Octave Intelligence plc 10-Q

ITEM 1. Financial Statements. OCTAVE BUSINESS OF HEXAGON Condensed Combined Balance Sheets (Unaudited) In thousands As of March 31, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 175,506 $ 156,069 Accounts receivable, net 345,875 400,686 Prepaids and other current assets 101,358 100,008 Total current assets 622,739 656,763 Property and equipment, net 53,864 54,642 Operating lease right-of-use assets 46,997 50,605 Goodwill 6,216,181 6,221,366 Intangible assets, net 1,635,141 1,649,408 Deferred income taxes 29,801 29,903 Other noncurrent assets 29,140 33,564 Total assets $ 8,633,863 $ 8,696,251 LIABILITIES Current liabilities: Accounts payable $ 32,507 $ 48,765 Accrued compensation 100,193 113,532 Deferred revenue 415,371 380,612 Operating lease liabilities 14,628 15,683 Other current liabilities 71,066 94,282 Total current liabilities 633,765 652,874 Operating lease liabilities - noncurrent 34,736 36,770 Deferred income taxes 268,496 269,152 Other noncurrent liabilities 36,241 59,820 Total liabilities 973,238 1,018,616 Commitments and contingencies (Note 11) EQUITY Net Parent investment 7,740,186 7,749,558 Accumulated other comprehensive loss ( 79,561 ) ( 71,923 ) Total equity 7,660,625 7,677,635 Total liabilities and equity $ 8,633,863 $ 8,696,251 See the accompanying Notes to Condensed Combined Financial Statements. 1 Table of Contents OCTAVE BUSINESS OF HEXAGON Condensed Combined Statements of Operations (Unaudited) In thousands (except per share amounts) Three Months Ended March 31, 2026 2025 Revenue: Subscriptions $ 279,180 $ 258,832 Licenses 35,125 42,639 Subscriptions and licenses 314,305 301,471 Services and other 72,196 81,333 Total revenue 386,501 382,804 Cost of revenue: Cost of subscriptions and licenses 43,786 39,484 Cost of services and other 45,037 60,078 Total cost of revenue 88,823 99,562 Gross profit 297,678 283,242 Operating expenses: Research and development 47,486 43,402 Sales and marketing 96,520 88,638 General and administrative 42,592 36,392 Amortization of intangible assets 42,993 37,353 Other operating expense, net 4,453 3,553 Total operating expenses 234,044 209,338 Income from operations 63,634 73,904 Other income, net 348 551 Income before income tax 63,982 74,455 Provision for income taxes 16,601 14,969 Net income $ 47,381 $ 59,486 Earnings per share - basic and diluted $ 0.18 $ 0.22 Weighted average ordinary shares outstanding - basic and diluted 268,438 268,438 See the accompanying Notes to Condensed Combined Financial Statements. 2 Table of Contents OCTAVE BUSINESS OF HEXAGON Condensed Combined Statements of Comprehensive Income (Unaudited) In thousands Three Months Ended March 31, 2026 2025 Net income $ 47,381 $ 59,486 Other comprehensive (loss) income, net of taxes: Foreign currency translation adjustments ( 7,638 ) 16,181 Total other comprehensive (loss) income, net of taxes ( 7,638 ) 16,181 Comprehensive income $ 39,743 $ 75,667 See the accompanying Notes to Condensed Combined Financial Statements. 3 Table of Contents OCTAVE BUSINESS OF HEXAGON Condensed Combined Statements of Equity (Unaudited) In thousands Net Parent investment Accumulated other comprehensive 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 Parent ( 71,575 ) — ( 71,575 ) Balance as of March 31, 2025 $ 7,783,785 $ ( 106,006 ) $ 7,677,779 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 Parent ( 56,753 ) — ( 56,753 ) Balance as of March 31, 2026 $ 7,740,186 $ ( 79,561 ) $ 7,660,625 See the accompanying Notes to Condensed Combined Financial Statements. 4 Table of Contents OCTAVE BUSINESS OF HEXAGON Condensed Combined Statements of Cash Flows (Unaudited) In thousands Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 47,381 $ 59,486 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,955 40,315 Stock-based compensation expense 3,482 3,529 Deferred income taxes ( 553 ) 5,782 Remeasurement of contingent consideration reserves ( 2,622 ) ( 1,538 ) Restructuring charges ( 8,072 ) ( 263 ) Other 978 268 Changes in assets and liabilities, net of effect from acquisitions: Accounts receivable 52,122 13,779 Prepaids and other current assets ( 1,745 ) ( 4,453 ) Accounts payable ( 16,121 ) ( 11,522 ) Accrued compensation ( 12,650 ) ( 18,105 ) Deferred revenue 15,135 31,216 Other assets and liabilities ( 7,845 ) 7,015 Net cash provided by operating activities 115,445 125,509 Cash flows from investing activities: Purchases of property and equipment ( 2,371 ) ( 1,509 ) Capitalization of software development costs ( 31,060 ) ( 32,351 ) Acquisitions, net of cash acquired — ( 11,653 ) Other 357 ( 53 ) Net cash used in investing activities ( 33,074 ) ( 45,566 ) Cash flows from financing activities: Net transfers to Parent ( 60,235 ) ( 75,104 ) Payment of contingent consideration ( 606 ) — Net cash used in financing activities ( 60,841 ) ( 75,104 ) Effect of foreign exchange rate changes on cash and cash equivalents ( 2,093 ) 2,537 Net increase in cash and cash equivalents 19,437 7,376 Cash and cash equivalents at beginning of period 156,069 97,214 Cash and cash equivalents at end of period $ 175,506 $ 104,590 Supplemental cash flow information: Income taxes paid, net of refunds $ 7,554 $ ( 229 ) See the accompanying Notes to Condensed Combined Financial Statements. 