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(Exact name of registrant as specified in its charter)

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Registrant’s telephone number, including area code: (610) 458-5000

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Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐  No ☒

As of April 30, 2025, the registrant had 11,537,627 shares of Class A and 291,843,811 shares of Class B common stock outstanding.

This Quarterly Report on Form 10‑Q is for the three months ended March 31, 2025. This Quarterly Report on Form 10‑Q modifies and supersedes documents filed before it. The United States (“U.S.”) Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report on Form 10‑Q. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report on Form 10‑Q.

Unless indicated otherwise, throughout this Quarterly Report on Form 10‑Q, we refer to Bentley Systems, Incorporated and its consolidated subsidiaries, as “Bentley Systems,” “Bentley,” the “Company,” “we,” “us,” and “our.”

This Quarterly Report on Form 10‑Q contains trademarks, service marks, brands, or product names owned by us, as well as those owned by others.

Numerical information in this report is presented on a rounded basis using actual amounts. Minor differences in totals and percentage calculations may exist due to rounding.

This Quarterly Report on Form 10‑Q includes forward‑looking statements. All statements contained in this Quarterly Report on Form 10‑Q other than statements of historical facts, including statements regarding our future results of operations and financial condition, our business strategy, and plans and our objectives for future operations, are forward‑looking statements. The words “believe,” “may,” “will,” “could,” “would,” “seeks,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions, as well as statements regarding our focus for the future, are intended to identify forward‑looking statements. We have based these forward‑looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short‑term and long‑term business operations and objectives, and financial needs. These forward‑looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‑looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10‑Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements. The forward‑looking statements, as well as our Quarterly Report on Form 10‑Q as a whole, are subject to risks and uncertainties.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward‑looking statements. We discuss many of these risks in this Quarterly Report on Form 10‑Q in greater detail in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10‑Q. You should not rely upon forward‑looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward‑looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, events, or circumstances reflected in the forward‑looking statements will occur. Except as required by law, we undertake no obligation to update any of these forward‑looking statements after the date of this Quarterly Report on Form 10‑Q to conform these statements to actual results or revised expectations.

												Three Months Ended
												March 31,
																		2025						2024
Revenues:
Subscriptions																		$	342,318					$	307,089
Perpetual licenses																		10,792						9,512
Subscriptions and licenses																		353,110						316,601
Services																		17,432						21,162
Total revenues																		370,542						337,763
Cost of revenues:
Cost of subscriptions and licenses																		46,498						40,218
Cost of services																		19,161						21,612
Total cost of revenues																		65,659						61,830
Gross profit																		304,883						275,933
Operating expense (income):
Research and development																		72,450						68,371
Selling and marketing																		63,059						54,386
General and administrative																		47,228						46,482
Deferred compensation plan																		(1,246)						5,799
Amortization of purchased intangibles																		8,208						8,964
Total operating expenses																		189,699						184,002
Income from operations																		115,184						91,931
Interest expense, net																		(3,808)						(6,520)
Other income, net																		449						7,137
Income before income taxes																		111,825						92,548
Provision for income taxes																		(20,488)						(22,247)
Equity in net income of investees, net of tax																		1						9
Net income																		91,338						70,310
Less: Net income (loss) attributable to noncontrolling interest																		(30)						—
Net income attributable to Bentley Systems																		$	91,368					$	70,310
Net income per share attributable to Bentley Systems stockholders:
Basic																		$	0.29					$	0.22
Diluted																		$	0.28					$	0.22
Weighted average shares:
Basic																		315,130,071						314,295,102
Diluted																		333,441,006						333,623,518

The accompanying unaudited consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. The unaudited consolidated financial statements and accompanying notes have been prepared in U.S. dollars, and in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10‑K. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal, recurring and non-recurring adjustments) that were considered necessary for the fair statement of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods indicated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ materially from those estimates. The December 31, 2024 consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements.

Certain reclassifications of prior period amounts have been made to conform to the current period presentation.

