On January 1, 2019, the Company adopted Topic 606, which superseded substantially all existing revenue recognition guidance under U.S. GAAP. The Company adopted Topic 606 using the modified retrospective method, under which the cumulative effect of initially applying Topic 606 of $125,464 ($101,489, net of tax) was recorded as a cumulative decrease to the opening balance of Accumulated deficit in the consolidated balance sheet as of January 1, 2019. The Company applied the standard only to contracts that were not completed as of the date of initial application. The comparative information for the year ended December 31, 2018 has not been adjusted and continues to be reported under Topic 605. Refer below for the qualitative and quantitative discussion regarding the impact of Topic 606 adoption.

The core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to a customer in an amount that reflects the consideration that is expected to be received for those goods or services. Under the new guidance, the Company is required to evaluate revenue recognition through a five‑step process: (1) identify a contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In applying the principles of Topic 606, more judgment and estimates are required within the revenue recognition process than was required under previous U.S. GAAP, including identifying performance obligations, estimating the amount of variable consideration to include in the transaction price, and estimating the value of each performance obligation to allocate the total transaction price to each separate performance obligation.

The most significant impact to the Company resulting from the adoption of Topic 606 relates to timing of revenue recognition for perpetual licenses and the accounting for certain of the Company’s subscription arrangements that include term‑based software licenses bundled with support. Under prior guidance, revenue for perpetual licenses was recognized ratably over a three‑year period, while revenue attributable to the term‑based software licenses was recognized ratably over the term. Under Topic 606, both perpetual license and term‑based software license revenue is recognized up‑front upon delivery of the software license. Revenue recognition related to support, hosting, usage‑based offerings, and services is substantially unchanged, with support and hosting revenue recorded ratably over the contract term, usage‑based revenue recognized upon usage or delivery, and services revenue as delivered.

With the adoption of Topic 606, the Company also adopted ASC Topic 340‑40, Other Assets and Deferred Costs‑Contracts with Customers (“Topic 340‑40”). Prior to the adoption of Topic 340‑40, the Company previously recognized compensation paid to sales employees and certain channel partners related to obtaining customer contracts when incurred. Under Topic 340‑40, the Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The contract costs are amortized based on the economic life of the goods and services to which the contract costs relate. The Company has determined that costs under certain sales incentive programs meet the requirements to be capitalized. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include the Company’s internal sales force compensation program and certain channel partner sales incentive programs for which the annual compensation is commensurate with annual sales activities. Under the modified retrospective method, the Company recorded a cumulative decrease of $7,734 ($6,333, net of tax) to the opening balance of Accumulated deficit in the consolidated balance sheet as of January 1, 2019. The comparative information for the year ended December 31, 2018 has not been adjusted and continues to be reported as incurred.

The following tables compare the reported consolidated balance sheet and statement of operations, as of and for the year ended December 31, 2019, to the amounts had Topic 605 been in effect. Adoption of the standards had no impact to net cash provided by or used in operating, investing, or financing activities on the Company’s consolidated statement of cash flows for the year ended December 31, 2019.


	December 31, 2019
			Impact from
			the Adoption of
	As Reported		Topics 606		As Adjusted
	Topic 606		and 340-40		Topic 605
Assets
Current assets:
Cash and cash equivalents	$	121,101	$	—	$	121,101
Accounts receivable	211,775		(233)		211,542
Allowance for doubtful accounts	(7,274)		—		(7,274)
Prepaid income taxes	4,543		2,189		6,732
Prepaid and other current assets (1)	23,413		(3,333)		20,080
Total current assets	353,558		(1,377)		352,181
Property and equipment, net	29,632		—		29,632
Intangible assets, net	46,313		—		46,313
Goodwill	480,065		—		480,065
Investments	1,725		—		1,725
Deferred income taxes	51,068		21,543		72,611
Other assets (1)	32,238		(5,721)		26,517
Total assets	$	994,599	$	14,445	$	1,009,044
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	17,669	$	—	$	17,669
Accruals and other current liabilities	167,517		(292)		167,225
Deferred revenues	204,991		77,079		282,070
Income taxes payable	2,236		(1,206)		1,030
Total current liabilities	392,413		75,581		467,994
Long-term debt	233,750		—		233,750
Deferred revenues	8,154		47,967		56,121
Deferred income taxes	8,260		(633)		7,627
Income taxes payable	8,140		(1,819)		6,321
Other liabilities	9,263		—		9,263
Total liabilities	659,980		121,096		781,076
Stockholders’ equity:
Common stock	2,548		—		2,548
Additional paid-in capital	408,667		—		408,667
Accumulated other comprehensive loss	(23,927)		841		(23,086)
Accumulated deficit (2)	(52,669)		(107,492)		(160,161)
Total stockholders’ equity	334,619		(106,651)		227,968
Total liabilities and stockholders’ equity	$	994,599	$	14,445	$	1,009,044


	Year Ended December 31, 2019
			Impact from
			the Adoption of
	As Reported		Topics 606		As Adjusted
	Topic 606		and 340-40		Topic 605
Revenues:
Subscriptions	$	608,300	$	5,625	$	613,925
Perpetual licenses	59,693		(7,174)		52,519
Subscriptions and licenses	667,993		(1,549)		666,444
Services	68,661		(256)		68,405
Total revenues	736,654		(1,805)		734,849
Cost of revenues:
Cost of subscriptions and licenses	71,578		(139)		71,439
Cost of services	72,572		—		72,572
Total cost of revenues	144,150		(139)		144,011
Gross profit	592,504		(1,666)		590,838
Operating expenses:
Research and development	183,552		—		183,552
Selling and marketing	155,294		(20)		155,274
General and administrative	97,580		—		97,580
Amortization of purchased intangibles	14,213		—		14,213
Total operating expenses	450,639		(20)		450,619
Income from operations	141,865		(1,646)		140,219
Interest expense, net	(8,199)		—		(8,199)
Other income (expense), net	(5,557)		—		(5,557)
Income before income taxes	128,109		(1,646)		126,463
(Provision) benefit for income taxes	(23,738)		1,976		(21,762)
Loss from investment accounted for using the equity method, net of tax	(1,275)		—		(1,275)
Net income	$	103,096	$	330	$	103,426

SELECT subscriptions — A prepaid annual recurring subscription that accounts (which are based on distinct contractual and billing relationships with the Company, where affiliated entities of a single parent company may each have an independent account with the Company) can elect to add to a new or previously purchased perpetual license. SELECT provides accounts with benefits, including upgrades, comprehensive technical support, pooled licensing benefits, annual portfolio balancing exchange rights, learning benefits, certain Azure‑based cloud collaboration services, mobility advantages, and access to other available benefits. Under Topic 606, SELECT subscription revenues are recognized as distinct performance obligations are satisfied. The performance obligations within the SELECT offering, outside of the portfolio balancing exchange right, are concurrently delivered and have the same pattern of recognition. These performance obligations are accounted for ratably over the term as a single performance obligation. Under Topic 605, SELECT subscriptions revenue was recognized on a ratable basis, over the subscription term.

Enterprise subscriptions — The Company also provides Enterprise subscription offerings which provide its largest accounts with complete and unlimited global access to the Company’s comprehensive portfolio of solutions. Enterprise License Subscriptions (“ELS”) provide access for a prepaid fee, which is based on the account’s usage of software in the preceding year, to effectively create a fee‑certain consumption‑based arrangement. ELS contain a term license component, SELECT maintenance and support, and performance consulting days. The SELECT maintenance and support benefits under ELS do not include a portfolio balancing performance obligation. Revenue is allocated to the various performance obligations based on their respective standalone selling price (“SSP”). Revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenues for the SELECT maintenance and support and the performance consulting days are recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. Under Topic 605, ELS revenue was recognized on a ratable basis, over the subscription term.

Enterprise 365 (“E365”) subscriptions, which were introduced during the fourth quarter of 2018, provide unrestricted access to the Company’s comprehensive software portfolio, similar to ELS, however, the accounts are charged based upon daily usage. The daily usage fee includes a term license component, SELECT maintenance and support, hosting, and Success Plan services, which are designed to achieve business outcomes through more efficient and effective use of the Company’s software. E365 revenues are recognized based upon usage incurred by the account under both Topics 606 and 605. Usage is defined as distinct user access on a daily basis. The term of E365 subscriptions aligns with calendar quarters and revenue is recognized based on actual usage.

Term license subscriptions — The Company provides annual, quarterly, and monthly term licenses for its software products. Term license subscriptions contain a term license component and SELECT maintenance and support. Revenue is allocated to the various performance obligations based on their SSP. Annual term licenses (“ATL”) are generally prepaid annually for named user access to specific products. Quarterly term license (“QTL”) subscriptions allow accounts to pay quarterly in arrears for license usage that is beyond their prepaid subscriptions. Monthly term license (“MTL”) subscriptions are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized. MTL subscriptions require a Cloud Services Subscription (“CSS”), which is described below. For ATL, revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenue for the SELECT maintenance and support is recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. Under Topic 605, ATL revenues were recognized on a ratable basis, over the subscription term. For usage‑based QTL and MTL subscriptions, revenues are recognized based upon usage incurred by the account under both Topics 606 and 605. Usage is defined as peak usage over the respective terms. The terms of QTL and MTL subscriptions align with calendar quarters and calendar months, respectively, and revenue is recognized based on actual usage.

Visas and Passports are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles our users to certain functionality of the Company’s ProjectWise and AssetWise systems. The Company’s standard offerings are usage based with monetization through the Company’s CSS program as described below.

CSS is a program designed to streamline the procurement, administration, and payment process. The program requires an account to estimate their annual usage for CSS eligible offerings and deposit funds in advance. Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis. CSS balances not utilized for eligible products or services may roll over to future periods or are refundable. Paid and unconsumed CSS balances are recorded in Accruals and other current liabilities in the consolidated balance sheets. Software and services consumed under CSS are recognized pursuant to the applicable revenue recognition guidance for the respective software or service and classified as subscriptions or services based on their respective nature.

Perpetual licenses may be sold with or without attaching a SELECT subscription. Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription. Perpetual license revenue is recognized upon delivery of the license to the user under Topic 606. Under Topic 605, the Company recognized perpetual licenses revenue ratably over a three‑year term due to the portfolio balancing feature users obtain through their SELECT subscriptions.

The Company provides professional services including training, implementation, configuration, customization, and strategic consulting services. The Company performs projects on both a time and materials and a fixed fee basis. The Company’s recent and preferred contractual structures for delivering professional services include (i) delivery of the services in the form of subscription‑like, packaged offerings which are annually recurring in nature, and (ii) delivery of the Company’s growing portfolio of Success Plans in standard offerings which offer a level of subscription service over and above the standard technical support offered to all accounts as part of their SELECT or Enterprise agreement. Revenues are recognized as services are performed under Topics 606 and 605.

The Company primarily utilizes its direct internal sales force and also has arrangements through independent channel partners to promote and sell Bentley products and subscriptions to end‑users. Channel partners are authorized to promote the sale of an authorized set of Bentley products and subscriptions within an authorized geography under a Channel Partner Agreement.

The Company’s contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation. When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, the Company accounts for those performance obligations as a single performance obligation. For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative SSP of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services.

The Company’s SELECT agreement provides users with perpetual licenses a right to exchange software for other eligible perpetual licenses on an annual basis upon renewal. The Company refers to this option as portfolio balancing and has concluded that the portfolio balancing feature represents a material right resulting in the deferral of the associated revenue. Judgment is required to estimate the percentage of users who may elect to portfolio balance and considers inputs such as historical user elections. This feature is available once per term and must be exercised prior to the respective renewal term. The Company recognizes the associated revenue upon election or when the portfolio balancing right expires. This right is included in the initial and subsequent renewal terms and the Company reestablishes the revenue deferral for the material right upon the beginning of the renewal term. As of December 31, 2020 and 2019, the Company has deferred $18,166 and $18,060, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.

For the year ended December 31, 2020, $203,682 of revenue that was included in the December 31, 2019 deferred revenue balance was recognized. There were additional deferrals of $193,999, which were primarily related to new billings. For the year ended December 31, 2019, $202,354 of revenue that was included in the January 1, 2019 deferred revenue opening balance was recognized. There were additional deferrals of $202,806, which were primarily related to new billings.

The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of December 31, 2020, amounts allocated to these remaining performance obligations are $209,314, of which the Company expects to recognize 96.6% over the next 12 months with the remaining amount thereafter.


	Year Ended December 31,
	2020		2019				2018
	Topic 606		Topic 606		Topic 605		Topic 605
Revenues:
Subscriptions:
SELECT subscriptions	$	270,749	$	267,249	$	267,340	$	273,745
Enterprise subscriptions	221,524		184,833		196,081		182,816
Term license subscriptions	187,000		156,218		150,504		100,860
Subscriptions	679,273		608,300		613,925		557,421
Perpetual licenses:
Perpetual licenses	57,382		59,693		52,519		61,065
Subscriptions and licenses	736,655		667,993		666,444		618,486
Services:
Professional services (recurring)	17,389		22,797		22,974		25,981
Professional services (other)	47,500		45,864		45,431		47,243
Services	64,889		68,661		68,405		73,224
Total revenues	$	801,544	$	736,654	$	734,849	$	691,710

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 years ended December 31, 2020 and 2019, the Company recognized $338,792 and $311,689 of license related revenues, respectively, of which $281,410 and $251,996, 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.


	Year Ended December 31,
	2020		2019				2018
	Topic 606		Topic 606		Topic 605		Topic 605
Revenues:
Americas (1)	$	395,746	$	356,331	$	360,934	$	328,749
Europe, the Middle East, and Africa (“EMEA”) (2)	254,036		236,602		235,254		231,486
Asia-Pacific (“APAC”)	151,762		143,721		138,661		131,475
Total revenues	$	801,544	$	736,654	$	734,849	$	691,710

(1)Americas includes the U.S., Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $348,222 (Topic 606) for the year ended December 31, 2020, $306,493 (Topic 606) and $307,259 (Topic 605) for the year ended December 31, 2019, and $277,706 (Topic 605) for the year ended December 31, 2018.