Earnings call transcript: Hexagon AB reports Q1 2026 revenue growth amid currency headwinds

Hexagon’s reaction looks less like a fundamental break and more like a clean-up move as investors finally price the portfolio transition risk: lower-quality revenue streams are being removed faster than the market can handicap the new mix. The key second-order effect is that near-term margin optics will remain noisy while the business is actually de-risking its mix toward higher recurring software/services and more defensible industrial positioning — that should matter more after the April 30 CMD than on the headline Q1 print.

The bigger incremental catalyst is Waygate, because it fills a strategic hole rather than simply adding scale. If integration is executed well, it can raise attach rates across Hexagon’s installed base in aerospace/defense and manufacturing, but the real value may come from cross-selling into inspection workflows where switching costs are high and buying cycles are long; that means the earnings benefit is back-half 2026 to 2027, not immediate. The market is likely underestimating how quickly operating leverage can reassert itself once currency and tariff noise stabilize, but it is also overestimating the pace at which revenue synergies show up in reported numbers.

For KMB, the signal is stronger than the quarter: the agreement to consolidate hundreds of systems onto Octave is the kind of enterprise proof point that can shorten sales cycles across adjacent verticals. That said, the transition to recurring revenue creates a temporary drag on reported growth and capitalized software accounting, so the stock can look optically more expensive before the ARR flywheel becomes visible. Contrarian view: the selloff may be overdone if investors are anchoring on gross margin compression while ignoring that the new mix should produce better durability and higher terminal multiple once the spin and acquisition stack is digested.