Hexagon Posts Its Fastest Organic Growth in Five Years at 13%, but Waygate Will Cut Group Margin by About 150 Basis Points and Humanoid Spending Is Set to Rise to EUR 70-80 Million in 2027
Third-quarter 2026 results call, October 23, 2026
Hexagon reported third-quarter organic growth of 13%, its highest in five years, against a tougher comparable. Management also said order intake was stronger still. CEO Anders Svensson called it "another excellent quarter." EBITAC excluding robotics was EUR 265 million, a margin of 25.3% versus 23.1% a year ago. Net sales rose EUR 73 million to EUR 1.05 billion, and the 13% organic increase added about EUR 121 million. The divestment of the D&E business took away EUR 68 million, and currency added EUR 20 million.
Waygate Dilution and a Humanoid Bill That Keeps Growing
The most consequential new information concerns the cost of the company's two big strategic bets. On Waygate, the nondestructive testing business that Hexagon expects to close in the fourth quarter, management put numbers on the near-term damage. Waygate contributes about $631 million of revenue at roughly a 10% EBIT margin, on 2025 figures. On those numbers it would dilute the group EBITAC margin by about 150 basis points and the Manufacturing Intelligence margin by about 300 basis points. Hexagon says it has a plan to lift Waygate into the MI target range of 21% to 24% EBITAC, but it declined to give a timeline. Svensson said the people who must execute the plan need to own it: "It won't be me and it won't be Andreas Renulf that execute on the plan." Investors will therefore have to wait for specifics. Management also offered no comment on Waygate's current trading, citing the hands-off period before closing.
On AEON, the humanoid robot, Hexagon gave its first guidance for 2027 spending. Robotics investment was EUR 25 million in 2025 and is heading for EUR 45 million to EUR 50 million this year. Svensson said next year would likely land at "EUR 70 million to EUR 80 million maybe, but that's not confirmed yet." Robotics cost EUR 13 million in the third quarter, against EUR 6 million a year earlier, and this accounts for the gap between the 24.0% EBITAC margin including robotics and the 25.3% excluding it. Revenue should begin next year, through a mix of outright robot sales and Robot-as-a-Service. Management's timeline for the economics is long. Svensson said the project breaks even "after '31 or so," and that humanoid sales are targeted to take off around 2032. Investors are being asked to fund roughly a decade of ramp-up on a market whose timing management attributes to "people who understand this better than me."
Commercial progress is real but early. Hexagon added two customers in the quarter. BMW and Schaeffler are now training AEON independently, which management called an industry first, enabled by its simulation and world models. Schaeffler has planned a rollout of at least 1,000 units over five to six years. The early customers are European, chosen partly for proximity to R&D. Hexagon is also looking for partners, but not for capital. Svensson said it wants "someone who adds value rather than only capital," such as technology, manufacturing or supply chain capability, and that it is "not in a hurry." The production version will not be called AEON 2.0 and may have a different name. It will be "Robot 1 instead of Prototype 7," redesigned for production rather than proof points. The quarter's reported EPS also included a fair value gain on the Unitree investment, which is excluded from adjusted EPS of EUR 0.082, up 19%.
Margin Quality: Strong Underlying, With Cost Headwinds Still Building
Hexagon's margin bridge was more detailed than usual. Last year's margin was flattered by 230 basis points from a large, highly profitable one-off defense order in Autonomous Solutions. Excluding that and some smaller items, the margin improved 450 basis points year on year. Of that, about 130 basis points came from favorable currency and 170 basis points from the cost-saving program, which has now reached full run-rate. The remaining 150 basis points was drop-through from organic growth. Currency is therefore contributing a meaningful share of the improvement, and the restructuring benefit is now fully in the base and will not repeat. Sequentially, the margin rose 100 basis points despite the third quarter being seasonally weaker than the second.
Gross margin held at about 62% even though sensor sales grew 20%, a mix that would normally be a drag, and management said pricing held up year on year. The CFO said tariff refunds in the quarter were offset by costs tied to the Iran war, semiconductor shortages, memory prices and higher transport, with each side worth roughly 70 to 90 basis points. Svensson said some mitigation actions will not take full effect until the first quarter of 2027. Tariff refunds are one-off by nature, while the cost pressures could persist. That leaves an uncomfortable asymmetry heading into next year.
Autonomous Solutions Is the Engine, Driven by European Rearmament
Autonomous Solutions grew 23% organically, its strongest quarter ever, with EBITAC margin up 250 basis points to 31.5% even against the prior-year one-off. Svensson attributed the growth mainly to demand for anti-jamming antennas, primarily in Europe, as countries re-equip against the backdrop of the war on the eastern border. The CFO named Septentrio as the standout. Demand extends beyond defense into aircraft and marine applications. Management expects the tailwind to last: "The rearming of Europe will take several years. I would say it's just started actually." Orders in the division were "considerably stronger" than sales, and backlog continued to grow. Svensson also said that part of the tariff burden in this division was paid directly by customers.
The prior-year order distorts the regional picture. Americas growth was 6%, but excluding that order, group growth would have been 16% rather than 13%, and Svensson said North American demand has not slowed. EMEA grew 17%, China 15% and the rest of Asia 14%, with management confirming there were no one-offs in those regions.
Manufacturing Intelligence and Cyclical End Markets
Manufacturing Intelligence grew 16% organically, and EBITAC margin excluding the divested China engineering business rose 310 basis points to 25.2%. Order intake was roughly flat versus sales, which management characterized as equally strong. Reshoring in the Americas is a key driver. Asked about channel checks pointing to customer stocking, Svensson rejected the idea, saying "our products are generally not products you stock up on," and that the investments are longer-term in nature. He said he sees no dramatic change in demand heading into 2027 in aerospace, defense, electronics and general manufacturing.
Automotive remains mixed. North America is strong, which Svensson linked to 50% tariffs on imported cars and the push for local production. EMEA and the rest of Asia are improving only in single digits. China is "clearly weak," and Svensson pointed to record global inventories of electric vehicles as Chinese producers export more. Mining grew, including a record quarter in Latin America, though sentiment is cautious given fuel costs and iron ore inventories. Agriculture, only 2% of sales, remains weak on diesel and fertilizer costs tied to the Middle East conflict.
Infrastructure & Geospatial grew 4%, up from 1% a year ago, with EBITAC margin up 120 basis points to 23.7%. Construction, at 27% of sales the largest end market, is still mixed. China grew from a low base, helped by large monitoring projects. Western Europe returned to growth on machine control and reality capture, and Svensson saw "very early indications" of recovery in the UK and Germany that are still only single-digit. North American machine control was weaker and South America declined. The new TS20 total station is selling well.
M&A: A Pricey Software Deal and a Continued Pipeline
Hexagon announced three bolt-ons. Guidance Marine (about EUR 22 million of 2025 revenue) positions vessels relative to quays and other marine assets. Rocscience (about $50 million of revenue) makes geotechnical engineering software. The company also bought the remaining 49% of ZG Technology. Rocscience raised the most questions given its price. Svensson was candid: "I think the multiple that we paid for this company is high." He said it is in line with Hexagon's own multiple, and that Rocscience has 80% recurring revenue, an EBITAC margin above 40% and faster growth than the group. The strategic logic is that Hexagon's radars and sensors monitor how slopes, bridges and tunnels move, Rocscience simulates how they will move in future, and Hexagon's mine planning tools act on that information.
Pro forma for Waygate, Rocscience and Guidance Marine, last-twelve-month revenue would have been EUR 4.7 billion, up from EUR 4.0 billion, with EBITAC of about EUR 1 billion, up from EUR 0.9 billion. Net debt to EBITDA would rise from 0.3x to 1.4x, against an internal ceiling of 2.5x. Svensson said investors should expect continued deal flow from a "very strong M&A funnel." He set a return-on-capital-at-WACC hurdle after about three years, along with double-digit sustainable growth, cultural fit and synergies.
Cash Flow and Balance Sheet
Cash conversion was 82%, reflecting normal third-quarter seasonality, with a EUR 63 million working capital outflow. Operating cash flow after tax and interest was EUR 119 million, and net debt fell from EUR 532 million to EUR 489 million. EBIT1 grew only 5% against 11% for EBITAC, reflecting the capitalization and amortization gap, which narrowed by 80 basis points. The effective tax rate was 18.7%, just under the 19% to 21% guided range. Hexagon will host investor site visits at Septentrio in Leuven on February 25 and at its Manufacturing Intelligence facility in Rhode Island on October 26 next year.