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Operator: Good afternoon, and welcome, everyone, to the GeoVax Third Quarter 2025 Corporate Update Call. My name is Sherry, and I will facilitate today's call. With me are David Dodd, Chairman and CEO; Mark Reynolds, Vice President, Chief Financial Officer; Mark Newman, PhD, Chief Scientific Officer; Kelly McKee, MD, MPH, Chief Medical Officer; and John Sharkey, PhD, Vice President, Business Development. [Operator Instructions] As a reminder, this conference is being recorded. Please note the following: -- certain statements in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors, including whether GeoVax can develop and manufacture its product candidates with the desired characteristics in a timely manner and such products will be safe for human use. GeoVax's vaccines will effectively prevent targeted infections in humans. GeoVax's product candidates will receive regulatory approvals necessary to be licensed and marketed. GeoVax raises required capital to complete development of its products. There is a development of competitive products that may be more effective or easier to use than GeoVax's products. GeoVax will be able to enter into favorable manufacturing and distribution agreements and other factors over which GeoVax has no control. GeoVax assumes no obligation to update these forward-looking statements and does not intend to do so. More information about these factors is contained in GeoVax's filings with the Securities and Exchange Commission, including those set forth at Risk Factors in GeoVax's Form 10-K. It is now my pleasure to introduce the Chairman and CEO of GeoVax, David Dodd. Please go ahead. David Dodd: Thank you. Welcome to the third quarter 2025 GeoVax corporate update. Following my comments, Mark Reynolds, our CFO, will provide an update of our financials, and then we will address any questions that you may have. We remain confident in the continued progress and compelling outlook for our portfolio of GEO-MVA, GEO-CM04S1, Gedeptin and the game-changing MVA vaccine manufacturing process. Each of our product development candidates address critically important unmet health care needs, providing opportunities for expedited registration paths and strong opportunities to commercialize differentiated solutions supporting patient needs worldwide. We also anticipate that the advanced MVA manufacturing process will provide a game-changing advantage in production of MVA-based vaccines and therapies. We're experiencing increased partnering and collaboration interest from established industry players as well as increased interest from nondilutive funding organizations, including stakeholders addressing various areas of worldwide vaccine needs. In June, we announced the receipt of guidance from the European Medicines Agency, referred to as the EMA, providing an expedited development path for GEO-MVA, our vaccine candidate against Mpox and Smallpox. This is most encouraging news in that it provides the potential for GeoVax to achieve marketing authorization and revenue generation sooner, allowing us to bypass Phase I and Phase II clinical trials and proceed directly to a Phase III immuno-bridging trial. As a result of this news, we're experiencing increased interest and dialogue with various industry colleagues and stakeholders regarding potential partnering, collaboration and funding. Relative to GEO-MVA, we have initiated the fill/finish of clinical batch vaccine material. We anticipate having vaccine available for clinical evaluation early next year. We're pleased to note that in addition to product in support of our clinical evaluation, we plan to produce additional product in support of potential use in conjunction with various stakeholder discussions that are underway. We believe that GEO-MVA provides the potential to end the current monopoly of MVA vaccine supply, expanding the global supply of this critically needed vaccine, addressing both the needs resulting from epidemic outbreaks as well as the various stockpile opportunities worldwide. Significant government interest exists relative to U.S.-based supply chains versus the current overdependence on non-U.S. suppliers. The strong sentiment in favor of such onshoring initiatives is a major national legislative focus and interest. We remain in active discussions and briefings with various stakeholders, including the White House, Congressional Representatives, HHS, WHO, the International Vaccine Institute, the Africa CDC and others regarding our progress relative to cGMP clinical inventory of GEO-MVA. In fact, this was the subject of numerous discussions during our recent series of meetings in Europe in conjunction with the World Vaccine Congress Europe, BIO-Europe and individual meetings held in Geneva and elsewhere. Over the remainder of 2025, we look forward to providing additional updates on our progress with this vaccine. GEO-CM04S1, our multi-antigen vaccine against COVID-19 is increasingly recognized as a critically needed vaccine for use among the over 40 million immunocompromised adults in the U.S. as well as the over 400 million worldwide. Based on the clinical data results thus far, we believe that CM04S1 provides potential for demonstrating a more robust immune response against emerging variants, improved durability versus the first-generation single antigen COVID-19 vaccine and especially in addressing the immune protection among those patients with compromised immune systems. Our current CM04S1 studies are progressing, especially our focus on continued enrollment of severely immunocompromised patients with blood cancers who have received cell transplants and towards completion of the investigator-initiated Phase II trial among chronic lymphocytic leukemia patients. Both the hematologic cell therapy patients and the CLL patients represent the highest risk groups in need of reducing the risk of severe infection, hospitalization and the risk of death resulting from COVID-19 infection. For these individuals, the pandemic continues. Demonstrating the critically important value of CM04S1 among such immune-compromised patients remains our focus for differentiation from the first-generation COVID-19 vaccines. The medical need for a vaccine such as CM04S1 remains substantial for those with medical conditions that render their immune systems inadequate in responding to the first-generation vaccine. It's noteworthy that just recently, the Infectious Disease Society of America, known as IDSA, issued updated guidelines regarding COVID-19 vaccine among immunocompromised patients. These critically important guidelines are well exceedingly well with our development of CM04S1. During third quarter, multiple presentations of clinical results for CM04S1 were provided at the International Workshop on Chronic Lymphocytic Leukemia, the World Vaccine Congress Europe and the European Society of Clinical Microbiology and Infectious Disease. Each of these presentations resulted in additional and expanded discussions regarding potential partnering and collaborative developments. Let me point out, while such discussions tend to follow a somewhat tedious due diligence process, we are encouraged by the continued interest in CM04S1 as the leading multi-antigen COVID-19 vaccine in clinical development. Relative to our plans for a Phase II Gedeptin trial in head and neck cancer, the primary determinant of the timing to initiate the Phase II trial is the completion of necessary product manufacturing. That is underway, along with the continued clinical operations plans and the necessary regulatory aspects. Earlier this year, Dr. Marc Pipas presented at the AACR meeting in Chicago, reviewing the clinical results thus far and our plans for the Phase II study. Peer-reviewed publication of this work is forthcoming in JCO Oncology Advances, so be on the outlook for this. Following the impressive results of the KEYNOTE-689 study presented at ASCO, we have modified the Gedeptin Phase II study protocol, changing the target population to first-line therapy, mimicking KEYNOTE-689 trials historical control. As such, our focus will be on evaluating neoadjuvant Gedeptin and pembro, offering meaningful efficacy and tolerability in patients with primary squamous cell carcinoma head and neck, who are being considered for surgical resection with curative intent. Our primary endpoint will be major pathological response. We believe that Gedeptin has the potential to address multiple solid tumors, especially via combination therapy, providing significant value long term. We also plan additional studies of Gedeptin addressing other solid tumors beyond head and neck cancer. In addition, we are engaging in various discussions related to potential collaborations in the long-term development and commercialization of Gedeptin. Overall, our goal is to successfully develop innovative cancer therapies and infectious disease vaccines, addressing critically important unmet medical needs, pursuing initial indications that support expedited registration pathways. We anticipate business partnerships and collaborations in support of worldwide development, commercialization and distribution. Our priorities and anticipated milestones for 2025 through 2026 remain focused on advancing GEO-MVA to clinical evaluation, advancing GEO-CM04S1 for immune-compromised populations, advancing the progress of the advanced MVA manufacturing process and our focus on oncology, specifically related to Gedeptin is a major priority for the future of GeoVax. We have high expectations for the potential broad utilization of Gedeptin against various solid tumors, especially in combination with immune checkpoint inhibitors. We also are focused on progressing various partnering and collaboration discussions in support of these developments with the potential to accelerate the pace of these programs. We're confident that we're on a course that will build significant shareholder and stakeholder value while delivering critically important differentiated products to improve lives worldwide. Now I'd like to turn the presentation over to Mark Reynolds, GeoVax Chief Financial Officer, for a review of our recent results and financial status. Mark? Mark Reynolds: Thank you, David. And the details of our third quarter financial results are summarized in today's press release. I'll start the review with our income statement. During the 9 months ended September 30, 2025, we reported revenues of $2.5 million versus $3.1 million in 2024. This relates to the BARDA Project NextGen contract that began in June 2024. And as we previously discussed in our Q1 earnings call this year, in April, the contract was terminated along with other Project NextGen funded contracts as part of the government's efficiency program, so there were no contract revenues reported during Q3. Research and development expense for the quarter was $5 million versus $7.4 million in 2024. For the 9-month period, R&D expense was $15.1 million versus $16.1 million in 2024. The decrease during 2025 is primarily related to discontinued costs associated with the termination of the BARDA contract as well as lower costs for the CM04S1 clinical trials and manufacturing costs associated with the CM04S1 and Gedeptin programs. These lower costs were partially offset by higher personnel and consulting costs and manufacturing costs associated with the GEO MVA development program in preparation for initiating clinical trials in 2026. General and administrative expense was $1.3 million for the third quarter of '25 versus $1.2 million in '24. For the 9-month period, G&A expense was $4.6 million versus $3.8 million in '24. The overall increase during 2025 is associated with higher personnel costs, investor relations consulting and other programmatic expenses and stock-based compensation expense. Other income expense was $151,000 for the year-to-date period in '25 as compared to $70,000 in '24, primarily reflecting higher interest income. So overall net loss for the quarter was $6.3 million versus $5.8 million in '24 and $17 million for the year-to-date period versus $16.7 million in '24. Turning now to the balance sheet. Our cash balances at September 30 were $5 million as compared to $5.5 million at December 31, '24, reflective of $16.5 million used in operating activities, offset by $16 million in financing transactions. Our outstanding common shares currently stand at $27.7 million. Supporting our clinical programs for the priority programs at CM04S1, GEO-MVA and Gedeptin will be the most significant use of our cash for the foreseeable future. We continue to explore various strategies to fund these programs through several valuation inflection points and also to extend our cash runway. These could include strategic partnerships, nondilutive funding or additional offerings of our common stock. And I'll be happy to answer any questions during the Q&A, and I'll now turn the call back to David. David Dodd: Thank you, Mark. My colleagues and I will now answer your questions. Joining us for the Q&A session are Dr. Mark Newman, Kelly McKee and John Sharkey, our Chief Scientific Officer, Chief Medical Officer and Vice President of Business Development, respectively. I'll now turn the call over to the operator for instructions on the question-and-answer period. Operator: [Operator Instructions] And our first question will come from the line of Jonathan Aschoff with ROTH Capital Partners. Jonathan Aschoff: I was kind of curious, can you envision any kind of scenario, an outbreak type of scenario that would get MVA into the hands of governments? Is there anything that you can think of that would make that go commercial at least temporarily way before you would do any sort of clinical trials with it? David Dodd: This is David, Jonathan. I wouldn't anticipate that prior to any clinical evaluation that such a situation would occur. We do believe there may be an opportunity as well as a significant need for emergency use licensing, which would come through WHO based on certain situations occurring. And some of those types of discussions were part of our recent trip in Europe that we had with WHO and other parties. Jonathan Aschoff: Okay. I think that's really all that I had. The Q will come out soon, yes. David Dodd: Yes. Jonathan Aschoff: The 10-Q. Mark Reynolds: Yes, the Q is [Technical Difficulty]. David Dodd: Yes, I think came out at 4. Operator: One moment for our next question -- and that will come from the line of Robert LeBoyer with NOBLE Capital Markets. Robert LeBoyer: Congratulations on all the progress you've been making. I know it's probably a little early to talk about the collaborations specifically. But on the broad strategic level, is there anything that you can tell us about what you're thinking in terms of the collaborations or partnerships or anything like that, that would be helpful in determining what the prospects are for kind of business combination or partnership? David Dodd: Sure, Robert. This is David. We hold worldwide rights for all of our product assets. And our plan and our focus is to register broadly on a global basis. It doesn't mean every single country, as you know, but broadly to register on it. And our initial thinking is that we would be able to handle North America, which would be the U.S. and Canada, but I would also underscore that we'll always listen to any proposal that a potential partner has. We are quite active in attending various conferences as we just did, both World Vaccine Congress Europe as well as BIO-Europe. BIO-Europe is largely a partnering-oriented conference. We attend that every fall as well as in the spring as well as obviously U.S. based similar types of conferences. So increasingly, our discussions related to potential partnering or collaboration, which would entail involvement of a partner as we develop it for a particular region, and you can sort of think through how certain rights would be distributed if someone was heavily focused in a certain region, the Pacific region, then they might be assisting us in the development process for their regulatory process, et cetera. So all of those types of concepts are actively discussed in meetings that we continue to have and have been having. And we're open to whatever makes sense from a win-win and from the basis of value for our shareholders as well as the stakeholders who are out there. Operator: One moment for our next question. And that will come from the line of Jim Molloy with Alliance Global Partners. Laura Suriel: This is Laura Suriel on for Jim Molloy. So for GEO-MVA, can you just talk a bit more about the collaboration you have in place with the University of Queensland and UniQuest for the needle-free administration method that you have for this vaccine? And also any research or manufacturing plans that you have in place here as well? David Dodd: So we announced not too long ago that we were doing an evaluation in conjunction with the technology out of out of Vaxxas. And we believe it's very important and in fact, critically important for certain regions of the world to look at nontraditional delivery methods. And as you know, Vaxxas is a leader in the area of microarray patches. There's someone we've known for several years as well as other very good players in those delivery areas. And so we're evaluating it to see what the feasibility is relative to GEO-MVA. And as information comes actively -- in evaluation now, as information comes forward, we will make appropriate announcements of that. And so that's what we're doing within that realm of it. You asked a question, I think, about manufacturing. What was that? I didn't quite get it, please. Laura Suriel: Just the manufacturing that you might have for this particular program for GEO-MVA? David Dodd: GEO-MVA, I'm going to ask our executive lead for our GEO-MVA program, John Sharkey to address that. John? John Sharkey: So in regards to our manufacturing, as we've explained before, our lead here is to manufacture on the CEF platform, Chicken Embryo Fibroblast. That is the fastest pathway to registration and EMA has understood this. Our partner is, as we do with all our programs, we use CDMOs. And so we're partnered with Oxford Biomedica in the U.K. We are -- as David mentioned in the presentation, we're in the process of packaging our clinical supplies, and we are in active discussions with OXB to how we can expand the supply out of their facility as well in discussions with other potential manufacturers to add additional supply as we move -- when we move forward to commercialization. Operator: [Operator Instructions] And our next question will come from the line of John Vandermosten with Zacks. John Vandermosten: So you guys are working with CEPI, Africa CDC, WHO and others. What regions of the world are looking most supportive for your vaccine programs? And then what are their pathogens of greatest concern? David Dodd: I think clearly -- and John, that from the perspective of GEO-MVA, it's obviously in the Southern Hemisphere, where you see endemic outbreaks. But then we're also seeing increasingly reports of Mpox and the new strain Mpox becoming evident not only in the U.S. but throughout Europe. But certainly, the concentration is in the Southern Hemisphere. And there's a significant interest from parties that relate to that. I mean we keep being encouraged and told by WHO leaders that this is not going away. It's going to continue to evolve. It's not going to get any better and that they really are in need of our supply contribution as well as the eventual shift to our AGE1, our suspension cell line, continuous manufacturing process for that. So I think from that standpoint, that's where that one is heavily concentrated, which sort of is intuitive. But it's on a broader basis. It's not just the stockpile needs, it will eventually also include the response in a more timely manner to endemic needs also. So we believe that. When it comes to our CM04S1, clearly, the most significant need are among those populations who have inadequate -- they have medical conditions that have rendered their immune systems, basically inability to appropriately respond to antibody stimulation. And for these people, as I mentioned, the pandemic continues. I mean, these 40-plus million adults in the United States, the estimated 400 million worldwide who have various medical conditions, blood cancers, kidney disease, diabetes, multiple sclerosis, lupus, et cetera, it goes on and on. These are individuals that their risk is not so much, for instance, to die of the blood cancer that they have or to be hospitalized from, it's more from an infection. That's where they're risk. And so that's where we see a broad interest for those parties that are caring for individuals who have such medical conditions. These medical practitioners, these medical health care groups, they are very interested in what our vaccine has the capability or potential to do and how can we move it faster. That's what we're always asked. And the answer is as a pre-revenue company, it's all about the balance sheet. The stronger our balance sheet is, the faster we can move something forward. Obviously, we're all looking forward to the Phase II trial with Gedeptin. And as we go forward with the implementation of that, evaluating Gedeptin along with pembro in first-line therapy, you're following mimicking the KEYNOTE-689 trial. So there's a lot of interest in that related to any parties that are following solid tumor cancers. So we get a question on all of these at various meetings. I would say right now, we have many more questions and interest because of the sense of urgency related to GEO-MVA. We spent a lot of time addressing that as well as opportunities with Gedeptin. John Vandermosten: Okay. And my next question is on Gedeptin actually and the use of -- you mentioned that you're going to have it in combination with pembro. Do you think by the time this is approved, there'll be a biosimilar version of that available? And do you think that will help adoption? David Dodd: I would say I really don't know because we may very well continue to develop Gedeptin across various immune checkpoint inhibitors. We have other players who have checkpoint inhibitors are interested in what we're doing. Obviously, we don't have the resources to do a blanket testing across all immune checkpoint inhibitors, but we do have potential interest, and that may evolve into some collaborative development opportunities. We've had some discussions, but I would be -- it would be incorrect for me to suggest that we're actively in discussions that are going to, within a reasonable time period, expand it to other ICIs. We have interest that's been expressed. We've had a few discussions, and we're certainly open to that and would encourage such discussions. But we'll just see how those discussions continue to evolve. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to David Dodd for any closing remarks. David Dodd: Well, thank you, everyone, for participating in today's update. We really appreciate your interest, and we look forward to ongoing interactions. As always, I wish to acknowledge and thank the GeoVax Board of Directors and advisers -- certainly, our GeoVax staff and the many other parties who contribute toward our success. We're committed to providing meaningful career development opportunities for highly competitive, quality-oriented individuals seeking to disrupt the current paradigm of cancer therapies and infectious disease vaccines. We welcome any and continued inquiries about opportunities at GeoVax. We're a small company, so we received many more inquiries than we have availability for, but we thank you for your interest. We're most proud and appreciative of our team, including those external partners who continue to contribute to the progress and success underway at GeoVax. For all of us, it's a great pleasure serving our shareholders and being a part of this team. Our overriding goal is to improve lives worldwide through our development and commercialization of novel critically needed cancer therapies and infectious disease vaccines. And with that, I want to wish everyone a safe and enjoyable day. And again, thank you for your time and attention. Operator: This concludes today's program. Thank you for participating. You may now disconnect.
Operator: Hello, and thank you for participating in today's conference call to discuss zSpace's financial results for the third quarter ended September 30, 2025. Joining us today are zSpace's CEO, Paul Kellenberger; and CFO, Erick DeOliveira; and Greg Robles from Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg, please go ahead. Greg Robles: Thanks, Operator. Good afternoon, and thank you for joining our conference call to discuss our third quarter 2025 financial results. Before we begin, I'd like to remind everyone that certain statements made on this call may be considered forward-looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. Additionally, we may discuss certain key business metrics, which are non-GAAP financial measures. A description of these non-GAAP measures and any comparison to the most directly comparable GAAP measures can be found in our earnings release on the Investor Relations section of our website. Now I would like to turn the call over to the CEO of zSpace, Paul Kellenberger. Paul? Paul Kellenberger: Thank you, and good afternoon, everyone. Thank you for joining us for our third quarter earnings call. I am Paul Kellenberger, CEO of zSpace, and with me is Erick DeOliveira, our Chief Financial Officer. We're excited to share zSpace's Q3 performance and the progress we've made advancing our strategic priorities. Our third quarter results reflect our focus on advancing our strategy and controlling what we can control. During the quarter, our software and services revenue comprised over 50% of total revenue, contributing to gross margin expansion of over 640 basis points. This performance was driven by strong customer renewals and the continued adoption of our software offerings, which is a key part of our strategy. In addition, we grew revenue 18% sequentially, which is a testament to our execution and disciplined focus on delivering value to our customers despite ongoing macroeconomic and funding uncertainties. We've made meaningful internal progress across our products and innovation. As announced last quarter, we completed the integration of Second Avenue Learning, leading to the launch and delivery of our career exploration application. We're pleased with our team's dedication to excellence and their ability to deliver innovative AI-powered education products with speed and impact. In addition, to support our global expansion and ensure accessibility across various educational geographies, we're strategically leveraging artificial intelligence to eliminate language barriers. AI is enabling quick and efficient translation across our platform, including website content and application interfaces and providing tools that can understand and interact in over 50 languages. This initiative not only expands our global reach, but ensures students and educators regardless of their native language, can fully utilize zSpace's award-winning educational experiences, significantly broadening our global reach. Building on this, we began deploying our solutions with GEMS Education at their flagship School of Research and Innovation in Dubai. This partnership represents a regional first in AR/VR learning integration across K-12 education in the UAE and allows students to explore complex STEM concepts through interactive 3-dimensional simulations. Beyond Dubai, we've secured deployments in Italy, Bulgaria, Poland and additional locations across the Middle East, continuing to build momentum in international markets. While funding uncertainty persists in the U.S., we've also achieved meaningful customer wins. Union Interactive, a key partner in Bulgaria, expanded its use of zSpace as part of the National STEM project for K-12, which was funded by the European Union. In Florida, Dixie County Schools made a significant investment in robotics and health applications for high school students, which was funded by the workforce development incentive grant. Lastly, in Alabama, the Challenger Learning Center deployed zSpace to enhance elementary STEM education to foster STEAM and STEM interest and learning. In closing, we remain confident in the long-term growth potential of zSpace and our ability to deliver on our vision. That said, we approach the fourth quarter with cautious optimism given the ongoing uncertainty related to tariff impacts and the education funding environment in the U.S. Importantly, this caution is not a reflection of customer demand. Recent wins and ongoing engagement demonstrate that both existing customers and prospects continue to express interest in our solutions and a desire to expand usage. We believe that as federal education policy continues to take shape and funding mechanisms become more predictable, the longer-term outlook for our business will strengthen. With that, I will turn the call over to Erick to walk through our financial results in more detail. Erick? Erick DeOliveira: Thank you, Paul. As you consider our results, a reminder that our revenues are substantially recognized upon shipment of laptop units or fulfillment of software license keys. This includes recognizing the full value of multiyear software licenses in the period in which they are fulfilled. Only a small portion of our revenue is ratably recognized. As a result of this revenue recognition treatment, our financial results can exhibit quarter-to-quarter and year-over-year variability that exaggerates the underlying seasonality of the business. Throughout this year, we have seen the dual themes of internal execution success, driving product innovation, quality of revenues and spend management, opposed by external headwinds from tariff policy and uncertainty around education funding. Both themes continue to be in evidence as we review financial performance through the period ending September 30. And now diving into our year-to-date performance. Year-to-date revenues were $23 million, down 22% year-over-year. As noted in our Q1 and Q2 results, we have been enjoying outperformance in software and services revenues, which make up 48% of the revenue portfolio versus 42% for the first 9 months last year or up 6 percentage points. This dynamic continues to be an important driver of gross margin expansion. As previously discussed, our P&L reflects multiyear software license revenue in period. To help better characterize the run rate health of the business, we offer 2 non-GAAP software operating metrics. As of September 30, 2025, the annualized contract value of renewable software was $10.2 million, down 10% compared with 12 months ago. Also as of September 30, 2025, the net dollar revenue retention of customers with at least $50,000 of ACV was 77% for those customers present as of September 30, 2024. Unfavorable performance on these 2 metrics is attributable to 2 large customers who collectively expanded their zSpace footprint a year ago, but who were not able to fully renew their expanded commitment at this time due to macro factors. Normalizing for these 2 customers, ACV would have been flat year-over-year and NDRR would have been 94%, pointing to stability across the broader customer base. Bookings for the 9-month period ending September 30 were $22.7 million, down 35% year-over-year versus the comparable prior year period. Gross profit was $10.9 million, down 10% against the same period last year. This includes a onetime charge in the second quarter for discontinued software license inventory, which is at once related to our exit of China and also our continued efforts to bring previously resold third-party titles in-house through both acquisition of applications and internal development. Gross profit was also affected by applicable tariffs and duties. Although we have largely treated these as pass-through on a dollar basis, we incurred some margin compression from doing so. Gross margins for the 9-month period were 47.3%, up 6.4 percentage points versus the prior year period. Improvements in profitability continue to be driven by the same 3 factors identified earlier in the year, a favorable mix of hardware versus software and services revenues, which contributed 2.4 percentage points to the margin expansion over the year-to-date period and rate-based factors, including new hardware products with better price performance profiles and an increased amount of zSpace-owned software content. These rate-based factors delivered an additional 4 percentage points of margin expansion over the year-to-date period. Operating expenses, excluding stock-based compensation, were up 9% for the first 9 months of the year. People-related costs, which make up most of our operating expenses were up 3% year-on-year for the same comparable period, again, excluding stock-based compensation. And now for the third quarter. Q3 revenues of $8.8 million were down 38% year-on-year against the prior year quarter, which included an unusually large customer order that did not fully repeat this year. Notably, this represents an 18% sequential improvement over Q2. As previously mentioned, strength in high-margin revenues continued into the third quarter with software and services representing 57% of total revenues, an 11 percentage point mix shift with significant gross margin implications. Previously discussed turbulence in the U.S. K-12 market has persisted, resulting in unpredictable purchasing patterns and delays in school districts across the country. Bookings for the 3-month period ending September 30 were $7.4 million, down 37% year-over-year. CTE customers drove 49% of bookings value, up from 41% in the prior year comparable period. Gross profit was $4.5 million and gross margins were 51.2%, up 6.4 percentage points versus Q3 last year. This laps the 6 percentage point margin expansion in that quarter and continues the improvements in profitability we have been delivering for 5 consecutive quarters now. Within the quarter, the 11 percentage point mix shift in revenues was responsible for 4.3 percentage points of margin gain and the rate base factors drove 2.1 percentage points of improvement. Normalizing for a $0.1 million adverse impact of tariffs, Q3 margins would have been 52.3%. Operating expenses of $6.6 million for the quarter, excluding stock-based compensation, were up 4% year-over-year. People-related costs, excluding stock-based compensation, which make up the bulk of costs, were up 5% year-over-year against the comparable prior year quarter. Our reported results include $2.7 million in stock-based compensation expense attributable to grants made as part of our employee equity incentive program. Relative to the 22.8 million shares issued and outstanding at the start of the year, we continue to manage the issuance of RSUs as part of the employee equity incentive program to a target burn rate of less than 7% for the full year. Turning to the balance sheet. As of September 30, 2025, zSpace had approximately $4.3 million in cash, cash equivalents and restricted cash compared to approximately $3.0 million in cash, cash equivalents and restricted cash as of September 30, 2024. Our path to profitability continues to run through revenue growth via operating leverage through our ongoing expansion of gross margins and tight stewardship of operating expenses. While overall revenues are challenged by the headwinds in the U.S. K-12 market, our success in driving more of the revenue portfolio from software is bearing fruit. The gross margin expansions from revenue mix shift into software from additional first-party software and from new hardware product releases are now part of our track record in delivering results. Additional and yet unannounced hardware innovations will further improve on this performance. Cautious and measured OpEx investments have also been a tool for driving performance and innovation while staying on the path to profitability. As a result, our adjusted EBITDA losses have narrowed to below $2 million for the third quarter, in sharp sequential contrast to earlier quarters this year. Now moving on to our outlook for the final quarter of the year. 2025 is concluding with familiar obstacles still before us and the challenges of the government shutdown over the first 6 weeks of the quarter. Clearly, many of our customers continue to value the contributions which zSpace makes in their classrooms and training environments as demonstrated by the proportion software and services revenues make up in our Q3 results. However, the overall outlook remains difficult to project at this time. As demonstrated throughout the year, we remain