Octave Intelligence — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $415 million for Q3 2026, an increase of 6% year-over-year and 6% on an Organic Constant Currency basis compared to $393 million in Q3 2025.
• Recurring revenue was $291 million, up 5% year-over-year and 5% on an Organic Constant Currency basis.
• Annualized recurring revenue (ARR) reached $1,171 million, a 7% increase year-over-year from $1,090 million.
• Income from operations was $56 million, improving from $33 million in Q3 2025, resulting in an operating margin of 13% versus 8% in the prior year period.
• Adjusted income from operations was $116 million, up from $106 million in Q3 2025, with an adjusted operating margin of 28% compared to 27%.
• Net income was $59 million, compared to $14 million in Q3 2025.
• Adjusted net income was $86 million, slightly down from $87 million in Q3 2025.
• Earnings per share (diluted) was $0.22, compared to $0.05 in Q3 2025.
• Adjusted earnings per share (diluted) was $0.32, flat compared to $0.32 in Q3 2025.
• Cash flow from operations was $95 million, down from $102 million in Q3 2025, with a cash flow from operations margin of 23% versus 26%.
• Free cash flow was $65 million, up from $64 million in Q3 2025, maintaining a free cash flow margin of 16%.
• Long-term debt as of September 30, 2026, was $518.5 million, compared to zero in the prior year period.
• Deferred revenue was $419.9 million as of September 30, 2026, up from $380.6 million as of December 31, 2025.

Guidance and Future Outlook:

• Full year 2026 total revenue is guided to be between $1,640 million and $1,660 million, representing organic constant currency growth of 0.5% to 2%.
• Full year 2026 ARR is guided to be between $1,185 million and $1,205 million, representing organic constant currency growth of 6% to 8%.
• Full year 2026 recurring revenue is guided to be between $1,145 million and $1,150 million, representing organic constant currency growth of 5.5% to 6%.
• Full year 2026 adjusted operating margin is guided to be approximately 30%.
• Full year 2026 free cash flow margin is guided to be approximately 20%.
• Fourth quarter 2026 total revenue is guided to be between $440 million and $460 million.
• Fourth quarter 2026 recurring revenue is guided to be between $292 million and $297 million.
• Fourth quarter 2026 organic constant currency revenue growth is guided to be between (2)% and 2%.
• Fourth quarter 2026 adjusted operating margin is guided to be between 31% and 32%.
• Guidance assumptions include continued customer retention, successful cross-selling and upselling, ongoing SaaS adoption, and no material adverse changes in macroeconomic conditions.

Business Segments and Product Lines:

• SaaS revenue grew 18% year-over-year, contributing to the company's shift toward recurring revenue.
• In November, Octave announced the acquisition of Cerebre, a U.S.-based software company that transforms fragmented engineering schematics and plant data into connected plant models.
• In November, Octave launched Attune Facilities, a cloud-based facilities management solution featuring AI tools for multi-site environments.
• In October, Octave released a new version of Alto, its geospatial solution, enabling live drone and camera video integration onto 2D maps and 3D terrain.
• In September, Octave released a research report on industrial workforce trends based on a survey of over 750 industrial leaders.

Market and Competitive Landscape:

• In October, Octave was named a Leader in both the ARC Advisory Group's MarketMap for Enterprise Asset Management and the MarketMap for Digital Worker Technologies for Manufacturing.
• ARC Advisory Group also classified Octave as a Transformation Pioneer in Enterprise Asset Management.

Risks and Challenges:

• Forward-looking statements are subject to risks including customer demand for software solutions, subscription license activity, SaaS adoption, pricing and packaging initiatives, and macroeconomic conditions.
• Risks include the ability to identify, consummate, and successfully integrate strategic acquisitions, specifically the integration of Cerebre.
• Risks include the ability to operate as an independent public company following the spin-off from Hexagon, including timing and costs associated with separation-related activities.
• Risks include the ability to generate sufficient cash flows and comply with the terms of indebtedness.
• Risks include the inability to reasonably predict future impairment charges, restructuring charges, acquisition costs, stand-up costs, and other non-recurring items without unreasonable effort.

Management Commentary and Tone:

• CEO Mattias Stenberg stated that third quarter results were in line with expectations and the company remains on track to achieve full-year outlook.
• Management highlighted that product innovation and go-to-market improvements gained traction during the quarter and momentum is being carried into the fourth quarter.
• The Board of Directors' approval of the share repurchase program reflects confidence in the company strategy, medium-term financial targets, and ability to grow free cash flow.

Other Key Points:

• The Board of Directors approved a $200 million share repurchase program for Octave Class B Ordinary Shares and Swedish Depository Receipts (SDRs).
• The repurchase program covers purchases from November 13, 2026, through the end of 2029, subject to market conditions and legal requirements.
• The program allows for the acquisition of up to 10,750,000 share equivalents, with purchases to be made in cash.
• The purpose of the program is to offset dilution from equity-based compensation and provide flexibility for capital allocation.
• As of the report date, Octave held zero treasury shares and zero SDRs.
• The company reported a significant one-time impairment charge of $2.13 billion in the nine months ended September 30, 2026, which was excluded from adjusted financial measures.
• The company generated a gain on the sale of buildings of $25.9 million in the nine months ended September 30, 2026.
• Cash and cash equivalents increased to $297.0 million as of September 30, 2026, from $156.1 million as of December 31, 2025.
• The company paid $625 million to Hexagon in connection with the Distribution (spin-off) during the nine months ended September 30, 2026.