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Operator: Good afternoon. And welcome to Lulu's Fashion Lounge Holdings, Inc. Fourth Quarter 2025 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Lulu's Fashion Lounge Holdings, Inc. General Counsel and Corporate Secretary, Naomi Beckman-Straus. Thank you. You may begin. Naomi Beckman-Straus: Good afternoon, everyone, and thank you for joining us to discuss Lulu's Fashion Lounge Holdings, Inc. fourth quarter and fiscal year 2025 results. Before we begin, we would like to remind you that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to, statements regarding management's expectations, plans, strategies, goals, objectives, and their implementation. These forward-looking statements are subject to various risks, uncertainties, assumptions, and other important factors which could cause our actual results, performance, or achievements to differ materially from results, performance, or achievements expressed or implied by these forward-looking statements. These risks, uncertainties, and assumptions are detailed in this afternoon's press release, as well as our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended 12/28/2025, which can be found on our website at investors.lulu.com. During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, net debt, and free cash flow. Our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure, can be found in this afternoon's press release and in our SEC filings. We also use certain key operating metrics, including gross margin, average order value, and total orders placed. The description of these metrics can also be found in this afternoon's press release and in our SEC filings. Joining me on the call today are our CEO, Crystal Landsem, our CFO, Heidi Crane, and our President and CIO, Mark Vos. With that, I will turn the call over to Crystal. Crystal Landsem: Thank you, Naomi, and good afternoon, everyone. We appreciate you joining us today. 2025 was a transformational year for Lulu's Fashion Lounge Holdings, Inc. We made meaningful progress strengthening our financial foundation, driving operational efficiencies, and leaning into our strengths in event, resulting in gross margin expansion, a significant reduction in operating expenses, and three consecutive quarters of positive adjusted EBITDA performance. We believe our stronger, leaner, and more resilient operating model, combined with our consistently improving profitability, positions us well to return to growth as consumer and category pressures begin to stabilize. We believe our focus on event-driven categories continues to differentiate us. Bridesmaid and special occasion dressing remained strong throughout the year, with sustained demand and multiyear category growth reinforcing our leadership position in this segment. We also saw exceptional momentum in our wholesale business in 2025, delivering triple-digit year-over-year growth as we expanded into major retail partners, further extending the reach of the Lulu's Fashion Lounge Holdings, Inc. brand across channels. Operationally, we executed well on major initiatives designed to simplify and modernize the business, including completing our distribution center consolidation, streamlining operations, driving sequential improvements in inventory and assortment optimization, and steady reduction in return rates. Together, these accomplishments drove significantly improved EBITDA performance over the course of the year. With these foundational changes largely in place, we are entering 2026 with greater strategic focus, a healthier cost structure, and an assortment more aligned to our core customer and brand identity. We also continue to strengthen our financial position, with net debt expected to be between $7.5 million and $8 million at the end of Q1. While work remains, particularly in repositioning our casual and footwear category, we are confident that our disciplined execution and sharpened assortment strategy position us for continued progress as we move through the year. We believe we have entered the new year well positioned to further accelerate our strategic priorities, lean into the strength of our core business, continue to focus on the turnaround of the casual and footwear businesses, drive and enhance customer engagement, and unlock sustainable long-term growth. As part of this effort, we are sharpening our strategic focus on the initiatives we believe will drive the most impact. This includes strengthening our casual and footwear categories to improve order economics, expanding our wholesale presence to broaden reach, and leveraging technology to deepen engagement, enhance efficiency, and support our growth. Mark will discuss each of these in more detail shortly. Turning to our fourth quarter performance. We are seeing encouraging momentum across the business reflecting the impact of our disciplined execution and strategic focus. Special occasion and event wear continues to outperform, led by strong growth in new occasionwear and both new and reorder cocktail categories, which drove healthy year-over-year net sales growth. Strength in event dressing reinforces our conviction in both the assortment strategy and value proposition and further validates our position as a leading destination for getting dressed up. Thanks to the strong contribution from our occasion categories and healthier average order value, in the fourth quarter, we saw our most meaningful sequential quarterly improvement in net revenue comparisons at an approximately 5% decline. This is an improvement from a 17% decline in the first quarter 2025. Product margins improved for the fifth consecutive quarter, a 240 basis point increase in the fourth quarter compared to the prior-year period and the highest product margin for the fourth quarter in four years. The improvement reflects sustained consumer demand for our higher margin categories, supported by our pricing and margin enhancement initiatives, and continued discipline in markdown strategy. We will continue to prioritize these initiatives to support ongoing margin gains in the year ahead. Gross margins expanded 640 basis points to 44.3% over the prior-year period, our highest fourth quarter gross margin since 2021. The consistent progress we are seeing reflects our commitment to margin-accretive growth. We plan to build on this momentum by further refining our assortment, strengthening sourcing, and managing pricing and cost efficiencies. Return rates improved 80 basis points from the third quarter, another quarter of sequential declines. We are proud of the enhancements we have made around customer experience in regard to improved fit and quality, as well as thoughtful adjustments to our return policy and customer abuse prevention deployed throughout the year. Brand momentum is accelerating, supported by ongoing visibility efforts to broaden Lulu's Fashion Lounge Holdings, Inc. exposure, reach, and relevance. We drove meaningful gains in brand awareness and engagement in the fourth quarter through a broader and higher-quality media footprint spanning earned media, cultural moments, editorial features, broadcast placements, and expanded studio stylist and talent relationships, while leaning into key holiday and event-driven moments. As a result, our brand equity score maintained its strong position, underscoring the resonance and relevance of the Lulu's Fashion Lounge Holdings, Inc. brand. Our wholesale business continues to gain significant traction, shown by strong interest from prospective partners and the addition of several major retailers in the fourth quarter. These additions expand our in-store and online presence to nine major retail partners. To date, this has translated into triple-digit, seven-figure growth in wholesale revenue. Importantly, in February, we announced our expansion into all Nordstrom stores nationwide, reflecting accelerating demand in brick and mortar and increased retailer confidence, reinforcing Lulu's Fashion Lounge Holdings, Inc. ability to scale beyond its direct-to-consumer roots while staying deeply connected to its customers. Furthermore, earlier this month, we broadened our reach with the launch of our Amazon storefront, offering a curated, primarily exclusive assortment enabling us to maintain full control of brand storytelling while leveraging Amazon's reach and convenience. As we grow with existing partners and add brand-accretive majors and boutiques, including the expansion into additional brands within our current major partners, as well as Victoria's Secret in the first quarter this year, we continue to expand access to Lulu's Fashion Lounge Holdings, Inc. in a thoughtful, strategic way to drive profitable wholesale volume and bring our products to more customers nationwide. Rather than taking a one-size-fits-all approach, each partnership features a channel-specific assortment aligned with how different customers shop and engage with our brand. We believe these partnerships further position Lulu's Fashion Lounge Holdings, Inc. as a digitally fluent brand with growing influence across the contemporary fashion and retail landscape. As 2026 progresses, we are further encouraged by our wholesale customers' request for more year-round assortment, which will help to rebuild our brand awareness in our casualwear assortments across all sales channels. Finally, we delivered our third consecutive quarter of positive adjusted EBITDA. Our tighter cost structure and stronger product margins lifted our performance again this quarter, underscoring the disciplined operational focus that continues to support our bottom line. Our performance over the last several quarters reflects the significant strides we are making in strengthening our core business and the opportunities we see ahead of us to continue driving results. On that note, we are making steady progress resetting our footwear and casual apparel businesses, which have pressured top-line performance over the last several quarters. We continue to drive the reset of casual apparel and footwear this quarter by narrowing our assortment, tightening inventory receipts to improve turn, and shifting to more elevated event-adjacent and dress-forward styles that better match customer preferences and where margins are strongest. We believe these steps will support the stabilization of these categories and set a stronger foundation for future growth. As we progress through this transition, we continue to expect the pressure on top-line contribution from these categories to ease towards the end of the second quarter, positioning us for a healthier revenue trajectory in the back half of the year. Looking ahead, we are intentionally prioritizing profitability and the quality of our assortment over short-term revenue growth. By resetting our casual and footwear businesses to more brand-aligned and event-adjacent assortments, and working down less productive inventory in the first half of the year, we are laying the groundwork for a stronger, more disciplined foundation that supports higher-quality and more durable performance. Turning now to our cost reduction initiatives. Our work has continued to pay off as evidenced by our third consecutive quarter of positive adjusted EBITDA performance. The improvement was driven in part by a 12% year-over-year decline in operating expenses in the fourth quarter, including a 13% reduction in fixed costs. We continue to build momentum off our streamlined cost structure and expect continued gains as we drive additional operational efficiencies and focus on returning to sustained profitable growth. As it relates to our SKU rationalization efforts, we are making meaningful progress around streamlining our assortment and reducing underperforming inventory to drive improved margins and greater operational efficiencies. As of this earnings call, in footwear and casual apparel, the SKU count owned and inventory on hand is down approximately 17% and 39%, respectively, compared to the prior year. While there is still work to be done, we believe the progress the team has made to date will set us up nicely for improved performance in the second half of this year. These actions are also enhancing our financial profile by promoting cash generation and fortifying our balance sheet. As it relates to tariffs, the environment remains highly uncertain, including potential changes in scope, timing, and rates. While we are closely monitoring developments, our strategy does not rely on any single external outcome. Instead, we are focused on actions within our control. These include advancing resourcing initiatives, strengthening long-time vendor partnerships, optimizing product costs, and applying disciplined pricing and assortment strategies. We also recognize that the broader environment, including potential tariff impacts, freight volatility, and a still cautious consumer, may continue to create variability in demand. Our approach is to remain agile, protect profitability, and adjust thoughtfully as conditions evolve. Taken together, we believe these actions position us to navigate near-term volatility while continuing to strengthen our long-term margin structure. Before I turn it over to Mark, I would like to highlight a couple of additional updates. First, we made an important leadership update last month. After joining us as fractional CFO in the third quarter, Heidi Crane was appointed as Lulu's Fashion Lounge Holdings, Inc. permanent CFO in February, a natural next step through this process. Working together over the last several months, it is clear that Heidi brings exceptional financial discipline, sharp strategic insight, and a deep understanding of our business, which will greatly support our efforts to achieve long-term sustainable growth and drive value creation. Second, our board recently approved an amendment to our certificate of incorporation to decrease the number of authorized shares of our common stock from 250,000,000 to 15,000,000 and the number of authorized shares of our preferred stock from 10,000,000 to 500,000, contingent on stockholder approval at our 2026 annual meeting. With that, I would like to turn the call over to Mark Vos, our President and Chief Information Officer. Mark will provide updates around progress we are seeing against strategic priorities. Mark? Mark Vos: Thank you, Crystal. As Crystal highlighted earlier, we have refined our areas of strategic focus to concentrate on the highest impact drivers of the business. I will spend a few minutes today with more detail on the progress we are making across these three key areas: one, enhancing our casual and footwear categories to improve order economics; two, expanding wholesale; and three, leveraging technology to drive engagement and efficiency. Starting with strengthening our casual and footwear categories to drive improved order economics. Fashion and footwear are lower return rate categories, which contributes to a more favorable overall return rate profile. Additionally, casualwear drives repeat purchase frequency, which in turn improves marketing efficiencies. Let me unpack these dynamics. As we discussed on prior calls, Lulu's Fashion Lounge Holdings, Inc. has demonstrated measurable strength in eventwear over the past several years. At the same time, we have seen non-eventwear product classes decline in both unit sales and revenue. As a result, eventwear as a percentage of revenue has grown from approximately 48% in Q4 2022, to 56% in Q4 2024, and further to 61% in Q4 2025. The increasing concentration of eventwear as a percentage of total revenue creates upward pressure on our overall return rate. However, the core return rate within eventwear, measured on non-markdown sales and adjusted for volume in 2025, has decreased by more than 5% year over year as a result of our continued investments in product quality and anti-buy-wear return measures, more than offsetting that upward pressure. In Q4 2025, and into Q1 2026, working closely with our vendor partners we strategically trimmed our new casual and footwear assortment buys, limiting introductions to products we have high confidence will resonate with our customer, while also improving the shopping experience across the website and strengthening our brand image. As a result, new product introductions in casual and footwear were 28% lower in Q4 2025 compared to Q4 2024 and are tracking to 50% lower in Q1 2026 compared to Q1 2025. And currently, we are focusing our new buys for the latter part of Q2 and Q3 2026. With our renewed merchandising focus, given the fewer but higher-quality product launches in casual and footwear, we expect the eventwear mix to continue increasing in 2026 relative to 2025, and, therefore, no immediate improvement in return rate percentage is anticipated in the first half this year. However, as we move into Q3 and Q4 2026, we expect our casual and footwear launches, featuring better resonating products, to normalize and begin to return to growth. As a result, casual and footwear revenue as a percentage of total revenue is expected to increase beyond normal seasonal trends and above last year, which should translate to favorable overall return rate comparisons in the second half of this year and better overall order economics and customer retention metrics. Importantly, we are already seeing clear early signals of this turnaround. In Q4 2025, units transacted per new product launched increased 21% year over year, and in Q1 2026, the units transacted per new product launched is tracking toward a 50% improvement over Q1 2025, a very encouraging trend. We are pleased with the strong position we have built in eventwear and the growth opportunity ahead of us. Strengthening our casual and footwear categories in the event-adjacent space is expected to also serve as a catalyst for re-growing customer repeat purchase frequency. Eventwear customer purchases tend to be more seasonal and episodic in nature, whereas casual and footwear lend themselves to year-round purchasing, which, in addition to driving repeat purchases, also supports new customer acquisition. Fashion and footwear as a share of new customer acquisition was approximately 41% in Q4 2022, declining to 31% in Q4 2024, and holding at 31% in Q4 2025. This underscores the opportunity ahead of us, and an improved casual and footwear assortment that aligns well with our core offerings in eventwear can materially contribute to new customer acquisition. Given the deliberate pullback in new casual and footwear product launches in 2026 in order to more aggressively reset the assortment, we expect the new customer acquisition contribution from these categories to remain pressured before beginning to improve and build momentum in Q3 2026. We will be monitoring repeat order frequency closely and look forward to reporting on our progress in future quarters. Turning to wholesale expansion. As Crystal mentioned, our wholesale channel continues to deliver steady growth. To provide more color around this wholesale expansion, I will share the following statistics. In 2024, we shipped to four major accounts; in 2025, that expanded to nine major accounts; and we expect to add several more in 2026. In 2025, our overall wholesale revenue increased by 143% and our same-majors revenue was up 62% compared to 2024. We believe this is a clear indicator of brand strength at existing retailers as well as expansion into new retailers. This growth is a validation that Lulu's Fashion Lounge Holdings, Inc. brand resonates in in-store retail where our customer is also shopping. Lulu's Fashion Lounge Holdings, Inc. wholesale expansion complements and amplifies our direct-to-consumer business model. Our customers find the Lulu's Fashion Lounge Holdings, Inc. brand where she shops, whether online, in the Lulu's Fashion Lounge Holdings, Inc. app, or in the store. The in-store experience, where our customers can feel the quality and fit of our products and be pleasantly surprised by the accessible price points of our products, builds trust and connection with our customers for years to come across channels. Finally, let me walk through how we are leveraging technology to drive engagement and efficiency. In previous calls, I have spoken about various AI initiatives, go-lives, and usage in product recommendations and search, demand and trend forecasting, marketing and marketing creative, as well as merchandising. This time, I would like to also highlight some initiatives that are not predominantly AI-driven, yet have real, tangible, and positive impacts on enhancing the customer experience, driving stronger engagement, greater ease of use, and ultimately, higher customer retention and repeat purchases. Return feedback optimization. We have redesigned our return initiation flow to make it seamless for customers to provide detailed product feedback. This gives us significantly deeper insight into return drivers, including fit experience and individual fit needs. This data forms the foundation for AI- and non-AI-driven improvements in product selection, fit specifications, and truly personalized fit and product recommendations. We believe we have a significant opportunity in front of us to reduce return rates, improve product curation, and create more successful and enjoyable shopping experiences, leading to customer delight, higher repeat purchases, increased word-of-mouth, and better order economics. Happy Returns integration. We are currently implementing Happy Returns as a return shipping solution, scheduled to go live in 2026. We believe this will improve the return experience for eligible customers through expanded drop-off locations and the elimination of printed return shipping labels. Additionally, the consolidated nature of return shipping will reduce return shipping costs, which have been steadily increasing year over year. Enhanced product descriptions. We are actively testing on-site product descriptions that improve the clarity and value of product detail information, reducing customer friction and increasing purchase confidence. Beyond streamlining the customer decision-making process, enhancements also better support AI data consumption and interpretation to facilitate feasibility in AI and agentic shopping experiences. Simplified account creation. We have improved the account creation process by enabling alternative login methods through various third-party authentication providers. Early results are very encouraging, showing significant adoption of these new login methods alongside notable increases in account creations, demonstrating reduced friction at a critical point in the shopping journey. AI-powered review summaries. Lastly, we are testing AI-generated customer product review summaries that help our customers navigate the extensive and often detailed reviews our customer community provides. By making these confidence-building social signals easier to digest, we are aiding our customers in their purchase decisions and helping them find the right products, continuing to deliver the Lulu's Fashion Lounge Holdings, Inc. brand hug and reinforcing our position as the shopping destination for all of life's moments. Taken together, these strategic focus areas reflect our deliberate and targeted approach to accelerating our path to growth in the year ahead. By strengthening our underperforming but strategically important categories, expanding our presence through wholesale, and removing friction across the customer journey with targeted technology investments, we are addressing both near-term execution and the long-term durability of the model. I am excited about the momentum we are building. Our teams continue to bring energy, discipline, and customer focus to their work, and I thank the Lulu's Fashion Lounge Holdings, Inc. team for their dedication and care for our customers. Next up is Heidi Crane, Lulu's Fashion Lounge Holdings, Inc. CFO, and she will walk you through the numbers. Heidi Crane: Thank you, Mark. I am excited to have joined the team in a permanent capacity last month, and I look forward to continuing to advance our strategy for profitable growth and strengthening operational and financial discipline across the organization. Now to our results. In the fourth quarter, net revenue was $63.0 million, a decrease of 5% year over year, driven by an 11% decrease in total orders placed, partially offset by a 6% increase in average order value. For the full year, net revenue totaled $282.3 million, a decrease of 11% versus 2024 due to a 15% decrease in total orders placed, partially offset by a 2% increase in average order value. Gross margin for the quarter was 44.3%, up 640 basis points year over year due to a higher mix of full-price sales and higher-margin product categories, as well as improved outbound shipping costs, which resulted in over $700,000 of cost savings. For the full year, gross margin increased 200 basis points to 43.2% when compared to 2024. On the expense side, Q4 selling and marketing expenses totaled $11.8 million, down $0.9 million year over year due to lower marketing costs and merchant processing fees. For the full year, selling and marketing expenses were $66.6 million, a decrease of $6.3 million versus 2024. General and administrative expenses decreased $2.8 million to $16.1 million in Q4, a 15% decline year over year, primarily due to our ongoing cost control initiatives, including lower fixed labor and benefit costs driven by reduced fixed overhead, a decrease in equity-based compensation expense, a decrease in variable labor and benefits from a combination of lower sales volume and increased productivity, a decrease in liability insurance, legal, and professional fees, and a decrease in software, occupancy, depreciation, and amortization expenses. For the full year, general and administrative expenses were $68.0 million, down $13.3 million, or 16%, from $81.3 million in 2024. Our net loss for Q4 improved $28.4 million from a $31.9 million loss in the same period last year, for a net loss of $3.5 million, excluding a non-cash goodwill impairment charge of $28.4 million in the same period last year. For the full year, our net loss is $13.7 million compared to $55.3 million in 2024, or a net loss of $26.9 million excluding the non-cash goodwill impairment charge. It should be noted that during the fourth quarter, we refined our methodology for estimating breakage related to store credits to better reflect changes in customer redemption patterns. This refinement increased breakage reported for the fourth quarter and full year beyond historical levels. As we continue to evaluate redemption patterns, adjustments to the breakage estimate may be recorded from time to time. Q4 adjusted EBITDA was positive $2.6 million compared to a $3.3 million loss in Q4 2024, a $5.9 million improvement year over year, and the adjusted EBITDA margin was positive 4.2% versus negative 5% in the prior-year period. For the full year, adjusted EBITDA was negative $1.2 million compared to negative $9.7 million, with a full-year adjusted EBITDA margin of negative 0.4% versus negative 3.1% in 2024. Interest expense in Q4 totaled $487,000 versus $313,000 in Q4 2024. For the full year, interest expense totaled $2.5 million compared to $1.3 million in 2024. The increase is primarily attributable to higher average borrowings along with a $900,000 write-off of loan amendment fees related to the prior credit agreement with Bank of America. Diluted loss per share for the quarter was $0.14 compared to diluted loss per share of $11.44 in Q4 2024. For the full year, our diluted loss per share was $4.90, which was $15.10 better than 2024 after adjusting for the 1-for-15 reverse stock split, which was effective as of 07/07/2025. For the fourth quarter, net cash used in operating activities was $3.8 million compared to $2.5 million of cash used in the same period last year. For the full year, net cash provided by operating activities was $1.4 million compared to $2.6 million in 2024. Our inventory balance at quarter end was $32.4 million, a decrease of $1.6 million, or 4.7% year over year. With a decline in 2025 sales, this inventory reduction reflects our disciplined approach to inventory management as we work to reposition our casualwear and continue our focus on curating a higher-margin assortment for our high-demand categories. Free cash flow used in the fourth quarter was $4.3 million compared to free cash flow used of $3.0 million in the same period last year. Free cash flow used for the year was $0.8 million compared to free cash flow used of $0.3 million in 2024. We ended the year with total debt of $14.4 million, an increase of $1.3 million, and net debt of $11.7 million, an increase of $3.1 million compared to 2024. The outstanding debt along with a $300,000 letter of credit is secured under our new credit agreement with White Oak Commercial Finance. As a reminder, we entered into this agreement in August 2025, which consists of an asset-based revolving credit facility with a $20.0 million commitment, a $5.0 million uncommitted accordion, and a $1.0 million sublimit for letters of credit. As we enter 2026, our focus is on driving profitability while continuing to strengthen the business. We are prioritizing higher-quality demand and disciplined order economics while more aggressively resetting the assortment of our casual apparel and footwear categories. While the first quarter of the fiscal year is typically our seasonally low selling period, we made it a priority to use this quarter to specifically work through slower-moving inventory. In addition, we capitalized on the end-of-year clearance sale which occurred in 2026 versus the last week of the fiscal year 2024. The seasonal impact of these actions to sales and margins, along with the impact of the annual audit fees and ramping up performance marketing spend in March to kick off the spring season, lead us to expect adjusted EBITDA to be negative for the first quarter, but significantly improved year over year. We believe these early actions will better align our assortment with customer demand, position the business for improved profitability during our peak selling periods, which typically occur in Q2 and Q3, and deliver stronger cash flows for the full year as well as an improvement in adjusted EBITDA year over year. For the full year of fiscal 2026, we expect adjusted EBITDA to inflect to positive compared to negative $1.2 million in 2025, and the net revenue growth trend to improve year over year compared to negative 11% in 2025. We expect capital expenditures to be between $2.0 million and $2.5 million, inclusive of capitalized software, which is comparable to 2025. And now I will turn it back over to Crystal for closing remarks. Crystal Landsem: Thank you, Heidi. Our fourth quarter capped a year of steady improvement and rising momentum for Lulu's Fashion Lounge Holdings, Inc. The progress we have made reflects the strengths of our strategy, the power of our brand, and the discipline of our team. We have entered 2026 with a stronger foundation, and we are energized by the opportunities ahead. We remain committed to delivering a more focused, connected, and resilient business while driving enduring profitable growth. As always, I want to thank the Lulu's Fashion Lounge Holdings, Inc. team for their continued effort, trust, and passion for our brand, and love for our customer, and thank our stockholders for their ongoing support. Operator: Ladies and gentlemen, thank you for your participation. This concludes today's conference. Please disconnect your lines. Have a wonderful day.
Operator: Good afternoon. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic Holdings, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead. Eric Cerny: Good afternoon, everyone. Welcome to Virgin Galactic Holdings, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. On the call with me today are Michael Colglazier, Chief Executive Officer, and Douglas Ahrens, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Our press release and slide presentation that will accompany today's remarks are available on our Investor Relations website. Please see Slide 2 of the presentation for our safe harbor disclaimer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and, as a result, are subject to risks and uncertainties. Many factors could cause actual events to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, refer to the risk factors in the company's SEC filings made from time to time. You are cautioned not to put undue reliance on forward-looking statements and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call whether as a result of new information, future events, or otherwise. Please also note that we will refer to certain non-GAAP financial information on today's call. Please refer to our earnings release for a reconciliation of these non-GAAP financial metrics. I would now like to turn the call over to our CEO, Michael Colglazier. Go ahead, Michael. Michael Colglazier: Hello, everyone. We have had a tremendously productive start to 2026 and the buildup to commercial space line operations is in full swing. Three massive milestones to call out at the start. First, we have completed structural assembly of all three major components of our ship, the wing, the fuselage, and the feather. Second, the weight-on-wheels milestone for this first ship is expected in the next few weeks as the process of joining the wing, fuselage, and feather has been moving along even better than expected. This allows the ground test phase to begin in April, with commencement of the flight test phase on track for Q3 as planned. And third, with the launch of our first spaceflight on track for Q4, we have opened the sales window for Virgin Galactic Holdings, Inc. spaceflight expeditions, and we are now adding people to our spacefarer community at new price points. We are very excited to share the progress made since our last earnings call, and I will start by calling your attention to the fantastic image on page 3 of our presentation. As you can see, we have wrapped up final assembly of all three of our major subassemblies: the wing, the fuselage, and the feather, and the process of joining these into our first complete spaceship has begun. A structural assembly set to finish over the next week or two we expect to bring this ship into ground testing in April, which has it on track for our first spaceflight in Q4 2026. Amazing progress by our entire company. With our first ship moving full steam ahead, we have released a limited tranche of Virgin Galactic Holdings, Inc. spaceflight expeditions, each priced at $750,000. Our new website is now live and will support the information application process for those interested in joining the Virgin Galactic Holdings, Inc. spacefarer community. We have hired our new Chief Growth Officer, Megan Pritchard, and she is joining at one of the most exciting times in our company's history. Looking at the agenda on page 4, today I will offer insight into our sales plans for the year ahead, share expectations for ramping the cadence of spaceflight during the first month of operation, hit highlights on progress of future spaceports, and provide a road map of expected milestones and catalysts as our first spaceship is ready for its maiden spaceflight. Doug will discuss our plans for cash management, capital structure support, and revenue planning over the next twelve months as we place our ships in the commercial service, drive meaningful revenue from spaceflight operations, protect our balance sheet, and target quarterly positive cash flows as early as 2027. He will also review our fourth quarter and fiscal year 2025 results. Let us get started on page 5. With the outstanding progress the Virgin Galactic Holdings, Inc. team has delivered with our first spaceship, we have included a series of images on pages 5 through 7 of our new ship, as structural assembly nears completion. We are incredibly excited at how well the ship is coming together. During our last call, we highlighted some specific challenges we were having with elements of our fuselage, and the fuselage remained on the critical path for us throughout the build phase for this first ship. With that said, finished the fuselage assembly last week, and joined it to the wing assembly shortly thereafter. Our feather assembly from Bell Textron has made its way across country to our factory and we expect to connect the feather to the wing and fuselage over the next week or two and then move this ship into its ground testing phase. I would like to take a minute to call out why this enormous milestone is so important to Virgin Galactic Holdings, Inc.'s future. We invested years designing this next generation ship and the result is spectacular. That heavy lift is behind us. We then spent significant time and capital developing tools both to build the carbon parts and also to assemble those parts into the final structure of the ship. These tools were built to exacting standards, designed to last, and they will support the efficient production of many spaceships going forward. Next, we spent time refining the process to produce a wide variety of carbon composite parts for our ships. As I mentioned with our fuselage, some components required a few iterations to get right, which is fairly typical of first-yield parts, but we have adapted our processes and techniques and we can now repeatedly produce high-quality parts. All these efforts came together and are enabling us to assemble the ship's structure in the span of just a few weeks. This final assembly time shaved months off our historical process, and we expect this efficient assembly process to be replicated as we expand our fleet over time. In sum, we now have the infrastructure and capability to build and assemble spaceships efficiently, reliably, and at scale. This provides an enormous competitive advantage we grow our business. Turning to exciting news on page 8. Sales have begun. With our first new spaceship preparing for its ground test phase, it is time to welcome more people into the Virgin Galactic Holdings, Inc. spacefarer community, which already contains over 650 founding astronauts. To support the process, we have reimagined and rebuilt our entire digital presence to focus on informing and engaging aspiring astronauts, with a streamlined and purposeful approach to our new public website at virgingalactic.com. I hope everyone listening will take time to explore this new site, as the life-changing aspects of our spaceflight experience really come through. We have opened a limited tranche of 50 spaceflight expeditions, each priced at $750,000. These space flights will be slotted in our manifest immediately after we fly the current members of our founding astronaut community, many of whom have been anticipating their spaceflight for several years. As I have shared before, we expect our prices will rise in steps over the near to medium term, and once this initial tranche of spaceflight reservations is concluded, we plan to retire sales at the $750,000 level to focus on welcoming this new group into our spacefarer community in trademark Virgin Galactic Holdings, Inc. fashion. We will then open our next tranche of availability which we expect will be priced higher than $750,000. We will also be offering a very limited number of reservations to join our earliest space flights on our new spaceship. To date, slightly less than 800 people have flown to space throughout history, and we expect flights from government agencies will leave fewer than 200 remaining slots to be one of the first 1,000 humans in space. We will be pricing these very limited opportunities substantially higher than our regular reservations. With sales beginning and commercial operations on the horizon, I am extremely pleased to welcome our first Chief Growth Officer, Megan Pritchard, to Virgin Galactic Holdings, Inc. Megan joins us from Uber, where she most recently led the U.S. mobility portfolio, including the luxury segment Uber Elite. Megan's career has been spent building commercial success in groundbreaking industries from eVTOL to autonomous vehicles to expansive growth and category expansion in the rideshare industry. Her charter is to drive growth and scale across the company, with an immediate focus on our initial sales efforts and a broad remit that includes scaling our business at Spaceport America, establishing additional revenue streams for our existing and emerging technology, building brand partnerships, and accelerating the development of new spaceports. Moving to page 9. I would like to share how we are planning to ramp our flight cadence during the early months of operation. We expect to begin commercial spaceflight operations with a cadence of approximately four spaceflights per month. We plan to have our space missions and maintenance teams trained and ready to turn the ships at a higher pace, but we want to take the time necessary to dial in our astronaut experience and incorporate any learnings and feedback we receive during our initial flights. Once we have the missions, maintenance, astronaut experience dialed in, we plan to progress to an average of eight space flights per month. We will then ensure all parts of our operation are scaling appropriately before moving to 10 flights per month or more. Actual flight cadence will be influenced by weather and other factors, of course, but our planning efforts are built with these flight rates in mind. Safety and operation, and dedication to an unparalleled astronaut experience will drive the actual pace of this progression and we will only proceed a step up in flight cadence when everything is fully ready. At this early planning stage, our goal is to move into a cadence of 10-plus flights per month sometime in 2027, subject to vehicle and operational readiness. On page 10, we have recently been flying our launch vehicle, Eve, as part of our pilot proficiency training. This ship was given a very meaningful upgrade over the last year while we have been building our new spaceships, and the improvements have readied Eve to target a launch support capability of up to 12 to 15 space flights per month, which is higher than our expected average commercial cadence. This additional capacity from Eve should be extremely helpful allowing us to respond to weather-related flight delays, so we can generally stay on track with our flight dates and customer commitments on a week-to-week basis. Our engineering and maintenance teams along with our pilot corps have done an incredible job with this launch vehicle. We expect the substantial upgrades we have made to Eve over the last few years will support a service life into 2032 or beyond. But we also plan to expand our spaceflight capacity beyond what Eve can support. That will require additional launch vehicles to support the next set of spaceships coming off the line. Our new launch vehicle development program, internally known as the LVX program, has been advancing modestly as we have kept most of our engineers focused on the delivery of our new spaceships. We expect the majority of our engineers will pivot to the LVX program as our spaceships move into flight test, and we currently are targeting commercial deployment of new LVX vehicles along with additional spaceships in 2030, which should coincide nicely with opportunities for a second spaceport in addition to expanding operations at Spaceport America. Speaking of future spaceports, on page 11, I would like to touch on progress with plans for our next spaceport. We are nearing conclusion of our initial study for Virgin Galactic Holdings, Inc. baseline operations in Italy. We have had a very successful engagement with our partners in the Italian government, and we jointly sorted important efforts necessary to fly from a location within the Puglia region in Southern Italy. Key achievements include understanding how airspace will be deconflicted, identification of probable flight paths and spaceflight trajectories, definition of infrastructure requirements of the spaceport, robust assessment of weather patterns across the year, and positive investigations into both supply chain and hospitality availability within the local area. Next steps will include specifics around licensing, timetables, and business arrangements, and we are looking forward to continuing this effort with our Italian partners this year. In addition to the exciting opportunity in Italy, we also progressed discussions for a Virgin Galactic Holdings, Inc. spaceport with additional governments during the last quarter. I have been very encouraged by the interest and opportunity within each of these locations, and I look forward to sharing more around international expansion opportunities in addition to the substantial growth we expect from Spaceport America. Starting on page 12, I would like to outline several upcoming milestones and expected catalyst opportunities, as our first spaceship moves through ground testing, advances to flight testing, and prepares to launch into commercial operation. First step, in April our first spaceship will begin a series of ground testing efforts, specifically known as production acceptance testing, or PAT, and integrated vehicle ground testing, or IVGT. Production acceptance testing will be done on every spaceship we produce and is conducted to ensure that all systems, including electrical, pneumatic, and hydraulic, are properly installed and function correctly in an integrated configuration. After that is done, we plan to begin the IVGT process, a deep systems-level integration test done on the first vehicle, which is conducted to validate and verify the overall system design and confirm that it meets all performance and safety requirements. This thorough ground testing period should wrap up in July, when we expect to open the hangar doors in Phoenix, christen this first ship with its new livery installed, and transport it to Spaceport America in New Mexico. It will begin flight testing shortly thereafter. Moving to page 13. Next up in May will be some excitement at our operating base in New Mexico. With flight testing on our horizon, it is time to expand our team of pilots and accelerate proficiency training. To do that, we have been interviewing some of the world's best test pilots to join our elite spaceship pilot corps. Commencing in May, our pilots are scheduled to begin flying our original spaceship, Unity, on a series of glide flights above Spaceport America. Our new spaceships share the same outer mold line and energy management characteristics as our original ship, which makes Unity an outstanding training vehicle in advance of our first glide flight with our new spaceship. This series of glide flights with Unity also gives our mission control and maintenance teams excellent preparation ahead of the new spaceship test flights. And it is going to be a majestic sight when Unity delivers these encore performances in the New Mexico skies. Advancing to page 14. The next milestone following ground testing and the Unity glide flight series will be the start of our flight test program, which we expect to commence in the third quarter. The flight test program will include a series of glide and rocket-powered test flights. We plan to have a partial burn test flight where we will ignite the rocket motor but purposely stop short of a full-duration burn. This will be followed by a full-duration burn spaceflight. The full flight test program is expected to extend into the fourth quarter. The main objective of our glide flights is to incrementally expand the flight envelope and evaluate overall vehicle performance, including tuning, and validating the tuning of the fly-by-wire flight control system. Rocket-powered flights focus on validating the performance of the ship during key stages of flight and validating predictive thermal models. Other test points will include the evaluation of the cabin experience, training and customer operations procedures, and maintenance and turnaround processes. The test program is ultimately designed to validate all systems, operating procedures, and the astronaut experience before entering commercial service. Throughout this phase, our timeline is driven by disciplined data collection, analysis, and model refinement. We will be posting and publishing images from all these flights along the way. It will be an exciting spring, summer, and fall as anticipation builds with the start of commercial operations. On page 15, a quick note on two additional milestones coming later this year. First, with production of spaceships well underway, we are gearing up to begin rocket motor assembly within our Phoenix factory, with production expected to begin in Q4 2026. We have a solid inventory of motors already on hand, but the new rocket motor assembly line is planned to keep pace with rocket motor production needs as we scale flight at Spaceport America, and the line is designed to support rocket production needs for a second spaceport as well. Next, with our first spaceship entering the test phase, fabrication efforts are pivoting to support both static testing efforts and also production of our second spaceship, which we expect will enter service between late Q4 2026 and early Q1 2027, in line with our planned ramp in spaceflight cadence. Turning to page 16. We often receive questions from our retail shareholder base regarding production schedule, commercial service launch dates and cadence, and cash management, including how we consider the benefits of cash inflows from our ATM program relative to its dilutive effects. I believe we touched on schedule and launch cadence already, but before I hand the call over to Doug, I would like to spend a little time on our cash management and capital market strategy as we conclude our pre-revenue phase and prepare to drive meaningful cash inflows with the launch of commercial space line operations. First and foremost, we will be using cash to complete our first two spaceships and place them into service, as those two ships enable the start of high-margin revenue operations and begin to unlock the tremendous value of our business model. As we bring these ships into service, we expect to generate significant cash from the current backlog of customers as their final payments become due in advance of their spaceflight. To enhance our cash flows as we start commercial operations, we will be offering a limited number of higher-priced space expeditions on our earliest flights for those who wish to be part of the first 1,000 people in space. We plan to manage our flight manifest in a fashion that will allow modestly positive quarterly cash flow within 2027, with positive cash flow forecasted to scale in 2028 and beyond as we fly astronauts and researchers who have reserved their spaceflight at higher price points. We entered into a series of capital realignment transactions last December and moved most of our debt maturity into 2028, in alignment with our planned ramp in price and profitability. Doug will share more about the many benefits of these capital realignment transactions, including flexibility in payment terms. We expect to leverage opportunities with the $138 million remaining within our existing ATM program to support corporate objectives in the upcoming year. Utilizing an ATM program is dilutive. However, we expect the value created from the assets that are being put into service with support from this ATM use will substantially outstrip the potential dilutive impact. We are excited to move into cash-generating operations as we place our new spaceships into service, expand our book of business with the addition of new astronauts, and prepare for high growth in the years ahead. I will now turn the call over to Douglas Ahrens for the full financial update including detail on our plans to leverage these aforementioned strategies to transition the company from a pre-revenue state to a profit-creating enterprise. Douglas T. Ahrens: Thanks, Michael. Good afternoon, everyone. I will start with the highlights of the capital realignment transactions we completed in December, and I will share how this forms the landscape for us to realize the economic potential of our business. I will follow with a recap of our recent financial results before providing an outlook for 2026 as we transition to commercial service. Starting with our capital realignment transactions on page 17, in December we successfully executed an exchange with several of the holders of our 2027 convertible bonds addressing $355 million of the $425 million convertible bonds originally due in February 2027. These transactions were done very intentionally and with capital preservation in mind. There were several key benefits to our business from executing these transactions. First, we extended the final maturity date of the new notes to December 2028, which better aligns with our planned ramp in cash flow from commercial operations with the two new spaceships in service. Second, we eliminated $142 million of contractual debt payments, representing a very substantial reduction in future indebtedness. Third, we built flexibility into the new structure, giving us the option to settle portions of the debt obligations with either cash or equity depending on future conditions. As part of the exchange, we also issued warrants, which are intended to align with shareholder interests given the warrant exercise price is more than double our recent stock price. Additionally, the warrants require cash payment to the company when exercised, further enhancing our balance sheet. These transactions were thoughtfully executed and are expected to support our ability to deliver shareholder value over the long term. To recap, we have substantially extended the maturity of our debt, materially reduced the principal amount due, added flexibility for method of payment, and with the inclusion of warrants, we have further aligned all stakeholders' interests with meaningful share price appreciation. Through the successful completion of these capital realignment transactions, we believe we have built a financial runway to launch and grow commercial space line operations. I think it is important for us to take a moment and reflect on Virgin Galactic Holdings, Inc.'s financial life cycle and call out the extraordinary place we have now reached. The first phase of our financial life cycle was the development phase, when we spent many years on research and development to optimize the performance of our unique spaceflight system. Not only did we create an amazing human spaceflight experience, but we also built significant barriers to entry with our technology. The next phase was the investment phase, when we put the infrastructure in place that enables us to build incredible spaceships. We have the factory capacity and tooling needed to repeatedly produce space vehicles that are designed for manufacturability and maintainability. With the first new spaceship nearing completion and the second ship in line, we are wrapping up the initial investment phase. We are set up for cost-efficient scaling of the fleet going forward. We have effectively converted cash into valuable assets on the balance sheet in the form of both factory capacity and new spaceships. As this initial investment phase concludes and we head into commercial service, we expect to see further improvement in free cash flow each quarter of this calendar year. This brings us to the next and particularly exciting phase, the commercial phase. With our first spaceship nearing completion and preparing to head into ground testing, we are now gearing up for the start of commercial service in the fourth quarter of this calendar year. Further emphasizing this incredible moment, we are welcoming our new Chief Growth Officer and opening up sales to new customers. With the start of the commercial phase, we plan to accelerate our flight rate and open the doors for sustained profitable growth. We are thrilled to have reached this extraordinary place on our journey. Let us now shift to our recent financial results on page 18. Starting with Q4 2025, we generated revenue of $300,000 from access fees related to future astronauts. Total operating expenses for the fourth quarter were reduced by 26% to $61 million compared to $82 million in the prior-year period as we reduced expenses and also continued to see the shift from R&D to capital investments in new spaceships. Similarly, net loss improved by 18% to $63 million in the fourth quarter compared to $76 million in the prior-year period. Adjusted EBITDA improved by 23% to negative $49 million in the fourth quarter compared to negative $63 million in the prior-year period. Free cash flow was negative $95 million in the fourth quarter, at the midpoint of our prior guidance and a 19% improvement compared to the prior-year period. Turning to page 19. For the full fiscal year 2025, we generated revenue of $2 million from future astronaut access fees. Total operating expenses were $287 million in 2025, reflecting a 25% reduction from $384 million in 2024. We reported a net loss of $279 million in 2025, representing a 20% improvement compared to a net loss of $347 million in the prior year. Adjusted EBITDA for the year was negative $226 million, a 22% improvement compared to negative $289 million in the prior year. Free cash flow was negative $438 million in 2025. Moving to page 20. We ended the year with $338 million in cash, cash equivalents, and marketable securities. In 2025, we generated $122 million in gross proceeds through an aftermarket, or ATM, equity offering program. For 2025, capital expenditures were $198 million, up from $122 million in the prior year. That growth in CapEx is reflected in property, plant, and equipment, or PP&E, on the balance sheet. We reported $389 million in PP&E at the end of 2025, an increase of 86% from $209 million at the end of 2024. This represents our significant investment in assets such as manufacturing capacity and spaceships that we expect to yield tremendous future economic returns. Spending trends in 2025 played out as expected. Peak spending occurred back in 2025. We have reduced our cash spending each quarter since then. Looking ahead, we expect continued reductions in cash spending each quarter this year. Although we plan to add resources in our space line operations and customer operations teams in anticipation of commercial service in 2026, these operating costs are expected to be more than offset by the reductions in manufacturing costs as we finalize the build of our initial spaceship fleet. Continuing with our projections, revenue for 2026 is expected to be $200,000 for astronaut access fees. Forecasted free cash flow for 2026 is expected to be in the range of negative $90 million to $95 million. We expect free cash flow to show sequential improvement following Q1. By Q4 2026, we expect to receive significant new cash inflows from customers as we initiate commercial service. Commercial service is obviously the pathway to delivering the economic model that we first laid out for you in August 2024, and that model is shown again here on page 21. We continue to see the economics of the model holding true. We plan to communicate two key metrics that drive the economics: flights per month and revenue per flight. The first metric, flights per month, is a powerful indicator of the success of our spaceflight system and is a key differentiator for us relative to a traditional vertical launch approach. Michael talked about our expectation of attaining a targeted flight rate of 10 or more flights per month sometime in 2027. This translates to approximately the annual flight rate of 125 flights per year as shown in the first column on this page. The second metric, revenue per flight, is a function of ticket pricing. Michael also mentioned that our current price for a spaceflight expedition has increased to $750,000 per seat. Plus, we will offer a limited number of tickets at a higher price to fly on the earlier flights. Given we currently have approximately 650 future astronauts tickets at various prices, revenue per flight will vary depending on how these tickets flow through the flight manifest. Currently, we expect to achieve modest quarterly positive cash flow within 2027 as we fly a large percentage of astronauts with tickets that were historically sold at lower prices. We forecast that we will achieve the adjusted EBITDA shown in the first column of this business model on an annualized basis sometime during 2028. We are pursuing a high growth trajectory. We are very excited to be approaching the growth phase of our business with the anticipated start of commercial service. In the 10-K to be filed, we included a going concern disclosure and management's plans to resolve it. The assessment leading to this disclosure looks at cash, cash equivalents, and marketable securities on the balance sheet as of the date of the filing of the 10-K and compares those amounts to our spending projections for the next twelve months. It also takes into account all contractual debt payments due within the next twelve months, which are assumed to be settled in cash. According to generally accepted accounting principles, this assessment does not yet allow inclusion of our expected future cash inflows from space flights, such as those we have highlighted today. It also does not include the potential of any additional capital inflows such as the $138 million remaining on the ATM. Given this methodology, the going concern disclosure is to be expected. We are at this stage in our financial life cycle where we are successfully converting cash into valuable assets in the form of manufacturing capacity and new spaceships that can drive our economic model. We forecast the start of commercial service in the fourth quarter of this year, and we expect significant cash inflows in connection with that milestone. Throughout the year, we plan to maintain appropriate strength in our balance sheet, and we are thrilled to be on the cusp of ramping commercial space line operations. With that, I will turn the call back over to Michael. Michael Colglazier: Thanks, Doug. I will close on page 22, which again shows the image of our new spaceship finishing final assembly in our Phoenix factory. What an accomplishment. It is a shared success that was only possible with enormous effort and dedication from our partners at Bell Textron and Carbon Aerospace, as well as a lengthy list of key suppliers who stepped up to deliver a very lengthy bill of material that enabled fabrication of the ship. Most of all, this ship coming together so well is a testament to the talent, genius, grit, and tenacity of our teammates at Virgin Galactic Holdings, Inc. We are on a bold endeavor and this team is delivering day in and day out. I am proud and inspired to see our team and our partners come together, and we cannot wait to show this ship off to the world when it is formally christened in just a few months. We have reached pivotal milestones this quarter, with the upcoming conclusion of our first spaceship assembly phase, the launch of sales, the impending start of ground testing of our spaceship program. We will be opening our factory to visits from our founding astronaut community in the next month, and I think this group is going to be over the moon with excitement as they see their spaceship coming to life so beautifully. Let us open the call for questions. Thank you. Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press 1 again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press 1 to join the queue. Our first question comes from the line of Oliver Chen with TD Cowen. Your line is open. Oliver Chen: Hi. Thanks a lot, Michael and Doug. Regarding the chief growth and what you see ahead with the consumer, what are your thoughts on our hypothesis on the opportunities and the workflow with much happening there. Also, as we think about the model going forward, what should we know about CapEx more quarterly? And then more broadly, the new spaceport sounds like a big opportunity. What is on the road map for that investment cost and how that may manifest? I know there is a lot of economic benefits you will bring to a region, and then lastly, more specifically, the commercial spaceflight in fourth quarter is very exciting. Any parameters on that? What is embedded in your guidance for the revenue that quarter? Michael Colglazier: Hey, Oliver. It is Michael. Why don’t I take, I think, the first and third and let Doug take the second and fourth? But if you would do me a favor, Oliver, just a little more clarity on your first question. Oliver Chen: Yeah. As we look ahead, I guess, Megan, the announcement of Megan Pritchard, what is on the road map for what you see as the growth framework and thinking about the luxury and consumer side, the strategy. Michael Colglazier: Got it. Incredibly excited to have Megan joining us. She is an amazing executive. She starts Monday. And as we kind of mentioned in the prepared remarks, there is, I will call it, tactical, and then there is strategic. So tactically, Megan will lead our team that is driving growth in sales during this year. That all that growth will be flowing through at Spaceport America. So that is a focus on our suborbital space business with both private citizens and researchers. Megan's remit is much broader, and the team and processes she will build will be much broader. So that includes, I will say, expansions of our suborbital business model. I will jump ahead a little bit, Oliver, to number four. You talked about new spaceport. So Megan will be heavily involved in the identification and kind of partnership development we do on new spaceports. You ask about economics. Each deal will be different, and each partnership will be different depending. But broadly, these are likely to be joint, joint agreements, you know, joint venture agreements in the countries at hand. Broadly, we will look to bring from Virgin Galactic Holdings, Inc. our spaceflight system, our space vehicles, and all the technology around that. And we would look for our partner countries to bring the physical infrastructure in those areas. So the spaceport runway, airspace, of course, is from a government standpoint. And we would look to the community around for, I will call it, the astronaut experiences outside of flight. So hotels, food and dining, beverages, activities to do, both for the astronauts and for all the friends and family who come. So that is kind of who is bringing what to the table. Then a sharing of the economics through that. So, hopefully, that gives you a little bit of clarity there. And I said each country has different things to bring to the table, and so I imagine things would be unique depending upon each country's specific interest. In addition then to growing our initial book of business further and managing the price, we think it will be price growth in the near term for that on Megan's plate, and then looking to expand through additional spaceports and get that underway because those are, you know, a number of years in development. We will be looking to additional business models that we can leverage both with our existing and, you know, emerging technologies that we create. So nothing more to share about that one broadly. But I think bringing someone in of Megan's caliber, like I said, with a wide remit to help us grow and accelerate the growth of our company. Doug, you want to talk the couple questions Oliver had, number two and four? Douglas T. Ahrens: Yes. So regarding the CapEx, we guided the free cash flow to be between $90 million to $95 million for Q1. That is million dollars negative. And then we said it would continue to improve each quarter sequentially through the year. That is what we are expecting. So to put the CapEx in perspective, around half of the projections for the first quarter and into the second quarter are CapEx as we finish up the work on primarily, you know, Delta One, and we have got the Delta Two coming in, the stack test article, all of that. So you will see CapEx be around half. And then as the total spending comes down, the CapEx comes down even faster in the second half because now we are moving into more of an operating phase and our spending shifts to the commercial operations, you know, with the spaceport and all of that. So that is really more front-end loaded in the first half of the year and then tapers off the CapEx side in the second half. Regarding the revenue, it is a little early to be giving revenue guidance four quarters out. But just to put it in perspective, we did say that we expect to start commercial service in that quarter, and we gave kind of a cadence to expect that in the beginning we would be expecting about one flight a week, and so four flights a month. And then when we are ready, we will ramp up to eight flights a month, and we give a timeline getting to 10 or so flights per month by 2027. So, you know, again, it depends a little bit on exactly when we start in the fourth quarter, and then the other variable, of course, is the mix of ticket pricing. We talked about quite a variety of prices, and those will weave their way into the early manifest. As we discussed today, you have got the legacy customers, and you have got some new opportunities here for people who want to be in the first 1,000 astronauts ever to go to space. Again, it varies on a few things there, Oliver, but I hope that gives you a little more color. Oliver Chen: Okay. Last and a follow-up. On the four-times monthly flight to the eight to the 10-times, what are the variables in terms of, you know, reaching 10 sooner or reaching 10 later that we should consider in the sensitivities as we model that monthly flight cadence ramp? Michael Colglazier: Sure. It is Michael. Think about it as almost balancing the line a little bit. We are super excited at the work that has happened with our launch vehicle, Eve. And talked about Eve, we expect has capacity to support 12 to 15, you know, launches, so, you know, better than, you know, three to four a week, if you want to think of it that way. And that is higher than what we expect we will average across the year, and that is important. That will help us, you know, do some catch up if we have a string of bad weather and other things. But let us say Eve is running three a week for conservative assumptions here. We have built each of these spaceships with an expectation that they can fly twice a week. So having one spaceship would theoretically let us fly twice a week. Eve has the capacity to fly twice a week, and that would get you to the eight flights per month capability with one spaceship and one mothership, one launch vehicle Eve. Now we have a second spaceship coming and we expect that to arrive 2026 into 2027. And that also we expect will be able to fly twice a week. So at that point, Eve, depending upon how it does between 12 to 15 a month, Eve starts to become the bottleneck of our system. That is, of course, why we have our LVX program to expand our capacity overall. So to go from greater than eight, we will need both Eve, obviously, but we will need our second ship to be able to move past eight per month and into 10-plus per month. Hopefully, that gives you a good sense of how to think about that math. Oliver Chen: Very helpful. Thanks, gentlemen. Best regards. Operator: Our next question comes from the line of Gregory Arnold Konrad with Jefferies. Your line is open. Gregory Arnold Konrad: Good evening. Hi. Good evening, continuing with the last question. Just to verify, I think you talked about the next mothership. Did you say 2030, and then I think in the past, you had talked about an expanded fleet scenario. Should we think about the third spaceship not coming online or kind of reaching that model to that 2030 timeframe, or how do you think about what is next after the two spaceships? Michael Colglazier: Yes. I think 2030 is the right timing for a next launch vehicle. And it is not a perfect match, but, broadly, we want two spaceships coming out for every launch vehicle that we bring out. That kind of brings a balanced set. So if the launch vehicle, which is the longer lead item for us, is what is coming 2030. As we mentioned on the call, we now have the infrastructure to build spaceships efficiently, quickly, and cost effectively. If you have not seen it, or if anybody on the call has not seen the Galactic 10 video that released shortly after market close, you will see in there just kind of a quick time-lapse of how we take a completed fuselage, completed wing, and bring the joining of those together. And we expect, you know, over the next week or two at most, you will see us into combining that with the feather that is already there. So we are able to build spaceships in a very effective and efficient fashion. And we would want at least one of those spaceships, if not two, ready to go by the time we bring the launch vehicle in 2030. And that is a fairly straightforward process for us to do now. Gregory Arnold Konrad: And then maybe just to follow up on the reopening of ticket sales. I mean, I think you are doing a limited first tranche and then, you know, talked about the other limited tranche and eventually a second tranche. Can you maybe just talk about timing, how you are thinking about, like, the metrics and balancing backlog, and then I think also since last time we talked, there have been some changes to, like, the competitive backdrop. I think there has been some discontinuation from competitors. I mean, how has that maybe materialized in terms of demand? Michael Colglazier: So let us see where to start with that. The competitive piece just to ask, Greg. The Blue Origin made an announcement that they are trying to focus on lunar program. It is very exciting and important to the country. We wish them the best. I think their stated piece was that they were out for no less than two years. So I think it is probably right for people who wish to take a spaceflight expedition and not go to the space station for $50,000,000, but do so at a more manageable price point, we believe we are well-positioned to be their company of choice in that regard. And I think that will help from a demand standpoint for us for sure. So that is one. Two, the kind of amount of availability we are putting out is more for price strategy, pricing strategy, than it is for picking a specific number. We think it is important to be clear that we are going to step our pricing up as we go, at least in the short and medium terms. And so that is why you see us with a fairly limited number of 50 at a $750,000 price point. I think everybody knows this, but just for context, in case anyone is new, we currently have 650 or so, a little more, founding astronauts, and that is a meaningful group that will carry us, you know, from 2027 into early 2028. So it is not that there is necessarily pressure on us to fill the backlog, but we do want to build our book of business at higher price points. So that is why we are going to start at 50 spaceflight expeditions at $750,000. We will retire that price point. We will take a beat and bring those 50 people into our community, as we want to do that in a world-class way. And then we will open up again. We will pick the number. We do expect the price point will be above $750,000. We have not picked that yet. And I think we will repeat that process a couple times until we hit steady-state price point, and build our book of business going forward. Now I may have missed one other part of your question, Greg. Gregory Arnold Konrad: No. No. No. That was perfect. I really appreciate it. Thank you. Michael Colglazier: You are welcome. Operator: Next question comes from the line of Myles Alexander Walton with Wolfe Research. Your line is open. Myles Alexander Walton: Thanks. Good evening. So I was hoping you could touch on the post-glide flight of the new spaceship to commercial service. I think you mentioned, Michael, that there is a partial burn, then there is one full powered burn. Is that all there is prior to the first commercial operation being presumably the third power burn? Michael Colglazier: That is correct, Myles. In fact, the second piece will be carrying research experiments on the second flight. We will technically be our first. And we do have Mike Moses in town today. He is in from, he is in back and forth in New Mexico and our factory in Phoenix much, but he is here. And, you know, Mike, of course, is our expert in everything to do with flight test. So, Mike, if you do not mind, you know, expanding upon that. Mike Moses: Yeah. Sure. Myles, happy to. So, and maybe just to clarify so that we do not talk past each other. One rocket-powered flight that is not full duration will not take us to space, just to get us supersonic and see how things behave in the Mach 1–1.5 region. And then two space flights before we enter commercial service, the first with just pilots on board and research in the back, so through the NASA Flight Opportunities program, we have got a manifest of payloads to bring in revenue on that first test flight to space. Then another one with two pilots and six mission specialists in back. Those will be internal folks, to validate the cabin experience and mostly our procedures and processes, like Michael said, and then we will be ready for commercial service. The reason that we are able to only have a couple of rocket-powered flights, unlike the Unity flight test program, is we are not learning that envelope for the first time. Our control system is different. We have some systems that are different. We certainly need to verify and validate the performance of the vehicle. We are not learning exactly what stresses are put on the vehicle, exactly how hot it will get, or exactly what happens in zero gravity as the ship maneuvers. So we know all of that from the Unity flights. So we are able to very rapidly move through that program. Of course, we will always operate with safety in mind and prudence. We will take our time to analyze the data, sure that the ship is actually behaving the way we thought it did, and then we will be ready to move. So a combination of not needing to do as many flights as Unity and a Delta spaceship that is designed to fly faster, so the turnarounds between test flights should be able to go a little faster, means that will be a fairly expeditious program as we move through test spaceflight. You will see us focusing more on the glide flights. That is where the new handling flight control systems are different. We want to spend the most time looking at that on both. Myles Alexander Walton: Got it. Makes a lot of sense. There was this, so I am just looking at the 10-K relative to the going concern, and there is a comment in there about the management's plan for addressing, mitigating the condition. And one of those points is partnering with third parties to fund and accelerate the pace of future space vehicle development. Can you elaborate on that, Michael? What exactly is meant by the partnering with third party? Is this different than your current organization? Is this something you are already doing, or is this something that is looked at as being incremental? Michael Colglazier: We have efforts that I would say we are exploring, Myles, both with governments for spaceports as well as the opportunities perhaps with the U.S. government and opportunities we may have with our launch vehicle and things we can do with our launch vehicle in those regards. I think there is nothing to share at this point in either of those places. But as it pertains to our plans, which, you know, the way, you know, this accounting is done is over the next twelve months, I think both of those categories become relevant in how we might partner with governments, be it the U.S. government or an international government, around the new spaceport. The partnership model one could conceive would bring in economics to allow us to accelerate the development of the vehicles for those uses. Myles Alexander Walton: Okay. That makes sense. And, Doug, just one quick one just to clarify for me. The cash flow commentary about the quarterly positive cash flow in 2027, we are talking about cash flow, right? Not operating cash flow. Douglas T. Ahrens: Specifically, I was using just the generic term cash flow for a reason. But let me just explain why. So we have all intents here to build our cash balance through 2027. So we would be spending less than we bring in from all sources. So the reason I chose the words cash flow instead of free cash flow is there is a scenario where if we brought in further investment, like we were just talking about with Michael, you know, say it came in through the capital markets, then we plowed that back into R&D. You do not get credit for those financing cash flows, and so free cash flow in that scenario, you know, you could get a negative number even though, you know, we are building for the future and, you know, not spending more than what we bring in. So when I just say cash flow, that accommodates that. So, again, the intent there is to say that we spend less than we generate, and we are targeting, you know, individual quarters to cross that threshold in 2027. Myles Alexander Walton: Okay. Alright. Thank you. Operator: And, again, if you would like to ask a question, press star then the number one on your telephone keypad. We do have our last question. It comes from the line of Michael David Leshock with KeyBanc Capital Markets. Michael David Leshock: Hey. Good afternoon. Just following up on the 2026 free cash flow guidance and your expectations for the burn rate to improve sequentially through the year? Is there any one quarter where you would expect the biggest step up? Is that kind of a 2Q event when you shift more from production into testing? But just curious if there are any milestones that you could talk about that might drive more of a step change in cash burn versus the more gradual improvement. Douglas T. Ahrens: It is really a gradual improvement until the fourth quarter. So we are expecting, you know, just quarter on quarter lower than the one before, and then by the fourth quarter we see a big change because that is when we get cash coming in from customers as they pay for the rest of their flight reservation. That is the main driver in that quarter. So think of it as a continuous reduction in spending each quarter until the fourth quarter when you get a big shift in the other direction. Michael David Leshock: Great. And then is there any update you can provide on the potential use case of your technology for defense initiatives like Golden Dome? You have talked about that in the past, and you mentioned the need to potentially carry heavy payloads at high altitudes. Just curious if that is still a focus, if there has been any update on that front that you can share. Thanks. Michael Colglazier: Nothing specific to share, Mike. We are, I would say, accepted into the IDIQ for the Golden Dome initiative. We are, you know, qualified as a supplier for that effort. And, yeah, we are spending our time being clear on what are both immediate things, immediate-term opportunities that we may be able to support with both our existing launch vehicle, Eve, and with our new spaceships as they come up, as well as things that are, I will call it, more developmental in nature, which are usually a little bit further in lead times. So but nothing specific to share in that regard. Operator: Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining in. You may now disconnect.
