Good morning. Thank you for joining Bentley Systems Q1 2024 Results Webcast. I'm Eric Boyer, Bentley's Investor Relations Officer. On the webcast today, we have Bentley Systems' Chief Executive Officer, Greg Bentley, Chief Operating Officer, Nicholas Cumins; and Chief Financial Officer, Werner Andre. This webcast includes forward-looking statements made as of May 7, 2024, regarding the future results of operations and financial position, business strategy and plans and objectives for the future operations of Bentley Systems, Inc. All such statements made in or contained during this webcast other than statements of historical fact are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentley.com on May 7, 2024. I would like to mention that the 2023 infrastructure year book which explores the world's top infrastructure projects is now available online at bentley.com/yii/yearbook. You can also order a printed version from the same link. Additionally, we have published our 2023 ESG report, which is available on our Investor Relations website. After our presentation, we will conclude with Q&A. And with that, let me introduce the CEO of Bentley Systems, Greg Bentley.

Good morning, and as always, thanks to each of you for your continued interest in BSY. Eric, thanks for setting the stage for our focus today. For all that we characterize and think of Bentley Systems as a no-drama company, we do realize that we've made news over the 2-plus months since we have last been together. And of course, I'm talking about our press release and announcement in London of our CEO transition plan. After this quarter, I will retire from CEO responsibilities to become Executive Chair. As I will continue to oversee Investor Relations, I expect our quarterly operating results presentations to continue foreseeably with the same format and lineup as today. Given that I will turn 69 years old next week, I believe that my retirement as CEO has been reasonably anticipated. The timing purposely follows the completion of transitions throughout our senior executive ranks since the IPO in 2020 in favor of a literally rejuvenating new, and I consider improved cohort of leaders. The generational improvement at my current position, handing the reins to a first-time CEO and is derisked for everyone, I think, by virtue of an incoming Executive Chair. In that role, my priority will be to support Nicholas Cumins through and beyond the transition stage. And in addition to management of our Board activities and Investor Relations, I will continue to be responsible for capital allocation decisions, including platform M&A. By way of capital allocation, for now, I am overseeing the asset analytics initiative, which we introduced this year. A transition to Executive Chair is probably unsurprising upon retirement of a founding tech company CEO, and most of you have heard me looking forward over the past few years to this change at BSY, but I find it interesting to see that this…

Thank you, Greg, First, I want to thank again the Board of Directors for entrusting me with the responsibility to lead Bentley. I am deeply honored to follow in Greg's footsteps as CEO. Greg's leadership for more than 30 years has delivered remarkable success for Bentley Systems, positioning the company for continued growth as we help address infrastructure sector's biggest challenges. I look forward to working with Greg as a transition to Executive Chair. Q1 was a continuation of the same strong and steady macro trends that we discussed throughout last year. The most notable being the ongoing engineering resources capacity gap, driven in part by high demand. In the most recent ACEC quarterly survey, U.S. engineering firms across all sectors once again highlighted lengthy project backlogs of 1 to 2 years, with expectations of higher backlogs 12 months from now. This optimism is supported by their increasingly positive views on the U.S. economy, the design and engineering sector, and their own firm's overall finances. Higher backlogs and engineering resource constraints continue to dominate conversations around the world as well. In April, I attended FIDIC global leadership form in Geneva, Switzerland. FIDIC, the International Federation of Consulting Engineers represents over 40,000 firms globally, and the forum brought together an exclusive group of senior leaders from among these organizations. The resource capacity gap remains an underlying theme which I see of one major firm commenting that the problem is getting worse, reinforcing the need and opportunity for digital solutions. Moving to our performance in Q1, it remained very consistent with last year Starting with our infrastructure sectors. Once again, public works and utilities, our largest sector, was the main growth driver for the company. We continue to benefit from strong global infrastructure spending across transportation, water utilities and electric grid. In…

