Hexagon’s cyclical headwinds continued in Q3, but the improved revenue mix contributed to gross margin growth. A plan to potentially spin off certain fast-growing, highly profitable, software-focused parts of the group was announced

Cyclical headwinds continued in Q3, and a material recovery might not yet take place in Q4. We estimate growth to rebound in 2025-26 as the relatively low comparison figures and lower interest-rates increasingly supporting industrial activity.

Hexagon released its Q3 earnings report today, which was somewhat weaker than we or the consensus expected. In addition, the company announced that it is evaluating the potential separation of its Asset Lifecycle Intelligence business, which is primarily software with a high proportion of recurring revenue.

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Hexagon suffered from cyclical headwinds in Q2 but also demonstrated strong underlying development with good growth in recurring revenue and improved efficiency. Analyst Pauli Lohi comments on this development and the company’s outlook.

Q2 performance suffered from cyclical headwinds, but Hexagon also demonstrated strong underlying development such as good growth in recurring software revenue and improved efficiency. A cyclical recovery is not yet in sight in the near term, but we expect the underlying positive development to be increasingly reflected in earnings in Q4 and 2025.

Hexagon announced its Q2 results this morning. Revenue growth was below expectations due to cyclical factors such as weak construction and automotive markets. However, profitability beat expectations, driven by strong gross margin and good recurring revenue growth.

Hexagon will release its Q2 financial results on Friday, July 26. We expect revenue to grow moderately, supported by software and recurring revenue.