BSY 10-K & 10-Q changes, risk factors and insider trading

The following is a discussion of the material factors that make an investment in the Company and its securities speculative or risky. The risks described herein are not the only risks we may face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations, or operatingcash results.flows.

Demand for our software solutions is subject to volatility in our accounts’ underlying businesses, which includes infrastructure projects that typically have long timelines.

Our sales are based significantly on accounts’ demand for software solutions in the following infrastructure sectors: (i) public works/utilities; (ii) resources; (iii) industrial; and (iv) commercial/facilities. Although these sectors are typically countercyclical to one another in nature, each periodically experiences economic declines and may be exacerbated by other economic factors. If participants in any of these sectors reduce spending or allocate future funding in a manner that results in fewer infrastructure improvement or expansion projects, then our accounts’ underlying business may be impacted and demand for our software solutions may decrease or our rate of contract renewals may decrease. A prolonged decrease in such spending may harm our results of operations. Our accounts may request discounts or extended payment terms on new arrangements or seek to extend payment terms on existing arrangements due to lower levels of infrastructure spending or for other reasons, all of which may reduce revenue. We may not be able to adjust our operating expenses to offset such discounts or other arrangements because a substantial portion of our operating expenses is related to personnel, facilities, and marketing programs. The level of personnel and related expenses may not be able to be adjusted quickly and is based, in significant part, on our expectations for future revenues and demand.

Infrastructure projects typically have long timelines and we may invest in building capacity based on expected demand for our software solutions that takes longer to develop than we expect or fails to develop at all. Additionally, government spending on infrastructure may decrease, which could decrease the demand for our software solutions and have a negative impact on our results of operations. We may not be successful in forecasting future demand levels and could fail to win business at the expected rates. If we underestimate the demand for our software solutions,software, we may be unable to fulfill the increased demand in a timely fashion or at all. If we overestimate the demand for our software solutions,software, we may incur additional expenses for which we would not have corresponding revenues, negatively impacting our results of operations.

Approximately 59%, 58%, and 58% of our total revenues were from outside the U.S. for the years ended December 31, 2025, 2024, and 2023, and 2022.respectively. We anticipate that revenues from accounts outside the U.S. will continue to comprise a majority of our total revenues for the foreseeable future.

Approximately 18% of our total revenues for the years ended December 31, 2025, 2024, 2023, and 20222023 relate to infrastructure projects in APAC, including China. We cannot assure you that spending in these countries on infrastructure projects will continue at historical levels or increase in the future, or that demand for our software solutions in APAC in general will not be negatively affected by reductions in spending or other limitations.

We sell our solutionssoftware in 189 countries, primarily through a direct sales force located throughout the world. Approximately 59%, 58%, and 58% of our total revenues were from outside the U.S. for the years ended December 31, 2025, 2024, and 2023, and 2022.respectively. As we continue to expand our presence in international regions, the portion of our revenues, expenses, cash, accounts receivable, and payment obligations denominated in foreign currencies continues to increase. Further, we anticipate that revenues from accounts outside of the U.S. will continue to comprise the majority of our total revenues for the foreseeable future.

It is likely that some of our existing accounts will consolidate, be acquired, or experience a change in management, which could lead to a decrease in the size of our account base. We expect consolidation among our accounts as they attempt to strengthen or maintain their market positions. If two or more of our accounts consolidate, they may also wish to consolidate the software solutions and services that we provide to them. If an existing account is acquired by another company that uses the solutionssoftware of one of our competitors, we may lose business in that account to our competitor. In addition, if an account experiences a change in management, the new management team may be accustomed to the software of one of our competitors, and we could lose that account. Any such consolidation, acquisition, or management change could lead to pricing pressure, erosion of our margins, loss of accounts, and loss of market share, all of which could harm our business, financial condition, and results of operations.

We have in the past and expect to continue in the future to seek to grow our business through acquisitions of or investments in new or complementary businesses, software solutions,software, or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing platform and business, could harm us.

Quality problems, defects, errors, failures, or vulnerabilities in our software solutions or services could harm our reputation and adversely affect our business, financial condition, results of operations, and prospects.

Our solutionsofferings are, in some cases, highly complex and incorporate advanced software technologies that we attempt to make interoperable with the products of other software providers. Despite testing prior to release, our software may contain undetected defects or errors. Further, the combined use of our software with those of other software providers may cause errors or failures, or it may expose undetected defects, errors, or failures in our software. These defects, errors, or failures could affect software performance and damage the businesses of our accounts, as well as delay the development or release of new software or new versions of software. Further, we cannot guarantee that all of our accounts are using the latest versions of our software solutions with enhanced security features and may be more vulnerable to cyber‑attacks. Allegations of unsatisfactory performance in any of these situations could damage our reputation in the market and our relationships with our accounts, cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting, or redesigning the software, cause us to lose accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects. We may also be required to provide full replacements or refunds for such defective software. We cannot assure you that such remediation would not harm our business, financial condition, results of operations, and prospects.

Our business, financial condition, results of operations, and prospects may be harmed if we are unable to cross‑sell our solutions.software offerings.

A significant component of our growth strategy is to increase the cross‑selling of our solutionssoftware offerings to current and future accounts, however, we may not be successful in doing so if our accounts find our additional solutionsofferings to be unnecessary or unattractive. We have invested, and intend to continue to invest, significant resources in developing and acquiring additional solutions,software offerings, which resources may not be recovered if we are unable to successfully cross‑sell these solutionsofferings to accounts using our existing solutions.software. Any failure to sell additional solutionssoftware offerings to current and future accounts could harm our business, financial condition, results of operations, and prospects.

Sales through our global network of independent regional channel partners accounted for 6%, 7%, 8%, and 8% of our total revenues for the years ended December 31, 2025, 2024, 2023, and 2022,2023, respectively. These channel partners sell our software solutions in geographic regions where we do not have a meaningful presence, and in niche markets where they have specialized industry and technical knowledge. Where we rely on channel partners, we may have reduced contact with ultimate users that purchase through such channel partners, thereby making it more difficult to establish brand awareness, ensure proper installation, service ongoing requirements, estimate demand, and respond to the evolving needs of an account. Any of our channel partners may choose to terminate its relationship with us at any time. As a result, our ability to service the ultimate users who were interfacing with that channel partner may take time to develop as we divert resources to service those users directly or find a suitable alternative channel partner to continue the relationship. Any disruption in service may damage our reputation and business. In addition, our channel partners may be unable to meet their payment obligations to us, which would have a negative impact on our resultsfinancial of operations and revenues.results. Our channel partners may also not have loyalty to our brand and therefore may not be particularly motivated to sell our software solutions or services.

