Good morning, everyone. And thank you for joining us for Bentley Systems’ Q2 2021 Operating Results webcast. I’m Carey Mann, Bentley’s VP of Investor Relations. On the webcast today, we have Bentley Systems’ Chief Executive Officer, Greg Bentley; Chief Financial Officer, David Hollister; and Chief Product Officer, Nicholas Cumins. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This webcast, including the question-and-answer portion of the webcast, may include forward-looking statements related to the expected future results for our company and are, therefore, forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our operating results release and other SEC filings. Today’s remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information, is provided in the press release and supplemental slide presentation. This webcast will be available for replay on Bentley Systems Investor Relations website at investors.bentley.com. Greg will begin by reviewing business developments and our progress over the last quarter. Greg will be joined by Nicholas, will provide an update on Bentley’s Seequent business. David will then take you through a review of the financial results as well as an update of our 2021 guidance. We will conclude with Q&A. And with that, let me introduce the CEO of Bentley Systems, Greg Bentley.

Good morning, as the case may be, and thanks to each of you for your interest in Bentley Systems quarterly operating results. Our prepared remarks today will follow our usual format with the addition of a presentation by our Chief Product Officer, Nicholas Cumins to introduce our new Seequent business unit. Interspersed throughout this agenda, I will provide some timely updates as to our work with digital co-venturers, Microsoft and Siemens. For the first time, our report today includes an update to our financial outlook for the year. Also for the first time today and observations about the tone of business, I would like to reset from recent convention. Last quarter, my narration provided yet further updates to the gyrations, which characterized in particular, our applications usage during the pandemic, which began over a year ago. But now that we're lapping those 2020 periods, and even though financial reporting needs to focus on such comparisons, it makes more sense to leave comparisons to the erratic trends of 2020 behind. My observations now and going forward will more so be informed by reference instead of to healthy pre-pandemic conditions. What I think about and we'll shortly speak about notable new business trends by sector, geography and/or product brand, I have in mind comparisons, especially to 2019, rather than the average past year. For each quarter to-date, including after 2021 Q1 shown here, we have started our tone of business narrative with the directions of application usage within each respective infrastructure sector, since that's where the trends of the pandemic impact have diverged most. The natural reason to start with application usage is that it's traditionally, literally the leading indicator of our new business growth, which particularly underlies ARR growth. And then in due course revenue growth, the proportions of revenue attributable…

Thank you, Greg. The world above ground is largely known and well described. The world below ground is uncertain because it is designed by nature and we cannot see it. Here, you need specialist expertise to understand nature's curves, grade, shade, anomalies, and exceptions. According to report by the Institution of Civil Engineers, the largest element of technical and financial risk lies in the ground. Studies have shown that unexpected problems related to ground conditions account for more than a third of product overrides. But imagine if you can see what lies beneath, you can derisk product delivery, you can greatly increase the resilience, the sustainability of the infrastructure. Seequent is a unique and truly innovative company in the subsurface. Seequent translated algorithm that originated in medical sciences into geology to create a paradigm shift in how the subsurface is interpreted. This capability, hone in the minerals industry where Seequent is very strong today has gone on to evolve into multiple industry verticals. This deep competence is well aligned with Bentley. Bentley has the goal to advance the design, construction and operations of the world's infrastructure to be more resilient and sustainable. To do that successfully, Bentley needed the best subsurface geoscience capabilities, the world has to offer and that is Seequent. Seequent brings a world-class leadership team to the Bentley family with a blend of geoscience and commercial experience for multiple industries, headquartered in New Zealand, half of the executive team is in other locations around the world as highlighted here. With a very strong history supporting the minerals industry, Seequent has built offices in areas of strong mining activities, such as Africa, Latin America, Western Australia, and Canada. And these are all highly complementary to Bentley office locations. Software development is concentrated in Ontario, Alberta and New Zealand.…

Nicholas, thank you. And especially for relating what Seequent’s users accomplish for responsible mining and environmental resilience toward achieving the U.N. Sustainable Development Goals. I know that our new Seequent colleagues all share zeal and responsibility for these advancements. We can together now deepen infrastructure, digital twins and deepen our collective commitment to these imperatives. In fact, I'm aware that ESG is a priority for everyone here. And it's especially a priority for us at BSY, but because an advancement in and through infrastructure engineering is vital to the world's consensus sustainable development goals and as you've seen for Seequent going digital is the palpable key to such advancements. I ask our colleagues to think of our own goals in this combined way. To remind us through Bentley Systems of our quite unique capabilities and enhanced imperatives and ESDG empowering sustainable development goals, including the examples that Nicholas also referenced. And while all organizations should attend to be evaluated upon and minimize their environmental footprint within ESG, for us, the much greater imperative must be ESDG, how are environmental handprint? So to conclude, I will briefly make the case that our imperative for ESDG can and should be empowered by digital twins, both our accounts, ESDG initiatives and digital twins will of course be in focused at the yearend infrastructure 2021. Our global thought leadership event which will again be virtual this year in early December and we will again have concierge arrangements for analyst, investor and investor attendees. Our virtual going digital award finalist presentations and judgings will lead up to the year and infrastructure, by way of accelerating progress toward digital twins. Among the 100s of projects nominated by our users again this year for going digital awards compared here to the year 2020 fully one third now…

Thanks, Greg. Jumping right in here with revenues. Our second quarter revenues of $223 million grew 21% over the same quarter last year. Of course, most of that growth comes from subscriptions, which grew 17.6% over the year prior and still represent well over 80% of our revenues. So I offer much of my business commentary here as it relates to subscriptions. Our recent acquisition of Seequent contributed nearly $4 million of subscription revenue growth during the quarter, accounting for 2.5 points of growth. Continuing foreign currency tailwinds, contributed about 4 points of our subscription growth during the quarter. Thus, the remaining growth in subscriptions of a little better than 10% comes from business performance. As Greg mentioned, our software performance in the public works and utility sector of our market led the way in overcoming the macro induced drag on our performance in the industrial and resources sector, where our footprint of EPC accounts continues to suffer declines induced by capital project delays and cancellations. On a product dimension, our SYNCHRO construction practice geotechnical open flows water modeling and asset-wide information management and inspection solutions all had notably positive contributions during the quarter. On a geographic dimension North America, the UK and Europe also had notably favorable quarters, net of some disappointing ARR performance in China with its geopolitical challenges and in the Middle East corresponding to the ongoing oil and gas exposures. Our perpetual license revenues are down $1 million for the quarter relative to the prior year, and now represent only 5% of total revenues. We continue to observe some ongoing cannibalization of perpetual licenses and into term license subscriptions at virtualized subscriptions, a trend we expected and walk around. Our professional services revenues now over a 11% of our total revenues increased nearly $12 million or…

For our first question, we'll go to Matt Hedberg from RBC.

Matt, we're not hearing you.

All right. Yes. Hey guys, can you hear me now?

Yes.

Hey, thanks for taking the question and congrats on a really strong quarter. Greg, I mean, I guess what really stood out to me, it was lot of good detail. It really feels like, you're returning now to pre-pandemic levels in lot of aspects of your business. And I think you guys noted that license revenue was down and that's a favorable trend, E365 usage was up, I guess, I'm wondering when you look across the broad business, are you seeing consumptions, patterns change in some of these customers that were maybe more impacted by the pandemic? In other words, are people leveraging your technology even more so to a greater extent than they did pre-pandemic, because of some of the stuff that they learned about digital transformation, leveraging technology? Just sort of wondering on a broad scale, if you've sensed any change there.

Hi, thanks. So all of the E365 accounts, and you see how that's growing are because of these accounts want success programs for new digital workflows. I’d like to say they expect their workload to grow and are concerned that they won't be able to grow their workforce to the extent that they – of the new work and hence new digital workflow methods and of course, for us, that can be application, mix accretion with more specialized products such as the examples we show here. I think you're right.

That's helpful. Then maybe just one more, David, you noticed that you're not making any additional macro assumptions within your guidance. I think the delta variant has been on a lot of people's minds recently, anything there that you're sensing from the field or is that – is it still too early to get a sense for that?

Yes, I think, I think it's still too early. I've not heard one negative feedback point from the field so far.

On the other hand, it changes by the day, our poster child for back to work has been China and the recent news is concerning there.

Got it. Well done thus far in the first half of the year. Congrats on Seequent closing. Thanks guys.

Thanks, Matt. We'll go to Jason Celino from KeyBanc.

