Global Infrastructure Investment And Digital Transformation Will Expand Market Opportunities

Key Takeaways

• Ongoing global infrastructure investment and digital transformation trends are boosting demand for Bentley's advanced AI and cloud solutions, supporting strong revenue and margin growth.
  
• Broadening the customer base and rapid adoption of subscription models improve revenue stability, reduce exposure to market cycles, and enhance long-term earnings prospects.
  
• Disruption from AI, intense competition, and challenging market dynamics threaten Bentley's growth, margins, pricing power, and revenue predictability, increasing operational and strategic risks.

Catalysts

Provides infrastructure engineering software solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.

• Sustained global investment in infrastructure-driven by government initiatives in the US, UK, EU, and high-growth regions like India and the Middle East-continues to expand Bentley's addressable market, supporting durable double-digit ARR and revenue growth.
  
• Large-scale productivity challenges (such as the shortage of skilled engineers) are forcing the sector to accelerate digital transformation, elevating demand for Bentley's AI-driven, cloud-based, and digital twin solutions, which should drive both revenue expansion and higher-margin product mix.
  
• Increasing adoption of subscription and consumption-based models (now representing >92% of revenues) provides greater revenue visibility, stability, and consistent margin expansion, which can support higher valuation multiples over time.
  
• Integration of advanced AI and reality modeling into core products (e.g., through Cesium and iTwin) enhances Bentley's ability to win larger, multi-year contracts and monetize high-value asset analytics opportunities, offering further potential for top-line and margin acceleration.
  
• Ongoing broadening of the customer base, especially through SMB and international expansion, reduces reliance on cyclical developed markets and large clients, underpinning recurring revenue growth and mitigating downside risks to future earnings.

Bentley Systems Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bentley Systems's revenue will grow by 9.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 17.9% today to 23.6% in 3 years time.
• Analysts expect earnings to reach $443.2 million (and earnings per share of $1.44) by about September 2028, up from $254.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $327 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 53.5x on those 2028 earnings, down from 66.2x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
• Analysts expect the number of shares outstanding to decline by 0.15% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.62%, as per the Simply Wall St company report.

Bentley Systems Future Earnings Per Share Growth

Risks

• Rising adoption of agentic AI and automation in engineering may reduce the reliance on traditional design software and user-based pricing models, potentially disrupting Bentley's core business and forcing costly R&D investments and business model adaptation, which could impact long-term revenue growth and net margins.
  
• Intensifying competition from cloud-native SaaS rivals and potential open-source or government-mandated standards in AEC software may erode Bentley's pricing power and market share, pressuring retention rates, squeezing contract renewals, and impacting recurring revenues and profitability.
  
• Saturation in well-developed markets (e.g., North America, Western Europe) means further growth is increasingly dependent on emerging markets, where infrastructure engineers have much lower software spend per capita and where regulatory and pricing challenges could constrain topline revenue expansion and operating margins.
  
• Continued high R&D and operational expenses, especially as Bentley accelerates hiring for AI and platform integrations (Cesium, iTwin), may limit operating leverage and put pressure on net margins if revenue growth does not accelerate as expected.
  
• Lumpy and volatile growth in emerging business lines like asset analytics, coupled with the challenge of shifting from project-based deals to recurring revenues, could lead to inconsistent earnings, impacting revenue predictability and potentially unsettling investor confidence in Bentley's long-term earnings quality.

Valuation

• The analysts have a consensus price target of $59.077 for Bentley Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $65.0, and the most bearish reporting a price target of just $45.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $443.2 million, and it would be trading on a PE ratio of 53.5x, assuming you use a discount rate of 8.6%.
• Given the current share price of $53.51, the analyst price target of $59.08 is 9.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.