Bentley Systems, Incorporated (BSY) Earnings Call Transcript & Summary

My pleasure to welcome the next company, Bentley -- Bentley Systems specifically. We don't get a lot of founders were name associated with the company. So thanks for coming. As well as Werner Andre, the CFO.

Hi.

So maybe to start, Greg, you and your management team have been leading Bentley for decades. This is our first meeting in London since 2019. For those who are not familiar, can you maybe spend a few minutes talking through us through Bentley's history as well as your long-standing connection to London? Because I think you said you have a house here.

[ Andrew ], thank you, and to each of you, thank for your interest and time today. In fact, the company was founded by 5 Bentley brothers in 1984. And we've worked hard since then to become the leading provider of software for the engineering of infrastructure. Infrastructure couldn't be more important to all of us. It's what underlies our economies and our environment at the same time. So we think that's the highest and best thing we could apply our talent and investment to. But perhaps I'll relate the history of the company to this notion of there being 5 brothers. The other 4 are proper engineers of various disciplines. And what we have done is worked to become reliable suppliers to the civil and structural and geotechnical engineers and those who work with them to advance the world's infrastructure. I think it's fortuitous that we would have applied ourselves in that way because, I guess, what you can say mostly characterizes us as a long attention span since 1984. And that might not be as helpful in other aspects of software, but for infrastructure where projects last for years and infrastructure assets last for generations, it's good to have [ ahead ] attention span to the quality and continuity and consistency of the software. And we've always taken a platform approach to it. So the specialized applications can be developed for our platform. And we've gone on to acquire the best of those for modeling and simulation, and now, project delivery and asset performance, the whole of the infrastructure life cycle. Something else that I think corresponds with having had a long history as a private company is that subscriptions were always our preferred way of doing business. It's not something new that came along late in the day for us. So we haven't gone through any troublesome transformations there. This helped us always make decisions to benefit the future, I might say. And that is ingrained in our company. And even as a public company, it's something investors can be sure of since our -- among things, our family continues to own the majority of the economic interest in the company. And then I'll say as well, if I -- has helped us to become profitable, but confident about being consistently more profitable, adding to our margins 100 basis points into the future because we just hold ourselves accountable to get more efficient. Every year, when you're in your 38th year doing the same thing, you can get more efficient and require that -- subject to that, we're going to grow as fast as we can and probably, we'll talk more about that. Let me just come back to the significance of London. And I'm delighted to be looking out beyond Berenberg here because in the background, the bread loaf-shaped building you see behind us, in fact, is our international headquarters. U.K. is our second most important country in the world quantitatively but also qualitatively. We have over 400 colleagues in the U.K. of our 4,700 in the world. But the U.K. is the focus, and London the center of thought leadership in the world for infrastructure. And our annual year-end infrastructure conference is here in London, again, physically this year and then alternates with Singapore, the other such country or city with a claim to that. But from there, in our Grace Church Street headquarters that I'm looking out at now, for instance, the Crossrail project was an excellent construction project. We can talk about it again now since the trains are running on the Elizabeth line. We didn't have anything to do with civil and structural and geotechnical engineers with the systems engineering of the rolling stock that took so long but is now finally completed. But we had a digital academy for Crossrail here in our premises where the notion of having a virtual counterpart to everything that was done physically. So our -- for instance, our 4D construction modeling software in the world was originated here on Crossrail and these projects, and we've gone on to do many acquisitions in the U.K. The U.K. has challenges in infrastructure because the rail infrastructure, to use that example, again, is Victorian and aged. But we have no choice in the world but to extend the useful life of our infrastructure and add synthetic capacity because new infrastructure is so expensive and so disruptive and wasteful of carbon and otherwise. And we've learned a lot about that here in the U.K. So I'm really grateful to be able to be back in the U.K. I do have a home here. I haven't been able to be here for 2.5 years prior to this. And frankly, I always imagined we would be talking to prospective investors in the U.K. as well. European investors tend to have an appreciation and an interest for infrastructure. And I think also for companies with a long-term viewpoint, even if they are software companies and perhaps even those that are family controlled and run. And we are all of those things, can't change that. And I think it could be a good thing for us and for infrastructure engineers in the world.