The use of channel partners could also subject us to lawsuits, potential liability, and reputational harm if, for example, any channel partners misrepresent the functionality of our software solutions or services to accounts, fail to comply with their contractual obligations, or violate laws or our corporate policies. Such actions may impact our ability to distribute our software solutions into certain regions and markets, and may have an adverse effect on our results of operations and cash flows.

We incorporate artificial intelligence and machine learning (collectively “AI” herein this item) into our software solutions and offerings, and challenges with properly managing its use could result in reputational harm, or liability, and adversely affect our operations.

AsWe believe AI represents a globalparadigm shift for infrastructure sectors. We are building and embedding AI capabilities across our comprehensive portfolio of integrated software andofferings serviceto provider, we are increasingly building AI into many of our software solutionssupport and offerings. We expect to rely onaccelerate the responsible use of AI technologiesby our users and accounts. We expect data-centric and AI-powered offerings to help drive future growth in our business but there can be no assurance that we will realize the anticipated growth or benefits from AI.benefits. As with many innovations, there may be slow adoption, regulatory challenges, or we may fail to appropriately implement and market our AIdata-centric solutions.and AI-powered offerings.

A significant portion of our software development personnel, source code, and computer equipment is located at operating facilities outside the U.S. We also depend on data maintained on servers running third‑party enterpriseenterprise-wide resource planning,administrative, account relationship management, and other business operations systems. We further rely upon a variety of Internet service providers, third‑party hosting facilities, and cloud computing platform providers, such as Microsoft Azure, as well as local service providers to support project teams and users in most regions and countries throughout the world, particularly with respect to our cloud service solutions.offerings. Failure to maintain the security, confidentiality, accessibility, or integrity of data stored on such systems could damage our reputation in the market and our relationships with our accounts, cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs, cause us to lose accounts, subject us to liability for damages, and divert our resources from other tasks, any one of which could adversely affect our business, financial condition, results of operations, and prospects. Any damage to, or failure of, such systems, or communications to and between such systems, could result in interruptions in our operations, managed services, and software development activities. Such interruptions may reduce our revenue, delay billing, cause us to issue credits or pay penalties, cause accounts to terminate their subscriptions, or adversely affect our attrition rates and our ability to attract new accounts. Our business would also be harmed if our accounts and potential accounts believe our products or services are unreliable.

The risk of a security breach or disruption, particularly through cyber‑attack or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased. These threats include but are not limited to identity theft, unauthorized access, domain name system attacks, wireless network attacks, viruses and worms, advanced persistent threat, application centric attacks, peer-to-peer attacks, phishing, backdoor trojans, and distributed denial of service attacks. Any of the foregoing could attack our accounts’ data (including their employees’ personal data), our data (including colleagues’ personal data), our IT systems or those of our accounts and/or critical vendors. It is virtually impossible for us to entirely eliminate this risk. Like all software, our software is vulnerable to cyber‑attacks. The impact of cyber‑attacks could disrupt the proper functioning of our software solutions or services, cause errors in the output of our accounts’ work, allow unauthorized access to sensitive, proprietary, or confidential information of ours or our accounts, and other destructive outcomes.

The steps we take may not be adequate to protect our technologies and intellectual property, our patent and trademark applications may not lead to issued patents or registered trademarks, others may develop or patent similar or superior technologies or solutions,offerings, and our patents, trademarks, and other intellectual property may be challenged, invalidated, designed around, or circumvented by others. Furthermore, effective copyright, patent, trademark, and trade secret protection may not be available in every country in which our solutionsofferings are available or where we do business.

As a global software and service provider, we collect and process personal data and other data from our users and prospective users. We use this information to provide solutionssoftware and applicationsofferings to our accounts, to validate user identity, to fulfill contractual duties and administer billing and support, to expand and improve our business, and to communicate and recommend products and services through our marketing and advertising efforts. We may also share accounts’ personal data with certain third parties as described in the privacy statement provided to each account. We may also share accounts’ personal data with certain third parties as described in the privacy statement provided to each account. Further, we collect and otherwise process personal data of our global employees and contractors.

Governments, regulators, privacy advocates, plaintiffs’ attorneys, and our users and accounts are increasingly focused on how companies collect, process, use, store, share, and transmit personal data. Regulation relating to the provision of our solutions and applications,software is evolving, as federal, state, and foreign governments continue to adopt new, or modify existing, laws and regulations addressing privacy, data protection, data sovereignty, information security and the collection, processing, storage, sharing, transmission, and use of data generally. This evolving regulatory landscape may be subject to differing interpretations, jurisdiction specific inconsistencies, or may conflict with other rules. We expect the regulatory landscape to remain uncertain for the foreseeable future. Further, our expectation is that there will continue to be new laws, regulations, and industry standards applicable to our collection, processing, storage, sharing, transmission, and use of data generally.

Although, we monitor the regulatory environment and have invested in addressing these developments, operating in an increasingly complex regulatory landscape may impact our innovation and business drivers in developing new and emerging technologies (e.g., AI). Globally, these and other requirements are causing increased scrutiny amongst users, particularly in the public sector and highly regulated industries, which could restrict the use and adoption of our solutions and applicationssoftware (in particular cloud services). Further, these developments may require us to take on more onerous obligations in our contracts, restrict our ability to store, transfertransfer, and process data or, in some cases, impact our ability or our users’ ability to offer our services in certain locations, to deploy our solutions,offerings, or to derive insights from user data globally.

Our accounts expect us to meet voluntary certification or other standards established by third parties or imposed by the accounts themselves. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutionssoftware to certain accounts and could harm our business. Further, if we were to experience a breach of systems compromising our accounts’ sensitive data, our brand and reputation could be adversely affected, use of our software solutions and services could decrease, and we could be exposed to a risk of loss, litigation, and regulatory proceedings.

