And then, we have some contracts where the usage-based pricing is in ban. So we do that for government contracting and so forth. So for all these reasons, it isn’t quite as simple a calculation, as you might think it could be. But we can say that without the change in — without having one fewer day than last year without having the bulge in perpetual licenses that instead, they’ve been the usual mix and without the attrition in China. If we didn’t have any of those three things, then there wouldn’t have been a reduction in our indicated ARR growth for the quarter.
Eric Boyer: Thanks, Greg. Next question comes from Kristen Owen from Oppenheimer.
Kristen Oppenheimer: I wanted to ask specifically about the BP announcement, the asset-wise project. How we should think about that as a blueprint for this migration or increased penetration with asset owners and the owner operators versus sort of the CapEx cycle? Just help us unpack the remote asset moderate opportunity, recurring revenue sources and the development of that type of agreement.
Greg Bentley: I think you had that exactly right. Imagine how important it is for BP in its history to get right, the access, the engineering information over the operations life cycle of assets. So very smart people and very smart data scientists made very good long-term decisions about their approach to this over time, and it really is unique that they have agreed on a system and a data model and a schema that they can use both during their CapEx, and they have a huge CapEx program and their operations. It really is unique to share that data model for engineering information and has enabled asset-wise to be extended to asset-wise reliability for, I would say, in inspection and corrosion management and so forth. I think it’s more important than anyone to BP.
And they have, as you know, in industrial, we do not have the footprint we have elsewhere. So I think it’s really important that BP is leading the way in what we call infrastructure intelligence using the engineering information for not only safety, but reliability, uptime and so forth. It’s a down to earth application of that that is now propounded throughout BP and really is a model. Generally, industrials that are ahead of public works and utilities, and I think this is a respective that you’re seeing with the BP enhancement.
Eric Boyer: The next question comes from Jason Celino from KeyBanc.
Jason Celino: Guys, can you hear me or same
Greg Bentley: Yes.
Jason Celino: Yes. Perfect. One of your competitors has been pretty vocal about the studies and partnerships they’ve been doing with different DOTs. Greg or Nicholas, can you tell us about this partnership with AASHTO? I think as they say it, is there any revenue opportunity? Or is it more about influence?
Nicholas Cumins: AASHTO is a nonprofit organization working with all the DOTs in the U.S. The partnership we’re doing with them goes beyond a study. It is about integration of our software with a software that they all actually call AASHTOWare, which is managed by Infotech. And in order to enable true digital delivery, meaning data flowing freely from one system to another, from AASHTOWare, from OpenRoads, from ProjectWise, from SYNCHRO and from one phase of the infrastructure life cycle to the next. From design to construction which is usually exciting because we see that as a big growth opportunity for Betley going forward. We are very strong when it comes to design, we’re going into construction with the DOTs in particular, as the embracing digital delivery across design and construction.
Greg Bentley: This will have a bearing on most projects.
Eric Boyer: Next question comes from Michael Funk from Bank of America.
Michael Funk: Yes, I come to with the mute button there. I apologize. So Greg, you mentioned a bit about IIJA, some of the funding starting to flow through. I think specifically, you mentioned now in water grid funding, still not permitting in that area. But can you help us quantify this based on the amount of funds for different projects, where you feel you have relative strength, obviously, in those two areas you do — and the modeling you’ve done a potential uplift to ARR from those projects coming online during 2024 and 2025? And then related question, you also spoke a lot about iTwins on the call. I appreciate the commentary there. How much potential lift to ARR do you believe at iTwins could provide in the next 12 months?
Greg Bentley: Well, first on IIJA, of course, the transportation funding had been slowing. It doesn’t increase. It just continues to flow for the next three and four years. The other programs had to be put in place, and that’s still not complete, but it is finally for water for grid, it’s kind of hit miss, but some of it has begun subject, however, to permitting for — you don’t need just money but also permits to do a new transmission capacity. So that is yet to happen. As far as quantifying the grid opportunity, the International Energy Association has done a good paper during the past quarter that estimates that what’s spent on transmission and distribution needs to double over a period of time globally to accomplish everything that’s required for electrification.
I don’t know that — I don’t mean to say that I predict it will necessarily double, but it will grow a lot. And that is the reason to say that our opportunity in grid, especially can multiply. But generally, there is the capacity constraints at the same time. So, I believe it will be a continued ramp in the right direction, and we saw that this quarter and year so far in North America. For iTwin, let me ask Nicholas.
Nicholas Cumins: Yes, iTwin is our platform for Digital Twins, Infrastructure Digital Twins. And as a platform, it is leveraged more and more across our product portfolio. This relates to a more fundamental evolution going on, where we as an industry overall, if you want, we’re going from file-based to data-centric workflows. The technology we’re using to do this is Digital Twin. What it means is all of our products over time will adopt iTwin as a platform. Last year, we announced Bentley Infrastructure Cloud, which is a combination of ProjectWise, SYNCHRO asset-wise to be powered by iTwin. And this year at YiI, we announced that our open applications, the first one being MicroStation. We’re going to also leverage iTwin going forward.
What I mean by this is iTwin is not a discrete part category. If you’re trying to put an ARR number to it, it’s actually our overall growth as a company, which will be based on iTwin as our entire product portfolio is more and more powered by iTwin.
Eric Boyer: Our next question comes from Matthew Broome from Mizuho.
Matthew Broome: All right. everyone. So Greg, you mentioned positive survey results. Could you maybe talk about how you found customer sentiment in recent months based on your conversations? What are their concerns on their main pinpoints?
Greg Bentley: Well, Nicholas has just been with the CEOs at the conference you described, I might ask him. He’s had those first hand meetings. In general, they are very excited and enticed by the possibilities of generative AI in helping to enable their work to get more efficient, but they’re very aware that they have valuable data at stay there and they never failed to bring that up and it’s appropriately so, I think. What we’re saying is their data should benefit only then, but that will be sufficient and is what they really want. But Nicolas, over to you, perhaps it will help.
