BENTLEY SYSTEMS, INCORPORATED (BSY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $36.93, BENTLEY SYSTEMS, INCORPORATED (BSY) is priced for today's economics sustained for ~7.8 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/BSY

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 11: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.7% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.

Per-Model Detail (n=17)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Roughly nine-tenths of revenue renews each year across enterprise, term-license and SELECT subscriptions, sold to engineers whose infrastructure projects run for decades rather than budget cycles.
• The growth rate is the weak spot: full-year 2025 revenue rose 10.99%, slower than every domestic peer in its comparison set, several of which are growing at more than twice that pace.
• Second-quarter results are due August 6, 2026, and the borrowings behind the balance sheet include convertible notes struck at 0.125% in January 2021 that reach maturity this year.

Bull Case

Start with the objection, because it is the honest one. Bentley Systems is a ten billion dollar software company selling into disciplines where far larger vendors already operate, and it says so itself. The FY2025 10-K lists the field by application: "our key competitors in Industrial applications include Hexagon AB and the AVEVA unit of Schneider Electric", with Autodesk named in commercial and facilities work and Dassault Systèmes among the mining competitors. A reasonable investor looks at that list and concludes the smaller party eventually gets squeezed.

Then look at what the accounts actually show. The trailing operating margin is 26.7%, ahead of ADSK at 25.1% and several times what GWRE manages at 8.2%, QTWO at 8.0% or AVPT at 9.6% on comparable revenue bases. A company that were being squeezed by larger rivals would show it in the margin first, and this one converts more of each revenue dollar into operating profit than almost everything in its cohort. Whatever is protecting that margin is not scale, because Bentley has less of it than the competitors it names.

What protects it is the customer and the timescale. Infrastructure engineering models outlive the engineers who build them. A bridge design, a rail corridor, a water network: these are assets maintained for forty years by organisations that need the original model to remain readable, and switching the software means re-creating decades of work. The revenue mix reflects exactly that stickiness, with enterprise subscriptions at roughly 41% of revenue, term license subscriptions near 32%, and the legacy SELECT program near 18%, so close to nine-tenths of what comes in each year is contracted to come in again. The company's stated plan is to keep pushing the same direction: "We intend to continue to expand the reach of our E365 subscription within virtually all of our enterprise accounts", and the 10-K reports that new business from small and medium accounts, including hundreds of new logos each quarter, has become a substantial contributor to recurring-revenue growth.

The capital structure is a quiet asset that most readers will miss. The FY2025 10-K describes "a private offering of $ 690,000 of 0.125 % convertible senior notes due 2026" completed on January 26, 2021, alongside a later issue carrying an effective interest rate of 0.864%. Operating profit covers interest roughly thirty times over. Borrowing costs fixed in the 2021 window are money that cannot be raised on those terms today, and every year the notes remain outstanding is a year of financing that a competitor issuing paper now cannot match.

Capital allocation is unusual for software in the same direction. The share count has fallen about 0.7% a year over the four years to March 2026, which is a genuinely rare thing in an industry where stock-based pay normally pushes the count the other way, and the board declared a second-quarter 2026 dividend in May. The concession the bull has to make is on growth: full-year 2025 revenue of $1.50 billion was up 10.99%, and every domestic peer in the set grew faster. The answer is that Bentley is not competing for the same budget. Public infrastructure programs are appropriated, not discretionary, and they get spent slowly and for a long time.

Bear Case

The advantage being worn away here is the one that never appears in a product comparison: the ability to raise prices inside an installed base without anyone negotiating back. Bentley's original economics rested on SELECT, an annual subscription attached to licences that customers already owned, renewed largely as a matter of course. That program is now roughly 18% of revenue, while enterprise subscriptions account for about 41%. An enterprise agreement is a negotiated instrument. It is sized, discounted, benchmarked against alternatives and renewed by a procurement department rather than by an engineering manager. The revenue may be equally recurring. The pricing conversation is not the same conversation.

The evidence that something is loosening sits in the growth rate. Full-year 2025 revenue rose 10.99%. Over their trailing years, PTC grew 27.7%, GEN 27.1%, AVPT 27.1%, GWRE 24.9%, APPF 20.7%, ADSK 18.3% and QTWO 14.0%. Bentley is the slowest grower in its own comparison set and it is not the smallest company in it, which removes the usual explanation. The 10-K names the mechanism it fears in plain language, warning that competitive or ownership change "could lead to pricing pressure, erosion of our margins, loss of accounts, and loss of market share".

Now hold that against what the price requires. At roughly 27 times company-wide operating income, the arithmetic needs operating profit growth pinned at the ceiling a business can fund from its own cash flow, held there for about six years. Only about 29% of comparable fast-growing companies sustained a pace like that for that long. And here is the specific tension: revenue is growing near 11%, so operating profit cannot grow at a fast-grower's rate unless the margin keeps expanding. The margin is already 26.7%, ahead of most of the cohort. The bet embedded in this price is therefore not really a growth bet. It is a bet on margin expansion from a level that is already high, in a business whose own filing flags margin erosion as the competitive risk.

