Octave Intelligence plc (OCTV)

Price$18.39Cached quoteAs of 2026-09-09 04:25 UTC

AI: Undervalued

Price checkThe shares look undervalued because strong cash conversion and recurring revenue outweigh modest near-term growth.

Octave's equity is valued near $5.2 billion, with about $340 million of net debt. Full-year guidance of $1.635-$1.665 billion in revenue and a roughly 20% free-cash-flow margin implies about $327-$333 million of cash left after running and investing in the business, a yield above 6%. A roughly 30% adjusted operating margin also implies around $490-$500 million of operating profit before selected charges. Those multiples look attractive if recurring revenue continues growing as planned.

Big pictureRecurring revenue and cash flow remain healthy despite slower total sales and a huge accounting loss.

Second-quarter revenue was $398 million, down 4% year over year, while recurring revenue rose 6% to $283 million and annualized recurring revenue reached $1.143 billion, up 7%. Free cash flow was $93 million, a 23% margin. The supplied SEC-derived figures show the quarter's reported operating loss was distorted by exceptional charges. Octave recorded $2.135 billion of noncash impairments, mainly goodwill and retired legacy brands, which did not consume cash or change debt-covenant compliance.

Business strengthSticky enterprise customers and modest leverage support resilience, while post-spin capital allocation remains unproven.

Octave serves about 4,500 customers, including more than 60% of the Global Fortune 500, and customers using three or more workflows generate roughly fifteen times more annualized recurring revenue per customer than single-workflow users. Net debt of about $340 million is manageable beside annual free cash flow near $320 million in 2025. Stock compensation was only $6.7 million in first-half 2026. However, Octave has no meaningful standalone buyback history, pays no dividend, and currently plans to retain cash for research, acquisitions and expansion.

What could change the storyFaster subscription growth creates upside, while prolonged weak sales or failed cross-selling would erase the discount.

The bull case requires annualized recurring revenue growth accelerating from the current 6%-8% target to more than 10%, while free-cash-flow margins expand toward 23%-24%. The bear case is that today's transition suppresses growth for longer: full-year organic revenue growth is guided to only 0%-2%, and some large public-safety license deals may slip into 2027. The $1.7 billion goodwill impairment also shows the standalone market already values the business below its former accounting carrying value. Sustained recurring growth is therefore essential to realizing the apparent valuation upside.

AI: News

First standalone earningsOctave delivered growing recurring revenue and strong cash flow, but slower sales and impairments drew caution.

On August 12, Octave reported annualized recurring revenue of $1.143 billion, up 7%, and $93 million of free cash flow. Adjusted operating income was $116 million, while $2.135 billion of noncash impairments drove the reported loss. Shares closed about 3.2% lower on volume roughly four times recent daily levels. The timing supports a mixed investor response to the results and outlook, although it cannot establish which individual disclosure caused the decline.

Independent Nasdaq listingThe Hexagon spin-off created a standalone public valuation and gave investors direct ownership of Octave.

Octave completed its separation from Hexagon in May and began Nasdaq New York trading on May 28. Approximately 268.4 million ordinary shares were outstanding following the distribution, which was a spin-off rather than a cash-raising initial public offering. The new standalone market valuation became economically important: by quarter-end it sat below Octave's balance-sheet carrying value, later triggering the $1.7 billion goodwill impairment. Because no prior standalone trading price existed, a conventional one-day market reaction cannot be calculated.

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Revenue

2022

2023

2024

Net income

2022

2023

2024

Free cash flow

2022

2023

2024

Total cash / debt

CashTotal debt

2023

2024

Financial statements

	2024	2023	2022
Revenue	$1.60B	$1.54B	$1.37B
Research & development	$156.2M	$145.0M	$121.6M
Operating expenses	$780.5M	$771.9M	$649.4M
Operating income	$390.5M	$318.9M	$297.4M
Operating margin	24.34%	20.70%	21.74%
EBITDA	$527.9M	$443.9M	$403.1M
EBITDA margin	32.91%	28.81%	29.46%
Net income	$309.1M	$243.9M	$256.0M
Net profit margin	19.27%	15.83%	18.71%
Basic EPSper basic share	$1.15	$0.91	$0.95
Diluted EPSper diluted share	$1.15	$0.91	$0.95

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Owners

Reported shareholders

Reference date Jun 30, 2026

1.64%of listed shares

Madison Avenue Partners, LP4.22M shares · Jun 30, 2026

View holders

Top 20 reported holders of OCTV
Holder	% owned
Madison Avenue Partners, LP	1.64%4.22M shares
Koch, Inc.	1.17%3M shares
Lansforsakringar Fondforvaltning AB (publ)	1.06%2.74M shares
JANE STREET GROUP, LLC	0.83%2.12M shares
Newtyn Management, LLC	0.75%1.92M shares
JPMORGAN CHASE & CO	0.56%1.44M shares
NORGES BANK	0.51%1.32M shares
EXCHANGE TRADED CONCEPTS, LLC	0.45%1.17M shares
DZ BANK AG Deutsche Zentral Genossenschafts Bank, Frankfurt am Main	0.41%1.05M shares
Legal & General Group Plc	0.40%1.03M shares
GOLDMAN SACHS GROUP INC	0.31%787.35K shares
Select Equity Group, L.P.	0.30%784.92K shares
MILLENNIUM MANAGEMENT LLC	0.29%748.36K shares
HRT FINANCIAL LP	0.24%612.13K shares
California Public Employees Retirement System	0.18%463.19K shares
GEODE CAPITAL MANAGEMENT, LLC	0.16%411.58K shares
MARSHALL WACE, LLP	0.13%325.49K shares
Allspring Global Investments Holdings, LLC	0.12%306.06K shares
NEEDHAM INVESTMENT MANAGEMENT LLC	0.12%300K shares
ROYAL BANK OF CANADA	0.11%279.84K shares