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SERKF 2026 Q2 财报电话会议

Operator: Good day, and welcome to the Serko FY '26 Interim Results Announcement. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Darrin Grafton. Please go ahead, sir. Darrin Grafton: Good morning from Auckland, New Zealand, and thanks for joining our investor briefing covering Serko's results for the half year ending 30 September 2025. I'm Darrin Grafton, CEO of Serko, and I'm with our CFO, Shane Sampson. This morning, I'll take you through our performance and highlights for the half year period. I'll then hand to Shane to cover our financial results in detail. Then, I'll talk through how we're positioning Serko for the future growth, our outlook and finishing with Q&A. As always, unless otherwise stated, comparisons are made to previous half year period 1H FY '25. And let's begin on Slide 5. This is Serko's strongest half year performance ever on both revenue and EBITDAFI. This was due to disciplined execution and our focus on profitable growth. Key callouts are: first, we achieved strong total income growth of 45% to $61.8 million, and this reflects the scalability of our model with strong contributions from Booking.com for Business and the addition of GetThere, driving our expansion into North America. Second, we delivered EBITDAFI of $6.1 million. This is our highest ever EBITDAFI result. Third, we generated $3 million of free cash flow, and this reflects our cash-generating existing business and the fact we're still in the early stages of our ramping our investment into building Serko for the future. At the same time as delivering these results, we're setting the business up for the future, and I'll touch more on that shortly. Turning to Slide 6. Total income was up 45%. This was driven by a strong trajectory we're on with Booking.com for Business, which continues to grow as we focus on activation, engagement and conversion. This is translating to substantial growth. The other driver is GetThere, which has delivered significant growth in online bookings and to Serko's income. Turning to Slide 7, where we double-click on our Booking.com for Business performance. Completed room nights grew 32% to 2.1 million. This was driven by a 40% growth in active customers, improved onboarding and new platform capabilities that are driving higher customer engagement. We added 40,000 new customers in the half year, significantly stronger than in the same period last year. Completed room nights frequency per active customer was slightly lower, and our view is this likely reflects small- and medium-sized businesses in Europe booking fewer trips due to the macroeconomic headwinds there. We monitor these trends closely, and our analysis gives us confidence that customer activity should normalize as macro conditions improve. Serko crossed into the second tiering of commissions on multiple months, and we're tracking above 4.2 million completed room nights this financial year. Shane will talk to this further. We're delivering at pace against the new initiatives we told you about at our FY '25 announcement, including the latest release of incentives. We're seeing green shoots of success with Genius Level 2, and we have confidence it's driving increased customer retention. We also rolled out significantly improved checkout experience and company onboarding that improved the overall customer experience. Turning to Slide 8. In Australasia, online bookings grew 2%. This was offset by a minus 2% decline in average revenue per booking from reduced third-party costs, some of which were previously passed through the customers. Although this impacts slightly on the ARPV, it significantly reduces our cost, creating a net cost benefit. This mix shift improves the quality of our revenue and demonstrates our focus on sustainable margin expansion. Overall, this resulted in a stable revenue result. Our early commitment to NDC is now paying off. We are one of the few players globally delivering a fully integrated NDC offering across Sabre and Amadeus. We continue to invest and innovate as we strengthen our market leadership and as NDC starts to gain traction. Turning to Slide 9 on our GetThere acquisition and strategic partnership with Sabre, which has fundamentally repositioned Serko in the U.S. market. What's working well? We've fully integrated GetThere, stabilized the customer base with new ARR churn on key accounts around 1% of annualized revenue. We've established our new India development hub and setup global capability center that's now scaling. Revenue exceeded our expectations in the half, reflecting some of the expected churning customers taking longer to offboard than anticipated and very low level of new churn. Where we've been less effective, we haven't achieved our targeted U.S. sales, but we have a clear path forward. It's become apparent as we've been establishing our sales pipeline with leading Fortune 500 companies that many of them want to wait for the new capabilities we're building rather than onboarding to our existing products and going through a second migration later. The other point to note is that our partner, Sabre has shifted their focus away from direct corporate contracts to growth and relationships with travel management companies. This change has contributed to lower direct corporate sales. Sabre is referring TMC resellers to us, but the lower direct corporate sales means we don't anticipate making any performance payments for the 2025 calendar year. Our go-forward plan. In North America, we're now focused on scalable growth through a dual channel approach, firstly, via our TMC reseller network and direct corporate sales. Leveraging our Sabre partnership, we're targeting key management resellers. We've already onboarded 2 partners, Tangerine and Elite Travel. And while smaller in volume, they provide valuable insights into mid-market customer needs. On the direct side, through customer forums with leading Fortune 500 companies, they are involved in helping us to codesign our future AI-powered capabilities. With GetThere fully integrated, we're in the room with major corporates, gaining visibility and confidence in our North American opportunity and our execution model. As discussed at our Annual Shareholder Meeting, GetThere and our Sabre partnership have redefined Serko's North America position. We now have strong market presence, direct customer insights and relationships, along with the data and expertise in a key market, which positions us well for our future success. In summary, the first half has been about strengthening the platform, deepening relationships and codesigning our next-generation AI-powered capabilities. The second half is about establishing the technology to enable our growth, executing with focus and accelerating our North American opportunity. And I'll talk more to the strategy and outlook shortly, but now I'll pass to Shane to cover the financial highlights. Shane Sampson: Thanks, Darrin, and good morning, everyone. Darrin has already called out some highlights for the half year, and I'll go into more detail. I'm going to focus on the key outtakes from the result, and we've also put some additional financial detail in the appendix for your reference. Turning to Slide 11. Total income increased by $19 million or 45% to $61.8 million, reflecting growth in bookings for business volumes in their acquisition. Operating expenses increased by 29% to $65.1 million, up $14.7 million, primarily reflecting costs associated with GetThere and investment in the U.S. market of approximately $16 million and the initial stages of our platform acceleration initiatives with investment of $1.6 million in the half. This was partly offset by lower third-party hosting costs, so lower third-party costs and hosting efficiencies achieved in our pre-acquisition business. Our preferred measure of total spend, which excludes the impact of accounting decisions around capitalization and amortization, increased by $15.2 million or 34% to $59.3 million, broadly consistent with the increase in operating expenses. Higher growth in income relative to spend resulted in EBITDAFI improvement of $4.9 million to $6.1 million. Net loss after tax increased to $9.5 million, an increase of $4.4 million. I will talk to the drivers on the next slide. Free cash flow improved by $1.7 million to $3 million, reflecting the stronger EBITDAFI partially offset by realized FX losses, increased capital expenditure and capitalization of internally generated software and higher taxes paid. Turning to Slide 12. Net loss grew despite EBITDAFI growing and total income growth outpacing total spend growth. The bottom part of Slide 12 shows the primary drivers of the increased loss, which are lower interest income, foreign exchange slipping from a gain in the prior period to a loss in this period and the disposal of InterplX. Net finance income was $1.3 million lower, reflecting lower interest rates and less cash on hand as a result of the GetThere acquisition. We incurred a $2 million noncash accounting loss on the sale of InterplX. I will talk to this in more detail later. Serko puts foreign exchange contracts or FECs in place as an economic hedge against revenue received in Australian dollars and euro. Historically, we have not designated these FECs as hedges for accounting purposes, and therefore, any gains or losses on the FECs were recognized in the profit and loss, while the revenue was accounted for at the actual rates applying at the time the revenue is earned. The significant appreciation of the euro against the New Zealand dollar in the last 6 months has resulted in $3.7 million in the recognition of losses on FECs not designated as hedges for accounting purposes and other sundry FX losses. In the prior period, FX rates moved the other way, resulting in a gain of $1.4 million, but the change from the prior period was an adverse movement of $5.1 million. Note that in substance, the FECs are acting as economic hedges. For FY '27, we have designated some euro FX contracts as hedges for accounting purposes. I will talk to this more on a subsequent slide. Turning to Slide 13. While Serko has started to make investments in the platform acceleration program and acquired GetThere to support long-term growth in the U.S., the faster growth in total income still resulted in total income exceeding total spend in the period. This reflects strong unit economics in Booking.com for Business and improved margins in Australasia. Through our Booking.com for Business and Australasian results, we have demonstrated our ability to invest and grow revenue and then to optimize the business to generate operating leverage, giving us confidence as we prepare to make increased growth investments again. Turning to Slide 14. Our balance sheet remains strong with cash and short-term deposits of $65 million and no debt. Relative to 30 September 2024, cash has reduced and other assets and liabilities have increased, reflecting the GetThere acquisition in January. Relative to 31 March 2025, cash was up $3.6 million, reflecting the positive free cash flow and a cash inflow relating to a working capital adjustment on the GetThere acquisition. Noncurrent assets and noncurrent liabilities increased, primarily reflecting our new India office lease. Intangibles declined, reflecting the disposal of intangibles and goodwill associated with the InterplX business and amortization exceeding capitalization of software, reflecting our conservative approach to software capitalization. Turning to Slide 15. Our partnership renewal with Booking.com in April 2024 revised our revenue share arrangement with the revenue share continuing at the 50% rate for volumes up to the equivalent of approximately 4.2 million completed room nights or CRNs per year and a new TA system for higher incremental volumes. The arrangement is designed to mutually incentivize and benefit both parties. The chart on the left is from our May annual results and shows that in FY '25, we achieved NZD 3.3 million completed room nights. And in FY '26, we expect to exceed NZD 4.2 million, the approximate level at which incremental transactions and lower commission. This reflects the strong growth in CRN since the renewal was signed. The chart on the right shows average revenue per completed room night or ARPCRN, as shown earlier in the presentation, with ARPCRN declining 3%. The chart in the middle shows the average commission per completed room night or AComPCRN. We introduced this new metric in May as a way to show underlying changes in our share of commissions as the ARPCRN has impacted by the tiering of commissions. You can see the AComPCRN declined by 2%, slightly less than the ARPCRN as we had 2 months in the first half where our monthly volumes slightly exceeded the first tier, resulting in the blended commission percentage reducing to 49% from 50% in prior periods. As you have seen from the strong operating leverage we've achieved over the past few years, our incremental margins are high, and therefore, even on the lowest tier, our gross margin percentage is expected to be healthy. Turning to Slide 16. As I noted earlier, Serko has historically had FECs in place to act as an economic hedge, but has not designated them as hedges for accounting purposes. During the half, we chose to put FECs in place for FY '27 and designate them as hedges for accounting purposes. This will reduce volatility in reported revenue, FX gains and losses and therefore, reported net profit or loss in each period. Instead, mark-to-market gains or losses at each reporting date will go through the cash flow hedge reserve and be reflected in the total comprehensive profit or loss for the period. We have included details of the accounting hedges here to assist analysts and investors to calculate the impact on projected FY '27 revenues. I note a portion of expected FY '27 euro revenues are not covered by the accounting hedges and that we've not designated any FECs as accounting hedges in relation to FY '26 revenues. Turning to Slide 17. As previously announced, we sold our U.S.-focused expense business, InterplX on 30 September. Serko has recognized a noncash accounting loss of $2 million on the sale, primarily reflecting intangibles and in particular, goodwill. The InterplX business made a modest contribution to revenue of $0.8 million in the first half, and the disposal is expected to have a small net benefit to our profitability going forward. In addition to the financial benefit, we expect strategic benefits from the sale, including increased operating focus and improved ability to partner with leading U.S. payments and expense providers. Thanks, and I'll now hand back to Darrin. Darrin Grafton: Thanks, Shane. And turning to Slide 19. Let's shift to the product initiatives we are delivering that position us for growth. And the first is Booking for Business. In Booking.com for Business, we're focused on 3 outcomes; acquiring, converting and retaining customers. The pace of delivery has accelerated with significant deliveries in the half. In particular, I'd like to call out the new checkout experience, which is consumer grade with pay now, pay at property capability, simplified VAT and company detail capture and tighter authentication. This is reducing checkout error rates, improving completion reliability and improving conversion. The new checkout is built in our new platform and enables faster iteration and experimentation to drive further improvements for users and improve activation, conversion and retention. It's also a significant milestone as users can now register, make a booking and check out all within the new platform with a consistent user experience. So in the Australasian market, Qantas switched to NDC as their preferred channel in July. This was a big milestone and a significant investment to integrate through our partners, Sabre and Amadeus. We've seen NDC volumes start to scale since launch. And while still small in percentage of total bookings by September, this was starting to make a positive contribution to our ARPB. In North America, our focus has been on how we engage with our customers to co-design the future, while at the same time, sustaining our heritage products and serving existing customers with an improved user experience and travel supply. This includes key initiatives we launched during the half year that help to deliver customers a consumer-grade experience. Examples of new capabilities launched within our GetThere product, our new hotel shopping experience and new NDC carrier connections with Air Canada and British Airways, which provide content breadth and depth for our key U.S., Canada and transatlantic markets. This is about Serko adapting to the changing travel distribution landscape and ensuring we maintain connections to sources of supply to -- so customers have access to the breadth and depth of choice. On the Serko platform evolution, we've designed our platform to enable performance, scale and excellent unit economics and fast delivery of new capabilities, including for Booking.com for Business. We're building out our product and tech capability in India. And this month, we officially cut the ribbon on our new Bengaluru office. We're hiring key talent to work alongside the team who came on board with GetThere. This is a key part of our platform strategy and a focus for our leaders. AI coding tools are firmly embedded across our engineering team with more than 55% of daily active users using AI coding tools. More than 30% of the suggestions from AI are accepted by our engineers. And these stats compare well with industry benchmarks, and we continue to drive them even higher. We're continuing to roll out additional AI metrics and support our developers to grow their capabilities as tooling matures, and we update our collection of analysis of the related data. We're also trialing a wide range of AI tools and models. Turning to Slide 20. Serko is in the strongest position operationally and strategically that we've ever been in, with ongoing improvements across the business and a clear blueprint for our AI platform. We're now able to accelerate our investment to capture the opportunity ahead. We're well positioned to achieve our NZD 250 million revenue aspiration for 2030. Booking.com is the strongest business brand in global travel. And our partnership with them has enormous potential. Booking.com for Business is already driving significant revenue and contribution, but we have only captured a fraction of the opportunity. We have a clear strategy in place for growth for Booking.com for Business through both our partnerships and platform investment. We're accelerating our platform transformation to deliver AI-powered capabilities for customers. And we're optimizing our operating model to enable fast delivery and scalable profitable growth. Turning to Slide 21. We have strong momentum delivering Booking.com for Business capabilities and a track record that proves we're executing on our growth strategy. Our platform is successfully powering core components of Booking.com for Business, including the new checkout experience and all hotel room bookings. As part of our accelerated investment program, we have major initiatives underway as we continue to deliver new platform capabilities and value. This includes flight service modernization, a core service of the platform, allowing flight content to be retrieved across multiple supply integrations. We continue to lay the technical foundations for Serko's future, including removing any dependencies that the new platform has on legacy technology. We're also building AI and data frameworks powered by Serko data as part of our strategy to unlock the value of AI and emerging technologies. Turning to Slide 22. AI is central to our strategy and our roadmap. We're increasing our investment in AI, a targeted, disciplined way so we can launch new capabilities to customers and deliver future growth. Our teams are working alongside customers and prospects in the U.S. as we codesign new AI-powered capabilities. To enable our future, we're optimizing our operating model to ensure we allocate resources where they generate the greatest long-term value. In October, we launched an internal program to reallocate some of our people investment to focus on delivering AI and data capabilities. Around 60 roles from our global team of 460 may be impacted, while at the same time, we are creating new roles while we're hiring for -- the proposed program is expected to deliver $12 million in annualized savings, providing capacity to reinvest further in AI and innovation while supporting continued margin expansion. You've previously seen the outcomes of how we have successfully managed our resources and grown revenue while holding back cost. You've also heard how we've activated AI across our teams to establish new ways of building technology and deliver new capabilities to market. And turning to our FY '26 outlook on Slide 23. We reaffirm our FY '26 total income guidance of $115 million to $123 million. Serko is revising its total spend range to $124 million to $128 million for FY '26 from the $127 million to $133 million previously. Risks to Serko achieving its FY '26 goals include macroeconomic and geopolitical factors and currency and ARPCRN movements. We're all in on executing our strategy with scalable global platform, strong partnerships and a clear roadmap to profitability and growth. Serko is positioned to deliver sustained shareholder value. Thank you. That concludes our presentation, and we're now happy to take questions to allow more people to ask questions. We request that you ask one question back into the queue. Thank you. Operator: [Operator Instructions] We'll take our first question from Guy Hooper with Jarden. Guy Edward Hooper: Well done on some strong growth numbers. Maybe just to start with one on the spend. I mean you previously outlined a base spend rate over the next couple of years and then what an accelerated path might look like. I mean how should we think about the change in the FY '26 guide and the reduction in spend in that context? Shane Sampson: Guy, it's Shane. I'll take that one. So I think there's probably a couple of things that are worth calling out on the spend. One is you'll note that the midpoint of guidance implies meaningful growth into the second half relative to the first half, the total spend. So if you like, you will start seeing that acceleration and that really reflects, as Darrin talked about in the speech, we've been quite prudent in our spend. So teams are using AI throughout the business. But in terms of particularly dedicated spend on building AI into the product, we've been relatively prudent while we get clear what that looks like. And now we're at the point where we have the confidence to really start investing and accelerating that. So you will start seeing that acceleration in spend in the second half. I think the other thing Darrin called out in his presentation was that we are effectively looking to reallocate some of our resources. So that will result in reduced spend on an annualized basis in terms of the roles that will go, but we're actually looking to reinvest that next year again, back into that more AI-focused build of the future products. So I think we're reallocating resource from our heritage businesses, generating more operating leverage in those and then that resource to build the future products that are going to drive our growth. So I think those will be 2 callouts as you be sort of familiar with our performance over the last years, we're generally reasonably prudent in how we spend. So we tend to be at the bottom end of the range. Probably the other call out would be -- effectively, as we noted, we're not where we want to be in terms of U.S. sales. A chunk of our executive and senior staff remuneration is on performance. And so that also reduces the spend a little bit this year. So yes, those combination things, but definitely starting to get to the point where we're pressing to go on investment and that's because we have that clarity that we're clear what we do and how we're going to do it. And we're currently, I think, targeting to have an Investor Day on the 12th of March and hoping that we'll be able to show some of what we're doing there at that. Operator: We will go next to Wei-Weng Chen with RBC Capital Markets. Wei-Weng Chen: Yes, just a question from me about the U.S. So you previously won that lower U.S. government work had impacted on GetThere volumes. Wondering if you could speak to, I guess, what happened during the shutdown period, which happened in, I guess, your second half. I assume it's all covered within the reiterated guidance, but it would be good to kind of get some color on what exactly happened there. Shane Sampson: Wei-Weng, this is Shane. I can talk to that. Yes. So we continue to see weakness in U.S. government through the half year. Definitely, the government shutdown had even more extreme impact. But yes, that's all incorporated within the guidance. And obviously, we're pleased that the shutdown has finally come to a conclusion after setting a new record. Obviously, still a little bit of risk of another one on [ 30 ] January when they have the next deadline in the U.S. But yes, that's all incorporated within our guidance. Wei-Weng Chen: Yes. Is there anything you can quantify there or not really? Shane Sampson: I think in terms of -- yes, not a massive impact in terms of the shutdown across the U.S. business as a whole. As we know as Darrin noted, we've seen churns being very low in terms of new churn. So even with that government shutdown, we still expect the U.S. to be a bit stronger than we were anticipating in May. Operator: [Operator Instructions] We'll go next to Vignesh Nair with UBS. Vignesh Nair: Just a quick one on Booking.com. Obviously, you talked to some of the weaker macro impacting completed room nights per active business, sort of a mid-single-digit compression there year-on-year, it looks like. Can you just talk to what style of number you're expecting through completed room nights per active business based in the last 2 months of trading for the second half of '26 and how we should think about it? Shane Sampson: Yes, certainly in terms of the last couple of months, I think, consistent. So I think we -- in terms of where we saw that drop in the frequency per active customer, that really kicked in from kind of mid-May. So -- and hopefully, just as we had talked to you guys back in May, we were just starting to see that and then it's pretty much carried consistently through. So the sort of September and October in terms of the last couple of months are seasonally strong months. So we've seen that seasonal uptick, but with sort of that same consistent issue of slightly weaker booking frequency. So if you like that -- that will have a little bit of a dampening effect across the year, but at a sort of similar effect to what you've seen in the first half of a few percentage points lower relative to the size of the base. Vignesh Nair: So if it started in May, that's kind of the second half of the first half, so the second quarter. Are you expecting that to continue into the third and fourth quarter? Shane Sampson: Yes sorry, is kind of middle of the first quarter of our financial year. So yes, at the moment, we're assuming that continues in terms of in our kind of base case, obviously, if we've got a reasonable range of guidance for total income, and that's one of the reasons of the potential for that to recover. But in just the last couple of months, we've kind of seen that being reasonably consistent. Operator: We'll go next to Joshua Dale with Craigs Investment Partners. Joshua Dale: Just a quick one for me. Total income grew 45% to $61.8 million. What were those numbers in constant currency terms? Shane Sampson: Apologies. So Josh, Shane here. Apologies, we haven't actually got those to hand. I will look to dig into that. It would have been a little bit lighter. I think off the top of my head, we had about a 7% or 8% upswing in Booking for Business revenue through FX. The Australian and U.S. impacts would have been meaningful. So yes, a little bit lighter if we hadn't had that FX benefit. Operator: [Operator Instructions] We currently have no other questions holding. I will turn the conference back to the speakers for any additional or closing remarks. Darrin Grafton: Thank you, everyone, and we're entering the second half with strong momentum, a clear plan and unwavering confidence in our ability to execute. Thanks for your continued support as we deliver on Serko's next phase of growth. Thank you very much, everybody. Operator: Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day.

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TCOM 2025 Q3 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to Trip.com Group Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Michelle Qi, Senior IR Director. Please go ahead. Michelle Qi: Thank you. Thank you, all. Good morning, and welcome to Trip.com Group's Third Quarter of 2025 Earnings Conference Call. Joining me today on the call are Mr. James Liang, Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer. During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Trip.com Group's public filings with the Securities and Exchange Commission. Trip.com Group does not undertake any obligation to update any forward-looking statements, except as required under applicable law. James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the third quarter of 2025 as well as outlook for the rest of the year. After the prepared remarks, we will have a Q&A session. With that, I will turn the call over to James. James, please. James Liang: Thank you, Michelle, and thanks, everyone, for joining us on this call today. Travel is thriving and the travel spirit shows no signs of slowing down. In the third quarter, travel demand surged across markets, led by vibrant domestic travel in China and a steady rise in outbound journey. Travelers are exploring with confidence seeking authentic experiences in new horizons, a reflection of their enduring passion for discovery. This growing enthusiasm is mirrored in the performance of our AI-powered tools such as Trip.Planner, whose recent upgrade has fueled a 180% year-over-year surge in unique visits. Inbound travel continues to play a vital role in fostering international exchange, trade and innovation, generating meaningful economic and cultural benefits. Expanded visa-free entry policies and broader coverage of the 240-hour transit visa exemption have made it easier than ever to visit, bringing the goal of raising inbound travel revenue to 1% to 2% of GDP increasingly within reach. As part of our inbound initiative, Trip.com Group launched Taste of China, an immersive dining experience that allows international visitors to explore Chinese culture through its rich culinary tradition. We remain optimistic about the future of travel. By leveraging AI innovation and delivering world-class service, we continue to make travel easier, more personalized and more enjoyable for every traveler. With that, I will turn the call over to Jane for operational highlights. Jane Sun: Thank you, Jane. Good morning, everyone. As a quick overview, our net revenue in Q3 increased by 16% year-over-year, reflecting strong demand across segments during peak travel season. Travel consumption remained robust throughout the summer and the National Day holiday with both domestic and international travel markets showing healthy momentum. This performance underscores travelers' growing desire for diverse, immersive and high quality experiences. Outbound travel continued to post solid growth in Q3 with our outbound hotel and air bookings growing by close to 20% from last year and reaching about 140% of 2019 volume. Japan, South Korea and Southeast Asian destinations remain the most popular choices, supported by their proximity and visa convenience. At the same time, travelers' radius of exploration continued to expand as more people sought new adventures and richer cultural experiences. This trend was particularly evident during the Golden Week, which was 1 day longer than last year and sparked stronger demand for long-haul trip. During the holiday, outbound hotel and air bookings surged by around 30% year-over-over reflecting sustained travel enthusiasm. Europe stood out as a key growth region driven by increased flight capacity and travelers appetite for in-depth experiences. Bookings to Iceland and Norway more than doubled year-over-year. Spain, Italy and Germany also grew by approximately 70%. These trends show that travelers are increasingly willing to invest in high-quality travel experiences highlighting strong consumption power and continued confidence in outbound travel. Domestic travel also remained vibrant fueled by travelers' passion for new and immersive experiences. From cultural discovery to outdoor exploration, the growing diversity of travel demand continues to drive solid market growth. Major cities such as Beijing, Shanghai, Chengdu and Xi'an remained the top choices for their accessibility and offering. Remote regions, including [indiscernible] and Lhasa also grew by nearly 30% as more travelers ventured West to discover unspoiled landscape and rich heritage. At the same time smaller cities are emerging as new favorites for urban residents seeking peace and renewal. Their local charms and slower pace offer refreshing escape from everyday life. Inbound travel continues to connect the world, bringing travelers from across the globe to experience oriental culture, spark innovation and drive trade. The Asia Pacific region remains the largest source of inbound travelers, with Europe and the U.S. also seeing strong growth. In Q3, inbound travel bookings on our platform grew by over 100%, reflecting robust international demand. Building on the success of relay over tours in Beijing and Shanghai, we recently launched a free layover experience for travelers at Hong Kong International Airport. Transit travelers with 7 hours or more can book in advance on the Trip.com app or website or on-site at the airport to explore Hong Kong's highlights. For those seeking a deeper adventure, premium tours provide access to landmarks, such as Lantau Island and Victoria Peak. We are making it easier than ever for international visitors to plan, book and enjoy these experiences, aiming to become the go-to platform and trusted hub for travelers from around the world. On the international front, Trip.com Group continued to deliver strong performance. International bookings on our platform grew by around 60% year-over-year. The Asia Pacific region remains the largest contributor, rising over 50% in Q3. Across all regions, Mobile continues to be a key growth driver, now accounting for over 70% of total bookings. Travelers increasingly rely on our app for one stop on the go experience managing flights, hotels and tours seamlessly combined with high service standards and hassle-free bookings. We offer users great convenience and excellent value, fueling continued growth across markets. As travel demand expands across borders, it is also diversified across generation. With spending power 3x that of younger travelers, affluent and active seniors are eager to explore and spend on quality travel, reshaping the market from price competition towards a true value creation. In Q3 the number of Old Friends Club members and their total GMV rising over 70%. Trip.com Group is tailoring more products and services for this growing segment. We launched our first Old Friends Club flagship store in Shanghai to connect with senior travelers face-to-face and introduced themed trips designed around their interest. We also formed a dedicated service team of [ chief ] mom and dad officers friendly travel buddies who travel alongside the seniors, offering support and thoughtful care for their needs. Younger travelers are also shaping new trends in travel, seeking experiences that go beyond the ordinary. In Q3, revenue from this segment grew by triple digit propelled by the rising craze for concerts and live experiences. To meet the growing demand, Trip.com Group announced multiyear strategic partnerships with the world's leading live entertainment company. The collaboration allows fans to plan entertainment trip seamlessly combining exclusive presale access to shows with flights, hotels and curated local experiences to our platform, as entertainment becomes an increasingly powerful driver of travel, these partnerships help fans follow the artists they love while supporting regional tourism and enhancing destination appeal across Asia. We are also strengthening event booking capabilities through our partnership with Cityline Group, covering Hong Kong and Macau. Users can now effortlessly collect tickets via Cityline extensive self-service kiosk network by connecting online bookings with offline ticketing, the partnership delivers a smooth, hassle-free experience for travelers enjoying large-scale events. Trip.com Group remains deeply committed to nurturing the broader travel ecosystem and supporting local economic development by promoting travel products around concerts, festivals, and major sports events. We inspire more travelers to explore these destinations, driving overnight stays and spending and turning seasonal excitement into lasting economic impact for local communities. At the same time, we continue to tailor products and services to meet diverse traveler needs. For example, offering Muslim-friendly options, highlighting smart toilets for Japanese users and providing foreign currency exchange for inbound visitors. To further empower partners and elevate service standards across the industry, Trip.com Group is harnessing technology and AI to help the entire travel ecosystem move forward. Hotels can now overcome language barriers with our AI communication tools that respond to guest inquiries in real time. Our AI content generator and training tools also empower hoteliers to produce engaging content and sharpen their digital skills, helping them connect with international guests and with our updated hotel scoring and page ranking algorithms, we encourage hotels to focus on what truly matters, genuine service and lasting guest satisfaction instead of chasing ratings or ranking. Together, these efforts help partners stay competitive in a fast-changing landscape and create richer, smoother and more seamless travel experiences for travelers around the world. Travel is a fundamental part of the human experience, and we remain confident in the industry's long-term growth. We will continue to enhance our services and empower the broader ecosystem, driving sustainable growth across the travel industry and the wider economy. With that, I will now turn the call over to Cindy. Xiaofan Wang: Thanks, Jane. Good morning, everyone. For the third quarter of 2025, Trip.com Group reported a net revenue of RMB 18.3 billion, representing a 16% increase from the same period last year and a 24% increase from the previous quarter, reflecting robust travel demand throughout the summer and the Golden Week holiday. Accommodation reservation revenue for the third quarter was RMB 8.0 billion representing an 18% increase year-over-year and a 29% increase quarter-over-quarter. This was mainly driven by strong momentum in outbound and international hotel bookings along with sustained strength in domestic demand. Transportation ticketing revenue for the third quarter was RMB 6.3 billion, representing a 12% increase year-over-year and a 17% increase quarter-over-quarter. International air bookings showed robust growth with outbound air bookings continuing to outpace the market. Packaged tour revenue for the third quarter was RMB 1.6 billion, representing a 3% increase year-over-year and a 49% increase quarter-over-quarter, primarily driven by the expansion of our international offerings, our destination services delivered strong growth with international markets continuing to drive overall expansion. Corporate travel revenue for the third quarter was RMB 756 million representing a 15% increase year-over-year and a 9% increase quarter-over-quarter. This was driven by more companies adopting our managed corporate travel services. Excluding share-based compensation charges, adjusted product development expenses for the third quarter increased by 12% year-over-year. Adjusted G&A expenses for the third quarter increased by 6% year-over-year. These were mainly due to increase in personnel-related expenses. Adjusted sales and marketing expenses for the third quarter increased by 26% from the previous quarter and increased by 23% from the same period last year. The sequential increase was primarily driven by broader marketing investments with incremental spend allocated to our international expansion. Adjusted EBITDA was RMB 6.3 billion for the third quarter compared with RMB 5.7 billion in period last year and RMB 4.9 billion (sic) [ RMB 4.8 billion ] in the previous quarter. Diluted earnings per ordinary share and per ADS were RMB 28.61 or USD 4.02 million for the third quarter of 2025. Excluding share-based compensation charges, and fair value changes of equity securities investments and exchangeable senior notes, non-GAAP diluted earnings per ordinary share and per ADS were RMB 27.56 or USD 3.87 million for the third quarter. Diluted earnings per ordinary share and per ADS for the quarter were elevated primarily due to a onetime gain from the divestment of one of our overseas investments. As of September 30, 2025, the balance of cash and cash equivalents, restricted cash short-term investment, held-to-maturity time deposits and financial products was and RMB 107.7 billion or USD 15.1 billion. Looking ahead, we are confident in the continued strength of our business and future opportunities. Our disciplined approach to investment and execution will remain central as we focus on sustainable growth and long-term value creation. With that, operator, please open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Joyce Ju from Bank of America. Joyce Ju: James, Jane, Cindy and Michelle, congratulations on another strong quarter. AI is clearly top of the mind for the market and a key pillar of Trip.com's strategy. Can management please elaborate on where do you see AI heading on your platforms, specifically, how do you view the trajectory for AI agents? Do you see them going mainstream? James Liang: Thank you for the question. AI is a central pillar of Trip.com's strategy, and we are committed to unlocking its full potential for the travel industry. We believe we are at the forefront of this transformation. On the user side, we are shifting more touch points to AI-driven tools continuously iterating our AI plus content ecosystem. Our AI agent, TripGenie, is now used in over 200 countries and regions, with users growing over 200% year-over-year in the first half of 2025. We are also refining the balance between advanced AI search and conventional search to better serve user intent. For hotels, search results now evolve from standardized information to real-time recommendations tailored to individual preferences. On the operational side, AI helps detect issues and provide intelligent solutions for complex cases. This enhances employee productivity, improves customer service efficiency, increases satisfaction and conversion rates and can help reduce cancellations through smarter, more responsive service. Looking ahead, we see AI as a tremendous opportunity to make travel more accessible, reliable and enjoyable. Trip.com is committed to investing in AI to enhance every step of the traveler's journey. By combining cutting-edge technology with 26 years of travel expertise, we ensure seamless experiences that go beyond AI alone. We will continue to explore how AI can make every step of the traveler's journey better and enrich the travel experience. Ultimately, travel is about exploration and experience, and we are focused on delivering the best for our customers today and in the future. Operator: We will now take our next question from Alex Yao from JPMorgan. . Alex Yao: I would like to ask some of the near-term consumer behavior and also travel trends during national holiday and also mid-autumn festival. In addition, I think when the current geopolitical tension between Japan and China, can you talk about Japan's revenue contribution to our company and also the financial impact that you could expect over the next, let's say, couple of quarters? Jane Sun: Sure. I'd be happy to take this question, Alex. So first of all, for the National Holiday, combined with midterm holiday, we have seen very strong trend. The trend we call is 3Ls, which is long stay, long distance and long tail. Because it's a longer holiday, most people go long haul, which is the strength for Trip.com. And also because people are going so far away, we are able to promote many long-tail travel destinations for sophisticated travelers, and the stay is longer. So if you look at the industry, the domestic market posted a very healthy single-digit growth. Cross-border, it was even stronger. The international capacity recovered even further compared to previous quarter at around 88% pre-COVID level. If you look at our platform, our long-haul, long stay drives strong growth, both domestically and internationally. For outbound hotel and air bookings, it jumped to more than 30% year-over-year growth. And also for inbound travel, we surged by more than 100% year-over-year for Golden Week holidays. So we are very positive for these holiday seasons. Regarding Japan, I think as long as consumers have the buying power, they will travel to different travel destinations. What we've seen a couple of factors impacting traveler's behavior. First of all, the travel destination needs to be safe and welcoming. Secondly, the visa application needs to be eased. Thirdly, the direct flight also is a very important consideration for travelers. So over the years, we have seen -- if certain destination is impacted, travelers as long as they have time, they have money, they can choose different travel destinations to go to. So overall, on our platform, we haven't seen major impact so far, yes. Operator: We will now take our next question from Thomas Chong from Jefferies. Thomas Chong: And congratulations on a strong set of results. My question is about how have hotel and air ticket price trend recently? And what's the outlook for next year? Xiaofan Wang: In Q3, the year-on-year decline in hotel and air ticket prices narrowed to the low single digits. During the Golden Week, both domestic hotel and airfares trended higher, reflecting strong travel demand before easing sequentially after the holiday on the supply side, domestic hotel capacity continues to expand at a mid- to high single-digit pace year-over-year, which is likely to keep some pressure on room prices going forward. Internationally, flight capacity has now recovered to about 88% of 2019 levels. As a result, cross-border air ticket prices have softened compared with last year but remain above pre-pandemic levels while hotel prices have stayed largely stable. Operator: We will now take our next question from Yang Liu from Morgan Stanley. Yang Liu: Congratulations on the solid results first. I have one question that -- yes, could you please hear me? . Michelle Qi: Yes, we can. Yang Liu: My question is that could management share some insight on the recent consumer sentiment and more importantly, your early thoughts for the coming year? Jane Sun: So we have seen the travel industry remain very strong. People's desire to explore the world continues to grow across culture, reflecting travelers' design for good products. In terms of the leisure travel, it has stayed robust supported by extra holidays this year. Our platform, long-haul trips show strong momentum. Outbound hotel and flights rose over 30%, with Europe emerging as a key driving force. Domestically, travelers are also seeking deeper and more immersive experiences and explore less known destinations. Year-to-date, per capital spending on our platform remains in line with last year. For business travelers, it has remained stable. We continue to attract new corporate clients with average business travel spending on our platform has increased year-over-year, supported by Chinese companies expanding its global footprint. Looking forward in 2026 at Trip.com Group we view challenges as opportunities to strengthen our foundation. Our focus remains on enhancing our product, service and to better meet the evolving needs of our global travelers. For international business, our strategy at Trip.com has proven to be very effective driving rapid market share gain outside of domestic market in recent quarter. We will also continue to invest globally, particularly across Asia Pacific to accelerate our growth and expand our presence. Domestically, we are focusing on capturing more demand and providing excellent services to our customers. In particular, we tap into the great opportunity for inbound travel and silver generation and young travelers. We aim to deep the collaboration with our partners when we bring inbound customers to domestic market, it drives huge job opportunities. and also drives huge incremental opportunities for our hotel partners, flight partners, destination partners, rental cars, et cetera. So we are very positive for the growth in 2026. Operator: Our next question comes from John Choi from Daiwa. John Choi: Congratulations on another great quarter. Just quickly, with new strategies from your industry peers in the China market, what kind of impact could this have on your business going forward? Jane Sun: Sure. First of all, I think the travel market brings joy and happiness to people. Secondly, we invest heavily in our technology and AI, try to improve the efficiency for the whole industry, that will benefit all the players in the market. And thirdly, as you can see, we have a couple of offerings, which is very much liked by the consumers. First of all, we provide one-stop total solution. So when you make a reservation for flight, customers automatically will book a nice hotel with us, and we offer airport transfer. We also have a trusted list for destinations -- for attractions. And when you are traveling, if you run into any issues, for example, if a certain area has a tsunami or earthquake or if there is a war happened during your trip within 2 minutes, our team will reach out to the customers in the destination, making sure they are moved to the safe area. The very next day, if our customers choose to fly back to their home countries, we will make prioritized arrangement for our customers. So that capacity and ability to help the customers in destination, pre-trip, post-trip give the confidence for our consumers that when they travel with Trip.com, they have peace in mind. So we continuously improve our customer service level to make sure we offer the best product, best technology and best service to our customers. And we'll continuously do that. I think as long as we make the right investment in this area, our customers will trust our team for our service and product. We will continue to grow. Operator: Our next question comes from Wei Xiong from UBS. Wei Xiong: Sure. Congrats on a solid quarter. On the international side, it's encouraging to see Trip.com continue to maintain strong growth in the third quarter. So could management maybe share more on our international performance and any regional operational highlights? Jane Sun: Sure. In Q3, booking on Trip.com increased by around 60% year-over-year, with APAC growing more than 50%, demonstrating robust growth despite macroeconomic uncertainties. In particular, Asia Pacific remains our operational focus and the largest contributor for our international business growth. Through localizing our products and tailor our marketing strategy, our brand recognition and market presence continue to strengthen across key markets. Trip.com was named as the Best Online Travel Agency in Asia at 2025 Travel Weekly Asia Readers' Choice Award. We are now a leading OTA in several key markets. reflecting our growing and solid footprint. For the new markets, emerging markets such as Middle East and Europe also show encouraging momentum signaling expanding global opportunities. For inbound booking, we surged more than 100% year-over-year in Q3 by continuously innovating our offerings such as half-day tour [ at The Bund ] or at the Great Wall and Taste of China immersive dining experiences we reinforced our position as the pioneer in inbound travel market. So our international business will continue to grow, and we will make strong investment in this field. Operator: We will now take our next question from Brian Gong from Citi. Brian Gong: James, Jane, Cindy and Michelle, congratulations on a solid quarter. My question is regarding the inbound travel. You just mentioned, which is the fastest-growing segment for Trip.com. Could you provide updates on your inbound business and the key catalysts for the growth ahead? Jane Sun: Sure. When we surveyed the inbound customers, we got very positive feedback. People told us the country is very safe, particularly for women travelers. They can run, they can jog in the middle of the night, where they cannot do even in some major cities in their home countries. People are very friendly, very hospitable, the food is delicious, the history is very rich and the infrastructure is very new and effective. And on top of it, they find affordable luxury in inbound travel. By paying USD 100, USD 200, they can stay in a very nice 5-star hotel with excellent services. So that gives a very good foundation for us to build upon these preconditions. And also the free visa gave more than 60 countries, convenience for these people to come for inbound travel. And also the extension for in transit travel from 3 days to 10 days also make it easier for business travelers to come. So we see great opportunity to capitalize on these opportunities. And from our end, because our inventory in China is the most comprehensive one. And our service is also very good. And we offer multi-language services when a customer come in, we offer 24-hour service. if you call our call center within 30 seconds, a live person will answer the call to help them to solve the issues on the ground. And we remain very alert when they enter into the country. So all that combined together, which enable us to drive the volume for inbound travel very strongly, and we will continuously do so. By winning these inbound customers into the country. We also offer very good job opportunities for young people. We also bring new revenue opportunities for our hotel partners for our airline partners for the local tour operators for major travel destination partners and also for famous landmarks attractions. So overall, I think we bring happiness for the consumers who are traveling inbound. We also bring great job opportunities for young people as well as great opportunities for our partners for inbound travelers. So a very positive move in this field. Operator: [Operator Instructions] Our next question comes from Wei Fang from Mizuho. Wei Fang: James, Jane, Cindy and Michelle, congrats on the good numbers. I think I heard there were additional marketing spend allocated to the international business, right, in the quarter? I was wondering, can management give us some more updates on your Trip.com's marketing progress in the quarter? And what's your plan for the next quarter and beyond like 2026? Jane Sun: Sure. Our marketing strategy on Trip.com delivered solid results in Q3. The scalable nature of our business is not directly improving marketing efficiency in our key targeted markets. In Q3, our mega sale in major markets, such as Korea, Thailand, Malaysia reached historical heights for the quarter. Internally, we also empower our execution team to set ROI targets aligned with long-term growth objectives. This approach drives motivation and ensure disciplined control over the key levers of marketing efficiency. Looking ahead, upcoming global holidays will continue to execute our signature campaigns using a proven play book while staying agile to capitalize on the emerging market trends by combining these opportunities with our long-term strategy, we aim to accelerate revenue growth and strengthen our market position, including expanding our organic mobile use base. Operator: Our next question comes from Parash Jain from HSBC. Parash Jain: I have a question more on the recent dynamics in the global market and how they will impact your business. And the dynamics on 2 fronts. Firstly, on probably with your deeper penetration in the region, as you rightly mentioned, are you seeing intensifying competition with the global OTAs like Agoda? And my second question is, I mean, another trend we have noticed is where Google is pushing the paid search instead of SEOs, and does it impact your metasearch platform? Jane Sun: Sure. Thanks for your question. Asia Pacific market offers huge potential representing around 60% of world's total population and benefiting from a strong economic growth rate. The middle income population is rising very fast and the GDP growth in this region is the fastest compared to the rest of the world. The region combined rich -- very rich travel resources from majestic nature to vibrant cities with a fragmented market and relatively low online penetration, highlighting opportunities for consolidation and digital expansion. So we invest heavily to expand into this market. These market dynamics create a very favorable environment for online travel companies. We focus on delivering one-stop total solution for our customers, with localized product and exceptional customer service for APAC travelers worldwide. Our globalization strategy involves the insights from each market, driving significant growth in our presence by taking the dynamic and market-specific approach we are confident in our continuous growth trajectory. Thank you. Operator: Our next question comes from Simon Cheung from Goldman Sachs. Simon Cheung: James, Jane, Cindy and Michelle, I just have one quick question. So I think you touched on when you discussed about your packaged tour business. One of the segments that I'm interested in your destination service business and the so-called experience markets. Wondering whether you can share some thoughts about your long-term positioning and the opportunity over there, especially given -- reported there's some IPO going on in that segment? Jane Sun: Sure. Destination service business is quite small compared to the overall pie. We expect our group to deliver around [ RMB 5 billion ] in GMV for destination service which represents only 2% to 3% of our total GMV. We drive our volume and the growth is more than 130% Trip.com growth year-to-date, and the rising demand from the APAC is strong. We cover about 300,000 offering worldwide, and we continuously cover more and more products in our platform. For us, our strength is one stop travel platform covering activity, attraction, transportation to better match users' demand and enhance overall travel experience. Leverage our large APAC user base, along with the loyalty program and AI tool, we're deepening engagement and driving repeated booking. Over the next 3 to 5 years, our focus is broadening product covering and market share. So for us, the [indiscernible] destination service is free because our customers already make the air flight and hotel bookings. So we don't need to spend money to acquire these customers. So the acquisition of these customers is free. And on top of it, we don't intend to make any money for destination marketing because it's very small. It's mainly to enhance users experience and making sure our customers love our product, love our platform. So we intend to expand aggressively in this field aiming to increase the loyalty and customer satisfaction to better serve our customers on the flight hotel. So the one-stop ecosystem gives us the advantage from a traffic acquisition also take away the pressure for making profit for this very small segment. Operator: Our next question comes from Ellie Jiang from Macquarie. Ellie Jiang: Congrats on the solid print. I have a question on the cost side. The operating expenditure came in at slightly lower end of expectations during the third quarter. How should we think about the outlook for the coming quarter, fourth quarter as well as for 2026? Xiaofan Wang: We continue to manage our investments with discipline on sales and marketing side, we adjust spending based on each market's maturity and the characteristics of different channels. As a result, the overall expense mix may in line with business priorities. On the personnel front, as more markets grow rapidly, we are expanding our global presence while maintaining high standards for new hires to ensure strong marginal cost efficiency. The quarter-over-quarter increase in operating expenses mainly reflected seasonal factors in China. With the global holiday season approaching, we plan to step up marketing investments as planned. while the marketing ratio may rise sequentially, it will vary year-over-year depending on regional and channel mix. Over the longer term, we remain focused on improving efficiency by growing direct mobile traffic enhancing cross-selling and strengthening customer loyalty. Operator: We will now take our last question from the line of Qiuting Wang from CICC. Qiuting Wang: My question is about Trip.com's margin as our international business grows rapidly, how should we expand margin out of Trip.com next year and in the longer term? Xiaofan Wang: It is still too early to provide specific commentary on the margin outlook for 2026. In general, we view margin as a natural result of a dynamic business mix. and ongoing improvements in operating efficiency across each business segment. In the long run, we do not see any structural limitations to our profit margins, supported by our innovative strategies global expansion and forward-looking investments, our margins could be comparable to both of our international peers. Operator: We have now come to the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Michelle for closing comments. Michelle Qi: Thank you. Thank you, everyone, for joining us today. You can find the transcript and webcast of today's call on investors.trip.com. We look forward to speaking with you on our fourth quarter of 2025 earnings call. Thank you, and have a good day. Jane Sun: Thank you very much. See you next quarter. . Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

189天前Insight Analytics约5分钟阅读

LFMD 2025 Q3 财报电话会议

Operator: Good afternoon. Thank you for joining us today to discuss LifeMD's results for the third quarter ended September 30, 2025. Joining the call today are Justin Schreiber, Chairman and Chief Executive Officer; and Marc Benathen, Chief Financial Officer. Following management's prepared remarks, we will open the call for a question-and-answer session. Before we begin, I would like to remind everyone that during this call, the company will make a number of forward-looking statements, which are subject to numerous risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties are described in the company's 10-K and 10-Q filings, and within other filings that LifeMD may make with the SEC from time to time. Forward-looking statements made during this call are based on current information available to the company as of today, November 17, 2025. The company assumes no obligation to update or revise any forward-looking statements after today's call, except as required by law. Also, please note that management will be discussing certain non-GAAP financial measures that the company believes are important in evaluating LifeMD's performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations thereof can be found in the press release issued earlier today. Finally, I would like to remind everyone that today's call is being recorded and will be available for replay in the Investor Relations section of the company's website. Now I'd like to turn the call over to LifeMD's CEO, Justin Schreiber. Please go ahead. Justin Schreiber: Thank you, and good afternoon, everyone. After the market closed, we issued a news release announcing our third quarter financial results and posted an updated corporate presentation on our website at ir.lifemd.com. LifeMD made considerable progress executing on our strategic plan in the third quarter. Our RexMD business returned to growth adding approximately 10,000 net new subscribers, and our weight management offering has stabilized and is now well positioned for significant growth in 2026. We also continued to deliver strong year-over-year performance with telehealth revenue up 18% and adjusted EBITDA increasing 30% compared to the prior year period. That said, the most exciting thing about LifeMD today is not our past performance or even the results this quarter, but the important foundational steps we have taken to set the company up for an exceptional 2026. During and following the third quarter, we made substantial progress on our women's health and behavioral health offerings, two verticals that we believe have the potential to each become 9-figure businesses over the next 3 years. We also advanced the development of our LifeMD+ membership and in-app health marketplace, which we expect will meaningfully enhance patient experience, deepen engagement and strengthen long-term retention. In addition, we secured regulatory approval for our nonsterile 503-A compounding pharmacy, a major milestone that will dramatically expand our ability to produce personalized medications at scale and a significantly improved economics compared to relying on third-party pharmacy partners. We were also pleased to successfully divest our majority interest in WorkSimpli. This transaction strengthened our balance sheet and allows us to operate as a pure-play virtual care and pharmacy company. While it was a difficult decision, the opportunity in front of our core business is so substantial that we felt it was essential to dedicate 100% of our focus and resources to our core health care platform. As we look ahead to 2026, our strategic priorities are clear. One, accelerating high-quality growth in our weight management offering by leveraging our collaborations with Novo Nordisk, Eli Lilly and others. Two, scaling our virtual women's and behavioral health businesses built around synchronous care delivered by highly trained providers and personalized therapies. Three, expanding and diversifying RexMD, particularly through personalized compounded medications and hormone therapies. And four, launching a more robust unified LifeMD platform and marketplace designed to increase patient engagement, improve cross-care participation and deliver a significantly enhanced experience across both mobile and desktop applications. LifeMD has made a deliberate decision to play the long game in the GLP-1 space. We are one of the few virtual care providers fully integrated with both Novo Nordisk and Eli Lilly. And we believe these collaborations represent a significant and durable competitive advantage, especially as prices come down on branded therapies and oral therapies come to market. The last 2 quarters have been challenging in the weight management category due to intense competition from low-cost and, in many cases, low-quality compounded GLP-1 makers offering prices we cannot and will not match. While many of these compounded products are less effective and in some cases, unsafe, aggressive marketing and artificially low entry price points have drawn in a portion of consumers and created near-term pressure. Despite this environment, we have maintained our market share, remained disciplined and continued investing in the high-quality, clinically sound weight management model that we believe will create long-term shareholder value. We have consistently believed that branded GLP-1 manufacturers would ultimately reduce pricing to broaden patient access. And that moment is now clearly underway. Just this morning, we announced that through our collaboration with Novo Nordisk, LifeMD will begin offering Wegovy and Ozempic to self-pay patients for $199 for the first 2 doses, a 60% reduction from current prices. Higher doses will be available to self-pay patients for $349 per month, representing a 30% reduction. Eli Lilly also recently announced that self-pay patients will be able to access the Zepbound multi-dose pen, if FDA approved, at $299 for the lowest dose and up to $449 for the highest dose. Even more exciting is the expected approval of the Wegovy pill with a PDUFA date in late December. Analysts widely anticipate FDA approval and commercial availability in early January. LifeMD will be among the first virtual care providers to offer oral Wegovy through our collaboration with Novo Nordisk. While formal pricing has not been publicly released, we expect lower dose levels to be approximately $149 per month based on recent public remarks from President Trump. The Wegovy pill is expected to be the most effective oral medication for weight loss ever approved by the FDA. In clinical trials, patients achieved on average 15% weight loss over 68 weeks with side effect profiles comparable to the injectable formulation. In addition, Eli Lilly plans to launch its oral GLP-1, orforglipron, later in 2026, which we also anticipate offering through our platform at accessible pricing. The bottom line is clear. oral therapies combined with substantial price reductions will fundamentally broaden access, accelerate demand and reshape the GLP-1 landscape. With more than 130 million Americans eligible for treatment, LifeMD is uniquely positioned to be a leading virtual destination for high-quality longitudinal care. Care is essential for patients to achieve the long-term outcomes these medications can deliver. Our men's health platform, RexMD, also had a strong quarter overall. Demand for our personalized ED medications, which combines sildenafil and tadalafil has been exceptional. And these formulations now represent 25% of all new ED prescriptions on the platform. These medications are currently fulfilled through a third-party pharmacy partner, so we plan to bring the majority of this fulfillment into LifeMD's in-house pharmacy in early 2026. This transition will meaningfully reduce COGS, improve gross margins and give us full control of the end-to-end patient experience. Our hormone replacement therapy offering is also demonstrating strong momentum and clear signs of future scalability. Early patient retention has been strong. New patient acquisition continues to grow. Demand is robust across age groups, and we have expanded into men's HRT coverage to 35 states. In addition, RexMD continues to broaden its portfolio with new men's-focused pharmacy products across behavioral health, weight loss, dermatology and more. We believe that our recently licensed 503-A compounding pharmacy will be a major enabler of RexMD's growth, allowing us to offer personalized therapies, lower-cost compounded options and superior margins across multiple men's health categories in 2026 and beyond. In addition to our weight management and men's health businesses, we are very optimistic about the 2026 opportunity in both women's health and behavioral health. Demand in both categories is very strong. And while these businesses are not yet contributing meaningfully to revenue, the initial engagement metrics, interest levels, click-through rates and acquisition costs are on par with categories like ED and weight loss that scaled rapidly within their first year. In both verticals, our focus is on building high-quality, high retention revenue streams. In my view, industry-leading retention is driven by 3 things: an exceptional product, great patient care and customer service, and transparent pricing and strong value proposition. We also believe that enabling patients to use their commercial or government insurance is a critical part of the equation. While insurance enablement has been slower to deploy in our platform than planned, it remains a top strategic priority and will be an important component of our 2026 story. Our women's health business is highly differentiated. We have built and continue to expand an exceptional advisory Board of national leaders in women's hormonal health, menopause, bone health and longevity. We've also assembled a dedicated, highly trained clinical team to deliver this care, and we are confident in our ability to scale as demand accelerates. Patients can choose between bundled care and prescription cash pay programs or flexible models where they pay a la carte or use insurance to cover visits, lab work and commercially available medications. In addition, our in-house compounding pharmacy will enable affordable access to compounded therapies for hormone optimization, sexual health, dermatology and more. We believe this will be the highest quality, most comprehensive and most accessible virtual women's health offering in the country, and we expect demand to be extremely strong. Our psychiatry offering follows a similar structure, combining a la carte consults with bundled care plus medication programs that deliver discounted access and long-term, high-quality care. Most patients begin with a synchronous consultation with a state license provider before transitioning into asynchronous message-based ongoing care. While the current patient count is small relative to our overall business, we saw meaningful quarter-over-quarter traction and expect psychiatry to become a sizable business in 2026. We believe this category will be another powerful, durable growth engine for LifeMD. Given the strength of our balance sheet and the promise of these new offerings, we intend to invest in growth in these verticals early on in 2026 to rapidly build the patient base in these 2 verticals and in our offering to drive superior long-term retention. Lastly, we are investing significant energy and resources into launching the core functionality and features that will enable LifeMD to execute on its long-term vision, building the leading integrated marketplace for virtual care, pharmacy, laboratory services and wellness. Much of this functionality, including a comprehensive relaunch of the LifeMD website and mobile app, we'll be rolling out between now and early Q1 2026. These upgrades will allow patients to effortlessly participate across multiple care programs, access a broad suite of pharmacy offerings and order convenient in-home lab testing through a partnership we expect to formally announce early next year. Enabling seamless navigation across cash pay and insurance supported workflows is not easy, but it is essential to our long-term strategy. When completed, these enhancements will not only broaden the depth and breadth of services we provide, they will also deliver a significantly improved patient experience with clear pricing, more flexibility and expanded a la carte options. Our objective is for patients to view LifeMD as a true virtual care destination, a place where they can access synchronous or asynchronous visits with trusted clinicians; obtain generic, branded or compounded medications at transparent prices; and conveniently order the labs that support their health goals and inform long-term care plans across both primary and specialty programs. We believe the integration of these capabilities will meaningfully differentiate LifeMD, deepen patient relationships and serve as a key driver of sustainable growth as we move into 2026 and beyond. With that, I'll now turn the call over to our CFO, Marc Benathen, to provide more detail on our third quarter financial results and outlook. Marc? Marc Benathen: Thank you, Justin. Good afternoon, everyone, and thank you for your flexibility as we rescheduled this call from November 6 to today. Our third quarter telehealth business results were solid with year-over-year growth of 18% in revenue and 30% in adjusted EBITDA. Our Rex business rebounded from its late second quarter lows with a net gain of 10,000 new members in the third quarter. We've also executed initiatives to significantly strengthen our balance sheet, including the divestiture of our majority ownership position in WorkSimpli and the payoff of all of our debt. Following these transactions, LifeMD has the strongest balance sheet and liquidity position in the company's history. This will enable us to operate from a position of strength in 2026 as we continue to invest in scaling our core offerings, plus further diversifying our platform through growth and recently launched offerings. Now turning to third quarter numbers. Consolidated revenue grew 13% versus the year ago period to $60.2 million. Telehealth revenue increased 18% to $47.3 million with telehealth adjusted EBITDA growing 30% to $2.9 million. Telehealth subscriber growth remained strong with the number of active subscribers increasing 14% year-over-year to over 310,000 at quarter end. Gross margin for the third quarter was 88%, a decline of 290 basis points versus the prior year due to revenue mix. Gross profit was $52.8 million, an increase of 9% from the year ago period. Telehealth gross margin was 86% as compared to 89% in the year ago period, driven by the revenue mix. Our GAAP net loss attributable to common stockholders for the third quarter of 2025 was $4.6 million or a loss of $0.10 per share. This compares with a GAAP net loss attributable to common stockholders for the third quarter of 2024 of $5.4 million or a loss of $0.13 per share. Adjusted EBITDA as a non-GAAP measure we define as income or loss attributable to common shareholders before various items as outlined in today's news release. Adjusted EBITDA totaled $5.1 million for the third quarter of 2025 as compared with $4.3 million in the year-ago period. Telehealth adjusted EBITDA as a non-GAAP measure defined as adjusted EBITDA for only the ongoing telehealth business, excluding WorkSimpli. This measure was $2.9 million for the third quarter of 2025 as compared to $2.2 million in the year ago period. We exited the third quarter with $23.8 million in cash and no debt. As previously disclosed on November 5, we identified adjustments following system migrations related to the recognition of revenue with offsetting related balance sheet accounts for 2022, 2023, 2024 and 6 months ended June 30, 2025. This resulted in an approximate $4.6 million impact in over recognition of revenue attributable for the total period. This adjustment had no impact on the company's cash flow or cash position. Turning to financial guidance. Following the divestiture of our majority ownership in WorkSimpli, resulting in a pure-play, stand-alone telehealth business, we expect fourth quarter revenue in the range of $45 million to $46 million, with adjusted EBITDA in the range of $3 million to $4 million. For the full year 2025, we expect revenue in the range of $192 million to $193 million and adjusted EBITDA in the range of $13.5 million to $14.5 million. Full year guidance represents growth of 24% for revenue and 254% for adjusted EBITDA versus 2024. With that, let's now open the call to your questions. Operator? Operator: [Operator Instructions] Our first question comes from David Larsen with BTIG. David Larsen: Congratulations on a good quarter. Can you talk a little bit about the mix of telehealth product revenue, especially in like weight loss, like how much is coming from branded scripts? How much is coming from compounded scripts? There was obviously a sequential decline. Just any color of why that happened? Just any thoughts around 2026 in the obesity health sort of product line. Marc Benathen: Yes. David, this is Marc. I'll let Justin take the second part of the question on go-forward product strategy. As far as the revenue mix, so weight management still is more than 50% of the company's total revenue mix. Yes, there was a slight sequential decline that we had quarter-on-quarter. The subscriber base was roughly flat. It was down about 1,000 quarter-on-quarter, although that has stabilized and looks to be stable through the balance of Q4 and then with some of the product innovation in 2026 should return back to growth levels. The biggest, I'd say, mix-wise, as far as new patient sign-ups, we're seeing more than half of them coming in through branded therapy. It's less than half of the total revenue because that -- the new patient base obviously needs time to build up relative to the existing base on the patients that are coming through branded therapy of which obviously, there's a substantial portion at this point. As we mentioned, we -- the only real difference in the economics is the fulfillment fee that was on the personalized compound. So obviously, we do lose that. That was roughly -- for the majority of the time period was roughly about $50 in orders. So we have had some impact from that. That we expect to have some additional impact in Q4, which is reflected in the guidance that we put out today. And then we expect ourselves, particularly with a lot of the product innovation going on in the market and where we're positioned with our collaboration partners to be able to capitalize upon pretty solid growth heading into next year. Justin Schreiber: This is Justin. I'll just add quickly on 2026. I mean there are 2 big things that we expect to drive the weight management business. The first, as we emphasized in the call, is better pricing for branded therapies, which, as you know, we've made a kind of big investment in. And so I think you're already seeing the writing on the wall there. I also think that as pricing for the cash pay programs comes down, I think you'll see more and more payers covering these medications. We've also, obviously, seeing the outline of a program for Medicare to cover these drugs, which is also something that LifeMD is set up for. So I mean we're generally like really, really positive on 2026. The other -- like the other big thing that would help us would be the Trump administration doing something. And I think this is likely, not just possible, but likely that as these -- as the branded therapies that are FDA approved become more affordable to patients, I think it is highly likely that you see FDA crack down on compounding, which would be an amazing thing for our business if FDA were to slow that down. Right now, we're getting beat up every single day by just a lot of these very low-priced semaglutide and tirzepatide offers out there that are all compounded, and it's very difficult for us to compete in that kind of a marketplace. David Larsen: So Justin, I think you had been talking at one point about the percentage of new obesity health members coming on the platform in December of '25, expected to be around either 50% or 75%. Does that -- is that still true, like the majority of new patients are on branded products? Justin Schreiber: Yes. I mean that's what Marc just said. I don't have the precise number as of the last 30 days, David. But I mean, I still think that, that range is certainly extremely likely. I think we're at the lower end of that range now. But I think as these prices come down and especially when the initial doses come down into the $200 to $300 range per month, it makes it very competitive with a lot of the other compounded offers that are out there. So I mean, I think you easily could see that number going to 75% or even higher in the very near future. David Larsen: Okay. That's very helpful. And then in terms of your coverage, your insurance coverage like Medicare, Medicaid, commercial, just I mean, it seems to me like now that Medicare and Medicaid apparently will cover these branded products in 2026. I'm not sure when that's going to start in '26, but assuming that it does happen, I mean, it seems like that could be a significant revenue stream for you. What portion of your revenue now is, I guess, Medicare or Medicaid or insurance covered versus cash pay? And by the end of '26, what percentage of your revenue do you think will be insurance related? Justin Schreiber: Yes, I mean, Dave, I'm not really prepared to -- Marc nor I are prepared today to give you an exact number for -- on a percentage by the end of '26. What I can say is that we are 100% ready to go with Medicare once these drugs are covered. So I think that's going to be a very significant thing for our business. And we have actually been seeing -- I don't think traction is the right word, but like we did turn on -- we have right now, it's somewhere between 100 -- I think it's somewhere between 100 million and 150 million lives under coverage right now. And we actually turned this on for the first time broadly last week. And we saw over a 1/3 reduction in our CPA. So it actually is a very, very positive thing for acquisition costs. So I think that -- I don't want to say I think, but the team at LifeMD is really energized around this. It's one of our differentiators. It's been frustrating how long it's taken for us to get these programs live. But I think that also speaks to like the difficulty for others that try to launch a 50-state payer network, right? So I think it's going to be a very positive thing for the business. And I'm really hopeful that we'll start to see that in the coming quarters and be able to talk in more detail about that becoming a greater share of our patients. David Larsen: Any sense for what percentage of the members that are on your platform now actually have insurance? Or what percentage that would -- that perhaps don't join the platform, don't because they wanted insurance, but now that you take it, they can join in '26? Just any -- can you put some numbers or anything around the potential lift in revenue we might see with insurance coverage? Justin Schreiber: Well, I can tell you, Dave, a decent percentage, I mean almost at least 25% of patients that sign up for our program end up not continuing with the program because they don't have insurance coverage for the medication. So that's a big thing. And as coverage increases these medications, it's going to be a massive thing for our business. So on the care side, I think it's significant. I mean I think that -- look, I mean, the stat I just gave you, we saw a 33% ballpark reduction in customer acquisition costs when we turned on the ability to use your health insurance for like, I don't know, 1/3 of the population, probably even less. So I mean that's a great sign. Like there's massive demand out there. And that once we get these programs live and functioning the way we need them to function of scale, like it actually will have a really positive repercussion on the overall business. David Larsen: And then just one more before I hop back in the queue. Can you talk about your clinical services and your retention levels amongst members? So let's say these GLP-1s go solid oral in early '26. Like the value that LifeMD brings to members that, say, for example, an Amazon would not or a typical like Costco maybe would not. Can you maybe just talk about the value you bring and the retention levels or the weight loss that your members typically see that they may not see otherwise at a different platform? Justin Schreiber: Sure. So I mean, some of the other partners like the Costcos of the world are going to have these drugs inventory, just like I think it's pretty likely at some point that LifeMD will be able to direct ship these medications as well from our pharmacy directly to patients. So not a big differentiator there. Where I think there is a really big differentiator is in the portfolio of services and products that LifeMD offers. So the way I envision it, Dave, is like people may come to LifeMD and -- or they make as an alternative to Costco or their family Doctor's office, they start with -- they typically start with an amazing visit with a state license provider, and they're going to use that to access -- initially, the goal might be to access the GLP-1 medication and use their insurance for the pharmacy coverage maybe even use their insurance to cover the cost of the visit. But no one has one need. And most people that are using a GLP-1 have many other health needs, whether it's preventative care, whether it's lab work for -- it could be something that most of these people have never had a provider speaking to them about their hormone health. LifeMD is also launching a cardiovascular offering in late this quarter, early January, which is going to be an incredible program. There's an incredible shortage right now of cardiologists throughout the country. So we're very excited about that. The ability to get a different medication. So we obviously don't compound GLP-1 medications, but we have a full-blown compounding pharmacy here that if somebody needs a hormone or a dermatology product, we can compound that at a fair price, ship it directly to them. So like this is the type of thing that I think many of these other retailers that you mentioned, I don't want to name names, but I think they would all love to have this type of marketplace and even the brand associated with that marketplace. So that's going to be the big difference between LifeMD and these other places. Also it's worth pointing out that Costco doesn't have a doctor or a nurse practitioner, like they don't have the provider that can write the script. So you can go pick up your drug at Costco or some other or CVS, right? But like you still need a provider. And that's where LifeMD comes into play. I think with Amazon, you obviously get the provider. But look, there's a big difference in the LifeMD brand and Amazon's brand. And there are certainly people that are going to be very loyal to Amazon. And -- but it's a big space, right? I mean there's going to be room for a number of high-quality players in this market. David Larsen: Great. And last one, Marc, was there any revenue impact from that, I guess, restatement, we'll call it? Was there a -- would revenue have been $4 million higher? Or was it -- there was no impact? Marc Benathen: No. So it was not a restatement, it was a revision. The revision had a $1.1 million impact on this year. However, the revisions were made in the quarters that they applied to. So there was no impact to this quarterly results from it. Operator: We'll now move on to Steven Valiquette with Mizuho. Steven Valiquette: So I think you kind of touched on this a little bit, but I guess I was kind of curious just also on kind of like the brand uptake, how that's going to track relative to your expectations. You gave some comments on less than half is still on brand. But I guess what kind of jumps out to me is just the fact that since you guys announced your brand drug partnership deals with Novo back in April and May, we've seen Novo Nordisk sign partnership deals for low-cost branded drive with a whole bunch of other companies in the virtual care space and pharmaceutical supply channel. So I'm wondering if some of those deals have diluted your expected uptake in any way, some of those other deals actually helped you in some ways again. Just trying to get a better sense of your ability to capture your fair share of customers seeking the lower-cost brand drugs in the weight management category and diabetes, too. Justin Schreiber: Sure. This is Justin. I'll answer that. So I think we knew that Novo and Lilly would do multiple deals. I think -- look, I don't think that them collaborating with other retailers and pharmacies and telehealth companies has an impact on the demand or the take rate on -- or the conversion rate on our platform. I think it's all about -- I think -- and I can tell you that I'm pretty sure they agree with me. Look, I think it comes down to price. And in a world where FDA ignores what's happening in the compounding world, and you can go out there and get a compounded therapy for, I don't know, even half the price or more a lot of times of what -- where the branded therapies are priced. It just makes it really difficult. And the competitiveness of even the compounding world, something that we didn't expect as -- since these drugs have come off of -- since these drugs have come off the shortage list, the number of players out there, the number of direct marketing firms that are competing in the compounded GLP-1 world has skyrocketed. I don't have an exact number, but it's just gotten -- we expected it to get better, and it actually just got a lot worse and a lot more competitive. So when people are seeing a branded therapy that's priced at $349 to $499, they're seeing -- while they're purchasing and immediately after they purchase while they're waiting for a visit, right, they're seeing 10, 20 other ads, right, for these drugs sometimes as low as $99 for the first month. And usually, the prices quickly escalate, a lot of times in ways that aren't clearly disclosed to the consumer. But that's the current landscape. So we're really optimistic about branded therapy continuing to -- these branded therapies continuing to like perform on our platform. I think there's a big demand. We think the price point, they need to be in the $200 to $300 range to be competitive with a lot of these offers. We need to see better coverage. We think oral therapies, and I mean, most importantly, we think that the Wegovy pill that's likely to be launched in January is going to be -- could be a massive catalyst for the business. And so that's kind of where we're at today. Operator: We'll now move to Anderson Schock with B. Riley Securities. Anderson Schock: So first, on the return to RexMD growth, how much of this volume has been driven by the men's HRT offering versus the ED business returning to historical levels? And how does ED patient acquisition outlook compared to historic levels? I know you previously mentioned it was back to around 80% to 90% of historic levels as of the call in August. Marc Benathen: Yes. This is Marc. Most of the growth, so the 10,000, about 8,000 came from the sexual health business, which is mostly ED. The balance of it came from a mix of the HRT business, hair loss and insomnia. As far as the acquisition volume, I mean, the acquisition volume is very close to where it was at historical levels. I'd say the caps are about $5 to $10 higher than what they had been, but still healthy unit economics comparable to where they have been, and the levels are very close to where they have been historically. Anderson Schock: Got it. And then telehealth's gross margin declined around 350 basis points. Could you provide some more color on what drove this? And how should we think about the telehealth? Marc Benathen: Yes. So this is Marc. Nothing in the business drove it. Like-for-like product lines or service lines, the margins are the same, but it was really -- it was a couple of fold. One, as we mentioned, we're shifting more to branded product in the weight management business. That branded product, obviously, doesn't carry with it some of the medication processing or medication processing fulfillment fees that we had on the personalized compounds. That contributed probably about 150 basis points of that change. And we had always mentioned that before when we had spoken about the change from compounding to branded. The balance of the rest of it is mix in business. So today, weight management is over 50% of the company's total revenue. If you were to flip back a year ago, Rex was the biggest part of our revenue. Rex, particularly Rex sexual health will have the highest gross margins that will sit in the upper 80s. So the mix in that business and the shift there contributed to the rest. Anderson Schock: Okay. Got it. And how should we think about the telehealth margins going forward with the new offerings in women's and behavioral health and also as you scale the 503-A compounding pharmacy? Marc Benathen: Yes. So in general, we would expect gross margins on a rate basis to probably be slightly below where they are today. And the reason for that is a fewfold. One, mental health is a big area of opportunity for us, which will be very accretive to the company's top line and bottom line. But with that being said, gross margins in that business are not going to be 85% to 87% or so. They are going to be lower. They'll typically have a 7 in front of them from a gross margin standpoint, which is if you operate very well, which we do operate our business very well. Secondly, some of the compounded offerings, the gross margins will be slightly lower even after we transition. Although after we transition fully to our pharmacy, they'll probably get back to where the generic is or very close there. But in the interim, there will be -- the gross margins will be slightly lower and we expect that ratio shifting to branded therapy and weight to continue to go up and up to gross margins under current arrangements today where the product is a complete pass-through to the end customer, that would also have a mild impact on gross margins. All of these businesses, we do expect to be accretive to the bottom line and they all have massive ability to scale and growth opportunities. Some of them have lower advertising costs than some other businesses that we've been in. So there are puts and takes there. But from a pure GM rate standpoint, we would expect a mild erosion in the rates just due to mix of business. Operator: We'll now move on to Sarah James with Cantor. Sarah James: Earlier, you mentioned turning on insurance broadly last week and you talked about an observation of customer acquisition costs being down 33%. I'm wondering if you have any other observations from turning it on broadly. And then just if you could clarify the 33%, was that the lower cost of customers with insurance coming on? Or was it that the cost per customer, customer acquisition costs for those with insurance would be even lower and you just had a big mix shift to those with insurance. Justin Schreiber: Sarah, it's Justin. I'll take that one. Look, I think what it demonstrates -- I think what it demonstrates is that a lot of patients that are coming through the medical intake process that have clicked on LifeMD ad or business because it's something they sell on TV. I think it just demonstrates that a lot of these -- a lot of people like want to use their insurance for health care. And one of the unique things about the platform that we have that is still mostly synchronous is that we can participate in the benefits world. So it's just a function of more people getting through the flow, being able to check the insurance route versus the self-pay route, obviously, they're seeing a lower price point as well if they choose the insurance route. So there's also like a kind of exercise that we need to go through to kind of rework the financial model and see how that all plays out. But it was super encouraging and I think there's a lot more optimization that we could do as well. And so where I get really excited about this, especially is things like Medicare where if you have broad coverage for these drugs, and we know we're going to get paid for a consult, and it's really just about the patient going through the initial benefits verification process. And then you have the visit and the medication that are covered and then we can ship the medication directly from our pharmacy to the patient. I think that's super exciting. And I think it just -- I think we've always known that this would have a big impact. We were just pleasantly surprised to see that it was that big of an impact without optimizing it more. Sarah James: Great. And the new consumer-facing app and website that you're launching, do you have any thoughts on how that could impact cross-selling ability? Justin Schreiber: Yes. I mean it's massive. I mean, the number of kind of cross-care sign-ups per day. I mean I think it could easily be 50 or 100 consults per day off the bat and various care programs without us doing any work except for just the technology functioning. So I'm really excited about it. I mean, I think I know that it has the -- I know that it's the potential to like totally change the profile of the business. And also just totally LTV and retention rates across the business. So it's been a big effort and the new app is going to be beautiful. It's going to look -- I mean, I think our current app looks good. But what we're launching is just leagues ahead of where we are today. And I think it's going to have a big impact on the brand and also on the cross-care rate and ultimately the LTV for the business. Operator: We'll now move on to Yi Chen with HCW. Eduardo Martinez-Montes: This is Eduardo on for Yi. I had a question regarding the 503-A pharmacy. You mentioned that you're licensed in 14 states now. I'm just curious if you have an anticipated time line to reach the 50-state coverage and how much margin impact do you think that will have once you're fully scaled. Justin Schreiber: Yes. I think -- this is Justin, again. The licensing process is pretty quick for a pharmacy that's already licensed up across the country like we are. So I would expect to be 35 state licensed in the next 60 to 90 days at the latest, could be even sooner. And then the next kind of 15 states will trickle in, I think, let's just say another 30, 60, 90 days from there with 1 or 2 like California being the most difficult. So it's not a long-term thing, let's just say, I think we can be 50-state licensed for compounding, maybe with the exception of 1 or 2 difficult states in the next couple of months. Eduardo Martinez-Montes: Got it. And then regarding the... Justin Schreiber: And your question on the margin, I mean, the reality is it does have -- I mean owning and operating a 503-A compounding pharmacy is a big, big competitive advantage for us. It's extremely difficult to get the COGS to where you need them to be for our type of business, working with a third-party pharmacy. We do have some great third-party compounding pharmacy partners, and they're not going anywhere. But again, being able to bring these things in-house, control the patient experience, really leverage kind of our supply chain capabilities as well, which are really good, especially in pharmacy to drive down COGS. I mean it just makes these things so much more accessible for patients. Eduardo Martinez-Montes: Got it. And regarding the oral obesity products that we anticipate coming on to market soon. Do you have any visibility? Is there any market research to indicate what kind of bump -- like what fraction of patients are really holding back because they don't like the needle, right? I'm just trying to get a feel for your impression of how much these orally bioavailable obesity products are going to have on uptake of these therapies. Justin Schreiber: I think it's big, but I think your guess is as good as mine and probably as good as the drug manufacturers, right? I don't think there's never been an oral medication for weight loss with the type of efficacy profile that Wegovy pill will have that's been approved by FDA. So it's really difficult. I think it's enormous. I mean in my social circles, especially people that are a little bit older, I think it could expand the market by 25% to 50%. I personally know a number of people that I would never think would avoid a very small needle like this or injectable, but that are just waiting for the oral product to come to market. So I think it's going to be very big. I mean to put a number on it, it's very difficult, but there is going to be massive demand is what I think. Operator: Thank you. At this time, we've reached our allotted time for questions. I'll now turn the call back over to Justin Schreiber. Justin Schreiber: Thank you for your questions and for your interest in LifeMD. And we look forward to speaking with you once again when we report our third quarter results -- or sorry, when we report our fourth quarter results in March of next year. Have a great evening. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