The financing advantage has a date on it. The 0.125% convertible notes described in the annual report reach their 2026 maturity this year, and the interest coverage near thirty times is a function of a coupon negotiated in a market that no longer exists. Whatever replaces that paper will cost more, and the coverage figure will move accordingly. That is not a solvency question at this size. It is a reminder that one of the numbers making the balance sheet look effortless is a legacy of timing rather than a permanent feature.

Two smaller exposures round it out. The company's principal supplier of cloud services is Microsoft under a multi-year agreement, which concentrates the delivery layer of a business whose customers are moving from desktop files to hosted models. And on unauthorised use, the 10-K concedes it is "unable to measure the full extent to which unauthorized use of our software products exists", which is a candid way of saying some portion of the installed base has never been a paying customer and the size of it is unknown.

The counter deserves stating. Renewal rates in this category are genuinely high, infrastructure spending is slow-moving and politically durable, and a company earning this margin at this size is not a company in retreat. The bear position is narrower: a price that needs six years of ceiling-rate profit growth, funded by margin expansion, from a business growing revenue at eleven percent, has left itself no room for the ordinary deceleration that its own filing describes as the competitive risk.

Valuation

Almost everything this business sells renews. Enterprise subscriptions, term licences and the older SELECT program together account for roughly nine-tenths of revenue, which makes the valuation question less about whether the money arrives and more about how fast it grows once it does. At the current price the market is paying about 27 times company-wide operating income. Invert that at a 9.56% cost of capital and the assumption embedded is operating profit growth held at the ceiling the business can fund from its own cash flow, sustained for about six years. The rate itself is within what this company has recently produced. The duration is the demand, and the calculation is comparatively firm about it: each percentage point of assumed cost of capital moves that horizon by only about 1.8 years.

The methods sort into two clear camps. Peer multiples and the forward-growth approaches land at or above where the shares trade, while the asset-value and earnings-power methods land far beneath them. Both of the low readings have specific mechanisms worth understanding rather than dismissing. Book equity is $3.81 a share, which for a software company that has bought its way into adjacent engineering disciplines records the accounting residue of past deals and essentially nothing about what the software now earns. The earnings-power reading normalizes operating profit across five years with one-time charges added back, credits no growth whatsoever, and capitalizes the result: that normalized figure is roughly 0.25 billion dollars against a trailing operating profit near 410 million dollars. The distance between those two numbers is the whole ramp of the last five years, and whether you find the price reasonable depends almost entirely on which of them you think describes the business.

Against its cohort the multiple sits in the lower half of the peer range, and the profitability comparison explains part of why. On operating margin this business runs 26.7%, ahead of ADSK at 25.1% and far ahead of GWRE at 8.2%, APPF at 17.1% and QTWO at 8.0%, but behind PTC at 38.7% and GEN at 42.4%. So it is a high-margin, slow-growth software company being priced below the group's typical multiple, which is internally consistent. The disagreement is not about what the business is. It is about how much longer the profit line can outrun the revenue line.

Solvency bounds rather than adds. Operating profit covers interest roughly thirty times, cash generation is positive, and the borrowings are convertible notes struck at 0.125% and an effective 0.864% rather than ordinary corporate paper. The share count has been falling about 0.7% a year across the four years to March 2026, so the per-share arithmetic has been working quietly in the holder's favour. The item to carry forward is the 2026 maturity on the cheaper of those two note issues, because the coverage figure above is partly a souvenir of when the money was raised.

Catalysts

Second-quarter results are scheduled for August 6, 2026, before the market opens, a date the company confirmed on July 8. The most recent print, delivered May 7, 2026, put first-quarter revenue at $424.2 million. For the full year 2025 revenue reached $1.50 billion, up 10.99%, with net income of $277.9 million, up 18.35% on the prior year. Profit growing faster than revenue is the pattern the current price depends on continuing, which makes the margin line in the August release more informative than the revenue line.

Analyst positioning has moved in both directions this summer. BMO Capital lowered its price target to $41 from $45 on July 24, 2026, while BNP Paribas initiated coverage at Outperform on June 23, 2026. Both targets sit above where the shares currently trade, which lines up with the growth-based methods discussed earlier landing above the price while the profit-normalizing ones land well beneath it. The street is crediting the continuation; the conservative frames are not.

On the business itself, two items in May are worth noting for what they signal about the customer base. The board declared a second-quarter 2026 dividend on May 22, 2026, and on May 19 the company announced a partnership with the Western Cape Department of Infrastructure. Public infrastructure agencies are the customer type that anchors the recurring base: they procure slowly, they standardize on a platform for a generation of assets, and once the asset models live in a given system, the relationship is measured in decades rather than contract terms.

Peer Cohorts (Per Segment, With Filing Citations)

Bentley Systems (infrastructure engineering software) (reported)

• ADSK (AUTODESK, INC.)
• FY2025 10-K: …quality, communicate plans, and collaborate with others. A summary of our revenue by geographic area and product family is found in Part II, Item 8, Note 2, "Revenue Recognition," in the Notes to Consolidated Financial Statements. Autodesk's product offerings include: Architecture, Engineering, Construction and…
• FY2025 10-K: …may also affect the relative value of our billings, Remaining Performance Obligations ("RPO"), and collections in the fourth and first fiscal quarters. 9 Table of Contents CUSTOMER AND PARTNER SUPPORT With the new transaction model, we are approaching the final phase of modernizing our go-to-market motion, which…
• PTC (PTC Inc.)
• FY2025 10-K: …Siemens AG. For our SLM products, we compete with enterprise software companies such as Oracle, SAP, IFS AB, Microsoft, and Salesforce, and with companies that offer point solutions. Proprietary Rights Our software products and related technical know-how, along with our trademarks, including our company names,…
• FY2025 10-K: …and processes. A product data foundation is the backbone of AI-driven transformation. Our business is based on a subscription model and 95% of our 2025 revenue is recurring in nature. Compared to a perpetual license model, our subscription model naturally drives higher customer engagement and retention and provides…
• APPF (AppFolio, Inc.)
• FY2025 10-K: …service, maintain operations, and create seamless experiences for residents, property owners, and investors. Our Realm Messages integrates text and email communications into a centralized inbox. This feature allows customers to manage resident correspondence within the platform's core workflow, which is designed to…
• FY2025 10-K: …results could be harmed. Some of our property management customers require their renters to maintain certain insurance coverage requirements. Through wholly owned and licensed subsidiaries, we make renters insurance policies available to these renters and, if our customers so elect, add uncovered units to a…
• GWRE (Guidewire Software, Inc.)
• FY2025 10-K: …serve our customers. Core Operational Products We offer the following suite of products: Guidewire InsuranceSuite and Guidewire InsuranceNow. Guidewire InsuranceSuite Guidewire InsuranceSuite is a highly configurable and scalable product, delivered as a service, and primarily comprised of three core applications…
• FY2025 10-K: …teams to geo-visualize claims to help improve customer satisfaction and reduce indemnity by proactively responding to storm events. Guidewire Compare Guidewire Compare is a cloud-native application included with ClaimCenter that monitors key claims measures and gives feedback on how those compare against peer…
• AVPT (AvePoint, Inc.)
• FY2025 10-K: …Platform into tiered bundles to simplify selling and adoption using a "good-better-best" model aligned to customer profiles and a clear growth path. While we expect these bundles will continue to evolve as they become more popular in the market, today they are focused primarily on the capabilities of the Control and…
• FY2025 10-K: …or payment information from users, or information from marketers, could result in the loss, modification, disclosure, destruction, or other misuse of such data, which could indirectly harm our business and reputation and diminish our competitive position within the market generally. In addition, computer malware,…
• CLBT (Cellebrite DI Ltd.)
• FY2025 20-F: …years . The Company concluded that the software license is distinct as the customer can benefit from the software on its own. Subscription revenues are derived from maintenance, support and SaaS subscriptions, which are considered distinct performance obligations. Maintenance and support revenues include unspecified…
• FY2025 20-F: …integration, expansion of product capabilities, and the assembled workforce. The Goodwill is not expected to be deductible for tax purposes. The identifiable intangible assets and their estimated useful lives are as follows: Fair Value Useful life in years Technology 57,667 8 Backlog 5,035 1.5 Customer relationship…
• QTWO (Q2 Holdings, Inc.)
• FY2025 10-K: …initiation, configuration, application testing, limited production and production. We offer customized professional services to assist our customers with their efforts to extend our offerings and differentiate their digital brands. We engage with select established customers for more tailored, premium professional…
• FY2025 10-K: …banking experiences and embedded finance and BaaS use cases with institutional control over compliance, risk and operations. 9 Table of Contents Key Benefits We believe our solutions provide the following key benefits to our customers and their End Users: • Unified digital engagement across channels: Our platform…
• GEN (Gen Digital Inc.)
• FY2025 10-K: …cyberattack or other business continuity event, such as a pandemic, could cause data to be lost or otherwise delay our ability to complete sales and provide the highest level of service to our customers. In addition, we could have difficulty producing accurate financial statements on a timely basis, and deficiencies…
• FY2025 10-K: …for rebates, recorded in Other current liabilities, were $ 2 million and $ 4 million, respectively. For products that include content updates and services, rebates are recognized as a ratable offset to revenue or contract liabilities over the term of the subscription. Performance obligations At contract inception, we…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.