Hey guys. Thanks for taking my questions. Maybe just two for me. It looks like the implied ARR guidance from Seequent is like $94 million. That's an uptick from the kind of $80 million commentary that you gave previously. I guess, any further thoughts on Seequent’s growth or margin profile now that the acquisitions finally closed and then?

Yes, just – Jason. I would say just a confirmation that Seequent is growing twice as fast as Bentley Systems, we're seeing that and that's concerned. And on an annualized basis, I described their margin profile as similar to Bentley Systems. You won't see that in the last half of the year, because of the seasonality, but on an annualized basis, their margin profile will look like Bentley Systems. And we're going to program it to look like Bentley Systems, because we're going to keep investing in that business to fuel that continued growth.

I guess I'll just ask Nicholas, I think we’re organizing as well, so that, that momentum continues and that we add to it through the reverse integration of our existing geotech business to decline for a strong momentum, right?

That's exactly right. So we are keeping Seequent as a standalone business unit, according to me, but they’re keeping all of their core business functions. The only changes we're making to their creating model are to either accelerate their growth for compliance purposes. The key objective is really to continue to grow that business as fast as they had been growing stand-alone, if not even faster under part of the Bentley family.

Okay. Excellent. Thank you. And then one quick one for Greg. You talked about the 5% higher TAM based on this new study and then AAC was growing and spend more than so on the manufacturing side. Is there any, – I guess, what is driving that outperformance and growth? Is it investments in certain areas, certain products, any thoughts there? Thank you.

Well, of course the report goes from 18% to 19% and when you – we will publish the report in due course here, you'll see that they – we measured a number of AEC engineers, the number of infrastructure engineers, as well as their spending. And they are also able to research this in more countries than before. I think going digital and going virtual will have accelerated that even more so, but this notion that, infrastructure engineering had been behind, but has this appetite to catch up now that there is lots of new work coming and we can't produce in the world even more civil structural and geotechnical engineers will make them more productive and make them collaborate better and those – the answer for that last year, not within the study has shown that.

Great, thank you.

I'll go to Matthew Broome from Mizuho.

Thanks very much. Just in terms of digital twins, maybe if you can talk a little bit about us, so the momentum for that in the course in terms of interest and pipeline. And given your ongoing efforts to evangelize that technology? And then to what extent are you seeing ecosystem partners ramp their investments in this area?

Well, we are working hard to evangelize, especially among ecosystem partners and our acceleration venture fund includes now technical support efforts and so forth to help with that. And ecosystem exists within our own applications, where our effort now is to have the platform underlie the digital clean advancements for all of our products, we’ll use the term iTwin and power increasingly for our products. And I think we are making headway there to see 11% of the projects nominated this year, referred to our iTwin platform, and they could be using just parts of it, not all of it necessarily. But we're trying to go broad with the iTwin platform at the same time as we go deeper with the examples, like the communication towers that I talked about last time that are moving ahead. And then eventually coalesce everything somewhere in between, we're working on both of those at the same time, going broad and going deep, but it's still very early.

Right. Of course. And then just longer-term, do you have any expectations in terms of what the E365 license mix will be for you?

Well, we – there are very many large select subscriber accounts who never went onto our ELS program, and that's the next set of priorities for us. Some of those have all very best interest are gone to E365. But we think there is another equal amount of E365 that we can gain there and the feedback from E365 has been very strong, accounts want the success initiatives and the [Technical Difficulty] embedded experts that we're getting better at having just started it a year ago, we're very encouraged by it. And of course the asset test will be the EPC, those accounts want new digital workflows. They want to be doing things like changing their offshore mix of business to floating – to wind – offshore wind fixed and floating platforms. Also floating solar is a horizon for them and something like a success blueprint and an E365 program gets their full attention. So yes, we think even though the ELS program will exhaust within the coming year target place, yet more years of such opportunity for us.

Great. Okay, thanks. Thanks very much, Greg.

We’ll next go to Kash Rangan from Goldman Sachs.

Okay, great. Congratulations, Greg; good to see you on this webinar. I was intrigued by your comment – differentiating the recovery in commercial versus civil infrastructure. I would have thought that probably received rebound in civil infrastructure first before we see commercial, because there are still – a lot of us are still working from home. Wondering if you can expand your thoughts on that. And I think you also made a comment that the owner-operators, so it's still lagging as far as the sentiment relative to the contractors. So we can just expand on those content. And finally, any thoughts on the competitive environment, I know that you've acquired Seequent gives you a larger tent. So as a result, are you seeing less competition, more competition or about the same, any thoughts there would be appreciated. And thanks once again. Congratulations.