Thank you, Nicholas. We are pleased with the strong start to the year, which puts us in a good position to achieve our full year outlook. Total revenues for the first quarter were $338 million, up 7% year-over-year in reported and constant currency. Subscription revenues for the quarter grew 11% year-over-year or 10% in constant currency, in line with our expectations, representing 91% of our total revenues, up from 89% in '23, Q1. Our E365 and SMB initiatives continue to be solid contributors to our subscription revenue growth. Perpetual license revenues for the quarter were flat year-over-year or up 1% in constant currency. Perpetual license sales make up only 3% of total revenues and will remain small relative to our recurring revenues. Our Professional Services revenues for the quarter declined by $6 million or 22% year-over-year in reported and constant currency driven primarily by weakness in Maximo related work within our digital integrator cohesive. First, '23 Q1 was a difficult comparison due to a particularly large Maximo implementation contract in the year ago quarter. And second, during the first quarter of 2024, our Maximo related implementation work was negatively impacted by delays in Maximo version upgrade work with such delays now likely to continue through the second quarter before the pace of upgrade projects is expected to increase early in the second half of the year. An advantage of later upgrades is that we will be better positioned to offer at the same time, the transition from on-premise to our hosting managed services for Maximo, facilitating eventual integration with our iTwin environment. On a positive note, we are pleased that our Bentley software-related services grew modestly as expected. Moving on to our recurring revenue performance. Our last 12 months recurring revenues increased by 11% year-over-year in reported and 10% in…

Thanks, Werner. Before we begin with Q&A, I want to remind everyone that we issued a press release on April 19 regarding Bentley's policy of not publicly commenting on market rumors or speculation. Reportedly, we will not be commenting on any such matters. Please keep your questions focused on our Q1 results and strategic progress. We also ask that you limit yourselves to one question so we can get through the queue. And with that, our first question will be from Matt Hedberg from RBC.

Congrats on the results. And actually, also congrats Greg, on your run as CEO, and Nicholas to this next phase of growth. I guess for you, Nicholas, we've known you for a while and you're a big part of the Bentley fabric. As we enter this next phase of growth, do you see any change in sort of your philosophy, and in terms of where you might look for some additional growth, potential synergies that might be a little bit different than Greg and sort of the prior growth phase?

Well, as you said, I've been the CEO for a little bit more than 2 years now. And before that, I was the CPO. So you shouldn't expect any major change either from a strategic or an operational standpoint. And our priorities remain the same. When it comes to growth, E365, SMB, digital twins, from a product standpoint, operative remain the same as well as we move from far base to data centric book flows using digital twin technology. Using there for data, leveraging data for AI purposes, et cetera. So no major change, either in strategy and operations. The key word here is continuation.

Our next question comes from Joseph Vruwink from Robert W. Baird.

Just on the new logo growth in the quarter. I was wondering how much of that is specifically in the U.S. and you would say is related to this expanding ecosystem or at state DOTs that's happening, just as more engineering firms want to participate in infrastructure work. And I guess, related to the question, I think in the past, when you talked about a new logo contribution within your growth algorithm, you had typically hedge that a little bit just because smaller accounts might have propensity to churn a bit more. But if the new logo growth is lining up to support infrastructure activity and the outlays for that are going to be higher each year for the next several years. Do you think new logos just become a more reliable contributor to the model?

I want to ask Nicholas if he has a sense of the quantitative makeup of logos including the geographic distribution then. I know that qualitatively that phenomenon and you mentioned smaller firms, especially getting into linear infrastructure work in the U.S. is significant, but I don't have a feel for the relative magnitude of it, Nicholas?

Our momentum in SMB is really around the world. It's not specific to North America. And in fact, in Americas, we had strong growth in Latin America, and the main driver there was SMB. So we really see momentum with SMB around the world. We think it's because of the flexibility that we offer in terms of commercial terms between subscription with Virtuosity or perpetual licenses with SELECT. We also hear from the accounts that they welcome an alternative to whatever they were using until now. So we see momentum. Now that momentum, we've seen it again, and again, and again, we've had more than 600 logos for so many quarters, as Greg said during the prepared remarks. And Q1 was even more than we've ever had in SMB. And what we can see is that, on one hand, it's quite predictable now for us as a line of business in SMB to see that level of momentum around the world. The other thing we're looking into is retention and retention is quite high, much higher than we have expected very, very initially at the beginning of the SMB program, which means this is -- yes, this helps a lot in productivity, and it helps a lot in linearity as well.