Software Development Costs — Under its Accelerated Commercial Development Program (“ACDP”) (the Company’s structured approach to an in‑house business incubator function), the Company capitalizes certain development costs related to certain projects once technological feasibility is established. Total costs capitalized under the ACDP were $322 and $1,299 for the three months ended March 31, 2025 and 2024, respectively. Additionally, total ACDP related amortization was $755 and $649 for the three months ended March 31, 2025 and 2024, respectively, and is included in Cost of subscriptions and licenses in the consolidated statements of operations. As of March 31, 2025 and December 31, 2024, $12,857 and $12,961 of ACDP capitalized costs were recorded in Other assets in the consolidated balance sheets, respectively.

Internal-Use Software Implementation Costs — The Company has entered into cloud-based software hosting arrangements related to new internal-use information technology systems, including a new enterprise resource planning system, human capital management system, and customer relationship management system for which it incurs implementation costs. As of March 31, 2025 and December 31, 2024, capitalized internal-use software implementation costs were $21,683 and $18,791, respectively, which are included in Prepaid and other current assets or Other assets in the consolidated balance sheets, depending on the short- or long-term nature of such costs.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024‑03, Income Statements–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024‑03”), which requires enhanced disclosure of income statement expense categories to improve transparency and provide financial statement users with more detailed information about the nature, amount, and timing of expenses impacting financial performance. ASU 2024-03 is effective for the Company for the annual reporting period beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in ASU 2024-03 may be adopted either on a prospective basis to financial statements issued for reporting periods after the effective date or on a retrospective basis to all periods presented. The Company is currently evaluating the impact of the adoption of ASU 2024‑03, however, other than additional disclosure, the Company does not expect a change to the consolidated financial statements.

In March 2024, the SEC adopted the final rule under SEC Release No. 33‑11275, The Enhancement and Standardization of Climate‑Related Disclosures for Investors. The final rule requires registrants to disclose certain climate‑related information in registration statements and annual reports. The final rule disclosure requirements will begin phasing in prospectively for the Company’s fiscal year beginning January 1, 2025. In April 2024, the SEC issued an order staying the final rule pending completion of a judicial review of certain petitions challenging their validity. In March 2025, the SEC voted to end its defense of the final rule. The Company is currently evaluating the impact of the final rule on its consolidated financial statements disclosures and monitoring the status of the final rule pending the court’s ultimate decision.

In December 2023, the FASB issued ASU No. 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023‑09”), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023‑09 is effective for the Company for the annual reporting period beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2023‑09 on its consolidated financial statements disclosures.

The Company’s revenues consist of the following:

(1)Enterprise subscriptions are primarily revenues attributable to Enterprise 365 (“E365”) subscriptions of $146,904 and $123,036 for the three months ended March 31, 2025 and 2024, respectively.

The Company recognizes perpetual licenses and the term license component of subscriptions as revenue when either the licenses are delivered or at the start of the subscription term. For the three months ended March 31, 2025 and 2024, the Company recognized $201,038 and $176,309 of license related revenues, respectively, of which $190,246 and $166,797, respectively, were attributable to the term license component of the Company’s subscription based commercial offerings recorded in Subscriptions in the consolidated statements of operations.

Revenue from external customers is attributed to individual countries based upon the location of the customer. Revenues by geographic region are as follows:

(1)Americas includes the U.S., Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $153,029 and $138,252 for the three months ended March 31, 2025 and 2024, respectively.

The Company derived 6% and 7% of its total revenues through channel partners for the three months ended March 31, 2025 and 2024, respectively.

Unbilled accounts receivable represent amounts that are unbilled due to agreed-upon contractual terms in which billing occurs subsequent to revenue recognition, and are included in Accounts receivable in the consolidated balance sheets. As of March 31, 2025 and December 31, 2024, unbilled accounts receivable were $170,242 and $159,924, respectively.

As of March 31, 2025 and December 31, 2024, the Company’s contract assets relate to performance obligations completed in advance of the right to invoice and are included in Prepaid and other current assets in the consolidated balance sheets. Contract assets were not material as of March 31, 2025 or December 31, 2024.