5 Table of Contents OCTAVE BUSINESS OF HEXAGON Notes to Condensed Combined Financial Statements (Unaudited) Dollars in thousands, unless noted otherwise NOTE 1. BACKGROUND AND BASIS OF PRESENTATION Background The accompanying unaudited Condensed Combined Financial Statements and notes present the combined results of operations, financial position and cash flows of the Asset Lifecycle Intelligence (“ALI”), Safety, Infrastructure & Geospatial (“SIG”), ETQ and Bricsys businesses (collectively, “Octave” or the “Company”) of Hexagon AB (“Hexagon” or “Parent”). Octave provides a suite of software solutions that help organizations design, build, operate, and protect their physical assets, people and critical infrastructure. These workflow environments often involve different teams, specialized tools, and large volumes of information that are difficult to integrate or interpret without context. When data is organized into separate systems or isolated workflows, decision making slows down, quality issues are harder to identify, and teams may miss early signs of risk or system failure. The Company’s platform connects data, events, and workflows across these environments and applies context-aware intelligence to help customers understand what is happening, what may happen next, and how actions in one area affect conditions in another. By providing a clearer picture of current and emerging conditions, Octave’s software helps optimize the performance and reliability of the systems that teams depend on so they can act quicker and reduce risk. Octave refers to its suite of software solutions collectively as its platform, noting that different components of the software architecture are at various stages of technical integration and interoperability. On March 4, 2025, Hexagon announced that its board of directors had directed management to prepare for the spin-off of the Octave business into an independent, publicly-traded company through a tax-free, from both a U.S federal income and Swedish tax perspective, pro rata distribution of all the outstanding share capital of Octave to Hexagon shareholders via a Lex-ASEA distribution. On April 24, 2026, the general meeting of shareholders of Hexagon approved the Distribution of the Octave business into a separate publicly-traded company named Octave Intelligence plc. On May 22, 2026, the spin-off was consummated by means of a tax-free pro rata distribution (the “Distribution”) wherein each Hexagon shareholder of record on May 22, 2026 (the “Record Date”) received one (1) Octave Class A Ordinary Share for every ten (10) Hexagon Class A Shares and one (1) Octave Class B Ordinary Share for every ten (10) Hexagon Class B Shares held. Octave Class A Ordinary Shares were delivered to holders of Hexagon Class A Shares, Octave Class B Ordinary Shares were delivered to holders of Hexagon Class B Shares, other than affiliates of Hexagon, in the form of Swedish Depository Receipts (the “Octave SDRs”), and Octave Class B Ordinary Shares were delivered to holders of Hexagon Class B Shares that are Hexagon affiliates in book-entry form via Octave’s transfer agent. Following the Distribution, the Company commenced “regular way” trading as an independent public company whereby Octave Class B Ordinary Shares were listed under the ticker symbol “OCTV” on the Nasdaq Global Select Market and the Octave SDRs were listed under the ticker symbol “OCTV SDB” on Nasdaq Stockholm. Following the Distribution, Hexagon does not beneficially own any Octave ordinary shares. Basis of Presentation These Condensed Combined Financial Statements have been derived from the consolidated financial statements and accounting records of Hexagon. These Condensed Combined Financial Statements reflect the combined historical results of operations, financial position and cash flows of the Company for the periods presented as historically operated within Hexagon in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”). The Condensed Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. 6 Table of Contents These Condensed Combined Financial Statements have been prepared on the same basis as the annual Combined Financial Statements for the three years ended December 31, 2025 included 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 (“SEC”) on May 12, 2026 (the “Information Statement”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The December 31, 2025 Condensed Combined Balance Sheet included herein is derived from the audited Combined Financial Statements included in the Information Statement. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results expected for the remainder of the fiscal year. These unaudited Condensed Combined Financial Statements and accompanying Notes should be read in conjunction with the audited Combined Financial Statements and accompanying Notes for the year ended December 31, 2025 included in the Information Statement. All intracompany transactions have been eliminated. All significant intercompany transactions between Octave and Parent have been included in these Condensed Combined Financial Statements. For those transactions between the Company and Parent that are historically settled in cash, the Company has reflected such balances in the Condensed Combined Balance Sheets as due from related parties or due to related parties. The total net effect of the settlement of intercompany transactions not historically settled in cash are reflected in the Condensed Combined Statements of Cash Flows as a financing activity and in the Condensed Combined Balance Sheets as Net Parent investment, with the difference between the amounts presented in the Condensed Combined Statements of Equity and the Condensed Combined Statements of Cash Flows being attributable to stock-based compensation. Historically, Hexagon provided certain corporate functions to the Company and costs associated with these functions were allocated to the Company. These functions include, but are not limited to, corporate communications, executive management, legal, human resources, treasury, finance, accounting, information technology, and the related benefit costs associated with such functions, such as stock-based compensation. The costs of such services were allocated to the Company based on direct usage when identifiable, with the remainder allocated on a pro rata basis of revenue of the Company and Hexagon. The charges for these functions are included in Sales and marketing and General and administrative expenses in the Condensed Combined Statements of Operations. The Company believes the basis on which the expenses have been allocated are a reasonable reflection of the utilization of services provided to, or the benefit received by, Octave during the periods presented; however, they may not be indicative of the actual expense that would have been incurred had the Company been operating as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, pricing power, whether functions were outsourced or performed by employees, and strategic decisions made in areas such as information technology and corporate infrastructure. The Company is unable to quantify the amounts that it would have recorded during the historical periods on a standalone basis, as it is not practicable to do so. Going forward, the Company may perform these functions using its own resources or outsourced services. For an interim period, however, some of these functions may continue to be provided by the Parent under a transition services agreement following the Distribution. Hexagon utilizes a centralized treasury management function for financing its operations. The cash and cash equivalents held by Hexagon at the corporate level are not specifically identifiable to the Company and therefore have not been reflected in the Condensed Combined Balance Sheets. Cash transfers between Hexagon and the Company are accounted for through Net Parent investment. Cash and cash equivalents in the Condensed Combined Balance Sheets represent cash and cash equivalents directly identifiable to the Company and its operations. The Condensed Combined Financial Statements include certain assets and liabilities that have historically been held at the Hexagon corporate level but are specifically identifiable or otherwise attributable to the Company. Hexagon’s third-party long-term debt and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt and the Hexagon borrowings were not directly attributable to the Company. The income tax provision included in these Condensed Combined Financial Statements has been calculated using the separate return basis, as if the Company had filed separate tax returns. 7 Table of Contents NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies of the Company are set forth in Note 2, “Summary of Significant Accounting Policies” within the Company’s audited Combined Financial Statements as of December 31, 2025 included in the Information Statement. The Company includes herein certain updates to those policies, when applicable. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have a minimal impact on the Combined Statements of Operations, Combined Balance Sheets and Combined Statements of Cash Flows. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is intended to update the guidance in Topic 270 by improving navigability of the required interim disclosures, clarifying when that guidance is applicable and adding a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-11 on its Condensed Combined Financial Statements and related disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments in ASU 2025-06 remove the concept of development stages and introduce a principles-based model for capitalizing internal-use software costs, including those related to agile and cloud-based development. The guidance also consolidates website development costs under ASC 350-40 and enhances disclosure requirements related to software development activities. ASU 2025-06 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods, and should be applied prospectively, with optional retrospective or modified retrospective transition methods. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on its Combined Financial Statements and related disclosures. In November 2024, FASB issued ASU No. 2024-03, Income Statements-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires enhanced disclosure of income statement expense categories to improve transparency and provide financial statement users with more detailed information about the nature, amount, and timing of expenses impacting financial performance. ASU 2024-03 is effective for the Company for the annual reporting period beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in ASU 2024-03 may be adopted either on a prospective basis to financial statements issued for reporting periods after the effective date or on a retrospective basis to all periods presented. The Company is currently evaluating the impact of the adoption of ASU 2024-03; however, other than additional disclosure, the Company does not expect a change to the Combined Financial Statements. Recently Adopted Accounting Standards In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . This ASU provides entities with a practical expedient to simplify the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606 by allowing entities to assume that current conditions as of the balance sheet date will not change over the remaining life of such assets. The Company adopted ASU 2025-05 during the three months ended March 31, 2026. The adoption did not have a material impact on the Company’s Condensed Combined Financial Statements or related disclosures. 8 Table of Contents NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The Company’s revenue based on the timing of revenue recognition is as follows: Three Months Ended March 31, 2026 2025 Recurring revenue (1) $ 279,180 $ 258,832 Non-recurring revenue (2) 107,321 123,972 Total revenue $ 386,501 $ 382,804 ___________________________ (1) Includes monthly subscription licenses, SaaS-based subscriptions and maintenance subscriptions. (2) Includes perpetual software licenses and services and other revenue. The Company’s revenue consists of the following revenue streams: Three Months Ended March 31, 2026 2025 Revenue: Subscription licenses $ 72,362 $ 74,167 SaaS 84,669 67,849 Maintenance subscription 122,149 116,816 Subscriptions 279,180 258,832 Licenses 35,125 42,639 Subscriptions and licenses 314,305 301,471 Services and other 72,196 81,333 Total revenue $ 386,501 $ 382,804 Revenue by geographic region, based upon the location of the end customer, are as follows: Three Months Ended March 31, 2026 2025 Americas: (1) United States $ 145,892 $ 160,489 Other Americas 41,853 35,911 EMIA (2) 145,520 132,200 APAC (3) 53,236 54,204 Total revenue $ 386,501 $ 382,804 ___________________________ (1) Americas includes the United States, Canada, and Latin America. (2) EMIA includes Europe, Middle East, India, and Africa. (3) APAC includes the Asia-Pacific region, excluding India. Operations in Ireland, our country of domicile, are not material in all periods presented. 9 Table of Contents Contract Balances As of March 31, 2026 and December 31, 2025, the Company's contract assets relate to performance obligations completed in advance of the right to invoice and are included in Prepaids and other current assets in the Condensed Combined Balance Sheets. Contract assets were not material as of March 31, 2026, or December 31, 2025. Deferred revenue consists of billings made or payments received in advance of revenue recognition from subscriptions and services. The primary changes in the Company’s deferred revenue are due to the performance under the contracts and new billings made or payments received in advance of revenue recognition from service, installation, and support. The satisfaction of performance obligations typically lags behind payments received under revenue recognition from contracts with customers. Deferred revenues are short-term in nature and are generally recognized as revenue within 12 months. As of March 31, 2026 and December 31, 2025, total deferred revenue was $ 438.3 million and $ 426.1 million, respectively, and is included within Deferred revenue and Other noncurrent liabilities on the Condensed Combined Balance Sheets. Changes in the Company’s total deferred revenue balances primarily relates to additional deferrals through new billings and reduced deferrals through revenue recognition. For the three months ended March 31, 2026, the Company recognized $ 165.3 million of revenue that was included in the December 31, 2025 Deferred revenue balance. For the three months ended March 31, 2025, the Company recognized $ 128.7 million of revenue that was included in the December 31, 2024 Deferred revenue balance. Remaining Performance Obligations The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2026, amounts allocated to these remaining performance obligations are $ 438.3 million, of which the Company expects to recognize approximately 95 % over the next 12 months with the remaining amount thereafter. NOTE 4. ACQUISITIONS AND DIVESTITURES 2026 Acquisitions For the three months ended March 31, 2026, the Company did not complete any business combinations. 2025 Acquisitions For the three months ended March 31, 2025, the Company completed one business combination for aggregate consideration of $ 11.7 million, net of cash acquired. The total purchase consideration was allocated as follows: $ 0.7 million to acquired intangible assets, $ 11.6 million to goodwill, and $ 0.6 million to net tangible liabilities. The acquired intangible assets consisted primarily of customer relationships and trademarks, which were valued using the income approach. Of the goodwill recognized with this acquisition, none is expected to be deductible for tax purposes. The Company’s transaction costs related to this 2025 acquisition were not material. The financial results of this acquisition were included in the Condensed Combined Financial Statements from the acquisition date. 10 Table of Contents Contingent Consideration Some of the Company’s acquisitions contain contingent consideration which is based on the outcome of the acquired company earnings for a predetermined period. These contingent consideration liabilities are included in Other current liabilities and Other noncurrent liabilities in the Condensed Combined Balance Sheets, depending on the expected timing of settlement. Additions to contingent consideration recognized in connection with acquisitions are non-cash in nature. Payments of contingent consideration are cash in nature. Change in fair value is recognized in Other operating (income) expense, net in the Condensed Combined Statements of Operations. Activity related to the Company’s contingent consideration is as follows: Balance as of December 31, 2024 $ 61,017 Additions — Payments — Change in fair value ( 1,538 ) Balance as of March 31, 2025 $ 59,479 Balance as of December 31, 2025 $ 6,067 Additions — Payments ( 606 ) Change in fair value ( 2,622 ) Balance as of March 31, 2026 $ 2,839 NOTE 5. GOODWILL AND INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill are as follows: Balance as of December 31, 2025 $ 6,221,366 Acquisitions — Foreign currency translation adjustments ( 5,185 ) Balance as of March 31, 2026 $ 6,216,181 11 Table of Contents Intangible Assets Components of intangible assets other than goodwill are as follows: March 31, 2026 December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-life intangibles: Developed technology $ 514,527 $ ( 216,695 ) $ 297,832 $ 574,250 $ ( 266,368 ) $ 307,882 Customer relationships 651,893 ( 184,335 ) 467,558 652,028 ( 176,158 ) 475,870 Capitalized development expenses 1,040,376 ( 659,581 ) 380,795 921,399 ( 546,111 ) 375,288 Other Intangible Assets 67,123 ( 59,268 ) 7,855 78,007 ( 68,873 ) 9,134 Total definite-life intangibles 2,273,919 ( 1,119,879 ) 1,154,040 2,225,684 ( 1,057,510 ) 1,168,174 Indefinite-life intangibles: Trademarks 481,101 — 481,101 481,234 — 481,234 Total Intangible assets $ 2,755,020 $ ( 1,119,879 ) $ 1,635,141 $ 2,706,918 $ ( 1,057,510 ) $ 1,649,408 The aggregate amortization expense for definite-life intangibles are reflected in the Condensed Combined Statements of Operations as follows: Three Months Ended March 31, 2026 2025 Cost of subscriptions and licenses $ 286 $ 285 Amortization of intangible assets 42,993 37,353 Total amortization expense $ 43,279 $ 37,638 Capitalized Development Expenses For the three months ended March 31, 2026 and 2025, total costs capitalized were $ 31.1 million and $ 32.4 million, respectively. For the three months ended March 31, 2026 and 2025, the related amortization recorded within Amortization of intangible assets in the Condensed Combined Statements of Operations was $ 25.3 million and $ 19.1 million, respectively. 12 Table of Contents NOTE 6. OTHER BALANCE SHEET COMPONENTS A summary of certain balance sheet components is as follows: As of March 31, 2026 December 31, 2025 Accounts receivable, net: Trade receivables $ 281,457 $ 340,360 Unbilled receivables 85,163 80,741 Allowance for doubtful accounts ( 20,745 ) ( 20,415 ) Total Accounts receivable, net $ 345,875 $ 400,686 Prepaids and other current assets: Prepaid expenses $ 84,919 $ 82,950 Other current assets 16,439 17,058 Total Prepaids and other current assets $ 101,358 $ 100,008 Other current liabilities: Accrued expenses $ 48,866 $ 55,184 Accrued indirect taxes 12,207 18,904 Restructuring reserve 5,703 13,775 Other current liabilities 4,290 6,419 Total Other current liabilities $ 71,066 $ 94,282 NOTE 7. LEASES The Company’s operating lease portfolio includes office facilities and automobiles. The majority of the Company’s leases have remaining lease terms of one year to 10 years, some of which include options to extend the leases for five years or more. A portion of the Company’s real estate leases is subject to annual changes in the Consumer Price Index (“CPI”). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. For the three months ended March 31, 2026 and 2025, operating lease expense, which includes immaterial amounts of short-term leases and variable lease costs, was $ 4.6 million and $ 4.8 million, respectively. Lease term and discount rate information related to operating leases are as follows: As of March 31, 2026 December 31, 2025 Weighted-average remaining lease term (in years) 6.5 7.2 Weighted-average discount rate 5.1 % 4.0 % Supplemental cash flow information related to operating leases is as follows: Three Months Ended March 31, 2026 2025 Cash paid for amounts included in the measurement of operating lease liabilities $ 5,521 $ 5,155 Right-of-use assets obtained in exchange for operating lease obligations $ 9,246 $ 3,932 13 Table of Contents NOTE 8. EMPLOYEE BENEFIT PLANS Stock-based Compensation Plans The Company’s employees have historically participated in the Parent’s stock-based compensation plans. The following disclosures of stock-based compensation expense recognized by the Company are based on the awards and terms previously granted to the Company’s employees. Accordingly, the amounts presented are not necessarily indicative of future awards and do not necessarily reflect the results that the Company would have experienced as an independent company for the periods presented. The compensation cost recognized in the Condensed Combined Statements of Operations of the stock-based compensation arrangements is as follows: Three Months Ended March 31, 2026 2025 Cost of goods sold $ 314 $ 289 Sales and marketing 1,070 1,169 General and administrative 1,374 1,331 Research and development 724 740 Total stock-based compensation expense $ 3,482 $ 3,529 Defined Contribution Plans Certain employees of the Company participate in various defined contribution plans sponsored by the Parent, which include employees from other Hexagon subsidiaries. For the three months ended March 31, 2026 and 2025, defined contribution plan costs were $ 7.2 million and $ 9.4 million, respectively. NOTE 9. INCOME TAXES Provision for income taxes for interim periods are calculated using an estimate of the annual effective income tax rate for the full year to be applied to the respective interim period, taking into account year-to-date results and projected full year results as well as separate consideration for the effect of significant, infrequent or unusual items. Estimating the Provision for income taxes involves a significant amount of management judgment regarding interpretation of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws, projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among the jurisdictions in which the Company operates. Changes in any of these estimates could have a material impact on the Company’s provision for income taxes. For the three months ended March 31, 2026, the effective tax rate was 26 % compared to 20 % for the three months ended March 31, 2025. The difference between the effective tax rate and the statutory tax rate primarily relates to the jurisdictional mix of earnings and effects of cross-border transactions in preparation for the Distribution. In July 2025, Public Law 119-21, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted in the United States. The OBBBA introduces several significant changes, including the permanent extension and modification of certain expiring provisions of the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions taking effect in tax year 2025 and others phased in through 2027. There were no material impacts of this legislation on the Company's Condensed Combined Financial Statements to date; however, management will continue to evaluate the full impact of these legislative changes as more guidance becomes available. 14 Table of Contents The Company is currently under examination by the Internal Revenue Service (the “IRS”) for the years 2014 through 2020. In May 2026, the Company received draft notices of proposed adjustment (“NOPA”) from the IRS for the years 2019 and 2020, which relate primarily to tax method changes, net operating loss carryback claims, and Base Erosion and Anti-Abuse Tax (BEAT) liability on sales-based royalties. The Company disagrees with the draft NOPAs and has informed the IRS audit team of its intent to contest the draft NOPAs. NOTE 10. RESTRUCTURING CHARGES From time to time, the Company has initiated various restructuring plans in an effort to better align its resources with its business strategy. For the three months ended March 31, 2026 and 2025, the charges incurred were primarily comprised of severance payments and termination benefits related to headcount reductions and are included in Other operating expense, net in the Condensed Combined Statements of Operations. Activities resulting from restructuring plans are as follows: Balance as of December 31, 2024 $ 6,764 Charges 3,383 Utilization ( 3,646 ) Balance as of March 31, 2025 $ 6,501 Balance as of December 31, 2025 $ 13,775 Charges 3,727 Utilization ( 11,799 ) Balance as of March 31, 2026 $ 5,703 All liabilities for restructuring charges under these plans are included in Other current liabilities in the Condensed Combined Balance Sheets as of March 31, 2026 as the Company expects to make cash payments to settle most of these liabilities throughout 2026. NOTE 11. COMMITMENTS AND CONTINGENCIES The Company is subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of the business. The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on the results of operations and financial condition. The Company regularly reviews the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the Company’s judgments using the best information available at the time. Actions currently pending are in various stages and no material judgments or decisions have been rendered by hearing boards or courts in connection with such actions. The Company does not believe the outcome of these matters, individually or in the aggregate, will have a material effect on the Condensed Combined Financial Statements. 15 Table of Contents NOTE 12. RELATED PARTY TRANSACTIONS The Condensed Combined Financial Statements have been prepared on a standalone basis and are derived from the consolidated financial statements and accounting records of Hexagon. Related Party Sales One or more members of the Company’s Board of Directors is an executive officer of an entity whose parent company also controls certain customers of the Company. Any such Director does not control, and is not a director or executive officer of any entity that controls, any of those customers. The Company believes sales to those customers are and have been conducted in the ordinary course of business and on arm’s-length terms. Allocation of General Corporate Expenses The Condensed Combined Statements of Operations include expenses for certain centralized functions and other programs provided and administered by Hexagon. For the three months ended March 31, 2026 and 2025, allocations of general corporate expenses were $ 1.7 million and $ 2.6 million, respectively. NOTE 13. EARNINGS PER SHARE On May 22, 2026, the Distribution date, 11,025,000 Octave Class A Ordinary Shares and 257,412,788 Octave Class B Ordinary Shares for a total of 268,437,788 Octave shares, each with a par value of $ 0.01 per share, were distributed to Hexagon shareholders of record as of May 22, 2026, the Record Date. This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Distribution. For the three months ended March 31, 2026 and 2025, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share. Basic and diluted earnings per share are the same for Class A Ordinary Shares and Class B Ordinary Shares as both rank pari passu in all respects except for voting rights. For periods prior to the Distribution, it is assumed that there are no dilutive equity instruments as there were no equity awards of Octave outstanding prior to the Separation. Three Months Ended March 31, 2026 2025 Net income $ 47,381 $ 59,486 Weighted average ordinary shares outstanding - basic and diluted 268,438 268,438 Earnings per share - basic and diluted $ 0.18 $ 0.22 NOTE 14. SUBSEQUENT EVENTS Revolving Credit Facility and Term Loan Facility In connection with the Distribution, on April 27, 2026, the Company entered into a senior unsecured credit facility (the “Credit Agreement”) consisting of (a) a five‑year senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $ 500 million (the “Revolving Credit Facility”) and (b) a four‑year senior unsecured term loan facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”) consisting of (i) a U.S. dollar-denominated term loan in an amount of up to $ 350 million and (ii) a euro-denominated term loan in an amount of up to € 150 million. Borrowings under the Credit Facilities bear interest, at the Company’s option, at variable rates based on Term Secured Overnight Financing Rate (“SOFR”) or an alternative base rate for loans denominated in U.S. dollars, Euro Interbank Offered Rate (“EURIBOR”) for loans denominated in euro or Daily Simple Sterling Overnight Index Average (“SONIA”) for Revolving Credit Facility loans denominated in pounds sterling, in each case plus an applicable margin. 16 Table of Contents The applicable margin varies based on the Company’s consolidated leverage ratio and ranges from (i) 125 to 175 basis points in the case of Term SOFR loans, EURIBOR loans and Daily Simple SONIA loans and (ii) 25 to 75 basis points in the case of loans bearing interest at the alternative base rate. Under the Credit Agreement, the Company is required to maintain a maximum consolidated leverage ratio as of the end of each fiscal quarter of no more than 3.50 to 1.00. The Company may elect to increase the maximum permitted consolidated leverage ratio to 4.00 to 1.00 for the fiscal quarter during which a material acquisition occurs and for the following three fiscal quarters. The Credit Agreement includes representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings, including, among other things and subject to certain significant