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Operator: Thank you for standing by. This is the conference operator. Welcome to the Sangoma Investor Conference Call. [Operator Instructions]. The conference is being recorded. I would now like to turn the conference over to Samantha Reburn, Chief Legal Officer. Please go ahead, Ms. Reburn. Samantha Reburn: Thank you, operator. Hello, everyone, and welcome to Sangoma's First Quarter of Fiscal Year 2026 Investor Call. We are recording the call and we will make it available on our website for anyone who is unable to join us live. I'm here today with Charles Salameh, Sangoma's Chief Executive Officer; Jeremy Wubs, Chief Operating and Marketing Officer; and Larry Stock, Chief Financial Officer. Charles will provide a high-level overview of the quarter. Jeremy and Larry will take you through the operating results for the first quarter of fiscal year 2026, which ended on September 30, 2025. Following their presentation, we will open the floor for Q&A with analysts. We will discuss the press release that was distributed earlier today, together with the company's financial statements and MD&A, which are available on SEDAR+, EDGAR and our website. As a reminder, Sangoma reports under International Financial Reporting Standards, IFRS. And during the call, we may refer to terms such as adjusted EBITDA and free cash flow, which are non-IFRS measures, but defined in our MD&A. Before we start, I'd like to remind you that the statements made during the course of this call that are not purely historical are forward-looking statements regarding the company or management's intentions, estimates, plans, expectations and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in the accompanying MD&A, unaudited condensed consolidated interim financial statements, our annual information form and the company's annual audited financial statements posted on SEDAR+, EDGAR and our website. With that, I'll hand the call over to Charles. Charles Salameh: Good afternoon, everyone, and thanks for joining us. I'm pleased to report that fiscal 2026 is off to a strong start. Q1 tracked to plan, exceeding consensus analyst expectations. As outlined last quarter, following the sale of our third-party hardware resale business, Q1 serves as a bridge to our higher-margin recurring revenue model, which now represents 90% plus of our total revenue. With that foundation in place, we are positioned for sequential growth in Q2 and continued improvement to the second half as we convert our growing bookings into revenue. In Q1, we delivered $50.8 million, $8.3 million in adjusted EBITDA with 16% margins and $3.2 million in free cash flow. The margin profile reflects normal seasonality, while free cash flow was temporarily impacted by a $3.2 million negative change in working capital that has since been largely reversed. Larry will provide more detail in his section. This quarter, I want to anchor on a few of the KPIs that guide how we run the business, pipeline, bookings, conversion and churn. Jeremy will provide additional detail and examples of recent bookings that reflect the strategy I've outlined in previous calls. Thanks to the transformation completed in May, including the successful ERP and CRM implementation, we now operate with far greater precision, visibility and speed. This gives us data-driven foundation as we enter our new phase of growth. The overall size of our pipeline remains steady, but new pipeline creation increased 39% quarter-over-quarter. Importantly, we saw a pickup in our higher velocity volumetric business, which now represents 62% of our 90-day forward pipeline compared with 55% in Q4, providing a better balance between short-term visibility and long-term growth. On the booking side, larger strategic opportunities continue to accelerate. MRR bookings grew 2.4% sequentially and 6.4% year-over-year, while deals over $10,000 of MRR increased 39% sequentially and are 72% above our FY '25 quarterly average. We're now seeing the bundled mid-market wins envisioned during our transformation materializing in the field. These deals span multiple verticals, including wholesale, carrier, education, health care and are emblematic of the new Sangoma go-to-market motion actually taking hold. Meanwhile, retention remains excellent with blended churn holding near 1%, highlighting the stability and the quality of our recurring base. Sangoma today is a much stronger, in a much stronger position with tremendous optionality in how we pursue growth. Our balance sheet provides flexibility to both invest and adapt quickly to shifting market dynamics. For example, our Prem business grew over 60% year-over-year, benefiting from capacity created by larger players exiting this segment. At the same time, we continue to generate strong cash even as we strategically reinvest in growth initiatives, expanding our partner ecosystems, launching new reps to market and forming high-value partnerships. One recent example is our wholesale channel, just launched 6 months ago, where we've already signed our first $10,000 MRR deal and have multiple opportunities in the active pipeline. These are solid leading indicators of the growth we expected and expect over the next several quarters. We're also exploring selective AI-driven software acquisitions to strengthen our vertical focus in health care, hospitality, retail and education. These initiatives are generating tangible pipeline, early bookings and a clear momentum. Now beginning this quarter, we are introducing a clearer view of our performance through 2 segments, core and adjacent. A core represents a SaaS-led communications platform services, UCaaS, CCaaS, MSP services and access, the primary growth drivers of the company. Adjacent includes cash-generative technologies such as trunking and open-source platforms that complement our core offerings and strengthen the company's financial foundation. This structure provides greater transparency into where we are investing and how our revenue mix continues to evolve towards recurring software-centric streams. Larry will provide additional color on those numbers shortly. Now with the systems leadership and programs and partners now fully in place, we are confidently scaling our go-to-market engine. We plan to invest approximately $2 million in incremental SG&A over the coming quarters to accelerate customer acquisition and partner enablement, supported now by higher NPS scores and customer satisfaction. On the capital allocation side, our approach remains disciplined. We continue to pay down debt, reduce leverage and return value to our shareholders through our normal course issuer bid. At the same time, we are maintaining flexibility for selective accretive M&A to complement our organic growth. Looking ahead, we remain on track to meet our fiscal FY '26 guidance. We expect sequential growth in Q2 and year-over-year growth in Q3 and Q4 as our bookings convert and new programs scale. While the broader SMB market conditions can influence deal timing, early Q2 activity is encouraging and consistent with our growth expectations. I want to thank the entire Sangoma team for their continued focus and execution. The progress we're making, seeing larger deal sizes, growing recurring revenue and expanding routes to market, gives me great confidence that Sangoma is entering a new phase of sustainable, profitable growth. I'll now turn it over to Jeremy to walk through our operating metrics in more detail, followed by Larry with the financials and the capital allocation update. Jeremy Wubs: Thanks, Charles. I'm excited to provide an update today on our go-to-market progress. As Charles noted earlier, the successful implementation of several of our transformation programs supports our ability to operate with greater precision and speed, and this is critically important to scale our go-to-market. Building on Charles' overview, I want to add that we exited Q1 with a healthy pipeline that remains strong, up 6% in the last 6 weeks. This recent momentum, combined with the 39% quarter-over-quarter increase in new pipeline creation that Charles mentioned, gives us confidence in our Q2 plan and beyond with a healthy balance of our volumetric business and larger strategic deals. To add a bit more color on our pipeline of larger, more strategic deals, we exited Q1 with $14.8 million in new logo TCV. Here, we are leveraging the breadth of our full essential communications capabilities, combined with our deep engineering pedigree to solve the challenges facing our largest prospects. This speaks to our ability to transition from a point solutions provider to a broader essential communications player in the market. The product roadmap and IT systems changes we put in place during our transformation are aligning well with these market opportunities. The pipeline momentum is encouraging, but what's even more important is that we're starting to see the deals moving through the sales cycle start to convert. Our teams are progressing opportunities more efficiently. And as a result, total MRR bookings are up 6% year-over-year. In our Q4 earnings call, I referred to a few of our go-to-market strategies targeting service providers, MSPs, vertical solution providers and more specifically, highlighted a wholesale opportunity in our pipeline with the CLEC of greater than $20,000 MRR with a potential to double over the next 9 months. That deal is now closed and booked, and we have 2 other material deals in our pipeline, each greater than 12,000 MRR using a comparable wholesale solution that we are actively working to close this quarter. Last earnings call, I also noted that our pipeline now includes some of the largest MRR opportunities since Charles and I joined, including some exceeding $100,000. Just in the last week, we closed a solutions bundle to a distributed enterprise of over $150,000 MRR, further demonstrating the momentum in our strategic segments. This trend towards larger, higher-value wins is a direct result of the effectiveness of our bundling and go-to-market initiatives. In fact, average revenue per customer increased 19% year-over-year, underscoring the effectiveness of our bundling and go-to-market initiatives in delivering greater value for both our partners and end customers. Beyond these larger strategic MRR wins, our hardware products, such as our prem UC products, phones, gateways continue to contribute to revenue without an implementation lag as they move through distribution. I am very pleased that our channel, driven by our prem UC programs has now delivered 4 consecutive quarters of sequential revenue growth. With Q2 underway, I'm encouraged by the progress we're making. We have a growing pipeline with a mix of volumetric business and larger strategic opportunities, which support our essential communications value proposition. We are booking these larger deals, and we'll see the revenue impact later quarters, and we're continuing to capture share in the premise UC market, which hits the P&L relatively quickly. I want to extend my sincere thanks and appreciation to the entire Sangoma team for their execution in Q1 and continued focus on driving sustainable, profitable growth. I'll end there and pass things over to Larry. Thank you. Lawrence Stock: Thank you, Jeremy, and welcome, everyone. We appreciate you joining us for today's call. Our first quarter results following our transformation tracked right to plan. We're now operating under a predominantly software and services-led recurring revenue model, and that's setting a strong foundation as we look to drive growth and operating leverage throughout the fiscal year. In the first quarter, we generated $4.9 million in net cash from operating activities, representing a 60% conversion rate from adjusted EBITDA. This included a negative change of $3.2 million in working capital, primarily driven by an increase in trade receivables due to a technical issue in transitioning to a new payment processor as part of our ERP implementation. The onetime issue has been resolved, and trade receivables have since returned to historical levels. Looking ahead, we expect quarterly net cash from operations to convert from adjusted EBITDA in the range of 90% to 100% for the rest of the year, underscoring our high operating efficiency and ability to drive value creation. Free cash flow for the first quarter was $3.2 million or $0.10 per diluted share. We retired an additional $5.2 million in debt during the first quarter, and we ended Q1 at $42.8 million of total debt compared to $69.1 million last year. We continue to execute on our normal course issuer bid. And to date, approximately 710,000 shares have been repurchased for cancellation, representing 2.1% of our shares outstanding and reinforcing our confidence in Sangoma's long-term value. Our capital allocation strategy for fiscal '26 is clear: leverage strong cash generation and our balance sheet to accelerate organic growth and expand profitability. As Charles mentioned, we're investing an incremental $2 million in SG&A, specifically targeting channel and go-to-market initiatives to advance our products and platforms, enhance the customer experience and scale our market reach. At the same time, we'll opportunistically evaluate inorganic growth through M&A while