This Stock Had Its IPO the Same Month as Palantir. Its Price Action Has Been Wildly Different, But You Should Buy the Dip Here.

There were a lot of high-profile IPOs in September 2020, none more so than Palantir Technologies (PLTR), which completed a direct listing of its stock on Sept. 30, 2020, 17 years after its founding.

One of the lesser-known businesses going public that month was Bentley Systems (BSY), an infrastructure software company. It raised approximately $237 million from its IPO at an offering price of $22, above its $19 to $21 price range. 

The former has fared much better in the nearly six years since, gaining 1,510%, 52 times higher than the latter.

On Tuesday, BSY hit a new 52-week low of $28.37, its 39th of the past 12 months. It hasn’t been this low since it opened at $28 on its first day as a public company. From its all-time high of $71.92 on Sept. 13, 2021, BSY has lost 60% of its value. 

While Palantir has benefited greatly from AI, Bentley has been crushed by it, as have many of its software peers. 

Aggressive investors with a contrarian bent ought to be interested in making a speculative bet that Bentley can pull itself out of this secular trend and tailspin.

Here’s why. 

The Business Model’s Not Broken

About 23 months ago, I wrote about Bentley for another publication, suggesting it was one of three stocks with a dual-class share structure worth owning for the long term; the other two were Berkshire Hathaway (BRK.B) and Dick’s Sporting Goods (DKS).

None of the three has done well with Berkshire and Dick’s both up 14%, and BSY down 41%. 

At the time, Bentley’s ARR (annual recurring revenue) was $1.22 billion as of June 30, 2024. As of Q1 2026, it’s up 22.1% to $1.49 billion. 

Bentley generates most of its revenue from subscriptions. In the latest quarter, it was 92.5%, with another 2.1% for perpetual licenses, and the remaining 5.4% from services,

It has three subscription types: Enterprise (43.9% of subscription revenue), Term License (39.0%), and SELECT (17.1%). The enterprise subscriptions are charged based on usage, while the SELECT subscription is prepaid annually, and the Term License subscription is prepaid annually, quarterly, or monthly. I won’t get into the weeds on the differences between the three.

Needless to say, the company’s RPOs (remaining performance obligations) as of March 31 were $284.4 million, or about 17% of Wall Street’s $1.70 billion revenue estimate for 2026.  

So, it does have some deferred revenue, but it’s not like Boeing (BA) and other large manufacturers, where the backlog can be 2-3 years or more. 

On the earnings front, its EBIT (earnings before interest, taxes, depreciation and amortization) has grown from $127.8 million in the 12 months ended March 31, 2022, to $381.7 million in March 2026, nearly 200% cumulative growth. 

What’s Not to Like?

If you’re a Wall Street analyst, not much. Of the 17 covering it, 12 rate it a Buy (4.35 out of 5), up from 4.06 three months ago, with a $45.21 target price. 

The two things consistently mentioned by online pundits about Bentley are slowing growth and margin pressures. The rationale being that AI will make the digital twinning of buildings and infrastructure-related projects so much easier and more cost-efficient that Bentley will go out of business.  

However, both Piper Sandler and BofA upgraded Bentley’s stock in May: The former from Neutral to Overweight ($45 target price) and the latter from not covering BSY to a Buy rating ($40 target price).

Piper Sandler’s positives include 2.5% sequential ARR growth in the first quarter, continued traction in the resources sector, and 15-20% services revenue growth in 2026.

Interestingly, BofA analyst Tomer Zilberman called Bentley a “defensive play against AI disruption,” suggesting that its ARR growth in 2026, excluding currency, should be about 11.5%, with FCF (free cash flow) margins of 31%, considerably higher than the average of its peers at 25%.

The good news, and I say this with a grain of salt -- analysts rarely give sell ratings -- is that no analysts give BSY a Sell rating. 

Referring to Zilberman’s thoughts on FCF, Bentley’s was $492 million in the trailing 12 months ended March 31, 13% higher than at the end of Q1 2025, with an FCF margin of 31.6%. 

Based on an enterprise value of $9.96 billion, it has an FCF yield of 4.9%. I consider anything between 4% and 8% to be fair value, meaning you might not be getting a bargain, but you’re likely not getting ripped off either. 

In fact, its FCF yield is higher than it’s ever been since going public in 2020.  

The Bottom Line on Bentley Stock 

Executive Chair Greg Bentley discussed the company’s clients in its Q1 2026 conference call with analysts. 

“...45% of our revenue comes from 220 accounts which each spend over $1 million per year with us,” Greg Bentley stated. “Almost two-thirds of our revenue comes from 824 accounts which each spend over $250K per year with us, mostly, of course, through E365 consumption subscriptions, which include, in each case, a dedicated BSY technical success team positioned to nurture joint AI initiatives.”

As mentioned in the conference call, the annual revenue run rate for its newish Asset Analytics business, which helps companies analyze the real-time condition of infrastructure assets, was $50 million and growing. It’s just one example of how Bentley is using AI to help its customers be more efficient across its software offerings.

As long as Bentley continues to maintain a net customer retention rate greater than 100% -- it was 108% in Q1 2026 -- I don’t see it having any trouble growing the top and bottom lines by double digits in the years ahead. 

You’re buying steady growth at a reasonable price. I like it.