confident in our ability to improve the quality of both hardware and software revenues and move the company forward to profitability but cannot credibly project business volume under current circumstances in the U.S. education sector. Given this, we will continue to refrain from issuing formal financial guidance. Now I will turn the time back to the operator for Q&A. Operator: [Operator Instructions] Our first question coming from the line of Alex Paris with Barrington Research. Alexander Paris: Nice job on revenue in the quarter, better than our expectations, better than the consensus in this still uncertain environment. Diving into the uncertainty of the environment, and you mentioned that I want to talk a little bit about the funding environment. But before I talk about that, you referenced the government shutdown first 6 weeks of the quarter. How does that impact zSpace directly? Or is it just another point of uncertainty influencing decision-making? Paul Kellenberger: Erick, do you want to take that? Erick DeOliveira: Yes, I can take that. And Paul, you can add in. Thanks for the question, Alex. I think the way to think about the shutdown is, in many ways, it feels like the kind of headwind we felt throughout the year where our end users have obstacles to overcome in making purchasing and funding decisions and additional challenges in accessing those funds. Through the first 6 weeks of this quarter, their biggest obstacle has been just an inability to access funds that would have cascaded down from various federal departments, whether it's Department of Labor or Education. And that imposes a delay in many cases in accepting shipments of products as well as upfront determination to conclude purchase orders with us. So in many ways, it feels like more of the same from the first half of the year. In other ways, it's a slightly different wrinkle that doesn't necessarily influence their decision-making, but the timing of their decisions. Alexander Paris: Yes, that's what I was thinking because if -- what buckets of federal money do schools access to purchase your product given that most -- the vast majority of K through 12 funding is state and local derived. But things like Title I and so on come through the federal government, but it's my understanding that, that money continued to flow. Erick DeOliveira: To take that from the perspective of... Paul Kellenberger: Yes. Let me take that one. As you well know, and 2 different pieces to the business, Alex, the CTE business, which a lot of the funding is Perkins, and that has flown. I think the speed at which the funding has flown is different, depending on which color the state is, and I can make that comment. But that funding on the CTE side is flowing. On the K-12 STEM side of it, 10% of the funding is from the DoE, which is federal. And there are a number of different title programs that we participate in. Some of them are even things like Title I. But as you noted, the vast majority of the funding is state and local. And I just think it's the overall macro environment. And to give you a little bit of a little more detail, I was at a conference about 3 weeks ago with a group of superintendents. I won't name any of them, but there was about 60 of them, and I probably spoke to about 15 of them. They were all, I'll say, believing things have kind of gone back to the way they were previously with significant nuance that federal funding is now flowing directly to the states unencumbered. And when I say unencumbered, if you recall, as a part of the administration's revisions in education, the funding is no longer tied to specific title acts. And again, Title I and some of the other titles have a lot of things like special education learning, English learning programs, supplemental type things, they no longer have those connections. So I think the term we're continuing to use is cautiously optimistic. We actually -- in the big scheme of things, and thank you for your comments on our results. We're -- again, we're just cautiously optimistic, and that's probably the best way to leave it. Alexander Paris: Okay. That works. I appreciate that color. The -- in talking about your recent wins, Paul, both in the press release and your prepared comments, I don't know that you mentioned Danbury. The Danbury school press release looked quite interesting. It's the largest school -- largest high school, school district in the state of Connecticut and the seventh largest overall. What is the deployment there? Is it 1 high school and 3 middle schools? Or is it going to be ultimately more than that? Paul Kellenberger: Ultimately, we are -- right now, I'll say it's the beginning. There's still more opportunity. We're hoping it goes entirely across the district. And I think it's got a lot even more opportunity that goes beyond it. We announced it pretty recently. It's been deployed. We know there -- and as evidenced by our continued focus on the software side of the business and the renewals. We know they're quite happy with it, which we hope to keep them there. It is -- they are using Career Explorer, which, as we've discussed previously, the acquisition of Second Avenue Learning has been instrumental in us helping move that one forward. But it is right now really focused on the middle and high schools. And I think there's 12,000 students, something like that in the district. The other one that I will mention that you didn't ask about it, but it was in -- I happen to be in the Middle East as we speak and met with GEMS Education this week. GEMS Education is the largest private school network in the world, and they put in a zSpace classroom lab into a brand-new facility. I was meeting with the senior leaders this week. And we're working hard, nothing is concluded on really making this broader within GEMS. And when I say broader across the entire UAE, Saudi markets within the Middle East. They're also in the U.K., they're also in India with schools. So that one is very much at the beginning. Alexander Paris: That sounds exciting. But essentially, you put it in this classroom lab, do a great job, they use it. And in time, there's opportunities to roll out to other schools. That's the idea, right? Paul Kellenberger: Correct. And also the opportunity to roll out additional software applications within the existing -- in Danbury's case, there's other applications that we would like them and quite frankly, more devices as well to make it even broader. Alexander Paris: Okay. And then while I'm kind of on the same topic, you talked about -- Erick talked about the net dollar revenue retention 77% and said that, that is due -- it looks like in large part to 2 large customers who collectively expanded their footprint last year, but could not renew at the same rate. Maybe just a little bit more color there. Erick DeOliveira: Yes, I'll take that one, Paul. That's correct, Alex. And in particular, what stands out as encouraging for us is this was one -- the largest of the 2 had a deployment of several hundred, not quite 1,000 units across 6 schools in their district and faced with the same budgetary constraints that many schools, many of our K-12 customers are dealing with, they made a decision to not fully renew. They've gone from being a 7-figure software renewal account to being a mid-6-figure account. And just taken by itself, if you were to normalize for that one customer, both of those metrics would have been essentially flat year-on-year. Now by way of color, what's encouraging is how they made the decision to shoehorn themselves into their next year budget. They didn't go dark on all of the devices. So they had, I think, about 700 devices, 800 devices across the school district in 6 schools or so. And they have preserved all of those. So they thinned out some of the software titles on those devices, but they've kept a presence on all of the 700, 800 student desks that feature zSpace. So to put it in other terms, we're still farming the same acreage. There are fewer crops growing there, but it's the same footprint that they have preserved going into their next year of experience with zSpace. Alexander Paris: Encouraging. So the idea there would be hopefully, when the budget constraints are not so prevalent, maybe they'll take additional software titles onto that farm. Erick DeOliveira: No, exactly. As Paul said, cautiously optimistic. Paul Kellenberger: By the way, if I can add a little more color, Alex, and this is allowed in the public domain. So I'm not saying anything confidential here, but there have been massive changes at the superintendent level in St. Louis over the course of the last 1.5 years. And I'll just call it upheaval. They've been through 2 superintendents and a lot of, I'll just say, disruption at the board level between that and the funding challenges and having to make some decisions about closing schools, that's -- it's been a really difficult situation when you look at it from the school district side of things. But as Erick said, we're happy they're with us and they continue to use the product, and we have an upsell opportunity down the road here. Alexander Paris: Great. And then let me just ask one last quick one, and I'll pass the -- pass it along. The guidance, I appreciate the fact that you can't credibly project volumes here at this point. But seasonally, there tends to be an increase in revenues from Q3 to Q4. Do you think that, that pattern will persist this year without getting into the numbers or the magnitude? Or is there a risk that it could be lower sequentially? Erick DeOliveira: I'll take that one, Paul. I think that this is really where the government shutdown looms as a huge wildcard. And because our revenue recognition is tied to actual shipment and fulfillment of product and very little of our revenue is ratably recognized, it is, at least as of today, an unanswerable question. You're correct that typically, we see a sequential increase in revenues into Q4 or at least relatively strong revenues that come from fulfillment of orders that came in late in Q3. The government shutdown just means that the timing of those shipments continues to be up in the air. Operator: And our next question coming from the line of Rohit Kulkarni with ROTH Capital Partners. Jared Osteen: This is Jared Osteen on for Rohit. And going a little bit deeper into the several recent developments within the Workforce and CTE segment, could you walk us through some of the ones you're most excited about and generally how CTE traction has been trending? Paul Kellenberger: Let me take that one, Erick, to start. And if you want to add in numbers by all means, do so. Jared, as I was saying earlier, the -- I'll say the vibe in the CTE segment and a lot of the CTE market, again, the way that we go to market, there's really 2 segments. One is the K-12 CTE market and the other one is in the community colleges and other type groups and workforce development. The K-12 CTE business, right now, and there are a number of deals that we have that were pending, I'll say, funding confirmations. And I think what's changed in the business -- and by the way, again, the CTE funding, it's the one that's supported -- got bipartisan support, and we feel good about that side of the business. On the K-12 CTE side of it, that side also, I'd say, has been somewhat slowed down than the normal pace, mostly because CPE directors still report to a superintendent and the superintendent is the one leading the K-12 district. But again, we feel bullish on it. So it might have slowed down a little bit. The biggest piece that continues to resonate with our customers, and we've been talking to many of them is this Career Explorer application that we announced. I know we discussed it and we've been shipping and it's in the market now. And it is really the launch point for us, for careers. And it could be careers and skilled trades. And as we previously have released and announced, we've got -- we're using AI. We're working with OpenAI and using AI within Career Explorer. Our plan is -- and again, this is in the public domain, to release all of our applications and embed AI into the applications, and that's something that we're working on now. So I think the Career Explorer piece within CTE is extremely well, strong reception. There's the largest annual conference coming up in December, ACTE. And I think, come the next quarter, we'll even have some more detailed answers to your questions once we get through that. Erick, I don't know whether you want to talk about any other numbers. I know we -- you talked about the CTE business quarter-to-quarter. Erick DeOliveira: Yes. Since you brought up Career Explorer, I think the one thing that I'd note there that's encouraging is you'll recall back in Q2, we announced that at the very beginning of Q2, we closed on an acquisition for Second Avenue Learning. And we'd indicated that part of the purpose of that team was to drive road map acceleration and bring new products forward soonest. Our career exploration product was delivered by that team and put into the market in Q3. So very rapid go-to-market from the conception of that idea to actually fielding it through our sales team. And the bookings, I believe -- or bookings, we've actually delivered low 6 figures in value for that product alone. I think that part of that is encouraging just internally from us that we got a product to market that quickly. But I think also it highlights how well positioned that is that the CTE market is hungry for the kinds of tools that will not only accelerate students through training to the qualifications they're seeking, but also the kinds of institutions that are looking to help guide students into the right programs that are most suitable for them. So part of that is us being very pleased that having done a good job at bringing that product to market. The fact that we're finding a very receptive market and that we've actually concluded sales within 6 months of closing on Second Avenue, I think highlights that we're well positioned for growth in that segment going forward. Paul Kellenberger: By the way, Jared, one other detail, really tactical, but you probably noticed within the last 6 weeks or so, we announced, I'll say, a broadening of our suite in the robotics applications area. Next week, we'll drop another press release on another important area within the CTE that is going to broaden our offering as well. Jared Osteen: Great. And then you recently announced the global availability of the Inspired laptop. Could you discuss how the international segment is contributing to the business? And separately, whether you're seeing any remaining tariff or supply chain challenges? Paul Kellenberger: So let me take the first one about the international piece of it. And then Erick, I'll let you take the tariff piece. Internationally, I would say we've always had very strong demand. It's not an area where we, quite frankly, have really focused or invested. And obviously, given the disruptive year we've had this year, so far in the U.S., we have given it a little bit more focus. And in one of the recent press releases, we talked about our partners in Italy, Bulgaria and Poland. Part of the GEMS focus; and again, GEMS is headquartered in Dubai, and it's very much a premium-oriented private school system; is, for us, to expand internationally. And so I think you're going to see more and more of that coming, and we've got more and we're building more and more of a pipeline in that area. On the tariffs, I'll hand that over to Erick to cover the second part. And if you didn't cover it, Jared, to your satisfaction, you can follow up with some of the questions. Go ahead, Erick. Erick DeOliveira: Yes. I think the tariffs were most disruptive to the sales motion in Q1 and early Q2 when they were moving around so much and remained unsettled. Where we are now in Q3, and you'll see this in our filings, they have an impact of about 1 percentage point of gross margin. We've been treating the tariffs for the most part as a pass-through on a dollar basis, but that still creates a small amount of gross margin compression just because we're not marking up the tariff impact to us. You'd asked about impacts on supply chain as well. We haven't really noticed so much of a dislocation in terms of supply chain as a result of tariffs. The bigger impact is coming right now from just uncertainty in how education funding ultimately flows from federal level funding vehicles down to individual schools where a superintendent can make those decisions. And at that level, tariffs less of a factor, funding more of a factor. On the P&L, tariffs do show up as a factor, but relatively modest impact to gross margins given the other tailwinds that we've picked up on a profitability basis. Is that helpful? Jared Osteen: Yes. And then I think last quarter, you had spoken about shifting some of the manufacturing of core components from China to Thailand. Can you talk to whether that started to become a benefit or where we're at on that? And then also with the hinting of new hardware coming out, can you talk to anything new about where we should expect margins to trend from here with that? Paul Kellenberger: Erick, how about I take that first, and you can add to it. I'll let you talk about. Erick DeOliveira: Yes, I'll come back to the margins. Paul Kellenberger: You will see a press release coming out next week, Jared. And this is -- when we talk about hardware, it's not the laptop, but it's the interaction component. And it is somewhat in the public domain, but it hasn't formally been press released. And this is the new stylus. So you will read more about it next week. I've been actually showing it to a number of people, and people are calling it game changing. So we think it's going to be -- it's going to simplify everything with the way people use zSpace. And so I think it's super, super impactful. Erick can talk about the margin piece of it. Erick, do you want to take that part? Erick DeOliveira: Yes, I'd be delighted to. So the key drivers of our margin expansion, we've talked about this before. One is the mix between software and hardware. You saw that very much in evidence this quarter. Every year going back, that's been responsible for 200 to 300 basis points of margin expansion. Structural factors within our software and our hardware revenues. On the software side, as we bring more first-party content to market, you'll see that be a driver of software and software COGS as we break them out in our Q. On the hardware side, the way to think about this is not an ongoing upward slope, but a sequence of step changes as new hardware is introduced at the laptop level with improved price performance characteristics. With the new tracking device, the new interaction device, you should expect, again, a small, modest but measurable and structural improvement that will show up as a step change improvement in hardware-related costs going forward. And the big appeal as we see here is, firstly, in the user experience, Paul alluded to that. It's exciting. It's a much better user experience. Secondly, in terms of logistics, there are fewer -- there will be fewer peripherals to manage, which if you're an IT director in a school district, that's going to be attractive. And obviously, that creates opportunities for us where less hardware in the ecosystem is less costly. And as there are fewer boxes to ship as part of providing a solution, delivering a solution to a school, we expect to see shipping and handling improve as well. So again, modest changes, but structural, and you'll see a onetime step-up improvement that should be sustained in future reporting periods. Operator: I'm showing there are no further questions at this time. I will now turn the call back over to Mr. Paul Kellenberger, for any closing remarks. Paul Kellenberger: Thank you. So this concludes our earnings call, and I just want to thank everybody for participating. And we're looking forward to the next one and getting through the fourth quarter here and through 2025. Thanks to everyone. Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Greetings, and welcome to the BioHarvest Sciences Third Quarter 2025 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described on the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-IFRS financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable IFRS financial measure is included in today's earnings release, which is available on the BioHarvest website under the Investors tab. On our call today is Chief Executive Officer, Ilan Sobel; and Chief Financial Officer, Bar Dichter. I would now like to hand the call over to CEO, Ilan Sobel. Ilan, the floor is yours. Ilan Sobel: Thank you, operator, and good morning, everyone. I'm pleased to welcome you to today's third quarter 2025 corporate update conference call. Q3 2025 was underscored by continued robust operational performance. We delivered revenue growth in line with our targets and moved closer to our near-term goal of achieving adjusted EBITDA breakeven. Total revenues increased 39% year-over-year to $9.1 million in the quarter, in line with our guidance with our total U.S. VINIA active user base now exceeding 75,000 customers. This growth was fueled by sustained momentum in our core VINIA capsules, the expanding success of our VINIA Inside product portfolio and an increasingly significant contribution from our CDMO customer base. For those less familiar with our company, BioHarvest is the inventor of Botanical Synthesis, a patented non-GMO platform that produces highly potent plant-derived compounds without needing to grow the whole plant. This technology enables us to create consistent bioavailable products at industrial scale, serving high-value markets across pharmaceuticals, nutraceuticals, cosmetics and nutrition. We operate 2 synergistic business verticals. First, our direct-to-consumer products division, which includes our flagship VINIA nutraceuticals; and second, our services division as a CDMO, where we partner with other companies to develop novel plant-based compounds. This dual model positions us to drive revenue both from our own branded products and from B2B partnerships, leveraging our unique technology. Now turning back to the third quarter, let me share with you some key facts which help explain the quality of our growth in the products business, which increased overall by 30% versus previous year. The core capsules business accounted for 88% of product revenues with new products representing the remaining 12%. Core capsules growth represented approximately 70% of total product revenue growth with new products contributing a significant healthy approximately 30% of growth, fueled by strong double-digit growth in tea and coffee businesses and the successful launch of our VINIA 2X Formula Chews, which today has a record review rating of 4.8 out of 5 on Amazon. I'd like to now take a moment to highlight three key growth drivers that defined our Q3 performance. Our CDMO business is playing an increasingly important role in our growth with milestone-based project revenues compounding this quarter and together with new deals represented nearly 25% of the company's revenue growth for the quarter. Notably, we secured an exciting new CDMO partnership to develop saffron-derived compounds with Saffron Tech, in which BioHarvest will retain a 25% ownership of the resulting saffron compound. This collaboration is running Stage 1 and Stage 2 of our process in parallel to accelerate time to market. For context, saffron is known as the world's most expensive spice often retailing for over $10,000 per kilogram due to labor-intensive cultivation and limited supply. Our Botanical Synthesis technology has the opportunity to overcome these supply constraints, providing a unique high-value opportunity in this market. Beyond saffron, we continue to advance a robust CDMO prospective customer pipeline with several other target compounds, and we expect additional partners could onboard in the coming quarter. Now turning to the product side of our business. To further drive VINIA's growth in Q3, we launched Phase 1 of our VINIA Health Pros professional affiliate program, creating a new network of health practitioners, athletes, coaches and wellness influencers who are passionate about VINIA. The early response has been very encouraging. We have already onboarded 75 Health Pros to date, and we're targeting approximately 300 by year-end as we launch Phase 2 of our onboarding process. These professionals effectively become a VINIA professional sales force, introducing our VINIA products to their clients and followers in return for earning a high-teen commission on all sales, costing us significantly less in marketing spend. We believe this professional affiliate program will amplify our reach and credibility in the health and wellness community, and we are preparing to enter a more aggressive Phase 2 of this program following the success of our initial Phase 1 onboarding. This week, we continue to advance our VINIA Inside strategy by providing our customers with exclusive early access to our VINIA BloodFlow Hydration Solution, which we believe has the potential to be a major category disruptor and driver of significant incremental revenue for the company. We began a VIP early adopter rollout on November 10, ahead of a broader market-wide public launch on December 3. This product extends the VINIA brand into the $17 billion U.S. electrolyte hydration market. The line features six great tasting flavors and leverages VINIA's core competence of driving better blood flow, which is so critical in delivering hydration benefits by ensuring the effective transportation of fluids and electrolytes to the body's organs, tissues and cells. We are configuring our marketing stack and e-commerce platform to support an aggressive rollout of this exciting new product as we work to uniquely differentiate our BloodFlow Hydration solution versus competition, anchored in our delivery of unique benefits such as increasing dilation of arteries and improving blood flow, improving physical energy and mental alertness, regulating body temperature under heat and stress. This product is backed with a 90-day money back guarantee if consumers do not love the taste or feel the VINIA difference. Early feedback from our VIP users has been very encouraging, and we're confident that VINIA BloodFlow Hydration will open a significant new revenue stream for BioHarvest. In addition to these growth initiatives, gross profit margins continue to benefit from scale increasing to 61%. We remain disciplined and focused on taking every possible action to drive costs out of the manufacturing and distribution side of the business as well as controlling OpEx and G&A. On the capital markets front, over the last 2 months, we executed a series of strategic transactions to fortify our balance sheet. In September, we completed a $14.7 million strengthening of our balance sheet with an injection of USD 10.9 million of gross proceeds and an additional $3.8 million in debt reduction via accelerated warrant exercises and debt-to-equity conversions, which significantly reduced our debt and warrant overhang. Leveraging that momentum, earlier this week, we closed a successful $19.9 million institutional equity financing, marking our largest financing ever and the first to bring institutional investors into our shareholder register, bringing total gross proceeds from these combined efforts to roughly $30.8 million. This transaction fully funds the company for our next growth phase, giving us the strength and flexibility to accelerate our direct-to-consumer health and wellness business, including the required funds to triple our manufacturing capacity and drive our growing CDMO services business. It also diversifies our shareholder base, enhances trading liquidity and confirms that BioHarvest now firmly belongs on the big stage of NASDAQ. Looking ahead, we remain laser-focused on closing out 2025 on a high note. We currently expect to deliver in fourth quarter revenue in the range of $9 million to $9.5 million and adjusted EBITDA between negative $0.6 million and 0, essentially breakeven. If not in Q4, this milestone is extremely close and will be delivered in early 2026. Achieving positive adjusted EBITDA has been a key near-term objective for us, and we are consistently pushing forward on this important financial outcome every day. With that, I'll now turn it over to Bar to walk through the financials. Bar, over to you. Bar Dichter: Thank you, Ilan. Good morning, everyone. I will provide you with a succinct review of our financial results. A full breakdown is available in our SEC filings and in the press release that crossed the wire before market opened today. Please note that all figures are in U.S. dollars unless stated otherwise. Revenue for the third quarter of 2025 increased 39% to $9.1 million, in line with management revenue guidance as compared to $6.5 million in the third quarter of 2024. Third quarter product revenue grew 30% to $8.4 million, while CDMO revenue grew 722% to $0.7 million. Gross profit increased 50% to $5.6 million or 61% of total revenue in the third quarter of 2025 as compared to $3.7 million or 57% of total revenue in the same year ago quarter. The increase in gross margin was primarily due to the benefits of increased manufacturing scale and improved manufacturing yields. Total operating expenses for the third quarter totaled $6.5 million as compared to $5.8 million in the same year ago quarter. The increase in operating expenses was primarily due to increased marketing spend and the development of the Health Pros affiliate programs to support future revenue growth and higher expenses for the CDMO service division, which partially offset by lower general and administration expenses. Net losses for the third quarter of 2025 totaled $2.5 million or $0.14 per basic and diluted share as compared to a net loss of $2.7 million or $0.16 per basic and diluted share in the same year ago quarter. Adjusted EBITDA loss, a non-IFRS measure, totaled $0.4 million in the third quarter of 2025 as compared to an adjusted EBITDA loss of $1.7 million in the same year ago quarter. Cash and cash equivalents as of September 30, 2025, totaled $11 million as compared to $2.4 million as of December 31, 2024. Subsequent to the close of the third quarter, the company fortified its balance sheet with $19.9 million in gross proceeds from an institutional equity raise in November. Importantly, with current margin momentum and expense discipline, we continue to project that we will reach adjusted EBITDA breakeven in the coming quarters. This inflection is a key financial milestone for validating the scalability of our business model. I would now like to pass the call back to Ilan to offer some closing remarks, after which we will begin our Q&A session. Ilan Sobel: Thank you, Bar, and thank you all for joining us today and for your continued support of BioHarvest. We are executing against a clear plan. Our direct-to-consumer engine is scaling. The Health Pros program is expanding our reach with more efficient customer acquisition and the VINIA BloodFlow Hydration launch opens new doors accessing a multibillion dollar market with an incremental customer base. In parallel, our CDMO pipeline is advancing with the Saffron partnership and additional prospects that can translate milestones into durable revenue and often an economic interest in the underlying molecules we hope to create. The recent capital formation simplifies our capital structure, fortifies our balance sheet and gives us the resources necessary to invest in strategic CapEx to expand capacity and capabilities. We will prioritize additional bioreactor capacity, process automation, quality systems and the tooling needed to support both VINIA growth and CDMO scale. These investments are designed to improve throughput and increase gross profit margins. The near-term priorities are straightforward: execute the VINIA BloodFlow Hydration rollout, scale Health Pros quickly, convert additional CDMO customers and advance projects with existing clients and keep tightening our cost base while we scale. We will judge ourselves on revenue growth, gross margin progression, adjusted EBITDA trajectory and cash discipline as we work towards achieving the critical adjusted EBITDA breakeven target in the near term. With that, operator, please open the line for questions. Operator: [Operator Instructions] The first question comes from Matt Hewitt with Craig-Hallum Capital Group. Matthew Hewitt: Maybe first up, could you kind of help us with what to expect from a ramp with the new hydration product? Obviously, you've got it in some initial customers' hands. But as that gets broadly launched on December 3, how should we be thinking about kind of the uptake from that point? Ilan Sobel: Thank you for the question. So let's step back. I mean, this is a monster category, $17 billion category in the U.S., the electrolyte hydration category. You've got the largest player being Liquid I.V. that sits on about $1 billion of revenue. Other major players like [BevNology] sitting at about $200 million of annual revenue. Obviously, very, very competitive category. We are doing a stage launch. So starting Monday this week, we launched VINIA BloodFlow Hydration to all of our existing customers to give them a sneak preview and almost like a VIP opportunity to purchase. We're doing this through a series of very engaging e-mails. All of these people obviously are part of our e-mail database, and this is a very efficient way to reach them. And I must say, in the last 4 days, we've had a great response. very, very encouraging response. And we will be shipping out product to them around about the middle of next week. The products will be shipped out, and then they'll start to consume the product and experience really the amazing overall sensory performance of the product. We will then December 3, start turning on all of our assets. So all of our assets, marketing assets, everything from TV assets, so short form as well as long form, as well as YouTube, Instagram, Health Pros will all start to basically drive the multiplier effect of driving BloodFlow Hydration. So we should start to see it ramping up in December, and that continued to ramp up in the first quarter. We -- it will take time for us to get it on to Amazon just purely because this is Amazon's most critical sales period, and it takes a long time for the product to reach through their distribution system. So we don't expect to see any Amazon revenue coming on board until early January. And then we've also, through our Health Pros affiliate network, we're very, very focused on signing up gyms and other points of sweat, and those will start coming on board literally as we speak. So what you can expect to see is a quarter-on-quarter ramp-up. Definitely, the focus for us from a marketing communications perspective will be heavy weighted BloodFlow Hydration because we really believe in this opportunity. And we'll be putting all the required resources towards it. And basically, we'll see a ramp-up every single quarter and largely also not just through the driving top of the funnel customer acquisition, but we really believe, just given the uniqueness of the proposition, anchored in BloodFlow Hydration, really, it's the first hydration product, which is powered by circulation, powered by blood flow that there will be a significant organic focus, not just through our influencers, but just purely just given the PR value and the unique nature of the proposition. Matthew Hewitt: That's super helpful. And then kind of shifting gears to the CDMO opportunity. Congratulations on the Saffron Tech agreement. I noted that you're planning to run the Stage 1 and Stage 2 in parallel. What comes after that? Is there another stage? Or at that point, would you have product that you believe you could start to sell? I'm just trying to think about for fiscal '26, how that opportunity might shake out. Thank you. Ilan Sobel: That's a great question. So partnering with Saffron Tech really is kind of like a glove fitting on a hand for us because they're obviously very local here in Israel. They have developed significant technology utilizing vertical agriculture, indoor agriculture to -- indoor agriculture to be able to grow saffron at a very high premium grade with very high active levels indoor. And therefore, we have the plants on our doorstep, which allows us to move very, very fast. They also have great plants from an overall bioactives perspective, which is critical for us. And so we're going to be running two swim lanes with them. They themselves have already done a set of tissue culture work, and we will take their existing tissue