Thank you, operator. Good morning, everyone, and welcome to Hexagon's fourth quarter 2025 conference call.

First, I would like to direct you to the standard cautionary statement. Then we are turning to the next slide with the agenda.

We will start with taking you through the Hexagon Group performance in the fourth quarter and then dive into the Hexagon Core business areas performance in the same quarter. I will then hand you over to Mattias Stenberg, who is the incoming CEO of our potential spin-off company Octave, and he will take you through the performance of Octave in the quarter.

Mattias will then hand over to Norbert Hanke, our interim CFO, who will cover the financials for Hexagon Group in more details. We will then of course have time to take any questions that you may have.

Moving into the next slide, and we can jump directly into the highlights of the quarter. In the fourth quarter of 2025, we returned to good financial performance.

We delivered a 3% organic growth, while still taking decisions that improve the long-term performance of both Hexagon and Octave. The operating margin of 29.4% was impacted by significant currency headwinds of 150 basis points.

We also began implementation of the restructuring program that we launched during the third quarter to further improve the underlying profitability of the group. The star delivery of the quarter was the strong cash conversion at 121%.

Alongside this, we delivered operationally, too. If we look at M&A's first, we announced that we will acquire Inertial Sense within the Autonomous Solutions business area to strengthen the breadth of our successful positioning portfolio.

We acquired iCON pro, expanding the range of proactive maintenance services that we provide to our metrology customers. The sale of our business Design & Engineering was sold to Cadence, as and the closing of this is progressing on track for a closing during the first quarter.

The new operating model, which we began to implement across Hexagon Core businesses during the third quarter is progressing well, and this model then decentralizes Hexagon into 17 P&Ls within our three externally reported business areas, creating clear accountability and transparency. Decisions are taken closer to customers, increasing our customer responsiveness, but also speed in decision-making and execution.

Our humanoid robot, Aeon, continued to make great progress in its customer pilots, and we announced an important partnership with Microsoft aimed at advancing humanoid robotics further. We also announced a new CFO for Hexagon Core, Henrik Patriksson, who I will talk more about in the coming slide.

Finally, we continue to progress the potential separation of Octave, which remains on track to be completed during the first half of 2026. Following this set of results, the board will propose a dividend of 14 euro cents per share at the Annual General Meeting on April 24th.

We had a busy quarter behind us, and we move into the next slide. I'm pleased to announce that we have appointed a new CFO, Henrik Patriksson, and he will join us then latest in July of 2026, but most likely already early in the second quarter.

He is a veteran CFO with many years of corporate finance and strategic experience. At his most recent role at the European private equity firm Triton, he has been responsible for advising a number of their investment companies on financial matters and best practices.

His experience has been within companies ranging from €300 million up to €5 billion in revenues in all phases of development. Before that, he was at Viaplay, where he played a central role in the turnaround of the business that was a critical part of Viaplay's history.

Previously, he also spent time with Electrolux and Assa Abloy, where he held strategic finance roles across Europe and Asia. I'm very excited to welcome Henrik to the team, and we look forward to the next phase that he can contribute also with profitable growth going forward.

Norbert Hanke will remain our interim CFO until Henrik joins, and after that, Norbert will become Executive Vice President at the group level. I would again like to thank Norbert for stepping into this role and supporting us extremely well while we found a strong permanent candidate.

Turning now to our performance in the quarter. I was pleased to see that we had good organic growth while allowing some of our businesses to make operational and strategic decisions that will offset growth in the short term, but will ultimately set them up for success in the long term.

In Octave, Mattias and the team continue to focus on SaaS deals, generating another quarter of strong double-digit SaaS growth. In Geosystems, we chose not to restock channels in the market, which has been weak for some times, such as in China.

This had a total top-line effect of 10 million in the quarter negative for Geosystems. 8 out of those 10 millions were related to destocking in China.

Despite these items, the group grew 3% in the quarter, maintaining the momentum that we already saw in the third quarter. Recurring revenues grew 3%, fully in line with the organic growth, and new products contributed with 2%.

We expect that the new products will contribute more going forward as we are ramping up the products that we released during 2025. Turning now into the development by region and industry during the quarter.

Here you get a snapshot of the development. The overall markets remained broadly stable in the fourth quarter.

Some highlights first by geography: Americas is a standout region, grew 11% for the group with positive performance across all of our business areas. EMEA recorded a 4% organic growth, driven by Autonomous Solutions and supported by stable performance in Geosystems and Octave.