Our next question comes from Jason Celino from KeyBanc.

Great. Greg, Nicholas, Congrats. Nice to see the continuity here. So my question is actually for Werner. The explanation of the resets and the mix for the year was really helpful. But as we think about the sequential ARR guidance, what does that look like for 2Q and the rest of the year?

Yes, our growth ARR sequentially aligns a little bit more with the contract renewal timing. We previously gave guidance on what the contract renewal timing is for the year, so that reset now that the correlation of ARR growth is more like 20%, 25%, 20% and 35% throughout the year, you would expect. So we would expect that for Q2, the sequential quarterly year ARPU is picking up again. And as I look into the ARR guidance for the remainder of the year. It is more that can loaded as we discussed last time, our expectations did not change. There is still growth opportunity from our asset analytics business that's working on bigger, bigger deal opportunities. There is still growth opportunities from acquisitions. We expect acquisitions to be somewhat lower than it was in the historic past. There's a little bit of a shift in the acquisition, more to earlier-stage companies, but throughout the rest of the year, there's still like that tailwind from asset analytics and acquisitions coming in and the expectation is that we move back to the mid-range of the guidance as we move for the year.

I was hoping that Werner, would indeed mention our asset analytics initiatives. All of that business is ARR and we are working on, as I've mentioned, significant opportunities, it will be lumpy when they occur during the year and don't have any relationship to our established renewals and seasonality as sort of the overlay on that, but I do expect to be moving the needle with that by the time the year is out.

Our next question comes from Sitikantha Panigrahi from Mizuho.

Congratulations, Nicholas and Greg. Great quarter. But can you comment on the trends in the international business, which is close to now 58%. So what segments are more robust than others? And also in terms of geography, how specifically like Western Europe doing? And how do you see this election in different countries going to impact your business? Like India is almost wrapping up election. How should we expect post-election, and in the U.S. as you are heading into election.

I'm going to ask Nicholas to take that, but I myself, I wonder the same thing. India had led the world in growth rates through most of last year and then decline for a while, and now is boring back, and I don't know if that has to do with political situation there. Nicholas what you think?

Yes. To the first question, Siti, I will simply refer back to the prepared remarks in terms of where we see growth by sector and then by region. Specifically to India, India did, and was again a major growth driver in Asia Pacific, even though it had normalized towards the end of 2023, we saw it taking momentum again. And to the earlier question, by the way, SMB played a big part there. A lot of investments still in the water infrastructure and as for the full ecosystem. Not just the local authorities. And there might be a pause, obviously, because of the elections on some new projects to be awarded, but it should be a mandatory pause. Yes. The good thing is our growth in India is really based on full ecosystems, all consistent, including the smaller firms. So we expect the growth to remain strong in India for the remainder of the year.

I guess something else to add about India is that India has benefited not only from its own indigenous investment program, but also from the resource capacity constraints elsewhere. India continues to produce more qualified civil and structural engineers especially, and more of the work gravitates to India, thanks to our ProjectWise environment, that tends to be, however, overflow would not be quite the right word, but that does fluctuate with workloads in the industrial sector, especially as we've observed it. So superimposed on a steady domestic demand in India is a more cyclical international sourcing to India, and it's good to see it benefiting from both apparently, again, [indiscernible]

Great. Congrats on the quarter. And very impressive margins and cash flow.

The next question comes from Clarke Jeffries from Piper Sandler.

