, and enduring strength of our platform acquisitions—subject to wider uncertainty surrounding potential outcomes in China. Our balanced capital allocation provides sufficiently for programmatic acquisitions and for equity and debt repurchase programs, as well as our 2023 increase to our modest dividend payout."

Recent Financial Developments

On November 30, 2022, we completed the acquisition of Vetasi, a leading international consultancy specializing in enterprise asset management (EAM) solutions, with a strong focus on IBM Maximo;
On February 23, 2023, we announced we completed the acquisition of EasyPower, a developer of design and analysis software for power systems engineering and an established market leader in arc-flash hazard resilience;
For the year ended December 31, 2022, to offset dilution from stock-based compensation, we spent approximately $43.6 million on de-facto share repurchases associated mainly with deferred compensation plan distributions, and under the BSY Stock Repurchase Program which we announced in the second quarter of 2022 we repurchased 896,126 shares for $28.3 million, and $2.2 million aggregate principal amount of our outstanding convertible senior notes due 2026 for $2.0 million; and
On January 25, 2023, we announced our board of directors increased our regular quarterly dividend from $0.03 per share to $0.05 per share effective from the first quarter of 2023.

2023 Financial Outlook

The Company is sharing the following financial outlook for the full year 2023:

Total revenues in the range of $1,205 million to $1,235 million, representing growth of approximately 9.5% to 12.5% (10.5% to 13.5% in constant currency);
Constant currency ARR growth rate (business performance)⁽¹⁾ of 11.5% to 13.5%;
Adjusted OI w/SBC margin of approximately 26%;
Effective tax rate of approximately 20%;
Cash flow from operations representing a conversion rate from Adjusted EBITDA of approximately 80%; and
Capital expenditures of approximately $30 million, which includes certain IT investments.

______________
(1)		Business performance excludes ARR acquired from platform acquisitions, but includes ARR acquired from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

The 2023 outlook information provided above includes non-GAAP financial measures management uses in measuring performance and liquidity. The Company is unable to reconcile these forward-looking non-GAAP measures to GAAP without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact of certain items and unanticipated events, including stock‑based compensation charges, depreciation and amortization of acquired intangible assets, realignment expenses, and other items, which would be included in GAAP results. The impact of such items and unanticipated events could be potentially significant.

The 2023 outlook is forward-looking, subject to significant business, economic, regulatory, and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and those variations may be material. As such, our results may not fall within the ranges contained in this outlook. The Company uses these forward-looking measures to evaluate its ongoing operations and for internal planning and forecasting purposes.

Operating Results Call Details

Bentley Systems will host a live Zoom video webinar on February 28, 2023 at 8:15 a.m. EST to discuss operating results for its fourth quarter and full year ended December 31, 2022.

Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://us06web.zoom.us/webinar/register/WN_KICwUBUARgy6AyL7WgEOMw. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems' Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems' Investor Relations website for one year.

Definitions of Certain Key Business Metrics

Definitions of the non‑GAAP financial measures used in this operating results press release and reconciliations of such measures to their nearest GAAP equivalents are included below under "Use and Reconciliation of Non‑GAAP Financial Measures." Certain non‑GAAP measures included in our financial outlook are not being reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward‑looking basis. The Company is unable to reconcile these forward‑looking non‑GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected for these periods not to impact the non‑GAAP measures, but would impact GAAP measures. Such unavailable information, which could have a significant impact on the Company's GAAP financial results, may include stock‑based compensation charges, depreciation and amortization of acquired intangible assets, realignment expenses, and other items.

Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions;
ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates;
Business performance excludes the ARR onboarding of our platform acquisitions and includes the impact from the ARR onboarding of programmatic acquisitions, which generally are immaterial, individually and in the aggregate;
Adjusted OI w/SBC margin is calculated by dividing Adjusted OI w/SBC by total revenues;
Net income margin is calculated by dividing net income by total revenues; and
Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenues.

Constant Currency Metrics

In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with GAAP.