This was then partially offset by continued weakness in Manufacturing Intelligence in EMEA. China declined with 5%.

Strengths were shown within Manufacturing Intelligence, but it was offset by continued weakness in Geosystems. Here I want to again remind us that we had 8 million related to destocking in the sales channel within China.

The rest of Asia also declined, mainly due to tough comparables within Autonomous Solutions. If we look by industry, there was strength within construction segment in Americas, but it remained weak for us overall, primarily due to China.

General manufacturing was strong in the US and in China, but remained muted in EMEA. Aerospace and defense, as you can see, was a standout performer in the quarter, recording strong growth across all our key markets here in Americas and EMEA.

Mining, also globally very strong in the fourth quarter across basically all important market for us. Automotive remained weak in the key EMEA markets and, as expected, unfortunately also turned negative in China due to overcapacity in the market.

Electronics was very strong in China, but weaker elsewhere, but China here is the important market for us within electronics; the other markets are quite small, insignificant in comparison. Agriculture remained weak, with the market still looking weak globally since the post-COVID supply to market, which was an oversupply to market.

This market has been quite muted in the last periods. Turning now into profitability, we start with the gross margin, which was a record-strong gross margin in the quarter, 67.5%, benefiting from strong product mix.

I think we can also show that we managed pricing and cost very well. Also then we got a contribution, which was quite small, but still there, of new products going to market with better margins.

On a rolling 12-months basis, we were in line with the prior year. Turning now to operative earnings.

During the first quarter, we delivered an operating margin of 29.4%, with significant negative currency impact of 150 basis points, which is sort of offsetting the underlying strong performance that we had in the quarter. As we recently launched several new products that are now in ramp-up phase, we also have a negative impact from reduced gap between capitalization and amortization versus the previous year.

Norbert will talk more about this in his slides later. As we also launched the restructuring program in the third quarter to remedy the underlying margin performance, and we are targeting here savings of a run rate of 110 million at the end of 2026.

As a reminder, we said 74 million of those will be within Hexagon Core, and 36 will be related to Octave. Norbert will also cover the progress of this program at the later stage here.

In the first quarter, we will continue to see benefits of the restructuring program, but at current exchange rates, we expect significant headwind from currency, alongside with the usual seasonality that we have in the first quarter, such as, for example, merit increases across the organization from the 1st of January. I'll now turn to the performance by business area.

I will start with the Hexagon Core. This is, as excluding then Octave.

Hexagon Core grew 4% in the fourth quarter with operating margins of 28.4%, with significant negative impact from FX year-on-year. There was a slight moderation in the organic growth from the 5% we had during the third quarter.

Again here, I want to highlight the 10 million of destocking within Geosystems. If you would add that back, we actually hit the 5% mark just as we did in the third quarter.

I'm very pleased with the underlying performance that we have made within Hexagon Core. Turning now to Manufacturing Intelligence.

We reported revenues of €491 million, which represents then a 1% organic growth from 2024. The market dynamics were broadly unchanged from the third quarter, with strength in China that grew 5%.

America was also good, while, as I stated previously, EMEA, the market conditions continued to be challenged, but if you look quarter-on-quarter versus the third quarter, it was stable, it was not worsening from the third quarter. By industry, demand was particularly good in electronics and aerospace and defense.

Automotive remained challenged. The organic growth moderated from Q3 as we saw delays in customer decision-making, especially early on in the quarter, pushing work into 2026.

If we look at orders here instead, we had strong order intake growth of 7% versus the previous year, and as a result of this, we exit the quarter with a strong order book to be delivered in 2026. The division or the BA reported a EBIT of €139.3 million and an operating margin of 28.4%, impacted by currency FX also here.

I now turn to Geosystems. Here we reported revenues of €363 million during the quarter, and that represents a -1 in terms of organic growth compared to the previous year.

As I mentioned earlier, the primary reason for Geosystems to turn into negative growth was the proactive decision that management took to destock the channels where we have seen softer demand for some time, like in China, where our exposure to heavy infrastructure has, as faced significant headwind and challenges in that marketplace. Excluding this destocking, if you look at Geosystems' underlying growth, it was actually +2% year-on-year.

This destocking headwind will persist on a similar level also during the first quarter of 2026 as we are right-sizing these delivery channels. After that, we will have a normalized business going forward, from Q2 and onwards, you will not see effects of destocking further.

Markets remained similar to the third quarter, with good demand in the Americas for construction software, surveying tools. We also saw stability in EMEA with a modest growth, but the challenging environment in China heavy infrastructure remains significant.

