OCTV 10-K & 10-Q changes, risk factors and insider trading

There have been no material changes in risk factors from those disclosed in the Information Statement section titled “Risk Factors,” which isare incorporated herein by reference.

This section should be read in conjunction with the Condensed CombinedConsolidated Financial Statements and accompanying Notes included under Item 1. Financial Statements of this Form 10-Q and the Combined Financial Statements and accompanying Notes and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the three years ended December 31, 2025 included in the Information Statement. See the sections of this Form 10-Q titled “Note About Forward-looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements that could cause future results to differ materially from those reflected in this section. The financial information discussed below and included in this Form 10-Q may not necessarily reflect what our financial condition, results of operations or cash flows would have been had we been a standalone company during the periods presented or what our financial condition, results of operations and cash flows may be in the future.

Octave Intelligence plc ("Octave" or the "Company") 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.

OurThe 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, ourOctave’s software helps optimize the performance and reliability of the systems that teams depend on so they can act quicker and reduce risk. WeOctave referrefers to ourits suite of software solutions collectively as our platform, noting that different components of the software architecture are at various stages of technical integration and interoperability.

On March 4, 2025, Hexagon AB ("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.SU.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. Prior to the Distribution (as defined below), the Company was wholly owned by Hexagon.

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.held resulting in the distribution of 268,437,788 of the Company's ordinary shares to Hexagon shareholders. 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”), andShares. Octave Class B Ordinary Shares were delivered to holders of Hexagon Class B Shares thatother arethan Hexagon affiliates in the form of Swedish Depository Receipts (the “Octave SDRs”), and to Hexagon affiliates in book-entry form via Octave’s transfer agent. Following the Distribution, Hexagonthe doesCompany notcommenced beneficially"regular ownway" anytrading as an independent public company whereby Octave ordinaryClass shares.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.

Immediately following the Distribution, there were 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 ordinary shares, outstanding. Non-affiliateHolders of Hexagon shareholdersClass B Shares other than Hexagon affiliates on the Record Date received Octave Class B Shares via 210,003,594 Octave SDRs delivered through Euroclear Sweden that are listed on Nasdaq Stockholm under the ticker symbol “OCTV SDB,” while Hexagon affiliates of Hexagon received 47,409,194 Octave Class B Shares in book entry form via Octave’s transfer agent. OfAs theof initialAugust 210,003,5947, 2026, 167,780,741 Octave SDRs deliveredwere outstanding in respect of the initialClass distribution,B 5,713,266Shares Octaveand SDRs were converted at the request of the holders thereof into89,632,047 Octave Class B Shares deliveredwere onheld Maydirectly 28, 2026. From time to time, holders ofby Octave SDRs may convert such interests into Octave Class B Shares pursuant to the procedures established in the General Terms and Conditions for the Octave SDRs, as previously disclosed. The Octave Class B Shares are listed under the ticker symbol “OCTV” on the Nasdaq Global Select Market in New York.shareholders.

Relationship with Hexagon Prior to the Distribution

ThePrior to the Distribution, the Condensed CombinedConsolidated Financial Statements included hereinin arethis Form 10-Q were derived from Hexagon’s historical accounting records and presented on a standalone basis as if the Octave operations had been conducted independently from Hexagon. The Condensed CombinedConsolidated Financial Statements arewere prepared in accordance with U.S. GAAP and Hexagon’s historical accounting policies, by aggregating financial information from the components of Octave’s and Hexagon’s accounting records directly attributable to Octave. The Condensed CombinedConsolidated Financial Statements include all revenues and costs directly attributable to the Octave business. Historically, Hexagon provided certain corporate functions to Octave and costs associated with these functions were allocated to Octave. 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 Octave based on direct usage when identifiable, with the remainder allocated on a pro rata basis of revenue of Octave and Hexagon. Octave and Hexagon believe the basis on which these 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 Octave been operating as a standalone company for the periods presented.