continuing to reduce debt and return capital to shareholders. This balanced approach preserves flexibility and position us to drive long-term value creation. Let's turn to the P&L. Revenue for the first quarter was $50.8 million, representing a decrease of $8.5 million from the fourth quarter, primarily due to the divestiture of Sangoma's third-party hardware resale business, VoIP Supply LLC. Without VoIP Supply, revenue was $1.1 million lower compared to $51.9 million from the fourth quarter. On a year-over-year basis, revenue declined by $1.7 million or 3%, excluding $7.6 million in revenue from VoIP Supply. Core revenue, which accounted for 74% of total revenue, decreased 6% year-over-year, while adjacent revenue increased 6%. Core revenue was in line with our expectations and reflects longer sales cycles on larger MRR deals, the dynamic we discussed during our Q4 earnings call in September. As Charles and Jeremy highlighted in our KPIs, we expect to see more of this booking momentum convert to revenue in subsequent quarters with stronger core performance anticipated as the year progresses. Adjacent revenue was primarily driven by our Trunking as-a-Service offering, which has been reinvigorated through our transformation activities in fiscal '25. We continue to disclose services and product revenue splits in our MD&A with services now accounting for 92% of total revenue. This further reinforces our transformation this year to a predominantly MRR-driven company. Gross profit was $36.8 million in the first quarter. Gross margin was 72% of revenue compared to 67% in the fourth quarter. Without VoIP Supply, gross margin was 76% in the fourth quarter. This change was driven mainly by a higher attachment of product to our recurring revenue offerings driven by competitive displacement opportunities. Adjusted EBITDA for the first quarter was $8.3 million or 16% of revenue and included approximately $0.4 million in expense related to our ERP implementation. Excluding these costs, adjusted EBITDA would have been $8.7 million or 17% of revenue. This was in line with historical seasonal patterns and margin improvement is expected over the course of the year. Operating expenses for Q1 totaled $38.5 million, down $3.6 million or 9% compared to the same period last year. This reduction reflects the efficiency gains we've achieved through our transformation initiatives in fiscal '25. Importantly, we've maintained a steady commitment to innovation. Our investment in R&D remained consistent at $11.3 million for the quarter, in line with Q1 last year. Capitalized development costs were $1.5 million compared to $1.7 million in the prior year, noting that we amortized $1.5 million in R&D expense in Q1, which is included in our adjusted EBITDA calculation. What's evolved over time is our focus on developing new product capabilities. We're increasingly incorporating both in-house and third-party AI innovations across our cloud, hybrid and on-prem platforms. Notably, 90% of our R&D spend is now directed towards new products and capabilities, reflecting our strong emphasis on innovation and long-term growth. With the quarter coming in largely as expected and given the solid bookings activity we've seen in Q1 and into the early weeks of Q2, we are reaffirming our guidance for fiscal '26 of $200 million to $210 million in revenue and adjusted EBITDA margin in the range of 17% to 19%. As we said on our prior earnings call, we expect sequential growth to begin in Q2 and continue through the year with Q1 marking the low point and the bridge to stronger growth ahead. As always, I want to extend my sincere thanks to the talented team at Sangoma. Your dedication and daily contributions continue to drive our success. That concludes our prepared remarks. Operator, let's open up the call for some Q&A. Operator: [Operator Instructions] Our first question is from Gavin Fairweather with Cormark Securities. Gavin Fairweather: I just wanted to start out on the growth investments. I think you referenced $2 million of incremental growth spending here. Maybe you can just update us on the timing of making those investments, what the key buckets are and how you're thinking about the timelines to returns on that spend? Charles Salameh: Well, our initial investments are really going to be in SG&A, the $2 million at least started in Q1 materialize in Q2 and Q3 and Q4, mostly in the buckets of increasing capacity in the field, providing us more coverage to recruit partners who are really now embracing the bundle and also partners who are in the vertical orientation areas of health care, education, retail and hospitality. And then the second area is just investment in marketing. which is brand coverage to get our end customers, some of the verticals that we're focused on and certainly our partners much more aware of the full breadth of the portfolio and the suite that the company has to offer. So that's where most of our investment is going right now. Obviously, on the capital side, we've tried to gain efficiencies in our capital expenditures within our engineering team using our internal tools and technologies that are allowing us to reinvest, recouped capacity from within our engineering core into innovation. We've actually moved the needle quite a bit on that. And obviously, the other investment areas are as per our capital allocation program, which investing in NCIB, investing in potential acquisition opportunities and obviously paying down our debt. Gavin Fairweather: Appreciate that. Very helpful. And you've done a lot of work to cultivate new partner relationships and build out new channels like wholesale. Curious what you're seeing in the pipeline tied to that. Are you finding that these new paths to market are generating significant new pipe for you? Any commentary there would be helpful. Jeremy Wubs: Yes. I mean we highlighted a few of those kinds of metrics earlier, our pipeline is up 6% in the last 6 weeks. I mean new pipeline creation is up 39% and even year-over-year pipeline is up 6%, so we are seeing pretty significant, our bookings are up, sorry, 6%. So, we are seeing the kind of fruits of our labor pay off. We're seeing strength in our pipeline. We're seeing a good balanced mix between kind of the velocity business and some of these larger strategic deals. And of course, now we're starting to see those like some of the examples I gave earlier, convert into bookings. So, the investments are paying off. The $2 million incremental investment will help us to build even bigger, more significant pipeline, close more bookings and drive the growth strategy that we have. Charles Salameh: On your path to the mark-to-market question, Gavin, a couple of really interesting new paths. The most exciting one right now that we're seeing, to be honest, beyond the vertical bundles and the vertical partners that are really starting to grab hold of what we're trying to do within those particular verticals is the wholesale channel. This wholesale channel has become a really interesting opportunity that I don't think we really saw about a year ago, this idea of being able to put together our solutions and then put them in a private model, giving them to a CLEC type company and allowing them to sell that to their end user base at a discounted rate, kind of takes the commission part away from traditional channel routes and really provides a more wholesale pricing model to a particular customer who wants to then take it to an ecosystem of their end users. In this area, that's one of the deals we just closed this quarter. And I think, a really cool new path to market for us that really wasn't part of the original plan. It's something Jeremy has talked a lot about in a white label offering, but we've kind of gotten a fast track from white label into wholesale. And I think this is an exciting area that we're going to keep our eye on. Gavin Fairweather: Appreciate that. And then just lastly for me on services, a bit of a steeper decline in the quarter. You called out sales cycles. Is there any other moving parts that you'd kind of call out this quarter? And maybe just discuss whether you think that the services line is part of the sequential growth that you're expecting to see in Q2? And that's it for me. Charles Salameh: This was a plan. We understood where services were going relative to the transformational programs that really started, as you know, back in early 2024. We knew there was going to be those customers that signed on with us. They're really tiny customers before we got here in 2021 that were on 3-year contracts. They're coming through the system. pretty much coming through now in completion this quarter. That's why this quarter is where it's going to be at and why we think sequential quarter starts in Q2 and Q3 because we've pretty much cut most of those older customers of smaller natures through the pipeline. Don't really expect to see much more in the area of declines in services. In fact, we think churn is going to continue to improve between now and the end of the year for a whole lot of reasons, one of them the one I just mentioned. And we still foresee sequential growth in Q2 and the year-over-year growth beginning in Q3 and Q4 on a pure organic basis, mostly and entirely in the services area. Operator: The next question is from Suthan Sukumar with Stifel. Suthan Sukumar: Congratulations on a nice all-around quarter here. For my first question, I just wanted to, on your successful pivot to larger customers. Can you speak a little bit about how some of the optimizations you guys have implemented around sales cycles and implementation timelines, given that these tend to be relatively longer here for these larger customers versus the smaller customers that Sangoma has targeted in the past? Jeremy Wubs: There's 2 things I'd highlight, Suthan, around our ability to be more efficient in executing on some of these larger, more strategic prospects. One is certainly we, over, during our transformation period, made sure that we look very carefully at the product roadmap and make sure we had the right sort of more advanced feature sets, other things that were required that really fit well with starting to push ourselves upmarket into these more strategic opportunities. So that helps really fill the funnel in the pipeline with more of these larger strategic deals. The second thing is we have a very disciplined weekly cadence around how we pursue large opportunities. The sort of no stone unturned. We're very, very focused on understanding what's required for the client, how do we put the right proposal together. And we have our teams kind of on the ready to support the really professional proposals that get out to those clients, with the quality and speed that allows us to go capture these opportunities quickly. So, when I talked earlier about some of the booking examples, the large wholesale deal, we hunted down 2 other significant ones in the funnel and that large distributed enterprise deal over $150,000 MRR. Those we are able to successfully win as a result of having an integrated proposition, the right features on the road map and having a really strict and well-disciplined deal process to hunt those down. Charles Salameh: Also, Suthan, I'll just tell you, quite frankly, one thing I don't talk a lot about as part of the transformation, we talk about process systems, tools, but one thing that we did, that we should be highlighting a lot more is we improved the pedigree of the entire team as we pivoted ourselves from kind of point solution sellers to bringing in high-caliber sales folks who really understand the propositions that we're trying to put forward, that the company can offer and bring an ecosystem of more sophisticated partners who also are looking for solutions like this. All of that plays on top of what Jeremy said, plays into speeding up the deal cycles and improving the quality of close rates. So that's a big part of it. We don't spend a lot of time talking about it, but we've pretty much rebuilt the entire sales team over the course of the last, I would say, 18 months. Suthan Sukumar: Great. That's helpful color. Maybe a follow-on to that. Do you guys foresee making other organizational changes across the business to further support your go-to-market motion? Charles Salameh: No, the only, the organization right now is very stable from a leadership or structural point of view. The only other changes that could happen to the company, obviously, would be anything that we did in terms of M&A, either being integrated and expanding an existing part of our business or something that might be even more exciting that's in an adjacent market that could create another division of the company. We're just not there yet. We're in the process of looking at M&A. But as far as the way the current company is set up, no, we don't see any real big changes to the company and the structure. Suthan Sukumar: Okay. Great. And just one last one for me is it sounds like the partner ecosystem is starting to gain more momentum, especially if you guys are looking to step up more investments in that area. Could you remind us on some of the heavy lifting that's been done to date in your partner ecosystem? What's left to do? And what are some of the proof points as investors we should be