Greg, I noticed that you mentioned you'll be overseeing the asset analytics opportunity and the prior question you mentioned moving the needle with some of these opportunities and if they will be lumpy. I just wanted to ask, are there any other near-term 2024 opportunities? And I think, specifically, do you plan to accelerate the industrial or vertical coverage for asset analytics as a business model? Any preview of expansion beyond Blyncsy and cell towers that we've already talked about.

Well, we have said that our programmatic acquisition priorities this year will be in this asset analytics space. We have -- we're working on consolidating our offerings there so that we can leverage and share platform capabilities, including the processing economics of AI and inception, and to produce insights and we're going to get very, very good at how reliable and fast and efficient is our processing. It's our way of participating in the AI workloads, if you like for compute load and we want to have multiple vertical offerings where we have, as you say, only towers and Blyncsy so far, we'll target others, for instance, transmission and distribution infrastructure. And we know there are the types of small companies that we had previously been participating in through our iTwin ventures fund in small investments. We're more interested now in outright acquisitions as in the case of Blyncsy and incorporating them to take advantage of these economies of scale. One of the other aspects of economies of scale and asset analytics is offering to the engineering firms who are ahead of our business. So they should be in the asset analytics business with their own proprietary analytics laid on to the processes that produce the instant on digital twin insights, where they can add their knowledge of particular assets and their services to interpret and prescribe and perhaps even design and construct the resulting improvements in operations and maintenance to be able to offer them a full menu for any asset type where they may be the incumbent engineers serving the owners, we want to help get them quickly into the business where they don't have to set up their own back office to do the processing and learn the technology of the AI. Ultimately, those go-to-market is leveraged in that respect. And technology back office and the other respects. So we have big eyes, and you might say, a big appetite to accomplish some more investments, including acquisitions, but we will also make as well as buying in the asset analytics area. We see it as all upside. And we have a good head start that has really reinforced our intention to invest there. But investing corresponding with the ARR growth we gained from all things we have already.

So yes, shared infrastructure investments this year, but definitely ARR opportunity as well alongside it. Thank you.

Next question comes from Kristen Owen on from Oppenheimer.

Congratulations both Greg and Nicholas. I wanted to ask about the resources growth and ask you to maybe double-click on that. Help us understand how much of that portfolio today is CapEx versus OpEx activity? And any updates that you could share on cross-selling synergies for Seequent across the broader portfolio?

Nicholas?

Yes, the majority of our business in resources is mining. The rest of the resources sector performed as in previous quarters. But in fact, mining also performed as in the previous quarter, which is there is still a slowdown in investments in new mines or major expansion of existing mines. Now the interesting thing is even with that slowdown, Seequent in mining is still growing faster than the company average, right? So if it's still actually a growth driver for us, even in other environments. And as because Seequent is not just us for exploration of new mines or major expansions of existing mines, but throughout mine operations. And in fact, we are a bit taking advantage, so to speak, of the slowdown to strengthen our position with existing accounts. There's such a pressure to be more efficient. That's fantastic for an incumbent to strengthen the position. And we are overlaying this with more investments from a product standpoint in -- specifically for mining operations. Now within Seequent, so the majority of the revenue of Seequent is also in mining. But the fastest growth part is actually civil, as I commented in the prepared remarks. And that's also a continuation of what we've seen in Q4. What's very interesting here is that not only is the geotechnical product business growing and you could argue, well, that was the historical business that Bentley had for the subsurface that we transferred to Seequent. But what's more interesting, I think, is the geomodeling piece of civil is growing very fast. Leapfrog works, which I referred to. This is the adaptation of the core product of Seequent called Leapfrog or the civil industry. And here, we're literally creating a market, right? And the value proposition we have is just very unique and very strong. It's because of a better understanding of the subsurface. We can reduce the financial risk, we can use the -- reduce the technical risk of project delivery. We can also improve the carbon footprint. And then the other part of the Seequent business is in energy, energy transition, in particular, most in almost 2 years ago, I commented on Seequent software being used for geothermal. And that's a strong part of the business, but Seequent software is used more and more for offshore wind platforms as well to have a better understanding of the subsea, subsurface conditions if you're going to do fixed foundations for these offshore platforms, yes. So tremendous growth opportunities beyond mining with civil and with energy, but mining itself, even in the context of a slowdown, we're great, we're going very well.