Deferred revenues consist of billings made or payments received in advance of revenue recognition from subscriptions and services. The primary changes in the Company’s deferred revenues are due to our performance under the contracts and new billings made or payments received in advance of revenue recognition from subscriptions and services. The satisfaction of performance obligations typically lags behind payments received under revenue from contracts with customers.

For the three months ended March 31, 2025, $104,622 of revenues that were included in the December 31, 2024 deferred revenues balance were recognized. There were additional deferrals of $98,003 for the three months ended March 31, 2025, which were primarily related to new billings. For the three months ended March 31, 2024, $105,678 of revenues that were included in the December 31, 2023 deferred revenues balance were recognized. There were additional deferrals of $96,617 for the three months ended March 31, 2024, which were primarily related to new billings.

As of March 31, 2025 and December 31, 2024, the Company deferred $19,831 and $18,540, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.

The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2025, amounts allocated to these remaining performance obligations are $260,651, of which the Company expects to recognize approximately 94% over the next 12 months with the remaining amount thereafter.

The Company did not complete any acquisitions during the three months ended March 31, 2025 and 2024.

The operating results for any acquired business are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition:

The Company is in the process of finalizing the purchase accounting for certain acquisitions completed during the year ended December 31, 2024. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however, such measurement period cannot exceed one year. The primary areas of preliminary purchase price allocation that are not yet finalized relate to tax assets and liabilities, and residual goodwill.

Property and equipment, net consist of the following:

Depreciation expense for the three months ended March 31, 2025 and 2024 was $3,345 and $3,367, respectively.

The changes in the carrying amount of goodwill are as follows:

Details of intangible assets other than goodwill are as follows:

The aggregate amortization expense for purchased intangible assets with finite lives was reflected in the Company’s consolidated statements of operations as follows:

Investments consist of the following:

The Company invests in technology development companies, generally in the form of equity interests or convertible notes. During the three months ended March 31, 2025 and 2024, the Company invested a total of $0 and $250, respectively. As of March 31, 2025 and December 31, 2024, $8,928 of the total cost method investment balance relates to the Company’s equity interest in Worldsensing, a leading global connectivity hardware platform company for infrastructure monitoring.

The Company’s operating leases consist of office facilities, office equipment, and automobiles. As of March 31, 2025, the Company’s leases have remaining terms of less than one year to eight years, some of which include one or more options to renew, with renewal terms from one year to five years and some of which include options to terminate the leases from less than one year to five years.

The components of operating lease cost reflected in the consolidated statements of operations were as follows:

(1)Operating lease cost includes rent cost related to operating leases for office facilities of $3,532 and $3,471 for the three months ended March 31, 2025 and 2024, respectively.

Supplemental operating cash flows and other information related to leases was as follows:

The weighted average remaining lease term for operating leases was 4.2 years and 4.3 years as of March 31, 2025 and December 31, 2024, respectively. The weighted average discount rate was 5.3% and 5.2% as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, the Company had additional minimum operating lease payments of $496 for executed leases that have not yet commenced, primarily for office locations.

Accruals and other current liabilities consist of the following:

Long‑term debt consists of the following:

The Company had $150 of letters of credit outstanding as of March 31, 2025 and December 31, 2024 under its second amended and restated credit agreement, entered into on October 18, 2024 with a syndicate of banks (the “Credit Facility”). As of March 31, 2025 and December 31, 2024, the Company had $1,299,850 and $1,164,535, respectively, available under the Credit Facility.

As of March 31, 2025 and December 31, 2024, the Company was in compliance with all debt covenants and none of the conditions of the 2026 Notes or 2027 Notes to early convert had been met. Unless converted, upon maturity in January 2026, the Company will be required to repay the outstanding principal amount on the 2026 Notes, which, as of March 31, 2025, was $677,830. As of March 31, 2025, the 2026 Notes were classified as long-term debt in the consolidated balance sheets as the Company currently has the ability and intent to refinance them on a long-term basis through available capacity under the Credit Facility.

During the first quarter of 2025, the Company paid $9,797 in cash to repurchase $10,000 aggregate principal amount of its outstanding 2026 Notes through open market transactions resulting in an insignificant gain, which was recorded in Other income, net in the consolidated statements of operations for the three months ended March 31, 2025. The 2026 Notes were repurchased under the BSY Stock Repurchase Program (the “Repurchase Program”) authorization (see Note 13).