Thanks for that. And when you mentioned the rail system in the U.K., I felt it's a lot better than what we have in the U.S. So I don't know, We all need some work apparently.

Do we have a rail system in the U.S.?

No, we don't. Maybe just staying on topic on the -- because you mentioned the infrastructure depreciation here in Europe, and I wanted to touch a little bit on the secular tailwinds. Like in Europe, in particular, I would say 1 big topic of interest right now is ESG and decarbonization, sustainability. So how does the energy transition, so to speak, help you? How does that trend help you?

Well, it helps everyone, of course. But the rest of us care about it and are concerned about it. We talk about ESG -- we should talk about ESG. In our company, we say [ ES(D)G ], and we mean Empowering Sustainable Development Goals. All of the UN Sustainable Development Goals call for and require the responsibility and the work of civil engineers and structural engineers and geotechnical engineers, those who are -- whose quality of work primarily depends on our software products at Bentley Systems. And the priorities of the world now for decarbonization, for climate resilience and adaptation for energy, security and so forth, correspond exactly to what our users do and how -- and what we help them with. It's more true after 2 acquisitions, which we have done as -- and we couldn't have done without having become a public company. Maybe I'll back up and say we were a successful private company. We didn't become a public company in order to access capital markets. It was by virtue that equity participation is the secret sauce for software companies. Everyone understands that now, retention of colleagues and so forth. But from the very beginning, we had a broad-based stock option program and we realized that would oblige us or give us the opportunity for our colleagues to provide them not only with ownership in the company but the satisfaction of a market price for their ownership in the company. And that led to our going public during 2020. But that, in turn, created opportunities for us to do some major acquisitions. So Seequent was our acquisition last year for $1.1 billion. It corresponds to the 3D and 4D modeling we do for infrastructure above the ground. Seequent is a leader in doing that below the ground which has to do with mining and the mineral imperative that is associated with electrification of the world. And there's a lot else that we learn from mining that can be applied to environmental digital twins generally, having to do with water permeation and seismic and other risks below the ground. And then our other acquisition that closed earlier this year was Power Line Systems, the leader in the world in transmission engineering, so tower structures and lines for electrical conduction. And that is the significant bottleneck, including in the U.K., especially in Europe and the world for connecting up the renewable sources for our carbon-neutral future. It's the one part of infrastructure that we, at Bentley Systems, didn't have applications for. That's only because Power Line Systems had locked up the market by doing such a good job since they were founded in 1984 just on that particular vertical specialty. But now to bring together an integrated grid digital twin with transmission, substation, distribution and communications towers as well since they share 5G location and mobility, digital twins, so that's where we lead the world in engineering software for road and rail and metros and transit; and then the environmental digital twins, including water and mining resources and so forth. We pretty much correspond in what we do to the priorities of ESG investors and what all of us as constituents [ of ] infrastructure need to in order to improve our environment at the same time as sustaining our economies.

Yes. That's very helpful. And I guess you mentioned these 3 acquisitions you made. Just curious in terms of what are you thinking -- what is your thinking around M&A? Is it just, "Hey, I'm going to grab an asset that I know they did a good job in and I know I can't grow organically." Maybe just in terms of the framework that you have when you think about these type of transactions.

