Hexagon: Bolt-on acquisition of small SaaS-business

The acquired business complements Hexagon’s enterprise asset management software offering. With revenue of only 1 MEUR, the acquired business has no material impact on Hexagon’s short-term earnings.

A complementary bolt-on acquisition

Hexagon announced Thursday that it has acquired Itus Digital, a US-based provider of asset performance management software. The acquired product capabilities directly complement Hexagon’s enterprise asset management platform, which focuses on optimizing industrial customers' asset reliability, improving uptime and reducing costs. Itus Digital is small in size, with estimated sales of 1 MEUR in 2024 and initially lower profitability compared to Hexagon.

Little impact on short-term revenue

The acquired business will be reported in the Asset Lifecycle Intelligence (ALI) division that had revenue of 782 MEUR and adjusted EBIT of 283 MEUR in 2023. We estimate ALI division to grow 9% organically in 2024 as it is one of Hexagon’s fastest growing divisions (group organic growth 2024e: 5%). ALI's growth will be supported by acquisitions of large enterprise asset management software businesses in 2021-22 (Infor EAM and ETQ). A large portion of the division's revenue is SaaS-based. Hexagon is typically able to achieve significant sales synergies for the acquired industrial software businesses by expanding the distribution and cross-selling of solutions.