culture work and move that into our Stage 2 -- into our Stage 2, which goes from solid media into liquid media. So in a way, that gives us basically a 9-month head start that we could then take their existing cell bank and work to optimize their existing cell bank into the transfer into liquid media, into [indiscernible] and small and medium bioreactors. If we're successful at that stage in driving the mirroring and the magnification, which is part of our Botanical Synthesis technology, then we will move very quickly to large-scale bioreactors. And I believe based on our success in the past, we can get a product to market relatively quickly. So this is leveraging the power of their existing capabilities Secondly, we will go back to their plant and start and do Stage 1 ourselves, leveraging our unique IP and know-how on how to drive the mirroring and the magnification at a -- specifically at a tissue culture level. So we're kind of in a way, got two horses in the race, two tracks. And we're obviously trying to bring the optimized product to the market, which ultimately we believe is going to be an opportunity to bring a super saffron to the marketplace. In a way, Matt, do on Saffron what we did on Resveratrol. Our Piceid Resveratrol is kind of like a super Resveratrol with greater solubility, greater bioavailability and obviously, the fact that we have Piceid levels 100x the levels of what's found in the red grape. So we obviously, for us, the vision is to do a super saffron and then be able to bring product to the market through the power of BioHarvest e-commerce machine and also play a critical role in the joint venture that we own 25% of to be able to bring the product to market from a B2B perspective at very, very high margins. Operator: The next question comes from Nick Sherwood with Maxim Group. Nicholas Sherwood: Kind of I guess my first question will be, how many of the other pre-existing CDMO contracts are nearing Stage 2? I know that I believe it was the pharmaceutical company had moved to Stage 2, but there's also an existing cosmetics company agreement and then the Tate & Lyle agreement. Can you kind of give an update on some of those other pre-existing CDMO agreements? Ilan Sobel: Yes. Thank you, Nick. So let's first talk about the -- we call it -- let's call it the cosmetic fragrance space. Obviously, we're under a strict NDA. We can't get too specific. What I would tell you there is that we're making great progress. We have actually accessed multiple plants around the world. In fact, our R&D team came back on Thursday from a specific country that will remain nameless where they were actually doing work at a tissue culture level in the country, in local laboratories, which is a unique change that we've made in our overall methodology as it's more efficient than trying to bring plants through the transportation system. And so we're making continued good progress in building the cell plates -- and now we've got to give the plates the required time to basically let biology do its work with obviously the different know-how that we apply to influence biology. In the case of Tate & Lyle, we've already accessed one plant, and we're making progress. And actually, now we're in the process of sourcing a second plant as part of our relationship that we'll be working to bring to the table as part of this overall deal in order to get -- gives us a better chance of getting at least one over the line into Stage 2. Nicholas Sherwood: Okay. Yes. That sounds like a lot of work is going on there. And then also on the CDMO side, can you kind of just give an update on any increased interest you've experienced from potential partners after the release of the exosome creation announcement? And just sort of also, can you talk about how that technology has developed further since you -- announced it? Ilan Sobel: So just generally, from a CDMO perspective, the pipeline is rich. I think we're really fortunate that just given the multitude of factors from a global perspective, the world is really understanding the critical importance of going back to the future in the sense of actually going back to the plant kingdom. And so as a result, we're seeing a significant amount of pharmaceutical customers all the way through to nutraceutical and cosmetic customers who are now really looking to find life-changing compounds from plants. And obviously, we at BioHarvest with our Botanical Synthesis technology, we have the critical role to play as the bridge between the plant kingdom and the industry and bringing these life-changing compounds to these customers given our ability to produce with consistency, with economic viability and with the patent protection that they're looking for. So Nick, the pipeline right now is intense. The deal flow is significant. It's a lot of work that we have to go through in order to make sure that we're prioritizing our R&D resources on the right big bets. And I think when you look at the nature of the four deals that we have already signed and you look at the potential revenue, the overall royalty revenue from a manufacturing agreement, you start to understand that if we're able to get these compounds all the way through into manufacturing, these are significant, significant multibillion-dollar industries where the overall royalty revenues are very, very meaningful. So right now, we believe we will announce another deal before the end of the year. And there's a number of opportunities that are quite deep in the pipeline. So that just gives you, I think, just a perspective on the pipeline and on what's coming in the immediate term, I would call it. And then understanding that there's a lot that we're working on that will bleed into the first quarter, but really significant opportunities. And we're seeing major titans of industry, companies that are significant leaders in the industry who are now looking in a way at the validation of what we've delivered and achieved in our VINIA, overall VINIA operating model and looking at how they are able to do something similar across their different industries that they're operating in. So it's really helpful for us to have VINIA as a great validation of the power of our Botanical Synthesis technology. As it relates to exosomes, look, the exosomes opportunity is for us in the medium term is significant. It's not short term, but it's more medium term. We are currently now doing further work -- in the process of doing further work to really understand the downstream implications on how we most effectively move to actually drive the ultrafiltration process to be able to remove the exosomes from the media. And obviously, this is going to be an integral part of the process development work that we need to do over the next 12 months as part of the engineering design work for our new manufacturing facility that we -- as a result of the capital raise that we've done, we will start to aggressively move forward with final overall engineering design, design drawings to start to actually build that facility. And obviously, the downstream exosome component to be able to go from exosome in a bioreactor all the way through to actual exosomes ready for market, that downstream process will be a critical component of our new facility. We have seen significant demand. What it also helps us is that for our CDMO customers and our future customers in our pipeline, there's really an opportunity for them to get, in a way, buy one, get one free or in the sense of us also being able to really deliver more value because when we go after a specific life-changing compound from a plant, not only are they going to get the unique composition from the actual cell but they have an opportunity of also being able to leverage the power of the exosomes that those cells are actually producing. So there's significant incremental -- the value proposition that we provide now to our CDMO customers, obviously, specifically in the cosmetic industry and in the nutraceutical industry has been significantly strengthened, and that will allow us to get more deals over the line, create more value and even potentially allow us to take some pricing realization because of the significant incremental value that we're taking. And we're just trying to figure out what the right balance is right now on that. And part of that is a learning process. Nicholas Sherwood: Okay. Yes. I mean it sounds like a lot of really exciting progress. And then my last question is, can you just talk about some of the early success you've had with the Health Pros program? Any positive trends and maybe click-through rates from your Health Pros? Or have you found the recruitment for the Health Pros to kind of be accelerating as that program has been active longer since we last spoke? Ilan Sobel: Yes, that's a great question. So look, the focus for us in Phase 1 on Health Pro was getting the technology perfect. Because when you're taking a doctor and you're onboarding a doctor into the whole, let's call it, Health Pro ecosystem from actual onboarding, getting all of their account details, taxation, social security numbers, educating them on the brand, educating them on what they can say, what they can't say, all the way through to providing them with specific materials to help their creative process we had to make a significant investment in development, technology. What many of our investors see, obviously, is the technology being the Botanical Synthesis and how we bring Botanical Synthesis to market through our e-commerce machine. But behind all of this is a huge amount of technology that we've built across each of the different aspects of our business. So over the last four months, we built like an end-to-end affiliate system with a very seamless onboarding process so that we can scale this. And we wanted to make sure that the overall user experience for all the doctors, the coaches, the nutritionists was a very, very good experience. And that's why in Stage 1, we onboarded 75. We learned, we did interviews. We understood where some of the issues were, and then we overlaid additional development work, which we've now finished. And now we're about to ramp it up. Between now and the end of the year, we want to bring on 300 Health Pros. What we have found is that, obviously, these -- the Health Pros that have significant ecosystems of social media followers that are highly engaged when those Health Pros are posting information about VINIA, talking about the science, talking about the benefits. We're starting to see a very significant funnel build and very high conversion rates because of the trust-based relationship between these Health Pros and their social media ecosystems. And we started to see -- you talked about click-through rates, very good click-through rates and more importantly, very good conversion rate. And for us, it's a cost of acquisition, which is significantly lower than some of the other channels that we have. So for us, the next six weeks are critical. Also a really important product for the Health Pros is our hydration product. So now we have basically the integration of the hydration product coming out, Health Pros coming in. And because of just the ability to scale the hydration product, given the size of the category, every hydration is relevant to such a broad cross-section of consumers that it gives the Health Pros something to start to talk about, start to sell and actually start to see the scaling. And we've actually also built a model now to be able to show the Health Pros what the recurring revenue looks like for them as they start to bring on board customers because our business is a subscription business. So we want to show that you bring on 100 customers now, right? This is what you get today, but understand you're going to get this in 3 months, this in 6 months, this in 12 months. And that's very, very important. That's part of the education so they understand the size of the -- or the return on the time that they're spending. Operator: [Operator Instructions] The next question comes from Susan Anderson with Canaccord. Susan Anderson: I guess maybe just a follow-up on the CDMO business. It sounds like there's definitely a lot of interest there. How are you thinking about that business longer term as a percent of the total versus where the product revenue is at right now? And then also, have you talked about the difference in margin of that business versus the product revenue? Ilan Sobel: Susan, thank you. Two very good questions. So look, let's just try and just dimensionalize like what does the business look like in, let's call it, 5 to 7 years. We really see that, obviously, as we continue to bring more deals through the pipeline, we're not going to be able to convert every single deal. We build into our economics roughly a 40% success rate. So 4 out of every 10 deals we bring in, we'll be able to develop those compounds. We start to see end of '27, '28 those compounds coming to life and really starting to see the magnitude of revenue coming from royalties. Important to note that in Stage 1, Stage 2 and Stage 3, there's still meaningful revenue, as you see already from today's announcement, there's meaningful revenue that we're able to recognize. And also, we do make money. In Stage 1, we make money. In Stage 2, we make more money. In Stage 3, we make more money as the work becomes more efficient. And then obviously, the huge upside is in the royalty-based manufacturing revenue. And just remember, on a number of deals, we also have a piece of those specific compounds as a result of the structural agreement that we have with those companies. So like, for example, in the case of Saffron, we own 25% of the future compound that we will be developing. So for us, we will see, whilst today, the large proportion of the revenue, obviously, is coming from the products business, we'll start to see, I believe, this flipping over time, whereby in the course of the next 5 to 7 years, probably 75% of the revenue will come from the CDMO, 25% from the products business. But obviously, the size of the pie is going to obviously be significantly larger. From a margin perspective, where we see and specifically, you've seen we've been very purposeful and strategic on the compounds, life-changing compounds that we're going after with our technology. We're not going after the coffee, we're not going after cocoa. We're going after really strategic profit pools where our technology has the greatest utility value. And when you look at the margin structures that we will be able to achieve from a royalty-based manufacturing revenue, it's significantly north of 70%. You're looking at 70%, sometimes going up to 80%. And obviously, this kind of business has a significant earnings multiple versus the direct-to-consumer business where today, we're around about that 60% mark. We do believe we will move it over the course of the next 6 to 9 months, closer to 65% with a potential of getting even further with scale. But the CDMO business, just given the nature of the business and the very strategic surgical approach we have to the selection of life-changing compounds we're going after, combined with the ownership that we have in the compounds, this is when you start to get to those kind of margins, which are north of -- well north of 70%. And ultimately, we're going to drive that mix very, very hard. And it's also -- and I'll leave you with this, anchored in the North Star of the company because if you look at the North Star of the company that drives us every single day, it's all about discovering, developing, manufacturing. And then for me, the most important word is democratizing life-changing compounds to affect the lives of hundreds of millions of people from a health and wellness perspective. And whilst our direct-to-consumer business is a great business, and we've been really successful in the U.S., and we will scale to other markets over time, the CDMO is going to get us to touch with our compounds, the tens and hundreds of millions of people. And that's what we're really, really focused on ultimately as the future of the company and the North Star that we're tracking on. Susan Anderson: Okay. Great. That was very helpful. Maybe if I could just follow up on the VIP early adopter launch of the VINIA BloodFlow Hydration. I'm just curious if there's been any feedback from the early adopters or learnings that you've come across that you maybe can apply to the overall launch? Or just any color on how that's gone so far? Ilan Sobel: Yes, sure. So literally, we started on Monday evening. We sent our first e-mail out to our existing customers, giving them basically special rights to be -- to have access to the first 1,000 variety packs. And I would say we've sold a significant amount of those variety packs as I sit here on Thursday evening with not a lot of effort. Just one e-mail is going out. We have another e-mail going out in a few hours' time, all talking about the different aspects and benefits of the BloodFlow Hydration proposition. What's going to be critical is when those people receive their first shipments, their overall reaction to the product. First of all, the sensory reaction to the product. We've worked endlessly. This is a 2-year project. We've worked with probably the best of the product developers of the Coca-Cola Company, Louis Heinsz, who's partnered with us. Louis runs a company called BevNology out of Atlanta. I personally made about six trips to Atlanta to drive the optimization of the product. And we really believe this is going to be the best tasting product in the category. And then obviously, we've got all the benefits of VINIA in the product. So you've got hydration powered by BloodFlow. And as we know, you've got to have really good blood flow to be able to transport all the fluids and the electrolytes to your body, tissues and cells. So it's a very strong, simple, easy-to-understand proposition for consumers, and we believe quite differentiated and disruptive. And obviously, for us, leveraging the power of our marketing machine we're cautiously optimistic that this is going to build a significant future revenue base for us. What's going to be critical is that the first moment of truth for the consumers. What we are seeing is when people are going to our landing page, we're seeing a really good conversion rate. So that's pretty encouraging. The next step now is the repeat purchase rates based on the overall flavor profile and the efficacy of the product, which we know delivers because it's got the equivalent of one capsule VINIA in every single stick pack plus all the benefits of the naturally sourced electrolyte. So we've done a lot of homework on this. We've put all the right building blocks to drive differentiation. We're focused on learning from every single step to make sure we scale smarter. But the initial signs -- the early, early initial signs are encouraging. And importantly, everybody that consumes this product, they love the taste. And I'll give you one small anecdote. We were -- we had like a shoot with models where we were shooting obviously, multiple different scenes with them consuming the product. And what the producer told me is that like normally, when all the models come in and they have to drink a product, they just take a sip because they have to. They've got to do it as part of the overall -- their job. They had to do consumption shots. And what they said is that with our product, people were just drinking and enjoying the product and literally taking extra sachets or stick packs of the product. So all these anecdotal feedback on the taste is very, very encouraging because when you're dealing with a product like this, taste is king and then efficacy is so critical. So early signals are encouraging, but watch -- we all got to watch the spot. Susan Anderson: Okay. Great. Yes, I remember tasting it at our conference, and it does taste really good. Last question, I guess, for me, I wanted to just see if there is a time frame or how long you think it's going to take to get to that Phase 2 of the Health Pro affiliate program to get to that 300? Like when do you think you'll reach there? What time frame are you expecting... Ilan Sobel: In our company, I think our shareholders understand this, we're very operationally focused. And we -- in our company, we work on missions. We have like missions. And one of those missions now is 300 Health Pros by December 31. And we have a team working on that. We have resources working on that. So that's the mission that I've set the marketing organization and I believe we can do that. We have access to the ecosystems. We have the right people bringing in the networks. We're now working on trying to convert. We have one network of gyms, over 200 gyms across the U.S. So we're working to convert gym by gym. And it's -- we'll be reporting out more about this, I guess, when we do the end of year results. But yes, this is an important milestone. And then when we get to 300, we'll move to 500. And from 500, maybe to 700, I want to get to 1,000 as soon as possible. I think now we have the product portfolio that really gives the Health Pro the ability to, in a way, generate scalable revenue for their time. Because these are people that are professionals. We're dealing with doctors, nutritionists, coaches, trainers, their time is precious. For them to go and post on social media, they're very professional. It takes time out of their day, and they've got to see the revenue coming in, in their bank accounts every single month. And now we have almost like the scale, the heft of products with hydration, with tea, with coffee, with capsule, with the chew business. And so this is now really -- we've been waiting some time to do this. It took us a while to get the technology right and to get the whole onboarding experience really perfect. So getting customer success and if they got a problem, there's a help line. Again, these are people that are busy people. So we've got to get the onboarding right. And now we have the portfolio for them to get the return on time, which is so critical for them. So watch the spot, 300 by the end of December, and then we'll ramp it up again. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ilan Sobel for any closing remarks. Ilan Sobel: So thank you, everybody. I appreciate you taking the time to be with us today. I personally enjoyed the questions. It's great to see all of our analyst partners really understanding the granularity of our business. I hope from the results that we've delivered to the marketplace as reflected in the Q3 results and specifically the events of the last four weeks where we had some significant milestones for the company that you'll start to see the continued maniacal focus on execution. Yes, we do have, as a result of a lot of hard work, the required treasury, the cash in the bank. The company is now obviously fully funded for all of our critical activities in the foreseeable future. That means that management can really focus another degree of intensity on executing and driving results. Those results are obviously anchored in continuing to grow revenue, continuing to squeeze every single possible margin point on the product side of the business and the CDMI side of the business as well as being very, very responsible stewards of resources to make sure we continue despite the cash that's in the bank, we continue with a culture of ownership to be really ensure we're spending every dollar in a very, very thoughtful way. And this is a commitment that I make to shareholders that there's going to be a really purposeful use of the funds. We are going to be using a proportion of the funds initially to start to build our second manufacturing facility, which we need to have operational by the second quarter of 2027. We are actually going to be building this in a modular way so that we're able to manage the capital very, very cautiously and carefully, and we'll continue to ramp up the scale as the business continues to scale, which I think is quite appropriate. And ultimately, this is going to allow us to deliver the revenue growth, the gross margin progression and the adjusted EBITDA trajectory and cash discipline that's going to get us to adjusted EBITDA breakeven in the near term and then continue to improve those margins in the medium term, so that becomes a really nice profitable business that ultimately is delivering on the North Star every single day. So -- thank you for your time. And on this note, I think we'll end the call. Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Research Solutions' financial and operating results for its fiscal 2026 first quarter ended September 30, 2025. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Beisler, Investor Relations. John Beisler: Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Research Solutions First Quarter Fiscal Year 2026 Earnings Call. On the call with me today are Roy W. Olivier, President and Chief Executive Officer; Bill Nurthen, Chief Financial Officer; and Josh Nicholson, Chief Strategy Officer. After the market closed this afternoon, the company issued a press release announcing its results for the first quarter of fiscal 2026. The release is available on the company's website, researchsolutions.com. Before Roy, Bill and Josh begin their prepared remarks, I would like to remind you that some of the statements made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Research Solutions' recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the company's future operating results and financial condition. Also on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. A reconciliation of those measures to GAAP measures is included in today's earnings press release as well. Finally, I would like to again remind everyone this call is being recorded and made available for replay via link on the company's website. I would now like to turn the call over to President and CEO, Roy W. Olivier. Roy? Roy Olivier: Thank you, John. The first quarter continued our progress in improving our B2B new logo sales teams as well as our transformation to becoming a comprehensive SaaS and AI solution for scientific research. It is the strongest organic first quarter B2B results on record. Total ARR for the quarter is up 21%, driven by that strong B2B performance. That performance includes closing some of the largest deals in the company's history, including new platform sales to Real Chemistry, a top 10 pharma company and others. This resulted in the company's ASP increasing and also contributed to driving our second highest quarterly adjusted EBITDA result as well as strong cash flow. I'd like to pass it over to Bill to walk you through the financial -- I'm sorry, the fiscal first quarter financial results in detail, and then I'll wrap up with some comments and outlook for the remainder of the year, and Josh will discuss our strategy. Bill? William Nurthen: Thank you, Roy, and good afternoon, everyone. Total revenue for the first quarter of fiscal 2026 was $12.3 million compared to $12 million in the first quarter of fiscal 2025. Our platform subscription revenue increased 18% to $5.1 million. The growth was primarily driven by a net increase of platform deployments from last year as well as upsells and cross-sells into our existing customer base. We ended the quarter with $21.3 million in annual recurring revenue, or ARR, up 21% year-over-year, which consisted of roughly $14.8 million in B2B ARR and approximately $6.5 million in normalized ARR associated with Scite's B2C subscribers. By Q1 standards, this was a strong quarter for ARR growth. Total incremental ARR for the quarter was $375,000 compared to $195,000 in the prior year quarter, which represents a 92% increase. Moreover, B2B growth was especially strong at $561,000 for the quarter, up from only $128,000 last year. While we did experience a decline in B2C ARR, last year's increase was relatively minimal in what is seasonally a challenging time for B2C growth. Additionally, on a positive note, we are also seeing an increase in B2C leads that are transitioning into B2B business. Please see today's press release for how we define and use annual recurring revenue and other non-GAAP items. Transaction revenue for the first quarter was $7.2 million compared to $7.7 million in the prior year quarter. You may recall from our fourth quarter fiscal year 2025 earnings call, in which we discussed an 8% decline in transaction revenue that we expected transaction growth to continue to be challenging minimally through the first half of fiscal 2026. As a result, the decline for the quarter was in line with our expectations and was actually a little improved over the decline we experienced in the fourth quarter of fiscal 2025. Our total active customer count for the quarter was 1,326 compared to 1,390 in the same period a year ago. Gross profit for the first quarter was $6.2 million, up 8% from the prior year quarter. Gross margin was 50.6%, a 270 basis point improvement over the first quarter of 2025. The increase is due to the ongoing revenue mix shift towards our higher-margin platforms business, which was also enhanced by expanding gross margins in the Platforms business. Platform revenue accounted for 42% of the revenue in the quarter compared to 36% in the prior year quarter. On a trailing 12-month basis, the company blended gross margin now stands at 50%. The Platform business recorded gross margin of 88.1%, a 70 basis point increase compared to the prior year quarter. We have been able to continue to expand gross margins in the Platforms business as our labor and hosting costs continue to increase at a proportionately slower pace than our revenues. Gross margin in our transaction business was 23.8% compared to 25.7% in the prior year quarter. The decrease was primarily attributable to lower copyright margins and lower fixed cost leverage due to the reduced revenue base. Total operating expenses in the quarter were $5.3 million compared to $5.1 million in the prior year quarter. Higher sales and marketing expenses were partially offset by lower general and administrative expenses and lower stock-based compensation expenses. We have made a concerted effort to keep general and administrative costs contained as we increase investment in other parts of the business. Net income for the quarter was $749,000 or $0.02 per diluted share compared to $669,000 or $0.02 per diluted share in the prior year quarter. Adjusted EBITDA for the quarter was $1.5 million compared to $1.3 million in the year ago quarter, a 16% increase. This was the second best adjusted EBITDA performance in company history and with Q3 and Q4 typically being our strongest quarters for adjusted EBITDA, we are off to a very strong start for the year. Turning to our balance sheet. Cash and cash equivalents as of September 30, 2025, were $12 million versus $12.2 million on June 30, 2025. It is important to note that during the quarter, we made our first payment of the Scite earnout, which consisted of $1.3 million in cash and the issuance of approximately 265,000 shares. Despite the cash outlay related to the earnout, we are almost back to where we ended Q4, which means our operational cash flow remains very healthy. Cash flow from operations was $1.1 million compared to $843,000 in the first quarter of fiscal 2025, a 31% increase. We continue to believe that we can grow our cash balance in fiscal year 2026, while also continuing to service the Scite earn-out from operational cash flow. Further, there are no outstanding borrowings under our revolving line of credit. As we look ahead, we are off to a good start for fiscal year 2026. As you may recall from our prior earnings call, I discussed some of the seasonality in our business with respect to adjusted EBITDA. Typically, we see a dip in adjusted EBITDA between Q1 and Q2 before rebounding to higher levels of adjusted EBITDA in Q3 and Q4 with Q4 usually being our best quarter of performance. We think that it is likely that this seasonality will play out again in fiscal 2026, but we think the dip will be less pronounced in Q2 from where it was last year, and there's also a shot at some EBITDA growth sequentially between Q1 and Q2. All that said, our goal remains to experience outperformance to fiscal 2025 in each of the remaining quarters for the fiscal year. To the extent we can execute on that, it will be another record year for the company, and we will continue to experience expansion in cash flows generated by the company. I'll now turn the call back to Roy. Roy? Roy Olivier: Thanks, Bill. A few comments about the transaction business. In last quarter's call, we discussed that we thought the year-over-year decline was driven by 0 click searches. Further research suggests that may not be the case. Our Academic segment is growing and the corporate segment is declining with about 60% of that decline coming from churned account. The remaining churn dollars are primarily 2 customers who are very large and are buying less year-over-year. Both report that this is based primarily on the current economic environment or changes in their research priorities. In short, 3 customers are largely driving the year-over-year results. As you know, we started investing about this time last year in more of B2B sales resources. We continue to actively monitor these investments to ensure that we are seeing a return on them. In looking at the first half of FY '25, actual results versus our current forecast for the same period in FY '26, we expect to see new ARR growth to be materially higher than the incremental sales investments we made. We expect the new logo teams to generate over $1 in new ARR for every dollar invested. We expect to see the churn upsell team generate a bit under $1 in new ARR for every dollar we've invested. This suggests a payback period of a little over 1 year on products that have a 6- to 8-year lifetime value. In my view, we need to continue to show improvement on the upsell churn teams, but overall, the investments we have made are working. As previously discussed, the new sales process is resulting in rising ASPs. We continue to set records in terms of total contract ARR and per seat ARR through better sales execution, especially with our AI-based products. While we saw less-than-expected B2C net ARR growth in Q1, we are starting to see more traction toward B2B strategic revenues from B2C. As you know, B2C are primarily month-to-month subscribers who are attending school or researchers in a corporate account that are trying out the product. We are seeing an increasing number of those users try the product and then report back to their academic or corporate enterprise that it should consider an enterprise subscription. A year ago, in Q1 FY '25, about 50,000 of our total sales pipeline came from this B2C to B2B channel. At the end of Q1 FY '26, over 1 million of our pipeline came from B2C. Now I'd like to turn the call over to Josh to talk a little bit about our current thinking on product strategy. Josh? Josh Nicholson: Thanks, Roy, and hello, everyone. I'm going to spend a few minutes connecting what we're seeing in the market to the strategic decisions we've been making over the last few quarters, especially around AI rights, Scite, Article Galaxy and our role with publishers. A few key trends worth calling out. One is enterprises want to use AI on their articles. Another is publishers are moving into AI licensing. Then a third one is the AI usage of articles is not being tracked. In response to these market trends, we have made various product additions, tweaks to our go-to-market offerings and made sure we're aligned with where the market is going. On the first point, enterprises wanting to use AI on research articles, we've launched an AI rights offering in Article Galaxy called [ RightsDel ]. RightDel allows the researcher to acquire AI rights for documents they already own. The revenue we charge for those rights is split between the publisher and research solutions in a similar manner to the transaction business we have today. This gives publishers a way to monetize AI usage of their content either on an article-by-article-by basis or across the company's existing library. We believe this will grow platform seat revenues, lead to more cross-sells, increased transactional purchases and ultimately decrease churn. On the second point, publishers moving into AI licensing, we are working with our publisher partners to offer an AI gateway product based on Scite, in which customers can purchase the rights to use AI with all of that publisher's content to materially improve the productivity of their research teams. This would create an ARR upsell opportunity for publishers in their academic and corporate customers and as a revenue share with research solutions while deepening our role as their AI technology partner. This is a major challenge for our industry, especially the long tail of medium and small publishers, and as we solve this gap, it could make Scite's smart citations a key part of AI infrastructure and a key partner to publishers. On the third point, AI usage of articles not being tracked. Today, the industry standard is counter-compliant usage metrics. These usage metrics show how many times articles have been downloaded or read, and they're central to how libraries and publishers assess the value and ROI of subscription spending. There is no equivalent for AI usage today. By working with publishers to deploy our AI gateway, we can introduce AI-specific usage metrics that play a similar role to capture for traditional usage, giving publishers visibility, creating a basis for pricing and value discussions and enabling a clear upsell and revenue share opportunity for AI analytics and rights on top of existing subscriptions. This would be a huge value to both the publisher and our corporate and academic users. Researchers expect tools like Scite Assistant and Article Galaxy to help them answer concrete questions, summarize bodies of work and find key insights across many articles using AI. We believe we're well positioned to do that in a copyright compliant way that delivers real value to customers while generating new sources of revenue for Research Solutions and our publisher partners. Thanks again for having me, and I'll turn it back to Roy. Roy Olivier: Thanks, Josh. Looking forward, we expect to focus on several areas for the remainder of the year. First, improve Scite B2C net ARR growth through product improvements, the pace of delivering those improvements, the marketing and sales messaging around our unique capabilities in this segment. Second, continue to show improvements in overall ARR growth and ASP growth through better sales execution and improving our products. Third, demonstrate improvements in the retention and upsell part of the business by driving proactive versus reactive customer engagement through better health scoring and product improvements. Fourth, continue to innovate in the transaction or dockdel space to return that business to a flat to slow growth business; and lastly, manage our cost structure to continue progress toward our goal of a weighted Rule of 40. With that, I'd like to turn the call back over to our operator for Q&A. Operator? Operator: [Operator Instructions]. Our first question comes from Jacob Stephan with Lake Street Capital Markets. Jacob Stephan: Nice quarter on the B2B growth and on profitability as well. I just want to talk about the attach rate on the AI rights add-on product. Maybe you could help us think through attach rate on kind of new logo deals versus kind of current customer add-ons? Maybe just part B of that question would be, how significant is that in the overall ASP uplift that we're seeing? Roy Olivier: Yes. I don't think we have a clear answer to either of those questions. The product is brand new. We've sold it only to some existing customers, and we are currently signing up more-and-more publishers to participate in that product. I think the next quarter or 2, we'll start to get better visibility on an attach rate. To your second question, there has been some industry chatter recently about what type of uplift on ARR SaaS or AI? Well, vertical SaaS companies expect by adding AI to their vertical SaaS solution. One of those studies suggests the uplift opportunity is about 50% of the ARR. As a reminder, our kind of AG business is about $11-point-something million in ARR, so that could be a material uplift. However, we have a long way to go before we really understand what the real rate is going to be. Bill or Josh, feel free to add to that. William Nurthen: Yes. I'll just say that it was not a big contributor to the ASP increase for this quarter. That was more the larger new logo deals that Roy talked about earlier in the call. Jacob Stephan: I'm wondering also maybe you could help us think through some of the overall product strategy shift in B2C. Maybe how are you planning to actually increase the attach rate and the net churn as well? That would be helpful. Roy Olivier: Go ahead, Josh. Josh Nicholson: I think from the product perspective, how we got to success was pretty critical on every single aspect from sign-up to completion of using, say, Scite search or Scite assistant. I think we lost a little bit of that and slowed us down in kind of the velocity, and so we're back on pace and I think rigorously looking at every single metric from sign-up to conversion and rigorously testing, right? A lot of testing to optimize and make sure that we're competitive with that. I think that's maybe a little bit of a reflection of joining a company where it takes some time to kind of get into that fit or swing. I think now the velocity has really hit. I think product is starting to catch back up. Roy Olivier: I think just to comment on that further, we have obviously much more competition today than we did a year ago, and that is certainly impacting the conversion rate on the product. I think Josh and the team are doing a lot of really great work now in terms of rolling out product improvements that we think will materially move that conversion rate back up to where we'd like it to be. Churn on that product has actually been improving. Churn is going up, lifetime value is going up. The issue we're having is new subscriber sign-up conversion from trial, which is not where we'd like it to be and not -- it's below where it was last year. I think that's partly product and partly messaging and being clear about the distinct advantages we have by having access to content behind the paywall. Jacob Stephan: I'm wondering if -- maybe you could help us think how long is the trial period on that product? Are you seeing that maybe students sign up for just the trial and then cancel it basically to get them through one paper or something like that? Is that kind of what you're seeing? Roy Olivier: Yes. churn is improving. In other words, we have materially less churn this year than a year ago. They're not signing up and they're not signing up for 7 days and leaving. Lifetime value is going up. However, in the spring, people cancel because they're going to be out of school for summer and then they resign up in the fall, and so the re-sign-up process or attracting new people in the fall is where we go through a trial, which Josh has mentioned is 7 days, and then we convert that to subscribers, and our conversion rate is not where we'd like it to be. Sorry, Josh, go ahead. Josh Nicholson: Yes. I was just going to say, it is 7 days. In many cases, the product has improved significantly in terms of the output you get out of it where it was, you can get a few paragraphs, you can get now a 15-page fully referenced report. To your point, sometimes the success of the product means they're solving their problems quicker, and so we think about all these different aspects, not just conversion rate, but how many queries are they doing, what is the weekly active users, monthly active users. I think, again, we need to be really disciplined in looking at those numbers across the board and then optimizing kind of the product decisions around what gets deployed. Does that increase the conversion rate? What does that do to the lifetime value of the customer and then also the usage of various KPIs. We are, I would say, in a much better position now. We've also started to really leverage a lot of AI in our own development work, which has greatly accelerated the ability to deploy new features and a lot of UI/UX changes that are necessary for testing. You can easily run a test on this button moving here versus there and what does that do to conversion rates and things like that. Operator: Our next question comes from Richard Baldry with ROTH Capital. Richard Baldry: Hoping you could drill a little deeper into the, call it, non-typical or non-seasonal strength you saw in ARR in the first quarter that looked up versus prior years, and it was multiples of what you've seen before. Can you sort of break down where you think that's coming from? Was there any sort of pull forwards that we have to be cautious about looking forward? Or is there something sustainably higher going on there? Roy Olivier: Yes, there was no pull forwards. I would say, over the last year, we have upgraded well over half of our sales teams. We've spent well into the 6 figures on training an entirely new sales process where we work with the customer closely to understand the problem we're solving and assess the value of solving that problem for the customer and then pricing accordingly. I think just having a much more disciplined and focused sales process in addition to marketing is doing a great job driving top of the funnel leads into that sales team resulted in the ARR that we posted. Bill or Josh, you're welcome to add to that. William Nurthen: I'll just add that the -- some of it also was again, some of the larger deals, but I think that's not a onetime thing. Again, we started talking about it last quarter and then obviously some this quarter. The sales team is focused, and I know we have other deals in the pipeline now that are kind of some similar size to some of what we saw in Q1. That definitely helps the situation when you can land 1 to 2 to 3 of those in a quarter. I think that's something that we have a chance to do each quarter going forward as well. Richard Baldry: Switching to the expense side. The G&A is the lowest in almost 2 years, I think. Again, anything onetime oriented there or sort of out of pattern that would reverse itself? Or is this sort of a sustainable level? How do we think about that forward? William Nurthen: Yes. As I said, we had some concerted effort to keep the cost down. I think in some prior quarters, we may have had some legal and stuff. We did have an executive departure at the end of last quarter, so some of that reduction there is that executive no longer being in the business, and we were sort of able to kind of replace that with some resources that are just more efficient from a cost perspective. I do think it's decent sort of to think about it as a run rate with maybe a little bit of exception here and there as being a little bit low, barring some kind of something that drives legal expense or a onetime recruiting item of some sort, I think we can modestly increase that through the year. Richard Baldry: Then last for me, sort of switching gears to AI internally as opposed to talking externally. This seems like the pace of new offerings from the companies is increasing. How much is AI enabling sort of either efficiency gains or productivity gains? How much more do you think you can do with that? We're sort of hearing that a lot of companies are really embracing it internally, not just externally now. Roy Olivier: Go ahead. Josh Nicholson: Yes. I would say on the internal side, we've made some changes. They're not fully kind of deployed across all of the team, but a lot of that is the AI to greatly speed up development, and it's pretty inspiring to watch. So a lot of this copilot and different AI coding tools are now part of a workflow from senior developers to junior developers. We've clearly put in guardrails in place and rules to use this AI, and so it's secure and it's largely done around light UI/UX changes, so not large features. It's hard to quantify it, but it is dramatic. I think that allows us to shift a lot of things that are important to the business that might seem superficial, but matter a lot, right? Again, that is the workflow of getting that PDF in a second, making sure you're AI compliant using that PDF, asking a question and getting an answer from the literature, all those things built on that foundation of relationships and data that we have needs to be done seamlessly. I think the AI tools that we're now using primarily in development are greatly accelerating the pace. I think we'll continue to see that pace as it rolls out to more teams and more people on the development teams. Roy Olivier: Yes. The only thing I would add to that is I think in the next 1 to 2 quarters, we'll be implementing some AI on the support side of the business to improve that. I don't think the development AI impact that Josh talked about or the support team impact is going to result in cost structure reduction. If anything, what it's going to do is free up software engineers to work on the more important stuff or it's going to free up support people to do a better job covering our existing support workload unless we see an unusual percentage of our account base start to use the AI chat tools to solve their issues as opposed to sending in a ticket to us, if that makes sense. Operator: [Operator Instructions]. Our next question comes from Derek Greenberg with Maxim Group. Derek Greenberg: I wanted to touch on just the transaction segment. You guys had called out already that, that was largely due to 3 customers churning and largely first half will be impacted. I was wondering if you had any visibility into the second half yet? If maybe we'll see potential release due to just lapping when the initial declines had happened. Roy Olivier: Yes. Just to be clear, it's 3 customers, 1 churn, the other 2 are simply buying less year-over-year, so they didn't churn. It's just reduced spend on their side. In terms of visibility in the second half, certainly don't think I do. Bill, do you have any comments on that? William Nurthen: We really don't. I think part of the reason we said that we think the second half will be better is we started experiencing the sharp declines in January of last year, and it really sort of accelerated in February. We are seeing a little bit of stabilization. As I mentioned, the decline this quarter was a little bit less than last quarter. We're seeing some things that we're seeing growth in our academic business, and we're obviously adding more platform customers. When you look at that, that's more hunch than anything at this point that we'll start to see improvement. I'm not saying it will necessarily be growing in Q3 and 4, but hopefully, we're seeing a reduction in that decline just given some of those factors. Derek Greenberg: Then in terms of second quarter, I was wondering if you saw any impact from the government shutdown regards any of your end markets, your customers? Roy Olivier: No, we have not seen material impact in government. Well, in government, corporate or academic. Derek Greenberg: Then I was wondering if you could just give an update too. I know on the last call, you kind of introduced this concept of a headless strategy plugging directly into customers' workflows. I was wondering if you had any updates there, that would be great. Roy Olivier: Really no updates other than we continue to make product changes to be where the [indiscernible] is going. We continue to support many large customers with that strategy today. I would say, I don't know what the percentage is, but a material part of our pipeline is headless work because more of our larger corporate clients are frankly building their own internal LLM or tool set. So what they're looking to do is connect us into the parts of the workflow where they need specific problems solved, whether it's AI rights, document rights, citation information or something else. Derek Greenberg: Then just my last question was just on M&A. You guys have previously said you were expecting at least one acquisition this year. I was just wondering how the pipeline is looking, how the market is looking, if there are any updates there? Roy Olivier: Yes, active pipeline, good discussions. I don't think we have something that will close by the end of the year, but we have a lot of things that are pretty close. Operator: Thank you. This does conclude today's question-and-answer session. I will now turn the call back over to Roy for any additional or closing remarks. Roy Olivier: Well, thanks, everyone, for joining us on our call today. Bill and I will participate in the Southwest IDEAS Conference on November 20. Qualified investors interested in participating should contact Three Part Advisors. We look forward to speaking with you in February to discuss our second quarter fiscal 2026 results. Have a great day. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
Operator: Good afternoon, and welcome to the Evolv Technology Third Quarter Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Brian Norris, Senior Vice President of Finance and Investor Relations for Evolv Technology. Please go ahead, sir. Brian Norris: Thank you, Megan, and good afternoon. Welcome to today's call. I'm joined by John Kedzierski, our President and CEO; and Chris Kutsor, our CFO. Earlier today, after market close, we issued a press release detailing our third quarter 2025 results and full year outlook. The release is filed with the SEC and available on the Investor Relations section of our website, where you will also find a supplementary slide highlighting the benefits of our transition to our direct distribution model, which we'll reference during the call. During today's call, we will make forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to our current expectations and views of future events, including, but not limited to, statements regarding our future operations, growth and financial results, our potential for growth and ability to gain new customers, demand for our products and offerings and our ability to meet our business outlook. All forward-looking statements are subject to material risks, uncertainties and assumptions, some of which are beyond our control. Actual events or financial results may differ materially from these forward-looking statements because of a number of risks and uncertainties, including, without limitation, the risk factors set forth under the caption Risk Factors in our annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 28, 2025, and our quarterly report on Form 10-Q for the 3 months ended September 30, 2025, filed with the SEC earlier today. The forward-looking statements made today represent our views as of November 13, 2025. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee that future results, performance or the events and circumstances reflected therein will be achieved or will occur. Except as may be required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances. Our commentary today will also include non-GAAP financial measures, which we believe provide additional insights for investors. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. These measures include adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted operating income, adjusted EBITDA and adjusted EBITDA margin, adjusted earnings and adjusted earnings per diluted share. Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures can be found in our press release issued today. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. We will be discussing key operating metrics such as annual recurring revenue, or ARR, remaining performance obligation, or RPO, both of which we believe are helpful to investors in understanding the progress we are making in this business. One last item, we have an active IR schedule coming up, including the Craig-Hallum Alpha Select Conference next week in New York and 2 events in December, the UBS Technology Conference in Scottsdale and the Northland Capital Conference, which is being held virtually. We will also be on the road this quarter at several financial centers across the country. For more information, please contact me at bnorris@evolvtechnology.com. With that, I'd like to turn the call over to John. John Kedzierski: Thank you, Brian, and thanks to everyone for joining us today. Our results throughout the year demonstrate meaningful progress toward greater consistency and stability across the organization. We're moving closer to our goal of building a scalable, high-growth business with predictable performance. Our focus remains on disciplined execution and an unwavering commitment to our customers' success. Our Q3 results reflect the latest steps on that journey. Revenue was $42.9 million, up 57% year-over-year, driven by strong new customer acquisition and expanded deployments within existing customers as well as higher onetime product revenue associated with certain customer wins, including the largest customer contract in the company's history. We have also benefited from the completion of certain short-term subscription contracts, including the premier international soccer tournament we supported over the summer. Chris will get into more detail on revenue in a few minutes. Our overall visibility continued to strengthen with Q3 marking the strongest booked-to-deployed unit ratio in the company's history. Thanks to the changes we have been sharing with investors in our go-to-market model, we expect 2026 to be an inflection point where Evolv's ARR growth will outpace revenue growth. Let me explain that encouraging trend a bit further, which we introduced to investors on our prior call. While we are delighted with 57% year-over-year revenue growth, it is important to note that our deployed unit count grew by about 30% year-over-year, which we believe provides a more normalized view of the fundamentals of the business. The gap between revenue growth and unit growth is primarily based on 2 factors. First, it reflects the trailing impact of our legacy distribution fulfillment model, which results in a higher proportion of the total contract value taken in the immediate period, lower ARR and lower total contract revenue as compared to direct purchase fulfillment. The second factor driving the delta between revenue growth and unit growth is a higher proportion of purchase versus subscription sales or our mix. Specifically, units purchased by our customers represented 57% of unit activity in Q3 compared to 41% in the year ago period. By transitioning away from our legacy distribution model, we now capture 100% of the average revenue per unit or ARPU. This shift increases recurring revenue over the 4-year subscription term and delivers back to Evolv a higher level of cash per unit. To illustrate the differences between distribution and direct fulfillment, we've created a chart and posted it on our Investor Relations website. While we have largely completed the move away from the distribution fulfillment model, and we have also repriced our solutions effective July 1 to emphasize software and ARR, it will take some time for our revenue recognition to match our new pricing. As a result, in Q3, we saw higher onetime product revenue related to the prior distribution model and associated revenue recognition treatment. Over time, our revenue recognition will more closely match our pricing and the majority of our ARPU will be in ARR instead of onetime product revenue. In summary, the trailing effects of distribution fulfillment and a higher proportion of purchase units drove revenue to outpace unit and ARR growth and why we believe 30% is a more meaningful measure of year-over-year growth. We finished the quarter with annual recurring revenue, or ARR, at $117.2 million, reflecting growth of 25% year-over-year. While our ARR growth trailed revenue growth in Q3, we expect this ratio to begin to flip in 2026 with faster ARR growth relative to total revenue growth, as I mentioned. We reported our fourth consecutive quarter of positive adjusted EBITDA with adjusted EBITDA margins of 12% in Q3. We welcomed over 60 new customers in Q3 and are raising our year-end estimate for active subscriptions to between 8,000 and 8,100. This continues to represent a very small slice of the hundreds of thousands of entrances that advanced weapons detection can help protect. We continue to see a strong trend of customers proactively upgrading to our Gen2 Express platform. These upgrades typically reset the subscription churn with fresh 4-year commitments. Gen2 upgrades also helped drive a sequential 8% increase in RPO, which stood just shy of $300 million at the end of Q3. eXpedite, our new autonomous AI-powered bag screening solution continued to gain strong traction since its Q4 2024 launch. In Q3 alone, we added 12 new customers, primarily in schools where we are beginning to see one-for-one deployments of eXpedite and Express to help streamline security by lowering alarm rates and enhancing the student experience. We believe the combination of Express plus eXpedite provides an exceptional security experience in terms of threat detection capabilities and false alarm rates. Based on early deployment data across education customers, Evolv eXpedite has shown an alert rate of approximately 2%, demonstrating strong promise in balancing detection with the goal of keeping false alarm rates low. Beyond the numbers, we are making a real difference in the communities we serve. Every day, we screen on average more than 3 million people. And since the launch of Evolv Express, we have screened over 3 billion visitors. Evolv eXpedite introduced just a few quarters ago, has already been used to screen more than 1 million bags. On average, our technology helps customers detect and tag 500 firearms daily. What does that look like in real life? In August, at a high school in Nashville, our system identified and helped intercept a loaded handgun at the door. In October, Evolv Express detected a loaded firearm in a student's backpack at a high school in Georgia. And just 2 weeks ago, our solution identified a concealed firearm during morning arrival at a high school in Atlanta. These 3 examples provide a small glimpse into the impact we are having on education. In the third quarter, we added over a dozen new school districts across the U.S. These included 2 new districts in New Jersey, 2 in Michigan, 2 in California and 1 each in Wisconsin, Tennessee, South Carolina, Nevada, Montana, Louisiana, Iowa and Connecticut. In health care, we are driving meaningful change by helping hospitals elevate safety standards while minimizing the impact on patient and visitor experience. Our solutions are enabling smoother and faster entry while enhancing threat detection at critical access points. With growing demand across the sector, we are now screening hundreds of thousands of visitors daily in medical facilities nationwide. A few recent wins in this market include WellSpan Health, UC Davis Health and Seattle Children's Hospital. Shifting to sports and live entertainment, we expanded our presence in professional hockey with -- the Buffalo Sabres, who entered a multiyear subscription agreement to deploy 9 Evolv Express Gen2 systems at KeyBank Center. This deployment is part of a broader 2025 arena upgrade initiative aimed at improving ingress and egress for fans. In Collegiate Athletics, the University of North Carolina at Chapel Hill is deploying Evolv Express to enhance safety and streamline entry at its athletic venues. In the world of professional football, Bank of America Stadium, home to the Carolina Panthers and Charlotte Football Club, recently completed a long-term renewal upgrading to Gen2 of Evolv Express. The venue now operates 19 systems and has added Evolv eXpedite for enhanced bag screening and faster guest entry. Staying in professional football, our technology is now being deployed at nearly a dozen practice and training facilities league-wide. This initiative includes both Evolv Express and Evolv eXpedite. We believe this is a strong endorsement of our ability to deliver a superior security experience for a variety of entry flows, covering fans, staff members, players, media and VIP guests. These wins reinforce our ability to penetrate diverse markets and deliver trusted solutions that drive long-term growth. We welcome all our newest customers and take sacred the trust they have placed in us. We look forward to the challenge of earning their business every day. Shifting into business operations. We're excited to announce a new strategic partnership with Plexus -- a collaboration that expands production capacity, global reach and operational resiliency. Plexus is a global leader in design, manufacturing and supply chain services that brings the infrastructure and expertise to support the next phase of our growth. With 26 facilities and more than 20,000 team members worldwide, they'll help deliver our technology to the places people gather every day. I want to shift gears for a moment and share some exciting developments on the product development front. I'm pleased to share that we recently released the latest versions of our software, Evolv Express 9.0, Evolv eXpedite 1.2 and – MyEvolv Portal and Evolv Insights 6.0. These updates reflect our ongoing commitment to improving performance and user experience for our customers, now numbering over 1,000 globally. With this release, we've introduced several enhancements aimed at supporting security teams in their day-to-day operations. Among the highlights is a new integrated tablet interface, which brings together the workflows of Express and eXpedite into a single streamlined user interface. We also released the integration of eXpedite into the -- MyEvolv Portal, enabling customers to see operational data for walk-through and now bag screening in a single location. With these enhancements, we have strengthened the bundled customer ownership experience for Express plus eXpedite. We've also expanded alert tagging and added sensitivity tuning, giving our customers more control in how they manage their security operation. These improvements are the results of listening closely to our customers and continuing to push the boundaries of what's possible in safety and efficiency. Through our subscription model, we're able to deliver these software capabilities seamlessly via the cloud, enabling innovation to reach the field without disruption. With each release, we aim to raise the bar, not just for ourselves, but also for the entire industry. Before I hand things over to Chris, I want to take a moment to share a bit of context around our outlook. We're seeing strong momentum in the business. Our backlog continues to grow, and we've got a healthy pipeline. For those reasons, we are raising our 2025 outlook. We now expect to grow revenue by about 37% to 40% in 2025 compared to our previous guidance of 27% to 30% growth. I would point out that our upwardly revised revenue forecast for the year of between $142 million to $145 million includes certain onetime benefits, in particular, related to onetime revenue recognition from our legacy fulfillment and pricing models that I mentioned earlier. Excluding these short-term revenue items, we will be forecasting total revenue growth in 2025 of about 30% year-over-year. We continue to expect to deliver positive full year adjusted EBITDA with full year margins in the high single digits. We remain committed to generating positive cash flow in Q4. Looking ahead to 2026, let me start with this fundamental principle. We're planning to add more units in 2026 than we did in 2025 with ARPU trends remaining stable. As a reminder, our 2025 results included the largest customer contract in the company's history, more than 250 units. We plan to grow on top of that order. The changes in our distribution fulfillment model and pricing structure will allow us to capture 100% of contract ARPU, shift more of that ARPU from onetime revenue into ARR and RPO and create an opportunity to maximize leverage in the business over time. We estimate that the subtle but powerful shifts of emphasizing ARR over short-term product revenue will defer about $5 million to $10 million of revenue in 2026 that we would otherwise have captured had we not changed our distribution and pricing structure. We expect that $5 million to $10 million to convert into long-term recurring revenue streams that will benefit future years. We're currently modeling full year 2026 revenue of between $160 million to $165 million. Importantly, we expect ARR to grow by at least 20%, outpacing total revenue growth in 2026, which is an important pivot for Evolv. This management team continues to prioritize ARR growth and other long-term value drivers. With that, I'll turn it over to Chris, who will take you through our financial results and the details behind our outlook. George Kutsor: Thanks, John. Good afternoon, everyone. I'm going to review our third quarter results in more detail and then walk through our updated guidance for the rest of the year as well as context on our early thoughts for next year. As John mentioned, revenue was $42.9 million in Q3, an increase of 57% year-over-year. This was fueled by strong new customer growth and expanding deployments across our customer base. It also includes a few items that, while positive, aren't expected to recur at the same scale every quarter, as John mentioned. Let me unpack those a bit further. First, our new contract with Gwinnett County Public Schools, the largest in Evolv's history, contributed approximately $3 million in revenue in Q3, primarily as onetime product revenue. Second, Q3 included a very high proportion of direct purchase method deployments compared to our legacy distribution motion, which brings more immediate revenue recognition and less ARR, which John covered already. The nearly $3 million of product revenue recognized for Gwinnett County this past quarter is an example of that effect. We also recognized approximately $3 million in IP license and other onetime revenue in Q3, primarily tied to our legacy distribution subscription model. Finally, we had roughly $1.5 million in short-term subscription revenue or rentals. These short-term subscriptions are valuable and remain part of our strategy, but they tend to be episodic in nature. When adjusting for these specific items, you get a more normalized view of Q3 revenue closer to $35 million to $36 million, which would reflect growth of about 30% year-over-year. Annual recurring revenue, or ARR, at September 30 was $117.2 million, reflecting growth of 25% year-over-year and 6% sequentially. Remaining performance obligation, or RPO, was approximately $299 million at the end of the third quarter compared to approximately $275 million at the end of the second quarter and $269 million at the end of Q3 last year. Adjusted gross margin was 51% in Q3 compared to 64% in the same period last year. There are 3 drivers here worth diving into a little bit deeper. First, as discussed on our last call, the shift from distribution fulfillment to direct purchase fulfillment creates a near-term gross margin headwind, but it also brings higher gross profit dollars over the term of the contract, along with higher revenue, higher ARR, higher RPO and cash compared to the legacy distribution model. With the business now delivering a consistent track record of positive adjusted EBITDA, that's an important long-term trade-off we are pleased to make. Second, we saw the impact of several large education contracts that included significant volumes of our newest product, eXpedite. eXpedite is still operating at subscale manufacturing cost. We expect eXpedite costs to improve in 2026, which we expect to positively impact future gross margins. And finally, we recognized approximately $3 million of onetime costs related to inventory and service adjustments. Moving down the P&L. Adjusted operating expenses, which excludes stock-based compensation, loss on impairment of equipment and certain other onetime expenses were $24.8 million compared to $25.2 million in the third quarter of last year. This modest year-over-year decline in contrast to strong year-over-year growth in units deployed, total revenue and ARR growth reflects the actions we have taken since the start of the year to reduce spend and improve the profitability of the business. We believe it is also an excellent indicator of the leverage we believe is central to our business model. Adjusted EBITDA, which excludes stock-based compensation and other onetime items, was a positive $5.1 million in Q3 of '25 compared to a loss of $3 million in the third quarter of last year. This resulted in adjusted EBITDA margin of 12% in the third quarter of 2025. Turning to the balance sheet. Cash, cash equivalents and marketable securities increased $19 million sequentially to $56 million, up from $37 million at the end of Q2 2025. This primarily reflected proceeds from the new credit facility that we completed in July, along with tighter inventory management and stronger overall collection activity. I'm going to provide some additional details to our updated 2025 outlook that John mentioned a few minutes ago. We now expect total revenue to grow by 37% to 40% in 2025 to be between $142 million and $145 million this year. This is up from our prior guidance, which called for revenue between $132 million and $135 million. A few things we'd encourage investors to consider for context in our '25 revenue estimate. First, as I mentioned in my earlier commentary, the largest deal in the company's history contributed about $3 million to Q3 revenue, and we expect to contribute more than $5 million for the full year due to higher upfront revenue recognition related to the residual effects of our legacy distribution fulfillment model. Second, IP license and other revenue was about $3 million in Q3, and we're expecting that to be about $10 million for the full year. That onetime revenue stream is primarily tied to our legacy distribution fulfillment model, which has been phased out. Investors should assume that IP licenses are no longer a driver to revenue growth starting here in Q4. Third, short-term subscription contracts contributed about $1.5 million to revenue in Q3, and we are expecting that to be about $2 million for the full year. Those opportunities are generally onetime in nature, so it is not something that we plan around. In light of these 3 factors, we estimate a more normalized revenue growth rate for 2025 would have been about 30% year-on-year growth compared to 2024. We expect 2025 adjusted gross margin to be in the range of 52% to 54%, not due to ARPU compression or a change in competitive pressure, but because of the shift to direct purchase fulfillment. To reiterate my previous comment, the direct purchase fulfillment model is a headwind to gross margin in the first year of the new contract. But over the term of the subscription contract, it generates higher total gross profit dollars, higher revenue, higher cash and ARR compared to the distribution fulfillment model and also makes us easier to do business with. With strong top line growth and continued focus on expense management, we expect to deliver positive full year adjusted EBITDA in 2025 with full year adjusted EBITDA margins in the high single digits compared to our previous guidance, which called for margins in the mid-single digits. We expect to be cash flow positive in the fourth quarter of 2025. Turning now to 2026. As John mentioned, we remain encouraged by the changes we made this year, and we expect to see ARR growth begin to outpace revenue growth in the next year. While we are still developing our final plans, let me set some additional context to the 2026 outlook. The fundamentals of our business remain strong with a robust customer demand and a stable pricing environment. We expect to add more units in 2026 than we did in 2025, with ARPUs remaining relatively consistent and the trends that we've seen this year continuing. In other words, we expect continued unit growth and stable pricing. That said, we expect recent shifts in our distribution fulfillment and pricing model will result in less onetime revenue, but more ARR and RPO in 2026 compared to 2025. We encourage investors to refer to the presentation material posted on our IR website for a graphical view of the positive impact of pivoting to direct purchase. We also expect a higher percentage of new units in '26 to be full subscription compared to 2025, which will also lower the '26 growth rates but drive faster ARR growth. We expect the changes we've made to our direct purchase pricing model, changes that maximize ARR by making the upfront hardware price lower, commensurate with reduction in our manufacturing costs will push at least $5 million to $10 million of revenue out of 2026 and into ARR and RPO. The higher ARR and associated recurring subscription value will also provide higher ARR rates when those contracts move to renewal discussions 4 years down the road. We believe all of these are smart changes for the business in the long term. We are currently modeling full year revenues of about $160 million to $165 million in 2026. And again, the important news here is that we expect to add more units in '26 than we did in '25 with ARPU trends remaining stable and ARR growing at a faster rate than total revenue. Specifically, we expect ARR to grow by at least 20% year-over-year. And to reiterate John's earlier comment, we believe 2026 will be an inflection point for the company as ARR begins to outpace revenue growth. While we haven't finalized our investment plans, we are committed to growing revenues faster than total expenses in 2026 and therefore, are currently modeling modest expansion of adjusted EBITDA margins. We will share more thoughts on how we're thinking about 2026 during our Q4 call in March. And in the meantime, we're focused on finishing a strong 2025. Before we open the call for Q&A, let me turn the call back over to John for a few closing remarks. John Kedzierski: Thanks, Chris. We continue to be driven by our mission to make the world a safer place to live, learn, work and play while building a leading IoT SaaS security business. We believe security is a necessity, not a luxury. We remain highly confident in our market position. We continue to move forward with purpose, guided by a clear strategy and an unwavering commitment to long-term value creation. We've been intentional and transparent about the adjustments we're making, whether refining our go-to-market and pricing model to maximize ARR and recurring revenue, forging new partnerships to enhance cost efficiency and reduce COGS or evolving our organizational structure to ensure we optimize every investment across the business. Each of these steps underscores our focus on building a scalable, high-growth business with predictable performance. Our strong Q3 results and the momentum we see across the organization reflect meaningful progress in all of these areas. While we're proud of these results -- as I remind our team often, we will not be complacent. We are moving steadily toward our goal of creating a business that is both scalable and consistently high performing. We deeply appreciate the partnership of both our customers and our investors in the continued confidence they place in us and more importantly, in the mission we are pursuing. George Kutsor: Thank you, John. At this time, we'd like to open the call up for Q&A. Again, we ask participants to limit themselves to one question and one follow up. Operator: [Operator Instructions] Our first question will come from Jeremy Hamblin with Craig-Hallum. Jeremy Hamblin: Congratulations on the very strong results. Just want to come back to the kind of the call outs of some of the onetime items here. Understand certainly for the short-term contracts, the $1.5 million of why you would exclude that and understand kind of the front revenue recognition of some of those deals that are going through distributor. But in terms of thinking about the build overall -- you do have the largest increase you've seen in recurring revenues as well as the largest increase you've had in RPO in a quarter. So just help me understand in terms of the large contract, how the revenue recognition overall on that will play out on a go-forward basis as an example. John Kedzierski: Jeremy, I'll start and Chris can address any other specifics you might have. So as we communicated in the prepared remarks, we just shared, one of the impacts of legacy distribution model is more upfront revenue. We have largely moved away from that and the majority of our purchase subscriptions were executed through our direct fulfillment. But there'll be a tail of effect about how we take revenue on those deals over time, and that will normalize and result in a new pricing that we've already put in place months ago in July 1. As Chris mentioned, we'll ultimately recognize about $5 million of that order. It's a very significant proportion of the total order that we'll take in the first 2 quarters of a 48-month deal. Again, we expect that to adjust to the overall longer 48-month revenue recognition as we get into 2026. George Kutsor: Jeremy, just a bit more context to that. This effect is only relevant for purchase subscription orders and doesn't have the effect for full subscription orders. And the effect is due to the hardware pricing that's part of the mix of the contract that we do in a purchase subscription order. So for about half of our business, this is the effect. And the impact, as John was talking about, ties back to GAAP accounting, ASC 606 that requires us to take that amount of upfront revenue in the way that's reflected in our remarks. So hopefully, that gives you the perspective as to why it's happening and the proportion of our business that it happens to. Jeremy Hamblin: Understood. That's helpful. Dovetails nicely, though into -- I wanted to ask about the new strategic contract manufacturer agreement you've entered into. In terms of how you expect that to change what your baseline cost is for Gen2 or potentially Gen3 machines on a go-forward basis. Can you give us a sense for whether or not you expect that to reduce the manufacturing cost for the Gen machines -- I'm sorry, for the Express machines and whether or not they're also going to be manufacturing eXpedite and what that might do for the ramp of that business as well? John Kedzierski: Jeremy, we're pleased and looking forward to the partnership with Plexus. We just executed that agreement. We're focused on onboarding them and get them to start manufacturing our product, which we will be focused on through the first half of 2026. Over time, we look forward to a larger scale and the potential of cost synergies that will come and the ability to be able to leverage their entire footprint. George Kutsor: You should expect our full portfolio to eventually be available at Plexus as well. John Kedzierski: As you would expect, we're doing it thoughtfully and carefully. Operator: Understood. And then just one more quick one before I hop out of the queue. In terms of the eXpedite bag scanner product, what is the rough attachment rate that you're getting with that on sales of Express machines? And how does that vary? Are you getting more success with that, let's say, in the education vertical or in the stadium vertical versus a couple of your other verticals? John Kedzierski: We're very pleased with the progress of eXpedite -- as we have shared in the prior quarter, a very significant portion of that large education order was eXpedite. In Q3, we had 12 new additions of eXpedite customers. To answer your question directly, 11 of those also acquired Express. And that's a trend that we're really excited about. We have seen deployments across education, sports, entertainment and health care. Operator: Our next question will come from Eric Martinuzzi with Lake Street Capital Markets. Eric Martinuzzi: Yes. So you talked about the number of units growing in '25 versus '24. Is that -- are we talking aggregate units, so Express plus eXpedite in 2025 is greater than '24 and the same thing, '26 versus '25? Are we talking the Express units only? John Kedzierski: The aggregate units, of Express and eXpedite, which is consistent with how we've been discussing this year. Eric Martinuzzi: Okay. And then can you remind me just the delta between the price of those 2 if someone were to purchase them outright, maybe not the absolute dollar. John Kedzierski: We shared before, the unit economics are similar. As Chris commented, we expect the gross margins to be more similar over time. Today, eXpedite is a new product, hasn't benefited from the multiyear manufacturing scale that we built into Gen2. So right now, it's a bit of a headwind on gross margin. George Kutsor: And Eric, remind you, that's also a 4-year subscription go-to-market model for eXpedite as well. Operator: Your next question will come from Shaul Eyal with TD Cowen. Shaul Eyal: On results, and thanks for the color and transparency on the business and the outlook. As you guys shift away from distribution to direct fulfillment model, just curious, what was the reaction of some of those channel partners involved? John Kedzierski: It's very positive. There's one thing I want to make sure we're very clear on. This had no impact on our channel. But the majority of our business as it has, continues to transact from a channel. What the change was is how our channel partners get the product from us. In the past, in the motion that we introduced in 2023, they would purchase it from a distributor. Now they purchase it directly from us, which means that we capture 100% of the ARPU. We did not see the portion that went through distribution. So from a direct channel partner reaction, we have simplified their buying process. They used to have to buy one solution to an end user by issuing 2 orders, one to our distributor contract manufacturer for the hardware and one to us for the subscription. So their process to do business with us is much simpler. Shaul Eyal: Got it. This is great. I appreciate it. And maybe the biggest contract that you discussed, those 250 units, yes, we're becoming greedy here. How many of these contracts are currently in the pipeline? I know they don't come too often, but I think we're beginning to see where the business is heading as we start to thinking about '26 and maybe even '27 down the road. Just curious how many of those, call it, triple-digit transactions are out there? John Kedzierski: We haven't provided specific outlooks or details on our pipeline. But what I'll reiterate is that in the preliminary '26 guidance we just provided, we're planning to grow units over this year, which included that 250 units [ award ]. Operator: [Operator Instructions] Your next question will come from Michael Latimore with Northland Capital Markets. Unknown Analyst: This is [ Aditya ] on behalf of Mike Latimore. Could you tell me what percentage of your bookings came from existing customers? Brian Norris: Yes, for sure. This is Brian. It was well over 50%. A bit of that was slightly skewed in that one of the largest orders in the company's history was actually an order that started very briefly in Q2. So if I exclude that, it would be right around 50% on the quarter, it was higher because of that. So we're certainly seeing very significant expansions from existing customers to both Express and now eXpedite as well. Unknown Analyst: Got it. And could you give some color among the new verticals? Are there any promising ones such as the warehouse or office? John Kedzierski: Our vertical mix overall has stayed consistent. As we've shared in the past, sports and entertainment, education and health care are our largest verticals. In Q2, we discussed a large Fortune 500 distribution customer that entered the fold, and we're thrilled for the potential in that area. And we're focused on growing our vertical presence everywhere. And we like the diversity in the mix that we have, but we see opportunities to continue to expand. Operator: That was your last question. I'd now like to turn the call over to John for closing remarks. Brian Norris: Actually, it's Brian. I'm just going to close it out by, again, thanking everybody for joining us today. Again, we have a very active IR program here in the quarter, 3 conferences, multiple other visits to financial centers across the country. Look forward to meeting as many folks as we can each period. Thanks so much, and have a wonderful Thanksgiving. Operator: Thank you for joining. This concludes today's call. You may now disconnect.
Operator: Welcome to Shimmick's Third Quarter 2025 Financial Results. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to the Investor Relations team. Anthony Rasmus: Good afternoon, and thank you for joining us on today's conference call to discuss Shimmick's third quarter 2025 results. Slides for today's presentation are available on our Investor Relations section of our website, www.shimmick.com. During this call, management will make forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect. We identify the principal risks and uncertainties that may affect our performance in our reports and filings with the Securities and Exchange Commission, which can also be found on our Investor Relations website. We do not undertake a duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's third quarter press release for definitional information and reconciliations of historical non-GAAP measures to comparable GAAP financial measures. With that, it is my pleasure to turn the call over to Ural Yal Shimmick , CEO. Ural Yal: Good afternoon, and thank you all for joining us on today's call. I'm joined by Todd Yoder, Shimmick CFO. I'm going to kick it off with our results for the third quarter and speak to our expectations for the remainder of 2025 and for an exciting 2026. But before I go there, I would like to reiterate our go-forward strategy, which has been consistent since I joined the company. There are 3 major components to our strategy: grow the top line through bidding and winning strategic new business that play into our strengths and market differentiators that will drive consistent margins. Complete noncore projects that have impacted our profitability over the last 2 years and implement operational improvements that build on our existing talent and result in more predictable, consistent margins and lower G&A as a percentage of revenue. We are confident that our disciplined execution of the strategy is going to allow us to have a company that performs at or above the industry year after year. And I'm pleased to report that we are making progress. Moving to our financial results, starting with revenue. For the third quarter of 2025, we delivered revenue of $142 million with a gross margin of $11 million and an adjusted EBITDA of $4 million. As I've mentioned over the last few quarters, the majority of our current business consists of our core Shimmick projects, those we've won since becoming independent from our previous ownership. The remainder consists of non-core projects, which were awarded prior to that transition, and represent the types of projects we no longer pursue. Throughout 2025, we've been making progress towards replacing more of these non-core projects with new Shimmick projects as we complete them. Now of the third quarter revenue, over 75% came from Shimmick projects with a revenue of $107 million, representing a 6% increase year-over-year. We also expanded our gross margin on Shimmick projects from the prior year's third quarter by 67% on the continued operational improvements we've implemented this year. We expect our core business to continue to generate higher margins as we continue to build our backlog. Our non-core projects' revenue was $35 million, a reduction of $30 million from the same quarter last year, reflecting our continued progress with those projects. We achieved positive adjusted EBITDA for the first time this year and for the first time since the same period in 2024. So you can clearly see our strategy come to fruition in our financials. We've also maintained a strong liquidity position in the third quarter, finishing the quarter with a total liquidity of $48 million. The momentum we're seeing is a direct outcome of the strategic shift we implemented earlier this year, which focused on pursuing projects that align closely with our strengths, deepening client partnerships to drive superior project outcomes, and reinforcing operational discipline to boost both execution and employee engagement. Looking ahead, we're particularly encouraged by the continued strength in market conditions and our backlog growth, which I'll touch on next. We continue to see a large and expanding addressable market, particularly in critical infrastructure segments where our expertise aligns closely with long-term national priorities. In September and then in October, again, we achieved $1 billion in bidding volumes, a clear indication that our pipeline remains both active and robust. Our 12-month bidding outlook stands at over $9 billion, demonstrating our disciplined pursuit strategy, but also the favorable nature of the market conditions. Water and electrical projects remain the most compelling opportunities driven by ongoing investment in infrastructure, in turn driven by technology, population patterns, and the ever-growing need for clean water. Given our strong presence and expertise in water and existing and growing electrical capabilities, we expect to see more of our backlog shifting towards these 2 sectors over the next couple of quarters. Within that, we're seeing notable success and increasing opportunities in the Texas water market, where significant funding, population growth, and infrastructure needs are creating a strong demand for our services. Our focused approach and our resources have positioned us to capture a growing share of these opportunities. We view the West Coast and Texas as a key growth engine within our broader water strategy, and the momentum we're seeing there reinforces our confidence in the scale and durability of this market. We're also seeing strong momentum within our Electrical segment, particularly across manufacturing and data center markets. Bidding activity in these areas has been exceptionally strong, reflecting continued investment in large-scale industrial and technology infrastructure. It's no secret that investments in mission-critical infrastructure are continuing at a fast pace across the country, and we're seeing more and more of our pipeline consisting of opportunities in this market sector. We're actively pursuing a number of high-quality opportunities in this space, and our teams are maintaining discipline to ensure we target the right projects with the right risk profiles. Given the strength of the pipeline and the volume of active bids, the outlook for the fourth quarter and the first quarter of next year is shaping up to be promising. All this activity reinforces the strength and diversification of our end markets and positions us well as we move into 2026. I'm pleased to share that our transformation is clearly hitting its stride. Over the past few quarters, we've seen meaningful progress in both the pace and the quality of our execution, and that progress is now shaping our results. We are starting to see the new Shimmick come to fruition. We achieved a book-to-burn ratio of 1.7 in the third quarter, a significant improvement from last quarter. And for the first time, we exceeded 1.0 in 2 years. During past quarters, I spoke about investments we're making in the sales side of the business, focusing on our core strengths while expanding our capacity to bid and win work consistently. This healthy backlog growth is a direct result of our strategy and is designed to fuel our growth into 2026. As a result, in the third quarter, we grew our backlog by over $100 million or 15% sequentially, and now it sits at $754 million as of October 3, 2025. To highlight a few of the project awards that were added to our backlog in the third quarter, include the $116 million City of Modesto River Trunk pump station and the $51 million Bellota Weir modifications projects. Both of these projects are located in California and are designed to improve water quality for the local communities, shore up flood resilience, and maintain environmental stewardship. Additionally, we've been awarded contracts for $60 million that added to our backlog in October. The $30 million City of Santa Monica Pier Bridge replacement that restores a historic structure along the Los Angeles shoreline and reflects our efforts to support the accelerating efforts to prepare the local infrastructure for the upcoming 2028 L.A. Olympics. We see a lot more Olympics-related opportunities as the preparations ramp up, with various projects already in our pipeline throughout the region. The $30 million Port of Seattle Terminal 18 Shore Power project is an electrical project that improves operational efficiencies at the port facilities while reducing carbon emissions. We have performed similar projects for other ports along the West Coast, and we expect more of these projects as the ports continue their electrification journeys. And lastly, after the third quarter concluded, we've been selected as the preferred bidder on projects totaling $169 million, with projects that are predominantly in our core sectors of water and electrical construction. We are currently negotiating these contracts or waiting for an award from clients, which we expect to happen in the fourth quarter. The steady increase in backlog provides greater visibility into future revenue and positions us well for continued growth as we move into 2026. All of this gives us confidence that the actions we've taken to strengthen the business are working. We are competing more effectively, delivering for our customers, and building a strong foundation for sustainable long-term performance. As we move forward, our focus remains on maintaining this momentum, executing with discipline, converting backlog efficiently, and continuing to drive consistent profitable growth. Looking ahead, we feel confident about the trajectory we're on. We're seeing forward momentum in our business, and we will get stronger as we continue to capitalize on favorable market conditions and put the noncore work behind us. We will consistently execute our three-pronged strategy to achieve a growing, profitable, and dependable Shimmick in 2026 and in the future. With that, I'd like to turn to Todd, who will review our financials in more detail. Todd Yoder: Thank you, Ural, and thank you to all of you for joining us today. We're excited to share our third-quarter results that really underscore our disciplined execution and operational improvements across the business. But before we jump into the numbers, I want to thank all of the talented men and women across Shimmick who continue to make it happen every day. The progress we've made so far this year would not be possible without your commitment and contributions. With that, let's jump into the third quarter results. And as a reminder, all comparisons made today will be on a year-over-year basis as compared to the same period in 2024, unless otherwise noted. Total revenue for the third quarter of 2025 was $142 million, a decrease of 15% as compared to $166 million for the third quarter of '24. The year-over-year decrease was primarily the result of a one-time favorable claim settlement on our GGB project that contributed $31 million to revenue in the third quarter of 2024. Excluding this one-time GGB impact, our third quarter total revenue grew 5% year-over-year on a like-for-like basis. Shimmick project revenue for the third quarter of 2025 was $107 million, up 5% compared to $101 million last year. The net increase in Shimmick revenue was driven by $25 million of revenue from new projects ramping up, partially offset by $19 million impact from projects that are winding down and experienced lower burn during the quarter. Noncore project revenue for the third quarter of '25 was $35 million, a decrease of 46% as compared to $65 million last year. The decrease as compared to the prior year period was driven by the favorable GGB claim settlement that I mentioned earlier. Gross margin for the third quarter of 2025 was $11 million, down $1 million compared to the gross margin of $12 million for the third quarter of '24. The $1 million decrease was driven by the one-time GGB claim settlement, which contributed $11 million to gross margin in the third quarter of '24. Excluding the GGB settlement impact, the third quarter '25 gross margin was $10 million higher on a year-over-year like-for-like basis. Gross margin recognized on Shimmick projects was $10 million, up 61% as compared to $6 million for the third quarter of '24. The $4 million increase in gross margin was driven by $8 million of gross margin from new projects ramping up, partially offset by a $4 million decrease in gross margin from those projects winding down and which experienced lower burn during the period. Gross margin recognized on non-core projects was $1 million for the third quarter of '25 as compared to $6 million for the third quarter of '24. The $5 million decrease was driven by the favorable GGB claim settlement that occurred in the third quarter of '24. And as a reminder, these noncore projects continue to wind down to completion. So no further gross margin will be recognized. And in some cases, there may be additional costs associated with these projects, which are recognized in the period identified. G&A expense for the third quarter of '25 was $14 million, down 5% or nearly $1 million as compared to the second quarter of '25. The favorable impact was driven by the continued execution of our transformation strategy. We reported a net loss for the quarter of $4 million as compared to a net loss of $2 million for the third quarter of '24. The $2 million difference was driven by a gain on the sale of assets of $17 million in the third quarter of '24, a decrease of $1 million in both gross margin and earnings from unconsolidated joint ventures. This was offset by the ERP asset impairment and associated costs of $16 million taken in the third quarter of '24 and an increase in other income and expense of $1 million. Adjusted EBITDA for the third quarter '25 was $4 million as compared to adjusted EBITDA of $30 million in the third quarter of '24. The $30 million was driven by the one-time favorable GGB project settlement, and the ERP impairment was an add-back for the Q3 '24. Turning to the balance sheet. Unrestricted cash and cash equivalents at the end of the quarter totaled $18 million, and availability under our credit agreements totaled $30 million, resulting in total liquidity of $48 million. We feel comfortable that our liquidity at the end of the third quarter provides the capital needed to continue executing on our strategic and operational priorities. We booked new awards of $190 million during the third quarter and achieved a book-to-burn ratio of 1.7x. At the end of the quarter, our total backlog was $754 million, which is a sequential increase of over $100 million from the second quarter of 2025. And our backlog mix continues to improve with Shimmick projects now representing 86% of our total backlog to end the quarter. We are fully committed to winning the right way, one of the three pillars that define our growth strategy of building a sustainable risk-balanced backlog, which centers around a disciplined approach to how we bid work, what work we bid, all while remaining focused on risk-balanced work that aligns with our strong self-perform capabilities. In our initial full-year 2025 guidance, we anticipated noncore projects would be approximately 10% of our total revenue, and we now expect noncore project burn to come in closer to 20% of our total revenue for the full year '25, which drives an unfavorable mix impact to our total gross margin, as I described on our call last quarter. Despite this negative mix impact, we remain confident in achieving our full year '25 guidance and anticipate the full year revenue to land in the higher end of the provided range and adjusted EBITDA to land toward the lower end of the provided range. For the full year 2025, we reaffirm our guidance communicated last quarter and expect to finish the year with Shimmick project revenue in the $405 million to $415 million range with overall gross margin between 9% and 12%. Noncore project revenue in the range of $80 million to $90 million with gross margin between negative 15% and negative 5%, and consolidated adjusted EBITDA between $5 million and $15 million for the full year. With that, I thank you all for joining us on our call today and for your continued interest in Shimmick. And now back to Ural. Ural Yal: We are happy to report results from another quarter that advance Shimmick towards the goals we set. We now have more capability than ever to bid and win more work and have the processes in place to ensure we are bidding on projects that are right for us that will drive consistent profits. As a result, our backlog is growing for the first time in a while, and we see an ever-growing pipeline of opportunities, especially in the water and electrical fields. As 2025 comes to a close, we will continue to target backlog growth and strong margins achieved by healthy bidding activity, completion of non-core projects, and consistent execution driven by continuous operational improvements. As always, I want to thank the entire Shimmick team, our clients, and our industry partners for their support in our journey to create the Shimmick of the future. Operator, you may now open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Aaron Spi-Halla from Craig-Hallum Capital Group. Aaron Spychalla: First on Axia, can you just talk about how much of the pipeline or backlog that represents today? And just how are you expecting growth there in the coming quarters? Maybe what end markets are driving that? And just where do you think that business can go as we look out for the next couple of years? Ural Yal: Yes, it's a great question. Good to see you, Aaron. Yes, right now represents about 15%, 16-ish percentage-like the mid-teens, a little bit higher maybe. But it represents a growing percentage of what we're bidding on a monthly basis. And the markets generally, we're seeing a lot of electrification-related work. We see a lot of industrial electrical work, both on water treatment plants and other manufacturing-type facilities. And we're starting to really bid and price data center and mission-critical type projects across the board on the electrical side. So I see a growth there because it's representing a lot higher volume of the bids that we're putting in. I think we're going to start to see an improvement or an increase in the percentage on the backlog, and then that will turn into the top line over time. Aaron Spychalla: And then maybe on data centers, do you have some projects there? Maybe what markets are you seeing activity in? And any sizing and margin profile of those as we go with those? Ural Yal: Yes. So, Texas, I talked about Texas. Texas has quite a few of those. So we're actively bidding in Texas. We're bidding in the Tennessee, Georgia area. And we're following our kind of trusted clients to where those projects are at and trying to fill the needs that they have. There's a big shortage, and there's a lot of work in that arena right now. So we're pursuing multiple opportunities and hope to be successful on some of them and then start getting that into the backlog. Aaron Spychalla: And then maybe just one last question on cash flow. Can you talk about some of the dynamics there in the quarter and maybe how you see that trending in the coming quarters and just longer term as we get through these legacy projects? Ural Yal: Yes. And I'll start and turn it over to Todd as well. But yes, so it's ebbs and flows to some extent. And yes, we have a negative impact from the non-core legacy projects as we continue to get through those. We're still thinking we're going to be done at the end of 2026. So the impact will, to some extent, continue at a decreasing level. But part of the positive is that as we get through and increase our backlog, and that translates into the top line, we're going to be able to generate cash that offsets that impact, and over time, we expect to be in a better and better position into 2026. Todd Yoder: No, I think you pretty much covered it. $48 million of liquidity ending the second quarter, we're comfortable with that position. I mean, there's a lot of puts and takes that go into the business being lumpy, as you know. So, advanced payments, retention collection, claims, and changes in AP. So there's a lot of noise in there, but I want to stay away from forecasting liquidity, but we're comfortable where we are. Operator: Our next question comes from the line of Gerard Sweeney from ROTH. Gerard Sweeney: I got disconnected when I was jumping onto the elevated panels. But did Aaron talk about guidance specifically? You're, I think, aiming for the lower end of the $5 million to $15 million, which implies a pretty strong fourth quarter, which does have some seasonality involved. So I want to see if we could unpack that a little bit in terms of what gives you confidence to hit the lower end? Is it just increasing margins in the backlog, increasing backlog in total, and just overall quality of work, or what have you? Todd Yoder: Yes. It's a great question. I think generally, the bottom line of that is, yes, I agree, it shows a strong fourth quarter. It's largely related to the new work starting to really kick in, and those are obviously higher-margin work. So it's starting to really offset the loss-generating noncore projects much better as we go through each quarter. So I think that's where we're starting to see better results, even with the seasonality, we expect for those newer projects that are driving higher margins, offsetting the lower margin work a lot better as we go forward. Gerard Sweeney: And then you've talked a little bit about water and electricity being strong markets. But I think one of your strategies was to do more negotiated work and less bidding work. Just curious as to how that's coming along. Ural Yal: It's coming along well. As far as our bidding volume goes, its negotiated work is starting to become a lot bigger portion of that as we go forward as well. We have a couple of projects that are already in negotiation at the moment. So we're hoping to see those go into backlog as well, and we'll report on those as we go forward. And also just looking at the water and the electrical market, especially the electrical market, a lot more of those are already delivered through negotiated contracts. And even when we're in a subcontractor specialty sub position, it's still negotiated for the sub as well as the GC there. So I think as the more electrical we get, that number is going to start to go up as well. Gerard Sweeney: And again, I think it's a multiyear process to transition that more to negotiated work, correct? Ural Yal: Yes. 2027 is where we're going to really see benefits out of that effort. Gerard Sweeney: Do you target a certain percentage of your backlog to be negotiated work or any type of, I don't want to say guidance, but thought on where it potentially could fall out? Ural Yal: Our goal is to get to 50%. I think that's a really good mix where you're really risk-balanced at that point. You always want to have some of the fixed price work, which drives higher revenues and passive burns, but you also want to balance that off with the lower risk negotiated contracts. So if you can get to the 50-50 range, I think that's a very healthy place to be. Gerard Sweeney: Then maybe one more for me. The nonstrimic work, I mean, had positive gross margins. Was that just a function of where the quarter fell out? Or do you have a little bit more visibility on that work? And can some of those margins stay close to flat to slightly positive on a go-forward basis? Ural Yal: Yes. I mean, yes, so it's a couple of things where we're obviously getting through them. And as you get to the end of those projects, there's always some scope growth that plays into that. We lose sense to tie in and finish out the contract. So some of that's related to closing out those issues and negotiating additional revenue for that scope growth with the clients. So that's what drives it. But I think we're going to try to keep it as even as we possibly can, but we still have some work to do throughout '26 to get those couple of projects done. Gerard Sweeney: I mean, it was a nice positive surprise. Operator: There are no more questions at this time. I'd now like to turn the call over to Ural Yal for closing remarks. Ural Yal: Thank you. Again, we're pleased to report another consistent quarter that aligns with our plans aligns with our strategic planning. And we're looking forward to the next quarter, to the end of the year, and as well as a bright 2026 for Shimmick. So thank you all for joining.