Andrew, we have 2 courses for acquisitions. We do what we call programmatic acquisitions. They're programmatic because they occur so regularly and there are so many, it's been almost 100 of those. They're not -- they don't tend to be material either individually or even collectively. It accumulates to maybe 1% or 1.5% of revenue growth consistently. But they are acquisitions of applications for modeling and simulation generally for our platform. So it's because we had this platform mentality, everything we do, we want to make sure nobody writes code twice. It's all to be reused for a platform purpose. So our platform for infrastructure modeling and simulation has been the subject of many good specialized applications being created over time. Our accounts often prefer that we would bring those to market in a common and consistent way and even improve the integration that exists fundamentally. So that's -- and our ecosystem of developers has created a pipeline of regular programmatic acquisitions that, however, hasn't slowed us down with incompatible code for the reasons that I went through. There's a set of programmatic acquisitions that are necessary and will continue or grow, which is the simulation engines that infrastructure engineers use, for instance, for pipe stress simulation or seismic structural simulation or pedestrian movement simulation and so forth. This is specialized software created in general by academic authorities who make a company out of it. And it takes decades to get credibility and to have that software vetted well, and engineers want to stick with the name brands that they continue that they have confidence in over the course of their career. So we can't make those. We can't start from scratch in that. So there will always be many of those programmatic acquisitions. There's been one so far this year. The platform acquisitions are rare and should be rare. And it's not actually -- like I'm sometimes asked, "What about your capital allocation? Will there be more of those? Can you afford them?" The subject doesn't come up because there are not more of those. We wish perhaps that there were. It be good to have degrees of freedom about it. But there aren't others that are substantial in infrastructure engineering that would help us complete the picture we have now. So I'm not anticipating any more platform acquisitions. They are opportunistic. It was amazing that these 2 became available, and we're glad to have been able to do it. It's a good return on being a public company. We used convertible debt issuance last year for the -- to afford the Seequent acquisition. And of course, in each of the cases of these acquisitions, along with the strategic fit above and below the ground, the missing transmission engineering and integrated grids, they also were amazing acquisitions as they each have been growing twice the rate of our company otherwise and more profitable considerably. So they've been good financial acquisitions, and we think that's good stewardship in terms of capital allocation, along with the strategic advantages of now corresponding in what we do to everything, which is the world's ESDG priorities, many of them funded priorities now for the first time in the world.

Yes. That's helpful. Maybe I'll tie in some financial question on the [indiscernible] that Greg has just mentioned in terms of the ARR trajectory. I mean, that's grown to double digits, organic, it would be correct to say, and which is impressive, right? And then, I guess, at the same time, how should we think about the contribution of these inorganic acquisitions to that growth? And maybe also touch on a little bit, what's been the factor that's accelerated it?

Yes. So recurring revenue is now 90% of our revenue in total. And this is clearly where we focus on growing the business. We expect for 2022 an ARR growth between 11.5% and 13.5%. The acquisition of Power Line Systems that we talked about will add approximately 2.5% to our ARR growth as we onboard the business. The majority of the ARR growth will come from our existing book of business, where we go through increased usage, increased seats, accretion to more valuable specialized products, which we do within the E365 program, which is very successful for us. New names typically add like 2% to 3% to our ARR growth; and then programmatic acquisitions, 1% to 1.5%. And from a long-term perspective, I would say like there are a lot of momentum within our long-term growth drivers. Right now, I would say like -- I would expect that momentum in ARR growth to continue, maybe even accelerate.

Interesting. And I guess when it comes to the -- people are going to ask. I mean, we were in a very interesting environment with supply chain issues, pandemic. Like there's, I guess, a lot of, call it, environmental issues that people are bringing up that potentially stop infrastructure projects. So there's a lot of things -- risks that someone from the outside might say, this is potentially an impact for you guys. But you mentioned the 90% recurring revenue. What else would you say is like key in terms of making your business more resilient?

Well, maybe I'll jump in there. You mentioned environmental objections in infrastructure projects. Most of the projects are projects that advance environmental goals. But I will mention that in our -- in the U.S. even, we can spell infrastructure now. We have an infrastructure funding bill for the next 5 years. It isn't just financial. One of its -- what we think will be most significant in it is it expedites permitting for new transmission corridors, which is really important because, otherwise, we can have new -- as in the U.K., be able to bring on new renewable power sources and not be able to have allocation to hook them up to the grid to get to where we would use the electricity. So the bill in the U.S. eliminates some of the objections in veto power and so forth over transmission corridors. And you could say, is that overcoming environmental objections? Is that an environmental cost? Or do we need the transmission so we can take carbon out of our power generation? And these choices are not made by us, but by politicians and so forth. So I don't think there are significant impediments to the agenda of public works and utilities. The bulk of our -- I'll get down to your question of resilience. We certainly are -- I believe our company has greater resilience at this time in our current configuration than we've ever had in terms of concern about these macro factors. The majority of our business is what we call public works and utilities, which is publicly funded or, in the case of utilities, funded from [ rates ] and revenues. And that, if anything, the public funding for infrastructure projects has been countercyclical. I don't like the word stimulus because it's good long-term investment, but it hasn't tended to decrease when private investment would go down in the other sectors of infrastructure. So where we have exposure to private sector investment is in commercial and facilities sector, we say vertical buildings. And they're also subject to the overcapacity after the pandemic, if you look at the window and see underutilized space, presumably. So I think there's vulnerability there, but it's only about 10% of our business. And half of that, of our business in commercial and facilities, is in the OpEx -- excuse me, the operations and maintenance, the OpEx side rather than the CapEx, new projects. So I might say that since 2008, when, of course, there was the complete slowdown in -- or elimination of new capital projects, we learned from that and have focused our R&D and our acquisitions since then on the operations and maintenance life cycle of infrastructure. And we've become #1 according to ARC in asset reliability, the software you use during operations and maintenance. And that has helped our resilience also. But in that domain of vertical buildings, the 5% of our business having to do with new capital projects there, I think, is indeed exposed to macro downturns. But it's only a small portion of our business. The next larger, and the bulk and majority being public works and utilities; and I might say, resources. Resources would be mining, also renewables, geothermal and so forth, while that is intrinsically cyclical over the long term, certainly, I think we would all think that the mineral requirement for electrification for net 0 is going to provide a tailwind in that sector foreseeably. And then in industrial, privately funded projects, again, half of that -- that's about 20% of our business, half of it being again on the OpEx side, where even the oil majors and so forth have increased their spending with us on digital twins for their existing facilities. When the oil prices went down, they had to sweat those assets. So that's not at risk. So the 10% of our business that would be in industrial CapEx, you would again say theoretically, that's considerable exposure to economic downturns. But we have at the moment the requirement for energy security in the world, the redundant infrastructure, if you like, needed for LNG import and export and so forth to make sure we can provide heating in the U.K. and Europe without Russia and so forth. That has already turned that in the right direction. And we think there's a sustainable tailwind there as well. So in terms of macro risks related to potential recession to inflation, as that may relate to interest rates and hurdle rates on new private capital -- privately funded CapEx, it can't help to have more worries, but our particular business is rather resilient with respect to that at this time from my perspective. But you sort of said, we live in interesting times. I do have a worry, which is that our business in China, which is about -- was 5% of our business, now 4%, and that is subject and a source of concern with trade tensions between the U.S. and China that have gotten even worse this week. And perhaps you'll ask more about that, I don't know. But there's an asterisk to our resilience, which is when it's a geopolitical risk -- now Russia was less of a concern, very sad and very shamed in Russia. But we've, in effect, written off the 1% of our business in Russia already. But China is a greater multiple and a bigger share of our prospective future. 30% of infrastructure spending in the world is in China, and we just have to be more creative and resourceful than ever. We have a good business there, high demand. Our new products are used first and fastest and best in China, and it's something to be very proud of. The Chinese as they use our products for hydro projects and water viaducts and trash to steam plants and high-speed rail and cleaning up metals' generation and so forth, things that will benefit the rest of the world at the same time, we -- seemed to be somewhat at risk of discouragement of doing business in China from our own country. So that's part of the interesting world you referenced. And we roll with the punches that come, but we feel pretty good in general, overall, subject to what I've talked about.

I want to touch on -- you answered several questions along the way, but I definitely want to touch on a little bit on to legislation in the U.S. on infrastructure because that was unusual, right? It happened after 20 years, 30 years, I don't know, right?

Unique.

I mean, it was kind of -- it was pretty substantial, I would say. And at the same time as I think it was a 10-year spending timeline or longer?

5 years.

5-year, sorry. 5-year spending [ timeline ].

That's long for the U.S.

Yes. And I guess maybe, Werner, just touching a little bit on what's the contribution to growth from your perspective? Maybe it's qualitative in terms of how this -- maybe breaking out, like of the bill, what sort of affects you directly? And then how things...

We see it probably coming in first is like rolled rails. It will be over like a 5-year timeline. It's definitely like a tailwind that we see. But for '22, we didn't really factor in like any hockey stick, like if you will, into our outlook for that.

Right. Interesting.

Well, maybe I'll say that there's 2 halves to the funding the $1 trillion in the U.S. Half of it increases what the Feds had been already spending in match to state funds for highways, for road and bridges. And there's a rail, where federal funding already had been applied. And there, the bill increases those appropriations by 20%, 30% effective for this year and in the next 4 years. So that will have a linear effect, if you like. The roads and bridges in the U.S. are engineered with our software very mainly. And there might be concern about shortages of materials and labor and so forth because things are pretty busy already. If that would mean that things get spread out kind of evenly over 5 years, I don't think that would be a bad thing for the civil engineering professions in the U.S. and ourselves because civil engineers and structural engineers and geotechnical engineers are already fully utilized. So going digital is their priority in order to get this work done. But it's literally 20% or 30% more than there otherwise would have been, but it is exactly being spent in the way that federal funding for infrastructure in the U.S., which previously has been limited to roads and highways, has always been spent. But the other half of the $1 trillion is in aspects of infrastructure where the federal government has not been involved before, and this is water, grid and broadband. And it's very significant spending. And those magnitudes are game changers in those areas. But the Commerce Department, the Energy Department, the EPA, respectively, have to set those programs up their grant programs to qualify for federal subsidies and contributions to projects there. And that is taking longer, of course, because the people have to be put in place and so forth. So that money isn't quite flowing yet. But it will be significant. And I mentioned an aspect of the legislation that wasn't financial, the getting rid of the permitting delays in transmission lines, that presumably is effective and may be useful immediately. So 2 different aspects of it. One is more of the same, but a lot more over 5 years. And the other is something new where most of the funding for these other areas has been private or in local municipalities, and the federal government has to get that right. But they're working on it, and I'm not cynical at all about it. They will do it as quickly as they can. It serves their purpose. They want to be reelected, et cetera, and get that in place, and it will be a real boon. Our business corresponds to both sides of that spending initiative. And we like the idea that it's 5 years long. We don't have much in the U.S. that we do that has a long horizon. I might say those of you in the U.K., you have a government with ministers and so forth that do care and pay attention to long-term planning. Things are always controversial and not everyone may agree, but we don't, in our government, in the U.S., pay much attention to things that last longer than 4 years. And infrastructure finally is -- it took that long to get something agreed that really will be useful for everyone but including us and our investors.

Yes. And then when -- you touched on your end markets and how countercyclical [ codes ] are. But like also competition seems to be limited to a certain subsegment of that. Like, I guess, you mentioned, I think the past commercial and industrial is where you see some competition, that public works, utilities, resource, that's kind of where -- things you're kind of more stronger in terms of the market.

Well, our footprint, if you like, is -- let me start with where we're not, in commercial and facilities sector of infrastructure, so that's buildings, vertical. We're not the leader. Autodesk and [indiscernible] are stronger than we are in terms of market share in that area. In industrial process plants, especially oil and gas and chemicals and pharma and so forth, the market leaders are AVEVA and Hexagon. We participate in both of those markets, but one is 10% of our business, the other is 20% of our business. In all of the other sectors in which we participate, we are, we consider the -- and I think most consider the market leader. Of course, it doesn't mean we don't have competition. But where we're differentiated and how we win is being comprehensive across all of the disciplines, the nature of modeling and simulation that needs to be done -- used together to complete substantial projects. If I talk about the U.K., it would be Crossrail, which was an excellent construction project that ran into trouble when it became a systems integration project with the rolling stock and the signals. But civil and structural and geotechnical engineers are not involved in that. That was an excellent construction project. But in Highways England, now National Highways; in High Speed Two, the world's largest rail project; in the water utilities; in many of these other public works and utilities we are more comprehensive and provide solutions that we think result in better quality of projects because things are integrated better across these various disciplines and asset types that need to work together to do projects of those, of that sort.