Our operations are internationally diversified, and our results of operations have been, and we expect in the future will be, affected by changes in foreign currency exchange rates. For the three months ended March 31, 2026, and 2025, approximately 54% and 49%, respectively, of our total revenues and 36% and 41%, respectively, of our total operating expenses were denominated in a currency other than the U.S. dollar. Our most significant currencies outside of the U.S. dollarDollar are denominated in euro,Euro, Canadian dollar,Dollar, Chinese renminbi,Renminbi, Indian rupee,Rupee, British poundPound and Australian dollar.Dollar. Other than the natural hedge attributable to matching revenue and expenses in the same currencies, we did not hedge foreign currency exposure in these historical periods.

We identify the effects of foreign currency on our operations and present constant currency information because we believe exchange rates are an important factor in understanding period-over-period comparisons and enhance the understanding of our results and evaluations of our performance. Refer toSee the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

We generate revenue through subscriptions, perpetual licenses, professional services and other offerings. Our revenue base is well-diversified across account types, industries, and geographic regions. Excluding the impact of acquisitions, our primary sources of revenue growth come from increased subscriptions revenuerevenue, focused on SaaS solutions, within our long-standing client base, particularly through expanded usage of existing solutions, as well as adoption of new product offerings by those clients and subscriptions from new customers.

We anticipate subscriptions will continue to represent a significant majority of new arrangements, including customers migrating from existing perpetual license arrangements to subscription services, in future periods.subscriptions. Due to the ratable recognition of subscriptions revenue, growth in subscriptions revenue will lag behind the growth of subscription orders and will impact the comparative growth of our reported revenue on a quarter-over-quarter basis.

Management continuously assesses our cost structure to ensure an optimal balance of personnel necessary to support revenuecustomer levels,activity, investment in innovation and the associated infrastructure necessary to support business operations and continuity, including investments in certain public company functions necessary to operate as a standalone business.

Cost of revenue decreased by $10.7$14.2 million or 11%,13%, primarily due to the reduction in services and other labor and associated delivery costs that supported the divestiture of non-core businesses.businesses divested in the prior year. This decrease was partially offset by an increase in cloud platform costs associated with public cloud infrastructure providers and general labor costs. As a result, gross profit decreased by $0.8 million, despite gross profit margin improvedincreasing from 74% to 77%, and when coupled with the growth in revenue, gross profit increased by $14.4 million or 5%.77%.

Sales and marketing expenses increased by $7.9$2.1 million or 9%,2%, primarily due to higher salaries and wages drivenfrom annual salary increases, an increase in outbound marketing costs and higher sales commissions expenses. This increase was partially offset by increasedoverall marketingheadcount costs,reductions wagecompared inflation,to additionalthe hiringprior year as a result of salescost andsavings salesactions support personnel, and increased investmentstaken in salesthe enablementsecond technology.half of 2025.

General and administrative expenses increased by $6.2$2.2 million or 17%,3%, primarily due to higher salaries and wages driven by wageannual inflation,salary increases, increased hiring to support public company functions, anand investment in information technology. This increase was partially offset by savings achieved through cost savings actions undertaken in the allowancesecond forhalf doubtfulof accounts, and a general increase in information technology costs.2025.

Amortization of intangible assets increased by $5.6$6.3 million or 15%,16%, primarily due to an increase in incremental new releases of developed product solutions for sale.sale and the initial amortization of trademarks following management’s conclusion that all historical trademark assets have a finite useful life starting in the second quarter of 2026.

Other Operating Expense,Expense (Income), Net

Other operating expense (income), net increased by $0.9$2,153.5 million or 25%,million, primarily due to anthe increasecurrent inperiod restructuringimpairment charges associatedrecognized withon certaingoodwill costof reduction$1,671.0 actionsmillion toand offsetindefinite-life investmentsintangible inassets publicof company$463.7 functions,million. partiallyAdditionally, offsetthere bywas a decrease in contingent consideration fair value remeasurement gains.gains recognized compared to the prior year period.

Other Income,Income (Expense), Net

Provision (Benefit) for Income Taxes

For the three months ended MarchJune 31,30, 2026, the effective tax rate was higherlower as compared to the three months ended MarchJune 31,30, 2025, primarily due to the non-deductible nature of the Company’s goodwill impairment charge taken during the period as well as jurisdictional mix of earnings and effects of cross-border transactions in preparation for the Distribution.

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,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: