Octave Intelligence plc

What they do

Octave provides a suite of software solutions that help organizations design, build, operate, and protect physical assets, people, and critical infrastructure. Its platform connects data, events, and workflows across four core environments—Design, Build, Operate, and Protect—applying context-aware intelligence to optimize performance and reliability. The company generates revenue primarily through recurring software subscriptions and SaaS offerings, with a focus on recurring revenue growth and annualized recurring revenue (ARR) as key performance indicators.

Revenue drivers

• Recurring revenue (SaaS and subscriptions) — Recurring revenue was $283 million in Q2 2026, up 6% year-over-year, and represents a growing share of total revenue as the company shifts from perpetual licenses to a subscription model. SaaS revenue specifically grew 21% year-over-year.
• Total software and services revenue — Total revenue in Q2 2026 was $398 million, down 4% year-over-year on an as-reported basis and down 1% on an organic constant currency basis. This includes both recurring and non-recurring revenue streams.
• ARR (Annualized Recurring Revenue) — ARR reached $1,143 million at the end of Q2 2026, up 7% from $1,066 million in the prior year, reflecting the company's strategic focus on expanding its recurring revenue base.

Recent performance

In Q2 2026, Octave reported total revenue of $398 million, down 4% year-over-year, with recurring revenue up 6% to $283 million. The company reported a net loss of $1.97 billion, driven by $2.1 billion in non-cash impairment charges, including a $1.67 billion goodwill impairment and a $464 million trademark impairment. On an adjusted basis, income from operations was $116 million and adjusted net income was $95 million, with adjusted earnings per share of $0.36. Cash flow from operations was $125 million and free cash flow was $93 million.

Strategy

Octave is executing a deliberate business model shift toward recurring revenue and ARR, which management says are better indicators of underlying performance than reported total revenue. The company is investing in go-to-market priorities and deepening its platform and agentic capabilities, including the launch of Octave CoLabs, a collaborative innovation program with customers to build agentic AI workflows. It also acquired VXG Inc., a cloud-native video management software provider, to strengthen its Protect workflow environment and expand AI-enhanced cloud capabilities. The spin-off from Hexagon allows Octave to operate as an independent, pure-play enterprise software company, and management reaffirmed confidence in the medium-term financial objectives shared at its March investor day.

Risks

• Goodwill impairment risk — The company recorded a $1.67 billion goodwill impairment in Q2 2026, indicating that its market capitalization remains below the carrying value on its balance sheet, which could lead to further impairments.
• Revenue decline risk — Total revenue decreased 4% year-over-year in Q2 2026, and even on an organic constant currency basis it declined 1%, signaling potential challenges in the transition to a recurring revenue model.
• Integration risk from acquisition — The acquisition of VXG Inc. may pose integration risks, and the company may not achieve the expected synergies or product enhancements in its Protect workflow environment.
• Trademark impairment risk — The company took a $464 million impairment on trademarks due to the phase-out of legacy brands and the transition to a unified Octave brand, which may affect brand recognition and customer retention.

Outlook

Management remains confident in the path and the medium-term financial objectives shared at the March investor day, despite the reporting a net loss in the quarter. The company expects that recurring revenue growth and ARR will be the primary indicators of performance going forward. Octave is focused on executing its go-to-market priorities, deepening platform capabilities, and expanding agentic AI workflows through initiatives like Octave CoLabs. The company did not provide specific forward guidance in the earnings release.