189天前Insight Analytics约5分钟阅读

SKO.NZ 2026 Q2 财报电话会议

Operator: Good day, and welcome to the Serko FY '26 Interim Results Announcement. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Darrin Grafton. Please go ahead, sir. Darrin Grafton: Good morning from Auckland, New Zealand, and thanks for joining our investor briefing covering Serko's results for the half year ending 30 September 2025. I'm Darrin Grafton, CEO of Serko, and I'm with our CFO, Shane Sampson. This morning, I'll take you through our performance and highlights for the half year period. I'll then hand to Shane to cover our financial results in detail. Then, I'll talk through how we're positioning Serko for the future growth, our outlook and finishing with Q&A. As always, unless otherwise stated, comparisons are made to previous half year period 1H FY '25. And let's begin on Slide 5. This is Serko's strongest half year performance ever on both revenue and EBITDAFI. This was due to disciplined execution and our focus on profitable growth. Key callouts are: first, we achieved strong total income growth of 45% to $61.8 million, and this reflects the scalability of our model with strong contributions from Booking.com for Business and the addition of GetThere, driving our expansion into North America. Second, we delivered EBITDAFI of $6.1 million. This is our highest ever EBITDAFI result. Third, we generated $3 million of free cash flow, and this reflects our cash-generating existing business and the fact we're still in the early stages of our ramping our investment into building Serko for the future. At the same time as delivering these results, we're setting the business up for the future, and I'll touch more on that shortly. Turning to Slide 6. Total income was up 45%. This was driven by a strong trajectory we're on with Booking.com for Business, which continues to grow as we focus on activation, engagement and conversion. This is translating to substantial growth. The other driver is GetThere, which has delivered significant growth in online bookings and to Serko's income. Turning to Slide 7, where we double-click on our Booking.com for Business performance. Completed room nights grew 32% to 2.1 million. This was driven by a 40% growth in active customers, improved onboarding and new platform capabilities that are driving higher customer engagement. We added 40,000 new customers in the half year, significantly stronger than in the same period last year. Completed room nights frequency per active customer was slightly lower, and our view is this likely reflects small- and medium-sized businesses in Europe booking fewer trips due to the macroeconomic headwinds there. We monitor these trends closely, and our analysis gives us confidence that customer activity should normalize as macro conditions improve. Serko crossed into the second tiering of commissions on multiple months, and we're tracking above 4.2 million completed room nights this financial year. Shane will talk to this further. We're delivering at pace against the new initiatives we told you about at our FY '25 announcement, including the latest release of incentives. We're seeing green shoots of success with Genius Level 2, and we have confidence it's driving increased customer retention. We also rolled out significantly improved checkout experience and company onboarding that improved the overall customer experience. Turning to Slide 8. In Australasia, online bookings grew 2%. This was offset by a minus 2% decline in average revenue per booking from reduced third-party costs, some of which were previously passed through the customers. Although this impacts slightly on the ARPV, it significantly reduces our cost, creating a net cost benefit. This mix shift improves the quality of our revenue and demonstrates our focus on sustainable margin expansion. Overall, this resulted in a stable revenue result. Our early commitment to NDC is now paying off. We are one of the few players globally delivering a fully integrated NDC offering across Sabre and Amadeus. We continue to invest and innovate as we strengthen our market leadership and as NDC starts to gain traction. Turning to Slide 9 on our GetThere acquisition and strategic partnership with Sabre, which has fundamentally repositioned Serko in the U.S. market. What's working well? We've fully integrated GetThere, stabilized the customer base with new ARR churn on key accounts around 1% of annualized revenue. We've established our new India development hub and setup global capability center that's now scaling. Revenue exceeded our expectations in the half, reflecting some of the expected churning customers taking longer to offboard than anticipated and very low level of new churn. Where we've been less effective, we haven't achieved our targeted U.S. sales, but we have a clear path forward. It's become apparent as we've been establishing our sales pipeline with leading Fortune 500 companies that many of them want to wait for the new capabilities we're building rather than onboarding to our existing products and going through a second migration later. The other point to note is that our partner, Sabre has shifted their focus away from direct corporate contracts to growth and relationships with travel management companies. This change has contributed to lower direct corporate sales. Sabre is referring TMC resellers to us, but the lower direct corporate sales means we don't anticipate making any performance payments for the 2025 calendar year. Our go-forward plan. In North America, we're now focused on scalable growth through a dual channel approach, firstly, via our TMC reseller network and direct corporate sales. Leveraging our Sabre partnership, we're targeting key management resellers. We've already onboarded 2 partners, Tangerine and Elite Travel. And while smaller in volume, they provide valuable insights into mid-market customer needs. On the direct side, through customer forums with leading Fortune 500 companies, they are involved in helping us to codesign our future AI-powered capabilities. With GetThere fully integrated, we're in the room with major corporates, gaining visibility and confidence in our North American opportunity and our execution model. As discussed at our Annual Shareholder Meeting, GetThere and our Sabre partnership have redefined Serko's North America position. We now have strong market presence, direct customer insights and relationships, along with the data and expertise in a key market, which positions us well for our future success. In summary, the first half has been about strengthening the platform, deepening relationships and codesigning our next-generation AI-powered capabilities. The second half is about establishing the technology to enable our growth, executing with focus and accelerating our North American opportunity. And I'll talk more to the strategy and outlook shortly, but now I'll pass to Shane to cover the financial highlights. Shane Sampson: Thanks, Darrin, and good morning, everyone. Darrin has already called out some highlights for the half year, and I'll go into more detail. I'm going to focus on the key outtakes from the result, and we've also put some additional financial detail in the appendix for your reference. Turning to Slide 11. Total income increased by $19 million or 45% to $61.8 million, reflecting growth in bookings for business volumes in their acquisition. Operating expenses increased by 29% to $65.1 million, up $14.7 million, primarily reflecting costs associated with GetThere and investment in the U.S. market of approximately $16 million and the initial stages of our platform acceleration initiatives with investment of $1.6 million in the half. This was partly offset by lower third-party hosting costs, so lower third-party costs and hosting efficiencies achieved in our pre-acquisition business. Our preferred measure of total spend, which excludes the impact of accounting decisions around capitalization and amortization, increased by $15.2 million or 34% to $59.3 million, broadly consistent with the increase in operating expenses. Higher growth in income relative to spend resulted in EBITDAFI improvement of $4.9 million to $6.1 million. Net loss after tax increased to $9.5 million, an increase of $4.4 million. I will talk to the drivers on the next slide. Free cash flow improved by $1.7 million to $3 million, reflecting the stronger EBITDAFI partially offset by realized FX losses, increased capital expenditure and capitalization of internally generated software and higher taxes paid. Turning to Slide 12. Net loss grew despite EBITDAFI growing and total income growth outpacing total spend growth. The bottom part of Slide 12 shows the primary drivers of the increased loss, which are lower interest income, foreign exchange slipping from a gain in the prior period to a loss in this period and the disposal of InterplX. Net finance income was $1.3 million lower, reflecting lower interest rates and less cash on hand as a result of the GetThere acquisition. We incurred a $2 million noncash accounting loss on the sale of InterplX. I will talk to this in more detail later. Serko puts foreign exchange contracts or FECs in place as an economic hedge against revenue received in Australian dollars and euro. Historically, we have not designated these FECs as hedges for accounting purposes, and therefore, any gains or losses on the FECs were recognized in the profit and loss, while the revenue was accounted for at the actual rates applying at the time the revenue is earned. The significant appreciation of the euro against the New Zealand dollar in the last 6 months has resulted in $3.7 million in the recognition of losses on FECs not designated as hedges for accounting purposes and other sundry FX losses. In the prior period, FX rates moved the other way, resulting in a gain of $1.4 million, but the change from the prior period was an adverse movement of $5.1 million. Note that in substance, the FECs are acting as economic hedges. For FY '27, we have designated some euro FX contracts as hedges for accounting purposes. I will talk to this more on a subsequent slide. Turning to Slide 13. While Serko has started to make investments in the platform acceleration program and acquired GetThere to support long-term growth in the U.S., the faster growth in total income still resulted in total income exceeding total spend in the period. This reflects strong unit economics in Booking.com for Business and improved margins in Australasia. Through our Booking.com for Business and Australasian results, we have demonstrated our ability to invest and grow revenue and then to optimize the business to generate operating leverage, giving us confidence as we prepare to make increased growth investments again. Turning to Slide 14. Our balance sheet remains strong with cash and short-term deposits of $65 million and no debt. Relative to 30 September 2024, cash has reduced and other assets and liabilities have increased, reflecting the GetThere acquisition in January. Relative to 31 March 2025, cash was up $3.6 million, reflecting the positive free cash flow and a cash inflow relating to a working capital adjustment on the GetThere acquisition. Noncurrent assets and noncurrent liabilities increased, primarily reflecting our new India office lease. Intangibles declined, reflecting the disposal of intangibles and goodwill associated with the InterplX business and amortization exceeding capitalization of software, reflecting our conservative approach to software capitalization. Turning to Slide 15. Our partnership renewal with Booking.com in April 2024 revised our revenue share arrangement with the revenue share continuing at the 50% rate for volumes up to the equivalent of approximately 4.2 million completed room nights or CRNs per year and a new TA system for higher incremental volumes. The arrangement is designed to mutually incentivize and benefit both parties. The chart on the left is from our May annual results and shows that in FY '25, we achieved NZD 3.3 million completed room nights. And in FY '26, we expect to exceed NZD 4.2 million, the approximate level at which incremental transactions and lower commission. This reflects the strong growth in CRN since the renewal was signed. The chart on the right shows average revenue per completed room night or ARPCRN, as shown earlier in the presentation, with ARPCRN declining 3%. The chart in the middle shows the average commission per completed room night or AComPCRN. We introduced this new metric in May as a way to show underlying changes in our share of commissions as the ARPCRN has impacted by the tiering of commissions. You can see the AComPCRN declined by 2%, slightly less than the ARPCRN as we had 2 months in the first half where our monthly volumes slightly exceeded the first tier, resulting in the blended commission percentage reducing to 49% from 50% in prior periods. As you have seen from the strong operating leverage we've achieved over the past few years, our incremental margins are high, and therefore, even on the lowest tier, our gross margin percentage is expected to be healthy. Turning to Slide 16. As I noted earlier, Serko has historically had FECs in place to act as an economic hedge, but has not designated them as hedges for accounting purposes. During the half, we chose to put FECs in place for FY '27 and designate them as hedges for accounting purposes. This will reduce volatility in reported revenue, FX gains and losses and therefore, reported net profit or loss in each period. Instead, mark-to-market gains or losses at each reporting date will go through the cash flow hedge reserve and be reflected in the total comprehensive profit or loss for the period. We have included details of the accounting hedges here to assist analysts and investors to calculate the impact on projected FY '27 revenues. I note a portion of expected FY '27 euro revenues are not covered by the accounting hedges and that we've not designated any FECs as accounting hedges in relation to FY '26 revenues. Turning to Slide 17. As previously announced, we sold our U.S.-focused expense business, InterplX on 30 September. Serko has recognized a noncash accounting loss of $2 million on the sale, primarily reflecting intangibles and in particular, goodwill. The InterplX business made a modest contribution to revenue of $0.8 million in the first half, and the disposal is expected to have a small net benefit to our profitability going forward. In addition to the financial benefit, we expect strategic benefits from the sale, including increased operating focus and improved ability to partner with leading U.S. payments and expense providers. Thanks, and I'll now hand back to Darrin. Darrin Grafton: Thanks, Shane. And turning to Slide 19. Let's shift to the product initiatives we are delivering that position us for growth. And the first is Booking for Business. In Booking.com for Business, we're focused on 3 outcomes; acquiring, converting and retaining customers. The pace of delivery has accelerated with significant deliveries in the half. In particular, I'd like to call out the new checkout experience, which is consumer grade with pay now, pay at property capability, simplified VAT and company detail capture and tighter authentication. This is reducing checkout error rates, improving completion reliability and improving conversion. The new checkout is built in our new platform and enables faster iteration and experimentation to drive further improvements for users and improve activation, conversion and retention. It's also a significant milestone as users can now register, make a booking and check out all within the new platform with a consistent user experience. So in the Australasian market, Qantas switched to NDC as their preferred channel in July. This was a big milestone and a significant investment to integrate through our partners, Sabre and Amadeus. We've seen NDC volumes start to scale since launch. And while still small in percentage of total bookings by September, this was starting to make a positive contribution to our ARPB. In North America, our focus has been on how we engage with our customers to co-design the future, while at the same time, sustaining our heritage products and serving existing customers with an improved user experience and travel supply. This includes key initiatives we launched during the half year that help to deliver customers a consumer-grade experience. Examples of new capabilities launched within our GetThere product, our new hotel shopping experience and new NDC carrier connections with Air Canada and British Airways, which provide content breadth and depth for our key U.S., Canada and transatlantic markets. This is about Serko adapting to the changing travel distribution landscape and ensuring we maintain connections to sources of supply to -- so customers have access to the breadth and depth of choice. On the Serko platform evolution, we've designed our platform to enable performance, scale and excellent unit economics and fast delivery of new capabilities, including for Booking.com for Business. We're building out our product and tech capability in India. And this month, we officially cut the ribbon on our new Bengaluru office. We're hiring key talent to work alongside the team who came on board with GetThere. This is a key part of our platform strategy and a focus for our leaders. AI coding tools are firmly embedded across our engineering team with more than 55% of daily active users using AI coding tools. More than 30% of the suggestions from AI are accepted by our engineers. And these stats compare well with industry benchmarks, and we continue to drive them even higher. We're continuing to roll out additional AI metrics and support our developers to grow their capabilities as tooling matures, and we update our collection of analysis of the related data. We're also trialing a wide range of AI tools and models. Turning to Slide 20. Serko is in the strongest position operationally and strategically that we've ever been in, with ongoing improvements across the business and a clear blueprint for our AI platform. We're now able to accelerate our investment to capture the opportunity ahead. We're well positioned to achieve our NZD 250 million revenue aspiration for 2030. Booking.com is the strongest business brand in global travel. And our partnership with them has enormous potential. Booking.com for Business is already driving significant revenue and contribution, but we have only captured a fraction of the opportunity. We have a clear strategy in place for growth for Booking.com for Business through both our partnerships and platform investment. We're accelerating our platform transformation to deliver AI-powered capabilities for customers. And we're optimizing our operating model to enable fast delivery and scalable profitable growth. Turning to Slide 21. We have strong momentum delivering Booking.com for Business capabilities and a track record that proves we're executing on our growth strategy. Our platform is successfully powering core components of Booking.com for Business, including the new checkout experience and all hotel room bookings. As part of our accelerated investment program, we have major initiatives underway as we continue to deliver new platform capabilities and value. This includes flight service modernization, a core service of the platform, allowing flight content to be retrieved across multiple supply integrations. We continue to lay the technical foundations for Serko's future, including removing any dependencies that the new platform has on legacy technology. We're also building AI and data frameworks powered by Serko data as part of our strategy to unlock the value of AI and emerging technologies. Turning to Slide 22. AI is central to our strategy and our roadmap. We're increasing our investment in AI, a targeted, disciplined way so we can launch new capabilities to customers and deliver future growth. Our teams are working alongside customers and prospects in the U.S. as we codesign new AI-powered capabilities. To enable our future, we're optimizing our operating model to ensure we allocate resources where they generate the greatest long-term value. In October, we launched an internal program to reallocate some of our people investment to focus on delivering AI and data capabilities. Around 60 roles from our global team of 460 may be impacted, while at the same time, we are creating new roles while we're hiring for -- the proposed program is expected to deliver $12 million in annualized savings, providing capacity to reinvest further in AI and innovation while supporting continued margin expansion. You've previously seen the outcomes of how we have successfully managed our resources and grown revenue while holding back cost. You've also heard how we've activated AI across our teams to establish new ways of building technology and deliver new capabilities to market. And turning to our FY '26 outlook on Slide 23. We reaffirm our FY '26 total income guidance of $115 million to $123 million. Serko is revising its total spend range to $124 million to $128 million for FY '26 from the $127 million to $133 million previously. Risks to Serko achieving its FY '26 goals include macroeconomic and geopolitical factors and currency and ARPCRN movements. We're all in on executing our strategy with scalable global platform, strong partnerships and a clear roadmap to profitability and growth. Serko is positioned to deliver sustained shareholder value. Thank you. That concludes our presentation, and we're now happy to take questions to allow more people to ask questions. We request that you ask one question back into the queue. Thank you. Operator: [Operator Instructions] We'll take our first question from Guy Hooper with Jarden. Guy Edward Hooper: Well done on some strong growth numbers. Maybe just to start with one on the spend. I mean you previously outlined a base spend rate over the next couple of years and then what an accelerated path might look like. I mean how should we think about the change in the FY '26 guide and the reduction in spend in that context? Shane Sampson: Guy, it's Shane. I'll take that one. So I think there's probably a couple of things that are worth calling out on the spend. One is you'll note that the midpoint of guidance implies meaningful growth into the second half relative to the first half, the total spend. So if you like, you will start seeing that acceleration and that really reflects, as Darrin talked about in the speech, we've been quite prudent in our spend. So teams are using AI throughout the business. But in terms of particularly dedicated spend on building AI into the product, we've been relatively prudent while we get clear what that looks like. And now we're at the point where we have the confidence to really start investing and accelerating that. So you will start seeing that acceleration in spend in the second half. I think the other thing Darrin called out in his presentation was that we are effectively looking to reallocate some of our resources. So that will result in reduced spend on an annualized basis in terms of the roles that will go, but we're actually looking to reinvest that next year again, back into that more AI-focused build of the future products. So I think we're reallocating resource from our heritage businesses, generating more operating leverage in those and then that resource to build the future products that are going to drive our growth. So I think those will be 2 callouts as you be sort of familiar with our performance over the last years, we're generally reasonably prudent in how we spend. So we tend to be at the bottom end of the range. Probably the other call out would be -- effectively, as we noted, we're not where we want to be in terms of U.S. sales. A chunk of our executive and senior staff remuneration is on performance. And so that also reduces the spend a little bit this year. So yes, those combination things, but definitely starting to get to the point where we're pressing to go on investment and that's because we have that clarity that we're clear what we do and how we're going to do it. And we're currently, I think, targeting to have an Investor Day on the 12th of March and hoping that we'll be able to show some of what we're doing there at that. Operator: We will go next to Wei-Weng Chen with RBC Capital Markets. Wei-Weng Chen: Yes, just a question from me about the U.S. So you previously won that lower U.S. government work had impacted on GetThere volumes. Wondering if you could speak to, I guess, what happened during the shutdown period, which happened in, I guess, your second half. I assume it's all covered within the reiterated guidance, but it would be good to kind of get some color on what exactly happened there. Shane Sampson: Wei-Weng, this is Shane. I can talk to that. Yes. So we continue to see weakness in U.S. government through the half year. Definitely, the government shutdown had even more extreme impact. But yes, that's all incorporated within the guidance. And obviously, we're pleased that the shutdown has finally come to a conclusion after setting a new record. Obviously, still a little bit of risk of another one on [ 30 ] January when they have the next deadline in the U.S. But yes, that's all incorporated within our guidance. Wei-Weng Chen: Yes. Is there anything you can quantify there or not really? Shane Sampson: I think in terms of -- yes, not a massive impact in terms of the shutdown across the U.S. business as a whole. As we know as Darrin noted, we've seen churns being very low in terms of new churn. So even with that government shutdown, we still expect the U.S. to be a bit stronger than we were anticipating in May. Operator: [Operator Instructions] We'll go next to Vignesh Nair with UBS. Vignesh Nair: Just a quick one on Booking.com. Obviously, you talked to some of the weaker macro impacting completed room nights per active business, sort of a mid-single-digit compression there year-on-year, it looks like. Can you just talk to what style of number you're expecting through completed room nights per active business based in the last 2 months of trading for the second half of '26 and how we should think about it? Shane Sampson: Yes, certainly in terms of the last couple of months, I think, consistent. So I think we -- in terms of where we saw that drop in the frequency per active customer, that really kicked in from kind of mid-May. So -- and hopefully, just as we had talked to you guys back in May, we were just starting to see that and then it's pretty much carried consistently through. So the sort of September and October in terms of the last couple of months are seasonally strong months. So we've seen that seasonal uptick, but with sort of that same consistent issue of slightly weaker booking frequency. So if you like that -- that will have a little bit of a dampening effect across the year, but at a sort of similar effect to what you've seen in the first half of a few percentage points lower relative to the size of the base. Vignesh Nair: So if it started in May, that's kind of the second half of the first half, so the second quarter. Are you expecting that to continue into the third and fourth quarter? Shane Sampson: Yes sorry, is kind of middle of the first quarter of our financial year. So yes, at the moment, we're assuming that continues in terms of in our kind of base case, obviously, if we've got a reasonable range of guidance for total income, and that's one of the reasons of the potential for that to recover. But in just the last couple of months, we've kind of seen that being reasonably consistent. Operator: We'll go next to Joshua Dale with Craigs Investment Partners. Joshua Dale: Just a quick one for me. Total income grew 45% to $61.8 million. What were those numbers in constant currency terms? Shane Sampson: Apologies. So Josh, Shane here. Apologies, we haven't actually got those to hand. I will look to dig into that. It would have been a little bit lighter. I think off the top of my head, we had about a 7% or 8% upswing in Booking for Business revenue through FX. The Australian and U.S. impacts would have been meaningful. So yes, a little bit lighter if we hadn't had that FX benefit. Operator: [Operator Instructions] We currently have no other questions holding. I will turn the conference back to the speakers for any additional or closing remarks. Darrin Grafton: Thank you, everyone, and we're entering the second half with strong momentum, a clear plan and unwavering confidence in our ability to execute. Thanks for your continued support as we deliver on Serko's next phase of growth. Thank you very much, everybody. Operator: Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day.

189天前Insight Analytics约5分钟阅读

N91.L 2026 Q2 财报电话会议

Hendrik du Toit: Good morning, ladies and gentlemen. Welcome to the Ninety One interim results presentation for the half year to 30 September 2025. I will highlight the key numbers before moving to the business review. Kim McFarland, our Finance Director, will then present the financial review. I will then update you on recent developments and conclude before we take questions. Those of you participating through the webcast can submit questions during the presentations via the chat function at the bottom of your screen. Assets under management rose more than 19% over the past year. Flows turned around strongly. We recorded net inflows of GBP 4.3 billion for this half year, resulting in adjusted earnings per share growing by 15%. This net inflow number consists of GBP 2.4 billion of organic inflows and GBP 1.9 billion that came from the Sanlam U.K. transaction. The dividend per share increased to 6p per share and operating margins expanded to 32.1%. Staff shareholding grew to 32.7%. The people of Ninety One are fully aligned with all our other shareholders. I'm delighted to report that our business is growing again, in terms of revenues, earnings and assets under management. This is supported by investment returns and a significant turnaround in net inflows. We are sticking to our core strategy and investing in our existing growth drivers, while selectively backing new growth initiatives across our ecosystem. Investment performance remains competitive. The Sanlam relationship is delivering, and Ninety One is poised for further growth. We always show the long-term track record of Ninety One to remind everyone that we are about growth over time and not growth all the time. The business has been built over many years in a patient and predominantly organic way. Markets have been supportive of late, but we are clear that sustaining growth over time takes focus, rigorous execution, discipline and belief. We remain committed to our people-centric, capital-light and technology and AI-enabled business model. Market conditions have improved over the reporting period. The panic that followed Liberation Day is now history, and animal spirits are back supporting overall equity market levels. More interestingly, we are observing a new openness to diversification of institutional portfolios, which includes interest in emerging markets. This interest seems to be driven by the desire to diversify geographically as well as a recovery in relative returns. Given the high concentration levels in indices, we are also witnessing a renewed interest in active strategies. A little over 1 year ago, I reported to you in a world in which active long-only and emerging markets across the capital structure would deeply out of favor. Therefore, Ninety One was experiencing a third consecutive year of hostile business conditions. I'm delighted to report that these conditions have improved substantially over the past year. Despite the strong performance from emerging markets and the rise in financial asset prices generally, we are some way off historic levels of demand at this stage. As mentioned at the end of the previous reporting period, our industry continues to be extremely competitive. Clients are setting high standards and continue to be price sensitive. Fee pressure remains a challenge. It goes without saying that Ninety One is exposed to market levels and how financial assets are priced. A sharp decline in markets will affect revenue generation and new business volumes. More generally, the Internet era is being replaced by the AI era. This touches every industry, including our own. At Ninety One, we are embracing this and look forward to reporting progress in more detail in due course. In summary, conditions have improved, while competition remains relentless in this industry. Equity markets have done well over the past 3 years with headline indices close to doubling. Over the past 6 months, our clients continued to benefit from strong performance. Emerging markets in general have outperformed developed markets and the strength in South Africa further contributed to our assets under management and driving these through the threshold of GBP 150 billion and $200 million, respectively. In fixed income, we have also seen positive returns, even though developed market bonds have had a tough time. Ironically, this is where most of the inflows in our industry have been over the past few years. Emerging market bonds are doing much better, and we expect demand to grow in this space. This is an area in which Ninety One is one of the market leaders. Since our listing, investors showed little interest in emerging markets. We're now seeing a decline in the active outflows in equities and an improvement in the environment for specifically active equities. For the second half year in a row, we're seeing positive active fixed income inflows. But as you can see, we are still well below the long-term demand levels for emerging markets. Judged by recent client engagements, we expect demand to pick up in due course. This assumes a world in which risk assets remain attractive. The outflows that have been with us from 2022 have started to reverse in the second half of the 2025 financial year, and inflows have now accelerated into the first half of the 2026 financial year. In addition, we have added GBP 1.9 billion of Sanlam U.K. assets with the completion of the acquisition of Sanlam U.K. We also benefited from the strongest year since 2020 in terms of market and portfolio growth. We are mindful of the fact that markets do not usually go up in a straight line, and we remain vigilant on the cost front. These slides show organic net flows, excluding the Sanlam take on. We had substantial equity inflows largely in our competitive global equity offerings, and positive flow in all asset classes, except multi-asset. This related to our own performance and general client demand. We have addressed the situation by bringing in new leadership and renewed focus on the multi-asset part of our business. The majority of our client groups were positive for the half year given the pipeline. And given the pipeline, I'm hopeful that U.K. will show positive results for the full year and that South Africa will return to positive net flows for the second half as well. Investment performance has been solid over the period, and we can compete in the areas where we need to compete for net inflows. As always, a few strategies have done outstandingly well while there are also laggards. Overall, we have a competitive offering, which has the potential to generate ongoing net inflows and meet the high standards of our clients. I now hand over to Kim McFarland, our Finance Director, to take you through the financial results. Thanks, Kim. Kim McFarland: Thank you, Hendrik. I'm here to present a set of strong financial results for the period ended 30 September 2025. I would like to highlight that our core operating business has again produced a solid outcome. Management fees and adjusted operating expenses both increased by 3%, resulting in the core business recurring results increasing by 2% on the prior period to GBP 82 million. Management fees were at GBP 290.7 million. This is as a result of the increase in average AUM from GBP 126.7 billion to GBP 139.7 billion, alongside a decline in the average management fee rate to 41.5 bps. More on this later, but worth noting that the increased closing AUM positions Ninety One's revenues well for the next 6 months. Adjusted operating expenses of GBP 208.7 million includes the interest expense on the lease liabilities for our office premises and the full bonus accruals. It does exclude nonoperating costs. The business produced an adjusted operating profit of GBP 98.8 million, up 12% from the prior period. This increase is predominantly as a result of higher performance fees of GBP 4 million. Other income is negligible and there's mainly a number of fair value adjustments on seed investments. There were FX losses as a result of the stronger GBP to USD in the period. So the adjusted operating profit margin increased from 30.5% to 32.1%. And at the finals for 2025, we reported an adjusted operating profit margin of 31.2%. So let me explain further the decline in the average management fee rate. This is calculated as a monthly average and over the 6-month period has shown a slow decline. However, there was a market fall at the end of H1 2026, which we have analyzed. During the period, daily average AUM upon which the management fees are generated, consistently lagged monthly average AUM upon which the average management fee rate is calculated due to the manner in which markets moved markedly during the period. And this effectively overstated the average management fee rate decline by an estimate 0.8 bps. Calculated on a daily averaging basis, the actual daily average rate is closer to 42.3 bps. So closer to a fall in 1 bp over the 6-month period, which is higher than our historic guidance. There were further factors that are impacted on the fee rate in the period, which were a significant AUM increase in lower-than-average fee rate clients. The Sanlam U.K. take on being an example, although this impact was small. However, the take on of large mandates at lower-than-average fee rates has and will have a material impact on our management fee rate, an AUM decrease for higher than average fee rate clients. The U.K. OEIC being an example, and this would have had an estimate 0.5 bp negative impact. And at the same time, there were some downward fee adjustments for existing clients who generally compensated with additional assets. Ninety One's profit before tax after considering the list of nonoperating adjustments, adjusting net -- adjusted net interest income, the small share scheme, net expense, corporate-related professional fees and now the amortization of the intangible asset as a result of the U.K. Sanlam transaction increased by 10% to GBP 102.2 million. At the interim, the share scheme is generally a net expense. And this is largely reflecting the amortization impact from prior year credits where staff bonuses were allocated to Ninety One shares. At the year-end, we have a better understanding of the share scheme and the allocation of annual staff bonuses to Ninety One shares. Remember, we fully expensed the bonus payments within adjusted operating expenses, irrespective of how settled. IFRS requires the amortization of bonus-related share awards over 4 years, which is then included in the share scheme expense. The effective tax rate for the year was 25%, down from 26.3% in the prior period, and this was driven by higher earnings in lower tax jurisdictions. And in the prior period, there were a larger number of nondeductible expenses. So the above factors resulted in a profit after tax of GBP 76.7 million, up 11% from the prior period. And our adjusted EPS shows a 15% increase to 8.4p, more than the increase of adjusted operating profit of 12% due to the lower effective tax rate on the adjusted operating profit and a lower number of ordinary shares for the calculation of adjusted EPS. So this analysis summarizes the absolute movement in adjusted operating profit from H1 2025 to H1 2026. It clearly shows that management fees, performance fees and other income increased. These increases were partially offset by the increase in employee remuneration, but noting business expenses were actually lower by GBP 2.7 million than the prior period. This is the analysis of the movement in adjusted operating expenses. Adjusted operating expenses increased by 3% to GBP 208.7 million. Employee remuneration represented 64% of the total expense base. In the prior period, it was 62%, and increased by GBP 9.5 million to GBP 134.1 million. This was driven by an increase in fixed remuneration consistent with the increase in head count and annual inflation increases as well as an increase in variable remuneration in line with increased adjusted operating profit. Over 50% of employee remuneration remains variable and the resulting compensation ratio was 43.6%, up from 42.9% in the prior period. Business expenses decreased by 3% to GBP 74.6 million. We began to analyze the cost changes, at a high level, we've broken this down -- the movement down as follows: inflation-linked increases of GBP 1.4 million for those costs that are impacted by inflation. FX-linked impact was negative GBP 2 million. And there's been a pickup in technology spend of GBP 1.7 million, with other costs then decreasing by GBP 2.8 million. Technology now is the largest business expense. Previously, it was third-party administration. Looking ahead, we're expecting business expenses to be impacted by inflation, ongoing technology spend and the move into the new offices in Cape Town planned for January 2026. Post the Sanlam integration in South Africa, there will be a cost impact, which will be predominantly headcount driven. So increases to employee remuneration as well as the resulting general operating costs. This is showing the business expenses and total expenses as a percentage of average AUM in basis points over a 5.5-year period. The adjusted operating profit margin over the period is also reflected here. Irrespective of the movement in AUM, business expenses have marginally decreased over the period, even noting the continual investments in our core technology system. Total expenses as a percentage of average AUM hav,e, in fact, declined aided by the growth in the denominator. The adjusted operating profit margin has remained in the range of 31% to 35%, reflecting ongoing cost management with the underlying AUM growth. Ninety One's qualifying capital was GBP 316.3 million at the end of September 2025. In line with our dividend policy, the Board has proposed an interim dividend of 6p, this is an increase of 11%. After this dividend payment, there will be an estimated capital surplus of GBP 155.3 million. This will result in a capital coverage of 245%. During the period, we continued with our buybacks, and this resulted in another return of capital of GBP 20.4 million and a reduction of 14.1 million shares. We did, however, issued GBP 13.7 million of plc shares for the U.K. Sanlam transaction in the period. In line with our capital-light model, since listing over 5.5 years ago, we have returned close to 60% of our initial market capitalization to shareholders. So a few updates regarding the Sanlam transaction. All regulatory approvals have now been secured. The U.K. transaction completed on the 16th of June 2025, with the result of GBP 1.9 billion of AUM on boarded and Ninety One plc issuing 13.7 million shares. It's planned for the SA transaction to be completed by the end of the financial year, which results in expected total onboarded AUM of circa GBP 17 billion and revenue in line with what we previously reported. An additional 112 million shares will be issued when the SA transaction closes. Now reviewing the position for H1 2026. The adjusted EPS and operating margin were accretive. There was a slight dilution on the average fee rate, which I mentioned earlier. And also, as previously mentioned, we will be waiting the shares issued to Sanlam for the determination of the adjusted EPS for the interim and then for the final 2026 results. For the interest, this looks as follows. So shares in issue, excluding Sanlam U.K. is GBP 882.7 million, weighting of shares issued for the Sanlam U.K. is 13.7 million times by 107, the days since the transaction in the period, divided by 183, so the days in the total period, which gives you 8 million shares. So shares in issue for adjusted EPS calculation is 890.7 million. The actual number of shares and issue at end of September 2025 was 896.4 million. The intangible assets arising on the balance sheet for the Sanlam transaction will be amortized over 15 years. To note, this is tax deductible in the U.K. but not in South Africa. And so on that final technical point, I will now hand you back to Hendrik. Hendrik du Toit: Thank you, Kim. At Ninety One, we think long term and our commitment to our strategic pillars do not preclude us from constant improvement and development of our firm. Over the period, we've continued to invest in talent. We've broadened the top leadership team and evolved accountability throughout our firm. We ensured that our 3 core opportunities international public markets, Southern Africa and private markets are adequately resourced to compete effectively as market-facing units, supported by our 3 pillars of investments, client group and operations. And so as we go into the second half of the year, we have formed a dedicated international public markets team, which can focus on the commercial opportunity for a recovery in demand for active investment management especially in international and emerging market strategies. We have a focused and strong Southern African team to take a market-leading business to an entirely new level. Finally, we've reinforced our private markets team with fresh talent and additional senior leadership and asked them to accelerate progress in this growth market. We are backing new growth opportunities out of the recently established Ninety One Foundry. These include in-region presence and partnerships in key emerging markets, allowing us to become domestic competitors in certain regions and deepen our investment insight in these fast-evolving markets. For example, we opened 2 offices in the Middle East in the previous reporting period. We have now put additional resources in, and we are building an on-the-ground domestic business in the Kingdom of Saudi Arabia, which includes a strong investment presence. In Asia, we're developing an exciting joint venture with a Singapore-based alternative investment firm with deep experience and relationships in the region and in particularly China. This will strengthen our investment capabilities in the region as well as positioning us to compete more effectively for capital flowing out of the region. We have established a digital finance unit with dedicated leadership to provide clients in certain markets with a far better experience than they traditionally have received from asset management firms. We've committed substantial resources to AI-related innovation which we will update you on further at the end of the year. I must stress that these developments are fully expensed through the cost line and are not consuming significant additional capital. Over the reporting period, we've made meaningful progress on the technology front, which includes a major systems migration. Now that this has been fully completed, significant resources have been freed up for further enhancements and innovation. These are the additional 3 areas of growth we're pursuing, which we believe will impact the way we run our business in years to come. What we're really trying to do is from strong foundations, build the active investment manager of the future. To become the active manager of the future, AI is key. At Ninety One, we approach AI on 3 levels: advocate, equip and use. So this is how we rate ourselves. We see quite high levels of adoption, we see reasonable levels of experimentation given the widely available AI tools to all our staff members, sort of 6 out of 10. Then our people have embraced it, and we are working hard to get our proprietary data organized for the effective deployment of AI across the firm. The proof of the pudding is in the transformational impact of AI. We have much to do on this front. The business is stronger than it was in the previous reporting period, supported by better business conditions and recovering demand. We plan to improve and modernize our business through disciplined investments in and adjacent to our core activities and markets. Emerging markets and the search for diversification are coming back into favor, which supports us. Active investing has a role to play in this world particularly within emerging markets and in the global equity opportunity set. The strategic clarity and simplicity of our business model enables us to seize the opportunity with pace and strength. In short, we see renewed opportunity for growth. Thank you very much. We can now move on to Q&A. We will take questions in the room first, and then will watch -- then we'll take questions from webcast viewers. [Operator Instructions] I think Angeliki, you had the hand up right in the beginning, so. Angeliki Bairaktari: This is Angeliki Bairaktari from JPMorgan. So your flows were much stronger than the previous semester, GBP 2.4 billion. And we -- you say in your presentation that you feel that active is back. Can you perhaps give us a little bit more color with regards to where you see that strength coming from I think you had APAC, Middle East and also equities. But if you can just give us a little bit more color on the pipeline that you're seeing for the next 6 to 12 months where you see the strength coming from? And that's my first question. And then maybe on the management fee margin outlook. There's a lot of moving parts there, relative to my expectations, the management fee margin followed more. I think we still have some dilutive impact to come from Sanlam once the further AUM gets onboarded on the platform. So how should we think about the run rate, management fee rate for next year perhaps? Hendrik du Toit: I think you've asked the real questions that we all need answers for. So I can give you color on what we see rather than a prediction, Angeliki. So firstly, the -- if I can go to the flow or the pipeline that we see. Firstly, the result is again emphasizing the strength of our diversity. We source capital from the same kind of client but in different regions around the world. They have slightly different perceptions on risk and on willingness to take risk at a point in time. And that's why we've seen equity up weightings from large clients in Asia. And that's really where we've seen it. In the rest of the world, particularly North America, where we've delivered some positive, we are seeing a significant search activity or investigating activity's about how to diversify's their portfolios. That flood's gate has not yet opened. We expect that given the sense that markets normalize over time, and we've come out of a long period of underperformance for the rest of the world relative to the U.S. And we know these things go into 10, 15-year cycles. There's a very good paper on our website about dollar cycles and dollar cycles and international investments seem to be highly correlated. You can go and read that. So -- but what we have seen in the last 6 months picking up from the previous 6 months, not the year ago, but the preceding half year is an intensity or intensification of client and search a client engagement and, call it, presearch engagement. What, of course, can change the flow picture is whether we, in this very competitive world win in the very final stage. I mean an example in the last 6 months, and it really hurts me to say it. But after eliminating all competitors, we came second for a sort of close to $5 billion mandate, one client that would have made this figure look a lot better. And so we are driven, and I think you should understand it Ninety One deals in the upper end of the institutional market. Small numbers of clients make a big difference. The fee on that depends on where they're already engaging with that client at scale, and therefore, the client gets a better deal and we price persistency as well. So clients that are persistent, and this is not price cutting, but clients that are persistent have proven themselves to be persistent over time, get a better deal than those who rent your capacity. And so sometimes, we would not do a deal, which we could do and create great inflows to make all of you happy because we know this client is a capacity renter. And they'll come for 3 years and then cause a problem for us when they go out again, whereas others deserve the respect of a value-for-money deal plus scale benefit. So it's very, very difficult to predict where we are. I think we still, with our underlying guidance of market fee pressure is around -- and I still think it's around the 1 where we are is 50% of our growth typically when we're in growth cycles is upweighting from existing clients, 50% is new. If those existing clients are the big ones, your fee goes lower, if they come from general market, mutual fund market, et cetera, your fees are a bit better. But I think over time, Ninety One is moving towards and increasingly institutional. So the breakdown in the addendum to the slide pack, the appendix where we show institutional versus adviser actually, we are trending towards a much more institutional business. And even in South Africa, where we have a strong advisory business, those advisory firms are getting bigger and bigger and behaving more like institutional multi-manager. So I think -- we're going through that lowering a fee process but hiring of what increasing of volume and therefore, increase operating margin but not necessarily on a fee basis. So I think the 1% we guide to is still the underlying fee compression in our industry. We might as of late, be hit by something a little more or less, but it depends. And it also depends on the growth of the alternatives business because that is a still and where I see the real fee pressure in our industry is actually on the alternatives business. I don't think the 2 and 20 models are going to hold because if clients look at their fee budgets, this is where. So what they're currently doing, just an interesting thing in private equity, private credit, et cetera. They pay the full fee, but then they do a deal on the side to co-invest for nothing. So what is the real effective fee of providing those services and your capabilities to a client for free. So I think about -- it would be a really interesting work -- a piece of work for you to do when you look at that side. So I think that's where the fee pressure is more than in ours, but we are preparing for a world where we have to be at least 1 basis point more efficient every year. And I can't tell you whether we're going to be at 40. Right now, I'll -- Kim, I think you've got the answer. We're running at a slightly higher fee level, maybe you can add here for me, then actually the number shown there. Kim McFarland: Yes. Well, I kind of explained that in my sort of daily -- I think I did that on the call this morning actually as well on the sort of daily, monthly factor. But I think you're sort of -- you're asking the question about looking ahead. And Hendrik is right, we are seeing pressure on the fees, both. You've got the standard 1 bp a year that we advise on. But when you're looking at both new mandates, but actually more so existing client mandates that are coming on board at lower rates and then giving us the asset to compensate. So hence, we're seeing the pickup in the AUM, but they are often negotiating at lower fee rates. So this is why we're definitely seeing more fee pressure. Hendrik du Toit: But for us, it is -- the value lies in embedding those relationships for the long term. And if you can do that, you have a higher-quality business. But what we're not doing is price-cutting to win volume. We don't going out there saying, "Hey, we're cheap". But this -- and I still believe, this market will settle down when nominal interest rates are on the rise again because actually, it's hard for a treasurer or someone to sign a check, when he earns it out of interest, it's easier. So I think there's a -- there is a link, which one day will prove statistically, but we can't give you an exact number now. The next step on the pipeline, we're seeing substantial opportunities against scale ones, so there won't be fee level enhancing ones, they'll probably be roughly where we are for the rest of the year that we should convert. What we don't know is where the unexpected redemptions or changes in strategy can happen with the client. And that's the problem when you deal with these large clients. They get a new CIO, they get staff changes and a new strategy comes in, you're being seen as okay, but not necessarily central to the strategy. So -- but I'm fairly comfortable that the visibility of the pipeline is better than it's been in recent reporting periods. Jonas Dohlen: Jonas Dohlen here from Deutsche Bank. Just one follow-up. Yes, just one follow-up on the fee margin. I was just wondering if that guidance now includes the Sanlam or if that's still on kind of the legacy assets on that 1 basis point... Hendrik du Toit: Sanlam is lower because it's a $20 billion deal. So it's lower, and it's largely fixed income assets. Jonas Dohlen: Yes. But on a group level, you expect 1 basis point... Hendrik du Toit: Yes, on an organic basis. So there's an organic basis and then there's the Sanlam transaction. And what I'm saying, the 1 basis point is the market pressure. If we were to ex Sanlam or if we were to get a big up weighting from a sovereign wealth fund where we already have a premium deal because they've got billions and billions with us, it's probably going to be below that fee level. If we win 500 million mandate chunks, it will be at or around or above that fee level. You see. So that's why I'm saying the market -- the institutional market pressure is roughly 100 basis -- or 100 basis points per year. The -- sorry, 1 basis point per year excuse me. 1 basis point per year. But the -- for us, Sanlam is a separate transaction and then obviously hugely accretive from a profitability point of view, and it depends then what kind of flow we get. Jonas Dohlen: Great. And then just on the tax rate as well. I think you mentioned... Hendrik du Toit: I don't understand... Jonas Dohlen: 25%. Kim McFarland: 25%. Correct. Jonas Dohlen: Being a reasonable number to go forward. I'm just wondering how to kind of square that circle. I mean you have a higher tax rate in South Africa, and that amortization part not being tax deductible as well? Kim McFarland: But we have tax in many other jurisdictions as well. So it's linking up the 2 of it. And -- you're right. When I'm looking at it, I'm looking for the next 6 months and the South African impact is only -- it's going to be in the results for a couple of months next year. I think looking ahead with the nondeductibility of the amortization piece, it will tick up a bit. Hendrik du Toit: Piers, you'll come back in new uniform. Piers Brown: Yes. Indeed, yes, it's Piers Brown from Investec. Hendrik du Toit: Very good. Piers Brown: So very happy about that. I might be greedy and actually, go for 3 questions. So the first one, yes, just back on to the fee rate conversations. So I guess, if you look at this from the perspective of the operating margin, you're -- I mean you printed 32%, which looks very good for the first half. If I take out the performance fees, you -- which I know is a slightly dubious calculation, but it looks like you're maybe sub-30%. But the question would be just on the fee rate outlook, do you think 30% is still the level you can protect? Hendrik du Toit: I think you have to compensate higher average assets under management, that compensates a bit because remember, the markets had a run close to the end, there was Liberation Day down than up. So your average AUM doesn't reflect your actual AUM. And you've got to look at where the sterling is strong or weak, which then deflates a big cost base. So I'm more comfortable than you. But you are right, there's -- the core revenues have not grown as much as they should have. So we don't run to a target actually. And therefore, it's not something we monitor daily. But I'm not at this stage, I'm comfortable that we're going to come back to you with a 25% operating margin, put it that way. Kim McFarland: I think that's too right. I think you've also got to recognize the fact that we're taking on the Sanlam assets, as I said, next year at a low cost. Hendrik du Toit: And I would remind everybody, we've bought I know we call the GBP 1.9 billion acquired growth, but we bought back those shares already. So if you think about it, it's just a mandate win, the big one is going to take a bit longer, but if we can do that, if we have the cash flows, then you know what, it's actually akin to an organic transaction. Piers Brown: Okay. Second one is just on the composition of flows. And sort of relating this into Sanlam, but I mean you've had GBP 1.3 billion of Africa outflows, offset by very strong inflows in Asia Pac. Is there anything in the Africa performance, which is maybe impacted by clients reallocating in advance of Sanlam or... Hendrik du Toit: No, no, it's not Sanlam. It's the -- South Africa is actually a very competitive market, and it's very transparent. When you know exactly what each competitor is doing and your cousin or your kid works at the competitor, you literally know what goes on. And so we had some performance pressure in 1 or 2 strategies, which didn't get -- the market goes quickly, moves quickly against you. We've had the back end of the so-called 2-pot system, which means money was released out of the pension system, where if you're a large provider, you have to suffer that. That is now gone. So that structural bit has left. And then, of course, there was the back end of the internationalization of the SA equity or SA investment market because the exchange controls were relaxed for international opportunities opened up for retirement funds. The Minister gave a big -- a few years -- 2 years ago, a big -- there was a big change in the -- what they call Regulation 28. And that means they could invest more. So there was a structural flow abroad. Typically, to new competitors rather than to someone already has a high wallet share with a client because it just makes sense for those clients. And actually, international passive was a big winner there where we don't compete. So I think those 2 forces are over, think on our investment side, we have all intends -- we intend to be very competitive, and we have recovered quite a lot in terms of competitiveness. So I think on all 3 factors, we're stronger in the second half than the first, but it is one of those markets where if you have a big share and you're not absolutely on top of it, the competitors come after you and we've got some very good competitors in that market. Piers Brown: Okay. Perfect. And just maybe a last one on capital. So 245% capital coverage ratio. I think you've sort of indicated 200% in the past is where you'd like to be. It doesn't feel like there's an awful lot of need for seed capital for some of the new initiatives. So the obvious question is, would you look to move closer to the [ 200% ]? Kim McFarland: We will -- I mean, as you noted, we've continued with buybacks in the actual period. We will continue to look for opportunities to use additional seed capital for buybacks when we're comfortable with the price, and obviously in agreement with the Board. Hendrik du Toit: If pricing is reasonable, we think reducing the denominator is always better than just paying out the cash. But we must look at where the market goes. And who knows, there may be opportunities. Any other questions? Investing definitely add value for money, you'll get your dividend. Varuni, are there any of online questions. Varuni Dharma: Yes. There are a few. First one is from Brian Thomas at Laurium Capital. Are you able to comment on the buyback program that was suspended during the half? Are there any metrics that you take into account in determining when you buy back stock that we should be mindful of? Hendrik du Toit: Before we answer that, there's -- Kim just reminds me, there is one thing in the Africa side. There was a 1 single client sort of -- and many clients pay out and eventually but reallocated away from us as well. So you should sort of have the impact of that number. And that's why I'm quite confident that it can turn around. Sorry, on the buyback, yes, we carefully -- we carefully look at value and value in the context of the industry and the context of what we see ahead because the one downside with buying back is if you overpay for your own stock. And therefore, it's always a consideration and a discussion with the Board. It's not an automatic buyback process. And -- but our industry has been so extremely -- I actually had benefit of last week in Paris when I went to watch the Rugby and I have to remind, I know the French listeners, it was a wonderful moment for South Africa and Paris. But in spite of referee against us, we're still -- but I actually went to watch the Rugby with someone who used to be one of the top financial analysts in the market about 25 years ago -- 20 years ago. And he's gone to private equity. He hadn't looked at valuations of asset managers. He was -- it's a bit like talking to someone who fell asleep 25 years ago because he was completely mind boggled by the relative valuation of asset managers against other financial firms particularly wealth today because in his time, it was exactly the opposite. We were the 20 multiple shops and the others were single digit. So I think broad -- and that reminded me again, that these cash flows, quality cash flows are still, in my opinion, or at least in our opinion, fairly cheap, which is why we have also been acquiring stock slowly and as a management team because we think the market is not appreciating the quality of the cash flows we generate. And so even though they don't -- may not grow as much organically there could be -- and there has been a re-rating of late. Now if the re-rating is too much, we will obviously step away. But our industry is still structurally very cheap compared to other cash flows of similar quality. I mean just close your eyes, 30%-plus operating margins is that's tech. Okay, what do you pay for tech? Palantir last when I looked at 185 PE multiple. So it's very different. And it's in that context that we think rather than in short 1 month, 1 week, 1 quarter valuation cycles. But there is a proper process, which Kim can talk to you about when she reports it again. Do you want to add something, Kim? Kim McFarland: Yes, that's fine. Hendrik du Toit: Any other questions? Varuni Dharma: Yes. Next question, Murray Winckler from Laurium again. Congratulations on returning to net inflows for the business. Headcount increased by 8%, which seems high. What should we expect going forward? Hendrik du Toit: Murray, well to done to you, by the way. You're one of those guys stealing business. We will have to come take it back. Just I mean that is one of the big questions. Can we get to a bigger -- a real efficiency for our business? That's about the digitization and the technology investment. But we should also remember that there was some preparation for -- although we're not taking on many people from Sanlam, there's a significant preparation for taking on a book of that size that -- and then there's also the improvement of our communication with end clients, which we had to invest in to make sure it's there. And again, technology over time will make that a lot easier but it was really important, and we've had challenges on -- with South Africa being on the gray list. We've had real challenges on dealing with our international funds into South Africa and our service capability had to just be much sharper, much better equipped to deal with it. And then we've also been building the private markets business, which is much more -- actually much more human intensive than certain public markets investment businesses. And that's about the reasons. I don't know Kim, are there any other ones that you pick up and you want to... Kim McFarland: I think that's right. I think the pickup in a lot of op staff on the IP platform in South Africa. Likewise, on the Sanlam. A lot of them are actually long-term contractors at this stage because I see it as a temporary thing. So I think the sort of more permanent headcount growth has been in private markets and within the actual business. So I think the question is what are we thinking about it looking forward? I'm not seeing an 8%. I wouldn't be looking at an 8% increase in headcount going forward, I think, would be my answer. Hendrik du Toit: And I think with a better use of technology, we could run the same quality service, leaner, that includes client acquisition, client service, investment processes, but it's very important to do these things very slowly over time. I'm not as bold as the big banks that say that they will run -- I mean, 2 of the big bank CEOs in Global Bank CEOs confirmed to me that they'll double their business over the next 5 years with the same staff levels. That has to be seen whether that's going to realize, but those are ambitious goals. I think we should have similar goals, but it's early stage saying it because the promise and the layer of technology is always there and then the delivery is slightly behind. And we've -- those of us who have worked in the markets a long time have realized that. But definitely don't budget for a 8% staff increase, Murray. That's not going to happen. Varuni Dharma: Next question from Jaime Gomes, Laurium Capital. Can you please explain the expected total onboarded AUM from Sanlam remaining the same as what it was this time last year, circa GBP 17 billion. Has the book experienced some outflows given the strong market performance over the last 12 months? Hendrik du Toit: The book is roughly -- it's the same number. There might be a little benefit rand to sterling exchange. So it might be a little more in sterling. But remember, it's a very fixed income, heavy book. There are also -- there could be a few wins associated as well, but we first got to deliver them. So we're very comfortable that the numbers will reflect what we told the market at least. Varuni Dharma: Next question from Hubert Lam. Can you give us an update on the alternatives business and new initiatives, including private credit? And he has a second question, which is, how should we think about further investments you need to make in AI and tech and what that means for your cost base? Hendrik du Toit: Hubert, nice to get a question from you. I know you have another meeting, so you're not here in person. I would say that my simple answer is private markets are hard. And I'm so glad we didn't buy an overpriced boutique to grow, which then doesn't grow, okay? Because the top guys dominate they've got such a strangle hold. And so that's my one point. I think we found niches which we can live in and defend and grow. And what we have actually done is put some of our -- to make sure they get the full support of the firm, put some of our top leadership very close to the private markets guys and they support them to get through and we build it around and particularly around our emerging markets positioning. Now what we know is the emerging markets haven't had huge flows as such. We think there will be appetite and there will be appetite coming. We modest net inflow have been consistently in that space. But we are building through our cost line, and it's fully reflected in our cost line, we are building capability to be actually -- to be fully competitive in our various areas. And I think our focus is private credit. And private credit and transition credit, and that is very clear, and we have built a market name and position there. So we would expect accelerating flows to follow. But those businesses take -- will take a while to impact -- to truly impact on the bigger Ninety One bottom line. If you model us, model us largely as a long-only business, long-only active business because that's still very dominant in terms of revenues and flows. Kim McFarland: Cost. Hendrik du Toit: And yes, but private market is costly to build. It's high fee, but costly, whereas public markets could be done very efficiently with slightly lower fee, and that's the sort of trade-off between the businesses. But we do see the merger. And so the partnership we announced in the joint venture we announced with in -- with the Singapore based, which we are about to announce because we'll probably -- will probably sign in the next few days, and that's why we haven't been long on detail because anything still -- things have to be -- until they're fully signed, you don't want to talk too much. But there, we have -- we're talking to a business which does long short and crossover between public and private. Now I think these universes are getting closer, and one just has to make sure you understand what happens to the other side of the liquidity fence rather than just staying in the curated even if you want to be a very good long-only business staying in the highly curated screen-based long-only part of life. You've actually got to get -- understand what entrepreneurs are doing and what's happening in the ever longer pre-IPO pipeline because we do know a lot more happens on that side of the fence now from venture right through to growth. And I think that's important for us. But as these things emerge, who knows what product constructs will look like, who knows what client appetite will look like. Clients today are still very organized in boxes between the so-called alternatives units, which is now quite frankly, mainstream and active long only, which is becoming increasingly alternative and passive. So they've got their different boxes. But as they start looking at the total portfolio approach, who knows how they are going to buy and that's what we need to be prepared for. Kim McFarland: And I think the question on uptick in technology spend or AI spend, which was the other one, I think Hendrik mentioned the fact that our big technology replatforming exercise did complete early this year. So those costs are now -- and the ongoing cost of that are actually largely built into our figures. AI has largely been a part of our operating cost line. So the gain, how you should think about it is really a continuation of what our cost base is right now. Hendrik du Toit: Yes. And we absorb in what is available or what can be bought. We don't go to bleeding edge development. The big thing is getting your data organized. And I mean it's been with -- that data story has been with me ever since I've been in this firm. Everyone said we have to organize our data better. But you can get so much more value if you are properly digitized as digital middle business models are showing, it is not trivial and that easy. But as a midsized business, if we can't get it right, nobody can get it right. So -- but we're spending resource and effort on it to make sure we can extract maximum value given the enhancements of the available tools. And they are genuinely moving very fast. And I think 5 years from now, we will be in an entirely different world, and we need to be ready for it. Any other questions, Varuni? Varuni Dharma: Yes, a couple. We have a couple of questions on buybacks. The first one from James Slabbert from Standard Bank. There was a slide on the existing capital stack in the business, would it be aggressive to model for annual buybacks far in excess of earnings remaining after the payout of dividends. I think you've touched on that. But -- so by modeling for buybacks in excess of earnings. And then whilst we're on buybacks, a question from Keenon Choonoo from Investec. Is there a preference between Ninety One Limited or PLCs when considering buybacks? Kim McFarland: So we look at both the plc and the limited lines as far as buybacks are concerned. In fact, we look at even PLCs on the JSE line when we look at buybacks. So we look at all three because there sometimes is a variation in price. So we look at all 3 -- effectively 3 lines, although there's obviously 2 shares to answer that question. As far as buybacks to ceding earnings, we look at buybacks from a capital position. So we -- it comes back to the question asked earlier by peers, you aim for a 200% capital position. We're in excess of that. So I'm rather looking at my capital position, understanding, yes, is there any seed? Is there any regulatory requirements. As you mentioned, there's not an awful lot of that at the moment, but we take that into consideration and at the same time, then look at opportunities for buyback based on surplus capital that we're holding on the balance sheet. Hendrik du Toit: Yes. But we -- what we don't do is this is a highly operationally leveraged business. It will only be an extreme that we will leverage the business. You remember, this is what sticks out asset managers. They go on leverage and then they get the fall in assets under management. They get outflows and the debt stays the same and the equity gets wiped out. So we will be very, very careful to ever go beyond what we can do out of our ongoing earnings or surplus capital. Some other industries, people get very brave. I think, yes, this is probably one of the reasons why we haven't bought the firm from the market yet, okay, because you don't leverage these businesses. . Varuni Dharma: Another question from James Slabbert for clarity on the 1 basis point fee margin compression. Would you apply that to the current fee rates that H1 2026 or the FY '25, so the year-end? Hendrik du Toit: I think we've already done this year, we've already done it. I mean we doubled it. So we think we could have a -- we're not 100% sure, but we could have a far lower decline in the second half, just given what's happened in flow dynamics, excluding the Sanlam. But -- and it's really a gut feel here. But that 100 basis points feels like the underlying trend in the market, not necessarily ours. And James, I wish we can't even forecast it to our Board where we're going to be -- it's very -- you've got a very hard job at doing that. I don't know whether Kim can give you any more wisdom except to say the trend is not up. Kim McFarland: Well, I think you're right. I think you're going to look at the most recent fee rate. And if it's in the half year, so you're taking half or 0.5 based on the most recent fee rate, but then you have to take into consideration, as we mentioned, the Sanlam assets coming on board, which will have a further impact and should we take on any large new mandates in the period. If we see those flows, there's likely to be further fee erosion, hopefully not, but there's likelihood. Hendrik du Toit: You see -- especially when you do the relationship deals, with a large insurance company or something like that. And they are genuinely sensitive because it hits their profit, but they can give you assurance about commitment, timing, i.e., embedded value or present value of the deal, that's different from when you get in the normal distributed pension market OCIOs most -- many of them are in -- or multi managers are different because you're not going to compete on price there at all. So it depends where the flow comes from. What we haven't seen, and I think that's the bit you should understand. We haven't seen the sort of -- I've hinted that there are opportunities to grow. But the good times aren't back yet. When you get into the good times and clients want to deploy fast and -- they just want to get the money out there. Then price sensitivity tends to take a backseat. At the moment, they have lots of time to deploy. They're thinking multiyear. They're not chasing markets. I think if you get up severe underperformance or you get -- and I don't think we're going to see it immediately, but if you get a big correction in the dollar, then that changes life. And that's the positive for us. But I don't want you to model that. Varuni Dharma: Last question from Herman [ Van Veltsa]. Do new clients favor fixed fees? Or do they tend to opt for performance fees? Hendrik du Toit: Herman, nice to hear from you again. Another old campaign. I wish clients wanted to give more performance fees because the way you could resolve this constant fee bickering and say, come on, pay us afterwards, pay us properly. But Interestingly, clients have typically been burned by performance fees because they end up paying more. And so they're reluctant to do that. They're also reluctant to go to the -- I mean, in mutual funds, where it's quite prevalent in South Africa, it's not actually encouraged in the rest of the world. ETFs are very difficult. You can't really do -- it's difficult to do, whereas institutional owners don't want to go and pay the big check and ask their Board to pay a large check to a manager unless it's in the alternative bucket. Now again, if those buckets fade and different kind of people contract with us, we could possibly push more performance fees. We think it's a way to align well, although buy-side analysts or sell-side analysts would say it's lower quality of earnings. But I think we could make more profit. They're very happy to do that when they buy Millennium or Citadel. But for some reason, there is a reluctance in our space because that's just what it is. So we would be quite open because we know, over time, 80% of our offerings beat the benchmark. So it's in our favor. But -- it's not the reality today. So I wouldn't model for much bigger performance fee component in our business. I'd roughly keep it similar, noting that a period of good performance, we will own more performance fees. Thank you very much. Thank you very much, and I'll see you after second half, and I hope the positive -- the positive hence, have realized, but it's up to the market. Thank you. Kim McFarland: Thank you. Hendrik du Toit: Thank you very much, guys.

189天前Insight Analytics约5分钟阅读

SY 2025 Q3 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by for So-Young's Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After management gives their prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I will now like to turn the meeting over to your host for today's call, Ms. Mona Qiao. Please proceed, Mona. Mona Qiao: Thank you, operator, and thank you, everyone, for joining So-Young's Third Quarter 2025 Earnings Conference Call. Joining me today on the call is Mr. Xing Jin, our Founder, Chairman and CEO; and Mr. Nick Zhao, CFO. Before we begin, please refer to the safe harbor statement in our earnings release, which applies today's call, and we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release on our Investor Relations website and filings with SEC. At this time, I'd like to turn the call over to Mr. Xing Jin. Xing Jin: [Interpreted] Hello, everyone, and welcome to today's earnings call. In Q3, we continued to advance the strategic build-out of our branded aesthetic centers business, while deepening the foundation of its development and operating systems. Our long-term investments in the aesthetic center businesses are increasingly translating to a stable operating results. Total revenue for the quarter was RMB 387 million, including RMB 184 million from the aesthetic center business, up 305% year-over-year and approximately 8% above the high end of our guidance. This performance also fueled our year-over-year top line growth momentum. This quarter, net loss attributable to So-Young increased, mainly due to a sequential decrease of RMB 31 million in revenue from business other than the aesthetic center business. We remain confident that these revenues will stabilize in Q4. Since launching So-Young's clinic live medical aesthetic chain last year, we have continuously enhanced its standardization at digital management while improving central level efficiency and service quality. After 1 year, our brand now operates the largest number of centers nationwide among live medical aesthetic chains with a total number of 42 centers as of today, including 41 directly operating centers and 1 franchise center. We remain on track to reach our year-end target 50 centers. As of September 30, cumulative service visits exceeded 600,000, ranking among mass market chain brand in China in terms of service volume. Going forward, we will continue to expand our aesthetic center network in a disciplined manner and drive healthy sustainable growth through a higher standard system and deeper brand equity. Now let me walk you through our Q3 operational highlights. On the branded aesthetic center business builds upon the strong growth momentum. In Q3, revenue reached RMB 184 million, up 26% quarter-on-quarter and 305% year-over-year, further solidifying its role as the core of our business. As of September 30, So-Young clinic operates 39 centers across 10 cities. Operational efficiency continued to improve with 20 centers achieving center level profitability in Q3, including all 14 mature centers. In addition, 29 centers generated positive operating cash flow during the quarter. The scale of users and service volumes are also expanding. As of September 30, total number of active users of So-Young clinic exceeded 130,000. Total number of verified treatment visit surpassed 89,800 in the quarter, up 33% quarter-over-quarter and 280% year-over-year with total number of verified aesthetic treatment performed surpassed 194,700, up 26% quarter-on-quarter and 296% year-over-year. New customers continued to grow driven by word of mouth, referrals since our customer acquisition efficiency remains industry-leading levels. Our per capital sales remains at a low level and decreased quarter-on-quarter. In Q3, the proportion of new customers acquired via referrals rose to 46%. We also deepened cooperation with platforms such as Meituan, further improving brand exposure and user conversion through targeted advertising and content selling. New customers from public domain channels increased 38% quarter-on-quarter with continued optimization and public domain customer acquisition costs. We have upgraded our membership system during the quarter. So tiered operations benefits, incentives and personalized services, we increased user retention and customer lifetime value. In Q3, core members defined as user at level 3 and above grew by over 10,000, up 40% quarter-over-quarter. These core members continued a high double-digit percentage of revenue and nearly 70% quarterly repurchase rate. Customer satisfaction score remain at a high level of 4.99 out of 5. Our user structure continues to evolve to higher loyalty and repeat purchases. We continue to refine our blockbuster products, focusing on premium products with repeat purchase rates at word-of-mouth. In Q3, we optimized our blockbuster product portfolio and double down on refined operations for key offerings. By the end of September, we preannounced the launch of Miracle PLLA version 3, which delivered robust presales performance with over 1,300 orders completed within 2 days. Under a one order per customer limit. For energy-based device treatments as they exclusive distributor of BBL treatment in China, we made BBL, our highest penetration blockbuster offerings in Q3, and we will continue to drive its growth in Q4. Overall, revenue contributions from blockbuster products rose to over 30%. And this core offerings continue to unlock growth momentum, we are opening greater room for synergies with supply chain. As our business expands, we continue to prioritize health care quality and procedural compliance. In Q3, we fully upgraded our quality control framework, building a 60% client framework, including our clients, risk control supervision, internal audit, medical service delivery and information security department. This reinforces traceability across the medical service process. In Q3, we completed 55 centers inspections and emergency drills. By the end of third quarter, our physician team exceeded 150 ranking first by count among live medical aesthetic chamber-wise nationwide. All doctors have completed internships or training at public hospitals and passed our unified training and assessment, ensuring a consistent and reliable medical service experience across every center. Our business practices received recognition from mainstream media. In October, People's Daily online published a special commentary noting that So-Young is starting an example for the rational development of the industry through disciplined operations, transparent pricing and compliance management. We believe the industry landscape is shifting from marketing-driven to trust driven, we will continue to uphold transparency standardization and inclusive access to build a service system that truly puts customer at ease. We continued to strengthen our medical aesthetic supply chain. In Q3, shipments of Elasty exceeded 59,800 units, up above 63% quarter-over-quarter. Due to the combined impact of seasonal factors and industry prosperity in Q3, revenue of POP declined by RMB 80 million quarter-over-quarter. GMV for verified medical aesthetic services was around RMB 260 million with per capita in center GTV rate up 6% year-over-year. We continue to optimize the content recommendation and traffic distribution mechanisms to improve conversion efficiency. Looking ahead, we will continue pursuing our long-term goal of 1,000 centers, expanding buildout in core cities and commercial hub while further elevating standardized and digital management to raise the bar for service delivery and user experience. We believe our durable competitive advantage comes from long-term commitment and accumulated trust. We will drive the live medical aesthetic industry towards maturity with more measured pace and more professional capabilities creating long-term value for shareholders. Now I'll hand over to our CFO, Nick, who will walk through the financial results followed by the Q&A session. Hui Zhao: Hello. This is Nick. Please note that all amounts are quoted in RMB. Please also refer to our earnings release for detailed information of our comparative financial performances on a year-over-year basis. Total revenues during the quarter were RMB 386.7 million, up 4% year-over-year primarily due to our business expansion of the branded aesthetic center. Aesthetic treatment services revenues reached RMB 183.6 million showing a 304.6% year-over-year, once again exceeding the high end of our guidance. This was primarily driven by the robust business expansion of our branded aesthetic centers. Information and reservation services revenues were RMB 117.2 million, down 34.5% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Revenues from sales of medical products and maintenance services were RMB 67 million, down 25% year-over-year primarily due to a decrease in the order volume of medical equipment. Revenues from other services were RMB 18.9 million, down 67.6% year-over-year, primarily due to a decrease in revenues from So-Young Prime. Cost of revenues were RMB 203.8 million, up 43.4% year-over-year, primarily due to the business expansion of our branded aesthetic centers. Within cost of revenues, Cost of aesthetic treatment services were RMB 140.1 million, up 333.2% year-over-year, primarily due to the business expansion of our branded aesthetic centers. Cost of information and reservation services were RMB 12.9 million, down 44.7% year-over-year, which was in line with the decrease in revenue generated from information and reservation services. Cost of medical products sold and maintenance services were RMB 35.6 million, down 18.3% year-over-year, primarily due to a decrease in costs associated with the sales of medical equipment. Cost of other services were RMB 15.2 million, down 64.6% year-over-year, primarily due to a decrease in costs associated with So-Young Prime. Total operating expenses were RMB 255.6 million, up 13.6% year-over-year. Sales and marketing expenses were RMB 130.7 million, up 13.8% year-over-year primarily due to the increase in expenses associated with the branding and user acquisition activities for our aesthetic centers. G&A expenses were RMB 88.6 million, up 26.7% year-over-year and 12.4% quarter-over-quarter, primarily due to the onetime accrual of approximately RMB 5.8 million year-end bonuses and the business expansion of our branded aesthetic centers. R&D expenses were RMB 36.3 million, down 9.6% year-over-year and up 16.5% quarter-over-quarter. The year-over-year decrease was primarily due to improved staff efficiency, while the sequential increase was due to the onetime accrual of approximately RMB 3.6 million year-end bonuses and the continued investment in Miracle Laser products, particularly in clinical trials. Income tax expenses were RMB 1.1 million compared with RMB 2.1 million in the same period of 2024. Net loss attributable to So-Young International Inc. was RMB 64.3 million compared with net income attributable to So-Young International, Inc. of RMB 20.3 million during the same period last year. Non-GAAP net loss attributable to So-Young International, Inc. was RMB 61.6 million compared with non-GAAP net income attributable to So-Young International Inc. of RMB 22.2 million during the same period of 2024. Basic and diluted losses per ADS attributable to ordinary shareholders were RMB 0.64 and RMB 0.64, respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB 0.2 and RMB 0.2, respectively, during the same period of 2024. As of September 30, 2025, our cash and cash equivalents, restricted cash and term deposits and short-term investments were RMB 942.8 million, primarily due to an increase of investment in branded aesthetic centers. Looking ahead to the fourth quarter of 2025, we expect treatment services revenues to be between RMB 216 million and RMB 226 million, representing a 165.8% to 178.1% increase from the same period in 2024. This outlook reflects our confidence in the strong growth momentum of our branded aesthetics center business. As we near the 50 center milestone, we have also seen continued improvement in center level profitability and operating cash flow, demonstrating our model's scalability and operational efficiency. Going forward, we will pursue disciplined expansion while maintaining our focus on operational excellence and cost optimization to drive sustainable and quality growth. These efforts will reinforce the financial resilience of our aesthetic center business and create enduring value for our shareholders. This concludes our key remarks. I will now turn over the call to the operator and open the call for QA. Thank you. Operator: [Operator Instructions] The first question comes from Hai Jingpang with CITIC Securities. Hai Jingpang: [Foreign Language] So okay, let me briefly translate myself. This is Hai Jingpang from CITIC Securities. So first of all, congratulations on the company's continued rapid expansion of the chain clinics. So could you share more about the openings plans for next year, including your original strategy and expected pace for the new clinic openings by quarter? Xing Jin: [Interpreted] By the end of 2025, we will reach 50 centers. Our goal is to lay a solid foundation, focusing on improving customer acquisition efficiency and growing user base. As the business scales, we will enter a new stage of development, relying more on digitalization and AI capabilities to replicate service processes. This will drive breakthroughs in the bottlenecks, the industry often faces providing support for a broader build-out in the following up stage. The number of new centers to be opened next year will remain consistent with previous plans and will not be less than 35. We will keep the overall pace of center opening balanced, progressing on a quarterly basis to ensure every new center quickly enters the operation phase following its establishment. Our focus will remain on fourth-tier cities since they have strong demand and high repurchase rate potential, which will help us quickly build up regional density and amplify brand equity. At the same time, we will also systematically establish a presence in second-tier cities with a mature consumer base to validate our model and game experience for long-term expansion. Operator: The next question comes from Stacy Chen with Haitong International. Stacy Chen: [Foreign Language] I will translate myself. First of all, congratulation to the management for achieving such rapid growth even during the off-season quarters. I noted that you have released the core member data this quarter. So could you explain more about the membership system for the aesthetic center business and how we conduct the membership operations? Xing Jin: [Interpreted] The membership system is core to aesthetic centers operations each time, a user companies visit, a record is created, which helps us build a clear tiered membership system from Level 1 to 8 and identify high-value users with more committed and ongoing engagement. Level 3 and above are defined as core members. They have higher center visit frequency and greater flexibility to select additional services with annual spending 2.5x higher than the average, making them the good driver for aesthetic center. During Q3, they contributed a high double-digit percentage of our aesthetic center business revenue with a repurchase rate of nearly 70%. We provide tiered benefit and service touch points based on individual user consumption patterns, which ensures they continuously perceive brand value and received positive reinforcement, further bolstering repeat purchase rates. In Q3, our membership operations made solid progress. Users with verified business increased by nearly 40,000, up 36% quarter-on-quarter, including over 10,000 new core members up 40% quarter-over-quarter. Additionally, we've also enhanced repeat customer value operations, specifically repeat customer revenue reached RMB 120 million in Q3, up 32% quarter-over-quarter, accounting for 65% of aesthetic treatment service revenues, verified treatment visits from repeat customers surged over 4 times year-over-year to 50,000, while ARPU also increased. These metrics all exceeded our targets. Going forward, we will continue -- we will focus on conversion of highway active users and extending the life circle of high-value users. Operator: The next question comes from Nelson Cheung with Citi. We will move on to James Wong with GS Securities. James Wong: [Foreign Language] My question for company is how is the Miracle PLLA 3.0 are starting since its end of September launch and what is new compared to the previous version and what's the plan for promoting it? Xing Jin: [Interpreted] Miracle PLLA version 3 was an important upgrade on the supply chain. In China's medical aesthetic market, PLLA is still mostly used as an injectable for shipping. Before launching, we conducted research in South Korea and found that the medical practice there adopt a more standardized and safer skin booster technique after multiple rounds of testing, we launched [indiscernible] in terms of products, its ultra microsphere comes with 5 key features, including ultra smoot ultra solid, ultra fine, ultra pure and ultra active across safety results and longevity, these features make the product the best fit for [indiscernible]. Moreover, with a overall performance upgraded Miracle PLLA version 3 is also more competitively priced offering consumers a high-quality yet value-for-money experience. Regarding the promotion, we made upgrade based on the market landscape and user pain points, to capture user mind share, we adopted [indiscernible] a miracle more suitable for skin boosters and introduced the concept of ultra microspheres to take the lead in the segment. We also released 2 versions Miracle PLLA version 3 and Version 3 Pro to address different users' needs and budgets, thereby lowering the decision threshold for users. The first batch of 5,000 units was fully sold out within a short time. The mass arrival is expected in late November. We will continue to drive market penetration rate for Miracle PLLA version 3, converting users more efficiently and increasing ARPU and user loyalty. Market feedback shows that Miracle PLLA version 3 is receiving a high attention. We implemented an online purchase limit of 1 purchase per user. From these purchases, we can say that about 56% of users paid the Pro version priced at RMB 4,999, reflecting the trust they place in our brand and product. In the next year or 2, the PLLA that we have been working on upstream is expected to receive approval for launch, which should reduce procurement cost by several times. Overall, Miracle PLLA version 3 is not just a product upgrade, it's an important part of supply chain construction and blockbuster strategy. We will adopt the same approach for future categories. We will continue to deepen the vertical integration of our supply chain, further enhanced safety and continuously convert upstream manufacturers into long-term supply customers. Simultaneously, we will leverage our advantage in marketing products, doctors and channels to differentiated areas and solid our brand moat. Operator: The next question comes from Nelson Cheung with Citi. Nelson Cheung: [Foreign Language] Congratulations on a solid quarter. With the expanding aesthetic center count, how do we ensure the safety and compliance of the entire chain system? And how is the internal quality control mechanism work? Xing Jin: [Interpreted] Safety is our top priority. We have built a 6-pillar complaint framework covering compliance, risk control, supervision, internal audit, medical service delivery and information security department, and we will continue to make this framework more refined and systematic. We adhere to high standards and resource. On the treatment side, we only offer safe, mature medical aesthetic treatment with clear mechanism and solid user feedback to avoid potential risks. On the personnel side, we implement regular doctors' qualification assessments with an acceptance rate of around 10%. All doctors are also required to complete preemployment training and regular emergency drills to ensure the highest professional service and emergency response capabilities. Medical service delivery, we implement a tiered diagnosis that matches treatment with doctors based on their qualification levels. We conduct regular online and offline inspections as part of our quality control, ensuring reliable medical service across all centers. If there is any user feedback or dispute, we handle it at headquarters with crisis response team composed of key departments, including user experience, PR, GR and legal. Currently, our average response time is under 2 hours with issue resolution completed within 2 days. The compliance rate is below 1%. Going forward, we will continue to uphold the highest standards of safety and compliance with digital and AI tools. We aim to further enhance cost control efficiency and ensure consistent medical service quality and user safety across all centers as the business continues to grow rapidly. Operator: The next question comes from Jenny Xu with CICC. Jenny Xu: [Foreign Language] I will repeat it in English. So how does the management view the potential for improving the profitability of the aesthetic center business in the future? Xing Jin: [Interpreted] We believe the first priority now is to expand our user base and ensuring improvement of operating profit as it scales. As the operating model gradually matures, we are confident profitability will improve. On the cost side, we continue to optimize the structure of our customer acquisition channels, including referrals from existing customers and both public and private domain traffic continuously consolidating our advantage in customer acquisition costs. In addition, there is a significant room to lower the consumable costs. For instance, we recently upgraded Miracle PLLA from Version 2 to Version 3 as the new products, it will strengthen our bargaining power with upstream partners and further optimize our cost framework. In the future, with the gradual realization of digitalization, AI and economics of scale, the fixed cost in data operations will be further diluted. On the revenue side, as users increasingly prioritize resource and professionals, they are willing to spend on premium treatment, coupled with offering long-term high quality medical aesthetic products, operations of the existing [indiscernible] trajectory, leveraging our blockbuster product strategy, treatment volume have gradually concentrated on a strong number of SKUs, with the revenue share of blockbuster products increasing. The top 9 products contributed over 30% of revenue in Q3. This lays a solid foundation to further improve our profit margins through proprietary customized products. Once the number of aesthetic centers and verified treatment visits reach a central level, we will focus on housing the LTV of core members, further driving profit margin. Therefore, we believe there is great potential for the profitability of the aesthetic center business to increase from its current base. Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

189天前Insight Analytics约5分钟阅读

SOHU 2025 Q3 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by, and good evening. Thank you for joining Sohu.com Limited's Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference call, Huang Pu, Investor Relations Director of Sohu.com Limited. Please go ahead. Huang Pu: Thanks, Rebecca. Thank you for joining us to discuss Sohu.com Limited's third quarter 2025 results. On the call are Chairman and the Chief Executive Officer, Dr. Charles Zhang, CFO, and invest president of finance, Gemstone. Also, us, Chang will see with the Win Chen and the CFO Bin Wang. Before management begins their prepared remarks, I would like to remind you of the common safe harbor statement connection with today's conference call. Except for the information contained here, the matters discussed on this call may contain forward-looking statements. These statements are based on current plans, estimates, and projections, and therefore, should not place undue reliance on them. All risky statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 20-F. With that, I will now turn the call over to Dr. Charles Zhang. Charles, please proceed. Dr. Charles Zhang: Thanks, Huang Pu, and thank you, everyone, for joining our call. The 2025 marketing services revenues were in line with our guidance. Well, both our online game revenues and the bottom-line performance are benefiting from our continuous efforts in the gaming business and were well above our prior expectations. We recorded positive net income this quarter. For the social media platform, we continue to refine our products, integrate resources to better meet users' needs, and enhance their experiences. Meanwhile, leveraging our product metrics and distinctive events, we remain committed to generating and distributing diversified premium content and continuously energizing our platform. Our differentiated advantages and unique IP enabled us to further unlock monetization potential. For online games, both new and established titles delivered outstanding performance driven by our deep understanding of our needs and proven operational expertise. Before going through each business unit in more detail, let me first give you a quick overview of our financial performance. The 2025 total revenue is $180 million, up 19% year-over-year, and 43% quarter over quarter. Marketing services revenues are $14 million, down 27% year over year and 13% quarter over quarter. Online game revenues are $162 million, up 27% year-over-year and 53% quarter over quarter. GAAP net income attributable to Sohu.com Limited is $9 million, compared with a net loss of $60 million in 2024 and a net loss of $20 million in the second quarter of this year. Non-GAAP net income attributable to Sohu.com Limited was $9 million, compared to a net loss of $12 million in the third quarter of last year and a net loss of $20 million in the second quarter of this year. Now I'll go through our key businesses in more detail. For the Sohu platform, we continue to leverage cutting-edge technologies to optimize our products and promote deeper integration across our product metrics. This enabled us to further adapt to various narrows, improve operation efficiencies, and enhance users' experiences. At the same time, relying on the synergies between various online and offline events, we continue to stimulate the generation and dissemination of premium content and attract more users to our platform. In the quarter, we hosted a variety of events and activities to further build a vigorous social networking platform, providing users with abundant opportunities for online and offline communications. The 2025 autumn convention of social media influencers effectively promoted deeper communication among broadcasters across different verticals and significantly increased their vitality and retention on our platform. The ongoing 2025 Sohu Hip Hop Dancing Festival and other model competitions successfully ignited the passion of young people and further consolidated our influence in these areas. All these activities gained widespread recognition and popularity, continuously infusing a large amount of content and traffic into our platform. As a result, we were able to further expand the influence of Sohu and fostered a prosperous platform ecosystem. Additionally, we also held special theme activities like the Halloween American TV series party. Not only did we engage users with innovative content forms, but it also became a highlight of our social media's American TV series month, which brought audiences classic dramas such as Westworld and The Mandalorian. Meanwhile, we also launched multiple TV dramas, original drama, and short dramas during this quarter to attract and retain users. The original drama, The Rebirth, was well-received by audiences, attracting more users to our platform. Through our flagship IP, the physics class, and Charles's physics class, we continue to strengthen our differentiated competitive advantages and create monetization opportunities. With trust, we were able to reach a wider audience through discussions on popular science topics and hot events, bringing physics knowledge closer to the general public. This not only helped us generate unique and premium content, but also consistently unlocked monetization potentials. Together with the resources of Sohu's product metrics and our marketing capabilities, we actively adapted to market trends and provided advertisers with customized marketing solutions through a series of innovative campaigns and events, which are highly recognized by both audiences and advertisers. Next, turning to our gaming business, in 2025, we launched a new PC game, TLBB Return, based on a beloved early version of TLBB PC. The game features reduced grinding and pay-to-win pressure, offering players a lighter gaming experience. It helped us attract many former players, and its revenue performance has so far exceeded our expectations. For TLBB PC, we also launched game content for TLBB Vantage that recreated the classic design of the game, which evoked nostalgia among players. Players' enthusiasm was far beyond our expectations. With regular TLBB PC updates, we offered new gear and rewards for our promotional events and redesigned the cross-server clan wall gameplay, which boosted willingness to pay among higher-paying players. For mobile games, we launched an expansion pack for Legacy TLBB Mobile, which brought enhancements to the OEN clan's skills alongside a new storyline and engaging activities. Revenue for this game remained stable on a sequential basis. For the mobile TLBB Mobile, next quarter, we will continue to launch expansion packs and content updates for the TLBB series and other titles to further keep players engaged. Amid an increasingly competitive market, we remain committed to our top game strategy. We follow a user-centric philosophy and adhere to sound methodologies and a systematic R&D process to enhance efficiency and product success rates. As part of this strategy, we are taking concrete steps to unlock the potential of our TLBB IP. Meanwhile, building upon our core strengths in MMORPGs, we are working to diversify into new types of games, including card-based RPGs, sports games, and casual games, as well as expand our offerings for global markets. Now I'd like to give an update on the ongoing share repurchase program. As of November 13, 2025, Sohu.com Limited had repurchased 7.6 million ADS for an aggregate cost of approximately $97 million, accounting for two-thirds of the $150 million program. With that, I will now turn the call over to Joanna. Joanna Lv: Thank you, Charles. I will now walk you through the key financials of our major segments for 2025. All numbers are on a non-GAAP basis. You may find a reconciliation of non-GAAP to GAAP measures on our website. For the social media platform, quarterly revenues were $70 million, compared with $73 million in the same quarter last year. Quarterly operating loss was $71 million, compared with an operating loss of $72 million in the same quarter last year. For Changyou, quarterly revenue was $163 million, compared with $129 million in the same quarter last year. Quarterly operating profit was $88 million compared with operating profit of $62 million in the same quarter last year. For 2025, we expect marketing service revenues to be between $50 million and $60 million. This implies an annual decrease of 15% to 20% and a sequential increase of 10% to 18%. Online game revenue is expected to be between $130 million and $123 million. This implies an annual increase of 3% to 12% and a sequential decrease of 24% to 30%. Both non-GAAP and GAAP net loss attributable to Sohu.com Limited are expected to be between $25 million and $35 million. This reflects management's current and preliminary view, which is subject to substantial uncertainty. This concludes our prepared remarks. Operator, we would now like to open the call to questions. Operator: Thank you. We will now begin the question and answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now take our first question from the line of Thomas Chong at Jefferies. Please go ahead. Thomas Chong: Hi. Good evening. Thanks, management, for taking my question. My first question is about the online game business. Given our online games performed very strongly in Q3, I'm just wondering how the quarter-to-date performance is so far? In particular, when I look into the guidance, it basically implies a sequential decline. So I'm not sure if we are a bit conservative in giving out Q4 gaming guidance. And on the other hand, when I look into our portal business, when I look into the advertising side, we are actually seeing quite a sequential rebound in terms of the advertising revenue. Can Charles, may I ask about how you think about the macro sentiment coming into Q4, as well as the trend for different categories? And based on the current visibility, how should we think about the brand advertising outlook in 2026? If there's any color on that? Thank you. Huang Pu: The performance of the fourth quarter so far is in line with our expectation. The strong third quarter results are primarily driven by the successful launch of a new game, TLBB Return. Meanwhile, the new servers of TLBB Vantage also performed very well, achieving historic highs. So the actual revenue of the third quarter exceeded our expectation a lot. The performance of the fourth quarter depends mainly on the performance of new TLBB Return and the content and activities that we will launch during the first quarter for TLBB PC, Legacy TLBB Mobile, etc. Thomas Chong: Okay. So I think the Q4 rebound... Thomas, you... Is the same? Yes? Above the Q4? Yeah. Yeah. I think since the user... The whole ad base is not that big. Right? So it kind of oscillates a little bit. It depends on some, like, some, you know, a pact signed late and allocated to this quarter but went to the next quarter. Right? So it's... But we do have some... First of all, the macroeconomic situation is not that good, you know, under pressure. And different sectors like auto and IT services continue to deteriorate. But as our new innovative marketing campaigns or services are unique, we are still able to attract some advertising. So we are going against the trend and basically stabilizing the advertising revenue on a small basis. Because in Q4, we have some good events creating opportunities to advertise. Thomas Chong: I see. Thank you, Charles. May I ask a follow-up question about AI? Like, can you comment on how AI is integrated within Sohu.com right now? And are we seeing better productivity, cost savings, or enhanced advertising monetization so far? Thank you. Dr. Charles Zhang: I think AI has more impact and usefulness or improvement in productivity on the gaming business. Right? For Sohu.com, we are not developing a large language model. Instead, we are using AI to improve the user experience. Like for our social media platform, AI can summarize video content and provide subtitles. Also, in our news app, there are AI-enhanced search and question-answering features. So we are basically using AI and different models to improve our existing media and social network services, rather than investing heavily in the hardcore large language model. Yaobin Wang: The application of AI is mainly applied in art design, code generation, and game planning creation. Dr. Charles Zhang: Thank you. Operator: Thank you. We will now take our next question from Alicia Yap at Citi. Please go ahead, Alicia. Alicia Yap: Hi. Yeah. Thank you. Good evening, management. Thanks for taking my questions. I have a couple of follow-ups. First, on the gaming, can management share with us what are the biggest surprises you learned from the TLBB Return version? And which one is the bigger driver in terms of the outperformance for this quarter? Is it the TLBB Vintage new server or the new game TLBB Return? And I understand you gave out the Q4 guidance. You mentioned this reflects the current situation. I wanted to know, is the Vintage server seeing a drop-off in users, or are the new titles TLBB Returns seeing a sequential decline in users and revenue? Any color on that for Q3 and Q4 would be helpful. And then, a second question for Charles on the macro situation. I think you mentioned auto, IT services, and the ad sentiment seems to be deteriorating. Are there any industry verticals or subsectors you see either improving sentiment or it being about the same as the last few quarters? Thank you. Huang Pu: The first surprise from TLBB Return is that the user spending is beyond our expectation. Because it was positioned as a gameplay that's more relaxing and requires less time. And demand for spending is also less. So, originally, we thought the users' paying wouldn't be very good. Dr. Charles Zhang: Yeah. Huang Pu: Second, the retention is very stable, better than our expectations. As for the contribution to revenue increase of the quarter, we do not disclose the specific numbers for individual games. So far, the user base for both TLBB Return and TLBB Vintage are very steady, but their revenues are trending down. That's because TLBB Vintage performed very well in the third quarter. In the fourth quarter, we plan to roll out fewer promotional activities. For TLBB Return, as it was newly launched in the third quarter, it will experience natural decline compared to the initial launch period because users tend to have a stronger willingness to pay when the game was initially launched. Dr. Charles Zhang: Okay. So your second question is about the macro situation, the sectors? Yeah. Overall, the ad market is under pressure. For example, in the auto industry, there's fierce competition as there are too many car companies. They need to promote their brands and sales to stand out. However, the profit margins are very low for them, so the ad budgets are thinning. With this situation, we have unique campaigns like a physics class and social network distribution, allowing us to get ad budgets. The auto industry is flat but still declining. We are also looking at consumer electronics. China's manufacturing base is strong with many new products, but these need marketing for the domestic market. Our innovative offerings, such as live streaming and social media distribution, allow us to get consumer electronics advertisers. So, despite the deteriorating market situation, we can get some advertising. Huang Pu: Okay. Thank you, Charles. Operator: Thank you. I am showing no further questions. And with that, we conclude our conference call today. Thank you for your participation. You may now disconnect your lines.

189天前Insight Analytics约5分钟阅读

STUB 2025 Q3 财报电话会议

Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, November 13, 2025. I will now turn the call over to Clinton Hooks with StubHub. Clinton Hooks: Thank you for joining us to discuss StubHub's Third quarter 2025 results. For reference, our third quarter 2025 earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from our expectations. We assume no responsibility for updating these statements. Therefore, please exercise caution in relying on them. For detailed risk factors, please refer to our SEC filings. We'll also discuss certain non-GAAP measures, which we believe are useful to investors for evaluating our performance. These measures should not be considered in isolation or as substitutes for GAAP results. Full reconciliations to GAAP measures are available in our earnings release. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric. Eric Baker: Good afternoon, everyone, and thank you for joining us for our first earnings call as a public company. I want to welcome all our investors, both those who supported us throughout our private journey and those who are new to the StubHub story. We're grateful for your trust and partnership, as we embark on this next chapter together. Today, I'll focus primarily on the progress we've made in establishing StubHub as a leading live event ticketing marketplace and on our strategic initiatives. I'll then hand it over to Connie to speak to our third quarter financial performance. While we won't be providing detailed 2026 guidance on today's call, we look forward to sharing our outlook during our next earnings call in early 2026. With that said, I want to begin by stepping back and discussing the business that we have built over the last 2 decades and share the long-term vision of where we are going, one that continues to be defined by a customer-focused and relentless drive to make live entertainment accessible to everyone everywhere. The past few years have been transformative for our business. We completed the StubHub acquisition, navigated the pandemic, fully rebuilt StubHub's technology stack, restored StubHub as the clear category leader and have now entered the public market. Our thesis for the acquisition was to restore StubHub's market leadership in North America and create a unified global ticketing marketplace. Our business today is the result of the successful execution of that thesis, and we are very proud of the asset that exists as a result. Today, StubHub operates what we believe is the largest global secondary ticketing marketplace for live event tickets, selling over 40 million tickets annually across more than 200 countries and territories from over 1 million sellers all over the world. Our many years of leadership in the resale market have created brands synonymous with the category, resulting in moats around our business and durable competitive advantage through customer loyalty and trust, organic traffic and superior acquisition and conversion. We maintain what we believe is the most comprehensive operations and supply chain capabilities in our category, the largest event catalog in the world and the capability to fulfill virtually any ticket across any category, all through a single global marketplace. Our business produces a huge data asset as tens of millions of people interact with our product services on what we believe is the largest floating price marketplace for live events in the world. This data on supply, demand, pricing, user behavior, etc., provides structural advantage through differentiated product innovation, marketing optimization and pricing intelligence. Finally, this is all built on a single, modern, globally deployed technology stack, allowing us to rapidly innovate across our product surface and nimbly deploy features using new technologies, something becoming increasingly important as AI development shapes the future of digital commerce. Our business has built a rare combination of best-in-class financial attributes that create exceptional value at scale with proven durability. First, we are growing rapidly with nearly 20% GMS growth over the last 12 months. Second, our marketplace models operated with enduring economics, consistent take rates and high margins. Third, we built a profitable customer acquisition engine that allows us to grow and take market share while generating profits through our performance marketing channels. Fourth, our asset-light business model and the natural flow generated by our marketplace dynamics result in exceptional cash conversion. Fifth, we've demonstrated remarkable resilience through economic cycles, consistently growing nearly every year since inception. And finally, we operate in a large and expanding core global secondary ticketing market with durable long-term tailwinds. In addition, we have opportunities for significant TAM expansion through accessing the broader ticketing ecosystem. We believe you would be hard-pressed to find many other companies to check these boxes. That said, we are most excited about leveraging these assets to realize our vision to become the global destination for consumers to access live entertainment. We believe that buyers want one destination where they can purchase any ticket for any event in their language and currency. Sellers want to optimize revenue and attendance through broad distribution and pricing intelligence. We believe we can service these needs by building a single product that puts the world's live entertainment at fans' fingertips and services their needs throughout their entire journey. This is not something that exists in our category today. This is a product and service that can only be built by applying technology and relentless customer focus to eliminate friction around the live event experience. Technology businesses innovating on behalf of consumers have reimagined access to many products and services, information, music, video, food, but not yet for live entertainment. This is exactly what StubHub is, a business with a core competency in technology development focused on applying its expertise to revolutionize the way consumers interact with live event commerce. With this context, we can turn to some of the topics I think are top of mind regarding recent developments in our operating environment. First, we wanted to discuss some recent developments in our core resale market. Restoring StubHub's market share in North America was the key tenet of our acquisition thesis. Following our acquisition of StubHub in 2020 and the completion of the technology migration in 2022, we have consistently gained share in the North American market, transforming StubHub from a business that was roughly comparable in size to the nearest competitor in 2022 to one that is now approximately 4x larger than that same competitor based on GMS and comparable metrics. This momentum in share gains and the subsequent positive impacts of relative share we observed led us to invest in accelerating this dynamic via disciplined customer acquisition and conversion levers, specifically take rates and performance marketing, which continued in the most recent quarter. I want to highlight one specific downstream impact of this share gain, our growing share of the point-of-sale market. In our market, the point-of-sale is a software product used by power sellers to manage the listing, pricing, distribution and fulfillment of their ticket portfolios. Sellers build their operational workflows around the software infrastructure, which becomes sticky as a result, like many enterprise software products. For many years, the technology was provided by one of our competitors, whose product had the majority share of the market. We recently launched our own product called ReachPro. As our relative market share of sales volume has increased, we've seen rapid adoption of our technology. We have benefited from a powerful network effect. As our marketplace captures a larger share of sellers' sales, these sellers are increasingly willing to migrate their operations to what we believe is our far superior technology, backed by our unmatched data and insights. In the secondary market, installation of ReachPro naturally produces higher relative market share. When sellers use our tool, they tend to index their behavior around our marketplace, ensuring competitive pricing and high standards of fulfillment, leading to structural advantage and benefits for our buyers. It also provides valuable data insights, which can be used to improve the quality of our products and a strategic product development surface to launch advertising products and innovate with features that will serve large sellers even at enterprise scale. Q3 was both our largest relative market share quarter to date and the largest quarter of new seller adoption for ReachPro. We believe we have line of sight into becoming the largest provider of this product in the medium term, a durable and strategic asset created in part via our relative market share investments. This brings us to the next topic, direct issuance, which we believe will be a major innovation to original issuance ticketing distribution that will promote competition and improve the fan experience while improving economics for ticket issuers. As I mentioned earlier, we believe buyers want a single platform that offers access to all the world's live entertainment. At the same time, sellers maximize revenue and attendance by accessing the broadest possible distribution with the smartest pricing intelligence. Our strategy to unlocking this value proposition is through what we call direct issuance. Generally speaking, there are 3 seller types in the market: individuals, power sellers and enterprise sellers. StubHub and viagogo began as platforms to service individual sellers, season ticket holders, concert goers whose plans change and so on. As liquidity of the market grew, market makers developed. Power sellers selling large quantities of tickets through the marketplace on a regular basis, and we ultimately developed products such as ReachPro to allow these sellers to manage the listing, pricing and fulfillment of tickets seamlessly. For our business, direct issuance simply refers to expanding the supply side of our platform once again to allow enterprise sellers, content rights holders like teams, arts and venues to access our marketplace through a frictionless technology-enabled experience as any individual or power seller does. We believe simultaneous multichannel or open distribution using data-backed pricing intelligence is the future of ticket distribution, as it will maximize value for fans and content. To be clear, this is a very different model to legacy primary ticketing companies. Primary ticketing company's core service is to provide access control to venues. And secondarily, they provide a retail web storefront with limited or no marketing. Content today, for the most part, sells an inventory through antiquated distribution methods. They often sell tickets, expiring products that drive huge economics exclusively through these access control providers. The result is an opaque market with huge inefficiency, narrow distribution, lack of pricing intelligence and ultimately, unsold seats and tremendous value loss for content, not to mention a lack of competition leading to a terrible experience for fans. We are not competing with this model, and we are not providing access control technology. We offer something new, the ability for content to access StubHub's distribution engine through a variety of options that does not require them to switch their access control provider. We make our distribution available to content rights holders with no exclusivity requirement, broadening their distribution and empowering them with robust data insights from our scaled floating price marketplace to make informed pricing and utilization decisions. This means content rights holders can access our marketplace, distribution, data and customers, in the same way individuals and power sellers can. They can list tickets multichannel across retail outlets at whatever price points they choose to optimize their utilization and yield, and we compete to sell inventory the same we do today. We're actively making investments to grow this business and demonstrate the benefits of open distribution's content and are excited about the progress we are making. We recently signed a partnership with Major League Baseball, a great example of one of the world's premier sports properties endorsing open distribution. MLB momentum has continued, and more teams are continuing to become sellers on StubHub, several of which are doing so without any additional economic incentive or protection from us. They're selling just as any other seller on our platform does. We have also had success with the music festival category, adding Peachtree Entertainment, one of the largest independent promoters in the Southeast, and LED Presents, an independent EDM promoter on the West Coast. These promoters combined put on dozens of events attended by hundreds of thousands of fans annually. We have also continued to add talent to lead this initiative. Shaun Stewart, who spent much of his career building supply chain for travel businesses such as Expedia and Airbnb, joined as VP of Direct Issuance. Shaun will be reporting to Raj Beri, who was instrumental in building Uber Eats' APAC business and recently joined StubHub as Chief Business Officer to oversee all global supply. Direct issuance represents an addressable market opportunity well in excess of $100 billion, a transformative growth vector that we believe will drive substantial long-term growth, value creation for our business and shareholders for years to come. The other business we are in the early stages of developing is advertising, which we believe can be a large and profitable business for us, as it has been for many other marketplaces. We are pursuing 2 advertising models initially. First, sponsored listings, where sellers can bid for premier placement on event pages to dramatically increase exposure. For any given event, we may be merchandising hundreds, even thousands of tickets on our event pages. These are expiring products, meaning that sellers receive nothing if the ticket does not sell. With the sponsored listing offering, sellers can bid for higher visibility among competing inventory, improving the likelihood of a buyer seeing and ultimately purchasing their ticket. Conversations with sellers on our platform have demonstrated tremendous interest and features such as sponsored listings as an additional and powerful tool for sellers on our marketplace. As ReachPro has gained users and market share, we've also established a ready-made distribution platform for sponsored listings, as we can build access to the feature directly into ReachPro's user workflow without the heavy lift of a sales force. The second advertising model is through more traditional corporate advertising partnerships with businesses in adjacent product categories that can be additive to the customer experience. One example of this is Booking.com. Event tourism is a rapidly growing category, and we know that many of our customers are purchasing tickets for events outside of where they live. Our partnership with Booking is a great example of how we can monetize post-purchase real estate in our product to deliver a travel offering to customers. And it is also a great example of a high-quality business, recognizing the value of our customer base and paying us for access. We believe this will extend to other categories adjacent to sports, music and live event attendance. We are very excited about the potential for advertising on our platform. Of course, as with everything we do, our #1 priority is ensuring that we do not adversely impact the customer experience. Therefore, introducing advertising thoughtfully and methodically remains our focus. We recognize investors are eager for more details on direct issuance and advertising. We intend to provide a more fulsome update on the long-term opportunity on our call early next year. To close, StubHub is a business that is growing fast at scale while generating profits and cash flow. StubHub is a global category leader with the data, technology and customer focus to continue capturing share of the global ticketing market. Indeed, we are very proud of all that we have accomplished to date. However, the real goal for us is to reimagine our market to create an unprecedented experience for fans and an asset of tremendous value in the process. That is what is really exciting. With that, I'll turn the call over to Connie to discuss our financial results. Constance James: Thanks, Eric. Before I discuss our third quarter financial performance, I'd like to share our financial philosophy that guides our decision-making, and ultimately, how we look to drive long-term shareholder value. To that end, the foundation of our value creation approach rests on 3 financial principles. First, we prioritize driving sustainable market share growth by strategically investing in our marketplace ecosystem. Second, we are committed to long-term margin expansion through operational discipline and the natural leverage in our marketplace model. Third, we focus relentlessly on cash flow generation. Our business model efficiently converts adjusted EBITDA into free cash flow, providing us the financial flexibility to reinvest in the business and optimize our capital structure. With that context, let's turn to our third quarter results, beginning with our key marketplace metrics, gross merchandise sales, or GMS. GMS represents the total economic value flowing through our platform and directly drives the network effects that make StubHub increasingly valuable to both buyers and sellers. Our GMS reached $2.4 billion in the third quarter, representing 11% growth from the prior year period. This performance demonstrates the fundamental strength of our marketplace even as we navigated the anticipated impact of the federally mandated all-in pricing in the United States earlier this year. As expected, the transition has reduced conversion rates as customers adjusted to the new pricing format. Based on our internal estimates previously disclosed, we believe the implementation of all-in pricing had an estimated 10% one-time impact on the size of the North American secondary ticketing market. We expect this transition effect will continue to influence year-over-year comparisons through May 2026 as we cycle through the full 12-month period following the May 2025 implementation date. Even with this temporary growth headwind, our results demonstrate the resilience of our business model and our ability to continue to gain market share in this dynamic environment. Beyond the impact of all-in pricing, we believe our GMS growth reflects a more fundamental trend, sustained share gains across the North America secondary ticketing market, where we continue to outpace overall market, as well as continued international expansion. When excluding the outsized impact of Taylor Swift's Eras Tour from the prior year period, our GMS grew 24% year-over-year with broad-based strength across our platform and categories. Revenue for the third quarter was $468 million, up 8% compared to last year. The performance was primarily driven by our GMS growth, offset by 2 factors worth highlighting. First, as Eric discussed earlier, we made the strategic decision to further invest in market share expansion, in part through a reduction in take rates, resulting in our revenue as a percentage of GMS declining slightly to 19% this period compared to 20% in the prior year period. This measured reduction in take rates reflects our deliberate approach to balancing near-term results with long-term market leadership. Second, we experienced a reduction in inventory revenue as we strategically phased out the use of minimum guarantees for direct issuance sellers. This move is aligned with our long-term marketplace strategy of building sustainable, scalable relationships with content rights holders. Unless otherwise noted, the following discussion of our results will be on an adjusted basis to exclude stock-based compensation and other one-time costs. Full reconciliations to GAAP figures are available in our press release. Our adjusted gross margin was 84% during the quarter, up from 82% last year. The improvement primarily reflects a reduction in ticket substitution and replacement costs. Adjusted sales and marketing expenses were $255 million or 54% of revenue compared to $221 million or 51% of revenue last year. The increase as a percentage of revenue was driven by the reduction in take rates to drive relative market share gains in the North America secondary market. Adjusted operations and support expenses were $17 million or 3.5% of revenue during the quarter compared to $16 million or 3.6% of revenue last year. Adjusted G&A was $52 million or 11% of revenue during the quarter compared to $62 million or 14% of revenue last year. As we look forward, we do anticipate a modest amount of investment in technology resources. On the profitability front, we delivered adjusted EBITDA of $67 million, representing 14% of revenue, up 21% compared to $56 million or 13% of revenue in the same period last year. Finally, I want to highlight a one-time item on the income statement. Our GAAP results for the quarter include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted rewards in the quarter when the IPO-related performance conditions are satisfied. To be clear, all stock-based compensation, including this one-time expense is excluded from our adjusted EBITDA calculations. Additionally, this accounting recognition has no impact on our cash flow or cash position as it represents a noncash expense. Turning to cash flow. Before diving into our performance, I want to provide some context on how we view operational cash generation in our business. Our marketplace model has inherent favorable cash flow characteristics. We collect cash from buyers at the time of purchase, but remit payments to sellers at a later date, often after the event occurs. These cash balances show up on our balance sheet as payments due to sellers. With this timing difference, we earn a yield on these proceed balances. To illustrate, on a trailing 12-month basis, you will see $41 million of interest income on our income statement. Additionally, we are asset-light with only $26 million of CapEx over the trailing 12-month period. We also benefit from over $1 billion of NOLs, resulting in minimal cash taxes in the medium term. Over the same trailing 12-month period, our cash tax amount was only $17 million. This allows us to consistently convert cash at a rate roughly 100% of our adjusted EBITDA. In relation to free cash flow, we measured on a trailing 12-month basis to reduce the lumpiness created by quarterly timing differences between when we collect cash from buyers and when we remit payments to sellers, which is impacted by seasonality and event mix. For the 12-month period ending September 30, free cash flow was $6 million, which included $120 million of net cash outflows due to the change in our payments due to buyers and sellers. This amount was impacted by an atypical concentration in seller proceed outflows occurring in the fourth quarter of '24 following the final leg of Taylor Swift's North American tour. Our trailing 12-month free cash flow also included $153 million in cash interest costs during the period. Excluding those items, we generated $279 million in free cash flow conversion of approximately 100% of TTM adjusted EBITDA. Taking a step back, I want to frame our results within the broader context of our 2025 objectives. This year, our priorities have been clear: to grow market share in North America, to expand internationally and to lay the groundwork for long-term TAM expansion through disciplined and focused investment. From the outset, we anticipated that 2025 would present a more challenging growth environment for our market. There were 2 notable, but temporary factors shaping this year's comparisons. First, we are lapping the unprecedented Taylor Swift Eras Tour; and second, the industry transitioned to all-in pricing, which took effect in May. In addition, we are lapping the historic Yankees-Dodgers World Series as well as an unusually high concentration of major on sales that occurred in last year's fourth quarter. This year, we are observing some shifts in the timing of these on sales. Several large tours that would typically go on sale in the fourth quarter occurred earlier in late September. It remains to be seen how this concert on-sale timing dynamic plays out in November and December. Even with these temporary market dynamics in 2025, we are executing well against the objectives within our control, driving strong operational performance and expanding our leading market share position. And as we look ahead to 2026, the Taylor Swift comparison will be behind us, and we will lap the implementation of all-in pricing in May. Fan demand for live events remains strong, and we're excited about what is shaping up to be another robust year for live entertainment. Let me now address our thoughts on guidance, as we navigate our early stages as a public company. We are focused on operating the business for long-term value creation. Of course, we want to provide our investors with transparency so they can track our progress and execution against our long-term goals. While we are not providing specific guidance today, we plan to share annual guidance for our 2026 expectations when we report our fourth quarter and full year 2025 results early next year. Turning to the balance sheet. Our capital structure philosophy centers on maintaining flexibility and optionality to position our business for long-term success. This approach guided our capital markets activity during the quarter, which was designed to enhance our financial strength by prioritizing a reduction in our leverage, something that will continue to be a key priority. During the quarter, we successfully executed 2 transactions that collectively raised approximately $1 billion. First, we raised $224 million through our Series O preferred equity, which will convert into common equity at the expiration of the lockup. Next, we completed our $800 million IPO, raising net proceeds of approximately $758 million after deducting underwriting discounts and commissions. The influx of capital provided us with the opportunity to significantly improve our balance sheet by reducing leverage and lowering our debt service costs while maintaining strong liquidity. Specifically, we reduced our total debt by approximately 30%, retiring $750 million of our U.S. dollar-denominated term loan, bringing our total debt down to $1.7 billion. As a result, we ended the quarter with $1.4 billion of cash and cash equivalents or $623 million, net of our payments due to sellers, and $1.1 billion of net debt. The ratio of our net debt to TTM adjusted EBITDA was 3.9x at quarter end. Importantly, the interest rates on our remaining term loans are hedged via interest rate swaps through February 2027, resulting in a fixed, blended interest rate of 5.8%. Over the last 12 months, our debt service cost between cash interest and required amortization was $174 million. Today, our annual debt service requirement is $99 million, a reduction of $75 million, or 43%. Given the excess cash amounts we are holding, we intend to make additional debt repayments in the near term, which will reduce this cost even further. We also increased our revolver capacity by $440 million during the quarter from $125 million to $565 million, expanding our available liquidity and ability to respond quickly to any short-term capital need. Our strengthened balance sheet not only supports disciplined growth, but also reduces the interest burden, directly enhancing free cash flow generation. This creates a virtuous cycle that enables continued disciplined investment in organic growth and further deleveraging, both of which remain central to our capital allocation priorities in the near and intermediate term. With that, we will now open the call to Q&A. Operator? Operator: [Operator Instructions] And our first question comes from the line of Doug Anmuth with JPMorgan. Constance James: Eric, during 2025, you've made some substantial investments in core resale market share and also direct issuance. Can you just talk about the returns you're seeing on those 2 areas of spending and whether you expect those to continue in '26? And then, I know there's some noise as Eric mentioned in the 4Q on sales versus last year, but just curious on the thought process in not providing a 4Q guide in that you're halfway through the quarter. Eric Baker: Sure. Thanks for the question, Doug. Appreciate it. So I think you had a few things in there in terms of what we've been doing with market share investment, how we think about that and how we think about the outlook for the business. Again, I think as we said in our opening remarks, we take a long-term approach, so we are not providing guidance, and we'll be talking about 2026 when we're on our next call. But with that being said, let me address some of the things that you brought up. So first is, as you noted and as we talked about, we had a real focus this year in investing to take market share and to do that in a very systematic way. And we've been extremely pleased with the results. I think we can see in this quarter that has just passed that, that has continued to pace. Our relative market share, I think, as I said, is about 4x. And I think everyone can see what has happened out there in the market in a great way. I think what's exciting about that, again, is that we're really creating permanent advantages in terms of how people are situated. One of the things I mentioned at the opening was around the point-of-sale system. And we've seen that what we've deployed in the point-of-sale system has rapidly been taking share ahead of schedule, moving us into a dominant position, which obviously feeds the data that we have, feeds the -- we get increased durable share as people use the POS to operate their business, and it provides a great backbone for our advertising business and sponsored listings. So we're very excited about all of that. I think Connie addressed, as we go and we look forward from where we sit, there's an extremely strong market for live events. It's as strong as ever. I think Connie addressed their shifts in terms of when on sales may happen. But as we look at it, everything is going at pace. Operator: And our next question comes from the line of Eric Sheridan with Goldman Sachs. Eric Sheridan: As we turn the page on 2025, curious how you're thinking about aligning marketing investments over the medium to long term? And what signals you're getting in terms of the receptivity to marketing investments to continue to grow the user base across all the array of offerings and products you're bringing to the market? Eric Baker: Great. Eric, thank you for the question. And I think some of that echoes what I also would follow up. And I think as Doug asked about some of the various investments, and I talked about market share, and we're seeing great traction and durability in that as we sort of see the flywheel is working, I think the other thing which we've talked about is, obviously, we're very excited about our direct issuance business. And what that for us really means open distribution. And to sort of recap what that is, is we really view it as, look, our mission backing up is that for fans. We want to give them easy access to the events they want to go to so they can access those live events and get there in a very easy, delightful fashion. We also want to assist content in making sure tickets don't go unsold, seats don't go empty, and they can maximize their revenue. And that's a real pressing issue for people. I think even Live Nation on their most recent call mentioned that 98% of their events do not sell out. And there's tons of tickets, obviously, don't sell. Sports has a similar dynamic, where they're trying to fill arenas. And so I think this ties into the direct issuance initiative, and to your question, which is that we have seen a tremendous receptivity, which is that in order to solve this issue that rights owners have in order to try and increase their revenue, increase throughput, get people into the arenas, they see the wealth of data and distribution we have, that has sort of led to, obviously, Major League Baseball, where we're seeing great receptivity from the teams. We talked about the festival channel, where we signed up Peachtree and LED, and we've been doing a great job with that. Tying that back to your question in terms of some of the marketing spend, we also talked about as we built that out, we've made the investment to prove it. And we see rights owners and people in the queue coming on board where it does not require any financial payment for them to access our open distribution. And so similar to how teams like the Dodgers have done that, when I was speaking with Shaun and Raj just last week in New York, and we were looking at the pipeline, the majority of the pipeline, as it's transitioning, does not involve any cash payment from us. And so we think this is going in an excellent direction and tracking the way we want to see it. Operator: And our next question comes from the line of Justin Post with Bank of America. Justin Post: Wondering if you could give us any visibility on the sponsored listing ad launch, when you're thinking the timing is and how quickly that could ramp? And then second, maybe talk more about the Major League Baseball deal, are you going to get direct tickets from the league? And are you seeing more productive discussions across multiple leagues? Eric Baker: Excellent. Justin, thank you for the question. Appreciate it. I think you're asking -- let me address some of the advertising generally, including sponsored listings, then I can talk about what you asked about MLB. So let's talk about advertising. And first, let me just frame it. The way we think of our opportunity in advertising is, first of all, doing things which are value-added for our consumer base to enhance that experience and doing it for other members in the ecosystem who are selling tickets. There's 2 flavors of that advertising. One is, again, where you have things like the Booking.com deal that we did, where we work with different potential partners so that post-purchase people, if you're traveling again, we have a huge international business. People travel for these events, you can book through Booking and so forth. And so that Booking has been a great proof point and a start to that. The second, which you mentioned, is sponsored listings. And so on sponsored listings, just to explain what that is, is basically that we have sellers on our platform, and these sellers are looking to sell their tickets. And as in many marketplaces, we put the ability for these people to pay to bump their listings to the top and sort of feature them. This is not reinventing the wheel. Here's what we're excited about and get to sort of why we're excited about the progress and the promise for it. We have 2 great aspects to it that are unique. One is that these people are selling a perishable item. So it expires, and then, it's not worth anything. So it's very important to get that in front of people. And most of the supply that we have on our platform is competing to try and get in front of customers. And so if you've got similarly priced supply, taking the sponsored listings avenue is very attractive to these people, and we think, will add a lot of value and be done in a way that works for the customer. The second thing I want to highlight is I talked about our point-of-sale system in terms of relative market share and how that's helped us lock people in. That creates a very easy conduit. The point of sale, again, is what these sellers are using to operate their business. So as they operate their business, as they list tickets, as they price tickets, right in that workflow, with one click, they will be able to opt for sponsored listing. This means that basically, that product is our sales force to tie in for it. So that's why we're very excited about the opportunity. What we're trying to do is make sure that we roll it out the right way for consumers, in the right way that it works smoothly for sellers. As we've said, that will be rolling out second half of Q4. We look forward to rolling that out. Lastly, real quickly, I think, Justin, you mentioned about MLB. Let me quickly just recap what is that deal, and then, I can talk about why we're excited about it and how it looks promising. What the deal is? MLB, at the corporate level, they will be taking advantage of direct issuance with tickets that they control for certain MLB events, which is exciting. They're also helping us facilitate signing additional teams, as we already work with, as people know, the Yankees, the Dodgers and others. That has already been extremely promising. We're really liking the pipeline on that. And again, as I alluded to, many of these teams are understanding they're not concerned with or focused on a payment. They see the value of open distribution inherently driving intrinsic value for them. So that's an exciting way that it ramps in a great economic situation for us. Thank you. Operator: And our next question comes from the line of Mark Mahaney with Evercore. Mark Stephen Mahaney: Eric, I just want to ask about the direct issuance market. And if you think about it in terms of low, medium, high-hanging fruit, if there's such an expression, where do you think the best opportunities are for StubHub in the next 2 to 3 years? Is it more international? Is it more U.S.? Is it more sports? Is it more live theater? Like what are the best opportunities to ramp up into this promising market? Eric Baker: Sure. Thank you, Mark. Appreciate it. Let me again say that what we are talking about doing for content is universal to all content. So when I talk -- talking with Shaun the other day, when you go in and you say, we have a solution where we can actually get you access to more data, more distribution, more people nonexclusively to help drive your revenue and fill seats, people are like, this is great. They're very receptive to it. Because remember, what content is trying to solve every day is increasing the revenue, increasing the attendance and doing that in a way that works for fans. And we -- obviously, that's what we've been doing for years and years. So it's really just about making that as easy as possible from a product and service solution. So that's a long way of saying we're seeing a very diverse pipeline across the board. There's obviously multiple sports leagues in the United States. But globally, we've said before, we worked with European soccer franchises. Festivals we work with, I cited 2, that are domestic, but there are many internationally that we're looking at working with. We talked about the increased ramp in MLB. So I think really, this is something that is attractive across the board. Let me leave you with one other thought, Mark, on this, is that another way to think about it, and we've said this, is that this is not something which is competing with primary ticketing. We are not trying to replace primary ticketing companies. You can imagine us partnering with primary ticketing companies in order to open up our distribution to them. And that being a very powerful way to access anything across the planet because, again, this is a $150 billion-plus market. So it is a huge ocean to fish in, and we're very excited about it. Operator: And our next question comes from the line of Brian Pitz with BMO Capital Markets. Brian Pitz: Maybe a broader question on how StubHub is thinking about the future of Agentic search and ticket buying. Maybe you could provide us your views on how agents will impact either future take rates or advertising revenue going forward as we are hearing more and more industry discussions around Agentic capabilities in live event ticketing? Eric Baker: Yes. No, thank you, Brian, and thank you for the question on AI, which is obviously a very exciting topic. And so let me open by just saying, in the immediate term, everything has been business as usual with consumers using the channels that they use, and that continues. That being said, as you say, and we're always thinking long term and how this works. And I'll tell you why we're excited about the opportunities and how we think it will play out. The first thing is that any time there's top-of-the-funnel ways to reach people in competitive ways with people giving you that access top of the funnel to reach people and compete, which is traditional Google search and other methods, we believe it's extremely powerful. We believe we're extremely well positioned, and what we're seeing is that when you're looking at where you send traffic and where the agent needs to go and how they need to, they're solving for the best solution for that consumer, which naturally goes back to who has that supply chain, who has the catalog, who can be relied on for the ticket, who has the best selection, et cetera. So as we build that, we see the same way it worked even in search and everything else. That's ultimately where you need to be. Now, I think over time, what we're very excited about, Brian, is there's going to be both paid and unpaid ways to take advantage of this. We think that as we see in our dialogues with many of these companies that we talk to all the time, there may be ways where there's a paid model for them to drive traffic, but again, always with a quality score and thinking that way. And there's ways that there will be unpaid as they show. But again, the key thing is that they're going to want to drive people to the best possible outcome for consumers that's going to deliver value, and that's what we're building. So we're excited about the opportunities. That's how we see it. Operator: And our next question comes from the line of Lloyd Walmsley with Mizuho. Lloyd Walmsley: You guys talked earlier about the headwind to growth from all-in pricing. And just wondering if you guys feel like you've carved some of that back already. Is it still running at sort of the low double-digit headwind rate? And do you feel like we're just -- we're sort of -- we just have to comp through it next year? And then secondly, if you could just comment on how meaningful you think World Cup could be next year? And any early indications you're seeing on that would be great. Eric Baker: Sure. Thank you for the questions, Lloyd. Let me on all-in pricing and then World Cup. And so let me straight on, I think, as we talked about before when we've discussed this and we talked about it, the all-in pricing is a 10% headwind, we believe, for 1 year. We'll lap it in May of '26, I think, as Connie said. So that is -- we don't see any deviance from that. That's what we see. That sort of is what it is. I do want to put that in context for people to understand one thing. We talk about running our business for the long term and that we're really trying to do right by the consumers and the content. And look, I want to put this in context, we also have explained to people, we lobbied for all-in pricing for multiple years. It's something that I think you can go to the SEC website, it's public record. It's not something -- and we were the only people, I think, in our sort of sector to do that. And the reason I bring that up is we did that knowing that there would be this hit. And we knew that in the short term, it's obviously arithmetic, Lloyd, it's 10%. But in the long term, it creates a much better experience for consumers, and it's going to behoove people like us who provide the best experience. Anyway, that's all on pricing. The World Cup, again, listen, we don't -- again, we're not quantifying going forward, but what -- here's what I can tell you. The World Cup has always been a tremendous event for even going back to the days of viagogo because our heritage is international. It's phenomenal in terms of resale, and it is a global event that's going to be North America with a ton of matches, which is arguably the biggest sports spectacle on planet Earth. So we are extremely excited about it and very much looking forward to it, and we'll see. Operator: And our next question comes from the line of John Blackledge with TD Cowen. John Blackledge: One question on take rates. Could you talk about take rates between the secondary market and the emerging direct issuance business? And do you expect them to be similar as the direct issuance bid scales? And secondly, just curious if you can unpack the 3Q '25 GMS growth between North America and international? Eric Baker: Thanks, John. I appreciate the question. So let me -- I believe you had a question about how do take rates, how do you think about then direct issuance and open distribution and some stuff around our international business. Let me frame some stuff and then maybe Connie will give whatever color we can as well. So I think the first thing is when we talk about the open distribution-direct issuance model, the very straightforward answer to you is the take rates are the same. As we sit here today and everything we've seen, the take rates are the same. That's just fact. I think to help understand, so I want people to understand what we're doing here and why that is, is sometimes people again say, well, doesn't a primary ticketing company have a different take rate? And again, I just want to be very clear, we're not running a primary ticketing access control system. What we're doing is providing a marketplace, providing distribution for people just like we do for fans, just like we do for power sellers, no different. That is why we are able to tell people that when they sell through us, we're charging through the marketplace in the same way. We're not charging them. So that's the answer to that question. I think in terms of U.S. international, I'll just give you in terms of high-level flavor, and we don't break it out. So that's just not to disappoint you there. International has been a rapidly growing business for us, we're very excited about. I think sometimes we don't do a good enough job of articulating to people viagogo, which obviously went on to acquire StubHub, was built internationally. We're in 200 countries. I will tell you, Asia and Latin America are particularly strong. And I will also tell you that if you listen to different event and concert schedules for 2026 and what everyone says in the industry, which we see is tours are going increasingly global, and they're increasingly in these different geographies. So we're very excited about that. Constance James: Yes. Nothing further to add, just to emphasize that international continues to be an area where we see consistent growth. We're also excited to have Raj on board, who's going to put some direct focus on international as well, which is super exciting. So great momentum across the board. Operator: And our next question comes from the line of Shweta Khajuria with Wolfe Research. Shweta Khajuria: The first one is on direct issuance. Could you please talk to how you're thinking about the number of teams that you expect to perhaps bring on onto the platform next year? And what level of visibility do you have in terms of the timeline? Anything you can comment on when do you need to sign them all by to benefit by the end of next year? So that's the first one. And the second one, any color on just the overall demand trends that you're seeing through the quarter through October and November that could help us out as to how we think about fourth quarter going forward? Eric Baker: Yes. No, Shweta, thank you for the question. I know I think in terms of -- let me talk generally, I think about. I can talk to you generally about DI and open distribution, how we think about that. And also certainly, how do we see sort of live event demand and what's going on? Obviously, as we've said, the way that we think, and we're not providing guidance at this time, and I'm sure we look forward to the next call and talking about next year then. With that context, what I would say is in direct issuance, again, the way we think about it is, again, I think to the question that Eric may have answered -- asked earlier, is that we really have this wide ocean, and it's in so many different compartments when we talk to Shaun and Raj that you've got different leagues, different festivals, different geographies. So it's very, very broad. And what we're finding is the applicability is pretty universal and that really what we need to do is have the product and service work for people the right way. What I would also tell you is that when you get the product and service done the right way, and remember, I want to make this very clear, we are not doing this where it's not exclusive to us. It's multi-listed on multiple platforms, and it fits into their workflow. It doesn't -- that means you don't have to sign up at some predetermined date. You don't have to make a long-term decision. It becomes an option that is in your workflow at any point in time to flip the switch and sell through the retail channel. That then becomes a beautiful thing because you're not bidding on RFPs years in advance and saying, I own this for X years. So that's -- thank you for asking the question. It's an important distinction. I think, in terms of just consumer demand and live events, again, and we don't -- not giving guidance and stuff, but I will take it this way, the demand for live events is phenomenal. We don't see anything with consumer demand that's any different. I think as Connie alluded to, as she spoke, we run a marketplace business and the timing of when things go on sale on the event catalog sometimes varies. And I've been doing this for 20, 25 years, my gosh. And it can move. Sometimes things go in the fourth quarter instead of first quarter, sometimes things go in the third quarter instead of the fourth quarter. That is a timing catalog question that has nothing to do with the robust demand that we see from consumers who love going to live events and continue to do so. Operator: And our next question comes from the line of Jason Helfstein with Oppenheimer. Jason Helfstein: I guess, I want to just maybe re-ask the Shweta's question just because we're getting asked this by a number of clients. So maybe, Connie, can you help us understand, I guess, how much pull forward did you see in 3Q that may kind of be affecting fourth quarter? And I guess, how meaningful is kind of the unfavorable World Series relative to last year? And then a second question that's been coming up, Ticketmaster, Live Nation, whatever, has been under increased pressure, I think, to try to rein in speculative sellers. Can you just talk about like how you manage the business around speculative selling? And just your broad thoughts about it. Is it something that like -- kind of it's something we should all be paying attention to or just in the scope of a very big business, it's just not meaningful? Constance James: Yes. Great. Thanks for the question. And happy to provide some color. As we mentioned, we knew going in to the fourth quarter that it would be a little bit of a tough comparison. We had the unique Taylor Swift comp as well as the World Series. And as I mentioned, we did see a little bit of timing shift in relation to September. To Eric's point, what we continue to focus on is the long term. We know that there can be timing shifts from time to time. What we continue to be focused on is capturing share. And in the third quarter, we were able to do just that. In fact, if you look at our market share, we were nearing 50%. So as we look at it, we think it's merely a timing issue more than anything else. And more broadly, I'd say the outlook for '26 continues to look really strong. And so if there's a little bit of timing, the good news is that we're well positioned to capture a significant portion of those on sales when they do come in. So hopefully, that gives you a little bit of color. In relation to speculative ticketing, et cetera, I'll pass it over to Eric to provide some color. Eric Baker: Yes. No, thanks for the question, Jason. I think sometimes when people talk about, I think, within speculative ticketing, there's a lot of people in the market that -- how do we make sure that we're guaranteeing people get tickets and that it happens in an authentic way. That's our business. That's what we do. So minimizing fraud and make sure these tickets get delivered. So for us, there's not -- it's business as usual and nothing to talk about there. Operator: And our final question comes from the line of Andrew Boone with Citizens. Brianna Diaz: This is Brianna on for Andrew Boone. Just can you share how users are currently interacting with the mobile app and how that may be different than on the web? And do you see an opportunity for the mobile app to evolve into a more comprehensive platform, whether that's through loyalty program or a different lever to drive better frequency and retention? Eric Baker: Thank you for the question. Appreciate it. I think the question about mobile app, on the first thing, just we don't break out for the purposes of what we report. I think though, as you allude, and I think what we are seeing and what you're sort of alluding to is that as we are getting more and more people coming back to us all the time, as we think about what we provide to make that experience easy to know who you are to -- even with these things where we're adding in things through Booking and other things to build a more complete product, that's really what we're striving to do. So as we continue to do that, we're certainly adding the building blocks for a complete product and making it easier and easier for people to know that they just have the first port of call to go to, which is StubHub, and that's what we're excited about. Thank you. Operator: And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the call back over to Mr. Eric Baker for closing remarks. Eric Baker: Thank you, everyone, for joining us for our first earnings call as a public company. We very much appreciate it. As I said at the outset, both to those who have been along with us for our many-year journey and for those who are new to the story, thank you for taking the time. We look forward to speaking to you again in the future. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

189天前Insight Analytics约5分钟阅读

9868.HK 2025 Q3 财报电话会议

Operator: Hello, ladies and gentlemen. Thank you for standing by for the Third Quarter 2025 Earnings Conference Call for XPeng Inc. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Mr. Alex Xie, Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex. Alex Xie: Thank you. Hello, everyone, and welcome to XPeng's Third Quarter 2025 Earnings Conference Call. Our financial and operating results were issued by Newswire services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at ir.xiaopeng.com. Participants on today's call from management team will include Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu; and myself. Management will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on the IR section of our website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that XPeng's earnings press release and this conference call include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures. I will now turn the call over to our Co-Founder, Chairman and CEO, Mr. He Xiaopeng. Please go ahead. He Xiaopeng: [Interpreted] Hello, everyone. In Q3 2025, XPeng reported record sales -- record results in key operating metrics with new highs in deliveries, revenue, gross margin and cash reserves. Vehicle deliveries for the quarter totaled 116,007 units, a 149% increase year-over-year. The all-new XPeng P7 launched recently quickly became one of the top 3 BEV sedans priced between RMB 200,000 to RMB 300,000 boosting monthly deliveries to over 40,000 units starting in September. Additionally, the company's gross margin exceeded 20% for the first time in Q3, and we reduced our net loss further. Our goal is to achieve breakeven for the company in the fourth quarter. These continuous operational improvements strengthen our focus on physical AI R&D, supporting the targeted mass production of our VLA 2.0 model, Robotaxi and humanoid robot in 2026. As AI models advance and become increasingly integrated with real-world data, machines are slowly gaining the ability to interact, communicate, transform and create within our physical environment. This development is reshaping the future of mobility and daily life. Over the past 11 years, XPeng has dedicated itself to building full stack technologies in-house evolving from software-defined vehicles to the emerging realm of physical AI. We understand that vehicles and humanoid robot, the 2 primarily applications of physical AI, share a homogeneous physical world model, SoCs and infrastructure, allowing for rapid iteration and evolution. Excitingly, new capabilities are continuously emerging from our physical AI technology stack. Over the next decade, my goal is to make XPeng a leading global company in embodied intelligence. Focused on physical AI applications, we're developing an extensive portfolio of technologies, products and supporting business ecosystem. Besides providing AI-powered vehicles to consumers worldwide, we aim to deploy pre-installed mass-produced Robotaxi on a large scale and achieve the mass production of humanoid robots. We believe that an open and dynamic ecosystem is crucial to unlocking the full potential of physical AI for humanity. To achieve this, we plan to open source our physical world model, launch Robotaxi services in partnership with mobility platforms and relieve our humanoid robot SDK. This approach will expand the physical AI application ecosystem through collaborations with business and technology partners and accelerate the value creation process. I'm also glad to report that as we introduce the one vehicle, dual energy product cycle for AI vehicles, we'll expand our scale and increase our NEV market share through a wider product range. On November 6, we launched presales for the XPeng X9 Super Extended-Range EV, an industry frontrunner in extended-range vehicles equipped with a 5C rate high-capacity LFP battery and a total range of up to 1,602 kilometers. It is the world's first large 7 seater to offer the longest range, highest AI computing power, smallest turning radius and most efficient space utilization in its category. We see super extended-range EVs as crucial for accelerating the shift from ICE vehicles to NEVs. Since presales began for the X9 Super EREV, we've experienced unprecedented interest, especially in northern regions and inland cities of China, attracting many customers who previously hesitated to switch to BEV models. To date, preorders for this model are nearly 3x higher than the presale of the previous X9. On a like-for-like basis, the X9 Super EREV will officially launch on November 20 with deliveries starting immediately afterwards. I anticipate reaching a new delivery record in December. We plan to introduce 3 super extended-range products in Q1 2026 focusing on alleviating key challenges for our EREV users by offering long, pure electric range and quicker 5C supercharging, thereby capturing more of the EREV market. We have put in more R&D expenses in 2025. As a result in 2026, we'll also launch 4 new one vehicle, dual energy models, including our first product launch in some key market segments. These innovative products will help us establish a presence in these markets and build leading products like the MONA M03. I'm confident that the 7 one vehicle, dual energy models with super extended-range technology debuting next year will greatly increase our total addressable market or TAM and provide significant sales growth opportunities. On the global business front, we maintained strong sales growth and established a solid foundation for long-term expansion through our localized approach. In September 2025, our monthly overseas deliveries exceeded 5,000 units for the first time, a 79% increase year-over-year. During the third quarter, we grew our global presence with 56 new overseas stores, expanding our sales and service network to 52 countries and regions worldwide. Additionally, our first European localized production facility at Magna plant in Graz, Austria, officially commenced operations with the initial batch of XPeng G6 and G9 rolling off the line. Simultaneously, XPeng's R&D center in Munich, Germany, officially began functioning, helping us better understand overseas customer needs and accelerate technological advancement and product launches. In 2026, we plan to introduce 3 new overseas models, including popular mid- to small SUVs that meet the diverse preferences of global consumers. Our strong focus on investing in AI large models, computing infrastructure and data set is driving the continuous emergence of advanced capabilities from our physical world model. Our upcoming VLA 2.0 model, which has 10x more parameters than its predecessors will substantially enhance safety and user experience in intelligent driving. From my own recent driving experience during very complicated and complex road conditions, we experienced very impressive and unparalleled driving experience from the intelligent VLA model. So starting from late December, we will initiate a co-creation program with our early adopters. In the early quarter of 2026, we aim to deploy the VLA 2.0 model across the entire Ultra lineup. I see the mass production of VLA 2.0 as a major breakthrough in physical AI models, offering a significant generational leap in user experience and attracting more people to choose XPeng for its leading intelligent driving technology. Going forward, XPeng will open source it's VLA 2.0 model to global commercial partners, aiming to provide industry-leading advanced driver assistance experience to a wider audience. Volkswagen will be the initial launch customer for the VLA 2.0 model. Additionally, XPeng's Turing AI SoC has earned a formal sourcing designation from Volkswagen with codeveloped vehicles expected to start mass production early next year. Revenue from licensing our technology to external partnerships will be reinvested into our R&D, mainly to support iteration and upgrades of the Turing SoC and VLA models. This fosters a positive cycle of innovation and commercialization. We invite more automakers and Tier 1 manufacturers to collaborate with us on the Turing SoC and VLA 2.0, working together to promote the adoption of advanced intelligent technologies in both Chinese and global markets. Traditionally, end-to-end models were able to maybe reach advanced Level 2 at its best; however, the rise of physical world model is speeding up the arrival of true autonomous driving. I believe that only pre-installed mass-produced Robotaxis with a strong ability to generalize can achieve widespread adoption and create a sustainable business model. In 2026, XPeng plans to launch 3 Robotaxi models. Our technology stack for Robotaxi does not depend on high-definition maps or LiDAR. This approach enables us to address current industry's challenges, including high cost, operational limitations and poor generalization, allowing for an efficient and scalable deployment worldwide. We intend to begin pilot operations of XPeng Robotaxi in China in 2026, continuously improving both software and hardware of Robotaxi while building an operational ecosystem. I believe that a collaborative ecosystem where all industry stakeholders' benefit is key to scaling rapidly. Therefore, we plan to open our SDK to our partners, and Amap will be the first ecosystem partner for XPeng Robotaxi. We also invite more companies in the mobility sector to explore Robotaxi collaboration opportunities with us. Our humanoid robots adopt a technology road map driven by physical world model. With full support from our vehicle and powertrain R&D teams, we unveiled our next-generation IRON robot at the latest XPeng Tech Day. The IRON's human-like posture and agile gait surprised and deeply moved many XPeng fans and also highlighted the great commercial potential of humanoid robots. Currently, IRON demonstrates only a very small fraction of its capabilities. In Q2 2026, we plan to achieve full capability integration through cross-domain innovation aiming for performance and user experience for far surpass current market offerings. Our target is to begin mass production of advanced humanoid robots by the end of 2026. Once produced, IRON will be first deployed in commercial scenarios, providing services like tour guiding, retail assistance and patrols. By the end of next year, I hope IRON will be working alongside us at XPeng stores, campuses and factories as our new team members. Additionally, XPeng Robotics will open its SDK to global developers, inviting partners from various industries to collaborate on secondary development. This will enable IRON to be trained and to evolve across diverse and long-tail real-world well scenarios, unlocking broader application possibilities. From a long-term perspective, I believe the market potential for humanoid robots will exceed that of automobiles. Once a new generation of robots reaches the inflection point just as China's EV industry did with electrification, we expect explosive growth ahead. I envision that by 2030, XPeng robots could sell over 1 million units annually. With the launch of our one vehicle, dual energy product cycle, I expect total deliveries in the fourth quarter to reach between 125,000 and 132,000 units reflecting a year-over-year growth of 36.6% to 44.3%. We project fourth quarter revenue to be roughly between RMB 21.5 billion to RMB 23 billion, up 33.5% to 42.8% from the previous year. XPeng's AI-driven vehicle business is in the early stages of rapid expansion in terms of scale and market shares, while Robotaxi and humanoid robot programs are swiftly moving forward and towards mass production. I'm confident that XPeng will establish itself as a leader in physical AI, both in China and globally, delivering greater value for our customers and shareholders worldwide. Thank you, everyone. With that, I'll now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the third quarter of 2025. Jiaming Wu: Thank you, Xiaopeng. Now let me provide a brief overview of our financial results for the third quarter of 2025. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB 20.38 billion for the third quarter of 2025, an increase of 101.8% year-over-year and an increase of 11.5% quarter-over-quarter. Revenues from vehicle sales were RMB 18.05 billion for the third quarter of 2025, an increase of 105.3% year-over-year and an increase of 6.9% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly attributable to higher deliveries from newly launched vehicle models. Revenues from services and others were RMB 2.33 billion for the third quarter of 2025, representing an increase of 78.1% year-over-year and an increase of 67.3% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily attributable to the increased revenues from after sales services and technical R&D services rendered to the Volkswagen Group due to the successful achievement of certain key milestones in the current quarter. Gross margin was 20.1% for the third quarter of 2025, compared with 15.3% for the same period of 2024 and 17.3% for the second quarter of 2025. Vehicle margin was 13.1% for the third quarter of 2025, compared with 8.6% for the same period of 2024 and 14.3% for the second quarter of 2025. The year-over-year increase was primarily attributable to the ongoing cost reduction, while the quarter-over-quarter decrease was due to targeted promotion to clear outgoing inventory during product transition. R&D expenses were RMB 2.43 billion for the third quarter of 2025, representing an increase of 48.7% year-over-year and an increase of 10.1% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were mainly due to higher expenses related to the development of new vehicle models and technologies, as the company expanded its product portfolio to support future growth. SG&A expenses were RMB 2.49 billion for the third quarter of 2025, representing an increase of 52.6% year-over-year and an increase of 15% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily due to higher commission to the franchised stores, driven by higher sales volume as well as higher marketing and advertising expenses. As a result of the foregoing loss from operations was RMB 0.75 billion for the third quarter of 2025, compared with RMB 1.85 billion year-over-year and RMB 0.93 billion quarter-over-quarter. Net loss was RMB 0.38 billion for the third quarter of 2025 compared with RMB 1.81 billion year-over-year and RMB 0.48 billion quarter-over-quarter. As of September 30, 2025, our company had cash and cash equivalents, restricted cash, short-term investments and time deposits in total of RMB 48.33 billion. To be mindful of the length of the earnings call, I will encourage listeners to refer to our earnings press release for more details on our third quarter 2025 financial results. This concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead. Operator: [Operator Instructions] For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. [Operator Instructions]The first question today comes from Tim Hsiao with Morgan Stanley. Tim Hsiao: [Foreign Language] So my first question is about the physical AI because in the past, the competitive advantages of other companies were reflected in several aspects like cost, brand and channels. Just wondering if the management could elaborate a bit more about what aspects XPeng's long-term competitive advantage in physical AI will be demonstrated? And how will the company continuously enhance its strength in these areas? That's my first question. He Xiaopeng: [Interpreted] I think this is definitely a big question. The traditional way for automakers to make money is completely different from the new physical AI model generated kind of business format. They come from different DNAs. Traditionally, older traditional automakers focus on their own positioning and also about how they target their user segments and then everything boils down to their integration of Tier 1 suppliers and all the other different parts of the supply chain. However, when it comes to a physical AI-generated model, the definition is different. We determine what the -- we -- everything boils down to the definition of the future tech. It involves full-stack technology capability and also custom integration. For example, the launch of our IRON robot is a great example of that. So that's why different DNA is going to generate different products and different growth momentum. In the future, I believe that cars will be a new format of robotics, and it's going to actually come to the real life in the coming 5 to 10 years as the next generation of robotics in our life. So traditionally, the integration of supply chain is completely different from what we are looking at right now, which is the physical AI technology integration across different domains and involves software, hardware and infrastructure upgrades, which will lead to a completely new set of products. As a result, traditionally, software were only a small percentage of traditional car development, whereas right now, it takes up a large part of new product development. And I believe that when you look at our future developments, we are actually going to see more and more physical AI components in the future for car development over 50%, and we are going to see that very, very soon. Thank you. Tim Hsiao: [Foreign Language] My second question is about revenue from the collaboration with Volkswagen. So first of all, congratulations on the project wins of Turing chips at Volkswagen. So may I know from which quarters the related revenue will start to kick in? And how should we think about the trend of the revenue contribution from the collaboration with Volkswagen in December quarter and the full year 2026? That's my second question. Charles Zhang: Tim, this is Charles. So in Q3, we delivered a few key development milestones on time. So you probably have seen that the revenue from the technology collaboration increased significantly quarter-over-quarter. And we continue to see that there are a few key development milestones to be delivered in Q4. So we believe that the revenue from technical collaboration in Q4 will be expected at a comparable level we see in Q3 2025. And then regarding your question on the Turing SoC. Yes, we were -- our Turing SoC was selected by Volkswagen for the 2 B class vehicles we're jointly developing. And we have already started to supply the Turing SoC to some of the -- our partners, the preproduction and verification vehicles. So therefore, the revenue -- we would expect that the revenue from Turing SoC will start to be recognized in Q4 and probably in the small amount. But however, as our jointly developed vehicle SOP from early next year, and we would expect the revenue from the Turing SoC will ramp up with the sales volume of the 2 vehicles we jointly developed. In terms of the revenue from the technical collaboration in 2026, and we expect that as long as we can deliver the key milestones that are scheduled in 2026, we would expect that the revenue -- the technical -- the revenue from the technical collaboration for the full year 2026 would be comparable to that of the revenue we recognized in 2025. So I think looking back, we have demonstrated that we can -- well, we delivered the revenue from commercialization of our technology for 7 consecutive quarters. And I think we believe that there are still opportunities we would like to explore to commercialize our technology and also as our CEO, Xiaopeng, mentioned, and we will reinvest such revenue from the licensing or technical collaboration back into our R&D. Thank you, Tim. Operator: Next question comes from Nick Lai with JPMorgan. Y.C. Lai: [Foreign Language] My first question is -- my 2 questions is actually related to humanoid robot strategy and ambition in the longer term. At a recent Technology Day, XPeng demonstrated our first humanoid robot IRON which worked really like human. And can you talk about our technology road map and compare with the comparable peers? And where is our competitive advantage comparing with the peers in the medium and longer term? That's my first question. He Xiaopeng: [Interpreted] Thank you. Because there are so many robotics companies in the market, to be honest, the technological and product development road map and strategy of XPeng's robotics is moving forward as we expect, according to our own plan. We have paid really little attention to any other differences in the robotics industry to other companies before we launch our own products. Now when we look at XPeng, for example, our product philosophy is highly theoretical. You can actually -- well, it's highly human-like. That is the goal of developing our own humanoid robot. What's interesting about our product is that we realize that when we incorporate muscles and very bionic skin on to our robots, we actually attracted a lot of people to dare to hug him. And this is very, very exciting because traditional robots really were not that attractive and appealing for human beings to give them a hug. In addition to that, we also would like to mention that in the future, I believe that across many aspects of lifeline work, we are going to see more and more robots that is working alongside us. So for the current generation of XPeng robots, last time that we launched it, it was actually the seventh generation, and we are going to begin mass production of the eighth generation of our humanoid robots. In fact, when we look at some of the available robotics in the market, I believe that a lot of them are between generation 3 and 5, which is mainly being driven by joints and all the operation of different hardware. And when you look at the operation of hardware and software, you can see that the available products in the market look very similar in the way that they walk and they move. And these kind of robots, I believe, are very, very hard or difficult to commercialize in the end. So in the future generations of our robot, we actually have been thinking about what kind of technological route we should be used, and we have fully integrated actually hardware and software driven by integrated AI. So this time, you can see that the robot that we showed to the market is based on our full-stack R&D capability and cross-domain integration. I believe that XPeng Motors has many advantages when it comes to our robotics and humanoid robot development. For example, our physical AI resources have a synergy effect with our AI cars. For example, we actually are considering may be producing higher than car grade performance for our humanoid robots. And also our thinking logic on how to conduct business and mass production of our humanoid robot is largely driven by our knowledge and industry know-how in the EV industry. For example, when we build the future sales and marketing layout and globalization, there's a lot of synergistic effects that we can enjoy from the existing layout with our car sales. Also I believe when it comes to the future robotics development, some company will still -- some of the players will come from auto-making industry. And I believe that XPeng will definitely have a first-mover advantage in this regard because of the data, the SoCs and the capability that we have. Thank you. Y.C. Lai: [Foreign Language] My second question is also related to humanoid robot long-term strategy and operations. And from here to commercialization, what are the key critical milestones that we should be mindful? And from now towards the end of '26, can you remind us what the capacity and expected scale of our human robot operations? And also in terms of use case, by, say, 2030, you mentioned that 2030 we target to deliver 1 million units, can you also talk about the use case in the longer term? He Xiaopeng: [Interpreted] Thank you. To be honest, IRON's mass production is probably the most challenging kind of vehicle or products I've ever worked on at XPeng Motors, if I have to make the comparison between mass-producing IRONs and other cars because there's still a lot of challenges. For example, our ultimate goal is for it to be easily trained with human language so that it can really help us in various ways, and there's a lot of room for improvement there when it comes to capability integration. For example, if this robot can walk or run in various safe postures that requires a lot of integration of capability as well. For example, it needs to have all the joints embedded in management and also full coupling of different wiring, et cetera. Also, if we need to allow it to have more generalized kind of dexterous hand movements, well, it will also require a lot of hand-based VLA, which we believe by beginning of next year will be integrated. We also need to allow it to have that kind of communication and language-based communication capability between the robot and humans. So that also will come from, for example, a lot of VLM and VLT, which is the small brain and large brain kind of modeling capability. But what I'm really excited to share here is that we will start entering the 1.0 stage of our new generation of mass-produced models next month. I believe that in the next 10 months, we'll be able to actually promote the robot development in an orderly manner during mass production. And I think that's the first part of my answer. Thank you. I think the ramp-up in robot production capacity is much simpler compared to cars. However, the commercialization of robots is indeed very, very challenging. It requires us to look for really new heights of technology and ultimately achieving more capabilities. Therefore, we hope to initially implement in several commercial scenarios included tour guiding, shopping or retail assistance, et cetera. In 2026, we hope that we actually can see a lot of our own robots working alongside us at our XPeng stores, campuses for the first stage of field testing. At the same time, we are also opening our SDK to more of our partners so that our partners can easily and simply buy our robots and train them for commercialization purposes. If your question is about future possibilities of scenario application, I think it's going to be even more than you think. For example, for commercialized robots, maybe you can switch their arms and allow them to go into the industrial production scenarios. And when will the robots go into our household setting? I think maybe 5 years' time, we still have a big chance of achieving that. And I hope that through opening our SDK, we can allow more kind of partners to help us tackle those diverse and long-tail scenarios of application so that we can all enjoy a better robotic future and build a better ecosystem. Thank you. Operator: The next question comes from Ming from Bank of America. Ming-Hsun Lee: [Foreign Language] Why does XPeng choose to launch Robotaxi service in 2026? Could you share your technology inflection point or how fast you lower your cost? And compared to other Robotaxi companies in China, what is XPeng's technology path or business model? What is your advantages? He Xiaopeng: [Interpreted] Thank you, Ming, for your question. I think that within our R&D strategy, there are 2 key aspects, which are full-stack self-development and also cross-domain integration. I believe that in 2026, we will be actually seeing a collection of inflection points within our own development system. For example, we are going to be able to launch our current models into the Robotaxi configuration of fleets, which, by that time, we believe that the inflection point will arrive. At the same time, our VRM models will continue to offer new capabilities for our future vehicles to be more robotic-like. In addition to that, our current second-generation VLA can actually train our intelligent driving Ultra cars and also in the future, maybe also train our mass version of cars using the same kind of large model, too. In other words, we have our cross-domain capability based on our robotic development, which really can solve a lot of Robotaxi current limitations, for example, the high cost of production and also the limitation of the mobility destinations. For example, current Robotaxi now cannot really handle very complicated and complex road conditions and also in residential areas that has a lot of unpredicted scenarios and also a lot of them currently require LiDAR for their perception capability and so on. So in 2026, we hope that by commercializing fully shared L4 capability in our Robotaxi. We actually can have the dual development of the driverless L4 model together with an assisted driving L4 model. With the launch of both method or road map in the future, I think very soon, it will be proven that XPeng has actually a better commercial logic thinking compared to other Robotaxi companies and that will give us a great competitive advantage. Thank you. Ming-Hsun Lee: [Foreign Language] So how does the management team think about the commercialization of your Robotaxi business? Especially in the future, what is your planned milestone, for example, like in terms of the number of fleet? Or when will you plan to roll out in different cities or overseas market? And also currently, you already have a cooperation with Gaode, Amap, and could you elaborate more about your cooperation? And in the future, do we expand -- do you plan to cooperate with small partners like other ride-hailing companies? He Xiaopeng: [Interpreted] Thank you. Actually, next year, XPeng is going to launch 3 different types of Robotaxi models at different price points to support different mobility purposes and demands. In the next phase of development, I believe, with the premise of regulatory approval, our priority is to really get everything running smoothly, when it comes to the whole technological and operation and business model. So in that scenario, we hope to work with more and more business partner in the ecosystem. For example, Amap will be a great partner. They are going to give us more development support when it comes to traffic and also payment and operation and services, et cetera. That really set us apart from a lot of the autonomous driving OEMs. And I believe that in the future, for different countries and regions and different steps of development, we are going to actually launch more partnership with different service providers across different lanes. And for XPeng, what we need to do is that we are building our toolbox really well, and we're opening up our interface capability so that we can work more with our ecosystem partners in the future across different countries and cities. And so once we really get everything up and running commercially in different environments, we can then quickly build our ecosystem. This is one of our considerations. Thank you. Operator: The next question comes from Tina Hou with Goldman Sachs. Tina Hou: [Foreign Language] Let me translate my first question. So first, I would like to understand, over the next 1 to 3 years, do we have a rough revenue estimate or breakdown for our new businesses, including Robotaxi, humanoid robot as well as eVTOL? Gui Hongdi: Tina, it's Brian. First of all, I would say that for these future development areas, we do not provide any numerical guidance at the moment. Clearly, all those 3 areas, we anticipate volume, scale level production and operations in the next 12 months. For example, the Land Aircraft Carrier from our flying car company is aimed to be delivered to end customers before the end of next year, will be in volume, also scale, which I would say, in the thousands of range. But the other 2, for example, the humanoid robot as well as autonomous driving Robotaxi, as we just discussed earlier, next year will be actually a year we'll see a lot of operational testing as well as scaling up process to make them ready for large quantity production and use. So I would say the contribution from next year will probably be limited. But I think the volume we'll expect to ramp up rapidly once the model and the stability of these products is proven in the use, consumer end as well as application end. So the long-term goal of having 1 million per year humanoid robots sort of sales by 2030 is our long-term goal. And that is something that we have good confidence given we see the quick ramp-up in terms of technology as well as multiple application areas in home, in offices, in factory settings. So with all these future areas, we believe the potential is immense. So at this moment, unfortunately, I cannot give you the exact breakdown as well as precise cost estimates because these are still, I would say, evolving. But I think the overall trend is very exciting for us. Tina Hou: [Foreign Language] So my second question is regarding our passenger vehicles. So wondering if we can get more details on the new models, their segment as well as price segment, both in the domestic market as well as overseas and also do we have a volume target for 2026? Charles Zhang: Tina, it's Charles here. I think we believe that one chassis, dual powertrain vehicles present very attractive opportunities. It is also one of our strategic initiatives to expand the volume and the TAM of our -- each of our vehicles. So I think on November 20, we are launching the X9 with pricing, that will be our first, we call it the Super EREV product to be launched. And then you probably also have noticed that we have -- we already have 3 existing vehicles, Super Electric model, already registered with regulators, and we plan to launch those 3 products in early 2026. As Xiaopeng also mentioned that we have 4 vehicles -- 4 new vehicles when we launch, it will be equipped with both BEV as well as EREV powertrain options. And those 4 new vehicles are positioned in the different various segment -- various pricing segments we're in. And we believe that, that will continue to enhance our product portfolio in each of the price segments we're targeting. So in terms of the growth into next year, and we believe that the huge -- the one chassis, dual powertrain vehicle models, the 7 models will significantly drive our growth next year. And also another growth driver we have seen is that the international market will continue to be a major growth driver for us. With our current products available in the international market, we have already hit 5,000 per month for September and also October, the 2 consecutive months already. And of the 7 new vehicles we're launching next year, 3 of them -- at least 3 of them will go to international market. And so we are confident that the international market volume will continue to be a very important growth driver for us into 2026. Operator: The next question comes from Pingyue Wu with Citic. Pingyue Wu: [Foreign Language] I have 2 questions. And my first question is about the new EREV model. And what do we think about the growth potential of our new EREV models in 2026? And my second question is about the humanoid robots. And how do we think about the fuel economy of the humanoid robots since we have implemented some new technologies, for example, the solid-state batteries and et cetera. And in terms of the affordability, will IRON robot be affordable for family, say, like RMB 200,000 or even less? He Xiaopeng: [Interpreted] First of all, regarding the first question, I think what's interesting that we discover from the sales figures that we gather from -- since the launch of X9 was that the targeted customers and also the actual users of BEV and EREV are quite different. So we believe that we can expect to actually see several times of quarter-over-quarter growth when the new version of X9 actually get delivered, and actually different customer groups, when they purchase BEV versus EREV, they are using the cars across different scenarios as well. And specifically, what I want to share is that, obviously, BEV and EREV users in different sizes or scale of cars are also different. In larger vehicles, the percentage of EREV adoption is higher, whereas for Class A vehicles, especially smaller passenger vehicles, BEV ratio is actually higher. So I think we'll have to wait for more numbers to show maybe by Q4 and also Q1 next year before we actually can give you a more concrete answer. Thank you. And the second part of your question, regarding the pricing affordability of robotics, I think, first of all, the pricing logic is very different between cars and robots. When we look at the BOM cost of our Gen 6 and Gen 7 robots, they remain very high last year. But by first half of this year, when we were preparing for true mass production, we actually have enough reasons for us to actually believe the future retail sales price of the robotics -- of the robots can be very similar to car prices. And the second point that I want to mention here is that the traditional way of pricing a car is weight-based. It involves how many kind of iron and lithium and all kinds of elements included and components included in making a car, whereas robots, it's very different because the percentage of software in a robot is over 50% since day 1, whereas the number is only 10% to 20% for a lot of cars. In other ways, you have to put in a lot of cost to train the software and the model, and you need to have the overall capability to do a lot of integration and also domain controller as well. For example, you need to be able to combine all 4 SoCs into a super domain controller so that you can make them as light as possible and as affordable as possible. And these remain very challenging for many industry players. In other words, we really have high hopes for our future when it comes to robotics development. Hopefully, we are going to -- we expect to handle a limited amount of SKU integration, not as many SKU as when you're making a car. And we also will try our best to make the pricing of robots as affordable as possible. So it really can truly help and empower thousands of households in the future. Thank you. Operator: The next question comes from Xiaoyi Lei with Jefferies. Xiaoyi Lei: [Foreign Language] I have just one question. Could you please provide an update on the progress of our overseas localized production for next year? And additionally, how do we plan to leverage our smart driving capabilities to drive the sales growth in international markets? Gui Hongdi: It's Brian, again. Just to address your question on overseas plan for next year. You're right, we actually initiated our local production this half -- second half of this year with first factory in Indonesia and also the -- another factory production facility with partnership with Magna in Austria. Those, I think, is slowly ramping up the capacity. So we anticipate the volume for next year's production in these 2 plants will continue to rise and support our overall sort of overseas growth. I think in the Europe, we are looking at the tens of thousands in terms of numbers of vehicle locally produced there. And in Indonesia, I think probably a smaller, but also a sizable number, high thousands is something that we want to achieve. Looking beyond those 2 plants, we continue to look at additional opportunities to have local capabilities in other markets as well as building local supply chain capabilities to support the localization in these key regions. So we will be increasing our local content, increasing our local stores materials and also looking for further localization strategy to be implemented. So that's something I think is ongoing. I think it's a must do for a company has global ambitions. Looking at the global product sales next year, I think, as Charles mentioned, we're looking for higher growth in the international markets compared to our domestic market. We're also looking for higher contribution economically from those markets. So I would say in the next year or the year beyond, we're looking at a faster growing, higher profit contribution for our international businesses. Operator: Since there are no further questions, I'd like to turn the call back over to the company for any closing remarks. Alex Xie: Thank you once again for joining us today. If you have further questions, please feel free to contact XPeng's Investor Relations through the contact information provided on our website or the Piacente Financial Communications. Operator: This concludes today's conference call. You may now disconnect your lines. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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JKS 2025 Q3 财报电话会议

Operator: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Second and Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang. JinkoSolar's Investor Relations. Please proceed, Stella. Stella Wang: Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's second and third quarter 2025 earnings conference call. The company's results were released earlier today and are available on the company's IR website at www.jinkosolar.com as well as on newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding Co., Ltd., Mr. Gener Miao, Chief Marketing Officer of JinkoSolar Holding Co., Ltd., and Mr. Charlie Cao, CFO of JinkoSolar Holding Co., Ltd. Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and Mr. Cao will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under applicable law. Now it's my pleasure to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li Xiande will speak in Mandarin, and I will translate his comments in English. Please go ahead, Mr. Li. Li Xiande: In the first three quarters of 2025, our global module shipments totaled 61.9 gigawatts, once again ranking number one worldwide. Driven by our outstanding product performance and a strong presence in high-value overseas markets, gross margin improved sequentially for two consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continued to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage R&D in the past two years started to bear fruit gradually. In the first three quarters, our cumulative energy storage system (ESS) shipments exceeded 3.3 gigawatt-hours, increasing significantly for two consecutive quarters. This, combined with the rising share of overseas markets, has helped the profitability of our energy storage business improve noticeably. Considering that energy storage products have the process of installation, commissioning, and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that as economies of scale accelerate and competitiveness continues to improve, our energy storage business will more than double next year. Its revenue contribution is expected to rise significantly and it serves as a key driver of our overall gross margin expansion. In the second and third quarters, we continued to keep moderate utilization rates at a reasonable level. Since the third quarter, prices of polysilicon wafers and cells have all risen, and module prices showed some upward trends. Given that bidding rules in all provinces are still in the implementation phase, central and state-owned enterprises need some time to recalculate their IRR returns and adjust their business model for any project. It is expected that demand will take some time to release. However, we have seen some positive signals in the raw material segment. Supported by rising raw material prices, module prices in overseas markets have also increased. The upgrade of the world's high-power production capacity has become important for accelerating the industry's high-quality development. This technical upgrade also meets end-task demand for high-power products to achieve more reliable investment returns. As an industry pioneer to upgrade existing telecom capacity through technology enhancements, we made steady progress in high-power products upgrade in the third quarter. We have already delivered some high-power products carrying a premium of 1 to 2 US cents per watt compared to their conventional products. As the upgrade of the third-generation products with a maximum power of 670 watts is completed, we expect the shipment proportion of high-power products to increase quarter over quarter next year, accounting for 60% or above in 2026. Since market-based electricity reform has removed the mandatory energy storage requirements, China's energy storage industry is accelerating its market-oriented development. There is an increasing gap between peak and off-peak electricity prices, and the implementation of policies such as capacity pricing and capacity compensation means independent energy storage projects in multiple provinces can achieve sound economic returns. Driven by both improving economics and global energy transition, demand is increasing in Europe, Asia Pacific, the Middle East, and Latin America. In the US, the rapid expansion of AI data centers has led to an unprecedented surge in electricity demand, straining domestic electricity supply. Solar plus storage has therefore emerged as a safer and more easily deployed solution. We expect the global demand for energy storage to experience explosive growth driven by increasing renewable energy penetration and its declining storage cost. This once again validates our strategic decision to invest in the energy storage business in line with industry trends, and it has helped us build a long-term competitive advantage. As a leading enterprise in the PV sector, we possess long-established advantages in channels, brand reputation, and customer resources, enabling us to provide a localized one-stop solar plus storage solution. On the manufacturing side, we currently have 12 gigawatt-hours of pack capacity and 5 gigawatt-hours of battery cell capacity, and continuously improve product performance through self-developed technological breakthroughs. On the market side, we focus on high-margin overseas markets, particularly utility-scale and industrial and commercial projects. Although the lead time for reserve cycles is relatively long, demand remains strong, providing stable growth momentum for the company's energy storage business. In summary, the global supply chain is recovering, so the balance between supply and demand is gradually improving. As technological upgrades accelerate the industry's high-quality development, the market share of high-power and high-value products will continue to expand and become a dominant force in market pricing. As market competition, particularly in project bidding, increasingly favors leading enterprises that demonstrate strong technological capabilities and long-term reliability, resources such as bank financing are also concentrating towards leading enterprises, further strengthening their market share. With strong technological capabilities, long-term reliability, and global diversification of our energy storage business, we are well-positioned to further strengthen our competitiveness and benefit from the industry's next upward cycle. The 15th Five-Year Plan proposed accelerating the decarbonization of both the energy supply and the consumption sectors. The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have also recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy system. We expect that these measures will further strengthen the competitiveness of China's renewable energy sector and steer the industry back onto a healthy and rational development path. Looking forward to the fourth quarter and the full year, we will continue to actively respond to the industry's call for rational development by maintaining sustainable production levels and focusing on upgrading and transforming high-efficiency capacity. At the same time, we will proactively adapt to changes in overseas policies to ensure sustainable supply for our customers. We will keep strengthening our competitive advantages in technology and global operations, achieving a balance between scale and profitability while consolidating our industry-leading position. We expect total shipments, including solar modules, cells, and wafers, to be between 85 gigawatts to 100 gigawatts for the full year of 2025, and ESS shipments to be 6 gigawatt-hours for the full year of 2025. Gener Miao: Total shipments were 21.5 gigawatts in the third quarter, with module shipments up 9.93%. By the end of the third quarter, we became the first module manufacturer in the industry to achieve cumulative global module shipments of 370 gigawatts, with total cumulative shipments of the Titanium Series surpassing 200 gigawatts, the best-selling module series in history. In terms of geographic mix, in the third quarter, we focused on higher-value overseas markets, with shipments accounting for over 65%, achieving strong growth in Asia Pacific, emerging markets, and Europe. Shipments to the US were nearly 1.3 gigawatts, doubling against the backdrop of electricity market reform. Customer demand for high-power products continues to rise. Our high-power Titanium 3.0 series, with its high bifaciality rate of 85% and excellent low-light performance, can generate stable electricity during long, dark, and cloudy weather, effectively extending power generation hours. At the same time, in a market environment with increasing volatility in electricity prices, the outstanding power generation performance of Titanium 3.0 enables more power generation during peak price periods in the morning and evening, creating higher yield and more reliable returns for clients. According to our outdoor field test data, in Chengdu, China, under low-light conditions such as dawn and dusk, Titanium achieves a 7.2% gain compared to PERC products. And in Kagoshima, Japan, Titanium shows a 10.79% gain over PERC products in low-light conditions. In the third quarter, we delivered some high-power products that carried a 1 to 2 US cents premium compared to conventional products. We expect that our highest power, the Titanium 3.0 product with max 670 watts, will be produced on a large scale next year, further strengthening our competitiveness on the product side. We once again topped the PV Tech 2025 module test and reliability report with a triple-A rating, thanks to our solid operational capability, outstanding technological innovation, and strong recognition from global customers. As one of the few enterprises to continuously maintain top-tier creditworthiness and technological strength in the global PV industry, in the latest release of the BNEF energy storage tier-one list for Q4 2025, we were recognized as a tier-one energy storage provider for the seventh consecutive quarter. Our continuous efforts in sustainable development have also earned international recognition repeatedly. In the recent MSCI ESG, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global PV industry. Additionally, our S&P CSA score continued to improve from 2024, rising significantly to 78, far ahead of the industry. On the demand side, we expect the global PV demand to slightly contract in 2026. In China, due to the improvement, implementation of policy reform 136, the pace of carrying out the 15th Five-Year Plan, as well as industry self-discipline and anti-evolution measures, demand is expected to slightly decrease year over year in 2026. Markets outside China are generally expected to remain healthy. In the mid to long term, the urgent power demand from AI data centers, combined with most countries' commitment to reduce carbon emissions, will drive growth in the global deployment of clean energy and new grid infrastructure over the next three to five years. The Information Office of the State Council recently released the white paper on China's action on carbon peaking and carbon neutrality, which emphasizes that energy storage is a key support for building a new type of power system and an adequate base for actively developing the renewable energy plus energy storage solution. In the United States, we are already seeing some tech giants deploying co-located or nearby solar plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy plus energy storage has become an inevitable and accelerating trend. We remain optimistic about our long-term prospects in the US market. Although trade policies impose certain constraints on the manufacturing side, we have taken proactive measures and made early strategic deployments, adjusting our manufacturing and supply chain in response to policy changes to provide US customers with long-term stable and reliable solutions. We are confident that leveraging our advantage in technology innovation, high-power products, and global network, we can continue to satisfy our global clients' demand for clean, safe, high-efficiency, and reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets. Charlie Cao: Thank you, Gener. We are pleased that our focus on high-performance products and high-value markets, as well as our efforts in cost and expenses control, have delivered steadily improved financial results. Gross profit margin turned positive in the second quarter and continued to improve by 4.4 percentage points in the third quarter. Net loss and adjusted net loss narrowed sequentially for two consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter over quarter. Operating cash flow is expected to be positive for the full year 2025. Moving to the details in the third quarter, total revenue was $2.27 billion, down 10% sequentially and 34% year over year. The sequential decrease was mainly due to a decrease in solar module shipments, and the year-over-year decrease was primarily due to a decrease in the average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost of products sold, and the year-over-year decrease was mainly due to a decrease in ASP of solar modules. Total operating expenses were $363 million, up 36% sequentially and down 32% year over year. The sequential increase was due to an increase in the impairment of long-lived assets, while the year-over-year decrease was mainly due to a decrease in shipping costs as our solar module shipments decreased and the average freight rate declined during the third quarter this year. Total operating expenses accounted for 16% of total revenues, compared to 10.6% in the second quarter and 15.4% in the third quarter last year. Operating loss margin was 8.7%, compared with an operating loss margin of 10.7% in the second quarter this year and an operating profit margin of 0.3% in the second quarter last year. Moving to the balance sheet, at the end of the third quarter, our cash and cash equivalents were $3.3 billion, compared with $3.4 billion at the end of the second quarter and $3.2 billion at the end of 2024. Days sales outstanding were 105 days, compared with 97 days in the second quarter. Inventory turnover days were 90 days, compared with 66 days in the second quarter this year. At the end of the third quarter, total debt was $6.4 billion, compared to $6.7 billion at the end of the second quarter. Net debt was $3.1 billion, compared with $3.3 billion at the end of the second quarter this year. Debt conditions improved sequentially. Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year over year. The sequential increase was primarily due to an increase in solar module shipments, while the year-over-year decrease was mainly due to a decrease in ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to a lower unit cost of products sold, while the year-over-year decrease was mainly due to a decrease in ASP of modules. Total operating expenses were $266 million, down 24% sequentially and 15% year over year. The sequential decrease was mainly due to the reduced expected credit loss expense in the second quarter, while the year-over-year decrease was mainly due to a decrease in the impairment of long-lived assets, reduced expected credit loss expenses, and decreased shipping costs as the average freight rate declined during the second quarter this year. Total operating expenses accounted for 10.6% of total revenues, compared to 18.1% in the first quarter of 2025 and 16.9% in the second quarter of 2024. Operating loss margin was 7.7%, compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year. Moving to the balance sheet, at the end of the second quarter, our cash and cash equivalents were $3.4 billion, compared with $3.77 billion at the end of the first quarter this year and $1.9 billion at the end of the second quarter last year. Days sales outstanding were 97 days, compared with 111 days in the first quarter this year. Inventory turnover days were 66 days, compared to 84 days in the first quarter. Our operating efficiency is improving. At the end of the second quarter, total debt was $6.7 billion, compared to $6.4 billion at the end of the first quarter. Net debt was $3.3 billion, compared to $2.6 billion at the end of the first quarter this year. Stella Wang: This concludes our prepared remarks. Charlie Cao: We are now happy to take your questions. Operator, please proceed. Operator: Thank you. If you wish to ask a question, please press 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Philip Shen with ROTH Capital Partners. Philip Shen: Hi, everyone. Thank you for taking my questions. First one is on your gross margins. Can you share some color on what you see as the difference between yours and Canadian Solar? They reported recently 15%. You guys have Q3 gross margins at about 7%. And what was the main driver you think for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4? Charlie Cao: Thanks, Philip. And I think compared to our peer, particularly Canadian Solar, the gross margin difference is, you know, the different revenue contribution from the energy storage business. But if you look at Jinko, you know, quarter by quarter, we did improve gross margin dramatically. It's coming from the majority, you know, the module business. But for the energy storage sectors, we did want to have a, you know, very, very positive update. I think in the prepared remarks of Chairman Li, we think, you know, our energy storage business is really for the, you know, dramatic growth in next year, 2026. And we are expecting significant revenue contributions and gross margin expansions. You know, the storage is really, you know, in supply shortage. And this year, we shipped around 6 gigawatt-hours, you know, shipments. And next year, we expect to double, at least double. And in terms of the revenue recognition, it's a little bit different because, you know, the revenue is recognized, you know, for the shipments. With the final acceptance, it's a little bit delayed one quarter to two quarters. And for the energy storage business, the gross margin is at a decent level. We expect at least 15% to 20% gross margin. And, you know, looking forward, particularly for the ESS business out of China, we target 70% to 80%, you know, ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, you know, the rough revenue from ESS business compared to the total revenues of Jinko next year. So it's a very, you know, we are actually, we think our business is shifting from purely module business to module plus ESS next year. Philip Shen: Great, Charlie. Thank you very much for the color. And can you share also a little bit more color on your view? You've given us some color on the storage market. You shared that next year could be six gigawatt-hours. What might the geographic shipment mix be for 2026? And how much to the US, how much to China, and then maybe Europe and others? Thanks. Charlie Cao: Yes, yes. This year is six gigawatt-hours, and next year is double, okay? That is the total volume. In terms of geographical distributions, non-China, roughly think 70% to 80%, including the United States. And in the United States, we are in discussions with a lot of potential customers and developing, and we believe, you know, step by step, we are getting more and more orders from the US. We have a strong pipeline, particularly, I think, from Europe, Latin America, and Asia Pacific. Philip Shen: Got it. Okay. Great. Thank you. Shifting over to one more question here. On the foreign entity of concern for the US, FIEC. Can you help us understand you plan to have a big business shipping US, sorry, shipping solar modules to the US. Now you plan to ship batteries also to the US. Can you help us understand how you plan to comply with foreign entity of concern requirements for the US market? Thanks. Charlie Cao: Yes. Looking for the next year, we don't believe there's a lot of negative impact from the FIEC, let's say, OVBB, you know, compliance. We do see a lot of, you know, safe harbor projects, particularly for the solar plus some storage, you know, projects. And we committed, you know, to long term, and, you know, we, I think we really shape our supply chain, you know, globally, and including, and we are exploring options for our, you know, solar module facilities in Florida. And we think, you know, from the long term, there is going to be, you know, demand for both FIEC and non-FIEC. And we are in the, you know, if there is some kind of development, particularly for, you know, transforming our solar module facilities in the United States to the long FIEC entities, and we will let the investor know. But we have been in the process of discussion with potential investors. Philip Shen: Got it. Okay. Thank you, Charlie. I'll pass it on. Operator: Your next question comes from Alan Lau with Jefferies. Alan Lau: Hello? This is Alan from Jefferies. Thanks for taking my question. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or, yeah, our hyperscaler clients. And what type of demand are they requiring? Like, are they more like two to four hours of proof capability compatible demand, or it's more like even longer hours of storage with five? Thank you. Charlie Cao: Yeah. We're seeing the AI-driven data center, you know, is going to put a lot of demands for the global electricity from long term. And our ESS team is in discussion with potential and pipelines, you know, for the AI data center, including the US, Europe, and including China. But it's still, you know, it's in progress, and we believe we are able to reach a significant milestone early next year. Alan Lau: I see. Clear. Thanks. So in relation to the geographical breakdown, we'd like to know if the gross margin of ESS is similar across the regions, or it should be higher in Europe or the US. Like, how do you see the margins in different regions that you operate? Charlie Cao: Oh, you mean, yes, it's margin, you know, different regions, right? Yeah. Yeah. Yeah. We, you know, it's depending on different markets. And China is still a little bit low, but I think it's recovering a little bit. You know? Yes. This is very competitive in China. Europe and the US is, you know, it's still, we think that it is still a decent gross margin. So, you know? And the Middle East is a little bit low, and I think China and the Middle East is, yes, yes. The pricing, you know, the competitiveness, and the margin is relatively low to under ratings. But we think, you know, it's still very healthy. And, you know, business and in the next two years. Alan Lau: Yep. Would like to know on the cost side of ESS because I've noticed that the upstream raw materials are all the cost of raw materials like freezing, or searching, any plans to lock in any raw materials, or how are your view on different raw materials like batteries or, like, even more upstream battery materials like lithium carbonate, etcetera. Charlie Cao: Yeah. Yeah. Yeah. We, you know, because the strong demand is a material, it's unlikely in the upper work, and firstly, we have five gigawatts, you know, and battery cell capacities. And which put us at a relative advantage. And the second one, we partner with the key materials and, you know, suppliers. And the second one, we, you know, when negotiating contracts, we did anticipate, you know, some kind of material cost, you know, upwards. So it's a combination. I think it's a little bit challenging, but we think we can manage and how to minimize the impact of the material, you know, the pricing. Alan Lau: I see. I think my next question is about the speed length. On the solar module market. So how do you see the demand growth next year for maybe both solar and ESS? What is the growth rate you see? Charlie Cao: Yes. For the demand side, we should look separately for both PV and ESS. Right? So for the PV side, I think we are in a conservative way. We are expecting more or less flat year in 2026 versus 2025. So the main reason is because China demand, you know, we believe it will have a drop compared with 2025. Which, because the weight of China demand is so high in the global demand. So even with the other markets booming or other markets' growth, we still expect the total demand of the globe in the PV industry for next year will be more or less flat year. However, when we look into the ESS, it is in a different scenario. Right? So with more and more renewable installed, the grid needs more security for the ESS contribution. Certainly, we are seeing a sharp increase for the ESS side. That's why from the ESS, we are still keeping an optimistic opinion or expectation for next year's installation. If we need to quantify that, we think it will be at least a 25% increase for the ESS year over year. Alan Lau: I see. Thanks, Gener. Like to know what type of installation in China you are looking at? Like, because there are even numbers flowing around, like, are you looking at low 200 or even below 200 gigawatts in China. Charlie Cao: I am not that conservative for China because when recently, I visited a lot of our distributors and even installers in China, in all the different provinces, I think most of them still keep an optimistic view for next year. So that having said all those, I believe that it will be around, let's say, module-wise, it will be around mid-200. Let's say, around 250. About. And if we look into the grid connection number, it should be somewhere around 23%. Right? It's yours. And I think the October and in the process to get money out of China. And after regulatory approval. And we have paid the, you know, withholding tax, and we expect to get the money by the end of this month. And very soon. And for the shareholder, you know, the shareholder returns and we commit at least $100 million a year, and we had to pay a dividend early this year. And we start we bought some shares, certain shares. And I think last quarter, you know, in the middle of this year. And after the window, you know, after earning lease and we plan to repurchase this year throughout the end of the year. Alan Lau: Is that, like how much shares have been purchased or, like, how like, will the company look to basically buy all the remaining amount in the buyback program in the remaining one month? Charlie Cao: Yes. And I think we, you know, we plan to use the right, the monetization issues and the key, you know, funding and which is available, and it's around $78 million. So we, I think, depending on how the market moves, we definitely will repurchase the shares by the end of this year. And roughly, I think, this year, you know, $100 million, and we had to go dividend, I think, $70 million. So that's our, you know, the base plan. Alan Lau: That's clear. We will send you. Yes. It's a year-over-year plan, and next year, it's roughly the same plan. Charlie Cao: I see that plan. Thank you. Thanks, Charlie. Operator: Once again, if you wish to ask a question, please press 1 on your telephone and wait for your name to be announced. Next question comes from Rajiv Chaudhri with Sensorra Capital. Rajiv Chaudhri: My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18 to 33 gigawatts. And you're essentially kept to the same range that you gave for the full year back in the early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments? Charlie Cao: Yeah. I think we will close to the lower end of the range. I think because of the regulatory requirement, we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic. Rajiv Chaudhri: I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025? Charlie Cao: Well, we technically believe from the product-wise, we are looking at roughly 700 gigawatts. That's the high-level numbers we are estimating for the whole industry. Rajiv Chaudhri: And do you believe that 700 gigawatts would have been shipped out by the industry as well, or that was just the production? Charlie Cao: Well, I think it's more realized to a production closer to the production side, but because every company has slightly different ways to calculate or announce their shipment numbers. So that's why it's difficult to figure out what's the real shipment number. But production-wise, I think the number is more realistic. Rajiv Chaudhri: I see. Okay. So moving on to another relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026? Charlie Cao: It's roughly 5 billion RMB this year and next year. And by next year, we didn't have any, you know, plan to, you know, expand, you know, capacity, and it's kind of upgraded to a next-generation top kind of technology. And it's going to have significant, you know, high-end, high-power output. Solar modules, as we are able to provide to our customers, you know, next year, roughly 60%. Right. We hope we go some, you know, with price premium and relatively good margin contributions. Next year, quarter over quarter, as a capacity for the high-end, you know, upgrade high-end module capacity will be released quarter by quarter. Rajiv Chaudhri: So Charlie, just to be clear, this year, the CapEx is RMB 5 billion. And next year, it will be flat at RMB 5 billion? Charlie Cao: Yeah. Roughly. Roughly. But next year is I'll talk about this year is roughly payment of outstanding, you know, amount, you know, 5 billion. And next year, we are doing the upgrade. We are doing the upgrade existing capacities and to the next high level, you know, top-down capacity. And we foresee a lot of strong demands and with higher module price and higher gross margin contributions. Rajiv Chaudhri: So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well. And maybe substantially higher than 2025 because the gross margin will be higher. Is that a correct assessment? Charlie Cao: Yes. That's right. That's right. And, you know, we talked about firstly, I think the catalyst is the first one is ESS storage business next year. We are looking to, you know, 10% to 15% revenue contributions from ESS with decent gross margin and positive net profit release. The second one is the module business. We have, I think, the most advanced top con, you know, upgrade capacities in the industries. And developed by ourselves for the technology, and which will roughly have 60% shipment of the modules coming from the next generation Jinko developed. Top con capacities with higher, you know, gross margins. And the second one, we think from the high-level standards in the industry, anti-evolutions, you know, taking effect step by step. And the capacity will accelerate, you know, phase out and leading by the, you know, a top of on top of that industry-leading self-discipline, you know, control production volume, and reasonable, you know, pricing based on the cost will take, you know, further, I think, enforcement. So combined together, I think the industry is reaching the low point that is recovering step by step. And we think we are getting ready for the, you know, from the market and product perspective. And the plus, are shifting solar plus ESS story and the business. So the basic funding year, we are, you know, we are confident that we are able to, you know, navigate the cycles and in turn to positive earnings. That's kind of the, you know, the best plan next year. Rajiv Chaudhri: So should we no. You talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your cost for these premium products still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up? Charlie Cao: Yes. Yeah. Initially, by design, the cost is a little bit higher, but they are very, very small. You know, incremental cost. And by the way, our R&D team continues to, you know, dive into the details and to try to, you know, further improve the cost. But back to your question, I think the, you know, the high-end product cost is very, very small incremental, you know, cost increase. At the beginning. But we believe over, you know, over time, you know, our R&D team with our operational teams will continue to improve the cost. Rajiv Chaudhri: Final question, Charlie. On market share, in the past, in 2023 and '24, your global market share had gone up to somewhere between 15% to 16% of the global market. This year, it is down a little bit. I guess, because you have restrained production because of the pricing. Should we expect that your market share next year will go up again and maybe go up a lot more than 16% because the industry itself is consolidating? So and what do you think the range for next year module shipments could be? Charlie Cao: The consolidated market share after consolidation of, you know, the industry consolidation and the phase-out of capacity, the industry, you know, turns into the kind of normal situation. It's for sure, it's very good for tier-one companies. If you look at it long term, we are confident and we will continue to penetrate the market share. And next year is still, I think, you know, from the top-down approach, you know, and I think China will continue to, you know, launch, you know, implement the anti-involution policies. We don't expect significant, you know, shipments increase, you know, for the module bands. But, yes, it's a different story. Rajiv Chaudhri: I see. Okay. Thank you very much. Charlie Cao: Welcome. Operator: Your next question comes from Philip Shen with ROTH Capital Partners. Philip Shen: Hey, guys. Thanks for taking my follow-up question. One of the check-in with check back in with you on in terms of Q4 margin outlook. What kind of solar module ASP could we see in Q4? And then what kind of margin for the overall quarter that we see? Charlie Cao: We expect relatively stable Q4 versus Q3. But ESS business is contributing more revenues, and we estimate our ESS business in the fourth quarter is going to reach positive profitability levels. But the contribution is not significant, but next year is a different story. Right? We have talked about it. And for the module business, we expect, you know, relatively stable. Philip Shen: Okay. Got it. Thanks. And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins, you know, as you blend in more battery. Thanks. Charlie Cao: Yes. Phil, I think it's difficult to share those numbers or estimations right now because you know what is happening. It's like some of the key markets are still, you know, there are, you know, some key or some important policy is upcoming. For example, you know, the US, the guidance of the FIEC or material assistance or even upcoming 232. Which will significantly impact the market prices. Like in China, you know, there's anti-involution policies, and there's even more rumors coming out regarding the polysilicon. Even to the other part of the manufacturing value chain as well. So those changes could significantly change the market price overnight. That's why we believe it's still too early to share our estimation on the prices for next year. Philip Shen: Okay, Gener. That makes sense. You talked about the rumors on Poly. Can you give us a little bit more color on that? Thanks. Gener Miao: I don't have too much more to share based on there's a lot of rumors on the market or on the Internet. So I don't know what you're referring to. Philip Shen: Yeah. I was just you mentioned it, so I thought I would try to see if there's more color. Gener Miao: No. We are not part of the game, so I don't have too much to share with everyone. But thank you for your question. Philip Shen: Yep. No problem. Okay. Thank you, guys. I'll pass it on. Operator: Your next question comes from Brian Lee with Goldman Sachs. Tyler Bisset: Hey, guys, this is Tyler Bisset on for Brian. Thanks for taking our question. Just quick housekeeping questions. Can you share what was D&A and CapEx in Q2 and Q3? Charlie Cao: You mean the absolute number or percentage. Right? Hello? Hello? Tyler Bisset: Yeah. I'm sorry. Like, the actual number. Charlie Cao: I think it's a financial statement. You gotta check out, you know, the financial statements, the R&D, and the, you know, operating expenses and that we have disclosed quarter by quarter. So what would be your, you know, key question you want to explore? It D&A. And CapEx in February and March, like the absolute numbers. Charlie Cao: You mean the depreciation or CapEx? Tyler Bisset: Sorry. Depreciation. Alright. And then separately CapEx. Charlie Cao: Okay. Depreciation by quarter, I think, roughly, you know? And I think $300 million a quarter. And the CapEx, I think, is the first half year. We, you know, spend roughly 2 billion RMB. Operator: That is our last and that does conclude our conference for today. Thank you for participating. You may now disconnect.

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ELD.AX 2025 Q4 财报电话会议

Operator: Thank you for standing by, and welcome to the Elders Limited FY '25 Results Investor Briefing. [Operator Instructions]. I would now like to hand the conference over to Mr. Mark Allison CEO and Managing Director. Please go ahead. Mark Allison: Thank you very much, and welcome to all for the Elders' full year results presentation for the FY '25 financial year. And thank you for joining Paul and myself for the session today. As an overview, the full year results today are solid on a year-to-year basis with EBIT up 12%, transformational projects on track, positive progress on leverage and strong cash generation. Throughout the year, Elders has demonstrated solid operational and financial resilience in the face of mixed seasonal conditions. Our diversified portfolio through its national geographic footprint and multiproduct and service offering played a key role in mitigating the dry conditions across key agricultural regions and the increased competitive activity in our retail business. Stronger activity in livestock and real estate and high financial discipline also supported the solid result. On the transformational project front, we've also made good progress on Wave 2 of our SysMod project with all states rolled out and bedded down by the end of this calendar year. We are also well progressed in the final components of this project with Wave 3, and the completion phase, Wave 4, advancing in full on time. Focusing now on the areas out of our control. The FY '25 season has been a problematic year from a seasonal viewpoint, with a drier than average and late start to the winter crop across Southern Australia, with credit to our highly diversified business model, this is offset by our agency business, our real estate services business, our financial services and our feed and processing services businesses. Rural products has seen some limitation with very dry conditions in Southern Australia and Western Australia. In this context, the performance of Elders with its clear and consistent strategy, multiple diversifications, high financial discipline, hard-working and committed team and enduring customer anchor as the most trusted brand in Australian agriculture on an unprompted basis has remained resilient. This result is strong in safety, sustainability and cash flow with the full year outcome approaching the midpoint of the EBIT guidance range provided earlier this year. Moving now to the Delta Agribusiness acquisition, which completed on November 3. This acquisition is fully aligned with the Elders acquisition rationale that delivered Titan Ag, AIRR and many other bolt-on acquisitions to Elders, with pre-synergies EPS accretion, enhancement of our technical and AgTech expertise and offerings, strengthening of our geographical diversification, particularly in New South Wales and Northwest Victoria, South Australia and Western Australia, building on our crop protection and animal health regulatory package portfolio to drive our backward integration strategy, providing an additional platform for retail segmentation, allowing greater customer centricity and providing further coverage for our real estate and financial service offerings. Moving on to the FY '26 outlook. We are very optimistic on the broad outlook for Australian agriculture at a seasonal and commodity level with the return to average conditions. In addition, we welcome Delta Agribusiness to our portfolio as a platform for significant growth. The outlook and fundamentals for livestock remains sound, with prices for sheep and cattle forecast to be supported by strong international demand against the backdrop of tightening supply. The combination of a positive seasonal and commodity outlook also provides a great backdrop for continued growth of our -- in our real estate and financial services businesses. It's worth noting at this point that our first 6 weeks of trading for FY '26 is tracking some 30% up on last year for the same time on an apples-to-apples basis. So this is without the inclusion of Delta that's come in on November 3. Our approach for today is that I'll provide an overview of the results. Paul will go to the detail of our financial performance, and I'll then provide an update of our outlook and growth and transformational initiatives as we deliver the final year of our Fourth Eight Point Plan. With this overview, I will now commence with the FY '25 full results presentation. So if we can move along to the next slide. The approach, as you see with the -- it's worth noting in the appendix that there's further detail and transparency on sensitivities, business model, et cetera. So why it's worth looking at. So kicking off on the executive overview on the slide committed to improving our safety performance. So from a safety viewpoint, at the core backward-looking metric of lost time injuries, there have been 6 lost time injuries this year, which is an increase from last year. Quite a disappointing result, predominantly in the livestock area. And so we have been able to significant reduce -- significantly reduce injuries across our manual handling and our rural products area. But a disappointing result. We continue to aim for zero injuries to anyone. I think it is worth noting that at the start of the Eight Point Plan process, there were 34 lost time injuries. So we've made significant progress over the Fourth Eight Point Plans, and the lost time injury frequency and the total recordable injury frequency, and you can see the trend on the second slide, are significantly below equivalent industry benchmark. Moving to the next slide, just a quick snapshot of the financial performance. You can see the underlying EBIT, some 12% up on last year. Our return on capital of 11.3%, holding stable and maintained strong cash conversion and the dividend per share payout. And moving to the next slide. So Paul will clearly go into the detail on the financials. Moving to the next slide, and this is over the Eight Point Plan years. And you can see significant return as committed in Eight Point Plan 1, 2 and 3. At the beginning of -- prior to Eight Point Plan -- the Fourth Eight Point Plan, we took the decision to invest heavily in our transformational projects. And there's some $100 million of cost and capital being spent through this period in order to drive our systems modernization project, our automated wool project and also our Crop Protection formulation project. So we knew that, that would drag on our cost of capital and resources and focus through that period, but critical transformational projects that we're at the process of completing, with the formulation process complete, the automated wool project complete and with SysMod running into Wave 3 and 4, which are the final 2 waves through next year. Moving to the next slide. And some of the work we're doing across -- with our people and communities. It's worth noting, again, 186 years of Elders in Australian -- regional rural Australia and agriculture. Unprompted remain the most trusted brands throughout all of these areas and with significant activity across -- with multiple activities across the business. From a safety viewpoint, very clear focus on safety from an engagement enablement viewpoint, as you can see, quite high engagement enablement, as have been for many years, and also a very high focus on safety throughout our people. Moving to the next slide. And just a quick look at the work we do from a sustainable responsible future viewpoint. Many of you are aware of our alignment across many environment, people and community projects and the work we've done with our sustainability report. And you'll note the very strong and aligned partnership with the Royal Flying Doctors. So from our viewpoint, this is who we are. This is core to our DNA, and we'll continue to invest and be highly engaged with our communities around Australia. Moving to sustainability. And our progress against the emissions targets with the next slide. And you can see the trend towards the emission targets we've set. We'll continue to work through these. As many of you will also be aware, there's been a reviewed methodology on emissions calculations from livestock. So we're working through that. But I think the point to note is that we're well on track. And if you take the time to read the sustainability report, I think you'll be very impressed with the progress we're making right across the board in this area. Moving to the next slide. And this is really to emphasize one of the changes that we've made this year. Historically, we've been diversified by product and service, and we've talked about that in our business model, and it's in the business model that appears in the appendix of this pack. But you'll see right through the supply chain from crop protection, through the wholesale with the Elders Rural Service, Delta Agribusiness and then real estate and feed and processing, there's a very solid diversification component that comes out of the business. And if you look through all the key investment drivers, and I think Paul will comment on many of these, very strong EPS growth, diversification. The industry fundamentals are looking very good. And I think it's one of the points that you'll hear us make a few times that we're at the stage now where we've moved through our transformational projects and the big cost of capital resource investment, and we've got an outlook of positive commodity conditions and also seasonal conditions. So we feel very, very optimistic about the next 3 to 5 years as we run through all of these. And finally, just as a quick recap before we jump into the deep dive into the financials. The next slide, just to recap on Delta Agribusiness that joined the group on the 3rd of November, a great business, well run, very complementary from a geographical viewpoint, and it fills many gaps that we did have, very strong in its technical expertise, which also complements Elders significantly. We're looking at $12 million of synergies at EBIT level over a 3-year period in the original business case. Now given that the ACCC have put on a 12-month delay, we're discussing around the Delta Board on how we can fast track this with regard to backward integration given the strong foundation of Four Seasons' brands or products at the moment. So that's a very positive opportunity to fast track those synergies, targeting greater than 15% post synergies from an ROC viewpoint and very much aligned to Elders -- across our approach to the business. And as we've said a number of times, as divisions, all the divisions are stand-alone. So with that, I'll pass over to Paul to go through the financials, and then I'll come back towards the end on strategy and outlook. Paul Rossiter: Yes. Thanks, Mark, and welcome, everybody. I'll commence on Slide 14 of the pack, which summarizes progress against key financial objectives. Highlights include: double-digit growth in our agency real estate and feed and processing businesses; below inflation cost growth when adjusted for acquisition and transformation; strong momentum in SysMod, as Mark referenced, with all states now live on Wave 2 retail, and Wave 3 livestock to commence rollout in early 2026; product and geographic diversification, mitigating the impact of dry conditions in Southern states; Delta Ag acquisition to further enhance our geographic diversification from FY '26 and strengthen our technical capability in ag tech and precision agriculture; leverage to return to target in FY '26 through a renewed focus on capital allocation and client profitability. I'll now turn to Slide 15, which displays Elders' 5-year financial performance. I note the following progress from FY '24. Sales revenue increased $70.4 million, or 2.2% despite mixed seasonal conditions supported both by acquisition and organic growth. Gross margin increased 7.4%, up $47 million compared to the prior corresponding period or PCP. Comparatively, costs increased 6.2%, noting this includes the impact from acquisition and is therefore not comparable to inflation. Costs will be further discussed later in the presentation. Underlying EBIT increased $15.5 million compared to PCP, but has declined over the 5-year period, with FY '25 impacted by dry conditions. Moving to Slide 16 now, which contrasts FY '25 against PCP. In addition, this slide details the impact on key financial metrics from capital held on September 30 in preparation for the completion of the Delta Ag acquisition, which occurred on November 3. Elders has delivered a resilient result with the following highlights evident. Sales revenue, up $70.4 million despite dry conditions in some key cropping regions, which thankfully ended in June. Gross margin increased $47 million, to $684.6 million, up 7% year-on-year, with growth achieved across most products. Underlying EBIT increased $15.5 million, to $143.5 million, supported by a strong turnaround in agency services and continued growth in real estate. Return on capital was steady at 11.3%, notwithstanding the mixed seasonal conditions and systems modernization CapEx weighing on this metric as the capital outlay proceeds benefits. Improving this metric in FY '26 is a key priority. Cash conversion was broadly in line with expectations with a favorable outlook for FY '26. Net debt increased $20.5 million, to $457.3 million, excluding capital held for the Delta completion, broadly in line with sales growth and the impact of higher cattle prices. I'll discuss these key metrics further as we move through the pack. Moving to Slide 17, which displays Elders' gross margin diversification, a key defense against seasonal variability. As noted, gross margin increased $47 million, to $684.6 million, with growth across most products more than offsetting the impact on crop protection from dry conditions. The key drivers of this result include agency gross margin up $27.1 million, or 22%, following a strong recovery in livestock prices and increased cattle volumes. The outlook for agency services remains positive, driven by strong international demand for protein as well as some destocking in drier regions, limiting supply and supporting prices. Real estate services gross margin increased $22.5 million, or 27.2% with property management, residential, broadacre and commercial all improved on PCP, supported by both acquisition and organic growth. Feed and processing was another highlight with gross margin up $4.1 million or 23.8% due to productivity and efficiency benefits from the new feed mill commissioned in August 2024. Financial services gross margin increased $2.3 million, or 4.2%, supported by continued growth in our new broker model alongside improvement in the livestock warranty product. An increase in on-balance sheet lending was also achieved, partially because of the increased cattle prices. Collectively, the increase in gross margin across these products more than offset the reduced earnings from the exit of the Rural Bank exclusivity agreement in FY '24. Wholesale products delivered a steady result, notwithstanding lower crop protection sales from those dry regions. Growth in the above products significantly outweighed the negative impact from crop protection, which will be discussed further on the following slide. Moving to Slide 18, which analyzes product performance. This slide demonstrates the importance of our product and geographic diversification. The waterfall forward efficiency chart shows the extent of dry conditions, especially in South Australia and Western Victoria, which negatively impacted Elders' retail business with sales, gross margin percent and client confidence, all impacted. Fortunately, seasonal conditions improved from late June which caused for optimism for a recovery in these regions in FY '26. Turning now to Slide 19 to discuss costs, which increased $11.4 million, or 2.2% when adjusted for acquisitions and the impact of transformation. Part of this increase resulted from the inclusion of Elders Wool in base costs from transformation in FY '24, which added an additional $3 million, or 0.6% to base costs. Given this change in categorization, holding base costs below inflation was a pleasing outcome. Turning now to Slide 20 to discuss return on capital, which was steady in FY '24 despite mixed seasonal conditions. When adjusted for the impact of acquisitions and transformational projects, return on capital is 12.7%. Lifting return on capital is a priority for FY '26 through a renewed focus on capital allocation, client profitability and delivery of SysMod benefits. In terms of capital allocation, Mark will speak to the potential divestment of the Killara Feedlot in the strategy and outlook section. Moving now to Slide 21. And working capital, where we see an increase of $68 million from FY '24, mostly driven by higher cattle prices, which increased working capital in feed and processing and financial services. Resale inventory increased $12 million from FY '24, a pleasing result given the late start to winter crop in key cropping regions, which caused an uplift in carryover inventory. This carryover inventory is forecast to clear in the first half of FY '26. On to Slide 22. And cash flow, where we see an operating cash inflow of $117.9 million, a pleasing result considering the late start to winter crop, which pushed some receivables to the fourth quarter. The outlook for operating cash flow and cash conversion in FY '26 is positive with a focus on client profitability to result in some receivables being transitioned to third-party lenders away from Elders' balance sheet. I note that the physical payment of company tax for Elders Limited will recommence in 2026. We'll now move to Slide 23 to provide a detailed update on net debt and leverage. The waterfall charts display a normalized net debt and leverage position, adjusting for the benefit of capital held at balance date in preparation for the completion of Delta Ag. Breaking down the movement in net debt, we see an increase from $436.8 million at the end of FY '24, to $457.3 million at balance date, acknowledging this includes the benefit of $50 million of equity retained for flexibility in acquisitions, approximately 40% of which was deployed in FY '25. I note that the majority of net debt pertains to client receivables, which is self-liquidating in nature. Excluding receivables funded through debtor securitization, Elders' core debt is $161.9 million. Turning to leverage. We see a reduction from 3.1x at the end of FY '24, to 2.9x, normalized for Delta funds held. A return to our target range of 1.5 to 2x is forecast in FY '26 from a renewed focus on capital allocation and client profitability and increased referral of client loans to third-party lenders given trade receivables comprise almost 2/3 of net debt. I note that the return to target leverage is underpinned by but not dependent on the potential sale of Killara Feedlot. I'll now move to Slide 24, where we see significant headroom across banking covenants, noting that these calculations do not require adjustment for the capital held for the completion of Delta Ag. I also note that our bank leverage covenant excludes receivables funded through debtor securitization given their self-liquidating nature. I'll now move to Slide 25, which provides a macro overview of key growth pillars over the coming years. This slide has been included to demonstrate significant growth opportunities and focus areas over the coming years and is not meant to be exhaustive. Regarding systems modernization, Elders has now commenced the final wave of its SysMod program, which once completed, will provide Elders Rural Services with a modern technology platform in Microsoft Dynamics, which itself is evolving at pace. Delivering a return of at least 15% on the program spend is both a high priority and significant growth pillar in the coming years. The acquisition of Delta Ag represents a significant milestone for Elders, increasing points of presence and geographic diversification while enhancing Elders' technical expertise in ag tech and precision agriculture. Accelerating synergies from backward integration in crop protection and animal health are key priorities for FY '26, as Mark noted. The divisional structure is aimed at improving focus and accountability within significant business units. By way of example, real estate services gross margin has grown $45.6 million, or 77% since FY '23, but market share remains less than 5% nationally. We believe the divisional model will help accelerate growth in this and other business units. Acquisition will remain a growth pillar alongside organic growth, provided acquisition prospects meet our financial and values criteria. Finally, the new Elders' brokerage business is noted as a growth pillar, given success to date with our brokered loan book exceeding $1.3 billion from a near standing start in FY '24. Gross margin from loan brokerage has increased from $0.9 million in FY '23, to $6.1 million in FY '25 at a CAGR of 160% with our network of brokers expanded further in recent months. This concludes the financial section of the presentation. I'll pass back to Mark now, who will provide an update on strategy and outlook. Mark Allison: Thanks, Paul. And really leading off from Paul's comments on the divisional structure, just going to Slide 27 as we look at the Fourth Eight Point Plan. And historically, we've expressed the Eight Point Plan in terms of the diversification of our products and services. And we're now looking at the Eight Point Plan in terms of the 6 divisions of Elders and how that diversification across the matrix of products and services adds further to our ability to work through difficult seasonal conditions. So when you look at the -- this is the final year of the Fourth Eight Point Plan, we've had the ambition of 5% to 10% growth in EBIT and EPS through the cycles over an Eight Point Plan. Clearly, as we -- at above 15% return on capital. Clearly, as we come into a taxpaying state in the next financial year, the EPS growth ambition will need to be adjusted accordingly. But -- and we've emphasized the impact that the transformational part of our agenda over these 3 years has had from a cost of capital and resource on the business. But we're setting us up now for a very solid platform with all the transformational projects coming to a close as we go forward for the next 3 to 5 years. Going on to the next slide. And we -- our view and our move to go to a divisional structure, effective the beginning of FY '26, was really around the fact that each of these areas of the businesses had largely been run as either stand-alone or with a particular focus and emphasis through the governing Board or management team. So as we've laid them out, we've laid them out in order of supply chain, starting with Elders Crop Protection. very experienced managers right across all of the divisions. So Elders Crop Protection with Nick Fazekas. This includes our Titan Crop Protection business and our formulation businesses in Eastern Australia and Western Australia with AgriToll and Eureka. And it's a specialist crop protection business as per Nufarm, Adama, et cetera, et cetera. Then we move the next step along the supply chain to our wholesale business, with Peter Lourey. And this has -- I think you're all aware of AIRR, with multiple touch points and membership base throughout Australia for the AIRR business, and its highly efficient and effective warehouse network throughout Australia. Next, as we go to retail, we have Elders Rural Services, which has a complete offering of retail products, agency products, real estate, financial, et cetera, right across the board. And that business at the moment, since the split of divisions, I've been acting as the divisional CEO for ERS. And very shortly, we'll have an upgrade to that appointment, and we'll announce that in the next few weeks. The next business, again, Gerard Hines running Delta Agri business, very experienced and competent manager and co-founder of the business and with an excellent executive team. So the Delta Agri business doesn't have -- sorry, has a much greater focus on cropping technical service with some additional services -- products and services, but very well run, and looking forward to a period of strong growth and profitability across the board. Elders Real Estate. So Tom Russo had previously run the product of real estate before he ran the Elders network. And so we thought it was appropriate for him to take control of the separate dedicated division. The idea here is that Elders Real Estate has grown significantly, and we'll talk about the growth profile, some slides coming up. Tom is a highly experienced professional in this area, across a number of areas as well, has been the guardian of the expansion of the property management component of Elders Real Estate and also our entry into commercial real estate, which we kicked off a big time in Tasmania. So lots of growth opportunity there, highly dedicated manager and executive team and pretty exciting. And then feed and processing, that, we talked about with Andrew Talbot, another highly experienced manager with a great team. He's grown the profitability of feed and processing fivefold since the First Eight Point Plan, have done an excellent job. The record profitability of this division this year is based on a number of the investments we've made historically with feed mill, center-pivot irrigation, shading, a bunch of investments that have enhanced well [indiscernible] productivity. And it's a very, very well-run business in the portfolio. The consideration we've had with feed and processing is actually if you look across that supply chain, feed and processing is a different business to the others. And our thinking is that it's been highly successful. It's grown significantly. We've invested significant capital and got good returns as we saw with record profitability this year. But we've reflected on whether feed and processing would do much better and go to the next level with under natural ownership. And so that's the reason we're considering a divestment of the feed and processing division. And if the moons align and there's an appropriate shareholder value-creating proposition put in front of us, we'll consider it strongly. And I'll just reiterate Paul's earlier comment that our pathway to back on leverage and to a lesser extent -- well, actually, on leverage is the key metric we're thinking about, is not dependent on the divestment of feed and processing. So if the exercise comes up with options that are not to enhance the shareholder value, then obviously, we're very happy, and it's a great business and a great team to be in the Elders Group. So moving to the next slide. And if we look at the modernizing of the platform, we've talked about SysMod. We gave a commitment from a transparency viewpoint to disclose each of the cost of capital components of each of the waves as the Board approved business cases, so when it was formally approved. And we've done that. But you can see -- and if we include Wave 1, there's some $100 million to $110 million investment over this period. And this is the period in that slide that we talked about upfront, where from '22 -- FY '22, where we have had considerable transformational investment. Now with all of these investments, as we've seen with Killara on the capital investment there, there is a lag. And so the benefits of these investments are coming through now, in FY '26. And as we close off SysMod at the end of FY -- calendar FY '26, we look forward to those investments coming through into the future. And I think it's worth noting that this does really set Elders up with a contemporary platform where we can take advantage of multiple AI opportunities that historically we haven't been able to. So just looking to the next slide and running through each of the waves and the different components of the waves. That's really for information. But as I mentioned, the plan is that we'll complete these. We're still running in full on time, which I know sounds amazing for an IT project, but we're still running in full on time, and it's -- we're looking for the finish line as we run out next year. Okay. Now moving to the next couple of slides. In the next 2 slides, we've wanted to showcase a couple of products and services just to put more of a spotlight on them. And for this presentation, we picked financial services and real estate, which we had covered in the half year. But really to emphasize, in terms of the balance of our portfolio, products and services, we've now -- clearly, we've strengthened our position across the whole supply chain and real products, from Elders Crop Protection, to wholesale, to retail, all the way through and technical service. And in our portfolio, we're looking at really strengthening and rebalancing our financial services, all capital and real estate. So the characteristics of both of these services, as we look at them, and it fits nicely in our portfolio management, a high return on capital. We have a relatively low market share in both, financial services and in real estate. The brand is important. So unprompted most trusted brand in Australian -- regional, rural Australian agriculture. So the Elders brand is critical. There's excellent market outlook in both areas. And obviously, there are links to livestock outlook and general commodity outlook, but a strong outlook, and it really does help us balance the portfolio. So just a quick a quick look at financial services. And you can see, in line with Paul's comments, solid growth, replacing the Rural Bank exclusivity agreement and growing in a capital-light manner. So -- and we can go to questions on that in detail. The next slide on real estate. Very, very similar profile. And I think the gems that are probably not as obvious for everyone. One is the product -- sorry, the property management business. We have some 20,000 properties that we're managing now across Australia, which is a very solid and reliable flow for us and also our entry into the commercial real estate only in regional, rural Australia. So very, very positive platforms. And in terms of portfolio balance, a bit -- quite nuanced, and this is how we run Elders as you -- many of you are very aware. So then going to the forecast and outlook across all of the areas on the next slide with -- without going through each one of them, and [indiscernible] each one of them on the next slide. You can see our thinking is that we've had a period of difficult market conditions and significant transformational investment. We've come through that period. We've lagged benefits from the transformational investment. Right now, we're confronted with the next 3 to 5 years, we're looking at completion of the transformational projects, the commodity outlook and the seasonal outlook being average to positive and our ability to really hone in division by division to grow, to drive the capital out, as Paul mentioned, from a leverage viewpoint and to enhance the business for strong growth against the backdrop of average to good seasons. So it feels very positive. For the first 6 weeks, as I mentioned, of this trading year, FY '26, apples-with-apples. So with that, Delta included, we're up some 30% on the previous year. So very early days. But I think it does fall into the -- our thinking and how we've been talking about our outlook for FY '26 going forward. So with that, I think I'll open up for questions. So we'll just leave that slide on the screen, and we'll open up for questions. Operator: [Operator Instructions] Your first question comes from James Ferrier from Canaccord Genuity. James Ferrier: First question I wanted to ask you about was just on your view on livestock volumes in the year ahead, just in the context of the volumes that were achieved in FY '25 as a baseline, herd sizes as they stand right now. I mean everyone can see the livestock prices, but what's your view on volumes in the year ahead? Paul Rossiter: Yes. Thanks for the question, James. And it is one where there is a little bit of uncertainty going forward, I think particularly in sheep volumes. And just for those who don't know, we saw certainly higher cattle volumes in FY '25, up about 13%. Sheep volumes were down about 8.1%. So we do see that rebuild coming through SA and Western Vic, and that's likely to drag on sheep volumes into FY '26. Cattle is a little bit different just because of the geographical footprint. But it is one to watch. But what we do expect is that if volumes do taper off in sheep, we expect prices to offset because the international thematic for Australian protein remains very strong. And so we just see that price being flowing through the supply chain. James Ferrier: Yes. That makes sense. Second question, on Slide 17. We can see there that crop protection gross profit declined 9% on PCP. What was the volume of product associated with that $129 million of gross profit? Paul Rossiter: Yes, I don't have a volume number to hand, James. So I'll see if I can cover that post. But I will speak to the impact of dry conditions. So we did note a roughly $12 million impact from SA and Vic, [ Riv ] at the half. We saw that continue into the second half, mostly in Q3. We think the impact was roughly $19 million volumes. Yes, we're certainly up in Northern New South Wales, obviously down in SA and Vic, but I don't have the net numbers here. Mark Allison: I think, James, the story is on margin compression as you've seen with other businesses and the sales that we experienced particularly in the dryer areas. James Ferrier: Yes. Okay. Understood. And last one from me and probably one for Paul again. Just some thoughts on D&A, CapEx, interest and tax for the year ahead. Paul Rossiter: Yes. Look, depreciation, well, will increase given the completion of Wave 2 and the commencement of the continued amortization of SysMod CapEx. In terms of CapEx outlook, once again, in FY '26, it is dominated by SysMod. Some of Wave 4 will fall into FY '27, as you can see on the SysMod slide. So it's a bit uncertain, but we think -- I'd say, sort of $20 million to $25 million will fall from SysMod into FY '26 and perhaps another $5 million to $10 million outside of that. In terms of tax, so we will pay a small amount of tax, about $1 million following the submission of the FY '25 tax return. So it will be in February 2026, and then we'll pay effectively pay-as-you-go company tax thereafter. I think your question may be referring to the statutory tax rate, which fell in FY '25. That was pertaining to a tax credit related to prior period for R&D. So that's likely to be nonrecurring. Operator: Your next question comes from Richard Barwick from CLSA. Richard Barwick: Can I just double check, when you're talking SysMod -- and obviously, it looks like some benefits from an EBIT perspective are expected in FY '26. Are you able to put some numbers around that? And then equally, what you would see as the non-underlying OpEx impact from SysMod in '26? Paul Rossiter: Okay. So yes, thanks for the question, Richard. So in terms of benefits, the major tranche of benefits is through an uplift in retail margins. And we see that coming from better control of discounting and better categorization of clients. And just for context, a 1% uplift in retail gross margin percent is about $22 million. So 0.5% uplift there gets us fairly close to the benefits required. The other benefits we see coming from uplift in sales, and that comes from better client data over time, but probably longer dated than the retail margin benefits. In terms of non-underlying OpEx for FY '26, so if we work on roughly 60% CapEx, 40% non-underlying OpEx, over that sort of $20 million to $25 million in FY '25. Richard Barwick: Okay. And my other question is to do with the -- there's quite a sizable impairment of goodwill obviously captured within this FY '25 result. Can you just give us a little bit more background exactly what that related to, please? Paul Rossiter: Yes. So there's a couple of businesses that we impaired, both which were reported on during FY '25. So one was Currin Co, where we lost a number of agents in Victoria. The other was Esperance Rural. Yes, we had, I suppose, an unsuccessful transition post earnout. Mark Allison: I think, Richard, it's -- one of the learnings is that, as you know, we've been highly successful with our acquisition -- bolt-on acquisition template in keeping the vendors in the business. And when we do our post-implementation reviews post earnout, it's been 95% plus positive. And we've identified in the last 12 months, whether it's through tougher conditions or whatever the driver is, that the 2 years post earnout is now an area that we need to really focus on in terms of potential loss of staff as we saw with -- actually, it was longer than 2 years with Currin Co, where the vendor leaves the business, the earnout is completed. Historically, we've seen that in business as usual within ERS. And we've now established a project a couple of months ago to identify how we ensure that we don't get a repetition of that situation because it had been a very high success rate of post earnout of keeping the people. Richard Barwick: And well, I guess it's -- the obvious question is, what are the risks? I mean, obviously, you've got something in place here to try and to mitigate it, which would suggest you are a bit concerned that this could repeat with some -- because I mean you made a lot of acquisitions in the last few years. Yes, how do we think about that risk? Mark Allison: Yes. Well, I think the -- a couple of points, is that if there is -- like something in the order of 100 bolt-on acquisitions, and we've had 2 or 3 like this. Clearly, the Currin Co was a larger one. If you like a sense of Shakespearean irony, the Esperance rural supply defection was to Delta. I'm sure you enjoy that. But the -- I think the materiality of it has dropped off because we aren't pursuing the same sort of strategy on bolt-on acquisitions that we had, as you're aware, given that the rural product supply chain is pretty complete and also given that the ACCC regime is hard to unscramble to do business. The -- our sense is that, that won't be where we'll be getting our growth from. It will be more organic. But I think the issue is that post earnout, the -- and we have time. We have 2 or 3 years each time. We have to have the business as usual hooks and retentions in place for these people. Because as you know, in regional, rural Australia, the personal relationship goes a long way. Operator: Your next question comes from Ben Wedd from Macquarie. Ben Wedd: Maybe just turning to your question -- your comments around capital allocation there and particularly with the potentially moving some of the receivables into third-party lenders there. I'd just be interested in sort of, I guess, any timeframes you can give around that and how that sort of looks from an operational standpoint. Paul Rossiter: Yes. Thanks, Ben. Look, it is something -- and I think the way that I'd explain it firstly is that we are taking a return on capital approach. So where we're not seeing, I suppose, a deep relationship with clients that warrants the use of Elders' balance sheet, then we'll look to obviously do that business with the client that use third-party financiers. So we do see this as certainly something that has commenced already. It's a process that's commenced. And that will roll through FY '26 and beyond. But it won't be something that we seek to do hurriedly either. So it will be an incremental thing over a number of years with a significant start in FY '26, particularly in the fin services and seasonal finance areas. Ben Wedd: Yes. Got it. And then maybe just any comments you can sort of give us around Delta's sort of performance over the last 12 months as it might compare to Elders as well in some of those key categories like ag chem and other cropping areas. Paul Rossiter: Yes. Thanks, Ben. So I mean, just a couple of comments. I think the first thing to note is that Delta's financial year is June 30, and their footprint was very exposed to dry conditions that occurred in FY '25. So I think there are a couple of key distinctions between Delta and Elders. The other being, Elders obviously had an offset in livestock agency that doesn't exist to the same extent in Delta. Yes, so the Delta result was impacted certainly more than Elders by the dry conditions. Trading, since it started raining in July in Delta has been above -- certainly above PCP. So yes, that business is operating very well. Operator: Your next question comes from Evan Karatzas from UBS. Evan Karatzas: Maybe just to follow up on that one then, so sort of the ASIC accounts for Delta. So the EBITDA went from sort of the $53 million to $40 million. Can you sort of just give a bit more information around if you expect that original FY '24 earnings to be realized assuming, I guess, normal conditions? And then anything you can say around the synergy benefit we should expect in '26 for Delta as well? Mark Allison: Yes. I think the key point for us is that what we experienced as the turnaround from these dry conditions was outside the Delta financial year. And so that's what we've experienced ourselves. Just as a note, prior to going to the next phase on the acquisition a few months ago, we -- so Paul, myself and the Chair of the time, Ian Wilton, sat down with the Delta management team to go through their FY '25 results, just to give ourselves comfort that our proposition and thesis on the acquisition remained on track. And after the presentations, discussions, I think, Paul, it's fair to say that we felt very, very comfortable. In terms of your question on the synergies, I think it's a key point for us. We've already had meetings with the team, with [ Jarred ] and Matt and Chris and the team around the synergies. We had planned for 12-month -- sorry, a 3-year development of the -- or extraction of the $12 million synergies. Our belief is that given the timing, given the November 3 timing and the proximity to the FY '26 winter crop that we do have time to do a lot of the work that we wouldn't have been able to do if it had been in the same period the previous year. So our sense is that we can fast track those synergies and bring them through. And as you know, they're largely crop protection. They're largely providing different crop protection supply chains out of Titan into the Four Seasons brand. And with Steve Hines, the person who runs that business within Delta, there's great alignment with Nick Fazekas, who runs the overall crop protection business. So we've established the governance structure, the Board structure, et cetera, around Delta and all the divisions. And again, I feel pretty comfortable and optimistic that we will get -- we will optimize the synergies in FY '26. Evan Karatzas: Okay. And just final question. Just with the debt position, can you provide a number of -- to sort of normalize it if you remove the reduction in carryover inventory in SA, Vic and removing or transitioning some of the select client loans from Elders' balance sheet to third parties, just so we can sort of look for an adjusted or a like-for-like debt position, please? Paul Rossiter: Yes. Look, just very high level and back of envelope, I would say the carryover inventory, I've put a number of around $30 million on that, which we expect to be resolved in the first half. In terms of -- I'll put another bucket in there, Evan, in terms of overdue debtors, we think there's a $20 million to $25 million opportunity there. You may have noted that we have had a $10 million increase in 90-day plus receivables. That is 2 clients -- 2 large clients, that we expect to be resolved in FY '26. So we feel that we're at a peak in terms of overdue receivables as well. And then you've got -- in terms of client receivables or client loans, seasonal finance and loans, I've put a number of sort of around -- a target of around $50 million across financial services and seasonal finance. Evan Karatzas: Okay. That's super helpful. Maybe just a quick one, I'll just sneak it in. The 1Q comments you made, do we assume you're up 30%? Do we assume we're sort of back close to that? I think you previously mentioned, like, a through cycle 1Q average EBIT was around $37 million. Is that sort of where we're, I don't know, trending towards or run rating towards? Paul Rossiter: Yes. And I think the -- in terms of tailwinds in the business, Evan -- so I think the -- certainly, livestock prices are up relative to year-on-year. I'd say that tailwind will moderate the further we get through the financial year. Obviously, livestock prices increased throughout FY '25. But I think in terms of the Q1, it goes back a couple of years, when we gave that number, obviously noting that's not audited. But yes, it's a fair comment. Operator: Your next question comes from Paul Jensz from PAC Partners. Paul Jensz: Just one at the top, Mark, if I can. You talk about the 5% market share you have in the wider farm input space. Can you see some additions to your business or the Elders business? Or is it a case of organic growth from where you are to get a larger part of that pie? Mark Allison: Yes. Thanks, Paul. So when you say the larger rural products, are you referring to finance? Paul Jensz: Right across the board. You had a chart there with the Delta acquisition where you're a small part of a very big pie in farm inputs. and you've got the new structure that you have. I'm just wondering where to from here if you're just such a small part of the pie? Mark Allison: Okay. Yes. So that broader pie includes fuel, like all the finance, et cetera, et cetera. So a whole heap of services that we're not in. So I think our focus with -- well, I think it's -- the focus that Delta has had for a long time, will continue on, where it's a service-based customer-centric approach across the board. Delta is very small in Queensland and -- but ERS is also not that strong in Queensland. So there are geographical gaps, but it will largely be sticking to the knitting of what each of the divisions does best. And in that -- in the case of Delta, although it's got some broader offers, the focus is around that very technical rural products-based customer centricity. Paul Jensz: And that's across the broader Elders business as well, if I look at the new structure that you have? It's really just sticking to the core business? You don't see another bolt-on there? Mark Allison: No, I don't think so. I think our view is that the -- any deviations, slight deviations from where we are now, we've talked about in the Elders Real Estate business, it's around strengthening our commercial real estate in regional rural Australia area, continuing to build on our property management business, which is a really solid good business. I think in ERS, there's a lot of -- in the traditional pink-shirted DRS front end, there's a lot of efficiency. Because we've just put SysMod through ERS, they've got the front-end point of sale across all the branches across Australia. So it's really around all the efficiencies that we promised and controls. And again, customer understanding that Paul talked to in terms of data, that ERS hasn't been doing in the past. In terms of Elders Crop Protection, I think the focus will be some -- a little more on integration because the formulation businesses run stand-alone to the traditional Titan business. So we'll slowly move around integration there on systems. And then feed and processing, really, we're looking at ways of expanding efficiency with acquiring extra land with some increased backgrounding, many of the efficiency programs that we've had previously. So across each division -- and I guess it goes to the point of why having focused divisions makes so much sense. Because each of them have their own nuance, their own focus, and it allows the management teams to really drive the efficiency and profitability. Paul Jensz: Okay. And then if I -- just a second question, if I can, if I build the building blocks towards, let's say, 2027, '28 numbers that consensus have, it doesn't seem to be a lot of, I suppose, underlying organic growth if you do the SysMod 250 staff that came across with the bolt-ons, Delta and the small free kit you get from '25, some of the earnings come into '26. So I'm interested in that organic growth number because I don't think consensus has got a big number in there for it and neither do I at the moment. Mark Allison: Yes. Well, I'm not sure how the -- what the assumptions are on the models. But I do know from a -- I mean, if backward integration is organic growth, and we certainly see it that way, the backward integration opportunity for ERS still has 10-or-so percent to go of the available generic portfolio and the -- just in crop protection and in Delta, there's probably 40% to go. So I think from us doing things that we control, not relying on market conditions, there's a lot of -- and then you've got also the benefits, the lag benefits of the transformational projects. But yes, your observation is probably right, Paul. Paul Jensz: And the final one, I thought others would ask this question, Mark, but I'll do it. The press -- I love talking about management transition, Mark, and your term comes up at the end of next year. I'm interested in whether you could return fire with what the press, like, talking with management change. Mark Allison: Yes. No, I thought the comment in the Australian was relatively accurate. I said when we refreshed the Board and I stayed -- I decided to stay, I said the earliest that I'd leave would be at the end of this Eight Point Plan, so that's September next year. And that's still the case. And it's not a term in the contract. It's an ongoing contract. So basically, my position has been that as a minimum, I'll stay to the end of the Eight Point Plan. Operator: Your next question comes from John Campbell from Jefferies. John Campbell: Firstly, just for clarity, what's the dollar value of adjustments that you've made to arrive at adjusted EBIT? Paul Rossiter: So you're -- in the investor presentation, John? John Campbell: Yes. Yes, it just said $143 million, just for clarity. So I know what we're adjusting. Paul Rossiter: Okay. I might just come back offline on that. So we do have -- we've got a list in the annual report, but yes, I'll come back on that offline. John Campbell: Yes. I can see where you've got that in the accounts. I just wasn't 100% sure which is included in your adjustment calculations. But I think we've got a call on this afternoon, Paul, so we can maybe touch base then. And just Mark, around -- and you sort of touched on it, but I presume with the improving seasonal conditions in the Southern regions that impacted in FY '25, in terms of that competitive intensity in crop protection that you've been talking about, I presume you see FY '26, so that sort of level of intensity and price competition and the like abating over the course of '26? Mark Allison: Yes. I think there are probably 2 components that leads us to think that way. One of them is around the seasonal conditions, as you just mentioned. And the second one is the stabilization of COGS out of Chinese factories. So the idea of lower priced cost of goods coming into Australia and then driving market price down, that doesn't seem to be where it was. Earlier, I think 6 months ago, we were concerned that tariffs on Chinese crop protection into North America may drive dumping of product in Australia and therefore, further drive prices down. If you're caught with high-cost inventory, you're obviously going to be screwed from a margin viewpoint. But our sense is that it's stabilized. And regardless, even a stabilized normal season environment, Australia has the lowest crop protection prices for all around the world. And it's not uncommon for multinational companies to divert product from Australia to Europe because they can make so much more money out of the same active ingredient. John Campbell: Okay. So that all augurs pretty well for crop protection for '26? Mark Allison: It looks like -- yes, as I said, I think we're pretty optimistic, both commodity season and the back of the transformational projects. Operator: Your next question comes from Mark Topy from Select Equities. Mark Topy: I just wanted to ask a question around the property side, the retail, the growth and both in the gross margin and the sort of volumes and some expectation around that and maybe some breakdown between what's organic and what's been achieved by acquisition because you clearly got a very strong growth rate. Can you give us some sense of how that looks going forward now? Paul Rossiter: Yes. Thanks, Mark. So just for clarity, so that was for real estate services. Mark Topy: Yes. Paul Rossiter: Yes, yes. So look, we -- in terms of growth, we see roughly the split between acquisition and organic, about 60% acquisition in F '25, 40% organic. I do note that one of the significant benefits from the acquisition of Knight Frank was to substantially grow our commercial real estate business. It also introduced a valuations business to the group as well. So when we think about real estate growth, it is across residential properties under management, broadacre, commercial and now valuations. So there's a few strings to the bow there. I'd also just make a comment in regards to broadacre. It did grow, but very fractionally in F '25, that part of the book was held back by the dry conditions in South Australia and Victoria. We do expect sort of pent-up vendor demand as those regions improve. Mark Topy: Right. Just thinking about the Tasmania market, kind of, say, how much growth opportunity do you see in that market going forward? Mark Allison: Yes. I think with Tasmania per se, I think it's -- it would be incremental growth. But I think the big benefit of that acquisition, which is the old Knight Frank business, is the commercial real estate knowledge, networks, et cetera, in the Mainland. And we're already seeing that is very, very important. So there are many contacts and insights that we didn't have on commercial real estate that we've gained from that business that is really helpful in our approach to Mainland expansion in commercial real estate. Mark Topy: Great. And just on the Delta side then, can you just talk to the systems and system harmonization in terms of what's being done in the Elders and whether any CapEx might be required if you like to harmonize Delta in line with Elders? Mark Allison: Yes. So the SysMod project is predominantly Elders'. And our approach at the end of Wave 4 when we switched off the AS400, and we're completely on Microsoft Dynamics 360 -- 365, sorry, we might have got a discount. Definitely not. So from that point forward, each of the acquisitions or each of the other divisions, whether that be AIRR, Elders Crop Protection or Delta, will be business case-based. So if there's a business case from the Delta Board around aligning, enhancing systems, then it will be treated on a return on capital business case basis. And we want to take it to business as usual because it's not just an ideological, everything has to be on the same system. This is all around return to shareholders. And all the systems that they're all operating on are fine. Mark Topy: They're all fine. Okay. I was going to say. And then in terms of -- I know you want to accelerate the Delta, but in terms of any risk areas, in terms of that integration, I noticed, for instance, they've got -- they're using different property managers. Do you perceive any sort of issues in migrating Delta across to Elders in that regard? Mark Allison: No. Well, I mean, it's all going to stay the same. So there's -- in terms of backup and stuff, which I think you're talking about. So we've got a mandatory integration. We've got a [ might ], and then there's a light touch component of it. Each of those are being developed with project teams between the businesses. So the -- our view is that it's a well-run business. It's got good management. It's got a strong Board governance to set the direction, and we'll be making the right decisions for the right reasons rather than any kind of ideological control-based decision. Of course, the mandatories around safety, financial transparency, regulatory compliance and so they're mandatories, as you'd expect. Operator: Unfortunately, that does conclude our time for questions. I'll now hand back to Mr. Allison for closing remarks. Mark Allison: Okay. Well, thank you very much to everyone. I did note that we have a couple more in the queue. So apologies to those. Paul and I have a back-to-back with all Elders staff. So 2,000 or 3,000 people will be waiting on the line for 5 minutes. So we've had to call it there. So for those that we haven't been able to talk to, we look forward to talking to you in our one-to-one sessions. But I appreciate everyone coming in, and thank you very much. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

189天前Insight Analytics约5分钟阅读

ARMK 2025 Q4 财报电话会议

Operator: Good morning, and welcome to Aramark's Fourth Quarter and Full Year Fiscal 2025 Earnings Results Conference Call. My name is Kevin, and I'll be your operator for today's call. At this time, I'd like to inform you this conference is being recorded for rebroadcast. And that all participants are in a listen only mode. We will open the conference call for questions at the conclusion of the company's remarks. please proceed. I will now turn the call over to Felise Kissell, Senior Vice President, Investor Relations and Corporate Development. Ms. Kissell, please proceed. Felise Kissell: Thank you, and welcome to Aramark's earnings conference call and webcast. This morning, we will be hearing from our CEO, John Zillmer; as well as CFO, Jim Tarangelo. As always, there are accompanying slides for this call that can be viewed through the webcast and are also available on the IR website for easy access. Our notice regarding forward-looking statements is included in our press release. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the Risk Factors MD&A and other sections of our annual report on Form 10-K and SEC filings. We will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in our press release and IR website. With that, I will now turn the call over to John. John Zillmer: Thanks, Felise, and thanks to all of you for joining us. On today's call, Jim and I will review our fourth quarter and full year results including the strategic, financial and operational milestones accomplished in fiscal '25. We've built upon our historically strong consistent performance and advanced a number of initiatives that position us well for the years ahead, which will be discussed in more detail. First and foremost, we take delivering on our commitments very seriously, and it's important to understand that as we onboard an unprecedented level of new business, we took the appropriate time to work closely with certain large clients in preparing for a seamless transition to Aramark becoming their new hospitality partner. In some cases, this led to a shift in the timing of new account openings, which impacted revenue in the fourth quarter. With many of these sites now up and running, we are well positioned for strong revenue performance in the quarters ahead. We are more resolved than ever to meet and even exceed the high yet very attainable bar we set for ourselves. This past year has represented many consequential firsts for the company, all of which contribute to the strong growth trajectory for the businesses, including annualized gross new wins of $1.6 billion, which is 12% higher than fiscal '24 and reflects the largest contract awarded in FSS U.S. history and the second largest globally. An industry-leading client retention rate of 96.3%, with many lines of business and countries in the portfolio above this retention level. All combined, resulting in net new of 5.6%. Over $1 billion of new purchasing spend added for a second consecutive year in our supply chain GPO network. And lastly, achieving a leverage ratio of 3.25x, a number we haven't seen since prior to when Aramark went private in 2007. Our new business pipeline across the organization is significant, including first-time outsourcing opportunities, and we are already off to another strong start at this early stage of the fiscal year. This includes adding Blue Origin, Pennsylvania's Eastern Public Schools, the Welsh Rugby Union as well as expanding our services for Airbus. I have great confidence in the company's continued ability to achieve net new of 4% to 5% of prior year revenue, with retention levels exceeding 95% in fiscal '26 and beyond. And when we over-deliver on this metric, we reward our teams appropriately, as was the case particularly in the fourth quarter, reflected in additional incentive-based compensation from net new business, an objective representing 40% of the company's incentive plan for leaders across the organization. Moving to our results in the quarter. Aramark's organic revenue increased 14%, largely from net new business and base business growth. Excluding the 53rd week, organic revenue was toward the higher end of our long-term growth model. FSS U.S. grew organic revenue 14% in the fourth quarter. Again, excluding the 53rd week, organic revenue was up mid-single digits, led by Workplace Experience and Refreshments continuing its pace of record net new business, Collegiate Hospitality with strong retention rates, meal plan optimization success, and benefiting from higher student enrollments, particularly from our portfolio of academic institutions in the popular South and Southeast. And Healthcare reporting its best performance in over 2 years. Our Healthcare+ business was recently named #1 in Best Places to Work by Modern Healthcare for our commitment to a people-first culture and operational excellence across the industry. While we are encouraged with our roster of high-performing teams as the MLB playoffs approached, the outcome was not what we anticipated with the majority of our teams ultimately falling out of playoff contention. We've now entered the NFL, NBA and NHL seasons where fan attendance has been strong to date. Leveraging our expertise in professional sports, Aramark's Collegiate Sports business is experiencing double-digit revenue growth with per capita rates up 14% year-over-year, driven by increased concession spending and expanded premium services. I also want to commend our employees in the Destinations business, who worked closely with the National Park Service to assist during and following the devastating Dragon Bravo fire in the Grand Canyons North Rim. We had been operating the historic Grand Canyon Lodge, which was severely damaged. While it's still early, we are supporting the recovery and rebuilding efforts in the region and are optimistic about what's ahead for their visitor experience at the North Rim. We continue to expand our enterprise-wide capabilities and collaboration, which resulted in our new multiyear agreement with the University of Pennsylvania Health System, the largest contract win ever in the U.S. from one of the most prestigious medical systems in the world. We are proud to put our understanding of sophisticated and complex health care systems to work in new settings. We will be providing patients in retail food, environmental services and patient transportation, alongside an integrated call center to support these operations at sites across a nearly 4,000-bed, 7 hospital system. Among our many technologies offered at Penn Medicine will be an AI-driven patient menu platform that configures patient meals based on diagnosis and dietary requirements, in addition to proven robotic applications for both environmental services and meal preparation. Our proprietary AIWX platform will be used to map staffing and other needs, as well as our Quick Eats micro markets and mobile ordering platforms. We look forward to launching operations early in calendar '26 and are working closely with Penn Medicine to identify other opportunities to further grow the partnership. Additional clients added to the U.S. portfolio in the fourth quarter included Chicago's DePaul University in Collegiate Hospitality, where we'll begin operating next semester. Discover, following the acquisition by Capital One, also a client, as well as expanding our hospitality services into top-tier law firms within Workplace Experience. Now on to International. Once again, International delivered consistent double-digit organic revenue growth increasing 14% in the fourth quarter, with approximately 3% growth coming from the 53rd week, led by substantial new business, high retention and strong base business growth. All geographic regions contributed to this performance, with particular strength in the U.K., Canada, Ireland, Spain and Latin America. Toward the end of the quarter, International experienced its highest revenue ever for a single 1-day event when the NFL's Pittsburgh Steelers played the Minnesota Vikings at Croke Park Stadium in Dublin, Ireland, all Aramark clients. We also just had great success at Olympic Stadium in Berlin, Germany with another NFL match-up as the league's fan base continues to quickly grow in Europe. International was awarded new clients in the fourth quarter across sectors and geographies. This included expanding our growing presence in the UEFA Champions League and Bundesliga with the addition of Bayern Leverkusen Football Club in Germany, the health care network of Hospital Italiano in Argentina, energy exploration and developer, ENAP, in Chile, and mining leader, IAMGOLD, in Canada. Looking forward, we expect International to maintain its strong business momentum, delivering on a growth agenda focused on culture, team, capabilities and process. Turning to global supply chain. Avendra International added another $1 billion of new purchasing spend in its GPO network this past fiscal year, primarily from travel and leisure, health care, senior living and education. The supply chain team is also leveraging enhanced technology capabilities to optimize client compliance and contract productivity. We're making the appropriate investments to build upon our strong analytics and client mobile chatbot platforms. These powerful tools put the answers our frontline clients need in the palm of their hand and continue to deliver back-end efficiencies in our supply chain operations. We are now deploying these solutions globally. We are expanding our international footprint and supply chain, and the Quantum acquisition has fit well into the portfolio, contributing accretive growth to both Europe and Latin America. Inflation levels have been as expected, and we currently estimate inflation around the 3% range heading into the new fiscal year as we continue to effectively manage the broader macro environment. Our teams are closely monitoring any changes in the marketplace and will leverage our extensive capabilities to support our clients. Before turning the call over to Jim, I want to reiterate that our teams across the company are hard at work and focused on accelerating performance, and we are already seeing success entering the new fiscal year in leveraging enterprise-wide capabilities, starting operations for a record number of new clients, maintaining our client retention momentum, optimizing global supply chain strategies and, lastly, pursuing substantial growth opportunities. Jim? James Tarangelo: Thanks, John, and good morning, everyone. We reported another year of commendable operational performance on both the top and bottom line, a testament to the capabilities of our business model. We are experiencing unprecedented levels of success in key leading indicators of performance, annualized gross new wins and client retention, which provide us the momentum to deliver our expected growth in fiscal '26 and even beyond. I want to now provide some insights into our fiscal '25 financial performance before reviewing our expectations for the upcoming fiscal year. As John reviewed, fourth quarter organic revenue was up 14%. The growth was driven by new business, high retention levels, increased base business and the benefit of the 53rd week which contributed approximately 7%, more than offsetting a shift in the timing of new account openings. For the full fiscal year, we reported revenue on a GAAP basis of $18.5 billion, up 6% compared to the prior year, with approximately 1% of foreign currency impact. Organic revenue grew 7% versus the prior year, again from net new business, base business and 2% from the 53rd week. And as you know, also reflects the company's portfolio exits in Facilities in the prior year. Adjusted operating income for the quarter was $289 million, and grew 6% on a constant currency basis, led by higher revenue levels, leveraging technology capabilities, particularly in supply chain, and above-unit cost discipline. The increase more than offset higher incentive-based compensation of $25 million recorded in the quarter associated with achieving record net new business. As a reminder, our growth-oriented model is structured with 40% of our incentive-based compensation tied to an annualized net new business metric. Throughout the fiscal year, we accrued this compensation based on expected performance. The Penn Medicine win in the fourth quarter, in particular, resulted in a maximum payout under the incentive plan for this metric. Additionally, we did have higher prescription claims in the quarter along with some new business start-up costs in Higher Ed and Collegiate Sports, areas of attractive growth for the company. Excluding these expense items in the quarter, AOI margin would have been higher by 70 basis points. The company has taken decisive actions to decrease future medical expenses related to elective lifestyle prescription, specifically GLP-1 coverage. For fiscal '25, AOI was $981 million, up 12% on a constant currency basis, which represented AOI margin expansion of nearly 25 basis points. This growth was led by our operating levers and the estimated contribution from the 53rd week of approximately 2%. Which more than offset the additional incentive-based compensation I just mentioned, affecting AOI growth by 3% or 20 basis points. Turning to the business segments. The U.S. reported AOI growth of 2% during the quarter. Growth was due to higher revenue levels, enhanced technology capabilities and effective cost management. AOI growth in the quarter more than offset the higher expenses associated with incentive-based compensation, medical and some new business start-up costs already mentioned. We also took the opportunity to make some strategic reinvestments within Destinations, which included property development, digital marketing optimization and other enhancements to drive the guest experience. To a lesser extent, we did feel some effect from our MLB teams falling out of playoff contention. The International segment experienced AOI growth of 31% during the fourth quarter and 21% for the full year, both on a constant currency basis. AOI margin for the year improved by more than 40 basis points. AOI growth and margin expansion was led by higher revenue, effective cost management and supply chain efficiencies. For the fourth quarter, adjusted EPS was $0.57, up 6% on a constant currency basis. For the full year, adjusted EPS was $1.82, an increase of almost 20% and on a constant currency basis. The additional incentive-based compensation impacted adjusted EPS by $0.07 in both the fourth quarter and full year. On a GAAP basis, Aramark reported consolidated operating income of $218 million and EPS of $0.33 in the fourth quarter. And for fiscal '25, operating income was $792 million and EPS was $1.22. This included severance charges from restructuring initiatives to further optimize operations as well as a noncash asset write-down in the fourth quarter associated with a minority interest investment made in the previous fiscal year. Moving to cash flow. Consistent with our normal seasonality of the business, the fourth quarter generated a significant cash inflow, which contributed to our strong cash flow for the full year. Net cash provided by operating activities in fiscal '25 was $921 million, and free cash flow was $454 million. Our free cash flow grew by more than 40% compared to the prior year period from higher cash from operations and favorable working capital, particularly from improved collections. Our cash flow performance and higher earnings resulted in our consolidated leverage ratio improving to 3.25x at the end of September, down from 3.4x a year ago and represent the company's lowest level in nearly 20 years. We closed the fiscal year with more than $2.4 billion of cash availability. This provides us with the continued flexibility to execute on our capital allocation priorities, which effectively optimizes investing in the business, reducing leverage below 3x and increasing the quarterly dividend, which was just increased by 14%, while repurchasing stock utilizing excess cash generation. I'll now wrap up with our outlook for fiscal '26. Based on our current expectations, we anticipate the following full year performance. Organic revenue of $19.45 billion to $19.85 billion, representing growth of 7% to 9%. AOI of $1.1 billion to $1.15 billion, an increase of 12% to 17%. Adjusted EPS in the range of $2.18 to $2.28, reflecting growth of 20% to 25%. And a leverage ratio below 3x. One point to keep in mind on the quarterly cadence for fiscal '26. There is a slight calendar shift from the 53rd week in fiscal '25, which has no effect on the full year fiscal '26 numbers, with more detail in the analyst modeling section of our earnings slides. In summary, we remain resolved in driving our strategies to capitalize on the significant growth opportunities for the business centered on strong revenue growth and through new business wins, high client retention rates and base business growth. At the same time, we expect to continue accelerating our profitability from our multiple operating levers, including differentiated supply chain capabilities and disciplined cost management, enhancing our efficiencies and scale across the business. With a resilient business model and a clear path forward, we are well positioned to deliver long-term value for our shareholders. We believe the future of the company is extremely bright, and we're energized about the opportunities ahead. Thank you for your time this morning. John? John Zillmer: Thank thank you, Jim. With fiscal '26 now underway, we look ahead with great confidence. Our efforts are centered on building a high-performing, sustainable business focused on providing exceptional hospitality services to our clients. I want to reiterate that we are committed to creating significant value for our shareholders and are taking the appropriate actions to realize this unwavering objective. And operator, we'll now open the call for questions. Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star then 11 on your touch tone phone. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. In order to accommodate participants in the question queue, please limit yourself to one question and one follow-up. Remove yourself from the queue, please press star 11. Our first question comes from Ian Zaffino with Oppenheimer. Ian Zaffino: Very impressive on the new win side. I mean, I guess this kind of just speaks to the culture of the company, retentions going up. And I guess this is just a culmination of a very kind of client-focused culture here. Glad you're taking the time to spend time with the clients to do so. But the question would be, when we're thinking about these new account openings, can you maybe just delve a little bit more into the shift in timing? Was this in particular sectors or areas? Do you think it will continue? Any economic related factors that you didn't mention? Or any kind of other color there would be helpful. John Zillmer: You bet. Yes. First of all, it was the calendar shift or the opening shift, if you will, really occurred in multiple businesses, Corrections, Workplace Experience and Healthcare, all had kind of late-breaking opportunities for openings, which were deferred into calendar -- into fiscal '26. Without going into specifics, the impact was significant in the quarter, but it was appropriate from a timing perspective to make sure that we could open effectively. And frankly, it was also appropriate for the timing of the client. It was really ultimately their decision with respect to the opening timing. So yes, it was significant. It's not typical. Generally, we -- when we sell accounts, we tend to open them in the year that we sell them. This was a result of a number of different opportunities, all of which were terrific for the company. And we're very excited about the overall results. As you know, we sold nearly $1 billion of new business -- of net new business this year, on a gross basis, $1.6 billion. So just a fantastic performance by the entire team delivering on the new business objectives, and with the retention rate exceeding 96.3%, just ends up being a great trajectory for '26. Ian Zaffino: Right. And since you mentioned new business, congratulations on this Penn deal, and this will bring me into my next question. Maybe you could talk about 2026 cadence here. Maybe talk about that UPenn contract, how that kind of ramps throughout the year. Do you have any other deals baked in to the guidance or how are you thinking about deals? And then also, just as you talk about cadence, just maybe day count, playoff lapping, which might mean maybe a better back half of the year. But any other color you can kind of give. John Zillmer: Sure. With respect to Penn specifically, Penn will begin -- we'll begin operating at Penn in February. That will be staged over the course of several months as we open up the operations in the individual locations over multiple cities and multiple institutions. So it is a very exciting process. As you know, much of it was self-operated, so we're converting self-op, we're converting some competitors' operations as well. So a very complex opening. So taking the time to do it effectively, I feel absolutely committed to delivering on the performance for Penn and, frankly, to taking the time to do it right for Aramark as well. So in typical fashion, we have significant new business expectations for next year as well, but really don't have any cadence, if you will, on those opportunities. Our pipeline is very robust and very strong. We've had very strong early successes. As I mentioned, the Welsh Rugby Union and others, DePaul University opening as well. So the cadence, I think, is going to be more normal next year than it happened this year. So all in all, very strong results, and we're very pleased. Operator: Our next question comes from Toni Kaplan with Morgan Stanley. Toni Kaplan: I wanted to start with a question on margins. Just wanted to understand with the new wins that you got this year, I know there's this cost dynamic where sometimes there is a ramp in higher costs when you ramp up on those contracts. And so I just wanted to understand the cost trajectory there. And then also, if you could talk about any AI initiatives or other efficiency initiatives that should contribute to '26 margins? James Tarangelo: Yes. So we've had really good progress right on margins. I mean, from 4.6% to 5.1% to 5.3% this year. And if you look at the midpoint of the guidance I think for next year, to be at about 5.7%. So sort of consistent 30 to 40 basis points of margin appreciation has been generated. So yes, we do have some -- obviously, with the large wins coming in next year, that will be associated with maybe some incremental start-up costs. But I think we're able to offset that with the continued productivity we're seeing in our supply chain, in particular, leveraging AI in supply chain and across other functional areas. And then continuing to scale our overhead. We have very good visibility with respect to our corporate costs and SG&A. We're able to take on this business really with not adding much in the way of new above-unit overhead costs. So I think we're fit for purpose and able to take this on and still continue to leverage the operating levers that have been working well for us over the past couple of years. John Zillmer: Yes. And Toni, I would just add, normalized opening costs are baked into our projection and into the guidance. So we don't anticipate opening costs impacting our guidance negatively next year. If we continue to see accelerating performance in terms of net new, that ramp does occur. But as Jim said, we're basically able to offset those cost increases through efficiency, through productivity, through SG&A leverage and through supply chain dynamics. So we're very comfortable with the continued margin accretion as we continue to grow the company. Toni Kaplan: Great. And then you mentioned the double-digit growth in Collegiate Sports, which is great. And just want to ask about the pipeline there and particularly how the progress is going with converting some of the education contracts, either sports to education as well or education to sports, et cetera, that would be great. John Zillmer: Sure, you bet. We have taken the opportunity. We do engage both the Collegiate Hospitality and the Sports & Entertainment teams collectively when we pursue those opportunities. As you'll remember, we added Arizona State's system this year. As we grew the relationship there, we added the sports. That's being run by our Sports & Entertainment team. And Oklahoma, that's being run by our Sports & Entertainment team. We are pursuing several large university athletic programs right now. They're currently underway and that we have engaged the S&E team on those opportunities. So we run them based on what we think the needs of the business are, particularly if there's alcohol involved. Our S&E team has extraordinary capabilities with respect to the delivery and the appropriate management of alcohol systems in university environments. And so we engage both sides of the organization to do it. And we are seeing significant opportunities for growth there and major institutions that are currently self-operated and looking for support and help and also some competitors who are currently out for bid as well. So it's a great marketplace and we intend to -- we're the #1 company in that space and we continue to be focus aggressively on pursuing growing it. Operator: Our next question comes from Leo Carrington with Citi. Leo Carrington: If I could ask a follow-up on that Penn Medicine deal. What's the implications in terms of the potential for further hospital groups to follow suit and consolidate and outsource their catering? What can you tell us about the rest of that subsector, if you like? And then secondly, on the B&I segment, the organic growth, even excluding the 53rd week, was quite a sharp acceleration. My understanding is this is the most consolidated segment. So can you elaborate on what is driving your market share growth here in terms of your capability? John Zillmer: Sure. I think both great questions. First of all, on the health care systems, yes, there are significant new opportunities that we're pursuing in health care for self-op conversion, large systems adopting strategies like Penn did to go ahead and find ways to become more effective and to reduce their overall cost of operation. And we're able to deliver very significant benefits to the institution as a result of both our supply chain capabilities as well as our systems that we're bringing to bear across their enterprise. And so the solutions that we offered to Penn are very, very transferable to other institutions, and we think the opportunity there is very large. So in this particular case, Penn is such a wonderful institution and has such a stellar reputation that we do believe other systems will follow their lead in terms of consolidation and systemization, and we're already pursuing new opportunities in that regard. With respect to B&I, Workplace Experience group, our team has just done a fantastic job growing that business, pursuing opportunities, competitive opportunities, and as you noted, continue to grow share across the organization. I think it's a function of both our capabilities, our different brand offerings, if you will, under the Workplace Experience umbrella, and frankly, just overall performance. Our team is delivering at a very high level. Our customers recognize that, our potential new clients recognize that. And so we've been able to grow that share in a number of niches where we haven't historically competed. So we're very excited. It's got -- it has great leadership, and we're very confident in its future growth opportunities as well. James Tarangelo: Yes. And John, I would just add that it also includes our refreshment services, coffee service and micro market, which is also growing very rapidly, very consistently. Both Workplace Experience, Refreshment Services, high levels of retention, high levels of net new as a result of the branding and success they've had with clients that John just mentioned. So we're seeing it from really all parts of that organization. Operator: Our next question comes from Andrew Steinerman with JPMorgan. Andrew Steinerman: It's Andrew. When you talk about base business growth, I'm pretty sure you're talking about both price increases and other base business growth like cross-selling. And so with that, in mind, could you just go through the organic revenue drivers between net new price increases and other base growth both in the fiscal '26 guide as well as '25 just completed? James Tarangelo: Yes, I'll take that. So yes, in terms of the components of growth for fiscal '25, the base business growth was consist of volume and price. And pricing generally has been at about 3%, and so base business sort of 3.5% in '25. Net new contribution, that's the in-year contribution, about 1.5%, and then the 53rd week added about 2%. That gets you to the 7% for fiscal '25. And in terms of the outlook for '26, we'd expect to gain about 3% to 4% base business growth, roughly 3% or so coming from price. And then again, given the strong levels of retention and record new, be in the 4% to 5% range on net new contribution in fiscal '26. And this is on an apples -- on a 52-week comparison to the prior year. That gets you to the guide of 7% to 9%. Operator: Our next question comes from Jaafar Mestari with BNP Paribas. Jaafar Mestari: I had just a follow-up on this net new business contribution in '26 in the year. Given where you ended at the end of '25 and given some of your KPIs in terms of new signings and retention being very much forward-looking, why is the outlook for '26 not a bit stronger in terms of the contribution in that year? The 5.6% wasn't reflected in '25 because of the timing of some of those signings and the ramp-up, should we now expect it to be reflected in '26 fully? James Tarangelo: Yes. So there's a couple. So as we -- so Penn Medicine, remember, it's an annualized number, and Penn Medicine, for example, the largest one, is starting early in the year and will ramp up throughout the course of fiscal '26. And then the Oakland A's is another large win that will have more of an impact into the following fiscal year. So that's why there's some -- there's always a bit of timing between the annualized and in-year realization of those revenue. Jaafar Mestari: That's clear. And then one follow-up on the margins. You're right, obviously, that the guidance in '26 will mean that the margin improvement year-over-year will be between 30 bps and 40 bps. But that's using as a starting point '25 with some of the items you flagged, including the exceptional sales team compensation in Q4. And so a similar question here, if we don't expect those to reoccur -- if they reoccur, fantastic, it's something you've signed a lot. But if we don't expect those to reoccur, shouldn't the margin in '26 normalize a touch for those and then grow 30 to 40 bps on a normalized basis? James Tarangelo: Yes. If you look at the range of outcomes, so I think if you sort of the low end and high end of the range, right, sort of 5.6% to 5.8%, and as I mentioned, 5.7% in the middle. So the range of outcomes is wider. So correct, those items, if you don't -- if they repeat, it's a good problem to have. But sort of, yes, if you normalize fiscal '25 and you're in the 5.4%, 5.5% neighborhood. The other factor is, given the large ramp-up of these accounts, there will be some additional start-up costs in '26 that is baked into the guidance. You can think about that as sort of maybe 10 basis points as part of that. Jaafar Mestari: It's baked in. And then just last point, very quickly. You've updated us on health care opportunities where you're saying you're still working on some material opportunities. Another area where you've been talking about some potential big wins to come was Corrections. Any update here? Is the decision-making process in that segment just very slow? John Zillmer: Yes. We actually had some significant Corrections new wins, some of which did actually get recorded as wins in the net new and are ramping up now. So we are continuing to pursue additional state systems and it continues to be one of our largest opportunities for self-op conversion. And so we think the pace of that business's growth will continue, both on the correctional feeding side as well as the commissary side of the business as well. So still a very significant total addressable market available to us to pursue and very confident in that team and its approach to the business and its ability to generate top line growth. Operator: Our next question comes from Neil Tyler with Rothschild and Co. Neil Tyler: I'm just interested in the restructuring measures that you've initiated in the International business. Can you talk a little bit about the thought process and maybe operational metrics that prompted you to initiate restructuring in a business that seems to be growing very healthily? And then secondly, perhaps when you're talking -- when you refer to the postponement or sort of slightly delayed startup of some of the operations, can you talk a little bit -- give us a little bit of a sort of context or description around what sort of factors need to be considered when you decide to slow down the start-up of operations in a contract? Maybe give us some anecdotal evidence or anecdotal sort of description of why that might be the case. John Zillmer: Yes. It's really more client-driven than it is Aramark-driven. Clients have time frames that they have -- that they're working under, and in particular, they're dealing with multiple constituents. One of those opportunities, for example, using Penn as an example of an account that we anticipated potentially opening earlier, they had to work through a number of different decision processes. They needed to inform their employees, they needed to work through union relationships. And so really, we tend to respond to our clients' needs and our customers' needs more than ours with respect to timing. And that was also very significantly evident in a couple of those correctional opportunities where decisions were deferred by states and in a couple of opportunities in the Workplace Experience group where we had a large client we were already serving that was making a decision to displace a competitor that was also a customer of theirs. So as I said, more often than not, these deferrals tend to be related to customer timing, not Aramark timing. And we just had a number of them occur that affected our fourth quarter this year. James Tarangelo: Yes. And on the restructuring in the International, again, the backdrop here, this -- the International group has had a long track record of success, multiple quarters, multiple years of up double-digit growth. So this is a business we're happy to invest where we need to, to make sure we're well positioned to achieve our financial targets and streamline the business a little bit. So it's geared toward streamlining some SG&A and optimizing some SG&A. As you know, it's fairly expensive to do that in certain parts of Europe. So that was a piece of it. Optimizing a little bit in mining in South America to position us for the coming year. And then there is a final piece that was related to some real estate consolidation as well, some of the bolt-on deals that we did presented an opportunity to bring those together more efficiently. Neil Tyler: Got it. And then just going back to the first question just so I have it clear in my mind. When we think about the slight growth shortfall relative to the sort of lower end of your guidance that occurred in the fourth quarter, is it fair to characterize the majority of that as being down to contract timing as opposed to sort of the comp effect of things like the MLB playoffs and the like? John Zillmer: Yes. I think that was certainly the most significant part of it. The MLB impact was secondary. The closure of the Grand Canyon was certainly secondary to that. So there are a couple of items. Rather than giving you a laundry list of every reason, the one that I would really focus on is that, opening deferral mechanism and timing of that. But the other 2 impact items were also part of that fourth quarter. Operator: Our next question comes from Jasper Bibb with Truist Securities. Jasper Bibb: I wanted to ask if you could give us a bit more detail on the organic run rate into fiscal '26, maybe using what organic growth looked like in October or September excluding the 53rd week? James Tarangelo: Yes. Thanks, Jasper. Yes, so the cadence in '26, so just a couple of points here, I said that the 53rd week will have an impact on the cadence, as I mentioned in my comments, on '26. So essentially, we have a strong operating week in higher ed and K-12, in particular. That sort of gets absorbed into fiscal '25 with that extra week. So with that, you could think about losing a few days in Q1 that will come back in Q2. So first half growth will be kind of consistent with our run rate. But I think the first quarter, think that sort of minus 3%, 3.5% versus the run rate that will be captured back in the second quarter. So that's the cadence I wanted to note. But we're exiting with good speed, good run rate here as we exited here in Q4, and good momentum as we expected in October and the outlook for Q1. So it's running according to track, but I just did want to note there's some timing of -- due to the 53rd week that will have no impact on the full year, just quarterly. Jasper Bibb: Maybe give us a bit more detail on the quarterly cadence of margin. I imagine with the contract ramps, you might be a little lower in the first half than is seasonally normal and stronger in the back half. Is that a fair interpretation? Or any other detail you can give us on what that will look like? James Tarangelo: Yes. I think that's fair. But again, the larger driver on the margins will be the same thing. It's the drop-through on the revenue in Q1 versus Q2. So the first half will look normal. But given less revenue in Q1, there will be a margin impact on Q1 as well, but it will even out in the -- for the full first half. Operator: Our next question comes from Andrew Wittmann with Baird. Andrew J. Wittmann: I think the last question is actually a really important question. And I understand that you commented on percentages here, Jim, for the revenue first quarter down 3% to 3.5%, bigger -- sounded like bigger impact to margins just because you don't get the fixed cost leverage. Did you want to -- did you want to be even more precise on that one? I think we can all do math, but did you want to give revenue and EBIT kind of numbers for 1Q? I just feel like it's a big enough change. And then I think as we -- given kind of the last couple of quarters how numbers have been kind of moving around a lot, it might be even better to give actual numbers for 1Q. I know that's a big ask, but I just think it's important here. James Tarangelo: Yes. Again, I think what I would just say there, if you think about the first half versus second half, and if you sort of again adjusting for the 53rd week, and I'll just give a sort of ballpark, if you're sort of running at sort of 7% to 8% in the first half, a little bit higher, in the second half, right, I mentioned about a 3% impact in Q1, you could think of that coming off of the 7% to 8% roughly, and then that will be captured back in Q2, just to give you a little bit of sense. But again, I don't want to be too specific, but that gives you a sense of some of the movements. Andrew J. Wittmann: Okay. And then, John, maybe have you comment a little bit more on the pipeline. Obviously, it's been robust. Can you give a little bit more there, kind of what you're seeing, how the size of the pipeline compares today versus maybe this time last year? I think that would be kind of helpful to just build some mental model for all of us around how the top line might unfold this year. John Zillmer: Yes. I would say the pipeline continues to be very robust. And at least as good as last year at this point. So we continually build on those pipeline of opportunities and we continue to add new markets and new niches that we're pursuing aggressively to go ahead and expand our total addressable market, adding sectors, in particular, if you think about Workplace Experience, really aggressively pursuing new opportunities in the legal world, if you will, in top-tier law firms. If you look in International, pursuing new mining initiatives, new remote camp initiatives. So we continue to build the pipeline with lots of new opportunities, and it continues to be very robust. So I would say there's really no fundamental change year-over-year other than we're continuing to invest in the growth of the enterprise. We expect it to continue. Very encouraged by the strong results this year. And also, again, encouraged by the very strong retention rate and the discipline inside the organization. And so all in all, I think it leads to fundamentally a very strong trajectory going into '26. And as Jim described, we'll have our seasonal kind of normal impacts on a quarter-to-quarter basis. But overall, I think our full year guidance is absolutely achievable and, yes, very comfortable with the ranges that we've talked about. Operator: Our next question comes from Shlomo Rosenbaum with Stifel. Shlomo Rosenbaum: Can you just talk -- just getting back a little bit more to those contracts that didn't start quite as expected in the fourth quarter. Can you just talk a little bit more about whether there were carry costs that were incurred as part of that? And for some of those contracts, does that continue into the first quarter in terms of impacting margin? Or just trying to have a better understanding as to the impact financially. And then frankly, the visibility that you have in terms of managing your business towards those things. And then I have a follow-up. John Zillmer: Yes. I would say, yes, there is a little bit of ramp-up in starting costs, particularly for those accounts that have already opened in the first quarter on the correction side and in some of those other businesses. So yes, we were preparing to open them and incurring costs in the fourth quarter in terms of the run rate opening costs, if you will. So there is some -- a little bit of an impact there that dribbles into the fourth quarter or into the first quarter, I would guess. But I wouldn't characterize it as overly significant. So I think all in all, the -- I would point you to 2 big items. Obviously, the medical costs last year were a significant impact on the total earnings of the company, both the medical claims cost as well as GLP-1s. And we have taken very decisive action with respect to the GLP-1 impact and which will go into effect in the -- in January and which will significantly reduce our costs year-over-year from that perspective. So if you look at the 2 big impact items in the quarter, there are medical costs and the higher incentive compensation. I'll take those higher incentive costs every year if I can achieve those kinds of numbers, and drive permanently the growth trajectory of this organization by outperforming on new growth, I'll do it every time. And I feel very good about that. And I love the fact that I've got to pay the people of this organization for delivering on those results. The GLP-1s, we've taken care of that; that won't be an issue. So if I really look at year-over-year, the earnings miss in the quarter, I would be focusing on those items as opposed to the other details in the business. That's really where the fundamental miss was. Shlomo Rosenbaum: Okay. And then one of the things when you started years ago and you and I talked about the focus on retention, and you've done -- you really moved the retention up significantly. And I was wondering, are we looking at retention right now as a steady state? Or hey, it was kind of unusually high, we're usually looking for like around the 95%, but we had some big contracts that really skewed those numbers? Or is the bar just moving higher because of the operational changes that you've made within the business in terms of getting ahead of some of those contracts, better servicing the contracts, better in [indiscernible]? As we sit here next year, are we going to talk about 96% plus again or we should think that, hey, annually, you want to expect 95% and, if you can outperform, you outperform? John Zillmer: Well, I think I would love to be sitting here next year talking about 96% or higher again. We have very high expectations for our people. We hold them accountable. And so it's our expectation that we're going to get better, not worse. Part of that is both performance, part of it is negotiation. Part of it is continuing to find ways to extend agreements with clients and customers proactively. So this is a process we are fully engaged in all the time. And so I would love to sit here and say next year, we'd love to hit 97%. I don't know if that's possible. But we're going to be striving to that and we're going to do the best that we possibly can. And so yes, 95% should be a floor. It should never be -- it should never fall below that. And frankly, we have high expectations that we can do better. And we're raising the bar for our people all the time. Operator: Our next question comes from Josh Chan with UBS. Joshua Chan: On that retention point, I know that some years, it's never easy, but some years, it's easier than others to retain business just because of the cadence of what comes up for renewals. Could you just like remind us what's happening in 2026 compared to '25 in terms of what of your contracts may be rebid or have to come up for renewal? John Zillmer: Yes. I would say it's pretty much a normal year, a normal expectation. Some of the businesses that have more cyclical contract renewals like K-12, like Corrections will have their normal cadence. And those are the ones that are really impacted and have different impact items -- or different cadences year-over-year. I would say, we're very well positioned this year from a retention perspective. Last year, going into the year, we had Arizona State was our largest Higher Education contract. It was going out for bid for the first time in over 20 years because the State of Arizona dictated that it needed to. We retained that business and grew it. So that was a very exciting result. But I would characterize '26 as kind of a normal year, really no high-impact items one way or the other. So we continue to be focused on delivering at a very high level from a retention perspective. Joshua Chan: And then I think, Jim, you talked a little bit about the impact in Q1 from the calendar shift. I guess does Q1 not also have the Major League Baseball dynamic as well? And maybe could you just kind of put a finer point on whether that will have a material impact also on the growth rate, just so that everybody can be baselining off of the right numbers? James Tarangelo: Josh, you're correct, there's less. You only had the Phillies advanced to less playoff games in '26 versus '25 Q1. But having said that, the overall strong retention and net new coming to the year should offset that. So I would say, more of a normal cadence aside from that. So a little downward pressure from playoffs, but offset by other areas of growth in the business. So the main factor I would say in Q1 is just simply the calendar shift. Operator: Our next question comes from Stephanie Moore with Jefferies. Stephanie Benjamin Moore: Maybe touching on a more of a higher-level question. I'd love to get your thoughts as you look at -- reflect back on fiscal '25 and you look towards fiscal '26. Just what you're seeing from an overall in-sourcing versus outsourcing trend, how '25 compared to maybe prior years? And then in the same vein, if you could touch on just the competitive landscape, especially given maybe some more changes with one of your competitors as of late. John Zillmer: Yes, I would say the level of first-time outsourcing continues to be in an elevated state. And in particular, for us this year, the single biggest impact item was the Penn contract and the fact that they were moving to first-time outsourcing in a number of those operations. But we continue to see elevated outsourcing in a number of the segments, in particular, Higher Education, particularly in their sports side and university athletic departments really seriously considering outsourcing as a strategic alternative, particularly as they cope with the realities of the NIL environment and their need for funding. So I continue to see a very, very strong marketplace, a very strong opportunity set, if you will, across a range of sectors. It's not limited to just one; it's in multiple sectors where that first-time outsourcing continues. And we're enjoying very significant success. As an organization, we have grown our share this year. We've had a very significant performance against self-op and against our competitors as well. And we just focus on those opportunities one at a time. We believe we focus on the strength of our operations and on our client relationships and we sell from a position of quality and consistency and program. And we've been very successful doing that against all elements of the market. So we're very pleased with our overall results, but we are striving to do better day in and day out, and we'll continue to compete aggressively on quality and capability and client relationship. And that's how we win. Operator: I'm not showing any further questions at this time. I'd like to turn the call back over to Mr. Zillmer for closing remarks. John Zillmer: So again, thank you all for your support of the organization. We're very pleased with the overall performance, most especially with the net new and with retention this year. Really very strong finish to the year. We're very excited about our prospects for 2026 and the future ahead for the company and for our shareholders. Thank you. Operator: Thank you for participating. This does conclude today's conference call. You may now disconnect, and have a wonderful day.

189天前Insight Analytics约5分钟阅读

JJSF 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the J&J Snack Foods fourth quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Reed Anderson with ICR. Please go ahead. Reed Anderson: Thank you, operator, and good morning, everyone. Thank you for joining the J&J Snack Foods Fiscal 2025 Fourth Quarter Conference Call. Before getting started, let me take a minute to read the safe harbor language. This call contains 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 facts should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, expectations, and objectives as well as our anticipated financial performance. Operator: This includes, without limitation, Reed Anderson: our expectations with respect to the success of our cost savings initiatives, and customer demand improvements in the sales channels in which we operate. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, achievements expressed or implied by the forward-looking statements. Risk factors and other items discussed in our annual report on Form 10-Ks and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on the call today. Any such forward-looking statements represent management's estimates as of the date of this call today, 11/17/2025. While we may elect to update forward-looking statements at some point in the future, we disclaim any obligation to do so even if subsequent events cause expectations to change. In addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA, adjusted operating income, or adjusted earnings per share. All of which are reconciled to the nearest GAAP measure on the company's earnings press release, which can be found on our Investor Relations website. Joining me on the call today is Dan Fachner, our Chief Executive Officer along with Shawn Munsell, our Chief Financial Officer. Following management's prepared remarks, we will open the call for a question and answer session. With that, now like to turn the call over to Mr. Fachner. Please go ahead, Dan. Dan Fachner: Good morning. I am pleased with our fourth quarter results. Despite a challenging backdrop during the summer, we delivered adjusted EBITDA of $57.4 million on sales of $410.2 million, down 3.9% on sales versus the prior year. As anticipated, over half of the sales decline was associated with our frozen beverage business, as we lapped strong volumes from the Inside Out 2 movie last year. Pretzel sales in both retail and food service rose in the quarter, reflecting progress on key initiatives to drive growth through innovation. Pretzel growth helped to offset some declines in frozen novelties, that we are addressing through marketing, trade spend, and innovation. For the full year, adjusted EBITDA was $180.9 million while net sales increased 0.5% to $1.58 billion. Although 2025 was a more challenging year, I'm encouraged by our operational execution in the second half, which puts us in a strong position moving forward. Some bright spots for fiscal 2025 include we achieved record sales, and adjusted EBITDA in fiscal Q3. We modernized our flagship Super Pretzel product with a recipe enhancement, and fresh packaging. The effort to reinvigorate our pretzel business led to a 2.7% pretzel sales increase in 2025 driven by a strong second half performance with sales up 8% compared to the prior year. The rollout of Dippin' Dots to theaters was substantially completed with a presence now in almost 1,600 theaters. Dippin' Dots Sundays were launched at retail with great success, adding approximately $5 million to the top line. We optimized our frozen beverage distribution and service network, which reduced expenses by 2% in the fourth quarter. Now I'll talk through some initiatives underpinning our optimism for fiscal 2026. To start, we have initiated a business transformation program which we are calling Project Apollo. That will generate sustainable efficiencies and cost savings across the enterprise. Some key elements are already underway and we expect the program to deliver at least $20 million of annualized operating income once all the initiatives are implemented in 2026. The initial focus of Project Apollo is consolidation of our manufacturing network. During the fourth quarter, and early in 2026, we announced the closure of three facilities, Holly Ridge, North Carolina, Atlanta, Georgia, and Colton, California. Production from these facilities will either be consolidated into other facilities or discontinued as part of an ongoing portfolio optimization. The closures reflect the next logical step in the evolution of our manufacturing footprint and are enabled by the investments we have made in our plants to modernize and expand capacity for core products and to build out our regional distribution centers. We expect annualized savings associated with the plant closures of approximately $15 million which should be materially complete in 2026. We are also undertaking various initiatives within our distribution system that will generate approximately $3 million of annualized savings. The remaining net savings from Project Apollo are associated with various administrative initiatives we expect to realize most of the annualized freight and administrative related savings by 2026. The initiatives I have just outlined represent the first phase of Apollo. We are working on a second phase that is focused on generating within the plants further efficiencies following the completion of the consolidation work. We are also developing a robust roadmap for modernizing our system and tech infrastructures to streamline additional corporate processes and sharpen the quality of our data analytics. We'll be sharing more as the next phase of the project work is finalized. I am energized that the projects we have identified will generate durable structural savings and will do so relatively quickly in fiscal 2026. I'm encouraged by the impact that these actions are having on our early performance so far in Q1. Our operating teams are focused on the closures and seamless redeployment of production within our network to prevent any disruption to customer orders. I'm also excited about several commercial and innovation initiatives that are being rolled out for our fiscal 2026. Starting with the commercial activities. We will commence shipping churros to a major QSR later in fiscal Q1 as part of a limited time offer program. We expect the program to be successful given it is such a great fit with this customer and believe there is potential to be converted to a permanent volume. We are completing the rollout of ICEE machines for a large and growing convenience store operator in the Southwest, the frozen beverage test with a major West Coast QSR operator is nearly complete and we are encouraged by the results. And the handheld capacity outage should be remedied by the start of our second quarter. With respect to innovation, we have several exciting launches around the corner for fiscal 2026 with most of these products available to consumers beginning the fiscal second quarter. These innovation items underscore the quality, and breadth of our iconic brands. Our new protein pretzel for retail will be available for consumers as a four-pack of large pretzels with 10 grams of protein or a smaller mini pretzel with seven grams of protein per serving. We are rolling out Super Pretzel pizza sticks, and queso sticks which are smaller pretzel bites with tasty fillings. On the frozen novelty front, we are introducing Luigi's Mini Pops which feature exciting flavor profiles and better-for-you attributes such as hydration, and immunity support. We are extending our popular Pet Street brand, Dogsters, to include a new mini ice cream sandwich. Regarding Dippin' Dots innovation, I am pleased to announce that we will be launching Dippin' Dots in its original form for resale. This represents another major growth milestone for the brand. Additionally, we are introducing two new flavors to the Dippin' Dots retail sundae lineup, taking the flavor total to four. The outlook for theater also is encouraging. As the industry continues closing the gap, to the pre-COVID environment. Box office sales for the period that aligns to our fiscal 2025 up 10% versus the prior year. Industry sources are projecting North America box office sales that aligns with our fiscal 2026 to increase by 9% supported by a great lineup of movies that includes Wicked for Good, Zootopia 2, and Spider-Man, A Brand New Day. The lineup for our fiscal first half looks particularly promising as compared to last year's slate. With $106 million in cash and no debt, our financial position remains strong. And we continue to take a balanced approach to capital allocation across three areas: investing in our business to drive growth and operational efficiency, strategic acquisitions, and returning capital to shareholders through dividends, and share repurchases. Given the current trends of our business, and outlook for fiscal 2026, including the benefits we expect to realize from Project Apollo, we expect to increase our focus on share repurchase activity as we see compelling value in our shares. Share repurchases totaled $3 million in the quarter, and we intend to accelerate our pace significantly during the current quarter. I'll now turn the call over to Shawn to discuss the quarter and full year results in a little more detail. Shawn? Shawn Munsell: Thanks, Dan. And good morning, everyone. Before I discuss the results, I'd like to note that we no longer allocate all corporate expenses to segment results. Starting with the fourth quarter, as Dan indicated, we are pleased with our Q4 performance. This methodology change has been applied to our historical results, with some expenses now captured as unallocated corporate expense. We believe we are well positioned early in fiscal 2026. 1.1% to $259.3 million as volume softness more than offset price increases. Soft pretzel sales increased 3.6% marking consecutive quarters of year-over-year sales growth. Bavarian pretzel sales continue to lead the growth. Pretzel dollar share increased 1% in the quarter. Frozen novelties declined 5.1% driven primarily by transition between Luigi's and ICEE branded products. We expect volumes to normalize over time. Churro volume declines primarily reflect the wind down of last year's LTO, with a major QSR customer. Retail segment net sales declined 8.1% primarily driven by lower frozen novelty volumes, partly offset by higher pretzel volume. We are taking action to support our frozen novelty business with shopper marketing and trade spend. And we see improving trends in the recent four-week data. Dogsters continues to stand out of the portfolio with sales and units up in the quarter and we anticipate additional distribution in 2026. Handheld sales declines reflect the temporary capacity constraints from the fire at our North Carolina facility last year. Soft pretzel sales increased 9% continuing the momentum from the third quarter. Frozen Beverage segment sales declined 8.3% attributed to lower beverage volume in the quarter. Foreign exchange translation did not have a significant impact on segment results in Q4. Beverage volume declined primarily due to lower theater sales. As we lapped the success of the Inside Out 2 movie last year. Box office sales for our fiscal fourth quarter are estimated to have declined approximately 11%. As I mentioned earlier, we expect the theater industry to continue its rebound in 2026, and we're encouraged by the solid lineup of movies that we expect will be popular with our target consumers. Consolidated gross profit was $130.2 million compared to $135.5 million last year. While gross margin was 31.7% compared to 31.8% last year. Gross margin in frozen beverage declined given the lower mix of beverage revenue in the quarter. Tariff costs added approximately 35 basis points to cost of goods. These unfavorable impacts were partly offset by insurance proceeds for business interruption costs, related to our handheld capacity constraints. And early plant consolidation savings in the quarter. Operating expenses increased 24% to $118.8 million or 29% of sales. Which included $24.8 million of nonrecurring charges primarily related to Project Apollo plant closures. Plant closure charges predominantly reflect noncash asset write downs and write offs totaling approximately $21 million. We expect additional plant closure and other nonrecurring costs associated with our business transformation project of $3 million to $5 million in fiscal 2026. Marketing expenses were $32.6 million or 4.8% higher than in the prior year driven by increased spending on new sponsorships and other promotional activities. Distribution expenses for the quarter declined 8.3% on lower volume and steady efficiency gains. The efficiency gains were driven by fewer internal transfers and better truck utilization. Distribution as a percentage of sales declined to 10.3%, compared to 10.8% in the prior year. Administrative expenses were $19.1 million, an increase of 5.1% from the prior year primarily associated with higher compensation expenses. Adjusted operating income was $37.7 million as compared to $42 million in the prior year. Adjusted EBITDA for the fourth quarter was $57.4 million versus $59.7 million last year. The effective tax rate for the quarter was 4.8%, compared to 26.8% in the prior year. Adjusted earnings per diluted share were $1.58 versus $1.60 last year. The significantly lower effective tax rate in the quarter primarily reflects a change in estimate on our blended state tax rate and the corresponding impact on the valuation of our net deferred tax liabilities. Our balance sheet and liquidity position remains strong with approximately $106 million in cash and no long-term debt as of quarter end. We had approximately $210 million of borrowing capacity under our revolving credit agreement. Let me briefly touch on full year results. Sales increased 0.5% to $1.58 billion as price increases helped to offset lower volume. Growth in foodservice, which was up 1.6%, was partially offset by declines in retail, including from lower handheld sales related to the capacity constraints. While frozen beverage was essentially flat. Unfavorable foreign exchange rates for fiscal 2025 reduced the top line by approximately 40 basis points. Adjusted operating income was $108.2 million as compared to $130.4 million in the prior year. Adjusted EBITDA for the fiscal year was $180.9 million versus $200.1 million last year. Adjusted earnings per diluted share were $4.27 versus $4.93 last year. That concludes our prepared remarks, and we are now ready to take your questions. Dan Fachner: Operator? Operator: Star 11 on your telephone. And wait for your name to be announced. To withdraw your question, please press 11 again. Dan Fachner: Our first question comes from Jon Andersen with William Blair. Jon Andersen: Hey, good morning. Dan, Shawn. Thanks for the question. Dan Fachner: Good morning, Jon. Jon Andersen: Hey. I wanted to start by getting you to mention the portfolio optimization work that is going on. And that's one of the reasons why the closure of the three facilities, you know, you were able to do that while kind of moving production on production that you're going to keep. Can you talk about the impact of that portfolio optimization on sales both kind of in quarter but then how to think about that perhaps going forward as we look to kind of 2026 and what impact that might have on the top line. We'll start there. Dan Fachner: Sure, Jon. Thank you. That's one of the things that we've been talking about for a while, especially as it relates to our bakery group of optimizing that portfolio. And then as you look at our plans and the consolidation that we've been working on with the plants, it just made sense that during this timing that we'd be able to optimize the portfolio that we have and be able to consolidate some of these plants. The total impact of that, if you think about our business growing in that mid-single-digit rate year over year, might be a one, one and a half percent impact on that overall sales. But we're, you know, we're kind of bullish. It's the play that we called a couple years ago as we continue to build efficiencies inside our system and put in some new plants or new lines within our plants. And then rebuild the distribution system now allows us to be able to go back and optimize. And we're really excited about that work that's being done. Shawn Munsell: Yep. And in terms of timing, Jon, you know, think about that as being kind of near that full run rate sometime in Q2. Jon Andersen: Okay. Helpful. And maybe stepping back even a little bit more, but I know you don't provide specific guidance. But as we exit '25 and think about '26 at this point, there are quite a few moving parts, some of which should be tailwinds. And some of which might be a bit of a headwind, but headwinds for the right reason in terms of the portfolio work. Can you talk at all about just kind of the macro environment? Dan Fachner: And you know, kind of try and combine that to the extension to can't can with some of the internal initiatives. To give us some sense of how you're thinking about '26, both from a maybe a top line perspective, but also a margin standpoint because with the transformation work that's happening, I think some of the pricing that you've been able to implement and may implement to offset commodity costs. There's a lot of different ways that we could go with this. So just want to get your any commentary you could provide forward-looking around that. Thank you. Yeah. The macro environment, if I started there first, we still think that there's a consumer sentiment that is cautious. Alright? And so, we're gonna continue to watch that, especially as it relates to our retail side of our business. But we're really, really feeling some good momentum as we exit '25 and enter into '26 with some of the great things that we have going on. The plant closure benefits that we already talked about, some tremendous innovation. The teams are doing a really, really good job with that. And we feel positive as we move into 2026 and some even early results in Q1. And we think the theater industry is bouncing back some. So we feel good about the overall business as we move into it. You know, we think back at '25 and know, we think of some of the challenges that we faced there. And you kind of you can kind of tally it up to just a few primary factors. We had that big churro LTO that we're not facing anymore. We had some unfavorable foreign exchange impact. We had the chocolate cost inflation. Most of that hit us in the first half of the year. But when you really look at the second half of the year, you know, the second half EBITDA was just shy of what we delivered the second half of '24. So for all those reasons and the Apollo that we're doing, we're really we're a little bullish on 2026 as we turn that page. Shawn Munsell: Yeah. That's helpful. You'll see those closure benefits relatively quickly in the P&L. We just announced the closure of that third facility. So consider by the time you get to the second quarter, we should be at or very near that full run rate. Jon Andersen: And Shawn, on that, you mentioned the full run rate. Do you mean on the plant closures or on the kind of the Shawn Munsell: Yeah. That's right. So on the plant closure component, the $15 million, we should be very near that full annualized run rate come the second quarter. And then the rest of those savings, you know, think about that, you know, sort of layering in in the third and the fourth quarter for the balance of the year. Jon Andersen: Excellent. Super helpful. Just one more question. You talked about maybe a little bit of a near-term or short mid-term adjustment to your capital allocation approach with a greater focus on share repurchase. Can you talk about, you know, just kind of ongoing how you how you kind of evaluate that? And what kind of acceleration or step up we might anticipate there to the extent that you can. Comment on it. Thank you. Shawn Munsell: Yeah. So, yeah, for sure. And, you know, we said in the prepared remarks that, you know, we're we intend to accelerate our stock buybacks here in the quarter when the window opens. Just for context, and I'm not you know, I'm not implying that this is the amount by which we're we're gonna execute. But, you know, we've got about $42 million remaining on the authorization that we implemented earlier this year. We did buy back about $3 million worth of stock in the quarter. But notably, we pulled back a little bit on that. Dan Fachner: You know, there was some M&A in the pipeline, and we thought that it would be a prudent thing for us to do. But we'll be buying back some stock this quarter. Jon Andersen: Oh, maybe I have to follow-up on that one. You just mentioned M&A in the pipeline. Can you comment at all on that? Should we be thinking about some near-term actions there? Dan Fachner: I wouldn't go that far, Jon. We were looking at a couple different things that just caught our attention. And so at the period of time where we had the window open to be able to buy some stock back, we were just trying to take a conservative approach there. But I would not go as far as to see anything imminent on the M&A front. Jon Andersen: Okay. Thanks. And looking forward to a strong '26 behind these initiatives. Thanks. Dan Fachner: Great. Thank you. Yep. Thanks. Operator: Our next question comes from Scott Marks with Jefferies. Scott Marks: Good morning, Scott. Dan Fachner: Good morning. Scott Marks: Hey. Good morning, guys. Thanks so much for taking the questions. Wanted to ask first about this efficiency initiative. You mentioned Project Apollo, and then you mentioned kind of a second phase where you're looking at some more automation and efficiencies within the existing or remaining facilities. Just wondering if you can share some more color on that and how we should be thinking about the timeline for that, maybe expected benefits. Thanks. Shawn Munsell: Yeah. Sure. So the way I think about that is probably gonna be later '26, but, you know, more likely 2027. And I'd say that that's gonna be a combination of just, you know, automation and process improvement. You know, once we get the consolidation work behind us, you think about it as just making those plants more efficient. You've got some plants that are gonna be taking on, you know, new production. So for 2027, it's, you know, for '26, it's, you know, optimize the network. And then 2027, kind of optimize further within the four walls of each of those plants. Scott Marks: That's helpful. Appreciate that. And then, next question for me. You touched on some challenges in the frozen novelty business within retail. Wondering if you can kind of share any color on what's been happening there and how we should be thinking about the stabilization of some of those. Dan Fachner: Yeah. We touched on that at the end of last quarter. That's just a segment where the consumer probably has hit the hardest. And really saw those, most of that impact in July. The teams have been working really hard at greater marketing and trade spend within that category, and we're starting to see it come back. And we think that will continue to come back over this next year. We're actually feel like we've corrected the things that we needed to correct and I'm really pleased. I met with that retail team this last week, and they're doing a nice job. And I think we'll see that come back over this year. But it is an area where I think, just a consumer sentiment where you'll see the biggest summertime. So if you challenges. So don't forget that, you know, it's frozen novelties. It's this July, it's hard to make those back up in the back half of the quarter. But the teams are working hard at getting the right trade spend as it relates to those. Shawn Munsell: And again, it was in the prepared remarks, but we've got a great pipeline of frozen novelty innovation planned for '26 that's right just around the corner. So we're excited about that. And, you know, going back to your prior question, Scott, I failed to mention that I didn't want to imply that, you know, sort of, like, all the additional automation is gonna be in 27. If you look at the closure of the Colton plant and the consolidation into a nearby plant in California, that was taking what was basically production through manual process and converting it to almost fully automated process at the plant that it's being shifted to. Scott Marks: Got it. Appreciate the follow-up there. I'll pass it on. Thank you. Shawn Munsell: Yep. Thanks. Thank you, Scott. Operator: Press 11 on your touch tone phone. Our next question comes from the line of Todd Brooks with The Benchmark Company. Todd Brooks: Hey. Good morning, Todd. Dan Fachner: Good to talk. Todd Brooks: To you about. Dan Fachner: Few questions kind of feeding off some of the things that we've heard earlier. Todd Brooks: Shawn, can we talk about I think we were talking about the consolidation or the rationalization of some of the bakery products and dinging a revenue algorithm by maybe 100 to 150 basis points? Shawn Munsell: In fiscal twenty six. Can you walk us through, like, where does the algorithm stand now for a baseline level? Does still start in that mid single digit place and we back off to Todd Brooks: Yeah. Yeah. That's right. Yeah. That's exactly right, Todd. Shawn Munsell: Okay. Great. And then the rationalization in Bakery, when like, how does that fall during the year? When should we see kind of the biggest drag from the 100 to 150 basis Todd Brooks: Yes. You'll start seeing it in the second quarter. Shawn Munsell: Okay. Great. Todd Brooks: Secondly, Dan, you've ripped through a list of exciting commercial opportunities for fiscal twenty twenty six. Can you maybe drill down a little bit on the two or three you think are the biggest needle movers and maybe status and timing. Dan Fachner: Yeah. We're really pleased just in total with pipeline that we have going through. Through the system. And have some some really nice opportunities. You know, we have the LTO with a with the churros with a big customer that ran an LTO last year, and it's a perfect fit with this customer that we know is gonna is gonna do well. And we have anticipations that it does so well that maybe it sticks also. So really excited about that particular one. On the frozen beverage side, we're in the midst of rolling out a large c store. In the in the Southwest that has the potential to continue to grow as their you know, that they're striving to be the third largest c store in the country. Also have talked a few times about a test that we have with the QSR in the frozen beverage in the West Coast. Just continues to do really, really well. We're in the third phase of testing now kind of bringing that to an end and having live conversations about how we might roll that out in this year. So really encouraged by the things that we have going on. You know, the last thing I touched on was just that handheld that we were up against with the fire last year in August. And now are just about as we hit the second quarter should have that capacity caught up and see the benefits from that in 2026 as well. Teams are doing a great job. Lot of really good opportunities, and pipeline is as strong as I've seen in a while. Todd Brooks: Okay. Great. Thanks. And the final one for me. Shawn, is there a way to kind of frame up And and I ask about kind of gross margin potential for the business. But obviously, you've identified savings from Apollo one. You've identified a framework for what Apollo two will consist of for maybe a plant efficiency and automation standpoint kind of post Apollo maybe. Can can you talk to what you think the the gross margin potential for the business is? Thanks. Shawn Munsell: Yeah, I'd say that we're still committed improving the gross margin. Getting up above 30% on an annualized basis, toward the mid thirties, let's call it. And you can do the math and see that, you know, that you know, just that the $15 million of plant consolidation savings, you know, all that's gonna roll through your gross margin. Obviously, there's some OpEx savings associated with this leg of Apollo, but, you know, that's that's not gonna get you all the way there. Obviously, but it's gonna help to close the gap. And I would think that we're just gonna keep kind of chunking away at that over the next few years. You know, through, you know, through Project Apollo and, you know, growing the business. The one thing we didn't talk about is the extent to which we can continue to grow the top line as we have historically. And start seeing some leveraging impacts as we, you know, both at the at the plant level and with respect to OpEx. Todd Brooks: Okay. And just a follow-up on that. Thoughts on CapEx in '26 based on the work that you're doing? Shawn Munsell: I would say about in line with fiscal twenty five, but we're working to trim that. Todd Brooks: Okay. Perfect. Thank you both. Shawn Munsell: Yep. Thank you, Todd. Operator: That concludes today's question and answer session. I'd like to turn the call back to Dan Fachner for closing remarks. Dan Fachner: Thank you, operator. In closing, I want to emphasize that while fiscal twenty twenty five presented its challenges, we built significant momentum in early fiscal twenty twenty six through our strategic initiatives and operational improvements. Our innovation pipeline is robust and should drive sustainable growth in key categories while Project Apollo enables meaningful efficiency improvements. With a strong balance sheet, including $106 million in cash and no debt, we're well positioned to invest in growth opportunities, while returning capital to shareholders through share repurchases. Thank you for your continued support, and we look forward to updating you on our progress throughout fiscal twenty twenty six. Thank you very much. Reed Anderson: This concludes today's conference call. Operator: Thank you for participating. You may now disconnect.

189天前Insight Analytics约5分钟阅读

CRGO 2025 Q3 财报电话会议

Operator: Hello, and welcome to Freightos' Q3 2025 Earnings Conference Call. A press release with detailed financial results was released earlier today and is available on the Investor Relations section of our website, freighters.com/investors. My name is Anat Earon-Heilborn, and I'm joined today by Dr. Zvi Schreiber, the CEO of Freightos; and Pablo Pinillos, CFO. Following the prepared remarks, we'll open the call for questions. We are sharing slides during the call and using video, so we recommend using Zoom on a computer rather than dialing in by phone. The slides as well as a recording of this earnings call will be available on our website shortly after the call. Please be aware that today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online. In discussing the results of our operations, we'll be providing and referring to certain non-IFRS financial measures. You can find reconciliations to the most directly comparable IFRS financial measures along with additional information regarding those non-IFRS financial measures in the press release on our website at freightos.com/investors. The company undertakes no obligation to update any information discussed in this call at any time. Before we begin, I'd like to note our upcoming investor events. In December, Freightos will participate in the AGP Electric Vehicle and Transportation Conference and [indiscernible] year-end investor conference. In February, the company will participate in the Oppenheimer Emerging Growth Conference. Links to webcast when applicable and other event updates can be found on our website. Today's earnings call will begin with an overview of Q3 performance and overall progress by Zvi. Next, Pablo will present the financial results and the guidance for Q4 and full year 2025. We'll conclude with Q&A. Questions can be submitted in writing during the call by using the Q&A feature in Zoom. Zvi, please go ahead. Zvi Schreiber: Thanks, Anat, and welcome, everyone. And today, I'll cover 3 topics. I'll start with the quarter's highlights and what they mean. Next, I'll discuss the product and network progress that will power our next phase of growth. Lastly, I'll share how the digital transformation of ocean carriers is creating a significant midterm opportunity for Freightos, particularly as we expand our multimodal capabilities. First, let's start with the quarter. In Q3, we processed 429,000 transactions, up 27% year-on-year. It's our 23rd consecutive quarter of record transactions. Unique buyer users were about 20,600, and the number of carriers with more than 5 bookings from our platform during the quarter increased to 77%. Most major airlines are already connected to our platform. So new airline additions are often regional or niche airlines at this point. We're focused on expanding airline coverage in Asia and expect further global expansion as smaller carriers look to leverage our digital channel. These metrics tell a consistent, more buyers and more sellers are using Freightos more frequently, driving short-term revenue growth and long-term scalability of our business. This gives us both breadth and depth on the platform, more opportunities to monetize transactions and to deepen relationships with higher frequency users. Now, let's put this performance in context of the market. During Q3, air cargo volumes increased 4% compared to Q3 2024, reflecting growth in many markets, even as transpacific e-commerce volumes faced headwinds from tariffs and changes to U.S. import regulations. According to our Freightos' Index, FCX, average global air cargo rates decreased 6% compared to Q3 last year. The bigger picture in the freight market, given tariffs and macro uncertainty, is that of volatility and nervousness. Such conditions make speed, transparency and automation in logistics more important. When customers need to move faster and make decisions with less friction, they turn to digital platforms. This is helpful to our Platform segment, but the market nervousness is unhelpful for selling solutions. Now, let's discuss product and network progress. We're excited to highlight our strategic partnership with Visa and [indiscernible], announced by Visa a couple of weeks ago. This collaboration enables us to provide freight forwarders and importers and exporters with access to modern financing solutions through our platform. The partnership integrates Visa's global commercial solution expertise with transcard's payment orchestration technology, creating a more efficient payment experience for our users. The fact that a global leader like Visa has chosen to partner with Freightos demonstrates the significant potential they see in the $600 billion international freight markets and the role that we, Freightos, play in it. Next, we launched and commercially validated our new multimodal rate management and quoting SaaS product, WebCargo Rate & Quote ocean. In Q3, we completed a rollout at our first multinational freight forwarder customer and proved that the workflow quoting air and ocean in 1 product works well in practice. Unifying air and ocean quoting allows freight forwarders to give a superior service to their customers, the importers and exporters. But the real transition towards digital booking happens when that workflow is supported by bookable carrier inventory. For Ocean, that bookable inventory depends on carriers digitalizing more meaningfully, so we can connect them to our platform. I'll expand on that in a moment. A notable early adopter of this product, the new multimodal solution, is Nippon Express, a top 5 global freight forwarder. Nippon Express expanded its use of Freightos this quarter, moving from our own usage to a multimodal deployment across much of its global network. This expansion increased their annual commitment to Freightos by multiples. Given that 90% of goods are transported by ocean, we expect to see many more upsells from air to ocean. Other successes in our Solutions segment this quarter included a number of renewals and targeted scope expansions. For example, we closed an upsell of our terminals rates benchmarking capabilities to a global mining company, expanded Procure tendering functionality with a top 5 pharma company and extended our terminal data contracts with a major electronics customer. That said, we had anticipated even stronger solutions revenue growth than the 30% year-on-year we delivered this quarter. As we mentioned earlier in the year, due to tariffs and the current macro environment, enterprise SaaS deals have had longer sales cycles. So in the meantime, we're strengthening commercial execution. Michael recently joined Freightos as Chief Revenue Officer. Michael brings deep experience scaling digital logistics and enterprise sales, most recently as VP at Premion and previously as SVP of Sales for Intermodal at Project 44 and other B2B companies. He has a proven track record of building commercial relationships across carriers, forwarders and shippers, which will help us further scale multimodal adoption and our enterprise deployments. Michael will ensure Freightos has world-class sales and customer success capabilities with value-based selling to both enterprises and small and medium-sized businesses worldwide, optimizing our LTV to CAC ratio. Now, we talked about our updated software solution for quoting Ocean, but what about ocean booking transactions on our platform. This, of course, requires ocean carriers to make capacity pricing in booking, available digitally, through APIs. We discussed One Ocean Carrier integration success on our last call. And in Q3, we made progress with 2 more integrations, which we expect to go live in the coming quarters. Each integration brings more capacity into our system in an automated form, helping forwarders better source and decide on shipping options in real time. We're now among the first platforms receiving rates from several major global ocean carriers. And our launch of a next-generation ocean rate management solution is, of course, synergistic with our platform finally making progress integrating to ocean liners. With ocean representing approximately 3x the GBV of air cargo, the potential is significant, but we do expect adoption to follow a measured pace, as the conservative industry works through its transformation. We anticipate meaningful revenue contribution in the midterm, not in the immediate future as this transition continues to unfold. Of course, platform growth is not limited to new carriers. Once a carrier is launched on Freightos, we can continue to grow in different geographies. We can add more advanced services, like expanding from general air cargo to temperature control services, expanding from spot bookings or one-offs to handling bookings against negotiated contracts. So these are the operational and commercial priorities that drove our Q3 progress. Pablo will now walk through the financials and explain how these milestones translate into revenue, margin and cash. Pablo? Pablo Pinillos: Thank you, Zvi, and good morning, everyone. I will now go through how the quarter's operating progress translated to the P&L, cover cash and liquidity and then walk through our near-term outlook and priorities. Revenue for the quarter was $7.7 million, up 24% year-over-year. Platform revenue was $2.6 million, up 15% year-on-year, and Solutions revenue was $5.1 million, up 30% year-on-year. As Zvi we said, Solutions and Platforms support each other. The way solutions drive bookings is practical and proven. Our mission-critical SaaS solutions become embedded in a customer's day-to-day operations. Our customers centralized pricing and workflow on freighters and makes it far easier for them to go and then convert those quotes into bookings. Our data supports that dynamic, forwarders that adopt our tools tend to grow transaction volume materially over time. Looking to our cohort data, we see 3 to 4x growth in transaction volumes for cohorts over their initial 2 years using our platform. Put it simple, solutions creates the stickiness that enables more frequent platform bookings because we're still early in the industry's transition to platform model, solutions today represents the majority of our revenue. Over the long term, we target Platform revenue to scale faster and ultimately outpace solutions revenue. Now, let's take a closer look at Platform revenue. You will notice that platform transaction volume and GBV are growing faster than our platform revenue. This is purely due to our business mix. Take rates are not going down in any segment. Our WebCargo platform, which connects freight forwarders with carriers, consistently grows at a faster rate than Freightos.com, which serves importers and exporters. WebCargo operates mainly on a fixed fee model with a lower implied take rate compared to Freightos.com higher take rate structure. As the fastest-growing web cargo continues to outpace Freightos.com, the aggregate revenue platform naturally grows more slowly than transactions volume. Our carrier cohort analysis reinforced this, carriers run quickly after integration, producing a strong booking growth, but much of that early volume is under relatively low fixed fees. So it doesn't translate into proportional transaction revenue immediately. Gross margins were strong this quarter. On an IFRS basis, gross margin improved from 65% a year ago to 69.1% in Q3 this year. And our non-IFRS gross margin rose from 72.7% to 74.8%. That improvement reflects the inherent operating leverage in our model as we continue scaling. We are seeing benefits from automation efforts in customer services, which allow us to handle more transactions with our proportional increases in personnel or infrastructure costs. Looking ahead, restructuring our hosting agreements and infrastructure improvements represents our next significant opportunity to enhance margins. While we have made good progress optimizing our infrastructure costs, there is still more efficiencies to capture. Adjusted EBITDA improved to negative $2.6 million in Q3 2025 versus negative $2.8 million in Q3 last year. That improvement reflects revenue growth, a stronger gross margin and disciplined cost management. Those operational gains were, however, partially offset by continued currency impact, a stronger euro on cycle versus the U.S. dollar, reduced the gain in adjusted EBITDA compared to our operating performance. Our hedging program limited the impact on the cash, so the translation effect shows in the P&L more than in the cash balance. We closed the quarter with **$30.6 million in cash and short-term bank deposits**, a position that supports our continued measured investments in product and commercial execution, while we scale the business to breakeven. Looking ahead, we remain focused on the levers that will narrow losses and drive durable profitability. The overall plan remains the same, keep growing revenue and margins while keeping OpEx close to constant. Our new CRO is already laser focused on cost-efficient growth. With these concrete actions, we continue to plan to reach adjusted EBITDA breakeven in Q4 2026. For the fourth quarter of 2025, we anticipate continued year-on-year growth across transactions, GBV and revenue. Adjusted EBITDA will likely continue to be impacted by foreign exchange headwinds. This means that for the full year, we now expect a more modest year-on-year improvement in adjusted EBITDA than what we have projected at the beginning of the year. Despite successfully reducing our total cost by almost 5% this quarter and 3% year-to-date compared to our budget in a constant currency basis, exchange rate fluctuations have created an unfavorable impact that has significantly reduced these cost savings. A secondary factor relates to our revenue composition, while we remain on track to meet our revenue guidance despite a challenging year on the logistics industries, the mix between our revenue streams differs from our initial expectations. We are finishing the year with a slightly better performance of platform revenue relative to solutions revenue than what we had planned, which we attribute to the longer sales cycles, as Zvi has mentioned it earlier. Since solutions typically generate higher margins, this shift in mix has modestly impacted our overall profitability. Nevertheless, we are pleased that our cash spend remain on track throughout the year. We expect to end the year with cash and equivalents of approximately $27 million, reflecting on cash burn of about $10 million for 2025 compared with $15 million in 2024. We remain focused on the fundamentals, growing revenue while maintaining disciplined cost management and operational efficiency. Based on these fundamentals, we continue to expect reaching breakeven adjusted EBITDA by Q4 2026. Anat Earon-Heilborn: Our first question will come from the line of Jason Helfstein. Jason Helfstein: So when I look at the contribution margin, it's basically year-to-date, it doubled year-over-year, so clearly, you're seeing efficiency and the sales cycle. I think your OpEx, excluding sales and marketing, is up 9% against revenue up, I don't know, some 27% or 29%. And obviously, you called out the pressure of the FX. So you're doing everything you can do. I guess the question is, and you've now told us you're going to -- the plan is breakeven EBITDA by the end of next year. So I guess, is there anything you could do to grow faster organically or inorganically? And I guess, how much of the gating factor growth at this point is kind of the path to breakeven EBITDA and managing the cash balance? And then I have 1 quick follow-up. Zvi Schreiber: Yes. Thanks, Jason. Well, that was a complicated question. So I'm thinking where to start from. The -- look, it's a constant balance. I mean, even now as we finalize our budget for next year, it's a constant balance between growth and breakeven. And we very much want to grow and break even by the end of next year. And so it's a balance between them. For sure, yes, we're doing what we can. Thank you for calling out. We have done a lot of work on efficiency. In fact, if you look back a bit, we've grown in the last -- 2 years, I think revenue has grown 40-something percent and the team hasn't grown at all. So we're certainly becoming more productive the whole time. And beyond that, we are, of course, now with AI, there may be further opportunities for efficiency. So we've been doing that the sort of the hard way, and now, there may be other ways to become more efficient. And Pablo mentioned, we're already seeing some improvements in the customer support using AI. So we're going to continue pushing on that side as well. And then, it's just the balance between how much do you want to spend in sales and marketing to grow, but also to break even. And we'll -- we're finalizing a budget, which will allow us to grow as fast as we can without compromising the target of breakeven. Jason Helfstein: And then just to follow up. I mean, where do you feel like we are with kind of the tariffs volatility? Like are we at a point where now you feel like you're seeing kind of normal shipping volumes? And I don't say normal, like the volatility has slowed down. Like are their patterns now that makes sense? Or it still feels like the ecosystem is still working through the kind of week-to-week changes around certain products and certain tariffs, et cetera? And I don't know if you want to call out China specifically, but any color how it's impacting your kind of thinking, your forecasting of the business. Zvi Schreiber: Yes. It's a bit of both. I mean, certainly, there is not as much uncertainty as there was in April or something like that. But even so I just saw today a headline that President Trump canceled certain tariffs on food. And so it's still -- a, there's still some uncertainty, and you never know what you're going to -- what's going to happen tomorrow. And secondly, even if there's no uncertainty, the tariffs are higher, and that certainly creates some friction for imports to the United States. So in the market data, I presented actually that the overall global trade is up on the year, but trade with the U.S., if I'm not mistaken, was down a bit. So it's still an issue. The uncertainty is still an issue, the tariffs themselves still creates some friction, but it's not at the levels that it were and people are at least to some extent adjusting to the new normal. Like I said in my remarks, it affects us more. We don't feel it's affected. On the platform side, it can be good as well as bad because uncertainty drives the need for marketplaces and finding new opportunities to ship in different ways or from different sources. But solutions, yes, although things have somewhat stabilized, people are still -- freight forwarders, importers and exporters are still more nervous than they used to be to write big checks. We're now busy talking to customers about their plans for next year and getting a feel for whether things can get back to normal. But it was harder to get a big contract signed this year for sure, although we did several, but it was harder than expected, yes. Anat Earon-Heilborn: Next question from the line of George Sutton. George Sutton: I wondered if we could just talk about penetration. You mentioned a lot of the growth will come from -- at least on the air cargo side, from just growing your penetration with the carriers. Can we talk about where we stand in terms of penetration? Any sort of cohort type analysis that you could suggest? Zvi Schreiber: Yes. If you look at -- it sort of -- it varies quite a bit by geography. Our penetration in the European market from a supply perspective is very high. We've got virtually every airline in Europe turned on to the platform, at least for a lot of the capacity, not always for all their capacity. But in Europe, we have a very significant penetration. We have a very nice proportion of the freight forwarders in Europe. I don't know have exact numbers to hand. I don't know exact numbers at all because there isn't a very reliable list, but very significant in the U.S., we're growing nicely, but it's still smaller penetration. And in Asia, we reckon we're still sort of -- whether you look at supply or demand, we're still in the single digits of penetration. That's still a huge amount to do there. George Sutton: So I wondered if you could explain the Visa link and how that might impact your opportunity? And just give us a sense of how it was occurring prior to that or separate from that. Zvi Schreiber: George, you said Visa? George Sutton: Yes. Zvi Schreiber: Yes. Good. So 1 of our initiatives with airlines, both to add more value and to get -- to monetize more to get a better take rate with the airlines is handling payments. That's still a minority of the transactions, the vast majority of transactions on our platform or with airlines. And in most cases, the freight forwarder books on our platform and then pays through an off-line system. But we have a growing platform value add, where we handle the payments. And up to now, we've been doing that with other financial partners or through our own sort of bank accounts in certain cases, depending each country with its regulation, et cetera. Now, with Visa, obviously, we have a partner who's a worldwide name and who has credit lines and other sort of financial technology that we just don't have. So we definitely think that this will enhance our payment solution a lot, and we hope to see payments growing. And over time, really bringing up our average take rates with the airlines, which as you know is one of the issues is we have this fantastic amount of airline revenue being generated from our system. The monetization is still modest. Payments is definitely a way we increase that. and the partnership with Visa is a key way that we make our payments more attractive. George Sutton: Last question for Ocean [indiscernible] midterm growth opportunity, but maybe how you define midterm? Zvi Schreiber: George, you were pretty cut off there, but I think I got the question. George Sutton: I'm just curious how you're defining midterm growth relative to the ocean carriers. Zvi Schreiber: Okay. Yes, very good. That's what I thought you said. So how do I define midterm? Let's say only meaningfully contributing to revenue in 2028. Next year, I don't think Pablo is even going to budget at all for -- there'll be some, but I don't think there's -- it will be even in the budget, 2027. It will start growing. I think it's only in 2028 that we get significant revenue from that aspect. But, of course, just to remind you, and we've discussed this before, George, but once you become the leading platform, that can be a -- that can hold for decades. So this is a very strong long-term opportunity. Pablo Pinillos: Yes, to double down on what you just said, and we will provide guidance for 2026, whenever we provide, but we will probably won't assume revenue for oceans bookings in 2026 at all, and really, really, really probably a small 2027. Any significant will come in 2028, as you said. Zvi Schreiber: But on the solutions side, we did start to see -- I mentioned the deal with Nippon Express and a couple of others where I didn't give names, we will see a nice contribution from solutions to ocean in already in 2026. Anat Earon-Heilborn: Okay. I'm going to read a question from the chat. So as you've stated earlier that platform revenue will be driving the revenue in the future, what target do you have for the take rate by the end of 2026? Zvi Schreiber: Pablo, you want to take that or do you want me to comment? Pablo Pinillos: No, I can start. So we are finalizing the plan for next year. And of course, the -- we will be driving plan to increase the take rate. It will all depend, as we've been saying about the mix, the business mix and how the growth in the WebCargo platform versus the Freightos.com, and within that mix, what are the fasting growth carriers that will drive that mix. Right now, we are in the middle of addressing all of that, and -- but for sure, the take rate will not decline year-on-year, and we are expecting that to grow. Anat Earon-Heilborn: Next question is why is revenue growth slowing down in Q4 despite the addition of carriers and forwarders? How much do you expect FX headwind to affect the revenue? And if the FX stays at the same level as Q4, would it delay the timing of breakeven point? Pablo Pinillos: Let me take this, Zvi. So this, again, for us, is the slowdown in Q4 revenues is related to slower revenue -- solution revenues coming in that we have seen a slightly delayed in being able to close business. It's important to say as well that the -- most of our revenue in Solutions revenue is recurring with a small piece of nonrecurring revenue, and the decline of Q4 that we see is specifically related to a competition of one of development that finished in Q3 that when we did plan, we expected to -- that the Solutions revenue will overcome that decline. But so far, we are -- due to the delays, we are not able to foresee that in the future. And the second question is, if FX stays at the same level as Q4, it won't -- from our point of view, it doesn't mean that it will delay our breakeven in 2026. As a guiding principle, we're going to manage expenses as needed to breakeven in Q4 2026 even if the Solutions revenue, it doesn't accelerate in the future. Zvi Schreiber: And I think Pablo, the FX is mainly affecting us on the expense side, right? Our revenue is mostly dollars and less affected by FX. Pablo Pinillos: Yes. But if the FX maintains the same in a 12-month cycle, everything at the end compensates. Zvi Schreiber: Yes, because we'll budget for next year based on the exchange rates that we know now. And just to emphasize a point that Pablo made, the -- our solutions revenue is mostly recurring. And recurring revenue for solutions will be up, we believe, in Q4, not by as much as we hope for the reasons we discussed, but it will be up. And if you see a dip, it will be just, as Pablo said, because of a nonrecurring project, which has recently come to an end. Anat Earon-Heilborn: Okay. The next question, I think we answered part of it, but the second part -- of the first part, so you recently launched WebCargo Rate & Quote integrating Air and Ocean quoting into a single multi-model platform. What early traction have you seen with major forwarders? And how quickly do you expect Ocean to scale relative to Air in terms of transactions and platform revenue? So I think we answered to George about the second part, but maybe we can talk about the traction with forwarders? Zvi Schreiber: Yes. So I want to separate when it comes to Ocean, which is obviously a major part of how we grow in the next few years. I want to separate Platform and Solutions. Platform, as we said, we are connecting 1 by 1 to some very big ocean carriers, which is exciting progress, but we're not yet at critical mass. We're not expecting for at least a few months to see real volume on the platform side. But Solutions, we mentioned Nippon Express, we mentioned a couple of others. I can also mention that we've just started selling ocean to some of our small forwarders. And so we expect to see good traction on the Solutions side. With Ocean, we have -- the great thing is it's existing customers. So we have 4,000 freight forwarders roughly using our solution for air using our software for air. And so it's just going back to the same freight forwarders and saying now we've got a modern solution to ocean, you can do air and ocean in 1 platform in a beautiful modern software. And so we expect that to be a major part of how we grow solutions revenue next year. Anat Earon-Heilborn: Okay. Our next question is about revenue share with partners. If partners like Meg cap Aviation bring 13 carriers to Freightos platform, what would make a benefit from the partnership? Would get the revenue share from this partnership? Zvi Schreiber: It's not -- yes, interesting question. It's not really a revenue share scenario because they are resellers of the carriers. They're a general sales agent or whatever arrangement they have. So from our perspective, they're a carrier. They may be a virtual carrier, but we treat them as a carrier. They pay us a fee for bringing them a booking. And then, what's between them and the airline is between them and the airlines. So they're not a channel in that respect. They may be a reseller of the airline. But as far as we're concerned, they're a carrier or a virtual carrier. They're the ones selling the capacity on our platform. Anat Earon-Heilborn: Okay. Our last question, I believe. Could you please say how much proportion is recurring and nonrecurring among the solutions revenue? Zvi Schreiber: I don't think we give numbers, but Pablo, I think it's fair to say that a very big majority is recurring of our solutions revenue, right? Pablo Pinillos: Nonrecurring, it doesn't get up to 5%. Zvi Schreiber: Yes. We only mentioned it this quarter because there was a big part of the nonrecurring came to an end. And that's actually not -- it's not our business model to do nonrecurring. We do it sometimes because we have to help the customer -- if we need to help the customer with a project and help them adopt our software, we do it sometimes. And we had 1 big project, which just came to an end on the nonrecurring, but yes, as Pablo said, that's not our model. Our model is selling SaaS and data subscriptions, and it's almost all recurring. Anat Earon-Heilborn: Okay. That was the end of the questions. Thanks, everyone, for joining. Have a good day. Zvi Schreiber: Thanks. Pablo Pinillos: Thank you.

189天前Insight Analytics约5分钟阅读

YSG 2025 Q3 财报电话会议

Operator: Ladies and gentlemen, good day, and welcome to the Yatsen Holding Limited Third Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Irene Lyu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead. Irene Lyu: Thank you, operator. Please note that discussion today will contain forward-looking statements relating to the company's future performance, and our intent to qualify for the safe harbor and liability as established by The U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yatsen Holding Limited's business and financial results is included in certain filings of the company with the Securities Exchange Commission. The company does not undertake any obligation to update its forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes. Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Joining us today on the call from Yatsen Holding Limited's senior management are Mr. Jinfeng Huang, our Founder, Chairman, and CEO, and Mr. Donghao Yang, our CFO and Director. Management will begin with their prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen Holding Limited's Investor Relations website at ir.yatsenglobal.com. I will now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir. Jinfeng Huang: Hello, everyone. Thank you for joining our third quarter 2025 earnings call. The beauty market in China continues to show signs of recovery in the third quarter, particularly in the skincare category, which remained robust and supported overall industry growth. Amid this improving backdrop, we remain focused on executing our long-term strategy to build a competitive, resilient brand portfolio anchored in R&D and innovation. Through disciplined execution, we delivered our fourth consecutive quarter of revenue growth, with total net revenues increasing by 47.5% year over year and exceeding the high end of our guidance. Our momentum continues to be driven by strong growth from skincare and sustained performance of our hero product engine, rather than short-term promotions. Our skincare brands grew by 83.2% year over year and reached 49.2% of total revenue, making another step forward in our category upgrade strategy and reinforcing our transformation toward a more sustainable, margin-accretive portfolio. Meanwhile, our net loss narrowed meaningfully as a result of the improved gross margin, optimized operating efficiency, and a more disciplined resource allocation. Net loss margin improved significantly from 17.9% in the prior year period to 7% this quarter, demonstrating the continued progress in our profitability trajectory. These results reflect the strength of our brand as well as our commitment to distinct execution. Looking ahead, our priority is to continue progressing toward profitability in a disciplined and sustainable way. We expect further improvement to be driven by a higher skincare mix, ongoing gross margin optimization, and greater marketing efficiency. While we will continue to invest in innovation and hero products, we remain disciplined in balancing growth with profitability. Now let me share some brand and product highlights during this quarter. Galani delivered strong momentum and remained one of the fastest-growing premium skincare brands. The brand's PO series continued to perform well, with the number one VC Serum and the number two AVA serums ranking among the top-selling serums across major e-commerce platforms. The newly introduced number three VB7, launched in mid-September to further build up the brand's ABC cellular level skincare framework, quickly became one of the brand's best-selling items on Douyin. We are also seeing encouraging signs of regimen adoption, with more consumers purchasing multiple products within the series, supporting stronger customer lifetime value. Doctor Wu recorded healthy growth during the quarter, supported by strong performance from its core categories. In September, Doctor Wu unveiled its first anti-aging product in the UK, leveraging decades of clinical expertise in skin renewal. The newly launched TDI N Serum gained strong traction across e-commerce platforms, driven by its innovative formula featuring a high concentration of active ingredients and a patent penetration technology, underscoring the brand's ability to build trust through clinically validated innovation. In China, Doctor Wu continued to lead the mandelic acid category across online platforms. In addition, Doctor Wu presented its research at the ninth Annual Academic Conferences of the Dermatology Committee of the Chinese Non-Government Medical Institution Association, further demonstrating the brand's commitment to clinically grounded innovation and strengthening its leadership in renewal-focused skincare. Our flagship brand, Fabulare, also continued to make progress following the successful launch of the Translucent Blurring Setting Powder and BioPhase Essence Foundation. The brand focused on streamlining its core product assortment, improving hero product quality, and enhancing overall product experience under the makeup unification concept. Several of these hero products delivered performance above expectations, driving Perfect Diary's base makeup category to exceed 40% of the total sales and supporting a more sustainable and distinct recovery. In the third quarter, COVID-19 also excelled in new channel performance and achieved the number one ranking among makeup brands on WeChat video channel, reflecting the brand's strengthened competitiveness and growing consumer IND and innovation have consistently served as the cornerstone of our product development and brand building. We are committed to advancing scientific research to strengthen our long-term competitiveness. During the quarter, we participated in the IFCC Congress for the fourth consecutive year. This time, 11 of our papers were shortlisted by the IFCC, covering topics from molecular mechanism, clinical translation to AI algorithm, and emotion skincare. This work highlights our full chain capabilities, from fundamental science to technology translation and clinical validation, and it directly supports future hero highlights across our brands. As we finish the third quarter, we are pleased to see continued progress in both growth and operational improvement. We remain confident that our strategic focus on R&D, together with disciplined execution and a sharper resource allocation, will enable us to deliver sustainable long-term growth. At the same time, we will remain highly disciplined in capital allocation, prioritizing investments that strengthen our core brands and innovation capabilities while creating long-term value for shareholders. Thank you. I will now turn the call to Donghao Yang. Donghao Yang: Thank you, Jinfeng, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in RMB amounts, and all percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for the 2025 increased by 47.5% to RMB 998.4 million from RMB 677 million for the prior year period. The increase was primarily due to an 83.2% year-over-year increase in net revenues from skincare brands combined with a 25.2% year-over-year increase in revenues from color cosmetics brands. Gross profit for the 2025 increased by 51.9% to RMB 780.5 million from RMB 513.8 million for the prior year period. Gross margin for the 2025 increased to 78.2% from 75.9% for the prior year period. The increase was primarily driven by an increase in sales of higher gross margin products. Total operating expenses for the 2025 increased by 31.9% to RMB 864.1 million from RMB 655.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the 2025 were 86.5% as compared with 96.8% for the prior year period. Fulfillment expenses for the 2025 were RMB 61.8 million as compared with RMB 50.4 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the 2025 decreased to 6.2% from 7% for the prior year period. The decrease was primarily driven by fulfillment costs optimization coupled with the leveraging effect of higher total net revenues in the 2025. Selling and marketing expenses for the 2025 were RMB 682.3 million as compared with RMB 494.4 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the 2025 decreased to 68.3% from 73% for the prior year period. The third quarter included a portion of our planned upfront investments for the Double Eleven shopping season. These investments typically elevate selling and marketing ratios in the short term but support revenue acceleration and stronger brand equity in the fourth quarter and beyond. Excluding these seasonal effects, we continue to see improving marketing efficiency driven by a higher skincare mix and more disciplined spending across channels. General and administrative expenses for the 2025 were RMB 80.2 million as compared with RMB 85 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the 2025 decreased to 8% from 12.6% for the prior year period. The decrease was primarily driven by lower share-based compensation expenses coupled with the deleveraging effect of higher total net revenues in the 2025. Research and development expenses for the 2025 were RMB 39.8 million as compared with RMB 25 million for the prior year period. As a percentage of total net revenues, research and development expenses for the 2025 increased to 4% from 3.7% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from a rise in research and development headcount. Loss from operations for the 2025 was RMB 83 million as compared with RMB 141.3 million for the prior year period. Operating loss margin was 8.4% as compared with 20.9% for the prior year period. Non-GAAP loss from operations for the 2025 was RMB 60.6 million as compared with RMB 98.5 million for the prior year period. Non-GAAP operating loss margin was 6.1%, as compared with 14.5% for the prior year period. Net loss for the 2025 was RMB 70.4 million as compared with RMB 121.1 million for the prior year period. Net loss margin was 7%, as compared with 17.9% for the prior year period. Net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for the 2025 was RMB 0.7 as compared with RMB 2.2 for the prior year period. Non-GAAP net loss for the 2025 was RMB 51.5 million as compared with RMB 76 million for the prior year period. Non-GAAP net loss margin was 5.2% as compared with 11.3% for the prior year period. Non-GAAP net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for the 2025 was RMB 0.5 as compared with RMB 0.77 for the prior year period. As of September 30, 2025, the company had cash, restricted cash, and short-term investments of RMB 1.1 billion as compared with RMB 1 billion as of December 31, 2024. Net cash used in operating activities for the 2025 was RMB 126.8 million as compared with RMB 175.9 million for the prior year period. The operating cash flow was primarily due to working capital movement, including inventory positioning and receivables timing ahead of Double Eleven. These are seasonal and planned effects. We expect operating cash flow to improve as these improved investments convert into revenue in the fourth quarter and as we continue to optimize inventory efficiency and marketing ROI. Looking at our business outlook for the 2025, we expect our total net revenues to be between RMB 1.32 billion and RMB 1.49 billion, representing a year-over-year increase of approximately 15% to 30%. These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A. Operator, Operator: Thank you. We will now begin the question and answer session. To ask a question, begin the question session. And if you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, if you wish to ask your question, please immediately repeat your question in English. And our first question will come from Maggie Huang with CICC. Please go ahead. Maggie Huang: Thank you for taking my question. This is Maggie Huang from CICC. Firstly, congratulations on beating our revenue guidance. I have two questions. My first question is about our performance during the Double Eleven festival. Is that in line with our expectations? And have we observed any change in the competition from foreign high-end brands? And my second question is, how do we expect the profitability of the fourth quarter and the next year? That's my questions. Thank you. Donghao Yang: Well, I think first of all, the Double Eleven performance for the whole company in general is in line with our expectations. And of course, some of the brands are exceeding our expectations. So having said that, I think we are very happy to observe some of not only the existing hero SKUs are doing well, but some of the newly launched products have gained very strong momentum during the Double Eleven Shopping Festival, which will contribute to further growth potentials in coming quarters. Those products we already mentioned in the earnings call. Going back to your question about the challenges and also competition coming from the foreign high-end brands, we did observe a very big challenge and also competition. For the past Double Eleven Shopping Festival, some of the high-end brands are struggling with very big O2O price up the hero product. We did see that with our R&D supporting some of our new product launches, those products are still gaining very strong momentum. Looking forward, I think the competition during the Double Eleven Shopping Festival will load some of the pantry for some of the foreign high-end brands, which means it will hurt their long-term growth. So having said that, I'm happy to see that our high-end brands are still keeping a very strong momentum by balancing the price promotion. And also, we are focusing on promoting some of the new SKUs. So going back to the Q4, I think we are on the right track to reach profitability. And that's our long-term goal. And then we are seeing the balance of growth and also the right track for profitability. Maggie Huang: Okay, got it. It's very clear. Thank you very much. And I have no more questions. Donghao Yang: Thank you. Operator: Next question will come from Lucia Zhang with CP Securities. Please go ahead. Lucia Zhang: Thank you for taking my question. This is Lucia Zhang from CP Securities. I also have two questions. The first one is we can see that the skincare business of the company has achieved rapid growth this year. So from which efforts should we make efforts to sustain the growth maybe in the last quarter and next year? And the second question is about profitability. So in which aspects will the company make efforts to continuously improve their profitability? Thank you. Jinfeng Huang: Well, so going back to the fundamental drivers for our skincare business, I think the number one thing is about the R&D. The beauty market has always been driven by further and better innovation. So we are very happy to see that, yeah, with our R&D growth engine, we can launch a very strong pipeline this year and also for the coming years as well. The second thing we can think of is with our expansion for our skincare portfolio, including the benefit expansion and also product line expansion, we see further link sales for our product portfolios, which can help us to drive further marketing ROI. The third thing is our skincare brand. I think overall, for the three major skincare brands, we still have a pretty far potential to reach their optimized revenue level. So during this process, as we continue to drive brand awareness and also continuously drive the customer base, we still have the potential to grow our existing skincare brand. And last but not least, I think for us, we focus on launching some new products on some of the key channels. And then in the future, we will expand into other channels and also drive a better channel mix. So with that, I think that will contribute to the sustainable driver for the allocation. Going back to your questions about how can we continuously improve, I think as we said many times before, I think the product mix optimization and the channel mix optimization can help us drive the gross margin and also the further ROI on the marketing expenses. The second one is as we focus more on the customer CIM and also the product link sales, this will help us to further drive better ROI on the marketing expenses. The third thing is very important. For some of our brands, those brands are reaching what we call the optimized threshold. And in the future, as the brands like the revenue scale grow up, we will see further leverage on the true branding expenses ROI. So those are some of the things we see as very important to drive continuous improvement for profitability. Lucia Zhang: Thank you. That's really helpful and clear. Operator: The next question will come from Jennifer Wong with Hightower Securities. Please go ahead. Jennifer Wong: Hi. This is Jennifer Wong from Hightower Securities. So congratulations on the company's great performances. Could you please introduce just give us some colors on expected expenses of the company in the future? And maybe could you please share how do you view the increasingly fierce competition in the online channel? Thank you for your answers. Donghao Yang: Bob, can you help me to clarify what you mean by expenses? Jennifer Wong: Like, general expenses, operating expenses, etcetera, just generally speaking. Donghao Yang: Okay. Well, if you look at our financial statements, I see we see pretty stable G&A expenses in the past quarters. But having said that, I think moving forward, as the scale of our total revenue grows, I think we will see some operational leverage on the general and administrative expenses. We will continue to invest in some of what we think short-term wise, we will categorize as expenses, but we see it more like an investment, including R&D, and also for branding dollars to really build up the brand equity. Those are some of the areas that we focus on. And what sorry. What was your second question? Jennifer Wong: Oh, that's how do you view the ongoing sales competition on the online channel? How do you think our company is going to face such kind of situation? Thank you for your answers. Donghao Yang: I think as we said before, when we are looking at the beauty market, there are so many players, and then one of the reasons that we can continuously and also accelerate our growth is mainly driven by some of the investments we have devoted to R&D in the past few years and also our continuous commitment to brand building. So we did something right before why we are getting the growth today. So if we are looking at the competition, as long as we continue to focus on what we have done right, and then we will see more and more robust product lineup and better innovation is coming. And we will see the higher brand awareness so that we can get some more operational and also brand building optimization. And also, we will see some of the operational efficiency improving by our product mix and the channel mix optimization. And we will see some organization growth, but we focus on the cornerstones of our product innovation, customer focus, CIM, and etcetera. So as long as we focus on doing the right thing, we think in the future, we will achieve the long-term sustainable growth result. Thank you. Jennifer Wong: Thank you for your kind response. We're very looking forward to seeing the company's rapid growth. Donghao Yang: Appreciate it. Thank you. Operator: And this concludes our question and answer session. I would like to turn the conference back over to management for any additional or closing comments. Please go ahead. Irene Lyu: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen Holding Limited directly. Our contact information for IR in both China and the U.S. can be found in today's press release. Thank you and have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

189天前Insight Analytics约5分钟阅读

EDESY 2025 Q4 财报电话会议

Operator: Thank you for standing by, and welcome to the Elders Limited FY '25 Results Investor Briefing. [Operator Instructions]. I would now like to hand the conference over to Mr. Mark Allison CEO and Managing Director. Please go ahead. Mark Allison: Thank you very much, and welcome to all for the Elders' full year results presentation for the FY '25 financial year. And thank you for joining Paul and myself for the session today. As an overview, the full year results today are solid on a year-to-year basis with EBIT up 12%, transformational projects on track, positive progress on leverage and strong cash generation. Throughout the year, Elders has demonstrated solid operational and financial resilience in the face of mixed seasonal conditions. Our diversified portfolio through its national geographic footprint and multiproduct and service offering played a key role in mitigating the dry conditions across key agricultural regions and the increased competitive activity in our retail business. Stronger activity in livestock and real estate and high financial discipline also supported the solid result. On the transformational project front, we've also made good progress on Wave 2 of our SysMod project with all states rolled out and bedded down by the end of this calendar year. We are also well progressed in the final components of this project with Wave 3, and the completion phase, Wave 4, advancing in full on time. Focusing now on the areas out of our control. The FY '25 season has been a problematic year from a seasonal viewpoint, with a drier than average and late start to the winter crop across Southern Australia, with credit to our highly diversified business model, this is offset by our agency business, our real estate services business, our financial services and our feed and processing services businesses. Rural products has seen some limitation with very dry conditions in Southern Australia and Western Australia. In this context, the performance of Elders with its clear and consistent strategy, multiple diversifications, high financial discipline, hard-working and committed team and enduring customer anchor as the most trusted brand in Australian agriculture on an unprompted basis has remained resilient. This result is strong in safety, sustainability and cash flow with the full year outcome approaching the midpoint of the EBIT guidance range provided earlier this year. Moving now to the Delta Agribusiness acquisition, which completed on November 3. This acquisition is fully aligned with the Elders acquisition rationale that delivered Titan Ag, AIRR and many other bolt-on acquisitions to Elders, with pre-synergies EPS accretion, enhancement of our technical and AgTech expertise and offerings, strengthening of our geographical diversification, particularly in New South Wales and Northwest Victoria, South Australia and Western Australia, building on our crop protection and animal health regulatory package portfolio to drive our backward integration strategy, providing an additional platform for retail segmentation, allowing greater customer centricity and providing further coverage for our real estate and financial service offerings. Moving on to the FY '26 outlook. We are very optimistic on the broad outlook for Australian agriculture at a seasonal and commodity level with the return to average conditions. In addition, we welcome Delta Agribusiness to our portfolio as a platform for significant growth. The outlook and fundamentals for livestock remains sound, with prices for sheep and cattle forecast to be supported by strong international demand against the backdrop of tightening supply. The combination of a positive seasonal and commodity outlook also provides a great backdrop for continued growth of our -- in our real estate and financial services businesses. It's worth noting at this point that our first 6 weeks of trading for FY '26 is tracking some 30% up on last year for the same time on an apples-to-apples basis. So this is without the inclusion of Delta that's come in on November 3. Our approach for today is that I'll provide an overview of the results. Paul will go to the detail of our financial performance, and I'll then provide an update of our outlook and growth and transformational initiatives as we deliver the final year of our Fourth Eight Point Plan. With this overview, I will now commence with the FY '25 full results presentation. So if we can move along to the next slide. The approach, as you see with the -- it's worth noting in the appendix that there's further detail and transparency on sensitivities, business model, et cetera. So why it's worth looking at. So kicking off on the executive overview on the slide committed to improving our safety performance. So from a safety viewpoint, at the core backward-looking metric of lost time injuries, there have been 6 lost time injuries this year, which is an increase from last year. Quite a disappointing result, predominantly in the livestock area. And so we have been able to significant reduce -- significantly reduce injuries across our manual handling and our rural products area. But a disappointing result. We continue to aim for zero injuries to anyone. I think it is worth noting that at the start of the Eight Point Plan process, there were 34 lost time injuries. So we've made significant progress over the Fourth Eight Point Plans, and the lost time injury frequency and the total recordable injury frequency, and you can see the trend on the second slide, are significantly below equivalent industry benchmark. Moving to the next slide, just a quick snapshot of the financial performance. You can see the underlying EBIT, some 12% up on last year. Our return on capital of 11.3%, holding stable and maintained strong cash conversion and the dividend per share payout. And moving to the next slide. So Paul will clearly go into the detail on the financials. Moving to the next slide, and this is over the Eight Point Plan years. And you can see significant return as committed in Eight Point Plan 1, 2 and 3. At the beginning of -- prior to Eight Point Plan -- the Fourth Eight Point Plan, we took the decision to invest heavily in our transformational projects. And there's some $100 million of cost and capital being spent through this period in order to drive our systems modernization project, our automated wool project and also our Crop Protection formulation project. So we knew that, that would drag on our cost of capital and resources and focus through that period, but critical transformational projects that we're at the process of completing, with the formulation process complete, the automated wool project complete and with SysMod running into Wave 3 and 4, which are the final 2 waves through next year. Moving to the next slide. And some of the work we're doing across -- with our people and communities. It's worth noting, again, 186 years of Elders in Australian -- regional rural Australia and agriculture. Unprompted remain the most trusted brands throughout all of these areas and with significant activity across -- with multiple activities across the business. From a safety viewpoint, very clear focus on safety from an engagement enablement viewpoint, as you can see, quite high engagement enablement, as have been for many years, and also a very high focus on safety throughout our people. Moving to the next slide. And just a quick look at the work we do from a sustainable responsible future viewpoint. Many of you are aware of our alignment across many environment, people and community projects and the work we've done with our sustainability report. And you'll note the very strong and aligned partnership with the Royal Flying Doctors. So from our viewpoint, this is who we are. This is core to our DNA, and we'll continue to invest and be highly engaged with our communities around Australia. Moving to sustainability. And our progress against the emissions targets with the next slide. And you can see the trend towards the emission targets we've set. We'll continue to work through these. As many of you will also be aware, there's been a reviewed methodology on emissions calculations from livestock. So we're working through that. But I think the point to note is that we're well on track. And if you take the time to read the sustainability report, I think you'll be very impressed with the progress we're making right across the board in this area. Moving to the next slide. And this is really to emphasize one of the changes that we've made this year. Historically, we've been diversified by product and service, and we've talked about that in our business model, and it's in the business model that appears in the appendix of this pack. But you'll see right through the supply chain from crop protection, through the wholesale with the Elders Rural Service, Delta Agribusiness and then real estate and feed and processing, there's a very solid diversification component that comes out of the business. And if you look through all the key investment drivers, and I think Paul will comment on many of these, very strong EPS growth, diversification. The industry fundamentals are looking very good. And I think it's one of the points that you'll hear us make a few times that we're at the stage now where we've moved through our transformational projects and the big cost of capital resource investment, and we've got an outlook of positive commodity conditions and also seasonal conditions. So we feel very, very optimistic about the next 3 to 5 years as we run through all of these. And finally, just as a quick recap before we jump into the deep dive into the financials. The next slide, just to recap on Delta Agribusiness that joined the group on the 3rd of November, a great business, well run, very complementary from a geographical viewpoint, and it fills many gaps that we did have, very strong in its technical expertise, which also complements Elders significantly. We're looking at $12 million of synergies at EBIT level over a 3-year period in the original business case. Now given that the ACCC have put on a 12-month delay, we're discussing around the Delta Board on how we can fast track this with regard to backward integration given the strong foundation of Four Seasons' brands or products at the moment. So that's a very positive opportunity to fast track those synergies, targeting greater than 15% post synergies from an ROC viewpoint and very much aligned to Elders -- across our approach to the business. And as we've said a number of times, as divisions, all the divisions are stand-alone. So with that, I'll pass over to Paul to go through the financials, and then I'll come back towards the end on strategy and outlook. Paul Rossiter: Yes. Thanks, Mark, and welcome, everybody. I'll commence on Slide 14 of the pack, which summarizes progress against key financial objectives. Highlights include: double-digit growth in our agency real estate and feed and processing businesses; below inflation cost growth when adjusted for acquisition and transformation; strong momentum in SysMod, as Mark referenced, with all states now live on Wave 2 retail, and Wave 3 livestock to commence rollout in early 2026; product and geographic diversification, mitigating the impact of dry conditions in Southern states; Delta Ag acquisition to further enhance our geographic diversification from FY '26 and strengthen our technical capability in ag tech and precision agriculture; leverage to return to target in FY '26 through a renewed focus on capital allocation and client profitability. I'll now turn to Slide 15, which displays Elders' 5-year financial performance. I note the following progress from FY '24. Sales revenue increased $70.4 million, or 2.2% despite mixed seasonal conditions supported both by acquisition and organic growth. Gross margin increased 7.4%, up $47 million compared to the prior corresponding period or PCP. Comparatively, costs increased 6.2%, noting this includes the impact from acquisition and is therefore not comparable to inflation. Costs will be further discussed later in the presentation. Underlying EBIT increased $15.5 million compared to PCP, but has declined over the 5-year period, with FY '25 impacted by dry conditions. Moving to Slide 16 now, which contrasts FY '25 against PCP. In addition, this slide details the impact on key financial metrics from capital held on September 30 in preparation for the completion of the Delta Ag acquisition, which occurred on November 3. Elders has delivered a resilient result with the following highlights evident. Sales revenue, up $70.4 million despite dry conditions in some key cropping regions, which thankfully ended in June. Gross margin increased $47 million, to $684.6 million, up 7% year-on-year, with growth achieved across most products. Underlying EBIT increased $15.5 million, to $143.5 million, supported by a strong turnaround in agency services and continued growth in real estate. Return on capital was steady at 11.3%, notwithstanding the mixed seasonal conditions and systems modernization CapEx weighing on this metric as the capital outlay proceeds benefits. Improving this metric in FY '26 is a key priority. Cash conversion was broadly in line with expectations with a favorable outlook for FY '26. Net debt increased $20.5 million, to $457.3 million, excluding capital held for the Delta completion, broadly in line with sales growth and the impact of higher cattle prices. I'll discuss these key metrics further as we move through the pack. Moving to Slide 17, which displays Elders' gross margin diversification, a key defense against seasonal variability. As noted, gross margin increased $47 million, to $684.6 million, with growth across most products more than offsetting the impact on crop protection from dry conditions. The key drivers of this result include agency gross margin up $27.1 million, or 22%, following a strong recovery in livestock prices and increased cattle volumes. The outlook for agency services remains positive, driven by strong international demand for protein as well as some destocking in drier regions, limiting supply and supporting prices. Real estate services gross margin increased $22.5 million, or 27.2% with property management, residential, broadacre and commercial all improved on PCP, supported by both acquisition and organic growth. Feed and processing was another highlight with gross margin up $4.1 million or 23.8% due to productivity and efficiency benefits from the new feed mill commissioned in August 2024. Financial services gross margin increased $2.3 million, or 4.2%, supported by continued growth in our new broker model alongside improvement in the livestock warranty product. An increase in on-balance sheet lending was also achieved, partially because of the increased cattle prices. Collectively, the increase in gross margin across these products more than offset the reduced earnings from the exit of the Rural Bank exclusivity agreement in FY '24. Wholesale products delivered a steady result, notwithstanding lower crop protection sales from those dry regions. Growth in the above products significantly outweighed the negative impact from crop protection, which will be discussed further on the following slide. Moving to Slide 18, which analyzes product performance. This slide demonstrates the importance of our product and geographic diversification. The waterfall forward efficiency chart shows the extent of dry conditions, especially in South Australia and Western Victoria, which negatively impacted Elders' retail business with sales, gross margin percent and client confidence, all impacted. Fortunately, seasonal conditions improved from late June which caused for optimism for a recovery in these regions in FY '26. Turning now to Slide 19 to discuss costs, which increased $11.4 million, or 2.2% when adjusted for acquisitions and the impact of transformation. Part of this increase resulted from the inclusion of Elders Wool in base costs from transformation in FY '24, which added an additional $3 million, or 0.6% to base costs. Given this change in categorization, holding base costs below inflation was a pleasing outcome. Turning now to Slide 20 to discuss return on capital, which was steady in FY '24 despite mixed seasonal conditions. When adjusted for the impact of acquisitions and transformational projects, return on capital is 12.7%. Lifting return on capital is a priority for FY '26 through a renewed focus on capital allocation, client profitability and delivery of SysMod benefits. In terms of capital allocation, Mark will speak to the potential divestment of the Killara Feedlot in the strategy and outlook section. Moving now to Slide 21. And working capital, where we see an increase of $68 million from FY '24, mostly driven by higher cattle prices, which increased working capital in feed and processing and financial services. Resale inventory increased $12 million from FY '24, a pleasing result given the late start to winter crop in key cropping regions, which caused an uplift in carryover inventory. This carryover inventory is forecast to clear in the first half of FY '26. On to Slide 22. And cash flow, where we see an operating cash inflow of $117.9 million, a pleasing result considering the late start to winter crop, which pushed some receivables to the fourth quarter. The outlook for operating cash flow and cash conversion in FY '26 is positive with a focus on client profitability to result in some receivables being transitioned to third-party lenders away from Elders' balance sheet. I note that the physical payment of company tax for Elders Limited will recommence in 2026. We'll now move to Slide 23 to provide a detailed update on net debt and leverage. The waterfall charts display a normalized net debt and leverage position, adjusting for the benefit of capital held at balance date in preparation for the completion of Delta Ag. Breaking down the movement in net debt, we see an increase from $436.8 million at the end of FY '24, to $457.3 million at balance date, acknowledging this includes the benefit of $50 million of equity retained for flexibility in acquisitions, approximately 40% of which was deployed in FY '25. I note that the majority of net debt pertains to client receivables, which is self-liquidating in nature. Excluding receivables funded through debtor securitization, Elders' core debt is $161.9 million. Turning to leverage. We see a reduction from 3.1x at the end of FY '24, to 2.9x, normalized for Delta funds held. A return to our target range of 1.5 to 2x is forecast in FY '26 from a renewed focus on capital allocation and client profitability and increased referral of client loans to third-party lenders given trade receivables comprise almost 2/3 of net debt. I note that the return to target leverage is underpinned by but not dependent on the potential sale of Killara Feedlot. I'll now move to Slide 24, where we see significant headroom across banking covenants, noting that these calculations do not require adjustment for the capital held for the completion of Delta Ag. I also note that our bank leverage covenant excludes receivables funded through debtor securitization given their self-liquidating nature. I'll now move to Slide 25, which provides a macro overview of key growth pillars over the coming years. This slide has been included to demonstrate significant growth opportunities and focus areas over the coming years and is not meant to be exhaustive. Regarding systems modernization, Elders has now commenced the final wave of its SysMod program, which once completed, will provide Elders Rural Services with a modern technology platform in Microsoft Dynamics, which itself is evolving at pace. Delivering a return of at least 15% on the program spend is both a high priority and significant growth pillar in the coming years. The acquisition of Delta Ag represents a significant milestone for Elders, increasing points of presence and geographic diversification while enhancing Elders' technical expertise in ag tech and precision agriculture. Accelerating synergies from backward integration in crop protection and animal health are key priorities for FY '26, as Mark noted. The divisional structure is aimed at improving focus and accountability within significant business units. By way of example, real estate services gross margin has grown $45.6 million, or 77% since FY '23, but market share remains less than 5% nationally. We believe the divisional model will help accelerate growth in this and other business units. Acquisition will remain a growth pillar alongside organic growth, provided acquisition prospects meet our financial and values criteria. Finally, the new Elders' brokerage business is noted as a growth pillar, given success to date with our brokered loan book exceeding $1.3 billion from a near standing start in FY '24. Gross margin from loan brokerage has increased from $0.9 million in FY '23, to $6.1 million in FY '25 at a CAGR of 160% with our network of brokers expanded further in recent months. This concludes the financial section of the presentation. I'll pass back to Mark now, who will provide an update on strategy and outlook. Mark Allison: Thanks, Paul. And really leading off from Paul's comments on the divisional structure, just going to Slide 27 as we look at the Fourth Eight Point Plan. And historically, we've expressed the Eight Point Plan in terms of the diversification of our products and services. And we're now looking at the Eight Point Plan in terms of the 6 divisions of Elders and how that diversification across the matrix of products and services adds further to our ability to work through difficult seasonal conditions. So when you look at the -- this is the final year of the Fourth Eight Point Plan, we've had the ambition of 5% to 10% growth in EBIT and EPS through the cycles over an Eight Point Plan. Clearly, as we -- at above 15% return on capital. Clearly, as we come into a taxpaying state in the next financial year, the EPS growth ambition will need to be adjusted accordingly. But -- and we've emphasized the impact that the transformational part of our agenda over these 3 years has had from a cost of capital and resource on the business. But we're setting us up now for a very solid platform with all the transformational projects coming to a close as we go forward for the next 3 to 5 years. Going on to the next slide. And we -- our view and our move to go to a divisional structure, effective the beginning of FY '26, was really around the fact that each of these areas of the businesses had largely been run as either stand-alone or with a particular focus and emphasis through the governing Board or management team. So as we've laid them out, we've laid them out in order of supply chain, starting with Elders Crop Protection. very experienced managers right across all of the divisions. So Elders Crop Protection with Nick Fazekas. This includes our Titan Crop Protection business and our formulation businesses in Eastern Australia and Western Australia with AgriToll and Eureka. And it's a specialist crop protection business as per Nufarm, Adama, et cetera, et cetera. Then we move the next step along the supply chain to our wholesale business, with Peter Lourey. And this has -- I think you're all aware of AIRR, with multiple touch points and membership base throughout Australia for the AIRR business, and its highly efficient and effective warehouse network throughout Australia. Next, as we go to retail, we have Elders Rural Services, which has a complete offering of retail products, agency products, real estate, financial, et cetera, right across the board. And that business at the moment, since the split of divisions, I've been acting as the divisional CEO for ERS. And very shortly, we'll have an upgrade to that appointment, and we'll announce that in the next few weeks. The next business, again, Gerard Hines running Delta Agri business, very experienced and competent manager and co-founder of the business and with an excellent executive team. So the Delta Agri business doesn't have -- sorry, has a much greater focus on cropping technical service with some additional services -- products and services, but very well run, and looking forward to a period of strong growth and profitability across the board. Elders Real Estate. So Tom Russo had previously run the product of real estate before he ran the Elders network. And so we thought it was appropriate for him to take control of the separate dedicated division. The idea here is that Elders Real Estate has grown significantly, and we'll talk about the growth profile, some slides coming up. Tom is a highly experienced professional in this area, across a number of areas as well, has been the guardian of the expansion of the property management component of Elders Real Estate and also our entry into commercial real estate, which we kicked off a big time in Tasmania. So lots of growth opportunity there, highly dedicated manager and executive team and pretty exciting. And then feed and processing, that, we talked about with Andrew Talbot, another highly experienced manager with a great team. He's grown the profitability of feed and processing fivefold since the First Eight Point Plan, have done an excellent job. The record profitability of this division this year is based on a number of the investments we've made historically with feed mill, center-pivot irrigation, shading, a bunch of investments that have enhanced well [indiscernible] productivity. And it's a very, very well-run business in the portfolio. The consideration we've had with feed and processing is actually if you look across that supply chain, feed and processing is a different business to the others. And our thinking is that it's been highly successful. It's grown significantly. We've invested significant capital and got good returns as we saw with record profitability this year. But we've reflected on whether feed and processing would do much better and go to the next level with under natural ownership. And so that's the reason we're considering a divestment of the feed and processing division. And if the moons align and there's an appropriate shareholder value-creating proposition put in front of us, we'll consider it strongly. And I'll just reiterate Paul's earlier comment that our pathway to back on leverage and to a lesser extent -- well, actually, on leverage is the key metric we're thinking about, is not dependent on the divestment of feed and processing. So if the exercise comes up with options that are not to enhance the shareholder value, then obviously, we're very happy, and it's a great business and a great team to be in the Elders Group. So moving to the next slide. And if we look at the modernizing of the platform, we've talked about SysMod. We gave a commitment from a transparency viewpoint to disclose each of the cost of capital components of each of the waves as the Board approved business cases, so when it was formally approved. And we've done that. But you can see -- and if we include Wave 1, there's some $100 million to $110 million investment over this period. And this is the period in that slide that we talked about upfront, where from '22 -- FY '22, where we have had considerable transformational investment. Now with all of these investments, as we've seen with Killara on the capital investment there, there is a lag. And so the benefits of these investments are coming through now, in FY '26. And as we close off SysMod at the end of FY -- calendar FY '26, we look forward to those investments coming through into the future. And I think it's worth noting that this does really set Elders up with a contemporary platform where we can take advantage of multiple AI opportunities that historically we haven't been able to. So just looking to the next slide and running through each of the waves and the different components of the waves. That's really for information. But as I mentioned, the plan is that we'll complete these. We're still running in full on time, which I know sounds amazing for an IT project, but we're still running in full on time, and it's -- we're looking for the finish line as we run out next year. Okay. Now moving to the next couple of slides. In the next 2 slides, we've wanted to showcase a couple of products and services just to put more of a spotlight on them. And for this presentation, we picked financial services and real estate, which we had covered in the half year. But really to emphasize, in terms of the balance of our portfolio, products and services, we've now -- clearly, we've strengthened our position across the whole supply chain and real products, from Elders Crop Protection, to wholesale, to retail, all the way through and technical service. And in our portfolio, we're looking at really strengthening and rebalancing our financial services, all capital and real estate. So the characteristics of both of these services, as we look at them, and it fits nicely in our portfolio management, a high return on capital. We have a relatively low market share in both, financial services and in real estate. The brand is important. So unprompted most trusted brand in Australian -- regional, rural Australian agriculture. So the Elders brand is critical. There's excellent market outlook in both areas. And obviously, there are links to livestock outlook and general commodity outlook, but a strong outlook, and it really does help us balance the portfolio. So just a quick a quick look at financial services. And you can see, in line with Paul's comments, solid growth, replacing the Rural Bank exclusivity agreement and growing in a capital-light manner. So -- and we can go to questions on that in detail. The next slide on real estate. Very, very similar profile. And I think the gems that are probably not as obvious for everyone. One is the product -- sorry, the property management business. We have some 20,000 properties that we're managing now across Australia, which is a very solid and reliable flow for us and also our entry into the commercial real estate only in regional, rural Australia. So very, very positive platforms. And in terms of portfolio balance, a bit -- quite nuanced, and this is how we run Elders as you -- many of you are very aware. So then going to the forecast and outlook across all of the areas on the next slide with -- without going through each one of them, and [indiscernible] each one of them on the next slide. You can see our thinking is that we've had a period of difficult market conditions and significant transformational investment. We've come through that period. We've lagged benefits from the transformational investment. Right now, we're confronted with the next 3 to 5 years, we're looking at completion of the transformational projects, the commodity outlook and the seasonal outlook being average to positive and our ability to really hone in division by division to grow, to drive the capital out, as Paul mentioned, from a leverage viewpoint and to enhance the business for strong growth against the backdrop of average to good seasons. So it feels very positive. For the first 6 weeks, as I mentioned, of this trading year, FY '26, apples-with-apples. So with that, Delta included, we're up some 30% on the previous year. So very early days. But I think it does fall into the -- our thinking and how we've been talking about our outlook for FY '26 going forward. So with that, I think I'll open up for questions. So we'll just leave that slide on the screen, and we'll open up for questions. Operator: [Operator Instructions] Your first question comes from James Ferrier from Canaccord Genuity. James Ferrier: First question I wanted to ask you about was just on your view on livestock volumes in the year ahead, just in the context of the volumes that were achieved in FY '25 as a baseline, herd sizes as they stand right now. I mean everyone can see the livestock prices, but what's your view on volumes in the year ahead? Paul Rossiter: Yes. Thanks for the question, James. And it is one where there is a little bit of uncertainty going forward, I think particularly in sheep volumes. And just for those who don't know, we saw certainly higher cattle volumes in FY '25, up about 13%. Sheep volumes were down about 8.1%. So we do see that rebuild coming through SA and Western Vic, and that's likely to drag on sheep volumes into FY '26. Cattle is a little bit different just because of the geographical footprint. But it is one to watch. But what we do expect is that if volumes do taper off in sheep, we expect prices to offset because the international thematic for Australian protein remains very strong. And so we just see that price being flowing through the supply chain. James Ferrier: Yes. That makes sense. Second question, on Slide 17. We can see there that crop protection gross profit declined 9% on PCP. What was the volume of product associated with that $129 million of gross profit? Paul Rossiter: Yes, I don't have a volume number to hand, James. So I'll see if I can cover that post. But I will speak to the impact of dry conditions. So we did note a roughly $12 million impact from SA and Vic, [ Riv ] at the half. We saw that continue into the second half, mostly in Q3. We think the impact was roughly $19 million volumes. Yes, we're certainly up in Northern New South Wales, obviously down in SA and Vic, but I don't have the net numbers here. Mark Allison: I think, James, the story is on margin compression as you've seen with other businesses and the sales that we experienced particularly in the dryer areas. James Ferrier: Yes. Okay. Understood. And last one from me and probably one for Paul again. Just some thoughts on D&A, CapEx, interest and tax for the year ahead. Paul Rossiter: Yes. Look, depreciation, well, will increase given the completion of Wave 2 and the commencement of the continued amortization of SysMod CapEx. In terms of CapEx outlook, once again, in FY '26, it is dominated by SysMod. Some of Wave 4 will fall into FY '27, as you can see on the SysMod slide. So it's a bit uncertain, but we think -- I'd say, sort of $20 million to $25 million will fall from SysMod into FY '26 and perhaps another $5 million to $10 million outside of that. In terms of tax, so we will pay a small amount of tax, about $1 million following the submission of the FY '25 tax return. So it will be in February 2026, and then we'll pay effectively pay-as-you-go company tax thereafter. I think your question may be referring to the statutory tax rate, which fell in FY '25. That was pertaining to a tax credit related to prior period for R&D. So that's likely to be nonrecurring. Operator: Your next question comes from Richard Barwick from CLSA. Richard Barwick: Can I just double check, when you're talking SysMod -- and obviously, it looks like some benefits from an EBIT perspective are expected in FY '26. Are you able to put some numbers around that? And then equally, what you would see as the non-underlying OpEx impact from SysMod in '26? Paul Rossiter: Okay. So yes, thanks for the question, Richard. So in terms of benefits, the major tranche of benefits is through an uplift in retail margins. And we see that coming from better control of discounting and better categorization of clients. And just for context, a 1% uplift in retail gross margin percent is about $22 million. So 0.5% uplift there gets us fairly close to the benefits required. The other benefits we see coming from uplift in sales, and that comes from better client data over time, but probably longer dated than the retail margin benefits. In terms of non-underlying OpEx for FY '26, so if we work on roughly 60% CapEx, 40% non-underlying OpEx, over that sort of $20 million to $25 million in FY '25. Richard Barwick: Okay. And my other question is to do with the -- there's quite a sizable impairment of goodwill obviously captured within this FY '25 result. Can you just give us a little bit more background exactly what that related to, please? Paul Rossiter: Yes. So there's a couple of businesses that we impaired, both which were reported on during FY '25. So one was Currin Co, where we lost a number of agents in Victoria. The other was Esperance Rural. Yes, we had, I suppose, an unsuccessful transition post earnout. Mark Allison: I think, Richard, it's -- one of the learnings is that, as you know, we've been highly successful with our acquisition -- bolt-on acquisition template in keeping the vendors in the business. And when we do our post-implementation reviews post earnout, it's been 95% plus positive. And we've identified in the last 12 months, whether it's through tougher conditions or whatever the driver is, that the 2 years post earnout is now an area that we need to really focus on in terms of potential loss of staff as we saw with -- actually, it was longer than 2 years with Currin Co, where the vendor leaves the business, the earnout is completed. Historically, we've seen that in business as usual within ERS. And we've now established a project a couple of months ago to identify how we ensure that we don't get a repetition of that situation because it had been a very high success rate of post earnout of keeping the people. Richard Barwick: And well, I guess it's -- the obvious question is, what are the risks? I mean, obviously, you've got something in place here to try and to mitigate it, which would suggest you are a bit concerned that this could repeat with some -- because I mean you made a lot of acquisitions in the last few years. Yes, how do we think about that risk? Mark Allison: Yes. Well, I think the -- a couple of points, is that if there is -- like something in the order of 100 bolt-on acquisitions, and we've had 2 or 3 like this. Clearly, the Currin Co was a larger one. If you like a sense of Shakespearean irony, the Esperance rural supply defection was to Delta. I'm sure you enjoy that. But the -- I think the materiality of it has dropped off because we aren't pursuing the same sort of strategy on bolt-on acquisitions that we had, as you're aware, given that the rural product supply chain is pretty complete and also given that the ACCC regime is hard to unscramble to do business. The -- our sense is that, that won't be where we'll be getting our growth from. It will be more organic. But I think the issue is that post earnout, the -- and we have time. We have 2 or 3 years each time. We have to have the business as usual hooks and retentions in place for these people. Because as you know, in regional, rural Australia, the personal relationship goes a long way. Operator: Your next question comes from Ben Wedd from Macquarie. Ben Wedd: Maybe just turning to your question -- your comments around capital allocation there and particularly with the potentially moving some of the receivables into third-party lenders there. I'd just be interested in sort of, I guess, any timeframes you can give around that and how that sort of looks from an operational standpoint. Paul Rossiter: Yes. Thanks, Ben. Look, it is something -- and I think the way that I'd explain it firstly is that we are taking a return on capital approach. So where we're not seeing, I suppose, a deep relationship with clients that warrants the use of Elders' balance sheet, then we'll look to obviously do that business with the client that use third-party financiers. So we do see this as certainly something that has commenced already. It's a process that's commenced. And that will roll through FY '26 and beyond. But it won't be something that we seek to do hurriedly either. So it will be an incremental thing over a number of years with a significant start in FY '26, particularly in the fin services and seasonal finance areas. Ben Wedd: Yes. Got it. And then maybe just any comments you can sort of give us around Delta's sort of performance over the last 12 months as it might compare to Elders as well in some of those key categories like ag chem and other cropping areas. Paul Rossiter: Yes. Thanks, Ben. So I mean, just a couple of comments. I think the first thing to note is that Delta's financial year is June 30, and their footprint was very exposed to dry conditions that occurred in FY '25. So I think there are a couple of key distinctions between Delta and Elders. The other being, Elders obviously had an offset in livestock agency that doesn't exist to the same extent in Delta. Yes, so the Delta result was impacted certainly more than Elders by the dry conditions. Trading, since it started raining in July in Delta has been above -- certainly above PCP. So yes, that business is operating very well. Operator: Your next question comes from Evan Karatzas from UBS. Evan Karatzas: Maybe just to follow up on that one then, so sort of the ASIC accounts for Delta. So the EBITDA went from sort of the $53 million to $40 million. Can you sort of just give a bit more information around if you expect that original FY '24 earnings to be realized assuming, I guess, normal conditions? And then anything you can say around the synergy benefit we should expect in '26 for Delta as well? Mark Allison: Yes. I think the key point for us is that what we experienced as the turnaround from these dry conditions was outside the Delta financial year. And so that's what we've experienced ourselves. Just as a note, prior to going to the next phase on the acquisition a few months ago, we -- so Paul, myself and the Chair of the time, Ian Wilton, sat down with the Delta management team to go through their FY '25 results, just to give ourselves comfort that our proposition and thesis on the acquisition remained on track. And after the presentations, discussions, I think, Paul, it's fair to say that we felt very, very comfortable. In terms of your question on the synergies, I think it's a key point for us. We've already had meetings with the team, with [ Jarred ] and Matt and Chris and the team around the synergies. We had planned for 12-month -- sorry, a 3-year development of the -- or extraction of the $12 million synergies. Our belief is that given the timing, given the November 3 timing and the proximity to the FY '26 winter crop that we do have time to do a lot of the work that we wouldn't have been able to do if it had been in the same period the previous year. So our sense is that we can fast track those synergies and bring them through. And as you know, they're largely crop protection. They're largely providing different crop protection supply chains out of Titan into the Four Seasons brand. And with Steve Hines, the person who runs that business within Delta, there's great alignment with Nick Fazekas, who runs the overall crop protection business. So we've established the governance structure, the Board structure, et cetera, around Delta and all the divisions. And again, I feel pretty comfortable and optimistic that we will get -- we will optimize the synergies in FY '26. Evan Karatzas: Okay. And just final question. Just with the debt position, can you provide a number of -- to sort of normalize it if you remove the reduction in carryover inventory in SA, Vic and removing or transitioning some of the select client loans from Elders' balance sheet to third parties, just so we can sort of look for an adjusted or a like-for-like debt position, please? Paul Rossiter: Yes. Look, just very high level and back of envelope, I would say the carryover inventory, I've put a number of around $30 million on that, which we expect to be resolved in the first half. In terms of -- I'll put another bucket in there, Evan, in terms of overdue debtors, we think there's a $20 million to $25 million opportunity there. You may have noted that we have had a $10 million increase in 90-day plus receivables. That is 2 clients -- 2 large clients, that we expect to be resolved in FY '26. So we feel that we're at a peak in terms of overdue receivables as well. And then you've got -- in terms of client receivables or client loans, seasonal finance and loans, I've put a number of sort of around -- a target of around $50 million across financial services and seasonal finance. Evan Karatzas: Okay. That's super helpful. Maybe just a quick one, I'll just sneak it in. The 1Q comments you made, do we assume you're up 30%? Do we assume we're sort of back close to that? I think you previously mentioned, like, a through cycle 1Q average EBIT was around $37 million. Is that sort of where we're, I don't know, trending towards or run rating towards? Paul Rossiter: Yes. And I think the -- in terms of tailwinds in the business, Evan -- so I think the -- certainly, livestock prices are up relative to year-on-year. I'd say that tailwind will moderate the further we get through the financial year. Obviously, livestock prices increased throughout FY '25. But I think in terms of the Q1, it goes back a couple of years, when we gave that number, obviously noting that's not audited. But yes, it's a fair comment. Operator: Your next question comes from Paul Jensz from PAC Partners. Paul Jensz: Just one at the top, Mark, if I can. You talk about the 5% market share you have in the wider farm input space. Can you see some additions to your business or the Elders business? Or is it a case of organic growth from where you are to get a larger part of that pie? Mark Allison: Yes. Thanks, Paul. So when you say the larger rural products, are you referring to finance? Paul Jensz: Right across the board. You had a chart there with the Delta acquisition where you're a small part of a very big pie in farm inputs. and you've got the new structure that you have. I'm just wondering where to from here if you're just such a small part of the pie? Mark Allison: Okay. Yes. So that broader pie includes fuel, like all the finance, et cetera, et cetera. So a whole heap of services that we're not in. So I think our focus with -- well, I think it's -- the focus that Delta has had for a long time, will continue on, where it's a service-based customer-centric approach across the board. Delta is very small in Queensland and -- but ERS is also not that strong in Queensland. So there are geographical gaps, but it will largely be sticking to the knitting of what each of the divisions does best. And in that -- in the case of Delta, although it's got some broader offers, the focus is around that very technical rural products-based customer centricity. Paul Jensz: And that's across the broader Elders business as well, if I look at the new structure that you have? It's really just sticking to the core business? You don't see another bolt-on there? Mark Allison: No, I don't think so. I think our view is that the -- any deviations, slight deviations from where we are now, we've talked about in the Elders Real Estate business, it's around strengthening our commercial real estate in regional rural Australia area, continuing to build on our property management business, which is a really solid good business. I think in ERS, there's a lot of -- in the traditional pink-shirted DRS front end, there's a lot of efficiency. Because we've just put SysMod through ERS, they've got the front-end point of sale across all the branches across Australia. So it's really around all the efficiencies that we promised and controls. And again, customer understanding that Paul talked to in terms of data, that ERS hasn't been doing in the past. In terms of Elders Crop Protection, I think the focus will be some -- a little more on integration because the formulation businesses run stand-alone to the traditional Titan business. So we'll slowly move around integration there on systems. And then feed and processing, really, we're looking at ways of expanding efficiency with acquiring extra land with some increased backgrounding, many of the efficiency programs that we've had previously. So across each division -- and I guess it goes to the point of why having focused divisions makes so much sense. Because each of them have their own nuance, their own focus, and it allows the management teams to really drive the efficiency and profitability. Paul Jensz: Okay. And then if I -- just a second question, if I can, if I build the building blocks towards, let's say, 2027, '28 numbers that consensus have, it doesn't seem to be a lot of, I suppose, underlying organic growth if you do the SysMod 250 staff that came across with the bolt-ons, Delta and the small free kit you get from '25, some of the earnings come into '26. So I'm interested in that organic growth number because I don't think consensus has got a big number in there for it and neither do I at the moment. Mark Allison: Yes. Well, I'm not sure how the -- what the assumptions are on the models. But I do know from a -- I mean, if backward integration is organic growth, and we certainly see it that way, the backward integration opportunity for ERS still has 10-or-so percent to go of the available generic portfolio and the -- just in crop protection and in Delta, there's probably 40% to go. So I think from us doing things that we control, not relying on market conditions, there's a lot of -- and then you've got also the benefits, the lag benefits of the transformational projects. But yes, your observation is probably right, Paul. Paul Jensz: And the final one, I thought others would ask this question, Mark, but I'll do it. The press -- I love talking about management transition, Mark, and your term comes up at the end of next year. I'm interested in whether you could return fire with what the press, like, talking with management change. Mark Allison: Yes. No, I thought the comment in the Australian was relatively accurate. I said when we refreshed the Board and I stayed -- I decided to stay, I said the earliest that I'd leave would be at the end of this Eight Point Plan, so that's September next year. And that's still the case. And it's not a term in the contract. It's an ongoing contract. So basically, my position has been that as a minimum, I'll stay to the end of the Eight Point Plan. Operator: Your next question comes from John Campbell from Jefferies. John Campbell: Firstly, just for clarity, what's the dollar value of adjustments that you've made to arrive at adjusted EBIT? Paul Rossiter: So you're -- in the investor presentation, John? John Campbell: Yes. Yes, it just said $143 million, just for clarity. So I know what we're adjusting. Paul Rossiter: Okay. I might just come back offline on that. So we do have -- we've got a list in the annual report, but yes, I'll come back on that offline. John Campbell: Yes. I can see where you've got that in the accounts. I just wasn't 100% sure which is included in your adjustment calculations. But I think we've got a call on this afternoon, Paul, so we can maybe touch base then. And just Mark, around -- and you sort of touched on it, but I presume with the improving seasonal conditions in the Southern regions that impacted in FY '25, in terms of that competitive intensity in crop protection that you've been talking about, I presume you see FY '26, so that sort of level of intensity and price competition and the like abating over the course of '26? Mark Allison: Yes. I think there are probably 2 components that leads us to think that way. One of them is around the seasonal conditions, as you just mentioned. And the second one is the stabilization of COGS out of Chinese factories. So the idea of lower priced cost of goods coming into Australia and then driving market price down, that doesn't seem to be where it was. Earlier, I think 6 months ago, we were concerned that tariffs on Chinese crop protection into North America may drive dumping of product in Australia and therefore, further drive prices down. If you're caught with high-cost inventory, you're obviously going to be screwed from a margin viewpoint. But our sense is that it's stabilized. And regardless, even a stabilized normal season environment, Australia has the lowest crop protection prices for all around the world. And it's not uncommon for multinational companies to divert product from Australia to Europe because they can make so much more money out of the same active ingredient. John Campbell: Okay. So that all augurs pretty well for crop protection for '26? Mark Allison: It looks like -- yes, as I said, I think we're pretty optimistic, both commodity season and the back of the transformational projects. Operator: Your next question comes from Mark Topy from Select Equities. Mark Topy: I just wanted to ask a question around the property side, the retail, the growth and both in the gross margin and the sort of volumes and some expectation around that and maybe some breakdown between what's organic and what's been achieved by acquisition because you clearly got a very strong growth rate. Can you give us some sense of how that looks going forward now? Paul Rossiter: Yes. Thanks, Mark. So just for clarity, so that was for real estate services. Mark Topy: Yes. Paul Rossiter: Yes, yes. So look, we -- in terms of growth, we see roughly the split between acquisition and organic, about 60% acquisition in F '25, 40% organic. I do note that one of the significant benefits from the acquisition of Knight Frank was to substantially grow our commercial real estate business. It also introduced a valuations business to the group as well. So when we think about real estate growth, it is across residential properties under management, broadacre, commercial and now valuations. So there's a few strings to the bow there. I'd also just make a comment in regards to broadacre. It did grow, but very fractionally in F '25, that part of the book was held back by the dry conditions in South Australia and Victoria. We do expect sort of pent-up vendor demand as those regions improve. Mark Topy: Right. Just thinking about the Tasmania market, kind of, say, how much growth opportunity do you see in that market going forward? Mark Allison: Yes. I think with Tasmania per se, I think it's -- it would be incremental growth. But I think the big benefit of that acquisition, which is the old Knight Frank business, is the commercial real estate knowledge, networks, et cetera, in the Mainland. And we're already seeing that is very, very important. So there are many contacts and insights that we didn't have on commercial real estate that we've gained from that business that is really helpful in our approach to Mainland expansion in commercial real estate. Mark Topy: Great. And just on the Delta side then, can you just talk to the systems and system harmonization in terms of what's being done in the Elders and whether any CapEx might be required if you like to harmonize Delta in line with Elders? Mark Allison: Yes. So the SysMod project is predominantly Elders'. And our approach at the end of Wave 4 when we switched off the AS400, and we're completely on Microsoft Dynamics 360 -- 365, sorry, we might have got a discount. Definitely not. So from that point forward, each of the acquisitions or each of the other divisions, whether that be AIRR, Elders Crop Protection or Delta, will be business case-based. So if there's a business case from the Delta Board around aligning, enhancing systems, then it will be treated on a return on capital business case basis. And we want to take it to business as usual because it's not just an ideological, everything has to be on the same system. This is all around return to shareholders. And all the systems that they're all operating on are fine. Mark Topy: They're all fine. Okay. I was going to say. And then in terms of -- I know you want to accelerate the Delta, but in terms of any risk areas, in terms of that integration, I noticed, for instance, they've got -- they're using different property managers. Do you perceive any sort of issues in migrating Delta across to Elders in that regard? Mark Allison: No. Well, I mean, it's all going to stay the same. So there's -- in terms of backup and stuff, which I think you're talking about. So we've got a mandatory integration. We've got a [ might ], and then there's a light touch component of it. Each of those are being developed with project teams between the businesses. So the -- our view is that it's a well-run business. It's got good management. It's got a strong Board governance to set the direction, and we'll be making the right decisions for the right reasons rather than any kind of ideological control-based decision. Of course, the mandatories around safety, financial transparency, regulatory compliance and so they're mandatories, as you'd expect. Operator: Unfortunately, that does conclude our time for questions. I'll now hand back to Mr. Allison for closing remarks. Mark Allison: Okay. Well, thank you very much to everyone. I did note that we have a couple more in the queue. So apologies to those. Paul and I have a back-to-back with all Elders staff. So 2,000 or 3,000 people will be waiting on the line for 5 minutes. So we've had to call it there. So for those that we haven't been able to talk to, we look forward to talking to you in our one-to-one sessions. But I appreciate everyone coming in, and thank you very much. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

189天前Insight Analytics约5分钟阅读

ARBE 2025 Q3 财报电话会议

Operator: Good day, everyone, and welcome to the Arbe Robotics Ltd. Third Quarter 2025 Results Conference Call. All participants will be in a listen-only mode. Following management's formal presentation, instructions will be given for the Q&A session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not, please check with the company's website at www.arberobotics.com or call EK Global Investor Relations. I would now like to turn the floor over to Mr. Kenny Green from EK Global Investor Relations. Mr. Green, would you like to begin? Kenny Green: Thank you, Operator. Good day to all of you, and welcome to Arbe Robotics Ltd.'s conference call to discuss the results of the third quarter of 2025. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the Safe Harbor statements outlined in today's press release also pertain to this call. If you have not received a copy of the release, please view it in the Investor Relations section of the company's website. Today, we are joined by Kobi Marenko, Arbe Robotics Ltd.'s Co-Founder and CEO, who will begin the call with a business update. Then we will turn the call over to Karine Pinto-Flomenboim, CFO, who will review the financials. Finally, we will open the call to our listeners for the question and answer session. And with that, I'd like to turn the call over to Kobi Marenko. Please go ahead. Kobi Marenko: Thank you, Kenny. Good morning, everyone, and thank you for joining us to discuss our results and recent business developments. I'll begin with an update on the most important aspect of our current activities: our strategic progress with OEMs. We are pleased with the solid strategic progress made in the third quarter. As you know, our main goal is to secure design wins with OEMs and become the radar technology provider and core enabler of their ADAS and autonomous driving programs. While it is a long process, we are moving forward and making solid progress each and every quarter. We believe that we are well-positioned and in the lead to be selected as the key enabler for an eyes-off, hands-off automated driving program for a serial retail vehicle by one of the major European OEMs in the near future, and we hope to share further information as soon as we hear. Additionally, another premium European OEM is conducting data collection for a Level 3 program using radars based on Arbe Robotics Ltd.'s chipset. We continue to make strong progress with other OEMs as well. A top Japanese OEM ordered our radar kit for its Level 4 development activities and approved the expansion of the project it initiated last year based on our chipset, including predevelopment activities. I also want to add that in terms of our highly strategic non-OEM collaborations, a global leader in artificial intelligence computing has ordered radar development kits for its full stack of autonomous driving software development, marking a strong validation from one of the most influential players shaping the future of autonomous driving technology as well as AI in general. Global economic shifts are causing some OEMs to postpone new model launches and lengthen their decision timelines for autonomous driving solutions. Despite this, Arbe Robotics Ltd.'s market position continues to grow stronger. We remain encouraged by the steady progress we have achieved throughout 2025, and as the year comes to a close. Based on what we see now, we believe we are well-positioned to secure the key European OEM program I discussed earlier in the short term and additional three program wins within the next three quarters. Our initiatives are aligned with the path to OEM selection, and we continue to expect that Arbe Robotics Ltd.'s radar technology will serve as a key enabler for 2028 passenger vehicle platforms. We expect the initial revenues will begin in 2027 with a ramp-up in 2028 as our chipsets are used in high-volume production. Thanks to our strong balance sheet, we delivered $52 million in net cash, and we have the runway to support all programs as our revenue reaches the ramp-up stage. With regard to our focus on non-automotive projects, we are seeing increasing global demand in the defense sector. We are currently supplying radar systems for defense pilot programs and evaluation projects. Last quarter, we announced a new defense client. In addition, in the third quarter, we expanded into the maritime domain since our Tier 1 supplier for non-automotive applications announced an order from Watches for radar systems powered by our chipset. These systems will support collision prevention for boats in all weather and lighting conditions. Boating represents another promising new vertical for our radar technology. During the quarter, we won two prestigious automotive technology industry awards: the JUST Auto Excellence Award for leading technology in the perception category and the Auto Tech Breakthrough Award for sensor technology solution of the year 2025. Both awards are proof of Arbe Robotics Ltd.'s contribution to the automotive industry and leading technological advantages, which are bringing unparalleled safety for drivers and advancing ADAS and autonomous driving. Before closing, I want to welcome Chris Van den Elzen to our Board of Directors. Chris brings over thirty years of experience in the automotive industry, working with both OEMs and Tier 1s as former Vice President of Magna International and Executive Vice President of Veoneer, and brings us strong business experience and deep technological expertise, and I'm sure he will be a very valuable asset. In closing, Arbe Robotics Ltd. is well-positioned to benefit from current industry trends as the market transitions to high-resolution radar. Now I would like to turn it over to our CFO, Karine, to go over the financials. Karine Pinto-Flomenboim: Thank you, Kobi, and hello, everyone. Let me review our financial results for the third quarter of 2025 in more detail. Revenue for the third quarter of 2025 totaled $300,000 compared to $100,000 in Q3 2024. As of September 30, 2025, backlog stood at $200,000. Gross profit for Q3 2025 was negative $200,000 compared to negative $300,000 in the same period last year. The improved change in profitability related to revenue mix. Turning to operating expenses, total operating expenses for Q3 2025 were $11.3 million, down from $12.2 million in Q3 2024. The decrease in operating expenses was primarily due to lower share-based compensation expenses resulting from the full vesting of prior grants and to the reduced volume of new grants, which was the result of new grants being in the form of bonus liability. The decrease in operating expenses was partially offset by an unfavorable foreign exchange impact and higher labor costs. Operating loss for the third quarter of 2025 was $11.5 million compared to a $12.4 million loss in 2024. Adjusted EBITDA, a non-GAAP measurement, which excludes expenses for non-cash share-based compensation and for non-recurring items, was a loss of $9.2 million in 2025 compared to a loss of $8.2 million in 2024. We believe that this non-GAAP measurement is important in management's evaluation of our use of cash and in planning and evaluating our cash requirements for the coming period. Net loss in the third quarter of 2025 was $11 million compared to a net loss of $12.6 million in 2024. As of September 30, 2025, Arbe Robotics Ltd. held $52.6 million in cash and cash equivalents and short-term bank deposits. Turning to our outlook, while global economic shifts are leading some OEMs to delay new model launches and extend decision timelines for advanced driver assistance systems, Arbe Robotics Ltd.'s market position continues to strengthen. We are actively expanding engagements with leading OEMs, progressing through advanced RFQ stages, and building a solid foundation for large-scale adoption. Our goal remains to secure four design wins with OEMs in the coming three quarters. For 2025, revenues are expected to be in the range of $1 million to $2 million. The change to our revenue expectation reflects shifts of certain NRE programs. However, adjusted EBITDA expectations remain unchanged at a loss of $29 million to $35 million. I want to stress that Arbe Robotics Ltd. enters 2026 with a significantly strengthened balance sheet with over $52 million in net cash, supporting continued execution of our long-term strategic and growth plan. Now we will be happy to take your questions. Operator? Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. Our first question today comes from Suji Desilva from ROTH Capital. Please go ahead with your question. Suji Desilva: Hi, Kobi. Hi, Karine. First question on the guidance for four design wins. Curious if that's four separate OEMs. And second of all, the specific guidance of the next three quarters, I'm curious what's driving the near-term visibility there? Kobi Marenko: So yes, it's four different OEMs. And basically, we know that for sure there are decisions that should be taken in the next three quarters. We believe that we will be able to win at least four of them. Suji Desilva: Okay, Kobi. Very helpful. Thanks. You said at least four. Okay. And then the customer programs, do you have a sense whether these model wins or opportunities are for certain premium models or across the board platforms or mainstream? Any color on the penetration you would expect if you secure these wins will be helpful? Kobi Marenko: We believe that all of the programs will start with premium cars. But with the volumes as time goes by and the years go by, this will go to non-premium models as well. We see it from the numbers. So we're starting, of course, in very high-end. And it's going to still, it won't be in entry-level vehicles, but it will be in high-end and let's say the top cars. Suji Desilva: That's helpful, Kobi. And then last question maybe for Karine. The calendar 2025 full-year guide implies a wide Q4 range here. I'm wondering what the factors are to swing it from the low end to the high end? Karine Pinto-Flomenboim: Thanks. Sorry, can you repeat the question? Suji Desilva: Sure. Your full '25 revenue guidance of $1 million to $2 million implies a fairly wide Q4 range of outcomes. I'm wondering what might swing it to the high versus low end? Is that product shipments or revenue coming in? Any color there would be helpful. Karine Pinto-Flomenboim: Understood. So as we mentioned, we have some NRE shifts, and based on the decision that is made by our customers, the sooner the decision will be made, the sooner in Q4, then we will be able to push those NRE revenues rather than push them outside to 2026. So this is what's driving mainly the tweak between the low to the high end. Suji Desilva: Okay. Thanks, Kobi. Thanks, Karine. Operator: And our next question comes from George Gianarikas from Canaccord. Please go ahead with your question. George Gianarikas: Hi, everyone. Thank you for taking my questions. Maybe just to give us a little bit more insight into how these conversations are going with the OEMs and the puts and takes, things that are happening that you see as positive, and maybe some of the reasons you're seeing for the push out in decision making? Thank you. Kobi Marenko: So I think, first of all, I think that the dialogues are going well. And we see more and more OEMs buying radars and using them in order to collect data and to train their algorithms for full self-driving. What we see now, I think with all of the OEMs, there was at the beginning of the year, there was, I believe, decisions were postponed because they didn't know what the tariff will look like and what influence it will have. And this is what caused, I think, at least two quarters of delay. Right now, there is a clear path to decisions. And I think that from now on, we will see decisions are taken, will be taken. There is price pressure from the OEMs on every component in the system. And I think because of that, we have a huge advantage because our high-end radar is almost in the price of low-end radar today in the car, and we will be able, from the beginning, to design our system for a price that is affordable, and now we see the benefit of it. George Gianarikas: Thank you. And maybe just, I know it's early, but I'd like to understand how you think we should think about 2026 and 2027, maybe, and just sort of the way we should model the ramp in your revenue, OpEx, cash burn, just so we can have sort of a sense of a new model over the next couple of years? Thank you. Kobi Marenko: So I think '26, most of our revenues will come from non-automotive, which we see right now a great ramp-up from this business. As I mentioned, from almost every vertical that we are touching, we see orders and repeated orders from different sectors, from yachts, from small cities, all of that are bringing more and more orders, and we believe that next year we should expect a nice amount of revenues from non-automotive. The second part of it is the ramp-up of revenues from China from hiring. We still don't have the final visibility on the exact month that it will start, but we believe that we will see some revenues from common vessels in China as well. Karine Pinto-Flomenboim: Just to complete for your understanding of the OpEx, so as Kobi mentioned, next year will be non-automotive. Our current OpEx structure supports those revenues. And also going towards '27, so we assume a stable level of OpEx not increasing too much, and towards the ramp-up of the automotive, we will see a ramp-up, of course, in headcount, mainly customer base, to support this ramp-up. Kobi Marenko: Thank you. Operator: And ladies and gentlemen, with that, we'll be ending today's question and answer session. I'd like to turn the floor back over to Mr. Marenko for any closing remarks. Kobi Marenko: On behalf of the management of Arbe Robotics Ltd., I would like to thank our shareholders for your continued interest and long-term support of our business. Our employees and partners, your continued dedication is deeply appreciated. In the coming months, we will be meeting with investors and presenting at various investor conferences, which we have announced, and we hope to see some of you there. If you're interested in meeting or speaking with us, feel free to reach out to our Investor Relations team. You can contact us at investors@arberobotics.com to schedule a meeting. And with that, we end our call. Have a good day. Operator: And ladies and gentlemen, that concludes today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