Our last twelve‑month recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from accounts with recurring revenues in the prior period ("existing accounts"), but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period. A period is defined as any trailing twelve months. Related to our platform acquisitions, recurring revenues into new accounts will be captured as existing accounts starting with the second anniversary of the acquisition when such data conforms to the calculation methodology. This may cause variability in the comparison; and
Our constant currency ARR growth rate is the growth rate of ARR for our business performance, measured on a constant currency basis.

Use and Reconciliation of Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we have calculated Adjusted OI w/SBC, Adjusted operating income, Adjusted net income, Adjusted EPS, and Adjusted EBITDA, each of which are non‑GAAP financial measures. In future periods, we will discuss Adjusted OI w/SBC rather than Adjusted EBITDA as our performance measure, as management believes Adjusted OI w/SBC better captures the significant economic costs of stock‑based compensation and of operating depreciation and amortization. In future periods, we will discuss Adjusted EBITDA as our liquidity measure in the context of conversion of Adjusted EBITDA to cash flow from operations (i.e., the ratio of GAAP cash flow from operations to Adjusted EBITDA). We have provided tabular reconciliations of each of these non‑GAAP financial measures to such measure's most directly comparable GAAP financial measure.

Management uses these non‑GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance. Our non‑GAAP financial measures are presented as supplemental disclosure as we believe they provide useful information to investors and others in understanding and evaluating our results and prospects period‑over‑period without the impact of certain items that do not directly correlate to our operating performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as to compare our financial results to those of other companies.

Our definitions of these non‑GAAP financial measures may differ from similarly titled measures presented by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non‑GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP, and should be read in conjunction with the financial statements included in our Annual Report on Form 10‑K to be filed with the United States Securities and Exchange Commission.

We calculate these non‑GAAP financial measures as follows:

Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation, for the respective periods;
Adjusted OI w/SBC is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods;
Adjusted net income is defined as net income adjusted for the following: amortization of purchased intangibles, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax, for the respective periods. The income tax effect of non‑GAAP adjustments was determined using the applicable rates in the taxing jurisdictions in which income or expense occurred, and represent both current and deferred income tax expense or benefit based on the nature of the non‑GAAP adjustments, including the tax effects of non‑cash stock‑based compensation expense;
Adjusted EPS is calculated as Adjusted net income, less net income attributable to participating securities, plus interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method, if applicable, (numerator) divided by Adjusted weighted average shares, diluted (denominator). Adjusted weighted average shares, diluted is calculated by adding incremental shares related to the dilutive effect of convertible senior notes using the if‑converted method, if applicable, to weighted average shares, diluted; and
Adjusted EBITDA is defined as net income adjusted for the following: interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), other non‑operating (income) expense, net, and (income) loss from investments accounted for using the equity method, net of tax.

During the second quarter of 2022, we modified our definitions of Adjusted net income, Adjusted operating income, and Adjusted EBITDA to adjust for realignment expenses (income) relating to our wind down of business in, and exit from, the Russian market, which were subsequently adjusted during the third and fourth quarters of 2022 for our change in estimates. These realignment expenses (income) are comprised of termination benefits for colleagues whose positions were eliminated and corresponding asset impairments. Amounts for all periods herein reflect application of the aforementioned definitions modification.

For the three months and year ended December 31, 2022, payments related to the Company's interest rate swap were recognized in Other income (expense), net in the consolidated statements of operations and the corresponding prior period amounts, which were previously recognized in Interest expense, net, were reclassified to conform to the current presentation. For the three months and year ended December 31, 2021, the amounts reclassified were not material, and Income before income taxes and Net income in the consolidated statements of operations did not change as a result of these reclassifications.

Forward-Looking Statements

This press release includes forward-looking statements regarding the future results of operations and financial position, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the "Company," "we," "us," and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: adverse changes in global economic and/or political conditions; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts' rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; and our ability to integrate acquired businesses successfully.

Further information on potential factors that could affect the financial results of the Company are included in the Company's Form 10‑K and subsequent Forms 10‑Q, which are on file with the United States Securities and Exchange Commission. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Bentley Systems

Bentley Systems (NASDAQ:BSY) is the infrastructure engineering software company. We provide innovative software to advance the world's infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings, powered by the iTwin Platform for infrastructure digital twins, include MicroStation and Bentley Open applications for modeling and simulation, Seequent's software for geoprofessionals, and Bentley Infrastructure Cloud encompassing ProjectWise for project delivery, SYNCHRO for construction management, and AssetWise for asset operations. Bentley Systems' 5,000 colleagues generate annual revenues of more than $1 billion in 194 countries.

www.bentley.com

© 2023 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, Bentley Infrastructure Cloud, EasyPower, iTwin, MicroStation, Power Line Systems, ProjectWise, Seequent, SYNCHRO, and Vetasi, are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners.


BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) (unaudited)


	December 31,
		2022			2021
Assets
Current assets:
Cash and cash equivalents	$	71,684		$	329,337
Accounts receivable		296,376			241,807
Allowance for doubtful accounts		(9,303	)		(6,541	)
Prepaid income taxes		18,406			16,880
Prepaid and other current assets		38,732			34,348
Total current assets		415,895			615,831
Property and equipment, net		32,251			31,823
Operating lease right-of-use assets		40,249			50,818
Intangible assets, net		292,271			245,834
Goodwill		2,237,184			1,588,477
Investments		22,270			6,438
Deferred income taxes		52,636			71,376
Other assets		72,249			48,646
Total assets	$	3,165,005		$	2,659,243
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	15,176		$	16,483
Accruals and other current liabilities		362,048			323,603
Deferred revenues		226,955			224,610
Operating lease liabilities		14,672			17,482
Income taxes payable		4,507			6,696
Current portion of long-term debt		5,000			5,000
Total current liabilities		628,358			593,874
Long-term debt		1,775,696			1,430,992
Deferred compensation plan liabilities		77,014			94,890
Long-term operating lease liabilities		27,670			35,274
Deferred revenues		16,118			7,983
Deferred income taxes		51,235			65,014
Income taxes payable		8,105			7,725
Other liabilities		7,355			14,269
Total liabilities		2,591,551			2,250,021
Stockholders' equity:
Common stock		2,890			2,825
Additional paid-in capital		1,030,466			937,805
Accumulated other comprehensive loss		(89,740	)		(91,774	)
Accumulated deficit		(370,866	)		(439,634	)
Non-controlling interest		704			—
Total stockholders' equity		573,454			409,222
Total liabilities and stockholders' equity	$	3,165,005		$	2,659,243


BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited)


	Three Months Ended						Year Ended
	December 31,						December 31,
		2022			2021			2022			2021
Revenues:
Subscriptions	$	251,489		$	223,105		$	960,220		$	812,807
Perpetual licenses		12,164			19,707			43,377			53,080
Subscriptions and licenses		263,653			242,812			1,003,597			865,887
Services		23,295			24,920			95,485			99,159
Total revenues		286,948			267,732			1,099,082			965,046
Cost of revenues:
Cost of subscriptions and licenses		39,674			34,439			147,578			124,321
Cost of services		22,677			25,128			89,435			92,218
Total cost of revenues		62,351			59,567			237,013			216,539
Gross profit		224,597			208,165			862,069			748,507
Operating expense (income):
Research and development		67,890			63,002			257,856			220,915
Selling and marketing		53,946			47,394			195,622			162,240
General and administrative		45,666			39,883			174,647			150,116
Deferred compensation plan		6,091			5,719			(15,782	)		95,046
Amortization of purchased intangibles		10,245			8,898			41,114			25,601
Total operating expenses		183,838			164,896			653,457			653,918
Income from operations		40,759			43,269			208,612			94,589
Interest expense, net		(11,114	)		(3,555	)		(34,635	)		(11,221	)
Other income, net		9,505			1,155			24,298			9,961
Income before income taxes		39,150			40,869			198,275			93,329
(Provision) benefit for income taxes		(13,062	)		(1,642	)		(21,283	)		3,448
Loss from investments accounted for using the equity method, net of tax		(366	)		(646	)		(2,212	)		(3,585	)
Net income		25,722			38,581			174,780			93,192
Less: Net income attributable to participating securities		(11	)		(3	)		(42	)		(9	)
Net income attributable to Class A and Class B common stockholders	$	25,711		$	38,578		$	174,738		$	93,183
Per share information:
Net income per share, basic	$	0.08		$	0.13		$	0.57		$	0.30
Net income per share, diluted	$	0.08		$	0.12		$	0.55		$	0.30
Weighted average shares, basic		310,025,480			307,447,788			309,226,677			305,711,345
Weighted average shares, diluted⁽¹⁾		323,916,511			325,541,718			331,765,158			314,610,814

_____________
⁽¹⁾		Weighted average shares, diluted for the three months ended December 31, 2021 have been corrected to reflect the dilutive effect of convertible senior notes.


BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) (unaudited)


	Year Ended
	December 31,
		2022			2021
Cash flows from operating activities:
Net income	$	174,780		$	93,192
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		71,537			52,793
Deferred income taxes		(5,126	)		(19,745	)
Stock-based compensation expense		75,206			49,045
Deferred compensation plan		(15,782	)		95,046
Amortization and write-off of deferred debt issuance costs		7,291			5,955
Change in fair value of derivative		(27,083	)		(9,770	)
Foreign currency remeasurement loss		6,000			64
Other non-cash items, net		2,593			5,338
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable		(60,938	)		(35,519	)
Prepaid and other assets		14,053		14,260
Accounts payable, accruals, and other liabilities		29,181			47,957
Deferred revenues		2,292			5,340
Income taxes payable, net of prepaid income taxes		320			(15,932	)
Net cash provided by operating activities		274,324			288,024
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software		(18,546	)		(17,539	)
Proceeds from sale of aircraft		2,380			—
Acquisitions, net of cash acquired		(743,007	)		(1,034,983	)
Other investing activities		(10,954	)		(4,081	)
Net cash used in investing activities		(770,127	)		(1,056,603	)
Cash flows from financing activities:
Proceeds from credit facilities		833,292			745,310
Payments of credit facilities		(487,694	)		(991,310	)
Proceeds from convertible senior notes, net of discounts and commissions		—			1,233,377
Payments of debt issuance costs		—			(5,643	)
Purchase of capped call options		—			(51,605	)
Settlement of convertible senior notes		(1,998	)		—
Proceeds from term loans		—			199,505
Repayments from term loans		(5,000	)		—
Payments of acquisition debt and other consideration		(8,460	)		(2,371	)
Payments of dividends		(34,493	)		(33,396	)
Proceeds from stock purchases under employee stock purchase plan		10,335			3,846
Proceeds from exercise of stock options		8,338			5,605
Payments for shares acquired including shares withheld for taxes		(43,561	)		(120,539	)
Repurchase of Class B Common Stock under approved program		(28,250	)		—
Other financing activities		525			(197	)
Net cash provided by financing activities		243,034			982,582
Effect of exchange rate changes on cash and cash equivalents		(4,884	)		(6,672	)
(Decrease) increase in cash and cash equivalents		(257,653	)		207,331
Cash and cash equivalents, beginning of year		329,337			122,006
Cash and cash equivalents, end of year	$	71,684		$	329,337

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures

For the Three Months and Year Ended December 31, 2022 and 2021

(in thousands, except share and per share data)

(unaudited)

Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income:

	Three Months Ended					Year Ended
	December 31,					December 31,
		2022			2021		2022			2021
Operating income	$	40,759		$	43,269	$	208,612		$	94,589
Amortization of purchased intangibles		13,418			11,998		53,592			34,001
Deferred compensation plan		6,091			5,719		(15,782	)		95,046
Acquisition expenses		4,342			6,369		25,398			34,368
Realignment (income) expenses		(114	)		—		2,109			—
Adjusted OI w/SBC		64,496			67,355		273,929			258,004
Stock-based compensation		23,592			15,966		74,566			48,152
Adjusted operating income	$	88,088		$	83,321	$	348,495		$	306,156

Reconciliation of net income to Adjusted net income:

