Bentley Systems Reports Strong Q1 Results, Cloud Business Expansion Expected

Mizuho's Matthew Broome raised their price target on Bentley Systems (NASDAQ: BSY) by 5.3% from $57 to $60 on May 8, 2024. The analyst maintained their Strong Buy rating on the stock.

Bentley Systems, a provider of computer software and services for infrastructure design, construction, and operation, reported its Q1 2023 earnings on May 7, 2024. While the results were described as mixed, management's positive tone stood out in the face of a challenging macro environment, according to Broome. Mizuho believes that Bentley Systems' cloud businesses have the potential to significantly expand, and the public takeover interest from Schneider provides a valuation floor.

For Q1 2024, Bentley Systems reported earnings per share (EPS) of $0.31, beating the Zacks Consensus Estimate of $0.26 and showing a 24% increase compared to Q1 2023's $0.25. Revenue for the quarter was $337.76 million, surpassing the Zacks Consensus Estimate by 0.83% and showing a 7.4% increase compared to Q1 2023's $314.41 million. The company also reported an Annual Recurring Revenue (ARR) of $1.18 billion, up from Q1 2023's $1.071 billion.

Looking ahead, Bentley Systems' management guided for a revenue range of $1.35 billion to $1.375 billion for FY 2024. They also expect ARR growth of 10.5% to 13% and a capital expenditure (capex) of $22 million. CEO Greg Bentley expressed satisfaction with the Q1 performance, highlighting the consistent year-over-year ARR growth of 11%. However, he noted that the digital integrator Cohesive's professional services business, unrelated to Bentley Systems software, has declined significantly from 2023.

In a generational transition, Bentley Systems announced that COO Nicholas Cumins would succeed Greg Bentley as CEO on July 1, 2024, while Greg Bentley would assume the role of Executive Chair. The company sees the transition as an opportunity to leverage the infrastructure digital twins' unprecedented potential for transformative growth.

Piper Sandler analyst Clarke Jeffries also weighed in on Bentley Systems on May 8, 2024. Jeffries raised their price target by 5% from $60 to $63 and reiterated their Strong Buy rating on the stock.

According to WallStreetZen, 100% of the top-rated analysts currently rate Bentley Systems as a Strong Buy or Buy, with none recommending a Hold or Sell. The consensus forecast among analysts projects an earnings per share (EPS) of $0.82 for the upcoming year. If the analysts' predictions hold true, it would represent a 27.4% decrease in yearly EPS on a year-over-year basis.

Since the release of Bentley Systems' latest quarterly report on May 7, 2024, the stock price has experienced a 1% decline. However, on a year-over-year basis, the stock has seen a 29.2% increase, outpacing the S&P 500's 25.4% growth during the same period.

Mizuho analyst Matthew Broome, the source of the price target increase and the Strong Buy rating, is ranked in the top 22% out of 4,577 Wall Street analysts by WallStreetZen. Broome specializes in the Industrials and Technology sectors and has an average return of 6.7% and a win rate of 65.7%.

Bentley Systems, Incorporated, founded in 1984 and headquartered in Exton, PA, serves the architecture, engineering, and construction markets with its software products used to design, engineer, build, and operate various infrastructure projects, including roadways, railways, bridges, buildings, industrial plants, power plants, and utility networks.

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