Interest expense, net consists of the following:

The weighted average interest rate on borrowings under the Credit Facility were 6.20% and 7.46% for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025 and 2024, the incentive compensation, including cash payments, election to receive shares of fully vested Class B common stock, and deferred compensation to plan participants, recognized under the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) (net of all applicable holdbacks) was $2,435 and $7,031, respectively.

In June 2024, the Sustainability Committee of the Company’s Board of Directors (the “Committee”) established an equity‑based incentive program to compensate a limited set of executives (the “Career Stock Program”) pursuant to which the Company may grant restricted stock units (“RSUs”) awards under the Bentley Systems, Incorporated 2020 Omnibus Incentive Plan (the “2020 Plan”). Under the Career Stock Program, the Committee may from time to time grant RSU awards to program participants, the amount of which is to be determined based upon the Company’s 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”)) growth in the year preceding the date of grant (the “Performance Year”) as a percentage of the difference between realized AOI less SBC growth during the Performance Year and an inflation-adjusted target growth level for such Performance Year. Any such awards, if made, would thereafter cliff vest five years following the end of the Performance Year and would otherwise be subject to the terms and conditions of the 2020 Plan.

During the three months ended March 31, 2025, the Company granted 28,913 RSUs with a fair value of $1,160 under the Career Stock Program based on the achievement of the performance goals for the year ended December 31, 2024. As of March 31, 2025, there was $1,148 of unrecognized compensation expense related to unvested RSUs under the Career Stock Program, which is expected to be recognized over a weighted average period of approximately 4.7 years.

Under the Company’s amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”), certain officers and key employees may defer all or any part of their incentive compensation, and the Company may make discretionary awards on behalf of such participants. Elective participant deferrals and discretionary Company awards are received in the form of phantom shares of the Company’s Class B common stock, which are valued for accounting purposes in the same manner as actual shares of Class B common stock, and are recorded as stock‑based compensation expense in the consolidated statements of operations (see Note 15). The DCP has 50,000,000 shares of Class B common stock reserved for issuance. As of March 31, 2025, shares of Class B common stock available for future issuance under the DCP were 4,329,074.

For the three months ended March 31, 2025 and 2024, DCP elective participant deferrals were $0 and $58, respectively. No discretionary contributions were made to the DCP during the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, phantom shares of the Company’s Class B common stock issuable by the DCP were 12,060,481 and 12,728,808, respectively.

In August 2021, the Company’s Board of Directors approved an amendment to the DCP, which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B common stock into other phantom investment funds. DCP participants’ holdings in phantom investment funds are classified as liabilities in either Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheets as they will be settled in cash upon eventual distribution. The 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.

Deferred compensation plan (income) expense was $(1,246) and $5,799 for the three months ended March 31, 2025 and 2024, respectively.

The total liabilities related to the DCP is included in the consolidated balance sheets as follows:

The Company’s Board of Directors approved the Repurchase Program authorizing the Company to repurchase up to $200,000 of the Company’s Class B common stock and/or outstanding convertible senior notes through June 30, 2026. As of March 31, 2025, $133,358 was available under the Company’s Board of Directors authorization for future repurchases of Class B common stock and/or outstanding convertible senior notes under the Repurchase Program.

The shares and outstanding convertible senior notes proposed to be acquired in the Repurchase Program may be repurchased from time to time in open market transactions, through privately negotiated transactions, or by other means in accordance with federal securities laws. The Company intends to fund repurchases from available working capital and cash provided by operating activities. The timing, as well as the number and value of shares and/or outstanding convertible senior notes repurchased under the Repurchase Program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s shares, the market price of the Company’s Class B common stock and outstanding convertible senior notes, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, and applicable legal requirements. The exact number of shares and/or outstanding convertible senior notes to be repurchased by the Company is not guaranteed, and the Repurchase Program may be suspended, modified, or discontinued at any time without prior notice.

