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Infrastructure Software Revenue Recovers To Pre-Downturn Levels, Vendor Reports

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An infrastructure construction software vendor, who specializes in design and analysis applications, is working to have it both ways.

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As a privately held company, Bentley Systems Inc., Exton, Pa., is not required to file statements with securities regulators, as publicly traded companies must do. But not filing means Bentley misses the PR bang that comes when annual statements are released by its publicly traded competition. So on March 2, Bentley held its first “annual report” conference call with analysts and investors, as well as trade journalists, to proclaim successes, announce new business moves and reiterate some announcements of the preceding year.

“It’s not an earnings call, not detailed financials,” said CEO Greg Bentley in a pre-call interview. “It focuses on top-level financial highlights of 2010 and notable achievements of the last year and the first two months of this one. It conforms a bit more schedule-wise and so forth with what other large companies do.”

One driver for the relative transparency may be that the company achieved its “initial public rating” for the first time late last year when both Moody’s Investor Services and Standard & Poor’s—which is a rating service owned by ENR’s parent company, McGraw-Hill—issued ratings that Bentley has used to obtain credit in the form of publicly traded loans. The company used the ratings and “entered into a $310-million credit facility” in February that enabled it to buy back $200 million of company stock from outside investors. The Bentley family and employees now own 85% of the company’s shares.

The company reports “generally accepted accounting principals” (GAAP) revenues, when adjusted to constant foreign exchange rates, of $476 million, “which is where we were at our 2008 peak in real terms,” says Bentley. That figure represents a year-over-year growth rate of 6%.

Bentley says that while subscriptions had helped sustain revenues, some of the company’s brands (STAAD, ProSteel, AutoPIPE, and Bentley Map, among others) and sectors (structural, bridge and electrical engineering, among others) have outpaced the recession by growing substantially throughout. He says, “Six percent is our new target organic growth rate in this reset economy. With 74% of our revenue being subscription-based—and we are not go to raise that—we can’t grow much more than that except through acquisitions.”

The company did announce an acquisition: SACS, an integrated suite of finite-element structural analysis programs for the design, fabrication, installation, and operations and maintenance of fixed offshore structures, including oil platforms and wind farms. It purchased the software from New Orleans-based Engineering Dynamics Inc., a 38-year-old-firm with deep penetration in the offshore industry, Bentley says. “The preponderance of offshore structures have been engineered with SACS,” Bentley says, although he noted that SACS has not been applied to floating structures, including the Deepwater Horizon drill ship that blew up and sank a year ago in the Gulf of Mexico.

Terms of the deal were not disclosed.

Bentley says special requirements for fixed offshore platforms are analysis of environmental loads such as waves, marine growth—which he says has a very significant impact on water flows—vulnerability to ship collision, bending and collapse. “These are all special algorithms when they occur offshore,” he says. “It’s a different set of physics. It’s cool.” He says the growing offshore wind-farm market is an area he expects the software to serve.

For current customers, the call included news that purchasers of new software and users enrolled in its SELECT subscription plan will be able to swap underutilized Bentley titles for others of equal value at the anniversary of their subscriptions as part of an annual “portfolio balancing” plan. That way, if a company’s business evolves to need less of one product and more of another, it can simply trade in the less-needed title. “We think they will be less inhibited in making a software licensing investment,” Bentley says.

Another new accessory for users announced on the call is an apps site called “iWare,” which delivers free plug-ins for Bentley products and the products of others, including Autodesk Revit and Microsoft Windows 7, to improve interoperability between them.

 

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