exceptions, limitations on liens, indebtedness, mergers and asset sales, as well as customary reporting and compliance obligations. Sale Lease-back Transaction On April 21, 2026, the Company became bound to effect a sale-leaseback transaction pursuant to which it will sell its corporate headquarters located in Madison, Alabama, which serves as Octave’s principal executive offices, for an estimated gross proceeds of $ 57 million subject to customary closing procedures. Concurrently with the closing of the sale, Octave will enter into a lease agreement with the third-party purchaser that will allow Octave to continue to use a portion of the facility. The accounting treatment for this transaction has not been finalized. Approval of the Spin-off On April 24, 2026, the general meeting of shareholders of Hexagon approved the Distribution of the Octave business into a separate publicly-traded company named Octave Intelligence plc. Transition to a Unified Octave Brand Following the approval of the Distribution on April 24, 2026, management initiated the phase out of legacy brands and transition of the Octave business to a unified Octave brand. As such, the Company performed an assessment of the useful life estimates of all trademarks which have historically been carried as indefinite-life intangible assets in the Condensed Combined Balance Sheets and had a carrying amount of $ 481.1 million as of March 31, 2026. In completing this assessment, management concluded all trademark assets should no longer be carried as indefinite-life intangible assets, but rather determined each to have a finite useful life. As such, management performed a quantitative impairment test subsequent to such approval which consisted of a comparison of the fair value of the Company’s trademarks with the carrying amount, and in all cases where the carrying amount exceeded its fair value, an impairment loss is expected to be recognized in an amount equal to the excess. For each trademark, after the impairment loss is recognized, the adjusted carrying amount of the intangible asset will be its new accounting basis which will be amortized prospectively over its remaining useful life. While the accounting treatment for this assessment has not been finalized, management expects to record a non-cash impairment charge for substantially all of the carrying amount during the second quarter of this year. Executive Annual Incentive Plan On May 20, 2026, the Compensation Committee approved and adopted the Octave Intelligence plc Executive Annual Incentive Plan (the “Plan”), effective as of January 1, 2026. The Plan provides participants, including the Company’s named executive officers, with the opportunity to earn annual cash incentive awards, as determined by the Compensation Committee. Under the Plan, the Compensation Committee will establish individual target awards (expressed as a percentage of each participant’s annual base salary) and performance goals (which may be based on individual performance and/or Company performance (including a subsidiary, division, other operational unit or administrative department thereof)) for each performance period (generally, the Company’s fiscal year). Awards are contingent upon the achievement of the applicable performance goals established by the Compensation Committee and may be adjusted, reduced or increased in the Compensation Committee’s discretion, subject to the terms of the Plan. The Plan also includes customary provisions regarding termination of employment, clawback provisions and compliance with Section 409A of the Internal Revenue Code of 1986, as amended. 17 Table of Contents Completion of the Spin-off On May 22, 2026, the spin-off was consummated by means of a tax-free pro rata distribution (the Distribution) wherein each Hexagon shareholder of record on May 22, 2026 (the Record Date) received one (1) Octave Class A Ordinary Share for every ten (10) Hexagon Class A Shares and one (1) Octave Class B Ordinary Share for every ten (10) Hexagon Class B Shares held, resulting in the Distribution of 268,437,788 of the Company’s ordinary shares to Hexagon shareholders. In connection with the Distribution, on the Distribution date the Company fully drew the Term Loan Facility and borrowed approximately $ 120 million and € 25 million under the Revolving Credit Facility. The proceeds from the borrowings under the Credit Facilities were used to fund a cash payment of $ 625 million to Hexagon in connection with the Distribution. Agreements with Hexagon Following the Distribution, Octave is a public company and Hexagon has no continuing ownership interest. For purposes of governing the ongoing relationships between Hexagon and Octave after the Distribution, and to provide for an orderly transition, Hexagon and Octave entered into a Distribution Agreement, Tax Disaffiliation Agreement, Employee Matters Agreement, and Master Transition Services Agreement that outline the terms and conditions of the transactions and provide a framework for our relationship after the transactions. 18 Table of Contents