Operator: Greetings, and welcome to the Vaxart Business Update and Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the webcast over to your host, Ed Berg, Senior Vice President and General Counsel. Please go ahead. Edward Berg: Good afternoon, and welcome to today's call. Joining us from Vaxart are Steven Lo, Chief Executive Officer; Dr. Sean Tucker, Founder and Chief Scientific Officer; Dr. James Cummings, Chief Medical Officer; and Jeroen Grasman, Chief Financial Officer. Before we begin, I would like to remind everyone that during this conference call, Vaxart may make forward-looking statements, including statements about the company's financial results, financial guidance, its future business strategies and operations and its product development and regulatory progress, including statements about its ongoing or planned clinical trials. Actual results could materially differ from those discussed in these forward-looking statements due to a number of important factors, including uncertainty inherent in the clinical development and regulatory process and other risks described in the Risk Factors section of Vaxart's most recently filed annual report on Form 10-K and on other periodic reports filed with the SEC. Vaxart undertakes no obligation to update any forward-looking statements after the date of this call. I'll now turn the call over to Steven Lo. Steve? Steven Lo: Thanks, Ed, and thanks to all of you for joining us this afternoon. I'll begin today's call with an overview of our business, then we'll pass the call to James and Sean for the latest program developments. Jeroen will then share an update of our financials. And finally, I will have some closing comments before we open the call for your questions. Starting with our COVID-19 clinical program. Last week, we were excited to announce an important value-creating partnership with Dynavax, a commercial stage biopharmaceutical company that has a proven track record in commercializing innovative vaccines. As part of the agreement, Vaxart could potentially receive up to $700 million in total license, regulatory and milestone fees as well as royalties for our oral COVID-19 vaccine candidate. This is a major milestone for the company and this program, which validates the potential of our platform and will provide critical nondilutive capital that will help us advance this program forward. Here are some of the important terms of the agreement. Dynavax will pay Vaxart an upfront license fee of $25 million and make a $5 million equity investment in Vaxart at a per share price premium to market pursuant to the terms of the securities purchase agreement. Combined with our current cash position, our cash runway now extends into the second quarter of 2027. Dynavax will receive an exclusive worldwide license to develop and commercialize oral COVID-19 vaccines based on Vaxart's delivery platform. Vaxart will retain full operational and financial responsibility for the oral COVID-19 vaccine program through the completion of the ongoing Phase IIb clinical trial and the subsequent end of Phase II meeting with the FDA. In addition, after receiving the results of the Phase IIb clinical trial, Dynavax will pay an additional fee of $50 million to Vaxart if Dynavax elects to assume responsibility for continued clinical development of the oral COVID-19 vaccine program. Finally, if Dynavax elects to assume responsibility for the continued development of the oral COVID-19 program, Vaxart may be entitled to receive up to $195 million in potential future regulatory milestone payments, up to $425 million in potential future net sales milestone payments and tiered royalties at rates in the low to mid-teens on potential future net sales of our oral COVID-19 vaccines. We believe this collaboration is extremely important for Vaxart as a company. It not only extends our cash runway, but it speaks to the potential of our oral vaccine platform, which could be a major differentiator versus other vaccine delivery methods. Later on, James will highlight details of our Phase IIb progress, but we remain on track to announce multiple datasets in 2026. We appreciate Dynavax's view that COVID-19 remains prevalent in society as infections, hospitalizations and even death persist and that the new solutions are in order. At the present time, there are very few deals in the vaccine space, and we appreciate Dynavax's investment and expertise, which can assist in moving this project forward to approval. Partnering with Dynavax will also allow Vaxart to become better positioned for late-stage development on other indications. To reiterate, this is a major step forward for the company. We also appreciate that Dynavax shares our view that our innovative approach could potentially transform global public health and revolutionize distribution and administration. We look forward to sharing updates on our progress and collaboration in the future. Turning to our norovirus program. As we previously shared, we were pleased to report positive Phase I top line results from our second-generation constructs, which demonstrated this vaccine technology produced much stronger antibody responses compared to our first-generation constructs. Since this positive top line data update, we have presented at multiple medical conferences, highlighting the statistically significant increases in GI.1 and GII.4 norovirus blocking antibodies as well as other analyses from the study, which underscores the potential for protection that the new constructs provide. Sean will share more details of our compelling norovirus data shortly. Norovirus continues to be a leading cause of acute gastroenteritis worldwide, causing significant morbidity and mortality in countries of all income levels, particularly amongst young children and older adults. At an economic cost of more than $10 billion in the United States alone, there remains an urgent need for a safe and effective norovirus vaccine. We believe that our norovirus vaccine candidate has first-in-class or best-in-class potential as currently, there are no approved vaccines and other products in development do not have the unique profile as well as delivery advantages of our platform. We remain eager to advance this program and continue to dialogue with several interested parties since our last update. While we are committed to securing our partnership, please understand that these discussions are predicated on other parties' time lines, not just ours. As a result, we now anticipate initiating the next clinical trial in 2026, provided that we receive funding. To recap, with multiple programs, we look forward to further demonstrating the strength of our oral vaccine program. Now with a partner in Dynavax, we can further advance our COVID-19 program, pending 2 potentially robust data readouts in 2026. With a platform designed to generate both systemic and mucosal immunity, our oral pill vaccine has the potential to transform global public health and revolutionize distribution and administration. I'll now turn the call over to Dr. Cummings for a review of our COVID-19 clinical program. James? James Cummings: Thanks, Steve, and thanks to everyone joining today's call. As Steve has discussed, we've made significant progress with our COVID-19 oral pill vaccine candidate on the business development front with the signing of an exclusive license agreement with Dynavax. We also continue to make important progress in the clinical development of this asset. As we announced in August, we did receive a stop work order from BARDA on our Phase IIb clinical study comparing our COVID-19 oral pill vaccine to a commercially available mRNA injectable vaccine. This order stopped enrollment, but allowed us to continue work associated with the per protocol follow-up of subjects who had already received a vaccine. In October, we announced that BARDA will continue to provide funding for follow-up for the approximately 5,400 enrolled subjects, consisting of 400 subjects in the sentinel cohort and approximately 5,000 subjects in the KP.2 cohort enrolled in the trial. We believe that the trial data from the enrolled participants will provide useful insights and a strong foundation of evidence that could potentially advance our COVID program. As a reminder, the primary endpoint of this study is the relative efficacy of our oral pill vaccine compared with the mRNA vaccine for 12 months post vaccination. The trial will measure efficacy for symptomatic and asymptomatic disease, systemic and mucosal immune induction and adverse events in each cohort. We remain on track to report 12-month top line data from the 400-participant sentinel cohort in the first quarter of 2026 and to report 12-month top line data for all participants in the fourth quarter of 2026. In addition to potentially advancing our COVID-19 program, we believe the results of this trial also support our oral pill vaccine platform technology and inform development of our additional pipeline assets. I'll turn the call over to Dr. Sean Tucker for an update on those assets. Sean? Sean Tucker: Thank you, James. In the third quarter, we presented additional Phase I data supporting the potential efficacy of our second-generation norovirus oral pill vaccine candidate at the Ninth International Calicivirus Conference. The data showed a 25-fold increase in the GII.4 fecal IgA response and a tenfold increase in the GI.1 fecal IgA response over baseline with a high dose of the second-generation vaccine candidates after a single tablet administration for each strain. The data also showed an eightfold increase in the GII.4 fecal IgA response and a sevenfold increase in the GI.1 fecal IgA response over baseline with a low dose of the second-generation vaccine candidates after a single tablet administration for each strain. While the Phase I study was not powered to determine superiority by statistical methods, the fecal IgA increases observed with the second-generation constructs at the high dose compared favorably to the increases observed with the first-generation constructs at the same high dose level. As a reminder, results from the Phase II challenge study of our first-generation constructs identified fecal IgA as a critical correlate to protection from norovirus infection. The positive fecal IgA results observed with our second-generation construct, combined with the previously announced serum responses strongly suggests that the second-generation constructs induce much more robust immunological responses than our first-generation constructs. We believe this has the potential to translate into improved protection for our second-generation constructs. As previously discussed, this program is ready to advance to the next clinical study pending a partnership or other funding. With the successful completion of our partnership with Dynavax for our COVID-19 program, norovirus remains a highly attractive opportunity, and we continue to focus on securing resources to advance our second-generation norovirus program. We are updating our guidance for the potential timing of the next clinical trial to start in 2026. I'll now hand the call over to Jeroen for a brief discussion of our financials. Jeroen? Jeroen Grasman: Thank you, Sean. The details of our third quarter 2025 financial results are summarized in today's press release. Revenue for the third quarter of 2025 was $72.4 million compared to $6.4 million (sic) [ $4.9 million ] for the third quarter of 2024. Revenue in the third quarter of 2025 was primarily from the BARDA contract awarded in June 2024. Revenue in the third quarter of 2024 was primarily from a separate BARDA contract awarded in January of 2024. Vaxart ended the third quarter with cash, cash equivalents and investments of $28.8 million. Based on our current plan, which includes proceeds from our license agreement with Dynavax received after the quarter close, Vaxart expects cash runway into the second quarter of 2027. Vaxart will continue to remain aggressive in seeking strategic partnerships, pursuing other nondilutive funding options and managing our expenses prudently in order to extend our cash runway. I will now turn the call back to Steve for closing remarks. Steven Lo: Thank you, Jeroen. To recap, everyone here at Vaxart is excited about the collaboration agreement with Dynavax for our COVID-19 program. The support from Dynavax and their late-stage expertise will be instrumental as we advance this program. Moreover, this partnership further validates our oral vaccine platform, underscoring its potential in transforming global public health. We look forward to sharing multiple data readouts from our COVID Phase IIb trial in 2026. Our pipeline of norovirus, flu and HPV assets, which are backed by promising preclinical and clinical data demonstrate the broad value of our oral vaccine platform. We remain actively engaged with many interested parties about partnership opportunities for each of these programs, and we'll share updates on developments as they become available. Before we take your questions, I would like to remind our listeners that we have a scheduled webcasted fireside chat on Tuesday, November 18, at 4:30 p.m. Eastern Time. At the fireside chat, we look forward to addressing more of the frequently asked questions we have received from our stockholders. As a reminder, you can submit written questions to ir@vaxart.com. We will do our best to answer as many questions as possible at the fireside chat. Since we have the fireside chat next Tuesday, we will not take written questions on the call today. Thanks, everyone, for your time today. Operator, you may open up the line for questions. Operator: [Operator Instructions] Our first question is from Cheng Li with Oppenheimer. Cheng Li: Congratulations on the progress and the collaboration with Dynavax. Maybe 2 questions from us. First, can you maybe talk about why Dynavax decided to reach a deal now instead of maybe waiting for a few months for -- to see the data from the sentinel cohort in early '26? And also like can you provide some color on the data they saw before maybe reaching the deal? And I have a follow-up question. Steven Lo: Great. Cheng, thanks for the question. Yes. So first of all, we're, of course, very excited to have our partnership with Dynavax. And in terms of just what they looked at, right, I think at the high level, first is the science in the platform. And I think there was a lot of discussions around what the platform can offer, right, and all the things we've talked about in terms of the oral delivery, the mucosal immunity, et cetera. And then on top of that, right, I think this was a good time for both companies even before the data came out because of the good fit between the companies, right? We're really happy to have a proven vaccine company that has been able to take a product through FDA approval as well as through commercialization. And I think it just worked out really well from a timing standpoint, and we're delighted to have them on board. In terms of the data that they would have seen, and James can certainly comment on this, we're blinded to the clinical data. But as well, in any partnership deal, there is quite a bit of due diligence. And so we're actually pleased that they did take their time, go through the diligence and in the end, felt very comfortable with moving forward with the deal. James, if you want to just comment or reiterate on the fact that certainly in the clinical trial, we're blinded, I'll let you comment more on that. James Cummings: Thanks, Steve. So from the clinical trial currently ongoing, we are -- it's a double-blinded trial. So both ourselves as well as the participants are unaware of which product they may have received, and we continue to collect data on them. The sentinel cohort will have top line data available in Q1 of 2026. The larger KP.2 cohort, which is approximately 5,000 individuals will have top line data available when that study is concluded during its 12-month follow-up, and that would put us in Q4 of 2026. Until that time, because we are double blinded, we can't comment on further on the study over. Cheng Li: Got it. That's helpful. And I guess just another question is with the additional funding like upfront payments from Dynavax. Can you maybe talk about your thinking about the norovirus program, whether you can maybe start the Phase IIb trial by yourself? If not, what kind of the pipeline priority you are thinking with the additional funding? Steven Lo: Yes. Thanks, Cheng, for the question. I think overall, we're, number one, excited that we have the validation from a proven vaccine company that our technology has good utilization in the marketplace. And certainly for a COVID vaccine candidate, right, they share -- Dynavax shares in our same view about this still being a good opportunity in the marketplace. In terms of our other assets, whether it's HPV, norovirus, even flu, it's created some opportunities for us to really have ongoing dialogue with potential partners on any of these assets. So the priority is still the same, which is including norovirus, being able to have productive conversations with anyone who is interested in partnering with us. On top of that, Sean, who's sitting right here, I think he can also attest to the fact that with the validation of the platform, I think there's also folks who may be interested in providing us their antigen to our platform. Sean, if you want to comment more on that. Sean Tucker: Sure. Yes. I think that given the strength of our clinical data and of course, with this recent validation by our friends across the bay at Dynavax, there's been a lot of interest coming up about using some novel antigens with our system. And of course, these possible collaborations are still at a very early stage, but we remain committed on the current pipeline. But if something comes along, we're very excited about moving it forward. Operator: Our next question is from Roger Song with Jefferies. Nabeel Nissar: This is Nabeel on for Roger. Just maybe a couple from us. How do you think about this year's COVID season and -- in comparison with last year and kind of the market potential for something that is again oral? And how do you also think about your product's strain -- ability to respond to strain change as we've seen also not just in COVID, but previously in norovirus? Steven Lo: Great. Nabeel, thanks for the question. Yes, I'll make some general comments about the market. And I think the best person to talk about strains and being able to respond to that is going to be James. But I'll just make an additional comment just on our manufacturing. So I think the audience knows that we do our clinical manufacturing right here in South San Francisco. And for the COVID trial, we were pretty pleased to be able to produce not only just for the XBB strain but also for the KP.2 strain. So as a company, we think we were pretty versatile in being able to manufacture something for a strain in a very timely manner. I think you've seen as well, just to your first question around the COVID marketplace, right, and it's still a sizable market. Certainly, there are less folks who are taking the COVID shots now. It could be attributed to what's happening in the press. It could be attributed to their perceived side effects. It could be just perceived on the fact that it's a bit of a hassle to schedule an appointment, go to the pharmacy, get the shot. And from our standpoint, we offer a lot of advantages as well as alternatives to that. So I think from our standpoint, and Dynavax certainly evaluated as well that there is still a good market opportunity as it relates to COVID. I'll turn it over to James. James, if you want to comment a bit just on strains and so forth. James Cummings: Thanks, Steve, and thanks for the question. So I think 2 things. One, in terms of strain changes, what we've shown earlier in our development of this product is that we have the ability for cross-reactivity, not just for the strain of interest, the strain that was developed for this product, but also across newly developing strains. And so the benefit of this -- one of the benefits of this protocol is that we're looking at efficacy over an up to 12-month period. And during that time, not only taking a look at was someone ill or infected with the virus and/or symptomatically ill, but also taking a look at what the potential strains may be. As we know, the coronaviruses do have an ability to adapt and to shift or strain change. And so we would expect over the course of a 12-month period that we'll see more than likely one strain circulating certainly in the United States, but really across the globe. And -- so that's some of the data that we'll be taking a look at as part of this study. Sean Tucker: One other thing I -- one other thing I'd like to add on, and this is one of the -- again, one of the key things about that we demonstrated in a nice animal model is we showed that our vaccine in producing these mucosal responses, it could impact the ability of the virus to be transmitted to others. So it may have a better overall health benefit. And certainly, this kind of -- this platform makes it, because it's oral pill, much more differentiated than other things that are out there. Operator: Thank you. This concludes our question-and-answer session. We want to thank you again for your participation today. You may disconnect your lines. This concludes our call.
Operator: Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Fourth Fiscal Quarter and Full Year Ended September 30, 2025. Today's call is being recorded, and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company's website at www.beazer.com. At this point, I will now turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer. David Goldberg: Thank you. Good afternoon, and welcome to the Beazer Homes Conference Call discussing our results for the fourth quarter of fiscal 2025. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of the date the statement is made. We do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is simply not possible to predict all such factors. Joining me today is Allan Merrill, our Chairman and Chief Executive Officer. On our call today, Allan will discuss highlights from the full year, the current operating environment, including the discussion of both our operational response and our strategic positioning and the progress we're making towards our multiyear goals. I will then provide some highlights from our fourth quarter results, guidance for our first fiscal quarter fiscal '26 results and some commentary on how we are thinking about full year fiscal '26 expectations. Updates on our balance sheet and liquidity, including our outlook for capital allocation and land spend and finish with a discussion about our shareholder rights agreement. Allan will conclude with a wrap-up after which we will take any questions in the remaining time. I will now turn the call over to Allan. Allan Merrill: Thank you, Dave, and thank you for joining us on our call this afternoon. Fiscal '25 was a productive but challenging year, highlighted by both community count growth, and prudent balance sheet management as we operated in a very difficult new home sales environment. In the fourth quarter, we were able to improve our sales base, including in Texas, and exceed our expectations for home closings and profitability. For the full year, we were able to make continued progress on our multiyear goals. Specifically, we finished fiscal '25 with an average active community count of 164, up 14% from last year. We reduced our net debt to net cap below 40% and we grew book value per share to nearly $43 from a combination of profitability and the impact of share repurchases. It is certainly the case that fiscal '25 didn't go exactly like we expected at this time last year but I'm very proud of the resilience our team demonstrated. We effectively responded to the environment, allowing us to remain on track to achieve our multiyear goals for community count growth, deleveraging and book value per share accretion by the end of fiscal '27. By this time in the quarterly reporting cycle, you've already heard from our peers that the macro environment remains quite challenging as consumers grapple with both confidence and affordability and builders work through excess inventory. For now, conversion and sales paces remain well below historical norms and aggressive incentives and move-in ready specs are still required to sell homes. However, we are encouraged by the recent decrease in months supply of new homes and the improvement in affordability arising from wage growth and lower mortgage rates. If these trends persist, we should see better selling conditions over the next year. But rather than waiting for the environment to improve, we are taking actions to enhance returns and capitalize on our differentiated strategy. Over the course of fiscal '25, we took steps to improve both profitability and balance sheet efficiency. Relative to profitability, we rebid our material and labor costs, which has resulted in savings of about $10,000 per home so far. These savings should be fully realized in our closings by the fourth quarter and we continue to pursue additional opportunities. In the fourth quarter, we completed a reduction in force, a painful but necessary reflection of the current environment, which resulted in run rate savings of about $12 million per year. And we made product and sales leadership changes in several divisions, including Houston and San Antonio. Our Texas pace improved to 1.8 in the quarter, up from 1.3 last quarter. To enhance balance sheet efficiency, we re-underwrote our portfolio to identify assets that were not a strong fit with our strategy, this led to asset sales of $63 million and a profit contribution of about $7 million. This portfolio realignment will continue in fiscal '26 with nonstrategic asset sales likely to generate more than $100 million in capital for reinvestment and likely to occur at or above book value in the aggregate. We increased the share of our lot position controlled by options from 58% to 62%, and we completed a sale leaseback of about 80 of our model homes to free up cash for higher return uses. Our entire industry seems to use some version of the same affordability playbook. Higher purchase incentives, smaller square footage and fewer features, all help buyers attain home ownership. But they don't excite homebuyers and they don't address all of the costs that are straining affordability. At Beazer, we are focused on the total cost of homeownership by offering lower mortgage rates through competition and elimination of the middleman, lower utility bills from dramatically more efficient homes and lower insurance premiums through competition and advanced building practices. On this slide, we've shown these savings for a recent closing here in Atlanta. This example demonstrates savings of about $3,000 per year versus comparable new homes. That represents nearly $50,000 in buying power or additional value for our buyers. And this is demonstrative of what we can do for every home buyer. We think that's an incredibly compelling value proposition in a housing market hampered by affordability constraints. The next step in our journey and likely the most important one for our shareholders, is to ensure that homebuyers and realtors in our market know what we have created. Last month, we introduced Enjoy the Great Indoors. Our campaign to increase brand awareness and help our sales team explain the many benefits of owning a Beazer Home. Strategically, we believe we are uniquely well positioned to offer homebuyers solutions that address affordability concerns. Both our operational responses and our differentiated strategy are designed to help us achieve our multiyear goals for growth, deleveraging and book value per share accretion. With 169 active communities at year-end and nearly 25,000 active lots under control, we are confident we can reach our greater than 200 community count goal over the next two years. In fiscal '25, we were able to deleverage to just under 40%, an important milestone on our progression. We anticipate decreasing net leverage by several points in fiscal '26 and our goal remains to reach a net debt to net capitalization ratio in the low 30% range by the end of fiscal '27. Finally, we grew book value per share to nearly $43, extending our track record for strong book value growth. Our goal is to generate a double-digit CAGR in book value per share through the end of fiscal '27 through both profitability and share repurchases, which would equate to a book value in the mid-50s. With that, I'll turn the call over to Dave. David Goldberg: Thanks, Allan. During the fourth quarter, we closed 1,400 homes well ahead of our expectations. Our stronger-than-anticipated closings in the quarter were a function of two factors: First, we executed 83 model home sale leasebacks to improve balance sheet efficiency. Second, we sold more specs that could close in the quarter than we expected. Given the competitive environment currently, the margins on the specs we sold and closed in the quarter were below our expectations heading into the quarter. The combination of a higher percentage of specs and larger incentives resulted in a 17.2% gross margin. On the positive side, our strong fourth quarter closings led to improved operating leverage in the period with SG&A at 9.6% of total revenue. All told, in a tough market, we were able to deliver fourth quarter adjusted EBITDA of approximately $64 million and $1.02 in diluted earnings per share. With that said, let's detail our expectations for the first quarter compared to the same quarter last year. Our outlook contemplates market conditions remaining challenging, with incentives elevated as builders push calendar year-end closings. We expect to sell approximately 900 homes with specs representing up to 75% of the total. We expect to end the first quarter with about 170 communities. We anticipate closing about 800 homes in the quarter with an ASP around $515,000. While spec sales will remain elevated, we expect a lower portion of these sales to close in the period compared to the fourth quarter. Adjusted gross margin should be around 16%. This is primarily being driven by the higher level of incentive on specs and a very low share of to-be-built sales in the quarter's closings. SG&A total dollar spend should be relatively flat compared to last year's first quarter. We expect land sale revenue to be about $10 million with minimal P&L benefit. This should generate adjusted EBITDA between breakeven and $5 million. Interest amortized as a percentage of homebuilding revenue should be about 3%. We should generate a net tax benefit of approximately $2 million. All of this should lead to a net loss of about $0.50 per diluted share. While it's difficult to predict full year results at a seasonally slower time of the year, we wanted to provide some commentary on our full year goals. Simply put, we want to meet or exceed our fiscal 2025 adjusted EBITDA despite beginning the year with fewer homes in backlog and lower first quarter margins. It won't be easy, but here's why we think we can do it. We expect a combination of community count growth and a slightly improved sales pace, especially in the third quarter to help generate a 5% to 10% increase in closings versus fiscal 2025. ASP will also be up from a changing mix of communities delivering homes. We expect first quarter gross margin to represent the low point for the year, and we have a clear strategy to deliver about 3 points of margin improvement by the fourth quarter, assuming no reduction in current incentives. Here are the catalysts, we believe will drive this improvement. First, the realization of the savings from our rebidding should grow sequentially over the year, adding about $10,000 a home or nearly 2 points of margin by year-end. Second, we expect to benefit from a positive mix shift within our existing communities. Our most aggressive incentives have occurred in our communities priced below $500,000, typically 3 to 5 points above our higher ASP communities. The share of our closings from these lower-priced communities should fall by double digits by the fourth quarter. And third, our newest communities are performing very well. The 48 opened since April 1 have generated margins more than 200 basis points above our reported margins. These new locations should grow to more than 1/3 of our closings by year-end. Any reduction in incentives or a more favorable mix of to-be-built homes would only help. Estimating the timing and exact impact of these factors is difficult but they should all contribute to sequential margin improvements this year. Finally, SG&A as a percent of total revenue should be down compared to our full year fiscal 2025. Our balance sheet remains healthy with total liquidity at the end of the fourth quarter of nearly $540 million, with $215 million of unrestricted cash nothing drawn against our revolver and no maturities until October 2027, we have ample resources to fund our growth plans in fiscal '26 and still allocate capital toward our other goals. In fiscal '25, we repurchased about 1.5 million shares for about 5% of the company. We continue to view our stock's current valuation as compelling, and we expect to repurchase at least that many shares in fiscal '26. During the fourth quarter, we spent $122 million on land acquisition and development, bringing our full year fiscal '25 total to $684 million. At the same time, we generated $63 million in land sale proceeds for the full year, leaving our net land spend just above $600 million. At year-end, our active controlled