	Three Months Ended												Year Ended
	December 31,												December 31,
	2022						2021						2022						2021
	$			EPS⁽¹⁾			$			EPS⁽¹⁾			$			EPS⁽¹⁾			$			EPS⁽¹⁾
Net income	$	25,722		$	0.08		$	38,581		$	0.12		$	174,780		$	0.55		$	93,192		$	0.30
Non-GAAP adjustments, prior to income taxes:
Amortization of purchased intangibles		13,418			0.04			11,998			0.04			53,592			0.16			34,001			0.10
Stock-based compensation		23,592			0.07			15,966			0.05			74,566			0.22			48,152			0.15
Deferred compensation plan		6,091			0.02			5,719			0.02			(15,782	)		(0.05	)		95,046			0.29
Acquisition expenses		4,342			0.01			6,369			0.02			25,398			0.08			34,368			0.10
Realignment (income) expenses		(114	)		—			—			—			2,109			0.01			—			—
Other income, net		(9,505	)		(0.03	)		(1,155	)		—			(24,298	)		(0.07	)		(9,961	)		(0.03	)
Total non-GAAP adjustments, prior to income taxes		37,824			0.11			38,897			0.12			115,585			0.35			201,606			0.61
Income tax effect of non-GAAP adjustments		(4,227	)		(0.01	)		(5,909	)		(0.02	)		(18,059	)		(0.05	)		(30,491	)		(0.09	)
Loss from investments accounted for using the equity method, net of tax		366			—			646			—			2,212			0.01			3,585			0.01
Adjusted net income⁽²⁾⁽³⁾	$	59,685		$	0.19		$	72,215		$	0.22		$	274,518		$	0.85		$	267,892		$	0.83

Adjusted weighted average shares, diluted⁽⁴⁾	330,825,309						332,450,516						331,765,158						328,085,393

____________
⁽¹⁾		Adjusted EPS was computed independently for each reconciling item presented; therefore, the sum of Adjusted EPS for each line item may not equal total Adjusted EPS due to rounding.
⁽²⁾		Total Adjusted EPS for the three months and year ended December 31, 2021 have been corrected to reflect the dilutive effect of convertible senior notes.
⁽³⁾		Adjusted EPS numerator includes $1,695 and $1,706 for the three months ended December 31, 2022 and 2021, respectively, and $6,810 and $4,843 for the years ended December 31, 2022 and 2021, respectively, related to interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method.
⁽⁴⁾		Adjusted weighted average shares, diluted includes incremental shares, which were considered anti-dilutive on a GAAP basis, of 6,908,798 shares for both the three months ended December 31, 2022 and 2021, and 13,474,579 shares for the year ended December 31, 2021 related to the dilutive effect of convertible senior notes using the if‑converted method.

Reconciliation of net income to Adjusted EBITDA:

	Three Months Ended						Year Ended
	December 31,						December 31,
		2022			2021			2022			2021
Net income	$	25,722		$	38,581		$	174,780		$	93,192
Interest expense, net		11,114			3,555			34,635			11,221
Provision (benefit) for income taxes		13,062			1,642			21,283			(3,448	)
Depreciation and amortization		17,893			16,847			71,537			52,793
Stock-based compensation		23,592			15,966			74,566			48,152
Deferred compensation plan		6,091			5,719			(15,782	)		95,046
Acquisition expenses		4,342			6,369			25,398			34,368
Realignment (income) expenses		(114	)		—			2,109			—
Other income, net		(9,505	)		(1,155	)		(24,298	)		(9,961	)
Loss from investments accounted for using the equity method, net of tax		366			646			2,212			3,585
Adjusted EBITDA	$	92,563		$	88,170		$	366,440		$	324,948

Reconciliation of cash flow from operations to Adjusted EBITDA:

	Three Months Ended						Year Ended
	December 31,						December 31,
		2022			2021			2022			2021
Cash flow from operations	$	36,126		$	80,607		$	274,324		$	288,024
Cash interest		8,934			1,350			26,581			4,631
Cash taxes		7,388			6,292			25,890			30,831
Cash deferred compensation plan distributions		—			—			7,336			—
Cash acquisition expenses		2,999			4,416			26,168			27,873
Changes in operating assets and liabilities		38,588			(4,823	)		8,088			(27,681	)
Other⁽¹⁾		(1,472	)		328			(1,947	)		1,270
Adjusted EBITDA	$	92,563		$	88,170		$	366,440		$	324,948

_____________
⁽¹⁾		Includes payments related to interest rate swap.

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Bentley Systems Announces 22Q4 and 2022 Operating Results, and Its 2023 Financial Outlook