Furthermore, concerns regarding privacy, data protection, cross-border data flows, and information security may cause our accounts’ customers to resist providing the data necessary to allow our accounts to use our services effectively. Even the perception that the privacy of data is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our software solutions or services, and could limit adoption of our cloud‑based solutions.offerings.

We license third‑party technologies for the development of certain of our software solutions,offerings, and, in some instances, we incorporate third‑party technologies, including open source software, into our software solutions.software. If we fail to maintain these licenses or are unable to secure alternative licenses on reasonable terms, our business could be adversely affected.

We license third-party technologies to develop certain ofsoftware our products,offerings, and, in some cases, we incorporate third‑party technologies into our own software solutions,software, including technologies owned by our competitors. If we were to seek to expand the scope of this activity in the future, we could be required to obtain additional licenses and enter into long‑term arrangements with third parties on whose technology we could become substantially dependent.

If we are unable to use or license these third‑party technologies on reasonable terms, including commercially justifiable royalty rates, or if these technologies fail to operate properly or be appropriately supported, maintained, or enhanced, we may not be able to secure alternatives in a timely manner and our ability to develop and commercialize our own software solutionsofferings could be adversely impacted. In addition, licensed technology may be subject to claims that it infringes others’ intellectual property rights and we may lose access to or have restrictions placed on our use of the licensed technology. We also incorporate open source software into our products. While we have attempted not to use open source code in a manner which could adversely impact our proprietary code, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to market or sell our products or to develop new products.

Assertions by third parties of infringement or other violations by us of their intellectual property rights could result in significant costs and harm our businessbusiness, financial condition, and results of operations.

Recent and potential tariffs imposed by the U.S. government or a global trade war could increase the cost of our products and services and the cost of conducting our business, which could harm our business, financial condition, and results of operations. The U.S. government has threatened substantial changes to trade agreements and has raised the possibility of imposing significant increases on tariffs on goods imported into the U.S., particularly from China. The imposition of additional tariffs by the U.S. could result in the adoption of tariffs by other countries, leading to a global trade war. In addition, certain of these risks may be heightened as a result of changing political climates. For example, the U.S. and China have been levying tariffs on their respective imports. Such tariffs could have a significant impact on our business and the business of our accounts. While we may attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective. We might also consider increasing prices to the end consumer; however, this could reduce the competitiveness of our products and servicesservices, and adversely affect revenue. If we fail to manage these dynamics successfully, our gross margins and profitability could be adversely affected.

Our offerings may be subject to U.S. export controls and economic sanctions laws and regulations that restrict the delivery of our solutionssoftware and services to certain locations, governments, and persons. While we have processes in place to prevent our offerings from being exported in violation of these laws, including obtaining authorizations as appropriate and screening against U.S. government lists of restricted and prohibited persons, we cannot guarantee that these processes will prevent all violations of export control and sanctions laws. We may also decide to acquire companies whose past activities could give rise to potential liability under export control and sanctions laws. Such acquisitions may require substantial time and resources to integrate the acquired company into our compliance processes, to correct potential compliance gaps, and to remediate past potential violations by the acquired company, including through our own internal actions, voluntary self‑disclosures, or other measures.

The use of our softwaresoftware, including AI-enabled offerings, could lead to the filing of product liability claims against us were someone to allege that our software provided inaccurate or incomplete information at any stage of the infrastructure lifecycle or otherwise failed to perform according to specifications. In the event that accounts or third parties sustain property damage, injury, death, or other loss in connection with their use of our software or infrastructure for which our software solutions and services were used to engineer, we, along with others, may be sued, and whether or not we are ultimately determined to be liable, we may incur significant legal expenses, management’s attention could be diverted from operations, and market acceptance of our software could decrease. Our risk of exposure to litigation in these situations could rise as our software solutions and services are used for increasingly complex and high‑profile infrastructure projects. Litigation could also impair our ability to obtain professional liability or product liability insurance or increase the cost of such insurance. These claims may be brought by individuals seeking relief on their own behalf or purporting to represent a class. In addition, product liability claims may be asserted against us in the future based on events we are not aware of at the present time.

In January 2021, we issued $690 million aggregate principal amount of convertible senior notes due 2026 (the “2026 Notes”), which will mature on January 15, 2026, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. In June 2021, we issued $575 million aggregate principal amount of convertible senior notes due 2027 (the “2027 Notes”), which will mature on July 1, 2027, unless earlier redeemed or repurchased by us or converted by the holder pursuant to their terms. The 2026 Notes and 2027 Notes rank senior in right of payment to our Class B common stock and any of our indebtedness that is expressly subordinated in right of payment to the 2026 Notes and 2027 Notes; equal in right of payment to any of our liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. In the event of our bankruptcy, liquidation, reorganization, or other winding up, our assets that secure debt ranking senior or equal in right of payment to the 2026 Notes and 2027 Notes will be available to pay obligations on the 2026 Notes and 2027 Notes only after the secured debt has been repaid in full from these assets, and our assets will be available to pay common stockholders only after all debt obligations have been repaid. There may not be sufficient assets remaining to pay amounts due on any or all of the 2026 Notes and 2027 Notes then outstanding or any or all shares of our Class B common stock then outstanding.

The accounting method for convertible debt securities that may be settled in cash, such as the 2026 Notes and 2027 Notes, could have a material effect on our reported financial condition and results.results of operations.

The accounting method for reflecting the 2026 Notes and 2027 Notes on our consolidated balance sheets and reflecting the underlying shares of our Class B common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

Under the if‑converted method, diluted earnings per share will be calculated assuming that all the 2026 Notes and 2027 Notes are converted solely into shares of Class B common stock at the beginning of the reporting period, unless the result would be anti‑dilutive. The application of the if‑converted method will reduce our reported diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2026 Notes and/or the 2027 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability. This reclassification could be required even if no noteholders convert their notes and could materially reduce our reported working capital.

The conditional conversion feature of the 2026 Notes and 2027 Notes may adversely affect our financial condition and operatingresults results.of operations.

In the event the conditional conversion feature of the 2026 Notes and/or the 2027 Notes is triggered, holders of the 2026 Notes and/or the 2027 Notes will be entitled to convert the 2026 Notes and/or the 2027 Notes at any time during specified periods at their option. If one or more holders elect to convert their 2026 Notes and/or their 2027 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class B common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their 2026 Notes and/or their 2027 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes and/or the 2027 Notes as a current, rather than long‑term, liability, which would result in a material reduction of our net working capital.

Conversion of the 2026 Notes and/or the 2027 Notes will dilute the ownership interest of existing stockholders, including holders who had previously converted their 2026 Notes and/or their 2027 Notes, or may otherwise depress the price of our Class B common stock.

The conversion of some or all of the 2026 Notes and/or the 2027 Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion of any of the 2026 Notes and/or the 2027 Notes. Any sales in the public market of the Class B common stock issuable upon such conversion could adversely affect prevailing market prices of our Class B common stock. In addition, the existence of the 2026 Notes and 2027 Notes may encourage short selling by market participants because the conversion of the 2026 Notes and/or the 2027 Notes could be used to satisfy short positions, or anticipated conversion of the 2026 Notes and/or the 2027 Notes into shares of our Class B common stock could depress the price of our Class B common stock. As of December 31, 2024,2025, without giving effect to any potential adjustments to the conversion rate set forth in the indenture or any limits on conversion, and assuming our Class B common stock is trading at or above $64.13 per share for the 2026 Notes and $83.23 per share for the 2027 Notes, 10,725,557 and 6,908,567 shares of our Class B common stock would be issuable upon a full conversion of the 2026 Notes and 2027 Notes, respectively.Notes.

The capped call transactions entered into when we issued the 2026 Notes and 2027 Notes may affect the value of our common stock.

In connection with the issuancesissuance of the 2026 Notes and 2027 Notes, we entered into capped call transactions with the respective option counterparties. The capped call transactions are expected generally to reduce the potential dilution upon conversion of the 2026 Notes and 2027 Notes, and/or offset any cash payments we are required to make in excess of the principal amount of converted 2026 Notes and 2027 Notes with such reduction and/or offset subject to a cap. In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates entered into various derivative transactions with respect to our Class B common stock concurrently with or shortly after the pricing of the 2026 Notes and 2027 Notes. The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding derivatives with respect to our Class B common stock and/or purchasing or selling our Class B common stock or other securities of ours in secondary market transactions prior to the maturity of the 2026 Notes and 2027 Notes (and are likely to do so during any observation period related to a conversion of 2026 Notes andthe 2027 Notes). This activity could cause or avoid an increase or a decrease in the market price of our Class B common stock.

Our Class A common stock has 29 votes per share, and our Class B common stock, which is the class of common stock that is issuable upon conversion of the 2026 Notes and 2027 Notes, and is the only class that is publicly traded and listed, has one vote per share. The beneficial owners of our Class A common stock together hold approximately 53.5% of the voting power of our outstanding common stock as of December 31, 2024.2025. Moreover, as a result of the 29 to one voting ratio between our Class A and Class B common stock, the Bentley Control Group controls and will continue to control a majority of the combined voting power of our common stock and therefore is able to control all matters submitted to our stockholders for approval, subject to the occurrence of certain events that would reduce the voting power of our Class A common stock or cause the conversion thereof. This concentrated control will limit or preclude stockholders’ ability to influence corporate matters for the foreseeable future and may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover, or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders. The Bentley Control Group may also have interests that differ from those of other stockholders and may vote in a way with which other stockholders disagree and which may be adverse to such other stockholders’ interests.

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of a breach of fiduciary duty owed by any of our directors or officers, any action asserting a claim against us arising pursuant to Delaware General Corporation Law, our amended and restated certificate of incorporation or amended and restated bylaws, or any action seeking to interpret, apply, enforce, or determine the validity of our amended and restated certificate of incorporation or amended and restated bylaws, and any action asserting a claim against us that is governed by the internal affairs doctrine. In addition, the choice of forum provision provides that, to the extent permitted by applicable law, claims brought under the Securities Act or the Exchange Act must be brought exclusively in the federal district court for the District of Delaware. Despite the choice of forum provision, investors cannot waive compliance with federal securities laws and rules and regulations thereunder. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other colleagues, which may discourage such lawsuits against us and our directors, officers, and other colleagues. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our businessbusiness, financial condition, and financialresults condition.of operations.

Global economic and political conditions may negatively impact our business, financial condition, and results of operations.operations, and cash flows.

Our operations and performance depend significantly on foreign and domestic economic and political conditions. Uncertainty regarding economic and political conditions may negatively impact us as accounts defer spending or postpone infrastructure projects in response to tighter credit, higher unemployment, higher interest rates, higher inflation, increases on tariffs, financial market volatility, government austerity programs, negative financial news, declining valuations of investments, and other factors. In addition, certain of our accounts’ budgets may be constrained and they may be unable to procure our solutionsofferings at the same level as in prior periods. Our accounts’ ability to pay for our software solutions and services may also be impaired, which may lead to an increase in our allowance for doubtful accounts and write‑offs of accounts receivable. Since we are exposed to the majority of major world markets, uncertainty in any significant market may negatively impact our performance and results, particularly with respect to our largest geographic accounts. Our accounts include government entities, including the U.S. government, and if spending cuts impede the ability of governments to purchase our products and services, our revenues could decline. In addition, a number of our accounts rely, directly and indirectly, on government spending. We are unable to predict economic conditions or the likelihood of additional economic uncertainty arising in any of our key markets. Changes in economic conditions could result in us not meeting our revenue growth objectives and could harm our business, financial condition, results of operations, and cash flows.

Geopolitical trends toward nationalism and protectionism and the weakening or dissolution of international trade pacts in response to changing trade policies may increase the cost of, or otherwise interfere with, conducting our business.business including supply chain disruptions, and reduced competitiveness due to the imposition of trade barriers. These trends have increased levels of political and economic unpredictability globally, and may increase the volatility of global financial markets; the impact of such developments on the global economy remains uncertain. Political instability or adverse political developments, including, without limitation, as a result of or in connection with trade relations between the U.S.U.S., E.U., and China, as well as terrorist attacks, cyber events, armed conflicts (or the threat or escalation thereof), bank failures, civil unrest, espionage, natural disasters, epidemics, and pandemics in any of the countries in which we do business could harm our business, financial condition, and results of operations.operations, and cash flows.