The next question comes from Jay Vleeschhouwer from Griffin Securities.

So I'd like to ask a question about portfolio management. Last fall, you spoke at the Infrastructure Conference about a number of new industry solutions. I believe the number was 8 at the time. More broadly, over the last year or so, we've spoken, Nicholas, you and I, of your intent to simplify the portfolio, particularly with respect to the number of open modules you have trying to improve the salability, for example, through the channel. The question therefore is, can you update us on how the progress of portfolio simplification or reconfiguration is progressing and as that occurs, do you think that could play into some effects on consumption? Or that is to say, might simplification improve consumption over time.

Absolutely, because as we simplify the portfolio, we simplify the way our accounts or users can discover new capabilities that I can benefit from. So we remove friction in that discovery process we make it as easy as possible for them to understand how else Bentley can help. So that's one, indeed one of the main reasons for the simplification of the portfolio. And simplification of the portfolio, just to make it clear to the others, we're not part of that conversation that we had, Jay. It doesn't mean that we are reducing our coverage or comprehensiveness, not at all, right? Our portfolio comprehensiveness is what makes us very distinct. What we mean by portfolio simplification is just how can we make it easier to discover the breadth and depth of capabilities that Bentley has to offer. And it's true that the main mechanism that we use in order to simplify that portfolio is the industry lens. And it's both a lens that we're using from a go-to-market standpoint. So it's easier for you to discover for a given industry such as, I don't know, electric utilities or water utilities, what Bentley has to offer, but we also use it from a product standpoint to make sure that our products integrate great with non-Bentley software, but they integrate even better with Bentley software. And that's when we come into industry solutions specifically, the 8 that you were referring to, Jay, there's another one that we launched just a couple of months ago called electric distribution design. We did that at DISTRIBUTECH. And this is a bit of an obstruction, if you will, on top of many capability that we have, where we test the integration and we ensure the true synergies between our product capabilities to help solve a given industry business problem.

Just a little commercial for my asset analytics. I say mine because I'm going to be hanging on to that for a bit after the CEO transition that the idea there is where we had, had a broad set of offerings. For instance, we talk about the solutions for dam safety, let us say. For those asset types where we can package it up to a standard price per asset to generate the AI insights. And we've so far done that with communication towers, obviously, and now with miles of roadway, where, for instance, the new offering we were talking about here is crowd-sourced imagery to identify the reflectivity of the lines, how often do they need to be repainted where it can be boiled down to something which can be programmatically delivered on a standard menu at a standard price, we can package that up into asset analytics and have it be instant on for any engineering term that wants to add that offer that plus more to their own accounts. So we're trying to find that which can be most digestible and there's a lot more in common with communication towers from 1 to the next and roadway miles from one to the next, then there is for dams. So we're imagining we can add more asset plates to the asset analytics menu, the instant on menu to yet try more so to shorten the sales cycle and increase the pace of monetization. But that's in addition to what Nicholas has described on the industry solutions side.

Next question comes from Michael Funk from Bank of America.

Greg, thank you so much for attending us over the years, and congratulations to you. And you as well Nicholas. So Greg, earlier you mentioned greater focus on marketing is one thing Nicholas has brought to Bentley. So to put it another way, I guess, where do you believe there have been deficiencies and marketing, and how can you improve?