lot position was nearly 25,000 with 62% of our lots under option contracts. With our 2027 community count under control, we're able to be very disciplined in our land spending allowing us to allocate capital to maximize flexibility and returns. Finally, earlier this week, our Board unanimously authorized the company to enter into a new rights agreement to continue the protection of our deferred tax assets. At the end of September, our deferred tax assets totaled more than $140 million, about $84 million of which related to energy tax credits. The rights agreement is critical to reduce the risk of an unintended ownership change, which would limit our ability to realize benefits related to these credits. We would note two important points about our rights agreement. First, at the end of the year, our DTA represented more than 10% of our book value and that percentage is expected to grow through June 30 as we continue to recognize additional energy efficiency credits. Second, the agreement will be presented for shareholder ratification at our upcoming annual meeting in February and will expire if shareholders do not support it. Ultimately, our board took this action because they believed it was prudent to protect these assets, which were earned through our incorporation of energy efficiency products in our homes on our way to becoming America's #1 energy-efficient builder. With that, I'll now turn the call back over to Allan. Allan Merrill: Thank you, Dave. 2025 was certainly challenging, but it was also productive. We demonstrated both operational agility and strategic discipline and we made progress towards each of our multiyear goals. Although we don't expect 2026 to be dramatically different at a macro level, we are encouraged by following new home inventories and better affordability. But we aren't just waiting around hoping for better conditions. With a leaner, more efficient balance sheet and numerous catalysts for margin improvement, we're positioned to make further progress toward our multiyear community count, deleveraging and book value growth goals. Our homes are different, they're better, and in 2026, we expect that both customers and investors will notice. Let me finish by thanking our team for their ongoing efforts to create value for our customers, our partners, our shareholders and for each other. With that, I'll turn the call over to the operator to take us into Q&A. Operator: [Operator Instructions] Our first question comes from Rohit Seth with B. Riley Securities. Rohit Seth: Just on the gross margin, you got a 7.2% -- 20.3% in the fourth quarter. You're [guiding] to 16% in Q1, a little bit of a decline there, but you got the cost savings coming through. So just curious, you said you mentioned incentives are going up. Just curious when the rebate benefits start to hit, is that in Q2, Q3? David Goldberg: Well, yes, Rohit. Look, we really talked about three things. So you put it correctly in Q1, obviously, going in, we have incentives, higher and specs have been a higher percentage of our sales closings and backlog, frankly. So that you're going to see in Q1 and close in Q1. But as we go through the year, we didn't give an exact timing, but we talked about being able to pick up three points and those are really the three points that we talked about, right? The direct costs, which are nearly two points of margin improvement with the $10,000 of rebid we've got so far. And frankly, what we continue to work on. And then you think about the mix shift that we discussed in some of our existing communities, we went into some depth about lower-priced communities and what that means and the shift away from lower-priced communities, that's going to add some margin accretion as we move through the year. And then finally, and we talked about it pretty in-depthly, we've got a lot of new communities that have come online. The margin profile of our new communities is better than our existing communities. And frankly, as those constitute a higher percentage of our overall closings that will be accretive to margins. So look, we try to make it pretty clear. We're not waiting for the market to get better. This isn't about assuming incentives are going to come down or that something is going to change in the macro environment. If those things happen, great, but what we're really trying to do is control what we can control. Rohit Seth: And then on your orders, your orders improved substantially from your 3Q, I think you had some issues there that you want to resolve what you did. Q1 guide of about 900 orders. Just curious what you saw maybe October and November? Allan Merrill: I think -- it's Allan, October was sluggish as it usually is, so it was sort of in line with our expectations. I would expect, as we have seen, I think, almost every year, November and December, we'll build on that. So nothing out of the normal seasonal pattern and I think the overall guide is to just below 2. I think it's about 1/8 for the quarter. Operator: Our next question comes from Alan Ratner with Zelman & Associates. Alan Ratner: Thanks, as always, for all the thoughtful comments, and I know it's not easy to give a '26 outlook right now, but I think you walk through the moving piece as well. Dave, just on -- or Allan, on the margin improvement for the year, I think you certainly walked through the tailwinds. One thing I didn't hear mentioned is land costs. And I would be surprised if your land, flowing through the P&L, at least is not somewhat of a headwind relative to '25. So how should we think about that as a at least a partial offset to the tailwinds you have on the material and labor side and mix? Allan Merrill: So I understand the question entirely. You always ask very good ones. What I've seen and what we've seen, Alan, is that the newest communities that are starting to hit the P&L. They've referenced 48 that have opened since April have across the board had better margins than existing communities. Now they're very, very low impact in closings in Q1. And that grows. So I mean, there's got to be -- you're right about the fact that having bought later, they may have a per lot cost that is higher, but it appears to date that the mix of product and price is still allowing us to show margin improvement on those new communities. I realize that's a little contrary to some other narratives, but that's the experience we've had since April. David Goldberg: And there's not a big move in the percentage of land cost as you look forward. And remember, the ASP, we talked about is probably going to go up, especially in the second half of the year as we come out of some of our lower cost communities, and that's part of that percentage is not changing. Alan Ratner: And then second, on the volume side, just 5% to 10% growth being, I guess, the goal for next year. I'm hoping you can help bridge that a little bit for me. I mean, I'm looking at your backlog, it's down 36% to start the year. I look at your spec count, that's also a bit lower than it was entering 2025 not that that's a bad thing, but your first Q orders guidance is also down year-on-year. So it feels like you had a pretty big hill to climb out of to put up closing growth for the year. So can you help us think through exactly how that's going to flow through at least based on your expectations? David Goldberg: Yes. Look, Alan, I would kind of focus on a couple of things. And there's a lot that goes into it, obviously, backlog is less and less predictive in a more spec-oriented market. And so what you really have to think about is units under production, your ability to turn units. And frankly, given the community count growth that we have and the sales pace improvement that we expect, especially in the third quarter off a pretty easy comp, we get to our 5% to 10% number. But that's really where it comes from. Allan Merrill: Alan, you're a student of the industry, obviously. If you go back and look at '16, '17, '18, '19 and just look at units under production and the number of times they turn relative to closings in an environment where sales paces were not in the 3s, they were in the low, mid and high 2s in different years. We were turning the units under production 2.5x. We don't even have to turn the unit under production number from September at that speed to get to up and closings. So it really is a function of sales more than it is backlog or more than it is a function of units under production. And we absolutely think having a higher community count and having not repeating our Q3 challenge of 2025 will help us get there. But that's -- you characterized it, we characterized it. That's our goal. And we laid out very clearly the parts and pieces of how we can get there. Alan Ratner: And if I could squeak in one last one, there's been a lot of chatter over the last month or so about things the administration is or might potentially do as far as getting involved in your guys' business to try to improve affordability, increase production, et cetera. There was an article in the Journal today about forward rate commitments, which was pretty negative just in terms of the mechanics of it, and I'm not going to get into it whether I agree or disagree with that. But you guys have a little bit of a unique mortgage program and yet you're competing against these aggressive rate commitment rate buydowns that your competitors are offering and you're probably doing it to some extent as well. What are your thoughts about forward rate commitments in terms of -- are they healthy for the market? Do you expect them to continue? Do you expect them to be cracked down upon by FHFA? And any thoughts you can give, I think, would be helpful. Allan Merrill: It's obviously, a tricky topic because there are lots of different facts and we can look at different buyer profiles and different lenders and see things that are good or bad from our perspective. We'd like to give customers choices. And if they want to use incentive dollars to buy rates down, we have a mechanism for them to do that, and they get tremendous transparency from multiple lenders on exactly how those dollars are being spent on their behalf to achieve that rate buydown. If they want to use those dollars in the design center, if they want to use those dollars on the price, our buyers have the opportunity to make those choices. And I think any time you've got transparency in the marketplace and consumers are making choices. We feel pretty good about that. Operator: Our next question comes from Alex Rygiel with Texas Capital. Alexander Rygiel: Dave, I do appreciate all the guidance here for 2026. A couple of quick questions. The gross margin on your land sales was obviously low in the quarter, and you talked a little bit about your expectations for 2026. Can you just talk a little bit bigger picture sort of exactly what you're doing here with regards to your land sales and what the strategy is? Allan Merrill: Yes. What we've done is a combination of probably two different things. The easiest part is a number of the communities that we've bought over the last three or four years were larger than we intended to use. And as we have brought them through entitlement and development, they're at a natural state now where we can -- what we call sell off a product line. We're at least consider selling off a product line. So that's just sort of absolute ordinary course. It doesn't happen a lot, but there have been instances where opportunity to control 300 or 400 lots, maybe four product lines. We want to do two or three of them, and we want to have a partner do the other one, but we control the asset. So that will be a part of our asset sale activity in 2026. But the other thing, and I talked about this in the script was we went through this, we realized middle of last year, I mean, by the spring selling season, it was clear the demand environment did not take off. And we were very intentional about rescrubbing everything in our pipeline. And one of the things we realized that sort of links to the incentive discussion is in those lowest priced communities where incentives were the highest, those did not generate the kind of returns that we wanted. And I'm delighted with the fact that we've been able to sell. We sold $60-odd million of that in '25 at a nice gain. I think we've got other opportunities to harvest and reinvest that capital in locations where we can make great returns. It's hard to predict what will be the result of negotiations over individual sales, but we expect the aggregate value will be over 100, and we expect that in the aggregate, there will be a gain. It will be above our cost. I don't know that, that will be true about every single asset, it's hard for me to predict that. But I feel excellent about the underwriting that we have done in our assets. I think that held value or gain value since we bought them. But we are aligning really the locations where we have the best opportunity to get paid for our differentiated value proposition. You got to remember, and I don't mean to sound pedantic, but we're the first builder to do Zero Energy Ready at scale. And so figuring out which buyer profiles, which submarkets align best with that differentiated value proposition, there are some places that are price, price and only price, those are spots where I am happy that we've got a market to sell some land to others who want to play that way. We'll take our capital and put it in places where our value proposition is well rewarded. Alexander Rygiel: And then coming back to your spec home strategy, with 75% of your sales in the quarter are up spec related. What's your view on sort of how we end 2026 and what that mix looks like sort of heading into 2027? Allan Merrill: You ever heard the expression, "It's nice to want things"? Somebody -- if you got kids, they want something and you're like, "Oh, honey, that's great. It's nice to want things". I want for us to have a much, much lower spec ratio. We are dealing with the reality though that right now, the buyer dynamic is specs are how to drive an acceptable sales pace. So I think it can take -- I mean there are an infinite number of possible outcomes. But let's take kind of two ends of the spectrum. I think if the environment stays as it is, rates stay where they are, we're still fighting affordability. We're dealing with an overhang in markets of inventory. I think specs are going to stay much higher than we would like long term. I think if we see some strengthening in the spring selling season, and I'm not predicting that, but it's certainly possible. We're seeing -- we talked about some green shoots and affordability, and it appears there's a little reduction in that inventory, which we anticipated, we could be in an environment where we can move back to 60-40 or 50-50. We don't love being at 75-25 because we absolutely do make more money on to to-be-built where we give buyers the opportunity to have the style selections in their home. But we are going to play in the market that is out there, not the one that we want. And so we've acknowledged that for the time being is different than we want, but it is the way it is. Alexander Rygiel: And then one last question. Any directional thoughts on net land spend next year? Allan Merrill: I think directionally, it's going to be on the order of what it was in '25. It could be a little more, it could be a little less. I mean but it's not going to be dramatically different. We've got development activity going on as we move toward that 200 community count and we'll have some takedowns as we open additional communities. But as Dave said, we have a lot of discretion over our land spending this year, which is a good place to be. Operator: [Operator Instructions] Our next question comes from Sam Reid with Wells Fargo. Richard Reid: Just following up on the direct cost savings. You talked to that $10,000. It sounds like it's labor and material. I was wondering if you could just bucket those savings a little bit in greater detail. Some of your peers have called out some nice savings on the labor side, and we've heard anecdotally some nice savings on the material side, too, but just would love to see -- hear what you're seeing and the drivers behind that $10,000 number. David Goldberg: Sam, I appreciate the question, but we don't really bucket out the individual labor versus material cost. I don't know, Allan, if you have other thoughts. Allan Merrill: Well, I can help you in one way and then it's something that's a little bit different for us, and we kind of committed to it last year that we would do it, and that is drive down the cost of delivering a Zero Energy Ready Home. And I think of that $10,000 probably it's not half, but probably several thousand dollars relate to finding efficiencies but maintaining the performance of our homes. Again, I come back to we're the first builder at scale to do Zero Energy Ready. And so some of the trades, some of the material providers we weren't getting discounts as we were doing that for the first time. And I think we've been able to use our experience in the construction science that we have to reduce those costs. So that's a piece of that $10,000 but the larger share of it, as Dave said, is a combination of things. We've got some turnkey trades. We've got some piecemeal trades. So I kind of distrust people talking about labor and materials as they can completely bucket it because, again, in a turnkey market, if you've got a cost reduction, it's a combination of both, and you can't really know that. Richard Reid: And then just wanted to quickly hear any thoughts on the economics of the model home sale leasebacks. I mean I realize that's not something that's going to be big every quarter. But just kind of curious, high level sort of what those economics look like. David Goldberg: Yes. Look, just big picture. There were 83 sales and you can kind of work out the revenue impact from that. We've given that information. And the profitability was roughly in line with what we did as an overall business. Allan Merrill: There was a financing cost. Look at it like if you're doing land banking or something like that, maybe a little better than that. I mean it was just a way to use our cash we can redeploy it in the business earning a higher return than that cost of funds. Operator: Our next question comes from Julio Romero with Sidoti & Company. Julio Romero: You guys said that the sales pace in Texas improved sequentially in the fourth quarter. Can you just talk about your expectations for Texas from a sequential sales pace in the first quarter? And then secondly, what's kind of embedded with regards to the market in Texas from a full year standpoint? Allan Merrill: Look, our full year forecast for all three of our Texas markets is subdued but it's nothing like what we experienced in the aggregate in the third quarter of last year. I don't want to get into quarterly state-wide projections but it's nothing like a snap back to what I would call normalcy. We were under 2 in the fourth quarter. I think we want 8, which is better than the one free for sure, but it's still not great. we're not assuming, as I said, some dramatic improvement. But I'm really, really happy with our teams in San Antonio and Houston. I mean, we struggled in the third quarter, and they really found a different gear. I'd like that whole state to lift up. It did have a huge effect for us as a company with nearly 40% of our communities in Texas. But I think we're taking a fairly cautious static view that, that market doesn't get dramatically better over the next 9 or 10 months. Julio Romero: And you mentioned one of the things that's encouraging you is the improvement in affordability arising from wage growth. Can you just speak to which markets in particular you're seeing that? And which markets are you encouraged about the prospects for improving wage growth helping your business in '26? Allan Merrill: So we've got a national data slide, and I think it's -- I don't know what slide number it is, Slide 5, where we have tried to consistently for, I mean, multiple years and every quarter, just kind of track this percentage of what the mortgage payment represents as a percentage of the income. And it's -- we haven't done anything to manipulate the data. We've cited all of our sources, and we've just kind of done an apples-to-apples-to-apples over a period of time. And you can see that with rates being down 40 or 50 basis points, 2% or 3% and in some markets, more wage growth over the last year. Those two things together have changed the direction of travel of the line. It's still at an elevated level. I think trying to drop it down a market is not something I don't have that data in front of me, but we are super intentional about our footprint. The places where we are, we like because they have multiple sources of job growth. They have multiple sources of demand. Again, we're really committed to where we are and part of that is because we have confidence in the economies. Operator: Our next question comes from Jay McCanless with Wedbush. James McCanless: So good job on getting the specs down sequentially. I guess, should we expect further diminution there? Or you guys going to have to add some to get ready for the spring season? How should we look for the direction on that? Allan Merrill: That's a great question. I think that number will pick up a little bit, honestly, as we do get ready for the spring selling season, but we're very careful. We watch sales paces. We don't start specs just to start specs. We react to where the demand is. So to the extent that it's up, it's going to be because sales pace is supported at being up, not because we were chasing a dream. James McCanless: The second question I had, looking at the fiscal '26 slide, if you think about land revenue being up from $60 million to $100 million you're saying 5% to 10% closings increase. And just rough math makes me think high single digit, maybe potentially low double-digit growth in total revenues. I guess how much -- how good is the line of sight you think to getting to that $100 million in land sales and especially if you could walk us through again when you think this closings jump might occur back half or whenever? Allan Merrill: Well, the closings are certainly going to be in the back half. I mean we know exactly where our backlog was coming into the quarter. We've guided to as few as 800 closings in the first quarter. So for us to have closings growth, it is going to be back half weighted to also where the community count growth will appear. On the land sale side, Jay, we've got good visibility. I mean these are transactions where in every instance, we have multiple parties that we're either talking to or we're talking to before going under contract or under LOI. So I feel pretty good about it. These are highly desirable locations and we're going to get out of them at or above book. So I feel like that's going to be great because that's the capital we can recycle into higher returns. James McCanless: And then just the last question I had makes a lot of sense on protecting the DTAs like you all talk about in the deck, assuming that the shareholders do vote for that, I guess, how much of that remaining balance do you think you guys can monetize whereas some portion of that is going to be lost within the program. I think in the deck, if it's ratified, it's still going to expire sometime in '28, I guess how much of that value do you think you can get out of those DTAs before it has to disappear? Allan Merrill: Well, let's sort of separate it. We're really focused on the energy efficiency tax credits. And I think Dave quoted the number of $84 million. That number is going to grow through June of 2026, every Zero Energy Ready Home that we deliver is eligible for a $5,000 credit. So that's going to be the source of that number growing. The program ends in June but we will be able to use all of those energy efficiency credits. It's just a question of how quickly we can use them, which in turn, is a function of what level of profitability we have '26, '27, '28. We think we will use them relatively quickly, and that's why one of the features of this rights plan is that subject to shareholder approval, it will go away the sooner of those energy efficiency credits being gone for three years. This is absolutely to allow our shareholders to recoup the costs that we've already incurred to build these homes. And I think we'll be able to do that over the next several years, and that's what the rights plan is really about. Operator: At this time, I am showing no further questions. Allan Merrill: All right. I want to thank everybody for dialing into our fourth quarter call, and we look forward to speaking to you on our first quarter call. Thanks so much. This concludes today's call. Operator: Thank you for your participation. Participants, you may disconnect at this time.
Operator: Greetings, and welcome to Vuzix's Third Quarter ending September 30, 2025, Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Now I would like to turn the call over to Ed McGregor, Director of Investor Relations at Vuzix. Mr. McGregor, you may begin. Edward McGregor: Thank you, operator, and good afternoon, everyone. Welcome to the Vuzix Third Quarter 2025 ending September 30 Financial Results and Business Update Conference Call. With us today are Vuzix CEO, Paul Travers; and CFO, Grant Russell. Additionally, Chris Parkinson, President of Enterprise Solutions, will be joining for a portion of this call. Before I turn the call over to Paul, I would like to remind you that on this call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements during the question-and-answer session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, as well as changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management's estimates as of today, November 13, 2025. Vuzix assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its Q3 2025 financial results and filed its 10-Q with the SEC. So participants in this call who may not have already done so may wish to look at those documents as the company will only provide a summary of the results discussed on today's call. Today's call may include certain non-GAAP financial measures. When required, reconciliation to the most direct comparable financial measures calculated and presented in accordance with GAAP can be found in the company's filings at sec.gov, which is also available at ww.vuzix.com. I will now turn the call over to Vuzix' CEO, Paul Travers, who will give an overview of the company's operating results and business outlook. Paul will then turn the call over to Chris Parkinson, President of Enterprise Solutions, who will also briefly discuss developments in the enterprise smart glasses space. We will then hear from Grant Russell, Vuzix's CFO, who will provide an overview of the company's third-quarter results, after which we'll move on to the Q&A session. Paul? Paul Travers: Thank you, Ed, and thank you to everyone else joining us today. The race to deliver production-ready waveguides and display engines for broad markets is fully underway, and Vuzix is in it with momentum. Inbound interest from leading ODMs and microdisplay suppliers has accelerated over the last 12 months, led by Quanta Computer, one of the world's largest ODMs. Just over a year ago, Quanta made an initial $10 million strategic investment to support a long-term waveguide design and supply partnership. We received a second $5 million tranche in June and completed the third $5 million tranche in September after meeting or exceeding the agreed-upon manufacturing milestones. This brings Quanta's total investment to $20 million. We are now into discussions with Quanta on how to ramp in a more significant way, capacity-wise, as the AI smart glasses industry begins to accelerate much further. Both of us want to be primed and ready to deliver. We also announced 2 new display ecosystem partnerships in Q3, one with TCL, China Star Optoelectronics Technology to develop an integrated AR optical solution that combines our high-transparency production-ready waveguides with their microLED display engines, initially a monochrome green module with a road map to full color in 2026, and another with Saphlux to co-develop next-generation AR display engines pairing their high brightness mono microLEDs with our waveguides, targeting a reference design and ultimately full color mass producible optical solutions. Beyond these public announcements, we've signed NDAs with multiple other ODMs, microdisplay makers, and consumer electronics brands seeking a capable, cost-effective waveguide supplier. Put simply, demand for high-quality color waveguides continues to rise, and Vuzix is making sure it is well-positioned to serve it. In parallel, our OEM and defense business continues to accelerate in active programs, engagements, and revenue, and our ties with prime contractors continues to deepen. We are now transitioning into production deliveries of the waveguides and display engines for a lightweight heads-up display for fielded military personnel, with revenue contribution beginning in Q4 this year. We also have secured, as previously announced, a 6-figure development order for a new program that was received and expected to be delivered in Q4. And finally, a third program is advancing, pending a display engine modification that Vuzix needs to make to support the high dynamic range required for that unique application. On the enterprise side, which currently accounts for the majority of revenue, AI-enabled smart glasses are driving a new wave of interest as customers bring us their specific operational challenges. We've seen a real shift from push to pull. Customers now are coming to Vuzix with specific workflows and ROI targets and asking us to help deliver for them. A good example of this is Amazon. As we disclosed in May of this year, Amazon is using Vuzix's Smart Glasses to support reliability and maintenance engineering teams with see what I see capabilities to reduce cost, speed repairs, and improve safety in large-scale logistics facilities. That program, which started in Europe, has now entered commercial rollout in the U.S. and Canada, with discussions underway to expand to additional regions, business units, and use cases. And as a result, we expect this business to grow materially with Vuzix delivering more and more custom M400 kits for them as they scale. Overall, business and revenue momentum is increasing in Q4 as quarter-to-date revenue and purchase order obligations have already exceeded Q3 levels, with both our OEM waveguide and products business performing well. Finally, our waveguide development efforts are not only focused on cost-effective high-volume manufacturing, but we are developing advanced high-index materials that are designed to deliver on the future performance requirements that this industry is going to demand as the industry matures. We will have more to share on this in 2026 as these new developments unfold, but you can imagine technology that revolves around all the way to silicon carbide waveguide solutions. In September, we welcomed Dr. Chris Parkinson, Co-Founder and former Chief Technology Officer and CEO of RealWear, as President of Vuzix's Enterprise Solutions business. Chris' mandate spans the entire enterprise stack, product portfolio, and road map, solutions architecture, sales, strategic partnerships, customer adoption, and global channels so we can capture the clear, measurable value smart glasses deliver in the enterprise, higher productivity, faster time to resolution, better safety, and more consistent quality. Chris's leadership of our enterprise business also frees me to double down on core waveguide and optical technology, the defense business, and strategic development funding opportunities, ensuring we solidify being the supplier of choice for brands and prime contractors with the Made in U.S.A. operations. Of course, we also have our eye on Asian operations for some of our high-volume broad market programs. His arrival coincides with the formal introduction of the LX1, our purpose-built warehouse-ready voice and vision smart glasses designed for full shift duty and fast time to productivity. Early customer feedback has been excellent, and Chris is already engaging with multiple key accounts that will shape this market. And with that, I'm delighted to introduce you all to Chris Parkinson. Chris? Chris Parkinson: Thank you, Paul, and thank you, investors, for allowing me to share a little about myself and what I'm up here at Vuzix. I've been in the enterprise wearable space since 2007 and have been watching with increased interest the evolution of smart glasses over the last few years. We've seen an amazing improvement in displays and optics, a steady miniaturization of electronics, better batteries and power-efficient operating systems, and have seen an increased awareness and desire by the enterprise to want wearables. But one problem has continued to plague the industry: the user interface for hands-free systems, causing a barrier for wide-scale adoption. But about 2 years ago, AI burst into our space to solve this overnight. With AI comes the natural language interface, and almost immediately, those clumsy devices can become eminently usable at scale. Just talk to the device and it works. This huge convergence of technology over the last few years has left me eager to continue to be a part of the smart glasses revolution. but not as a customer to a waveguide company, but rather part of the company that owns the building blocks of that future. And that's the Vuzix opportunity for me. Plus, of course, the Vuzix made in America story is such a strong message that just makes sense in the enterprise sales area. As you know, I've only been on board at Vuzix for about 2 months, but I already feel I'm hitting the ground running. We are rebuilding the sales motion at Vuzix, building on the work performed by the teams today and adding procedure, accountability, and discipline to the way we go to market. That means working with trusted software partners to identify and assemble solutions, working with trusted resellers to educate, train, and help them scale their businesses, and to enhance the reputation and quality of Vuzix products in the field. This is by no means a small feat, but the end justifies the effort. Done well, we will have an army of people around the world eager, excited, and incentivized to sell Vuzix products and customers that are happy with the value that Vuzix brings. And by product, we are talking about the M400, maybe long in the tooth for some, but actually a really solid device. We are seeing sales pick up at the moment, and I believe this device, when positioned correctly, has strong legs through 2026. And of course, we have the LX1 coming out very soon, not to replace the M400, but to sit side by side as a portfolio of devices, choose your model, lightweight M400 or rugged LX1 with integrated all-day battery. They make a very strong pairing, giving customers a choice to own what they need. And what are the Ultralight Pro? This is one device I'm really excited about, but it was never designed to be an end product. It's a platform to seed an industry, which I'm looking forward to helping to deliver on. So I'd love to tell you more, but I feel I'm going to get in trouble if I do that. So needless to say, though, I'm actually very buzzed about these products, very buzzed about the story and the portfolio we're building. It's exactly why I'm here at Vuzix. With that said, I'll hand the microphone over to Grant for the financial overview. Grant Russell: Thank you, Chris. As Ed mentioned, the 10-Q we filed this afternoon with the SEC offers a detailed explanation of our quarterly financials. So I'm just going to provide you with a bit of color on some of the quarterly numbers. Our third quarter 2025 revenue was $1.2 million, down 16% year-over-year due to decreased sales of our M400 smart glasses. Engineering services revenues recognized were $0.3 million for the 3 months ended September 30, 2025, versus $0.4 million in the prior year's period. The decrease was primarily due to the timing of work on a major project, and we have a strong pipeline for Q4 currently expected. There was an overall gross loss of $0.4 million for the 3 months ended September 30, 2025, as compared to a gross loss of $0.3 million for the same period in 2024. The larger gross loss was primarily the result of lower product sales to absorb our relatively fixed manufacturing overheads. Research and development expense was $2.9 million for the 3 months ended September 30, 2025, as compared to $2.3 million for the comparable 2024 period, an increase of approximately 26%, primarily due to $0.3 million increases in both external