Operator: Good afternoon, and welcome to Fathom Holdings Fourth Quarter and Full Year 2025 Conference Call. Joining us today are the company's CEO, Marco Fregenal; and Senior Vice President of Finance, Daniel Weinmann. [Operator Instructions] Please note this conference is being recorded. Before I turn it over to management, I want to remind listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those outlined in the Risk Factors section of the company's Form 10-K year ended December 31, 2025, and other company filings made with the SEC. Copies of which are available on the SEC's website at www.sec.gov. As a result of those forward-looking statements, actual results could differ materially. Fathom undertakes no obligation to update any forward-looking statement after today's call, except as required by law. Please note that during this call, management will be discussing adjusted EBITDA, which is non-GAAP financial measure as defined by the SEC Regulation G. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release, which is now posted on Fathom's website. With that, I will turn the call over to Fathom's President and CEO, Marco Fregenal. Please go ahead, sir. Marco Fregenal: Good afternoon, everyone, and thank you for joining us today. Before Daniel walks us through the financial results, I want to take a few minutes to step back and talk about the progress we made during the fourth quarter and throughout 2025. This past several years have been challenging for the housing market. Higher interest rates and affordability constraints have significantly reduced transaction activity across the industry. Despite those headwinds, we continue to execute on our long-term strategy and strengthen the foundation of the Fathom platform. That progress is reflected in our results. For the full year 2025, we generated $420 million in revenue, representing a 25% year-over-year growth, and our total transactions increased nearly 15%, driven in part by the addition of My Home Group and the continued addition of strong agents to our network. For the full year 2025, gross profit increased 20.8% to $34.2 million compared to $28.3 million in 2024. And adjusted EBITDA improved by $1.7 million or a loss of $4 million compared to a loss of $5.7 million in 2024. Beyond the financials, we made meaningful strategic progress. We expanded our ancillary businesses, launch new programs and partnerships, strengthen our leadership team and sharpen our focus on the core Fathom ecosystem. It also merits noting that in our fourth quarter, transaction volumes continue to reflect broader market trends. In December, for example, the industry saw a significant number of contract cancellations in some markets, including Atlanta, Jacksonville, and San Antonio, cancellation rates exceeded 20%. Even in this environment, we are encouraged by the strengthening quality of our business. These conditions reinforce why we proactively restructure our economics to reduce reliance on transaction volume and build a more durable, diversified profit model across our platform, positioning us well for our long-term growth and meaningful acceleration when conditions improve. With that context, let me shift to the 4 areas that are central to where we're going as a company, margin expansion, agent experience, customer experience and AI-driven technology. Let me start with margin expansion. In the fourth quarter of 2025, we continue to build Elevate, our concierge level offering by adding more than 100 agents and implemented START, our first-time buyer concierge program through an acquisition. So far in 2026, we have expanded START into 5 states, and we expect by operating 10 states by the end of the year. Looking ahead, our goal is for these 2 programs to represent at least 10% of our total transaction volume by year-end and increase to over 15% by the end of 2027. That's important because both Elevate and START carry significantly higher gross profit margins, typically ranging from 20% to 50%. As these programs scale, we expect them to have a meaningful positive impact on overall margins and further improve the profitability profile of the business. In addition, we are seeing continued progress across our ancillary businesses. Our mortgage business delivered strong performance with revenues increasing 70% in the fourth quarter of 2025 compared to the fourth quarter 2024 while maintaining gross profit margins of approximately 35%. Momentum has continued into the first quarter of 2026, where we have seen file starts increased by over 150% compared to the first quarter of 2025. Our title business also performed well, with revenue growing 38% in the fourth quarter compared to the fourth quarter of 2024, and it continues to be a strong contributor to gross profit margins of approximately 58%. Taken together, both our mortgage and title businesses are scaling nicely and expected to be meaningful contributors to improved margins and overall profitability in 2026. We're also implementing several initiatives to improve profitability and strengthen unit economics across the platform. Let me take a minute to explain our new commission plan named Edge and why matters. Under Edge, new agents will pay a $75 monthly fee. Previously, we charged a $700 annual fee collected on the agent's first transaction of each anniversary year. The challenge was that approximately 35% of our agents never closed the transaction, which made it more difficult to collect the annual fee. By moving to a monthly fee of $75, the total annual amount increases from $700 to $900, a 28.6% increase, which we should now be able to collect from the significant majority of our agents who join Fathom. Moving to our monthly structure increases consistency and predictability in our revenue align us with our industry standards and supports a more engaged agent base, which we believe will drive higher transaction activity over time. To put this in perspective, we believe this change could add to over $1 million in additional gross profit over a full year. With Edge, we are moving away from a flat fee transaction fee and introducing a 7% split while maintaining our $9,000 annual cap, which we set at the agent's anniversary. This is a strategic evolution. The flat fee model works well in a static environment, but a split model allow our economics to scale with home prices. As values increase, our gross profit per transaction increases as well. In other words, we participate more directly in the upside of the market. And even with that change, we expect to remain extremely competitive. A 7% split is well below brokerages, which typically charge from 20% to 30% or even more. While this change will increase our average gross profit per transaction by more than $200, we remain firmly positioned as a value leader. We are not repositioning as the traditional brokerage. We are strengthening our position as the highest value brokers in the industry. In addition, we have introduced a new transaction fee of $250, applied to every transaction in Fathom Realty. On our previous Fathom One and Fathom Max plan, this fee alone will increase our per transaction gross profit by between 45% and 54% on transactions that have not yet reached the annual cap. To put that in perspective, on just 10,000 transactions, that represents an additional $2.5 million in gross profit. On our new Edge plan, which includes both a higher commission split of 7% and the separate $250 fee, the combined effect represents on average a 116% increase in gross profit on a pre-cap transaction over our Fathom One plan, which is the plan under which the majority of our agents operate. It is important to understand our identity has never been tied up to a specific pricing structure. Whether it's flat fee or split, those are simply tools. Our identity is and always has been delivering the greatest value to our agents. Even with these changes, including the additional commission split under Edge and now the new $250 transaction fee, we believe we remain among the most competitively priced brokerages in the country. We continue to deliver significantly more in tools, technology, training and operational support than virtually any competitor while still pricing well below the vast majority of brokerages nationwide. This is something which we're very proud. Taken together, these structural changes are significant as these changes could add a significant incremental gross profit before any benefit from a market recovery. And finally, on implementation. All existing agents are being grandfathered into their current plan. Edge applies to new agents joining the platform. Over time, as natural attrition occurs and new agents join, the mix will shift towards Edge organically. We view this as a controlled low disruption transition that allows us to improve unit economics while maintaining stability across our existing agent base. In addition, we are now applying a monthly fee to agents who have historically closed 0 transactions with Fathom. We fully expect some of these agents to leave the platform, and we are comfortable with that outcome. These agents do not generate revenue or contribute to EBITDA. To date, we have already removed approximately 1,100 of these agents, and we expect a similar number to follow as we implement the monthly fees. Removing these agents will have 0 negative impact on our net income or EBITDA. As these initiatives scale, we believe they will play a meaningful role in driving overall margin expansion. Now to agent experience. Agent success is at the core of our platform. We recognize that agents have different goals and operate at different stages of their careers, and we are committed to delivering a seamless experience that supports them at every step. That includes enhancing training, stronger lead generation and new tools like our marketing platform, [ MAXA ]. Across our Elevate and START programs, we're now generating more than 4,000 leads per month, creating over 200 active customer opportunities for our agents. We expect that number to scale to more than 20,000 leads per month by year-end as we continue expanding these programs and roll out additional initiatives, including our partnership with ByOwner.com. We're also seeing encouraging traction with Fathom Business Services, our coaching program designed to improve collaboration between agents and ELG loan officers. While still early, more than 500 agents have completed the training and over 10 million in mortgage transactions are currently in process. Taken together, these initiatives are strengthening our value proposition, helping us attract and retain high-quality agents, increasing attachment across services and driving incremental margin improvement while reinforcing our position as a technology-first platform. The customer experience is just as important to our platform. We focus on delivering a simple and transparent process that builds trust and confidence from search through closing and beyond. In Q2, we plan to launch an integrated consumer portal that will provide buyers and sellers with greater visibility throughout and after the transaction. We're also investing in programs like HOMESTAR, which helps consumers improve their credit. Although we are in the early stages of the rollout, over 600 potential buyers have enrolled, and we have seen approximately 40% of the participants graduating towards beginning the homeownership process. In addition, partnerships such as Move Concierge help streamline decisions around Internet, cable and utilities while our START Concierge program supports first-time buyers as they navigate the complexity of home-buying process. These efforts not only drive satisfaction, repeat business and referrals but also strengthen our network to contribute to greater efficiency and improved unit economics over time. Finally, we continue to enhance intelliAgent, our proprietary technology platform as we lean further into AI-driven initiatives to modernize our offering and to improve overall efficiency. As a technology-first real estate platform, innovation is central to how we operate. We are leveraging AI and automation to streamline agent workflows, enhance the customer experience and scale the business more efficiently than traditional models. These investments are already enabling smarter automation, better insights and more efficient operations across recruiting, training, lead management and transaction support. Over time, we believe this will help us attract and retain high-quality agents, further differentiate the platform and stay ahead of our competitors that are slower to adopt to these technologies. Ultimately, each of these initiatives is designed to improve productivity across the platform, increase revenue per transaction and drive stronger profitability. Taken together, they reflect how we are evolving the model, expanding margins, increasing agent productivity, enhancing customer experience and building a more scalable technology-driven platform. Now let me take a few minutes to discuss some of the leadership changes of the past few months. Samantha Giuggio, who has been with the company for more than 14 years, made a decision to step down as President of Fathom Realty. I have had the privilege of working with Samantha for many years through both the challenges and opportunities our industry has faced. I am deeply grateful for her leadership and the many contributions she made to the growth and success of Fathom. We wish her nothing but the best moving forward. At the same time, I'm excited to welcome Lori Muller, who joined us in February as the new President of Fathom Realty. Lori brings more than 30 years of industry experience, most recently serving as President of EXIT Realty, where she oversaw a network of more than 25,000 agents. She is a proven leader with deep operational expertise, and I'm confident she will play a key role in driving the next phase of growth for Fathom Realty. I have already had the opportunity to work closely with Lori, and I'm excited about the energy, perspective and leadership she brings to the organization. With that, let me turn the call over to Daniel to review the financial results for the fourth quarter and full year. Daniel? Daniel Weinmann: Thank you, Marco. I'll begin reviewing our financial results for the fourth quarter and full year 2025 and then provide a breakdown of performance across our business segments, starting with revenue. Fourth quarter revenue totaled $90.6 million, a 1.2% decrease year-over-year compared to $91.7 million in the prior year period. The modest decline was primarily driven by a 3.2% decrease in brokerage revenue, reflecting softer real estate transaction activity during the quarter. This was partially offset by strong performance in our ancillary businesses, which grew an average of 54.2% year-over-year, driven by increased attach rates and continued expansions of our mortgage and title operations. For the full year 2025, total revenue increased 25.4% to $420.5 million compared to $335.2 million in 2024. The growth was primarily driven by the addition of My Home Group in November 2024 as well as continued momentum in our ancillary businesses, which increased an average of 27.6% year-over-year. This reflects our ongoing focus on driving higher attach rates across our integrated platform and expanding revenue per transaction. Gross profit for the fourth quarter of 2025 increased to $7.1 million compared to $6.7 million in the fourth quarter of 2024. The increase was primarily driven by stronger contributions from higher-margin ancillary businesses, including mortgage and title. The continued expansion of our Elevate program also contributed to improved revenue per transaction and stronger unit economics. Gross profit margin for the fourth quarter of 2025 increased to 8.1% compared to 7.2% in the fourth quarter of 2024. The improvement was primarily driven by a more favorable revenue mix with greater contribution from higher-margin ancillary services as well as improved operating efficiency. For the full year 2025, gross profit increased 20.8% to $34.2 million compared to $28.3 million in 2024. The increase was primarily driven by growth in mortgage and title and the continued expansion of the Elevate program, which helped increase revenue per transaction and overall gross profit contribution. Gross profit margin for the full year 2025 decreased moderately to 8.1% compared to 8.4% in 2024 as the benefits from growth in higher-margin ancillary businesses were offset by revenue mix changes, including the addition of My Home Group and continued investments in growth initiatives. Our technology and development expenses were approximately $1.7 million for the fourth quarter of 2025 compared to $1.8 million in the prior year period. For the full year 2025, technology and development expenses increased to $7.3 million from $6.6 million in 2024. The approximately $700,000 increase was primarily driven by continued investments in our technology platforms, including the expansion of new features within intelliAgent. General and administrative expenses totaled $8.2 million for the fourth quarter of 2025 compared to $8.4 million in the prior year period. For the full year 2025, general and administrative expenses decreased to $33.1 million from $33.6 million in 2024, primarily reflecting the impact of cost reduction initiatives implemented throughout the year. Our marketing expenses totaled $1.4 million for the fourth quarter of 2025 compared to $1.9 million in the prior year period. For the full year 2025 marketing expenses decreased to $5.2 million from $5.8 million in 2024. The decrease was primarily driven by continued expense discipline and increased efficiency across marketing initiatives. Our GAAP net loss for the fourth quarter of 2025 totaled $6.7 million or $0.21 per share compared with a net loss of $6.2 million or $0.29 per share for the fourth quarter of 2024. The year-over-year increase in net loss was primarily driven by a lower income tax benefit of approximately $20,000 in 2025 compared to $1.1 million in the prior year period as well as the recognition of approximately $900,000 loss on the sale of business. For the full year 2025, GAAP net loss was $20.3 million or $0.72 per share compared with a GAAP net loss of $21.6 million or $1.07 per share for 2024. The year-over-year improvement was primarily driven by higher revenue and expense reduction initiatives. These improvements were partially offset by the recognition of a $900,000 loss on the sale of a business and approximately $2 million in accrued legal expenses. Our adjusted EBITDA loss, a non-GAAP measure for the fourth quarter of 2025 improved to $2.6 million compared to $2.9 million in the fourth quarter of 2024. For the full year 2025, adjusted EBITDA loss was $4 million compared to $5.7 million for 2024, representing an improvement of approximately 29.8% year-over-year. The improvement was primarily driven by higher revenue, particularly from the addition of My Home Group and growth in our ancillary businesses as well as continued expense reduction initiatives, including lower marketing and general administrative expenses. These improvements were partially offset by increased investment in technology and development to support long-term platform growth. I will now provide a more detailed review of performance across our individual business segments. Starting with our brokerage segment. We closed approximately 8,501 real estate transactions during the fourth quarter, a decrease of 14.2% compared to 9,903 transactions in the fourth quarter of 2024. The decline was primarily driven by continued softness in the residential real estate market, including elevated mortgage interest rates, affordability constraints and limited housing inventory, which impacted overall transaction volumes. Notably, U.S. home purchase agreements canceled in December represented approximately 16.3% of homes that went under contract during the month, the highest December level recorded since tracking again in 2017, highlighting the ongoing volatility and pressure in the housing market. For the full year, we closed approximately 42,405 real estate transactions, representing a 14.6% increase compared to the prior year, primarily driven by the addition of My Home Group in November 2024. We ended the fourth quarter with approximately 14,135 agent licenses, a decrease of 1.2% compared to 14,300 agent licenses at the end of the prior year. The modest decline was primarily driven by continued softness in the real estate market, which impacted agent recruiting and retention as well as a continued focus on improving agent productivity and overall network quality. Revenue for the real estate division was approximately $84.9 million in the fourth quarter compared to $87.7 million in the prior year period, representing a 3.2% decrease. The decline was primarily attributable to softer housing market conditions, including reduced transaction volumes during the quarter. For the full year 2025, revenue increased 26.8% to $399 million compared to $314.7 million in 2024. The increase was primarily driven by the addition of My Home Group in November 2024. Gross profit margin for our real estate division remained consistent at 5.4% for the fourth quarter of 2025 compared to the fourth quarter of 2024 as improvements from higher agent productivity and increased contribution from Elevate were largely offset by softer transaction volumes and revenue mix during the period. For the full year 2025, gross profit margin improved to 6.1% compared to 5.8% in the prior year. The increase was primarily driven by the continued expansion of our Elevate program, which enhances revenue per transaction as well as a broader initiative focused on improving unit economics, including pricing discipline and increased contribution from higher-margin transactions. Adjusted EBITDA loss in the brokerage division was approximately $200,000 in the fourth quarter of 2025 compared to adjusted EBITDA income of $40,000 in the fourth quarter of 2024. The year-over-year decline was primarily driven by lower transaction volumes in the softer housing market, which reduced revenue and operating leverage in the quarter, partially offset by continued expense discipline. For the full year 2025 adjusted EBITDA income in the brokerage division increased to $5 million compared to $3.2 million in 2024. The improvement was primarily driven by higher transaction volumes from the addition of My Home Group as well as improved unit economics, including increased revenue per transaction and ongoing cost optimization initiatives. Next, I will turn to our mortgage segment. Our mortgage business generated revenue of $3.4 million in the fourth quarter of 2025 compared to $2 million in the fourth quarter of 2024, representing an increase of approximately 70%. The growth was primarily driven by higher loan origination volumes and improved attach rates from our brokerage channel. Mortgage adjusted EBITDA loss for the fourth quarter of 2025 improved to approximately $200,000 compared to a loss of $600,000 in the prior year period, reflecting improved operating leverage on higher volume as well as continued expense discipline. For the full year 2025, revenue increased 17.4% to $12.8 million compared to $10.9 million in 2024. Adjusted EBITDA loss improved to approximately $500,000 compared to a loss of $1.5 million in the prior year, representing an improvement of approximately 67%. The improvement was primarily driven by higher revenue, improved attach rates and continued strategic cost reduction initiatives as well as increased efficiency across the platform. Turning now to our title segment. Our title business generated revenue of $1.8 million in the fourth quarter of 2025 compared to $1.3 million in the fourth quarter of 2024, representing an increase of approximately 38.5%. The growth was primarily driven by organic expansion and increased transaction volume from internal referrals. Those title adjusted EBITDA loss for the fourth quarter of 2025 was approximately $300,000, consistent with the prior year period as higher revenue was offset by continued investment in personnel and infrastructure to support future growth. For the full year 2025, revenue increased 37.8% to $6.2 million compared to $4.5 million in 2024. Adjusted EBITDA loss for 2025 increased to approximately $1.2 million compared to a loss of $500,000 in the prior year. The increase in loss was primarily driven by continued investment in scaling the title platform, including hiring, market expansion and infrastructure build-out, which outpaced revenue growth during the year. These investments are intended to support increased attach rates and improve profitability over time. That concludes our segment review. Turning to our balance sheet and liquidity. We continue to maintain a disciplined focus on our balance sheet given the dynamic real estate market environment. We ended the quarter with a cash position of $5.7 million, reflecting our ongoing focus on liquidity management, expense control and operational efficiency. We did not repurchase any shares during the fourth quarter under our existing stock repurchase program. On March 18, 2026, the company entered into a $2 million financing arrangement, which provides additional liquidity and financial flexibility as we continue to execute our strategic initiatives and navigate current market conditions. That concludes my remarks on the financial results. I'll now hand it back to Marco to share more on our strategic initiatives and outlook. Marco Fregenal: Thank you, Daniel. Before we open the call for questions, I want to spend a few minutes talking about how we see the opportunity ahead as we move to 2026. What I want to emphasize is that the structural changes we have made to our business are designed to deliver meaningfully stronger results regardless of what the broader housing market does. We are not counting on a market recovery to drive our improvement. The pricing and fee changes I described a few minutes ago are already going into effect, and they fundamentally improve our unit economics at any level of transaction volume. At the same time, the long-term fundamentals for housing demand in the U.S. remain very strong. Regardless of when transaction volumes recover, Fathom is well positioned. And more importantly, we are entering the next phase of the business, which we believe will be very positive. Over the past several years, we have invested in building a scalable platform, expanding our agent network and developing our technology and building our ancillary services across mortgage, title and lead generation. During 2025, we took important steps to improve the economics of the model, including changes to our commission structure, the introduction of recurring fees and the continued expansion of higher-margin services. As a result, we believe our business today is stronger, more efficient and more diversified than it has been in the past. So even without a market recovery, we expect to deliver better margins and greater operating leverage. And if the housing market does begin to normalize or improve, which we believe they will, over time, that becomes more meaningful additional upside. And that brings me back to our four priorities we outlined earlier, which will guide our execution in 2026. We are focused on pursuing margin expansion, seeking to improve revenue per transaction and looking to increase the contribution from our higher-margin businesses. We intend to continue enhancing the agent experience with the goal of helping our agents close more transactions and grow their businesses. We also expect to explore new tools, new services and partnerships aimed at improving the customer experience and simplifying the transaction process. And we anticipate continuing to invest in technologies and AI, which we believe will be a key driver of efficiency and scalability across the platform. Together, these initiatives position Fathom to capture growth opportunities as the housing market recovers and to deliver stronger financial performance over time. Before we conclude, I want to take a moment to thank our employees, our agents and our leadership team across the organization. The past several years have been a challenging period for the real estate industry, and I'm incredibly proud of how our team has continued to execute, innovate and support our agents and clients throughout that time. Their work has positioned Fathom for what we believe is the next phase of growth. As we move to 2026, our focus remains on executing these initiatives because we believe they'll deliver materially improved financial results with or without a market recovery. To summarize, there are three points I would highlight from today's call. First, we made meaningful progress from strengthening the foundation of the business during 2025, growing revenue and expanding the platform despite a difficult market. Second, the structural pricing changes we have made, including the new $250 transaction fee and the shift to a monthly recurring fee and more than 100% increase in gross profit for pre-cap Edge transaction are designed to meaningfully improve our unit economics and any transaction volume. And third, our business is more scalable and more profitable per transaction than it has ever been. When the housing market recovers, we are positioned to capture the upside with significantly better margins. Operator, we're now ready to open the line for questions. Operator: [Operator Instructions] Our first question is from Tom Hayes with ROTH Capital Partners. Thomas Hayes: Marco, I guess a couple of things. And again, I appreciate all the details. Really two things. One on the Elevate program, could you just reiterate what you said as far as your target to bring on new Elevate partners in '26? Marco Fregenal: Sure. So Elevate, think of Elevate as a platform, right? And there'll be different kinds of agents to use Elevate in different ways. So you have our regular starting program those Elevate, then we created the START program that leverages some of it, the functionality and the benefits into lead generation that Elevate offer. So Elevate, it will evolve into 2 or 3 different kinds of offerings under the Elevate platform. Our goal by the end of the year is to have about 1,000 agents on Elevate. And I think combined right now, we're about 260, 275. We think that by the end of the year, will be at around 1,000 agents on the entire Elevate platform, which, again, is going to consist of agents on just the basic Elevate program on START, Elevate and a couple of other versions of Elevate that will create over the year. Thomas Hayes: Okay. I appreciate that. And then on the new Edge program, just wondering what some of the feedback from the agents has been. That went into effect Jan 1, and can you just remind me that should be a margin contributor for the START, correct? Marco Fregenal: Yes. So actually that went live -- it's going to go live on April 1 this week. We'll be working on it for several months. I think a lot of our agents like the program in a sense that it compares this team incredibly well against other companies that charging 20% and 30%. Again, keep in mind that our current base is grandfathered, so they can continue to stay on our previous plans, whether it was Fathom Max or Fathom Share. They don't have to move to Fathom Edge. Having said that, we already heard from a variety of agents saying they want to move to Fathom Edge for a variety of reasons in terms of the cap and some of the benefits of Fathom Edge. So I think there'll be a percentage of our regular agents that move to Fathom Edge, but all new agents starting on April 1 will go into Fathom Edge. And again, over time, as we have regular attrition in the business, right, the percentage of Fathom Edge agents will continue to grow and be a bigger percentage of the total agent base. But the new program, Fathom Edge starts on April 1 as well as the $250 brokerage fee. Thomas Hayes: I appreciate that. And maybe just lastly, I know you and I spoke about it last time, but certainly, the agents are key to the Fathom story. But I was just wondering about your strategic partner with ByOwner because I think certainly, the for-sale ByOwner is a significant market piece as well. So just maybe any updates on that partnership as well. Marco Fregenal: Yes, absolutely. So our goal is to leverage a significant percent of individuals who want to sell their house by themselves. Actually, at some point, do hire a real estate agent and the number is over 90%, right? So our partnership with ByOwner is really focused on that, right? It's how do we introduce the agent network to those sellers who want to take advantage of really working with an agent and getting the benefits of everything an agent can do that, right? And so our partnership is really focused on that. Our partnership is not focused -- they have another partner that handles -- when a seller wants to sell the house by themselves, again, the focus of our partnership is that. And we already are in the beginning of the partnership. We already are connected with them. We're already getting leads from them. They are about to announce several partnerships that will be announced soon, which will be the real estate partner for them. And so the ByOwner platform is going to be a meaningful platform for us as we get into Q2 and beyond this year. And the positive thing about that relationship is that's focused on listings, right? And so we're going to get a lot of listings from that relationship. I think I mentioned this before that they currently get about 500,000 visitors a month, right? And so they have a significant audience, and we're certainly going to be able to help ByOwner and our agents monetize and help those clients who want to get the benefit of the full service or agent. Operator: There are no further questions at this time. I would like to turn the conference back over to Marco for closing remarks. Marco Fregenal: Well, I just want to thank everybody for joining us today. I know this is a long call, but there was a lot to update about our business and some of the key initiatives that we are already implementing for 2026. We look forward to a great year. We're very excited about the changes that we're implementing to our business that we believe are going to have meaningful results to our profitability and our growth for 2026. I want to thank everybody for joining us and look forward to talking to you soon. Have a great week. Operator: Thank you. This will conclude today's conference. You may disconnect at this time and thank you for your participation.
Operator: Thank you for standing by, and welcome to the Nano Labs Limited Second Half 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Kong, CEO of the company. Please go ahead. Mr. Kong, you can now begin your presentation. Jianping Kong: [Interpreted] Thank you, operator, and everyone, for joining Nano Labs second half of 2025 earnings conference call today. On our call today, I will provide an overview of our recent development and our strategic initiatives going forward. The year 2025, the Web3 industry experienced robust growth with the continued improvement in global crypto market environment, including enhanced crypto assets, infrastructure and increasing market participation. The crypto market and Web3 related sectors entered a new phase of growth and opportunities. Following a comprehensive and prudent internal assessment of the strategic value and long-term perspectives of BNB, we initiated and continue to advance the build-out of our BNB reserves. As of December 31, 2025, the company showed a total of 126,662 BNBs along with a receivable collateral of 3,338 BNBs by steadily increasing our BNB holdings. We have optimized our crypto asset allocation and created favorable conditions for future business expansion and ecosystem collaboration. In terms of capital operations, we successfully completed 2 rounds of financing in 2025, providing strong support for our strategic transformation, expansion of our critical asset reserves and the exploration of new business directions. In March 2026, we officially launched our next generation product, the iPollo ClawPC A1 Mini designed to support the OpenClaw AI Agent System. Going forward, we plan to introduce the Claw OS system and additional hardware products to further expand our full ecosystem services for AI agents. Meanwhile, to enhance shareholder value and demonstrate management confidence in the company's long term development, we announced a share repurchase program of up to USD 25 million in October 2025. The program has commenced and is expected to be implemented steadily over the long time. Looking ahead, we will continue to closely monitor industry trends and market dynamics while maintaining stable operations, we will further advance our critical assets, strategic reserves and actively explore broader opportunities with the AI agent ecosystem. Thank you for your support and interest. Next, I will turn the call over to our Chief Financial Officer Mr. Chen for a closer review of our financial results. Mr. Chen, please go ahead. Bing Chen: [Interpreted] Thank you, Mr. Kong. Good morning, everyone. On behalf of the management team, I will provide a brief financial overview of the second half of 2025. In the second half of 2025, our net revenue was RMB 18.7 million equal to USD 2.7 million compared to RMB 50.9 million in the same period last year, increase of 18.1%. This increase was primarily due to the increase in sales volume of the iPollo V series product. We recorded a gross loss of RMB 29.1 million equal to USD 4.1 million for the second half of 2025 compared to a gross profit of RMB 11.6 million in the same period of 2024. Cost of revenues for the second half of fiscal year of 2025 were RMB 47.8 million equal to USD 6.8 million compared to RMB 4.3 million in the same period of 2024, the decline was mainly due to the write-downs of inventories and value-added tax recoverable. Total operating income for the second half of fiscal year 2025 increased by 233.9% to RMB 89.9 million equal to USD 12.8 million, increased from RMB 67.1 million in the same period of 2024. Selling and marketing expenses dropped by 56.2% to RMB 2.1 million equal to USD 0.3 million compared to RMB 4.8 million in the same period of 2024. This decrease was mainly due to the decrease in employee salary expenses. General and administrative expenses increased by 30.3% to RMB 33.1 million equal to USD 4.7 million for the second half of 2025 from RMB 25.4 million for the same period of 2024. The increase in general and administrative expenses was primarily due to the increase in professional service fees. Research and development expenses decreased by 76.9% to RMB 4.9 million equal to USD 0.7 million for the second half of 2025 from RMB 21.2 million for the same period of 2024. The decrease in research and development expenses was primarily due to the decrease in salary expenses, material fees and equipment fees. Profit from operations was RMB 60.8 million equal to USD 8.7 million for the second half of 2025 compared with loss from operations of RMB 55.6 million for the same period of 2024. Other income was RMB 38.2 million equal to USD 5.4 million for the second half of 2025 compared to RMB 1.7 million for the same period of 2024. The change was due to the Binance Launchpool and airdrop income for BNB holders and income for crypto investment products. Net income was RMB 137.7 million, equal to USD 19.6 million for the second half of 2025 compared to a net loss of RMB 60.4 million for the same period of 2024. Basic and diluted earnings per share was RMB 6.2 equal to USD 0.9 for the second half of 2025 compared to basic and diluted loss per share of RMB 6 in the same period of 2024. As of December 31, 2025, the company had cash and cash equivalents of RMB 8.5 million, equal to USD 1.2 million compared with RMB 32.4 million as of December 31, 2024. We remain confident in our business strategy and ability to execute it. We will continue to leverage the strength of our technology to capture development opportunities, drive long-term growth and create additional value for our shareholders. Now I would like to turn the call over to the operator for questions-and-answer session. Operator: [Operator Instructions] The first question today comes from [ Irene Rubano ] with a private investor. Unknown Attendee: My question is, what is the company's long-term strategic plan regarding BNB Holdings? Unknown Executive: [Interpreted] Okay. After comprehensively evaluating the development trends of crypto assets and the long-term potential of BNB, our company has designated BNB as a core component of its crypto asset strategic reserves. Over the long term, we plan to continue holding BNB and to gradually increase our holding at appropriate times, maintaining a relatively stable reserve level. This strategy is expected to enhance the company's crypto asset allocation capabilities while strengthening synergies with the Web3 ecosystem, thereby providing a solid asset foundation for the company's long-term strategic development. Operator: Next question comes from [ Alfred Wu ], a private investor. We appear to have lost connection with Alfred. The next question comes from [ Claire Harrison ], a private investor. Unknown Attendee: I have 2 questions. My first question is, why did the company launch a share of repurchase program? Unknown Executive: [Interpreted] In October 2025, we announced a share repurchase program of up to USD 25 million based on the following considerations: First, to enhance shareholder value and deliver long-term returns. Second, to demonstrate management's positive outlook on the company's long-term development. Third, to signal confidence in the company's long-term growth and operations to the capital markets. The company will implement the repurchase program in a steady and disciplined manner over time, taking into account market conditions and capital allocation plans. Thank you. Unknown Attendee: And my second question, what was the rationale behind the launch of the iPollo ClawPC A1 mini product? Unknown Executive: [Interpreted] As you may know, one of the most prominent concept in the AI space today is OpenClaw. The iPollo ClawPC A1 Mini is the company's next-generation AI agent hardware product designed to support the OpenClaw AI Agent System. We believe that AI agents are likely to become a key form of next-generation intelligent applications and have therefore chosen to proactively invest in the related infrastructure. Our company has already gained significant brand visibility in the market with the product sales and ecosystem development progressing steadily. Going forward, we plan to launch the Claw OS system and additional agent hardware products to support a full-chain AI Agent ecosystem. Thank you. Operator: The next question comes from [ Ella Rosenblatt ], a private investor. Unknown Attendee: So my question is, what are the company's key long-term business development directions? Unknown Executive: [Interpreted] Our company's future business development will focus on 2 primary directions. First, crypto asset reserve strategy, continuing to advance its BNB centered crypto asset reserve strategy and steadily expanding asset allocation when market conditions are favorable. Second, AI Agent ecosystem development, advancing the launch and the commercialization of hardware products such as the iPollo ClawPC, introducing the Claw OS system and building an AI agent application and service ecosystem to capture opportunities arising from the transition from Web3 to Web4. Thank you for your question. Operator: And that concludes the question-and-answer session. Let me turn the call back over to Mr. Chen for closing remarks. Bing Chen: [Interpreted] Thank you very much for joining this conference call. If you have any questions, please contact us through e-mail at ir@nano.cn or reach our IR counsel, Ascent Investor Relations at tinaxiao@ascent-ir.com. Management will respond to your questions as soon as possible. We appreciate your interest and support in Nano Labs and look forward to speaking with you again next time. Operator: Thank you again for attending Nano Labs second half of 2025 earnings conference call. This concludes our call today, and we thank you all for your listening in. Goodbye.
Operator: Good day, and thank you for standing by. Welcome to the Solana Company Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sarina Jassy of Investor Relations. Please go ahead. Sarina Jassy: Thank you, operator. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, March 30, 2026, only, and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations and other similar information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in the sections entitled Risk Factors in our annual report on Form 10-K for the year ended December 31, 2025, filed with the United States Securities and Exchange Commission, or the SEC on March 30, 2026, and in other subsequent filings with the SEC. Our SEC filings can be found on our website or on the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements. Please note that this conference call will be available for audio replay on our website under the News and Events section of our Investor Relations page. With that, I'd now like to turn the call over to Solana Company's Executive Chairman, Joseph Chee. Choon Wee Chee: Thank you. Good afternoon, everyone, and welcome to Solana Company's Fourth Quarter and Full Year 2025 Earnings Call. I'm Joseph Chee, the Executive Chairman of Solana Company, and I'm pleased to report on transformative year for Solana and the shareholders. When we closed our $500-plus-million PIPE transaction in September 2025, we described it as a new beginning. Looking back over the full year and particularly over the fourth quarter, I believe we have validated the ambition with tangible results across every dimension of our strategy. Our digital treasury is larger. Our efficacy is broader. Our capital markets tool kit is more sophisticated, and we have expanded the business well beyond a passive holding structure into a multifaceted platform with distinct value-adding legs. I'll speak to the strategic picture and then Cosmo Director at the Solana Company will take you through the operational and financial results. As we closed out 2025, I want to walk through the 3 distinct activities that together define the foundation of the Solana company and how each contributes to our goal of creating long-term shareholder value by growing Solana Company's SOL per share and contributing to the growth of Solana ecosystem. The first is capital markets. from our ATM programs and other offerings to share buybacks to operating businesses that synergize directly with our SOL holdings and the broader Solana ecosystem. The second is asset management. The core accumulation or SOL and this disciplined deployment of capital to grow our holdings in a way that's accretive on a per share basis. This includes taking yield which is the unchanged income we generate by taking substantially all of our SOL. This is not passive. It requires a rigorous validated selection, MEF optimization and continuous rebalancing and it produces a meaningful and growing revenue stream. Cosmo will speak to the specific API we achieved in '25 and year-to-date, 2026 and how that compares to public benchmarks. It also includes intelligent risk-adjusted deployment into other new opportunities on Solana. We'll talk about our on change partnership with Anchorage and Kamino on this front later. The third is marketing and partnership. Our role as a designated DAT partner to the Solana Foundation, particularly in Asia Pacific, and the broader institutional outreach that has defined our public presence since launch. This has included publishing educational content on Solana and DATs on our website, participating in prominent podcasts, engaging with local print and online media and presenting a key ecosystem industry events, including Solana Breakpoint Abu Dhabi, Solana Accelerate Consensus Hong Kong, Hong Kong FinTech Week, Token to our online GTX, Japan FinTech week, among others. The company has also conducted investor roadshows and partnership meetings with Solana Foundation with a focus on underpenetrated Asian markets, including Mainland China, Japan, Hong Kong, and Singapore. In addition, the market has delivered -- the company has delivered educational presentation on Web3 and Technology Executive Programs at leading Universities and Institutions and make regular appearances on mainstream financial media outlets, including CNBC and Bloomberg. We are also very active in engaging the bankers and research analysts of investment banks and brokers to promote coverage on Solana and Solana company. The company also intends to establish a strategic partnership with major financial institutions across key markets, which may adopt Solana as their underlying blockchain to support payment and tokenization initiatives. In February, we announced a landmark collaboration with Anchorage Digital and Kamino, making HSBC the first digital asset treasury to enable borrowing against natively stake SOL held in qualified custody. This is the first of its kind triparty custody model to access on-chain protocols on Solana. Under the structure, Anchorage Digital acts as a collateral manager for our natively-stakes sold, allowing us to earn taking rewards, while simultaneously unlocking borrowing power on Kamino all while our assets remain in a segregated account at Anchorage Digital Bank, never leaving custody. Anchorage Digital's Atlas collateral management system provides 24/7 automated oversight of loan-to-value ratios, orchestrate margin at collateral movements, and execute rules-based liquidation when required, giving us institutional-grade risk and compliance control alongside direct on chain participation. Also in February, we announced the Pacific backbone, a strategic roadmap to invest in a new low latency cluster across the Asia-Pacific region, beginning with notes, connecting SOL, Tokyo, Singapore and Hong Kong. This infrastructure buildup is designed to drive staking and validation, support ecosystem development in the region and diversify our revenue streams. Asia Pacific represents the majority of the world's crypto users and a substantial share of global cross-border payments and trading activities. Yes, it remains significantly underserved by the Solana existing network infrastructure. The Pacific backbone is our commitment to closing that gap. We plan to begin activating notes immediately, optimize performance and adopt new technologies in the second half of 2026 and launch liquidity-related products and services within the next 12 to 18 months. The buildout is designed to serve Market Makers, High-Frequency Traders, Exchanges and Traditional Finance Partners and is expected to include DeFi, liquid staking AMM RPC and execution services for institutional partners in the region. With that, I'll turn it over to Cosmo to elaborate on our treasury management and capital markets results and some of the key financials. Cosmo? Cosmo Jiang: Thank you, Joe. Hello, everyone. I'm Cosma Jiang, Director of Solana Company and General Partner at Pantera Capital. Pantera has been the asset manager for Solana Company's Digital Asset Treasury since the close of the PIPE transaction in September 2025. And I'm proud to report on a relatively strong first 6 months of operation. As I noted last quarter, we believe the genesis phase of the digital asset treasury market is over. The white space that we identified earlier in 2025 has been substantially filled. We're now squarely in the execution and consolidation phase, and I believe the fourth quarter validated that thesis. We've seen meaningful differentiation among that with stronger operators or those with institutional sponsorship, transparent reporting and disciplined capital management starting to separate from the others. We believe Solana Company is among that leading group and the results we are reporting today, we believe, reflect that. Let me begin with staking as it's one of the most important and differentiated aspects of our business. As of December 31, 2025, Solana Company had staked substantially all of its SOL holdings. For the fourth quarter of 2025, our internal calculations reflect an average net staking yield of 6.8%. This compares to the system-wide average of 6.2%, using public benchmarking data from research provider Blockworks over the same time period, representing outperformance of nearly 60 basis points. Year-to-date in 2026, our internal calculations show our staking yield has been 7.0% APY compared to the system-wide average of 6.0%, continuing to that same pattern of disciplined outperformance. This staking yield is generated through careful validator selection, active MEV capture and continuous rebalancing, the same institutional approach that Pantera implies across its broader digital asset portfolio. Taking rewards are automatically restated to compound returns and result is consistent daily on chain revenue that can fund the operations of the business and grow the company's SOL per share. As Joe mentioned, we have recently expanded our yield generation options through an announced collaboration with Anchorage Digital and Kamino, which provides institutional-grade infrastructure for both custody and on-chain borrowing. We're in the early stages of executing against this opportunity and believe it could have the potential to drive an additional 100 to 200 basis points of yield across our asset base. Turning to capital markets. Different market environments and valuation paradigms provide different opportunities. And regardless, we plan to always pursue actions that are accretive on a per share basis. Since the launch of our Digital Asset Treasury, we've been able to grow SOL per share through both share issuance as well as share buybacks. Early in the fourth quarter, when our stock traded well above 1.0x mNAV our ATM program was a useful tool for disciplined issuance. We raised over $29 million through the ATM program with proceeds deployed primarily into SOL purchases. When the broader digital assets markets pulled back, we also saw our valuation multiple compressed to below 1.0x mNAV, at which point, share repurchases became an accretive option. We have now executed over $3 million in share repurchases year-to-date under our buyback program adopted this past November, funded primarily by the sale of Solana at prices that were accretive to NAV per share. We believe the ability to operate on both sides of the capital structure, which means issuing when trading at a premium and buying back when trading at a discount is what makes the ATM and buyback program together such a powerful toolkit to create shareholder value in almost any market environment for this business model. Looking ahead to 2026. We continue to evaluate the full spectrum of capital formation alternatives, including convertible debt, warrant-linked structures and strategic M&A. We're often in exploratory conversations with many different investors, ranging from retail brokerages to family offices, to strategic corporates, to institutional hedge funds and long-only funds, and we do welcome any shareholder feedback and referrals. Next, our Treasury. As of December 31, 2025, Solana Company held 2.36 million SOL tokens and $7 million of cash and stable points. The company's diluted share count, including common shares and in the money warrants was 84.1 million shares. As of March 27, 2025, Solana Company held 2.33 million SOL focus. The company has diluted share count, including common shares and in-the-money warrants was 82.6 million shares. That means that in the 6 months since the beginning of embarking on our Digital Asset Treasury strategy on September 18, we have actually increased our SOL per share by 14%. This is measured using the value of the capital grade divided by the price of SOL and the diluted share count at transaction close compared to the March 27 figures just mentioned. We are proud of that meaningful per share accretion from our active management. I will now turn the call over to Jeff Mathiesen for the financial results. Jeff Mathiesen: Thank you, Cosmo. Our financial results reflect our full fourth quarter of DAT operations and the full year ended December 31, 2025. Our fourth quarter revenue of $5.2 million included staking revenue of $5.1 million, comprising the majority of the increase from the prior year period. For the full year 2025 total revenue was $6 million, including $5.5 million of staking revenue compared to $0.5 million for the full year 2024. For the fourth quarter, cost of revenue was $0.2 million, in line with the prior year period. Selling, general and administrative expenses for the fourth quarter of 2025 were $13 million compared to $2.2 million reported in the fourth quarter of 2024 due primarily to increased noncash compensation costs, salaries and wages, digital asset management and custodian fees as well as legal and professional fees in conjunction with the addition of the company's VAT strategy. Research and development expenses were $0.9 million, in line with the prior year period. Total operating expenses for the fourth quarter of 2025 were $206.1 million compared to $3.1 million in the fourth quarter of 2024. Operating expenses included noncash charges of $178.3 million of unrealized loss on digital intangible assets and digital assets receivable, $12.1 million for realized loss on digital intangible assets and $2.1 million for unrealized loss on digital assets and investment due to the decline in the value of SOL. The resulting loss from operations for the fourth quarter of 2025 was $201.1 million compared to a loss of $3.1 million in the prior year period. Current year nonoperating income for the fourth quarter was $526.6 million and included a $526.3 million gain from the change in fair value of derivative liability related to the stapled warrants from the September PIPE transaction compared to nonoperating loss of $0.8 million in the prior year period, comprised mostly of foreign exchange loss. We reported net income for the fourth quarter of 2025 of $325.6 million or earnings of $4.25 per basic and diluted common share based on weighted average shares outstanding of $76.6 million. We had a net loss of $3.9 million in the prior year period or a loss of $793.01 per basic and diluted share. For the full year 2025, we reported a net loss of $40.9 million or a loss of $1.85 per basic and diluted common share based on weighted average shares of $22.0 million compared to a net loss of $11.7 million or a loss of $3,282.26 per basic and diluted common share for the full year of 2024. At December 31, 2025, we had $7.3 million in cash and approximately $293.7 million of digital assets comprised of $217.7 million in digital intangible assets, $70.4 million in digital assets receivable and $5.6 million in digital assets fund investment. The combined total approximately $301 million. Total assets were $303 million and total shareholders -- $303.9 million and total shareholders' equity was $300.9 million at year-end. With that, operator, let's now open the call up for questions. Operator: [Operator Instructions] Our first question will be coming from Fedor Sabelin of B. Riley. Fedor Sabelin: I just have a couple of questions. First one is on ATM and buybacks. So beyond these 2 and the stake in yield compounding organically what incremental capital rising structures are you actively evaluating? Just maybe specifically SOL collateralized term lending beyond the Kamino facility or maybe structured equity products on the table? And how do you think about the accretion now for each relative to the dilution cost of the ATM at current levels? Cosmo Jiang: Yes. Thanks, nor for the question. So we're thinking pretty broadly about what the capital markets opportunities are to us. We're trying to optimize for the lowest cost of capital that we can get. Clearly, when our stock is trading below 1x NAV, we think share buybacks are a pretty powerful tool to accrete value per share for our shareholders. and we have an outstanding share buyback program that we'll continue to pursue. At the same time, there are interesting ways where we can raise additional capital in a prudent way as so long as it is accretive, accretive to our shareholders, some of the options that are out there that we've seen some of our competitors do include things like convertible debt with high strike warrants or high strike -- with the high strike or high strike warrants, structured equity notes with -- where the common is being sold above NAV, potentially with additional kickers above NAV as well as preferred equity options. We're evaluating all these. It really comes down to where we think we can have the best terms and where the market is. It does seem like that there is appetite to do things, but you guys will know when we actually do execute. We are going to be focused on to the extent that we are selling our volatility via warrants that we are selling volatility at a price that makes sense. And we do think there's a reasonable world where we can continue to excel our volatility and do so via either convertible debt or equity -- structured equity. Fedor Sabelin: That's helpful. And my second one, Cosmo, probably for you again. In your press release, your odd references pursuing highly selective strategic capital market transactions to advance the company's objectives. Can you help me understand what highly selective actually means in practice. And so the company has already launched the Kamino Anchorage borrowing structure and the new recently announced specific backbone infrastructure initiatives. So that strategic capital markets transactions refer to new instruments like tokenized equity through super states opening Solana delineated convertible structures or potentially mergers with complementary debt vehicles. And given that Solana Company's fully diluted share count moved a little bit by late March through warrant exercises and buyback, what is the internal hurdle rate or Solana per share accretion test transaction must clear before you would proceed in current environment? Choon Wee Chee: This is Joseph Chee. Maybe I'll start with one point, and then I think you have kind of multiple questions in one question. I guess when we talk about highly selective strategy, it is like Cosmo, it's important that we raise capital at the right level so that would be -- it's accretive to -- for our shareholders. But at the same time, one important consideration that we bear in mind is also to bring in like high-quality strategic investors, not only the name on our share would mean something to the market would actually promote the credibility and reputation of the firm. Also, I think some of the strategic investors may work with us on some of the strategic business build-out or opportunities. And there might be someone that is very close to the Solana ecosystem. I think part of this statement here when the highly selective strategic capital market transaction. It also means optimizing the shareholder register and bringing some of the good investors under register to help us grow and also to get them on to the Solana ecosystem. We're going to build out their businesses on the blockchain, right? And then I guess, for the rest of the question, it talks about hurdle rates and things like that. I'll leave that to Cosmo. Cosmo Jiang: Thanks, Fedor. Yes. But again, great question. I would say -- and I apologize -- apologies for this. It is dependent on what the market will give us. There's our controllables that we can control and then there's uncontrollables that are out of our hands. From a controllables perspective, I hope I can -- you can trust me when I say that we are aggressively looking at anything under the sun that is reasonable. Now all the options are out there. We're talking to existing investors that have been with us for a long time. We're talking to new investors who are looking at that -- who have been looking at that for a long time or even new investors that have not looked at that, but are looking for Solana exposure in an alpha-generative way. And so we're talking to all these folks about what kinds of things make the most sense for them. There is a little bit of a -- when you talk about accretion, different structures can be accretive on different time horizons as well, right? Something that may be -- there are some transaction structures where it maybe looks a little less accretive near term, but it's actually very accretive long term, especially when you think about the strategic benefits that might bring to us, some of which Joseph Chee just mentioned. I think the other color I would give you is that we are active repurchasers of our stock, and I'd say that is -- that continues to be an interesting avenue. If someone would do the math, they would be able to get to probably something like double-digit type accretion that we're targeting. That said, there's always opportunity to do things for less than that, with less accretion than that. I'm very proud to say that we are managing both the asset side of the balance sheet as well as the liability side of the balance sheet. The asset side, which means buying things well, finding opportunities to acquire Solana in interesting ways beyond just buying spot Solana and the liability side, all the capital markets transactions we've been talking about. And in aggregate, in the 6 months since we started doing this, we're pretty -- it's pretty -- I would say it's pretty compelling that we've been able to grow Solana per share by 14%, all right, over 6 months. No, I'm definitely not saying that, that is what we will do going forward or necessarily that the market will present opportunities for us to do that. But at least like inception to date of this strategy, we're pretty happy about those results. Operator: And our next question will be coming from the line of Matthew Galinko of Maxim Group. Matthew Galinko: You touched on the I guess, the DAT stake center and consolidation phase. I was hoping maybe you could go a little bit deeper into how you see that playing out? And over what time frame we might see consolidation, particularly in the SOL DAT? Choon Wee Chee: Thank you, Matthew. It looks like you have -- I guess, your question is actually for Cosmo as well. Cosmo? Cosmo Jiang: Yes. It's a great question. Look, I would say -- I wear a few hats. One is certainly as a Director of HSDT and the other is as an investor at Pantera Capital, where we've invested in many of these the DATs. And I think you realize that a lot of these DATs were formed not so long ago, right? This -- I'm realizing that now it's almost exactly the 1-year anniversary of when I decided to kick off investing in these digital asset treasuries and which really kicked off the boom in the DAT space. Almost exactly a year ago today. And so a lot of these companies and management teams have only been at it for at most a year, which was early on or more likely 3 to 6 months. And so as you would expect, many of these people who came in with the right intentions I still believe they have the right to win. And so it's going to take some time for some management teams to realize they either are not going to make it or they need to throw in the towel. And so that takes some time for people to come to that realization. And so that's that's one thing to think about. The other is strategically, it has to be a good fit and culturally, you have to be a good fit. It takes 2 to tango ultimately with consolidation. To date, we've only seen one instance of DAT consolidation in the Bigpoint space. We haven't seen anything else. But I think it's -- and the easiest way to consolidate certainly Solana DAT to Solana DAT. But it is possible that we see acquisition opportunities of other assets. And certainly -- of other assets that could be accretive even if they're required by a Solana DAT. And so we're looking -- we're considering things pretty widely. But it does take 2 to tango. It does take a management team that's willing to realize that the right path forward is consolidation. And then just as importantly, there is the concept of whether it's accretive enough and while the math is kind of tricky, while everyone trades below 1x NAV, there are ways to structure it, and we don't want to give away all the capital markets special sauce that we're working on. But there are interesting things that we can do. And so we're working through that. And hopefully, we -- hopefully, there's something to do eventually, but unfortunately, nothing to report today. Matthew Galinko: Great. That's super helpful. Appreciate it, and look forward to seeing where that goes. My follow-up question is just on, I guess, the cleanup on the model. Your SG&A was about $13 million in the fourth quarter. I'm just curious if that's a good number to use as the run rate on a GAAP basis in 2026? Or is that a little bit inflated for kind of the early stages of operating through the DAT launch? Choon Wee Chee: Again, thank you for the questions. I think it's probably a question that our CFO, Jeff will answer. Jeff Mathiesen: Yes. Are you able to hear me? Okay. All right. We talked about was the noncash compensation expense that came in during the quarter. And then also, we had higher run rate for legal and professional fees as we were setting up this new business for us. So as we get moving forward, some of that should come out of our future costs. And obviously, it's going to somewhat fluctuate as we do some of the business, but I would say for the most part, fourth quarter was higher than what we achieved to expect. Operator: And our next question will be coming from the line of Bill Papanastasiou of Chardan Capital Markets. Bill Papanastasiou: For the first one, I apologize if I missed this, but just a clarification. Is the Anchorage collaboration active today? And are you able to share how that's going in the early days? And what kind of institutions you're seeing the most demand from using this product? Or which one is your plan targeting first? Cosmo Jiang: Bill, thanks for dialing in. So the increased partnership is still -- we're still working out the kinks. We're pretty excited to deploy, but we want to do so in a risk-managed way and in a way that -- in a risk-managed way that makes sense. We anticipate that being relatively soon, but it has not yet taken off. I would say that some of the most interesting opportunities that exist on Kamino today relate to some of their private credit yields or rather -- sorry, ready to their housing-backed financing opportunities, such as Prime, which yields in the 7% plus range. or some of the other stable coin yields, which are in the 6%-plus range. We believe we're able to borrow closer to 3% or 4% to be able to pursue those opportunities. And so that is a really interesting spread. Now we want to do so, again, in a risk managed and controlled way. But we do think that is available to us, and we feel pretty good about the capacity of those opportunities. We do think that as the first ones to really do this, we anticipate that other people will want to follow and will likely follow in our footsteps. And we certainly welcome that for the growth of the Solana ecosystem. We're doing this as much for growing our actual yield that we can generate at Solana as well as to make sure that the underlying Solana token, which we believe in and are invested in also increases in value as we as we participate in the ecosystem and encourage others to participate. Right now, we haven't seen a lot of other institutions start to deploy yet in Solana DeFi. I think a big piece of that is the regulatory clarity. People are looking for market structure legislation to pass in order to come in to DeFi in a much bigger way. But when we do, we believe the on-chain yields available to us on Solana could actually increase in addition to capacity increasing. And so we're pretty -- we are excited about that opportunity in the medium-term horizon. Bill Papanastasiou: Great. I appreciate that color. And then one last question, if I may. Kind of just a high-level one on the Solana ecosystem. Taking a step back and looking at the landscape, obviously, there's a lot of excitement with tokenization of real-world assets and bringing TradFi on chain. Perhaps you can just provide your view on where Solana sits in all of this and how you see competing with the other networks that are going after similar markets. Choon Wee Chee: Cosmo, do you want to go first? I'll step in. Cosmo Jiang: Bill, thank you so much for asking that. I mean as much as an investment in Solana Company is about investing in our management team's ability to execute against this plan and growth Solana per share in an effective way. The most important piece of that function is certainly Solana itself, the SOL itself and its value growth. And this really comes back to why we are so excited about pursuing a Solana based Digital Asset Treasury. And because one of the areas that we're seeing really fine product market fit right now across blockchain technology is this concept of real-world assets tokenization and everything that you can do with that when you put it into DeFi. Solana is very well positioned because Solana has speed, low fees, broad retail and institutional distribution make it one of the most compelling networks for RWA tokenization. Solana is the #3 blockchain for RWAs with $1.7 billion on chain and the #2 network for tokenize stocks with over $260 million of value locked. According to Blockworks Research, Solana has facilitated almost 98% of tokenized equity spot volume by blockchain, showing that Solana is actually, while maybe the second or third place for a number of assets is actually the chain where assets actually move in or traded. The top 3 contributors to Solana's RWA HCBL are BlackRock product, their tokenized treasuries, Prime, which is issued by bigger markets and asset-backed credit and on those U.S. treasuries. There is a growing roster of institutional partnerships already live on the network from Apollo Global and they're tokenized private credit fund to Janus Henderson and their 2 tokenized funds on Solana or VanEck Treasury Fund or Franklin Templeton's money market fund. And so we really look forward to seeing the continued traction from these asset issuers as well as new issuers and new products as the RWA tokenization market matures? Choon Wee Chee: And Bill, I guess, just to add on to that, right? I think I've been asked that question many times when as we get the various functions and dinners and seminars, right? Like at the RWA that you get on to the chain, where is liquidity coming from? That's the biggest question mark for most people around the world. Let's say you have another $10 trillion of assets coming on chain, who's buying it? We think that a lot of this liquidity that we're buying this on-chain asset, we sort of accumulation of stable coins and crypto-based payment, mainly from cross-border payments. And a lot of that probably have to do with trade over time. We did -- I mean in various functions, we did talk about this. I think as you could see that last year, the broad numbers, the stable coins payment is already hit something like over $30 trillion, right? And a lot of this I think over time, they will stay in the form of crypto instead of turning back to PR. And if you think about Solana, especially if you think about the export and cross-border trade, a big part of it has to do with Asia, China being one of them, the market that's very export led. And as you know, all for all these cost-border trading companies, manufacturing companies, speed uncertainty, lowering the FX risk is important, but cost is also very important. And then if you see all that sort of point towards Solana. That's why we're also spending quite a bit of work in different parts of Asia, especially there are a lot of import/export trade and a lot of cross-border payments. We believe that Solana probably will be one on the main blockchain if not the blockchain to use for a lot of these cross-border payments. Operator: And I would now like to turn the call back to Joseph Chee for closing remarks. Choon Wee Chee: Thank you. Thank you all for joining Solana Company's Fourth Quarter 2025 Operating Results Update, and thanks for all the good questions. We are pleased by the progress we have made this year and look forward to sharing further updates next quarter. Operator, I guess it's time to close the call. Operator: Thank you. This does concludes today's program. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Bicara Therapeutics Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rachel Frank. Please go ahead. Rachel Frank: Thank you, and good morning, everyone. It's a pleasure to welcome you to Bicara Therapeutics Fourth Quarter and Full Year 2025 Earnings Call. Earlier this morning, we issued a press release highlighting results from the quarter and recent business progress. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our company website. Before we begin, please note that this call will include forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to our most recent SEC filings for important risk factors that could cause our actual performance and results to materially differ from those expressed or implied in these forward-looking statements. Any forward-looking statement made on this call represents our views only as of today, and we disclaim any obligation to update any forward-looking statements. Joining us on the call today are Claire Mazumdar, Chief Executive Officer; Ryan Cohlhepp, President and Chief Operating Officer; and Ivan Hyep, Chief Financial Officer. I'll now turn the call over to Claire. Claire Mazumdar Clemon: Good morning, and welcome to Bicara Therapeutics Inaugural Quarterly Earnings Call. I'm Claire Mazumdar, Chief Executive Officer. Today marks an important milestone for our company as we begin this tradition of regular communication with investors, analysts and stakeholders to provide transparent updates on our business progress and strategic direction via the quarterly earnings call process. We're implementing these quarterly calls as part of our commitment to maintain an open dialogue with the Street and ensuring you have consistent visibility into our execution against key milestones and strategic objectives. Before I jump into our Q4 2025 highlights and recent progress, let me provide a brief background for those who are newer to our story. Bicara Therapeutics is a clinical stage biotech company pioneering bifunctional antibodies for targeted tumor modulation. Founded in 2020, we've built a global team of over 100 employees headquartered in Boston with a clear focus on advancing our lead asset, ficerafusp alfa or FICERA, a potentially first-in-class bifunctional EGFR-directed antibody combined with the TGF-beta ligand trap. Our innovative approach combines tumor targeting with tumor modulation, where one arm localizes to the tumor while the other serves as a modulator designed to deliver superior efficacy, improved safety and enhanced durability directly at the tumor site. FICERA specifically addresses a key challenge in solid tumor treatment by enabling immune cell penetration into tumors, reducing fibrosis and immunosuppression while reversing TGF-beta-driven resistance mechanisms. ultimately designed to drive the deep durable responses that may translate into better outcomes and survival for patients. Over the past several months, there have been significant shifts in how the competitive landscape in frontline recurrent and metastatic head and neck cancer is evolving. Our recent clinical data and regulatory progress clearly position FICERA as a potential best and first-in-class asset with a differentiated clinical profile on both long-term outcomes and tolerability. Looking back at the progress we've made since October 2025, I'm energized by the exceptional momentum we've built across our pipeline and operations. Over the past several months, we've achieved multiple critical inflection points that fundamentally strengthen our position as we advance FICERA toward a pivotal study interim analysis in the middle of next year. First, FICERA received breakthrough therapy designation, or BTD, in combination with pembrolizumab for the first-line treatment of patients with metastatic or with unresectable HPV-negative recurrent head and neck squamous cell carcinoma. This designation from the FDA underscores the growing recognition of HPV-negative head and neck cancer as a distinct clinical indication within head and neck cancer, one with particularly poor outcomes, limited therapeutic options and that represents the vast majority of patients. Second, we presented 2 additional Phase Ib clinical data sets across clinically active doses of FICERA that demonstrated consistent overall response rates, further validating FICERA's unique dual mechanism targeting both EGFR and TGF-beta and derisking the OR endpoint in our pivotal study interim analysis. Third, building on this robust data set, we selected 1,500 milligrams as our optimal biological dose and have successfully moved into the Phase III portion of our pivotal FORTIFI-HN01 study, for which we expect an interim analysis in the middle of next year. This represents a major strategic advancement that brings us significantly closer to our goal of delivering a potential best and first-in-class treatment option for patients living with HPV-negative head and neck cancer. Fourth, we recently announced plans to develop FICERA with a loading and every 3-week maintenance dose, a strategic commercial decision based upon updated clinical, translational and pharmacokinetic data that we believe will enable additional optionality for patients and providers choosing treatment with FICERA. Lastly, to support this accelerated trajectory and pull forward investments in our early commercial and medical build, we successfully completed an oversubscribed public offering, strengthening our balance sheet and providing the capital foundation necessary to execute this next chapter of our business with confidence. With that, I'll turn it to Ryan to provide a bit more detail on our recent clinical updates and business progress. Ryan Cohlhepp: Thank you, Claire, and good morning, everyone. We've now reported clinical experience in approximately 90 patients across 3 Phase Ib cohorts evaluating FICERA in combination with pembrolizumab in frontline recurrent metastatic HPV-negative head and neck squamous cell carcinoma. Our 1,500-milligram every week data is the most mature with 2 years of follow-up and demonstrates deep durable responses that lead to median duration of response and median overall survival of 21.7 and 21.3 months, respectively, nearly tripling the median overall survival observed with the standard of care of pembrolizumab in HPV-negative patients. Late last year and just last month, we presented 2 additional cohorts. In December of 2025 at ESMO Asia, we presented data from our 750-milligram every week cohort, which helped to ultimately inform 1,500 milligrams every week as the optimal biologic dose for our ongoing pivotal Phase III FORTIFI-HN01 trial. And just last month, at the Multidisciplinary Head and Neck Cancer Symposium, we presented data from a higher but less frequent dose of FICERA in combination with pembrolizumab, 2,000 milligrams every 2 weeks, from which we announced our plan to develop a less frequent loading and maintenance dosing option. Our aim is to gain alignment with the FDA on this approach and initiate that study in parallel to the pivotal study to allow to have data from that regimen in hand upon potential U.S. approval. Clinically, tumor shrinkage is seen at all doses that trends deeper with higher exposure. The 1,500-milligram cohort showed deeper median depth of response versus 750 milligrams, and the exploratory 2,000-milligram every 2-week cohort produced consistently high proportions of deep responders with greater than 80% shrinkage and complete response rates. Our translational data shows consistent TGF-beta inhibition across all FICERA doses, confirming the mechanism that drives tumor penetration and immune activation. Importantly, inhibition is strongest with the 1,500-milligram weekly dose and less frequent 2,000-milligram regimen. We believe this TGF-beta-driven depth of response is the defining hallmark of FICERA and a clear differentiator versus EGFR-directed therapies, which do not target TGF-beta. This mechanism is especially meaningful in HPV-negative disease, a setting with poor outcomes and limited innovation where deeper, more durable responses are urgently needed for patients. We remain confident that this biology will continue to translate into clinically differentiated long-term outcomes for these patients. Importantly, FICERA's deep responses are paired with sustained durability without any trade-off. The median duration of response approaches 22 months, more than 3x longer than the 6.7 months median duration of response reported with pembrolizumab plus chemotherapy. Our 2,000-milligram every 2-week cohort similarly delivered multiple deep responses persisting beyond 20 months, underscoring the consistency of benefit across dosing schedules. Crucially for patients, providers and payers, FICERA maintains this level of durability even with less frequent dosing. This positions FICERA favorably in a market moving toward treatment regimens that reduce clinic burden, improve quality of life and support long-term adherence. We believe this performance reflects FICERA's tumor-penetrating mechanism, enabling depth and durability that translate into meaningful long-term outcomes while supporting a more flexible patient-centric dosing paradigm. We're often asked whether deep depth of response translates to long-term outcomes. As we first showed at ASCO last year, there is a clear distinction in duration of response, progression-free survival and overall survival among HPV-negative head and neck cancer patients who have had deep responses versus those that do not. This data is what drives our belief that deep responses that are the hallmark of FICERA's clinical profile drive outsized durability and long-term benefit. Importantly, other investigational agents also need to demonstrate the deep and durable responses to meaningfully improve long-term clinical outcomes. As our recent financing highlights, we have strong conviction in FICERA's clinical data and its differentiated profile compared to other investigational agents in the head and neck space. And we are continuing to bolster our commercial and medical investment in preparation for a potential U.S. launch, including hiring of the Chief Commercial Officer this year. Head and neck cancer is a significant and fast-growing global market, projected to reach more than $5 billion in global sales in the 2030s. HPV-negative patients represent the heavy majority of patients in the frontline recurrent metastatic setting and HPV status is known by the time the disease recurs or metastasizes, which means the HPV testing will not be a barrier to care. There are roughly 50,000 annually incident patients across major markets, including approximately 18,000 in the U.S. where we plan our initial launch. With FICERA, we have the potential to significantly expand an already significant HPV-negative head and neck cancer market. FICERA's clinical data show us that we further expand that market in 2 ways: first, by growing the number of patients who are responding to therapy as seen with the fact that FICERA provides a 2 to 3x greater overall response rate; and second, by growing the duration of response as seen by FICERA's two to threefold improvement over standard of care median duration of response. We are pioneering a new treatment paradigm for HPV-negative head and neck cancer with a tailored therapy engineered to overcome the unique biology of this disease and achieve deep, durable and clinically significant benefit while sparing the use of chemotherapy to further improve quality of life for patients. With this knowledge in hand, we are eager to further invest in our prelaunch activities across commercial and medical, including additional evidence generation strategies that may further expand the market opportunity beyond that being studied in our pivotal trial. Recent competitive updates have only strengthened our conviction that FICERA may have the best chemo-sparing regimen that actually addresses both the EGFR and TGF-beta inhibition underlying biology of HPV-negative head and neck cancer to improve long-term outcomes for patients. We are preparing to launch in an environment where based upon evolving regulatory and clinical development commentary across our competitor set, we have the opportunity to set the tone for what the therapeutic bar looks like for significantly improving unmet medical need in this space. As we head into the second quarter, we look forward to providing long-term follow-up data from across our Phase Ib studies of FICERA in combination with pembrolizumab in frontline recurrent metastatic HPV-negative head and neck cancer. The Phase Ib 1,500-milligram every week data presented at ASCO 2025 were mature with a median duration of response of 21.7 months and a median overall survival of 21.3 months. In this update, we are looking for a better understanding of that IO tail at extended duration of follow-up as well as the additional maturity on key endpoints from the 750 milligram every week and the 2,000-milligram every 2-week data sets. No other investigational agent targeting EGFR in the head and neck cancer space have shown durability of outcomes out this far, a key differentiating factor for FICERA that resonates deeply with clinicians. With that, I'll turn it to Ivan to review the financials. Ivan Hyep: Thanks, Ryan. Earlier this morning, we reported detailed fourth quarter and full year 2025 financial results in our press release, and I'll summarize a few highlights here. Our total operating expenses for 2025 increased compared to the fourth quarter and full year 2024, driven by clinical operations and development expenses, including increased manufacturing and process development costs associated with our ongoing pivotal FORTIFI-HN01 study. We also saw an increase in personnel-related costs, including stock-based compensation as we grew our workforce throughout the year, primarily in support of clinical operations and development functions. We anticipate an increase in operating expenses for 2026, driven by increased investment in clinical operations, particularly for the pivotal FORTIFI-HN01 study, the interim analysis for which is expected in mid-'27 as well as an increase in SG&A and headcount expenditures as we invest in early commercial and medical infrastructure to support the potential launch of FICERA. We entered 2026 with $414.8 million in cash, cash equivalents and marketable securities. In the first quarter, we raised an additional $161.8 million in net proceeds via an oversubscribed public offering, which further strengthens our balance sheet, and we maintain cash runway guidance into the first half of 2029. This additional capital will allow us to support a planned regulatory filing for FICERA, further invest and build in our medical and commercial infrastructure ahead of a potential U.S. approval and launch. Further accelerate the development of FICERA in head and neck cancer, including a less frequent dosing schedule, fund manufacturing costs for FICERA for ongoing and anticipated drug development efforts, fund early signal finding activities to support further indication expansion for FICERA and fund other general corporate purposes. Our existing cash as of year-end and this additional recent cash infusion puts us in a position to be able to drive smart growth for FICERA as we enter a period of disciplined but increased investment to drive future clinical and commercial success. With that, I'll now turn the call back over to the operator for questions. Operator? Operator: [Operator Instructions] Our first question comes from Tyler Van Buren with TD Cowen. Tyler Van Buren: Can you provide more color on the patient demand and willingness to participate in pivotal FORTIFI study that you're seeing in both the U.S. and in ex U.S. sites? And as a follow-up or kind of related question, do you have a sense of how many patients you might need to enroll in a separate study of the less frequent dosing regimen to achieve registration? Claire Mazumdar Clemon: Thank you for your question, Tyler. So there are two questions. One was around momentum around patient enrollment in the FORTIFI-HN01 study. And then the other was approximately how many patients do we plan to enroll in the parallel bridging study for the loading and maintenance dose? I'll answer the first one -- the second one first and speak to the fact that we are looking for regulatory alignment, and we'll provide far more clarity to the study in more detail once we have that regulatory alignment. But the approximate size is anywhere between 150 to 200 patients is our current estimate. The first question was around enrollment of the FORTIFI study. What I can say is that we continue to build significant momentum in that study as we have both received breakthrough designation as well as moving from the Phase II to the Phase III portion and going now to the 2:1 randomization of 1,500 milligrams weekly, randomized 2:1 to pembro monotherapy. We've seen great momentum also ex U.S., in particular, in European sites, Asian Pacific sites as well as South America with a significant momentum in areas where we know that there's a high prevalence of smoking. I will pass it over to Tanya to give additional details to the FORTIFI-HN01 momentum. Tanya Green: This is Tanya Green, Chief Development Officer. So yes, as Claire said, we're -- we have really strong momentum for the Phase III study in terms of enrollment. As is publicly available, we have 129 active sites right now. And this team remains highly focused in executing the study to achieve substantial enrollment by the end of this year, which will keep us on track to have our interim analysis by mid-2027. Operator: Our next question comes from Eric Schmidt with Cantor Fitzgerald. Eric Schmidt: Congrats on all the recent progress. Questions on the colorectal cancer update that we might see in the second half of the year. Could you just give us a sense for the scope of that update in terms of patients dosing? And in particular, what type of benchmarks you think you'd hope to be able to provide in order to demonstrate proof of concept? Ryan Cohlhepp: Eric, thank you for the question. In terms of our CRC update, as we've indicated, we look to have data in the second half of this year on those cohorts. In terms of the total number of patients that we plan to present, I think that's still somewhat variable based upon enrollment. But consistent with our previous updates, we're always looking for data sets probably no less than 20 patients per cohort. I think that certainly, even as recent, we've seen the treatment landscape evolve, and we're mindful of that with recent data that's been out. I'd say what we're -- the two cohorts that we are currently exploring and seeking signals in are third line. As you know, that's a highly challenging population. And again, we've got both a cohort in monotherapy as well as one in combination with pembrolizumab at the 1,500-milligram weekly dose. So again, I think we continue to look at that data for signal-seeking purposes and determine whether there's a path forward in CRC, particularly as we look to see about the opportunity to move into earlier lines of therapy in colorectal cancer using those signals to determine whether there's something there to invest further. Operator: Our next question comes from Stephen Willey with Stifel. Stephen Willey: I guess with the understanding that you're going to be providing the kind of pooled expansion cohort data at ASCO in a few months. Just curious if the patients in the 750 mg once-weekly cohort were given the opportunity to up-titrate to the 1,500 mg dose, just given the, I guess, the relative deficiency in depth of response. Claire Mazumdar Clemon: Great question, Steve. So what we'll be presenting at ASCO is likely an update from 3 separate cohorts. The 3-year follow-up -- median follow-up for the 1,500-milligram dose weekly. The 750-milligram weekly dose was about a 30-patient cohort with at least 18 months of follow-up and same for the 2,000-milligram every 2-week cohort, an additional 30 patients with about 18 months of follow-up. So in that particular cohort, to your question, the 750, we did not increase the dose afterwards. These were patients that were maintained at the 750-milligram dose throughout their course of treatment. And we will be providing an update to PFS and duration of response from those cohorts that will continue to speak to the depth and durability profile that we see across our cohorts. If your question regarding the pivotal study in FORTIFI-HN01, I do believe that we were able to cross over the patients enrolled at this lower dose. And so they were -- if they remained on treatment, they did cross over to the 1,500-milligram dose in the pivotal study. Thank you for your question. Stephen Willey: And then maybe just a quick follow-up. I know there's been kind of some background discussion about having interest in the pre-metastatic setting, whether it's neoadjuvant and adjuvant. And just wondering kind of where you are on that now? And does the pursuit of this new loading maintenance strategy and the need to generate maybe a couple of hundred patients worth of data change perhaps the plans to pursue [indiscernible] in the pre-metastatic... Claire Mazumdar Clemon: No. I think to that question, we do believe that the locally advanced setting of head and neck has always been a large opportunity. And given the signal we've seen in the recurrent and metastatic setting, there is a strong biology to move into earlier lines of head and neck cancer. And we do believe it is also becoming a more competitive landscape as well. So we have begun initial signal-seeking studies in those areas and hope to provide updates as we move forward in more detail. But we do think it is a very important opportunity that could potentially triple the market opportunity compared to recurrent and metastatic setting. Ryan Cohlhepp: Yes. Steve, I'd say that, in fact, our evolution of the dosing paradigm, I think, further supports and reinforces our ability to go into those earlier lines in head and neck cancer. And from an overall operational execution perspective, part of the key driver of our last financing was to be able to fund that alternative dosing schedule as well as continued investment in earlier areas of head and neck cancer. Operator: Our next question comes from Judah Frommer with Morgan Stanley. Judah Frommer: Maybe just can you help us with an update on how many centers you're in with FORTIFI-HN01, what overlaps are with petosemtamab trials and kind of what that does from a potential market share capture perspective for you, the likelihood based on investigator response for investigators at your centers to stick with FICERA in the case of an approval? And then just secondarily, maybe just help us with that cash runway guidance being maintained despite the raise, what was not contemplated in the previous guide that is in there now that will eat up some of the cash that was raised to maintain that guidance? Claire Mazumdar Clemon: Sounds great. And so I'll pass over the first part of the question to Tanya Green, Chief Development Officer, to speak to the sites and the study and then to Ivan Hyep, our CFO for cash -- guidance. Tanya Green: Yes. Thanks for the question. So in terms of sites, we have 129 sites that are open globally. And in terms of the competitive overlap with the other studies, we do believe that there are some sites that overlap, but we have seen great momentum at all of our sites in terms of patients. So we don't see that being a consideration. Ivan Hyep: And Judah, thanks for the question. In terms of use of proceeds for this recent financing, we are heavily focused on the alternative dosing, prelaunch activities and investment in both commercial and regulatory. And so for us, we didn't feel that we needed to change guidance there as it allows us to kind of build up instead of just extending runway. Operator: Our next question comes from Kelsey Goodwin with PSC. Kelsey Goodwin: Maybe again just on FORTIFI and the enrollment. How should we think about the ultimate split of enrollment across geographies? And is this similar to other trials in the setting? And then second, in terms of the bridging trial design, I guess, do you have a sense of when you might be able to provide more color for the Street? Ryan Cohlhepp: Great, Kelsey, thank you for the question. In terms of geographical distribution on the trial, I'd say what we anticipated is it will be very similar to some of the recent trials, KEYNOTE-048 in particular, I think what we had anticipated and continue to see in our own enrollment is very consistent with some of those historical trials. In terms of the alternative dosing, again, as Claire mentioned, we intend to get regulatory input on that trial and do expect to be able to provide greater clarity later this year. Operator: Our next question comes from Reni Benjamin of Citizens. Reni Benjamin: Congrats on the progress. Just sticking with FORTIFI, can you maybe just help quantify a little bit as to what you mean by substantial enrollment? And as we think about the number of patients required for the ORR interim versus kind of the final OS, can you give us a sense as to how that might look? And then just kind of related, since this would be used for accelerated approval, can you give us some thoughts on how you're thinking about more of a global filing as well for FICERA? Claire Mazumdar Clemon: Great question. So to your question around substantial enrollment, that is really predicated on what the FDA is looking for at the time in terms of a seamless Phase II/III design. What the FDA wants to ensure is that we are close to fully enrolled in the total confirmatory study, so as not to introduce bias at the time of granting an accelerated approval. So substantial is a key objective for very meaningful enrollment to ensure we're not introducing additional bias into the confirmatory study. To that question, we do believe that in the United States, with the FDA, we are on a path to potential accelerated approval predicated on a response rate endpoint from an interim analysis that will also look at durability of response as well as qualitative overall survival. The study will continue for full confirmatory approval on an overall survival endpoint. Today, we believe that ex U.S., a full overall survival endpoint is needed to predicate a global approval. Operator: Our next question comes from Jeet Mukherjee with BTIG. Jeet Mukherjee: Great. Two for me. Could you speak to the rationale and reasons for confidence on the loading and once every 3-week maintenance strategy when it was a 2,000 mg once every 2-week regimen that showed a notable response and depth of response? And the second question was just related to the colorectal cancer update. Could you confirm if the patient enrollment criteria allows for liver mets? Ryan Cohlhepp: Thanks for the question. So on the alternative dosing, we have gotten comfortable with our proposed strategy there. Looking at the compilation of all of our data sets. I think this is where really having the 750-milligram weekly, the 1,500 weekly and then the 2,000 every 2 weeks has given us the ability to do extensive exposure response modeling across those data sets. I think a couple of key notes in terms of the data. One of the things that we know when we look at the patients in our Ib data is that 1,500-milligram weekly dose, we're getting very rapid responses at 1.4 months that we're getting responses. The vast majority of patients will have achieved the response within 12 weeks. And at that same time, most of them will have hit their maximal depth of response by the 12-week time. And so that gives us the confidence in why we want to initiate with a weekly dosing phase and then be able to transition to extend that interval out to every 3 weeks. Again, what we'll look to do is to match the pharmacokinetic profile from both an exposure as well as a C trough perspective to the 750-milligram weekly, which, again, we know, as you saw in that data set that we presented last year, you see really good response rates. You see really good activity even at the 750. I think one of the things to remember here, if you recall our data, that depth of response, we're seeing more than 80% of our patients get an 80% or greater reduction in their tumor. So you think they're at that 12-week mark, you've got significantly less tumor in the patients at the 12-week mark, which gives us confidence in our ability to extend out that interval, maintain a very durable response and give the patients the ability to have a more convenient administration schedule. For your CRC question, the inclusion criteria does allow for liver metastases. And in fact, the anal canal data that we have presented previously really shows our ability and FICERA's ability to resolve liver metastases in that population. So it is something that we think could be a unique differentiating perspective of our molecule, and so we did allow liver mets. Operator: Our next question comes from Eva Fortea with Wells Fargo. Eva Fortea-Verdejo: A quick one from us. We've seen now in the 3 different dose cohorts with FICERA plus pembro, a similar response rate or even higher in some cohorts with CPS 1-19 compared to CPS 20 or higher. And so is there anything about the biology that could explain this? And if this holds in the Phase III, could you comment on the potential implications from a commercial standpoint? Claire Mazumdar Clemon: Great question, Eva. So to your question, it is known that, in particular, in HPV-negative head and neck cancer, there are both higher levels of EGFR and TGF-beta that makes these tumors typically more immunosuppressive or treatment-resistant than their HPV-positive counterparts. In particular, in fact, HPV-negative tumors tend to have a slight skewing for CPS low or the CPS 1 to 19. And in fact, it's in this patient population that pembro has worse response rates across the board. And so seeing very strong response rates in the CPS 1 to 19 really speaks to the underlying biology of being able to target both EGFR and TGF-beta, which is why we believe we're able to target these very immunosuppressive tumors. In fact, we do think that it's always going to be a differentiating aspect for our molecule compared to other EGFR inhibitors that are currently being tested that have not seen the outsized impact in the CPS flow. And in fact, we do believe that especially given we are going after a chemo-sparing regimen, being able to go after these 1 to 19 will allow us to have a dominant share in what accounts for approximately 50% of the total head and neck market, but slightly skewed even higher in the HPV negative. In fact, to your question, you may remember that we also have a cohort open in the CPS 0 cohort that we plan to disclose at a later time point that also speaks to this underlying biology. Operator: Our next question comes from Richard Law with Goldman Sachs. Unknown Analyst: This is [indiscernible] on for Rich. Just one from us. How are you thinking about when to unblind the study for the interim analysis for accelerated approval? Will it be based on an overall survival rate? Claire Mazumdar Clemon: To your question, this is a fully double-blinded study. We will not be unblinding the study as it needs to continue for overall survival. At the time of our prespecified statistical analysis based off of the number of patients for overall response rates, durability and qualitative overall survival, the IDMC will look at that data. But as management, we will not be unblinded to the data. Thank you for your question. Operator: And I'm not showing any further questions at this time. I'd like to turn the call back over to Claire. Claire Mazumdar Clemon: Thanks, everyone, for joining us for our first quarterly earnings call and for your support of Bicara Therapeutics. There's never been a better time to be following our story, and we look forward to speaking with you all again soon. Thank you, and have a good day. Operator: Well, ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.