Well, I'll start with the last part of the question. I think everyone sees infrastructure as a great opportunity for going digital advancement. So I'd say there is more competition all the time. I don't think that's a bad thing, because there is so much – our TAM is such a multiple based on what product engineer has already spent, just catching up on that. Let me go back to bisector and be more clear. So public works and utilities, there never was a slowdown if you like – that continued to grow at various rates through the pandemic, commercial and facilities dipped and now has rebounded above the pre-pandemic levels. In public works and utilities, contractors stayed busy, owner-operators. Some of them had work schedules that changed and they had furloughed workers and so forth. So there were those institutional variations, public works and utilities, the civil side, as you say, generally has stayed strong. In commercial and facilities, we see the owner-operators responding faster and I just use this example, maybe like us, we believe we need to make changes in the fitness of our office facilities to attract our workforce back, that's just as surmise on our part. So of course our facilities, owner-operators are coming back sooner, public works and utilities, nobody ever was slowing down. But there were some work furloughs and so forth on the younger side that didn't – that won’t reflect on the contractor side. And generally, I think the public works and utilities folks are expecting this new work to come across the world in the commitments that are, of course not limited to road and rail, but especially in the energy grid communications networks and in lot of all these environmental resilience opportunities, where it's – civil engineers have to do the work and are eager and able to do the work.

Got it. Thank you. Thank you, Greg.

Now we’ll go to Gal Munda from Berenberg.

Gal, we don't hear you yet. Carey, let’s come back to Gal.

Yes, so let's go to Joe Vruwink from Baird.

Okay, great. Hi everyone. I wanted to discuss a bit, your advocacy here in the U.S. around smarter infrastructure investments, particularly as we contemplate stimulus measures. What has been the feedback from stakeholders and governments, your customers, as you've been communicating this idea and then if this advocacy does result in action, how would you expect that to manifest for Bentley Systems in terms of maybe particular areas of the business or products that could potentially fill this void relative to practices standards that aren't being pursued right now?

Joe, the feedback generally is that there's enthusiasm about going digital, especially for construction and project digital twins for new capacity of infrastructure. But our point is that's great. However, most of our infrastructure in the future, 99% is the infrastructure we have now. And digital twins are even more immediately applicable with drone inspection and where you can find the existing modeling data for digital twins and use it to maintain fitness for purpose. And now connect it up, make it living with IoT inputs to avert catastrophes and continue safety. That is a new thought. What we advocate in federal legislation is to provide incentives to the states and I'll use the example of a transit agencies especially and we think there's some receptivity to that, but it's tough to get above the noise for everyone lobbying for their particular new capacity project. We're just saying, do what you can there. It's still going to matter less in terms of quality of life and energy transition and safety then would digital twins for our existing infrastructure. That's rather an urgent need. What translate for us is to help the engineering firms get in the business of providing the digital twins for the assets they've created on behalf of the owner-operators. But we're pretty hopeful that metros and transit will be a next entry point on that, however.

Okay. Okay. That's great. And then just on Seequent, so my understanding is, Seequent is growing at twice the rates as kind of core Bentley Systems, but now you have this dynamic where there's certainly acquisition opportunities. You're already executing on that. You're incorporating the Bentley geotechnical product. So I would imagine there's a cross sale synergies that can be achieved. What TAM Seequent grow by if that's two times as better now, before some of these things gain traction, I guess what would be the targeted rate of growth?

Well, I'm going to ask Nicholas to come in, but my observations are everything below ground is going from 2D to 3D, and you can only do that with the geoscientist portfolio and Leapfrog. So that's a one-time but continuing momentum, mining is a great business, as important as it is now for the world's electrification. And then we have the opportunity for these synergies in infrastructure and environmental. So I think our expectations should be, Nicholas, you and the team will be delivering on that expectation. Go head, Nicholas.

Yes, so just real quick, Nicholas, first. So Joe, the expectations for Seequent acceleration they're in the revised guidance. But certainly this is going to talk with some enthusiasm here about where we can go with this.