During the three months ended March 31, 2025, the Company repurchased 673,898 shares for $30,014, and $10,000 aggregate principal amount of the Company’s outstanding 2026 Notes for $9,797 (see Note 10) under the Repurchase Program. During the three months ended March 31, 2024, the Company repurchased 302,598 shares for $15,006 under the Repurchase Program.

During the three months ended March 31, 2025 and 2024, the Company issued 689,203 and 537,745 shares of Class B common stock, respectively, to DCP participants in connection with distributions from the plan. There were no shares sold back to the Company as they were issued on a gross basis during the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025 and 2024, the Company issued 22,818 and 65,939 shares of Class B common stock in connection with Bonus Plan incentive compensation. There were no shares sold back to the Company as they were issued on a gross basis during the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2024, the Company issued 844,283 shares of Class B common stock to colleagues who exercised their stock options, net of 67,146 shares withheld at exercise to pay for the cost of the stock options, as well as for $2,195 of applicable income tax withholdings. The Company received $4,007 in cash proceeds from the exercise of stock options. The total intrinsic value of stock options exercised for the three months ended March 31, 2024 was $40,775.

The Company declared cash dividends during the periods presented as follows:

During the three months ended March 31, 2025, colleagues who elected to participate in the Bentley Systems, Incorporated Global Employee Stock Purchase Plan (the “ESPP”) purchased a total of 130,212 shares of Class B common stock, net of shares withheld, resulting in cash proceeds to the Company of $5,312. Of the total 133,840 shares purchased, 3,628 shares were sold back to the Company to pay for applicable income tax withholdings of $169. During the three months ended March 31, 2024, colleagues who elected to participate in the ESPP purchased a total of 122,020 shares of Class B common stock, net of shares withheld, resulting in cash proceeds to the Company of $5,560. Of the total 125,374 shares purchased, 3,354 shares were sold back to the Company to pay for applicable income tax withholdings of $175. As of March 31, 2025 and December 31, 2024, $3,052 and $5,577 of ESPP withholdings via colleague payroll deduction were recorded in Accruals and other current liabilities in the consolidated balance sheets, respectively. As of March 31, 2025, shares of Class B common stock available for future issuance under the ESPP were 23,888,248.

Accumulated other comprehensive loss consists of the following during the three months ended March 31, 2025 and 2024:

Total stock‑based compensation expense consists of the following:

(1)As of March 31, 2025 and December 31, 2024, $2,415 and $1,556 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.

Total stock‑based compensation expense is included in the consolidated statements of operations as follows:

Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. Specifically for performance‑based RSUs, stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period based on the number of awards expected to vest at each reporting date. The Company accounts for forfeitures of equity awards as those forfeitures occur.

The Company’s 2020 Plan provides for the granting of stock, stock options, restricted stock, RSUs, and other stock‑based or performance‑based awards to certain directors, officers, colleagues, consultants, and advisors of the Company, and terminates in September 2030. The 2020 Plan provides that 25,000,000 shares of Class B common stock may be issued for equity awards. Equity awards that are expired, canceled, forfeited, or terminated for any reason will be available for future grant under the 2020 Plan. As of March 31, 2025, equity awards available for future grants under the 2020 Plan were 18,317,920.

Under the 2020 Plan, the Company may grant both time‑based and performance‑based shares of restricted Class B common stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business growth targets, which include growth in annualized recurring revenues (“ARR”), as well as actual bookings for perpetual licenses and non‑recurring services. Performance targets are generally set for performance periods of one year to three years.

The following is a summary of unvested RSUs activity and related information:

(1)Includes 175,928 time‑based RSUs granted during the three months ended March 31, 2022 to certain officers and key employees, which cliff vested on January 31, 2025. Additionally, includes 300,964 time‑based RSUs granted during the three months ended June 30, 2024 to certain officers, which vest 20% on each of December 15, 2025, 2026, 2027, 2028, and 2029.

(2)Primarily relates to the 2024 annual performance period. Includes 162,038 performance‑based RSUs granted during the year ended December 31, 2022 with extraordinary terms, which are described below.

(3)Primarily relates to the 2025 annual performance period. Includes 10,493 additional shares earned based on the achievement of 2024 performance goals for performance-based RSUs granted during the year ended December 31, 2024.

(4)Includes 45,607 RSUs which are expected to be settled in cash.

During the year ended December 31, 2022, the Company granted 185,186 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals over a three‑year performance period (the “Performance Period”). For each year of the Performance Period, one‑third of the performance‑based RSUs were subject to a cliff, whereby no vesting of that portion would occur unless the Company’s applicable margin metrics (which, for 2022 was Adjusted EBITDA margin, and for 2023 and 2024 was AOI less SBC margin, excluding the impact of foreign currency exchange fluctuations) also equaled or exceeded the relevant target level for such year. Provided that the applicable margin targets were met, the total number of performance‑based RSUs that vested were determined by the achievement of growth targets, which included growth in ARR, as well as actual bookings for perpetual licenses and non‑recurring services. As of December 31, 2024, 162,038 of the aforementioned performance‑based RSUs were outstanding. On January 31, 2025, 162,038 performance‑based RSUs were determined to be vested based on the achievement of the performance goals during the Performance Period.

The weighted average grant date fair values of RSUs granted were $40.54 and $50.83, for the three months ended March 31, 2025 and 2024, respectively.

During the three months ended March 31, 2025 and 2024, restricted stock and RSUs were issued net of 257,394 and 113,790 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $11,734 and $5,729, respectively.

As of March 31, 2025, there was $139,505 of unrecognized compensation expense related to unvested time‑based RSUs, which is expected to be recognized over a weighted average period of approximately 2.1 years. As of March 31, 2025, there was $9,335 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 0.9 years.

The following is a summary of Income before income taxes, Provision for income taxes, and effective tax rate for the periods presented:

For the three months ended March 31, 2025, the effective tax rate was lower as compared to the same period in the prior year primarily due to the impact of the increase in discrete tax benefits recognized in the current year period and an increase in the forecasted deductions to U.S. taxable income related to foreign revenues. For the three months ended March 31, 2025 and 2024, the Company recorded discrete tax benefits of $5,073 and $2,138, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

A financial asset or liability classification is determined based on the lowest level input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

The Company’s financial instruments include cash equivalents, account receivables, certain other assets, accounts payable, accruals, certain other current and long‑term liabilities, and long‑term debt.

Current Assets and Current Liabilities — In general, the carrying amounts reported on the Company’s consolidated balance sheets for current assets and current liabilities approximate their fair values due to the short‑term nature of those instruments.

The following methods and assumptions were used by the Company in estimating its fair value measurements for Level 2 financial instruments as of March 31, 2025 and December 31, 2024:

Interest Rate Swap — The fair value of the Company’s interest rate swap asset or liability is determined using an income approach and is measured based on the implied forward rates for the remaining term of the interest rate swap. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy.

Long-Term Debt — The fair value of the Company’s borrowings under its Credit Facility approximated its carrying value based upon discounted cash flows at current market rates for instruments with similar remaining terms. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy. As of March 31, 2025, the estimated fair value of the 2026 Notes and 2027 Notes was $656,465 and $523,681, respectively. As of December 31, 2024, the estimated fair value of the 2026 Notes and 2027 Notes was $671,123 and $519,271, respectively. The estimated fair value of the 2026 Notes and 2027 Notes is based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop estimates of fair values. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold, or settled.

Deferred Compensation Plan Liabilities — The fair value of deferred compensation plan liabilities, including the liability classified phantom investments in the DCP, are marked to market at the end of each reporting period.

Financial assets and financial liabilities carried at fair value measured on a recurring basis consist of the following:

(1)Included in Cash and cash equivalents in the consolidated balance sheets.

(2)Included in Other assets in the consolidated balance sheets.

(3)Included in Deferred compensation plan liabilities, except for current liabilities of $3,748 and $3,798 as of March 31, 2025 and December 31, 2024, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets.

(4)Included in Accruals and other current liabilities in the consolidated balance sheets.

In the normal course of business, the Company enters into various purchase commitments for goods and services. During the three months ended March 31, 2025, the Company did not enter into any non‑cancelable future cash purchase commitments. During the year ended December 31, 2024, the Company entered into approximately $45,500 of non‑cancelable future cash purchase commitments for services related to cloud provisioning of the Company’s software solutions and for internal‑use software costs. As of March 31, 2025, total non‑cancelable future cash purchase commitments were approximately $101,300 to be paid through September 2029. The Company expects to fully consume its contractual commitments in the ordinary course of operations.

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcome of such actions is not expected to have a material adverse effect on the Company’s future financial position, results of operations, or cash flows.

The Company operates and manages its business in a single reportable segment, the development and marketing of computer software and related services. The Company defines its chief operating decision maker (“CODM”) to be its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The Company’s reported measures of profit or loss for segment reporting purposes are Net income and AOI less SBC. The CODM is regularly provided Net income and AOI less SBC to understand the Company’s financial and operating results across accounting periods and for comparison of the Company’s results to those of other companies. The CODM regularly reviews AOI less SBC for internal budgeting and forecasting purposes, to evaluate operating performance, and to make decisions on allocation of resources. The CODM does not use segment asset information to evaluate operating performance or allocate resources.

The presentation of Net income is included in the Company’s consolidated statements of operations. AOI less SBC is a non‑GAAP financial measure and is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods.

Reconciliation of operating income to AOI less SBC:

Further explanation of certain of the Company’s adjustments in arriving at AOI less SBC are as follows:

(1)Acquisition expenses. The Company incurs expenses for professional services rendered in connection with business combinations, which are recorded in General and administrative in the consolidated statements of operations. Also included in the Company’s acquisition expenses are retention incentives paid to executives of the acquired companies.

(2)Realignment expenses. For the three months ended March 31, 2025, Realignment expenses were primarily associated with a strategic realignment program, which the Company initiated during the fourth quarter of 2023 (the “2023 Program”).

“Headcount‑related” costs are considered the Company’s significant expense category and primarily include salaries, benefits, bonuses, stock‑based compensation expense, employment taxes, travel, training, and realignment of the Company’s colleagues, and third‑party personnel expenses and related overhead. The CODM is regularly provided headcount‑related costs to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, to evaluate financial performance, and to align colleague resources and evaluate compensation to support the Company’s operational efficiency and maximize long‑term growth. Headcount‑related costs of $199,609 and $185,201 are included in Cost of subscriptions and licenses, Cost of services, Research and development, Selling and marketing, and General and administrative in the consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively.

Under the Company’s Net income measure of profit or loss for segment reporting purposes, other segment items were $79,595 and $82,252 for the three months ended March 31, 2025 and 2024, respectively. These other segment items primarily include cloud‑related costs incurred for servicing the Company’s accounts using cloud provisioned solutions and the Company’s license administration platform, channel partner compensation for providing sales coverage to users, marketing costs, acquisition costs, depreciation expense, and amortization expense recorded in Cost of subscriptions and licenses, Cost of services, Research and development, Selling and marketing, and General and administrative. Additionally, other segment items include Deferred compensation plan expense (income), Amortization of purchased intangibles, and non‑operating expense (income) amounts presented in the consolidated statements of operations.

Under the Company’s AOI less SBC measure of profit or loss for segment reporting purposes, other segment items were $45,529 and $42,402 for the three months ended March 31, 2025 and 2024, respectively. These other segment items primarily include cloud‑related costs incurred for servicing the Company’s accounts using cloud provisioned solutions and the Company’s license administration platform, channel partner compensation for providing sales coverage to users, marketing costs, and depreciation expense recorded in Cost of subscriptions and licenses, Cost of services, Research and development, Selling and marketing, and General and administrative. Within the reconciliation of AOI less SBC, retention incentives paid to executives of acquired companies included as a component of acquisition expenses and costs associated with the 2023 Program included as a component of realignment expenses totaling $816 and $2,185 for the three months ended March 31, 2025 and 2024, respectively, are excluded from the calculation of headcount‑related costs.

Revenues by geographic region are presented in Note 3. Long‑lived assets (other than goodwill), net of depreciation and amortization by geographic region (see Notes 5, 6, and 8) are as follows: