Octave Intelligence (OCTV) Q2 2026 earnings summary

Executive summary

• Completed spin-off from Hexagon in May 2026, becoming an independent public company with over 7,000 employees and 268.4 million shares distributed to Hexagon shareholders.

• Q2 2026 revenue was $398–$398.4 million, down 1% organically and 4% as reported, mainly due to divestitures and lower perpetual license sales, partially offset by strong SaaS growth.

• ARR grew 7% year-over-year to $1.143 billion, recurring revenue up 6% to $283 million, and SaaS revenue up 21%–23%.

• Net loss for Q2 2026 was $1.97 billion, driven by $2.1 billion in non-cash impairment charges on goodwill and trademarks; adjusted net income was $95 million, EPS $0.36.

• Customer base expanded to 3,267 with high retention rates and over 60% of revenue from Global Fortune 500 clients.

Financial highlights

• Gross margin improved to 77%, up from 74% year-over-year.

• Adjusted operating income was $116 million for Q2 2026, with a 29% margin; adjusted operating margin for FY'25 was 31%.

• Free cash flow was $93 million for Q2 2026 (23% margin), $175.5 million for H1 2026 (22% margin), and $320 million for FY'25 (20% margin).

• Cash and cash equivalents at June 30, 2026: $304 million; gross debt: $644 million; net debt: $340 million.

• R&D capitalization was 7% of revenues in Q2 2026, down from 8% prior year.

Outlook and guidance

• Q3 2026 guidance: revenue $400–$410 million, ARR $1,185–$1,205 million, recurring revenue $285–$290 million, adjusted operating margin ~27%.

• Full-year 2026 guidance: ARR $1,185–$1,205 million (6%–8% growth), total revenue $1,635–$1,665 million (0%–2% growth), recurring revenue $1,140–$1,150 million (5%–6% growth), adjusted operating margin ~30%, free cash flow margin ~20%.

• Medium-term ambition: ARR growth above 10%, total revenue growth 6%–8%, adjusted operating margin ~30%, and free cash flow margin 23%–24%.

• Guidance reduced for 2026 due to removal of large perpetual public safety deals, which may slip into 2027.