Peer Schlinkmann: Good afternoon, everybody, and welcome to the 2025 full year earnings call of the Wacker Neuson Group. My name is Peer Schlinkmann, Head of Investor Relations and Corporate Communications. Thank you for joining today on the occasion of the release of our 2025 full year results. As usual, we will first start with the operational and financial results of the fiscal year 2025 and give additional insights on the recent developments as well as our outlook for 2026. Following this, we are happy to answer your questions in a Q&A session. If you are not able to follow today's call via the webcast, the presentation slides are also available for download at wackerneusongroup.com/investor-relations. Please note that the entire call, including the Q&A session, will be recorded and a replay will be made available on our corporate website by the end of the day. And now I would like to hand over to our executives, Karl Tragl and Christoph Burkhard, who will, as usual, lead you through this call. Christoph Burkhard: Thank you, Peer. This is Christoph Burkhard, CFO of the Wacker Neuson Group. Welcome, everybody, to our earnings call, and thank you for joining. Thank you. Karl Tragl: Dear all, a warm welcome from my side, too. And thanks again for joining today's conference call. I'm Karl Tragl, the CEO of the Wacker Neuson Group. I would like to start the presentation with a brief overview of our key financials for the fiscal year 2025. Our revenue stood at EUR 2.2 billion, which is essentially on par with the previous year's level. After a weak start in the first quarter, characterized by low capacity utilization following the downturn in 2024, we saw a gradual operational recovery as the year progressed. Throughout the year 2025, our order intake level has been slightly above revenue, resulting in a book-to-bill ratio of above 1. Our earnings before interest and taxes amounted to EUR 132 million, resulting in an EBIT margin of 6.0%. While this represents an improvement of 0.5 percentage points compared to 2024, the margin was impacted by onetime effects in the fourth quarter. These included legal and advisory costs related to takeover talks, adjustments to our virtual stock option plan and certain asset impairments. Without these effects, the recovery in earnings quality would have been even more visible, especially following the improving momentum, which we gained since the second quarter. At year-end, we saw a very successful development of our net working capital ratio. We managed to reduce it faster than originally forecasted, reaching about 29%, which is below our strategic target of 30%. This is, amongst others, a result of disciplined inventory management and the efficiency agenda, which we continued throughout 2025. The significant reduction of net working capital led to another increase in our free cash flow, which reached EUR 202 million by the end of the year. Christoph will explain the financial details in more depth. Now let's take a closer look at our performance across business segments and regions. In 2025, we continued to navigate a challenging market environment. Also, we saw a recovery starting in the second quarter of 2025. Starting with the business segments, light equipment and compact equipment, we had a powerful presence and stood out visibly at the Bauma Trade Fair in April, which led to higher revenue and increased profitability in the second quarter. However, development remained on that level in the following quarters as geopolitical instability, high interest rates and rising costs continued to weigh on construction industry. In detail, light equipment grew by 2% to EUR 460 million, while compact equipment declined by 2% to EUR 1.26 billion. On the one hand, demand for tele handlers, especially in Europe and skid steers in the U.S. was below previous year. On the other hand, we saw continued growth in demand for dumpers and excavators in Europe. Our services business showed further growth, increasing to EUR 521 million and accounting for 23% of total revenue. Strong demand for spare parts and used machines, combined with structural improvement of our service levels out of the new logistics hub in Mulheim-Karlich supported this positive trend. Revenues in Europe, representing 79% of group revenues rose by 1% to EUR 1.75 billion. While Germany and France were weaker, we saw growth in the U.K. and Switzerland. Our brands, Kramer and Weidemann with focus on the agriculture industry also regained momentum late in the year. In the Americas, revenue declined by 7% to EUR 422 million, heavily impacted by customer reluctance and U.S. tariffs. In Asia Pacific, revenue fell by 16% to EUR 44 million, primarily driven by a slowdown in Australia. In summary, despite regional headwinds and the weak start into the year 2025, the recovery in Europe and our stabilizing order intake provide a solid foundation for this year 2026. I will come back to our outlook at the end of the presentation. I will now hand over to you, Christoph, for more insights into our financials. Christoph Burkhard: Thank you, Karl. I will talk now about working capital. With 29.2%, we were able to stay with our working capital ratio below our target ratio of 30%, which clearly exceeded our expectations. This decrease of working capital was primarily driven by the following reasons. Firstly, we increased our trade payables preparing for 2026. Secondly, we maintained our discipline around inventory management and this despite the complexities around the U.S. tariff situation. Thirdly, a reduction of receivables also supported the overall result. As an overriding feature, I would like to mention our ongoing and successful efforts to systematically improve our integrated system-based planning processes across the entire group. This concretely enhances our planning quality end-to-end, starting with the sales forecast all the way through logistics, the production planning and supplier management. Eventually, all this has a sustainably positive impact on all working capital levers. Looking ahead to 2026, our expectations towards moderate growth will certainly influence net working capital throughout the year. However, we remain fully committed to our target ratio of below 30%. Now let's have a look at our cash flow performance. A good cash conversion into operating cash flow, plus the mentioned positive working capital momentum led to a strong cash contribution of EUR 86 million in the fourth quarter. This again generated an overall free cash flow of EUR 202 million in 2025, even exceeding previous year's EUR 185 million. As a consequence, we could reduce our net debt to EUR 185 million, reaching the lowest level since the first quarter in 2022. Compared to the previous year, net debt decreased by over 40%, and this translated into a further reduced leverage ratio of 0.6. And to complete the picture, an equity ratio of 62% underscores the robustness of our balance sheet. Now let's have a look at our dividend payout. The Wacker Neuson Group is known for its continuity in delivering attractive shareholder dividends, one of the main pillars of our financial policy. Despite the challenging market environment in the past year, our focus remains clear: to successfully increase profitability while simultaneously improving operational efficiency and therefore, preparing ourselves for the next growth phase in times of higher geopolitical uncertainty. Against this background, we want our shareholders to participate in our results again. Therefore, we will propose a dividend of EUR 0.70 per share for the past fiscal year at the Annual General Meeting, which will be held on May 13 here in Munich. And this corresponds to a payout ratio of around 61% of our earnings per share and marks again an attractive dividend yield of 2.9% based on the 2025 year-end share price. And with this, back to you, Karl. Karl Tragl: Thank you. In the following, we would like to highlight a couple of operational milestones, which we completed in 2025. Kramer celebrated its 100th anniversary. To mark this milestone, a completely revised machine design was introduced. Moreover, new wheel loaders and a new tele handlers were launched. We also attended numerous construction and agriculture trade fairs like Bauma and Agritechnica. The trade fairs will not only provide additional sales stimulus, but also enable us to meet our sales partners and our end users and understand their needs in personal discussions. The strong customer interest was also reflected by significant order intake at the trade fairs. And for the first time in September, we exclusively presented new products to key customers as part of a prelaunch 2026 event. We already announced that we have successfully started the delivery of first excavators for John Deere from Linz in 2025. And very important, in fall, we completed the production line for further models at our U.S. plant, which enables us to start manufacturing there in 2026. Last but not least, we successfully launched numerous new Wacker Neuson, Weidemann and Kramer, light and compact equipment machines. Our zero emission portfolio was expanded as well, adding further fully electric excavators, battery-powered wheel loaders as well as different light equipment solutions to our portfolio. Additionally, we introduced new digital solutions such as a Wacker Neuson and Weidemann app to provide our customers an even deeper insight into our products and to consistently support them during machine operation life cycle. Finally, I would like to conclude now with our outlook for 2026 and key topics, which are currently shaping our industry. The global economic and geopolitical environment remains volatile and characterized by significant uncertainty. Factors such as subdued investment momentum, trade conflicts and increasing protectionism continue to impact planning certainty. This is further intensified by ongoing geopolitical tensions, including the war in Middle East since beginning of March. This adds another layer of complexity to energy markets and global supply chains. At the same time, current market indicators point towards a moderate recovery, albeit at a slower pace than previously expected. Against this backdrop, we view the 2026 fiscal year with cautiously positive expectations. In Europe, we anticipate an environment that remains challenging, yet stabilizing, supported by public modernization investments. In North America, we expect solid demand from building of data centers and further infrastructure projects despite ongoing U.S. tariffs. Overall, we anticipate a slight market upturn in 2026. With great trust in our customers, employees, investors and in our strategic plan, this should enable us to achieve a moderate increase in revenue and a higher EBIT margin. So this is our guidance for 2026. We anticipate a revenue between EUR 2.2 billion and EUR 2.4 billion and an EBIT margin in a range of 6.5% to 7.5%. We plan to invest another EUR 70 million to EUR 90 million in the course of the year. And we aim to keep our net working capital ratio below the strategic target of 30% by the end of 2026. In 2026, we will consistently pursue our operational agenda. However, the market environment remains dynamic, shaped by realities of the past 2 years, low market volumes and ongoing geopolitical uncertainties, ranging from U.S. tariff policy to the most recent war in Middle East. Furthermore, we must acknowledge that electrification in construction and agriculture is progressing slower than originally expected. Despite these headwinds, we remain fully committed to our Strategy 2030. It remains our North Star with profitability now moving even more into our focus. During the course of 2026, we will reevaluate both the underlying market scenarios and the 10 strategic levers. Regarding our revenue up until 2030, we now rather anticipate a level of EUR 3.5 billion. However, what stands unchanged is our commitment to sustainable, profitable growth and continuous improvement of operational performance. Our profitability target an EBIT margin of more than 11% remains the core objective of our Strategy 2030. Let me summarize the key takeaways of today's presentation. First of all, we have taken action, and we improved our working capital management as well as operational efficiency. So we are well prepared to benefit from this in the expected economic upswing. As for the outlook 2026, we expect moderate revenue increase and EBIT margin improvement, while markets will still be influenced by U.S. tariff policy and geopolitical uncertainties. We focus on innovation, and we have new machines already in the pipeline. And moreover, we constantly enhance our solutions. Our strong balance sheet is a foundation to execute our plans and drive future growth. And we will reassess underlying market scenarios of our Strategy 2030, and we stay committed to our profitability target of more than 11% EBIT margin. Thank you for your continued trust and for joining our earnings call today. As we move into 2026, we are energized by the opportunities captured in our motto, driving progress, building success. We look forward to sharing our journey with you throughout the year. If you would like to connect, our Investor Relations team is available to provide further insights. Before we open the floor now to your questions, I want to express my sincere gratitude to all our employees of the Wacker Neuson Group. Their dedication and their hard work remain the true engine behind our value for customers and shareholders. Nobody is perfect, but a team can be. Thank you for listening. Operator, we are now ready to start the Q&A session, and we are very much looking forward to answering your questions. Operator: [Operator Instructions] The first question comes from the line of Stefan Augustin from Warburg Research. Stefan Augustin: The first one is actually on the current order intake trend. And what has -- what have you seen actually on the -- in the very short term, is there anything that you can tell us over the last 4 weeks since the war in Iran started? And did this in any way impact so far order intake behavior at your customers? That would be the one to start with, I think. Christoph Burkhard: Thank you for your question, Stefan. This is Christoph. Let me take your question. We do see -- now starting into the new year, we do see in January and in February kind of very first tender trend for a better book-to-bill ratio above 1. So currently, we do stand at around 1.2, 1.3 within the group. And that ratio is allocated across our landscape with a fairly strong order intake momentum in the U.S. after very weak months towards the end of previous year, as you recall. But we had a good start into the new year in the Americas, I should say. And Europe is also okay. It's above 1. The only exception still being Germany, where it's kind of sluggish. I think that somehow represents still the overall sentiment in Germany. We are all waiting for a kickstarting the German economy. But overall, we are moderately optimistic also with respect to order intake. Stefan Augustin: One follow-up here directly. Is that good development in the U.S. in any way connected to the next model ramp-up by Deere? Or is that something that should come on top later in the year? Christoph Burkhard: That's independent from the John Deere collaboration. Looking deeper into root causes there, the feedback we receive is around -- we have been frequently talking about this famous dealer inventories, which have come down. The second thing is we have been looking at quite some months of reluctance, particularly of the big rental companies to place new orders that eventually seems to have come to an end. I mean, anyway, they couldn't stay away from investments from forever. So that's also probably what is gaining momentum here. Stefan Augustin: Also. I also like your statement that you will focus on the 2030 targets in the longer term on the margin more than on the growth. Maybe as a first step in '26, how much of that you expect in the margin improvement is actually intrinsic and rather on costs and processes and is -- what part is actually on the higher volume based? Christoph Burkhard: It's rather on cost and processes in 2026, definitely. And that also does explain already, let's say, the building blocks then moving into 2027, where we would expect then more to benefit also from growth. But the growth aspect is not the key in 2026. Stefan Augustin: Yes. So would it be fair to say if the sales would be at the higher end, there would be an additional probability to also be better on the margin side. Is that an implication of your statement? Christoph Burkhard: I can buy into this logic without going into specific amount, but I follow your logic, Stefan, definitely. Operator: The next question comes from the line of Lukas Spang from Tigris Capital. Lukas Spang: I would like to start with the topic you just mentioned in your presentation. It's the data center area. And I think that's a very interesting part in the building segment in general. Also, it's probably a very small portion in general. But is it quantifiable for you as a group, how many machines or equipment you are delivering to this specific area? So is it possible to quantify how big the revenue you are making with all stuff regarding data center? And what could be the potential in the future for you? That would be my first question. Karl Tragl: Thank you for the question, Karl speaking here. I mean I was -- just a week ago, I visited U.S. talked also to partners and customers. And that was a topic throughout all the discussions as a positive momentum in U.S. in time, and it should be sustainable because it's driven by artificial intelligence, and that's something which will go on for more time and into the future. And it's -- the data center is driving a lot of infrastructure around because you need fiber cables to connect them, you need roads to come to them, you need other topics to people bring them over there. But this is not quantifiable. We cannot quantify such a specific topic in the U.S. But as I said, it's for me, it's a sustainable topic driven by artificial intelligence, and it is driving more investments around just to connect it. Lukas Spang: Okay. But you would say that it's more driven from the U.S. than Europe currently? Karl Tragl: Yes. Obviously, I mean, just reading through the papers and talking to people, there's only a few data centers currently as projects in Germany as far as I know at least. There's a lot in the U.S. So yes, I fully agree with what you said. Christoph Burkhard: I think we're talking about 20 or something like that more in the U.S. Lukas Spang: And then on the guidance, it's a very broad range in terms of revenue, again, like last year. So what kind of scenarios did you bake in for the lower and the higher end on the revenue guidance? Christoph Burkhard: Yes. Lukas, I guess we were a bit burned by last year and to be very frank, and by last year's -- particularly by last year's first quarter. And we lost a little bit trust in short-term recovery with significant numbers. So let me put it this way. The lower end is certainly conservative, and we wanted to really have a gradual approach here in a sense that we -- by May, when we will talk again about Q1, our picture will certainly be much clearer around the lower end of the guidance. We first want to -- we want now to accomplish a successful first quarter, and then we'll see further. Lukas Spang: Yes. But the higher order intake you mentioned now on the -- yes, I would say, very nice book-to-bill ratio in Q1 will be then mostly revenue in Q2. Is that right? Christoph Burkhard: That's probably right. However, I need a little bit to tone the enthusiasm down in a sense compared to last year, this is really -- this is good in terms of order intake. However, there are 2 qualifications to it. Firstly, of course, we are looking at a book-to-bill ratio in connection with 2 months with relatively lower absolute revenues because January and February are months with lower revenues, winter months plus months with relatively fewer working days. The heavy months are coming now. So March, of course, is supposed to be a strong sales month. And here, we need to see again also the higher book-to-bill ratios. That still remains to be seen. Secondly, of course, again, we went through this kind of depressing period partly in 2025 with low order intake. So for the time being, I would not go beyond the statement that this is now according to what we need also. So we are not yet talking about upside or higher-end guidance. That's basically the calibration you need to understand behind our statements. Lukas Spang: Yes. But for Q1, after the strong Q3 and Q4, and I think also order momentum in the second half, and also book-to-bill was good. So there should be an improvement Q1 versus Q1 in terms of revenue. Christoph Burkhard: Yes, absolutely. Absolutely right. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peer Schlinkmann for any closing remarks. Peer Schlinkmann: Yes, ladies and gentlemen, as we can see, there are no further questions in line. This brings us to the end of our conference call. As usual, if you have any further questions, please do not hesitate to contact me or the entire Investor Relations team via phone or e-mail. If you would like to meet in person, please let us know or check our website and financial calendar for all relevant roadshow dates in the coming weeks and months. Thank you again for joining our call, and we wish all of you a pleasant Easter holidays. Thank you. Christoph Burkhard: Thank you, everybody. Karl Tragl: Thank you. See you. Bye-bye.
Operator: Greetings, and welcome to the INmune Bio's 2025 Fourth Quarter and Year-End Earnings Call. As a reminder, this conference is being recorded. A transcript will follow within 24 hours of this conference call. At this time, it is now my pleasure to introduce Mr. Daniel Carlson, Head of Investor Relations of INmune Bio. Daniel? Daniel Carlson: Thank you, Cloey, and good afternoon, everyone. We thank you for joining us on the call for INmune Bio's 2025 Fourth Quarter and Year-end Financial Results. Presenting on today's call are David Moss, CEO and Co-Founder of INmune Bio; Dr. Mark Lowdell, Chief Scientific Officer and Co-Founder of INmune Bio; Dr. CJ Barnum, Head of Neuroscience; and Cory Ellspermann, INmune Bio's CFO. Before we begin, I remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those such as forward-looking statements. Please see the forward-looking statements disclaimer on the company's earnings press release as well as risk factors in the company's SEC filings, including our most recent And quarterly filings with the SEC. There is no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, INmune Bio disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances. Now my pleasure to turn the call over to INmune Bio's CEO, David Moss. David Moss: Thank you, Dan, and good afternoon, everyone. Thank you for joining us for INmune Bio's Fourth Quarter and Full Year 2025 Earnings Call. Today, I'll begin with an overview of our progress and strategic priorities across the business. Mark will then provide an update on our CORDStrom platform with a focus on our RDEB program. CJ will follow with an update on XPro and our Alzheimer's disease development efforts. Cory will then review our financial results. After that, I'll return to highlight our key upcoming milestones before we open the call to questions. 2025 was a pivotal year for INmune Bio. We completed our MINDFuL Alzheimer's trial, advanced CORDStrom towards registration, and continue to position each of our platform programs for the next stage of development. As we move into '26, our focus is very clear. Execute against the most important regulatory clinical and strategic milestones across the portfolio. Starting with CORDStrom, this remains our most advanced program and a major value driver for the company. We recently presented additional patient data that further reinforces the therapeutic profile of CORDStrom in Recessive Dystrophic Epidermolysis Bullosa, or RDEB. These data showed clinical meaningful wound healing, reductions in itch and improvements in quality of life, all with a favorable safety profile. Based on this progress, we're in the final stages of preparing our regulatory submissions in both the U.K. and the United States, and we remain on track to file the MAA in the U.K. by the end of summer of '26. As Mark will tell you shortly, CORDStrom has a clear batch-to-batch manufacturing consistency, which makes the product reproducible ensuring commercial grade uniformity. Further, the clinical mechanism of action of CORDStrom for RDEB has been worked out along with the potency assays, which is an important step for regulators. The repeatable reliability -- the repeatable manufacturing reliability with the worked out MOA along with CMC readiness, safety and clinical results is what gives us confidence in the -- in CORDStrom for RDEB. Importantly, we want to highlight that CORDStrom is not simply a single asset opportunity, but as a platform with broader potential. Beyond RDEB, we believe the biology underlying the program may support development in additional inflammatory and degenerative conditions and over time, may also enable genetically modified applications in oncology and rare disease settings. Our immediate priority is to bring this therapy to patients with RDEB while also building the foundation for long-term platform expansion. Personally, there is no greater mission in my career than delivering CORDStrom to the children and families living with RDEB. Behind every trial result is a story that I've read and a face that I've seen in the video shared by these incredibly brave families. These images serve as a constant reminder of why we do what we do. Our team is deeply motivated by the human element of this condition, and we are working with an absolute urgency to bring this therapy to patients who need it most. Further, in our mission to develop medicines to unmet needs, I now turn to XPro for Alzheimer's disease. We believe this program is in the strongest position it has ever been. We completed MINDFuL, we've aligned with the FDA on the development path, and we're now preparing for a Phase III. This alignment effectively creates a preapproved blueprint for a partner to execute. CJ will give you the full picture shortly. On INKmune we completed our Phase II trial in metastatic castration-resistant prostate cancer ahead of schedule and under budget. The study met its primary endpoint and 2 of its 3 secondary endpoints. Mark will explain more on this later. Before I hand the call over, I want to thank patients and families who participated in the clinical studies, the investigators and trial sites, who supported this work, and our employees for their continued commitment and execution throughout the years. I also want to thank our shareholders for their continued support. Our strategy of advancing multiple differentiated platforms in parallel continues to create meaningful opportunities for value creation. We now have 1 platform approaching the regulatory stage, another with a completed Phase II study, an important translational data and 1/3 that has also generated encouraging clinical results. We believe '26 will be an important year for INmune Bios to work to advance CORDStrom towards approval, further clarifying the next steps for the Phase IIb trial for XPro and continue to build the partnerships and resources we need to move our programs forward. With that, I'll turn the call over to Mark Lowdell for an update on CORDStrom. Mark? Mark Lowdell: Thank you, David, and thank you to everyone who's joined the call today. Welcome. So as David said, CORDStrom showed great promise in the randomized placebo-controlled trial in RDEB, but it potentially extends way beyond RDEB to other forms of Epidermolysis Bullosa, and indeed to other conditions and indications. CORDStrom remains truly revolutionary in the MSC field. And last year, we reported on the fact that since it's created from mesenchymal stromal cell banks from 4 or more pooled donors, it really has unrivaled stability and reproducibility to compare to all of the other mesenchymal stromal or stem-cell products that are being developed or are on the market. Moreover, what we found is that the pooling allows us to select the individual mesenchymal stromal cell donor seedstocks, and we can choose those that have the appropriate potency characteristic for each disease indication, which allows us to tailor the final product to target different disease indications and thus have different drugs. As you know, RDEB is our first disease indication, and over the past 6 months, we've been able to dissect the precise mechanism of action of CORDStrom in RDEB. That's pretty unique for mesenchymal stromal cell product, while the diversity of the product means that working out quite how it delivers its effect is actually very challenging, but we now know that CORDStrom works by secreting an array of chemical messengers called cytokines, which are used by the body to control inflammation. We know that RDEB is predominantly a disease of inflammation, and it's driven by cells in the skin, which are called Type 1 macrophages or M1 cells. These M1 cells secrete inflammatory cytokines, which drive the itch and lead to the scratching, which causes the skin wounds so prevalent in RDEB patients, in which you'll be familiar with. M1 cells in normal skin also induce itch when provoked, but in RDEB patients, the absence of the protein which binds the skin layers together means that itch scratch cycle causes those very severe lesions that are so famous. One of the cytokines secreted by CORDStrom drives the M1 cells in the skin to mature into an M2 noninflammatory wound healing cells. We all have these and these M2 cells secrete a cytokine called IL-10, which switches off other INmune cells driving the itch-inducing cytokines. In parallel, the M2 cells also secrete other chemical messages cytokines, which enhance wound repair. And when we looked at the serum samples from the patients who were treated with CORDStrom on the U.K. trial and compared those to those treated with placebo. The CORDStrom recipients all had in their blood, cytokines that our mechanism of action predicted. And those patients that had the highest concentration reported much less pain, less itch and had better skin scores. They scored better in all measures of well-being and increased ability to eat. So this is the first RDBE treatment to have such diverse whole body clinical benefits, over and above those, which we see from the skin treatments that are already licensed. The patients, their caregivers and their doctors, all want to continue to have access to CORDStrom, and as David said, we're working tirelessly at present to submit the applications for marketing authorizations in the U.K., and then the European Union, and finally the U.S. before the end of the year. We are driving forward and they're all completed by the end of this year, and we hope to be supplying CORDStrom to RDEB patients in 2027. As I said earlier, the fact that CORDStrom is manufactured from a pool of 4 or more donor cell banks means that we can select the best donor cells for specific clinical indications. So while we are progressing with CORDStrom for RDEB and the marketing authorizations, my group of R&D scientists here in the U.K. are working on other broader indications and we're seeking business partnerships to develop those through clinical trials and bring those to market accordingly. So as a company, we're laser-focused on preparing the marketing authorization application for the U.K. and then the EU and the Biologics License Application, or BLA, for the U.S. by the end of 2026. These are highly aggressive time lines, but so far, we've met all of the deadlines that have been set, and I'm incredibly proud of our team in the U.K. for working so diligently to keep to these time lines to remain on track and to use all the resources that we have in the U.S. office to support. So I'm happy to take questions that you have, but meanwhile, I'll hand over to CJ for the latest update on XPro. CJ, floor is yours. Christopher Barnum: Thank you, Mark. I'll give you an update on XPro and where we're headed. MINDFuL was our Phase II trial in Alzheimer's disease. We designed it around a simple question. If we pick patients who have both Alzheimer's pathology, and signs of inflammation in their body, and we treat the inflammation, do they do better? What we saw was very encouraging. The results consistently favored XPro across clinical, behavioral patient-reported and blood and imaging biomarkers. The Phase I identified what works, who it works for and resolved the open questions so that Phase III can be successful. These results directly inform how we designed the Phase III program. We identified the patient population, those with both Alzheimer's pathology and biomarkers of inflammation. Decades of Alzheimer's research show that cognitive changes come first and functional changes follow with time. That's why the Phase III trial runs 18 months, long enough for the cognitive effects we saw at 6 months to show up on the functional measures the FDA requires for approval. The program is built as an adaptive trial with 2 stages. Phase IIb gives us a decision point at 9 months. a clear go or no go before we commit to the full Phase III investment. If the data hold, the trial continues seamlessly into the registrational stage with the CDR sum of boxes, the same primary endpoint used to approve lecanemab, and donanemab at 18 months. We presented this program to the FDA at the end of Phase II meeting earlier this year. The agency reviewed our data, our enrichment strategy, and our trial design and aligned with our approach. We are now moving forward on several fronts. On the development side, we continue to analyze the MINDFul data set to fully understand the impact of XPro treatment. At the same time, we are preparing the Phase III program for initiation, which includes finalizing the protocol based on the FDA's feedback and pursuing the partnerships and funding needed to execute it. There's a lot of work ahead, but the foundation is solid. I'll hand it back to David. I look forward to your questions. David? David Moss: Thanks, CJ. Before I hand the call to Cory to go through our financial results, I want to emphasize from a capital perspective, we remain committed to capital efficiency. Our strategy is built on hitting clear data-driven milestones that allow us to maximize shareholder value while minimizing unnecessary burn. We're focused on maintaining the lean execution-oriented culture that has brought us to this stage. With that, let me pass the call to Cory to go through our financial results. Cory? Cory Ellspermann: Thank you, David. Net loss attributable to common stockholders for the year ended December 31, 2025, was approximately $45.9 million compared to approximately $42.1 million for 2024. Research and development expenses totaled approximately $20.7 million for the year ended December 31, 2025, compared with approximately $33.2 million for 2024, with the decrease due to incurring lower expenses in connection with the Alzheimer's trial in 2025. G&A expenses was approximately $10.3 million for the year ended December 31, 2025, compared with approximately $9.5 million for 2024. We also recorded a full impairment of our intangible asset of $16.5 million in 2025 following the release of the Phase II results of the Alzheimer's trial, in which the trial did not meet the clinical endpoint. During 2025, the company sold 3 million shares of common stock for net proceeds of approximately $17.4 million in a registered direct offering. In addition, the company sold approximately 1.3 million shares of common stock for net proceeds of approximately $10.1 million under at-the-market offerings. At December 31, 2025, the company had cash and cash equivalents of approximately $24.8 million. And as of March 30, 2026, the company had approximately 26.6 million shares of common stock outstanding. Based on the current operating plan, we believe our cash is sufficient to fund our operations through Q1 2027. And now, I'll hand the call back to David. David Moss: Thanks, Cory. Now I'd like to present upcoming milestones for the company, and then we can start with the Q&A. For CORDStrom program, we have several significant milestones ahead, which will really set our track for 2027. As Mark mentioned, we're on track to file the MAA in the U.K. by mid-summer 2026. A few months after the MAA filing, we expect to submit the MAA to the EMA and then the BLA to the FDA towards the end of the year. We should have feedback from all 3 geographies in '27, if not, approvals by then. I mind investors that it's our belief that a successful BLA application would likely result in the company obtaining a priority review voucher from the FDA, given that the program already has orphan drug designation and rare pediatric disease designation. For XPro, we continue to make strong progress. We've now received the minutes from our end of Phase II meeting with the FDA, as CJ had mentioned, and we obtained positive initial feedback on the accelerated approval pathways or we're active preparing for next steps. We're advancing partnership and funding discussions to support late-stage development of XPro. Stepping back, we entered 2026 with a focused set of objectives and multiple meaningful opportunities to create value, while MINDFuL trial did not achieve its top line primary endpoint due to powering the patient population properly, the totality of XPro data set continues to support our conviction in the program's potential in Alzheimer's disease and other neuroinflammatory disorders. At the same time, we believe CORDStrom is advancing towards a potentially transformative regulatory and commercial inflection point with the broader platform still not fully reflected in the market. We appreciate the continued support of our shareholders and the commitment of our team as we work towards these goals. At this point, Cloey, I'd like you to tell people how they can ask questions and poll for questions. Operator: [Operator Instructions] And we'll take a question from Elmer Piros with Lucid Capital Markets. Elemer Piros: David, what I'd like to ask, and maybe Mark can help us out here. If there is any anticipated differences between an MAA and an FDA submission. Have you had interactions with the FDA, what might be their requirements different from the European or from the U.K. agency? Mark Lowdell: Yes, I'll -- that's a very good question. Yes. So we -- the last time we spoke to the FDA specifically was a little bit about 13 months ago? And what they came back with was some -- one of the things that's been at the top of my mindset is, -- all of the work we've done so far in RDEB, the products being made from umbilical cord donors from the U.K. and there is a sensitivity about using U.K. donor materials in the U.S. And so we asked the FDA specifically whether we would be allowed to use U.K. donor cords for the U.S. submission. And they came back and said, absolutely, yes, but we would have to screen the U.K. donors for the standard globally agreed infectious disease markers, but they'd have to be tested in U.S. labs in clear accredited labs. And so what we're doing at the moment is creating new master seedstock and from donors that we can ethically test in the U.S. So that's the biggest difference. We have to create a new master seedstock, which is ongoing at the moment. But because we -- as I said earlier on, we've worked out the mechanism of action. We now have potency assays. We've been able to demonstrate that we've made 4 different master seedstocks experimentally from U.K. donors, and they've all been consistent. So the next point is that we make for the FDA filing, which you're going through at the moment, will be those that we take through for commercialization globally. So that was the principal question that we had, and it was the principal answer that they came back with The rest of the questions they came back with were identical to those from the MHRA. So yes, we will present exactly the same data set. David Moss: Elmer, let me -- if you don't -- Elmer, if you don't mind, let me just add to that. So the plan is what's -- if you -- a few months -- a few weeks ago, we submitted essentially a pre-MAA package to the MHRA, which will -- which really effectively is like a Type B meeting and it kind of -- it kind of smooths the process of the full MAA application speeds the process up that we intend to file midsummer. Once we get the feedback from the MHRA, and as Mark will tell you, they've already set a face-to-face meeting with us. Once we get that, we'll put that together with the answers to whatever questions they have or whatever feedback they give us, and then we'll submit that as a Type B meeting to the FDA in preparation really like a pre-BLA in preparation of the BLA with the FDA. And so that will be the steps that will take place. I think that might have been a little bit of what you're asking, if I'm correct? Elemer Piros: Yes, yes, yes. And just maybe one more detail around this. So would you have to have the samples tested in U.S. labs before you submit or you can have that during the submission or during the evaluation and submit it when you have the results? Mark Lowdell: So what they will ask is for a confirmation that we will only supply drug into the U.S. from U.S. tested donors. But in point of fact, we're making the master cell batch now. So we will have products that have been made from U.S. tested donors before we submit the BLA. Elemer Piros: Yes. And maybe one question about the course -- the XPro program. David, have you had interest, any interactions with potential former partners at ABPD? upon feedback, you get . David Moss: No, good question, Elmer. We have ongoing discussions with some groups. And one of the things that now you have to realize, we've just got the end of Phase II minutes a few weeks ago, 3, 4 weeks ago now. And -- so everything is being factored out. But 1 of the things we intend on doing this is finding a group to help us on the BD perspective because there's just a lot of not just large pharma but midsized companies, that we think the program is very appropriate for because if you think about it, it's a relatively small investment to see the Phase IIb portion for obviously a very large market, potentially one of the largest markets. The Phase IIb portion reads out as we expect with the right patient population from what we've learned from the MINDFuL trial, then it's a very clear path to the registration program as CJ had talked about linking the cognitive aspects of EMAC to the cognitive aspects of CDR and then getting the functional scale of CDR, which comes after cognitive changes over time. So the link is very logical. The correlation between EMAC and CDR is very logical. And so we think that this package had explained appropriately to the midsized EBITDA biotech companies that have an interest in neurology, all the way up to the large pharma. I think it's going to be a very attractive program. Operator: And it does appear that there are no further questions at this time. I would like to hand it back to David Moss for any additional or closing remarks. David Moss: Thank you, Cloey. 2025 was a year of significant progress for INmune Bio. We completed and analyzed the MINDFuL Alzheimer's trial, advanced CORDStrom towards registration in RDEB and positioning commute for its next stage of development in prostate cancer. As we move toward through 2026, our priorities are very clear: advance CORDStrom's towards marketing approval in the U.K., EU and the U.S., secure regulatory clarity on the path forward for XPro and build the partnerships and financial support necessary to bring these programs to patients. On behalf of the entire INmune Bio team, thank you for your continued support and confidence in our mission. We look forward to updating you on our progress in the months ahead. Have a great evening, everybody. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Zhiheng Wang: Ladies and gentlemen, good afternoon. I'm the President of ABC. Welcome to the annual results announcement of ABC. It's a great pleasure to meet with the friends, online, offline investors and analysts and friends from the media. I'd like to take this opportunity to express my appreciation for your support, trust and interest in the development of ABC. With that, I'd like to present to you the management of ABC. Mr. Lin Li, [indiscernible] Vice President of ABC and Mr. [indiscernible] Vice President of ABC and the Board Secretary, Mr. [indiscernible]. And some of the senior management are participating from a meeting online. With that, I'd like to present to you the business performance, business strategies and the outlook for 2026 of ABC. In terms of the business highlights, which you are interested in, 2025 is the last year of the 14th 5-year plan. It is a year for the new progress for ABC. In the past year, we guided by the thought on socialism with the Chinese characteristics and strengthen overall leadership of third party and implement the relevant decisions, arrangement of the CPC Central Committee and the State Council, deeply practiced the political and people-oriented nature of financial work and firmly grab main line of preventing risks, promoting high-quality. Development, made overall efforts in our aspects, providing more powerful and effective service to the real economy, achieving steady progress in business, achieving steady progress in business operations with the high effective service, main characteristics of our business, our steady improvement and steady progress in the business operations. First, stable profits, ABC's net profit and operating income continue to maintain a double-digit growth, reaching RMB 292 billion and RMB 725 billion, respectively, a growth rate of 3.3% and 2.1%, respectively. Compared to first -- 3 quarters, growth rates increased by 2 bps and 0.1 points, respectively. Net NIM, 1.28% among topping the peers and average return on total assets, 0.63%. Weighted average return on net assets at 10.16% with a capital adequacy ratio of 17.39% with excellence of our business. Total assets reached RMB 48.8 trillion with a growth rate of 12.8%. New loans and financial investment in local foreign currencies totaled RMB 4.7 trillion. In sensitive of economy is a leading industry and the loan growth rate was 8.9% liability, business continued to maintain a good development with a deposit growth rate of 7.7%. An average daily increase in RMB deposits ranked first among the comparable peers. Daily deposits is consistently improving and duration of local foreign currency deposits in the end of last year was 0.58%, best among the comparable peers. We are the only bank to achieve a positive growth in RMB loans for 7 consecutive years with high-quality loans. NPL ratio of domestic banks declined for 5 consecutive years and further decreased by 3 basis points in 2025, remains a relatively low level of 1.7% -- 1.27% industry. And provision -- the special mention loan ratio, 1.39% and overdue loan ratio 1.25%. The difference between the NPL and overdue loan ratio was registered a negative growth and which was also the only bank in comparable peers with exhibited a loan ratio lower than the nonperforming loan ratios. ABC loan balance is continued to above RMB 1 trillion, an increase of RMB 39.6 billion over the previous year. Provision coverage ratio was 292.5% with both indicators of the balance of loan provision and provision coverage ratio ranked among the first among the comparable peers. The fourth return is very high. Since its listing in 2010, considering the comprehensive return of stock price increase and the dividend, the annualized average returns of investors in A shares and H shares reached 12% and 10%, respectively. In the next 3 years, that is from 2023 to 2025, and it reached to 48% and 41%, respectively. In terms of dividends, the Board of Directors proposed a distribution in final dividend for 2025 with a rate of RMB 1.3 per share and tax included. Inclusive together with the dividend already distributed in the range the total dividend of the whole year amounts to HKD 2.495 per share and RMB [indiscernible] per share tax included. Dividend payout ratio was 30%. We'll have a more resilient and more sustainable development. Last year, we did the work in the last following 5 aspects. First, we stick to our main businesses that is providing service for the agriculture, that is agricultural rural areas and farmers. We consolidated the foundation for business development and improve the quality and efficiency of providing service rural-related areas and build a differentiated competitive advantages and the loans from the country level regions balance reached RMB 1 trillion for 4 consecutive years and the balance reached RMB 10.9 trillion, and the balance accounted for more than 40% of the total loans. And the balance in the county levels has doubled during the 14th 5-year plan period. And deposit balance was 14.3 trillion, an increase of RMB 1.23 trillion over the end of the previous year and contributed more than [indiscernible] to the increase of deposits of the whole bank. Specifically, our channels for serving clients have been further improved among the 22,800 branches of the bank, 56% are located in county-level cities and rural towns or townships. ABC is only a large state-owned bank with a full coverage of county-level outlets. In recent years, we have further shifted the focus of our service to the grassroots levels existing the reach of our services continuously improving, completing them. And we have [indiscernible] 61 services, namely our physical outlets, self-service machines, mobile banking, rural service stations, mobile service, [indiscernible] and remote banks to form them into one, which continuously enhance our service capabilities to provide service to every villages and household. And last year, we moved another 179 outlets to townships built 1,742 rural service stations enrich our product shelves. And also, we have also made great efforts to build a product and service system to 10 major financial areas, including green finance and targeted property, alleviation finance, innovated and promoted inclusive products such as agric park loans, technology loans and professional farmer loans specifically serving the differentiated diversified financing needs of agricultural areas and farmers. And we can develop -- we have developed 43 products across all industries and 208 regional characteristic products and dedicated products to cover key areas of rural revitalization. By leveraging technological means, we have continuously optimized the loan application process for farmers, actively promoting on-site and remote work mode, further enhancing the convenience and accessibility of rural financial services with the balance of the reaching RMB 1.84 trillion. Fourfold increase during the 14th 5-year plan period. And grain and important agricultural products have been increased. Long industries [indiscernible] road development and related fields grew by 20.3%, 19.5% and 9.6%, respectively, and 832 property stricten counties and 160 key counties for rural revitalization have seen faster loan growth than the average growth rate of the entire bank. Second, we sticked to the essence of finance and building new advantages in business development by implementing national strategies and serving the rural economy. We insist on serving the real economy as our fundamental purpose sees the trend of new and old driving forces transformation and industrial upgrading, continues to optimize allocation of financial resources while serving the high-quality development of the rural economy also strive to promote our own high-quality development. In 2025, the loan balance of ABC reached RMB 27.13 trillion, an increase of RMB 2.23 trillion over the end of the previous year. Among them, personal loans, inclusive loans and private enterprise loans took the lead exceeding RMB 9 trillion, RMB 4 trillion and RMB 7 trillion, respectively. Our financial investment was RMB 16.3 trillion, an increase of RMB 2.47 trillion over the previous year. We made every effort to serve the stable investment and consumption with the supporting of financing were too heavy, that is implementation of national strategy and the key areas in ensuring national strategy projects. We also are going in the front and the projects are ranked among the best in the comparable industry, increase of growth rate of the consumer loans were also ahead of the peers. Personal consumption loans, including credit cards, have a growth rate of 9% and the balance reached RMB 1.45 trillion. We continue to strive the Five Priorities of finance, promote more financial resources, invest in the productivity, green development, inclusive finance and provide loans to the SMEs. Other key areas was strength in the key areas and weak claims. The balance of the technology finance loan, green finance loan, inclusive finance loan reached RMB 4.7 trillion, RMB 5.93 trillion, RMB 4.35 trillion, respectively, growth rate of 20.1%, 18.7% and 20.9%, respectively. A number of inclusive known clients ranked the first among comparable peers. Total supply of inclusive finance is the largest with the widest service coverage, further consolidating the leading bank's position with the strongest sustainable development capability. In the field of pension finance, the number of physical and electronic social security card users ranked first among peers and the number of clients and the amount of individual pension service are also among the best in the comparable peers. The loan with the pension industry reached RMB 23.16 billion and were 108.5%. We actively serve higher level of opening up, introduce a work plan to stabilize foreign trade and investment active supports the cross-border use of RMB and helps to diversify the trade markets and integrate domestic and foreign trade. Third is to focus and put the client first, expand the new space for business development while enhancing client service capabilities. Clients are the foundation of our bank. We always take client development as a fundamental and strategic task. We will press ahead with the project to expand the client base, improve service for corporate clients with a group and tiered management personal loans, improve the service model driven by digital plus model and continuously enhance refined and comprehensive client service. Client base has been expanding, reaching 896 million for personal clients and remaining the largest in the industry. Nonbanking -- nonbank financial assets on AUM for personal clients amounted to RMB 24.7 trillion, an increase of RMB 2.4 trillion and end of previous year with 13.29 million corporate clients, an increase of 1.16 million clients from the end of previous year and ranked among the top in the peers. We had 609 million personal mobile banking clients with over 276 million monthly active users and over 292 million monthly active users. Our mobile devices maintained industry-leading growth rates on both metrics. The quality and efficiency of customer service continue to improve with a focus on better meeting customers' financial needs. We continuously enrich and expand our product offerings and portfolios in areas such as deposit credit, wealth management, strengthen service, synergy between commercial banks and investment banks and domestic foreign currencies, financial and nonfinancial service and advancing rural service project, we have been steadfast in promoting customers' rights and interest, making our customer service more diverse and personalized. We have strengthened our professional service capabilities. We have improved our employee training system, provided classified professional training to strengthen the team on wealth management and providing solid support for client service. Our total number of wealth management advisers have reached 119,000 increase of 6,000 from the end of last year. Fourth, we have deepened the reforming and innovation by deeply integrating business technology data. We have created a new impetus for business development. We have actively embraced the new round of technological revolution, deeply advanced construction and smart banks, intensified data empowerment and AI applications striving to transform technological innovation, a key variable into the greatest increment for high-quality development, making the application base for technological innovation more solid, accelerating the building of AI plus capability systems such as data technology, security, providing strong support for the large-scale and inclusive application of AI, making the approach of digital operations more mature, effective reducing the burden and workload empowering grassroots outlets become more significant. First, strengthen bottom line thinking and thickening and strengthen the safety cushion and buffer for business development. We also take risk management and control as our longstop task and continuously enhance professional capability in building risk management serve the ballast for maintaining financial stability. We continue to improve the comprehensive risk management system, strengthen forward-looking risk identification and enhanced risk disposal response in key areas and consolidating foundation of internal control and compliance management. And third, an outlook for 2026. We have confidence from 2 sources or aspects. First, the economic performance -- macroeconomic performance is stable and growing, creating a favorable macro environment for the development of ABC. The outline of our 15th Five-Year Plan have provided a guideline for our development. And in China's economy is has a solid foundation with many advantages and a strong resilience and long-term positive support conditions and basic trends with great potential have not changed. With the implementation of the supporting measures of the 15th Five-Year plan are gradually implemented, the economic growth rate will continue to maintain within a high reasonable rate. And we will continue to have the strong foundation. This has led a solid foundation for us to make further breakthroughs. Over the past 5 years, we have thoroughly studied and implemented General Secretary Xi Jinping's important expositions on the financial work, and we have actively pursued this path of financial development with Chinese characteristics. And we have also expanded our product and service quality and also optimized our team building capacities and also cemented our risk control efforts. This has given us a very good starting point. Dear friends, ABC's defining feature is agriculture. This year marks our 75th anniversary. During the past 75 years of ups and downs, we have always been resonating with our national strategy and also standing in unity with billions of customers and sharing value with broad investors. 2026 is the first year of the 15th plan. And the new era calls for new responsibilities and also the new journey requires new actions. ABC will continue to strengthen our party leadership and uphold a correct view of achievements. We will continue to lay a solid foundation and contribute to the starting chapter of the 15th Five-Year plan and create more value for shareholders, customers and investors in all sectors of society. Next, let's head into the Q&A session. I would like to invite the Secretary of BOD, Ms. Liu to be the moderator. Qing Liu: Now the first question, please, on site. lady on my left, first row, please. Unknown Attendee: I'm from Xinhua News Agency. After hearing the introduction, we can see that even though the overall external environment has been quite complicated, but ABC has reaped very good operating outcome and especially in the capital market, I'm just wondering what is the outlook of ABC in next year, such as in NIM and also in the net profit? What are the main driving forces? Li Lin: Well, I will take that question. I have just shared with you in 2025, even though we have a very complex business environment, our revenue growth has remained resilient and also operating income has maintained positive growth for 2 years running. Our net profit has also been maintaining positive growth as well. And also, it is now on an upward trajectory for better growth. If we look this over the long term, the performance or the financial performance of ABC is quite good and also remarkable. Our net profit growth has been leading the industry for 6 years and operating income has also been leading among our peers, creating new historical highs. And this has shown the growth and the bonus of the market. And we believe that the 15th Five-Year plan has given us even more confidence. I have just shared with you that the senior management is quite confident about better operating performance in 2026. So from the performance of the first 2 months of 2026, where operating income or overall operations have maintained stable growth and also positive trend. Our physical loans increased by RMB 1.1 trillion, achieving a year-on-year growth and NIM has -- or say net interest income has also turned positive year-on-year, which is an inflection point in the first quarter. This has further confirmed that our operating income will continue to be put on an upward trend, laying a solid foundation for the profitability across the entire bank. In the next phase, we will keep our strategic focus while providing better financial services. We'll continue to coordinate our pricing strategies while deepening our efforts to drive down cost and improve efficiency and continue the current solid momentum, and we will focus on the following 3 aspects. First of all, we will continue to drive the positive growth of net interest income, and we also strengthen our efforts to make sure that we have a positive growth in net interest income. In terms of scale, we will continue to issue more loans and also contribute to the real economy, and we will also optimize the structure of our assets and also strengthen refined management and improve the marginal returns of the assets. We will continue to consolidate our customer base and flexibly arrange our next efforts in driving down cost of deposits. And secondly, we'll continue to expand the growth space of net interest income. We will leverage the consumption policies and try our best to satisfy the diverse demands of our customers and seize the opportunities of the capital market and amplify the service supply for wealth management products. On the other hand, we will also strengthen our analysis of the market and flexibly determine on our trading or transaction strategies as well as the allocation of different categories of assets. And thirdly, we will better control risks and cost to better coordinate development and security and ensure that we put credit risks under control and try our best to drive down risks and cost. We will also strengthen our intensive and refined management model to reduce nonessential expenses. Anyway, we will try to achieve higher profits at better cost. So we are fully confident about the performance in 2026. So much from me. Qing Liu: Thank you so much, President Wang. Next question, please, on the right, please. Unknown Analyst: Thank you so much senior management members. I would like to ask a question about loans. In 2025, the credit loans has increased pretty fast. And in retail and country level loans, we have seen very good growth. Could you walk us through the plans or, say, the growth target for credit loans in 2026? And what are the key areas that you will focus on? Zhiheng Wang: I will continue to take your question. In 2025, we have actively implemented important major strategies at the national level. We have aligned ourselves with demands of the real economy and the overall volume of loans has shown better structure and also bigger volume. In terms of the total amount, I've shared with you that we have a total of RMB 2.23 trillion newly added loans. And in terms of structure, we have invested more in agriculture-related loans as well as rural revitalization services. And we have also injected greater momentum into 5 priorities and improving quality and efficiency. This year is the starting year of the 15th Five-Year plan. And in the government work report, we have a GDP growth target of 4.5% to 5%. And we also want to build a strong domestic market to achieve technological self-reliance and also [indiscernible]. There are a series of supporting projects as well as measures for rural revitalization. I believe that these are opportunities for commercial banks in credit placement. We will maintain our current intensity of credit to support the real economy and the average growth rate would be roughly the same as last year in the first 2 months of 2026, where economy is now rebounding. So we will seize the opportunity to focus on our national major strategies and credit deployment or credit placement has also achieved a very good start. By the end of February, our bank-wide physical loan growth has achieved year-on-year positive growth. And also, this is a sign of good momentum for sure. Our green technology where agriculture-related loans have registered positive growth, maintaining at average levels for comparable peers. And -- in the future, we will continue to highlight the agriculture and rural areas and also farmers-related fields. We will focus on improving the large area grain yield improvement and also ensure that we produce new quality productive forces and strengthen financial services for links across the whole [indiscernible] field chain, focus on specialty industry and key sectors and also big customers and important projects. We will make it bigger and better, especially in financial services, such as the issuance of farmer loans to ensure that we have stable growth in loans in 2026. And secondly, we will focus on 2 different areas such as domestic demand. We will continue to lend more support to major projects on transportation and energy, ensure that we have supporting financing services for a new round of policy, financial tools or instruments. We will also align our efforts with traditional consumption models and also emerging new consumption models such as green consumption. And we will implement the physical policies to maintain a leading growth momentum for consumer loans. And thirdly, we will support the construction of a modern industrial system such as we will sort out the customer list and then cultivate new quality productive forces, step up or speed up our technological innovation to support or contribute to emerging industries development. We will also focus on industry green transformation, green development, low carbon and green transition of energy and other key sectors. This will mean that we will improve the credit placement in green sectors and also the proportion of green loans. And fourthly, we will focus on inclusive SME loans and establish a work coordination mechanism. We'll continue to increase the support for SMEs and coordinate development and security, consolidate our leading advantages in inclusive finance and make sure that we cater to the demands of our residents in education, health care and so many others. Qing Liu: Thank you so much, President Wang. Next, I would like to ask for the gentleman on the right, the lady on the right for a question. Unknown Analyst: I know that commercial banks are under pressure, but ABC has maintained very stable asset quality. What measures have you taken in order to manage and prevent risks? And I would like to know about the NPL formation rate as well as your key focus in both retail and also corporate sectors. Qing Liu: So Vice President Lin, please take the question. Li Lin: Thank you for that question. From the perspective of a commercial bank, in the future 2 to 3 years, I think that the watershed should lie in the ability of risk management because the products can be very homogeneous and also the services can also be quite similar. And even AI models can be pretty much the same in the future, but there will be definitely differences between commercial banks in risk management and provision efforts. So that's why we think that we should do a good job in risk provision and management. For ABC, what did we do in that regard? Well, I think that it can be summarized in the following points. Generally speaking, it can be summarized as really doing hard work and getting our feet on the ground. ABC has placed risk prevention and management as an internal theme of our financial work. And we have been building our strong foundation and also cementing the current base for risk management. We have been quite prudent in our operations. We think that we can't say that the commercial banks are too careful or too much careful in their operations. And also, firstly, we have highlighted the role of quality and efficiency. And fourthly, we have to be problem oriented. And fifthly, we have to uphold our bottom lines. By integrated risk management and control and also with a forward-looking reflection capabilities, we can proactively control our risks and ensure good asset quality overall. And just now President Wang has shared with us the overall business or the overall situation at ABC. In 2025, our NPL ratio stood at 1.27%, down by 0.03% compared with the end of last year. The NPL ratio for 5 years running has been on a downward trend. Well, the special mention loan ratio was 1.39%, down by 1 bp from the beginning of the year. Overdue loan ratio, 1.25%, maintained the lowest among the comparable peers. And the difference between the NPL and overdue loan was always at negative. And also, we our credit balance of RMB 1.057 trillion, and we believe ABC is the only bank with a credit balance exceeding RMB 1 trillion. And from a prudent perspective, our credit provision increased by RMB 39.6 billion. The provision for loan loss ratio reached 292.55%, maintaining ABC at a strong risk resilient position. And in terms of the nonperforming loan formation, the formation ratio of corporate loans decreased compared to last year and the NPL ratio of inclusive retail loans has increased, compared to last year. NPL ratio of the whole bank for the whole year was 0.89%. We do believe the asset quality is well under control and similar of last year. And also the formation ratio of NPL has been maintained below 1%, which is relatively quite low. For the loans for the SMEs balance reached RMB 3.93 trillion, an increase of RMB 700 billion from the year beginning and NPL formation ratio, 1.54%. For the inclusive finance or the credit cards, including rural households, which is at the key of our risk control. So if we also incorporate them, our -- the balance of our retail loan balance loan was RMB 9.26 trillion, an increase of RMB 448.5 billion from the year beginning with NPL ratio of [indiscernible]. The main indicators of inclusive retail loans maintain leading position among the peers. It is worth notable that credit card business in terms of serving consumption, boosting development and advancing quality and quantity has performed quite well. And also our credit card loan incremental increase and asset quality are the best among our peers. And also, we apply the innovation and also the systematic thinking and relative philosophies to build a new management measures for the credit businesses and also further build a comprehensive risk management system for the inclusive retail business, we have done in the following 6 aspects for inclusive retail business. The first one is to build a stratified marketing system and also to promote or roll out the new business models and also have the top-level design of the head office from the provincial branch, and we have the sandbox operation at the city level branches, and we have the template of marketing for our outlets and branches focus on local conditions, industrial clusters and professional markets and also have a county-specific system. And also we draw a financial ecosystem map or road map adapting to the needs of different areas, adapting to the local conditions and also the formulating credit plans. We screen high-quality customers, and we have SOP so as to change the [indiscernible] , inefficient and a passive customer acquisition model. And we built an active batch based and a source customer acquisition business development model. And second, we adhere to the idea of minimization or focus on the [indiscernible] long accounts and also match the credit line with the customers' demands and also expand our business while also have system control so as to enhance our serviceability or quality to the small- and medium-sized customers to enhance the accessibility and coverage of our financial service. While at the same time, we give up using a simple model to measure or calculate the credit line so as to put our risk within our risk tolerance. And we take the households at our center or as a priority and also build a new vision of management. We have a unified credit approval and also credit management -- to be more specific, for the same family business for the SME legal persons and business owners and the relatives or friends or in the personal or individual business, consumption and credit card businesses are putting under the same umbrella of management. We have a cross-line and cross-product coordination so as to effectively prevent the under-standard eligibility of the customers for certain products because for some of the products, we have the differentiated threshold for the eligibility of the customers. So we also prevent the overlap of the credit granting, but also prevent the risk of excessive credit granting. Fourth, we integrated online and offline businesses. We leverage on the models or the digital tools, but we are not over relying on the digital tools. We insist on the principle of enhancing people's awareness, understanding and also have on the spot investigations for due diligence, while at the same time, we enhance businesses, tax, credit history, private fund as well as other third-party data to do the customer or KYC business. We have a cross check of the authenticity of our customers, so as to ensure that the fund they use is for the real purpose for business. And we are not just following the trend. We also used open cloud to process and analyze the data in an automized way and to generate the KYC report so as to make our credit approval and more efficient and also have a process and procedure constraints and build a business mechanism. What is key here is to separate the approval from the credit granting. And also we separate the roles because impressive for some of the inclusive retail loan granting, the approval and the lending are put together. But in our practice, we insist for the online SME inclusive loan, we separate the amount of the business and also we separate the roles in the -- between the approval and the loan or disbursement, so as to form checks and balances in the process of credit granting and we also make up for the shortcomings of the decisions for the models. And also, we prevent the one people have to save for everything. And we say no to any form of intermediary person participating in the marketing or doing the -- handling the business. If some of the illegal or inappropriate intermediaries or agencies participate in that they will bring a lot of shock to the business of the bank. Sixth, we empower on the technology and also to enhance our risk management capabilities empowered by technologies, meaning on the model process identification and system real-time early warning, we use UCR recognition and GPS positioning and also cash flow clearing and AI intelligence and other technologies to do the improved ability of anti-fraud and -- and also rely on the big data or large language model, we focus on new loans, professional debtors or the intermediary loan companions and other risk characteristics, consistently optimizing the risk control model and during -- before, during and after the lending to improve the accuracy of our early alerting, so as to ensure the stability of our asset quality, and we will further enhance our risk management and mitigation in a more systematic way in inclusive retail business. Moving forward, we firmly establish appropriate attitude to our performance and do our own job well for the right purpose. We will stick to a prudent and steady risk appetite and also put the risk prevention and management as a priority. It is very promising that asset quality will be -- continue to be stable and maintain a relatively leading position among our peers. Why we are so confident? First, we have a more profound and comprehensive full-fledged risk management control system, to be more specific, we'll have credit management. We have online/offline coordination and separate the credit approval and credit branding business. And we also have a unified credit management and also to enhance accountability, we use the smart tools and to have a unified monitoring and supervising. In Chongqing, ACB set up a head office level digital risk management center for the purpose of enhance our monitoring of the early warning identification and also early check and dispose of the credit risk of inclusive retail business and also to enhance our management overdue loans and enhance the disposal of NPAs and also enhance the notification of the overdue or when the loans come due. Here, we enhanced the smart disposal platform 2.0 version and also to enhance the dispatched transfer or disposal of NPA, enhance the efficiency of the diversified NPA disposal channels. Please rest assured, the inclusive retail loan are small, scattered or there are a lot of amount of them, but we will further make a health check so as to clarify and also have an order well-organized management of this type of business. And also for the risk management of the key areas that has been further improved in terms of efficiency. In terms of the real estate loan by the end of -- as at the end of 2025, NPL ratio in the industry remain unchanged from the previous year. And newly NPL has been decreased year-on-year. We'll continue to adhere to a household-specific policy and approach, project-specific plan and step up risk control for large clients focus on key links such as funds, assets, equity strictly managing the account presale funds and separating the operation from project funds. And we'll use the 16 financial policies for rules and whitelist loan continuation. And also, we will enhance or we will provide our credit support for the high-quality or better housing projects and also will enhance the credit measures. We will not expand our business or lendings in this area in a blend way and also use the policies to replace the implicit debts. And also we have to optimize the structure of the existing debt to lower down our risk exposure and also have a market-oriented rule-based and appropriate finance approach to increase our financing in these areas so as to safeguard the bottom line of not increasing the implicit debt. And also, we will enhance our structures in a preventive way that is very important. And also, we will reduce the low-quality or inefficient customers, but at the same time, support the building of the modernized industrial system. We'll focus on the structural risks, and we will take preemptive measures for the overcapacity. We will not do the evolution so as to ensure the credit quality. Qing Liu: The next question, please. Unknown Analyst: From Economic Daily. My question about wealth management, the personal customer is around RMB 896 million, which is leading among the peers and over the several -- past several years, customers have high demands on wealth management with the fluctuations in the capital fluctuation and also people have a demand of the capital allocation. As Mr. Wang said, ABC rolled out a lot of innovative measures in wealth management. Could you please elaborate more on the innovative measures on wealth management? And what are the plans moving forward. Qing Liu: Thank you for the question. Mr. Lin, please. Li Lin: Thank you for the question. So as an entity or a bond in connecting people's saving or household savings to the circulation of economy, there is a lot of room for us to -- or potential for us to tap into in wealth management. This is an important measure to serve to boost China's strength in finance. Wealth management is an important part for the modern financial system. By developing strengthen wealth management will help to cultivate potential capital increase the direct financing and also to enhance the efficiency and quality of the financial service to the real economy and the high-quality development. It also projected for people's well-being. Next, it can also improve the residence income. Wealth management can expand their income generation channels and it can also get the public to participate more broadly in the capital market and then share in the fruits of economic development. And thirdly, it is an intrinsic requirement for high quality development of commercial banks, wealth management features light capital, stable returns, and sustainability. It is an important path for commercial banks to transition from scale expansion to value creation. ABC has been people oriented in recent years, and we placed wealth management business development as a very important priority, and we have deepened our strategy for integrated and 2-wing approach of retail development. And basically, it's all about customer development. So the 2-wing refers to wealth management and digital transformation or transition. And with our forward-looking layout, we have a driven financial development system to cement the development for operating income. First of all, we have upheld value-driven approach and also a people-oriented model. The nature of our management approach is to have an asset allocation with customer at the center. We want to create value and also provide allocation service strategies. We hope that we want to strive to become a reliable planner or say, family, financial adviser for our clients. And another one is comprehensive service capability. By the end of 2025, the personal financial assets across the entire bank has reached RMB 24.7 trillion. During the 14th Five-Year plan period, the number has increased by nearly RMB 10 trillion, ranking ourselves at the forefront of the industry. If we look at the latest figures, we can see that is now exceeding RMB 25.4 trillion. In terms of assets and liabilities, ABC's personal asset, deposits and also personal loan scale, all ranked first in the industry. So we have the most deposits, loans and also the largest number of customers. So we should be a very big and preferred bank for a large number of customers. And secondly, we have optimized the asset allocation of customers and integrate that with advancing 5 priorities. In that regard, we have created an agricultural pension financial service platform. And in ESG, we have made comprehensive breakthroughs crossing the RMB 100 billion threshold across different product lines. And thirdly, we have achieved the breakthroughs on multiple fronts. In the past 5 years, we have seen that our LBM has currently reached RMB 3.65 trillion. And also during the 14th Five-Year period, the total customer volume has increased by nearly 2 trillion. So all of this has put us also at the forefront of the entire banking industry. The wealth management products in agriculture sector has also exceeded RMB 2.2 trillion, leading comparable peers. And more importantly, we have created over RMB 340 billion for investors. We are also doing very best to satisfy our consumer demands and also insurance demands. In terms of premiums under agency, we have ranked the first among our peers. ABC Life Insurance and also other institutions under ABC, have all maintained a leading position among comparable peers. We have also adhered to a reform-driven progress approach. Wealth management and resource integration and innovation have all followed a similar path. So we have 896 million individual customers and also 22,800 outlets, and we also have very big advantages in channels and customers. All of these have turned into the driving forces for ABC. First, we are dedicated to create a full spectrum of product portfolios to leverage the advantages of integrated operations. We need to build a multifunctional portfolio or is a matrix that covers different diversified strategies, wealth management products such as trust funds, precious metal investments and more. Secondly, we have upgraded the market open platform. We have to keep ourselves open to work with third-party institutions and improve our coordination and step-up management in scientific evaluation mechanisms, introduce quality resources from the market and satisfy diversified and customized demands of the customers. Thirdly, we have to provide full life cycle customer companionship at different stages. We can ensure that we provide the right services such as wealth management and also family protection. Throughout the life cycle, we have to focus on developing comprehensive services for private businesses and in this way, we can also have cross-border wealth management and also so many other options to satisfy our customers diversified demands at multiple levels and also improve the accessibility and inclusiveness of our financial management services. And thirdly, we have been persisting in organizational-driven efforts to forge wealth management service capabilities. We ensure that professionals under professional matters. A professional team can improve our efficiency and core competitiveness, which is in investment research and customer service. First of all, we have created an open integrated professional research system. We have also strengthened the group's investments source integration mechanism built a multidisciplinary expert team and gained market insights. With the forward-looking and culture of study progress forward, we have implemented a very sound strategy for research, product introduction, marketing support and asset allocation, evaluation and final review. And we have also been insisting in reasonable expectations and qualified interactions. We know that for our wealth management subsidiaries, we require them to have a realistic pricing expectations. We also worked with these joint venture financial companies, I would check their figures to ensure that we have the best delivery with our customers. This can help us to ensure that we have a sound interaction between customer and the market. And on the other hand, we also need to ensure that our team is also customer oriented. There are many things involved in ABC's business and our unique advantage is, of course, Sannong or agriculture-related services, but internally, we want to really interpret this service brand as improving results every day. It's not that we want to just do easy work or just shut out [indiscernible], but it is that we want to see improvements every day. And next, we insist on precision management and strengthen our structural optimization and capacity development. We have -- already have professional compromising 119,000 customer manager and 6,000 wealth advisers. We have also focused on the Yangtze River Delta, Pearl River Delta and emerging potential areas. We have implemented differentiated strategies according to local conditions, build benchmark. And also in a total of 500 branches, we have done so in private banks. And also in some wealth management centers, we have definitely ensure that there is a tiered system for training to empower their training system and also service or professional service capabilities on the ground. Sometimes we can go at bottom up. But other times, we think that top-down approach is also a very effective channel. Now we have 120,000 customer managers and 6,000 financial advisers. They should be working like seeds and they are providing services across the bank and serving our customers with their expertise. And fourthly, we have to uphold a digitalization-driven approach and let wealth management be one of our growth engines. By using digital means and intelligent approaches, we can ensure that we have online and offline wealth management coordination efforts and a multidimensional service network. On one hand, we can improve our online and off-line service efficiency and these digital means can also empower our business, and we will continue to advance this all channel convenient and intelligent platform building. And we will also make sure that we improve our capacity for all whether around the clock responsiveness. We are also actively using AI. We're applying in different scenarios. We have an employee, who is an AI model, and we will strengthen customer insights and intelligent layout as well as post investment companionship throughout the entire life cycle. From the performance in 2025, we can see the great wealth management income has reached RMB 35.7 billion and financial management fee income reaches RMB 251 billion, and we should say that this is a very big resilience market. Basically, we have shown strong resilience in our business and also high market recognition and also, our business has maintained very stable growth with little fluctuations. And many of our joint venture wealth management companies have proper expectations for their products. So we have talked so much about what work we have done and data and statistics. At the end of the day, high-quality development should be an all-hands-on-deck effort, which involves not only counter managers and also customer managers and wealth management managers and consultants and advisers and even sci-tech personnel. Here, I would like to take this opportunity to -- on behalf of the senior management, express our heartfelt gratitude to our staff, who have weathered through many hardships and difficulties. And with their expertise and hard work, you have been fighting right at the forefront. Thank you so much for your diligence and hard work. Qing Liu: Okay. Thank you so much, Mr. Lin, for that very encouraging words. And next, I would like to invite next question. Unknown Analyst: [indiscernible], a financial analysist. I'm wondering about the situation in international business. We are now paying attention to business going global and also foreign trade, especially the growth structure and also the overall layout with a new market environment and also new customer demand, ABC -- how will ABC support key foreign trade enterprises to go global? And how will this contribute to your operating revenue and also your efforts for high-level opening up? Qing Liu: Thank you so much for that question. I would like to invite President Dr. Wang for a response. Zhiheng Wang: Thank you so much for your interest in international business. ABC has been earnestly implementing the decisions and arrangements of the [ Party Central Committee]. And with that, we have been cementing the interplay between domestic and overseas market and optimize our cross-border financial comprehensive service system, the international settlement business volume has reached about USD 16,400, an increase of 8% year-on-year. And the international trade financing business volume has increased by 30% year-on-year. The growth rate is still very impressive. So I think that, first of all, we have been helping or supporting businesses to go global. In ABC, we have a presence in 18 countries and 21 overseas institutions, and we also have 1 joint venture bank. More than half of them are in building road countries and regions. So this has aligned with our efforts to help businesses