And with that, we are ready for Q&A. Over to Eric. Thank you.
A – Eric Boyer: Thanks, Werner. Before we begin with Q&A, I want to remind everyone that we issued a press release on April 19th regarding Bentley’s policy of not publicly commenting our market rumors or speculation. Accordingly, we will not be commenting on any such matters. Please keep your questions focused on our Q1 results and strategic progress. We also ask that you limit yourselves to one question so we can get through the queue. And with that, our first question will be from Matt Hedberg from RBC.
Matthew Hedberg: Great, can you hear me okay.
Greg Bentley: Yes.
Matthew Hedberg: Hey, good morning. Congrats on the results. And actually, also congrats Greg on your term as CEO and Nicholas to this next phase of growth. I guess for you, Nicholas, we’ve known you for a while and you’re a big part of the Bentley fabric. As we enter this next phase of growth, do you see any change in terms of philosophy, in terms of where you might look for some additional growth, proportion of condition synergies that might be a little bit different than Greg and sort of the prior growth pace?
Nicholas Cumins: Well, as you said, I’ve been the COO for a little bit more than two years now. And before that, I was the CPO. So you shouldn’t expect any major change either from a strategic or an operational standpoint. And our priorities remain the same. When it comes to growth, E365, SMB, Digital Twins, from a product standpoint, operative remain the same as well as we move from far base to data centric book flows using Digital Twin technology. Using there for data, leveraging data for AI purposes, etc. So no major change, either in strategy and operations. The key word here is continuation.
Matthew Hedberg: Got it, thanks a lot. Congrats to you.
Nicholas Cumins: Thank you.
Eric Boyer: Our next question comes from Joe Vruwink from Robert W. Baird.
Joseph Vruwink: Hello, can you hear me.
Greg Bentley: Yes Joe, go ahead.
Joseph Vruwink: Okay, great. Hi, everyone. Just on the new logo growth in the quarter. I was wondering how much of that is specifically in the U.S. and you would say is related to this expanding ecosystem or at say DOT that’s happening, just as more engineering firms want to participate in infrastructure work and I guess, related to the question, I think in the past, when you talked about a new logo contribution within your growth algorithm, you had typically hedged that a little bit just because smaller accounts might have propensity to churn a bit more, but if the new logo growth is lining up to support infrastructure activity and the outlays for that are going to be higher each year for the next several years, do you think new logos just become a more reliable contributor to the model?
Greg Bentley: I want to ask Nicholas if he has a sense of the quantitative makeup of — will those including the geographic distribution I know that qualitatively, that phenomenon you mentioned smaller firms especially getting into linear infrastructure work in the U.S. is significant, but I don’t have a feel for the relative magnitude of it. Nicholas?
Nicholas Cumins: Our momentum in SMB is really around the world. It’s not specific to North America. And in fact, in Americas, we had strong growth in Latin America, and the main driver there was SMB. So we really see momentum with SMB around the world. We think it’s because of the flexibility that we offer in terms of commercial terms between subscription with virtuosity or perpetual licenses we select. We also hear from the accounts that they welcome an alternative to whatever they were using until now. So we see momentum. Now that momentum, we’ve seen it again and again and again, we’ve had more than 600 logos for so many quarters, as Greg said during the prepared remarks. And Q1 was even more than we’ve ever had in SMB. And what we can see is that, on one hand, it’s quite predictable now for us as a line of business in SMB to see that level of momentum around the world.
The other thing we’re looking into is retention and retention is quite high, much higher than we have expected. Very, very initially at the beginning of the SMB program, which means this is — yes, this helps a lot in productivity, and it helps a lot in linearity as well.
Joseph Vruwink: Great, thank you very much.
Operator: Our next question comes from Jason Celino from KeyBanc.
Jason Celino: Great. Good morning Greg, Nicholas, congrats. Nice to see the continuity here. So my question is actually for Werner. The explanation of the resets and the mix for the year was really helpful. But as we think about the sequential guidance, what does that look like for 2Q and the rest of the year?
Werner Andre: Our growth there are sequentially in line a little bit more with the contract renewal timing. We previously gave guidance on what the contract renewal timing is for the year, so that reset now that the correlation of ARR growth is more like 20%, 25% — 20% and 35% throughout the year, you would expect. So we would expect that for Q2, the sequential quarterly year ARPU is picking up again. And as I look into the ARR guidance for the remainder of the year it is more back half loaded as we discussed last time, our expectations did not change. There is still growth opportunity from our asset analytics business that’s working on bigger deal opportunities. There is still growth opportunities from acquisitions. We expect acquisitions to be somewhat lower than it was in the historic past.
There’s a little bit of a shift in the acquisition, more to earlier-stage companies, but throughout the rest of the year, there’s still like that tailwind from asset under and acquisitions coming in and the expectation is that we move back to the mid-range of the guidance as we move for the year.
Greg Bentley: I was hoping that, Werner, would indeed mention our asset analytics initiatives. All of that business is ARR and we are working on, as I’ve mentioned, significant opportunities. It will be lumpy when they occur during the year and don’t have any relationship to our established renewals and seasonality as sort of the overlay on that, but I do expect to be moving the needle with that by the time the year is out.
Jason Celino: Okay, thank you.
Eric Boyer: Our next question comes from Sitikantha Panigrahi from Mizuho.
Sitikantha Panigrahi: Hey guys, congratulations, Nicholas and Greg. Great quarter, but can you comment on the trends in the international business, which is close to now 58%. So what segments are more robust than others and also in terms of geography, how specifically like Western Europe doing and how do you see this election in different countries going to impact your business, like India is almost wrapping up election, how should we expect post-election and in the U.S. as you are heading into election?
Greg Bentley: I’m going to ask Nicholas to take that, but I myself, I wonder the same thing. India had led the world in growth rates through most of last year and then decline for a while and now is boarding back, and I don’t know if that has to do with political situation there. Nicholas what you think?
Nicholas Cumins: Yes. To the first question, Siti, I will simply refer back to the prepared remarks in terms of where we see growth by sector and then by region. Specifically, to India, India did and was again a major growth driver in Asia Pacific, even though it had normalized towards the end of 2023, we saw it taking momentum again. And to the earlier question, by the way, SMB played a big part there. A lot of investments still in the water infrastructure and as for the full ecosystem not just the local authorities. And there might be a pause, obviously, because of the elections on some new projects to be awarded, but it should be a momentary pause. Yes, the good thing is our growth in India is really based on full ecosystems, all consistent, including the smaller firms. So we expect the growth to remain strong in India for the remainder of the year.
Greg Bentley: I guess something else to add about India is that India has benefited not only from its own indigenous investment program, but also from the resource capacity constraints elsewhere there. India continues to produce more qualified civil and structural engineers, especially and more of the work gravitates to India, thanks to our project-wise environment. That tends to be, however, overflow would not be quite the right word, but that does fluctuate with workloads in the industrial sector, especially as we’ve observe it. So superimposed on a steady domestic demand in India is a more cyclical international sourcing to India, and it’s good to see it benefiting from both apparently, again this year.
