Q2 2026 Octave Intelligence PLC Earnings Call Transcript
Key Points
- ARR grew 7% organically to $1.143 billion, in line with expectations and at the midpoint of full-year guidance.
- SaaS revenue grew 21% organically, with SaaS bookings growth accelerating from Q1, indicating strong demand.
- Adjusted operating margin of 29% was in line with expectations, demonstrating cost discipline despite public company launch costs.
- Free cash flow margin of 23% for the quarter and 22% for the first half, supporting confidence in achieving the 20% full-year target.
- Strong customer expansion with over 100 customers adding another solution in the quarter, and large customer count (over $500k ARR) up to 438 from 421 at year-end.
- AI initiatives are gaining traction, with Octave Assist running over 2 million assists daily and five marquee CoLabs accounts signed, including Bechtel and Fluor.
- Recurring revenue mix improved to 69% of total revenue, up from 65% a year ago, progressing toward the 75% medium-term target.
- Total revenue declined 1% organically year-over-year due to lower perpetual license sales and timing delays in public safety deals.
- Full-year organic constant currency revenue growth guidance was reduced to 0%-2% from the prior 3%-4% outlook, due to the removal of large public safety perpetual deals that may slip into 2027.
- Adjusted operating margin decreased to 29% from 31% in the prior year, impacted by public company launch costs and lower R&D capitalization.
- The company recognized significant non-cash impairment charges of $1.7 billion for goodwill and $464 million for brand write-downs, reflecting a lower market valuation.
- Q3 recurring revenue growth guidance of 3%-5% is slightly below the underlying run rate due to a difficult comparison from a one-off maintenance catch-up in the prior year.
- The Middle East region, previously a fast-growing area, was flat in Q2, with no growth or decline, impacting overall performance.
- The shift to SaaS and lower R&D capitalization will continue to be a drag on reported adjusted operating margin going forward.
Good day everyone. Welcome to the Octave Q2 26 earnings call. All participants will be in listen-only mode until the question-and-answer session begins.
Following the presentation, we will conduct a question-and-answer session.
This call is being recorded. If you have any objections, please disconnect at this time.
I would now like to turn the call over to Elizabeth Chork, Vice President of Investor Relations. Go ahead.
Thank you, operator, and welcome to everyone joining us for Oktiv's second quarter 2026 earnings call. With me on the call today are Matthias Stenberg, our Chief Executive Officer and Ben Maslin, our Chief Financial Officer. We have distributed our earnings press release over the wire and it is now posted on our website at investors.oktave.com along with an updated company presentation and our 10-Q filing. This call is being broadcast live via webcast and following the call, an audio replay will be available at investors.oktave.com.
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