looking out for to gauge ongoing success here? Charles Salameh: Well, look, we took, Jeremy will add a couple of bit more color to this, but we took 4,000 partners when we started this company back in 2024, down to top 1,100 or so, of which of those the top 400 have really generate most of our revenue, 80% of our revenue. We've realigned that partner program to a more sophisticated segmented partner structure called Pinnacle Partners. And then we've aligned our SG&A investments and our resource allocation to partners depending on where they sit in the pyramid, which not only allows us to be much more and deeply entrenched with more strategic partners around exploiting market discontinuities or opportunities within, particularly within verticals, but also to encourage partners who are coming into the system to move upmarket, selling more of our services to incentives that are much more organized, much more thoughtful and much more aligned to the needs of what channel looking for nowadays. It's a very different model, I think, in my mind, the channel has evolved quite a bit in the last 5 years. These guys are much more sophisticated. They want recurring revenue. They want deeply entrenched relationships with their technology vendors, and they want quality service. And so that heavy lifting of trying to discover what they want, understand, organize them in a manner that's scalable for a company of our size and then have an ongoing onboarding, training, awareness program for them, which is most of that work is now behind us, and we're just facilitating these partners and growing with. Jeremy Wubs: Yes. I think, Charles, you summarized it well. I'd say we've gone through the major, call it, horizon of transforming our partner program, getting traction, getting engagement. The second horizon for us is now we do have partners in the ecosystem who grew up selling a single point solution, right? And that's kind of how they've grown up. Now our kind of next horizon is how do we take what we've accomplished with our new channel model, it's hunting, it's driving pipeline. How do we get those partners who grew up selling one thing? How do we get them selling multiple things so they can go on a journey with us. So as that transformation happens, you're talking the longer tail, the smaller partners, but that's a whole additional opportunity to drive growth and pipeline for us. Operator: The next question is from David Kwan with TD Cowen. David Kwan: Maybe tying on the last series of questions as it relates to kind of refining your channel partner strategy and whatnot. You quoted some new numbers here, which appreciate the additional metrics. One of them was on the average revenue per customer and you saw some good growth there. Can you maybe dissect that number though, a little bit more in terms of trying to figure out how much that was kind of maybe culling of kind of smaller customers versus kind of growth in your larger core set of customers? Jeremy Wubs: Yes. I would say, I mean that's all MRR-related growth, David, like MRR type accounts, like some of that's a combination of supersizing deals. So, getting at larger sort of single element deals, but more importantly, actually our bundle strategy executing. So, when you sell these bundle opportunities, network, security, unified communications, et cetera, the deal sizes just get larger, right? So that's really what's occurring, and we're pulling our average deal sizes up. I think I quoted an increase of 19% year-over-year in average revenue per customer, and that's really driven by new logos and our ability to upsell into these larger bundles. Charles Salameh: I'll just quickly, very quickly, David, add that part of the transformation was building an integrated CRM and ERP. If you say that really fast, it sounds like a simple tool. But what CRM really provides is the ability to allow your partners to bundle products together and understand what their commission payouts or recurring revenue will be as a result of that. We launched a program called BV IgniteX, one of our portfolios, one of the sort of flagship portfolios. We put some resources attached to it, and we basically reinvigorated partners who really only sold one of our solutions. But back to those partners haven't talked to them in a long time, gave them an opportunity to understand they can bundle new products with their own products together, and we're starting to see the impact of that on ARPU. And so, we believe mining to account expansion, some of our existing partners through more sophisticated programs that allow us to cross-sell and upsell because we can now because we have the tools and systems to do so, is going to continue to drive ARPU up over the coming quarters. David Kwan: That's great color, guys. And then on the gross margin side, that came in a bit lower than what we were expecting, I think what you guys were guiding for the quarter. And it sounds like it was kind of a revenue mix and more greater mix of higher, product revenue that carries lower margins. I guess just given the timing of when you guys came out with the guidance kind of right towards the end of the quarter, just was there a lot of product sales that came in, in the last week or 2, I guess? Charles Salameh: Yes. So we saw product sales higher than expected. originally. And if we look absent board supply quarter-over-quarter, it's about consistent to what it was prior. So it was in line with really where we thought overall, and we do expect that to increase as we get through the next 3 quarters for sure as we move on through the year, and we see services continue to be such a high percentage for us as well as core. David Kwan: So I guess, could you throw out the 75% number for Q1? Like is that something that you think you can hit in Q2? And how should we be thinking about for the balance of the year? Charles Salameh: Yes, that's exactly right. That's how I am thinking about it for the balance of the year. David Kwan: Okay. That's helpful. And just one last question. I saw there was just over $0.5 million in restructuring costs. What did that relate to? Charles Salameh: It's part of the transformation. It's also part of, as we look at things like ERP and how we're looking at the company moving forward as we've implemented that. That's really all that is some staffing-related items. Operator: The next question is from Mike Latimore with Northland Capital. Mike Latimore: This is Vijay Dewar for Mike Latimore. A couple of questions. One, how much did backlog grow sequentially? Charles Salameh: I'm sorry, I didn't hear that. Can you repeat that? Mike Latimore: How much did backlog grow sequentially? Jeremy Wubs: Backlog was pretty consistent quarter-over-quarter. There wasn't a material growth like Q4 into Q1. I think what you'll see is bigger backlog growth going into the next quarters given some of the bookings and the deals that I highlighted earlier. Mike Latimore: Okay. And how are bookings in the quarter relative to your expectations? Jeremy Wubs: Yes. Our bookings in this quarter were pretty much like almost 100% on expectations, like it was completely in line with our plan. Operator: The next question is from Robert Young with Canaccord Genuity. Robert Young: I'm trying to understand the large deals that you were talking about over $100,000, the MRR opportunities over $100,000. Are these bundled mid-market at the high end? Or are these the wholesale CLEC opportunities that you were talking about early in the call? Jeremy Wubs: Yes. Let me cover it, Rob. There's, I'll put them in 2 buckets. So first, in the kind of wholesale type solutions and bundles, we did close a deal, $25,000 MRR with, and I mentioned about 9 months out, we expect that to expand quite considerably. So that's in the wholesale space. Again, it's an MRR deal. We have 2 other pretty substantial ones I referenced earlier, both over 12,000 that are in our pipeline, not, those aren't closed yet. And then as a solutions bundle, so this networking, some network security, UCaaS, some other combination of solutions we sold to a large, distributed enterprise in the retail space. That deal was $150,000 MRR. So that's completely different than the deals that we sold in the wholesale space. Robert Young: Okay. And then as you look at this wholesale opportunity with the CLEC, is that where the CLEC is effectively operated as a channel? Like is that selling through into their customers, a bundle. Jeremy Wubs: That's right. I mean we're selling basically a wholesale solution to the CLEC. I mean, usually, they're buying at a wholesale price, and they'll go out and sell a combination of that solution with some of their own, say, infrastructure, maybe it's over their fiber or their network, they'll sell the solution out to their end customer. So, the CLEC deals are like that. I would think of it, you've probably seen other companies go after this spaces as well. We see some opportunities in the soft switch space, so replacing some of the soft switch opportunities that the process shops and CISCOS would have gone after with our own hosted wholesale solution offer. Robert Young: Okay. And I mean when you, the CLECs, when they're looking at your product, is there a significant lift here in go to market like training salespeople within the CLECs to resell here? Or is it a situation where this is, I mean, maybe an industry standard that you just weren't able to sell into before because the CRM systems didn't allow you to bundle. Like what is it that's opened this up suddenly? Jeremy Wubs: I think it's a very good question. I would say this is an opportunity, I think both Charles and I saw early when we got and joined Sangoma. It was a channel that Sangoma hadn't been pursuing. The hadn't been going after CLECs MSPs with this type of white label solution. I think, we had some of the building blocks in place, not all of them. We had to make some systems changes and some road map changes in particular to address it. We did that, and now we're hutting this down, and we're pretty excited to see some pretty substantial deals in the pipeline. And as I mentioned before, a pretty substantial one closed already in Q1. Charles Salameh: There's not, and just I want you to be clear, this is not just geared at CLEC, Rob. The idea of wholesale is really to any institutional company that wants to kind of control the networking and technology stack for a bunch of end users. We have a deal we're proposing right now. It's a health care institution that has multiple hospital facilities with hundreds of special care clinics attached to this ecosystem in the United States. They're looking for a white label solution, and they've come to us. And we're pretty far down the road with these guys where you'd never have thought that these guys wanted to actually take a wholesale solution from us as a health care institution and ecosystem. And so there's a ton of opportunity beyond CLEC that we're exploring. The idea that Jeremy and I saw here was wholesale white label, not necessarily wholesale and white label just for the CLEC. It's just one of the channels of many others that are interested in this type of solution, and now we're geared to serve them. Robert Young: Okay. Last question on that would be just around the TAM. Does that materially increase the TAM that Sangoma can address? Charles Salameh: Look, we're a $200 million company. So, any TAM that's a sizable nature, we're going to go after it. It does absolutely open up a whole new channel for us. I think it's come faster than we had anticipated, which is all goodness. And when you're going through these transformations and you understand how the company, all the components the company has and when you start putting things together, coupled with a very rapidly changing dynamic, in the tech space, these opportunities open up. The prem was a great example, another area that just, we had a Mitel exit, we had an Avaya exit. We pounced in, and we have a 60% increase in our pipeline just in a short period of time. So we have lots of really exciting deals that are happening in spaces that we maybe didn't really originally plan for. This is one of them, and I think there's a significant opportunity for TAM. This goes, like I said, beyond CLEC, it goes into these other institutions. It goes into ISPs, it could go into hyperscalers. We could take it into a lot of places. And we're just in the very early innings right now. And within 4 or 5 months, managed to close our first deal and see many more in the pipeline. Robert Young: Okay. And maybe one more question. You made, there was a comment earlier in the call where you said that the size of the pipeline was the same, but the new pipeline creation was up 39% quarter-over-quarter. And I'm trying to understand what you meant by that statement. you just a little bit for me? Jeremy Wubs: I mean, the pipeline is up 6% in the last 6 weeks. The pipeline creation, new pipeline creation is up 39%. So that's relative to last quarter. So the aggregate pipeline is up and the new pipeline creation is up. So it's both. It wouldn't make sense to have one and not the other. Operator: This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good afternoon. Thank you for attending the Babcock & Wilcox Enterprises Third Quarter 2025 Conference Call. [Operator Instructions] I would now like to turn the conference over to our host, Sharyn Brooks, B&W's Director of Communications. Thank you. You may proceed, Ms. Brooks. Sharyn Brooks: Thank you, Victoria, and thanks to everyone for joining us on Babcock & Wilcox Enterprises Third Quarter 2025 Earnings Conference Call. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer; and Cameron Frymyer, Chief Financial Officer, to discuss our third quarter results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our safe harbor provision for forward-looking statements that can be found at the end of our earnings press release and also in our Form 10-Q that was filed this afternoon and our Form 10-K that is on file with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-GAAP information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAAP. This information should not be considered superior to or as a substitute for the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our third quarter earnings release published last week and in our company overview presentation filed on Form 8-K this afternoon and posted on the Investor Relations section of our website at babcock.com. Kenneth Young: Thanks, Sharyn. Well, good afternoon, everyone, and thanks for joining us today on our call. We continue to execute on our strategy to expand our Global Parts & Services business while also focusing on large opportunities within North America and reducing the majority of our debt obligations. The increasing demand for power in North America drives our growth and aligns well with our strategy to divest certain noncore assets to significantly reduce our debt while positioning B&W to play a pivotal role in supporting AI data center expansion and increased baseload generation needs. We are pleased to report a number of positive developments this quarter at Babcock & Wilcox, both in relation to our quarterly financials as well as our recent projects and partnerships that we have completed. Adjusted EBITDA and operating income significantly outperformed company and consensus expectations this quarter. Adjusted EBITDA was 58% higher compared to third quarter of 2024, while operating income was up 315% when compared to the same period of 2024. Our improved margins directly reflect the record quarter results for our Parts & Services business. During the third quarter, our Global Parts & Services achieved the highest quarterly and year-to-date bookings, revenue and gross profit in recent company history. Our growing backlog continues to benefit from increasing demand across projects, upgrades and construction as power generation needs for industrials and utilities in North America continue to accelerate. In total, we saw our backlog rise 56% quarter-over-quarter to a total of over $393 million. Through a combination of disposition of noncore assets and equity raises, we have paid or will pay down the February 2026 notes by end of the year 2025. We also have the liquidity to pay down the December 2026 bonds, a process that we plan to begin by end of year. Over the course of the past several months and with key equity raises last week, our balance sheet has significantly improved. With this improvement, along with the tailwinds from baseload generation demand in the market, we have positioned B&W for substantial growth in 2026. We are currently projecting a range of $70 million to $85 million in EBITDA from our core business in 2026, which is 80% growth year-over-year from 2025. And this does not include any revenues or margin from our recently announced AI data center projects. We have been in discussions on several opportunities within the AI data center space, and we are seeing Agentic AI as a new catalyst for higher power demand in the U.S. and around the world. We are pleased to announce that we have signed a limited notice to proceed with Applied Digital to begin work for the delivery and installation of natural gas technology that will provide 1 gigawatt of efficient energy for an AI factory and data center project. The total project valued at full notice to proceed will be over $1.5 billion in total once finalized, and we anticipate that full notice to proceed to be released in the next few months. As a part of this deal, B&W plans to design and install 4 300-megawatt natural gas-fired power plants consisting of proven boilers and associated steam turbines to support Applied Digital's AI factory. The plant is targeted to begin operation in 2028. This technology carries equal efficiency as simple cycle turbines and can be operational much faster than combined or simple cycle power plant options. The impact from this deal on B&W is profound adding $3 billion to $5 billion in AI data center opportunities in our pipeline. We are also pursuing other projects and opportunities, which brings our total global pipeline to $10 billion to $12 billion in totality, including ClimateBright and BrightLoop. Taking a look at our BrightLoop technologies, our efforts to progress BrightLoop are moving forward as we further the commercial development of our existing projects and continue working to improve the overall operational effectiveness of these technologies to produce low-cost hydrogen or steam. We're seeing increasing activity for BrightLoop technology, both for steam generation and hydrogen production that can produce energy with lower cost and expenditures. In fact, we're in discussions with a number of oil and gas companies and large utilities about using BrightLoop for specific steam or hydrogen generation projects. From a ClimateBright perspective, we are seeing an increased demand to leverage carbon credits, both in waste to energy and coal to energy as optional offtake revenues for our customers. We also are in discussions on several opportunities and believe we can announce a significant carbon capture project utilizing our SolveBright technology very soon. I'll now turn the call over to Cameron to discuss the financial details for the third quarter of 2025. Cameron? Cameron Frymyer: Yes. Thanks, Kenny. I am pleased to review our third quarter results, further details of which can be found in the 10-Q that is on file with the SEC. Our third quarter consolidated revenues were $149 million, which was roughly in line with the third quarter of 2024. Global Parts & Service remained strong in the third quarter of 2025 with revenues of $68.4 million compared to revenues of $61.7 million in the third quarter of 2024. The improvement is primarily due to the increasing need for electricity from fossil fuels, driven by the demand from artificial intelligence, data centers and expanding economies. Our net operating income in the third quarter of 2025 was $6.5 million compared to operating income of $1.6 million in the third quarter of 2025. Loss from the continuing operations in the third quarter of 2025 was $2.3 million compared to a loss of $7.9 million in the third quarter of 2024, and our adjusted EBITDA was $12.6 million compared to $8 million in the third quarter of 2024, beating Street expectations. As Kenny stated earlier, we have announced our 2026 full year adjusted EBITDA target range of $70 million to $85 million stemming from our core business, which does not take into account any growth related to data centers. I'll now turn to our balance sheet, cash flow and liquidity. Total debt at September 30, 2025, was [ $379.3 million ] (sic) [ $309.3 million ] consisting of $98.4 million of February 2026 bonds, $90.9 million of December 2026 bonds and $121 million of bonds due in 2030, with the remaining debt being related to our letters of credits. As of September 30, we had 0 drawn on our asset-based loan. The company had cash, cash equivalents and restricted cash balance of $201.1 million, giving us a net debt as of September 30, 2025, of $178.2 million. On October 2, B&W paid down $70 million of bonds that were due in February of 2026, and we recently announced the remaining outstanding February 2026 bonds will be paid down fully in December of 2025. Another notable development took place last week when the company was able to raise an additional $65 million of equity, which has further strengthened our balance sheet and shows the ability to pay down the remaining of the 2026 bonds that are due in December of 2026. When factoring in our recent equity raise, this will leave us with a pro forma net debt of $113.2 million, which will be between 0.8 to 1.6x targeted 2026 EBITDA. Lastly, although we said on Friday that we would be pausing sales under the ATM program, we've decided to resume ATM sales and intend to sell shares under the ATM program opportunistically based on market conditions and our share price. I'll now turn the call back over to Kenny. Kenneth Young: Cameron, thanks. Well, in closing, as always, I would just like to recognize the efforts of our dedicated and talented employees that are around the world who focus on working hard every day to meet the challenges and supporting our customers while meeting the energy demands of today. I will now turn the call back over to Victoria, who will -- and I think we have time for about 3 questions. So Victoria, I'll turn it back over to you. Thanks. Operator: [Operator Instructions] Our first question comes from the line of Aaron Spychalla with Craig-Hallum. Aaron Spychalla: Maybe first on the $1.5 billion project. Can you just talk a little bit about next steps that are needed and how you see potential contribution from a timing and margin perspective moving forward? And then just thoughts on the supply chain and kind of working capital needs as that ramps? Kenneth Young: Sure. No. I appreciate that, Aaron. Thanks for jumping on the call today. So first of all, we're actually right now working with Applied, obviously, to finalize the exact location where this will take place and so we can finalize the full notice to proceed, which again, as [ John ] mentioned in the comments, we anticipate being done here in the next couple of months. As part of that, we're also behind the scenes working with a few of the steam turbine generators at this point in time and have secured some verbal commitments that we have the ability to meet these time frames. And so we'll look to finalize those details on that as well as our own manufacturing of these particular boilers. The great news, I think, in this case is that we're using -- I'm going to use the term off-the-shelf. So these are -- these 300-megawatt boilers are designs that we have installed at several locations prior to this event. So this is a proven technology and architecture. And so there's very little, if any, engineering that needs to be performed in order to get these to a manufacturing state. We already have the construction drawings of each of these fabrication diagrams, the layout, the header layout, the tubing, everything associated with this type of a boiler to meet the specs and standards here in the U.S. And so it's an easy method for us to move that right into the manufacturing process. And that's the exciting part here. It's a rare opportunity for us to do and utilize a design that we have implemented in many locations prior. So we're obviously very comfortable with the standards and the performance of the boilers, easy to move into manufacturing and leveraging the fact that we have access to the steam turbines in a much faster go-to-market model than trying to leverage a combined cycle or simple cycle turbine plant today. So that's the benefit here on that. But we're working through all of those in parallel with Applied and again, plan to have the full notice proceed signed here in the next couple of months. And we're working diligently behind the scenes to move the project full forward. As it relates to working capital aspects on it, we'll work with Applied on the timing of that and how we move that forward. That will be part of the full notice to proceed process here over the next couple of months. Typically, for us, we typically keep the working capital on projects like this at a neutral to positive. So down payment requirements that we have with manufacturers or subcontractors are typically collected upfront on these projects and have no reason to believe it would be any different here. So there -- that we're moving forward under that direction and Applied understands that as well. So we think that will help minimize this a little bit overall and any impact to working capital in the company, and we should remain cash flow positive on this as we typically do on projects like this at this point in time. So that's the overall plan. As far as revenue recognition goes and margin recognition, obviously, we're a POC shop under that. It will depend on timing of when we can apply the cost to the project into next year. Some of that will be based on the final notice to proceed and the time frame there. So it's a little bit vague and it won't be terribly much, I would say, in '26. I don't know, I'm just throwing out a number, maybe 10%, 15% of the value would be realized then. The bulk of it would, based on the accounting method would be realized more in the '27 and obviously '28. So we've -- based on the fact that we're still finalizing that NTP and our guidance next year, we have not included this project or any other data center projects in that $70 million to $85 million range. So this would represent complete upside and probably significant upside to any number that we would be putting out right now. Cameron, I don't know if you have anything you want to add to that, but otherwise, I'll turn it back to you. Cameron Frymyer: No, no. I think you hit all the points, Kenny. Aaron Spychalla: That's very helpful. And then maybe just second on the additional pipeline, it sounds like last week, it was $1.5 billion. Today, it sounds like maybe $3 billion to $5 billion. So maybe some growth there. Can you just talk about how mature some of those opportunities are and potential timing of when you could see some of those move forward as well? Kenneth Young: We are obviously in talks with several as it relates to -- and have been -- I want to emphasize that have been prior to this announcement in talks with several on this particular solution in different sizes, right? Meaning and some would be smaller in maybe 0.5 gigawatt range, some are perhaps even a little larger in a 1.5 to 2 gigawatt range. So there's a number of these opportunities where this solution makes the most sense from both a cost standpoint as well as delivery and time frame standpoint. Some of that would be subject to complete availability in the manufacturing and the steam turbine side. And again, the early indications are we've got some real positive capacities there to meet this entire demand. And so it's -- on some of those, that we'll be working with them to move forward, hopefully, on a couple of the opportunities if we can get them to commit I would say those would be in the next year's time frame to announce on that regard. But we're obviously involved with these other opportunities that are out there and fully intend to push those across the goal line. That's on this solution. The other ones that we're heavily working with is related to our Denham partnership, and we are working very closely with Denham Capital right now on a number of locations to convert some coal plants to natural gas, and that's also in the works as well, too. So I think we have -- those opportunities are within that opportunity and pipeline as well as the other natural gas and steam turbine combination that were proposed for Applied would also be in that opportunity as well. So the combination of all that and the sizes of those, we decided to take the pipeline up even a little bit further from last week. Operator: Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Robert Brown: On the ability or your capacity for that pipeline, what is your capacity sort of in this power gen segment? And how do you sort of think about capacity kind of limits there? Kenneth Young: So the main -- so there's 2 main components to that capacity aspect, Rob, and thanks for jumping on, by the way. There's 2 aspects to that. One is the manufacturing of the boiler fabrication of the boiler. For us, that's part for the course, right? That's what we do. And we have been looking and evaluating our own internal capacities that we have today as well as our external partners that we use in various places around the world to manufacture these kind of systems. So all of those companies are on board with this. And quite frankly, it's a volume. Many of these manufacturing and fabrication groups are comfortable and used to dealing with projects of this size. So it's just a matter of how much we can put into each location on that, and we're going through that right now. So within -- I would say, within the pipeline that we have today, again, depending on the exact timing of some of this, we feel pretty comfortable that we can complete the manufacturing and have the capacity to do that on the boiler fabrication and manufacturing. On the steam turbine aspect of this, the good news is there's a lot more steam turbine companies than there are combined cycle and simple cycle companies out there. We're in -- can't give names right now, but we're in discussions with several and are quickly trying to move into a relationship with them that we have this capacity secured. And we believe, just based on a lot of the early conversations that we're having with these particular groups that, that capacity does exist. Maybe across a couple of different manufacturers, and we'll have to -- we'll work through that. But from a steam turbine perspective, we think these opportunities do exist. They're obviously very excited because this is a way for them to get involved in a high-growth area for them as well, too. So, so far, it's been full energy, if you will, across both the manufacturing side and on the steam turbine side as well. Robert Brown: Okay. On the -- just switching to kind of the ClimateBright projects. I think you mentioned the CO2 capture opportunity that's developing. Could you give a little more color there on when that might happen and what the size could be? Kenneth Young: Yes. So there are a few projects that we're in dialogue and discussions on. Some of these are FEED studies that we always talk about FEED studies out there, FEED studies, meaning Front-End Engineering Design studies, and we have several of those going on at this case. So we're in discussions right now to finalize an opportunity and feel like that could happen fairly soon, hopefully, not days, weeks at max on a project that we can put out. And order of magnitude would be in the, I'll just call it, $70 million to $100 million-ish in that category. I'll give it kind of a little bit of a range there as we finalize it. But on the initial project itself, and then there's probably more opportunities and upside on that. But we are seeing in the U.S. from some of these operators and the hyperscalers and other aspects where a few occasions, they would like to have the CDRs or the carbon offtake as -- and the groups that are building out these power plants are looking at how they can capture CDRs or carbon to be able to sell those as additional revenue for the plant owners as it relates to building out the infrastructure to support the hyperscalers. And we've seen that with a few developers, and we've got, I think, a pathway here to hopefully announce a project or 2, but one specifically in the next days, if not weeks. Robert Brown: Congratulations on the progress. Operator: Our next question comes from the line of Brent Thielman with D.A. Davidson. Brent Thielman: Kenny, I want to ask just back on the Applied Digital contract, the $1.5 billion, is that all within B&W's scope? I know this is all getting worked out. But obviously, it's a massive potential uptick to the backlog that you have today. So I just wanted to kind of understand what's all in there. Kenneth Young: Yes. No, this is -- that $1.5 billion would anticipate and represent BW scope as associated with this project, right? B&W would bring all of the aspects and elements of the boiler and the steam capabilities plus the construction aspect, right? We have our own construction company here in the U.S. So it would be blended with construction, the steam turbines and the boiler aspect of it. And then we'll work through some of the other elements to complete the plant on time and on schedule. We'll work with Applied on that. So we put it as over $1.5 billion at that site. The total value could be higher depending on final scope, and we'll just have to work through that. But I wanted to give some idea and indication of what it looks like from a B&W perspective. So we intended that to be our scope. The scope of the project would be a little bit larger under that scenario, but we'll work with them to complete that once we have the NTP finalized. Brent Thielman: Okay. Yes, I appreciate that, Kenny. And then I guess, just as a follow-up, anything you can say in terms of just risk sharing associated with it. Is this all fixed price in terms of execution? And I noticed there's an equity component that Applied Digital gets in BW. Maybe just talk about that and whether that's going to be something that's ongoing as you look to maybe some of these other opportunities out there. Kenneth Young: Hard to say whether that same model would exist elsewhere too early. Not saying it won't, but hard to say right now on it. We viewed it as a very positive thing. We think having those warrants out there, obviously, there's incentives for Applied to get the NTP done sooner and complete, obviously. But also, there's buying, if you will, or support for BW overall, not only as a potential customer and client, but as a shareholder as well, too. And we think all of that is very much positive. And we obviously have seen that throughout some of the data center and other aspects as well, too. So we view that as overall very, very positive. As far as the risk share, we're working through that right now on how that would appear to be. And obviously, with the outside manufacturers and speed turbines companies would share a part of that risk overall as well, too. And we, as we always do, we look to balance it. I think the biggest piece here is that -- and this is what greatly reduces the risk overall to us is that this is -- these are projects and technologies that we have performed on a multitude of other occasions. So there's no new technology being designed or installed here or implemented here. This is well-proven technology that has been installed in tens, if not dozens of locations where B&W has actually constructed these. Obviously, we have the I think, advantage in the U.S. having our construction company and leveraging the boiler makers who are a great welding and fabrication aspect of this on-site. But again, these are all boilers that have been built previously. So we know the performance, we know the complexity that's involved in these, the time frame that's involved in these and as well as we've gone through all of the risk aspect of overseeing the manufacturing processes of these and understand how to manage that manufacturing process effectively. And we've got all the best practices and everything from each of these that we've implemented in prior periods. So this is unlike any other large project that B&W has been in historically. This one, I think, is extremely unique and opportunistic because it is something that has been done many, many times before, and there is absolutely no new technologies being implemented here. So to us, that's a significant reduction in risk in that case. And the terms and conditions all be detailed in the final notice to proceed. Operator: Thank you for your questions. That will conclude our question-and-answer session today. I would now like to pass the call back to Sharyn for any final remarks. Sharyn Brooks: Thank you for joining us. This concludes our conference call. A replay will be available for a limited time on our website later today. Operator: That concludes today's call. Thank you for your participation, and enjoy the rest of your day.
Operator: Good evening, and welcome to the SenesTech Reports Third Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead. Robert Blum: All right. Thank you very much, operator. And as you just mentioned, thank you, everyone, for joining us to discuss SenesTech's third quarter 2025 financial results, and this is for the period ended September 30, 2025. With us on the call today is Mr. Joel Fruendt, the company's Chief Executive Officer; Mr. Tom Chesterman, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. [Operator Instructions] Before we begin with prepared remarks, we submit for the record the following statement. Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission. All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise. With that said, let me turn the call over to Joel Fruendt, Chief Executive Officer of SenesTech. Joel, please proceed. Joel Fruendt: Thank you, Robert, and good afternoon, everyone. Thank you all for joining us today for our third quarter 2025 conference call. We once again had a very strong quarter with record quarterly revenues driven by the rapid adoption of our Evolve product line, which is showing growth across nearly every one of our key distribution channels and market verticals. E-commerce continues to be our largest channel, representing more than 50% of our revenue, and was up 55% year-over-year. And as many of you saw, we had a very exciting announcement as our products are now available at lowes.com. The intersection of our e-commerce and brick-and-mortar retail sales have the opportunity to be a significant growth driver for us moving forward, and Lowe's fits perfectly into that intersection. But as we have been communicating to you for the past year or so, our objective is clearly not to just grow at any cost. We need to reach profitability and believe we have the pathway to do so in the near term. Yes, high-margin revenue growth will be the easiest pathway there, but efficiently managing our expenses will be an equal part of the equation, and we are doing just that. During the quarter, we had a robust 43% increase in year-over-year sales. Gross margins continued in the 63% range and operating expenses were down 4% compared to last year and down 12% sequentially. And note that we had more than $100,000 of onetime legal expenses during the quarter that if removed, would have shown even further OpEx improvements. Overall, our adjusted EBITDA loss, which closely tracks our cash utilization, was the best in our company's history at $1.2 million. This compares favorably to $1.4 million last year and the most recent sequential quarter. With the continued focus on high-margin revenue growth, operational efficiency and cost discipline, we are poised to achieve our profitability objectives. Given the strong progress we continue to make, we feel very comfortable with the cash position we have, which at the end of September was more than $10 million. We will continue to execute and make incremental progress towards our profitability objectives, and we see a potential path to the future that may not require further equity offerings. So that's the high-level overview of the quarter. Record revenues, strong gross margins, reduction in our operating expenses, all of those resulting in the best adjusted EBITDA in the company's history. And finally, a strong balance sheet, which will bridge us to profitability. Okay. Let's transition to a few key activities that took place since we last spoke in August and some items we are working on, which we'll hopefully develop in the months to come. First off, as I mentioned a moment ago, our e-commerce business continues to show strong growth. Amazon continues to lead the way here with double-digit monthly growth. We continue to focus on being efficient with our advertising spend, ensuring that we don't spend during seasonally slower times for deployment. To that end, we slowed spend during late July and August, and we revamped our ad spend in early September. We had a highly successful Labor Day special that really boosted our sales in the month of September and should set the stage for a strong Q4 from Amazon as well. Beyond Amazon, which represents about 50% of our e-commerce revenue, we also are seeing growth from our existing senestech.com websites as well as walmart.com, homedepot.com and tractorsupply.com. And we had a big announcement about Lowes.com that has started carrying our Evolve Rat product. This expansion represents a major milestone in both consumer accessibility and retail distribution possibilities for the company. Launching on Lowes.com is a key component of our planned expansion through the broader retail channels. As we have talked about in the past, many retailers start new products on their e-commerce platform to assess overall potential and then transition to having them placed in their brick-and-mortar locations. We have a compelling case with Lowe's, Walmart, Home Depot and others that as the e-commerce side of the equation gains traction, we may then expand to in-store offerings in the future. We look forward to this being a large opportunity for us moving forward in the near future. During the quarter, our retail sales were up 254% compared to the year ago period, driven by expanded adoption that more than doubled its coverage with our ACE Hardware customer and follow-on orders from Bradley Caldwell, a wholesaler serving over 8,000 retail locations in the Northeast. Beyond e-commerce and retail, we continue to see adoption of our solutions within the municipal markets as well. During the third quarter, municipal revenue grew 139% year-over-year, driven by expanded deployments in New York City, Chicago and Baltimore, reflecting increased adoption in diverse urban settings. In September, we announced that Evolve Rat Birth Control would be deployed in another of Chicago's special service areas, this time, SSA #48 or the Old Town area. The new initiative led by the Old Town Merchants & Residents Association is focused on improving sanitation and public health in one of Chicago's most historic and vibrant neighborhoods. Planned deployments include strategic alleyways throughout the SSA, which spans key commercial and residential areas. SSA #33 or The Wicker Park Bucktown Special Service area of Chicago has expanded deployments in their area as well. We are working with the other 53 SSAs as they seek to implement an Evolve program. On a recent visit to Wicker Park Bucktown, a customer remarked, we've now seen in a week the rat activity we used to see in a day. It's good to have such simple articulation of Evolve's efficacy. These current programs continue to focus on controlled deployments in high-impact areas, laying the groundwork for potential large-scale expansion. And further, the overall awareness of these municipal deployments continue to have a positive impact on other channels such as retail, e-commerce and pest control distribution. In New York City, our rat contraceptive pilot program is showing exceptional results. Our team has been in New York supporting the deployment, where they continue to note 100% consumption of Evolve. We are working with New York City for reorders to advance the trial. In addition, we are working with local distributors to arrange for long-term supply to the city. While many of the headlines come from e-commerce channels such as Amazon, Home Depot, Walmart, Lowe's, et cetera, or our deployments in hardware retailers like ACE Hardware or municipal deployments in New York City or Chicago, the continued utilization of our solutions from pest management professionals or PMPs continue. Representing nearly 20% of our third quarter revenues, PMP revenue was up 72% sequentially from the second quarter as a wide variety of PMP partners are leveraging the unique attributes of fertility control across a wide range of customer applications, including theme parks. One of these theme parks is internationally known and is now in their third monthly order cycle. Our diverse distribution channel was clearly demonstrated during the quarter with near across-the-board growth from our various market verticals and distribution channels. With multiple shots on goal, each of which has shown stable growth and strong upside characteristics such as a large deployment of a major retailer or a large-scale deployment in municipal area, we feel very good about the future. Before I turn to Tom to review the financials in more detail, with the growth we expect, we have taken important steps to make sure we are structurally ready to meet this growth. Last quarter, we took the important step to increase our production capacity to meet future demand. We have officially completed our move into our new larger facility in the Phoenix area with new automotive capabilities designed to increase efficiency. So with that being said, let me turn the call over to Tom to review the financials in more detail and will then make a few closing comments before we turn it over to your questions. Tom? Thomas Chesterman: Thank you, Joel. Let me take a moment to expand on the numbers in the press release and a few points that Joel mentioned in his earlier remarks. On the revenue line, total revenue for the second (sic) [ third ] quarter was $690,000, which was an increase of 43% from Q3 of last year and up 10% sequentially. Breaking it down further, Evolve revenue increased 77% and accounted for 85% of our third quarter sales. ContraPest decreased approximately 31% and accounted for 15% of our Q3 sales. While down from a year ago period, ContraPest was basically flat from Q2 as there are still a number of loyal ContraPest customers. Looking at it from the vertical break in, e-commerce was clearly our largest contributor coming in at 54% of our overall Q3 sales. Overall, e-commerce was up 55% compared to our Q3 of last year and up 6% sequentially. As Joel mentioned, we dialed down unprofitable ad spend over the summer vacation period and re-ramped it up on Labor Day. We continue to see Amazon growth at double digits monthly. Our second largest vertical is pest management professionals or PMPs, which accounted for 19% of our Q3 sales and was up 29% year-over-year and up 72% sequentially. Municipal sales, while still a relatively small percentage of total sales, saw a 139% increase from the year ago quarter, driven by new deployments in Chicago and New York. Brick-and-mortar sales were up 254% year-over-year, driven by the expansion of ACE Hardware and Bradley Caldwell. Other contributors during Q3 were in the areas of agribusiness, commercial as well as zoos and sanctuaries. One item to point out is that we had very nominal revenue during the quarter from international sales. The groundwork has been set, and we simply need to wait for progress in terms of approvals, et cetera. We have communicated previously that this is a process, and we believe we are making good progress. Turning to gross margins and gross profits as a whole. For the third quarter, gross margins remained strong at 63%. The transition to the new facility will continue to show efficiencies and improvements in gross margins. Looking at it from a gross profit dollar perspective, gross profit was $433,000 compared to $315,000. More broadly speaking, the higher gross margins of Evolve continue to be a key driver to our improved financial performance. On the OpEx line, operating expenses were down 4% compared to last year and down 12% sequentially. As Joel mentioned, we had more than $100,000 of extraordinary expenses during the quarter that if removed, would have showed even further OpEx improvements. We continue to focus on being as efficient as possible within our expense structure, focusing on profitable ad spend and the overall cost structure. The revenue growth, improved gross profit dollars and decreased OpEx resulted in our lowest adjusted EBITDA loss in the company's history as we focus on achieving our goal of profitability. For the quarter, adjusted EBITDA loss was just $1.2 million and excluding the extraordinary items, would have been $1.1 million. Coinciding with the improved bottom line results is a balance sheet cash balance that has the ability to allow us to reach profitability without proactively raising any additional dilutive capital. Clearly, the ramp of revenues is the biggest unknown, but at the current sequential pace of growth in gross margin and OpEx structure, there is clearly a path where we do not need to proactively raise additional dilutive capital. I'll remind everyone that we do have additional capital potential if we need it, including 2.2 million short-term warrants outstanding at $5.25 per share, which, if exercised, would potentially bring in more than $11.4 million, and we have an ATM that is currently dormant. Let me now turn the call back to Joel. Joel? Joel Fruendt: Thanks, Tom. The adoption of our Evolve rodent birth control solution continues to be a game-changing solution, which has significantly opened up the addressable market opportunity for us. We have numerous shots on goal for continued steady sequential growth with outsized opportunities for what I would define as transformational growth that has the ability to quickly catapult us to profitability. We feel very good about our broad approach to expanding adoption of Evolve and the results to date are reaffirming our strategies. With a large addressable global market that has shown regulatory tailwinds in our favor, a first-mover advantage in rodent birth control, a diverse and scalable go-to-market strategy that is producing results and a lean focused growth strategy which balances revenue growth with operational efficiencies, I couldn't be more excited about the position SenesTech is in today. As always, I thank you all for your interest in SenesTech. With that, I'm happy to open up the call to questions. Robert, let me turn the call over to you to see if there are any questions in the webcast portal. Robert Blum: Great. Thank you very much, Joel, for your prepared remarks there. [Operator Instructions] All right. We have a few questions here, gentlemen. The first one is, will we see the company's products in Lowe's brick-and-mortar stores? Joel Fruendt: And I'd say the answer to that is we are in discussions with them. The first step was the e-commerce, and -- but we're also talking to them about doing a test deployment in about 100 stores. So stay tuned. I think the expectations of that would be sometime at the end of Q2. Robert Blum: Okay. Very good. Next question here is, do you have visibility on PMP-driven sales? What kind of growth are you expecting from this channel? Joel Fruendt: Well, PMP is certainly a key growth channel for us and one of our massive market verticals. We've had 20% -- account for 20% of our sales, which was up significantly over the last quarter and the year ago period. So we see that growing at significant levels as we go along, as more of the customers, the pest control operators become aware of that birth control is indeed another part of an integrated pest management program. And we're starting to see that by the reorders that we're getting. Robert Blum: All right. Very good. A couple of questions here on e-commerce. I think you addressed some of this in your prepared remarks, but how much of the revenue of the $690,000 was from e-commerce? Joel Fruendt: Well, it accounted for 54% of our quarterly revenue. That has been consistent with some of the other quarters that we've had in the past. Robert Blum: All right. Expanding on e-commerce here. A question here is Evolve is priced much higher than other rat control products on Amazon. With your big margins, you have lots of room to cut price. Is that part of your sales strategy going forward? Joel Fruendt: Well, what we did is we've positioned Evolve kind of in the middle of the pricing pack with different rodenticides that are out there. We monitor that closely. And we think that when there's -- the time is right, and we may have to discount a little bit in order to gain some large orders, we're willing to do that. But we're really comfortable where our price point is now. And I think our double-digit growth on Amazon monthly is proof of that. Robert Blum: All right. Very good. Next question here. There's actually a number of international questions. I'll try to summarize a few of these. First off here, could you give just sort of basic general details on your progress in the international markets? Joel Fruendt: Yes. Great news from New Zealand. We got the official approval for New Zealand. New Zealand has a program where they want to limit out pests by 2050, rodents and a couple of other pests. We got the approval there. We have our distribution set up there. So we're in the process of working on, okay, what does that order look like that we're shipping to New Zealand. And we have a number of those areas. We have now 18 exclusive distributors who are all working every day to get those country approvals. And it may take a little bit longer than what we would like. Sometimes in countries, it takes a little bit longer than others. But we know that once we get approvals in the countries that the container load orders are going to follow there. And so we're really excited about that. We're being very patient. And at the same time, we're pressing forward. So we expect many more country approvals over the course of the next 3 months. Robert Blum: All right. Very good. I hope that, that addressed most of the questions that were on here internationally. [Operator Instructions] Next question pertains to the legal expense. Any additional color that can be provided on that? Joel Fruendt: Tom, do you want to take that? Okay. It looks like Tom is not on. We have some legal expense. We have -- go ahead. Thomas Chesterman: I'm sorry, I had my mute on, sorry about that. Yes, as we've disclosed in our filings, we are being sued by Liphatech, a rodenticide manufacturer that we did some joint research with a while back. They claim we violated our nondisclosure agreement and infringed on their IP. We can't really comment specifically on the litigation, but I will say this. I mean, their assertions are baseless. It's bordering on ridiculous. And to some extent, I think the SenesTech and rodent birth control in general is beginning to scare the poison companies. They're now realizing that Evolve may hurt their business, and they're doing what they can to stop us. So I suppose that's a positive signal for our future in a strange way. Robert Blum: All right. Very good. Next question here is, could you give an estimate on how much revenue is expected from recent field trials that started in Somerville and Cambridge? Anything you can add on to that? Joel Fruendt: Well, I think it's too early to project revenues. All I can say is this is that those trials are going very well and that they're looking for a long-term solution. And we're very confident that as we have the positive results from these trials, that the orders will follow. It's very similar to the third monthly order in a row from one of the large theme parks. They try it out, they do their own internal work to make sure that it's something they want to use. And then once they realize that this is a way to end infestations, the orders will follow. And we think that there's going to be some really good things coming from both of those areas. Robert Blum: All right. Very good. Well, I am showing no additional questions here or topics. So I guess with that, Joel, I'll go ahead and turn it back over to you for any closing remarks. Joel Fruendt: Well, thanks, everyone, again for being on the SenesTech earnings call. We've been working hard. I think you can see by the results that a lot of our legwork is starting to pay off, and we're expecting even better things going forward. So thank you for your time and look forward to talking to you again after the post of the year. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Beeline Holdings third quarter 2025 earnings conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I’ll now like to turn the conference over to Tiffany Milton, Chief Accounting Officer. Please go ahead. Tiffany Milton, Chief Accounting Officer, Beeline Holdings: Thank you. Good evening, everyone, and thank you for joining us today to discuss Beeline Holdings’ financial results for the third quarter of 2025. I’m Tiffany Milton, Beeline Holdings’ Chief Accounting Officer, and joining us on today’s call to discuss these results is Nick Liuzza, our Chief Executive Officer, and Chris Moe, our Chief Financial Officer. Following our remarks, we will open the call to your questions. Now, before we begin with prepared remarks, we submit for the record the following statement: this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding Beeline Holdings’ expected future growth, expected future operating results, and financial condition, including projections concerning our ability to be cash flow positive and profitable and achieve other milestones within specified time frames, expected reductions to interest rates and the impact on our business, the anticipated Beeline Equity closings, the future development and potential of our technology offerings, and the introduction of new products and features. Forward-looking statements are typically identified by words such as believe, expect, anticipate, plan, intend, seek, estimate, will, would, could, may, continue, forecast, target, potential, project, undertake, and similar expressions. These statements are based on management’s current assumptions, beliefs, and expectations and are not guarantees of future performance. Actual results may differ materially from those described in forward-looking statements due to various risks and uncertainties. These include, without limitation, the risk factors we provided in our 2024 Form 10-K and prospective supplements. In addition, there is a risk that our new technologies we are developing may not work as expected. We caution investors not to place undue reliance on any forward-looking statements made during this call. All forward-looking statements speak only as of the date of this presentation and are based on information available to Beeline Holdings as of today. We undertake no obligation to publicly update or revise these statements to reflect events or circumstances occurring after today’s date, except as required by law. Now, with that said, I’d like to turn the call over to Nick Liuzza. Nick, please proceed. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Good afternoon, everyone, and thanks for joining us today. I’m Nick Liuzza, co-founder and CEO of Beeline Holdings. With me is our Chief Financial Officer, Chris Moe. We appreciate you spending time with us on our third quarter 2025 earnings call. Before we jump into our Q3 performance, I would like to start with a key subsequent event. Beeline Loans Incorporated, our lending subsidiary, achieved its first positive cash flow month in October of 2025. Beeline Loans increased monthly closed loan units by 91% since January of 2025, while keeping our production payroll virtually unchanged, underscoring the scalability and efficiency of our digital mortgage platform. This is certainly a key development. When we started 2025, we identified two critical goals related to our financials, with targeted completion by Q1 2026. The first goal was to be debt-free, which we accomplished in September. Our second goal was for the company to be cash flow positive by Q1 2026. Now that Beeline Loans is cash flow positive, we’re very confident about achieving this goal, which will eliminate our need to raise capital in 2026 to support operations. Now, let me turn to some macro points related to interest rates. As of the Federal Reserve’s announcement on October 29, the effective Fed funds rate is now 3.9% versus its peak of 5.3% in September 2024. The market yield on the 10-year Treasury securities hit nearly 5% as of October 19, 2024, and is now eased to 4.1%. Also relevant, the spread between the 30-year fixed mortgage and 10-year Treasuries has tightened from 152 basis points to 127 basis points. All of these are beneficial to the demand for mortgages, as well as the margin Beeline makes on them. The market is expecting the Fed to make further cuts this December or January, and then again probably in Q2 of next year. For Q3 2025, Beeline Loans saw demand for mortgage loans increase substantially. That demand was driven by targeted marketing campaigns implemented by Beeline and declining rates. To illustrate, lending originations expanded from $51.9 million in Q2 to $69.8 million in Q3, reflecting quarterly growth of more than 35%. We closed 242 units in Q3, up more than 29% over Q2 loan closings of 187. We could not have accomplished this growth in mortgage originations without strong support from our warehouse banks. We expanded our warehouse line capacity from one bank with a $5 million limit to three banks with a total of $25 million of capacity. Given that we sell our loans on average in seven business days, that gives Beeline a monthly origination capacity of approximately $75 million. We will certainly continue to increase our warehouse capacity to support future expansion. To restate an earlier point, we kept operational headcount flat during this growth. This is a reflection of the scale that is possible from the technology investments we made at all stages of the customer journey. What is even more exciting is that we can double our October production, which is already up 40% from September, with minimal cost to operational payroll. We are ready for much higher volumes, which is a testament to our strategic commitment in the down years to build scale and diversification. In short, we kept our foot on the gas pedal during the difficult times to ensure we would be ready when the market normalized. I’m proud to say we are ready. During the down years, from late 2021 through 2024, some lenders chose to drive volume by spending heavily on marketing, even with industry unit economics running at a negative during much of that time. Even though we’ve seen 91% growth in volume since January, we were doing so with a measured spend on marketing, which curtailed stronger top-line growth. It did not make sense to further drive our top-line at a loss. Now that unit economics are positive, our appetite to increase our marketing spend is high, which we believe will lead to much faster quarterly growth. Our lending revenue per closed file has grown from a feeble $6,400 per file, driven heavily by market conditions and product mix in January, to a more robust $8,828 per file in October. We expect to see the revenue per file continue to increase and to normalize between $10,000 and $11,000 per file. This will lead to higher marketing spends and additional growth starting in Q4. Our technology edge remains one of the central drivers for our momentum. Our AI sales agent, Bob, continues to deliver outstanding results. As we mentioned on our last call, we’re seeing six times increase in lead conversion and eight times increase in full mortgage applications, all while operating 24/7, 365 at net zero incremental cost with this portion of the business. The lift from Bob will increase as Bob becomes more integrated throughout the entire sales funnel and moves into the early stages of the mortgage production process. We also continue to see strong performance from Hive, our workflow engine, which enables us to close loans in as little as 14-21 days, about twice as fast as traditional lenders. This efficiency allows us to handle growing volume without adding proportional cost, giving us a real structural advantage. This continued growth in innovation and performance is a testament to our Australian product development and digital marketing teams. Turning to our title business, we leveled out for the quarter. Q3 units were 280 versus Q2 units of 294. With that said, October was our strongest month since inception, and we did not spend any marketing dollars driving the title business. In other words, zero CAC. That is going to change. Recently, Beeline Title hired an experienced title sales executive to do third-party marketing, which should grow units substantially. After 20 years in title and a highly successful exit, we’re excited and confident in our ability to grow this vertical in a normalizing mortgage market. In my view, based on our team’s significant experience, title has been a sleeping giant for Beeline that is now just awakening. All the KPIs we monitor indicate that Q4 will comfortably exceed Q3 for both Beeline Loans and Beeline Title. Finally, we have successfully launched our fractional equity sale business and are closing transactions leveraging the blockchain in unison with our partner. Our product is provisionally branded as Beeline Equity. We expect to close approximately 30 of these transactions by year-end and are taking applications on our website for 2026. The average size of a sale of equity transaction is approximately $250,000, and we earn a 3.5% fee plus title fees. Since we are not underwriting the homeowner, the process is seamless with margins at 80% or better. There’s high demand for this product. We are positioned to scale quickly by mid-Q1 as we work through anticipated regulatory considerations and perfect the consumer experience. Beeline may very well be the only mortgage lender with this product, which is not tied to interest rates, providing strong revenue opportunity for Beeline regardless of market conditions. We are a technology-driven mortgage and title provider focused on using AI and automation to reshape the home financing experience from slow and painful to fast and fun for a new generation of homeowners and investors. We’re launching a business to provide near-instant liquidity for homeowners who have significant locked-up equity in their homes but either cannot qualify for a mortgage or are disappointed with the amount. In the coming quarters, we will begin to share key metrics such as ROAS and NPS and other indicators to help you evaluate how our technology is driving Beeline’s brand value, customer retention, and earned media. We expect to show continued improvement in both revenue and our expense structure. My goal as CEO is to continue to lead Beeline towards substantial growth and profitability. The future is bright for Beeline. With that, I’ll turn it over to Chris. Chris Moe, Chief Financial Officer, Beeline Holdings: Thanks, Nick. As a reminder, due to pro forma accounting adjustments and GAAP purchase accounting rules, our income statement and balance sheet reflect the impact of the recent Ford merger transaction, which had its final closing on March 7, 2025, and as such, certain comparative periods are not directly comparable. Additionally, Magic Blocks, our AI product technology company in which we hold a significant minority stake, is not consolidated in our income statement under GAAP. Lastly, our legacy spirits business, Bridgetown Spirits Corporation, was reclassified during Q2 as discontinued operations and was subsequently sold in Q3, resulting in a $718,000 loss on the extinguishment of debt. Let me now walk you through the Q3 2025 financial highlights. Total net revenues were approximately $2.3 million for Q3 and $5.4 million for nine months year-to-date, driven primarily by Beeline’s mortgage activities, which accounted for over 78% of revenue year-to-date, with the remainder from the Beeline Title business and a small amount from other revenues. Our total net revenue growth rate was 27% for Q1 to Q2 and 37% Q2 to Q3. Preliminary results from October and now early November suggest an even stronger growth rate for Q4, spurred in part by declining interest rates. In terms of unit growth of our mortgage business, in January, we closed 43 loans. In September, we closed 82 loans, up 91%. In October, we closed 98 loans, generating just under $863,000 in revenue, representing 44% of our total lending revenue for Q3. In terms of unit growth for our title business, in January, we closed 45 titles. In September, we closed 85 titles, up 89%. October was a record revenue month for title, coming in at $175,000 in revenue, representing 45% of our title Q3 revenue, with 106 title closings. Turning to the expense side of the P&L, operating expenses totaled approximately $5.2 million for Q3 and $16.9 million for nine months year-to-date. For Q3, we incurred $2 million in compensation, commission, and benefits, $871,000 in general and administrative expenses, $831,000 in depreciation and amortization, $682,000 in marketing and advertising, and lastly, $804,000 in other operating expenses. This resulted in a loss from operations of $2.8 million for Q3, a noted improvement over the Q2 loss from operations of nearly $4 million, and much improved from the Q1 loss from operations of $4.7 million. Total other income and expense net was $746,000 for Q3 and $2.8 million year-to-date, which includes the spirits loss of $718,000. We reported a net loss of $4 million for the quarter and $15 million year-to-date. While this loss is significant, it represents an improvement over our Q1 loss of $6.7 million and reflects deliberate investments and one-time capital structure effects. Our core mortgage operations are scaling well, and we are confident these investments will position us for a step change in performance in the quarters ahead. We are also aware of rapid customer and revenue growth from our AI sales agent spinout, Magic Blocks, whose operating results are not reflected in these figures. Turning to the balance sheet, we ended the third quarter with $1.3 million in cash plus restricted cash, up from $872,000 in cash on December 31, 2024. From December 31, 2024 to September 30, 2025, we made debt repayments of $6.5 million. Now, with the exception of our office leases and our warehouse lines of credit, I am pleased to confirm that Beeline is debt-free. We have also reduced our accounts payable over 48% from $1.7 million to $864,000, and with aging and terms notably improved. Total equity at period end was $51.7 million, up 6% from $49 million as of 12/31/2024. Regarding cash flow for the nine-month period, net cash used in operating activities was nearly $11.5 million. Net cash used in investing activities was just over $1 million. Net cash provided by financing activities was nearly $13 million for a net increase in cash of $481,000 for the nine-month period. To summarize the year-to-date financial picture, we have rapidly grown our revenue, while trimming expenses and completely deleveraged the balance sheet. While I can’t provide firm Q4 guidance due largely to the rapid pace of transformation in this business, I am aligned with Nick that Beeline can expect to see continued robust growth from introducing new and unique products, growing existing loan and title revenues, and controlling expenses with the goal of achieving operating profitability and positive operating cash flow by early in Q1 2026. With that, I’ll turn it over to the operator for questions. Conference Operator: We will begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star one again. We will pause for a moment for callers to join the queue. Your first question comes from a line of Glenn Matson of Leidenberg. Your line is open. Glenn Matson, Analyst, Leidenberg: Hi. Yeah. Thanks for taking my questions. Might I ask, the last call you had was before the Fed started cutting rates? Curious if the market response has matched, exceeded, or fell below your expectations of what demand profile would look like in a rate-cutting environment, number one. Two, now that you’ve added this capacity to the warehouse line, is that enough to meet that demand or just kind of some color on your ability to meet that inflow? Nick Liuzza, Co-Founder and CEO, Beeline Holdings: I’m sorry, what was that in a second? Yeah, okay. Hey, Glenn, good to hear from you. I’ll take the first question, and then Chris Moe will take the second question. In regards to our expectations, I would say that we did expect to see that rate cut in September and then the second one that we just received. I would say that the volume kind of was where we thought it would be. We knew that we felt pretty strongly that the rate cuts were coming. As a result of that, we started negotiating with our warehouse lines to make sure that we had the capacity to close the loans we needed to close. You want to go ahead. Chris Moe, Chief Financial Officer, Beeline Holdings: Yeah, I’ll just add to that. I mean, I think if we’re "suffering success," our existing warehouse lenders, as well as three or four others who are clamoring for our business, will be more than happy to step in and give us the ammunition, so to speak, to fight the war. Not concerned about it. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Yeah. I mean, the ability for us to raise our lines will not be difficult. But the $75 million capacity that we currently have is probably a little more than what we need until. Chris Moe, Chief Financial Officer, Beeline Holdings: We’ll grow into it. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Yeah, but we’ll grow into it very quickly, and we have the ability to increase it very quickly as well. Glenn Matson, Analyst, Leidenberg: Okay. Great. Thanks for that. On the cash-out equity business, can you just give a sense, Nick, as we get closer to a full launch or whenever that may be, what you’re learning about the market in terms of the demand and the willingness for end customer to go after this product, which is kind of unique in the market? Yeah. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Yeah. Listen, I mean, the demand is significant, right? I mean, we’re targeting initially baby boomers that maybe are outgrowing their retirement. In the areas that we’re targeting, there’s about $10 trillion of available equity. We have a product that meets their needs with virtually very little competition. The demand is quite significant. This is leveraging the blockchain and essentially connecting the blockchain with the real estate chain and, in this particular case, the public record. We need to be a bit careful in our first, call it, 50 transactions to make sure they go off correctly. We’re trying to anticipate regulatory matters as well because there’s not a blueprint for what we’re doing. We’re kind of out ahead of this, I think. I mean, I don’t see anyone else doing this except us, honestly. What we want to make sure is that we’re being transparent, we’re being quality-focused, we’re meeting the KPIs and the timelines that we set for the market. I think after we get about 50 transactions under our belt, you’ll see a wider launch, which means more marketing dollars behind it, more product awareness, more scale, and then we’re off to the races. I think I said in my call earlier today, we’ll close about 30 transactions this year and then probably another 20-25 in January, and then we’re off to the races. I’ll just add that it’s very, very important that we do this right. I know I’m saying that again, but not understanding the regulatory blueprint and what that means to our business, we just want to proceed carefully before we launch. Glenn Matson, Analyst, Leidenberg: Right. I guess I’ll just follow up with that. You mentioned you don’t think anyone else is doing this. You’ll have a lead and perhaps be able to build some sort of momentum before you see competition. Is that fair to say? Chris Moe, Chief Financial Officer, Beeline Holdings: Yeah. Let me answer that. I think if by, let’s say, third quarter next year, if we didn’t have any competition, that means we really overestimated the opportunity. We expect to have vigorous competition. I mean, the market is so huge, that’s actually good for everybody. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Yeah. The opportunity is tremendous. It’s a huge market. Remember, the reason why I say we don’t have a lot of competition is, remember, it’s a true fractional sale of equity, and we are recording a deed, not a deed of trust. A deed of trust is a mortgage or a lien. When you look around the other equity products out there, for the most part, they turn into P&I instruments, and they’re recording a deed of trust. Our product is a pure fractional sale of equity. It’s an equity product. Again, I’m not aware of many people that are doing this, certainly not any of the lenders. There are some other fractional equity sale of equity companies out there, but it’s my understanding that they’re recording a deed of trust and not a deed. Big difference. Glenn Matson, Analyst, Leidenberg: Okay. Yeah. Sure. Thanks for all that, Tyler. I’ll jump back in with you. Thank you. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Thank you. Thank you, Glenn. Glenn Matson, Analyst, Leidenberg: Thanks. Conference Operator: Once again, if you have a question, please press star one. With no further questions, this concludes the question and answer session. I would like to turn the conference back over to Nick Liuzza for closing remarks. Nick Liuzza, Co-Founder and CEO, Beeline Holdings: Thanks, operator. To wrap up, Q3 2025 marks yet another inflection point for Beeline. We have fully transitioned into a fintech mortgage company, one carefully designed to scale and compete with the largest lenders in the country. We have aimed Beeline to pursue a $2.3 trillion US mortgage market with a different technology-driven strategy focused on younger digitally native borrowers and real estate investors, and now offering a fractional equity product that will provide quick cash to asset-rich homeowners who may not qualify for a traditional mortgage or HELOC. Looking ahead, we have exciting initiatives in the pipeline, including new AI-driven solutions, potential SaaS products, and expanded strategic partnerships. These initiatives reflect our firm desire to reshape borrower behavior across the industry. I want to close by thanking our executive team, our employees, our customers, the investors who buy our loans, our tech partners, and our shareholders. We are grateful for the progress we’ve made and highly motivated by the long-term value we’re building. Thanks to everyone for joining the call. Conference Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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