189天前Insight Analytics约5分钟阅读

CSAN 2025 Q3 财报电话会议

Operator: Good morning, everyone, and thank you for waiting. Welcome to Cosan's Third Quarter 2025 Earnings Release Conference Call. [Operator Instructions] The conference call is being recorded and will be available on the company's IR website at cosan.com.br. [Operator Instructions] Please note that the information contained in this presentation and in statements that may be made during the conference call regarding Cosan's business prospects, projections and operating and financial goals are based on beliefs and assumptions of the company's Executive Board as well as information currently available. Forward-looking considerations are not a guarantee of performance as they involve risks, uncertainties and assumptions and refer to future events that depend on circumstances that may or may not materialize. Investors should bear in mind that overall economic circumstances market conditions as well as other operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araujo. Rodrigo Alves: Hi, everyone. Welcome to our earnings call of the third quarter of 2925. Here, we have the disclaimers about future projections and future assumptions with respect to the company's results. Next slide, please. So looking at the financial highlights of the third quarter of 25, you can see that we had an EBITDA under management of BRL 7.4 billion that's about BRL 1 billion less than 2024 and mostly impacted by the results of Moove, Radar and Raizen that we're going to detail later on. We also had given the lower EBITDA and the higher financial expenses, we had a lower net income in the period, negative BRL 1.2 billion. Our net debt was relatively stable in the quarter, slightly higher than Q2 '25. We had a quarter with lower dividends received. Of course, we have a concentration of dividends in the beginning and end of the year. So that's reflected in dividends for Q3. And in that sense, we also have our debt service coverage ratio of 1x. And this is, of course, one of the main reasons why the company needed to improve and enhance its capital structure and did the transactions that we announced recently. And in terms of safety, we continue to have positive metrics, low metrics in terms of incidents. Of course, there's an increase compared to Q2 '25, but still highly efficient ratios. And we continue, of course, to have safety as a priority for the company and continue our journey of improving safety over time. Next slide, please. In terms of operational performance for Q3 '25, we had in the case of Rumo, we had largest -- an increase in the transported volumes but also a reduction in the average tariffs that resulted in an increase in EBITDA of 4%. The company has been repositioning itself over the course of the year to improve its competitiveness in the Brazilian logistics market. In the case of Compass, we had higher distributed volumes in the quarter, also an increase in the participation of the residential segment that has healthier margins and it's quite accretive for the company as well. We continue to see the increase in the volumes sold by Edge in the unregulated market in Brazil. So we saw a growth of 6% of Compass EBITDA in the quarter. In Moove, something that we've been talking about. We already see the company having stable volumes compared to '24. When we compare to the second quarter of 25, there was a 13% increase in the volumes sold. So the company is gaining back its track in terms of volume, even though the EBITDA was 7% lower, and we are working on eliminating the logistics and tax inefficiencies of the new production settlements settings for the company after the fire in the Rio de Janeiro plant. We continue with the CapEx of the reconstruction of the plant. And in terms of insurance, the company has already received until October roughly BRL 500 million of proceeds in insurance. In the case of Radar, we had the sale of properties that impacted positively the results in 2024 that didn't occur in '25. So that's the main reason for the difference year versus year, and we will have the land appreciation review in the fourth quarter. We expect increase in the value of the portfolio given the current market environment. Finally, in Raizen, we have an increase in the pace of harvesting that was favored by weather conditions. So the sugarcane crushing increased in the quarter, even though we had lower sugar prices that affected EBITDA. And we also have an overall lower volume given the drought and fires that affected the company's production for this year. In the fuel distribution segment, we see a very healthy environment. We see operations of the federal police in Brazil and the crackdown of irregular players that's translating into higher margins and healthier margins. So we have quite relevant margins in the fuel distribution segment in Raizen. Next slide, please. In terms of liability management, you can see that, as I mentioned, gross debt relatively stable, net debt slightly higher, interest coverage about 1x. And in terms of the amortization schedule, we continue to have a duration of roughly 6 years with an average cost of CDI plus 90 bps. So no relevant change in terms of the debt structure of the company. And finally, when we look at the cash position through the quarter, we have no relevant events in terms of liability management. We only have the dividends received and interest payments in the quarter. So those were the only events that happened this quarter compared to the second quarter. So that's the main reason for the changes in the cash balance. So next slide, please. So thank you for participating in our earnings call of the third quarter of 2025, and we continue with the remaining of our earnings call. Thank you. Thank you for joining. Operator: [Operator Instructions] Before we begin the Q&A session, Mr. Marcelo Martins would like to say a few words. Please go ahead, Mr. Martins. Marcelo Martins: Good morning, everyone. Thank you for joining us at our earnings release conference call. And before we move on to the Q&A session, I'd just like to make a few comments because this is a key time for the company. I'd like to talk about what Cosan is going through right now. Since there's been a change in management at Cosan, more specifically when Nelson stepped down as a CEO and went to Raizen and I joined as a CEO, roughly 12 months have gone by. So a year after that change, and that's when we first started discussing our objective to improve Cosan's capital structure very objectively, and we discussed different alternatives. We've always made it clear that we wanted to as efficiently and constructly as possible, preserve the portfolio and look for an encompassing solution that would be definitive and to provide a positive perspective for the business and for Cosan. All of you who have taken part in conversations with us, with me here at Cosan or at other events will know that we've always made it clear that our first option was to potentially divest from some assets, but we also wanted to preserve the quality and integrity of our portfolio to continue to be a compelling company for future investments. And that's precisely what we did. We looked at what Brazil was going through, what the market was going through and came to the conclusion that the best option was to find relevant shareholders that could make significant contributions to the future of the company at an investment size that would also make sense. So in our pursuit, we identified a few potential investors, and I am completely confident that we ended up with the best investors possible for the future of this company. We were able to not only increase capitalization significantly, so reducing the company's issues substantially. So even if we still have a residual divestment balance so that we can reduce Cosan's debt to 0 or close to 0 in the near future, which is another commitment I've made to investors. We looked for a relevant transaction with the contribution of these new shareholders as the main factor and also some subscriptions to this new public offering that ended last week. I'm very happy to say, and I can speak for myself, for Cosan and Rubens as a controlling shareholder of Cosan that we are extremely happy to have highly valuable shareholders who have huge credibility in the market. They're very successful. They're fantastic risk managers, portfolio managers. They are very familiar with the infrastructure sector and considering our portfolio right now, they will make amazing contributions to the future of this company. So before anything else, I wanted to thank Boston and their commitment the level of involvement they've shown to the process and the fact that we were able to conclude this transaction. So looking forward, very excited and fully confident in the future of this company. That said, we know that as of now and over the next few months, probably the next year, we will be focusing entirely on integrating the new shareholders with a shareholder getting to know the companies in depth. You know the level of contribution they'll be making and what we expect as well at the Board at Cosan and the invested companies. The objective is to fully engage this group of shareholders, looking at future investments, that should bring the company's debt to 0 or close to 0. We also want to make it very clear that we do have divestment priorities, but this plan will be executed at the right pace so that we can really create value without any pressure to sell assets at any price. That is not going to happen, has not happened and will not happen, especially now that we are in a much more comfortable position when it comes to capital structure. So we will be focusing on our portfolio on identifying the priorities at Cosan looking forward and divesting so that we can execute our plan as efficiently as possible. And we're going to look at growth options down the line once we know the way forward, then we'll be able to look at assets that will become part of this portfolio in the future because, obviously, we want to unlock value and to use the levers we've always used in the past, but which hasn't been possible for the time being, given that we'll be focusing on rebalancing our capital structure. That's the main change now. We have a completely open horizon whilst a while back, there was quite a high level of uncertainty. So that was basically what I had to say. These are just my opening remarks, and we can now begin the Q&A session so that Rodrigo and I can answer any questions you might have about our results. Operator: We will now begin the Q&A session with Mr. Marcelo Martins, Mr. Rodrigo Araujo, and Ms. Camila Amorim. [Operator Instructions] Our first question is from Gabriel Barra from Citi. Gabriel Coelho Barra: My first point based on what Marcelo said is about supply. What was the allocation rationale in terms of supply and the outcome? I know Marcelo touched on it, but if you could provide us with a bit more detail, it would be really interesting to hear about that. And second question, also touching on what Marcelo said is after this capitalization, the company is a bit more comfortable and can now think about restructuring the portfolio, selling assets. If we could talk specifically about Raizen, even if the company is in a more comfortable position now with a better capital structure, Raizen has been burning cash and you've changed the perspective of the second offering to strengthen the subsidiary company's capital structure. So could you tell us about Cosan's strategy considering the subsidiary companies? Will there be a third entrant? What are the options on the table? Could you tell us about that? So those are my 2 questions. Rodrigo Alves: Thanks Barra. I'll start with your first question, and Marcelo can answer your second question. About the offering, this transaction was big enough to be relevant for the company's capital structure and for new partners to come in with expertise in infrastructure in Brazil with a long-term strategy and an amazing plan with the new partners. And that can be seen in the stats of the offering. The first offering was 10x the demand. The second offering was also significant. So we had 2 very successful offerings. And an interesting challenge in terms of allocation. For the first offering, we kept what we said to the market when we announced the offering, so we prioritized existing shareholders. The first offering had one non-shareholder that was long term strategic and was allocated. The rest were all part of the company's existing base. The second offering was a priority offering but we went beyond that and gave allocation priority to the existing shareholder base. 2/3 of the offering was allocated to the existing base. So we've really prioritized the company's long-term shareholders who've been with the company a long time, believing in our recovery journey. So in summary, we had 2 successful offerings where we kept what we had said that we were going to prioritize our existing shareholders. I'll turn it over to Marcelo so he can talk about our capital structure. Marcelo Martins: Well, Gabriel, adding to what Rodrigo said, we were very happy with the level of interest and demand for our first and second offering, which is a clear testament to the fact that the market is betting on the future of the company as well as knowing that this was the best solution possible considering the different alternatives and that we were committed to the market to resolve our capital structure this year. That's why it was so important to deliver on all these elements within 2025. As for Raizen, yes, we do understand solutions for the company's capital structure are required urgently. And I just want to say that I'm very happy with what the company's management has been delivering. And considering all of our expectations concerning what was to be delivered, I'd say management has complied with what we had expected for this year, 100%. Despite the challenging scenario, deliveries have been very positive. And a lot of points were addressed during the call on Friday. We know that this is the best way possible and it will be very positive for the portfolio and for the companies in the future. But obviously, capital structure challenges remain our conversations with Shell have progressed considerably. On a number of aspects that can be potential solutions or solution, we have made progress, although we haven't yet come to a conclusion about the way forward. I'd say that in our conversations with them, the clearest direction compared -- is much clearer than we had a few years -- weeks ago, but we haven't come to a final conclusion yet to announce to the market. We have been working hard on it. This is a massive priority for me and Cosan's team. After Cosan's capitalization we know that we need to focus on that, and we'll continue to work on it with a sense of urgency and closely with Shell so that we can come to a conclusion. I can't share with anything with you for the time being because we're still working on it. We haven't come to consensus on their side or on our side. So no conclusions yet. What we did do recently during the second offering was to announce that we might be using proceeds from that offering to capitalized companies, broadly speaking, and Raizen is included in that. So that remains, obviously. We have already disclosed that because we think that's a key consideration when it comes to Cosan. And depending on the solution, if it's a broad solution with a positive effect, we will definitely consider that capitalization. As I said, we haven't decided on the terms yet. And in fact, the structure to be pursued so that we can continue to deleverage the company hasn't been decided on yet. But our commitment to get to the right solution and to potentially making a capital contribution remains as we had said previously. Operator: The next question is from Isabella Simonato from Bank of America. Isabella Simonato: You touched on many different points, including the new shareholders and Raizen's process. And on Friday, during the call, you also announced several Board changes to the directors. I would imagine that comes from a shareholders' agreement that was signed. But if we could also talk about the context of the changes in directors, which at the end of the day also had an impact on Raizen at a crucial time, as we all know, when they're working on the balance sheet. So if you could provide us with more color about that, that would be very helpful. Marcelo Martins: Well, yes, those changes to the Board are a consequence of the new partners coming in. We had agreed that those changes would take place. And obviously, totally in line with the new partner's contributions to the company. Not only were we expecting those changes, but we also believe that they are extremely positive to the future of the company. Another point, which I didn't mention during my opening remarks, but I will now, before I address the financial changes is that we have been making significant changes at Cosan to streamline the team and to streamline the company itself. We believe that in line with Cosan's future and the contributions the company will have to make to its portfolio, it is important to streamline the holding company and to generate more efficiencies, which is something we've been thinking about for a while and now is the time to do it. I think that streamlining process will be very accretive in terms of value to Cosan. Streamlining the holding company and reducing expenses will also be a huge contribution in addition, obviously, to the capital increase. So that's how we're going to proceed. As for the changes in CFOs. Now that Rodrigo is leaving and with the objective of bringing in people from inside the company who have the knowledge and who can run this area with in-depth knowledge of the portfolio and the process, it had to be somebody from the company. Bergman has been with us a long time, 14 years, I think. He's been through many companies in the group. He has a lot of experience within the group. So he's highly qualified to take on the job. And since the holding company is focusing on the portfolio, the partnership with the new partners and focusing on the portfolio more constructively, it was key to bring in someone, if I may use a word in English that could hit the ground running. So he is somebody who is going to come in and hit the ground running and continue to manage things as we expect them to be managed now that Rodrigo is leaving. And somebody who is going to come into Rafa's place to make the right contributions, who had experienced enough to run such a complex company as Raizen. Hence, Lorival is now taking Rafa's place. What I wanted to say is that during the 2 years, Rodrigo spent with us, he made massive contributions even though it wasn't a long time, he was extremely active. He had a huge role to play and made exceptional contributions to the company. When we said we were going to sell our stake at Vale and with the current capitalization, that means we move BRL 20 billion in the Brazilian capital market in 12 months. That's a historical milestone for any company in Brazil, especially considering current times. So I really want to thank Rodrigo for his contribution, and I wish him the greatest of successes in his next professional stage. Isabella Simonato: Excellent. Marcelo, if I can have a follow-up question, please. Looking at the shareholders' agreement, it's clear that the new shareholders can join the Board, and it's slightly different at Raizen. Rubens -- and will be more in charge of the JV and the JV decisions. Did you make that decision? Did Shell have an opinion? And also, congratulations, Rodrigo, on the last 2 years. And I wish you success on your next stage. Marcelo Martins: These are actually, our new shareholders' agreement will keep the same terms as the pre-existing shareholders agreement. And these were the terms for Raizen already. So what we agreed with the new partners is that we wouldn't change anything. We would keep the same terms. There was no reason to change it, and that is our agreement with Shell. That's why Raizen was the exception. We have kept the appointment of the Board members in line with the shareholders agreement that is in force. As Rodrigo leaves, we're going to replace him at Raizen. We have an idea of who's going to do that, and we should be doing that soon. I just wanted to make that clear. And obviously, it won't be anyone appointed by the new partners for the reason I have just given you. Operator: The next question is from Thiago Duarte, BTG. Thiago Duarte: Good morning, everyone. Marcelo, Rodrigo pleasure to talk to you. If we can go back to Marcelo's opening remarks about the role the holding company has to play in this new context. Historically, Cosan has been going through different formats as a holding company, diversification, then simplification, eliminating holding companies along the way. In the last few years, there's been a significant investment cycle at the holding company and the subsidiary companies. And now with the offering, things are much more tangible. You're talking about a significant simplification with new partners coming in the controlling shareholders group, not only in terms of reducing expenses, but also bringing down the company's debt to 0. So given that context, once this process is concluded or is on the right track, a significant part of it has already been done. What will be the role that Cosan as the holdco will have to play in the future? And I also have a second question. Considering the funds that you raised and considering that a major part of it, if not all, will be used to reduce the holdco's debt, as you said. My question is what part of that debt would you be tackling? Do you think it will be the cost of debt or the maturity, the duration? What kind of an impact will that have on your liability and liquidity? Rodrigo Alves: I'll start with your second question, Thiago, and then I'll turn it over to Marcelo to talk about the holding company. Yes, you're right in terms of how the funds will be used. Substantially, they will be used to pay for the debt, we had already announced that during the offerings. In terms of priorities, there is a cost packing order to be tackled because the duration is compatible. And there's a lot that can go into call in the short term. And the trade-off will end up being positive between a high cost, but also a duration contribution. In terms of the duration itself, I think there is a first stage where there will be a reduction but once the company's credit improves, we'll have more opportunity for tactical operations in the long term. We don't have anything maturing by 2028. So in terms of that kind of pressure there isn't any. And a really good duration for the holding company's horizon. So we'll be focusing on costs, but naturally, there will be an opportunity for a part of the debt, which is callable in the short term to have a positive impact on the duration as well. I'll turn it over to Marcelo so he can answer your first question about the holding company. Marcelo Martins: Well, Thiago the last time Cosan had a capital increase before this one, obviously, was in 2007. So that was roughly 18 years ago. And that capital increase took place before we started diversifying our portfolio because the first acquisition of sugar and ethanol took place in 2008 when we acquired Esso Brasileira de Petróleo. So in practice, all the financing of these acquisitions of the companies in the portfolio took place in the last 17 years, which means that if we had leveraged the company in time because, obviously, that capital increase was crucial for that acquisition, but not enough to build up a portfolio that leveraging took place gradually over time. And it wasn't efficient because it's -- this is a pure holding company. Up to the point where the macro scenario changed, interest rates, skyrocketed and that coincided with the recurring leveraging of our stake at Vale. So we started going in a direction to where to resolve the company's capital structure, either would have to make a significant sale in the portfolio or have a capital increase somehow, which is what we did. So the holding company played a role in the last 17, 18 years that has changed. It doesn't make any sense continuing to use Cosan as a leveraging tool for future growth. First, because it's been clear to us for a while, especially our experience with Vale that we shouldn't develop any other verticals using Cosan's resources. So future investments will be made through the controlled companies when that makes sense again when the time is right. So there's no sense in continuing to leverage Cosan over time. It doesn't make financial sense. It's fiscally inefficient. So the holding company, regardless of our active participation in portfolio management, the holding company will no longer be a vehicle for future investments. We need to consider creating efficiencies and streamlining it over time, and that is our objective for now. Now what will happen once we get to a size that makes sense and the leverage that makes sense, then we'll discuss it again. But right now, we want to create efficiencies and streamline it. Operator: The next question is from Matheus Enfeldt from UBS. Matheus Enfeldt: My first question is based on what Marcelo said about timing. I know it's hard to say, but there's a lot of news about Cosan being in a hurry to resolve investments, to reduce the company's balance sheet in the very short term, which diverges from what you said, Marcelo which is that you now have the time to do it gradually. So I'd like to hear about that timing difference. When do you think we'll be able to see new decisions about the company's portfolio? And also in terms of timing, the message about Raizen sounded very different to my ears in the sense that Raizen doesn't need capital immediately, that it's in no rush, that it can perhaps wait for 2 or 3 years. Whereas what you said, Marcelo, is that they want to resolve it in the short term. So could a potential solution for Raizen happen in the next 6 months? Or do you think it will be over the next 2 or 3 years? So that's my first question. Second question is about Moove. We haven't talked about Moove yet. I'd like to hear more about the company's results. You had quite a solid result. How much of that came from operations? How much of that is a result of insurance proceeds or tax credits? I'd just like to hear about what's recurring and how the operational business is running? Rodrigo Alves: Thanks for the questions. I'll start with your question about Moove and Marcelo can talk about the company's balance sheet and timing. Let me just recap what we showed during the presentation. In terms of volume, the company is well covered. If you compare it to the same period last year, you can see that there's been significant volumes recovery, the reconstruction CapEx. Obviously, the dismantling and reconstruction of the Rio de Janeiro plant is ongoing. And given the volume solution, the company is focusing on eliminating tax and logistics complications in the setup, which transfer interstate products, a return of ICMS credits. The logistics is much more complex than if it was centralized in a single asset. So the company is working on that so that it can land on a new production setup. It's not just about the real plan, part of what was going to be done that will be done to the facilities that we've been acquiring over time, especially in Sao Paulo. So the company is on track to position itself competitively. And given everything that happened, that's quite remarkable. In terms of the insurance proceeds, yes, there was a considerable recognition in the second quarter, another BRL 200 million in the third quarter. But the main thing than the accounting recognition was what we expected that would happen, which is significant cash coming in, BRL 300 million in the second quarter, in October another BRL 200 million, which we have announced and that reiterates our confidence in the process. And we are confident that the company will recover. And again, the Rio de Janeiro plant reconstruction CapEx, as I said, part of the insurance was associated to property. So we expect that Rio's plant CapEx will also be covered and realized over time. I think that's it. And I'll turn it over to Marcelo. Marcelo Martins: Matheus, let me make it very clear so that there is no doubt. Our sense of urgency at Raizen is obviously much more along the lines of 6 months than 2 years. There's no question about that. As we continue to talk and define a strategy with Shell, not only will we announce that, we will also start executing on it as soon as possible. And there is definitely a sense of urgency. No, we do not think that we can wait for 2 years before we find a solution for Raizen's capital structure. The point is that it has been delivering significantly but that's part of the equation. The sense of urgency is there. As for the portfolio, what I said was there is no need for any fire sale of assets. In other words, we will do what's best to solve the company's indebtedness and the portfolio's prospects without burning assets. That doesn't mean there is no sense of urgency, but it's changed with the capitalization. So we have resolved a major part of the capital structure. And the rest will be done, delivered and announced will be executed in a time frame that makes sense, in a schedule that makes sense, for the price that makes sense and the right mood in a coordinated and organized fashion. We don't want to give anybody the impression that we're rushing around trying to sell assets. We didn't do it in the past when we needed to raise funds. So obviously, we're not going to do it now, considering that a major part of that solution has been found. Operator: The next question is from Monique Greco from Itaú. Monique Greco: I have a couple of questions. If you could provide us with more detail about some of the things you've already touched on. First question is if you can comment on the streamlining measures at the holdco level. Have you mapped them? Have you started implementing them? Do you have a time frame in mind to get to the streamlined level you would like? I heard that you are hoping to cut annual expenses by half at the holdco level. My second question is about the divestment agenda. Could you comment on the order and the pipeline? What would make a sense focusing on first? Rodrigo Alves: Thank you, Monique, and thank you for the questions. Well, with regard to implementing measures, as Marcelo said, we have mapped a process to streamline the structure at the holdco level, partly decentralizing some the rules, which is something we had already been doing. Now looking forward, we want to bring the holdco to a level that is strictly necessary. So we'll be focusing on what will remain in the portfolio. For next year, considering this personnel streamline, we should be saving about BRL 30 million for next year. That 50% reduction entails a few other initiatives. As you know, our prospectus announced that we are looking into the company's ADR because of its relevant annual cost. It's over BRL 10 million when we consider all the associated costs. So that's something we're considering, and other things as the physical space as well as other expenses based on what the company has been doing and will take place over time. So without giving you a time frame, we believe that it is very doable to bring -- to cut down on costs by half. As Marcelo said that is key in terms of capturing the value of the deal we announced. So it is in our interest to implement those measures as quickly as possible so that we can capture them also as soon as possible. And Marcelo will tell you about our divestment agenda. Marcelo Martins: As we've been saying to the market, Monique, divestments should take place following the order of capital allocation priority within the portfolio. And obviously, considering that we should start with Radar. So if you look at our portfolio and the level of priority of the business is looking forward, I think Radar is possibly the company where we might consider thinking selling a more considerable share. The rest will come as a consequence of that first step, obviously, depending on the size of the divestment, then we can allocate it to the other businesses as we consider a combination of value, size of the business and the future strategy for investment in those businesses. That's why it's the asset that makes the most sense to start with at the moment. Operator: The next question is from Regis Cardoso from XP. Regis Cardoso: Good morning, Marcelo, Rodrigo. Congratulations on the offering. Your exit will surprise, Rodrigo, but it will leave an important legacy. Marcelo you just talked about Radar, would it make sense to sell more assets or a stake in the company itself? And if you could talk about Rumo, would it make sense to sell a stake? Is there a minimum stakehold and needs to have to remain as a controlling shareholder? And the same applies to Moove, I would imagine that in time, a decision to raise funds at Moove would depend on resuming production. And I don't know if there's anything else on your radar in terms of when it would be possible to normalize things. Marcelo Martins: Well, first of all, with regards to Radar, it's a combination of factors. We can continue to sell properties that are part of the portfolio or sell a part of Cosan's stake. Obviously, there is a trade-off between speed and what makes the most sense in terms of adding value. So we'll look into that to make a decision on the best way forward. We know that, that is compelling to many investors. We have an exceptional portfolio, one of the best portfolios in Brazil. Its size is considerable and a performance track record that is also exceptional. So those are all very positive factors when we consider a significant divestment in that business. As for the other businesses, and I can speak for all other businesses, they are considered very relevant to the portfolio with the potential to create huge value, all of them without exception. If we are effectively going to consider selling a stake in some of them, more diluted stake in more than one of them or if we're going to concentrate it more in one rather than the others, will depend on, first, understanding our strategy looking forward as well as potential buyers and opportunities that may arise. Always, always bearing in mind that value is key. We have built this portfolio over time. We've made considerable progress in terms of growth investments. And obviously, we will make divestments that make sense for the right price depending on the demand, but also obviously considering what is key to the portfolio as a priority. Regis Cardoso: May I ask a follow-up question, please? What about capitalization at Raizen? Is there a maximum amount that you'd be willing to contribute? Marcelo Martins: Well, that is under discussion, but in the context of the offering, I think we've made it clear where that amount would be, right? Where that value would be. We're currently discussing that. I mean it will depend on how our conversations with Shell goes. It depends on what they will be willing to do. It depends on many other factors. But on our side, let's remember all of our statements, the first offering, the second offering and the context. So it will be within those thresholds that we announced to the market. Operator: This concludes the Q&A session. I will now turn it over to Mr. Marcelo Martins for his closing remarks. Marcelo Martins: Well, thank you again for joining us. And this has been a very exciting journey. Our objective is to resolve Cosan's capital structure and more broadly speaking, all the group's companies. We are extremely happy with where we've got to and very excited with the prospects for the group, its portfolio and a clear notion that we will be able to create significant value, again, as we have done in the past. So we want to stop just resolving the company's capital structure and start building again. But until we do so, that's what we'll be focusing on. Construction will come after that. Once again, I want to thank Rodrigo and the whole team for their huge effort, the professionalism, everyone at Cosan, even through tough times when we're talking about cutting down on our personnel, as we know, their level of commitment and professionalism is unique. We are undoubtedly one of the best companies in terms of its people. I want to thank my own team. I want to work -- to thank everyone who works for the companies in the portfolio, and thank you for joining us. Thank you. Operator: Cosan's Third Quarter 2025 Earnings Release Video Conference Call is now concluded. For further questions, please contact the Investor Relations department. Thank you so much for joining us, and have a great afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

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CSAN3.SA 2025 Q3 财报电话会议

Operator: Good morning, everyone, and thank you for waiting. Welcome to Cosan's Third Quarter 2025 Earnings Release Conference Call. [Operator Instructions] The conference call is being recorded and will be available on the company's IR website at cosan.com.br. [Operator Instructions] Please note that the information contained in this presentation and in statements that may be made during the conference call regarding Cosan's business prospects, projections and operating and financial goals are based on beliefs and assumptions of the company's Executive Board as well as information currently available. Forward-looking considerations are not a guarantee of performance as they involve risks, uncertainties and assumptions and refer to future events that depend on circumstances that may or may not materialize. Investors should bear in mind that overall economic circumstances market conditions as well as other operating factors may affect Cosan's future performance and lead to results that differ materially from those expressed in such forward-looking statements. I will now turn it over to Mr. Rodrigo Araujo. Rodrigo Alves: Hi, everyone. Welcome to our earnings call of the third quarter of 2925. Here, we have the disclaimers about future projections and future assumptions with respect to the company's results. Next slide, please. So looking at the financial highlights of the third quarter of 25, you can see that we had an EBITDA under management of BRL 7.4 billion that's about BRL 1 billion less than 2024 and mostly impacted by the results of Moove, Radar and Raizen that we're going to detail later on. We also had given the lower EBITDA and the higher financial expenses, we had a lower net income in the period, negative BRL 1.2 billion. Our net debt was relatively stable in the quarter, slightly higher than Q2 '25. We had a quarter with lower dividends received. Of course, we have a concentration of dividends in the beginning and end of the year. So that's reflected in dividends for Q3. And in that sense, we also have our debt service coverage ratio of 1x. And this is, of course, one of the main reasons why the company needed to improve and enhance its capital structure and did the transactions that we announced recently. And in terms of safety, we continue to have positive metrics, low metrics in terms of incidents. Of course, there's an increase compared to Q2 '25, but still highly efficient ratios. And we continue, of course, to have safety as a priority for the company and continue our journey of improving safety over time. Next slide, please. In terms of operational performance for Q3 '25, we had in the case of Rumo, we had largest -- an increase in the transported volumes but also a reduction in the average tariffs that resulted in an increase in EBITDA of 4%. The company has been repositioning itself over the course of the year to improve its competitiveness in the Brazilian logistics market. In the case of Compass, we had higher distributed volumes in the quarter, also an increase in the participation of the residential segment that has healthier margins and it's quite accretive for the company as well. We continue to see the increase in the volumes sold by Edge in the unregulated market in Brazil. So we saw a growth of 6% of Compass EBITDA in the quarter. In Moove, something that we've been talking about. We already see the company having stable volumes compared to '24. When we compare to the second quarter of 25, there was a 13% increase in the volumes sold. So the company is gaining back its track in terms of volume, even though the EBITDA was 7% lower, and we are working on eliminating the logistics and tax inefficiencies of the new production settlements settings for the company after the fire in the Rio de Janeiro plant. We continue with the CapEx of the reconstruction of the plant. And in terms of insurance, the company has already received until October roughly BRL 500 million of proceeds in insurance. In the case of Radar, we had the sale of properties that impacted positively the results in 2024 that didn't occur in '25. So that's the main reason for the difference year versus year, and we will have the land appreciation review in the fourth quarter. We expect increase in the value of the portfolio given the current market environment. Finally, in Raizen, we have an increase in the pace of harvesting that was favored by weather conditions. So the sugarcane crushing increased in the quarter, even though we had lower sugar prices that affected EBITDA. And we also have an overall lower volume given the drought and fires that affected the company's production for this year. In the fuel distribution segment, we see a very healthy environment. We see operations of the federal police in Brazil and the crackdown of irregular players that's translating into higher margins and healthier margins. So we have quite relevant margins in the fuel distribution segment in Raizen. Next slide, please. In terms of liability management, you can see that, as I mentioned, gross debt relatively stable, net debt slightly higher, interest coverage about 1x. And in terms of the amortization schedule, we continue to have a duration of roughly 6 years with an average cost of CDI plus 90 bps. So no relevant change in terms of the debt structure of the company. And finally, when we look at the cash position through the quarter, we have no relevant events in terms of liability management. We only have the dividends received and interest payments in the quarter. So those were the only events that happened this quarter compared to the second quarter. So that's the main reason for the changes in the cash balance. So next slide, please. So thank you for participating in our earnings call of the third quarter of 2025, and we continue with the remaining of our earnings call. Thank you. Thank you for joining. Operator: [Operator Instructions] Before we begin the Q&A session, Mr. Marcelo Martins would like to say a few words. Please go ahead, Mr. Martins. Marcelo Martins: Good morning, everyone. Thank you for joining us at our earnings release conference call. And before we move on to the Q&A session, I'd just like to make a few comments because this is a key time for the company. I'd like to talk about what Cosan is going through right now. Since there's been a change in management at Cosan, more specifically when Nelson stepped down as a CEO and went to Raizen and I joined as a CEO, roughly 12 months have gone by. So a year after that change, and that's when we first started discussing our objective to improve Cosan's capital structure very objectively, and we discussed different alternatives. We've always made it clear that we wanted to as efficiently and constructly as possible, preserve the portfolio and look for an encompassing solution that would be definitive and to provide a positive perspective for the business and for Cosan. All of you who have taken part in conversations with us, with me here at Cosan or at other events will know that we've always made it clear that our first option was to potentially divest from some assets, but we also wanted to preserve the quality and integrity of our portfolio to continue to be a compelling company for future investments. And that's precisely what we did. We looked at what Brazil was going through, what the market was going through and came to the conclusion that the best option was to find relevant shareholders that could make significant contributions to the future of the company at an investment size that would also make sense. So in our pursuit, we identified a few potential investors, and I am completely confident that we ended up with the best investors possible for the future of this company. We were able to not only increase capitalization significantly, so reducing the company's issues substantially. So even if we still have a residual divestment balance so that we can reduce Cosan's debt to 0 or close to 0 in the near future, which is another commitment I've made to investors. We looked for a relevant transaction with the contribution of these new shareholders as the main factor and also some subscriptions to this new public offering that ended last week. I'm very happy to say, and I can speak for myself, for Cosan and Rubens as a controlling shareholder of Cosan that we are extremely happy to have highly valuable shareholders who have huge credibility in the market. They're very successful. They're fantastic risk managers, portfolio managers. They are very familiar with the infrastructure sector and considering our portfolio right now, they will make amazing contributions to the future of this company. So before anything else, I wanted to thank Boston and their commitment the level of involvement they've shown to the process and the fact that we were able to conclude this transaction. So looking forward, very excited and fully confident in the future of this company. That said, we know that as of now and over the next few months, probably the next year, we will be focusing entirely on integrating the new shareholders with a shareholder getting to know the companies in depth. You know the level of contribution they'll be making and what we expect as well at the Board at Cosan and the invested companies. The objective is to fully engage this group of shareholders, looking at future investments, that should bring the company's debt to 0 or close to 0. We also want to make it very clear that we do have divestment priorities, but this plan will be executed at the right pace so that we can really create value without any pressure to sell assets at any price. That is not going to happen, has not happened and will not happen, especially now that we are in a much more comfortable position when it comes to capital structure. So we will be focusing on our portfolio on identifying the priorities at Cosan looking forward and divesting so that we can execute our plan as efficiently as possible. And we're going to look at growth options down the line once we know the way forward, then we'll be able to look at assets that will become part of this portfolio in the future because, obviously, we want to unlock value and to use the levers we've always used in the past, but which hasn't been possible for the time being, given that we'll be focusing on rebalancing our capital structure. That's the main change now. We have a completely open horizon whilst a while back, there was quite a high level of uncertainty. So that was basically what I had to say. These are just my opening remarks, and we can now begin the Q&A session so that Rodrigo and I can answer any questions you might have about our results. Operator: We will now begin the Q&A session with Mr. Marcelo Martins, Mr. Rodrigo Araujo, and Ms. Camila Amorim. [Operator Instructions] Our first question is from Gabriel Barra from Citi. Gabriel Coelho Barra: My first point based on what Marcelo said is about supply. What was the allocation rationale in terms of supply and the outcome? I know Marcelo touched on it, but if you could provide us with a bit more detail, it would be really interesting to hear about that. And second question, also touching on what Marcelo said is after this capitalization, the company is a bit more comfortable and can now think about restructuring the portfolio, selling assets. If we could talk specifically about Raizen, even if the company is in a more comfortable position now with a better capital structure, Raizen has been burning cash and you've changed the perspective of the second offering to strengthen the subsidiary company's capital structure. So could you tell us about Cosan's strategy considering the subsidiary companies? Will there be a third entrant? What are the options on the table? Could you tell us about that? So those are my 2 questions. Rodrigo Alves: Thanks Barra. I'll start with your first question, and Marcelo can answer your second question. About the offering, this transaction was big enough to be relevant for the company's capital structure and for new partners to come in with expertise in infrastructure in Brazil with a long-term strategy and an amazing plan with the new partners. And that can be seen in the stats of the offering. The first offering was 10x the demand. The second offering was also significant. So we had 2 very successful offerings. And an interesting challenge in terms of allocation. For the first offering, we kept what we said to the market when we announced the offering, so we prioritized existing shareholders. The first offering had one non-shareholder that was long term strategic and was allocated. The rest were all part of the company's existing base. The second offering was a priority offering but we went beyond that and gave allocation priority to the existing shareholder base. 2/3 of the offering was allocated to the existing base. So we've really prioritized the company's long-term shareholders who've been with the company a long time, believing in our recovery journey. So in summary, we had 2 successful offerings where we kept what we had said that we were going to prioritize our existing shareholders. I'll turn it over to Marcelo so he can talk about our capital structure. Marcelo Martins: Well, Gabriel, adding to what Rodrigo said, we were very happy with the level of interest and demand for our first and second offering, which is a clear testament to the fact that the market is betting on the future of the company as well as knowing that this was the best solution possible considering the different alternatives and that we were committed to the market to resolve our capital structure this year. That's why it was so important to deliver on all these elements within 2025. As for Raizen, yes, we do understand solutions for the company's capital structure are required urgently. And I just want to say that I'm very happy with what the company's management has been delivering. And considering all of our expectations concerning what was to be delivered, I'd say management has complied with what we had expected for this year, 100%. Despite the challenging scenario, deliveries have been very positive. And a lot of points were addressed during the call on Friday. We know that this is the best way possible and it will be very positive for the portfolio and for the companies in the future. But obviously, capital structure challenges remain our conversations with Shell have progressed considerably. On a number of aspects that can be potential solutions or solution, we have made progress, although we haven't yet come to a conclusion about the way forward. I'd say that in our conversations with them, the clearest direction compared -- is much clearer than we had a few years -- weeks ago, but we haven't come to a final conclusion yet to announce to the market. We have been working hard on it. This is a massive priority for me and Cosan's team. After Cosan's capitalization we know that we need to focus on that, and we'll continue to work on it with a sense of urgency and closely with Shell so that we can come to a conclusion. I can't share with anything with you for the time being because we're still working on it. We haven't come to consensus on their side or on our side. So no conclusions yet. What we did do recently during the second offering was to announce that we might be using proceeds from that offering to capitalized companies, broadly speaking, and Raizen is included in that. So that remains, obviously. We have already disclosed that because we think that's a key consideration when it comes to Cosan. And depending on the solution, if it's a broad solution with a positive effect, we will definitely consider that capitalization. As I said, we haven't decided on the terms yet. And in fact, the structure to be pursued so that we can continue to deleverage the company hasn't been decided on yet. But our commitment to get to the right solution and to potentially making a capital contribution remains as we had said previously. Operator: The next question is from Isabella Simonato from Bank of America. Isabella Simonato: You touched on many different points, including the new shareholders and Raizen's process. And on Friday, during the call, you also announced several Board changes to the directors. I would imagine that comes from a shareholders' agreement that was signed. But if we could also talk about the context of the changes in directors, which at the end of the day also had an impact on Raizen at a crucial time, as we all know, when they're working on the balance sheet. So if you could provide us with more color about that, that would be very helpful. Marcelo Martins: Well, yes, those changes to the Board are a consequence of the new partners coming in. We had agreed that those changes would take place. And obviously, totally in line with the new partner's contributions to the company. Not only were we expecting those changes, but we also believe that they are extremely positive to the future of the company. Another point, which I didn't mention during my opening remarks, but I will now, before I address the financial changes is that we have been making significant changes at Cosan to streamline the team and to streamline the company itself. We believe that in line with Cosan's future and the contributions the company will have to make to its portfolio, it is important to streamline the holding company and to generate more efficiencies, which is something we've been thinking about for a while and now is the time to do it. I think that streamlining process will be very accretive in terms of value to Cosan. Streamlining the holding company and reducing expenses will also be a huge contribution in addition, obviously, to the capital increase. So that's how we're going to proceed. As for the changes in CFOs. Now that Rodrigo is leaving and with the objective of bringing in people from inside the company who have the knowledge and who can run this area with in-depth knowledge of the portfolio and the process, it had to be somebody from the company. Bergman has been with us a long time, 14 years, I think. He's been through many companies in the group. He has a lot of experience within the group. So he's highly qualified to take on the job. And since the holding company is focusing on the portfolio, the partnership with the new partners and focusing on the portfolio more constructively, it was key to bring in someone, if I may use a word in English that could hit the ground running. So he is somebody who is going to come in and hit the ground running and continue to manage things as we expect them to be managed now that Rodrigo is leaving. And somebody who is going to come into Rafa's place to make the right contributions, who had experienced enough to run such a complex company as Raizen. Hence, Lorival is now taking Rafa's place. What I wanted to say is that during the 2 years, Rodrigo spent with us, he made massive contributions even though it wasn't a long time, he was extremely active. He had a huge role to play and made exceptional contributions to the company. When we said we were going to sell our stake at Vale and with the current capitalization, that means we move BRL 20 billion in the Brazilian capital market in 12 months. That's a historical milestone for any company in Brazil, especially considering current times. So I really want to thank Rodrigo for his contribution, and I wish him the greatest of successes in his next professional stage. Isabella Simonato: Excellent. Marcelo, if I can have a follow-up question, please. Looking at the shareholders' agreement, it's clear that the new shareholders can join the Board, and it's slightly different at Raizen. Rubens -- and will be more in charge of the JV and the JV decisions. Did you make that decision? Did Shell have an opinion? And also, congratulations, Rodrigo, on the last 2 years. And I wish you success on your next stage. Marcelo Martins: These are actually, our new shareholders' agreement will keep the same terms as the pre-existing shareholders agreement. And these were the terms for Raizen already. So what we agreed with the new partners is that we wouldn't change anything. We would keep the same terms. There was no reason to change it, and that is our agreement with Shell. That's why Raizen was the exception. We have kept the appointment of the Board members in line with the shareholders agreement that is in force. As Rodrigo leaves, we're going to replace him at Raizen. We have an idea of who's going to do that, and we should be doing that soon. I just wanted to make that clear. And obviously, it won't be anyone appointed by the new partners for the reason I have just given you. Operator: The next question is from Thiago Duarte, BTG. Thiago Duarte: Good morning, everyone. Marcelo, Rodrigo pleasure to talk to you. If we can go back to Marcelo's opening remarks about the role the holding company has to play in this new context. Historically, Cosan has been going through different formats as a holding company, diversification, then simplification, eliminating holding companies along the way. In the last few years, there's been a significant investment cycle at the holding company and the subsidiary companies. And now with the offering, things are much more tangible. You're talking about a significant simplification with new partners coming in the controlling shareholders group, not only in terms of reducing expenses, but also bringing down the company's debt to 0. So given that context, once this process is concluded or is on the right track, a significant part of it has already been done. What will be the role that Cosan as the holdco will have to play in the future? And I also have a second question. Considering the funds that you raised and considering that a major part of it, if not all, will be used to reduce the holdco's debt, as you said. My question is what part of that debt would you be tackling? Do you think it will be the cost of debt or the maturity, the duration? What kind of an impact will that have on your liability and liquidity? Rodrigo Alves: I'll start with your second question, Thiago, and then I'll turn it over to Marcelo to talk about the holding company. Yes, you're right in terms of how the funds will be used. Substantially, they will be used to pay for the debt, we had already announced that during the offerings. In terms of priorities, there is a cost packing order to be tackled because the duration is compatible. And there's a lot that can go into call in the short term. And the trade-off will end up being positive between a high cost, but also a duration contribution. In terms of the duration itself, I think there is a first stage where there will be a reduction but once the company's credit improves, we'll have more opportunity for tactical operations in the long term. We don't have anything maturing by 2028. So in terms of that kind of pressure there isn't any. And a really good duration for the holding company's horizon. So we'll be focusing on costs, but naturally, there will be an opportunity for a part of the debt, which is callable in the short term to have a positive impact on the duration as well. I'll turn it over to Marcelo so he can answer your first question about the holding company. Marcelo Martins: Well, Thiago the last time Cosan had a capital increase before this one, obviously, was in 2007. So that was roughly 18 years ago. And that capital increase took place before we started diversifying our portfolio because the first acquisition of sugar and ethanol took place in 2008 when we acquired Esso Brasileira de Petróleo. So in practice, all the financing of these acquisitions of the companies in the portfolio took place in the last 17 years, which means that if we had leveraged the company in time because, obviously, that capital increase was crucial for that acquisition, but not enough to build up a portfolio that leveraging took place gradually over time. And it wasn't efficient because it's -- this is a pure holding company. Up to the point where the macro scenario changed, interest rates, skyrocketed and that coincided with the recurring leveraging of our stake at Vale. So we started going in a direction to where to resolve the company's capital structure, either would have to make a significant sale in the portfolio or have a capital increase somehow, which is what we did. So the holding company played a role in the last 17, 18 years that has changed. It doesn't make any sense continuing to use Cosan as a leveraging tool for future growth. First, because it's been clear to us for a while, especially our experience with Vale that we shouldn't develop any other verticals using Cosan's resources. So future investments will be made through the controlled companies when that makes sense again when the time is right. So there's no sense in continuing to leverage Cosan over time. It doesn't make financial sense. It's fiscally inefficient. So the holding company, regardless of our active participation in portfolio management, the holding company will no longer be a vehicle for future investments. We need to consider creating efficiencies and streamlining it over time, and that is our objective for now. Now what will happen once we get to a size that makes sense and the leverage that makes sense, then we'll discuss it again. But right now, we want to create efficiencies and streamline it. Operator: The next question is from Matheus Enfeldt from UBS. Matheus Enfeldt: My first question is based on what Marcelo said about timing. I know it's hard to say, but there's a lot of news about Cosan being in a hurry to resolve investments, to reduce the company's balance sheet in the very short term, which diverges from what you said, Marcelo which is that you now have the time to do it gradually. So I'd like to hear about that timing difference. When do you think we'll be able to see new decisions about the company's portfolio? And also in terms of timing, the message about Raizen sounded very different to my ears in the sense that Raizen doesn't need capital immediately, that it's in no rush, that it can perhaps wait for 2 or 3 years. Whereas what you said, Marcelo, is that they want to resolve it in the short term. So could a potential solution for Raizen happen in the next 6 months? Or do you think it will be over the next 2 or 3 years? So that's my first question. Second question is about Moove. We haven't talked about Moove yet. I'd like to hear more about the company's results. You had quite a solid result. How much of that came from operations? How much of that is a result of insurance proceeds or tax credits? I'd just like to hear about what's recurring and how the operational business is running? Rodrigo Alves: Thanks for the questions. I'll start with your question about Moove and Marcelo can talk about the company's balance sheet and timing. Let me just recap what we showed during the presentation. In terms of volume, the company is well covered. If you compare it to the same period last year, you can see that there's been significant volumes recovery, the reconstruction CapEx. Obviously, the dismantling and reconstruction of the Rio de Janeiro plant is ongoing. And given the volume solution, the company is focusing on eliminating tax and logistics complications in the setup, which transfer interstate products, a return of ICMS credits. The logistics is much more complex than if it was centralized in a single asset. So the company is working on that so that it can land on a new production setup. It's not just about the real plan, part of what was going to be done that will be done to the facilities that we've been acquiring over time, especially in Sao Paulo. So the company is on track to position itself competitively. And given everything that happened, that's quite remarkable. In terms of the insurance proceeds, yes, there was a considerable recognition in the second quarter, another BRL 200 million in the third quarter. But the main thing than the accounting recognition was what we expected that would happen, which is significant cash coming in, BRL 300 million in the second quarter, in October another BRL 200 million, which we have announced and that reiterates our confidence in the process. And we are confident that the company will recover. And again, the Rio de Janeiro plant reconstruction CapEx, as I said, part of the insurance was associated to property. So we expect that Rio's plant CapEx will also be covered and realized over time. I think that's it. And I'll turn it over to Marcelo. Marcelo Martins: Matheus, let me make it very clear so that there is no doubt. Our sense of urgency at Raizen is obviously much more along the lines of 6 months than 2 years. There's no question about that. As we continue to talk and define a strategy with Shell, not only will we announce that, we will also start executing on it as soon as possible. And there is definitely a sense of urgency. No, we do not think that we can wait for 2 years before we find a solution for Raizen's capital structure. The point is that it has been delivering significantly but that's part of the equation. The sense of urgency is there. As for the portfolio, what I said was there is no need for any fire sale of assets. In other words, we will do what's best to solve the company's indebtedness and the portfolio's prospects without burning assets. That doesn't mean there is no sense of urgency, but it's changed with the capitalization. So we have resolved a major part of the capital structure. And the rest will be done, delivered and announced will be executed in a time frame that makes sense, in a schedule that makes sense, for the price that makes sense and the right mood in a coordinated and organized fashion. We don't want to give anybody the impression that we're rushing around trying to sell assets. We didn't do it in the past when we needed to raise funds. So obviously, we're not going to do it now, considering that a major part of that solution has been found. Operator: The next question is from Monique Greco from Itaú. Monique Greco: I have a couple of questions. If you could provide us with more detail about some of the things you've already touched on. First question is if you can comment on the streamlining measures at the holdco level. Have you mapped them? Have you started implementing them? Do you have a time frame in mind to get to the streamlined level you would like? I heard that you are hoping to cut annual expenses by half at the holdco level. My second question is about the divestment agenda. Could you comment on the order and the pipeline? What would make a sense focusing on first? Rodrigo Alves: Thank you, Monique, and thank you for the questions. Well, with regard to implementing measures, as Marcelo said, we have mapped a process to streamline the structure at the holdco level, partly decentralizing some the rules, which is something we had already been doing. Now looking forward, we want to bring the holdco to a level that is strictly necessary. So we'll be focusing on what will remain in the portfolio. For next year, considering this personnel streamline, we should be saving about BRL 30 million for next year. That 50% reduction entails a few other initiatives. As you know, our prospectus announced that we are looking into the company's ADR because of its relevant annual cost. It's over BRL 10 million when we consider all the associated costs. So that's something we're considering, and other things as the physical space as well as other expenses based on what the company has been doing and will take place over time. So without giving you a time frame, we believe that it is very doable to bring -- to cut down on costs by half. As Marcelo said that is key in terms of capturing the value of the deal we announced. So it is in our interest to implement those measures as quickly as possible so that we can capture them also as soon as possible. And Marcelo will tell you about our divestment agenda. Marcelo Martins: As we've been saying to the market, Monique, divestments should take place following the order of capital allocation priority within the portfolio. And obviously, considering that we should start with Radar. So if you look at our portfolio and the level of priority of the business is looking forward, I think Radar is possibly the company where we might consider thinking selling a more considerable share. The rest will come as a consequence of that first step, obviously, depending on the size of the divestment, then we can allocate it to the other businesses as we consider a combination of value, size of the business and the future strategy for investment in those businesses. That's why it's the asset that makes the most sense to start with at the moment. Operator: The next question is from Regis Cardoso from XP. Regis Cardoso: Good morning, Marcelo, Rodrigo. Congratulations on the offering. Your exit will surprise, Rodrigo, but it will leave an important legacy. Marcelo you just talked about Radar, would it make sense to sell more assets or a stake in the company itself? And if you could talk about Rumo, would it make sense to sell a stake? Is there a minimum stakehold and needs to have to remain as a controlling shareholder? And the same applies to Moove, I would imagine that in time, a decision to raise funds at Moove would depend on resuming production. And I don't know if there's anything else on your radar in terms of when it would be possible to normalize things. Marcelo Martins: Well, first of all, with regards to Radar, it's a combination of factors. We can continue to sell properties that are part of the portfolio or sell a part of Cosan's stake. Obviously, there is a trade-off between speed and what makes the most sense in terms of adding value. So we'll look into that to make a decision on the best way forward. We know that, that is compelling to many investors. We have an exceptional portfolio, one of the best portfolios in Brazil. Its size is considerable and a performance track record that is also exceptional. So those are all very positive factors when we consider a significant divestment in that business. As for the other businesses, and I can speak for all other businesses, they are considered very relevant to the portfolio with the potential to create huge value, all of them without exception. If we are effectively going to consider selling a stake in some of them, more diluted stake in more than one of them or if we're going to concentrate it more in one rather than the others, will depend on, first, understanding our strategy looking forward as well as potential buyers and opportunities that may arise. Always, always bearing in mind that value is key. We have built this portfolio over time. We've made considerable progress in terms of growth investments. And obviously, we will make divestments that make sense for the right price depending on the demand, but also obviously considering what is key to the portfolio as a priority. Regis Cardoso: May I ask a follow-up question, please? What about capitalization at Raizen? Is there a maximum amount that you'd be willing to contribute? Marcelo Martins: Well, that is under discussion, but in the context of the offering, I think we've made it clear where that amount would be, right? Where that value would be. We're currently discussing that. I mean it will depend on how our conversations with Shell goes. It depends on what they will be willing to do. It depends on many other factors. But on our side, let's remember all of our statements, the first offering, the second offering and the context. So it will be within those thresholds that we announced to the market. Operator: This concludes the Q&A session. I will now turn it over to Mr. Marcelo Martins for his closing remarks. Marcelo Martins: Well, thank you again for joining us. And this has been a very exciting journey. Our objective is to resolve Cosan's capital structure and more broadly speaking, all the group's companies. We are extremely happy with where we've got to and very excited with the prospects for the group, its portfolio and a clear notion that we will be able to create significant value, again, as we have done in the past. So we want to stop just resolving the company's capital structure and start building again. But until we do so, that's what we'll be focusing on. Construction will come after that. Once again, I want to thank Rodrigo and the whole team for their huge effort, the professionalism, everyone at Cosan, even through tough times when we're talking about cutting down on our personnel, as we know, their level of commitment and professionalism is unique. We are undoubtedly one of the best companies in terms of its people. I want to thank my own team. I want to work -- to thank everyone who works for the companies in the portfolio, and thank you for joining us. Thank you. Operator: Cosan's Third Quarter 2025 Earnings Release Video Conference Call is now concluded. For further questions, please contact the Investor Relations department. Thank you so much for joining us, and have a great afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

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VRCA 2025 Q3 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals' Third Quarter 2025 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to our host, Kevin Gardner of Lifesci Advisors. You may begin your conference. Kevin Gardner: Thank you, operator. Hello, everyone, and welcome to Verrica Pharmaceuticals Third Quarter 2025 Corporate Update Conference Call. With me on the line this morning are Jayson Rieger, President and Chief Executive Officer; Noah Rosenberg, Chief Medical Officer; John Kirby, Interim Chief Financial Officer; and David Zawitz, Chief Operating Officer. As a reminder, during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations. In addition, during today's call, management will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings release that the company issued Friday includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of Verrica's website. I'll now turn the call over to Verrica's President and CEO, Jayson Rieger. Jayson Rieger: Thank you, Kevin, and good morning, everyone. Thank you for joining us for our third quarter 2025 corporate update call. In the third quarter, Verrica achieved multiple commercial, corporate, scientific and regulatory milestones, providing a strong foundation for future growth in YCANTH as well as significant upside potential for our late-stage pipeline. Throughout the past year, we've advanced our clinical programs in two of the highest unmet needs in dermatology for future development. We are excited to embark on the first of these programs our global Phase III clinical program of YCANTH or VP-102 in common warts. This is with our Japanese development partner, Torii Pharmaceutical and is expected starting -- to be starting later this year with first patients targeted for dosing in December. Also, as I'll discuss in more detail later on in this call, we've received clear and positive feedback from the FDA about the Phase III development program for our oncology asset, VP-315, for basal cell carcinoma, the most common form of skin cancer. Even while advancing these two programs to Phase III readiness, we've reduced our spending by about half in the past year, while more than doubling dispensed units of our commercial product, YCANTH for molluscum contagiosum. I couldn't be more proud of our team's simultaneous achievement of these goals, and we are excited to see what's ahead for Verrica in 2025 and beyond. In the third quarter, we continue to see growth in the adoption of YCANTH by health care providers in the U.S., with quarter-over-quarter growth in dispensed applicator units of about 5%, compared to last year, dispensed applicator units increased to 37,642 for the 9 months ended September 30, 2025, a 120% increase over that same month in 2024. This year-over-year growth reflects the progress of our commercial strategy to expand distribution through the pharmacy channel and the concerted effort to expand beyond dermatology into pediatric and primary care offices. While the incremental growth in pull-through was softer in Q3 versus the prior quarter, we powered through seasonality and competitive headwinds to help providers treat more patients with what we view to be is the best-in-class therapy for molluscum. The growth and adoption of YCANTH for molluscum serves as the foundation for our strategy of establishing YCANTH as a valuable tool for treating multiple types of skin lesions as the same clinicians familiar with YCANTH will also be those who treat common warts if that is approved as an expanded indication. Through our amended agreement with Torii, we have received $18 million in cash milestones payments in 2025, of which $10 million was received in the third quarter upon the approval of YCANTH for molluscum in Japan. Torii continues to be an outstanding and highly collaborative partner to Verrica, and this additional non-dilutive capital has helped our cash position and supported our YCANTH activities in the United States. The financial arrangement for the global Phase III program in common warts, where by Verrica and Torii split the cost of the program with the first $40 million funded by Torii has unlocked the development of this key indication with first patient dosed in the United States expected by the end of the year. It's also important to note that Verrica retains exclusive global rights to YCANTH outside of Japan. The recent approval of YCANTH in Japan for molluscum is the first of what we hope to and expect will be multiple approvals across the major pharmaceutical markets, including the European Union. We recently received a significant regulatory milestone towards YCANTH approval for molluscum in the EU. Feedback from the European Medicines Agency on October 20 indicated that no further Phase III clinical studies would be needed to proceed with the filing of a Marketing Authorization Application for YCANTH as a treatment for molluscum, and we anticipate the filing could occur as early as the fourth quarter of 2026. The feedback was based on compelling efficacy from the well-controlled Phase III studies successfully conducted in both the United States and Japan. Europe represents a large and underserved market for patients who at present have no approved therapy for the treatment of molluscum as well as a large commercial expansion opportunity for Verrica. While we've been optimizing our cost structure and building the foundation for YCANTH as a best-in-class therapy for molluscum in common warts, our clinical teams have been developing VP-315, or ruxotemitide, our novel oncolytic peptide immunotherapy as one of the most exciting late-stage assets in oncology. We recently announced new data from our Phase II study evaluating VP-315 for basal cell carcinoma at the Society of Immunotherapy of Cancer, or SITC, at their 40th Annual Meeting. The presentation revealed supportive immunologic mechanistic data that helps explain why VP-315 shrinks treated basal cell carcinomas in many patients as evidenced by a 97% objective response rate and an 86% reduction in overall tumor size. We also observed a potential abscopal-like effect in non-treated lesions, which strongly suggests immune system engagement. We are also excited to announce that we reached alignment with the FDA on an efficient Phase III study design. We couldn't be more excited about VP-315 and its prospects to potentially become standard of care for the most common form of skin cancer. We believe the tremendous promise of these pipeline assets may present robust partnering opportunities to advance these programs through development and commercialization as well as bring in meaningful non-dilutive capital. and we are currently exploring these opportunities wherever they present themselves. I'd like to provide a more detailed update now on our commercial activities for YCANTH. During the third quarter, YCANTH dispensed applicator unit reached a total of 14,093, which represents approximately 5% sequential growth over the prior quarter. Not surprisingly, we experienced some seasonality in August. As in-office treatment, times of the year where there are generally fewer visits for doctors, largely driven, we believe, by scheduled vacations by both providers and patients and fewer sick child visits will have an impact on our volumes. I believe the seasonality did modestly impact our volumes in August. But as we enter the back-to-school season in September, we saw a return to the previous levels of pull-through which is consistent with the expected product utilization patterns for this indication and patient population. We also saw that momentum continue into the beginning of the fourth quarter. Turning to reimbursement. As noted on our last conference call, the substantial investments we have made in our commercial copay assistance program continues to give providers a consistent path for treating their patients with YCANTH. As a reminder, our copay assistance program allows all eligible patients with commercial insurance to pay just $25 per YCANTH treatment for up to two applicators, which provides physicians with comfort knowing that their patients will find affordable access to YCANTH. As previously indicated, our commitment to patient affordability and ease of access to YCANTH for health care providers had an incremental impact on our gross to net and by extension, revenue for the quarter. We view this investment as the best way to get YCANTH in the hands of providers to use as their frontline treatment for molluscum and to minimize concern for clinicians whether the prescription will be filled for their patients. One new development on the commercial front that we are excited to share is YCANTH Rx. Our new non-dispensing pharmacy that we expect to launch in the fourth quarter of 2025. YCANTH Rx will give prescribers a single place to write all YCANTH prescriptions and will assist with benefits investigations, processing any prior authorizations and enrollment in our copay program. Prescriptions written to YCANTH Rx will then be routed to a dispensing pharmacy in our pharmacy network that is contracted with the patient's insurance plan. We believe YCANTH Rx can improve speed to therapy for patients by navigating the prior authorization process with fewer delays. Prescribers will also enjoy this simplified, seamless experience that will reduce the paperwork burden on their offices and let them spend more time doing what they do best, treating patients. I'm also pleased to note that recent expansion of our sales force, which will continue into the next year. Our total sales force has risen to 45 sales reps this quarter, and we plan on increasing it to 50 in 2026. For the third consecutive quarter, YCANTH inventory remained at normalized levels with YCANTH applicator units shipped to distributors continuing to closely track underlying market demand of dispensed applicator units. I will now provide an update on our pipeline programs. Regarding our common warts program, as I mentioned earlier, we remain on track to enroll our first patient in the Phase III program in the U.S. in the fourth quarter. We provide updates on estimated timing of completion of the program and estimated availability of top line data as those items become clearer in the future. Moving to our novel oncolytic peptide, VP-315, which is being developed for basal cell carcinoma. As we have previously discussed, BCC is one of the most common skin cancer indications with over 3.6 million cases per year, representing a potential multibillion-dollar opportunity. As I mentioned, last week, we presented an oral presentation and a poster on VP-315 at the SITC 40th Annual Meeting. The new data presented at SITC underscores VP-315 potential to redefine how basal cell carcinoma is treated. We are particularly encouraged by the immunologic profile we're seeing with VP-315, which supports our view that this local short-term therapy not only destroys tumors directly but also stimulates a potent local immune response. The histological assessment in non-injected lesions suggests a potential abscopal-like effect. These data help explain the mechanism for the clinical safety and efficacy data previously reported and support the development of VP-315 as a potential non-surgical immunotherapy option for patients with BCC and further reinforces our confidence in VP-315's ability to address significant unmet need in dermatologic oncology. As this data release has prompted significant inquiries into the VP-315 program and the nature of our Phase III development plan, we are also pleased to share feedback with respect to our end of Phase II meeting with the FDA and our plans to advance the asset. In the meeting, the FDA confirmed alignment with our plans for the Phase III program to encompass two placebo-controlled Phase III studies with approximately 100 subjects each and a primary endpoint of complete clearance as assessed at week 14. Based on the FDA feedback, we expect these studies will be adequate to support an NDA filing with long-term follow-up studies to be conducted as post-approval commitment. We are extremely pleased with this collaborative and thoughtful discussion with the FDA, which provides us with an efficient path to making VP-315 available for patients with BCC. We are continuing our preparatory activities for the BCC program and are exploring new funding opportunities, which may include strategic non-dilutive partnerships for both the development as well as post-approval commercialization. As we finalize our preparation for Phase III with CROs and clinical site investigators, we will provide additional details on costs, timing and other key aspects of this exciting oncology program. As we approach the new year, we believe our company remains well positioned to realize strong organic growth as YCANTH continues to establish itself as the leading therapy for the treatment of molluscum. We are also excited about the value creation surrounding YCANTH's potential label expansion into common warts, the potential for expansion of YCANTH for molluscum around the world and the nearly universal positive feedback we are receiving for VP-315 for basal cell carcinoma. I'll now turn the call over to our Interim Chief Financial Officer, John Kirby. John Kirby: Thanks, Jayson. I'll now take a few minutes to summarize our financial results for the quarter ended September 30, 2025. For the third quarter of 2025, we reported total revenue of $14.3 million compared to total negative revenue of $1.8 million in the third quarter of 2024. Total revenue for the third quarter of 2025 primarily consisted of $10.7 million of Torii milestone and collaboration revenue and net YCANTH revenue of $3.6 million, compared to $84,000 in collaboration revenue from Torii and negative $1.9 million of net YCANTH revenue in the third quarter of 2024. Net YCANTH revenue in the third quarter of 2025 reflects shipments to our distribution partners, offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates and copay assistant program expenses. Recall that in the third quarter of 2024, negative net YCANTH revenue was due to an increase in our returns reserve for estimated returns from certain distributors and no revenues from ex-factory sales. This year, as Jayson mentioned earlier, net YCANTH revenue represents orders from our distribution partners to meet demand from their customers. Gross product margins for the third quarter of 2025 were 79.1% and cost of product revenue was $0.8 million, including $0.4 million of obsolete inventory costs. Research and development expenses of $2.2 million in the third quarter of 2025, increased by $0.1 million when excluding the impact of stock-based compensation, which is in line with the third quarter of 2024. Selling, general and administrative expenses of $9.4 million in the third quarter of 2025 decrease compared to the third quarter of 2024 by $5.8 million, excluding the impact of stock-based compensation, driven primarily by the implementation of our more focused commercial strategy for YCANTH, including decreases in compensation, benefits and travel due to reduced sales force of $3.5 million, decreased commercial costs of $1.2 million and decreased marketing and sponsorship costs of $0.8 million. Before I discuss net income and net loss per share, I will note that on July 24, we effected a reverse stock split at a ratio of 1 for 10 shares of our common stock. As a result, every 10 shares of our issued and outstanding common stock were automatically combined into 1 share. The 2025 and 2024 per share amounts I will note reflect the impact of the reverse stock split. GAAP net loss was $0.2 million or $0.03 per share for the third quarter of 2025, compared to a GAAP net loss of $22.9 million or $4.88 per share for the third quarter of 2024. On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense and change in fair value of embedded derivatives, the third quarter of 2025 net income was $1.2 million or $0.13 per share, compared to a net loss of $20.2 million or $4.30 per share for the third quarter of 2024. And finally, as of September 30, 2025, Verrica had aggregate cash and cash equivalents of $21.1 million. As Jayson mentioned earlier, we received a total of $18 million in cash milestone payments from Torii during 2025. In consideration of the $10 million minimum liquidity covenant in our debt facility, on a GAAP basis, our cash balance as of September 30, 2025, funds operations into the late fourth quarter. We will continue to apply discretion in our uses of cash and explore opportunities to further bolster the strength of our balance sheet while still advancing our commercial and clinical development efforts. I'll now turn the call back over to Jayson for closing remarks. Jayson Rieger: Thanks, John. Since my appointment as CEO, just over 1 year ago, I'm incredibly proud to report that Verrica has plotted a course to build a foundation in our commercial stage asset, YCANTH and further advance our pipeline of potential products for two of the largest unmet needs in dermatology. The Verrica team is always focused on delivering best-in-class therapies, and I can say that with confidence that we are fully executing on this strategy, and doing so utilizing a highly efficient operating model that prioritizes growth while prudently allocating capital resources to the growth. We will enter 2026 with significant accomplishments across all facets of our business in 2025 that I believe will lay the foundation for continued growth and success. With that, we'd be happy to take any questions. Operator? Operator: [Operator Instructions] We'll take our first question from Stacy Ku with TD Cowen. Stacy Ku: And great to hear about the stepwise sales for expansion in YCANTH patient hub. But first, can you further speak to the YCANTH demand that you're seeing in Q4. And then second, maybe go into more detail on the competitive headwinds. What kind of detailing are you seeing? And what has been the prescriber feedback on Zelsuvmi and maybe the efficacy that you're seeing when it comes to the competitor. Jayson Rieger: Sure. Thanks, Stacy. Nice to talk to you again. In terms of Q4, as we indicated earlier, the momentum we saw rounding up September, we've seen continue into this quarter. In terms of the competitive landscape, we continue to view the largest competitor to the treatment of molluscum as being watch and wait, and converting doctor behavior from simply watch and wait or referral to actual treatment. The Zelsuvmi launch is, in our view, a positive for the marketplace as there's now shared voice talking about the need to treat and the ability to treat molluscum, and we're still excited about the prospects of YCANTH as being a best-in-class option for those patients with most patients seeing their disease addressed in as few as one to two treatment. Operator: Our next question comes from Dennis Ding with Jefferies. Yuchen Ding: I have two. Number one, just on the recent sales force expansion, I'm just curious when you expect productivity to fully ramp? And is 2026 sort of the right way to think about it? And then number two, on EU, I appreciate the guidance around filing in Q4 '26, but that's still in 12 months despite no additional clinical trials, et cetera, required. So just curious, why do you need the 12 months? And is that a situation where you could find a partner first before filing? Jayson Rieger: Sure. No problem. So in regards to your first question, sales productivity, yes, it typically takes a few months for any rep to be up to speed. So we would expect that many of our reps that we've hired recently to be hitting the ground running and being quite productive in the early part of next year. In terms of the EU, there are some mechanical things that relate to filing in the EU that require sequential steps in time. One of those, in particular, is around securing the pediatric waiver, even though our drug is already been completed in pediatric patients, we have to go through the process of securing that waiver in the EU, and that adds a few months to the beginning of the time line. We're doing everything we can to expedite the process, but there are a number of sequential steps in Europe that require you to go through step 1 before you go to step 2, and we're continuing to do all those things actually right now. And also in terms of your question about partnership. In terms of that general run rate, that would provide us to fund a commercial plan ourselves or work with a partner and give us sort of that time line to prepare for commercial launch. So we don't believe it's going to adversely impact the time line to commercial. Operator: We will move next with Serge Belanger with Needham & Company. John Todaro: This is John on for Serge today. So first on YCANTH Rx, I guess it's kind of getting ramped up in the next month or so. Curious what some of your feedback has been from KOLs that you've spoken to that kind of led you to instilling this mechanism and how it could start -- could kind of kick start further dispensed applicator growth moving forward? And then back on the expansion of the sales force, just curious if this -- the goal here is kind of an expansion in the breadth of your current call points or more so an increase in depth in prescribing from your current prescribers? Jayson Rieger: Sure. Thanks. So we're very excited about the YCANTH Rx. The feedback has been, in general, we've worked very hard over the past year to continue to simplify the process for clinicians and their patients. And we believe a single point of referral for writing these prescriptions to a non-dispensing pharmacy will make that continue to be easier for the clinicians. And make it easier for their patients. So there'll be one stop shop that has familiarity with the commercial payers, the contracts, the insurance for the patients and also to facilitate expeditious ways to get that fulfilled for the patients. And the general feedback we've seen so far is it's been very positive. But it's still at early stages, and we'll continue to explore and share details as that rolls out. In terms of the breadth and call point, I would say it's still a bit of both. The -- we're seeing greater demand. And given that we're expanding into both the pediatric primary care, in addition to our core business in dermatology, this allows our reps to spend more time calling on the existing customers, but also to expand in some of their call points and high-value opportunities in the commercial space. What we see, as I mentioned earlier, in terms of the largest competitor being doing nothing or watch and wait, this means there's lots of clinician targets out there for which there is no deciling of data, and we just need to engage with them through conferences, through trade shows and through social media and marketing efforts as well as simply knocking on the doors in the old-fashioned way. So we're excited about that opportunity. There's plenty of targets for our reps, and I think that we'll start to see that traction going into this year. Operator: [Operator Instructions] We'll move next with Brian Kemp with Brookline Capital Markets. Brian Kemp Dolliver: Can you hear me all right? Jayson Rieger: A little bit. Brian Kemp Dolliver: Okay. A couple of questions for me, how should we think about seasonality impact in Q4 sales? And another one is on YCANTH Rx. Do we have any benchmark from a similar pharmacy model and a similar kind of indication? And what kind of KPI will you be tracking to measure on YCANTH Rx success in the first 6 to 12 months? Jayson Rieger: Can you please repeat the first part of the first question. It was static, I didn't hear it. Brian Kemp Dolliver: All right. So my first question was, how should we think about seasonality impact in Q4 sales? Jayson Rieger: Okay. No problem. So in terms of Q4, we would expect some of the traditional slowdown you could see in November, December based on vacations and holiday times and sort of the calendar in general. But we expect that, that momentum will continue into the first part of next year for prescriptions, especially as we believe that molluscum is often a secondary diagnosis for patients. And as we get into cold and flu season, we expect there'll be more doctor visits and could be more diagnosis of molluscum going forward. In terms of the NDP, at this point, we're not giving any expectations or metrics at the moment, but you would expect that we would follow all the core metrics of time to fill, the number of scripts that are fulfilled, et cetera. And as we get more data on that, we'll continue to evolve and monitor that process. But those are the expectations of a typical NDP. Operator: And this will conclude our Q&A session. I will now turn the call back to CEO, Jayson Rieger. Jayson Rieger: Thank you, operator. I'd like to thank all of you for joining us this morning, and we look forward to providing updates on our progress in 2026. Have a nice day. Operator: Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

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