Hexagon (HEXA) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw 0% organic growth, 67.2% gross margin, and 26.1% operating margin, with cash conversion at 71%.

• Revenue grew 1.8% year-over-year to EUR 1,322.8 million, but March declined 6% due to geopolitical uncertainty and tariffs.

• Recurring revenues grew 10% year-over-year, offsetting weakness in sensors, robotics, and perpetual licenses.

• Demand stabilized in April, but management remains cautious and is monitoring costs closely.

• Progress made on ALI and SIG separation, with NewCo to be listed in the U.S. and a new robotics division launched.

Financial highlights

• Reported sales of EUR 1,322.8 million, up 1.8% year-over-year; organic growth was 0%.

• Adjusted gross margin improved to 67.2% (up from 66.5% year-over-year).

• Adjusted EBIT1 was EUR 344.7 million, down 8% year-over-year; margin declined to 26.1% from 29.0%.

• EPS declined 7% to EUR 0.0940; interest expense and financial costs decreased.

• Operating cash flow at EUR 244.6 million, down 27% year-over-year; cash conversion at 71%.

Outlook and guidance

• Management remains cautious due to ongoing geopolitical and tariff uncertainties.

• Demand normalized in April, but visibility remains limited; cost base will be adjusted as needed.

• Strong pipeline of new products, especially in robotics, expected to impact results from H2 2025 onward.

• Conviction in 2022-2026 targets: 5-7% organic growth, >30% EBIT1 margin by 2026, 80-90% cash conversion.

• Preparations for the separation and US listing of ALI and SIG divisions are ongoing.