EBIT declined to €103 million with an operating margin of 28.4%, reflecting the combined effects of low volumes in some of the product segments and also a weaker product mix, and of course negative currency impacts. Finally then, turning to the outstanding performer of the quarter, Autonomous Solutions.

Within Autonomous Solutions, we delivered revenues of €196.4 million during the quarter, representing a 23% organic growth compared to the prior year. There was a record performance within both aerospace and defense and within mining.

This was slightly then offset by the challenging global market situation within agriculture, as I mentioned earlier. Performance was focused on Americas, but EMEA also grew well.

Asia declined due to very tough comparables, and this is also in reference to the MinRes project that we are executing in Australia. There were some timing issues, etc.

If you look at the underlying performance, it was actually good in Asia as well. EBIT came in at €67.7 million, representing an increased EBIT margin to 34.5%, driven by strong volumes and a positive product mix, but also here offset by currency.

I will now hand you over to Mattias, who will cover the Octave performance. Mattias, please go ahead.

Thank you very much, Anders, and good morning, everyone. Before we dive into the quarterly performance, I want to start by reminding and reinforcing what Octave is and the role we play for our customers.

We are the market-leading provider of enterprise software that helps customers design, build, operate, and protect their mission-critical assets. We serve industries where failure has real consequences, whether that is human safety, operational downtime, or material financial impact.

Across our portfolio, the common thread is accountability for outcomes across the full asset lifecycle. As technology capabilities expand, the requirements for uptime, safety, and compliance only become more rigorous.

Octave truly provides the platform and the technology to manage that complexity at scale. If we then turn to the next slide, our market position, as you can see, is very strong, and our leadership continues to be validated by leading independent research firms, including names like Gartner and IDC, but also several others.

For more than 15 years, we have consistently been recognized across multiple solutions and verticals. In this quarter, however, specifically, we were placed as a leader in Gartner's latest Magic Quadrant for QMS software and as a leader in IDC MarketScapes for both asset performance management, as well as for EAM.

I think these recognitions underscore our sustained innovation and relevance across the markets we serve. We move to the next slide, digging into the quarter results.

As you can see, we delivered 2% organic growth, with our recurring revenue slightly outpacing that at 3%. Our recurring base represents roughly 70% of our total revenue, and we continue to make good progress shifting our mix towards subscription-based models, which, as you can see, is reflected in our double-digit SaaS growth, as well as by another quarter of record new bookings, just like we had in the previous quarter.

Our EBIT margin landed at 32%, compared to 35% in the prior year period. This profitability is primarily a reflection really of a higher mix of perpetual revenue in the prior year period, as well as FX headwinds.

It also reflects deliberate investments in innovation, product development, and the infrastructure required for us to operate as a standalone public company. We expect to gradually offset these investments through the cost savings program we earlier announced in Q3 2025.

All in all, we are confident we are positioning Octave for stronger, durable, profitable growth. Turn to the next slide, please.

Here you can see our business broken down by our four core pillars. As you can see, Design is our largest business from the pie chart there.

In this pillar, we saw solid platform growth, which, however, was offset by a lower contribution from our monthly subscription licenses, which I will describe a bit more on a coming slide. Build, you can see, had a very good quarter, strong SaaS growth in construction software, as well as in project performance management software.

Likewise, Operate saw strong recurring growth, especially in our solutions around QMS, APM, and EAM. In the Protect pillar, the growth we saw in recurring revenue was offset by declines in perpetual licenses, mainly due to record activity in the prior year corresponding period.

Next slide, please. Yes, like I talked about, if we try to explain a bit what's going on in the recurring revenue, there are two things you need to understand.

If we look at our monthly subscription licenses here, it represents roughly 50% of total revenue and is driven by project activity for certain large customers within our Design pillar. While this revenue grows over time, it can fluctuate in the short term with macro conditions and customer project timing.

After a strong end to 2024, as you can see from the graph there, we saw a reduction in monthly license volumes in kind of early 2025 going in Q2, as you can see there, as broader market uncertainty influenced customer behavior. These levels have, however, been sequentially improving in the second half of the year, and we expect year-over-year comparisons to gradually get easier throughout 2026.

On the right side of this slide, you can see that excluding these project-driven monthly licenses, our underlying recurring revenue is growing in the high single digits, reflecting the solid underlying growth we see in our broader portfolio. Next slide, please.

Looking at some customer wins. We, of course, had many, many customer wins in the quarter.

I selected these four because I think it's a good reflection of showing how many different type of critical industry sectors we serve. It's really a good representation of the breadth of our platform and the diversity of our customer base.

I think it also shows the level of trust, performance, and scale that we are able to provide across a large, complex organizations, such as in this quarter, a very large, fast-growing e-commerce company in Asia, one of the global leaders in the energy sector, one of the largest pharmaceutical distributors in the world, and the largest US police department. Next slide, please.

Looking ahead, we are really focused on execution. We recently completed our first global sales kickoff as one Octave, reflecting our next phase as a standalone company.

We are truly operating with a clear set of priorities, and we expect each of these to support stronger, durable growth over time. First, we continue our transition, like I talked about, to subscription-based pricing models, supporting more predictable, high-visibility revenue streams.

Second, we are deepening our customer engagement by driving cross-sell across the design, build, operate, and protect pillars, supported by a shift in R&D toward a unified architecture and outcome-focused AI capabilities. Finally, we are also scaling our partner ecosystem and strengthening our go-to-market execution, while at the same time finalizing the governance and operating infrastructure that is required for us to be a standalone public company.

Turn to the next slide, please. If we look at the process and the update on the spin, it is moving forward as planned.

The final spinoff is targeted for the second quarter this year, pending the effectiveness of our public listing steps in the US and Sweden, and final approval, of course, from the shareholders and the board of directors. We expect our draft registration statement, the so-called Form 10, to be filed publicly in February.

We're also very excited that we're going to hold our first Octave Investor Day in New York on March 26th, 2026. We look forward there to share more about these strategic priorities I mentioned, as well as our business model and, of course, our growth opportunities.

You can expect invitations and details here in the next couple of weeks. I look forward very much to hopefully seeing many of you there.

With that, thank you very much, and I'll hand it over to you, Norbert.

Thanks, Mattias. I will take you now through the Q4 performance for the Hexagon Group.

Turning now to the next slide, please. Let us begin with the Q4 income statement, taking the sales bridge first.

Revenue were €1.4 billion, generating reported growth of -1%. Currency was a negative -6 on sales, and there was a positive 1% from structure, resulting in an organic growth of 3%.

Gross margin were strong at 67.5% despite the impacts of FX. We continue to be confident in driving gross margin expansion as we will have positive impact from new product releases.

Operating earnings decreased by 7% to €420 million, corresponding to a margin of 29.4%. I will explain this further in the profit bridge on the next slide.

Interest expense in financial cost decreased from 41 million to 30 million, giving a delta on earnings before taxes of -5%. The group's tax rate increased to 26.8% for the quarter, reflecting one-off transactions related to legal entity reorganizations ahead of the potential spinoff of Octave and sale of D&E.

The tax rate, excluding adjustments, remained at 18%, bringing us down to an adjusted EPS of 11.8 euro cents, also declining by -5%. Just for reference, the EBIT 1, including PPA, includes 27 million of amortization, and so it dilutes the EBIT 1 margin to 27.5%.

Next slide, please. During Q4, currency continued to be dilutive, reducing EBIT margin by 150 basis points.

The major impact came from a weakening dollar and RMB year-over-year, leading to an unfavorable earnings impact. The structural element was accretive, with solid contribution from acquired companies such as Septentrio and Geomagic, as well by the sale of the dilutive assets in Octave.

We saw a quarter-over-quarter improvement in organic EBIT contribution, supported by the cost action implemented in the quarter. Despite this improvement, we ended the quarter with a dilution of 80 bps year-over-year, driven by a few factors.

First, tariffs created a headwind of roughly 5 million in the quarter. Secondly, the capitalization amortization gap is narrowing as we normalize our R&D investments.

Further, Octave continued to invest in go-to-market capabilities, product development, and public company readiness. Turning now to the next slide, please.

Now let's discuss the R&D capitalization dynamics. R&D investments are reducing from their peak levels as we have released multiple new products during the year.

As many of these products were major new innovations, we capitalized them according to accounting principles. With the launches, our R&D investments are decreasing, and we expect the gap between R&D capitalization and amortization to narrow versus 2024 and '25.

This creates a year-on-year margin headwind in the near term until the new products start contributing materially over the next 12 months. Turn now to the next slide, please.

Let's continue with the restructuring program. We began implementing the program at the end of Q3, and this has generating savings of 11 million in the fourth quarter and achieving an annualized run rate of €65 million.

The savings will increase throughout 2026, and we will see the full benefits by the end of '26. Turning now to the next slide.