to go global. In 2025, we have continued to ensure that the interplay between domestic and overseas institutions is well underway. Our interplay business has reached USD 118 billion, an increase of 13%, and we have seen the financing business of BRI countries has reached USD 340 billion. We will continue to focus on Sannong areas and ensure that this leading business in this area can go global, and we will also lend support to international corporation projects. Across the year, the agricultural-related financing business has been handled for RMB 69 billion. And second, we strengthened our product innovation to support the development of our new forms and new models of trade. It is safe to say that in recent years, the scale of the main players in the new forms and models for trade has been accelerated, becoming an important support for foreign trade. And in response to the new characteristics of many players in new forms and new models of trade, ABC has empowered with technology to innovate cross-border payment products and many branches have completed the registration with SAFE and obtained the qualification for direct cross-border e-commerce collection. Scale of our direct cross-border e-commerce collection business ranks among the top in the -- among the peers. And third, we have strengthened implementation of our regulation or regulatory policies, and we have enhanced the level of cross-border financial service, the reform of foreign exchange business development is an important measure for the institutional opening up of financial sector of China. ABCs continuously promoted the reform and foreign exchange business development, expanded its scope business volume and a customer base accounted for a large proportion of the whole bank approaching to 40%. The ability of promoting facilities and prevent risks has been further enhanced -- and also, we have supported the international use of RMB. Cross-border RMB settlement volume reached RMB 3.82 trillion, an increase of 8.7% year-on-year. ABC will combine the relevant arrangements for expanding high-level in the 15th Five-Year plan period continue to enhance our support for the real economy on foreign trade and build a closed loop for cross-border financial service. And to serve the high-quality joint development of the Belt and Road Initiative, and we will optimize the linkage mechanism at home and abroad, enhanced supply of cross-border linked products and strengthen financial support for key overseas investment projects and introduce a special work plan to support the development of the new land and sea passage in the West. We will also strengthen the service capability for settlement and exchange of small currencies with neighboring countries and we'll optimize the cross-border financial system service system, and support stable skill and optimal structure of foreign trade, improve the service mechanism for our customers' high-end certified enterprises and strengthen support for cross-border financial business and high-quality agricultural and rural entities continue to support foreign trade enterprise under the financing coordination mechanism for SMEs and carry out innovation and application cross-border e-commerce financing products, building diversified payment channels. And third, strengthen the supply of cross-border financial services enhance the level of cross-border trade investment and financing. And we will further enrich the system of exchange rate risk management, products support SMEs expanding foreign trade market, and we will support the cross-border use of RMB in the rural economy will play a more active role. So we will also provide a strong support for high-quality development of the entire bank. Unknown Analyst: And from [indiscernible] Asset Management, I'm [indiscernible]. My question is about inclusive finance. In the presentation, you mentioned inclusive finance, inclusive finance as one of the Five Priorities of finance about China. It is also a highlight of the business performance of ABC. Looking forward to 2026, how ABC will maintain the good momentum in inclusive finance for sustainable development . Qing Liu: Thank you very much for the question. I'd like to invite Mr. Wang Dajun, Vice President of ABC to take this question. Wang Dajun: Thank you very much for the question. Inclusive finance covering a lot of industries, covering a lot of households. One of the Five Priorities of finance of China is also an important aspect of practicing or maintaining the political nature and people oriented nature of the financial work. By 2025, ABC has thoroughly implemented decisions, arrangements of the CPC Central Committee and the central government, deepened coordination mechanisms for supporting the financing of SMEs and also enhance the ability of our inclusive financial service in a comprehensive way. We have promoted the increase of expansion and improvement of our inclusive finance. And we also achieved high-quality development and the quality and efficiency of providing inclusive financial service, mainly reflected on 3 aspects. First, we are -- we have the largest supply of inclusive credit supply. As at the end of 2025, the balance of inclusive finance loan registered RMB 4.35 trillion increase. And also, we have -- compared with the beginning of this year, the inclusive finance loan to SME RMB 3.93 trillion. And also this year, we reached or exceeded RMB 4 trillion. The balance of -- the balance and also increase of inclusive finance loan are the first among the peers. And also, we have the widest customer service coverage -- as at the end of 2025, ABC's inclusive SME customer with the loan from the bank, we have RMB 5.24 million, an increase of [indiscernible] from the year beginning. The total number and increase of the customers has been the first among the peers for 3 consecutive years. So we are providing the truly inclusive finance service. Third, we excel in sustainable development capabilities, and we shifted from the digitalization. We are leading among the peers to do so. The asset quality of inclusive finance loans are also leading among the peers. The evaluation from the regulators leading among the peers. For 2026, as in the first year of the 15th Five-Year plan period, we will work on the following 3 fronts so as to ensure the inclusive finance business to maintain our good business momentum. To be more specific, first, we will make a good use of the policy tools of the country. In the beginning of this year, relevant ministries of China rolled out the one package policy to support the coordination between fiscal and monetary finance, in particular, the fiscal subsidy for the SMEs and also the private investment guarantee plan that has brought new opportunities for the inclusive finance development. We will enhance the cooperation between the banks and governments, between the banks and the guarantee agencies, focus on new policy tools, optimize our business process and rolled out featured products and offers so as to lower down the cost of financing our SMEs and increase the convenience, so as to transform the policy benefits into the growth drivers for inclusive finance. Second, we'll make a good use of the institutions and mechanisms. ABC will continue to give our role of the 3 Sannong or the rural business departments and inclusive finance department and taking advantage of the dual-wheel drive organized structure. It is -- we are the only bank that has such kind of dual-wheel drive that is the cooperation between the inclusive finance department and the rural business department. And we will continue to leverage our advantages across urban rural areas with a large number of branches, outlets and extensive outlets coverages at the county level cities. And also, that is also the uniqueness or the feature of ABC. We will continue to demonstrate or the mechanism advantage that provide us with the willingness, ability and also expertise and also the courage of provide credit service to rural areas or related businesses. And also, we will promote digitalization in our inclusive finance. We have the iteration upgrading and further enrich and improve our -- the Huinong or agricultural bank E-Loan platform and also build [indiscernible] outlets and the inclusive finance E-Loan to build an ecosystem on inclusive finance and also roll out AI intelligent credit-related business and also consistently improve the digital risk control system. And ABC on [indiscernible] is for this purpose. And also, we will solve with the problems of the asymmetric information in inclusive finance and also for the -- further enhance our risk control and management, provide a high-quality service with a lower cost. And in 2026, ABC will continue to adhere to the general key of seeking progress for maintaining stability and coordinate risk prevention development and to serve people's well-being focused on major strategies, key areas, weakness, so as to ensure the high-quality development of inclusive finance business. I'll stop here. Qing Liu: Next question, please. Unknown Attendee: I'm [indiscernible] from the The 21st Century Business News, serving the rural revitalization is the positioning of ABC and also that is what ABC is good at, how ABC will enhance your competitive edge in providing service to the county level areas. Unknown Executive: Thank you very much for the question. Yes, provide rural revitalization is our main business, and it is also our highlights. And by the same time, it is a key focus area in our strategic development. In the past year, we stick to our main business and also to seize opportunity of the integrated development of the urban and rural areas provide financial supply or credit supply and also enhance our the quality and efficiency of providing service to the agricultural areas and country economy. And also in the several aspects, first, with the contribution of county level for our average daily deposit and loan increment has been exceeded RMB 1 trillion. Proportion of increase increased by the 10.5% and 1.4 percentage points, respectively, compared with the previously with this better structure, balance of household loan exceeded RMB 1.8 trillion with an increase of RMB 337.7 billion or 22.4% and loans for key areas, green production rural industries, the growth rate of loans in these key areas is higher than the growth rate of all loans. Third, better quality and better efficiency. NPL ratio in county level regions was very low with stable asset quality moving forward. We will have the document from the 15th Five-Year plan and there are systematic arrangement for the rural revitalization by aligning our development to the national strategy. We rolled out 2026, 2 consolidations and 2 insurance of providing service to rural-related businesses. One is to consolidate the proportion of the county level loan in our overall loan portfolio and also consolidate our advantage of providing service to the county levels. And also we ensure that we'll maintain the same intensity and also the over stable asset quality. In the new year, our 2026 will continue to enhance the policy resource investment, enhance our ability of providing financial service. To be more specific, we'll do a good job well in the following 5 aspects. The first, we will provide service to the major projects and county levels. The net growth of the country level loan growth will continue to exceed RMB 1 trillion. In our businesses, in the agricultural-related business, we'll work with the improve the agriculture-related projects and national water networks and also comprehensive agricultural production capability and also taking the counties as a major vertical, we will provide service to the major projects and also have list-based service and supporting financing. In terms of the agricultural enterprises, we'll focus on the leading agricultural industries and also leading agricultural technology companies, providing full cycle financial service. In terms of the farmers or farming households, we thoroughly carry out information finding or information collection for the farmers to expand the toolbox of farmers loans, try to have more than RMB 2 trillion of farmer -- RMB 2 trillion of balance of loans providing to farmers this year. And second, we'll further enhance our financial service capabilities, and we'll have 6-in-1 service systems, and we will also further promote relocation of inefficient outlets to townships, accelerating sinking financial service to more rural areas. And this year, we'll strive to relocate 180 outlets to townships and also further increasing the development of agricultural assistance service stations throughout the combination of service stations, mobile service, further enhance our base financial service. And this year, we will build around 3,000 -- last year, we have already built around 1,700. This year, we hope to have around 3,000 agricultural assistance service stations. And we'll innovate the innovative financial products and models for agricultural businesses, and we will roll out some new and diversified products and also use the smart bank tools in providing service to the rural areas for rural businesses and build have promoted the application of smart bank tools in the field of agricultural areas, farmers promote on-site plus remote investigations and build a system covering satellite, UAV and ground IoT and other agricultural data, enhance our support data supply capabilities for agricultural businesses. And fourthly, we will ensure that this normalized financial assistance will be put at a prominent position, and we have already formulated a package of differentiated policies, and we will try to ensure that we lend targeted support or especially policy support to people who have just been lifted out of poverty and to ensure they will not return to their previous state. We will focus on national and provincial level rural revitalization strategies and projects support underdeveloped areas in carrying out initiatives and form internal motivation for these assistance projects. And fifthly, we will ensure the compliance and risk management work of the country-level regions and ensure that we manage or prevent risks at the source and ensure that the loans will have a very strict risk identification and monitoring process and also a series of risk monitoring models. Qing Liu: Next question please. You may ask your question. Unknown Analyst: I'm from JPMorgan Chase and banking analysis. My question is about the bond market. We have noticed that last year, the contribution of bond investment is actually pretty prominent. So what is your plans for this year's bond investment? And also what is your judgment on the bond interest rate for 2026? Qing Liu: President Lin, please. Li Lin: Thank you for the question. From the perspective of the overall operation and management, we attach great importance to the financial market. And with our understanding about inherent loss of the financial market, basically 3 positioning. First of all, the level of the market and the level of the professionalism and also the level of talent that's 3 positioning. And if we want to summarize this or the characteristics of ABC's financial market business, I think that it can be summarized in 3 key words. First, big; second, stable; and thirdly, good. So first, large or big, it means that we are big in scale and stable means that we have been upholding prudent operations. So we are also very unwavering on that. And the third point is good or good quality. That means that we have a pretty good outcomes. And it is also sustainable in the long term. You are interested in bond investment business. Here at ABC, we have been committed to serving the real economy. We focus on improving our capabilities and optimizing asset allocations and better promoting and controlling risks to achieve high-quality development. You have mentioned bond investment has contributed a lot to the performance of ABC last year. I think that's inseparable from the external environment and also at the head office, the investment decision-making committee as well as the overall investment team have made a very good analysis on the market, and they have a very targeted and precise investment strategy. Looking back in 2025. At ABC, we have done 3 things right. First of all, with our strategic focus, we have cemented our investment foundation. While serving the real economy, we have improved our ability to make evaluations of the entire market as a core participator of the bond market. The financial market managers of ABC has over RMB 10 trillion in bond assets. Therefore, we really value our ability to make macro assessment of the financial market. And we have been adhering to national policies as the guiding principle and also the economic loss as our guidance. And we have been making proper evaluations of the macro policy curves as well as the dynamics of the economic environment, so that in the ups and downs or fluctuations of the market, we can identify opportunities and effectively address up to the place to manage and prevent risks. We have to seize the opportunity of interest rate fluctuations and to really understand its reference. And this ups and downs and range fluctuations. Take, for example, before the interest rate rebound window, we proactively compressed or duration and to cushion against the risk of rising interest rates. With our professional capabilities in practice, we can effectively stabilize market expectations. And secondly, in our work, we have been serving strategic situation with more precise allocation. In dynamic balance, we have achieved a new increase in scale and efficiency, facing international economic and trade landscape adjustment in 2025, the global financial market has been facing increasingly complex environment. So we have to focus our strategic focus and the strive to proactively or more proactively use a sophisticated and refined management strategies and approaches to prevent and control risks. In particular, with our comprehensive income target as the goal, the RMB bond scale has increased by RMB 2.4 trillion, compared with the beginning of last year, and we have achieved a due growth in revenue and profit and also we have a better revenue structure or duration allocation has been more balanced. This has given us an edge and cushion against the cyclical fluctuations of the market. Here, I think that it is important to highlight flexible or dynamic management and optimization of duration as well as the duration structure. We have to constantly strengthen the monitoring of potential risks coming from interest rate and exchange rates, so as to improve the forward-looking analysis and prevention of bond investment or credit risks. Thirdly, as a major bank in China, we have been acting on national strategies and serving the real economy, we have advanced the Five Priorities. In the year 2025, ABC has taken a lead in underwriting national bonds and local government bonds and credit bonds and altogether, more than RMB 3.7 trillion, a year-on-year increase of 20 percentage points roughly. So it is fair to say that we have supported implementation of active physical policy and the real economy. We have also been focusing on 5 major priorities. We have been continuing increasing our investment in industrial bond in green and low-carbon areas and technology innovation. These directions represent our top priorities. And by the end of last year, the green financing [indiscernible] balance has maintained a leading position, and we have also anchored our efforts in rural revitalization strategy. Our investment in that regard has increased by 300% and/or underwriting share ranked first in the market for this year. And especially in the Sannong, where agriculture-related sectors, we have precisely allocated or investment portfolios. And you're also interested in the bond strategy for 2026. We deeply feel that 2026 because it is the starting year for the 15th Five-Year plan, it is a pivotal year for us to build momentum and step into high-quality development as China's economy transforms itself. Here at ABC, we have served the real economy and we have coordinated development and security and ensure we have a better coordination at a macro level. We have been maintaining stability while seeking progress in our financial market operations. But all at the same time, we emphasize that we have to really delve into structural opportunities in these cycles. First of all, we have to improve our ability to assess different situations and support proper investment decision-making. So I think that you are also an expert in that regard. So I will not go into any details here. I believe that logic of global asset pricing has been undergoing profound changes. I should say that all of you might feel it to some extent. And internally, we say domestically, our economy is now building momentum and the pricing signals are expected to recover and the monetory policy remains not really accommodative. The government bonds has increased and supply has increased, and the issuance has been also significantly front loaded. And since the beginning of this year, the curve of the bond market yield has been more steeper. So we estimate that the bond market will take on a volatile trend. Credit bond as well as green and sci-tech bond will be even more active. The fluctuations were volatile or transaction or trading opportunities will coexist with those low volatility assets. And also in foreign markets, there will be increasing interplay between exchange rates, bond stock and commodity markets, so we have to have the overall picture in mind. One important part of our work is to integrate all platforms at ABC and pull together the research power to conduct research across different markets, cycles, sectors and asset categories so that even in complex fluctuating scenarios, we can really lend ourselves our certainty. And secondly, we focus on national strategies to accurately empower the real economy. First of all, we have used -- or adopted a proactive physical policy. We have been deeply integrated into modern industrial system. So here, we're focused on some of the modern and strategic emerging industries and also, we will intensify efforts to allocate more resources to high-quality industries. And thirdly, we will advance Five Priorities, especially in pension finance, inclusive finance and green finance and so on. And next, we will continue to optimize our investment portfolio while controlling and preventing risks will ensure prudent growth. Thirdly, we will give full play to our advantage as a major bank in China. We will deepen services for domestic and overseas investors, and we will continue to cement our core commercial functions, piggybacked on a full range of bond varities and pricing capabilities. We will continue to improve bond market liquidity and stability and improve our cross-market allocation capabilities. On the other hand, piggybacked on the Bond Connect, Swap Connect and so many others or other mechanisms, we will ensure we provide better services for cross-border investors and leverage the advantages of domestic and international linkage and supports high-quality Chinese businesses to go global and expand their development channels. And fourthly, we will empower or digital transformation with science and technologies. So we have to uphold the leading role of science and technology and digital means and risk control and prevention, bond and research and also so many other areas we have to have whole chain integration, and we ensure that AI is applied in different application scenarios, such as position management and pricing and trading so that we can improve for quantitative analysis and also intelligent investment decision-making and empower development or high quality development of ABC. Qing Liu: Thank you so much, Mr. [indiscernible]. Next question, please. Unknown Analyst: I am a financial analysist from [ CICC ]. What ABC has done in supporting the development of sci-tech businesses what are your best practices? And how will better develop the sci-tech finance business or the fintech business? Unknown Executive: I think that I would like to take this question. We know that the technological finance is a very important part of our self-reliance and also the construction of a technological strong nation, and it also involves the construction of a modern industrial system and new quality predictive forces here at ABC. As of the end of 2025, we have already provided services to over 350,000 technology-based businesses and the balance for loans is RMB 47,000. The annual growth rate is more than 20%. The coverage and overall loan volume has been at the forefront at this industry. To be more specific, enhanceability of technology and financial service at ABC continued to carry the special actions to enhance the capability of technology and financial service in the whole bank, focus on Beijing-Tianjin-Hebei area, Yangtze River Delta area, Guangdong-Hong Kong-Macao Greater Bay Area, Chengdu-Chongqing other high lines of technological innovation establishing 25 provincial and municipal level technology and financial service centers and building more than 300 specialized technology and financial branches established professional talent pool for technology and finance. We have allocated professional equity investment personnel to each subsidiary and build a large number of financial technological and industrial professionals in the ABC Group. Second, we expanded the coverage of products and the services we have taken the lead, introducing guidelines for our technology and finance credit policies, promote the 5 [indiscernible] capabilities and 7 abilities on credit evaluation model inclusive to technology and enterprise -- technology enterprises in a build of full life cycle credit service system covering the institutes and the sci-tech parks and also the technology workers in total around 50 specific products and customers. For example, in providing service to the agricultural technologies, we rolled out in the agricultural park science enterprise loan, especially also have the agricultural or machinery loan, effectively providing service to the leading agricultural technology enterprises. And also, we provide the seed industry revitalization and also make good use of various policy tools. We know that in 2025, digital bank and other 7 departments issued a series of policy tools to support technology finance. And ABC actively connected and implemented those policies. We support the creation of a technology innovation on board in the bond market. The first batch of RMB 20 billion of commercial banking technology innovation bonds were issued while we increased the underwriting and investment in various market entities in science and technology, innovation bonds also underwrite an investment are at the forefront of the industry. And also we implemented the policy -- monetary policy tools. And also, we signed a contract amount of loans and technology innovation, technological transformation has been achieved. And also, we participate in the policy and pilot projects -- we were the first to sign a RMB 50 billion of Social Security Science and Technology Innovation Fund in Zhejiang and Yangtze River Delta and also established 30 various types of science and technology innovation funds, including establishment of 18 AIC equity investment policy, city funds, and we have a full coverage of investment. The cumulative lending [indiscernible] technology-based enterprise exceeded RMB 25 billion. Those measures have supported the development of technology innovation. 2026 is the first year of the 15th Five-Year plan period while fully focus and will get [indiscernible] in terms of the technology finance and to empower the new productive forces and provide service for the economy so as to contribute to accelerate the strength of China -- China's strength in science and technology. First, we will provide service to the modernized industrial system, promote innovation technology to combine what were integrated with the industrial innovation, focus on the upgrading of traditional industries, focused on the new and future industries, focused on the modernized infrastructure, focused on the major national scien-tech projects to seize our targeted industries and customers, enhance our policy and resource support and enhance our professional service capabilities so as to accelerate the formation of new product forces. And second, we have a full chain, full life cycle comprehensive or one-stop service by adapting to the laws and patterns of the innovation and also the growth pattern of the enterprises. We will invest early, invest in small and investing in the long term and invest in the hard technologies and also continue to enhance our policy and support system. And also, we upgrade entire chain and entire cycle, the technology finance or financial service solution of ABC. We have the -- based on the advantage of ABC full license investment, lending bonds and leasing, consulting, [indiscernible] play to the role of AIC in serving technological innovation and equity investment. We work with government agencies and also to research institutes and VC firms and other financial institutions to meet the comprehensive financial service demands of the enterprise to our customers. We accelerated the promotion and application of our data tools to adapt to the trend of digital and intelligent development, we deepened the AI+ empowerment of technology and financial service. We coordinated the deployment of our large language models and development of intelligent agents, optimize the service platform for industrial finance, which has registered now 5 million high-quality technology enterprises, enabling precise service capabilities and also make in-depth use of innovation, external data, such as innovation points, intellectual property and investment and loan linkages optimizing the precise evaluation model for technology enterprises and also use AI agent system that enhance our quality in providing service. Qing Liu: Thank you Mr. Wang. A question online, please take a common question that we haven't touched upon. Well, this year is the first year for mandatory sustainability information disclosure. And the investors in the capital market are very interested in the sustainability of listed companies. Also, ABC is performing very well in ESG work. So what is progress of the sustainable development -- sustainable development and what are the next steps? Unknown Executive: Thank you for the question. Well, we will disclose 2025 sustainability development in line with our annual report, in line with the new regulators and benchmarking to the international initiatives, demonstrating the performance of ABC in our sustainable development. We actively implement a national strategy in sustainable development and incorporate the targets in responding to climate change in our day-to-day work management and business operations, enhance resilience through sustainable development, enabling the benefits to all stakeholders. To be more specific, first, we focus on improving our governance and implement Chinese characterized financial governance. We incorporate the party leadership into our work and also enhance our sustainable topics, scope of the disclosure of sustainable development. And the BOD is supervising, senior management is implementing and also the executive level effectively implementing the policies forming a connected governance chain and enabling the concept of sustainable development into the top-level design of business operations in the 15th Five-Year plan and further stimulating the quality and momentum of high-quality development. Second, we'll fully implement the green finance strategy. We steadily promote our own energy conservation and carbon emission reduction, actively practice the concept and take carbon peaking and carbon neutrality as our guide and actively guide capital to towards key areas such as carbon reduction, pollution reduction, green expansion and growth in terms of green finance, balance of green loan is nearly RMB 6 trillion and equivalent to an annual reduction of RMB [indiscernible] million tons of CO2 and RMB 66 billion of green financial bonds have been issued in China ranking first in the industry. The balance of green bond investment has increased by 37%. In terms of ESG risk management, we have built ESG evaluation indicator, matrix system for our clients, launched ESG evaluation function for corporate clients. We also explored and conducted climate, risk stress test for agricultural, personal housing and wind power enterprise loans, applying the result of climate risk analysis investment and financing management. And also in terms of our operations, we actively practiced green office green procurement and in green travel and the total carbon emission per capita of the whole group in 2025 have decreased compared with the previous year. We always put people at the first place, enhance our -- to improve our people, employees well being. ABC will have a wide range of stakeholders. We take customer satisfaction, employee satisfaction at our core or at our priority, strive to give back to our shareholders, give back to the society, contribute to the society, continuously expand the accessibility of financial service mentioned and ABC will provide service outlets to cover all more than 2,800 country-level areas and making it the only bank to achieve a full coverage of country-level institutions or outlets. In 2025, ABC has relocated and built 179 new outlets in rural areas or towns, further fulfilling the rural areas with insufficient financial service. And also in regular provision for mobile financial service has cumulative served 120,000 rural households. Agricultural service projects significantly enhanced service capabilities. We built 3,308 elderly friendly service outlets with remote banking hotline providing service to senior customers throughout the year. We have 22,000 warm-hearted union service stations providing considerate service for outdoor workers and new citizens. More than 9,900 public welfare activities were held -- were launched. ABC has also thoroughly implemented the talent empowerment strategy for professionals and frontline young employees. We have implemented major talent projects for key groups, selecting over 2,200 young talents and adding 47,000 talents to talent pools of different levels and types, building 6,115 facilities for workers strive to create -- realize greater value for our shareholders. We also enhanced a 2-way interaction in the capital market for 3 consecutive years, ABC has led its peers in terms of total market capitalization growth. We have maintained a high dividend payout ratio. We continue to shine the brand ABC philanthropy with full employment -- incremental 4 major actions of rural revitalization, protection care fulfillment and through donation volunteer service, mutual assistance and other means to provide a generation or benefit to the general public. And also, we have volunteer service hours exceeding 850,000 hours, and that has also given a recognition and a branding for ABC. Moving forward, we'll continue to follow [indiscernible] strategy of national system of development, deepening the development of the management system and provide a better service to our customers and to our employees as well as respond to the concerns of stakeholders to ensure high-quality development through the sustainability practices to create a better value to our shareholders through the good sustainable practices. Qing Liu: We have a very thorough discussion today. For the sake of time, we will have one last question from the Beijing venue. Unknown Attendee: And from [indiscernible], I have a question on AI. Now AI is applied widely in banking sector in the management and business expansions and a lot of results have been achieved. And Mr. Wang also said ABC will vigorously promote application of smart AI in smart banks. So what achievements has been made and what measures have been taken? Unknown Executive: Thank you for the question. My colleagues just now in their presentation also touched upon a little bit on the application of AI in smart banking development. AI is buzz for now, ABC also seized the opportunities of AI development. We set up the specific office for smart banking development and also in [indiscernible] coordination. Also, we will focus on the AI agent application, focused on the project and also, we will build AI+ capability system to ensure the smart inclusive or wide-range use of AI. Past year achievements are reflecting the following aspects. First, the accelerated our service, innovation and product innovation, we keep the accelerating the research and development of digital products. We have launched a fly handbag in way to provide the loans for drone operators, we also have a farmer e-loan. Also at the same time, we innovated technology finance credit products. We call that tech loan. And also scale of online credit business has increased. As at the end of last year, the balance of agriculture e-loan was RMB 6.8 trillion, an increase of 18.7% over the end of previous year, also improve the quality of efficiency of online service. The monthly active users of personal mobile banking have been leading among their peers. We also rolled out the new version -- 5.0 version of the inclusive finance [indiscernible] build an online inclusive business covering multiple channels. And also, we have increased in the efficiency and effectiveness of smart risk control. In terms of credit risk management, we have the on-site and off-site prelending due diligence, also deepened automatic identification and comparison of GPS positioning, image information, applied advanced technologies such as generative AI, strengthening multidimensional verification of real people, real events and real scenarios. We also continue to strengthen a centralized monitoring for the 5 group of customers in terms of the group customers and large medium-sized customers, small SME customer, personal loans and agricultural loans and also enhance our smart disposal platforms. We have also achieved batch handlement or disposal of these cases so that we have promoted NPL disposal. AI can also empower anti-fraud efforts as well as anti-money laundering. The quality and efficiency have both been improved. And -- this can also help us to reduce our business burdens. For example, in terms of intelligent customer service, we can deepen application of AI models to fill in the forms, for example, and effectively reduce the burdens of frontline agents. The average time required has been shortened to 176 seconds from more than 200 seconds. We have also speed up the construction or the development of intelligent investigation review report templates. The automatic generation ratio of this report data exceeds over 70% for small enterprises, credit recipients and group credit. This has reduced the manual workload of credit personnel in drafting -- and just now our AI model mentioned by our senior management can also fulfill the smart or intelligent Q&A session. And this function can also empower the consumer protection or compliance and other processes. And this AI model, [indiscernible] has also won many awards, for example, in the recent Consumer Protection Day, the 15th of March has also announced that it has won the Financial Consumer Protection Golden Award for 10 outstanding cases in financial technology innovation services. So it is quite popular within our bank. And fourthly, AI is a systematic work. especially in terms of application in ABC, we have been systematically promoting the application of AI. We already painted we mapped out a blueprint for AI application and compelled the AI capability map. And with a platform dedicated to AI application, we can promote it capacity building of computer power to successfully deploy multi-industry leading-edge models. And this will also help us to develop even more model metrics regarding AI. Next step, with intelligent platform building, we will continue to improve the accuracy and convenience of financial services and also its inclusiveness. Qing Liu: Thank you so much, ladies and gentlemen, very big thanks from my bottom of heart for all of you in participating in this 2025 annual result announcement of ABC. We have implemented regulatory requirements and implemented an investor-oriented management approach and also clarified our mechanisms, targets and approaches for market capitalization management. We have appealed high-quality development and highlighted our features as well as serve the real economy as one of the major banks in China and strive to create more value for investors and shareholders and disclose the information in a timely manner. Our stock prices and also valuation have all achieved improvement. Thank you again, all investors, analysts and friends from the media for your continued interest and support in ABC. And I would also like to thank the senior management for your sincere sharing of the operating performance of ABC today. If you have any questions in the future, you are the most welcome to contact ABC's team. So that's all for today's result announcement conference. Thank you so much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Hello, and thank you for standing by. Welcome to Progress Software Corp. First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Michael Micciche, Senior Vice President of Investor Relations. You may begin. Michael Micciche: Okay. Thank you, Twanda. Good afternoon, everyone, and thanks for joining us for Progress Software's First Fiscal Quarter 2026 Financial Results Conference Call. Joining me on the call are Yogesh Gupta, President and CEO; and Anthony Folger, our Chief Financial Officer. Before we get started, please consider our safe harbor statement as follows. During this call, we will discuss our outlook for future financial and operating performance, corporate strategies, product plans, cost initiatives and other information that might be considered forward-looking. Such forward-looking information represents Progress Software's outlook and guidance only as of today and is subject to risks and uncertainties, and our actual results may vary materially. For a description of the factors that may affect our future results and operations, please refer to the risk factors in our SEC filings, particularly the Risk Factors section of our most recent Form 10-Q and the latest 10-Q being filed in conjunction with this announcement. Progress assumes no obligation to update forward-looking statements included in this call. Additionally, please note that all the financial figures referenced on this call are non-GAAP measures unless otherwise indicated. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP figures in our earnings press release, which was issued after the market closed today. This document contains additional information related to our financial results for the first quarter of fiscal '26, and I recommend that you reference it for specific details. We've also provided a slide presentation that contains supplemental data for our first quarter and provides additional highlights and financial metrics. Both the earnings release and the supplemental presentation are available on the Investor Relations section of our website at investors.progress.com. Today's call is being recorded in its entirety and will be available for replay on the Investor Relations section of our website shortly after we finish. Yogesh, let me turn it over to you. Yogesh Gupta: Thanks, Mike. Good afternoon, everyone, and thank you for joining us. We're very pleased to share our first quarter results with you today, so let's get right to it. We had another very good quarter. Revenue was $248 million, up 4% from last year's Q1. ARR grew 2% in constant currency over the same period and NRR remained strong at 99%. EPS for the quarter was $1.60, up 22% year-over-year as operating margins finished above 41%. We saw record cash flows as a result of strong focus on collections. Adjusted free cash flow was $99 million and unlevered free cash flow was $111 million. The balance sheet remains in great shape as we continue to aggressively pay down debt while also repurchasing shares. This strong performance is driven by AI and other innovations across our portfolio that are resonating with our customers. Now more than ever, our products remain mission-critical, our customers remain loyal, and our team continues to execute at a high level. These are also the reasons why we remain positive about our outlook. As always, the foundation underpinning our success is our total growth strategy. We continue to run the business with discipline as we innovate across the product portfolio and provide increasing value to our shareholders -- to our customers. That formula has worked for us through multiple technology shifts and industry transformations, and it continues to work today. On M&A, our corporate development team is betting deals aggressively and we further fine-tuned ShareFile operations, which continues to perform very well as one of our best acquisitions. Lastly, customer success remains our key focus. Now let me address the 3 topics that we know are top of mind. First, our business remains strong. We see solid retention and good performance across our products. Our product portfolio is broad and continues to power our customers' businesses, resulting in solid year-over-year growth and -- both in ARR and in revenue. As we previously said, our goal for NRR is 100%, and over the past few years, our NRR has consistently ranged between 99% and 101%. This quarter, NRR was 99% and ARR growth was solid, driven by the strength in our new customer acquisition as well as existing customer expansions, both of which were positively influenced by our AI investments and innovation. And this leads to the second topic, AI. We continue to see AI as an exciting opportunity for our business. We've discussed for several quarters how we're using AI internally to be better, more efficient operators, which we can demonstrate through improved productivity in every department. Our savings from these efforts are enabling us to continue to invest in our AI-related product efforts while delivering exceptional operating margins. Speaking of our product efforts, AI has enabled us to accelerate our innovation cycles as well as helped us transform our product capabilities to be more relevant for the future. We have been building AI into our products, and that is delivering meaningful business value to our customers today. It is our belief that trusted software companies like ourselves with excellent customer relationships, who leverage AI effectively will be the winners of this AI opportunity. Our customers are eager to understand how they can benefit from AI, while ensuring that their businesses remain secure and trustworthy. They continue to look to us to deliver AI capabilities that increase their competitiveness and improve their efficiency, so that they can thrive in this new world. One such example is a global beverage company that wanted to dramatically improve the way they serve their more than 20,000 employees worldwide. By leveraging our Progress agentic RAG product, they streamlined their HR operations, resulting in improved employee satisfaction at a significantly lower cost. Similarly, the tax authority and finance ministry of an overseas government is using the same product. So that all employees and citizens can get trusted verifiable answers from a host of data across that organization. And a state government in the U.S. is using the Progress data platform to harmonize and synthesize large volumes of data from different sources to identify and eliminate waste, fraud and abuse. They first became a Progress customer less than 18 months ago, and they continue to identify new use cases for the data platform, targeting efficiencies and elimination of fraud in the range of tens of millions of dollars annually. Today, they are a 7-figure ARR customer of ours. Progress data platform and Progress agentic RAG transform business data, unstructured files, archives, websites, knowledge bases and multimedia into an information system that instantly and securely delivers stack-based, trusted and verifiable answers. Our AI-powered infrastructure management products are also being used to manage and secure modern tech infrastructure. For example, a leading financial payment company that annually processes over $100 billion of transactions is using Progress WhatsUp Gold, Loadmaster and Flowmon to improve the availability and security of their infrastructure and to reduce the time to detect, analyze and prevent security threats. And ShareFile customers are doing work in minutes that used to take hours with its AI document summarization and Q&A capabilities. Additionally, ShareFile AI-powered security capabilities proactively detect sensitive information and recommend actions to significantly reduce security risk. Our customers rely on Progress to support their journeys because they trust us to focus on practical business outcomes. Across our product, AI is contributing to measurable customer value from workflow automation and productivity gains to monetization. Every product at Progress is now an active participant in our customers' AI efforts, and we have embedded AI into our products with attention to governance, observability, cost and LLM flexibility. The third topic, capital allocation and M&A. It's worth noting that in Q1, we paid down $60 million in debt and repurchased $20 million of stock. Our balance sheet remains in good shape, and our cash generation gives us significant flexibility. Our capital allocation priorities remain very clear. We will continue to, number one, invest in our business and innovate. Number two, aggressively reduce debt and be opportunistic on buybacks. And number three, maintain our commitment to generate excess returns through disciplined M&A, followed by rapid synergistic integrations. We will use the same M&A lens. We have always used to acquire good companies with strong infrastructure technology products, loyal customers, high recurring revenue and customer retention and a compatible culture. It's also worth expanding on how ShareFile continues to create additional value. While it was our largest and most complex acquisition and integration to date, ShareFile has strengthened and scaled our recurring revenue mix, expanded our SaaS capabilities and contributed meaningfully to the bottom line and cash flow. Just as important, it has enhanced our ability to evaluate and integrate future SaaS opportunities while keeping the same discipline we've always had around returns and fit. I'm also excited to share that Progress recently opened a new innovation hub in Bangalore. This consolidates the office space for our former Progress and ShareFile offices and also demonstrates our long-term commitment to the region, as we continue to scale our engineering, product development, sales, and customer success teams. Our people in India are critical to our global growth and our innovation strategy, and this logical next step will enable us to efficiently deliver greater value to our customers worldwide. Finally, we continue to be positive as we look ahead, and Anthony will give you all the details in a minute. From my perspective, what we're seeing in our own business supports our confidence for the rest of this year. We're also maintaining a close watch on the macro environment and geopolitical events. So to summarize, the business is performing well. The model remains durable. AI is making our products and operations stronger. ShareFile is delivering, and our top line, margins and cash flow reflect solid execution across the company. As always, I want to thank our employees around the world for their hard work and commitment, and I want to thank our customers and partners for their continued trust. With that, I'll turn it over to Anthony. Anthony Folger: All right. Thanks, Yogesh, and good afternoon, everyone. As you heard Yogesh's remarks, we're very pleased with our Q1 results, and we're excited to share a strong start to our fiscal year. So let's get right into the numbers, starting with ARR, which, as we've discussed, provides the best view into our top line performance. We closed Q1 with ARR of approximately $863 million, representing 2% pro forma year-over-year growth. For clarity, our pro forma results include ARR from acquired businesses in all periods presented. This growth in ARR reflects a broad-based contribution from across our portfolio, including OpenEdge, ShareFile, Loadmaster, WhatsUp Gold, MOVEit and our DevTools products. Consistent with prior quarters, our net retention rate remains strong, coming in at 99%, underscoring the resilience of our customer base and the mission-critical nature of our products. We did see some isolated churn in the quarter, which we expect to work through quickly, and we still delivered solid growth, thanks to strength in new customer wins and expansion in the installed base. Two areas positively influenced by our investments in AI and innovation. As a reminder, we calculate ARR in constant currency with all periods presented at current year budgeted exchange rates. Consistent with past practice, we've updated ARR using 2026 budgeted exchange rates. And as a result, ARR reported in prior periods has changed. The change is not material and doesn't alter the trend in ARR growth, although the previously reported ARR and NRR numbers changed slightly. The details of this update are included in the supplemental financial presentation filed with our press release. In addition to solid ARR growth, Q1 revenue of $248 million came in ahead of our expectations and reflects 4% growth on a year-over-year basis, led by strong performance in OpenEdge. As we've mentioned on previous earnings calls, the renewal timing of subscription contracts, especially multiyear subscriptions can have a meaningful impact on our revenue in any given quarter. And for this reason, we continue to focus on ARR as the best barometer of top line performance. Turning to expenses. Our total costs and operating expenses were approximately $146 million which was favorable to our internal forecast and largely flat compared to the year ago quarter as we continue to demonstrate disciplined cost management across the business. Operating income of $102 million was also better than our internal forecast, resulting in an operating margin of 41%, solid year-over-year margin expansion. Earnings per share of $1.60 for the quarter came in better than our internal expectations, the result of solid execution on the top line, coupled with strong cost management. Turning now to a few balance sheet and cash flow metrics. We ended the quarter with cash and cash equivalents of $113 million and total debt of $1.35 billion for a net debt position of approximately $1.24 billion. As a reminder, our total debt includes our revolving credit facility with $540 million drawn a $360 million convertible note maturing this April and a $450 million convertible note maturing in 2030. At the end of this quarter, our net leverage ratio was 3.1x and down meaningfully from when we acquired ShareFile a little over a year ago. DSO for the quarter was 52 days, a significant improvement from 73 days reported in Q4. Deferred revenue was approximately $425 million at the end of the first quarter, up roughly $25 million year-over-year. Adjusted free cash flow was $99 million for the quarter, a significant increase compared to the $73 million in the prior year quarter. The improvement is primarily the result of increased collections. During the quarter, we paid down $60 million against our revolving line of credit and repurchased $20 million of Progress stock. We ended the quarter with $540 million drawn on our revolving line of credit and $182 million remaining under our current share repurchase authorization. Okay. Now I'd like to turn to our outlook for Q2 and the full year 2026. Before I get into the numbers, I'll highlight a few items. First, we continue to focus on ARR as a key metric and expect ARR growth to be generally in line with revenue growth for the full year. Second, we plan to roll our 2026 convertible notes into our revolving credit facility when they mature in April. At the end of Q1, we had approximately $960 million of unused revolver capacity, positioning us well to absorb the convert maturity and continue executing our strategy. Our updated EPS outlook reflects higher interest expense associated with the expected refinancing of the 2026 converts. Finally, on capital allocation. We remain focused on deploying capital where we see the strongest returns. At current levels, that means repaying debt and remaining disciplined in pursuit of accretive acquisitions against a high return threshold. It also includes opportunistic share repurchases. We continue to forecast debt repayment of $250 million for the full year, bringing our net leverage ratio to approximately 2.7x by year-end. With that, for the second quarter of 2026, we expect revenue between $240 million and $246 million and earnings per share of between $1.47 and $1.53. For the full year 2026, we expect revenue of between $988 million and $1 billion, approximately 1% to 2% growth over 2025. And an operating margin for the year of approximately 39%, adjusted free cash flow of between $263 million and $275 million, and unlevered free cash flow of between $315 million and $326 million; and finally, earnings per share between $5.91 and $6.03. Our guidance for the full year EPS assumes a tax rate of 20%, the repurchase of approximately $30 million in Progress shares, total debt repayment of $250 million and approximately 43 million weighted shares outstanding. In closing, we are very pleased to deliver a strong Q1 to start fiscal '26. Our diversified product portfolio continues to demonstrate resilience. Our cost discipline remains strong, and we continue to focus our capital allocation strategy on generating the highest returns through a combination of aggressive debt repayment and opportunistic share repurchases. In short, we believe we're very well positioned to execute our total growth strategy throughout 2026 and beyond. With that, I'd like to open the call for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Ittai Kidron with Oppenheimer & Company. Ittai Kidron: Numbers. I have a couple of questions. Yogesh, maybe starting with you on the M&A front, I mean 1 would think that in this current environment, it'll be even easier for you to buy companies. I'm kind of wondering -- I know you've always been very disciplined, of course, on the metrics that you're looking for, but why is it still taking you this long to find the next one. Yogesh Gupta: So Ittai, 2-part answer to that question. One is that, as Anthony just mentioned, right, there is a clearly a higher bar today given where our own company stock is and our valuation is compared to what it historically was, right? So we are trading now at an EBITDA multiple that we would need to pay less to generate additional incremental value for our shareholders. So I think that creates a constraint on what we can pay. So that's part A. And I'm not saying that, that's why we haven't bought companies, but that's an important consideration in terms of the filter we can apply to the companies we can look at. The second one is we want to make sure that we find the right assets. And we are truly very active at this point looking at those. But again, as I said, that combination creates a challenge. And the flip side is that even though the public markets are where they are, the private markets Ittai, are still, let's just say, disconnected from reality, if what the public markets are is the reality, right? So at least they're disconnected from the public markets on the valuation side. So I think those two things are really it. We actually see tremendous activity in the market. We are seeing all kinds of companies come around. And obviously, everybody on this call will be the first to know when we do one. Ittai Kidron: Got it. And then Anthony, for you, can you talk about your SaaS revenue. It's kind of -- it's actually down quite substantially on a quarter-over-quarter basis. You guys talked about ShareFile actually doing well for you. But you did mention on the call some elevated churn, isolated churn, I think you called it. So we'd love to get a little bit more color on what isolated churn means and why is the SaaS revenue declining quarter-over-quarter. Anthony Folger: Yes, sure, Ittai. And maybe I'll take the isolated churn comment first because I do think they're a little bit different in terms of the isolated churn and the SaaS revenue. But in terms of isolated churn, yes, we had a couple of, I'd say, customer-specific events that weren't really related to product value or competitive dynamics or really a broader trend in the business. And to give you an example, we had a 7-figure government contract in Eastern Europe for data retention services and a European court ruled, the government had to cease retaining the data. And so as a result, contract churned out, right? So not because of any dissatisfaction with our product or competitive loss, but the underlying use case effectively gets eliminated by a court rule. And so occasionally, we see issues like that. We've seen them in the past. We've talked about it. M&A sometimes can be something that may cause a little bit of churn in our business. So like in times past, not material overall and really specific to a particular situation. And I think something will probably work through pretty quickly. And despite that, having put up 2% ARR growth for the quarter was a pretty good testament to new customer acquisition and some of the expansion that we got out of the base. So that was the -- what I was referring to in terms of the any sort of isolated churn. In terms of the SaaS dynamics on revenue, if you'll recall, back in Q4, we were asked about a big sequential increase in our SaaS revenue. And I think I said at the time that it was a little bit of an upside surprise. And we expected things to normalize in 2026 and sort of come back in line with the maybe closer to the annual number for 2025. So the Q4 number wasn't something we expected to sustain if you look at it sequentially. On a year-over-year basis, obviously, the SaaS revenue number is still growing. And the reason for it, what's underlying it is just a lot of the cleanup that we have been doing on the ShareFile business, right? We mentioned, I think, on the Q2 call last year that CSG was doing -- still doing the billings for us up until April of 2025. And then we have to stand up a billing system internally. And it probably took us until the back half of last year to get our arms around that completely. And so there's a lot of data that goes on. Some of it in Q4, some of it in Q1, and there'll be a little bit of it that continues throughout 2026. Again, not material in total, but it may bump numbers around a little bit from time to time. And I guess, from the other side of it is as we get our arms around the data and as we sort of get more and more control around the ShareFile business, the positive aspects that we saw, especially this quarter were enhanced collections, right? And the free cash flow of almost $100 million for the quarter. I think the significant improvement we saw was largely the result of improved collections in ShareFile. So on the one hand, there's a lot of data to clean up. But as we get that data cleaned and as we get our arms around the systems, we certainly make up for lost time on the collections front, which was nice. Operator: Our next question comes from the line of John DiFucci with Guggenheim Securities. John DiFucci: My first question is for Yogesh. So Yogesh, it was interesting that you mentioned Chef's doing really well and one of your best acquisitions performance-wise. As you know, the developer seat count, I'm glad you said that because there's a lot of concern out there with the developer seat count, and it's -- there's a huge debate out there. I guess you're doing well here, but are you seeing -- take Chef out of it. I mean -- when you talk to your customers, when you see what they're doing, are you seeing any change in developer numbers at your customer base? And whether that could be like they're not hiring as much as they used to be or they're actually declining or they're not declining. Whatever you're seeing? And then secondly, why is it regardless of what that answer is, why is it that Chef's doing so well? Yogesh Gupta: So I think, by the way, just I think -- I don't know whether it was the audio or whether it would mean or which end but John, the product I mentioned that's doing really well with ShareFile, not Chef. A misunderstanding. But anyway, let me talk about the developer scenario, though, because our developer products are doing well, right? And so the reason I think -- so there are two parts. So I think first, talking about our customers, what we are seeing, I believe that there is a change in trend, but I wouldn't say that the absolute developer numbers overall appear to be dropping. The absolute numbers have dropped in what I would call a small number of customers. But by and large, I think the trend is less growth than historic. And so I think that the developer seats and seat-based developer businesses which primarily is DevTools for us, which is a relatively small business. It's about -- it's a single digit -- mid-single-digit percentage business for us, right? That business is where if we didn't do the right things, we would see challenges. So what we have done is we've actually done significant AI investments there to make our developer tools, which are primarily libraries for developing great UI and so on, be more relevant in the agentic age, help with developers who are building agentic apps and provide them with the right tooling for that. So we are effectively doing a significant amount of change in that, what I call, the value proposition for the developer. And so we feel good about how that business continues to perform. But it is a business that has the greatest potential risk, which is why it has also had the greatest acceleration on our part in terms of the AI work that we have done with it. And so we're seeing good business there, and we continue to see good business there. I think that the products like Chef continue to do well because infrastructure needs to be managed, infrastructure needs to be configured, infrastructure needs to be set up so that things run well. And so that product is a workhorse for many large enterprises, including the largest credit -- pretty much every credit card company pretty much many of the Silicon Valley tech companies, et cetera. I mean, literally, 2 of the MAX 7 have been customers forever. So it is a very, very strong and solid product. And we continue to see basically the need for that product, and we win some new customers as well, which -- but I think the ShareFile product, on the other hand, is doing well from a customer perspective as well because of the AI efforts there. So I'm sorry about the confusion about my voice. I'm sorry about that. John DiFucci: No. Yogesh, it wasn't you. I'm sure it's me. I can't hear that well sometimes. But thank you for answering the second question, which was, I think, more important anyway. And I guess just a follow-up for Anthony. I want to follow up to Ittai's question on the SaaS business because it does sound like ShareFile is doing really well. And it's a big acquisition, and it's your first big SaaS acquisition, Big SaaS acquisition. But the SaaS revenue didn't just decline sequentially. It declined to less than it was the last 3 quarters. And so that like -- I mean it's not like just the fourth quarter was stronger. It's like the last 3 quarters were stronger. So can you help us a little bit because something odd happened. And it sounds like the business is doing really well. You guys have said it several times, even if I heard it wrong. But what is it that what happened this quarter, like it wouldn't have been just like recognition. Sometimes I can imagine you don't get the renewal and you're not recognizing it and then you recognize it like -- but it's not just the fourth quarter that was stronger than this quarter. Sorry. Anthony Folger: Yes. I got it, John. And yes, I think, the range of SaaS revenue for the business overall has been -- if I were to normalize for the cleanup issues that I sort of referred to, it's between $72 million and $73 million, going back to, I don't know, Q1 of last year. So that's if I sort of normalize each of these quarters. And all that's happening is we talked about it a little bit last year that taking over the billing system from CSG was a pretty significant milestone in terms of integration. And in the back half of the year, as we started to get our arms around the data, there was a lot of cleanup that needed to be done. In some cases, we had customers that haven't been billed and needed to get invoiced, they required some catch-up invoicing and there were some that needed to be written out of ARR or reserved against revenue for whatever reason. And there was just a lot of data that we really didn't have access to pre-acquisition and even with CSG doing a lot of the billings under the TSA. In the back half of last year as we started to clean that up. Again, not material overall. But if it's a few million dollars here and there as we go quarter-to-quarter, it may move that number around a little bit. And that's really all it was. I mean, otherwise, you're right. The ShareFile business, if I were to sort of normalize these things out, like I said, $72 million to $73 million for total SaaS revenue on a quarterly basis is where it's been. John DiFucci: Okay. And that's helpful. But should -- is it cleaned up now, Anthony, should we assume that this should behave like a listen, we didn't expect a lot of growth out of it, but just even if it's solid or steady or will -- or could we potentially see some declines going forward too? Anthony Folger: No, I think it is largely cleaned up in any of these cleanup issues that we need to do will get smaller and smaller as we go forward. So I don't expect significant issues with it. I mean, as Yogesh said, the business fundamentally from an operational perspective has been incredibly solid. Operator: Our next question comes from the line of Lucky Schreiner with D.A. Davidson. Lucky Schreiner: Great. Maybe and apologies to follow up again on the line of questioning here. But on that isolated churn event. If I remember last quarter, I believe you guys talked to not seeing an impact of multiyear contracts for this year. And so it sounds like maybe visibility there changed. Is that related to the isolated churn event? Or is that something different? Yogesh Gupta: Lucky, not really. When the EU court puts out a statement saying, "Thou shall stop immediately." This was an Eastern European government. They basically instantly told that they were going to stop paying. And so this was actually -- the customers were local telephone customers, local -- and this was call records of phone calls that people make. And when that became -- that was deemed illegal, the country immediately, government immediately said to all those call record companies and all the telephone companies saying, "Hey, can't retain this anymore, delete it all, and we will not pay you anymore starting right now." So it was what I would call a surprise churn, right? It was one of those things where they just happened to say, sorry, we can't pay you anymore because we've got -- we're not getting paid anymore. So it's a weird thing, right? I mean we could go and tell them, hey, you have a contract, it doesn't expire for a little bit. But at the same time, we really -- when governments do those kind of things, I think it's tough to get folks to comply. So we wanted to basically take the churn, and we'll take them the churn. Lucky Schreiner: Got you. So yes, it sounds like visibility hasn't changed then. Yogesh Gupta: Maybe not at all. This was unusual. This was truly unusual. It was -- the decision came out, the government acted and the service providers had to act. I mean it was within a matter of 2 weeks and completely from left field. Lucky Schreiner: Got you. That's helpful. Maybe then on NRR. I know you guys are within your target framework. But what's going to take to get that above the 100% target? Is that a function of just working through the recent churn event? And you mentioned maintaining a close watch on the macro. Is that at all playing a factor here? Yogesh Gupta: So I don't feel that today macro is playing a factor for our business. I can't speak for the rest of the world. But for Progress, I believe, this is purely because of the isolated churn that we saw. And as you know, Lucky, because our NRR is a trailing 4-quarter number, it moves rather slowly and so it will take us a little bit to get us back. Our target continues to be being at or above 100%. I mean our goal says 100% NRR is our goal. And -- but we've actually fluctuated between 99% and 101%, by and large, for the last few years. I think occasionally, we've touched 102%, but by and large, it's been between 99% and 101%. So we actually feel good about our business. And we also feel good, Lucky, that we were able to grow ARR by 2% year-over-year, which is another point because -- when you think about it, when NRR is somewhat light, it doesn't take much for first few tens of basis points of things to move. The fact that we were able to grow our ARR 2% year-over-year means that obviously, new customers are embracing us and our expansions continue to be good, et cetera. So we continue to be confident we are not concerned about the way the business is going at this stage. And the reason why caveat at this stage is the macro and the geopolitical events going on, which I think -- I mean the uncertainty around those, I don't have to sort of share with anyone that we all know that basically, some days, people think in the morning, it's going to be okay and the evening is going to be not okay. So with that kind of uncertainty, unclear as to what will happen in the market. We will continue to monitor that very, very closely. But so far, we have not seen any instance or any example or any anecdotal evidence, anything at all to say that macro is having an impact on us. Operator: [Operator Instructions] I'm showing no further questions in the queue. I would now like to turn the call back over to Yogesh for closing remarks. Yogesh Gupta: Well, thank you, everyone, for joining. It's a pleasure to speak with you all, and we look forward to speaking with you again next quarter. Bye-bye. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good afternoon, and welcome to the CVD Equipment Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, today's call is being recorded. We will begin with prepared remarks, followed by a question-and-answer session. Presenting on today's call are Emmanuel Lakios, President and Chief Executive Officer; and Richard Catalano, Executive Vice President and Chief Financial Officer. Our earnings press release and information about today's call replay are available in the Investor Relations section of our website at cvdequipment.com. Before we begin, please note that comments made during this call may include forward-looking statements, including statements regarding our future financial performance, market growth, product demand, business outlook and strategic initiatives. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our filings with the Securities and Exchange Commission including the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025. We undertake no obligation to update any forward-looking statements except as required by law. With that, I will now turn the call over to Emmanuel Lakios, President and Chief Executive Officer. Emmanuel Lakios: Thank you, Diego, and good afternoon, everyone. We appreciate you joining us today to review our fourth quarter and full year 2025 financial results and to provide you an update on our business and strategic initiatives. Following our prepared remarks, we will be happy to take your questions. As previously disclosed, in response to continued volatility in order rates and recent decline in bookings within our CVD Equipment division, we have initiated a transformation strategy during the fourth quarter designed to significantly reduce fixed operating costs, create a more agile organization and better position the company to maximize shareholder value. Key elements of this plan included: transitioning the CVD Equipment business from a vertically integrated fabrication model to outsource fabrication for certain components, which we expect will reduce fixed costs and improve scalability; completing a workforce reduction in the CVD Equipment division during the fourth quarter, which was to rightsize the organization, and is expected to reduce annual operating costs by approximately $1.8 million in 2026; revising our sales approach by leveraging distributors and external representatives to complement our internal sales organization; and exploring strategic alternatives for certain businesses and product lines, including potential asset sales or divestitures. As part of our strategic review on March 23, 2026, we announced that we had entered into a definitive agreement under which our SDC business will be sold to Atlas Copco Group. The purchase price is approximately $16.9 million in cash, subject to certain purchase price adjustments. The transaction is expected to close during the second quarter of 2026, subject to customary closing conditions. This transaction will allow us to sharpen our focus on our core CVD Equipment business in Central Islip, New York. It is also expected to strengthen our balance sheet and provide additional financial flexibility as we continue to evaluate opportunities across the CVD Equipment business, its product lines and our facilities. We expect net cash proceeds after transaction expenses and taxes to be approximately $15 million, of which $900,000 will be held in escrow for post-closing adjustments and indemnification obligations under the agreement. We retain ownership of our Saugerties, New York facility, which will be leased to Atlas Copco Group for the initial term of 2 years following the closing. I also want to express our appreciation to our SDC employees for their contribution to the company over the years. Turning to our financial results. Fourth quarter 2025 revenue was $5 million, down 33% from prior year period and down 33% sequentially from the third quarter. For our full year 2025, revenue was $25.8 million, a decrease of 4.1% from fiscal year 2024. Orders in the fourth quarter totaled $3.5 million, driven primarily by the demand in our SDC segment for gas delivery equipment and the receipt of two orders from Stony Brook University for two PVT150 units. For the full year, orders totaled $13 million compared to $28 million in 2024, primarily driven by demand in our SDC business for gas delivery equipment and order for spare parts and service for our CVD Equipment division. At December 31, 2025, backlog was $6.6 million compared with $8 million at the end of September 30, 2025, and $19.4 million at the end of December 31, 2024. Our bookings continued to be pressured by several factors, including softer demand for our products in our CVD Equipment division, tariff-related uncertainties, reduced U.S. government spending for universities and a slower pace of adoption of our solutions in certain end markets. We continue to market -- to monitor our customer demand, the general uncertainty of the geopolitical environment and potential tariff impacts as we are -- and we are planning accordingly. Even against this backdrop, we remain focused on delivering solutions across our key targeted markets of aerospace, defense, industrial applications, including silicon carbide on graphite and silicon carbide use in high-power electronics and other emerging applications. With that, I will turn the call over to our CFO, Richard Catalano, to review the financial results in more detail. Richard Catalano: Thank you, Manny, and good afternoon, everyone. Fourth quarter 2025 revenues were $5 million. This compares to $7.4 million in the fourth quarter of 2024. This year-over-year decline was primarily driven by lower CVD systems revenue. Revenue in our CVD Equipment segment was concentrated among two key customers, which together represented approximately 53% of total fourth quarter revenue. Our SDC segment reported revenue of $2.2 million in the quarter compared to $1.9 million in the fourth quarter of fiscal '24 and $1.7 million in the third quarter of 2025. Consolidated gross profit for the quarter was $1.1 million, resulting in a gross margin of 22.2%. This compares with a gross profit of $2 million and a gross margin of 26.4% in the prior year quarter. The decrease was primarily due to lower CVD revenue, which resulted in higher unabsorbed overhead as well as a less favorable contract mix. Our operating loss for the fourth quarter of 2025 was $1.3 million compared to operating income of $34,000 in the fourth quarter of 2024. Included in the fourth quarter 2025 results was a noncash impairment charge of $163,000. This was related to certain equipment and capitalized software associated with our transition to outsourced fabrication of certain components in our CVD business. After interest income, the net loss for the quarter was $1.3 million or $0.18 per diluted share compared with net income of $132,000 or $0.02 per diluted share in the prior year quarter. For the full fiscal year, revenue was $25.8 million. This compares to $26.9 million in fiscal 2024. The year-over-year decline was primarily due to lower SDC revenue and lower MesoScribe revenue as we ceased that business. MesoScribe ceased operations in 2024. Revenue in our CVD Equipment segment was again concentrated among two key customers, which together represent 41% of total revenue for the year. Our SDC segment reported full year revenue of $7.6 million as compared to $7.8 million in fiscal 2024. Consolidated gross profit in fiscal '25 was $7.3 million or 28.3% of revenue compared to $6.1 million or 22.5% of revenue in fiscal '24. The increase in gross profit was primarily due to improved gross margins in our CVD Equipment segment. This was primarily due to a prior year charge of $1.6 million that we took last year to write down certain inventory to net realizable value. We did not incur a similar charge in fiscal '25. This improvement, not having the charge was partially offset by lower gross profit in the current year in our SDC and MesoScribe segments due principally to lower revenues. Operating loss for fiscal '25 was $1.9 million. This compares to an operating loss of $2.4 million in fiscal '24. Interest income, net loss for the year was $1.6 million or $0.23 per diluted share compared to a net loss of $1.9 million or $0.28 per diluted share in fiscal '24. At December 31, '25, we had cash and cash equivalents of $8.7 million. This compares to $12.6 million at December 31, '24. Net cash used in operating activities during fiscal '25 was $3.7 million. This was largely driven by changes in working capital and contract timing as far as milestone billings. Working capital improved to $14.1 million at year-end '25. This compares to $13.8 million at the end of '24. This was due in part to the classification of approximately $0.5 million of fixed assets that we had held for sale and for which we sold in the early part of 2026. Looking ahead, our return to consistent profitability will depend on improved equipment order flow, disciplined cost management, successful execution of our transformation plan and continued control of capital expenditures. While our quarterly results might continue to fluctuate based on order timing, we believe our current cash position and projected cash flows will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. In addition, upon the closing of the transaction to sell SDC, we expect net cash proceeds, excluding the $900,000 escrow amount to approximate $14 million and we currently intend to initially invest those proceeds in U.S. treasury securities. With that, I'll now turn it back to Manny. Emmanuel Lakios: Thank you, Rich. Our priorities are clear: serving our customers, supporting our employees and creating value for our shareholders and returning the business to sustained profitability. Operator, we are now ready to open the line for questions. Operator: [Operator Instructions] And our first question comes from Brett Reiss with Janney Montgomery Scott. Brett Reiss: Can you hear me? Emmanuel Lakios: We can hear you, Brett. Good to hear you again. Brett Reiss: Great. Great. Great. You're sitting on $23 million, $24 million in cash. Could you describe to us the skill sets of your existing engineers? And what I'm trying to get at is what are -- their skill sets would be complementary and enhance what type of acquisition you might be contemplating with the $23 million? Emmanuel Lakios: Yes. Well -- so Brett, we -- the number, I'll let Rich speak to the actual number on the cash -- any cash on hand plus what will net from the transaction. But as far as the talent pool, you asked, there are a couple of questions in your one question. The first is talent pool is consistent with what the talent pool was essentially from a capabilities perspective a year ago. We have a full complement of resources in the engineering and technology group for CVD equipment or CVI equipment, basically the main product line from Central Islip. So we retain that skill set. As far as the subsequent question, which is what are we going to do with cash and the proceeds, the Board is looking at opportunities and strategic alternatives for increasing shareholder value, and we'll continue to do that. At this point in time, we do not have something that is material or a [ path ] yet. This was a fair transaction for all parties, the SDC transaction. So we took advantage of that. So time will tell, but we don't have something to highlight today. Brett Reiss: Yes. Fair enough. Can you give us some sense, though, of what the pipeline of opportunities you're looking at? Are you looking at 3, 4, 5 different things? And how long have you been kicking the tires on some of these opportunities? Emmanuel Lakios: Well, we -- as a Board, we've been looking at strategic alternatives for quite several quarters, as you can imagine. You don't do a transaction in a quarter or two. And so -- but again, at this point in time, I'd be speaking out of turn -- I think in the next few quarters, we'll be able to identify and share with you certain -- some additional information. But right now, again, Brett, I don't have anything to speak of. Brett Reiss: Okay. And are you guardedly optimistic, though, you'll be able to find something that will have a less lumpy or more recurring revenue stream, perhaps with service revenue, which has always been what the company would like to have had, but just the nature of the type of businesses we're in, it's always been a kind of lumpy revenue cadence. Emmanuel Lakios: Well, the equipment business, Brett, is lumpy in itself, especially when you're a couple of hundred million dollars of revenue as we are, of course. The -- I think you've outlined nicely the objective for any strategic activity, which we want to have is have a smooth non-lumpy revenue stream, good customer value in spares and service. Those are all the attributes of entities we would like to entertain. But again, I can't speak to that at this point. Brett Reiss: Okay. I'll drop back. I don't know if there are any other people... Emmanuel Lakios: Thank you, again, Brett. Good hearing your voice. Operator: [Operator Instructions] And your next question comes from Frank Giordano, Private Investor. Unknown Shareholder: I just wanted to ask a question, of course, the money. It's something continuing on with Brett before. Regarding that, have you ever considered paying a special dividend in situations like this? Or it's something that the company doesn't pay? Emmanuel Lakios: I do not believe that in the history of the company, a special dividend was paid, at least in the period of time that I've been with the company, which is 9 years that has not been the case. But I could be corrected, but I think I'm accurate. Clearly, we believe shareholder value is based on growing the business, and utilization of our funds in a respectful manner, and we are conservative. So at this point in time, that is not actively on the table. Unknown Shareholder: Okay. And something else regarding the business itself. Are you concentrating a little bit with the military right now, let's say, in the drone companies or anything dealing with the military due to the situation that we are in? Emmanuel Lakios: Yes. Frank, thank you. Yes, we do serve aerospace and defense. That's one of our key markets. About 78% of our revenue over the last several years of our orders has come from military and defense, whether it's gas turbine engines, the use of CMCs or other ceramics, which we create -- we build the equipment that creates the material, and that goes into both commercial and also military gas turbine engines. As well as last year, we received an order, we shipped it this year. Actually, we shipped it in 2025 was for a research system that will be used for especially the ceramic materials for hypersonics. So we are in the next generation, I would say, materials. So -- and it will continue -- I foresee that it will continue to be our revenue and previously that orders will be driven by aerospace, defense for the foreseeable future. That's where these advanced materials are primarily utilized. Unknown Shareholder: Okay. I just wanted to tell you just my opinion here. You remind me of a company based out of Milan, it's called SAES Getters, was founded during Mussolini's time, the dictator Mussolini. And it survived through World War II. And then it became a company was taken over, I believe, a couple of years ago, at a much higher price than what it was in 2000. It was the only Italian company trading on the NASDAQ back in 2000, and it was around your price around $3 or $4 a share. And they used to pay a dividend every 3 months. I couldn't believe it, but it wasn't with the vapor, the decision, they do a lot of stuff, maybe different from your kind of company. But again, it was similar. It was similar. If you could research that and give you some ideas, interesting company out of Milan. Emmanuel Lakios: Yes. Drop us a line on the -- I didn't catch the name entirely, but drop us a line on that... Unknown Shareholder: All right. I repeat it again. SAES Getters. And there was a takeover, but the name is still there. There's a website. Of course, you could research it. But again, I don't know if they do have a division here still in the United States, out of Denver or something like that. But I remember that 20 years ago, when I used to deal with them. Emmanuel Lakios: We'll do. Thank you, sir. Appreciate it. Operator: And there appears to be no additional questions at this time. So I'll hand the floor back to Emmanuel Lakios for closing remarks. Thank you. Emmanuel Lakios: Thank you, Diego, and thanks to everyone for joining us today. We appreciate your continued interest and support of CVD Equipment Corporation. If you have any additional questions, as I said earlier, please reach out to myself or Rich directly. And this concludes our today's conference call. Operator: Thank you. And all parties may now disconnect. Have a good day.