Well, Nicholas is a particularly good fit for our company because we recruited him as Chief Product Officer. And he has a real zeal for product management. You've been hearing some of that, the shops and so forth that make a difference in how you fit into a company of engineers for engineers. But prior to being a public company, we felt more entitled to stay in our comfort zone. And for instance, we never tried in SMB. As you know, we never had any e-commerce transaction ever until we were a public company and 36 years of age. So what's important going forward is that we identify what opportunities we hadn't taken advantage of and be sure we configure ourselves to be able to be competitively superior there as well. And we've got to start on that, with Nicholas, with excellent new marketing resources we just announced in our company I have to smile when I say we have a wonderful new Chief Storyteller, who comes to us from Amazon and prior to that, GE. And I know Eric mentioned in our infrastructure year book, just published in hard copy. I hope everyone will take a look at that. And read stories like that project in water and others with SYNCHRO and so forth that are ready to tell that are -- the reason that infrastructure improves our economy and environment at the same time, and we want to take a part of infrastructure engineers in telling those stories. So I think it's all green light, all it's -- we're so pleased by the return on investment in SMB. If the symbol got something that we couldn't be bothered with at one point in time that's helping balance the business and balance and roundedness and both sides of a brand are what I'm expecting from your team, Nicholas, I'm pointing to you from the screen. Thank you very much.

Great. Congratulations again to you.

So I'm still in my CEO seat for another 2 months.

Next question comes from Dylan Becker from William Blair.

Congrats Greg, congrats Nicholas and maybe first for the happy early birthday, Greg. Nicholas, you called out some of the U.S. transmission reform that's potentially accelerating investment on the energy side. I wonder how you kind of pair that because I think that was kind of somewhat of a gatekeeper of incremental new spend with some of the sustainability initiatives and maybe how that can kind of pair with asset analytics from your perspective, Greg, around things like reliability, resiliency, intermittency and things of the like, given that always on is maybe now more readily available or readily addressable. If that makes sense.

I get started. And -- so we're starting to -- for the past few quarters, we start to see some, let's say, announcements around IIJA funding for the electric grid, all related to expanding the grid. And we do need to expand the grid, especially to go and tap into a renewable source of energy, we are typically quite far away from the point of consumption. And I think the estimate is that we need to expand it by 2/3 by 2035 in order to meet our clean energy targets in the U.S. And indeed, the biggest issue we see the limiting factor for the expansion of the grid is permitting. So we saw some good news from the White House, but we are really cautiously optimistic, right? They're basically saying that within a standard 2-year schedule, all the environmental reviews will happen for the projects that is primarily actually for the clean energy projects, and that should be a gain of 50% in review time. We are cautiously optimistic. We need to see exactly how does that translate. . In the meantime, however, we are already quite busy. Our users are already quite busy using PLS or Power Line System tools in order to take care of the existing grid. And our existing grid is old, and it's a potential issue with climate change with extreme weather events, et cetera. So we still see PLS growing quite fast, even before we're talking about the expansion of the electric grid actually happening.

Next question comes from Arsenije Matovic from Wolfe Research.

This is Arsenije Matovic on for Josh Tilton. Congratulations, Nicholas. And congratulations, Greg, for your successful tenure as CEO. Wanted to ask on digital twin revenue from iTwin. I think the last time you had a target was for 8 figures of ARR, which you meant exiting the fourth quarter of 2020. Where are we today? Like has that doubled and how accretive has it been to overall ARR growth? And then just a brief follow-up to make sure that we understand the comment on ARR regarding the floor and ceiling dynamic of E365 renewals. So in this scenario where in the fourth quarter, a renewal was made with the floor and ceiling reset. And in the following first quarter, the consumption of E365 was below the floor set in the fourth quarter the ARR contribution in that first quarter is based on the floor for consumption set in the fourth quarter and not based on the consumption in the first quarter.

Yes. So I'll answer that last one first since it's in our mind. The ARR growth for the first quarter was zero because the consumption occurred, but it didn't get up to the level of a floor. The level of a floor is kind of -- it's going to be reached sometime during the year. Hopefully, the level of a ceiling would also be reached during the year. We don't know that. But there's ARR equal to the floor, but the ARR growth is none for such a -- and that is a rather representative the phenomenon we remarked on last time is that the accounts are asking for multiple year contracts, asking for floors and ceilings to kind of put a gate around. They know going digital is really important and is their top priority, but they would like to have boundaries around what they're going to be spending on that, but they're willing to commit to increases, step-ups in floors and ceilings. We just don't go to the science of having them step up every quarter. That's too hard. So they only step up once per year, and that's the reason for the phenomenon becoming more important. Along with more and more of the overall ARR is under E365. And I'm going to let Nicholas address the first question.

Yes. The reason we haven't given a number in terms of digital twin ARR for quite a while, it's because it's almost impossible now to separate it from the growth of our products because more and more of our products are leveraging digital twin are leveraging iTwin to support new capabilities and so you can argue iTwin is a reason why we see momentum with an Infrastructure Cloud, including ProjectWise, powering new capabilities such as ceiling design validation or advanced design review or even the 4D modeling piece of SYNCHRO is also powered by iTwins. So we cannot really separate it, yes. And then asset analytics, by the way, we'll also then can be considered as digital twin revenue because we actually create digital twins of the cell towers. We create a digital twin of the road network as we use OpenTower or Blyncsy.

We will break out the asset analytics ARR curves. When we're preparing a lot of marketing launch materials. It's going to have a proper name like Cohesive does and Seequent does and so forth, and we'll provide a lot of visibility into that. That's entirely owing to the iTwin platform, along with the other AI we incorporate in it, but we sort of envied iTwin platform and everything now as a preference, not only financially, but to get it fully taken up, so that we don't have an evangelism barrier in each account is something explicit for digital twins. We'd like digital twins to be implicit to start with.

The next question comes from Blair Abernethy from Rosenblatt Securities.

Congrats to Greg and Nick as well from me. Just a quick one. Can you give us an update on the IIJA funding programs? How are you seeing where you're at there, particularly on the road side? And secondly, Greg, just like, Blyncsy, what's the go-to-market program look like there over the next couple of years. Is it embedded with your core go-to-market or because it's more of a specialized solution? Is it something you're going to do separately?

It's not so specialized that it can't come through. Our account managers covering the transportation agencies. However, a lot of the opportunity is with smaller municipalities and counties and metropolitan planning organizations, for instance. And they have an engineer of record, and we would like to work with that engineer to enable them to bring Blyncsy offerings to all of their funds. So that's what we're working on ramping up. Now in the meantime, we're meeting with -- I mentioned a 7-figure ARR deal that was with a state DOT and there will be many others of that magnitude, but we want to reach every roadway owner, and we'll do that through our engineering comes through the plan.

Yes. And then on IIJA. Now 37% of the funding has been announced. And as we commented in the last quarter, there is a time gap between being announced and then being awarded. So you can consider IIJA as still a strong tailwind that we have in the U.S., and it's going to just sustain our momentum. What's interesting is -- and the bulk of it is indeed in transportation as we were alluding to Blair. Now what is interesting is that the states themselves or layering on top of that, their own investments for their own infrastructure. So we saw the budget of transportation for the different states increased by, I think, 11% year-over-year. And there were even voters who've decided that indeed we should increase investment in infrastructure in 15 states. So there were measures on ballots in 15 states asking borders whether yes or no, we need to increase investment infrastructure. So there's clearly momentum there, at federal level and at the state level.

And at the federal level, believe it or not in the U.S. I think you're there in Canada. The airports funding is controversial. Yet it just passed the houses of Congress, is about to become law. This bill is the best yet in explicitly allowing advanced digital construction management systems to qualify for federal funding and have an explicit funding for drone inspection programs that will really lead the way and rates of the gain for infrastructure in there in the U.S.

Before we conclude, Werner, you want to touch upon revenue seasonality point.

Yes. So as I mentioned in the prepared remarks, we expect that our maximum upgrade work in Q2 remains at Q1 levels before it's going to pick up again, but it's expected to pick up again really in the second half. So we expect that our services revenues in Q2 remain essentially at Q1 level. So that means that our revenues will be more concentrated on subscriptions in Q2.

Great. So that concludes our call today. We thank to you for your interest in time and Bentley Systems. We look forward to updating you on our progress in coming quarters.

Thank you.