Moving on to the Q4 cash flow, which is a strong performance for the quarter four. The adjusted EBITDA variance is at -5%, demonstrate the continued stronger cash leverage versus the EBIT 1 variance at -7% due to keeping D&A flat year-over-year.

Capital expenditures declined as a result of less capitalized R&D, in line with our previous communication to stabilize our R&D investments. Working capital management remained strong and represented a release of €121 million million euro in the quarter.

As a result of this, we end up with an operating cash flow before tax and interest of €509 million, which led to a very strong cash conversion of 121%. Both interest and tax payments decreased compared to last year.

The non-recurring cash flow of 67 million versus the prior year of 18 relates to the increased cash outflow of the potential spinoff of Octave and the restructuring program, resulting in an operating cash flow of €352 million, decreasing by 13% versus the prior year. Next slide, please.

Moving on to the working capital trend. In Q4, we delivered a net working capital release of €121 million, compared to a release of €141 million in the prior year.

As a result, the rolling 12 months working capital to sales ratio improved to 3.2%, lower than last year and well below our 10% threshold. To conclude, our business areas delivered solid organic growth alongside a strong gross margin for the group and a very strong cash conversion.

Currency headwinds impact negatively the EBIT 1 margin, and based on current FX rates, is expected to have a negative impact as well on Q1, combined with normal quarter-on-quarter margin and seasonality. We remain focused on addressing the cost base through the announced restructuring program, with additional benefits expected to gradually continue throughout the year.

I will now hand back to Anders.

Thank you, Norbert. Then we can move directly into the summary.

To conclude a bit, I'm very pleased with our progress in the fourth quarter of 2025. We delivered good, solid financial performance while also making decisions that support the long-term health of both Hexagon and Octave.

Profitability was again impacted by significant currency movements, and we implemented the restructuring program that Norbert covered, that we launched during the third quarter, and that will help to strengthen the underlying profitability of the group. Finally, we were able to deliver a fantastic cash conversion quarter with 121%.

Looking at the first quarter of 2026, the market basically looks consistent with the second half of 2025, and we are set up very well with a strong operating model, strong product releases during the previous year, and a leadership position within basically all the businesses where we operate. We are very confident going into the year.

However, normal seasonality will of course apply in the beginning of the year, as you would expect, and should currencies remain on a similar level as today, we expect also similar headwind from those currencies. Turning now to my final slide on the upcoming Capital Markets Day for Hexagon.

This is a reminder. The CMD will take place 30 April of this year in London.

This is of course then in addition to what Mattias talked about, the Investor Day within Octave. I look forward to seeing you all there.

Operator, I think that was all from the team here, and let's move into questions from the audience.

Thank you, operator, and good morning, Anders. I have a question on MI.

You comment in your CEO letter that you have a positive order intake and also you write here in the presentation of strong order book. You have new products out; we've seen the ATS800, Maestro, etc.

Can you comment any more color on this book-to-bill ratio or whatever? Thank you.

Yep, thanks. The quarter was quite weak in the beginning in terms of closing customer deals, or not weak, but rather customer postponed things.

We could see that from the second half of the quarter, it started to take off much better for us. Hence, we build up a strong order intake if you compare to the previous year.

We are then moving into the year with a stronger order book than we maybe even expected. We saw good deliveries also at the end of the quarter.

You still have a positive growth number there, but it was a little bit weak in decision-making from customers in the beginning of the quarter. We don't go out with exact numbers on order intake, I cannot give you how book-to-bill changed, only a reference towards the previous year.

Strong development, which I believe puts us in a good position going forward, and there's no reason why we shouldn't continue to perform well in here. Aerospace and defense doing very well in both North America and EMEA.

We have electronics doing extremely well in China. General manufacturing is actually doing really well in America and China.

The weakness there is basically in EMEA. I see that we have a strong setup that will continue also to go into this year.

Sounds great. May I have a follow-up, and that would be on the destocking you mentioned in China, Geosystems.

Obviously being a little bit more of a structural change, I guess. Is it fair to assume that it will not only impact also Q1, but also to some extent Q2 and Q3?

I think it had some 100 basis point impact on the Hexagon Core growth in full.

No, it's rather like this: We have done destocking previously in 2025 as well within Geosystems to right-size the delivery channels. If you look at the full-year impact for Geosystems, it's actually 21 million of destocking, and it's primarily Latin America and Asia.

We see that the biggest part is then with China. We wanted to raise it now because we did 10 million in one quarter here, where 8 of those 10 million were related to China.

We thought it was important to bring it up to increase the understanding. We also see that it will continue then in the first quarter of this year, and that will be mainly in the China channel.

We expect 8 to 10 million also in the first quarter of this year. Then there is nothing remaining to be done in Q2, Q3, or Q4.

From the end of Q1, all the destocking within Geosystems is completed, and you will see a normalized business going forward.

Super clear. Thank you.

I will go back to the queue.

Thanks.

Yes. Good morning.

I wanted to ask a question on the cost savings. I think the pace that you're delivering at now is steeper than what the chart implies for the rest of 2026 if we're already at 65 million run rate for 110.

I think we should be at the 110 run rate probably by middle of the year. I just wondered if there is any reason for that to slow down.

Is there kind of low-hanging fruit has been picked first? What is the appetite for further savings beyond 110 million?

Can we already start talking about that?

I will answer this. It's Norbert.

We did quite a bit in Q4, as we mentioned, and you can see, and you highlighted this earlier. That was in preparation, and we will take this now step-by-step in the sense.

From our point of view, it will be end of the year where we see the full savings going forward. I think that will be from our point of view.

Going forward, the appetite will be constantly to look at the different business in what performance they are, as we has mentioned, and Anders mentioned this particularly in Q3 as well. That is an ongoing process from our side.

That would be more of an organic development. We will not launch other programs like this one.

It's rather that some of the businesses will have a hiring freeze, and they need to reprioritize if someone leaves, etc. It would be more of an organic going forward.

Of course, we are continuously working on making further efficiencies within the group.

Thank you. If I may just follow up on the question on new product launches, could you quantify for us what percentage of sales do these new products account for in terms of the predecessors that they've replaced?

Is it possible to give us some idea of your kind of measure of vitality ratio, kind of percentage of sales from products that are less than three or five years old, so that we can also assess how these new products are shifting that ratio? Thank you.

It's Norbert here again. For us, 2025 was a big year.

Clear statement. I mentioned this as well that, sure, the new products does take some time to come to full benefit for us from a contribution point of view.

At the moment, we're running around 3 3% to 4% overall from our point of view. We're following this up going forward as well.

This is product launched in the last 3 years, the definition. Here you had a bit of a delay during the COVID cycle, and then we are basically seeing the launches of new products now coming in 2024 and 2025.

These products that we launched, these big products like Maestro and the TS20, those take time to ramp up. It takes 12 to 15 months before they are fully ramped up.

That's also why Norbert mentioned the shrinking gap between amortization and capitalization, because when you launch a product, that's the day where you start getting the amortization of what you have put on the balance sheet in R&D. Of course, that day, you have zero sales of the new products.

It takes time to ramp that up. There is a period where you have that R&D gap headwind.

Of course, over time, you will have a tailwind with the new products even though you're paying the R&D gap, right? That's the whole intention.

There is a time lag in between there.

You said 3% to 4% in total? My line just broke up.

Did I get that right?

3%

to 4% of group sales?

Yes. That is correct.

You heard this correctly. The line was broken up.

Yes, I saw that or we heard this.

Thank you. Thanks very much for your time.

No problem.

Good morning. Hi.

I have a question on Octave and on the transition from license to SaaS, if you can elaborate on how much of the 72% of recurring revenue today that is true SaaS versus turn-based subscription or maintenance. That's the first part.

Good question. I guess we will lay this out on the Investor Day in detail, Mikael, but I think high level, we have said that out of the 70% roughly recurring revenue, it's about a third, right, that is SaaS, and about a third that is maintenance, and about a third that is monthly subscriptions.

Okay. The same as you indicated before, of course.

The real question here is how we should think about maybe at this stage on a high level on the migration trajectory, when you will have sort of steady-state SaaS exposure or split.

Again, I don't want to lay out the whole plan here today. We'll do that at the Investor Day.

As you can see, the perpetual revenue is roughly 15%, right, of total sales. This will gradually shift.

It won't be dramatic in a couple of quarters, right. It will take some time.

You should expect a gradual shift there, but it will increase the pace compared to the history, right, because we are doing this more aggressively than we have done in the past. Again, you will have to come to New York, and we'll talk about it.

We'll do. Can you also maybe sort of give some indication of the cost situation now?

How much of this margin decline is sort of this short-term improvement or readiness cost that you have, and how much is an underlying inflation going into '26 and also '27?

I think what I can say at this point, again, without giving too much of an outlook, would be that I think you can expect a similar trend in Q1, right, where we still will have some headwind of the perpetual shift, of the increased investment level, and of the FX. Then hopefully as we gradually start to grow faster, right, if you see what I'm saying in the slide on the licenses and recurring revenue, we also expect the margins to start to improve.

That's as much as I'll say today.

Okay. Got it.

Thanks.

Thank you so much, and thanks for the presentation. I also have a question on Octave.

Have you seen any impact from the government shutdown then relating to SIG? I think one of your competitors highlighted that a couple of months ago, I was wondering if there are any pent-up demand trends to be materialized in 2026?

Thanks.

Yeah. Good question.

Not material, I would say. We, as you might remember, we divested two businesses in SIG in the HexFed area, right, which had had quite a lot of government exposure.

The government exposure we have left in SIG is not that big, right, some impact maybe, but not really material.

Thank you. That's very clear.

Then I also had a question on Aeon. After the Microsoft partnership announcement a couple of weeks ago, should we expect more partnerships ahead of commercialization, or is the framework now mostly in place, and how are you essentially tracking versus the general timeline here?

Thanks.

Thanks. I think we are tracking exactly on the timeline that we have laid out for Aeon from the Aeon team.

There's constantly new partnerships being formed with new ecosystem partners, right, that we use within the Aeon project. This is not something that we always go out with, but this one was quite significant because this is how we use Azure Cloud for training of AI models for Aeon and also for the imitation learning framework for Aeon.

This is quite significant and important one, and that's why we wanted to go out with this together with Microsoft, like we have done previously with Nvidia, etc. We go out with the big ones when we think it's relevant for the market to understand what we're doing, but we don't go out with all the partnerships that we are creating, because there are lots of those.

Very clear. Just a final very brief follow-up, if I may, on the supply chain.

Do you see any impact on your operations from the rising memory prices? If so, which segments, and what are the build of material costs here, and could this be something you can push through to the customers?

Thanks.

Thanks. No, in general, we compensate for all types of inflation that we have within our businesses.

Of course, we don't prefer when there's part of the supply chain that increase in cost, but in general, we take this into account and we compensate with pricing. I think we have done that successfully in the past.

We'll continue to do so also going forward. When it is challenging for us is rather when there is a supply chain constraints like we had a bit previously a couple of years ago.

Then it becomes more challenging, also for others of course, but for these kind of price hikes on memory or whatever, it's something that we compensate for and it's not significant at all in our total bill of material.

That makes sense. Thank you.

Thank you.

Hi, good morning. Thanks for taking my questions.

I have firstly a question for Mattias. There's a lot of debate in the market currently on how software is positioned in respect to AI.

Can you comment what are the major AI initiatives you have in place, both on a product and also on a cost side, and how you overall see Octave positioned in regards to AI? Then a question for Anders or Norbert on the software growth ex-Octave.

Overall, the software revenue decelerated by two points despite a one-point acceleration for Octave. I'm interested to hear what drove the software growth ex-Octave in the quarter.

Thank you.

Thanks. I'll start then with the AI question.

How much time do you have if we're going to go through everything? I would say, first of all, important to say is that we support, like I said in my presentation, customers that do mission-critical things, right, mission-critical infrastructure and assets.

We're not building an app for a website or something. It is truly mission-critical software.

I think it's very sticky, right, and I don't see the threat of being replaced by AI as that high. Then of course, we are building AI on top of our solutions every day, right.

We're launching agents every month, and that will just increase and increase. If we look at internal efficiency, I think that is a very good point.

We are training and adopting AI in our own development at a very fast pace, and the goal of course there is to get everybody trained and up to speed. I see it as a big potential efficiency.

Doesn't mean necessarily that we are going to get rid of people, right. I see it more as the people we have can do more important things, right, focus on innovation rather than documentation or bug fixing or things like that, right.

Yeah. Great question.

I'm very positive on AI in general, but yeah, I don't think we are at the first in line to be at risk. That would be my summary.

Yep. Then I step in, and if I understood the question, it was software growth excluding Octave.

Correct.

In the quarter.

Yes, because I think the overall software growth decelerated, while Octave accelerated.

Software growth for us in the quarter was 4% compared to previous year. The general software and services total, and this is only software then, not services, that grow 4%.

If you look at software and services, the revenue excluding Octave and excluding the D&E, Design and Engineering, that we are selling, is in the range of 45% to 50% of revenue, and the recurring part is 30% of revenue, approximately. That's a high level for you.

Great. Thank you.

Hi. Good morning.

Thank you for taking my questions. Two from my side, if I may.

First one on cash conversion, which has been quite strong for the group in recent periods, including contribution from working capital and CapEx expenditure being in check. As we look ahead, should we see the cash conversion profile as structurally better, or are there one-off impacts within which you would expect us to keep in mind before extrapolating current trends?

The second one on margins. As we look for margin evolution in 2026, and I appreciate you already have shared some color for first quarter, but if I look at 2026, there are of course few puts and takes.

Could you help us on how should we think of recovery in margin, both on underlying basis as well as in context of current FX evolution and growing amortization charges?

It's Norbert. I take the first one on cash conversion.

For sure, in Q4, that's very seasonal, let's call it like that. Therefore, we can expect in Q1 not the same magnitude from our point of view.

I think the overall, as we highlighted as well, what our target is, is the 80% to 90% conversion side, and that is, I think, you can say take as going forward as well in that range. There will be every time seasonality, particularly in Q4, that is given in the sense, but overall, we remain to our target.

If I move in to try to respond to the question, if I understood it correctly, the margin question for 2026. What we already covered is that we are doing things like the restructuring program that will help both Octave and Hexagon with the underlying marginal improvement.

We are targeting growth and you can see we have markets like Americas, we have areas like aerospace and defense and mining that are profitable markets and areas for us that continue to grow very rapidly. We have new products that we have launched to the market, and some of those were mentioned, with the ATS800, Maestro, the TS20, and other very important products that will sort of start ramping up now.

Those products will of course contribute positively also to the gross margin for us going forward. We are making sure that we compensate the pricing versus cost inflation in all areas, and you can see that we delivered a gross margin of 67.5%, which is the highest quarter in history for Hexagon.

We are managing cost versus price in a very good way. Then like you mentioned, there are drags as well that we have mentioned.

We have the similar FX drag. That could be significant, like it was for this quarter, also going forward.

We don't know when that will even out or how the FX will become going forward, I think your guess is better than mine. Then as Norbert mentioned, the amortization capitalization gap, as products ramp up, the effect of that will be smaller, since you will get the top line and the profitability of the new products that ramp up that will compensate for that shrinking gap.

Of course, we are compensating for tariffs, etc. We will have continued investments.

Mattias mentioned also that we need to invest for making sure that Octave is ready as a standalone company. The Octave team needs to invest in their product portfolio to make sure that they have a strong product portfolio when they stand standalone.

At the same time, on the Hexagon side, we are investing in Aeon, which is pre-revenue basically, which is basically only a cost for us, but long-term, that's a strategic right decision to do for the group. We are taking those investments.

I hope that explains something. I'm of course not going to go in and estimate margins for the year, but that's sort of some of the underlying drivers for you.

Understood. Thanks for color.

On cash conversion, if I can just follow up on that, I was asking more on full-year basis. As in last two years, conversion has been ahead of 90% despite rather softer growth, and working capital is one of the contributor being positive in both these years.

I was just trying to understand that structurally, because of growing share of recurring revenue, are we now structurally in a phase where the contribution from growing liabilities would provide a kind of tailwind where the cash conversion profile should be going higher, and this is also a period when it seems like we are going much more measured on CapEx?

From our point of view, yes, we are looking into, say, cash conversion constantly. I can tell you that, and looking for efficient way of doing this.

From our point of view, we remain to the target, as I said earlier, and from our side, we will not further, say, give more information out, honestly speaking.

It's not structurally changing. What you will see happening during this year is the the spinoff the potential spinoff of Octave.

Octave is a a business, as you refer to here as well, which has structurally different, which a higher cash conversion than the sort of Hexagon Core business. I see Hexagon Core moving in that direction, but much much slower than Octave.

I think an 80% to 90% would be a considered a very good level for Hexagon Core going forward. Of course, the tighter we go out with net working capital in in the year, the tougher the year the next year will be, right?

We had 3.2% working capital on on on sales, which is very low; it's the lowest we've ever had. I think you should not change your structure on on on cash conversion for Hexagon Core.

For the time being, because

Yes, for the time being.

Yeah.

Understood. Appreciate it.

Thank you.

Thank you, operator. Thank you everyone for participating, listening in, adding valuable questions.

We look forward to speaking to you in a quarter from now, giving you the first quarter of 2026, and then hopefully very tight after there, only a week after that, to see you in London for the Capital Markets Day. With that, we say thank you from Hexagon, and wishing you all a nice weekend.