Changes in existing accounting or taxation rules or practices, new accounting pronouncements or taxation rules, or varying interpretations of current accounting pronouncements or taxation practices could have a significant adverse effect on our results of operations or the way we conduct our business. Further, such changes could potentially affect our reporting of transactions completed before such changes are effective. Additionally, our effective tax rate is subject to volatility related to the tax effects associated with the accounting for stock‑based compensation including as a result of price changes in our Class B common stock.

Bentley Systems is the infrastructure engineering software company. Our purpose is to advance the world’s infrastructure for better quality of life. WeOur empowermission peopleis to design,reshape build,how infrastructure systems and operatecritical betterresources are delivered and more resilient infrastructure through the adoption of our intelligent digital twin solutions.optimized. We manage our business globally within one reportable segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker (“CODM”) reviews and manages our business.

•ARR(2) was $1,462,145 as of December 31, 2025, compared to $1,283,256 as of December 31, 2024,2024; compared to $1,174,774 as of December 31, 2023, representing a constantConstant currency(1) ARR growth rate(2) ofwas 12%11.5%;

•Adjusted operating income less stock-based compensation expense (“AOI less SBC”) (previously titled Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”))(1) was $372,222$429,917 for the year ended December 31, 2024,2025, compared to $324,677$372,222 for the prior year; and

•Cash flows from operationsoperating wasactivities $435,292were $538,464 for the year ended December 31, 2024,2025, compared to $416,696$435,292 for the prior year.

(1)Constant currency and AdjustedAOI OIless w/SBC are non‑GAAP financial measures. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definitions and our uses of constant currency and AdjustedAOI OIless w/SBC.

Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates. For the years ended December 31, 2025, 2024, and 2023, andapproximately 2022, approximately33%, 34%, 35%, and 36%,35%, respectively, of our total revenues and 45%, 42%, 45%, and 46%,45%, respectively, of our total operating expenses were denominated in a currency other than the U.S. dollar including most significantly: euros, British pounds, Canadian dollars, Australian dollars, Chinese yuan renminbi, and New Zealand dollars. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure. Additionally, because we have operations in, and derive revenue from, geographies around the world, we will continue to monitor the impact of tariffs and other trade policies on our business and the businesses of our accounts, as well as on our financial condition, results of operations, and/or cash flows.

We generate revenues from subscriptions, perpetual licenses, and services. Our total revenues are diversified by account type, size, and geography.geographic Ourregion. sourcesThe majority of our revenue growth, excluding the impact from acquisitions, primarilyis comedriven fromby additional subscriptions revenues from existing accounts using the same productsproducts. andTo representa thelesser majority ofextent, our revenue growth,growth additionalis attributable to subscriptions revenues from new accounts and subscriptions revenues from existing accounts using new products, and subscriptions revenues from new accounts.products. We believe that we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2025, 2024, 2023, and 20222023 generated from organizations that have been our accounts for over ten years.

(1)Constant currency is a non‑GAAP financial measure. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

The increase in total revenues for the year ended December 31, 20242025 was primarily driven by an increase in subscriptions revenues, partially offset by decreasesa decrease in services revenues.

Subscriptions. For the year ended December 31, 2024,2025, the increase in subscriptions revenues was primarily driven by improvements in our business performance of $143,055$153,334 ($144,846$142,592 on a constant currency basis). Our business performance includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

For the year ended December 31, 2024,2025, the improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 3%2.5% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the year ended December 31, 20242025 were led by ourBentley engineeringOpen applications,Applications, followed by Seequent geoprofessional applications, and our Bentley Infrastructure Cloud for project delivery.Cloud.

Services. For the year ended December 31, 2024,2025, the decrease in services revenues was driven by a decline in our business performance of $18,296$4,869 ($18,526$5,548 on a constant currency basis), driven primarily fromdue weaknessto the winding down of a large services project in Maximo-relatedthe workbeginning withinof our digital integrator, Cohesive.2025.

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

The improvements in business performance for the year ended December 31, 20242025 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S., partiallyas offsetwell byas a declineincreases in servicesour revenues.subscriptions revenues from new accounts.

The improvements in business performance for the year ended December 31, 20242025 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”), and the Middle East, andas Africa,well as increases in our subscriptions revenues from new accounts, partially offset by a decline in services revenues.

The improvements in business performance for the year ended December 31, 20242025 were primarily due to expansion of our subscriptions revenues from existing accounts in Australia, Southeast Asia,Australia and India, partiallyas offsetwell byas declinesincreases ofin our subscriptions revenues from existingnew accounts in China.accounts.

For the years ended December 31, 2025, 2024, 2023, and 2022,2023, approximately 80% of our aggregate cost of revenues, research and development, selling and marketing, and general and administrative expenses were represented by what we refer to herein as “headcount‑related” costs. These costs primarily include salaries, benefits, bonuses, stock‑based compensation expense, employment taxes, travel, training, and realignment and optimization of our colleagues, and third‑party personnel expenses and related overhead. Our headcount‑related costs are variable in nature. We actively manage these costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins.

During the fourth quarter of 2023, the Companywe approved a strategic realignment program to better serve our accounts and to better align resources with the strategy of the business, including reinvestment in go-to-market functions, as well as in AI in product development (the “2023 Program”). The realignment program resulted in realignment costs of $847 and $12,579 for the years ended December 31, 2024 and 2023, respectively, which represent termination benefits for colleagues whose roles were impacted (less than five percent of total headcount). See Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information. The realignment2023 programProgram activitiesactivities, haveincluding been broadly implemented across our various businesses, which were substantially completed by the end of the second quarter of 2024, and paymentpayments of termination benefitsbenefits, were completed as of December 31, 2024. The impact of the realignment program on headcount-related costs for the year ended December 31, 2024 and 2023 is included in our discussion below.

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Cost of subscriptions and licenses. Cost of subscriptions and licenses expenses primarily include headcount‑related costs, as well as cloud‑related costs incurred for servicing our accounts using cloud provisioned solutionsofferings and our license administration platform. Cost of subscriptions and licenses expenses also include channel partner compensation for providing sales coverage to users, depreciation of property and equipment, amortization of capitalized software costs associated with servicing software subscriptions and our Accelerated Commercial Development Program (“ACDP”), and amortization of intangible assets associated with acquired software and technology.

For the year ended December 31, 2024,2025, on a constant currency basis, cost of servicessubscriptions and licenses expenses decreasedincreased primarily due to aan decreaseincrease in headcount‑related costs of $12,514,$15,149, mainly due to aan reductionincrease in third‑partyannual personneland costs.other compensation costs, and an increase in cloud-related costs of $10,007.

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our prior definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Research and development. Research and development expenses primarily consist of headcount‑related costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external accounts, before technological feasibility is reached, which is generally shortly before the release of such products. Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings. Our allocation of research and development resources is based on a cost‑benefit analysis of acquiring available technology in the marketplace versus developing our own solutions.software. We anticipate that we will continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions.offerings.

For the year ended December 31, 2024,2025, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of $9,513,$25,665, mainly due to an increaseincreases in headcount, and annual and other compensation costs, and to a lesser extent, higher colleague separation costs. Offsetting the increase in headcountHeadcount‑related costs were $4,995 of realignment expenses related to the 2023 Program recorded duringfor the year ended December 31, 2023.2024 were lower due to run‑rate savings as a result of the 2023 Program.

For the year ended December 31, 2024,2025, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $23,408,$24,174, mainly due to an increaseincreases in headcount, and annual and other compensation costs, and an increase in third-party personnel costs primarily related to our marketing activities. Additionally, selling and marketing expenses further increased due to an increase in promotional costs of $5,449.$6,216. Headcount‑related costs for the year ended December 31, 2024 were lower due to run‑rate savings as a result of the 2023 Program.

For the year ended December 31, 2024,2025, on a constant currency basis, general and administrative expenses increased primarily due to an increase in headcount‑related costs of $11,048,$4,412, mainly due to an increaseincreases in headcount, and annual and other compensation costs, andpartially offset by lower incentive compensation expense related to athe lesserreduction extent,in higherGregory charitableS. contributionsBentley’s focusingfractional oninterest educationunder the amended and sustainabilityrestated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) as part of $4,143Mr. andBentley’s highertransition expenseto associatedthe with non‑income related taxesrole of $3,585.Executive Chair effective July 1, 2024. Additionally, during the year ended December 31, 2024, we recognized approximately $10,300 of costs associated with our internal-use software implementations, as well as approximately $2,200 of other corporate initiatives expenses.expenses, Partiallywhich offsettingdid thesenot increasesrecur werein lowerthe acquisitioncurrent costs of $4,276.year.

Interest expense, net primarily represents interest associatedexpense withon our credit facility borrowings,borrowings theand 2026outstanding Notes,convertible thesenior 2027 Notes,notes, amortization of deferred debt issuance costs, and interest income from our investments in money market funds. The majority of our debt is protected from rising interest rates, through either very low fixed coupon interest on our convertible notes or our $200,000 interest rate swap, which expires in 2030.

For the year ended December 31, 2024,2025, interest expense, net decreased primarily due to lower weighted average debt outstanding,outstanding under the credit facilities as compared to the prior year, mainly related to the continued pay down of our revolving loan borrowings, and repayments of our senior secured term loan during 2024 under our amended and restated credit agreement, entered into on December 19, 2017 (the “2017 Credit Facility”).year.

(1)Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries.

(2)Other income (expense), net for the year ended December 31, 2023 includes non-marketable equity investment impairment and other charges of $(16,988), partially offset by gains on non-marketable equity investments of $2,360.

The last twelve‑months recurring revenues for the periods ended December 31, 2025, 2024, 2023, and 20222023 compared to the last twelve‑months of the comparative twelve‑month period increased by $153,346, $141,327, $118,653, and $143,874,$118,653, respectively. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions, including the favorable impact from our platform acquisitions of PLS and Seequent.acquisitions. For the twelve months ended December 31, 2025, 2024, and 2023, and 2022,93%, 91%, 89%, and 89%, respectively, of our revenues were recurring revenues.

AdjustedAOI OIless w/SBC is a non-GAAP financial measure and is used to measure the operational strength and performance of our business, as well as to assist in the evaluation of underlying trends in our business.

AdjustedAOI OIless w/SBC is our primary performance measure, which excludes certain expenses and charges, including the non-cash amortization expense resulting from the acquisition of intangible assets, as we believe these may not be indicative of our core business operating results. We intentionally include stock-based compensation expense in this measure as we believe it better captures the economic costs of our business.

Adjusted Operating Income (“AOI”)

Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses,expenses (inclusive of cash‑settled retention incentives provided to key employees of acquired companies), realignment expenses (income), and stock‑based compensation expense, for the respective periods.

Reconciliation of operating income to AdjustedAOI OIless w/SBC and to Adjusted operating income:

Further explanation of certain of our adjustments in arriving at AdjustedAOI OIless w/SBC and Adjusted operating income are as follows:

(2)Deferred compensation plan. We exclude Deferred compensation plan expense (income) when we evaluate our continuing operational performance because it is not reflective of our ongoing business and results of operation.operations. We believe it is useful for investors to understand the effects of this item on our total operating expenses. Deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.

(3)Acquisition expenses. We incur expenses for professional services rendered in connection with business combinations, which are included in our GAAP presentation of general and administrative expense. Also included in our acquisition expenses are cash‑settled retention incentives paidprovided to executiveskey employees of the acquired companies. We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations. For the year ended December 31, 2022, $9,804 of our acquisition expenses related to our platform acquisition of PLS.

(4)Realignment expenses. We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses. During the fourth quarter of 2023, we approved the 2023 Program. For the years ended December 31, 2024 and 2023, we recognized realignment costs related to the aforementioned program of $847 and $12,579, respectively, which represent termination benefits for colleagues whose roles were impacted (see Note 21 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K). For the year ended December 31, 2023, Realignmentrealignment expenses were partially offset by income associated with the continued wind down of our Russian entities.entities For the year ended December 31, 2022, Realignment expenses were comprised of asset impairments and termination benefits as a result offollowing our decision to wind down business and exit the Russian market beginning in the second quarter of 2022.

•Total revenues were $424,181$410,727 for the three months ended MarchJune 31,30, 2026, up 14.5%12.8% or 11.9%12.2% on a constant currency basis(1) compared to the three months ended MarchJune 31,30, 2025. Total revenues were $834,908 for the six months ended June 30, 2026, up 13.6% or 12.1% on a constant currency basis(1) compared to the six months ended June 30, 2025;

•Subscriptions revenues were $392,484$378,635 for the three months ended MarchJune 31,30, 2026, up 14.7%13.6% or 12.2%13.0% on a constant currency basis(1) compared to the three months ended MarchJune 31,30, 2025. Subscriptions revenues were $771,119 for the six months ended June 30, 2026, up 14.1% or 12.6% on a constant currency basis(1) compared to the six months ended June 30, 2025;

•Annualized recurring revenues (“ARR”)(2) was $1,494,511$1,535,988 as of MarchJune 31,30, 2026, compared to $1,319,256$1,379,161 as of MarchJune 31,30, 2025;2025. Constant currency(1) ARR growth rate(2) was 11.5%12%;

•Last twelve-month recurring revenues dollar-based net retention rate(2) was 109% as of MarchJune 31,30, 2026, comparedconsistent towith 110%the assame ofperiod Marchin 31,the 2025prior year;

•Operating income was $126,260$88,608 for the three months ended MarchJune 31,30, 2026, compared to $115,184$84,430 for the three months ended MarchJune 31,30, 2025. Operating income was $214,868 for the six months ended June 30, 2026, compared to $199,614 for the six months ended June 30, 2025;

•AOI less Operating SBC(1) was $140,923$116,036 for the three months ended MarchJune 31,30, 2026, compared to $128,308$106,769 for the three months ended MarchJune 31,30, 2025. AOI less Operating SBC(1) was $256,959 for the six months ended June 30, 2026, compared to $235,077 for the six months ended June 30, 2025; and

•Cash flows from operating activities were $193,408$264,921 for the threesix months ended MarchJune 31,30, 2026, compared to $219,415$280,500 for the threesix months ended MarchJune 31,30, 2025.

The increase in total revenues for the three and six months ended MarchJune 31,30, 2026 was primarily driven by an increase in subscriptions revenues, and to a lesser extent, an increase in services revenues, partially offset by a decrease in perpetual licenses revenues. Our business performance includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

Subscriptions. For the three and six months ended MarchJune 31,30, 2026, subscriptions revenues increased $50,166$45,183 ($41,734$43,382 on a constant currency basis) and $95,349 ($85,116 on a constant currency basis), respectively, primarily driven by expansion from accounts with revenues in the same period in the prior year (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts. Increases in subscriptions revenues for the three and six months ended MarchJune 31,30, 2026 were led by Bentley Open Applications and Seequent applications, and to a lesser extent, Bentley Infrastructure Cloud.

Perpetual licenses. For the three and six months ended MarchJune 31,30, 2026, perpetual licenses revenues decreased $1,735$486 ($1,946$610 on a constant currency basis). and $2,221 ($2,556 on a constant currency basis), respectively.

Services. For the three and six months ended MarchJune 31,30, 2026, services revenues increased $5,208$1,924 ($4,496$1,771 on a constant currency basis) and $7,132 ($6,267 on a constant currency basis), respectively, primarily due to strength in Maximo-relatedMaximo‑related work within our digital integrator.

Americas. For the three and six months ended MarchJune 31,30, 2026, revenues from the Americas increased $26,659$25,308 ($25,323$24,414 on a constant currency basis) and $51,967 ($49,737 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts in the U.S.,U.S. and Canada, as well as increases in our subscription revenues from new accounts, as well as an increase in services revenues.accounts.

EMEA. For the three and six months ended MarchJune 31,30, 2026, revenues from EMEA increased $19,236$17,368 ($12,787$15,940 on a constant currency basis) and $36,604 ($28,727 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts,accounts in the United Kingdom, the Middle East, and toAfrica, aas lesserwell extent,as increases in our subscriptions revenues from new accounts, and to a lesser extent, an increase in services revenues.

APAC. For the three and six months ended MarchJune 31,30, 2026, revenues from APAC increased $7,744$3,945 ($6,174$4,189 on a constant currency basis) and $11,689 ($10,363 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts in India and Australia, as well as increases in our subscriptions revenues from new accounts, partially offset by a decline in perpetual licenses and services revenues.

Cost of Revenues and Operating Expense (Income)Expenses

Cost of subscriptions and licenses. For the three and six months ended MarchJune 31,30, 2026, on a constant currency basis, cost of subscriptions and licenses expenses increased primarily due to an increase in cloud-related costs of $5,683.$4,206 and $9,889, respectively.

Cost of services. For the three and six months ended MarchJune 31,30, 2026, on a constant currency basis, cost of services expenses increaseddecreased primarily due to ana increasedecrease in headcount‑related costs of $668,$1,283 and $615, respectively, mainly due to an increase in third‑party personnel costs, partially offset by decreases in headcount, and annual and other compensation costs, partially offset by an increase in third‑party personnel costs.

Operating Expense (Income)Expenses

Research and development. For the three and six months ended MarchJune 31,30, 2026, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount‑related costs of $6,436,$5,297 and $11,733, respectively, mainly due to increases in headcount, and annual and other compensation costs, and to a lesser extent, higher acquisition‑related retention incentives.costs.

Selling and marketing. For the three and six months ended MarchJune 31,30, 2026, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount‑related costs of $6,184,$7,181 and $13,365, respectively, mainly due to increases in annual and other compensation costs, and an increase in promotional costs of $2,428.$1,560 and $3,988, respectively.

General and administrative. For the three and six months ended MarchJune 31,30, 2026, on a constant currency basis, general and administrative expenses increased primarily due to an increase inhigher headcount‑related costs of $7,135,$9,392 mainlyand due$16,527, respectively. This increase reflected annual compensation increases, higher bonuses, stock‑based compensation expense, and associated employment taxes, as well as strategic headcount expansion across our corporate functions, as we continue to increasesscale the business. The comparison also reflects a prior-year period in headcount, and annual and other compensation costs, and an increase in third-party personnel costs. Additionally, during the three months ended March 31, 2026,which general and administrative expenses furtherhad increaseddecreased dueon toa lowerconstant capitalizablecurrency costsbasis associated with our internal-use software implementation aswhen compared to the same periodperiods in the prior year.2024.

Deferred compensation plan. For the three and six months ended MarchJune 31,30, 2026 and 2025, deferred compensation plan incomeexpense was attributable to the marked to market impact on deferred compensation plan liability balances period over period.