Steven Brown: Hello, everyone. Thank you for joining. I hope everyone is doing well and looking forward to a fantastic presentation today. I'm joined here by our esteemed CFO, Matt Boyle, and we're going to walk you through our full year results. We do have a longer presentation than we've had in the past. And so we won't have time, obviously, to cover every slide. So you're going to find I'm going to kind of do an abbreviated presentation today, and the full presentation is available -- will be available on our website. But just for the sake of hitting the key points, I am going to move around a bit for the sake of speed. So I'm going to start off actually on Page 8 because I think you all know who we are, what we do, what markets we serve. You all have heard that plenty of times and are very familiar with the business overall. But I want to point out that we have a history of sort of evolution. That's really what the whole company is about. And as we'll talk about more later, we're in that same position today. And we're kind of built for that. We're geared for change, all the way back from the very beginning when Leonard Sim had the idea to start a virtual queuing product because he got tired of waiting in line at Universal Studios in Florida from the fact that we started out with accesso Passport as a SaaS product when people thought we were crazy, that no one would rely on the Internet for their ticketing. Then we pioneered online ticketing. We were the first to market with mobile ticketing for theme parks and attractions. And so we're always evolving, always inventing. And while we're doing that with the products that we have, we've also been expanding our verticals and our capabilities with a whole range of acquisitions in what is now built, I would call it a global powerhouse across the attractions industry in terms of technology. So we're very familiar with change. And as we all know, the market is quite disrupted right now, SaaS Mageddon, if you will. And we'll talk more about that as we go through in terms of where our -- where we think our position is in that space. So I'm going to -- obviously, Matt will talk about the numbers. You can see the headlines here on Slide 10. Top line revenue, $155 million, cash EBITDA, $23 million. We have lots of cash and a great balance sheet at the end of the year and some great progress on our EPS and Matt will get into all this in more detail. But overall, a solid year. Obviously, we'd like to have more growth. But in a year that was a bit challenging for a variety of factors, we held our own quite well, and I am pleased to be end with the result given all the overall circumstances. So one of the things we've seen in our, I guess, our market updates is just the environment and how we responded to that. And we're a pretty nimble company. If you were around during COVID, you saw that in full play. And we adjust and not only in our technology, but also in how we operate our business. So we had some uneven demand across the geographies. There were some travel disruptions, people not wanting to travel to certain regions for social or political reasons. We had some summer softness with operators. And I think the operators are always struggling to respond. Is it this happening for a week? Or is it a trend? Should we change our pricing? Should we change our promotions? And then also, we were dealing with the overall backdrop in terms of our trading, I guess, you could say, our share price with the sort of indiscriminate, as someone called it, indiscriminate software sell-off despite the fact that we feel our position related to AI is actually very strong. So what we've done is our commercial team has done very well. You can see our wins. We've had a great focus on cost discipline. We've lowered our headcount from just to about 600 now, 605 or so where we stand today and focusing a lot on productivity and efficiency, some of that powered by AI, some of that powered by just rethinking how we're structured. Our margin, our transactional revenue was flat. It's important to note here. We didn't go backwards. And I think in hindsight, some of the conversations or updates we had about transactional revenue softness could have implied that we were going backwards. And really, what I meant was that we weren't seeing the growth that we had hoped for. So I just wanted to point that out because I think some translated the fact that, although, market was soft and transactional revenue went backwards for access, but that's not the case. Actually, it held flat even in a difficult market backdrop. And importantly, as we announced today, we laid out and have facilitated a structured transition plan between myself and Lee, having hired him at the beginning of last year. He is now ready to take the helm on May 1. So a lot of information here on the slide on Slide 12. A fantastic new Chief Commercial Officer in place. We've really refreshed our go-to-market approach. We've thought about our look and feel. You may notice today, our presentation looks a little different than it has in the past. We've gone to a sort of crisper look, more modern look. We have a fully a brand-new website, which actually is quite a project with all the products and markets that we serve. And as a result, our pipeline looks really good. It's continuing to strengthen as the year has progressed. And the quality of our wins has improved. We're seeing more customers from our legacy product moving into SaaS solutions or new customers coming in looking for SaaS product and also continuing to expand our relationships with existing clients. So overall, our win rate has dramatically improved. The new business that we signed compared to 2024 was roughly double in terms of annual value. So we're really happy with the traction we're seeing on the commercial side and with the new focus that our team has. 13 and 14 really are a bit of just an update on how things are going with both accesso Freedom and accesso Paradox, 2 acquisitions that we've made in recent years. And just highlighting the fact that we've thought about these acquisitions and these different products very carefully. And sometimes it takes a little patience, but our strategy is intact, and it's really paying off. We're seeing great momentum with Freedom. We now have 63 venues that are contracted and continuing to grow. That's more than double than we had in the prior year. And it's proving to be a really important part as prospects consider their overall operation and the benefit accesso can bring to them by having that integrated platform between ticketing, food, retail and all kinds of things. Same thing with ski, accesso Paradox, which is really an acquisition we made is to give us a path forward for our clients that are on Siriusware, which is an installed application. Customers looking to move to SaaS needed an alternative is particularly in the ski market. And accesso Paradox is doing exactly that. So we're seeing great move to -- from the clients in that Siriusware product moving over to our transactional model or SaaS model. And overall, just in terms of ski, remember, we have 160-plus resorts as clients that's double the nearest competitor in this sector. So we are very strong in ski and continue to grow. And I believe it's a very important vertical for us to continue to stay focused on and to continue to innovate with. So I want to take a moment on this one because if you're on Slide 15, about virtual queuing. And I think this is really important because context does matter. And as the headline says, one decision is not a verdict on the product. And we sort of had a lot of focus around this, a lot of chatter around what's going on with accesso and queuing. And I think it's important to point out that we have 25 years of fine-tuning a really robust application that works at scale and handles a wide range of scenarios. And as I called out on the slide, this is not something you can vide code over the weekend. And it's not just about the base idea of, okay, who's next in the queue, what's happening? It's all the multitude of scenarios that go on in an environment, when you have 10,000, 15,000, 20,000, 30,000, 40,000 people in a park and 15, 20 attractions, all the different variables that are going on, helping guests with accessibility, accessibility needs, the whole range. And importantly, we do still have IP. I know that our core patent expired some years ago, but we've continued to file patents for specific functionality that is very critical to how the application works when you're running at scale. Again, someone can make a very simple [ lo-Q ] type product. But our application and queuing is much more robust and much more significant than that. And we had a successful defense of one of those patents in 2025 that we're very happy about. So I just want folks to think about this product as something that's obviously the foundation of the business. but it's not a legacy product. It's not a tired product. It is a fantastic product that not only proves itself functionally, but also from a revenue perspective. And as we noted midyear last year, one of the major customers indicated they were not going to continue using the product. Near the end of the year, they changed their mind on that. They've extended through this year and actually have a pilot going at 2 additional locations and very, very pleased with those initial results from those pilots. So I just wanted to sort of put a pin in this because I think it's super important that we realize that LoQueue is a very great product, and it will still be a centerpiece for us from a product strategy. A couple of pages here, sort of 16 and 17. I won't go through those in detail. I think it goes without saying that every organization is looking at AI enablement in terms of how they work. We are certainly do that -- certainly doing that across every single area, including myself. Much of this presentation has been designed by AI as a matter of fact. And we are looking at everything from engineering, product design, sales and marketing, operations, so many tasks that can be expedited with the use of AI tooling, all in different scenarios. And we are seeing some great efficiencies coming from that, improved work product, improved time to market with everything across the board, whether it's an application, whether it's meeting notes, whether it's marketing content, we are -- we have embraced AI across the organization. And it's also allowing us to find some efficiencies, but also to be a better business to operate more efficiently and more effectively and be faster at bringing things to market. So we're going to talk more about AI in a minute as a product and how that as a strategy. But I think it kind of goes without saying that we're embracing AI in the organization. We're a technology company for goodness sake. And it's at the core of what we do. I have multiple AI applications on my own desktop. And I can only imagine how many our developers and our operations teams are using in their work every day. And so it's important just to call that out. I don't think it's something that you need to hear about every presentation because it's sort of, as I said, goes without saying that this would be a fundamental part of how we operate. So with that in mind, I want to save as much time as possible for the strategic inflections that is coming up later in the presentation. But I'm going to turn it over now to Matt to cover the financial highlights for you all. Matthew Boyle: Thank you, Steve. So key financial highlights on this page to call out. So you see at the top there is cash EBITDA was $23 million, so plus 0.8% up on the prior year, a margin of 14.8%, again, consistent with the close to 15% that we had in the prior year. So cash EBITDA for those that aren't familiar with it, is our principal operating metric. It is an adjusted EBITDA number less capitalized development spend. So our revenue was GBP 155.1 million. That was plus 1.8% up on the prior year on a reported basis. On a like-for-like basis, it was up just under 4%. So there were a few like-for-like adjustments to strip out there being the disposal of a Brazilian subsidiary that we made in January 2025 and a couple of -- well, a B2C business that we disposed of in 2024 and a onetime hardware sale that we also had in 2024. So stripping those out, we were just shy of 4% growth on a like-for-like basis. You'll see gross margin there, up slightly on the prior year, up to 78.5%, up from 78.1% in the prior year. That really is just due to the margin mix or the revenue mix -- so the hardware is typically a lower margin, and we didn't have it in 2025, so up slightly. You'll see there a notable increase in statutory profit before tax, which is very strong as well as a notable increase in adjusted earnings per share. And again, a very strong -- Steve mentioned it, strong balance sheet, so GBP 30.5 million of cash at the year-end. And that is after significant share repurchase activity that we've had over the 15 months -- past 15 months that I'll cover in a later slide. On the right-hand side, you'll see a mix of our revenue on a -- by type basis. So 84.6% is repeatable. And just as a reminder, the majority of our revenue is about just shy of 3/4 is coming from transactional arrangements, whether that's on a revenue share basis or a cents per transaction basis. That's the major component of repeatable revenue. And then we also have some support and maintenance agreements as well over term periods. Next slide, please, Steve. And then this slide, again, for those of you that have followed us for a while now, this is our breakdown of that revenue by type into the more granular buckets that we have. So at the top there, you'll see repeat the breakdown of repeatable revenue. So within transactional revenue itself, you've got virtual queuing. So we highlighted that had quite a choppy peak seasonal period in that summer. So we were down 6% compared to the prior year, but relatively flat ticketing and e-commerce. So flat attendances equates to flat ticketing revenue, but resilient despite that. And then offsetting that, you've got growth in distribution of 4.5%. So we mentioned this at the half year, where there are flatter attendances, operators will tend to lean on those distribution channels for promotions and discounting to fill the gaps that they have, and you see that reflected in the numbers there, sort of the 4.5% increase. So there are other components contributing to the repeatable bucket are recurring license fees that were up 30.8% and maintenance and support agreements are both up 16.8% and they're being driven really by the new Horizon venues that we've had going live throughout the back end of '24 and throughout '25 and predominantly in the Middle East, which operates a license and support model and less so of a transactional model. And then beneath that, you'll see the contributors to our non-repeatable bucket. Again, I think this is really highlighting the resilience of our business model. So whether there is flatness or less lower growth in transactional, you do have this service-based nonrepeatable business that we can turn to. So you'll see increases there in implementation change request and billable services and the professional services line that we've broken out on a more granular level this year to make it easier to follow. So the increases in implementation and change request really customers wanting advanced change requests or advanced road map items to align with their own projects or desires that they may have. And then we have a very willing and able professional services team that perform adhoc customer requests. And typically it fluctuates year-over-year, but really is another boat another string to our bow. And then the final item to call out there is the hardware line. So again, touched on it earlier, you'll see a drop of about $1 million, and that's really because of the onetime accesso Prism sale that we had in 2024 that we wouldn't expect to repeat in '25 or going forward. Next slide, please, Steve. And then this is the income statement. So a couple of call-outs on this slide. Really, we've covered revenue and cost of goods sold is the admin expenses. So flat there, which really goes to show the robust cost control we've had throughout the period. So reported admin expenses up 0.2% and the underlying admin expenses up to GBP 99.5 million, which is up 2.5%. The underlying expenses we have majority being a SaaS-based business, mostly payroll and headcount-related costs. And you'll see on Steve's earlier slide that we ended 2024 on 682 heads. We ended 2025 on 655 heads, and we're now down at 600 -- roughly around 605 heads, really having robust cost discipline and making sure that we're rightsizing the cost base to reflect the revenues that we have. And then the final piece to call out here is the net finance expense, I will call it. So that is a net number of GBP 0.1 million expense for the current year, which is significantly lower than the prior year. And then that's reflective really of the fact that we had lower drawings throughout the year. So we were drawn roughly about GBP 10 million average on the facility throughout the period compared to double that in 2024 as well as having some positive FX revaluations. We have a USD facility set in a GBP entity, so we benefit from the positive gains in that facility, and that's reflected in the finance income line. The next slide, so cash EBITDA. So this is bridging from the previous slide where you saw operating profit to how we get to our cash EBITDA numbers and the adjustments that we're making. You see the pretty limited exceptional expenditure during the year. Really, that's only related to our acquisition -- the disposal, sorry, of the Brazilian subsidiary. And then you'll see the amortization line dropping down quite dramatically during the year. That's really assets becoming fully amortized. So there's a 20% -- 20% drop in the number there year-over-year, assets becoming fully amortized and the cost dropping off. You'll see the share-based payments there dropped to about 14.9%. So we run equity programs for all of our staff, but the vesting assumptions changed slightly during the year, which is reflected in the cost decrease that we have there. And then the last one to call out on this slide is the capitalized development spend. Again, we're very prudent on this number. So you'll see a slight increase from GBP 2.6 million to GBP 3.1 billion, but that's still only representing about 2% of revenue year-over-year. And that's all really to call out on that slide. And then this slide is showing cash flow. So I think the thing to call out here really is the strong, stable, sticky nature of our cash flow. So you can see year-over-year, very, very consistent and strong free cash flow generation. So you can see the top there, GBP 1.8 million up on cash flow before working capital movements. And just to touch on those working capital movements, you'll see a large swing there from negative GBP 11 million almost in the prior year to plus GBP 6 million in the current year. So that really reflects the seasonality, particularly of our distribution business, depending -- it has a seasonal peak in December and depending on whether it's collected at the cutoff of December or whether it hasn't, it makes a significant difference on a December basis throughout a 3- to 5-year average, you'll see it normalizes quite dramatically. So that's driving that movement. Back to previous slide, Steve. Yes, sorry. And then the other things to call out on the cash flow are -- you'll see there the GBP 4 million acquisition, just over GBP 4 million acquisition of intangible assets. So that's the OneRisk intellectual property that we purchased in the midyear. And then you've got GBP 15.9 million on share buybacks and a further GBP 4.1 million on shares for our Employee Benefit Trust. So we ended the year on GBP 30.5 million, which is gross cash of GBP 41.4 million and borrowings of GBP 10.9 million. So again, very, very strong healthy balance sheet that we've got. Just touching on the outlook before we move on. So we have made movements, I think, it's fair to say, since the year-end. So we've had the tender offer of GBP 20 million as well as the acquisition. We expect to end the half year, so H1 in a relatively very modest net debt position, which is consistent with our normal seasonal cash profile. And then we collect cash significantly through H2, and we'll end the year -- end 2026 back in a very strong net cash position. And then final slide for me, really touching on capital allocation that we mentioned at our interim, but bringing to the fore again here. So we've operated quite a number of schemes over the past 12 months really at this point. So first buyback started in April 2025. So we purchased 1.7 million shares for just shy of $11 million a further program extended that for another 1.2 million shares for $5.3 million back in October through January '26. And then on the 18th of March, we completed a tender offer that you will all have seen for $20 million returning or purchasing and canceling 4.8 million shares and just shy of a total of 20% of the shares in issue being canceled over that period and a total of $36 million return to shareholders. So we still hold a very strong balance sheet post all of the movement post year-end, which gives us leverage to continue to providing shareholders -- shareholder returns through meaningful capital allocation in the period going forward. And that's everything for me. Back over to you, Steve. Steven Brown: Sorry, Matt, I'll practice your slide turning better than next time. All right. So on to some very exciting things. And there's a lot to unpack here, and we've tried to make sure we have plenty of time for this. And then obviously, we have a lot of time for questions at the end as well for those of you that have questions. We spent a lot of time thinking about AI, obviously, not only internally, but also what it means from a product perspective. And importantly, what are our customers looking for. But I want to start with just kind of highlighting what the overall AI space looks like. And as I said before, there's been a sort of indiscriminate sell-off of software companies. And it feels like everyone sort of said, run from software, and we'll figure it out later in terms of which ones are viable, which ones are at risk. And we obviously have an opinion about where we sit in that, based upon the facts of AI and the different categories of businesses that are at risk. And obviously, on the left-hand side, you see companies mainly that have per seat pricing. That's the big underlying issue. Think about all the applications we use in our daily lives, our e-mail, things like our word editing tools, all those applications that we use every day are seat licenses. And so companies that are running on seat licenses are looking obviously at a declining workforce, lower seats. And not only that has a onetime effect, but a continued drip of lower seat licenses being needed. And so those sort of are the big core types of products that are in the highest risk category. In the middle, you've got some companies that are systems of record. They have a lot of integrations, but the data is sticky, but AI really just become an interface layer, sort of translation layer. And then on the right-hand side, you see categories 4 and 5, and I think we sort of sit in the range of those depending upon the product that we're talking about. But vertical systems of record, deep domain expertise, which is certainly accesso, proprietary data, proprietary logic, obviously, there's a lot of that in our business, transactional pricing, not seat license pricing. And AI -- the jump -- the business in these categories really AI enhances them versus replaces them. And we clearly believe that AI enhances everything we do. As one headline we have, it says it makes us more valuable, not more vulnerable. And I believe that is absolutely true. And you can sort of digest this and think about, okay, where does accesso sit, but I do believe we've been caught in a wave of the sort of everyone running from software -- and when folks start peeling back and really categorizing the companies in the space, they're going to realize that, well, accesso was in a really strong position and not only in a strong position today, but also where we're going is going to further secure that position. And so I just kind of thought this slide was really helpful in terms of putting some context around that because we get a lot of questions about, oh, what's going to happen to accesso with AI. And I think it's going to make us a lot better. So as I said before, we have embedded customer data. Our systems are mission-critical. They're not a nice-to-have system. There's not an easy alternative to maybe work processing like you may have today or e-mail systems. We have 20-plus, probably almost 30 years of accumulated tech logic. And that's hard to come by in our space and not just across ticketing, but across a range of solutions that our operators are using. We have a whole ecosystem. We're not just one sort of a one-trick pony. You can come to us whether you need 1 solution, 2 solutions or 9 solutions. And we can help you out with that in an integrated and coordinated manner, and that's something that absolutely no one else has. And importantly, just our structure of our transaction-based revenue. And we've certainly had the jabs about that over the years about all being transaction-based, but I think it puts us in a really great position, and we are thankful we are in that situation versus having sold our products on a seat license basis, for example, we are well positioned and not under threat of -- from a revenue perspective that a lot of the other companies are going to be facing in a pretty strong way. So as I said, we have a strong position in what is an otherwise noisy market. And from an offense perspective, there's nobody else that has everything we have to offer to operators of these venues. And what we've stepped back and looked at is clearly, we're going to innovate within our products. Passport will get AI. Paradox will get AI. Horizon will get AI. Freedom will get AI. All of our products will get AI, where it benefits the product, where it benefits the user. But importantly, that overall view is really where AI is going to be at its strongest. The ability to take different components, different silos of data and make sense out of that and turn it into insights is invaluable. And it's not just about our systems, it's about all the systems the operators use. That is the opportunity. So I'll talk more about that in a minute, but we sort of have 4 things we've been working on in the past year, and they are accelerants of our growth going forward and at the core of our innovation history. Number one is we've expanded our view on payments. This is something that's been well considered because when you embark upon a journey on payments, it's rather permanent. You're installing hardware with the venue, the terminals you check out with, you're doing lots of internal plumbing. And importantly, you're relying on this partner for service, which is an important part of our customers' business. And so when you're going to connect yourself to a partner, you need to make sure you're connecting to the right partner because you don't want to sort of get -- have issues with your payment process that then sort of backwashes on your overall relationship. And so we spent quite a bit of time, the majority of last year and even part of the year before, evaluating all the different providers that are out there, and we're very happy to say we've secured a partnership with Adyen, and I'll talk more about what that looks like in a moment. Composable commerce, we've mentioned that before. At the core, as I reflect on accesso overall, e-commerce is at the core. It is our absolute powerhouse. And not just for ticketing across everything we do, leveraging that expertise for transaction optimization is absolutely foundational to this business. And we have to always evolve. And so right now, we are well underway with what we call composable commerce, and it's our next evolution of e-commerce and how customers will buy when they go to their computer, when they go to their phone. Alongside that is conversational commerce, which is there will obviously be people going to their computer, will go to our phones for a very long time, but there's a big wave coming, and that is conversational commerce. That is going to ChatGPT. That is going to Meta AI and saying, "Hey, I would like tickets to LEGO land this weekend. What are the options? I'm looking for a 6 flags annual pass. Can you give me my choices and have all that on the chat, never typing a thing on your keyboard or on your phone. And we have really made great progress on this. And in fact, we're ready for our first customer pilot here coming up in the next coming weeks, actually, allowing guests to browse, order and pay everything via conversation. And that is an example of, again, another level of innovation, just like mobile ticketing, just like being a SaaS company, this level of innovation and getting in there early, when you can be an early adopter, you can learn from those smaller sample sizes and perfect your process. So when it becomes larger, you're the leader. And last but not least is our AI evolution from a product perspective. And as we shared today, we have acquired DeXibBit. We identified that as a target. rightfully so, Lee brought this to our attention early on after joining accesso. And after getting to know them and realizing what they've built, it was clearly an opportunity for us to leapfrog to use the term to accelerate our capabilities. And we certainly looked at alternatives and hands down determined that acquiring DexibBid and bringing that into our ecosystem was going to be a game changer for us. So I'll unpack these a bit more as we go through. Payments are at our core. start with payments. We move billions of dollars a year. Passport alone moves something like $4 billion of revenue. That's just Passport. Think about all of our other products in total, we are moving a tremendous amount of money. And what that does is it allows us to get scale pricing. Our individual operators, maybe they sell $20 million a year across their whole resort or $200 million, they can't access the pricing that we can access when we look at the billions of dollars that we process. So what we're doing now is we moved from being a payment gateway, which is what we've had forever, which is where we hand off the transaction to the processor. We're now going into actually being a processor with a partnership with Adyen. And what that does is it allows us to, a, bring much better pricing to operators that can't negotiate anywhere near that level of rate. And it allows us to integrate our system in a more comprehensive way to become less disjointed, if you will, because we can then end-to-end offer the package that is plug-and-play more so than, please go here for your payments, go here for this, go here for that. We can bring you the whole package. And so within that, on the payment gateway, yes, you get a fee for every transaction that goes through. But on the processor side, you get a portion of the margin as well. So in addition to giving the clients a much better rate, access to much better rates, we also are rewarded with that for bringing those clients into the Adyen platform. And so it expands a new revenue line for us in a way that is scalable, not just across ski or theme parks or live entertainment, but across our whole business. And so that is a very scalable opportunity that over the sort of midterm, long term, is going to be a very valuable line item for accesso in terms of margin. And if you think about other operators that are out there in different areas like Shopify or Toast point of sale here in the U.S., they actually make most of their money on the processing side, and they don't make a whole lot from software, if you look at their financials. And so this is an area that we have not really explored until now. And we've made a big move with the partnership with Adyen, which was by far our top choice. Their global footprint is phenomenal. And they're going to give us that end-to-end relationship that we're looking for, for our customers. So our clients will get better rate. It's less complicated. And by the way, it doesn't take much capital for us to do this. So we're off and running. We'll start bringing customers on here mid-2026. Obviously, it will take time to scale, but we'll be moving on this very promptly to make it a core part of our offering. So I talked about composable and conversational. There's more details on this page. If you think about e-commerce and maybe true to my heart, if you think about excessive Passport, e-commerce is -- was the lifeblood, is the lifeblood of that product. And we've taken that learning across our whole product set in increments. And products all have their own e-commerce I guess, you could say module, right? But what we're doing with composable commerce is we're separating that from Passport, and we're making a commerce layer, an e-commerce layer that can work across any of our products. So it's adaptable and scalable across our product set. So taking that transactional revenue and that incredible optimization we bring to our clients for optimizing their revenue and opening that up to work for Paradox, to work for Horizon, to work across our whole product set is a very big move, and it's an effort we've been working on for about 2 years. We completed our first pilot over last summer. And now this year, we'll start the rollout to access of Paradox. It will be the first of our products to adapt composable commerce. And then clearly, we'll work across the portfolio to bring that to life. But if you look at the revenue profile this brings in, if you look at Horizon, for example, Horizon doesn't have a transactional-based e-commerce product. And why would we rebuild something only for Horizon, when we should build something that works across all of our products. And that's what we're doing. So you might imagine Horizon will be next. And then clearly, Passport will get a major upgrade with composable. So it's not just separate. It's also a different architecture. So if you think about e-commerce as a flow, A, B, C, D, then you check out, that's kind of what we have today. But composable is what it says, it's composable. Think about being able to drag and drop and design your own screens. Think about being able to go in as a user and change your colors, change the shape of the squares and rounding the corners and changing the fonts and changing the pictures and the images, that's what's composable. So we end up with a much more adaptable platform. And it's one of the things that our clients often ask for is the ability to customize the flow and the site to work for their branding, but it has all the optimization within that. So they can't mess with that essentially. We've determined which modules work the best, and we make those modules available to them to drag and drop on their screen. So this is a fundamental part of transactional revenue growth for accessory going forward. A sub to that, I guess, you could say, is conversational commerce. And that is, like I said, you just talk to it, right? And it helps you out with your order, helps you out with your choices. And this is where everything is going. And going to a venues owned website will certainly happen for many years to come. But there's going to be a convergence of shopping within things like ChatGPT, where everything we do will be -- we'll go to Claud, we'll go to ChatGPT for everything. And it will shift from being a Google search. Google is already doing that today. It will shift from going to a venue's prime website to just using ChatGPT for everything we use or whatever your platform of choice at the time. So conversational commerce allows us to plug in to those chat-based channels very smart and have a dialogue with our product set, have a dialogue with our customers' information and give the user back exactly what they're looking for in a way that we are managing the messaging. We're giving them those options, and we're still controlling the transaction. And again, something operators can't bring to the table themselves, and we're making sure we are -- our plumbing is there. We're making sure that this is available. And like I said, it will be rolling out in a few weeks of the trial at a very significant theme park. So we're looking forward to that. Stay tuned. So shifting now to the fourth box, which is how we think about AI. So my favorite headline here is data everywhere, inside nowhere. I'm going to say it in my sleep. But that's really what we were looking at. And on the left-hand side, you can see an operator all the things she's thinking about, right? Oh my gosh, I have all this information. Everything is in a different folder, right? It's all in a different data silo, guest surveys, social media, ticket sales, weather, accidents, incidents, you should say, their loyalty program, their point-of-sale data from the restaurants, from their retail stores. What do you do with all this data when it's not connected, and that is the problem. And the opportunity is to help them leverage that. So if you want to know how to optimize your labor, you have your labor scheduling system and you have your food sales, 2 different buckets. How do you leverage those 2 together to help the operators create optimized labor schedules, for example? How do you leverage weather, prebookings, social media feedback, marketing calendar, all those to drive dynamic pricing. Connecting all that is something that a human brain simply cannot do that AI now opens as a new opportunity. And so we are absolutely the best prepared in the market to bring this to our customers and to the end markets that we serve. We can see everything across the guest journey. We're embedded in their core systems. We have the foundation for AI insights. And we obviously have a huge customer base. We know how to execute at scale. And importantly, we know the business really well. That's something that's lacking. When you go to ChatGPT or to Claude or to whatever your choice of AI tooling is, it doesn't understand the attractions sector. It doesn't know what a per cap means. It doesn't know what seasonality means in terms of that context. And that's what we bring to the table, right? And that's what the tooling we need to do because that's different than just loading all the data into a random AI tool and hoping it can give you the proper answer, it needs context. So with Dexibit, we acquired that context. We acquired that intelligence. And what we're looking at is embedding the intelligence at the core. And like I said earlier, not just putting AI into our products, of course, we're going to do that, but thinking about it more broadly in terms of what will really make a difference to the industry, which is what matters, and that's what will drive our business. So on Saturday, Matt may be a little tired still. On Saturday, we completed the acquisition of Dexibit -- and we're bringing that into accesso and into the market as accesso Intelligence, which happens to stand for AI, by the way. And it's an AI analytics, demand forecasting, capacity planning. It's a big data management platform. And what's interesting is it gives you a single view across everything, not just the accesso systems. Clearly, we're important to that equation, but it gives you systems from other vendors. Maybe you're using a different food system, maybe you're using a different scheduling system. You need weather data. You need event data. You need local event data. You need school calendar access. You need all of that. And what it does is it unifies all that into one layer of intelligence. And the -- what Dexibit has done over several years now has accumulated the context, if you will. So the models are trained, the AI models are trained on specific context, like what does seasonality mean? What does an event do? What is an event -- what event in town has an impact on my attendance this coming weekend. When it rains, what happens to my attendance. When the sun is out, what happens to my attendance. All of that off-the-shelf AI absolutely does not bring to the table. So for us, this is clearly a leapfrog move. I did enjoy the frog icon, I have to admit. And we certainly evaluated whether this is a build versus buy -- and we determined that buying this was going to catapult us ahead of the industry and give us something that would take us years to build on our own. So there are already 75 venues using Dexibit. They include things like the Smithsonian. So a very good, strong blue-chip customer base. They have 1,000 prebuilt visualizations or dashboards, if you will, and they're already integrated to 100 systems. That alone would have taken years for us to do, just the integrations. So what it does, it brings all these things together on the left, right, food sales, wait times, whatever it may be the venue has and their different data forward or data silos. First of all, it gives you reporting, okay? Reporting is really important. And we struggle ourselves to bring all of our different applications if someone is using more than one of them into a single view. We get that immediately, just add water and you're going to have dashboards across all the accessory applications that you're using. And that will give you -- will give us a significant advantage in the marketplace and a big advantage for our clients to have a single view across the business. There's also an important part, which is called Voice of the visitor, which is looking out across the Internet at all the things customers are saying about your venue and bringing that all into a consolidated perspective and also providing you insights around things you can do to improve any concerns that visitors might be expressing. So what we do in Phase 2 is we move into predictive operations. So things like demand forecasting, what should I expect for attendance this Saturday? What should I expect for attendance across next year, dynamic pricing, things like staffing, as I mentioned before, as well as capacity planning. That's sort of Phase 2. And in fact, I think Dexibits already pretty far into this. What we'll be doing is looking at bringing that into our product set as capabilities. So imagine accesso intelligence taking all these different variables and creating dynamic pricing and then feeding it back into Passport, feeding it back into Verizon, feeding it back into Paradox. So it becomes a loop of not just putting data out about what happened, but helping you predict the future and operationalize that into something that maximizes revenue. And then Phase 3, that is sort of, okay, Star Trek here, but this is not far away, by the way, which is allowing things to automatically happen, right? Self-healing operations. So when you see something happening, you have the system respond to take care of it versus opening a trouble ticket, for example. So that is the next level. I think where we're going to see accesso out of the [ issue ] is going to be Phase 1. We're going to be largely there probably in a matter of weeks, honestly. Phase 2 will then be a process that will happen over -- starting this year, over the next couple of years and getting better and better every single day. So just the intelligent reporting alone is a significant advantage to the industry and the elements of the predictive operations that will come to market very soon and the ones that are already there are something that no one else is offering. So what you end up is a little bit of a complicated graphic that shows, I think, in one view, accesso in the middle, our applications, whichever ones you're using, wrapped around a payments platform. And then the internal systems, other systems you're using, your CRM system, your financial reporting system, Google Analytics is looking at your website traffic, your hotel management system, which we don't offer today, your visitor survey data and then external data like weather, school calendars, social sentiment, industry data, economic data, all of that can be combined to give you through accesso intelligence, applying sector context, all the data, all the dashboards that are there, being able to interact with a conversational engagement to do this and give you all the things you see across the bottom, forecasting, revenue optimization, dynamic pricing, ops planning. And I think an important part here I want to highlight because I didn't cover it before is that third green box, conversational. So having grown up in the theme park industry, my early days was deep in spreadsheets and a lot of manual data work. And what would happen is everybody comes to you asking you, can you run this query for you? Can you build a spreadsheet for me? Can you give me this report? The operator, the operators don't have the ability or the access to that kind of data or the skills to mine the data. And what Dexibbit accesso Intelligence brings to the table is conversational insight. So anyone with any skill level could ask a question, what was my #1 guest satisfier yesterday? What food items sold the most on Saturday? Which food items didn't sell on Saturday? What should I expect next week because there's a big concert in town? Will it affect my attendance? You can ask those questions and it can take all this information and come back to you with an intelligent answer, insight and predictions. And that's really what unlocks the power here is not that you've got to be a master in database queries, you can be anyone, you can be the CEO, you can be the Head of Marketing, you can be the store manager, and you can use this by simply asking a question and getting back the data you need, whether it's an answer, whether it gets you back a spreadsheet, whether it gives you back a report, that is conversational insight that absolutely does not exist today, and it's across all of these squares on the page, not just one system. This is an absolute game changer for accesso and importantly, for our customers. So Matt, you're going to cover the outlook, I believe, -- or am I going to cover the outlook? I'm going to cover the outlook. So the outlook is coming up, I think the slide is actually out of order. So #1, we're unrivaled in our position, cover all that ad nauseam. We're engineered to evolve. One of the things that we've gotten on the right side, you'll see, we've gotten beat up a little bit in the past about the amount of money we spend on R&D. Well, what that has done is kept us current, kept us flexible, kept us adaptable, and we are ready for AI. And if you scrim on the R&D, you find yourself in a position when something changes, you're not able to respond because you now have to go and spend the next couple of years on significant deficit of technology. Accesso is not in that position. And if I've ever been thankful for our commitment and our continued investment in our products, it's never been stronger than today and the fact that we are literally AI ready. And I can say that our competitors by the large, are not in that same position. This is an absolute strength for us, and it will -- and the ability to layer AI on to what we have immediately is going to have a significant impact on this business going forward. So I think, Matt, you now you've got the outlook part. Matthew Boyle: Yes, I'll cover this, Steve. Thank you. So at the top there, you've seen the 2 black boxes, with the guidance we're giving is in line with the current consensus, so revenue of $146 million approximately and approximately $20 million of cash EBITDA. As a trading update, January and February traded in line with our expectations, particularly on transactional volume, that's pleasing given the choppy end that we've had from June through December at the end of '25. Being mindful though that it is still early in the year. We are a seasonal base business and our peaks are in late May, late June through early September and then again in Halloween at the end of October. So mindful that there's still a lot of the year left to play out. Just really highlighting the Middle East piece in there that's in our numbers. So we expect this year somewhere between GBP 4.5 million and GBP 5 million of milestone-related revenue from that Middle East region. Half of that, so approximately GBP 2.5 million, we've delivered already. It's just pending customer acceptance, which is great. The remaining GBP 2.5 million is to be delivered from April through the year-end. So some level of risk there. We -- so far, it has been business as usual for us as best it can be given the circumstances, but it could change in a moment's notice. We did have a positive signal that Aqua Arabia, a large park there in the Qiddiya attraction opened on the 20th of March despite the conflict. So we are happy, but we are mindful of it. The last piece on this slide is just to highlight really the strength in the balance sheet, which I mentioned on my earlier slides with regard to capital allocation. So we have purchased 20% of shares back over the last 12, 15 months and completed, as Steve says a game changer of an acquisition. And we have predictable steady-state free cash flows, and we expect to continue supporting future shareholder capital returns. Steven Brown: Okay. Last slide, I have to leave it up there. Our new tagline, powering the business of fun. I'm going to close with that, and then I'm going to stop a share, so we can take questions from the group. I know we moved through a lot quickly. We have a lot to unpack. It's also been a very busy week or 2 here between finishing up results, finishing an acquisition of a company based in New Zealand, nonetheless. And so we're obviously very excited about all the things that are to come. We're very excited about -- I'm very excited about Lee, having I guess, you could say handpicked my successor and having him here since the beginning of last year, he's fully embedded in the business and having such a planned transition smoothly with such a qualified person, who was not only intelligent and great at what he does, he's a great person as well. So I'm super excited and to have a running start on the next wave of accesso with all the things that are to come. I think the Dexibit acquisition is just -- is going to really make a huge difference in this business on top of everything we already have that's working great. So I'm super excited. And Matt and I are happy to take your questions. So let's go. Operator: [Operator Instructions] We'll take our first question from Katie Cousins with Shore Capital. Hopefully, you can hear me okay. Katie Cousins: Two, please. On the Dexibit -- struggling with the name of Dexibit have you got any examples of their existing customers, who are already using it and anything tangible you can kind of point to how it's improved trading? That's the first one. Steven Brown: Yes. I mean the [indiscernible] is one that is -- that has a notable customer. I mean, Matt, you probably can blame name a few others on the list you have in front of you. I think it's -- the customers often request that they're not being quoted as a customer just for confidentiality reasons, so we can't provide the whole customer list. But there are a few notable ones that I think are important to highlight. And what we see is a very high retention rate for the customers. They see -- there was even one customer example where they said, oh, maybe we don't need this, and then they quickly came back realizing they didn't need it. The power of what it brings to them in terms of being able to operationalize the amount of savings just in report generation alone aside from the revenue and business optimization is very significant. And I can tell you that on the accesso side, we've been working with Dexibit now for, I guess, a year as a partner while this was happening on an underlying basis. And we're 2 for 2. We showed the product to 2 customers and both bought it. So in the first meeting, by the way, they bought it quickly, they bought it without question, and they're loving -- that's on its way. So I think it speaks for itself. And as I told someone yesterday, it's almost hard to explain it until you see the demo and see how it works because it's really mind-boggling. And the operators are getting a lot of value from it. And I don't have exact numbers on what the improvement to them is. I think some of the capabilities we're going to bring into our product like dynamic pricing, for example, will have a material impact on their top line revenue. Katie Cousins: It's good to hear the 100% success rate so far. Yes. The second question is just on -- in terms of new wins, and it was encouraging to see that actually, I think it was 11 out of 43 new wins took multiple products for you guys. So could you provide a bit more color on what products that they've taken? And is there a bit of a pattern between a combination of products? Steven Brown: We're basically seeing any product plus Freedom. That's kind of what the equation would be. Obviously, a lot of Paradox plus Freedom, and Passport plus Freedom. Freedom is gaining traction as there are more customers using it, our referral base increases and it sort of starts to snowball, but it's generally plus Freedom. Operator: Our next question comes from James Lockyer with Peel Hunt. James Lockyer: Firstly, just on the guidance for the year. I think within the GBP 146 million, you've got some milestone payments from the Middle East within that. And obviously, you have some of that in 2025. Am I right in thinking that on the current guidance, it sort of implies a decline year-over-year? And if that is the case, what's the major driver for that? And if not, how should we see some upside from current guidance from that perspective? Matthew Boyle: I'm not sure where you're getting the decline from, James. But the last year, we did roughly about GBP 3.5 million to GBP 4 million of milestone-related revenue from Saudi Arabia. James Lockyer: I meant the group revenue. Sorry, I meant the group revenue. I think it was 155 last year... Steven Brown: [indiscernible] Customer. Matthew Boyle: Yes, that one customer. I mean we do have the loss of a major queuing customer in the current year. And so transactional revenue would be below where it was in 2025 for 2026. And so that is reflected in that guidance. But the Middle East alone, if you're looking at it, will be slightly up where it was for '26 compared to '25. James Lockyer: And what's the implied underlying organic growth from the core business in the guidance? Matthew Boyle: For transactional revenue, you mean? James Lockyer: Yes. Matthew Boyle: Yes. Well, it's -- so it's reflected in our commercial wins really. So if you look at the commercial outperformance that we had, so we have moved from 30 wins in 2024 to 43 in the current year in 2025, and that will be reflected in the growth rate that we have underlying outside of the major milestones and non-repeatable revenue and ignoring the major customer queuing loss. So there will be growth in there. James Lockyer: Excellent -- and on the AI point, I think you flagged some operational efficiencies, their productivity gains throughout that. And obviously, we're early days with where that technology is coming through. Where do you see the benefits over the next few years in terms of time saved product releases quicker in terms of if you able to quantify that in terms of where you think margin might get to because of the AIs you're implementing? Steven Brown: Yes. So we've had enough time now with the tooling and understanding kind of where we see the most efficiencies the quickest. Clearly, any kind of operational or product area, operational area are seeing the most gains. We are not seeing the gains in engineering, which is not unusual, especially when there's so much context required. The tool doesn't quite understand the context in order to just write an e-commerce application for a theme park, for example. It doesn't have experience with that. And so we're seeing -- not seeing the gains in engineering, which I think is not unusual for a lot of companies. It is helping us move faster in certain areas. And certainly, refactoring code is quicker, things where we need to update something, we're seeing some gains there, but not large gains. The bigger gains are coming in sort of our -- like I said, our operations, product and marketing areas. Think about even just sales proposals, the speed with which and the quality with which we can create sales proposals. Those are the areas that I think are going to make the biggest underlying difference in terms of efficiency, both in being able to operate over time with fewer people, but also importantly, being able to move faster, getting quotes out faster, getting product design faster and handling customer queries either automatically through automated processes or more quickly with AI tooling. So I think we're going to see the biggest benefit in the areas outside of engineering, which is more than half our group. And engineering will be a little bit slower on the uptake, and we'll see those -- there will be a decent amount still, but it's not going to be the same level we're going to see in those other areas. James Lockyer: Okay. Maybe just a final one. I think historically, you've talked about a 20% margin. Do you think as the medium-term, longer-term guidance, do you think that this could see the AI investments, the acquisitions you've made recently, the pricing, the weight because your consumption versus per seat, do you think your -- the margin could be higher than 20% over the mid- to longer term? Steven Brown: Yes. I think where we get there is we need to increase our revenue growth rate. And one of the -- there is sort of 2 sides to that. One is attrition. So making sure we stick our customers right, we stick the landing with our customers for the long term, right? They're not seeing some better things across the street, so to speak. And this progress with AI will differentiate us in a way that competitors can't get to for years. And so I think on any attrition basis, this will really help a lot. Although we don't have much, if we allow the competition to continue growing, our attrition could start to grow. On the new wins, this is something that no one else can bring to the table. And sometimes we find ourselves competing on price maybe or customers sort of past history with an application they're considering. This is something that is going to be a differentiator for us that again is unmatchable. And I think our competitors are going to be showing a feature within their own system. They're not looking at the overall client ecosystem the way we can come into the room, already ready to do with the integrations that are in hand. And the conversational AI is really going to be unprecedented. So I think that will help the revenue growth rate. And if the revenue growth rate picks up 7%, 8%, 9%, which is probably about where this company can be given our scale. And at the same time, the cost base is not growing. It's continuing to shrink even by the amounts that we did this year, you get there pretty quickly. And so it's really about not solving -- we can't cost cut our way to 20%. That is certainly not the goal. And I think a lot of our savings, we will reinvest in things like accelerating AI capabilities even further. But at the same time, continuing to lower that cost base and propelling the growth rate is obviously the combination of higher margin. James Lockyer: I'm sure we'll catch up before you go, but I wish you good luck unless we don't. Steven Brown: Thank you, James. Operator: Our next question comes from Jon Byrne with Berenberg. Jonathan Byrne: Two questions from me, if I can, I take them in turn. So firstly, on Dexibit, I guess from a commercial perspective in terms of monetizing, what should we expect in terms of contribution from accesso intelligence going forward? And do you think about it as a stand-alone kind of product to monetize? Or is it kind of primarily a good foot in the door for cross-sell opportunities and sort of supplementing existing solutions? How should we think about it? Steven Brown: Yes. I think it's strategic for us, #1, around our product set and increasing our win rate, which is more powerful than just selling accesso Intelligence on its own because the value of selling intelligence along with Passport, along with Paradox, along with Freedom, that's a much bigger opportunity than Dexibit would have had on their own. And that really is going to amplify both the value that they their product rates, but also the overall results. And so I expect that the commercial model is still a bit of a discussion around that, and we will obviously be managing that going forward. But there will obviously be customers that are out there that can benefit from the technology that don't necessarily even maybe work in our space or they don't use our -- one of our applications. We see that as a lead opportunity. Let's bring them in. Even if they're using a competitor system, let's enable them with some elements of the product. And that brings them closer to accessory and allows us to talk to them more about our actual solutions and maybe switching over. So we see it as a conversion tool. We see it as a strategy to improve our overall portfolio. But I can say we've not sort of said, oh, is this line item today is going to grow in a trackable manner for its own revenue category. It's going to become more of an overall benefit to the business. Jonathan Byrne: Great. And then just secondly, on outlook, you mentioned seasonality. Can you just remind me or give us a steer in terms of concentration in those summer months, say, June to August, particularly given the growth of the ski product. What should we expect for this year? Steven Brown: Yes. It's -- so the majority of our revenue, Jon, comes from that June through September period. So -- and October, a little bit in December, but we think of it as pivotal really for our year. And we had that last year, right, when there was softer and weaker transactional volumes through the back end of June and early July, we revised guidance accordingly at that point in time. So it reflects the importance of it to our business, and that will continue going forward. I mean ski has seen some level of growth. It was certainly our strongest performer in terms of commercial new wins last year, but it will take some going in some way to offset the size and the impact of the attraction space that we have Operator: Our final question comes from Jasmine Rand with Deutsche Bank. Jasmine Rand: Hope you can hear me. Just chiming in for Tintin today. Jasmine Rand, Deutsche Numis. On the customer base, I appreciate you mentioned can be named. But can you talk at all about any joint customers you may have? And then again, I think you just touched on it slightly, but what do you expect kind of pricing for the solution to be looking ahead? And then secondly, on capital allocation, at this level, how are you thinking looking ahead in terms of share buybacks compared to kind of further bolt-on acquisitions? Steven Brown: So the interesting thing -- sorry, we can echo there. Yes, there we go. So interestingly when Dexibit is Angie and her team's focus have primarily been around cultural attractions, museums, if you will. And so our overlap, that's not one of our bigger markets. Similar operations, similar concept to a theme park, but it's just a different space. We certainly have museums in our portfolio, but it's not a primary sector for us. And so our overlap or sort of bumping into each other have been fairly limited. We obviously had gotten to know them before joining accesso. We got to know them as a group much more closely over the last year, year plus. In terms of customer overlap, I think that's what we're going to build going forward. And we see their customer list is additive as new commercial opportunities for us. Some of them are certainly customers we would like to move over to an accesso platform. And so it's really about taking what they've built, where they've learned the context of a venue operator, primarily in the cultural space and now enabling that across the broader leisure and attraction sector. That's really our goal. It's a bit -- obviously, they have a great customer base, but it's really focused on what the potential is for the product within our ecosystem. In terms of capital, Matt, you hold the money. Matthew Boyle: Yes, I'll just touch on the capital allocation piece. So thanks, Jasmine Rand. I think the key point to highlight there really is the nature and the stable, sticky nature of our cash flows, which I hope has been reflected in the last couple of years when you look at the cash flow that accesso generally see, consistent free cash flow, which we've used accordingly to provide shareholder returns over that same period. There's no reason that, that shouldn't continue. So whilst spending $20 million on a tender and making an acquisition over the weekend, we still hold a strong balance sheet, which we would continue to leverage to provide shareholder returns in whichever form that may take, we'll make the best use of our available options at the time that comes, but there's certainly no reason it shouldn't continue. Steven Brown: I'll add on to that, Matt, they wouldn't let me write in the annual report that our share price is frustrating. And so I'll say it now. They thought it was a little too direct. But it is very frustrating, obviously. If you look at our underlying business, it is strong. It's strong. We've got a very good position related to AI. And we have a really great customer set. And we've sort of been caught in a wave of either disproportionate focus on one client, one product some of the AI pressure, maybe some end market pressure as well, a whole variety of factors. And our view, I think, along with many probably of you is that our share price is tremendously undervalued. Our company valuation is much lower than it should be. And I'm confident that this too shall pass. We just got to keep our head down, continue to build great product, provide great service. And at this share price, obviously, buy back shares to the extent that it is reasonable for us from a balance sheet perspective. Operator: That's the end of our Q&A session. I'll now hand over to Steve Brown, CEO, for closing remarks. Steven Brown: Thank you very much. And it seems like this may be my last investor presentation. So I thank you all for sticking with us and staying so tuned into our business over time. It's clearly an exciting business. And I've been through many waves of change in this business since 2007, which turned into excessive in 2012 and then what it is today. I had 12 employees in the very beginning. There's 605 now. We worked, I think, 3 countries. We're working in 31 countries now. And this business is built on changing and innovating and not just sort of building something and letting it run, but it's always being ready for whatever is next. And I think the move we've made here is our big step into what's next and not just adding features and calling it a strategy, as we say in our report, but thinking about it more comprehensively. And importantly, if we always put the operators first, the clients first in terms of what will help their business, then we will win in the end. And I think that's exactly what Dexibit and accesso Intelligence will do for the business is put the client first, help them run their business much better than they can without it. And in turn, we'll continue to be the trusted partner and the market leader for many, many years to come. So I thank you all very much. And I'm sure Lee will do a fantastic job. I have all the confidence in the world, and he's obviously supported by Matt, who probably can use a good rest of out now. So thank you all very much, and we'll talk to you later. Operator: Thank you for joining today's call. We are no longer live. Have a nice day.
Operator: Good afternoon. Welcome to Oxbridge's Fiscal 2025 Earnings Call. My name is Shamali, and I will be your conference operator this afternoon. [Operator Instructions] Joining us for today's presentation is Oxbridge's Chairman, President and Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open up the call for your questions. I would like to remind everyone that this call will be available via telephone replay until April 13, 2026. Details for the telephone replay are included in the press release issued today. Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Wrendon Timothy: Thank you, operator. During today's call, there will be forward-looking statements made regarding future events, including Oxbridge's future financial performance. These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipates, estimates, expects, intends, plans, projects and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from forward-looking statements is included in the section entitled Risk Factors contained in our Form 10-K filed today, March 30, 2026, with the Securities and Exchange Commission. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition and the volatility of our earnings, which in turn could cause significant market price and trade volume fluctuations for our securities. Any forward-looking statements made on this conference call speak only as of the date of this conference call. And except as required by law, the company undertakes no obligation to update any forward-looking statements contained on this call or in any company presentation, even if the company's expectations or any related events, conditions or circumstances change. Now I'd like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay? Sanjay Madhu: Thank you, Wrendon, and welcome, everyone. Thank you for joining us today. Let me start by saying we are proud of the significant steps we have taken to fortify and innovate our business by bringing reinsurance on chain and broadening investor access. At our core, we are a disciplined reinsurance business, writing fully collateralized policies covering property catastrophe risk. We compete through selective data-driven underwriting with a focus on generating attractive risk-adjusted returns and long-term growth in book value per share. Our strategy centers on low frequency, high severity risk where significant data exists to rigorously evaluate the risk return profile. We emphasize disciplined risk selection, appropriate pricing and thoughtful structuring, supported by our fully collateralization to ensure transparency and alignment. Building on this foundation, SurancePlus continues to expand our ability to bring reinsurance on chain in a compliant and scalable manner, broadening access to an asset class that has historically been limited to institutional partnerships. We believe this combination of underwriting discipline and evolving platform capabilities positions Oxbridge well as we continue to execute our strategy and pursue opportunities within the growing real estate asset market -- pardon me, growing real-world asset market. We now turn things over to Wrendon to take us through our financial results. Wrendon? Wrendon Timothy: Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31 of the following year. Net premiums earned for the 3 months ended December 31, 2025, decreased to $555,000 from $595,000 for the quarter ended December 31, 2024. The decrease is due to lower weighted average rate on reinsurance contracts in force during the quarter ended December 31, 2025, when compared with the prior period. Net premiums earned for the years ended December 31, 2025 and 2024 was approximately $2.3 million. Our net investment income for the 3 months ended December 31, 2025, increased to $63,000 from $68,000 from prior comparable period. There was a decrease in the fair value of equity securities during this period. And along with net premiums, our total revenue amounted to $576,000 for the 3 months ended December 31, 2025, compared to $422,000 in the prior year comparable period. Our net investment and other income for the fiscal year ended December 31, 2025, increased to $314,000 from $248,000 from the prior year comparable period. Along with net premiums, change in fair value of equity securities and other investments resulted in total revenues of $2.58 million for the fiscal year ended December 31, 2025, compared to $546,000 in the prior year comparable period. Regarding total expenses for the 3 months ended December 31, 2025, total expenses, including policy acquisition costs and general and admin expenses and underwriting costs increased to $1.04 million from $497,000 for the quarter ended December 31, 2024. The increase is primarily due to the recording of underwriting losses incurred on Hurricane Milton, which occurred in 2024 as a result of adverse loss development as well as increased general and admin expenses when compared with the prior period. For the year ended December 31, 2025, total expenses, which includes policy acquisition costs, loss and loss adjustment expenses and general and admin expenses increased to $6.04 million from $2.17 million for the year ended December 31, 2024. Again, the increase is due primarily to the recording of losses on reinsurance contracts affected by Hurricane Milton in 2024, increased professional costs relating to investor relations, our web3 subsidiary tokenization costs, S-3 related costs, increased human resources and personnel and legal expenditures. Net income for the quarter ended December 31, 2025, was $120,000 or $0.02 per basic and diluted income per share compared to a net loss of $460,000 or $0.05 basic and diluted loss per share for the quarter ended December 31, 2024. The decrease in net loss is primarily due to the allocation of underwriting losses to token holders coupled with a decrease in negative change in fair value of equity securities and unrealized loss on other investments, an increase in investment income and other income during the quarter ended December 31, 2025, when compared with the prior period. Net loss for the year December 31, 2025, was $2.08 million or $0.28 basic and diluted loss per share compared to a net loss of $2.73 million or $0.45 basic and diluted loss per share for the year ended December 31, 2024. The change is primarily due to higher overall revenues driven by a significant decrease in unrealized loss on investments, partially offset by higher expenses and higher underwriting losses borne by token holders during the year ended December 31, 2025, when compared with the prior period. As we have discussed before on our investor calls, we use various measures to analyze the growth and profitability of our business operations. For our reinsurance business, we measure underwriting profitability by examining our loss ratio, acquisition ratio, expense ratio and combined ratio. The loss ratio is the ratio of loss and loss adjusted expenses incurred to premiums earned and measures the underwriting profitability of our reinsurance business. The loss ratio increased to 80.9% for the 3-month period ended December 2025 when compared with the prior comparative period. The loss ratio increased 119.9% for the fiscal year ended December 31, 2025, when compared with the prior comparative period. These increases were due to losses recognized on reinsurance contracts affected by Hurricane Milton, which was a loss event occurring in 2024. Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs and net premiums earned. The acquisition cost ratio remained consistent at 11% for the quarter and year ended December 31, 2025, when compared with the prior comparative period. Our expense ratio measures operating performance compares policy acquisition costs and general and admin expenses with net premiums earned. For the 3 months ended December 31, 2025, the expense ratio increased to 106.7% from 83.5% for the 3-month period ended December 31, 2024. For the year ended December 31, 2025, the expense ratio increased to 144.2% from 94.3% for the year ended December 31, 2024. The increase are primarily due to increased professional costs relating to our Investor Relations and marketing, our web3 subsidiary costs, renewed S-3 related costs, increased human resources and personnel and legal costs during the quarter and year ended December 31, 2025, when compared with the prior comparable periods. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and expense ratio. For the 3-month period ended December 31, 2025, the combined ratio increased to 187.6% from 83.5% for the 3-month period ended December 31, 2024. For the year ended December 31, 2025, the combined ratio increased to 264% from 94.3% for the year ended December 31, 2024. Again, the increase is due to higher general and admin expenses and losses incurred due to Hurricane Milton that have been recorded during the quarter and the year ended December 31, 2025, when compared with prior comparable periods. Now turning to the balance sheet. Our investment portfolio decreased to 0 at December 31, 2025, from $113,000 at the prior year-end, primarily due to the sale of our 2 equity securities during the year ended December 31, 2025. Cash and cash equivalents and restricted cash and cash equivalents increased by $1.08 million to approximately $7 million from $5.89 million as of December 31, 2024. The increase is due primarily to new collateral deposits for the current treaty year ended May 31, 2026, more than offset in fund being released from the underlying trust or loss payments during 2025 relating to Hurricane Milton. I'll now turn the call back over to Jay to wrap up before we take your questions. Jay? Sanjay Madhu: Thank you, Wrendon. We are encouraged by the performance of our 2025 and 2026 tokenized reinsurance contracts. The balance yield token is tracking 25% ahead of its 20% target, and the high-yield token is tracking its 42% target. These results reflect our disciplined underwriting approach and demonstrate the ability of our platform to deliver attractive uncorrelated returns within the global reinsurance market. We have also made meaningful progress expanding our platform through strategic relationships, including our entry into the Solana ecosystem and expanded distribution across more than 160 blockchain networks enabled by Layer 0 through the Alphaledger platform. These developments significantly broaden access to our offering and position SurancePlus within one of the leading blockchain ecosystems for real-world asset adoption. As we look ahead to the 2026, 2027 contract cycle, we are targeting returns of 20% and 42% for our T20 and T42 offerings. Industry commentary, including reports from Artemis include -- indicate that El Nino conditions may support a favorable risk environment, and we are optimistic about the opportunities these presents. In parallel, we are exploring opportunities to extend our model into additional high-quality cash-generating assets such as the tokenization of data center revenue streams, particularly as it relates to the growth of artificial intelligence, AI. We also believe our current market valuation does not fully reflect the strength of our balance sheet, including our cash and restricted cash positions nor the opportunities we are actively evaluating to significantly drive shareholder value. Overall, we remain focused on our disciplined execution, expanding distribution and scaling our platform as we continue to build long-term shareholder value. With that, we are ready to open the call for questions. Operator: [Operator Instructions] Our first question comes from the line of Peter Roy with Bloomberg. Peter are you on the line? And it appears that Peter, there's no one on the line of Peter. [Operator Instructions] Our next question comes from the line of Kent Engelke with Capitol Securities. Kent Engelke: Jay, in the press release, you mentioned this 2 different times, and you also said it in your comments as well. Can you expand a little bit more about when you're talking about the tokenization of artificial intelligence infrastructure. Can you expand on that at all? That sounds really, really intriguing. On top of that, it sounds like you got a bunch of stuff going on. And some of the stuff is -- looks like it's just about to hit. But first off, can you expand on the tokenization of data center revenue? Sanjay Madhu: Yes, absolutely. Thanks, Ken, for that question. So the data center revenue, let me kind of back -- take it back a little further, right? So SurancePlus, the reinsurance tokenization, that's moving along. But reinsurance cycles, as you guys are well aware, are June 1 to May 31 of the following year. So once we get through this next month, 1.5 months, 2 months, we look for new and additional things to go forward to, right? So the data center revenue streams, what we're considering doing is we're evaluating entering into strategic relationships with partners, developers, customers, operators. But the interesting thing over here is not only would that be significant for our shareholder valuation for Oxbridge, but also significant value proposition for SurancePlus. So while we are working on the other endeavors that we've already talked about, we're evaluating some extremely interesting endeavors that will be -- that could be very interesting. Kent Engelke: Look forward to following that as you go along. Also, it appears as though you have plenty of cash to go forward and the like. Am I reading that correctly in regards to your cash balances and your restricted cash? Sanjay Madhu: Yes. Yes. We have about $6.9 million in cash and restricted cash. That puts us in great position not only to do things with the reinsurance tokenization, but also to evaluate other opportunities. So great position, great opportunities ahead. Kent Engelke: I look forward to following you -- have been following you for a long time and it looks like there's just a bunch of things that is about to come to fruition and look forward to seeing it. Operator: At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Madhu for his closing remarks. Sanjay Madhu: Thank you for joining us on today's call. Before we conclude, I would like to extend my gratitude to our employees, business partners and investors for their unwavering support. I particularly want to acknowledge our dedicated Oxbridge team whose extensive expertise has been instrumental in navigating and advancing our business. We anticipate providing you with further updates to our progress during the next call. And should you have any additional questions, please do not hesitate to reach out to us any time. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge. Operator? Operator: Before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay via a link available in the Investors section of the company's website. Thank you for joining us today for our presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Helen Rubinstein, Vice President of Investor Relations and Corporate Strategy at Neumora. Please go ahead. Helen Rubinstein: Good afternoon, and thank you for joining Neumora Therapeutics Fourth Quarter and Full Year 2025 Financial Results Conference Call. Before we begin, I encourage everyone to visit the Investors and Media section of our website at neumoratx.com, where you can find the press release related to today's call. With me on the call today are Chief Executive Officer, Paul Berns; President, Josh Pinto; Chief Operating and Development Officer, Bill Aurora; Chief Scientific Officer, Nick Brandon; and Chief Financial Officer, Mike Milligan. I'd like to point out that we will be making forward-looking statements during today's call, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please review the risk factors discussed in today's press release and in our SEC filings for additional detail. With that, I'll now turn the call over to Paul. Paul Berns: Thanks, Helen. Good morning, everyone, and thank you for joining us. 2025 marked a year of important clinical progress and execution for Neumora. We made meaningful strides in advancing our diverse pipeline of novel mechanism therapies, reported compelling data for NMRA-511, our oral highly potent brain-penetrant and selective vasopressin 1a receptor antagonist, progressed our Phase III program for navacaprant with optimizations based on key learnings from prior studies, expanded our M4 PAM franchise with 2 new programs in clinical development and prioritized obesity as the lead indication for our brain-penetrant NLRP3 inhibitor, NMRA-215 and reported class-leading DIO data, all while continuing to strengthen our financial foundation. Our mission at Neumora remains clear: to advance the next generation of novel therapies that offer improved treatment outcomes and quality of life for patients living with brain diseases. We believe through our differentiated approach centered on advancing programs with best-in-class pharmacology and brain-penetrant chemistry targeting novel mechanisms of action, we have the potential to deliver transformative therapies to millions of patients in need of better options. Now as we move into 2026, Neumora is well positioned to achieve multiple potentially value-creating milestones within the next 12 months. As we approach these near-term catalysts, I am confident in the strength of our science, the focus of our strategy and the dedication of our distinguished Neumora team to deliver revolutionized therapies for patients living with brain diseases. I will now turn the call over to Josh to review our pipeline updates. Josh? Joshua Pinto: Thank you, Paul. We are poised to build on the strong momentum from 2025 as we enter a catalyst-rich period with multiple clinical data readouts expected this year. Leading with NMRA-511, our oral highly potent brain-penetrant and selective antagonist of the vasopressin 1a receptor in Alzheimer's disease agitation. In January, we announced positive results from the Phase Ib signal-seeking study of NMRA-511. NMRA-511 demonstrated a clinically meaningful effect size in people with Alzheimer's disease and a favorable safety and tolerability profile with no reports of somnolence or sedation. Today, we built upon those positive findings with new data from a prespecified analysis of the Phase Ib study in patients with a neuropsychiatric inventory agitation aggression or NPI-AA score of 4 or greater, which aligns with the enrollment criteria from the Rexulti and Auvelity pivotal studies. These data further reinforce the potential for an unsurpassed profile of NMRA-511 in AD agitation, an area with significant unmet need for new treatments. As a next step, we are exploring higher doses of NMRA-511 in a MAD extension cohort from which we expect to report data in the second half of 2026. From there, we plan to initiate a Phase II study with NMRA-511 in the first quarter of 2027. Turning to navacaprant, our kappa opioid receptor antagonist for the monotherapy treatment of major depressive disorder. The KOASTAL-2 and 3 studies are now fully enrolled with more than 400 patients enrolled in each study. We look forward to reporting data from these studies in the second quarter. Additionally, on our M4 PAM franchise, we announced today that we have selected NMRA-898 as our lead program. We believe that NMRA-898 is well suited for continued development in schizophrenia based on promising clinical results from an ongoing Phase I study. We are currently conducting a multiple ascending dose study of NMRA-898 in healthy volunteers and patients with stable schizophrenia, and we expect to report data in the second half of 2026. Turning to our metabolic franchise. We announced 2 key updates today regarding NMRA-215, our highly brain-penetrant oral NLRP3 inhibitor for the treatment of obesity. The first update and a very exciting one for us is new positive data from a 12-week diet-induced obesity or DIO mouse study that reinforces the potential of NMRA-215 for the treatment of obesity in both the mechanism of action switch and the weight loss maintenance paradigm. These encouraging results further validate what we reported previously, class-leading weight loss as a monotherapy, additive weight loss in combination settings, potential for an incretin-sparing and/or switch treatment paradigm and weight loss maintenance that matches semaglutide. We are eager to advance next steps for NMRA-215. However, as we shared this morning, there were unexpected adverse findings from a separate 13-week rat tox study in a small number of animals. We have opened a for-cause audit of this study and expect to bring NMRA-215 into the clinic in the first quarter of 2027. Nick will go into more detail on both of these updates shortly. But first, I will turn the call over to Bill to provide additional detail on our clinical programs. Bill? Daljit Aurora: Thank you, Josh. We are excited about the data from NMRA-511, which demonstrated a differentiated profile for the treatment of agitation in Alzheimer's disease. In January, we shared top line results from our Phase Ib signal-seeking study of 511. This was a 2-part signal-seeking study that was not powered to detect statistical significance. Instead, we evaluated the effect size of 511 on a variety of clinical measures to inform additional development in AD agitation. In the Phase Ib study, 511 demonstrated an unsurpassed clinical effect size on CMAI total score and a range of other endpoints in a prespecified population with elevated anxiety at baseline. Today, we announced new data from a prespecified analysis from the Phase Ib in 53 patients with an NPI-AA score of greater than or equal to 4 at baseline. This population is similar to the group studied in pivotal trials with Rexulti and Auvelity. 511 treated patients demonstrated a clinical benefit and had a Cohen's d effect size of 0.32 to 0.34 on CMAI total score, a similar magnitude to Rexulti. Additionally, in this population, 511 showed an unsurpassed effect size across the CMAI aggressive behavior subfactor score and CGI-S agitation score. Notably, 511 demonstrated a favorable tolerability and safety profile in Phase Ib, which we believe provides an opportunity for us to test higher doses. We are advancing a MAD extension study this year with data expected in the second half of the year before moving to a Phase II study in the first quarter of 2027. Transitioning to navacaprant, we are pleased with the significant progress we have made with the navacaprant KOASTAL program for the treatment of major depressive disorder. Today, we announced that KOASTAL-2 and KOASTAL-3 studies are fully enrolled with more than 400 patients enrolled in each study. We expect to report a joint top line data readout for KOASTAL-2 and KOASTAL-3 in the second quarter of 2026. As a reminder, KOASTAL-2 and KOASTAL-3 are Phase III studies being run both in the U.S. and in ex-U.S. territories. The design for these studies incorporated key learnings that we implemented in early 2025 following the KOASTAL-1 readout. This included enhanced medical monitoring to verify inclusion of appropriate patients, screening tools to rule out professional patients and site selection that focused on sites with expertise in conducting MDD studies. We believe that these optimizations facilitated appropriate patient enrollment in these trials. For example, we saw an approximately 10% higher screen fail rate in the KOASTAL-2 and KOASTAL-3 studies compared to KOASTAL 1. Overall, we are confident that these changes will result in a stronger data set and look forward to the results. In the joint top line readout, we expect to include top line results for each individual study as well as prespecified analyses with more than 450 patients enrolled after study optimizations occurred in early 2025. We believe this approach will provide a comprehensive view of the data and help us better assess navacaprant's clinical profile. We will assess next steps regarding regulatory submission once we have the data in hand, but we believe that with the FDA's recent commentary, one positive study plus supportive evidence may be sufficient for approval. With one positive study, we would request a pre-NDA meeting with the FDA. Lastly, on our M4 positive allosteric modulator franchise, today, we announced that we have designated NMRA-898 as the lead program in the franchise and plan to advance it for development in schizophrenia. This decision is supported by the encouraging data we have seen to date from our ongoing Phase I study. In that study, NMRA-898 demonstrated an approximately 80 to 100-hour half-life in humans, which confirms the potential for once-daily dosing and is within a similar range to the half-lives of highly successful neuropsychiatry medications like Vraylar, Abilify and Rexulti. We also observed dose proportional exposures with low variability as well as predicted free brain exposure significantly above the in vitro M4 EC50 levels. In addition, we saw on-target changes in heart rate that were similar to those demonstrated by Cobenfy, which we believe provide pharmacodynamic evidence of target engagement. Taken together, these findings strengthen our confidence in NMRA-898 and support our view that it has a potential best-in-class pharmacologic profile. We are conducting a multiple ascending dose study of 898 in healthy volunteers and patients with stable schizophrenia. The goals of this study are to identify a maximum tolerated dose and to confirm CNS penetration through CSF exposure. We expect to report data from this MAD study in the second half of 2026. While we have paused development of our other M4 PAM, NMRA-861, we believe it has a profile that could support development in the future. We are pleased to have this optionality in our portfolio. As you can see, we are making significant progress across our clinical pipeline that I believe has the potential to translate to meaningful medicines for patients. With that, I'll now turn it over to Nick to walk through our NLRP3 update in more detail. Nick? Nicholas Brandon: Thanks, Bill. I'll begin with our 12-week DIO data with our NLRP3 inhibitor, NMRA-215. As Josh noted, the results from this study further highlight our CNS penetrant pharmacology that translated to class-leading weight loss in these models. In earlier DIO studies, NMRA-215 drove dose-dependent class-leading weight loss as a monotherapy and in the combination setting with semaglutide. The 12-week DIO data we announced today provides supportive evidence for potential use of NMRA-215 in both the mechanism of action switch and maintenance treatment paradigms. DIO mice that was switched from a combination of NMRA-215 plus semaglutide to NMRA-215 monotherapy at week 8 maintained weight loss similar to mice who received semaglutide monotherapy for the entire study duration. NMRA-215 also demonstrated sustained semaglutide-like weight loss at 12 weeks following the switch from semaglutide monotherapy to NMRA-215 monotherapy at week 8. These findings, along with our previously reported data are very encouraging and supports our view that central NLRP3 inhibition may offer an important new mechanism for weight loss. Additionally, with data from multiple sponsors in the space showing reductions in hsCRP, it's become clear that NLRP3 inhibitors offer potentially compelling cardioprotective benefits. We believe that this is a class effect, and we are likely to see hsCRP reductions with NMRA-215 when it enters the clinic. Now as Josh mentioned, we also shared that unexpected adverse findings were observed in a very small number of animals in a 13-week rat toxicology study. A few details to highlight. The observations were not dose dependent and not associated with a known molecule-related or on-target effect, but did occur in conjunction with documented study conduct issues. We have opened a for-cause audit into the study. We have also completed 28-day rat and dog and 13-week dog toxicology studies with no similar findings and sufficient margins to achieve IC90 concentrations in the brain, which we believe are needed for weight loss. We remain confident in the potential of NLRP3 inhibition for the treatment of obesity and have started dosing in a repeat 13-week rat toxicology study. We now expect to bring NMRA-215 into the clinic in the first quarter of 2027. From here, I will turn it over to Mike to review the financials. Mike? Michael Milligan: Thanks, Nick, and good afternoon, everyone. As of December 31, 2025, we ended the year with $182.5 million in cash, cash equivalents and marketable securities. We expect our current cash position to support operations into the third quarter of 2027. Additional financial results are available for review in the press release that we issued this morning, including detailed information on our fourth quarter and full year 2025 operating expenses. Our total net loss for 2025 was comparable to the same period in 2024. With that, I'll now hand the call over to Helen to manage Q&A with the operator. Helen? Michael Milligan: Thanks, Mike. Before I turn it over to the operator, I'll ask that you limit yourself to 1 question. If you have an additional question, please feel free to return to the queue. With that, I'll turn it over to the operator to handle Q&A. Operator? Operator: [Operator Instructions] Our first question today comes from the line of Myles Minter from William Blair. Myles Minter: Congrats on the progress. I'll keep it to one. Just wanted to follow up on comments that potentially 1 study and supportive evidence would be sufficient for the navacaprant filing in MDD. Did want to confirm that just means that a positive KOASTAL-2 or 3 would be that one study. And then the source of supportive evidence, maybe that comes from the combined trial analysis of those more than 450 patients enrolled post protocol amendment? Or is that coming from something like the Phase II you've already got in hand or even external data like from the [indiscernible] that supports the core antagonist mechanism here? Daljit Aurora: Myles, this is Bill. Thank you for your question. Yes, we do believe that with 1 positive study, either KOASTAL-2 or plus supportive data, we'd be in a strong position to proceed in requesting a pre-NDA meeting. Supportive data could take a variety of forms, whether that's an improvement on anhedonia as measured by SHAPS, whether it is tolerability safety profile that's quite compelling in an untreated large population. So there are a variety of ways by which we believe supportive data could play an important role, but 1 of the 2 studies being positive puts us in that position to move ahead of the meeting. Operator: And the next question comes from the line of Brian Abrahams from RBC Capital Markets. Brian Abrahams: Congrats on the continued progress. Maybe just on 215, can you give us any color around these conduct issues that you mentioned, like what these were, why you suspect them and how these might relate to the toxicity findings? And I guess I'm curious, would the onus be on you to prove that the findings here were spurious? Or historically, has the FDA been fine with progressing a program if a redo of a 13-week tox study comes up clean? Nicholas Brandon: Brian, it's Nick here. So because we do have an ongoing audit into the initial 13-week rat study, we can't really provide too many more details. Clearly, we have stated today that we do believe they are procedure-related and we are now completing -- well, we've now started a second repeat study with a different CRO. And that -- in that second study, we have made some changes. I think importantly, these types of findings in top studies are very common in the industry. They're well documented in the literature. And we know that other sponsors have repeated studies and have been able to move their programs forward. So we're obviously looking forward to completing this second study and progressing 215. Operator: Your next question today comes from the line of Douglas Tsao from H.C. Wainwright. Douglas Tsao: Just on the M4 program, I'm curious if you could provide a little bit more in terms of what sort of put 898 in the lead. And also, I think Bill mentioned that you continue to see opportunity potentially for 861. I'm just curious, do you see that largely as a backup molecule right now? Or do you potentially envision development in alternative indications? Joshua Pinto: Yes. Doug, it's Josh here. And so as we mentioned, we're prioritizing NMRA-898 this morning as our lead in schizophrenia. And really, it's not because of anything that we saw with 861. Really, it's because 898 looks so compelling based on the data that we put out today, and both compounds are structurally distinct. So with our focus being on schizophrenia, we're going to progress 898 as the lead in that indication. But we do view 861 as a viable compound for future indications. And so as we think about indication expansion in LCM within this franchise, we could look to bring another compound like 861 forward in that. But for the time being, Doug, 898 is -- will be the lead for schizophrenia. And based on the data that we've published today, the compound is behaving exceedingly well in early clinical studies. Operator: Your next question today comes from the line of Marc Goodman from Leerink. Alyssa Larios: This is Alyssa on for Marc. I was just wondering if you could give a little bit more details on the prespecified analysis for the KOASTAL-2 and 3 readouts. What exactly are we going to see? And how do you imagine interpreting those results compared to kind of the entire top line analysis? Joshua Pinto: Yes. Alyssa, it's Josh here. And so in terms of the KOASTAL studies for the prespecified analysis, what you can really expect is that we will be putting out top line data for the KOASTAL-2 study, top line data for the KOASTAL-3 study. And then we will be looking at those patients that were in a post-pause pooled population, so those that have gone through the SAFER process since the KOASTAL-1 study read out. Bill, maybe you want to just add a bit more in terms of what we'll see from the prespecified top line and what we're really going to be looking for in the KOASTAL results in the second quarter. Daljit Aurora: Sure. Thanks for the question, Alyssa. So with respect to the KOASTAL-2 and 3 study, just as a quick reminder, when we paused those studies, we did implement a series of measures that were designed to enhance the quality of the patients coming in. And those included things such as working with MGH and implementing the SAFER process. It included implementing VCT as a screening database and paring back the number of sites overall. We're pleased with the measures that we had taken, and we've seen higher rates of screen failure as a consequence, for example, approximately 10% higher than in KOASTAL-1. These would have otherwise been patients that would have been randomized into the study. So it gives us confidence that, in fact, we've done a better job in making sure that we get the quality of patients consistent with what the protocol and our expectations were. With respect to the post-pause population, we'll have an opportunity in each of the individual studies to take a look at how those patients performed as well as taking a look at the pooled population post pause. So those will be added measures on top of looking, of course, at the individual study results for K2 and K3. Operator: And the next question comes from the line of Paul Matteis from Stifel. Julian Pino: Congrats on the progress. This is Julian on for Paul. Do you mind just walking us through really quickly the update that you shared with respect to the maintenance data for 215? I guess, was this your expectation? And how did you get to sort of modeling that target dose where you're showing an estimated 23% reduction in weight loss in the DIO model? And then really quickly, if I may, just how does the delay on the sort of tox-related issue for the program factor into your capital allocation strategy? Joshua Pinto: Yes. Thanks, Julian. And so -- this is Josh here. Maybe I'll answer the second part of your question first. So obviously, our spend this year for 215 will be reduced as we're not going to be moving the program into the clinic until the first quarter of 2027. So it will free up capital as we think about allocation to other areas. In terms of the maintenance data, I think the data is exactly what we would expect, and it built on what we think was the best-in-class monotherapy and combination DIO data that we presented in October at our R&D Day. In terms of what we showed in this DIO study, it was completely focused on longer-term combination paradigms. And so we demonstrated that you could switch from being on a GLP-1 to NMRA-215 and maintain the same level of weight loss, which commercially could be very important. We also looked at a paradigm where if you were on a combination of the 2 products, and you took one off, could you maintain weight loss? We absolutely validated there that, yes, if you're on a combo and you take away semaglutide, you can maintain monotherapy level weight loss with 215. And so in terms of how we selected the target dose, it was really around achieving IC90 concentrations in the brain, as we've highlighted previously. And so Julian, as you look at what we achieved in the 12-week DIO study, the combination of semaglutide and 215 alone, highly consistent with the 28-day data we previously put out, where you saw about a 20% to 25% reduction in combination therapy over the study. So Julian, I would say very validating, hits exactly what we'd expect to see out of the study and exceedingly consistent with what we have shown previously for 215 and DIO studies. Operator: Your next question today comes from the line of Yatin Suneja from Guggenheim. Maddalena Delma Caiati: This is Delma for Yatin. So a clarification on the 215 tox study. So have you received any specific guidance from the FDA on what would be required to clear the IND? Or are you proactively rerunning the studies based on your own assessment? Nicholas Brandon: Yes. Nick here again. Yes. So we haven't discussed the studies with the FDA, but we have consulted multiple consultants and KOLs around what was the appropriate path forward. So repeating the study was clearly the clear guidance we were given. And I would say, based on the experience of our internal team, including myself and our consultants, we're confident that this repeat study could -- will allow us to get the FDA to approve the IND. Yes, there's a lot of precedent for it. And first, I can look back on my own prior experiences at other companies where we've done similar things. So we're confident that this repeat study would allow us to get the IND cleared. Operator: Your next question today comes from the line of Ami Fadia from Needham & Company. Poorna Kannan: This is Poorna on for Ami. On NMRA-511, could you help us understand how the effect size changed at the different time points, week 4 and 6 in the subpopulation? And how are you envisioning the Phase II study design in terms of the patient population and trial duration? Daljit Aurora: Sure. With respect to the effect size that we have seen in the trial overall, we're really pleased with the consistency of the results and looking at the effect size. The effect size, whether it be at week 4 or 8 depending on the various measures was quite consistent, and we're pleased with what we've been seeing here. With respect to the next steps of the program, we've communicated that we'll be moving forward with another MAD cohort where we believe we've got room to push the dose given the favorable tolerability seen. And then from there, we'll describe in further detail what our plans are for Phase II, including the design, inclusion criteria and the alike. But suffice it to say, the data that we put out today showing the NPI-AA of 4 or greater is consistent with what other sponsors have used as a part of their inclusion criteria and been able to maintain a broad label. So that is one where one could expect to follow the path of other sponsors and where there's a regulatory path that's been well defined. Joshua Pinto: Yes. And Bill, I would just add, I think the data today that we put out is really quite compelling for NMRA-511. I think it shows that in the total population, our data is consistent and just as compelling as what we've seen in patients with elevated anxiety. And Bill, to your point, this new data that we've highlighted today shows that we can develop NMRA-511 down a well-established regulatory pathway while still preserving the ability for a broad label in patients with AD agitation. So we actually view this data as the most compelling data set we've put out thus far for 511 and are really excited about this being the launching point for the program going forward. Operator: Your next question comes from the line of Graig Suvannavejh from Mizuho. Graig Suvannavejh: I wanted to ask about 898 and the M4 PAM space. Could you just remind us how you're thinking about its differentiation versus, say, the Neurosterix's program? And if you could provide what you think the latest is with emraclidine, just as we think about the M4 PAM class and again, vis-a-vis the broader muscarinic space and any kind of thoughts you have on the Cobenfy launch and what that means about how doctors are thinking about muscarinics in the schizophrenia landscape? Nicholas Brandon: Greg, it's Nick here. Thanks for the question on the M4. In terms of the differentiation of 898 in particular, compared to some of the other competitors, even including emerging companies like Neurosterix. I think I'd point to a number of key bits of data which we've put out, knowing that we don't know a lot about a Neurosterix's compound. 898 and 861 have a very, very potent and equipotent across assays, which is critical. Those compounds are also optimized for CNS penetration. And we've put out some data around that, which is in our corporate deck. We really -- the more data comes out there, it really holds up. And now critically, we've got early clinical data and particularly with 898, it's really showed its hands [indiscernible] in the initial cohorts. Clearly, the half-life allows us for once-a-day dosing, which is critical. And I may hand over to Bill in a second to talk about some of the other elements that may drive -- we see really nice dose-dependent exposure. Variability is really, really low. And that's important. Other compounds in this class haven't had that quality. We also see really nice pharmacodynamic effects, and this is by the surrogate heart rate increases we see. So overall now, the profile of 898 just looks really good as we compare to what we know about other sponsors in the field. But maybe, Bill, do you want to add? Daljit Aurora: Sure, Nick. I would just simply add, Graig, that the half-life for 898 is within a similar range of half-lives of highly successful neuropsych meds like Vraylar, Abilify and Rexulti. We conducted market research with community prescribers that also has underscored some of the potential advantages of the profile that they've seen. And as an example, we know we have the ability to maintain steady state in the situations where a patient may miss dose of medication, which we know is a common phenomenon in schizophrenia. The half-life also has the potential to reduce withdrawal symptoms if patients discontinue medication. And so we're really pleased with the profile and the excitement is certainly one that's been underscored through some of the work we've done with physicians treating schizophrenia patients and the profile they've seen with 898. Joshua Pinto: Yes. And Graig, this is Josh. I would just add, we're really compelled by the data that's been put out this morning. I think as we look at it in the SAD study, we have not hit an MTD yet, so continue to move forward. And we're already seeing across the pharmacodynamic measures, activity elevated from what we've seen with emraclidine and even at levels relative to Cobenfy. If you look at what we've seen at the 15-milligram level in terms of heart rate elevation and beats per minute, that's comparable to what we've seen from Cobenfy at its highest doses. And so we feel like we are absolutely getting into a really good pharmacodynamic range while also having a compound that is behaving very well from a safety and tolerability perspective. Operator: Our next question today is from the line of Myles Minter from William Blair. Myles Minter: For the quick follow-up on Graig's question as well. On 898, did you also see any sort of transient increases in blood pressure in that single ascending dose study? Daljit Aurora: The changes that we've seen in blood pressure are consistent with what we have expected, nothing that is different from what's been seen with the class. So it underscores that in the Phase Ib, we plan to move forward as other muscarinics have with routine monitoring. We do anticipate as the molecule progresses in development, like other muscarinics have done, we would look to do an ambulatory blood pressure monitoring study as others have in the space. Joshua Pinto: Yes. But just to be clear, Myles, in the single ascending dose study, we have not seen blood pressure changes thus far. So we are seeing the positive changes in heart rate as we believe the pharmacodynamic measure is as it's related to a measure of target engagement for M4 in the class. But in these doses, we have not seen the elevated blood pressure yet. So we'll continue to monitor and move forward. But to Bill's point, we -- our assumption is that blood pressure could be a class effect, and we baked into our plans having to run an ambulatory blood pressure monitoring study if needed. Operator: And our final question comes from the line of Douglas Tsao from H.C. Wainwright. Douglas Tsao: I was just curious in terms of the combination -- or for 215, sorry, for the combination to 215 maintenance study, I'm just curious about the dosing that was utilized and are things that you think you might be able to do to sort of further optimize the maintaining of the weight loss that was seen when it was used in combination with semaglutide? Joshua Pinto: Yes. Doug, this is Josh here. As I mentioned before, I think in the 12-week DIO study, it's validated the hypothesis that we absolutely wanted. And the combo data, I think, is consistent where we saw over 12 weeks about a 23% reduction in weight loss on the combo. That's consistent with the roughly 25-ish percent we've seen in the earlier studies. And as we know in these DIO studies, as you continue to feed mice high fat diet over time, the weight does tend to rebound, whereas that's not necessarily the case in the clinic. I think as we're looking at ways to optimize the molecule, Doug, moving forward, really, the next step is to get it into the clinic, start to understand how it's behaving in humans from a PK perspective, and then we can look to move it forward there. But what I would say is the data we put out today continues to validate that NMRA-215 does have a best-in-class weight loss potential, at least as it relates to the DIO data we've put out between the R&D Day [indiscernible]. Douglas Tsao: And if I can, Josh, just as a follow-up. I mean, obviously, you've sort of outlined in the DIO models a number of different use cases. How many do you anticipate ultimately bringing forward? Or do you think that this is more of a situation where you'll just sort of validate the 215's ability to drive weight loss and maintain weight loss and then kind of leave it up to clinicians to figure out their own particular dosing regimens and sort of ways of using the molecule? Joshua Pinto: Yes, Doug. And so there's obviously -- our view is there's going to be a lot of different things and paradigms that can be tested out with this molecule in combination potential. I think in terms of what you can expect from us moving forward, what you can expect from us is consistent with what we've highlighted before, which is we're going to now be moving the program into the clinic in the first quarter of 2027. And initially at weight loss, you can expect data to come out from us in a standard monotherapy as well as combination approach. We'll talk about future paradigms downstream after we validated the hypothesis of weight loss clinically. Operator: That will conclude the Q&A portion of today's call. I will now hand the call back to Paul Berns, CEO, for closing remarks. Paul Berns: Okay. Thank you, operator, and thanks to all who joined us for this morning's call. We appreciate your interest and support. Have a lovely day. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Peer Schlinkmann: Good afternoon, everybody, and welcome to the 2025 full year earnings call of the Wacker Neuson Group. My name is Peer Schlinkmann, Head of Investor Relations and Corporate Communications. Thank you for joining today on the occasion of the release of our 2025 full year results. As usual, we will first start with the operational and financial results of the fiscal year 2025 and give additional insights on the recent developments as well as our outlook for 2026. Following this, we are happy to answer your questions in a Q&A session. If you are not able to follow today's call via the webcast, the presentation slides are also available for download at wackerneusongroup.com/investor-relations. Please note that the entire call, including the Q&A session, will be recorded and a replay will be made available on our corporate website by the end of the day. And now I would like to hand over to our executives, Karl Tragl and Christoph Burkhard, who will, as usual, lead you through this call. Christoph Burkhard: Thank you, Peer. This is Christoph Burkhard, CFO of the Wacker Neuson Group. Welcome, everybody, to our earnings call, and thank you for joining. Thank you. Karl Tragl: Dear all, a warm welcome from my side, too. And thanks again for joining today's conference call. I'm Karl Tragl, the CEO of the Wacker Neuson Group. I would like to start the presentation with a brief overview of our key financials for the fiscal year 2025. Our revenue stood at EUR 2.2 billion, which is essentially on par with the previous year's level. After a weak start in the first quarter, characterized by low capacity utilization following the downturn in 2024, we saw a gradual operational recovery as the year progressed. Throughout the year 2025, our order intake level has been slightly above revenue, resulting in a book-to-bill ratio of above 1. Our earnings before interest and taxes amounted to EUR 132 million, resulting in an EBIT margin of 6.0%. While this represents an improvement of 0.5 percentage points compared to 2024, the margin was impacted by onetime effects in the fourth quarter. These included legal and advisory costs related to takeover talks, adjustments to our virtual stock option plan and certain asset impairments. Without these effects, the recovery in earnings quality would have been even more visible, especially following the improving momentum, which we gained since the second quarter. At year-end, we saw a very successful development of our net working capital ratio. We managed to reduce it faster than originally forecasted, reaching about 29%, which is below our strategic target of 30%. This is, amongst others, a result of disciplined inventory management and the efficiency agenda, which we continued throughout 2025. The significant reduction of net working capital led to another increase in our free cash flow, which reached EUR 202 million by the end of the year. Christoph will explain the financial details in more depth. Now let's take a closer look at our performance across business segments and regions. In 2025, we continued to navigate a challenging market environment. Also, we saw a recovery starting in the second quarter of 2025. Starting with the business segments, light equipment and compact equipment, we had a powerful presence and stood out visibly at the Bauma Trade Fair in April, which led to higher revenue and increased profitability in the second quarter. However, development remained on that level in the following quarters as geopolitical instability, high interest rates and rising costs continued to weigh on construction industry. In detail, light equipment grew by 2% to EUR 460 million, while compact equipment declined by 2% to EUR 1.26 billion. On the one hand, demand for tele handlers, especially in Europe and skid steers in the U.S. was below previous year. On the other hand, we saw continued growth in demand for dumpers and excavators in Europe. Our services business showed further growth, increasing to EUR 521 million and accounting for 23% of total revenue. Strong demand for spare parts and used machines, combined with structural improvement of our service levels out of the new logistics hub in Mulheim-Karlich supported this positive trend. Revenues in Europe, representing 79% of group revenues rose by 1% to EUR 1.75 billion. While Germany and France were weaker, we saw growth in the U.K. and Switzerland. Our brands, Kramer and Weidemann with focus on the agriculture industry also regained momentum late in the year. In the Americas, revenue declined by 7% to EUR 422 million, heavily impacted by customer reluctance and U.S. tariffs. In Asia Pacific, revenue fell by 16% to EUR 44 million, primarily driven by a slowdown in Australia. In summary, despite regional headwinds and the weak start into the year 2025, the recovery in Europe and our stabilizing order intake provide a solid foundation for this year 2026. I will come back to our outlook at the end of the presentation. I will now hand over to you, Christoph, for more insights into our financials. Christoph Burkhard: Thank you, Karl. I will talk now about working capital. With 29.2%, we were able to stay with our working capital ratio below our target ratio of 30%, which clearly exceeded our expectations. This decrease of working capital was primarily driven by the following reasons. Firstly, we increased our trade payables preparing for 2026. Secondly, we maintained our discipline around inventory management and this despite the complexities around the U.S. tariff situation. Thirdly, a reduction of receivables also supported the overall result. As an overriding feature, I would like to mention our ongoing and successful efforts to systematically improve our integrated system-based planning processes across the entire group. This concretely enhances our planning quality end-to-end, starting with the sales forecast all the way through logistics, the production planning and supplier management. Eventually, all this has a sustainably positive impact on all working capital levers. Looking ahead to 2026, our expectations towards moderate growth will certainly influence net working capital throughout the year. However, we remain fully committed to our target ratio of below 30%. Now let's have a look at our cash flow performance. A good cash conversion into operating cash flow, plus the mentioned positive working capital momentum led to a strong cash contribution of EUR 86 million in the fourth quarter. This again generated an overall free cash flow of EUR 202 million in 2025, even exceeding previous year's EUR 185 million. As a consequence, we could reduce our net debt to EUR 185 million, reaching the lowest level since the first quarter in 2022. Compared to the previous year, net debt decreased by over 40%, and this translated into a further reduced leverage ratio of 0.6. And to complete the picture, an equity ratio of 62% underscores the robustness of our balance sheet. Now let's have a look at our dividend payout. The Wacker Neuson Group is known for its continuity in delivering attractive shareholder dividends, one of the main pillars of our financial policy. Despite the challenging market environment in the past year, our focus remains clear: to successfully increase profitability while simultaneously improving operational efficiency and therefore, preparing ourselves for the next growth phase in times of higher geopolitical uncertainty. Against this background, we want our shareholders to participate in our results again. Therefore, we will propose a dividend of EUR 0.70 per share for the past fiscal year at the Annual General Meeting, which will be held on May 13 here in Munich. And this corresponds to a payout ratio of around 61% of our earnings per share and marks again an attractive dividend yield of 2.9% based on the 2025 year-end share price. And with this, back to you, Karl. Karl Tragl: Thank you. In the following, we would like to highlight a couple of operational milestones, which we completed in 2025. Kramer celebrated its 100th anniversary. To mark this milestone, a completely revised machine design was introduced. Moreover, new wheel loaders and a new tele handlers were launched. We also attended numerous construction and agriculture trade fairs like Bauma and Agritechnica. The trade fairs will not only provide additional sales stimulus, but also enable us to meet our sales partners and our end users and understand their needs in personal discussions. The strong customer interest was also reflected by significant order intake at the trade fairs. And for the first time in September, we exclusively presented new products to key customers as part of a prelaunch 2026 event. We already announced that we have successfully started the delivery of first excavators for John Deere from Linz in 2025. And very important, in fall, we completed the production line for further models at our U.S. plant, which enables us to start manufacturing there in 2026. Last but not least, we successfully launched numerous new Wacker Neuson, Weidemann and Kramer, light and compact equipment machines. Our zero emission portfolio was expanded as well, adding further fully electric excavators, battery-powered wheel loaders as well as different light equipment solutions to our portfolio. Additionally, we introduced new digital solutions such as a Wacker Neuson and Weidemann app to provide our customers an even deeper insight into our products and to consistently support them during machine operation life cycle. Finally, I would like to conclude now with our outlook for 2026 and key topics, which are currently shaping our industry. The global economic and geopolitical environment remains volatile and characterized by significant uncertainty. Factors such as subdued investment momentum, trade conflicts and increasing protectionism continue to impact planning certainty. This is further intensified by ongoing geopolitical tensions, including the war in Middle East since beginning of March. This adds another layer of complexity to energy markets and global supply chains. At the same time, current market indicators point towards a moderate recovery, albeit at a slower pace than previously expected. Against this backdrop, we view the 2026 fiscal year with cautiously positive expectations. In Europe, we anticipate an environment that remains challenging, yet stabilizing, supported by public modernization investments. In North America, we expect solid demand from building of data centers and further infrastructure projects despite ongoing U.S. tariffs. Overall, we anticipate a slight market upturn in 2026. With great trust in our customers, employees, investors and in our strategic plan, this should enable us to achieve a moderate increase in revenue and a higher EBIT margin. So this is our guidance for 2026. We anticipate a revenue between EUR 2.2 billion and EUR 2.4 billion and an EBIT margin in a range of 6.5% to 7.5%. We plan to invest another EUR 70 million to EUR 90 million in the course of the year. And we aim to keep our net working capital ratio below the strategic target of 30% by the end of 2026. In 2026, we will consistently pursue our operational agenda. However, the market environment remains dynamic, shaped by realities of the past 2 years, low market volumes and ongoing geopolitical uncertainties, ranging from U.S. tariff policy to the most recent war in Middle East. Furthermore, we must acknowledge that electrification in construction and agriculture is progressing slower than originally expected. Despite these headwinds, we remain fully committed to our Strategy 2030. It remains our North Star with profitability now moving even more into our focus. During the course of 2026, we will reevaluate both the underlying market scenarios and the 10 strategic levers. Regarding our revenue up until 2030, we now rather anticipate a level of EUR 3.5 billion. However, what stands unchanged is our commitment to sustainable, profitable growth and continuous improvement of operational performance. Our profitability target an EBIT margin of more than 11% remains the core objective of our Strategy 2030. Let me summarize the key takeaways of today's presentation. First of all, we have taken action, and we improved our working capital management as well as operational efficiency. So we are well prepared to benefit from this in the expected economic upswing. As for the outlook 2026, we expect moderate revenue increase and EBIT margin improvement, while markets will still be influenced by U.S. tariff policy and geopolitical uncertainties. We focus on innovation, and we have new machines already in the pipeline. And moreover, we constantly enhance our solutions. Our strong balance sheet is a foundation to execute our plans and drive future growth. And we will reassess underlying market scenarios of our Strategy 2030, and we stay committed to our profitability target of more than 11% EBIT margin. Thank you for your continued trust and for joining our earnings call today. As we move into 2026, we are energized by the opportunities captured in our motto, driving progress, building success. We look forward to sharing our journey with you throughout the year. If you would like to connect, our Investor Relations team is available to provide further insights. Before we open the floor now to your questions, I want to express my sincere gratitude to all our employees of the Wacker Neuson Group. Their dedication and their hard work remain the true engine behind our value for customers and shareholders. Nobody is perfect, but a team can be. Thank you for listening. Operator, we are now ready to start the Q&A session, and we are very much looking forward to answering your questions. Operator: [Operator Instructions] The first question comes from the line of Stefan Augustin from Warburg Research. Stefan Augustin: The first one is actually on the current order intake trend. And what has -- what have you seen actually on the -- in the very short term, is there anything that you can tell us over the last 4 weeks since the war in Iran started? And did this in any way impact so far order intake behavior at your customers? That would be the one to start with, I think. Christoph Burkhard: Thank you for your question, Stefan. This is Christoph. Let me take your question. We do see -- now starting into the new year, we do see in January and in February kind of very first tender trend for a better book-to-bill ratio above 1. So currently, we do stand at around 1.2, 1.3 within the group. And that ratio is allocated across our landscape with a fairly strong order intake momentum in the U.S. after very weak months towards the end of previous year, as you recall. But we had a good start into the new year in the Americas, I should say. And Europe is also okay. It's above 1. The only exception still being Germany, where it's kind of sluggish. I think that somehow represents still the overall sentiment in Germany. We are all waiting for a kickstarting the German economy. But overall, we are moderately optimistic also with respect to order intake. Stefan Augustin: One follow-up here directly. Is that good development in the U.S. in any way connected to the next model ramp-up by Deere? Or is that something that should come on top later in the year? Christoph Burkhard: That's independent from the John Deere collaboration. Looking deeper into root causes there, the feedback we receive is around -- we have been frequently talking about this famous dealer inventories, which have come down. The second thing is we have been looking at quite some months of reluctance, particularly of the big rental companies to place new orders that eventually seems to have come to an end. I mean, anyway, they couldn't stay away from investments from forever. So that's also probably what is gaining momentum here. Stefan Augustin: Also. I also like your statement that you will focus on the 2030 targets in the longer term on the margin more than on the growth. Maybe as a first step in '26, how much of that you expect in the margin improvement is actually intrinsic and rather on costs and processes and is -- what part is actually on the higher volume based? Christoph Burkhard: It's rather on cost and processes in 2026, definitely. And that also does explain already, let's say, the building blocks then moving into 2027, where we would expect then more to benefit also from growth. But the growth aspect is not the key in 2026. Stefan Augustin: Yes. So would it be fair to say if the sales would be at the higher end, there would be an additional probability to also be better on the margin side. Is that an implication of your statement? Christoph Burkhard: I can buy into this logic without going into specific amount, but I follow your logic, Stefan, definitely. Operator: The next question comes from the line of Lukas Spang from Tigris Capital. Lukas Spang: I would like to start with the topic you just mentioned in your presentation. It's the data center area. And I think that's a very interesting part in the building segment in general. Also, it's probably a very small portion in general. But is it quantifiable for you as a group, how many machines or equipment you are delivering to this specific area? So is it possible to quantify how big the revenue you are making with all stuff regarding data center? And what could be the potential in the future for you? That would be my first question. Karl Tragl: Thank you for the question, Karl speaking here. I mean I was -- just a week ago, I visited U.S. talked also to partners and customers. And that was a topic throughout all the discussions as a positive momentum in U.S. in time, and it should be sustainable because it's driven by artificial intelligence, and that's something which will go on for more time and into the future. And it's -- the data center is driving a lot of infrastructure around because you need fiber cables to connect them, you need roads to come to them, you need other topics to people bring them over there. But this is not quantifiable. We cannot quantify such a specific topic in the U.S. But as I said, it's for me, it's a sustainable topic driven by artificial intelligence, and it is driving more investments around just to connect it. Lukas Spang: Okay. But you would say that it's more driven from the U.S. than Europe currently? Karl Tragl: Yes. Obviously, I mean, just reading through the papers and talking to people, there's only a few data centers currently as projects in Germany as far as I know at least. There's a lot in the U.S. So yes, I fully agree with what you said. Christoph Burkhard: I think we're talking about 20 or something like that more in the U.S. Lukas Spang: And then on the guidance, it's a very broad range in terms of revenue, again, like last year. So what kind of scenarios did you bake in for the lower and the higher end on the revenue guidance? Christoph Burkhard: Yes. Lukas, I guess we were a bit burned by last year and to be very frank, and by last year's -- particularly by last year's first quarter. And we lost a little bit trust in short-term recovery with significant numbers. So let me put it this way. The lower end is certainly conservative, and we wanted to really have a gradual approach here in a sense that we -- by May, when we will talk again about Q1, our picture will certainly be much clearer around the lower end of the guidance. We first want to -- we want now to accomplish a successful first quarter, and then we'll see further. Lukas Spang: Yes. But the higher order intake you mentioned now on the -- yes, I would say, very nice book-to-bill ratio in Q1 will be then mostly revenue in Q2. Is that right? Christoph Burkhard: That's probably right. However, I need a little bit to tone the enthusiasm down in a sense compared to last year, this is really -- this is good in terms of order intake. However, there are 2 qualifications to it. Firstly, of course, we are looking at a book-to-bill ratio in connection with 2 months with relatively lower absolute revenues because January and February are months with lower revenues, winter months plus months with relatively fewer working days. The heavy months are coming now. So March, of course, is supposed to be a strong sales month. And here, we need to see again also the higher book-to-bill ratios. That still remains to be seen. Secondly, of course, again, we went through this kind of depressing period partly in 2025 with low order intake. So for the time being, I would not go beyond the statement that this is now according to what we need also. So we are not yet talking about upside or higher-end guidance. That's basically the calibration you need to understand behind our statements. Lukas Spang: Yes. But for Q1, after the strong Q3 and Q4, and I think also order momentum in the second half, and also book-to-bill was good. So there should be an improvement Q1 versus Q1 in terms of revenue. Christoph Burkhard: Yes, absolutely. Absolutely right. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peer Schlinkmann for any closing remarks. Peer Schlinkmann: Yes, ladies and gentlemen, as we can see, there are no further questions in line. This brings us to the end of our conference call. As usual, if you have any further questions, please do not hesitate to contact me or the entire Investor Relations team via phone or e-mail. If you would like to meet in person, please let us know or check our website and financial calendar for all relevant roadshow dates in the coming weeks and months. Thank you again for joining our call, and we wish all of you a pleasant Easter holidays. Thank you. Christoph Burkhard: Thank you, everybody. Karl Tragl: Thank you. See you. Bye-bye.
Unknown Executive: Good morning, and welcome to the Capricorn Energy PLC Full Year Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Randy Neely. Good morning to you, sir. Randall Neely: Good morning, and good morning to everyone, and thank you for joining us for Capricorn's 2025 Full Year Results Presentation. I'm joined today by our CFO, Eddie Ok; and our COO, Geoff Probert. First, let me take a moment to address the evolving situation in the Middle East, particularly the conflict involving the U.S., Israel and Iran. We are closely monitoring the developments, but our operations remain stable and unaffected. It is very much business as usual for us on the ground. But before we also dive into the presentation, I want to briefly address the recent speculation regarding a potential offer for Capricorn. I understand there may be considerable interest, but due to the takeover code, I'm unable to provide any specific information beyond what was in our statement earlier this month. To reiterate, Alamadiyaf al-Masiyyah, also known as the Cafani Group, has made multiple unsolicited nonbinding proposals for potential all-cash offer for Capricorn. Discussions are ongoing, and the Capricorn Board is actively seeking further clarity regarding Cafani's funding arrangements. Under the U.K. takeover code, they have until the 8th of April 2026 to make a firm offer. At this stage, there is no certainty that a firm offer will be made nor clarity on the terms of any such offer should one materialize. So let's get into the presentation. 2025 was a significant year operationally, strategically and the financial progress made for the company, and a number of milestones were met across our Egyptian operations. 2025 marked a pivotal year for Capricorn. I believe we may have made the turn from a turnaround story to a serious growth opportunity in the Egypt and hopefully shortly, the U.K. North Sea arena. Over the past year, accounts receivable outstanding has come down materially, which allowed a significant reduction in accounts payable as well as retiring the company's senior debt. We also received the approval from the EGPC Board for the consolidation and amendment of the 8 jointly held production sharing contracts with Cheiron, our operating partner in the Western Desert. We are now only awaiting ratification, which we expect in the near term. Following EGPC Board approval, jointly with our partner, we were able to begin increasing our development activities to arrest the production declines. This, combined, of course, with the very solid technical work of our team resulted in our achieving the higher end of our production guidance. We put this graphic into our materials over a year ago to represent our base intentions and where we're going to take the company. Hopefully, our results are showing that we meant it. We now have an almost debt-free balance sheet. We have a disciplined and rigorous approach that we operate within and project on to our partner. And to be very clear, our partner has been receptive to this and has worked very collaboratively with us over the past year plus to allow a very -- sorry, to follow a very similar approach. We are now set to take advantage of all the hard work accomplished over this past 3 years, rebuilding Capricorn. In the near term, we will look to build on our base in Egypt, both organically and through acquisitions and also look to capitalize on our geographic location and capabilities in the U.K. North Sea. I'll now turn it over to Eddie, who will walk through some of our results and guidance for 2026. Eddie Ok: Thanks, Randy, and good morning, everyone. 2025 was a solid year as we not only achieved some key structural milestones in the Egypt business, but also really cleaned up our balance sheet. Production was just over 20,000 BOEs on a working interest basis, and we preserved a 40% liquids weighting in that production base. OpEx increased slightly over the prior year at $540 per BOE, driven by our fixed cost base and the currency devaluation from the prior year, having largely worked its way through the system. We're guiding to an OpEx range of $5 to $7 a BOE for 2026. A successful capital program in 2025 of $77 million invested, drove production performance in the year and set a sustainable foundation for '26's program. We had material collections in 2025 of $217 million, resulting in us ending the year with an $86 million receivables balance on $81 million in Egypt net cash flow. With only $30 million outstanding on a ring-fenced junior facility and having repaid the senior facility early, we entered '26 with a significantly improved balance sheet. The business ended 2025 with $103 million in cash, net of facility debt, which represents a year-over-year cash increase of $80 million, and we continue lobbying efforts with EGPC to return our receivables to a reasonable level. We are encouraged by the recent press from EGPC and the minister about receivables balances for IOCs and remain confident in the ultimate collection of our outstanding revenues. For 2026, the drilling activity completed in '25 and planned '26 activity will shift overall production to a slightly higher liquids weighting at about 43%, though 2 turnarounds planned for the year will impact full year production estimates as we guide to 18,000 to 22,000 BOEs per day. Capital of $85 million to $95 million this year will prioritize liquids and ratification will be critical to unlock acreage perspective for additional exploitation and development activity. Next up, Geoff is going to take you through our operational plans for the year. Geoffrey Probert: Thanks, Eddie, and good morning, everyone. Next slide. 2025 Egypt operational activity was a year of 2 halves, with the first half primarily fulfilling legacy exploration obligations and the second, pivoting the 4 rigs to development drilling. It's worth noting here that without the EGPC agreement to merge our 50-50 concessions and improvements on the payment side, we would not have been able to support much further development drilling there post the first half exploration commitments. So the timing was excellent for all parties. Development drilling was effectively reopened on BED, which supported by the ongoing reservoir management program contributed to improved production performance and a solid year-end exit rate. The legacy exploration yields success in NUMB and encouragement in Southeast Horus with the latter sufficient to move into the next exploration phase. Next slide, please. Much of this is a reiteration of what we've said on the merged concession before with improvements in concession longevity and fiscal terms a catalyst to increase Capricorn's reserves and production with value and cash flow enhanced through increased investment self-funded from Egypt. Two bullets I'd like to highlight are first, the example, approximately $5 per BOE improvement in netbacks at $80 a barrel Brent; and second, replacement of more than 250% of our 2025 production through reserve adds with the merged concession being a major contributor to that. For EGPC, our increased and more importantly, sustained investment delivers greater production over the long term for Egypt, having the potential to be a true win-win for all stakeholders. We continue to expect customer ratification in the near future with our investments since mid-2025, consistent with the application of the new terms. Next slide. This final operational slide demonstrates the impact of the new merged concession agreement on reserves and resources underlying our business. We previously highlighted the potential to convert up to 20 million barrels approximately working interest resources and reserves into reserves with the merged concession. We've achieved that as the 277% reserves replacement ratio shows. We've already identified a resource maturation runway with a further 332 million barrels of oil equivalent unrisked working interest 2C, of which around 80 million barrels of oil equivalent has been evaluated by GLJ. With some prospective resources to chase and discussions underway to improve the ASW concession, these are a bonus. All in all, the new merged concession supported by operational excellence and regular EGPC payments has helped transform the outlook for Capricorn Energy. Thanks for your time and attention. I'm now passing it back to Randy to wrap up. Randall Neely: Thanks, Geoff. So in closing, I would like to emphasize that we are now positioned to take advantage of all the hard work undertaken over the past 3 years. We are near debt-free with net cash of over $100 million at the end of 2025, thanks in part to regular robust collections of our revenues over the past 15 months and in particular, the last 6 months of 2025. We have new terms to the bulk of our concession agreements now just awaiting ratification, which we expect to happen shortly. We have a strong and collaborative working relationship with our joint venture partner, Cheiron. Our technical team has identified significant contingent resources for the JV to mature and exploit. We continue to be laser-focused on building cash flow and shareholder value. And our plan is to do that by continuing to employ technical rigor, be focused on costs and details and by seeking out opportunities to expand our operations in Egypt and realizing on our advantaged position in the U.K. North Sea. I want to thank everyone for attending. We're going to open the floor for questions, but I'll remind you that we will not be able to make any comments on the potential offer for Capricorn as mentioned in the opening. Unknown Executive: That's great, Randy, Eddie, Geoff. Thank you very much indeed for your presentation. [Operator Instructions] I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. And Diana, at this point, if I may hand back to you to take us through the Q&A session, and I'll pick up from you at the end. Thank you. Unknown Executive: Thanks very much, Alex. So we have 2 questions that have been submitted. Thank you very much for submitting them. Just to say any that aren't answered on the call will be followed up via the Investor Meet platform with a written response from the company. So to our presenters, first of all, we have the question, you mentioned M&A in Egypt and the broader MENA region. What valuation thresholds or return hurdles are you applying in the current oil price environment? Randall Neely: Well, given the recent changes in oil prices, we haven't factored any change -- long-term changes into our analysis at this stage. We do, however, always look for a reasonable rate of return on any investments. And for us, that typically means kind of starting with a 25% rate of return given just generally the business itself and, of course, the region. Unknown Executive: And then we have another question asking what production and cash flow uplift do you expect from the merged concession over the next 2 to 3 years? And what key risks could delay or reduce those benefits? Geoffrey Probert: Okay. I'll take that. In terms of the cash flow at the start, at first we don't really forecast cash flow, although we do put the CPR out there. So that's a place you can go and do your own calculations, I guess. Similar, I guess, on production as well. In terms of production, the new concession agreement is focused on giving us running room and the opportunity to grow. And I mentioned the -- not just the reserve side, but the continued resources side, which is a significant underlay to that GLJ evaluated CPR. I think in 2 to 3 years -- over the next 2 to 3 years, key risks, obviously, they're geological, but that's mitigated to a large extent by some of the improvement in the runway we have land-wise. There is the new development leases, which about our small BED concession area, apart from those concession. [indiscernible] North area, too. Plus over [indiscernible], we have with an improved gas price for incremental investments, some additional running room there. So there's a lot of broader, if I say, opportunity there to allow us to mitigate any risk from a geoscience point of view. Really, the thing that drives our investment is respect we get and we increasingly and continue to get from EGPC, our operating partner in Cairo, there in terms of being paid by EGPC is critical. So we've been very fortunate that we've been prioritized along with others in the IOC space for payments, and that really drives right into this investment we see. So that's what underpins our production. Unknown Executive: And we've got just one final question here asking what's the biggest financial risk that investors may be overlooking from Rob? Eddie Ok: Yes, Rob, I think that our annual report and the section that we publish on principal risks and uncertainties adequately captures our risk management process. And as always, within the operational jurisdiction of Egypt, receivables collections with us having one customer for our oil and gas is a sort of principal risk. But given the recent press out of the ministry as well as the minister in the past 48 hours, there's been a real commitment on the part of Egypt to ensure that IOCs are getting paid and continue to get paid. And so we look forward to continuing to invest in this jurisdiction. Unknown Executive: That's great, Randy, Eddie, Geoff. Thank you for addressing those questions for investors today. But Randy, before we direct investors to provide you with a feedback, which is particularly important to you and the company, could I please just ask you for a few closing comments? Randall Neely: Well, I think I'll just reiterate, I think the company has done a lot of heavy lifting over the past few years, and I'll spare going through the storybook, but a huge amount of work has been done over the last 3 years to put the company in this position, terrific balance sheet, great working relationships with our partners, not only Cheiron, but also the government and a great future with respect to the contract renegotiation that's taken place over the past 1.5 years. And so we're now in that position to take advantage in Egypt, and we're just sort of in the beginning to try to as I said, capitalize on our geographic and capabilities in the U.K. North Sea. So we're looking forward to expanding our operations and more to come in future months. Thank you very much for attending. Unknown Executive: Perfect. Thank you very much indeed to you all for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.
Operator: Good morning, ladies and gentlemen. Welcome to Sigma Lithium's 2025 Fourth Quarter Earnings Conference Call. We would like to inform you that this event is being recorded. [Operator Instructions] There will be a replay for this call on the company's website. [Operator Instructions] I would now like to turn the conference over to Anna Hartley, Vice President of Investor Relations. Please go ahead. Anna Hartley: I'd like to welcome you to our 2025 earnings conference call. Joining me on the call today is Ana Cabral, Co-Chair and CEO of Sigma Lithium. Our earnings press release, presentation and corresponding documents are available on our website. I'd like to remind you that some of the statements made during this call, including any production guidance, expected company performance, update on mining operations, the timing of our projects and market conditions may be considered forward-looking statements. Please note the cautionary language about forward-looking statements in our presentation, MD&A and press release. Before turning the call to Ana Cabral, we will be showing you a short corporate video as we think the pictures will paint a thousand words about what's happening at Sigma. [Presentation] Ana Cabral Gardner: Hi, everyone. Well, thank you, Anna, for showing us this video of our operations. As you can all tell, we're very, very proud of what we built here in Vale do Jequitinhonha. So without further ado, I'll go straight into the fourth quarter 2025 earnings release presentation, which covers the entire full year 2025 annual financial results. We're going to make quite a lot of forward-looking statements, and we would like to encourage you to read the disclaimer of this presentation that's going to be posted on our video. Sigma is the largest industrial mineral producer in the Americas. We've delivered operational excellence. We are a low-cost operation, and we are executing a high-growth strategy for 2026, 2027 and 2028. This is because we are a management operator company where our interests are fully aligned with the interest of our shareholders, which are to build long-term value. Our main competitive advantage is our resilience, which comes from operational efficiency. Our efficiency is, again, driven by the fact that the management is owner of the company. More importantly, we are located in a country in Brazil, which is a politically stable traditional mining jurisdiction, where we have a very low-cost operating environment. On sustainability, we are 100% sustainable. We have the Quintuple Zero lithium, which starts with 5 points. We do not have tailing dams, so 0. We do not use drinking water, 100% of the water is reused and recycled from sewage, 0. We use 0 hazardous chemicals in our operation. DMS is basically a physics-based process, so third zero. We use 100% clean energy, so 0 dirty energy. And we have had 0 accidents with lost time for almost 3 years. Again, a picture is a thousand words. Here's a picture of our waste tailings before and after the artificial germination program. It's blended into the landscape. It's basically stacked up rock, fully geotechnically stable. And we went through the sustainability initiative of actually planting the rock into a green mountain. So what you see now is essentially the picture below. We are 100% sustainable. We produce the Quintuple Zero lithium. We have zero tailing dams. We have 0 drinking water. We have zero hazardous chemicals. We have 0 dirty power. 100% of our power comes from clean electricity. We have had 0 accidents for 2 years and 7 months, 5 zeros. At the bottom, a picture is a thousand words. You see the before and after of our waste tailing piles, which are basically the rocks removed from the pits. Rocks, very stable, geotechnically stable. But more so, we have planted the face of those rocks with artificial germination. We basically did what we call proactive regeneration and the picture shows how it looks like now just a year after those piles were created. So geotechnically safe, sustainable, blended into the landscape, which further enhance the environment. We have built the fifth largest industrial mineral lithium producing complex in the world. So in the picture, you can see that we have a state-of-the-art industrial plant, integrated into a mine. But the plant is not just an industrial plant, is a state-of-the-art clean technology lithium processing facility where we achieved 70% recovery of the lithium, which is amongst the highest in the sector, and it compares with processing methods, which are a lot less sustainable. Sigma is the economic engine for developing the valley of Jequitinhonha. We lifted the valley towards prosperity. That is a key region of Minas Gerais, which is the second richest state in the Republic. We created 1,000 jobs, 11,000 indirect jobs and 21,000 beneficiaries from our social programs of microcredit and small-scale agriculture. We also have granted drinking water access to 18,000 people. 85% of our workforce is regional. 50% of the economically active population has benefited from our social programs. We have renovated, created and built schools that put over 500 children in after-schools or school programs. We have been instrumental in delivering 6.8% of GDP growth for the whole state of Minas Gerais. And still, every year, we serve 3 million meals so that the new waves of people keep coming to help build this lithium valley. So we have a built to last company. It's a resilient business that's been thriving throughout lithium cycles. That's what we have achieved in 2025, and that's what we will continue to deliver in 2026, large scale, low production costs and traceability. We have had 0 accidents for 2.7 years. We uphold the highest health and safety standards in the world, top ranking amongst all companies in metals and mining. But more importantly, we have demonstrated speed of execution, low CapEx to build and to restructure operations, such as what we've done with mining. And we are in a low-cost operating country, which supports us to achieve all of that. So now I'm going to go through the operational and financial highlights of 2025, and I'm going to give you a preview of the first quarter 2026 estimated. We have had unparalleled resilience throughout the last year to date. We have generated cash flows across 2025 lithium volatility. Our business was built to last and to endure the cycles. Four key examples, we signed $146 million in offtake agreements with very robust intrinsic values. Intrinsic value is the advancement we receive from clients for the right to have deliveries of tonnage throughout periods. First offtake agreement was basically to fund working capital. It was signed in '25 for deliveries throughout 2026. The total is $96 million for 70,000 tonnes of deliveries. The second was a $50 million typical offtake prepayment that was signed for 40,000 tons of annual deliveries throughout the next 3 years commencing in 2026. Second, we have been the demonstrators that a commercial strategy well executed can actually yield actual results even in this market, even throughout volatility. We have been tracking seasonality, and we have achieved $67 million in net sales in the fourth quarter of '25 and the first quarter of '26, solely a result as this sound commercial policy. First, we monetized lithium seasonality to by basically receiving price adjustments in the fourth quarter, working with our clients to time the deliveries and the final sales, resales of their products throughout the contract season of 2025. That has resulted in the revenues for the fourth quarter. More importantly, we have generated cash flow from a whole new line of business, which is selling the lithium fines, high-purity lithium oxide fines that we have reprocessed through our industrial plant out of our dry stack tailings. That happened initiated in 2025 and then throughout 2026. We've deleveraged our balance sheet and we repaid debt. That was our third highlight. 60% of our short-term debt has been repaid. 35% of our total debt has been repaid in the years such as 2025. On top of that, number four, we have upgraded and restructured our mining operations completely for safety, for efficiency, for low cost, for cadence and for better delivery. We transitioned from an outside contractor to full operational control, and we are poised to demonstrate those efficiency gains and cost optimizations throughout the next quarters. Here are pictures that, again, a thousand words. It just shows the lithium fines piles being moved across to the shipping halls already at the port. The result of those sales have actually monetized what we used to call green premium, which doesn't really exist. But the fact that we actually created this new line of product out of the dry stack tailings definitely delivered to our investors what we call a sustainability premium, meaning actual financial results from the investment we made on a dry stack unit for the Greentech Plant. This is a page with our offtake agreements. The offtake agreements single-handedly enabled our mining upgrade, our long debt repayment and the capacity expansions. We have an announcement. We signed a 40,000 tonne a year typical offtake agreement that is going to net us $50 million in a true prepayment to be closed within the next 3 months. That amount is equivalent to 120,000 tonnes to be delivered over the next 3 years. The use of proceeds will be for our growth strategy. We also announced and signed the 70,500 tonne 1-year offtake agreement for a total of $96 million. That offtake agreement is for deliveries throughout 2026 and the purpose of it is for working capital. That's the working capital that enabled the mining upgrade and some of the debt repayments. Now in 2026, we have two more offtakes to conclude. First, we're going to amend our contract for the equipment leases of the mining upgrade large-scale machines that have been backed by an offtake for 3 years. Initially, it was for 11,000 tonnes. The number probably will increase depending on the scale of machinery that we are able to secure in the second quarter. So again, the continuity of the mining upgrade to better, more efficient, more cost-efficient and safer operation. The second offtake that we're about to close is the 80,000 tonne a year for 3 years that is going to net us $100 million in a typical prepayment. That conventional offtake will have used proceeds to pay down the long-term debt that currently is sitting in our balance sheet as short-term debt because it matures in December of 2026. That was a 4-year shareholder that has been gracefully given us by our shareholders in late 2022 to enable us to have working capital to commission our plant. So that debt will be replaced by an offtake, which is a very sound and very logic operational move for Sigma. On this page, we again demonstrate how the competitive advantage of low costs create resilience from the price pressures that lithium has undergone this year, especially coming from new regions, sometimes not necessarily compliant or traceable product, but more importantly, from the constant refining innovation that the main markets have demonstrated by bringing the ceiling of this industry constantly lower. The ceiling for, for instance, lepidolite that once was $20,000 to $25,000 per tonne is now around $17,000 to $18,000 per ton, but going lower to a target of probably $15,000 per ton. It doesn't matter. Irrespectively, we are actually working below the floor of the industry, which is product coming from the African new supply regions. So long as we are sitting exactly where we are in the cost curve, we have the resilience of operations that allow us to, for instance, sign offtakes without floors and continue to deliver excess returns every time prices are in the current levels. On the left, we demonstrate the resilience with our total cash cost, which are all-in sustaining costs plus interest. On the left in green, we show the full year achieved all-in sustaining costs plus interest and the guidance. So we're pretty much in the same ballpark. And as a result, we felt comfortable to put in the guidance of $532 for all-in sustaining costs plus $60 for interest for 2026. In the next slide, we show the numbers of how we are able to bring our people safe to their families every single day, day after day. And this is what we work for. We have never had a fatality in 13 years of operations. We have been producing for almost 3 years. We have never had a fatality. But more importantly, we're getting to almost 2.7 years with 0 accidents with lost time. So our people go home every day and come back to work the following day. That is the highest operational global safety standard in the entire battery materials industry, but more so, we sit at the top of the ranking across all metals and mining companies. We have had 1,600 employees here. We now have 1,000 employees. It's a large operation, and we still achieved that, 966 days consecutively without accidents. We're very, very proud of it. So here is to the numeric operational excellence. A number is a thousand words. The unique resilience and robust cash flows can be demonstrated by each and every one of the main items of our 2025 and first quarter '26 estimated operational performance. First, offtakes. We had signed a $96 million offtake prepayment in '25 that enable us to receive working capital by having our production paid in advance. Then we just signed a $50 million traditional offtake for 3 years of 40,000 tonne deliveries totaling 120,000 tonnes to be delivered over the next 3 years. But in advance, up until June this year, we're going to receive $50 million, traditional typical offtake. Irrespectively, we have managed to repay debt to a magnitude that is significant considering the volatility in low points lithium prices reached in 2025. We paid 60% of our short-term debt and 35% of our total debt. That was basically because of cash flow generation. This company was built for cash flow generation. We are a cash machine. In the fourth quarter of '25, we generated $31 million of cash from operations. In the third quarter of '25, the previous quarter, we generated $23 million. So we increased our cash flow generation in 35% from third quarter to fourth quarter of 2025. More importantly, the lithium materials production has had a decrease in volumes because of the full restructure we conducted in mining. But given that we are an industrial operation, we delivered another source of revenues. In fact, we built another business, which was reprocessing the dry stack tailings into what we call low-grade lithium fines. So ultimately, we had equivalent of 70,000 tonnes of the main high-grade product in revenues sitting as inventory accumulated throughout the last years. And that material became this new line of business of what we call high-purity lithium fines. So for the full year of 2025, we produced 183,000 tonnes of high-grade premium lithium oxide. For the full year of 2024, we produced 240,000 tonnes of high-grade premium lithium oxide. So our annual production decreased in 24%. However, how did we generate so much cash flow? How did we accomplish so much repaying debt? By basically creating a new line of business, which is what we call the sustainability monetization, the green premium in numbers. We reprocessed the lithium contained in our lithium fines in our dry stack piles, and we created a whole new business, which is selling high-purity lithium fines, which have a lower grade, but in monetary value, it's equivalent to 70,000 tonnes of the high-grade premium lithium oxide. So all in all, we're not even solving for volumes. We're solving for cash flow and cash flows were delivered, and debt was repaid. And here are the numbers, which speak for a thousand words and do not have an opinion, numbers are numbers. What we want to show on this slide is, again, the quantification and a pictorial of how commercial successful strategy actually helped us to deliver revenues in the third quarter of '25 and in the fourth quarter of '25. We have fantastic clients who are commercial partners. So we sell them the material. We do a final sale and they take the risk. That sale takes place using a provisional price. So we take some of the risk, but we also gain some of the upside. In other words, when our clients resell their product, resell to their clients, we have a profit sharing gain or a profit sharing loss. Last year, we had a loss. This year, we had a substantial gain. Again, this was achieved by mapping seasonality and seasonality in this industry is pretty clear. It happens in the restocking period that takes place after September. It's called contract season. So our commercial partners worked with us to basically execute their final resales mostly after October of 2025, which allowed us to reap the benefits of a much better pricing environment than what was experienced throughout the whole year because of the tariff volatility in the metals market. So when you look at the greens, you can see the resales by our clients. When you look at the red, you can see the sales from Sigma to the client. And you look at the line, you see the lithium prices and the tremendous volatility that happened throughout the year. In partnership with our clients, we captured not only the first peak of volatility, which happened in August, but also the subsequent curve of price increases that happened throughout contract season beginning in October 2025. That helped us book over $20 million in final price adjustments in the third quarter of 2025, and it helped us book over $14 million in final price adjustments in the fourth quarter of 2025. These are substantial revenues, so that's a quantification of what a sound commercial strategy is. On this slide, I'll go very slowly because we have quite a lot of information to unpack. But again, it's the financial discipline that generated the high operating cash margins. High operating cash margins are the source of the cash flow we posted. In 2025, if you compare the fourth quarter of '24 with the fourth quarter of '25, we have substantially increased our operating cash margin. If you compare the full year 2024 full year and 2025 full year, our gross margins have decreased, yes, because the pricing environment in '25 was very challenging. But what is interesting is that the cash margins and the cash flow generation came from one thing and one thing only, we were able to reduce our costs faster than the decrease in our revenues. So despite the mining restructuring, despite price volatility, we were focused on what we could control and what we can control and on what we always control, which are our costs. So if you look at the bottom of the page, you can see that the quarterly comparison between fourth quarter '24 and fourth quarter '25 shown a 77% reduction in costs. That's way more than just variable costs. When you look at the annual cost reduction, you can see that full year '24 to full year '25, we've had a 21% decrease in costs. So when we talk about these operating costs, we had operating costs, SG&A, ESG plus all others. So it's truly an achievement of financial discipline. We're always cutting what we control. We're always optimizing costs. So with that, we can go back to revenues. In other words, when you look at net sales revenues on a quarterly basis, we've had fluctuations, which again just demonstrate how volatile lithium prices were. More notably, from the third quarter to the fourth quarter, when we restructured mining operations, we had a 41% decrease in net sales revenues. However, when we look at the first quarter 2026 estimate, we more than compensated for that decrease. Why is that? Because we not only opened this new line of lithium fines, which were the low-grade high-purity business that we created out of our dry stack tailings, but also all the work we've done in mine restructuring began to show results. So on an annual basis, the revenues decreased 27%. And so when you look at the bigger picture here, what is actually visible that, yes, revenues decreased 27% on an annual basis. Cost decreased 21% on an annual basis. So costs decreased less than revenues on an annual basis, but we were very quick to compensate that and to fix it in the fourth quarter, where we cut costs and we decreased costs in 77%. So this is how financial discipline is demonstrated with numbers. In this slide, we show the quantification of the financial discipline, but now on balance sheet optimization. We have significantly deleveraged despite all the price volatility, despite all that happened with revenues. From fourth quarter '24 to the fourth quarter '25, we lowered our short-term debt in 60%. From the fourth quarter '24 to the estimate of first quarter '26, which is actually the numbers that we have closing, we lowered it by 68%. So the work continued. We didn't stop. Then when you look at the third quarter '25 against current, we lowered the debt in 49%. That's a complete restructuring in the way we fund ourselves, in the short term, in a way we look at working capital even, meaning clients are now funding our operation because of our successful commercial partnerships with our clients. We make it win-win so that it cost us less in working capital and we deleverage our balance sheet. This slide, I'll go very slowly on it because it shows our cash flow generation outlook. It's quite simple. It's quite straightforward. And again, it just demonstrates how Sigma is a cash machine. Why? Because we have high margins. We are built for cash flow generation. We have estimated that in the next 12-month period for Phase 1, we're going to probably have 240,000 tonnes of production. As we've shown before, for the year, we're going to deliver 200,000 tonnes. Now because of our optimum cost efficiencies, we are going to be yielding an all-in sustaining cost, including interest of $592. That's our estimation for the next 12 months, as we've shown you in guidance. That creates cash flows no matter what. If lithium retrocedes to $1,500 a tonne, we're going to be generating about $158 million in free cash flow after interest, free cash flow. If lithium stays around where it is now between $1,800 and $2,000 a tonne, we can generate anything between $218 million to $260 6 million of free cash flow just with one phase. As we double capacity, which will be in place by the end of next year, capacity and we prorate production as we commission, you can sharpen your pencils and you can do the math of how much cash flow we're going to have with two plants. More importantly, as we calculate all-in sustaining costs and all-in cash costs, the only optimization we've done were on G&A and ESG. You don't need 2 of me or 2 of most of our personnel to run these businesses on the administrative side and interest because we're going to cut interest in half, given that the interest is on the total debt that we are going to contract precisely to build plant 2. So we have not factored in the actual operational scale gains that come from running 2 plants using infrastructure that is built and utilized now for 1 plant. So the infrastructure sharing of 2 plants are probably going to bring more cost gains, which are not here in these cash flows. But just with this conservative analysis of doubling operations and having some synergies on G&A and interest, we're bound to generate basically $600 million in free cash flow if prices stay where they are. If prices retroceded to about $1,500, that's okay, too. We'll generate $384 million in free cash flow, meaning after interest at those levels. What becomes really interesting is when we build a third line, which could be done concomitant with the second line. That means that at 770,000 tonnes of production, and again, we're just calculating efficiencies here on G&A, ESG and interest. And we flattened the interest. We haven't cut interest further. We just cut G&A further because, again, to be a commercial person or to be an administrative person, you don't need to triple your numbers when you have triple plants. So interest is flat, but G&A and ESG was the only number that was reduced. What does that mean? Our all-in cash sustaining costs, including interest, goes down to $495 per tonne with 3 lines. So if prices retroceded to $1,500 by the end of '28, when we plan to have this capacity in place, we could be generating $581 million in free cash flow. If the prices stay where they are, we could be generating $900 million in free cash flow. That's a significant amount. And it just shows how building long-term value means building a company that is geared to generate operating efficiency, operational excellence and quite a lot of free cash flow to shareholders. As management operators, our interests are 100% aligned. We're building a business to last. We're building a business to create shareholder value for all of us, management and outside shareholders. So this slide shows the cash flow bridge, the cash bridge with its respective explanation. So again, more numeric demonstration that the disciplined execution that we have delivered in '25 and continue to deliver throughout '26 has created this operational resilience despite the very volatile market conditions. We have had operating cash generation. This is why we didn't raise capital because we were able to generate the amount of cash to deliver and to execute on plan, on target. So let's start at the end of the third quarter of '25. We had $6 million in cash. As forecasted and as discussed in those materials, and I encourage you to go back to them, we continued on the trend to deliver cash flow from operations. So on a net basis, we delivered $31 million in cash from operations, mainly final price adjustments from transactions from sales that had taken place on a provisional price basis as we discussed earlier. Then we had our cash operating costs. We have executed CapEx towards the mining upgrade, and we had $26 million of debt repayment and interest repayment as we've shown in #1 and #2. Debt repayment was just debt repayment, amortization of principal. Interest expense was the annual cash expense for the $100 million of long-term debt we've had in our balance sheet. So we had a flat cash position between the third quarter '25 and the fourth quarter of '25. This is financial discipline. We conserve cash. We burned 0 cash. So with the knowledge that there was a whole new business of lithium fines coming on stream, which, again, we flagged during our third quarter presentation, we had inflows in the first quarter '26, which were the cash sales of those lithium fines that we affected and closed on the beginning of the year. So we achieved $30 million on the sales of the lithium fines, and we achieved $5 million on the sales of the premium high grade. That was the beginning of sales resulting from our mining restructuring. Then we had a $24 million CapEx bill for the mining upgrade, mining restructuring and all that we had to do. But as we conserve cash and as we generate cash from that new line of business, which was reprocessing dry stack tailings, we were able to not only pay our CapEx for mining restructuring and upgrade, but also to continue to do debt principal repayment. So we paid down another $5 million in debt, which means we increased our cash position in the first quarter of 2026 by 100%. So we doubled the cash position. So this is, again, numbers. Numbers don't have an opinion. And it's very much in line with the strategy for cash flow discipline that we have laid out in the third quarter '25. We're giving you an advancement here or a preview as we call it. We have another $14 million of cash sales from the -- we call lithium fines business, the reprocessed dry stacking tailings. Then we have another $50 million of a true long-term offtake agreement prepayment that is poised to close by the end of the second quarter. And then we have about $32 million of the first installment of the $96 million offtake that we signed just in 2025 for the high-grade premium lithium, which is the 70,000 tonnes that we are planning to deliver in 2026. So again, we closed the first quarter '26 with $12 million in cash, and we have a significant amount of cash coming our way in the second quarter of '26, having executed pretty much most of the mining upgrade, as you can see in the CapEx bill for $24 million we paid in the first quarter of '26 plus the $4 million we initiated in the fourth quarter of 2025. Now we're going to do a bit about the operational work we have done to restructure our mining operations. This was done for, again, the construction of long-term value for shareholders. We had to do this. We had to take control of our mine because without that, we would not be ready to deliver the cadence that was necessary to affect the capacity expansions of the second and third industrial plants. Just to recap, we are a fully integrated industrial mining operation. We have this proprietary cleantech technology that produces what we call the clean lithium. That means we have a mine that's integrated into an industrial facility. And again, stopping the mine doesn't mean the industry stops. Obviously, what we want is having a mine at full tilt and then the plant receiving fresh rock. But the plant can do many things given that we have dry stack materials. But once we think about doubling capacity and tripling capacity, we mean that our mines need to operate at full tilt and in perfect cadence so that our plant can deliver on the 70% recovery levels it actually is -- it has demonstrated it can achieve in the fourth quarter of 2024. Think of it as a blast furnace. If we turn it on and off, it will not maintain those levels of efficiency. So if the same amount of material is not fed into that dense media separators per hour, it won't achieve 70% recovery. And for that, we need mine planning, mine execution that delivers piles or delivers fresh rock to the ROM pad on the same quantities regularly, at least on a weekly schedule. So this is kind of the overall concept of 100% vertically-integrated operation. Here is a picture of a Greentech Plant at night, unquestionably a beautiful, beautiful industrial installation. This is what we've done with the Greentech plant that allow us to get to the 70% recovery. We had a 2.0 version of the plant, which was the version we operated from July '23 until November 2024. That was not recovering 70%. It was recovering anything between 50%, low 60s, almost 60%. The dry stack tailing units was not working as we wanted anyway. We actually invested a significant amount of CapEx to get the plant to what we call the current stage, which is the 3.0 version that we plan to double and triple, meaning we're building another one of this and then we're building a second one of this. But in order for that to happen, as we said earlier, we need mine and plant to work in cadence. How did we get to the 70% recoveries? We automated industrial operations. We have software, we have scatter, we have algorithms. We have detection of anomalies automatically. We have correction recommendations automatically. It's self-learning metallurgy, self-learning for mineralogy. It's a bot that basically keeps on getting better and better and better when it's fed the same mineralogy. This is a picture of our fully automated control room. Then we have the mine. The mine had quite a lot of work to be done. It was using less than efficient small equipment. It was using too many pieces of equipment. At one point, there were 48 small 40-tonne trucks trafficking through the mine. So a lot had to be done there. First, we had to fix geometry. It had to be widened. And here on the picture, you already see the result of widening the geometry. So we've done intermediary strip with the objective of widen geometry and increase the mine life and increase access and open other areas with ore that were closer to surface. So what we've done, we basically open additional mine fronts now to accelerate the ramp-up. How did we do this? By using larger equipment, larger fleet to remove strip faster. So larger equipment increases efficiency on the excavators, on trucks across the board. In parallel, while we did that mostly in the fourth quarter, the Greentech Plant continued to operate. So we reprocessed the lithium materials from the dry stack tailings during the fourth quarter '25 and the first quarter '26 with superior recovery, not the 70% recovery, but it enriched it enough to create decent cash flow to create a decent sale value, a decent value added so that it could generate the cash flow and the revenues we achieved both in the later fourth quarter, but also throughout the first quarter. So what we're hoping to happen, and we've seen happening already now in March was that recoveries get closer to 70% as we resume delivering fresh rock to the plant. Now this is how we're going to bring all that software knowledge to the plant. We started and we continue. So we have fast mining implemented in process for mine planning. We have the same software implemented for fuel control. We have fatigue automatic software detection. We have a cost control app sitting on iPads and iPhones for all the mine operators. So we have loading and blasting simulations for optimal results with minimum loads, minimum vibrations. So we're bringing the same software technologies, the same intelligence to the mining operation. And that is starting in the control room for mining, which is here, as you can see in the picture. This is a picture of the first wave of larger equipment. The equipment is going to get bigger and bigger. This is the kind of the small large equipment. So -- but more important than that, we own production control. We drive production control. Mine planning is ours, blasting control is ours. We hired a third-party driller for blasting. So we're managing different contractors with our own in-house mining team. That allow us to gain confidence on deploying larger equipment, on investing in larger equipment and on basically doing the calculated analysis of where should we be blasting for safety, for optimal geometry, but also for efficient ore recovery. Now I'm going to talk about how we're going to continue to expand. We are resuming the construction of Plant 2 this year. So we're going to double industrial capacity for the high-grade premium lithium oxide. And we're not that far. In other words, once we get to it, we're going to go from the 240,000 tonnes that we're guiding to 520,000 tonnes, and that is not that far away. More importantly, there's the potential that we may build 2 and 3 sequentially. So we are never going to decommission the construction crews, given that the CapEx involved here is actually very little and the CapEx efficiency is very high, meaning it's going to cost us $80 million to conclude the second plant, and it's going to cost us $100 million to build a third plant. So with $180 million we are able to take our production from 240,000 tonnes a year to 770,000 tonnes a year. That's a substantial increase, and that's one of the most efficient CapEx ratios in the whole industry. So this demonstrates what can happen when we double and then triple production. We run the fifth largest industrial mineral complex in the world. We are the largest lithium mineral producer in the Americas. But here, we have all of our peers. We have the lithium producers in the Americas that produce from the lakes in Argentina, and that includes the Chilean and the American producers. We also have the producers from Australia, and we have the producers from Africa. So although we are the fifth largest industrial mineral complex in the world, and we're the largest industrial mineral producer in the Americas, we are the eighth ranked producer in the world as a whole. Now look what happens when we double and we triple. When we double, we go from #8 to #6 or #5. Then when we triple, we go to # 4. All of these companies have valuations substantially higher than ours. In fact, we're valued as a nonproducing company. So the effect of doubling production and tripling production is not just numeric, it's also a clear demonstration that we can be up there in the rankings with a concomitant valuation. And that is what it means for us to build long-term shareholder value. And this is what we're planning to do. This is a slide that shows how close we are to getting there. We have made a decision in the fourth quarter '24 and in the first quarter '25 of accelerating the construction of Plant 2. And unfortunately, because of tariff volatility, lithium prices collapsed in more than 50%. So we deployed CapEx and we deployed our liquidity in the fourth quarter '24 and in the first quarter '25 towards the construction. Well, that is not the so good news. We managed, we delivered throughout '25 as we've shown. We overcame because the business was structured to generate cash flows and live through organic cash flow generation. But here's the good news. We're almost there. We've almost finished civil foundations. So what is missing really? Ordering equipment and assembling equipment, and that can be done quite rapidly. In the first plant, we were able to order equipment and assemble equipment in much less than 12 months. So this is how finishing building the second plant is actually a very expedited exercise in construction, managing procurement of equipment and managing assembly of equipment. And that's it. This is a fully licensed construction, fully licensed operation is just within our control to do this. So Sigma is very well positioned to deliver substantial returns to shareholders in 2026. And here, we're going to show why. This slide demonstrates how Sigma continued cash flow generation, production cadence in '26 and growth by building Phase 2 that will yield 520,000 tonnes of lithium will certainly position us for a re-rating of our stock. Why is that? When you look at our peers that produce lithium industrialized oxide from minerals in Australia, they have a larger nameplate production and a significantly larger cash flow. However, as we increase production, that means our cash flow will much more than increase because we have this competitive advantage of high margins, low cost and operational resilience. So our increase in nameplate production will bring a disproportionately larger increase in cash flow generation. More so, that happens irrespectively of pricing environment because of our low-cost operational resilience. The next slide just shows how we're going to get there. We've demonstrated operational discipline. We delivered on all fronts in '25. That's what we've seen on the right. We deleverage and repaid debt, we increased operating cash margins. We built a new line of revenues. We're now selling lithium fines high purity from our dry stack tailings. We increased mineral reserves by 40%, which shows we can operate for 66 years with 1 line for over 25 years with 2 lines and most likely for over 25 years with 3 lines. We strengthened commercial strategy by basically capturing seasonality. We monetized final prices in line with contract seasonality in the fourth quarter. And we closed 2 significant offtakes, almost $150 million in offtakes, $96 million to fund our working capital throughout 96 (sic) [ '26 ] to fund our upgrade and restructuring of mining operations and then a $50 million typical offtake that will basically be invested in building Phase 2. So how are we going to continue to deliver in all fronts in 2026? We're going to resume steady-state production from the mining operations, that integration mine plant cadence that we've shown before that will resume the cadence of what we call the premium high-grade lithium. We're going to close financially on the offtakes transaction signed, and we're going to close on 2 more offtakes as we disclosed when we discussed offtakes here. We're going to receive the development bank disbursement for the funding we already spent on Phase 2, and we are in discussions with several other banks for Phase 3. We're going to repay $100 million of shareholder debt funded by one of the offtakes that are in negotiation, 80,000 tonnes per year for 3 years. And we're planning to commission the Plant 2, the Greentech 2 by the end of 2026. So with that, I close -- very proudly close the full year results of 2025, where we crossed the Rubicon of probably one of the most volatile lithium environments this industry has seen. And we're entering 2026, awash in significant cash generation coming from numerically delivering operational efficiency. So with that, I close this presentation for the full year of 2025. We're very, very proud of our team. We're incredibly proud of how we work, how hard we work to cross the Rubicon of one of the most volatile lithium pricing environments I have ever seen, and I've been here for 10 years as a C-level executive. We've done it without raising capital. We've done it without a hiccup in our operations. We're entering 2026 in a much strengthened position. Why? We have the resilience that's basically quantify. We already earned our revenues by building a completely different product line. We resumed production cadence at the end of the first quarter, and we're entering '26 with roughly $48 million of quarterly revenues, which is a significant accomplishment considering we're just coming out of a volatile 2025. All of that without raising any dollars of new capital, pure organic, disciplined cash generation. And that is the quintessential competitive advantage of this company. This operations efficiency delivered and quantified in the numbers we've shown you. We're very proud of our team, and I want to thank all of our clients and stakeholders who have been there with us, holding hands and helping us cross '25 and enter '26 in this very strengthened position. Operator: [Operator Instructions] Our first question comes from Fortune Era. The company has indicated a production target of 520 kt in 2027. Does this imply that Plant 2 is expected to reach full capacity by the end of 2026? More specifically, when do you currently expect Plant 2 to begin commissioning? And how long do you expect the ramp-up to full capacity to take? Ana Cabral Gardner: We are going to have another presentation on plant construction, but we'll tell you what we're planning to do now. As we've shown in the slide previously, what there is between us and new production is essentially resuming ordering equipment, assembling equipment and commissioning that plant. That can be done quite rapidly. If we use the timetable from the previous plant, it could be easily done in under a year. We are going to order equipment in the summer after the close of the second quarter. The reason being the offtake we just signed will be the main driver for us to deposit and prepay the equipment that we need to build Plant 2. We believe that it will take us anything between 8 to 12 months to actually build and commission that line. So Plant 2 will be fully commissioned early 2027. And as a result, the guidance for '27 is not a guidance for production, it's a guidance for installed production capacity, and we will be further updating the market as that unfolds. But what we can say is we're almost there with three-fifths of our timetable accomplished in the construction of Plant 2. And what stands between us and that level of production is purchasing, building and commissioning, which we've shown we can do quite rapidly. Operator: A follow-up question. In the guidance section titled cash flow forecast at various realized lithium prices, could you please clarify whether the price assumptions of $1,500 and $1,700 refer to Sigma's expected average realized selling price for its concentrate or the benchmark SC6 China FOB price. For Sigma's concentrate grade of approximately 5.2% to 5.5% lithium oxide, what is the typical realized price as a percentage of the SC6 benchmark price? Ana Cabral Gardner: So we are using -- we're not using the gross prices. We're using adjusted prices. So when you think about the nameplate price, we take nameplate price from SMM. And then we typically ship 5.2, 5.3 lithium oxide grade product. So the adjustment is done dividing that level of oxide by SC6 in older contracts. In the newer contracts, we divide by 5.5. The results are kind of the same. So when you look at the prices on that table, they are net prices. As you probably are all aware, gross prices have reached $2,400 just 2 days ago. So $1,800 and $1,500 are far below the current level of nameplate prices at Shanghai Metals Market. Operator: Our next question comes from Lamartine Gomes. Question for Ana Cabral. Can you give us your directional sense of how much each plus USD 10 per barrel increase in oil prices impacts the demand for lithium? Ana Cabral Gardner: Unfortunately, I don't have that number, and I am not really an oil expert. What we can say, though, is 15% to almost 20% of the fossil fuels we use here are just the fuels that power the trucks that run around our operations. In other words, every liter of diesel in Brazil has mandatorily 15% of biodiesel. Now that percentage is slated to increase. So we actually are, let's put it that way, 20% less impacted by the increase in diesel prices than any other country in the world because we have this fantastic, we call, biofuels program in the country, which was actually created 30 years ago during the last oil crisis for this exact reason for energy security of Brazil. And we are the beneficiary of that when it comes to our emissions. So our trucks generate 20% less emissions because the fuel by law has 15% and we're putting 20-ish percent biofuels for every liter of diesel. Operator: Our next question comes from Robert Cook. Please detail the timing of Phase 2 and 3 to completion both 2028. Anything more specific? Ana Cabral Gardner: Well, I was mentioning what we're going to do on Phase 2. And again, we're going to keep giving the market updates pretty regularly on that. Phase 2, by the summer, we're going to be ordering equipment. So close second quarter order equipment. As we demonstrated, that will be funded by the growth offtake we signed, $50 million or more than enough to prepay or deposit towards the equipment we need. To be specific, now what's between that order equipment and production is essentially assembly. In the previous plan, we had 1,000 man on site assembling that plant, that line. That was done in 8 months. We use what we call air procurement for some of the parts that were delayed so that we could cut short delivery times. We use a lot of what we call acceleration techniques, which in this budget are factored in. If we use the accelerated timetable, it means we're going to spend another $7 million for extra man, extra shifts and air freight for some of the equipment. What does that mean? It means that we could have a built plant by the first quarter of 2027, assuming we start in the summer. And then there's commissioning. What is the advantage of doing a plant that is a carbon copy of a plant we've been operating by then for almost 4 years. That is the plant we really know. And as a result, we believe we can cut commissioning times significantly. And more importantly, start benefiting from the get-go, begin with the same levels of recoveries instead of going through the curve of going -- starting with 50% recoveries up to 70% recoveries we underwent from the 2.0 version of the plant to the 3.0 version of the plant. So without being more specific, we're quite confident that we're going to have Plant 2 by any time in the first half of next year. But that's the reason why we're making a clear distinction between installed production capacity and production. Production is dependent on the commissioning, and we're going to keep the market vastly updated as we go along. Now Plant 3. Plant 3 is what we're very proud of actually because given our operational success, given our cost resilience and given our strength as a business throughout cycles, what we've shown basically in 2025 has not gone unnoticed by the main development banks throughout the world, by the main players throughout the world, by the main financiers throughout the world. So we do have dialogues going on for building Plant 3. Building Plant 2 and 3 together is not new. In fact, in December '22, when we filed our DFS for expansion, that was the plan. So much so that we invested in building infrastructure for 3 lines. The goal was to do 1, 2 and 3 sequentially and maximize what we call construction synergies. Unfortunately, lithium took a tumble in '24, and we quickly aborted that plant, and we stuck to just the first plant. By the end of '24, we resumed Plant 2, and we went all in, again, with the volatility of tariffs in '25, we aborted that plant and we stuck to Plant 1. But doing 1, 2, 3 is actually what we have been designing this industrial complex for. Why? We spent the money in the infrastructure, and that was not a small feat, meaning we have the water to feed 3 lines. We licensed to feed 3 lines. We have the sewage inbound treatment station to feed 3 lines. We have the power substation to build -- to feed 3 lines. So from an infrastructure point of view, we are ready for 3 lines. And this is why we're delighted to actually say that, that has not gone unnoticed. And we have, let's say, no shortage of choices from where to get funded with the appropriate kind of debt, development financing debt to build these 3 lines. Operator: Our next question comes from David Feng with CICC. Can we have some color on how Sigma would mitigate any potential fluctuations in fuel costs and power costs? What percentage does diesel costs account for in your cash cost or AISC? Ana Cabral Gardner: I don't have the number by heart, but I can talk about power. It will have 0 effect in power. In other words, when you think about power, our power is fixed at $2 per kilo -- $0.02 of $1, meaning $0.02, $0.02 of $1 per kilowatt hour. This is fixed. One important point, power is renewable here in Brazil. So it's coming from a hydroelectricity dam. And we have a 5-year agreement, which is set to expire 2.5 years from now. So we're going to be good with power. Diesel is the element that is a little bit less straightforward to explain. First, because we got biofuels on the mix, and that is mandatory by law. Secondly, because our oil company is state-owned, and they have what we call a diesel compensation account, which works like a shock absorber during oil crisis. In other words, the diesel costs don't go straight to the consumer as they increase globally. Petrobras absorbs some of that shock initially using what we call the oil compensation account and then it releases in the market. And that was created because all transport in the country mostly is done by trucks so that -- and trucks are individual entrepreneurs so that they have time to plan to actually send that cost into their customers. So we're going to revert back to you on the percentage of diesel in our costs with that knowledge. Operator: This concludes the question-and-answer section. I am returning to our CEO, Ana Cabral, for her final remarks. Ana Cabral Gardner: Well, I want to thank you all of you. And in fact, everyone watching us for the trust. We have gone through 2025, which was one of the most volatile years in lithium, delivering exactly as we said we were delivering resilience, demonstrating operational excellence and executing to plan. We already started '26 on a fantastic note because of what we've learned in 2025 as far as becoming more and more and more resilient. So that's the effort, the collective effort of our management team, of our workers, of the team here in Vale do Jequitinhonha, essentially working like what we call racing horses. We lowered the flap, we focus on our lane and we raised our own race without looking to the sides, focusing on the target. And that's how we've been running this business, and this is why we achieved these results. So once again, I want to thank on behalf of our management-operated shareholders here that work at the company and control the company, we want to thank all of our outside shareholders and reiterate our interest cannot be further aligned. There isn't another company in the sector that's management-owned, management-operated, where employees are shareholders. So for all of you watching, we're in this together. And I want to thank you for staying our shareholders because we crossed 2025, and we are incredibly well positioned to deliver stellar 2026. Operator: Thank you. Thus, we conclude the fourth quarter of 2025 conference call of Sigma Lithium. For further information and details of the company, please visit the company's website, www.sigmalithiumresources.com. You can disconnect now.
Steven Brown: Hello, everyone. Thank you for joining. I hope everyone is doing well and looking forward to a fantastic presentation today. I'm joined here by our esteemed CFO, Matt Boyle, and we're going to walk you through our full year results. We do have a longer presentation than we've had in the past. And so we won't have time, obviously, to cover every slide. So you're going to find I'm going to kind of do an abbreviated presentation today, and the full presentation is available -- will be available on our website. But just for the sake of hitting the key points, I am going to move around a bit for the sake of speed. So I'm going to start off actually on Page 8 because I think you all know who we are, what we do, what markets we serve. You all have heard that plenty of times and are very familiar with the business overall. But I want to point out that we have a history of sort of evolution. That's really what the whole company is about. And as we'll talk about more later, we're in that same position today. And we're kind of built for that. We're geared for change, all the way back from the very beginning when Leonard Sim had the idea to start a virtual queuing product because he got tired of waiting in line at Universal Studios in Florida from the fact that we started out with accesso Passport as a SaaS product when people thought we were crazy, that no one would rely on the Internet for their ticketing. Then we pioneered online ticketing. We were the first to market with mobile ticketing for theme parks and attractions. And so we're always evolving, always inventing. And while we're doing that with the products that we have, we've also been expanding our verticals and our capabilities with a whole range of acquisitions in what is now built, I would call it a global powerhouse across the attractions industry in terms of technology. So we're very familiar with change. And as we all know, the market is quite disrupted right now, SaaS Mageddon, if you will. And we'll talk more about that as we go through in terms of where our -- where we think our position is in that space. So I'm going to -- obviously, Matt will talk about the numbers. You can see the headlines here on Slide 10. Top line revenue, $155 million, cash EBITDA, $23 million. We have lots of cash and a great balance sheet at the end of the year and some great progress on our EPS and Matt will get into all this in more detail. But overall, a solid year. Obviously, we'd like to have more growth. But in a year that was a bit challenging for a variety of factors, we held our own quite well, and I am pleased to be end with the result given all the overall circumstances. So one of the things we've seen in our, I guess, our market updates is just the environment and how we responded to that. And we're a pretty nimble company. If you were around during COVID, you saw that in full play. And we adjust and not only in our technology, but also in how we operate our business. So we had some uneven demand across the geographies. There were some travel disruptions, people not wanting to travel to certain regions for social or political reasons. We had some summer softness with operators. And I think the operators are always struggling to respond. Is it this happening for a week? Or is it a trend? Should we change our pricing? Should we change our promotions? And then also, we were dealing with the overall backdrop in terms of our trading, I guess, you could say, our share price with the sort of indiscriminate, as someone called it, indiscriminate software sell-off despite the fact that we feel our position related to AI is actually very strong. So what we've done is our commercial team has done very well. You can see our wins. We've had a great focus on cost discipline. We've lowered our headcount from just to about 600 now, 605 or so where we stand today and focusing a lot on productivity and efficiency, some of that powered by AI, some of that powered by just rethinking how we're structured. Our margin, our transactional revenue was flat. It's important to note here. We didn't go backwards. And I think in hindsight, some of the conversations or updates we had about transactional revenue softness could have implied that we were going backwards. And really, what I meant was that we weren't seeing the growth that we had hoped for. So I just wanted to point that out because I think some translated the fact that, although, market was soft and transactional revenue went backwards for access, but that's not the case. Actually, it held flat even in a difficult market backdrop. And importantly, as we announced today, we laid out and have facilitated a structured transition plan between myself and Lee, having hired him at the beginning of last year. He is now ready to take the helm on May 1. So a lot of information here on the slide on Slide 12. A fantastic new Chief Commercial Officer in place. We've really refreshed our go-to-market approach. We've thought about our look and feel. You may notice today, our presentation looks a little different than it has in the past. We've gone to a sort of crisper look, more modern look. We have a fully a brand-new website, which actually is quite a project with all the products and markets that we serve. And as a result, our pipeline looks really good. It's continuing to strengthen as the year has progressed. And the quality of our wins has improved. We're seeing more customers from our legacy product moving into SaaS solutions or new customers coming in looking for SaaS product and also continuing to expand our relationships with existing clients. So overall, our win rate has dramatically improved. The new business that we signed compared to 2024 was roughly double in terms of annual value. So we're really happy with the traction we're seeing on the commercial side and with the new focus that our team has. 13 and 14 really are a bit of just an update on how things are going with both accesso Freedom and accesso Paradox, 2 acquisitions that we've made in recent years. And just highlighting the fact that we've thought about these acquisitions and these different products very carefully. And sometimes it takes a little patience, but our strategy is intact, and it's really paying off. We're seeing great momentum with Freedom. We now have 63 venues that are contracted and continuing to grow. That's more than double than we had in the prior year. And it's proving to be a really important part as prospects consider their overall operation and the benefit accesso can bring to them by having that integrated platform between ticketing, food, retail and all kinds of things. Same thing with ski, accesso Paradox, which is really an acquisition we made is to give us a path forward for our clients that are on Siriusware, which is an installed application. Customers looking to move to SaaS needed an alternative is particularly in the ski market. And accesso Paradox is doing exactly that. So we're seeing great move to -- from the clients in that Siriusware product moving over to our transactional model or SaaS model. And overall, just in terms of ski, remember, we have 160-plus resorts as clients that's double the nearest competitor in this sector. So we are very strong in ski and continue to grow. And I believe it's a very important vertical for us to continue to stay focused on and to continue to innovate with. So I want to take a moment on this one because if you're on Slide 15, about virtual queuing. And I think this is really important because context does matter. And as the headline says, one decision is not a verdict on the product. And we sort of had a lot of focus around this, a lot of chatter around what's going on with accesso and queuing. And I think it's important to point out that we have 25 years of fine-tuning a really robust application that works at scale and handles a wide range of scenarios. And as I called out on the slide, this is not something you can vide code over the weekend. And it's not just about the base idea of, okay, who's next in the queue, what's happening? It's all the multitude of scenarios that go on in an environment, when you have 10,000, 15,000, 20,000, 30,000, 40,000 people in a park and 15, 20 attractions, all the different variables that are going on, helping guests with accessibility, accessibility needs, the whole range. And importantly, we do still have IP. I know that our core patent expired some years ago, but we've continued to file patents for specific functionality that is very critical to how the application works when you're running at scale. Again, someone can make a very simple [ lo-Q ] type product. But our application and queuing is much more robust and much more significant than that. And we had a successful defense of one of those patents in 2025 that we're very happy about. So I just want folks to think about this product as something that's obviously the foundation of the business. but it's not a legacy product. It's not a tired product. It is a fantastic product that not only proves itself functionally, but also from a revenue perspective. And as we noted midyear last year, one of the major customers indicated they were not going to continue using the product. Near the end of the year, they changed their mind on that. They've extended through this year and actually have a pilot going at 2 additional locations and very, very pleased with those initial results from those pilots. So I just wanted to sort of put a pin in this because I think it's super important that we realize that LoQueue is a very great product, and it will still be a centerpiece for us from a product strategy. A couple of pages here, sort of 16 and 17. I won't go through those in detail. I think it goes without saying that every organization is looking at AI enablement in terms of how they work. We are certainly do that -- certainly doing that across every single area, including myself. Much of this presentation has been designed by AI as a matter of fact. And we are looking at everything from engineering, product design, sales and marketing, operations, so many tasks that can be expedited with the use of AI tooling, all in different scenarios. And we are seeing some great efficiencies coming from that, improved work product, improved time to market with everything across the board, whether it's an application, whether it's meeting notes, whether it's marketing content, we are -- we have embraced AI across the organization. And it's also allowing us to find some efficiencies, but also to be a better business to operate more efficiently and more effectively and be faster at bringing things to market. So we're going to talk more about AI in a minute as a product and how that as a strategy. But I think it kind of goes without saying that we're embracing AI in the organization. We're a technology company for goodness sake. And it's at the core of what we do. I have multiple AI applications on my own desktop. And I can only imagine how many our developers and our operations teams are using in their work every day. And so it's important just to call that out. I don't think it's something that you need to hear about every presentation because it's sort of, as I said, goes without saying that this would be a fundamental part of how we operate. So with that in mind, I want to save as much time as possible for the strategic inflections that is coming up later in the presentation. But I'm going to turn it over now to Matt to cover the financial highlights for you all. Matthew Boyle: Thank you, Steve. So key financial highlights on this page to call out. So you see at the top there is cash EBITDA was $23 million, so plus 0.8% up on the prior year, a margin of 14.8%, again, consistent with the close to 15% that we had in the prior year. So cash EBITDA for those that aren't familiar with it, is our principal operating metric. It is an adjusted EBITDA number less capitalized development spend. So our revenue was GBP 155.1 million. That was plus 1.8% up on the prior year on a reported basis. On a like-for-like basis, it was up just under 4%. So there were a few like-for-like adjustments to strip out there being the disposal of a Brazilian subsidiary that we made in January 2025 and a couple of -- well, a B2C business that we disposed of in 2024 and a onetime hardware sale that we also had in 2024. So stripping those out, we were just shy of 4% growth on a like-for-like basis. You'll see gross margin there, up slightly on the prior year, up to 78.5%, up from 78.1% in the prior year. That really is just due to the margin mix or the revenue mix -- so the hardware is typically a lower margin, and we didn't have it in 2025, so up slightly. You'll see there a notable increase in statutory profit before tax, which is very strong as well as a notable increase in adjusted earnings per share. And again, a very strong -- Steve mentioned it, strong balance sheet, so GBP 30.5 million of cash at the year-end. And that is after significant share repurchase activity that we've had over the 15 months -- past 15 months that I'll cover in a later slide. On the right-hand side, you'll see a mix of our revenue on a -- by type basis. So 84.6% is repeatable. And just as a reminder, the majority of our revenue is about just shy of 3/4 is coming from transactional arrangements, whether that's on a revenue share basis or a cents per transaction basis. That's the major component of repeatable revenue. And then we also have some support and maintenance agreements as well over term periods. Next slide, please, Steve. And then this slide, again, for those of you that have followed us for a while now, this is our breakdown of that revenue by type into the more granular buckets that we have. So at the top there, you'll see repeat the breakdown of repeatable revenue. So within transactional revenue itself, you've got virtual queuing. So we highlighted that had quite a choppy peak seasonal period in that summer. So we were down 6% compared to the prior year, but relatively flat ticketing and e-commerce. So flat attendances equates to flat ticketing revenue, but resilient despite that. And then offsetting that, you've got growth in distribution of 4.5%. So we mentioned this at the half year, where there are flatter attendances, operators will tend to lean on those distribution channels for promotions and discounting to fill the gaps that they have, and you see that reflected in the numbers there, sort of the 4.5% increase. So there are other components contributing to the repeatable bucket are recurring license fees that were up 30.8% and maintenance and support agreements are both up 16.8% and they're being driven really by the new Horizon venues that we've had going live throughout the back end of '24 and throughout '25 and predominantly in the Middle East, which operates a license and support model and less so of a transactional model. And then beneath that, you'll see the contributors to our non-repeatable bucket. Again, I think this is really highlighting the resilience of our business model. So whether there is flatness or less lower growth in transactional, you do have this service-based nonrepeatable business that we can turn to. So you'll see increases there in implementation change request and billable services and the professional services line that we've broken out on a more granular level this year to make it easier to follow. So the increases in implementation and change request really customers wanting advanced change requests or advanced road map items to align with their own projects or desires that they may have. And then we have a very willing and able professional services team that perform adhoc customer requests. And typically it fluctuates year-over-year, but really is another boat another string to our bow. And then the final item to call out there is the hardware line. So again, touched on it earlier, you'll see a drop of about $1 million, and that's really because of the onetime accesso Prism sale that we had in 2024 that we wouldn't expect to repeat in '25 or going forward. Next slide, please, Steve. And then this is the income statement. So a couple of call-outs on this slide. Really, we've covered revenue and cost of goods sold is the admin expenses. So flat there, which really goes to show the robust cost control we've had throughout the period. So reported admin expenses up 0.2% and the underlying admin expenses up to GBP 99.5 million, which is up 2.5%. The underlying expenses we have majority being a SaaS-based business, mostly payroll and headcount-related costs. And you'll see on Steve's earlier slide that we ended 2024 on 682 heads. We ended 2025 on 655 heads, and we're now down at 600 -- roughly around 605 heads, really having robust cost discipline and making sure that we're rightsizing the cost base to reflect the revenues that we have. And then the final piece to call out here is the net finance expense, I will call it. So that is a net number of GBP 0.1 million expense for the current year, which is significantly lower than the prior year. And then that's reflective really of the fact that we had lower drawings throughout the year. So we were drawn roughly about GBP 10 million average on the facility throughout the period compared to double that in 2024 as well as having some positive FX revaluations. We have a USD facility set in a GBP entity, so we benefit from the positive gains in that facility, and that's reflected in the finance income line. The next slide, so cash EBITDA. So this is bridging from the previous slide where you saw operating profit to how we get to our cash EBITDA numbers and the adjustments that we're making. You see the pretty limited exceptional expenditure during the year. Really, that's only related to our acquisition -- the disposal, sorry, of the Brazilian subsidiary. And then you'll see the amortization line dropping down quite dramatically during the year. That's really assets becoming fully amortized. So there's a 20% -- 20% drop in the number there year-over-year, assets becoming fully amortized and the cost dropping off. You'll see the share-based payments there dropped to about 14.9%. So we run equity programs for all of our staff, but the vesting assumptions changed slightly during the year, which is reflected in the cost decrease that we have there. And then the last one to call out on this slide is the capitalized development spend. Again, we're very prudent on this number. So you'll see a slight increase from GBP 2.6 million to GBP 3.1 billion, but that's still only representing about 2% of revenue year-over-year. And that's all really to call out on that slide. And then this slide is showing cash flow. So I think the thing to call out here really is the strong, stable, sticky nature of our cash flow. So you can see year-over-year, very, very consistent and strong free cash flow generation. So you can see the top there, GBP 1.8 million up on cash flow before working capital movements. And just to touch on those working capital movements, you'll see a large swing there from negative GBP 11 million almost in the prior year to plus GBP 6 million in the current year. So that really reflects the seasonality, particularly of our distribution business, depending -- it has a seasonal peak in December and depending on whether it's collected at the cutoff of December or whether it hasn't, it makes a significant difference on a December basis throughout a 3- to 5-year average, you'll see it normalizes quite dramatically. So that's driving that movement. Back to previous slide, Steve. Yes, sorry. And then the other things to call out on the cash flow are -- you'll see there the GBP 4 million acquisition, just over GBP 4 million acquisition of intangible assets. So that's the OneRisk intellectual property that we purchased in the midyear. And then you've got GBP 15.9 million on share buybacks and a further GBP 4.1 million on shares for our Employee Benefit Trust. So we ended the year on GBP 30.5 million, which is gross cash of GBP 41.4 million and borrowings of GBP 10.9 million. So again, very, very strong healthy balance sheet that we've got. Just touching on the outlook before we move on. So we have made movements, I think, it's fair to say, since the year-end. So we've had the tender offer of GBP 20 million as well as the acquisition. We expect to end the half year, so H1 in a relatively very modest net debt position, which is consistent with our normal seasonal cash profile. And then we collect cash significantly through H2, and we'll end the year -- end 2026 back in a very strong net cash position. And then final slide for me, really touching on capital allocation that we mentioned at our interim, but bringing to the fore again here. So we've operated quite a number of schemes over the past 12 months really at this point. So first buyback started in April 2025. So we purchased 1.7 million shares for just shy of $11 million a further program extended that for another 1.2 million shares for $5.3 million back in October through January '26. And then on the 18th of March, we completed a tender offer that you will all have seen for $20 million returning or purchasing and canceling 4.8 million shares and just shy of a total of 20% of the shares in issue being canceled over that period and a total of $36 million return to shareholders. So we still hold a very strong balance sheet post all of the movement post year-end, which gives us leverage to continue to providing shareholders -- shareholder returns through meaningful capital allocation in the period going forward. And that's everything for me. Back over to you, Steve. Steven Brown: Sorry, Matt, I'll practice your slide turning better than next time. All right. So on to some very exciting things. And there's a lot to unpack here, and we've tried to make sure we have plenty of time for this. And then obviously, we have a lot of time for questions at the end as well for those of you that have questions. We spent a lot of time thinking about AI, obviously, not only internally, but also what it means from a product perspective. And importantly, what are our customers looking for. But I want to start with just kind of highlighting what the overall AI space looks like. And as I said before, there's been a sort of indiscriminate sell-off of software companies. And it feels like everyone sort of said, run from software, and we'll figure it out later in terms of which ones are viable, which ones are at risk. And we obviously have an opinion about where we sit in that, based upon the facts of AI and the different categories of businesses that are at risk. And obviously, on the left-hand side, you see companies mainly that have per seat pricing. That's the big underlying issue. Think about all the applications we use in our daily lives, our e-mail, things like our word editing tools, all those applications that we use every day are seat licenses. And so companies that are running on seat licenses are looking obviously at a declining workforce, lower seats. And not only that has a onetime effect, but a continued drip of lower seat licenses being needed. And so those sort of are the big core types of products that are in the highest risk category. In the middle, you've got some companies that are systems of record. They have a lot of integrations, but the data is sticky, but AI really just become an interface layer, sort of translation layer. And then on the right-hand side, you see categories 4 and 5, and I think we sort of sit in the range of those depending upon the product that we're talking about. But vertical systems of record, deep domain expertise, which is certainly accesso, proprietary data, proprietary logic, obviously, there's a lot of that in our business, transactional pricing, not seat license pricing. And AI -- the jump -- the business in these categories really AI enhances them versus replaces them. And we clearly believe that AI enhances everything we do. As one headline we have, it says it makes us more valuable, not more vulnerable. And I believe that is absolutely true. And you can sort of digest this and think about, okay, where does accesso sit, but I do believe we've been caught in a wave of the sort of everyone running from software -- and when folks start peeling back and really categorizing the companies in the space, they're going to realize that, well, accesso was in a really strong position and not only in a strong position today, but also where we're going is going to further secure that position. And so I just kind of thought this slide was really helpful in terms of putting some context around that because we get a lot of questions about, oh, what's going to happen to accesso with AI. And I think it's going to make us a lot better. So as I said before, we have embedded customer data. Our systems are mission-critical. They're not a nice-to-have system. There's not an easy alternative to maybe work processing like you may have today or e-mail systems. We have 20-plus, probably almost 30 years of accumulated tech logic. And that's hard to come by in our space and not just across ticketing, but across a range of solutions that our operators are using. We have a whole ecosystem. We're not just one sort of a one-trick pony. You can come to us whether you need 1 solution, 2 solutions or 9 solutions. And we can help you out with that in an integrated and coordinated manner, and that's something that absolutely no one else has. And importantly, just our structure of our transaction-based revenue. And we've certainly had the jabs about that over the years about all being transaction-based, but I think it puts us in a really great position, and we are thankful we are in that situation versus having sold our products on a seat license basis, for example, we are well positioned and not under threat of -- from a revenue perspective that a lot of the other companies are going to be facing in a pretty strong way. So as I said, we have a strong position in what is an otherwise noisy market. And from an offense perspective, there's nobody else that has everything we have to offer to operators of these venues. And what we've stepped back and looked at is clearly, we're going to innovate within our products. Passport will get AI. Paradox will get AI. Horizon will get AI. Freedom will get AI. All of our products will get AI, where it benefits the product, where it benefits the user. But importantly, that overall view is really where AI is going to be at its strongest. The ability to take different components, different silos of data and make sense out of that and turn it into insights is invaluable. And it's not just about our systems, it's about all the systems the operators use. That is the opportunity. So I'll talk more about that in a minute, but we sort of have 4 things we've been working on in the past year, and they are accelerants of our growth going forward and at the core of our innovation history. Number one is we've expanded our view on payments. This is something that's been well considered because when you embark upon a journey on payments, it's rather permanent. You're installing hardware with the venue, the terminals you check out with, you're doing lots of internal plumbing. And importantly, you're relying on this partner for service, which is an important part of our customers' business. And so when you're going to connect yourself to a partner, you need to make sure you're connecting to the right partner because you don't want to sort of get -- have issues with your payment process that then sort of backwashes on your overall relationship. And so we spent quite a bit of time, the majority of last year and even part of the year before, evaluating all the different providers that are out there, and we're very happy to say we've secured a partnership with Adyen, and I'll talk more about what that looks like in a moment. Composable commerce, we've mentioned that before. At the core, as I reflect on accesso overall, e-commerce is at the core. It is our absolute powerhouse. And not just for ticketing across everything we do, leveraging that expertise for transaction optimization is absolutely foundational to this business. And we have to always evolve. And so right now, we are well underway with what we call composable commerce, and it's our next evolution of e-commerce and how customers will buy when they go to their computer, when they go to their phone. Alongside that is conversational commerce, which is there will obviously be people going to their computer, will go to our phones for a very long time, but there's a big wave coming, and that is conversational commerce. That is going to ChatGPT. That is going to Meta AI and saying, "Hey, I would like tickets to LEGO land this weekend. What are the options? I'm looking for a 6 flags annual pass. Can you give me my choices and have all that on the chat, never typing a thing on your keyboard or on your phone. And we have really made great progress on this. And in fact, we're ready for our first customer pilot here coming up in the next coming weeks, actually, allowing guests to browse, order and pay everything via conversation. And that is an example of, again, another level of innovation, just like mobile ticketing, just like being a SaaS company, this level of innovation and getting in there early, when you can be an early adopter, you can learn from those smaller sample sizes and perfect your process. So when it becomes larger, you're the leader. And last but not least is our AI evolution from a product perspective. And as we shared today, we have acquired DeXibBit. We identified that as a target. rightfully so, Lee brought this to our attention early on after joining accesso. And after getting to know them and realizing what they've built, it was clearly an opportunity for us to leapfrog to use the term to accelerate our capabilities. And we certainly looked at alternatives and hands down determined that acquiring DexibBid and bringing that into our ecosystem was going to be a game changer for us. So I'll unpack these a bit more as we go through. Payments are at our core. start with payments. We move billions of dollars a year. Passport alone moves something like $4 billion of revenue. That's just Passport. Think about all of our other products in total, we are moving a tremendous amount of money. And what that does is it allows us to get scale pricing. Our individual operators, maybe they sell $20 million a year across their whole resort or $200 million, they can't access the pricing that we can access when we look at the billions of dollars that we process. So what we're doing now is we moved from being a payment gateway, which is what we've had forever, which is where we hand off the transaction to the processor. We're now going into actually being a processor with a partnership with Adyen. And what that does is it allows us to, a, bring much better pricing to operators that can't negotiate anywhere near that level of rate. And it allows us to integrate our system in a more comprehensive way to become less disjointed, if you will, because we can then end-to-end offer the package that is plug-and-play more so than, please go here for your payments, go here for this, go here for that. We can bring you the whole package. And so within that, on the payment gateway, yes, you get a fee for every transaction that goes through. But on the processor side, you get a portion of the margin as well. So in addition to giving the clients a much better rate, access to much better rates, we also are rewarded with that for bringing those clients into the Adyen platform. And so it expands a new revenue line for us in a way that is scalable, not just across ski or theme parks or live entertainment, but across our whole business. And so that is a very scalable opportunity that over the sort of midterm, long term, is going to be a very valuable line item for accesso in terms of margin. And if you think about other operators that are out there in different areas like Shopify or Toast point of sale here in the U.S., they actually make most of their money on the processing side, and they don't make a whole lot from software, if you look at their financials. And so this is an area that we have not really explored until now. And we've made a big move with the partnership with Adyen, which was by far our top choice. Their global footprint is phenomenal. And they're going to give us that end-to-end relationship that we're looking for, for our customers. So our clients will get better rate. It's less complicated. And by the way, it doesn't take much capital for us to do this. So we're off and running. We'll start bringing customers on here mid-2026. Obviously, it will take time to scale, but we'll be moving on this very promptly to make it a core part of our offering. So I talked about composable and conversational. There's more details on this page. If you think about e-commerce and maybe true to my heart, if you think about excessive Passport, e-commerce is -- was the lifeblood, is the lifeblood of that product. And we've taken that learning across our whole product set in increments. And products all have their own e-commerce I guess, you could say module, right? But what we're doing with composable commerce is we're separating that from Passport, and we're making a commerce layer, an e-commerce layer that can work across any of our products. So it's adaptable and scalable across our product set. So taking that transactional revenue and that incredible optimization we bring to our clients for optimizing their revenue and opening that up to work for Paradox, to work for Horizon, to work across our whole product set is a very big move, and it's an effort we've been working on for about 2 years. We completed our first pilot over last summer. And now this year, we'll start the rollout to access of Paradox. It will be the first of our products to adapt composable commerce. And then clearly, we'll work across the portfolio to bring that to life. But if you look at the revenue profile this brings in, if you look at Horizon, for example, Horizon doesn't have a transactional-based e-commerce product. And why would we rebuild something only for Horizon, when we should build something that works across all of our products. And that's what we're doing. So you might imagine Horizon will be next. And then clearly, Passport will get a major upgrade with composable. So it's not just separate. It's also a different architecture. So if you think about e-commerce as a flow, A, B, C, D, then you check out, that's kind of what we have today. But composable is what it says, it's composable. Think about being able to drag and drop and design your own screens. Think about being able to go in as a user and change your colors, change the shape of the squares and rounding the corners and changing the fonts and changing the pictures and the images, that's what's composable. So we end up with a much more adaptable platform. And it's one of the things that our clients often ask for is the ability to customize the flow and the site to work for their branding, but it has all the optimization within that. So they can't mess with that essentially. We've determined which modules work the best, and we make those modules available to them to drag and drop on their screen. So this is a fundamental part of transactional revenue growth for accessory going forward. A sub to that, I guess, you could say, is conversational commerce. And that is, like I said, you just talk to it, right? And it helps you out with your order, helps you out with your choices. And this is where everything is going. And going to a venues owned website will certainly happen for many years to come. But there's going to be a convergence of shopping within things like ChatGPT, where everything we do will be -- we'll go to Claud, we'll go to ChatGPT for everything. And it will shift from being a Google search. Google is already doing that today. It will shift from going to a venue's prime website to just using ChatGPT for everything we use or whatever your platform of choice at the time. So conversational commerce allows us to plug in to those chat-based channels very smart and have a dialogue with our product set, have a dialogue with our customers' information and give the user back exactly what they're looking for in a way that we are managing the messaging. We're giving them those options, and we're still controlling the transaction. And again, something operators can't bring to the table themselves, and we're making sure we are -- our plumbing is there. We're making sure that this is available. And like I said, it will be rolling out in a few weeks of the trial at a very significant theme park. So we're looking forward to that. Stay tuned. So shifting now to the fourth box, which is how we think about AI. So my favorite headline here is data everywhere, inside nowhere. I'm going to say it in my sleep. But that's really what we were looking at. And on the left-hand side, you can see an operator all the things she's thinking about, right? Oh my gosh, I have all this information. Everything is in a different folder, right? It's all in a different data silo, guest surveys, social media, ticket sales, weather, accidents, incidents, you should say, their loyalty program, their point-of-sale data from the restaurants, from their retail stores. What do you do with all this data when it's not connected, and that is the problem. And the opportunity is to help them leverage that. So if you want to know how to optimize your labor, you have your labor scheduling system and you have your food sales, 2 different buckets. How do you leverage those 2 together to help the operators create optimized labor schedules, for example? How do you leverage weather, prebookings, social media feedback, marketing calendar, all those to drive dynamic pricing. Connecting all that is something that a human brain simply cannot do that AI now opens as a new opportunity. And so we are absolutely the best prepared in the market to bring this to our customers and to the end markets that we serve. We can see everything across the guest journey. We're embedded in their core systems. We have the foundation for AI insights. And we obviously have a huge customer base. We know how to execute at scale. And importantly, we know the business really well. That's something that's lacking. When you go to ChatGPT or to Claude or to whatever your choice of AI tooling is, it doesn't understand the attractions sector. It doesn't know what a per cap means. It doesn't know what seasonality means in terms of that context. And that's what we bring to the table, right? And that's what the tooling we need to do because that's different than just loading all the data into a random AI tool and hoping it can give you the proper answer, it needs context. So with Dexibit, we acquired that context. We acquired that intelligence. And what we're looking at is embedding the intelligence at the core. And like I said earlier, not just putting AI into our products, of course, we're going to do that, but thinking about it more broadly in terms of what will really make a difference to the industry, which is what matters, and that's what will drive our business. So on Saturday, Matt may be a little tired still. On Saturday, we completed the acquisition of Dexibit -- and we're bringing that into accesso and into the market as accesso Intelligence, which happens to stand for AI, by the way. And it's an AI analytics, demand forecasting, capacity planning. It's a big data management platform. And what's interesting is it gives you a single view across everything, not just the accesso systems. Clearly, we're important to that equation, but it gives you systems from other vendors. Maybe you're using a different food system, maybe you're using a different scheduling system. You need weather data. You need event data. You need local event data. You need school calendar access. You need all of that. And what it does is it unifies all that into one layer of intelligence. And the -- what Dexibit has done over several years now has accumulated the context, if you will. So the models are trained, the AI models are trained on specific context, like what does seasonality mean? What does an event do? What is an event -- what event in town has an impact on my attendance this coming weekend. When it rains, what happens to my attendance. When the sun is out, what happens to my attendance. All of that off-the-shelf AI absolutely does not bring to the table. So for us, this is clearly a leapfrog move. I did enjoy the frog icon, I have to admit. And we certainly evaluated whether this is a build versus buy -- and we determined that buying this was going to catapult us ahead of the industry and give us something that would take us years to build on our own. So there are already 75 venues using Dexibit. They include things like the Smithsonian. So a very good, strong blue-chip customer base. They have 1,000 prebuilt visualizations or dashboards, if you will, and they're already integrated to 100 systems. That alone would have taken years for us to do, just the integrations. So what it does, it brings all these things together on the left, right, food sales, wait times, whatever it may be the venue has and their different data forward or data silos. First of all, it gives you reporting, okay? Reporting is really important. And we struggle ourselves to bring all of our different applications if someone is using more than one of them into a single view. We get that immediately, just add water and you're going to have dashboards across all the accessory applications that you're using. And that will give you -- will give us a significant advantage in the marketplace and a big advantage for our clients to have a single view across the business. There's also an important part, which is called Voice of the visitor, which is looking out across the Internet at all the things customers are saying about your venue and bringing that all into a consolidated perspective and also providing you insights around things you can do to improve any concerns that visitors might be expressing. So what we do in Phase 2 is we move into predictive operations. So things like demand forecasting, what should I expect for attendance this Saturday? What should I expect for attendance across next year, dynamic pricing, things like staffing, as I mentioned before, as well as capacity planning. That's sort of Phase 2. And in fact, I think Dexibits already pretty far into this. What we'll be doing is looking at bringing that into our product set as capabilities. So imagine accesso intelligence taking all these different variables and creating dynamic pricing and then feeding it back into Passport, feeding it back into Verizon, feeding it back into Paradox. So it becomes a loop of not just putting data out about what happened, but helping you predict the future and operationalize that into something that maximizes revenue. And then Phase 3, that is sort of, okay, Star Trek here, but this is not far away, by the way, which is allowing things to automatically happen, right? Self-healing operations. So when you see something happening, you have the system respond to take care of it versus opening a trouble ticket, for example. So that is the next level. I think where we're going to see accesso out of the [ issue ] is going to be Phase 1. We're going to be largely there probably in a matter of weeks, honestly. Phase 2 will then be a process that will happen over -- starting this year, over the next couple of years and getting better and better every single day. So just the intelligent reporting alone is a significant advantage to the industry and the elements of the predictive operations that will come to market very soon and the ones that are already there are something that no one else is offering. So what you end up is a little bit of a complicated graphic that shows, I think, in one view, accesso in the middle, our applications, whichever ones you're using, wrapped around a payments platform. And then the internal systems, other systems you're using, your CRM system, your financial reporting system, Google Analytics is looking at your website traffic, your hotel management system, which we don't offer today, your visitor survey data and then external data like weather, school calendars, social sentiment, industry data, economic data, all of that can be combined to give you through accesso intelligence, applying sector context, all the data, all the dashboards that are there, being able to interact with a conversational engagement to do this and give you all the things you see across the bottom, forecasting, revenue optimization, dynamic pricing, ops planning. And I think an important part here I want to highlight because I didn't cover it before is that third green box, conversational. So having grown up in the theme park industry, my early days was deep in spreadsheets and a lot of manual data work. And what would happen is everybody comes to you asking you, can you run this query for you? Can you build a spreadsheet for me? Can you give me this report? The operator, the operators don't have the ability or the access to that kind of data or the skills to mine the data. And what Dexibbit accesso Intelligence brings to the table is conversational insight. So anyone with any skill level could ask a question, what was my #1 guest satisfier yesterday? What food items sold the most on Saturday? Which food items didn't sell on Saturday? What should I expect next week because there's a big concert in town? Will it affect my attendance? You can ask those questions and it can take all this information and come back to you with an intelligent answer, insight and predictions. And that's really what unlocks the power here is not that you've got to be a master in database queries, you can be anyone, you can be the CEO, you can be the Head of Marketing, you can be the store manager, and you can use this by simply asking a question and getting back the data you need, whether it's an answer, whether it gets you back a spreadsheet, whether it gives you back a report, that is conversational insight that absolutely does not exist today, and it's across all of these squares on the page, not just one system. This is an absolute game changer for accesso and importantly, for our customers. So Matt, you're going to cover the outlook, I believe, -- or am I going to cover the outlook? I'm going to cover the outlook. So the outlook is coming up, I think the slide is actually out of order. So #1, we're unrivaled in our position, cover all that ad nauseam. We're engineered to evolve. One of the things that we've gotten on the right side, you'll see, we've gotten beat up a little bit in the past about the amount of money we spend on R&D. Well, what that has done is kept us current, kept us flexible, kept us adaptable, and we are ready for AI. And if you scrim on the R&D, you find yourself in a position when something changes, you're not able to respond because you now have to go and spend the next couple of years on significant deficit of technology. Accesso is not in that position. And if I've ever been thankful for our commitment and our continued investment in our products, it's never been stronger than today and the fact that we are literally AI ready. And I can say that our competitors by the large, are not in that same position. This is an absolute strength for us, and it will -- and the ability to layer AI on to what we have immediately is going to have a significant impact on this business going forward. So I think, Matt, you now you've got the outlook part. Matthew Boyle: Yes, I'll cover this, Steve. Thank you. So at the top there, you've seen the 2 black boxes, with the guidance we're giving is in line with the current consensus, so revenue of $146 million approximately and approximately $20 million of cash EBITDA. As a trading update, January and February traded in line with our expectations, particularly on transactional volume, that's pleasing given the choppy end that we've had from June through December at the end of '25. Being mindful though that it is still early in the year. We are a seasonal base business and our peaks are in late May, late June through early September and then again in Halloween at the end of October. So mindful that there's still a lot of the year left to play out. Just really highlighting the Middle East piece in there that's in our numbers. So we expect this year somewhere between GBP 4.5 million and GBP 5 million of milestone-related revenue from that Middle East region. Half of that, so approximately GBP 2.5 million, we've delivered already. It's just pending customer acceptance, which is great. The remaining GBP 2.5 million is to be delivered from April through the year-end. So some level of risk there. We -- so far, it has been business as usual for us as best it can be given the circumstances, but it could change in a moment's notice. We did have a positive signal that Aqua Arabia, a large park there in the Qiddiya attraction opened on the 20th of March despite the conflict. So we are happy, but we are mindful of it. The last piece on this slide is just to highlight really the strength in the balance sheet, which I mentioned on my earlier slides with regard to capital allocation. So we have purchased 20% of shares back over the last 12, 15 months and completed, as Steve says a game changer of an acquisition. And we have predictable steady-state free cash flows, and we expect to continue supporting future shareholder capital returns. Steven Brown: Okay. Last slide, I have to leave it up there. Our new tagline, powering the business of fun. I'm going to close with that, and then I'm going to stop a share, so we can take questions from the group. I know we moved through a lot quickly. We have a lot to unpack. It's also been a very busy week or 2 here between finishing up results, finishing an acquisition of a company based in New Zealand, nonetheless. And so we're obviously very excited about all the things that are to come. We're very excited about -- I'm very excited about Lee, having I guess, you could say handpicked my successor and having him here since the beginning of last year, he's fully embedded in the business and having such a planned transition smoothly with such a qualified person, who was not only intelligent and great at what he does, he's a great person as well. So I'm super excited and to have a running start on the next wave of accesso with all the things that are to come. I think the Dexibit acquisition is just -- is going to really make a huge difference in this business on top of everything we already have that's working great. So I'm super excited. And Matt and I are happy to take your questions. So let's go. Operator: [Operator Instructions] We'll take our first question from Katie Cousins with Shore Capital. Hopefully, you can hear me okay. Katie Cousins: Two, please. On the Dexibit -- struggling with the name of Dexibit have you got any examples of their existing customers, who are already using it and anything tangible you can kind of point to how it's improved trading? That's the first one. Steven Brown: Yes. I mean the [indiscernible] is one that is -- that has a notable customer. I mean, Matt, you probably can blame name a few others on the list you have in front of you. I think it's -- the customers often request that they're not being quoted as a customer just for confidentiality reasons, so we can't provide the whole customer list. But there are a few notable ones that I think are important to highlight. And what we see is a very high retention rate for the customers. They see -- there was even one customer example where they said, oh, maybe we don't need this, and then they quickly came back realizing they didn't need it. The power of what it brings to them in terms of being able to operationalize the amount of savings just in report generation alone aside from the revenue and business optimization is very significant. And I can tell you that on the accesso side, we've been working with Dexibit now for, I guess, a year as a partner while this was happening on an underlying basis. And we're 2 for 2. We showed the product to 2 customers and both bought it. So in the first meeting, by the way, they bought it quickly, they bought it without question, and they're loving -- that's on its way. So I think it speaks for itself. And as I told someone yesterday, it's almost hard to explain it until you see the demo and see how it works because it's really mind-boggling. And the operators are getting a lot of value from it. And I don't have exact numbers on what the improvement to them is. I think some of the capabilities we're going to bring into our product like dynamic pricing, for example, will have a material impact on their top line revenue. Katie Cousins: It's good to hear the 100% success rate so far. Yes. The second question is just on -- in terms of new wins, and it was encouraging to see that actually, I think it was 11 out of 43 new wins took multiple products for you guys. So could you provide a bit more color on what products that they've taken? And is there a bit of a pattern between a combination of products? Steven Brown: We're basically seeing any product plus Freedom. That's kind of what the equation would be. Obviously, a lot of Paradox plus Freedom, and Passport plus Freedom. Freedom is gaining traction as there are more customers using it, our referral base increases and it sort of starts to snowball, but it's generally plus Freedom. Operator: Our next question comes from James Lockyer with Peel Hunt. James Lockyer: Firstly, just on the guidance for the year. I think within the GBP 146 million, you've got some milestone payments from the Middle East within that. And obviously, you have some of that in 2025. Am I right in thinking that on the current guidance, it sort of implies a decline year-over-year? And if that is the case, what's the major driver for that? And if not, how should we see some upside from current guidance from that perspective? Matthew Boyle: I'm not sure where you're getting the decline from, James. But the last year, we did roughly about GBP 3.5 million to GBP 4 million of milestone-related revenue from Saudi Arabia. James Lockyer: I meant the group revenue. Sorry, I meant the group revenue. I think it was 155 last year... Steven Brown: [indiscernible] Customer. Matthew Boyle: Yes, that one customer. I mean we do have the loss of a major queuing customer in the current year. And so transactional revenue would be below where it was in 2025 for 2026. And so that is reflected in that guidance. But the Middle East alone, if you're looking at it, will be slightly up where it was for '26 compared to '25. James Lockyer: And what's the implied underlying organic growth from the core business in the guidance? Matthew Boyle: For transactional revenue, you mean? James Lockyer: Yes. Matthew Boyle: Yes. Well, it's -- so it's reflected in our commercial wins really. So if you look at the commercial outperformance that we had, so we have moved from 30 wins in 2024 to 43 in the current year in 2025, and that will be reflected in the growth rate that we have underlying outside of the major milestones and non-repeatable revenue and ignoring the major customer queuing loss. So there will be growth in there. James Lockyer: Excellent -- and on the AI point, I think you flagged some operational efficiencies, their productivity gains throughout that. And obviously, we're early days with where that technology is coming through. Where do you see the benefits over the next few years in terms of time saved product releases quicker in terms of if you able to quantify that in terms of where you think margin might get to because of the AIs you're implementing? Steven Brown: Yes. So we've had enough time now with the tooling and understanding kind of where we see the most efficiencies the quickest. Clearly, any kind of operational or product area, operational area are seeing the most gains. We are not seeing the gains in engineering, which is not unusual, especially when there's so much context required. The tool doesn't quite understand the context in order to just write an e-commerce application for a theme park, for example. It doesn't have experience with that. And so we're seeing -- not seeing the gains in engineering, which I think is not unusual for a lot of companies. It is helping us move faster in certain areas. And certainly, refactoring code is quicker, things where we need to update something, we're seeing some gains there, but not large gains. The bigger gains are coming in sort of our -- like I said, our operations, product and marketing areas. Think about even just sales proposals, the speed with which and the quality with which we can create sales proposals. Those are the areas that I think are going to make the biggest underlying difference in terms of efficiency, both in being able to operate over time with fewer people, but also importantly, being able to move faster, getting quotes out faster, getting product design faster and handling customer queries either automatically through automated processes or more quickly with AI tooling. So I think we're going to see the biggest benefit in the areas outside of engineering, which is more than half our group. And engineering will be a little bit slower on the uptake, and we'll see those -- there will be a decent amount still, but it's not going to be the same level we're going to see in those other areas. James Lockyer: Okay. Maybe just a final one. I think historically, you've talked about a 20% margin. Do you think as the medium-term, longer-term guidance, do you think that this could see the AI investments, the acquisitions you've made recently, the pricing, the weight because your consumption versus per seat, do you think your -- the margin could be higher than 20% over the mid- to longer term? Steven Brown: Yes. I think where we get there is we need to increase our revenue growth rate. And one of the -- there is sort of 2 sides to that. One is attrition. So making sure we stick our customers right, we stick the landing with our customers for the long term, right? They're not seeing some better things across the street, so to speak. And this progress with AI will differentiate us in a way that competitors can't get to for years. And so I think on any attrition basis, this will really help a lot. Although we don't have much, if we allow the competition to continue growing, our attrition could start to grow. On the new wins, this is something that no one else can bring to the table. And sometimes we find ourselves competing on price maybe or customers sort of past history with an application they're considering. This is something that is going to be a differentiator for us that again is unmatchable. And I think our competitors are going to be showing a feature within their own system. They're not looking at the overall client ecosystem the way we can come into the room, already ready to do with the integrations that are in hand. And the conversational AI is really going to be unprecedented. So I think that will help the revenue growth rate. And if the revenue growth rate picks up 7%, 8%, 9%, which is probably about where this company can be given our scale. And at the same time, the cost base is not growing. It's continuing to shrink even by the amounts that we did this year, you get there pretty quickly. And so it's really about not solving -- we can't cost cut our way to 20%. That is certainly not the goal. And I think a lot of our savings, we will reinvest in things like accelerating AI capabilities even further. But at the same time, continuing to lower that cost base and propelling the growth rate is obviously the combination of higher margin. James Lockyer: I'm sure we'll catch up before you go, but I wish you good luck unless we don't. Steven Brown: Thank you, James. Operator: Our next question comes from Jon Byrne with Berenberg. Jonathan Byrne: Two questions from me, if I can, I take them in turn. So firstly, on Dexibit, I guess from a commercial perspective in terms of monetizing, what should we expect in terms of contribution from accesso intelligence going forward? And do you think about it as a stand-alone kind of product to monetize? Or is it kind of primarily a good foot in the door for cross-sell opportunities and sort of supplementing existing solutions? How should we think about it? Steven Brown: Yes. I think it's strategic for us, #1, around our product set and increasing our win rate, which is more powerful than just selling accesso Intelligence on its own because the value of selling intelligence along with Passport, along with Paradox, along with Freedom, that's a much bigger opportunity than Dexibit would have had on their own. And that really is going to amplify both the value that they their product rates, but also the overall results. And so I expect that the commercial model is still a bit of a discussion around that, and we will obviously be managing that going forward. But there will obviously be customers that are out there that can benefit from the technology that don't necessarily even maybe work in our space or they don't use our -- one of our applications. We see that as a lead opportunity. Let's bring them in. Even if they're using a competitor system, let's enable them with some elements of the product. And that brings them closer to accessory and allows us to talk to them more about our actual solutions and maybe switching over. So we see it as a conversion tool. We see it as a strategy to improve our overall portfolio. But I can say we've not sort of said, oh, is this line item today is going to grow in a trackable manner for its own revenue category. It's going to become more of an overall benefit to the business. Jonathan Byrne: Great. And then just secondly, on outlook, you mentioned seasonality. Can you just remind me or give us a steer in terms of concentration in those summer months, say, June to August, particularly given the growth of the ski product. What should we expect for this year? Steven Brown: Yes. It's -- so the majority of our revenue, Jon, comes from that June through September period. So -- and October, a little bit in December, but we think of it as pivotal really for our year. And we had that last year, right, when there was softer and weaker transactional volumes through the back end of June and early July, we revised guidance accordingly at that point in time. So it reflects the importance of it to our business, and that will continue going forward. I mean ski has seen some level of growth. It was certainly our strongest performer in terms of commercial new wins last year, but it will take some going in some way to offset the size and the impact of the attraction space that we have Operator: Our final question comes from Jasmine Rand with Deutsche Bank. Jasmine Rand: Hope you can hear me. Just chiming in for Tintin today. Jasmine Rand, Deutsche Numis. On the customer base, I appreciate you mentioned can be named. But can you talk at all about any joint customers you may have? And then again, I think you just touched on it slightly, but what do you expect kind of pricing for the solution to be looking ahead? And then secondly, on capital allocation, at this level, how are you thinking looking ahead in terms of share buybacks compared to kind of further bolt-on acquisitions? Steven Brown: So the interesting thing -- sorry, we can echo there. Yes, there we go. So interestingly when Dexibit is Angie and her team's focus have primarily been around cultural attractions, museums, if you will. And so our overlap, that's not one of our bigger markets. Similar operations, similar concept to a theme park, but it's just a different space. We certainly have museums in our portfolio, but it's not a primary sector for us. And so our overlap or sort of bumping into each other have been fairly limited. We obviously had gotten to know them before joining accesso. We got to know them as a group much more closely over the last year, year plus. In terms of customer overlap, I think that's what we're going to build going forward. And we see their customer list is additive as new commercial opportunities for us. Some of them are certainly customers we would like to move over to an accesso platform. And so it's really about taking what they've built, where they've learned the context of a venue operator, primarily in the cultural space and now enabling that across the broader leisure and attraction sector. That's really our goal. It's a bit -- obviously, they have a great customer base, but it's really focused on what the potential is for the product within our ecosystem. In terms of capital, Matt, you hold the money. Matthew Boyle: Yes, I'll just touch on the capital allocation piece. So thanks, Jasmine Rand. I think the key point to highlight there really is the nature and the stable, sticky nature of our cash flows, which I hope has been reflected in the last couple of years when you look at the cash flow that accesso generally see, consistent free cash flow, which we've used accordingly to provide shareholder returns over that same period. There's no reason that, that shouldn't continue. So whilst spending $20 million on a tender and making an acquisition over the weekend, we still hold a strong balance sheet, which we would continue to leverage to provide shareholder returns in whichever form that may take, we'll make the best use of our available options at the time that comes, but there's certainly no reason it shouldn't continue. Steven Brown: I'll add on to that, Matt, they wouldn't let me write in the annual report that our share price is frustrating. And so I'll say it now. They thought it was a little too direct. But it is very frustrating, obviously. If you look at our underlying business, it is strong. It's strong. We've got a very good position related to AI. And we have a really great customer set. And we've sort of been caught in a wave of either disproportionate focus on one client, one product some of the AI pressure, maybe some end market pressure as well, a whole variety of factors. And our view, I think, along with many probably of you is that our share price is tremendously undervalued. Our company valuation is much lower than it should be. And I'm confident that this too shall pass. We just got to keep our head down, continue to build great product, provide great service. And at this share price, obviously, buy back shares to the extent that it is reasonable for us from a balance sheet perspective. Operator: That's the end of our Q&A session. I'll now hand over to Steve Brown, CEO, for closing remarks. Steven Brown: Thank you very much. And it seems like this may be my last investor presentation. So I thank you all for sticking with us and staying so tuned into our business over time. It's clearly an exciting business. And I've been through many waves of change in this business since 2007, which turned into excessive in 2012 and then what it is today. I had 12 employees in the very beginning. There's 605 now. We worked, I think, 3 countries. We're working in 31 countries now. And this business is built on changing and innovating and not just sort of building something and letting it run, but it's always being ready for whatever is next. And I think the move we've made here is our big step into what's next and not just adding features and calling it a strategy, as we say in our report, but thinking about it more comprehensively. And importantly, if we always put the operators first, the clients first in terms of what will help their business, then we will win in the end. And I think that's exactly what Dexibit and accesso Intelligence will do for the business is put the client first, help them run their business much better than they can without it. And in turn, we'll continue to be the trusted partner and the market leader for many, many years to come. So I thank you all very much. And I'm sure Lee will do a fantastic job. I have all the confidence in the world, and he's obviously supported by Matt, who probably can use a good rest of out now. So thank you all very much, and we'll talk to you later. Operator: Thank you for joining today's call. We are no longer live. Have a nice day.
Operator: Hello, and thank you for participating in today's conference call to discuss zSpace's Financial Results for the Fourth Quarter and Full Year Ended December 31, 2025. Joining us today are zSpace Chief Executive Officer, Paul Kellenberger; Chief Financial Officer, Erick DeOliveira; and Greg Robles from Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg, please go ahead. Greg Robles: Thanks, operator. Good afternoon, and thank you for joining our conference call to discuss our Fourth Quarter and Full Year 2025 Financial Results. Before we begin, I'd like to remind everyone that certain statements made on this call may be considered forward-looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. Additionally, we may discuss certain key business metrics, which are non-GAAP financial measures. A description of these non-GAAP measures and any comparisons to the most directly comparable GAAP measures can be found in our earnings release on the Investor Relations section of our website. Now I would like to turn the call over to the CEO of zSpace, Paul Kellenberger. Paul? Paul Kellenberger: Thank you, Greg, and good afternoon, everyone. Thank you for joining us for our Fourth Quarter and Full Year 2025 Earnings Call. I'm Paul Kellenberger, CEO of zSpace and with me is Erick DeOliveira, our Chief Financial Officer. We're excited to share zSpace's performance and the progress we've made advancing our strategic priorities. Our fourth quarter results reflect our continued focus on advancing our strategy and controlling what we can control. During the quarter, our software and services revenue continued to comprise over 50% of total revenue, contributing to gross margin expansion of nearly 850 basis points. This performance was driven by strong customer renewals and the continued adoption of our software offerings, which is a key part of our strategy and a testament to our execution and disciplined focus on delivering value to our customers despite ongoing macroeconomic and funding uncertainty. As we formally announced in late Q4 2025, we made structural changes in the business to align to the macro headwinds in the business we saw throughout 2025. We continue to look for ways to improve our business, both top line and bottom line as we get close to finalizing Q1. In addition, in January and more recently, we have announced additional capital via Planet One and [ 3i ] as well as announcing last week the additional restructuring of our [ Itria and PISA ] debt. During the quarter, we continued to advance our strategy by expanding both the capabilities of our platform and the breadth of our customer engagements across K-12, CTE and workforce pathways. We also strengthened our product portfolio with the launch of zStylus One, our next-generation AI-enabled stylist designed to simplify AR deployment and enhance precision across our Inspire and Imagine system. The new zStylus One showcases breakthrough embedded sensors powered by machine learning algorithms that eliminates the need for an external sensor module or embedded tracking in the laptop. Early feedback from customers and partners has been very positive, and we expect this product to support broader adoption of our next-generation platforms as our customers upgrade their hardware. We also achieved meaningful customer wins across several regions and program areas. In Pennsylvania, the Greater Altoona Career & Technology Center strengthened its Dental Assistant Program through the use of zSpace AR/VR technology, leveraging zSpace Inspire 2 and the zSpace Dental Anatomy Application to improve students' understanding of dental structures, support diverse learners and enhance preparation for hands-on clinical skills. In California, Mayfair High School has established a 36-station zSpace Inspire AR/VR laptop lab, where students interact with immersive simulations, applications and guided lessons aligned to CPE and core academic subjects. The lab serves as a central hub where teachers across the campus can bring classes to explore career pathways through interactive 3D experiences, demonstrating how dedicated immersive learning can drive cross-departmental adoption and provide students with early exposure to high-demand career pathways. And more recently, zSpace highlighted the long-standing success of its immersive augmented and virtual reality learning platform across Atlanta Public Schools, or APS, where students have used AR/VR technology since 2020 -- sorry, since 2015 to deepen STEM learning and explore career pathways. Over nearly a decade, Atlanta Public Schools has integrated zSpace immersive learning experiences across elementary, middle and high school classrooms, giving students hands-on opportunities to explore complex science, scientific concepts and practice real-world career skills in safe, simulated environments. Their long-term success underscores the durability of our platform and the impact we can achieve as districts expand diversive learning from early grade through workforce preparation. Finally, our Career Explorer powered by Career Coach AI was formally recognized with Tech & Learning's Best of 2025 Award of Excellence. This recognition reinforces the value our customers are seeing as they adopt immersive career exploration tools that engage students through real-world simulations and align directly to emerging skill trades and technical careers. Collectively, these wins highlight continued demand we see in immersive AI-enabled tools that simplify adoption for educators, deepen engagement for students and help districts strengthen both academic and workforce outcomes. In addition to support our global expansion and ensure accessibility across various educational geographies, we're strategically leveraging artificial intelligence to eliminate language barriers. AI is enabling quick and efficient translation across our platform, including website content and application interfaces and providing tools that can understand and interact in over 50 languages. This initiative not only expands our global reach, but ensures students and educators regardless of their native language, can fully utilize zSpace's award-winning educational experiences, significantly broadening our global reach. In closing, we remain confident in the long-term growth potential of zSpace and our ability to deliver on our vision. That said, we approach 2026 with continued cautious optimism given the ongoing uncertainty and the macro environment in the education market in the U.S. In addition, due to the war in Iran, we are seeing opportunities in the Middle East being delayed. We continue to believe that as the Federal Education Policy continues to take shape and funding mechanisms become more predictable, the longer-term outlook for our business will strengthen. With that, I will turn the call over to Erick to walk you through our financial results in more detail. Erick? Erick DeOliveira: Thank you, Paul. As you consider our results, a reminder that our revenues are substantially recognized upon shipment of laptop units or fulfillment of software license fees. This includes recognizing the full value of multiyear software licenses in the period in which they are fulfilled. Only a small portion of our revenue is rapidly recognized. As a result of this revenue recognition treatment, our financial results can exhibit quarter-to-quarter and year-over-year variability that exaggerates the underlying seasonality of the business. Throughout 2025, we saw dual themes of internal execution success, driving product innovation, quality of revenues and spend management, opposed by external headwinds from tariff policy, freezes and education funding and the longest federal government shutdown in U.S. history to close out the year. Both internal and external themes played familiar roles in our financial performance through the period ending December 31. And now diving into our full year performance. Revenues were $27.9 million, down 27%. As noted throughout the year, software and services revenues outperformed, down only 15% in comparison to total revenues and making up 49% of the revenue portfolio, up from 42% in 2024, a 7 percentage point improvement. This was an important driver of gross margin expansion. As previously discussed, our P&L reflects multiyear software license revenue in period. To help better characterize the run rate health of the business, we offer 2 non-GAAP software operating metrics. As of December 31, 2025, the annualized contract value of renewable software was $9.9 million, down 12% compared with 12 months ago. Also as of December 31, 2025, the net dollar revenue retention of customers with at least $50,000 of ACV was 71% for those customers present as of December 31, 2024. Unfavorable performance on these 2 metrics is attributable to 2 large customers who collectively expanded their zSpace footprint in 2024, but for whom macro factors prevented full renewal of their expanded commitments. Normalizing for these 2 customers, ACV would have been $11.1 million or down 2% and NDRR would have been 88%, pointing to wider stability across the customer base. Bookings for the 12-month period ending December 31 were $26.1 million, down 34% year-over-year. Gross profit was $13.3 million, down 15% against the same period last year. This includes a onetime charge for discontinued software license inventory, which is at once related to our exit of China and also our continued efforts to bring previously resold third-party titles in-house for both acquisition of applications and internal development. Gross profit was also affected by applicable tariffs and duties. 2025 gross margins were 47.6%, up 6.7 percentage points versus 2024. Factors driving improved quality of revenue were sustained throughout the year and highlighted in our quarterly results. Firstly, favorable growth in the mix of software content of our revenues drove 2.5 percentage points of margin. Secondly, product line refreshes in our hardware ecosystem led by the Inspire 2 platform reduced our bill of materials costs. Thirdly, increased first-party zSpace software content, combined with those hardware improvements for a total of 4.2 percentage points of margin, delivering the total 6.7 percentage points of gross margin expansion across the 12-month period. 2025 operating expenses of $28.3 million, excluding stock-based compensation, were up 11%. People-related costs, which make up 66% of 2025 OpEx were up 6% year-over-year, again, excluding stock-based compensation. As a result of corporate restructuring efforts in December 2025, management believes that our current OpEx run rate is closer to $19 million, still excluding stock-based comp, assuming stability of the current external environment. And now for the fourth quarter. Q4 revenues of $4.8 million were down 43% year-over-year, reflecting what amounted to a freeze in both orders and shipments during the U.S. federal government shutdown. For business secured during the effectively truncated quarter, revenue mix trends continue to be in evidence. Software and services represented 57% of total revenues, a 10 percentage point mix shift with significant gross margin implications, with hardware revenues falling below 50% for the second quarter in a row. Bookings for the 3-month period ending December 31 were $3.4 million, down 21% year-over-year. CTE customers drove 56% of bookings value, down from 58% in Q4 '24. Gross profit was $2.4 million and gross margins were 49.1%, up 8.4 percentage points versus Q4 '24. This laps the 6 percentage point margin expansion in that quarter and continues the improvements in profitability we have been delivering. Within the quarter, the 10 percentage point mix shift in revenues was responsible for 2.8 percentage points of margin gain and rate-based factors drove 5.6 percentage points of improvement. Operating expenses of $6.5 million for the quarter, excluding stock-based compensation, were up 9% year-over-year. Our Q4 reported results include $2 million in stock-based compensation expense attributable to grants made as part of our employee equity incentive program. Relative to the 22.8 million shares issued and outstanding at the start of the year, we managed issuance of RSUs to a target burn rate of 6.2% or 1.4 million RSUs, well below our 7% target. As of December 31, 2025, zSpace had approximately $1 million in cash, cash equivalents and restricted cash compared to $4.9 million in cash, cash equivalents and restricted cash as of December 31, 2024. Our path to profitability continues to run through revenue growth via operating leverage, our ongoing expansion of gross margins and tight stewardship of operating expenses. While overall revenues are challenged by headwinds in the U.S. K-12 market, our success in driving more of the revenue portfolio from software is bearing fruit. The gross margin expansions from revenue mix shift into software from additional first-party software and from new hardware product releases are now part of our track record in delivering results. As part of our ongoing attention to operating expenses, we undertook a significant restructuring in December 2025 that resulted in eliminating approximately half the FTE positions of zSpace across all levels and 1/3 of the people costs. We further reduced the size of our Board of Directors from 7 seats to 5 and abolished the executive bonus plan for 2026. Our consideration of these factors was made with the intention of aligning revenues and costs and putting a breakeven EBITDA performance in reach for 2026. Now moving on to our outlook for 2026. Familiar obstacles such as trade and tariff policies remain steadfastly unresolved, although promising developments have materialized. And the macroeconomic picture remains persistently volatile. These external factors present the same challenges to forecasting that we identified last year. Management's approach to 2026 was to consider the scenario in which we see a repeat of 2025's revenue performance and what it would take to weather such an environment. If 2026 presents a second year of top line volume similar to 2025, we believe the cost reductions made in December will allow us to deliver an adjusted EBITDA performance at or close to breakeven. We further believe that the company retains sufficient resources to scale back up to historical revenue highs. And in the event that opportunities for outperformance beyond that should appear, we will consider responsible reinvestment in the business at that time. We do not yet feel strongly enough about our ability to restore guidance on a sustained basis and want to avoid offering guidance in one quarter only to rescind the practice in the subsequent quarter. We will continue to manage the quality and mix of revenues for continued gross margin expansion as we've demonstrated over the past year as well as tight control of operating expenses as these are our 2 best levers for positioning the company to capture upside until our K-12 markets in the U.S. stabilize. Now I will turn the time back to the operator for Q&A. Operator: [Operator Instructions] And our first question comes from the line of Alex Paris with Barrington Research. Alexander Paris: To start off with the macro, maybe 2025 was obviously a tough year for K-12, the industry in general due to perceived funding disruptions, including Department of Education layoffs and inter-agency transfers of responsibilities, not to mention tariffs and the government shutdown. And as I recall, about 10% of your K through 12 STEM revenue comes from federal sources, if I'm not mistaken. So despite what was going on in 2025, most federal dollars came through. I know there was uncertainty, which probably made school districts hesitant to order or renew and things like that, but most of those dollars came through. And the government shutdown is essentially over with the exception of DHS currently. What does the funding outlook look like for 2026? I know you expressed some cautious optimism. And then how has Q1 gone so far? I know a lot of the revenue comes in the last 10 days of the quarter, but maybe talk about January, February. Paul Kellenberger: Sure. Alex, this is Paul here. By the way, about 10% of the funding in K-12 in our market does come from the federal side of things. So you're correct. That being said, particularly in the middle part of last year, Q2, Q3, we saw some very peculiar things. And I can't recall whether we had this conversation previously, but there was one specific state in the middle part of the country that actually sent money back to the federal government because of the uncertainty, and I'll just say their discomfort given all the headwinds and all the stopping and starting of funding. So you're correct with the 10% number. However, was, I would say, the ramifications and implications to our specific buyers, both in the K-12 STEM as well as in Career and Technical Education made them really hesitant and hesitate -- to hesitate to move things forward. So I think that was a big part of the middle of last year, Q2, Q3. Then I think in the fourth quarter, and we had business that in -- towards the end of the year that was impacted by the government shutdown. And maybe it was an excuse, but those facts were pretty -- it was pretty straightforward. That's what we were being told by a number of different school districts. So I know it's sounding like I'm making excuses here, but it was not the year that we wanted by any means, no surprise there. Although I do believe things -- and again, cautious optimism, things are starting to settle. And that's the best answer I can give you kind of looking -- I'll say, looking back at last year and the funding. And then this year, I'll maybe let Erick talk a little bit about the outlook. And here we are, it's March 30. We're not quite done the quarter, but we're pretty close to it and you asked about January, February. Erick DeOliveira: Yes, happy to pick up from there, Paul. What I'd say about the outlook for Q1 firstly requires an understanding that our Q1 is ridiculously back-end loaded, both in terms of bookings and shipments. And some of those on this call will recall Q1 of last year when with only a few days left in the quarter, we ultimately wound up outperforming our guidance by something like 30%. Now that said, we -- earlier in this quarter, the year started out, and we were observing some encouraging year-on-year strength through January and February. In March, the picture has become more mixed in large part because a number of our significant customer opportunities were customers that had previously started their zSpace relationship and are based in the Middle East and are therefore, in the midst of the current conflict there. So it remains an open question even with 48 hours left in the quarter, how much of that volume will actually ship and be accepted to capture revenue in the quarter. What I think I would say is the experience earlier in the year has given us some sense that the market has resumed its willingness to open their wallet, so to speak, and actually take possession and book new zSpace content. But our progress clearly has not been linear for much of the last 12 or 15 months. Alexander Paris: Okay. Understood. And then just a point of clarification, Erick, one of your last comments in the prepared comments, if revenues were roughly equal to what they were in 2025, so say, around $28 million, you're saying that the hope or target is to get close to adjusted EBITDA profitability or breakeven, at least [indiscernible] versus the current consensus of negative $12.5 million for 2026 adjusted EBITDA? Erick DeOliveira: Correct. And the 2 big levers there. So we -- in the absence of being able to forecast in the current environment, we engaged in some scenario planning and said, you know what, there are a lot of factors driving revenue that have proven themselves to be out of management's control. But if we saw a repeat of a $27 million, $28 million year what are the factors in our hands. And to that end, our ability to expand gross margins by approximately 7 percentage points year-on-year and to sustain the underlying business drivers that delivered that margin expansion, coupled with the cost reductions we took in December, we believe, put something close to a breakeven EBITDA performance within reach for 2026. Now obviously, as we move through the year, the revenue performance and the operating leverage we see on that will be the biggest driver. But we feel pretty good around our improvements around quality of revenue that delivered that margin expansion. Again, it all comes back to our ability to retain and renew existing software agreements, our ability to continue delivering hardware improvements that reduce that cost of initial deployment and also to roll out more zSpace-owned software where we just control more of the margin. Alexander Paris: Okay. In the absence of formal guidance, that's pretty helpful and reasonable sort of conversation regarding what 2026 might look like. My last question for now, and I'll get back in the queue is I just wanted to talk a little bit about that strategic investment from Planet One in late January, $3 million convertible preferred. But the really exciting thing there was the potential to expand international sales perhaps through cooperation or a joint venture based on what your press release said. What are you thinking there? And is that a potential opportunity in 2026? Paul Kellenberger: Let me take that, Alex. The answer is we hope so. And the war in Iran just really put everything kind of on the back burner for obvious reasons. Erick alluded -- so the answer is we think so. It's something that we're still pursuing. There are some other opportunities, Erick alluded to in his commentary in the Middle East, even some bigger ones. And we're hoping those come back. Operator: [Operator Instructions]. Our next question is from Rohit Kulkarni with ROTH Capital Partners. Rohit Kulkarni: A couple of questions to kick this off. Can you frame kind of size, scale, scope of these kind of recent announcements in the PR, Greater Altoona, Bellflower Mayfair High School and Atlanta Public School. Just talk about how they came about and how significant do you feel they could be for 2026 just from direct contribution as well as incremental on top of the base of '25. Paul Kellenberger: Yes. Let me take that, Rohit. This is Paul. Every one of those deals was -- I'll put it in the significant category. They're in the 6 figures. They have the potential, Atlanta being a very large school district APS [ length of ] schools, which, as I mentioned, we've been -- they've been our customer for 10 years. And we see some other -- I don't want to jinx us, but we see some other opportunities within that specific district late this year. So all of them, I'll put them in the category of substantial. Greater Altoona was in the CTE segment in a very specific in the dental component of it. I would again say strategic, Mayfair out here, again, a school system here in California that is newer customer. And so we have a combination of both newer customers and existing customers purchasing more. And I'm going to go back to something else. Erick kind of touched on it. I touched on it on my opening remarks. Over 50% of our revenue in the fourth quarter was software and services. And the way we look at the business and the way I look at the business is any time we're over 50% in that category, it's a really good thing. Now by the way, we also had a bunch of other changes we made in the fourth quarter. So that's the best summary I can give you. The other thing that, Rohit, I'm going to reemphasize is the zStylus One, which I mentioned, which is the new -- doesn't require the little device on the side. There's clearly a lower [ bond ] because we have one less device and the implications for it, including how we're using AI in the process. We're super bullish on. We're early in the shipments of it still, but we feel really, really positive about it. Rohit Kulkarni: Okay. Great. I guess you mentioned CTE, Paul. How is the mix today versus previous periods? And is CTE growing as compared to the shrinking on the other side of the business? Maybe comment on that. Paul Kellenberger: Yes. So CTE is more than 50%. I think the exact number is 56% versus 48%, Erick, in the previous year. Sorry? Yes. So it continues to grow. And some of that, Rohit, had to do with the funding. And again, Alex was asking the questions about the funding. Perkins is a big part of money in the CTE world that is a federal funding that has continued to expand and it's an annuity. But the CTE side of the business -- and by the way, along with the applications that we own and control has continued to grow for us. Rohit Kulkarni: Okay. Great. And in terms of -- I think just drawing out what the previous question was around kind of run rate OpEx and kind of run rate revenues that may lead us to a point not too far out in the future that you could have breakeven operating cash flows or even kind of positive EBITDA. Is that something that you feel reasonable to expect in '26, assuming modest shrinkage in revenues, but pretty significant drop in your expenses? Erick DeOliveira: Rohit, this is Erick. I'll take that one. That's our current outlook through the combination of continued margin expansion and the expense cuts we took in December. We think that our run rate OpEx is closer to $19 million, again, excluding stock-based compensation and with continued margin gains and a top line that looks relatively like last year, that could put a breakeven adjusted EBITDA performance in front of us. Operator: And at this time, this concludes our question-and-answer session. I would like to turn the call back to Mr. Kellenberger for closing remarks. Paul Kellenberger: Thank you, Carmen. We'd like to thank everyone for listening into today's call, and we look forward to speaking with you when we report our first quarter 2026 results. Thanks again for joining us. Operator: And ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Fermi America's Earnings Conference Call. Today's call will be conducted by Rodrigo Acuna, Fermi America's Director of Investor Relations. Before I turn the call over to Mr. Acuna, I'd like to read the company's abbreviated safe harbor statements. I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial positions, markets, economic conditions, product releases, partnerships and any other statements that may be construed as predictions of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such statements. Any non-GAAP measures that may be discussed on the call are supplemental to GAAP results and are intended to provide additional perspective on the company's ongoing operations. With that said, Mr. Acuna, the floor is yours. Rodrigo Acuna: Thank you, operator, and good morning, everyone. Welcome to Fermi America's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Toby Neugebauer, our Co-Founder and CEO; and Miles Everson, our CFO. Before we begin, I want to remind you that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks, please refer to our annual report on Form 10-K for the fiscal year ended December 31, 2025, which will be filed with the SEC later today. Today's call will be structured in 2 parts. First, Toby and Miles will walk you through an operational update on Project Matador. Then Miles will cover our financial results. We will open it for questions after that. And with that, I'll hand it over to Toby. Toby Neugebauer: Good morning. Thank you for taking the time to join us. This past Saturday, we had our Board meeting where we reviewed all of the accomplishments of the team over the past 100 days. And it's the first time in 30 years of business that I witnessed multiple rounds of applause. In my opinion, the response to the team's accomplishments were well deserved. Obviously, Fermi heard loud and clear from the market, go get a tenant. Unfortunately, getting the tenant is the easy part. As our shareholders, what you need Fermi to do is to earn the trust of investment-grade counterparties and the investors that provide the financing to fund multibillion dollars per gigawatt construction projects. That requires excellence from engineering to accounting. At Fermi, we're creating a private community powered by a private grid to be the leader in powering artificial intelligence that will shape tomorrow. But it all starts and ends with our tenants trusting us with their business, but just as importantly, their balance sheet to execute on the enormous undertaking in an environment where many are failing. At Fermi, we believe the best way to earn this trust is to do, to execute. I invite and almost plead with you all to come to the site. When tenants come to our site, they are blown away with the scale and the speed of which we are executing, 450 million cubic feet of gas pipeline in, 10 million gallons of water pipeline in, grid connect in, substation for an 800-megawatt, 60% to 70% completed, foundations for our gensets either completed or on the verge of completions. But what really turned our shoppers into buyers was the air permit. When we got the air permit is when the C-suites of our customers got very, very serious about buying. As you know now, we have the 6 gigawatt air permit. On Friday, we filed for an additional 5, which we qualify for and that I have a high expectation for us executing. But first, I just want you all to understand the expectation at Fermi is tenants. We need multiple tenants to maximize the use of our power gensets. I think you have to have multiple tenants because we need diversity of demand to achieve the proper efficiency of what we're creating with this private grid. Second, the Board is very concerned about disclosure that in any way impacts the negotiations on transactions that are multiparty and involve tens of billions of dollars. So while we are signing new LOIs, we are in the mode of coffee as for closers. We are not serving coffee until we have a complete close. It's clear that there have been issues with the stock. And as many of my friends and family and all of you all entrusted your capital and being a steward for your capital, I can't overstate how seriously I take it. I also can't be too focused on the day-to-day fluctuations. We are building a consequential company to solve a critical need for our customers to protect consumers and to serve our country. I'm now going to hand it off to Miles Everson, our Chief Financial Officer. Miles Everson: Thanks, Toby. This is our first Form 10-K as a public company, covering the period from our inception on January 10, 2025, through December 31, 2025. It's approximately 11.5 months. In that time, we moved from formation to IPO and substantially completed the initial phase of Project Matador. I want to frame the financials the way we manage the business internally. A traditional income statement does not fully capture the economics of this company at this stage. We are pre-revenue and in full-scale construction. While our GAAP net loss is significant, it is overwhelmingly noncash. The more meaningful story is reflected in the balance sheet and cash flow statement, specifically how nearly $570 million of investor capital has been deployed into physical infrastructure at Matador. Let's talk about the balance sheet. As of December 31, 2025, total assets were approximately $1.4 billion. Property, plant and equipment totaled $935 million, nearly all of which is construction in progress as no assets have been yet placed into service. Cash and cash equivalents were $409 million at the end of the year. On the liability side, accounts payable and accrued liabilities were $177 million, reflecting the pace of construction and vendor activity. Total stockholders' equity was $1.1 billion. As of March 2026, we had approximately 630 million common shares outstanding. If we turn our eye to the income statement and operating activities, for the full year, the net loss was $486 million. Importantly, approximately $445 million of that was noncash. General and administrative expenses totaled $178 million, of which $133 million was noncash share-based compensation tied to equity incentive arrangements established at formation and in connection with the IPO. Cash used for G&A was approximately $45 million, including $12 million in personnel costs for a lean team of roughly 35 employees, $22 million in professional services and $11 million in other corporate expenses such as recruiting, travel and marketing. Other expenses net was $312 million was almost entirely noncash. The primary components were $174 million related to charitable contribution of Class B units prior to the IPO, $61 million of fair value losses on Series B convertible notes $46 million of losses on embedded derivatives associated with preferred unit financing; and finally, $24 million related to preferred unit issuances. From a cash perspective, operating cash use for the year was $34 million. That represents our true operating cash burn while executing formation, completing the IPO, securing a 99-year ground lease, building the organization and advancing Phase 0 construction, we view this as strong demonstration of capital discipline. When we look at investing activities, which is the core of our financial story and the deployment of our investors' capital, what we see is net cash used in these activities was $570 million, with virtually all of that invested directly into property, plant and equipment at Project Matador and recorded as construction in progress. More than half of this capital was deployed to natural gas power generation, including turbine procurement across Siemens F-Class and SGT-800s as well as GE6B fleets, along with mobile generation and balance of plant equipment. The remainder was deployed across data center infrastructure, substation and electrical interconnection, general construction, land and water development and early-stage nuclear predevelopment. Now let's look at our financing activities. Cash provided by financing activities totaled approximately $1 billion. This included $746 million of net proceeds from our IPO, $108 million of preferred units, $100 million from a Macquarie term loan, $76 million from Series A convertible notes and $26 million from seed convertible notes. Subsequent to year-end, we executed 3 equipment financing facilities, a $500 million MUFG nonrecourse turbine warehouse to support Siemens F-Class procurement, which also fully refinanced a Macquarie term loan and a $120 million facility with Keystone National Group expandable to $220 million for high-voltage equipment, including transformers and switchgear. And finally, the third one this week for $165 million with Yellowstone to finance additional Siemens SGT-800s. Those facilities, combined with our existing cash, give us the liquidity to satisfy our financial obligations for at least 12 months, but we are being deliberate about what comes next. The next phase of capital deployment at Project Matador will be timed to 2 milestones: First, the execution of a definitive tenant agreement; and second, the closing of project financing. Those are the gates. Until both are in place, we will not commit significant capital to the next phase of construction. That is how we deliver shareholder value. We are advancing both work streams in parallel. On the tenant side, we have potential tenants competing for initial power. We are in active negotiations with multiple counterparties. But as of today, we've not executed a definitive lease agreement. Tenant revenues are expected to commence in 2027, but even when they do, they will not be sufficient to fund our full operating capital requirements until Matador is built out and operating at scale. On the financing side, we are in active discussions with multiple lenders and progressing technical diligence now so that we are positioned to move quickly once definitive lease agreements are executed. The project level financing is underwritten to the future cash flows that a tenant commitment unlocks. We expect both Phase 0 and Phase 1 of Project Matador will exceed $3 billion in total aggregate capital deployment. The path forward depends on our ability to execute tenant leases, raise project level debt and bring in strategic equity where necessary. We believe this is achievable. However, these financings are not certain to occur. If capital is not available in the amounts, timing or terms we need, we could be forced to delay investments, amend purchase commitments or potentially surrender collateral to preserve liquidity. We're telling you that directly because it's the reality of building a multibillion-dollar infrastructure platform from a standing start. And because we believe investors deserve to hear it, not just read it in a risk factor. The bottom line, we have the liquidity to meet our obligations. We are being strategic in how and when we deploy capital. The next phase of capital deployment at Project Matador will be sequenced with the execution of definitive tenant agreements and the related project financing that follows. There is more work to do, and we are doing it every day. I want to touch on the REIT election. As we've previously disclosed, we intend to elect REIT status for U.S. federal income tax purposes beginning with our short taxable year ended December 31, 2025. We believe this structure aligns well with the long-duration infrastructure-oriented real estate assets we are developing. Given the level of expected noncash depreciation, we do not anticipate generating material REIT taxable income in the near term. And therefore, we do not expect to pay dividends until such time as taxable income requires it. Finally, I want to highlight for those pre-IPO investors that were subject to a lockup agreement that lockup agreement expires today. Thanks. Rodrigo Acuna: Operator, we're ready for questions. Operator: Our first question is coming from Paul Golding with Macquarie. Paul Golding: Congrats on all the progress on the site. I wanted to ask 2 near-term questions. One being what the key discussion points are with prospective tenants that are being negotiated as you try to work to a definitive agreement. And secondly, more specifically on the near-term energization milestones. As you look to the SGT-800 frames that you've received in Houston, now that you have the equipment on hand, how is the time line coming together for deployment of those assets and how that might relate to your negotiations with prospects? Toby Neugebauer: Thanks, Paul. The #1 issue, the #2 issue and the #3 issue with our tenants is they want all of our power, and they want it all forever. But for our model to work, we need to have multiple tenants so that you deal with the differences in loads. So that really is the issue. And so from -- when they get out there to the site, they're blown away by the site and they realize this is a place you can generate a significant amount of power, and they want it all. In terms of the SGT-800s, we've had quite a bit of luck. So when -- and I'm going to come back to tenant. The units came, as you're aware of, to Houston. We kept them in a free trade zone in hoping maybe we could get a break while we were waiting for our environmental permit. And literally, the second, the Supreme Court had a ruling on the tariffs. We checked them into the country. We saved ourselves probably $27 million to $30 million. And we make -- I'll have them put the pictures. You can see the SGT-800 foundations are ready to pour. But on the tenant side, because I know that's what everybody is focused on. What we can share is that we're in the contracting phase with multiple new potential tenants. But everyone needs to understand these transactions are complex. They're multiparty. And Macquarie, as you know better than anybody, they involve billions of dollars. Miles Everson: Yes, hey Paul, it's Miles here. I would just add that -- and we've said this all along, the other thing is it's not a tension point, but it's one of our things we're holding firm on is we want investment-grade wraps. That's why Toby earlier referred to the fact that this is really companies saying, are they going to put their balance sheet up? And when we say companies, we're talking about investment-grade companies that wrap these things. So then the second thing I would add is that it's not just what we do and what we control, but the ultimate offtakers also or development partners need to look at this and say, can they get their side of the equation up? In other words, all their MEP and the racks, et cetera. And so we're doing more, I'll say, reverse due diligence than I expected we were going to have to do to make sure that they can have their stuff up in time to take our power because our power is ahead of most people's ability to get the other stuff in place. That has been one of the bigger surprises is if you'd say, bear me in the fall was worried whether, yes, convincing people that we could have the power. We now want to be convinced they have the MEP because we do have the power and we need to put it to work. Paul Golding: Miles, if I could just sneak one more in then on the back of the discussion seeming to be pretty robust around demand. Is pricing -- are you able to give any color on pricing directionally relative to where you expect it to be when you first started considering sort of the financial approach to the first gigawatt of power? Miles Everson: We're at the same. And we'll try to bid for more, but we're definitely ready to say we're at the same. Operator: Our next question is coming from Vikram Malhotra with Mizuho. Vikram Malhotra: Congrats on your full fiscal year. I guess I just want to dig deeper, if you can, on kind of the tenant discussions. And I'm wondering if there are different sticking points for sort of Fermi as a landlord versus your potential tenants and kind of how those sticking points may result in, I guess, delays in signings. I think you cited 12 months in your share -- over the next 12 months. And I just want to get a better understanding on the sticking points from either side. And from a time line perspective, should we think over 12 months? Or could it be sooner? Toby Neugebauer: Again, I know it comes across [indiscernible]. Once they get to the site, it really is they want the power and they're trying to lock in all of our power at a price today because I think our tenants really appreciate the scarcity of the gensets and that the price of energy for them will be increasing. So they are rightfully focused on locking in as much power at today's prices as possible. That really is it. And it's -- like I said, we're in the contracting phase of this process. In terms of providing guidance on the time, the Board, the coaching, I've got a really great -- Fermi has a really great Board [indiscernible] look at it. Their point is we'll -- when we provide guidance on timing or expectations, that changes the dynamics of the negotiations to Fermi's disadvantage. And so the Board was pretty firm with me on Saturday that we're not going to discuss the timing because what we're doing is it changes the dynamics of -- these aren't $1 billion transactions. These are multibillion-dollar transactions, and I just want to keep the dynamics as flat as possible. Vikram Malhotra: Okay. And then just 2 things to clarify. One, the -- I guess, the shareholder letter mentioned sort of term sheets and various agreements. I just want to clarify, one, is there an actual LOI in place with any of these 5, 6, 7 tenants that you're negotiating? Or is that sort of the next step? And number two, if you could just clarify any of the near-term financings like from MUFG. Is there a stipulation in any of these financings that you must have a lease signed by XYZ period? I think our comment on -- that we're comfortable with is signing new LOIs, it will be a normal course of our business, and we won't be commenting on them. Post that, I think it's kind of one of the lessons that we've learned so far is we do not want to change the negotiating dynamics. I'm -- each one of these financings is separate. And I'm sure we've disclosed it. Miles, I just don't want to comment on the... Miles Everson: Yes. We don't have any tenant signing covenants, if you will, Vikram, on our financing arrangements. And the other thing to remember that these financings are nonrecourse to parent which I think is really important when you think of the overall public company. And then the thing that hasn't changed is that we do have an agreement with Texas Tech that will have a tenant by the end of 2026. That remains the same, and we're working collaboratively with them to advance that. So that's probably what's most important right now is to understand that we're still full on, and we feel really good about where we're at, to be candid. Toby Neugebauer: Yes, that's only a 200-megawatt tenant. I don't want to call that -- I don't want to demean it, but that should be [indiscernible]. That's not close to expectation. We look at it this way. We don't have a tenant that wants 200 megawatts. That's not our problem. Vikram Malhotra: They want more. Toby Neugebauer: Yes. If we had to have a call, you only could have a 200-megawatt tenant, we would -- that would be a problem for us. The problem is they want gigawatts. Operator: Our next question is coming from Ryan Gravett with UBS. Ryan Gravett: Miles, you touched on this earlier, but what additional development at the site are you planning at this point before a first tenant lease is signed and you secure project financing? Is there anything you can share in terms of more precise CapEx spending or cash burn that you're expecting this year? Miles Everson: Yes. So we are going to be very diligent about matching our development with the signing of a project financing as well and our tenant leases. The -- but as far as we'll go -- and look, these things change. This is a long-term project, not a 30-day project. But what we'll do is have the site ready to receive our power generation equipment. It's largely there today. There's a little incremental work that needs to be done so that we can place those generation assets into service as soon as we see that we've got tenant agreements to line up with the timing of that installation. Toby Neugebauer: Yes. I think what we were talking about, Fermi become not skeptical, but we definitely want to see that the timing of our development matches the MEP that our tenants can acquire. And if you say, is there a change in how we as a company have viewed it as we've become -- where I would say, last year, we were focused on people being able to do great due diligence on us. We have pivoted and actually made hires. We picked up a really great person from Meta that helps us do diligence on the pace of execution of our potential tenants. Operator: Our next question is coming from Stephen Gengaro with Stifel. Stephen Gengaro: I apologize if there's any noise, I'm in an airport. So when we think about like your tenants need for power and sort of the various tenants and the timing of kind of when their data centers are up and running and when they need power, what's -- like when you're talking to the customers, how far out are they thinking about securing power relative to when the data center becomes fully operational? Toby Neugebauer: First of all, that differs between each tenant. And it's the #1 -- not the #1, but it's in the top 3 diligence items we have or how we prioritize tenants is obviously, are you financeable, i.e., are you investment grade is number one. But the #2 thing is we actually, unlike most companies in the world are sitting on a whole heck of a lot of power generation that we are very anxious to put to work. And so it is -- that is -- there's no one answer to it. But when you think about how we're running the business and prioritizing people that we would contract, that's probably our #2 thing. How fast we're not -- we can have the power because of all the work we did in at the site to date. We can have the power, what we now realize probably faster than some of them can have the MEP. So that becomes how we prioritize who we contract with. Stephen Gengaro: And the follow-up is like -- just kind of going back to the first potential tenant and the negotiations that were terminated or at least maybe terminated but delayed at least, like when did they actually need power? Because I'm just sort of thinking if there's a lack of power, what are they doing for power if they're not doing it with you? Toby Neugebauer: What I look back, and again, I don't believe that I hope that the first tenant is a tenant. So I just want to convey that. When we look at when they need power, it definitely brought to our attention is we have to really make sure that these tenants have the MEP. I think it's a bigger bottleneck than we originally anticipated. Stephen Gengaro: Miles, I mean, you were involved in that... Miles Everson: Yes. Look, so they originally were looking at they would have power that they could deploy and make revenue themselves off of in 2027, okay? But I think there's 2 parts to your overall question, which is when do off-takers need power. And if you look at their planned portfolios, most of them are into '27, '28 where they need to consume the power. However, and this is an important point, -- you can read it in the newspapers. There's other sites that are not capable of delivering on the power that they've committed to these. So we do expect and we've seen some potential reallocations of where they're going to get their power that they thought they already had and they actually don't have. Toby Neugebauer: We are in a special spot because we have a lot of power and the world recognizes it. Operator: Our next question is coming from Nick Amicucci with Evercore ISI. Nicholas Amicucci: Just wanted to touch upon something. So I guess just given kind of multiple new LOIs in process in addition to the original one, I just wanted to kind of get some sense, has there been any kind of potential -- has the potential scope of those tenants increased, meaning like different types of tenants? Or is it still more or less those hyperscalers? Obviously, investment grade, but just kind of trying to see if those horizons broadened a little bit. Toby Neugebauer: I think the only thing that I would say is significant engagement by chip makers, not some directly, not directly, I think they are getting really concerned that they -- those chips are only worth the power behind them. So in terms of scope, that would be the only change I would highlight. Miles? Miles Everson: That's how I would describe it as well. The chip makers are more directly engaged in where is the power going to come from? And frankly, where the whole consumption of their chips going to come from is really what they're focused on. Toby Neugebauer: I think you all are off the markets where that the leading chip makers are now realizing they're getting behind a number of companies. And so that changes the dynamic so it does broaden it. For us, it's -- the key thing is, and you know this as well as anybody, we do need a diversity of load to maximize the efficiency of our gensets. So I think what you're seeing us do is a little more math, not a little more, a lot more math. We are better off with a more diversified load base to maximize the efficiency of this private grid that we're building. Miles Everson: Yes. Nick, the other thing I would just add in terms of market dynamics, what's happening is increasingly on the MEP side, the emergence, if you will, of modular MEP, which if you think of it as a chip maker, what you're really concerned about is speed to token. And so you look through the whole value chain and you say, where do I have places to speed up? There's opportunities to speed up the timing of MEP. And so you see more modular players coming in to help make that happen, which is a huge positive for us because we got the power. Toby Neugebauer: Yes. That is another thing that we've become hyper focused on. And one of the great things that we've had exposure to from the oil and gas business is modularization. And again, in terms of hiring, we are bringing people in that can help us diligence and engage on our clients' supply chain for MEP. That have been a real focus for us the last month. Nicholas Amicucci: Great. And then, Miles, you had mentioned, obviously, today, kind of the locked -- IPO lockup expires and the intention is still to file as a REIT for 2025. Just want to see, are there any specific management sales that either need to occur that we should be on the lookout for to satisfy that status? Miles Everson: Yes. So there's not a management sale necessarily required for the -- at the time of this expiration of the lockup. However, to meet the REIT 550 rules, there will be, what I would say, an orderly sell-down that we're working to make that happen. And then that we have a few months to make that happen. And we're in -- we got an adviser we've retained to help with that. And so I fully expect that, that will be done in an orderly fashion, Nick. But that's been there from day 1. And now is the time that we're focusing on getting that executed. Toby Neugebauer: Obviously, I'm the -- my family is the problem. Today, we own about 38% of the company. What I would hope to achieve, can't promise, that if our family has to sell down, it needs to be to an accretive buyer. And what I mean by that is I want 1 plus 1 on the sell-down to equal 3 or 4. And that's why we've hired an adviser to help us find which acquirer of a block. And frankly, I don't want to sell down hardly anything at all, especially at these levels. But if we're going to do it, I want it to be something that adds something to the brand of Fermi. So that is our goal there. And we did -- I don't know if that we signed it, but we definitely verbally agreed to hire an adviser to run a process that, again, becomes an accretive transaction that you all are all excited about versus a dilutive sell-down of my family's position. Operator: Our next question is coming from Skye Landon with Rothschild & Company. Skye Landon: Coming back to the tenant questions. Clearly, a few months ago, we were talking about kind of one client taking the full first gigawatt. It now seems like you're potentially balancing trying to keep multiple parties happy. So just wondering if that first gigawatt maybe splits into multiple tenants taking smaller kind of megawatt numbers or not or kind of what you see the base case from here? And then secondly, you mentioned that pricing was remaining in the same ballpark as previously, but just wondering if the structure of rental revenues kind of ahead of operational shells is still going to be the same structure as previously or if various different conversations with new potential tenants is potentially changing this? Toby Neugebauer: My strong -- first of all, there's no one that wants less than 200 megawatts. I mean we're trying to talk them down. We'd rather do 5 200-megawatt deals if you ask us when we run our calculations, that is the right -- that's great -- and the problem -- not problem, the opportunity we've got is we've got 2.3 gigawatts with the F-Class units on their way. Our team was in Germany the other day, and they were -- 2 of them were in the loading dock. So hey, our goal is -- I don't think we get away with 3 tenants for the first 2 would be victory, and I think we only get away with 2. But... Miles Everson: Yes. I would say -- Skye, it's Miles. I would just -- I would put it this way. We will likely only do deals 500 plus, and we can do that. So it's allocation -- if we can allocate the initial commitments, right, over that 2-plus gigawatts that Toby referred to. The real question for me in these discussions is -- they all want ROFRs on future quantum of energy. And you got to not just look at the initial allocation, but also how are you allocating the ROFR so that you comply with any ROFR that we will commit to. Toby Neugebauer: And in terms of the pricing, it's the same as we said. I think we're getting more involved in the MEP -- I'm not saying we're getting into MEP business, but we are wanting to make sure we're solving all of our clients' problems. So not a change in strategy, but enhancing the services that we provide to our customer. Operator: Our next question is coming from Eric Whitfield with Texas Capital. Derrick Whitfield: Congrats on your progress to date. With respect to your prospective tenant list, could you -- could you perhaps add color on how this list has evolved since your air permit was finalized? Toby Neugebauer: I didn't hear the last part. I heard airport permit. That's my favorite word. [ I didn't interest at all ]. Derrick Whitfield: Yes. No, just could you speak to how the tenant list has evolved since your air permit has been finalized? Toby Neugebauer: The tenant list didn't change. The engagement changed dramatically. And basically, the best way I can describe it is shoppers became buyers. I mean it is one of the largest air permits ever. I think the largest gas gen project is in Florida. It's only 3.5 gigs. We're at 6. I think, as you all know, we filed for an additional 5. I mean we're looking at being the place where you can have the largest gas generation set on the planet. And I think the C-suites across all of our customers immediately got concerned is, hey, we better get while they're getting is good to use our West Texas freight. Derrick Whitfield: Great. And then for my follow-up, with regard to the emergence of modular MEP development, what is the base unit in general on this modular operations? And to what degree can they accelerate time to power? Toby Neugebauer: I went to the Schlumberger factory in Shreveport, gosh, Fermi. 6 weeks doesn't sound like that long ago, but at Fermi it's 6 weeks, it's 6 years at most companies. But I think it's game changing. And I think it's going to dramatically dramatic -- I don't believe we're going to be talking stick building MEP in a year. I really, really don't. It's just such a transformational way and a much more cost-effective way to build MEP. We're going to plug and play MEP into powered shells. That's what the business is going to go to. I encourage you all, I'm sure to let you go see their factory, and I know there's a couple of other companies. But I mean it took us 1 minute to realize, wow. We're trying to get Schlumberger to build a factory next to us. Operator: Our next question is coming from Joe Brent with Liberum. Joe Brent: Two questions, if I may. Firstly, you talked earlier about cash burn, and I understand there are different scenarios. But can you just give us the parameters of what the cash burn might be in FY '26? And secondly, related to that, I think you've got $885 million of equipment financing facility, which I understand is currently nonrecourse. Could you indicate at what point, if ever, that comes on to the balance sheet? And then related to both those, remind us of the funding structure. Toby Neugebauer: Well, first of all, on the cash burn, I like to tell people that I'm an aggressive personality but a financial [ CISI ]. And I -- we do have a standing call every day at 4:00 Eastern 3:00 Central where we review the cash position on a daily basis on the recourse. And I focus on it pre-tenant, meaning I'm, again, aggressive personality, financial [ CISI ]. Miles, I don't -- I'm not aware that any of it comes on to the balance sheet. Miles Everson: It doesn't come on to the holdco balance sheet. And then on the cash burn, we're running what does it look like cash burn from a pre-tenant signing perspective, and we got plenty of cash from that perspective. And then once we have the tenant, we'll do the project financing. And obviously, at that point, there's plenty of cash to finance the first tenant contract and finish out the deployment and commissioning of the gensets. Operator: Our next question is coming from Rich Anderson with Cantor Fitzgerald. Richard Anderson: So Miles, on the -- early on in the call, you addressed potential for asset relinquishment to preserve cash flow. Can you provide a little bit more color on how that might play out, assets that are sort of on that list? Anything more you can add to that topic? Toby Neugebauer: Yes. Let's be clear, Rich. That is not our intention whatsoever, and we don't see that happening. But when you think through all potential scenarios, right, you say, well, what are the levers I have to pull, that would be one lever if we had to. But right now, we don't have any plans to do it. But it would -- if you had to do it, you would do it with a genset or 2 because there's plenty of demand. I mean we get lots of inbound calls as to whether or not we would move our equipment to somebody else. We have no interest in doing that. I only mentioned it because -- well, and it's only prudent to say what are the levers if you got to pull levers, what do I have? So I would not want anyone to think that, that's on our list of things to do at this juncture given what we see on the tenant front and the timing of everything. But I don't even like talking about it. These gensets are incredibly valuable. And I would auction off my 2 boys first before I would let one of these gensets go. And probably the dumbest thing I've ever done is even before we got the tech lease, my family basically committed to buy those SGT-800s. So I did basically auction off my children's future for that. So it's a worst thing -- like I said, my boys will be auctioned off first, and then we'll look at the gensets. Richard Anderson: Well, that's love. Okay, and then... Toby Neugebauer: Please check where they stand. Richard Anderson: Okay. Second question is on the land lease -- ground lease. What must be in place by this date or that date from a power resource perspective or tenant or whatever it is that satisfies any sort of requirements around maintaining your position? Toby Neugebauer: Is a notice to proceed to begin construction. So we don't have to have anything built, which means we're further ahead. But yes, we don't have to have an actual data center. We have to have a tenant and an agreement with that tenant, and it has to be 200 megawatts. And I'm not going to diminish that. It would be hard to get 200-megawatt deal because no one wants that little of power. Miles Everson: And to be clear, that's by 12/31/26. Toby Neugebauer: Yes. Operator: Our final question today is coming from Andrew Fisher with Berenberg. Andrew Fisher: A few has already been answered, but I just had one follow-up just on the sort of pre-tenant cash or investment requirements. Could you maybe just give a little bit more color of, let's say, the turbines that you already have in your possession where you've already got the foundation being installed. Could you give us a rough idea about what remaining CapEx is needed just to get those installed to sort of get you there ready for the first tenant? Or if you can't give an absolute number, maybe an idea of the sort of percentage of the overall capital cost of those projects? I assume most of the heavy lifting has already been done, but it would just be good to get an idea, please. Toby Neugebauer: Okay. We're working on the actual calculations on the foundations for the F-Class units. Again, 2 of them is a wonderful picture. I hope -- let's put it on the website so people can see the F-Class units. I want to get those foundations installed. The site is cleared, the geotech is done. There are only 1,300 square feet per generator. I don't have the numbers for those. We have those out for bid literally right now. And if you're over here after this call, we're going to be debating how much money those -- the foundation we need to complete is the SGT-800s. And let me be clear, I don't think it should cost more than $10 million. But I would put that one in a source of consternation and debate at Fermi America. I'd like to get those SGT-800s instead of having them sitting in Houston, they need to come home to Amarillo, and it makes no sense to have those class units sitting in an expensive storage facility. I'm really zoned in on the foundations. We've got an additional extension on our deal with Excel that I think is kind of $8 million or $10 million-ish. I think it should cost $4 million. I think you're going to get a theme that the CEO says everything should cost half of what is currently being quoted. Operator: Ladies and gentlemen, this does conclude today's Q&A session and will also conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.