-- Total revenue of $398 million, a decrease of 4% on a quarterly
as-reported year-over-year basis and a decrease of 1% on an organic
constant currency basis
-- Recurring revenue of $283 million, an increase of 6% on a quarterly
as-reported year-over-year basis and organic constant currency basis
-- Annualized recurring revenue ("ARR") of $1,143 million, compared to
$1,066 million in the prior year, an increase of 7% year-over-year
-- Cash flow from operations of $125 million and Free cash flow of $93
million
HUNTSVILLE, Ala., Aug. 12, 2026 (GLOBE NEWSWIRE) -- Octave Intelligence plc (Nasdaq New York: OCTV and Nasdaq Stockholm: OCTV SDB), today announced financial results for the second quarter 2026, ended June 30, 2026.
"Our second quarter results reflect the continued momentum we are building as a newly independent company, with ARR of $1,143 million, up 7% year-over-year, and SaaS revenue growth of 21%," said Mattias Stenberg, Chief Executive Officer of Octave.
"We are moving faster and investing with focus, delivering strong free cash flow in the quarter while executing on our go-to-market priorities and deepening the platform and agentic capabilities that make our customers' operating context more valuable to them. The deliberate shift in our business model means recurring revenue growth and ARR are the better indicators of underlying performance than reported total revenue. We remain confident in the path and the medium-term financial objectives we shared at our March investor day"
Second Quarter 2026 Financial Highlights and Key Business Metrics:
USD millions, except EPS and percentages Q2 2026 Q2 2025 Total revenue $398 $413 Annualized recurring revenue $(ARR)$ $1,143 $1,066 Income (loss) from operations $(2,070) $97 Operating margin (520)% 23% Adjusted income from operations $116 $129 Adjusted operating margin 29% 31% Net income (loss) $(1,971) $75 Adjusted net income $95 $98 Earnings per share $(7.34) $0.28 Adjusted earnings per share $0.36 $0.36 Cash flow from operations $125 $123 Cash flow from operations margin 31% 30% Free cash flow $93 $87 Free cash flow margin 23% 21%
Recent Business Highlights
-- In July, Octave launched Octave CoLabs, a collaborative innovation
program that pairs Octave's product and technical leadership with
customer teams to build agentic AI workflows on customers' own
operational data. Initial participants include Bechtel and Fluor.
-- In May, Octave completed its separation from Hexagon AB and its Class B
ordinary shares commenced trading on the Nasdaq Global Select Market in
New York under the ticker symbol "OCTV," and its Swedish Depositary
Receipts commenced trading on the Nasdaq Stockholm under the ticker
symbol "OCTV SDB". This marked the culmination of a multi-year process to
establish Octave as an independent, pure-play enterprise software company
serving asset-intensive industries and the public sector.
-- In May, Octave announced it acquired VXG Inc., a provider of
enterprise-grade, cloud-native video management software, to strengthen
its physical security portfolio and build upon AI-enhanced cloud
capabilities in its Protect workflow environment, expanding its software
offerings for protecting people, places, and assets.
Balance Sheet
At June 30, 2026, total cash and cash equivalents was $304 million and total debt was $644 million.
Second quarter financial results include non-cash impairment charges totaling $2,135 million, recorded in Other operating expense (income), net. Following the commencement of regular-way trading of the Company's Class B Ordinary Shares, Octave's market capitalization remained below the Company carrying value on its consolidated balance sheet at June 30, 2026. Management considered this to be a triggering event requiring an interim goodwill impairment assessment as of June 30, 2026, resulting in a $1,671 million non-cash goodwill impairment charge. Separately, in connection with the approval of the spin-off and the phase-out of legacy brands and the transition to a unified Octave brand, the Company reassessed the useful lives and fair value of its trademarks, resulting in a $464 million non-cash impairment charge and a change from indefinite to finite useful lives.
These charges did not result in any current cash expenditure and did not affect the Company's cash flows or compliance with the financial covenants under the Company's Credit Agreement, nor are they indicative of any changes to the operating outlook for the business.
Consistent with the Company's definitions of its non-GAAP measures, impairment charges are excluded from Adjusted income from operations, Adjusted operating margin, Adjusted net income and Adjusted earnings per share.
Third Quarter and Full Year 2026 Guidance
Octave provided initial third quarter and full year 2026 financial guidance and expectations for certain key business metrics as set out below.
Q3 2026 Full Year 2026
Total revenue $400 - $410 $1,635 - $1,665
Annualized recurring revenue (ARR) N/A $1,185 - $1,205
Total revenue growth y/y (organic, constant
currency) 2 - 4% 0 - 2%
ARR growth y/y (organic, constant currency) N/A 6 - 8%
Recurring revenue $285 - $290 $1,140 - $1,150
Recurring revenue growth y/y (organic,
constant currency) 3 - 5% 5 - 6%
Adjusted Operating Margin 27% 30%
Free Cash Flow Margin N/A 20%
See the section entitled "Explanation of Non-GAAP Financial Measures" and the reconciliation of GAAP measures to non-GAAP measures at the end of this release.
Conference Call Information
Octave will host a conference call today, August 12, 2026, to discuss its results at 8:00 a.m. Eastern time. The call will be available live via webcast on Octave's website at https://investors.octave.com. A webcast replay of the event will also be available at https://investors.octave.com
Date: August 12, 2026
Time: 8:00 a.m. ET; 14:00 CEST
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact, including, without limitation, statements regarding our financial guidance, expected revenue, annual recurring revenue, recurring revenue, Adjusted operating margin, Adjusted net income per share, weighted average shares outstanding, Free Cash Flow margin, future financial position, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, are forward-looking statements. Use of words such as "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "seeks," "intends," "anticipates," "continues," "forecasts," "target," "outlook," "objective," "goal" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.
Forward-looking statements are based on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives and financial needs, and on a number of assumptions. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, among other things, customer demand for our software solutions, subscription license activity, SaaS adoption, pricing and packaging initiatives, macroeconomic conditions, our ability to identify, consummate and successfully integrate strategic acquisitions, our ability to successfully operate as an independent public company following the spin-off from Hexagon, the timing and costs associated with separation-related activities, our ability to generate sufficient cash flows and comply with the terms of our indebtedness, our ability to execute our growth strategies, and other risks and uncertainties included under the section titled "Risk Factors" in the Information Statement attached as Exhibit 99.1 to Octave's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2026 available on our investor relations website at investors.octave.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and those discussed in other documents we file with the SEC. All information provided in this press release and in the attachments is as of August 12, 2026. You should not rely upon forward--looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward--looking statements will be achieved or occur, including any expected or targeted financial or operating results. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of
the forward--looking statements. Except as required by law, we undertake no obligation to update publicly any forward--looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in our expectations.
Investor Relations Contact
Elizabeth Chwalk, VP, Investor Relations, elizabeth.chwalk@octave.com
investors@octave.com
This information is information that Octave Intelligence plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 13:00 CEST on 12 August 2026.
Media: media@octave.com
###
OCTAVE INTELLIGENCE PLC
Condensed Consolidated Balance Sheets (Unaudited)
In thousands (except per share amounts)
As of
-----------------------------
June 30, December 31,
2026 2025
----------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 304,147 $ 156,069
Accounts receivable, net 375,640 400,686
Prepaids and other current assets 98,300 100,008
---------- -------------
Total current assets 778,087 656,763
Property and equipment, net 23,417 54,642
Property and equipment held for sale 30,888 --
Operating lease right-of-use assets 52,037 50,605
Goodwill 4,554,993 6,221,366
Intangible assets, net 1,161,836 1,649,408
Deferred income taxes 31,441 29,903
Other noncurrent assets 57,051 33,564
---------- -------------
Total assets $6,689,750 $ 8,696,251
========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 54,834 $ 48,765
Accrued compensation 90,328 113,532
Deferred revenue 436,983 380,612
Operating lease liabilities 13,991 15,683
Other current liabilities 160,153 94,282
---------- -------------
Total current liabilities 756,289 652,874
Long-term debt 621,284 --
Operating lease liabilities - noncurrent 39,604 36,770
Deferred income taxes 152,584 269,152
Other noncurrent liabilities 40,039 59,820
---------- -------------
Total liabilities 1,609,800 1,018,616
---------- -------------
EQUITY
Preferred shares, $0.01 par value;
1,000,000 shares authorized; no shares
issued -- --
Class A Ordinary Shares, $0.01 par value;
4,500,000 shares authorized 110 --
Class B Ordinary Shares, $0.01 par value;
4,500,000 shares authorized 2,574 --
Additional paid-in-capital 6,783,958 --
Net investment by Hexagon -- 7,749,558
Retained earnings (1,629,928) --
Accumulated other comprehensive loss (76,764) (71,923)
---------- -------------
Total equity 5,079,950 7,677,635
---------- -------------
Total liabilities and equity $6,689,750 $ 8,696,251
========= =========
OCTAVE INTELLIGENCE PLC
Condensed Consolidated Statements of Operations (Unaudited)
In thousands (except per share amounts)
Three Months Ended June
30, Six Months Ended June 30,
----------------------- -------------------------
2026 2025 2026 2025
------------ --------- ------------ -----------
Revenue:
Subscriptions $ 282,813 $267,334 $ 561,993 $526,166
Licenses 39,104 50,983 74,229 93,622
----------- -------- ----------- --------
Subscriptions
and licenses 321,917 318,317 636,222 619,788
Services and other 76,497 95,024 148,693 176,357
----------- -------- ----------- --------
Total revenue 398,414 413,341 784,915 796,145
----------- -------- ----------- --------
Cost of revenue:
Cost of
subscriptions and
licenses 39,980 41,724 83,766 81,208
Cost of services
and other 52,783 65,190 97,820 125,268
----------- -------- ----------- --------
Total cost of
revenue 92,763 106,914 181,586 206,476
----------- -------- ----------- --------
Gross profit 305,651 306,427 603,329 589,669
----------- -------- ----------- --------
Operating expenses:
Research and
development 54,578 46,442 102,064 89,844
Sales and
marketing 99,973 97,903 196,493 186,541
General and
administrative 39,469 43,467 82,061 79,859
Amortization of
intangible
assets 44,570 38,284 87,563 75,637
Other operating
expense (income),
net 2,136,986 (16,529) 2,141,439 (12,976)
----------- -------- ----------- --------
Total operating
expenses 2,375,576 209,567 2,609,620 418,905
----------- -------- ----------- --------
Income (loss) from
operations (2,069,925) 96,860 (2,006,291) 170,764
Other income
(expense), net 3,754 (340) 4,102 211
Interest expense,
net (1,757) -- (1,757) --
----------- -------- ----------- --------
Income (loss) before
income tax (2,067,928) 96,520 (2,003,946) 170,975
Provision (benefit)
for income taxes (97,250) 21,352 (80,649) 36,321
----------- -------- ----------- --------
Net income (loss) $(1,970,678) $ 75,168 $(1,923,297) $134,654
Earnings per share -
basic and diluted $ (7.34) $ 0.28 $ (7.16) $ 0.50
========== ======= ========== =======
Weighted average
ordinary shares
outstanding - basic
and diluted 268,438 268,438 268,438 268,438
OCTAVE INTELLIGENCE PLC
Condensed Consolidated Statements of Comprehensive
Income (Loss) (Unaudited)
In thousands
Three Months Ended Six Months Ended June
June 30, 30,
---------------------- ------------------------
2026 2025 2026 2025
------------ -------- ------------ ----------
Net income (loss) $(1,970,678) $ 75,168 $(1,923,297) $134,654
Other comprehensive
income (loss), net
of taxes:
Foreign currency
translation
adjustments 2,797 30,335 (4,841) 46,516
----------- -------- ----------- --------
Total other
comprehensive
income
(loss), net
of taxes 2,797 30,335 (4,841) 46,516
----------- -------- ----------- --------
Comprehensive income
(loss) $(1,967,881) $105,503 $(1,928,138) $181,170
========== ======= ========== =======
OCTAVE INTELLIGENCE PLC
Condensed Consolidated Statements of Equity (Unaudited)
In thousands
Class A Ordinary Class B Ordinary
Shares Shares
-------------------- -------------------- -------- ---
Net Accumulated other
Additional investment Retained comprehensive
Shares Amount Shares Amount paid-in-capital by Hexagon earnings income (loss) Total equity
------- ---------- ------- ---------- ------------------- ----------- ---------- ----------------- -------------
Balance as
of December
31, 2024 -- $ -- -- $ -- $ -- $7,795,874 $ -- $ (122,187) $7,673,687
-------- ------ -------- ------ ------ --------- ----- --------- ---------
Net income -- -- -- -- -- 59,486 -- -- 59,486
Foreign
currency
translation
adjustments -- -- -- -- -- -- -- 16,181 16,181
Net
transfers
to Hexagon -- -- -- -- -- (71,575) -- -- (71,575)
------------- ------ ------------- ---------------- --- ---------- --- ----- ------------- ----------
Balance as
of March
31, 2025 -- $ -- -- $ -- $ -- $7,783,785 $ -- $ (106,006) $7,677,779
-------- --- ------ -------- --- ------ -------- ------ --------- --- ----- --------- ---------
Net income -- -- -- -- -- 75,168 -- -- 75,168
Foreign
currency
translation
adjustments -- -- -- -- -- -- -- 30,335 30,335
Net
transfers
to Hexagon -- -- -- -- -- (87,819) -- -- (87,819)
------------- ------ ------------- ---------------- --- ---------- --- ----- ------------- ----------
Balance as
of June 30,
2025 -- $ -- -- $ -- $ -- $7,771,134 $ -- $ (75,671) $7,695,463
-------- --- ------ -------- --- ------ -------- ------ --------- --- ----- --------- ---------
Class A
ordinary Class B ordinary
shares shares
--------------- ------------------
Accumulated
other
Additional Net investment Retained comprehensive
Shares Amount Shares Amount paid-in-capital by Hexagon earnings income (loss) Total equity
------ ------- ------- --------- ---------------- ------------
Balance as of
December 31,
2025 -- $ -- -- $ -- $ -- $7,749,558 $ -- $(71,923) $7,677,635
------ ------- --------- ------- ---- ---------
Net income -- -- -- -- -- 47,381 -- -- 47,381
Foreign
currency
translation
adjustments -- -- -- -- -- -- -- (7,638) (7,638)
Net transfers
to Hexagon -- -- -- -- -- (56,753) -- -- (56,753)
------ ------- ------- --------- ---------------- ---------- ----------- -------- ----- ----------
Balance as of
March 31,
2026 -- $ -- -- $ -- $ -- $7,740,186 $ -- $(79,561) $7,660,625
------ ------- --------- ------- ---- ---------
Net loss -- -- -- -- -- (340,750) (1,629,928) -- (1,970,678)
Foreign
currency
translation
adjustments -- -- -- -- -- -- -- 2,797 2,797
Net transfers
from
Hexagon -- -- -- -- -- 10,821 -- -- 10,821
Cash payment
to Hexagon
in
connection
with the
Distribution -- -- -- -- -- (625,000) -- -- (625,000)
Issuance of
Ordinary
Shares in
connection
with the
Distribution 11,025 110 257,413 2,574 6,782,573 (6,785,257) -- -- --
Stock-based
compensation
expense -- -- -- -- 1,385 -- -- -- 1,385
------ ------- ------- --------- ---------------- ---------- ----------- -------- ----- ----------
Balance as of
June 30,
2026 11,025 $ 110 257,413 $ 2,574 $ 6,783,958 $ -- $(1,629,928) $(76,764) $5,079,950
====== ====== ======= ======== =============== ========= ========== ======= ==== =========
OCTAVE INTELLIGENCE PLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
In thousands
Six Months Ended June 30,
---------------------------------
2026 2025
-------------------- -----------
Cash flows from operating
activities:
Net income (loss) $ (1,923,297) $134,654
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 93,416 81,648
Stock-based compensation expense 6,703 6,802
Deferred income taxes (97,472) 12,183
Impairment charges 2,134,660 --
Remeasurement of contingent
consideration reserves (2,622) (12,544)
Restructuring charges (10,103) (975)
Other (112) 1,546
Changes in assets and
liabilities, net of effect from
acquisitions:
Accounts receivable 22,678 17,979
Prepaids and other current
assets 2,382 (5,979)
Accounts payable 4,080 (396)
Accrued compensation (23,204) (14,969)
Deferred revenue 31,492 29,972
Other assets and liabilities 2,277 (1,403)
------------------- --------
Net cash provided by operating
activities 240,878 248,518
------------------- --------
Cash flows from investing
activities:
Purchases of property and
equipment (5,095) (3,540)
Capitalization of software
development costs (60,271) (66,443)
Acquisitions, net of cash
acquired (11,115) (16,751)
Purchases of investments (15,000) --
Proceeds from divestitures -- 4,136
Other (773) (1,305)
------------------- --------
Net cash used in investing
activities (92,254) (83,903)
------------------- --------
Cash flows from financing
activities:
Proceeds from issuance of term
loans 524,420 --
Proceeds from revolving credit
facility 149,070 --
Repayment of revolving credit
facility (46,500) --
Debt issuance costs (3,779) --
Net transfers to Hexagon (16,048) (166,195)
Cash payment to Hexagon in
connection with the
Distribution (625,000) --
Payment of contingent
consideration (606) --
Proceeds from other short-term
borrowings 22,903 --
------------------- --------
Net cash provided by (used in)
financing activities 4,460 (166,195)
------------------- --------
Effect of foreign exchange rate
changes on cash and cash
equivalents (5,006) 6,015
------------------- --------
Net increase in cash and cash
equivalents 148,078 4,435
Cash and cash equivalents at
beginning of period 156,069 97,214
------------------- --------
Cash and cash equivalents at end of
period $304,147 $101,649
=================== ========
DEFINITIONS OF KEY BUSINESS METRICS
We believe the presentation of key business metrics provides incremental useful information to investors regarding our results of operations. To the extent material, we disclose below the additional purposes, if any, for which our management uses these key business metrics. Our key business metrics may vary significantly from period-to-period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies. These metrics are based on management calculations derived from available operational data.
Recurring revenues includes monthly subscription licenses, SaaS-based subscriptions and maintenance subscriptions.
Annualized Recurring Revenue ("ARR") is a key business metric we use to evaluate the scale and growth of our business as well as to assist in the evaluation of underlying trends in our business. ARR represents the annualized value of recurring revenue from our subscription licenses, SaaS-based subscriptions and maintenance subscriptions. It excludes revenue from perpetual software licenses, non-recurring services and other revenues. The company calculates ARR as the sum of: (i) the annualized value of monthly recurring revenue recognized from SaaS-based subscriptions and maintenance subscriptions in the last month of the most recently completed quarter, plus (ii) the annualized value of recurring revenue recognized from subscription licenses in the most recently completed quarter.
EXPLANATION OF NON-GAAP FINANCIAL MEASURES
Below are definitions and reconciliations of certain non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. Management believes that, when considered together with reported amounts, these measures are useful to investors and management in understanding our ongoing operations and in the analysis of ongoing operating trends. Management believes these non-GAAP financial measures provide investors with a more meaningful measure of company performance period-to-period, align the measures to how management evaluates performance internally, and make it easier for investors to compare our performance to peers. These measures should be considered in addition to, and not as replacements for, the most directly comparable U.S. GAAP measure. The non-GAAP financial measures we use are as follows:
Adjusted Income from Operations--Income (Loss) from Operations
Adjusted income from operations is defined as Income (loss) from operations adjusted for amortization of acquired intangibles; amortization of developed technologies; stock-based compensation expense; impairment charges; acquisition costs and charges; restructuring charges; stand-up costs; and select other non-recurring items.
Adjusted Operating Margin--Operating Margin
Adjusted operating margin is defined as Operating margin adjusted for amortization of acquired intangibles; amortization of developed technologies; stock-based compensation expense; impairment charges; acquisition costs and charges; restructuring charges; stand-up costs; and select other non-recurring items.
Adjusted Net Income--Net Income (Loss)
Adjusted net income is defined as Net income (loss) adjusted for amortization of acquired intangibles; amortization of developed technologies; stock-based compensation expense; impairment charges; acquisition costs and charges; restructuring charges; stand-up costs; select other non-recurring items; and a corresponding adjustment to income tax expense for the impact of these adjustments.
Adjusted Earnings per share--Earnings per share
Adjusted earnings per share is defined as Adjusted net income divided by the weighted-average number of ordinary shares outstanding for the period, presented on a diluted basis.
Free Cash Flow--Cash Flow from Operations
Free cash flow is defined as cash flow from operations net of capital expenditures, including purchases of property and equipment and capitalization of software development costs. These expenditures consist primarily of facility improvements, office equipment, computer equipment, and software development costs. We believe that free cash flow, in conjunction with cash from operations, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations. Free cash flow is not a measure of cash available for discretionary expenditures.
Free Cash Flow Margin--Cash Flow from Operations Margin
Free cash flow margin is defined as free cash flow divided by revenue. We believe that free cash flow margin, in conjunction with cash from operations and free cash flow, is a useful measure of liquidity since capital expenditures are a necessary component of ongoing operations. Free cash flow is not a measure of cash available for discretionary expenditures.
Description of Adjustments
Amortization of acquired intangibles and amortization of developed technologies are non-cash expenses that are impacted by the timing and magnitude of our acquisitions and additions to developed technologies. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Stock-based compensation expense is a non-cash expense relating to equity-based awards issued to executive officers, employees and outside directors, consisting of performance share awards. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Impairment charges are non-cash expenses related to long-lived assets for which it was determined the carrying value of such assets was partially or fully unrecoverable. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Acquisition costs and charges are direct costs of potential and completed acquisitions and expenses related to acquisition integration activities, including transaction fees, due diligence costs, severance and professional fees. Subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are also included within acquisition costs and charges. The occurrence and amount of these costs and charges varies depending on the timing and size of acquisitions and subsequent adjustments to our initial estimated amount of contingent consideration. We believe the assessment of our operations excluding these costs and charges is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Restructuring charges include excess facility restructuring costs; impairment and accretion expenses related to the lease assets of exited facilities; sublease income from previously impaired facilities; severance charges resulting from employee reduction actions; and third-party professional consulting fees related to modifications of our business strategy. These charges vary in size based on restructuring plans and duration. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Stand-up costs include expenses associated with the spin-off and stand up of functions required to operate as a standalone public entity, these costs primarily relate to system implementation expenses, legal and consulting costs, development of our brand and other matters. We believe the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Other non-recurring items include selected costs and charges that do not naturally conform to one of the adjustments above, including certain litigation matters net of expected insurance recoveries. We believe the assessment of our operations excluding these costs and charges is relevant to our assessment of internal operations and comparisons to the performance of other companies in our industry.
Income tax adjustments include the tax impact of the items excluded from Adjusted net income.
We use these non-GAAP financial measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results and cash flows without items that are not, in our view, indicative of our core operating results. We believe that these non-GAAP financial measures, when used in conjunction with the most comparable U.S. GAAP measure, help illustrate underlying trends in our business, and we use the measures to establish budgets and operational goals (communicated internally and externally) for managing our business and evaluating our performance. We believe that providing non-GAAP financial measures also affords investors a view of our operating results and cash flows that may be more easily compared to the results of other companies in our industry that use similar financial measures to supplement their U.S. GAAP results.
The items excluded from the non-GAAP financial measures often have a material impact on our financial results, certain of those items are non-recurring, and other such items often recur. Accordingly, the non-GAAP financial measures included herein should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with U.S. GAAP. The following tables reconcile each of these non-GAAP financial measures to its most closely comparable U.S. GAAP measure on our financial statements.
Guidance for adjusted financial measures excludes amortization of acquired intangibles, amortization of developed technologies, stock-based compensation expense, impairment charges, acquisition costs and charges, restructuring charges, stand-up costs, other non-recurring items and related tax impacts.
Octave has not provided forecasts of the most directly comparable U.S. GAAP measures because certain items required to calculate those U.S. GAAP measures are outside of the company's control or cannot be reasonably predicted without unreasonable effort. With respect to Adjusted operating margin and Adjusted earnings per share, these items include the adjustment items described above. With respect to Free cash flow margin, the Company is unable to reasonably predict future operating cash flows, capital expenditures and capitalized software development costs without unreasonable effort. Accordingly, reconciliations of the forecasts of Adjusted operating margin, Adjusted earnings per share, Free cash flow margin, and organic constant currency growth to the most directly comparable U.S. GAAP measures have not been provided. The excluded items are uncertain, depend on various factors, and could have a material impact on the corresponding measures calculated in accordance with U.S. GAAP.
NON-GAAP FINANCIAL MEASURES
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
2026 2025 2026 2025
---------------- ------------- ---------------- -------------
Income (loss) from
operations $(2,069,925) $ 96,860 $(2,006,291) $170,764
Amortization of
acquired
intangibles 18,764 18,445 36,787 36,888
Amortization of
developed
technologies 26,101 20,124 51,357 39,319
Stock-based
compensation
expense 3,221 3,273 6,703 6,802
Impairment
charges 2,134,660 -- 2,134,660 --
Acquisition
costs and
charges 150 (11,006) (2,472) (12,544)
Restructuring
charges 1,625 657 5,352 4,040
Stand-up costs 1,436 356 2,504 356
Other
non-recurring
items -- -- 3,000 --
----------- -------- ----------- --------
Adjusted income from
operations $ 116,032 $128,709 $ 231,600 $245,625
========== ======= ========== =======
Operating margin (520) % 23 % (256) % 21 %
Amortization of
acquired
intangibles 5 4 5 5
Amortization of
developed
technologies 7 5 7 5
Stock-based
compensation
expense 1 1 1 1
Impairment
charges 536 -- 272 --
Acquisition
costs and
charges -- (3) -- (2)
Restructuring
charges -- -- 1 1
Stand-up costs -- -- -- --
Other
non-recurring
items -- -- -- --
----------- -------- ----------- --------
Adjusted operating
margin 29 % 31 % 30 % 31 %
=========== ======== =========== ========
Net income (loss) $(1,970,678) $ 75,168 $(1,923,297) $134,654
Amortization of
acquired
intangibles 18,764 18,445 36,787 36,888
Amortization of
developed
technologies 26,101 20,124 51,357 39,319
Stock-based
compensation
expense 3,221 3,273 6,703 6,802
Impairment
charges 2,134,660 -- 2,134,660 --
Acquisition
costs and
charges 150 (11,006) (2,472) (12,544)
Restructuring
charges 1,625 657 5,352 4,040
Stand-up costs 1,436 356 2,504 356
Other
non-recurring
items -- 335 3,000 335
Tax impacts (119,867) (9,054) (130,162) (17,973)
----------- -------- ----------- --------
Adjusted net income $ 95,412 $ 98,298 $ 184,432 $191,877
========== ======= ========== =======
Earnings per share $ (7.34) $ 0.28 $ (7.16) $ 0.50
Adjustments 7.70 0.08 7.85 0.21
----------- -------- ----------- --------
Adjusted earnings
per share $ 0.36 $ 0.36 $ 0.69 $ 0.71
========== ======= ========== =======
Cash flow from
operations $ 125,433 $123,009 $ 240,878 $248,518
Purchases of
property and
equipment (2,724) (2,031) (5,095) (3,540)
Capitalization
of software
development
costs (29,211) (34,092) (60,271) (66,443)
----------- -------- ----------- --------
Free cash flow $ 93,498 $ 86,886 $ 175,512 $178,535
========== ======= ========== =======
Operating cash flow
margin 31 % 30 % 31 % 31 %
Purchases of
property and
equipment (1) -- (1) --
Capitalization
of software
development
costs (7) (8) (8) % (8) %
----------- -------- ----------- --------
Free cash flow
margin 23 % 21 % 22 % 22 %
=========== ======== =========== ========
Constant Currency
Constant currency is a non-GAAP financial measure that presents our revenue excluding the estimated effects of foreign currency exchange rate fluctuations. A significant amount of our operations is conducted in foreign currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We use constant currency to evaluate the underlying performance of the business, and we believe it is helpful for investors to present operating results on a comparable basis period-over-period to evaluate our underlying performance.
In reporting period-over-period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current and prior period results on a functional currency basis to our reporting currency using the prior period average foreign currency exchange rates from which the transaction occurred.
Reconciliation of revenue to revenue in constant currency for the three and six months ended June 30, 2026:
Three months ended June 30,
2026 Six months ended June 30, 2026
------------------------------- -------------------------------
Impact of Impact of
Foreign Foreign
Exchanges Exchanges
at 2025 Constant % as Organic % CC at 2025 Constant % as Organic % CC
Actual Rates Currency Reported growth Actual Rates Currency Reported growth
-------- ----------- -------- ---------- -------------- -------- ----------- -------- ---------- --------------
Revenue:
Subscriptions $282,813 $ 2,375 $280,438 6% 6% $561,993 $ 11,779 $550,214 7% 6%
Licenses 39,104 398 38,706 (23)% (23)% 74,229 2,439 71,790 (21)% (23)%
-------- ----------- -------- -------- ----------- --------
Subscriptions
and licenses 321,917 2,773 319,144 1% 2% 636,222 14,218 622,004 3% 2%
Services and
other 76,497 1,368 75,129 (19)% (10)% 148,693 4,386 144,307 (16)% (6)%
-------- ----------- -------- -------- ----------- --------
Total revenue $398,414 $ 4,141 $394,273 (4)% (1)% $784,915 $ 18,604 $766,311 (1)% -- %
======= ======= ======= ======= ======= =======
Organic Constant Currency Growth--Revenue Growth
Organic constant currency growth presents period-over-period revenue growth excluding both the estimated effects of foreign currency exchange rate fluctuations (as described under Constant Currency above) and the impact of revenue attributable to businesses acquired or divested during the current or comparative period. We believe organic constant currency growth is useful to investors because it presents revenue growth from our existing operations on a comparable basis period-over-period.