Excellent. Maybe, Greg, I'll give you a break. I'll just move on to margins, maybe as we're getting close to time. But like I guess one of the things that set out to me was how profitable Bentley has been even before the IPO, right?

Yes.

Usually, the opposite is true. So just curious to know why was that the case? And what is -- I think you mentioned earlier the 100 to 300 basis points margin expansion a year?

It's 100 basis points.

100 basis points, my bad. But yes, so in terms of anything that you can -- in terms of the history behind that? And then maybe what -- could there be any surprises that maybe get us to the 300 that Greg was worried about that I was going to mention?

Yes. We're committed to 100 basis points a year. We just hold ourselves accountable every year to be like more efficient by 1%. We don't want to overshoot to like 2% or 3%. There are like -- and if I say, 100%, it's like we measure it in adjusted EBITDA margin. We target 33% for this year than 34% next year and so on. It is a high priority. It was a high priority for the company for the last 10-plus years to establish that. It's part of the DNA. And pretty much, I think that's the reason why you saw like profitability already leading up to the IPO, plus the company was established for like 38 years. It wasn't a start-up, you would say. Like...

What Werner means by DNA is stubborn ownership and management of the company named Bentley in that in our 38th year of doing the same thing, attention span, wouldn't you think we would be more efficient than our 37th year? We've already invested all over the world in everything we could possibly need. Of course, there's more R&D. R&D for us is 23% of revenue. So there's lots of spending for the future. But we just hold ourselves to saying, who couldn't get more efficient at doing the same thing in their 39th year and then their 40th year and so forth? And I am a believer in rule of 40, rule of 50, 60, whatever. You can trade off -- a company can trade off margins for longer-term growth rates. And maybe there's in theory, some smarter algorithm every year to what that trade-off should be. But I don't -- frankly, I'm not interested in risking the trajectory and commitment we have for that to be 100 basis points every year in order to think of something else that might take our mind off that fixation. So a reason that I can be confident as CEO that we will accomplish this every year is our executive incentives are conditioned on achieving that 100-basis point margin improvement. But the amount of the incentives depend on our ARR growth rate. So subject to getting measurably and regularly more efficient, we want to grow as fast as possible. And I think that's the right way to look at it for an investor who has some preference for growth but doesn't want to be at risk for margin surprises. Now speaking of margin surprises, when you would look at 2020 and 2021, you would see margins higher than the numbers we're talking about at the adjusted EBITDA level. And we did overshoot our margin targets in 2020 and 2021. When we're at 33% year -- we're 33% for this year, that's 100 basis points higher than the normalized targets we had. Last year was 32%, the year before that 31%. The reason we overshot them is because we didn't predict the duration of the pandemic. So at the beginning of each of those years, we expected to be resuming travel and events and so forth that are costly. When we weren't doing that, we were spending more on things that would cause us to grow faster, focusing on a new initiative for SMB, smaller and medium businesses, for that. Those are accounts that spend under $100,000 a year. That's been a very new but fertile place. Those engineers and those smaller organizations need exactly the same products that are already successful in the larger organizations. And we just hadn't reached them, hadn't focused on marketing. We're now focused on there as well. Direct sales were 92% direct. And e-commerce, for the first time, we did in 2020. So initiatives like that, we were spending on. But we expected to be going back to travel and events. So we saved enough money that we didn't ever end up spending. And then the same would be true in 2021 to a lesser degree. So we're not crazy. We just didn't expect the pandemic to last quite as long as it did do. And then I will say one more thing about adjusted EBITDA. For us, that does -- we do look at it in adding back stock-based compensation. But stock-based compensation for us is very important. It's our secret sauce, as I mentioned earlier, that makes a software company successful. We know that and believe in. It's the reason we're a public company. But we're reasonable and measured and stingy about it, if you like. It's about 6% of revenues for us. And for our peer competitors, it's almost -- it's twice that or more. And you can count on your management, those who invested in Bentley Systems, to be very attentive to and allergic to stock dilution. But we haven't been unwilling to raise some money in new equity issuance. When we first went public, it was -- there was no new primary issuance and. But we are mindful of the liquidity to have our stock trading well, and we will be attentive to that. But -- and of course, the conditions don't present themselves at the moment, obviously. But generally, we will allocate our capital. We pay a modest dividend even, and we will repurchase sufficient shares. But the bulk of our cash generation is available for the programmatic acquisitions, for some other investments, like the joint venture investments in China that help us navigate around the geopolitical issues there, and to modestly delever because the most recent platform acquisition did entail drawing on our credit line, and I would rather have an unused credit line.