Yes, fantastic growth opportunities Seequent now part of the Bentley Group – the Bentley family. The first one and the first priority actually, with Seequent products or Bentley now is to accelerate their growth in Seville, right. We have actually a number of joint customers has already joined users. But there's a lot of potential for cross selling there. So that is actually our number one priority. And then the other way around actually we don't have that many secret accounts who use Bentley products in mining. So mining actually could be a growth opportunity for the Bentley products as well. And then energy, in general, we don't have a lot of crossover here at all, actually between Seequent and Bentley, but we see that as a very important growth opportunity when it comes to renewable energy, when it comes to clean energy, when it comes to energy transition.

Great. Thank you very much.

We’ll next go to Jay Vleeschhouwer from Griffin.

Thank you. Good morning. For Greg and Nicholas first, couple of questions around the recent ProjectWise and SYNCHRO conferences, there was some interesting commentary at both of those events. In a session, the ProjectWise conference, it was disclosed that approximately 47% of your design users employ ProjectWise, it wasn't clear that should be considered a high attach rate or otherwise. And at the SYNCHRO conference, it was quite reasonably said, that project delivery is adjacent to design delivery. The question then is how does Bentley see its overall design or ET strategy, which is to say, could you talk about your internal investments in the ET business the importance of or likelihood of accelerating your growth or share in ET as our credit yet for the project delivery business and then a follow up for David? Thank you.

Well, I guess remark upon the intense rate with project lines. We think it should be a lot higher. The answer and the investment is in ProjectWise 365, ProjectWise design integration, the workhorse for work sharing is – it's great industrial strength, but there are a lot of projects that are smaller that are receptive to Instant On, no administrator. And of course, there are competitive products that are new there. So ProjectWise 365, the Microsoft commercial marketplace. Virtuosity our inside sales e-commerce is succeeding in introducing ProjectWise 365. So that's the answer to close that off and make – and should say project delivery and design delivery in inclusive and comprehensive. And the SYNCHRO opportunity is to have what's designed in 3D become 4D in construction rather than become 2D. Ultimately in construction, all of that has to come together. It's why we group project delivery and the cloud services together. I know we're being quick and an answer to that. Very good question, which we'll come back to more answers over time. Nicholas, do you want to add something to that?

The only thing I will say, the focus for SYNCHRO is very much in Seville. So this is where we're looking from a product standpoint for the synergies between our design products and our project products to make sure we can deliver true synergies here for our customers in Seville infrastructure.

For David, looking back over the last year considering the investments you've made in cohesive and your internal investments in services capacity, could you say to what extent that capacity might have changed or grown over the last year? In other words, how well resourced are you for what you anticipate in your deployment and engagements pipeline, particularly for project delivery and your introduction with new capabilities like Greg mentioned, ProjectWise 365, which we're also calling out blueprints, which seems to be a new, new-ish offering, so just perhaps talk about some connection between services capacity in your pipeline.

Okay. So I think about cohesive a little bit differently than the implementation work you're describing for a ProjectWise or an AssetWise implementation. I think that's where your focus is, are we staffed well for our core product implementation work? Are we staffed well to deliver on those success blueprints? And I would say it's always a trade off to make sure that we have enough resources on, on board to deliver what we sell. But, not so many that our utilization rates suffer. It's a constant back and forth. I feel we manage it well. We talk about the expansion of the E365 program. And frankly, the rate limiter there is we want to make sure we can deliver well on those programs with those success plans and success blueprints. So we're metering frankly our growth, in E365 to make sure that we are well-resourced to deliver that. So I would say, we're in a good spot, Jay, but it's a pretty constant back and forth to make sure that resource to what we're selling.

The best answer is for ProjectWise and AssetWise to require fewer implementation resources and ProjectWise 365, for instance, requires none. The cohesive group on the other hand are going to be working on digital twin projects that involve a lot of data, quality issues, a lot of enterprise integration issues, such as Maximo, where most of them start that's a different direction than implementation of ProjectWise and AssetWise alone. So it’s sort of two separate workforces. One is getting smaller. Our professional services implementation has more and more of them become instead success managers in E365, whereas the digital integrator workforce in cohesive is growing. But hopefully what it does is learned that business well and sets off many external digital integrators taken up the slack so that it doesn't have to grow beyond what we need to do to learn to do that well.

Thank you everyone.

All right. With that, we'll wrap up the call. Thank you everybody.