Amortization of purchased intangibles. For the three and six months ended MarchJune 31,30, 2026, amortization of purchased intangibles was flat compared to the same periodperiods in the prior year.

For the three and six months ended MarchJune 31,30, 2026, interest expense, net increased compared to the same period in the prior year, primarily due to higher weighted average debt outstanding and higher weighted average interest rates on borrowings following the January 2026 repayment of the 2026 Notes, which had a 0.125% coupon rate.

Other Income,Income (Expense), Net

For the three and six months ended MarchJune 31,30, 2026, the effective tax rate was higher compared to the same period in the prior year primarily due to the impact of the decrease in discrete tax benefits related to stock-based compensation, net of the impact from officer compensation limitation provisions, recognized in the current year period.periods.

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 51% and 50% as of MarchJune 31,30, 2026 and 2025, respectively, with our E365 subscription offering representing 46% and 45% of total ARR as of MarchJune 31,30, 2026 and 2025, respectively.

The last twelve‑months recurring revenues for the periods ended MarchJune 31,30, 2026 compared to the last twelve‑months of the comparative twelve‑month period increased by $168,849.$176,982. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions. For the twelve months ended MarchJune 31,30, 2026 and 2025, 93% and 92%, respectively, of our revenues were recurring revenues.

Given that recurring revenues represented 93% and 92% of our total revenues for the twelve months ended MarchJune 31,30, 2026 and 2025, respectively, this metric helps explain our revenue performance as primarily growth from existing accounts.

AOI less Operating SBC is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses (inclusive of cash‑ and equity‑settled retention incentives provided to key employees of acquired companies), integration costs, and realignment expenses (income), for the respective periods.

Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses (inclusive of cash‑ and equity‑settled retention incentives provided to key employees of acquired companies), integration costs, realignment expenses (income), and operating stock‑based compensation expense (non‑cash stock‑based compensation expense less equity‑settled retention incentives provided to key employees of acquired companies), for the respective periods.

(3)Acquisition expenses. We incur expenses for professional services rendered in connection with business combinations, which are includedrecorded in general and administrative expenses in our GAAP presentationconsolidated statements of general and administrative expense.operations. Also included in our acquisition expenses are cash‑ and equity‑settled retention incentives provided to key employees of the acquired companies. We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations.

Reconciliation of operating expense (income)expenses to operating expense (income)expenses in constant currency:

For the threesix months ended MarchJune 31,30, 2026, compared to the same period in the prior year, net cash provided by operating activities was lower by $26,007$15,579 due to a decrease in net cash flows from the change in operating assets and liabilities of $38,392,$35,140, partially offset by an increase in net income of $12,026 and a net increase in non‑cash adjustments of $8,374, and an increase in net income of $4,011.$7,535. The decrease in net cash flows from the change in operating assets and liabilities period over period was primarily due to lower accounts payable, timing of collections on our receivables, overall timing of payments for income taxes, and lower accounts payable. Partially offsetting these decreases were higher period over period accruals and other current liabilities, and Cloud Services Subscription deposits.

Net cash used in investing activities was higher by $2,507$6,131 for the threesix months ended MarchJune 31,30, 2026, compared to the same period in the prior year, due to higher purchases of property and equipment and investment in capitalized software.

Net cash used in financing activities was higherlower by $3,633$32,570 for the threesix months ended MarchJune 31,30, 2026 compared to the same period in the prior year. Net borrowings under the Credit Facility wereincreased higher by $678,727$781,221 for the threesix months ended MarchJune 31,30, 2026 compared to the same period in the prior year.year Wedue to proceeds from our new $550,000 Term Loan and higher net revolving borrowings. During the first quarter of 2026, we utilized a portion of theserevolving borrowings under the Credit Facility and available cash on hand to repay the $677,830 outstanding principal balance of the 2026 Notes upon maturity in January 2026. Subsequently, during the second quarter of 2026, proceeds from the Term Loan were used to repay a portion of those revolving borrowings. Further, payments for shares acquired, including shares repurchased under the Repurchase Program, were higher by $14,797$79,938 for the threesix months ended MarchJune 31,30, 2026 compared to the same period in the prior year. Additionally, under the Repurchase Program, we paid $9,797 in cash to repurchase $10,000 aggregate principal amount of outstanding 2026 Notes during the first quarter of 2025.

The 2026 Notes matured on January 15, 2026. Upon maturity, we repaid $678,254, which consisted of the remaining outstanding principal balance and accrued interest on the 2026 Notes using borrowings under the Credit Facility and available cash on hand. Subsequently, on April 23, 2026, we entered into a First Amendment to our Credit Facility, which provided for a new $550,000 Term Loan and used those borrowings to repay portions of the revolving indebtedness outstanding under the Credit Facility.

As of MarchJune 31,30, 2026, we had $756,439$1,203,944 available under the Credit Facility, and we were in compliance with all covenants under the Credit Facility and the 2027 Notes. Any failure to comply with such covenants under the Credit Facility would prevent us from being able to borrow additional funds under the Credit Facility, and, as with any failure to comply with such covenants under the 2027 Notes, could constitute a default that may cause all amounts outstanding to become due and immediately payable in full.

During the threesix months ended MarchJune 31,30, 2026, we repurchased 1,037,8483,747,742 shares for $40,021$125,075 under the Repurchase Program. During the threesix months ended MarchJune 31,30, 2025, we repurchased 673,8981,173,041 shares for $30,014,$50,023, and $10,000 aggregate principal amount of our outstanding 2026 Notes for $9,797 under the Repurchase Program.

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B common stock, including distributions from the DCP and share issuances under the Bonus Plan. In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts. Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings. During the threesix months ended MarchJune 31,30, 2026, we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock. During the three months ended March 31, 2025, weWe exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock.stock during the first quarter of 2025, but we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock during the second quarter of 2025. We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

The declaration and payment of dividends is within the discretion of our Board of Directors. We paid quarterly dividends of $0.07 per share of common stock during the threesix months ended MarchJune 31,30, 2026 and 2025. While we intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our Board of Directors and will be dependent on a number of factors, including our results of operations, capital requirements, restrictions under Delaware law, and overall financial condition, as well as any other factors our Board of Directors considers relevant. In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay.