Hexagon Q4’25 preview: Profitability to suffer amid transformation

Source: Inderes & Bloomberg  (consensus includes 16 estimates)

Hexagon will announce its Q4’2025 interim report on Friday, January 30. We expect the company to demonstrate a continued gradual recovery in organic growth that will, however, be offset by currency headwinds. Profitability is likely to decline due to FX headwinds and the ongoing costs associated with the company's major strategic transformation, even if the company has already started to implement a new cost-saving program. The split into two different listed entities during H1’26 is underway and could facilitate a comeback toward a profitable growth path by reducing the complexity of the group structure and improving the strategic focus.

Organic growth recovery to continue

We estimate Hexagon’s Q4 revenue to reach 1,440 MEUR, representing organic growth of 4% (flat against Q3, up from 2% in H1’25). Currency movements, however, have burdened sales by 5%, we estimate. Autonomous Solutions is expected to remain the fastest-growing division, supported by strong demand in aerospace, defense, and mining. We also anticipate a continued slight recovery in Manufacturing Intelligence and Geosystems, which have been emerging from a prolonged cyclical downturn. However, the Octave division’s performance remains a question after weak 1% organic growth in Q3 caused by sluggish perpetual license sales (we forecast 2% for Q4). Recurring revenue, which grew 6% organically in the previous quarter, is expected to continue outperforming the group average, providing a bit of a cushion against volatility caused by hardware and perpetual license sales.

Profitability to decline ahead of planned cost-cutting program

Our estimate for Q4 adjusted EBIT stands at 421 MEUR, implying an adjusted EBIT margin of 29.2%. This represents a clear drop against Q4’24 (31.1%) owing to the increased costs and pressure from currencies (FX impact on EBIT estimated at -34 MEUR). Part of the cost increase is linked to the administrative hassle regarding the upcoming spin-off of Octave. We expect the company to begin realizing the first benefits of its 110 MEUR cost-saving program already in Q4, but most of the benefits are not due until 2026. Following the substantial one-off restructuring charges of 113 MEUR and impairments of 186 MEUR recorded in Q3, we expect a "cleaner" reported EBIT in Q4, although some integration and separation costs may still persist. We forecast the company to cut its dividend to EUR 0.13 per share (2024: 0.14) due to weakened profitability for the full year.

Strategic split and divestment closing dominate 2026 outlook

The investment case for Hexagon is currently defined by its massive strategic transformation. The company is on track to split into two listed entities in H1’2026: Hexagon Core, focusing on sensors and robotics, and Octave, a pure-play SaaS business. A key milestone to watch is the closing of the Design & Engineering business divestment to Cadence for 2.7 BEUR, which is expected in Q1’2026. This transaction is anticipated to generate proceeds of 1.4 BEUR and significantly strengthen the balance sheet ahead of the split.

For 2026, we forecast a continued turnaround with organic growth reaching 5% and the adjusted EBIT margin recovering toward 28.9%. Key watchpoints for investors include success in streamlining the cost base and commentary regarding the global industrial demand environment amid high geopolitical uncertainty.