development costs for new products and depreciation expenses, a $0.2 million increase in cash compensation and salary expenses, all partially offset by a $0.4 million decrease in noncash stock-based compensation expense. Sales and marketing expense was $1.1 million for the 3 months ended September 30, 2025, as compared to $1.8 million for the comparable 2024 period, a decrease of approximately 35%. This reduction was largely due to a $0.3 million decrease in bad debt expense, a $0.2 million recovery of previously written off bad debt, and a $0.2 million decrease in noncash stock compensation expense. General and administrative expense for the 3 months ended September 30, 2025, was $2.6 million versus $4.3 million for the comparable 2024 period, a decrease of approximately 41%. The reduction in total G&A expenses was primarily due to a $1.8 million decrease in noncash stock-based compensation expense, which was driven by the cancellation of the company's original LTIP plan approved by the stockholders in June 2025. Total operating expenses for the 3 months ended September 30, 2025, declined $1.8 million or 20% to $7.1 million versus the prior year's period of $9 million, the lowest quarterly level achieved since 2020. The net loss for the 3 months ended September 30, 2025, was $7.4 million or $0.09 per share, versus a net loss of $9.2 million or $0.14 per share for the same period in 2024. Our cash and cash equivalents position as of September 30, 2025, was $22.6 million, up from $17.5 million as of June 30, 2025, and we had a positive working capital position of $24.3 million. As of September 30, 2025, the company continues to have no current or long-term debt obligations outstanding. For the third quarter of 2025, net cash flows used in operating activities was $5 million versus $5.3 million for the comparable 2024 period. For the 9 months ended September 30, 2025, net cash flows used in operating activities was $13.3 million versus $19.7 million for the same period in 2024, a decrease of $6.5 million in cash used for investing activities for the third quarter of 2025 was $0.5 million, versus $0.3 million in the prior year's quarterly period. During the third quarter of 2025, we received a total of $10.6 million from various financing activities, which primarily included the final tranche of $5 million from the sale of Series B preferred stock to Quanta Computer and $5.3 million in net proceeds from the sale of common stock under our ATM program. Total financing activities for the 9 months ending September 30, 2025, was $19.8 million. Let me close by reiterating that we believe our overall cash position, along with maintaining a disciplined cost structure, further conversions of our finished goods inventories into cash, and general business expansion, particularly on the ODM and OEM side, and potential future uses of our ATM program, gives us sufficient runway to execute on our current operating plan through 2026. With that, I would like to turn the call over to the operator for Q&A. Operator: [Operator Instructions] Our first question is from Christian Schwab with Craig-Hallum Capital Group. Christian Schwab: I just wanted to start with Quanta and potential -- your conversation about having conversations with them to ramp capacity even further. I think previously, you've said you had capacity for 1 million waveguides a year. I mean should we assume that when CES comes and some people introduce their products that there's high hopes for substantial volume? I'm just trying to understand that statement a little bit better. Paul Travers: Yes, Christian, thanks for asking the question. It's a good one. There are multiple programs that we're working on with our friends from Quanta right now. There'll be 3, maybe 4 new glasses presented, I think, at the Consumer Electronics Show. The forward momentum in this space, Quanta has inbound all over the place, of which I don't know all of it, frankly. They don't share. They're a very conservative company when it comes to who their customers even are. But there is a big pressure on being able to ramp to much significant -- more significant volumes than what we can do, the 1 million per year out of our plant here in Rochester. And actually, the very initial input or communications between us and Quanta was how do we get to the point where we can make millions a year. If you think about the size of this business, right, ultimately, these glasses could replace the foam. And when that happens, it's 1 billion or 2 billion waveguides a year that will be needed. So yes, we are in discussions about the best way, where to do it, and how to get it done so that the volumes can ramp much more significantly than what we have here in Rochester. I will say that the Rochester plant is easily expanded. However, I also think there's supply chain issues that need to be addressed. There's issues associated with tariffs these days that need to get looked at, at least for North American versus rest of world markets. And so there's a whole lot of discussions about the best way to go from where we are today to where we need to be over the next year. Christian Schwab: And following up on that, how long are these discussions in the early stages? Or do you think you're down the path to -- is that something that we're going to hear about in the next 1 to 2 quarters, how those discussions end? Or is it yet to be determined how long that may take? Paul Travers: I think people got to hold their breath just a little bit. We're working through the process. I would suggest that it takes time to bring up new lines. So it's sooner rather than later. But I can't comment on -- well, in Q1, you should see this happen, and then in Q3, this should be happening. Sorry about that. I wish I could put a sharper schedule and plan in place for you. I believe that as the next few quarters unfold, this will get way obvious, though. We'll be able to share a whole lot more. Christian Schwab: And then just another question regarding the defense industry. Can you guys -- I know we've talked about a 6-figure development order with a leading U.S. defense contractor in the past. But as these type of programs ramp, when do you think you'll be able to give greater clarity on volume ramping in a more measurable pace? Paul Travers: So we're on the same page here, Christian. We have development programs here in Q4, and we are shipping production waveguides in Q4. So these programs are going into production. Looking forward to being able to announce exactly, but you will see in our Q4 revenue numbers that our OEM business is bigger certainly than it's been in a while. And a portion of that is related to production rollout, not a proof of concept, and not another development project. But there's also some of that in there, too. 2026, this one particular program that is obviously off to the races, we should know a whole lot more here early in the year as to how that's going to unfold through '26 and '27 and into the future. But it's real production now. We're not -- next week, they might get there. This is production. Christian Schwab: And then as 2026 unfolds, how do you potentially see the defense contractor customer base expanding? And will we see other customers go into production in calendar '26 in your expectation? Paul Travers: This development program that we have is going to happen really fast. It's with a partner we've already had some level of success with, and the project is just waiting for the new waveguide. So that one should happen fairly quickly. So we might have 2 programs rolling in production in '26. There's another one that needs to have a design change to an engine that Vuzix has to have done. And we're in the process of doing that. It's got to force a display to do something that it wasn't really designed for, but it can do it. We have zero doubt about that. It's just we got to get through the engineering on that. And that's going to been the one that's been to hang up for that particular program getting into production. And that's the tip of the spear. There's some programs -- other programs that we have that are contracted that we'll be able to share a whole lot more about here in Q1 and after this sequestration or with the continuing resolution happens and people actually go back to work at the U.S. government. Some of that's been holding some of these things up, including some of our ability to make announcements. Operator: At this point, I would like to turn the call back over to Paul Travers. Paul Travers: We did have a couple of other questions come in that I thought what might be germane to the conversation for everybody. And one of them does relate to the Amazon program. The Amazon program actually has been around for some time now. They've been perfecting on how they use our glasses. And I don't know if you noticed, but if you're paying attention, you can see that Amazon robots, human in the loop, the use of glasses to help solve problems around some of the things that they're doing is all over the place at Amazon. And our glasses are being used today in fulfillment and warehouses, not for the picking actually, but for the maintenance and keeping the equipment up, and where there's human-in-the-loop relations between robots and humans, kinds of stuff. And they're expanding that now that we started in Europe. They've expanded throughout North America, and it's now being moved. This is a brand-new component to their data centers to keep all those AI server farms and Amazon Web Services, and the likes up and operational. They're even looking at janitorial services for the glasses. And on top of that, Amazon Web Services has an AI component that they're doing that they're looking at potentially putting that with the glasses to enable even more all-day use case kinds of applications. So Amazon could be significant. It's off to a really good start, and it's finally rolling for Vuzix. The other question, I think, Christian, I kind of answered it about what happened follow-on with our expectations around our partners, Quanta. And then there was one other question about gross margins. I will say that it's a balancing thing. The new stuff that we're doing, like the LX1, its margin models are better just out of the gate. The stuff that we do in defense typically is much higher margin than what we would do on something on the enterprise product side of the house. So in general, the product mix in 2026, you should start to see higher margins in the product side of the house. So that's the questions today. I'd like to again thank everybody for coming to our call today. It's really starting to get to be exciting at Vuzix. We've said this before, but the train is leaving the station. We look forward to sharing a whole lot more here as all this stuff unfolds. Thanks again, everybody. Have a nice evening. Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Origin Materials Third Quarter 2025 Earnings Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I will turn the call over to Ryan Smith, Co-Founder and Chief Product Officer. Please go ahead. Ryan Smith: Thank you. Good afternoon, and thank you for joining us, everyone. Speaking first today is Origin's CEO and Co-Founder, John Bissell; followed by CFO and CEO, Matt Plavan. Then we'll open the call to questions from analysts and discuss questions submitted as part of this quarter's "Ask Origin" campaign. Ahead of this call, Origin has issued its 2025 third quarter press release and presentation. These can be found on the Investor Relations section of our website at originmaterials.com. Please note that during our discussion today, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views as of today, should not be relied upon as representative about views of any subsequent date and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion on the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our quarterly report on Form 10-Q filed today. During today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Origin Materials performance. These non-GAAP measures should be considered in addition to and not a substitute for or in isolation from GAAP results. You will find additional disclosures regarding the non-GAAP financial measures discussed on today's call in our press release issued this afternoon and our filings with the SEC, which will be posted to our website. The webcast of this call will also be available in the Investor Relations section of our company website. And with that, I will turn the call over to John. John Bissell: Thank you, Ryan. Good afternoon. Today, we are announcing financing that strengthens our balance sheet and provides access to additional capital that can be staged according to our manufacturing capacity build-out. This financing fuels the scale-up of PET cap production. Our financing is composed of debt financing, both equipment backed and corporate level debt with the flexibility to optimize cash management and cost of capital by optionally servicing the debt with equity. Following our evaluation of multiple corporate financing structures over the past couple of quarters, we have executed a secured convertible debt facility with an initial close of $15 million in cash by the end of the month, with the capacity for additional tranches up to a total of $90 million as needed to maintain a healthy cash flow and to fund growth. During the third quarter, we evaluated a number of term sheets for CapFormer equipment financing and from those in the fourth quarter added USD 20 million in equipment backed financing capacity, bringing our total equipment financing capacity to approximately $30 million. We believe the funding from these 2 sources will enable us to continue to keep pace with our manufacturing build-out and to serve the forthcoming volume orders pursuant to qualification. For those new to Origin, we are making a big difference with a small cap and the technology behind it. Our technology platform produces what we believe are the only commercial-ready PET caps as opposed to the HDPE and polypropylene caps, which today dominate the over $65 billion closures market. Our platform excels in 7 areas: recyclability; oxygen and CO2 barrier, enabling shelf life extension; closure diameter, which enables more economic large-format production; thickness, which enables lightweighting; rigidity for a premium fuel; use of recycled content; and optical clarity. Our innovation stands to be transformative for the packaging industry. In addition to achieving key financing milestones this year, we continue to execute our operating plan. Our CapFormer deployment schedule is on track, and we are maintaining our related guidance. As such, we continue to expand PET cap production capacity in accordance with our revenue growth strategy. We remain on track for completing factory acceptance testing through CapFormer Line 6 by the end of 2025. To optimize capital deployment Line 7 and Line 8 start up could extend into Q1 2027, updated from Q4 2026. On the commercialization front, we are executing our water first go-to-market strategy with line of sight to our revenue targets in 2026. Last quarter, in California, we put our closures on what we believe are the only beverage products on the market with PET caps. Since then, we've built sales momentum globally, marketing our products in North America, Europe, South America and Asia and bolstering our customer pipeline in accordance with our water first growth strategy. In recent months, our sales team displayed PET caps at key international conferences for the plastic parts and beverage industries and it is clear that Origin holds a strong lead in PET cap commercialization. Water customer demand is strong, growing and provides a path on the way to CSD sales. More than half of the water brands in Origin's customer qualification funnel are also potential CSD customers. This quarter, our customer Berlin Packaging placed its first order, which we are now in the process of fulfilling. Berlin Packaging is a respected market leader and represents a sales and distribution partner for Origin. Berlin's broad and deep distribution footprint not only extends our market reach for 1881, but opens the door for all our forthcoming formats across closure applications globally. You can find more about our Berlin packaging relationship in our August 2025 release. We extended our technology lead this quarter by making significant progress with 2 priority challenges: Impact resistance and multi-day heated horizontal stress testing. Amongst separate cap designs, we successfully exceeded performance requirements for both of these tests. In upcoming production trials, we expect to consolidate these features into a single cap design. With that, I'll hand it over to Matt, who will discuss the quarter's financing and strategic highlights and provide a review of our expected near-term financial performance. Matthew Plavan: Thanks, John, and good afternoon, everyone. First, while the details of the convertible debt financing will be published in the 8-K to be filed in the coming days, I would like to share a qualitative perspective on our financing strategy. We expect the next several quarters to be operationally dynamic at Origin with concurrent executions of a number of critical workflows, including key design iterations, multiple customer qualification processes and significant capital equipment acquisition and capacity build-out activities. At the moment, we believe the combination of our equipment financing and convertible debt instrument is the optimal funding strategy for the agility to best respond to the rapidly evolving working capital needs and to have ready access to future equipment funding at the optimal cost of capital for a given situation. We anticipate drawing additional tranches in 2026 as needed, although we are not obligated to do so. It is at our discretion, contingent upon meeting certain minimum equity and financial conditions. Similarly, it is the company's decision whether to service any outstanding debt with either cash or shares, contingent on meeting certain minimum liquidity requirements. Second, our revenue and run rate adjusted EBITDA guidance remains unchanged. Before consideration of potential strategic review outcomes, we continue to expect 2026 revenues of $20 million to $30 million, 2027 revenues of $100 million to $200 million, and we continue to expect to reach EBITDA adjusted run rate breakeven in 2027. Third, during this quarter, Origin settled securities litigation with no finding of liability or wrongdoing. Announced in October 2025, Origin entered into binding agreements to settle the shareholder class action lawsuit and the related derivative lawsuit initially filed in August 2023 and March 2025, respectively, pending in the United States Court for the East District of California. The proposed settlement, which will be fully covered by insurance, resolves all claims asserted against Origin and the other named defendants in the lawsuit. Even when a company has strong confidence in its position, which Origin does, the way the litigation process works, it can often cost more to fight through vindication than it does to settle and make the case go away. This settlement allows us to avoid distractions associated with the lawsuits and avoid uncertainty and focus on our core business. Lastly, Origin's strategic review engagement with RBC Capital Markets announced in our Q2 2025 earnings release is progressing well with productive engagement from potential counterparties. We look forward to sharing more on this topic as appropriate. With that, I'll pass it back to John for concluding remarks. John Bissell: Thanks, Matt. I'll conclude with the following: We secured financing that strengthens our balance sheet and provides access to substantial additional capital. We are the clear technology leader for PET caps poised to grow and dominate a new market category. We are making strong progress with respect to our manufacturing capacity build-out and product development and demand is strong, both for water and CSD applications. We look forward to sharing our milestones with you as we progress in our mission centered on the future of packaging, sustainable materials and recycling that actually works. With that, I'll open up the call for questions. Operator, may we have the first question please? Operator: [Operator Instructions] Our first question today comes from Frank Mitsch with Fermium Research. Frank Mitsch: And congrats on the financing. Can I -- I wanted to ask a couple of questions on the cash position and the convertible debt financing. Okay. So you're going to get $15 million by the end of this month. And it is at your option to get up to the $90 million, the additional $75 million. I believe, Matt, you mentioned that there were some milestones or some mileposts that were necessary for you to pass in order to get the future funding. Can you -- is that true? And can you just kind of describe that those mileposts? Matthew Plavan: Yes. Frank, thanks for the question. And at this point, the 8-K with the deal terms, it's going to be out by month end, probably sooner. And frankly, I think it's best to see all the terms together at one time in order to get a proper understanding of how the instrument works. And so I think I need to wait until we file that to really get into a level of detail beyond what we did in the prepared comments. So I think that's the approach we should take at the moment. Frank Mitsch: All right. Fine. I'll be on the lookout for that. The burn rate in the third quarter was $15 million. It's a little bit higher than perhaps I've been thinking. Can you offer your outlook in terms of the burn rate for the next couple of quarters? Matthew Plavan: Yes. So the burn rate is a combination of kind of at the moment, kind of what our operating expenses are cash operating expenses. And as we talked about in Q1 and Q2 together in the first 6 months, that was approximately $20 million, and then the rest was CapEx for CapFormers. In Q3, it was roughly $10 million on OpEx and $5 million on CapEx, so relatively consistent. And I think as we look into 2026, that's probably a good guide to use. Of course, as we begin generating gross profit, we're going to reduce the net burn. But as we've said before, this is a capacity build story to gather all the -- to be able to service all the demand. So we're going to keep building the CapFormers, and that's kind of why we have the financing lined up that we do to take care of that. But it's a relatively straightforward split, 50-50, 60-40, something like that, between OpEx and CapEx for the foreseeable future. Frank Mitsch: Terrific. And John, you indicated that Lines 2 and 4 are going to be starting up in the fourth quarter and in the first quarter. And I was wondering if you could give us an idea as to when you expect that that's going to be generating acceptable product quality for the customers because it's kind of important, I guess, given the NASDAQ delisting, I guess, is you're extended until April of 2026. So if these lines are up and running and you're qualified, et cetera, then I think there could be scope to see the stock get to $1 on its own. But yes, if you can give us a little more color on the start ups of Lines 2 and 4, please? John Bissell: So we're making good progress on the start up of those lines already. And we're excited to get them up running and producing consistent product that we can test with our customers. As we said before, it can be a little bit tricky to predict exactly when we're going to get line time with customers to do that qualification on the customers' lines, right? So first, you've got to get our lines up and running, and then you've got to be take that product from those lines and specifically use it in the customer lines, check that off. And then you can figure out exactly what the timing is to start generating revenue off of that and making sales into that customer line. But we do think that we can make really significant progress across all of those items in the window that you were just referring to, which is really sort of through the end of Q1. We think we can do a lot across those. We're sort of not ready to commit on any single particular customer at this point, but we really think we can make a lot of progress across all of those. There's plenty of time for us to do that, and we're -- we like the way that the Lines 2 and 4 are starting up right now anyway. Frank Mitsch: All right. Very helpful. And then I guess, lastly, speaking of customers, you're getting your first order, you received your first order from Berlin Packaging. I assume that, that's for a water application. I'm curious -- and I assume that you're through qualifications, et cetera. But any color that you can give on that first order and what your prognosis is for future orders from Berlin Packaging. John Bissell: Yes. So we're excited to ship it. We haven't heard feedback from Berlin's customers on it yet. So we're excited to see that. I think that's going to be part of what we talked about I suspect next quarter is learning everything that we learned from those -- from Berlin's customers. We have been busy setting up our customer support service. So a lot of the work that we've been doing is really product development-oriented engagement with customers where we're going from qualifying in a very prescribed fashion with Berlin. What's a little bit different is we don't necessarily control exactly which customers are going to be using our caps there. So we need to have the ability to responsively provide customer service instead of just sort of planning too far in advance. So we're excited to do that. We've got that capability pretty much set up. And I think that's going to give us a heck of a lot of information about how our cap is performing, how people are using it. And as with most applications in the world, as you as you start to use something for that application, you're going to learn things that you weren't expecting. And that's, frankly, as an engineer and scientist, that's really exciting. Operator: Now I'll turn it over to Ryan Smith, Co-Founder and Chief Product Officer for a Q&A section answering Ask Origin questions submitted by investors prior to today's call. Ryan Smith: Thank you, operator. Prior to our earnings call, we invited all investors to submit questions as part of our Ask Origin campaign. So thank you so much to everyone who participated. These questions were, of course, submitted before our call today, and we answered many of them thoroughly with our prepared remarks. We will generally be answering the most relevant questions today during the time that we have. So let's start with the first question. The investor asks, could you please provide more explanation about the various phases of qualification and their significance? And this is specifically in reference to qualification of the Lines, terms like FAT and SAT. John Bissell: Yes. So first, I think your comment just now, Ryan, is a useful one to remind everybody of, which is, for better or for worse, we do talk about qualification in 2 different contexts. One of them is qualifying our product with customers on their bottling lines. And that's been a significant focus of ours over the last year or so. And that's a process where we send them caps. They run our caps on their bottling lines. And they see both how do those caps perform from a throughput and a quality perspective in their bottling lines, examples of things that could go wrong there, not specifically for our caps, but caps in general, could be misapplication of the caps or jamming of their bottling systems. And then the other thing that they're really looking for in the aggregate is how do those caps end up performing on those -- the products that they are making on the line. So there's sort of the performance of the cap running through the process and then there's the performance of the cap as part of the final package for the product. And there, you could have under application of the caps that might make it not feel properly or could be over application of the caps, which might cause a problem for, I don't know, tamper evidence or it might make it too hard to get off or something like that. These are sort of generic comments on what could go wrong with those sort of things. And so those are the 2 elements of customer qualification. And of course, with customer qualification, you're both looking for our particular cap design that's being qualified. It's also what do we maybe need to change, adjust settings on their lines in order to make our cap run properly on their lines. These are pretty typical things that you might manage your way through during a customer qualification process, whether it's a PET cap or any other cap. And so that process is what we often are referring to. And the key part of that process is we have to get on to our customers' operating lines. And they have to give us the time to do those runs, collect the data appropriately, make sure that our cap is working properly, and then they can incorporate our caps into their product and planning cycles going forward. But obviously, that's a long-winded way of saying, that's actually not what the question was about, although I think it was really worth walking through. The question is about our qualification of our own lines. So not the lines for using caps, but the lines for making caps. So this is what -- these are our cap forming lines. And what we do during factory acceptance testing which is FATs, which is something we talk a lot about, is that's us testing the performance of the equipment at the site that the equipment was fabricated and assembled. So hence, in the factory, not our factory, but the factory of the equipment suppliers. And that's verifying that before the equipment ever leaves the factory that it's operating the way it's supposed to, to all of its specs. With successful completion of the FAT, the factory acceptance test, it all gets boxed up. It gets shifted to wherever we're going to install and operate that equipment. So frequently, that means our Reed City manufacturing location in Michigan. We unbox all of the equipment. We reintegrate all of it, assemble it, start it up and then we run it again. And we see if it performs the same way now installed at a completely different location where we're going to be operating it for the foreseeable future, to see if it runs the way that it did during the factory acceptance testing. When we have checked that off and it is running the way that it was before, that is the completion largely of the site acceptance test or the SAT. So that's the FAT and the site acceptance test. Now we also go through a line start-up and qualification process for ourselves, which is where we're really -- we're not testing whether the equipment is working. We are dialing in the equipment so that it is operating exactly to the performance specifications that we're looking for as long-term operations of that equipment. And that's less of a test if this equipment work, that's do we have it honed in properly so that we're getting the level of precision that we want to see on those lines so that when we're shipping caps to customers, we are comfortable with those caps, statistically are meeting the specifications as frequently as they need to, to make sure that when we go on to customer qualifcations on their lines, that those caps are going to work the way that they're supposed to. Ryan Smith: Great. The next question from an investor, asks, can you speak to the customer demand in Europe versus the U.S. given the environmental stance of the current U.S. administration and how that factors into your expected growth plans? John Bissell: Yes. I think the first thing to say here is we see a real delamination between the sort of sustainability treatment and public opinion of something like a sustainable material or climate technology, low-carbon materials, those sorts of things. And end of life and recycling type sustainability. So those -- they're often sort of different working groups, if you're looking at the larger sort of meta organizations. They are frequently handled by suddenly different people, even if they might report up into the same broader sustainability group in inside of a company, and they're driven by different consumer factors. So while we have, I think, like everybody else, certainly seen somewhat of a change in tenor on the climate side of things. And notwithstanding that, that really hasn't changed our own view of the importance of climate, but I think that the broader view on climate has changed. We have not seen a reduction in intensity for end-of-life recycling type value propositions or sustainability efforts. And so we have seen a lot of push still in the U.S. just like we had before around resolving the issues for recycling and end of life, particularly for plastics. And I think -- and same in Europe, obviously, there's tethering in Europe that is leading a little bit sort of tethering activities or other kinds of end of life activities in the U.S. But I'd say, in both cases, we see really strong demand elements that are coming from this end-of-life and recycling sustainability desire. I think also, as the plastic and plastic microparticles are becoming more inherently linked to consumers. I think that's driving recycling more. And frankly, we think that, that favors PET quite significantly compared to other packaging materials. So we're really excited, frankly, about all of those demand elements. And I think it's all good right now for PET caps as far as you can tell. Ryan Smith: Excellent. All right. And so this next question, I think, was motivated by the fact that Origin has participated in a number of trade shows recently. The investor asks, have any concrete developments come from your recent spate of trade shows in the U.S. and Europe? John Bissell: Yes. So not things that we're ready to sort of communicate externally. A lot of these deals can take quite a long time. There's a lot of involvement especially if it's not just a straight up, I'm going to buy some caps from you that you're already making. And obviously, in our face of life, there are a lot of transactions or sort of commercial development activities that involve something that we could do or will do in the future or those kinds of things. And those take a little while to be able to communicate out. So lots of concrete things that happened there. not all things that we can talk about. But I will say our sales team and our business development team has been really busy with the outputs of not just those trade shows, but in general, and I think that our experience so far has been as people become aware of what we are doing, we get a lot of inbound interest as a result of that. And so that sort of qualitatively tells us that there's lots and lots of markets that we haven't touched, haven't tapped, isn't aware of us. It's going to be valuable for us to continue to push our message and show people our product and that there is a high percentage of the market that is very interested in PET caps across the board, both small companies and large covers. Ryan Smith: Yes. That makes sense. All right. And then last question here, John, to close this out. What do we have to get excited about as we look into the future? John Bissell: Look, we are excited about the capacity that we're bringing online. We think that, that's going to enable us to really drive caps to the larger customers. We're excited about new product features and continued product development, which left us -- access more parts of the market. And frequently with -- especially with large customers, while they want to start with a single product, they want to have a vision for how something like a PET cap can solve a lot of their -- solve the sort of cap and sustainability problem associated with caps of different non-PET materials, solve that for their whole portfolio. And so showing how we can do that to them is something that additional product types or product features can do, and we're really excited about that. We're excited about the financing that we just closed here. And we think we can show how that can drive the business the way that we all wanted to. And I think I think with all of that said, I think we're in a really good spot. And we've got the right products in the right market and we have the right resources to go execute on it. So there's going to be a lot to talk about. Thank you. Ryan Smith: Excellent. And that's all for our ASK Origin questions. Thank you, John. Thank you, Matt, and thanks to all of our investors on the line today. This concludes our call. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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