Yes. That's helpful to answer the capital allocation question I had. So maybe I'll take a step to maybe ask see if the audience has any questions for Greg or Werner?

Just a quick question on China. I think you mentioned it's 30% of infrastructure spend with only 5% of your business. And given how dominant you are in the rest of the world, I'm just wondering, a, how you close that gap; and b, what Chinese contractors are currently using and how you'd compare yourself to whatever technology that is?

Well, we're rather successful in China, we regard. By the way, we're down to 4% from 5% because earlier this year, the Chinese government observed the Russian sanctions and said we're not going to wind ourselves -- wind up being exposed to that. For those of -- those state-owned enterprises that use American software in relation to critical infrastructure, which is us, have to justify it. And not all of our accounts bothered to do that. So we lost a considerable portion of our business. But we have 300 people in China. When I hope you will look at our year-end Infrastructure Yearbook of the Going Digital Awards, where our accounts submit what they think is the best going digital infrastructure engineering projects in the world, you'll see that the international juries with no Chinese people on the juries, about 40% of the category winners every year are in China. Very well deserved, because of how well they use our software. They bring an R&D approach to the way in which they do things in infrastructure. So we do not face significant indigenous competition in China. We are -- do not face significant competition that we're losing business to from our other peers who are elsewhere in the world. It's just reaching the Chinese fulfilling the demand, something we are on a trajectory, I think, to do. But now that's subject to these geopolitical issues. So the strategy we have is to supplement what we do as Bentley China with new joint ventures with parties we know and trust from our 20 years in China to do China-specific products that are developed by Chinese for our platform will end up participating only in a royalty flow, but also a potential capital gain when the -- if those companies would be successful enough to go public on the Chinese stock market, which is the plan and hope of our joint venture partners. So that, we think, will supplement and hedge our exposure as an American company doing business in China. But it's a good -- that gap is one we wouldn't -- we would be optimistic about continually growing faster in China than elsewhere because of the opportunity, if not for the geopolitical issues, which I hope -- I think in the U.S., because we're going to buy a lot from China, why would we not want to sell a lot to China. When we have in the West the advantage in software, why wouldn't we want to keep that advantage? And it's so important to us as a global software company to have a global market because infrastructure is the same all over the world. Cars are the same, so the roads are the same, et cetera, To amortize our development costs over a greater market is the secret to being able to be successful in software. So it's just a shame if we can't meet the demand that exists when we have products that do meet that demand and we don't have obstacles otherwise. But -- so that is -- I'm telling you, that is an immediate worry limited to the 4% of our business, which remains in China and where we have legitimate hopes that we can gain this year, again claw some of it back. We were at 5% at a point in time. But where there exist forces back to your interesting developments in the world that could go backwards in China this year, conceivably.

Well, we're actually over time right now. So thanks so much for being here, Greg. And we appreciate that the entire Bentley Systems team for coming to London. I'm glad that you were able to go and visit your house again after a few years and your office here. If you have any questions, we have the entire IR team, [ Cam ] as well [ Simon ] and [ Ankit ], who are here, feel free to reach out to them or myself. Otherwise, thanks again.

Many thanks, Andrew.

Thank you.

Thanks to all of you.