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Operator: Good afternoon. Welcome to Radiant Logistics' Inc.'s Financial Discussion for Fourth Fiscal Quarter and Year Ended June 30, 2025. This afternoon, Bohn Crain, Radiant Logistics Founder and CEO; and Radiant's Chief Financial Officer, Todd Macomber, will provide a general business update and discuss financial results for the company's fourth fiscal quarter and year ended June 30, 2025. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes. This conference may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the company that may cause the company's actual results or achievements to be materially different from the results or achievements expressed or implied by such forward-looking statements. While it is impossible to identify all the factors that may cause the company's actual results or achievements to differ materially from those set forth in our forward-looking statements. Such factors include those that have in the past and may in the future be identified in the company's SEC filings and other public announcements, which are available on Radiant's website at www.radiantdelivers.com. In addition, past results are not necessarily an indication of future performance. Now I'd like to pass the call over to Radiant's Founder and CEO, Bohn Crain. Bohn Crain: Thanks, Matthew. Good afternoon, everyone, and thank you for joining in on today's call. With the benefit of our diverse service offering and ongoing acquisition efforts, we continue to deliver solid financial results and generated $38.8 million in adjusted EBITDA for our fiscal year ended June 30, 2025, which is up $7.6 million and 24.4% relative to the prior year period. The year-over-year improvement in adjusted EBITDA was driven principally through our acquisition efforts. For the year ended June 30, 2025, our acquisitions generated $6 million in adjusted EBITDA, driven principally by our greenfield acquisitions of Seattle-based Cascade Transportation in June of '24, Houston-based Foundation Logistics and Services in September of '24, St. Louis-based TCB Transportation in December of '24 and Los Angeles-based Transcon shipping in March of '25, along with the conversion of our strategic operating partners, Miami-based Select Logistics in February of '24 and Philadelphia-based USA Logistics in April of '25. Notwithstanding these strong year-over-year results, we expect to continue to see some near-term volatility tied to the ebb and flow of the ongoing U.S. negotiations around trade and tariffs. In any event, we continue to believe that there will ultimately be a surge in global trade as these tariffs disputes are brought to rest. In the interim, we intend to remain nimble in response to any tariff announcements by the U.S. administration and continue to support our customers in navigating these quickly evolving markets and executing thoughtful supply chain strategies for competitive advantage. As previously discussed, we believe we are well positioned with a durable business model, diverse service offering and strong balance sheet to navigate through a slower freight market. We continue to enjoy a strong balance sheet with approximately $23 million of cash on hand as of June 30 and only $20 million drawn on our $200 million credit facility. At the same time, we remain focused on the long term, staying true to our strategy to deliver profitable growth through a combination of organic and acquisition initiatives while thoughtfully relevering our balance sheet through a combination of strategic operating partner conversions, synergistic tuck-in acquisitions and stock buybacks. We made good progress in this regard over this last year, having completed 3 greenfield acquisitions and 3 strategic operating partner conversions in fiscal '25. In addition, earlier this month, we achieved a significant milestone with our acquisition of Mexico-based Weport. Mexico is an important market for us, and in addition to supporting Radiant's legacy and prospective customers across Mexico. Weport is well positioned to serve as a platform to help us continue to scale our North American footprint. We believe these transactions are representative of a broader pipeline of opportunities, which includes both greenfield acquisitions, companies not currently part of our network as well as acquisition opportunities inherent in our agent-based network where we can support our current operating partners in their exit strategies and look forward to providing further updates as we progress our acquisition efforts. With that, I'll turn it over to Todd Macomber, our CFO, to walk us through our detailed financial results, and then we'll open it up for some Q&A. Todd Macomber: Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the 3 and 12 months ended June 30, 2025. For the 3 months ended June 30, 2025, we reported net income attributable to Radiant Logistics for the quarter of $4.907 million on $220.6 million of revenues or $0.10 per basic and fully diluted share. For the 3 months ended June 30, 2024, we reported net income attributable to Radiant Logistics of $4.781 million on $206 million of revenues or $0.10 per basic and fully diluted share. This represents an improvement of approximately $126,000 of net income over the comparable prior year period or 2.6%. Quarterly adjusted net income results. For adjusted net income, we reported $5.485 million for the 3 months ended June 30, 2025, compared to adjusted net income of $7.015 million for the 3 months ended June 30, 2024. This represents a decrease of approximately $1.530 million or approximately 21.3%. For adjusted EBITDA, we reported $7.890 million for the 3 months ended June 30, 2025, compared to adjusted EBITDA of $9.078 million for the 3 months ended June 30, 2024. This represents a decrease of approximately $1.188 million or approximately 13.1%. Moving on to the 12-month results. For the 12 months ended June 30, 2025, we reported net income attributable to Radiant Logistics of $17.291 million on $902.7 million of revenues or $0.37 per basic and $0.35 for fully diluted share. For the 12 months ended June 30, 2024, we reported net income attributable to Radiant Logistics of $7.685 million on $802.5 million of revenues or $0.16 per basic and fully diluted share. This represents an increase of approximately $9.606 million over the comparable prior year period or 125%. For adjusted net income, we reported $30.944 million for the 12 months ended June 30, 2025 compared to adjusted net income of $22.647 million for the 12 months ended June 30, 2024. This represents an increase of approximately 8.297 million or approximately 36.6%. For adjusted EBITDA, we reported $38.756 million for the 12 months ended June 30, 2025, compared to adjusted EBITDA and of $31.160 million for the 12 months ended June 30, 2024. This represents an increase of approximately 7.596 million or approximately 24.4%. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers. Operator: [Operator Instructions] Your first question is coming from Elliot Alper from TD Cowen. Elliot Alper: This is Elliot Alper on for Jason Seidl. Can you talk about the changing trade policy and how that's affected your business. I guess, maybe more specifically first on the Mexico side, given your recent acquisition of Weport? Bohn Crain: Sure. It remains fluid, obviously, and there -- it's -- if it fits and starts, right? So initially, there were some pull forward with people trying to get ahead of tariffs, then there's little inventory builds up. There were some warehousing constraints with everybody trying to navigate various strategies around the tariffs including kind of bringing freight to U.S. adjacencies, whether that's Canada or Mexico. So there's -- it's -- it remains an interesting time. I think we're seeing definitely a continued shift or diversification away from China to Southeast Asia and markets like Mexico, we believe will continue to be a beneficiary of kind of the trade dynamic. I can't tell you kind of which way the wind will blow next, but it will remain volatile or I would expect that it will. And we're going to be there to support our customers through that process, while at the same time, continuing to build out and solidify our own presence across North America. for the longest time. We've been strong in the U.S. back in 2015, we acquired another public company, formerly known as Wheels that represented our platform in Canada, and so our opportunity to partner with Weport and the Mexico transaction is kind of a continuation along the theme and making good on our own kind of vision or aspirations to really have a robust kind of one-stop shop opportunity for North America on a more comprehensive basis and Weport represents that for us helping kind of complete our North American puzzle as we move forward. Elliot Alper: Okay. Great. And then yes. So we've seen a lot of volatility on the imports this year. I guess, 2 different pull-forward events. We've also seen kind of more capacity in TEUs come online this year. I guess, how are you managing your business differently given all that's going on? And how are your customers managing their businesses differently? Bohn Crain: Well, it's been an interesting time. It's harder for the customers to manage their supply chains just giving the -- given the volatility. So a lot of shippers have been just doing their best to by time in and around when they -- either getting in ahead of tariff effective dates or back to this idea of bringing freight either into Canada or Mexico while trying to decipher what's going to happen next or which commodities are going to be impacted and so on. So until there -- more announcements were made around various commodities or times for changes, it remains difficult. And then, of course, we've got the whole -- whether the tariffs are even legal, I guess, is coming before the Supreme Court. So needless to say, our and our competitors' customs brokerage operations are extremely active trying to keep up with kind of these uncertain times and doing what we can to support our customers through that journey. Elliot Alper: Okay. That's helpful. And then maybe just 1 on the near term. So adjusted EBITDA was a bit [ below us ], specifically EBITDA margins. I guess anything to call out in the quarter, any pull forward or a lack thereof would be helpful. Todd Macomber: Yes. I think it's more lack thereof. I think it's was more of a pull forward in earlier periods is what it was. And so like Bohn said, I mean, people pull forward and you build inventories and you burn through them and then you need to get back to bringing product in. So -- but that's what I was seeing. I think it's timing, right? And it's hard for us to really quantify when these things are going to change. But clearly, it's impacting us sometimes favorably and sometimes not. So in this particular quarter, I think there was less pull forward is what we saw. So that's -- it's nothing alarming but it's going to be expected, but it's hard for us to quantify exactly how things play out in the near term. Operator: Your next question is coming from Mark Argento from Lake Street. Mark Argento: Just a quick follow-up on the last question in terms of EBITDA. I did notice, it looks like depreciation and amortization in the quarter was down like $3.6 million, running closer to $5 million a quarter. Obviously, that add-back wasn't there for us. What did you guys end up? Writing something down or what was [indiscernible] Todd Macomber: No, no. As Bohn mentioned, in 2015, we did a pretty big acquisition, Wheels Group, and that was a 10-year life. And so basically, it's a substantial amortization associated with that acquisition that basically got to the end of its life. And so we -- so now the numbers you see for this quarter are going to be more baseline going forward. So it's purely that. Mark Argento: Got it. Just the Wheels deal fell off the amortization. Got it. That's helps. Yes. And just pivoting back, obviously, you guys have been super aggressive or active. I don't know if aggressive is the right word, but active on the M&A side and buying in. I mean a lot of these guys you're buying -- you're doing business, you're integrating, you've already -- they're already almost integrated effectively. Is there kind of a capacity limitation? Is there any reason you couldn't do 10 or 15 of these a year, I mean, not to get overzealous, but maybe just talk through how you're thinking about the pipeline and your ability to do more of this. Bohn Crain: Sure. We've always talked about kind of what are the constraints around acquisitions, and we really don't think it's a -- there's a true constraint on interesting acquisition candidates. And given our low leverage, we've got ample kind of capacity to do deals. So the ultimate constraint really becomes our ability to kind of integrate and digest the things that we acquire. And Mark, you'll remember, we've historically thought of having a couple of different platforms to support M&A. So we've historically had our U.S. forwarding operation platform. That's where you're seeing all of our Asia station conversions occurring. We also have our U.S. intermodal and truck brokerage platform in Chicago, where we're looking to do transactions, that's where we were able to do the TCB transaction from. And then we have our Canadian platform where we're always interested in exploring Canadian type opportunities. And now most recently with Weport, we'll will have yet a fourth -- I think of that as a fourth platform where we could explore kind of other potentially interesting opportunities. And from a Mexico standpoint, to continue to build out our capabilities in Mexico. And kind of coming back for the longest time, we've talked about our extreme low leverage on our balance sheet and as we kind of work our way back to a more normalized level. We have quite a bit of capacity within our existing capital structure to continue to grow, particularly when you consider kind of the free cash flow characteristics of the business, that's kind of part and parcel of what we're doing. So I like your choice of words. I really don't view us as being aggressive, but I do view us as being active. And I think kind of the overall market dynamics kind of point to arrow our way right now. So we're we're trying to lean into that opportunity and we're really excited about the things that we're doing as well as some other kind of organic initiatives that are pretty exciting that we're working towards. Mark Argento: And just a final one for me. In terms of the tariff situation and we're getting -- also getting closer to year-end here in the holidays and everything else going on. I mean is it -- are you starting to see any activity like if a country -- looks like they've come to terms with the administration. All of a sudden, you start to see things maybe moving around a little bit more and around those geographies or everybody is still playing a little bit of wait and see here, regardless of that we're 2.5 months or 3 months out from year-end? Bohn Crain: Yes. Well, I think people are generally expecting and, I guess, I would call it a muted peak. I don't think we're going to see the traditional peak season that we might have otherwise. But we do have kind of these underlying thematics of kind of more freight being sourced out of Southeast Asia. I don't think that's going away. But the growth -- I can't say enough about the growth that has occurred and is expected to continue to occur in Mexico. And so I think it was really important for us to expand our presence not only for kind of new opportunities, but to support our own existing customer base as they themselves are diversifying more and more of their own supply chains kind of to a kind of a near sourcing type strategy. Operator: Your next question is coming from Jeff Kauffman from Vertical Research Partners. Jeffrey Kauffman: Congratulations, guys. Great year. Bohn, I'd like to go revisit your comment about getting a little bit more active and levering up. Do you have a particular target where you don't necessarily want to level up past a certain point as you relever the balance sheet and grow? Bohn Crain: I think the short answer is, yes. I think for me, kind of a normalized target would be, call it, plus or minus 2.5x. That's not to say we might -- I mean who knows whether we'll get there. But at the same time, we might flex up a little bit more than that on a very temporary basis if we had the right type of transaction. But we certainly don't have any expectations to go lever up at 4x or 5x, like some of our CE sponsored competitors might. Jeffrey Kauffman: Well, and you stepped up and acquired a Mexican operation at a time when the transborder tariff situation is a little bit unclear. Is this -- was that a special situation? Or are you seeing this more as an opportunity where, look, eventually, when you get these tariffs figured out and if we can find the right international partners, it makes sense. Bohn Crain: Well, I think it was opportunistic. I also think it's the right international partners. But we all, myself included, have a tendency to think of the U.S. being the center of the world, but there's a big set of global commerce going on where we're not necessarily the center of. And there's an extraordinary amount of trade between China and Europe and Mexico. And Weport's international business really was virtually little, if any, cross-border business, it's true international air and ocean business from the Pacific and Europe. So we have, for a long time, been in the cross-border business independent of the Weport transaction. But what we really didn't have was a strong true international air and ocean capability as it relates to Mexico that we now enjoy by operation of the Weport transaction. Jeffrey Kauffman: Okay. And just a couple of detailed questions for Todd, if I can. Todd, I think you answered an earlier question on the D&A, so there's a step down there and $3.6 million is kind of the right forward run rate we should be thinking about? Was that the answer? Todd Macomber: Yes. I'd have to look at that closely but I think, if I remember correctly, we did the acquisition right at the beginning of the fourth quarter in 2015. I mean we're going back 10 years, right? So -- but I can validate that, but I'm pretty sure it was at the very beginning of the quarter. So I think what we've got -- we can circle back, but that's kind of my only question is, was there some within the quarter, which I don't think there really was. I think it really kind of fell off the Wheels transaction at the end of Q3. But I just want to [indiscernible] Jeffrey Kauffman: Wheels -- so the Wheels came up at the end of Q3. Got it. So the way I think about, I guess '26 is, it's going to be about a $4 million drag on EBITDA in terms of the comparison, '26 over '25. Is that the right way to think about it? Todd Macomber: For EBITDA, you're saying? Jeffrey Kauffman: Yes. Todd Macomber: Well, I mean, it's an add back, right? So it wouldn't... Jeffrey Kauffman: I'm sorry, it's a benefit. Benefit. Todd Macomber: Yes. So it will help -- well, it will help us for net income, right, but it will be -- it's kind of -- I think it wouldn't matter with EBITDA, correct? Jeffrey Kauffman: Correct. And then just 2 other quick detailed questions. The contingent consideration add back, that was just kind of more of a one-timer, but these things happen every now and then we're just [indiscernible] consideration. Todd Macomber: We have to evaluate all the time. We do that every quarter. And we've got some headwinds going on right now, and it's -- quite honestly, it's impossible for us to know where we're going to be 18 months from now. But we do our best and use our judgment to kind of true up where we think the overall contingent consideration liability, what it is today. And we're always adjusting, and sometimes we adjust up and we adjust down so we do... Bohn Crain: So let me hop in 1 second. Jeff, for me, that kind of line item is really just a manifestation of our earn-out structure at work, right? Mitigate to ensure we don't overpay or underpay for the businesses that we're acquiring. Jeffrey Kauffman: But overall, you'd rather be a payer of that contingent consideration because that would means the earn-out. Bohn Crain: Of course. Yes. Overall, we would. But at the same time, if we have a benefit, which means we had overestimated the liability that we're needing to unwind. That is just kind of -- again, just kind of the earn-out structure at work to protect us from overpaying or to mitigate [ the losses ] because we would overpay. Jeffrey Kauffman: And last question for Todd. Todd, I was expecting a 24% income tax rate this quarter. And I see in the detailed payables that you're saying that should be the effective tax rate. But taxes were in net add to that income. What happened with taxes this quarter? Todd Macomber: Yes. That was a true-up basically with the end of the year. It's -- we -- when we went through all the calculations, the net-net was an actual benefit, slight benefit. And so that's -- it's over -- an overestimate in the prior period. Jeffrey Kauffman: Okay. So that's just evening up an overpayment [indiscernible]. Todd Macomber: So yes. Yes. So I would not expect that going forward, right? I would use a normalized rate going forward, and this was just simply a true-up when we went through all the mechanics. So definitely we'll use this. Operator: Your next question is coming from Mike Vermut from Newland Capital. Michael Vermut: So our numbers have held up our result much better than most in our space, right? So hats off to you guys. It's been a very steady great results, and you've played a lot of offense during this downturn at a time where, I guess, most haven't. Most of kind of held back and haven't done the acquisitions that we have. So it's really laid the foundation for when I see for the future for when things start to pick up. Anyway to give us a look, you've brought all these new entities into the fold, what your customers are saying, new business wins that are out there? Just a sense of what it's going to look like over the next year, 2 years you see and how it's going to be additive to the business? We're one of the few that's actually gone out there and expanded in this time. So hats off to us. You've kept the balance sheet in perfect shape. Our numbers are great. Our cash flow is great. And I assume that our customers are loving what we're doing. It's just we haven't gotten that kind of view into it. If you could give us a little look as to what we should expect over the next year, 2 years with what we've brought in? Bohn Crain: Yes. Thanks, Mike. That's a great question. We are really -- we've been talking a lot here internally recently about just getting kind of working towards a more unified sales organization because we've got so many tools in the toolbox, and we want to make sure that our sales organization is in the best position possible to kind of sell all of the products and services. So more so than ever, we're starting to see cross-sell opportunities and kind of really getting at kind of this notion of wallet share within customers and selling more services. And particularly, I'm just going to kind of reflect back on our acquisition of Navegate a few years ago. And if you'll remember, it had some really enhanced, some really interesting technology that we picked up as part of that transaction that is for all intents and purposes, a state-of-the-art market differentiating, what I'll call, collaboration platform that we really don't see anybody else in the marketplace, having something quite like what we have. And so we're on the front end of beginning to roll that out with customers, and we're getting some really positive feedback around that. So it's definitely early innings keeping with the baseball metaphor as we're approaching the end of the regular season. But we're really excited about the whole kind of our position on the field around technology and our technology set and how we think that's going to be a differentiator for us. moving forward. Michael Vermut: Excellent. Yes. We've -- obviously, our valuation has been at a massive discount for years. And so the hope now is that people start to realize customers, I guess, acquisition targets and investors, what has been created here. So yes, hopefully, things like that on the technology side, on the new customers on the acquisitions, that starts to gel. It's been great when things have been really soft and it should be super as things expand. So hats off to you guys. Operator: Thank you. That concludes our Q&A session. I will now hand the conference back to Radiant's Founder and CEO, Bohn Crain for closing remarks. Please go ahead. Bohn Crain: Let me close by saying that we remain optimistic about our prospects and opportunities to continue to leverage our best-in-class technology, robust North American footprint and extensive global network of service partners to continue to build on the great platform we've created here at Radiant. At the same time, we intend to thoughtfully relever our balance sheet through a combination of agent station conversions. Synergistic tuck-in acquisitions and stock buybacks. Through our multipronged approach, we believe we will continue to create meaningful value for our shareholders, operating partners and the end customers that we serve. Thanks for listening and your support of Radiant Logistics. Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
Operator: Good afternoon, and welcome to the Dave & Buster's Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Cory Hatton, Vice President, Head of Entertainment Finance, Investor Relations and Treasurer. Please go ahead. Cory Hatton: Thank you, operator, and welcome to everyone on the line. In connection with today's call, you can find our earnings release, 10-Q and a supplemental deck titled September 2025 Investor Update that has been posted to the Events and Presentations section of our Investor Relations website. Joining me in the room and on today's call are Tarun Lal, our Chief Executive Officer; and Darin Harper, our Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc. and is copyrighted. Before we begin the discussion on our company's second quarter 2025 results, I'd like to call your attention to the fact that in our prepared remarks and responses to questions, certain items may be discussed, which are not entirely based on historical fact. Many of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on these risks and uncertainties have been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings release this afternoon. And with that, let me turn the call over to Tarun. Tarun Lal: Thank you, Cory. Good afternoon, everyone, and thank you for joining our call today. I am deeply honored to take the helmet and collaborate with this talented team to drive innovation, growth and the company's next chapter. Our brand strengths and unique national footprint provide a powerful platform to deliver meaningful social connections at scale. I have spent a lot of time over the past 6 months researching the space and analyzing this business, including meeting with many key members of the team and the Board, and this is prior to joining while I evaluated this opportunity. This prework has allowed me to align quickly on areas of success as well as missteps and develop my own views on the clear focus areas of near-term opportunity. Importantly, this largely aligns with the strategic plan put in place by Kevin Sheehan, our Interim CEO and the current Nonexecutive Chair of our Board. Just a little bit about my past experience. I officially joined this iconic brand in July with more than 30 years of leadership experience at Yum!, including recent roles as President of the KFC U.S. business, being the Global COO of KFC and Managing Director across key international markets. I have overseen marketing, operations and development in multiple geographies across the world. I've built and developed high-performing teams and together with them, have led multiple successful turnarounds in key markets. As a team, we drove strong same-store sales and profitability and catalyze breakthrough development of new stores. I'm disciplined and tenacious and strongly believe that executional excellence behind a few big strategic priorities can unlock significant value creation. To that end, I'm confident that my extensive U.S. and global experience uniquely positions me to drive strategic and operational excellence and financial success at Dave & Buster's. Dave & Buster's is a phenomenal business with very addressable challenges that I'm very confident we can overcome as a team. In my first several weeks here on the job, I've invested time training in stores and have gained what I believe is a solid understanding of our products. I've also developed a better appreciation of our team member and guest experiences. I have traveled across the country and witnessed firsthand the pride and dedication of our teams out in the field. The field, which is where the majority of our teams, our products and our customers are, is the best training ground. There is no better way to learn than the ground up. My manager and trainer in my training store was [ Garrett ], who graciously invested time with me and taught me everything from the most popular games to cooking the most popular items like wings and the burgers and making some of the guests' favorite cocktails like the million dollar margarita. Spending time with our guests and team members reminded me that Dave & Buster's is more than just a business. It's a place where people connect, celebrate and create lasting memories. I truly believe that the strength of our brands and the passion of our people give us a foundation to reach far beyond what we've already achieved. I look forward to shaping a vision that not only drives growth but also deepens our role as a destination where joy and connection thrive. As you may recall, the management presented a formal investor plan a few years ago that I studied in detail. My conclusion is that the principles and initiatives outlined in that strategy are generally right. However, the true measure of success depends not only on the strength of the ideas, but on the quality and consistency of execution. I believe there has been a very clear executional failure that will be rectified. My intention is to build on the sound foundations of that plan, assess where we can raise the bar and provide a clear focus that will allow us immediate and long-term growth and value creation, which we will get into a lot more detail with my presentation later on in the call. My immediate focus is clear: reinforce our guest-first culture, deliver memorable experiences and drive meaningful growth in sales, cash flow and shareholder value. We have significant key strengths. We are a true category of one with no peer at our scale. Our $1 million midway appeals broadly across demographics, driving repeat visits while our unique ability to serve multiple occasions, play, watch, eat and drink creates meaningful social connections that keep guests coming back. Our challenges are also clear: sharpening brand distinctiveness, improving retail marketing, strengthening value perception and delivering an excellent customer experience across both F&B and games. Tackling these areas will be critical to unlocking the full potential of our business. With that, and before getting into more details on my initial observations and strategic plan updates, I would like to turn the call over to Darin, our CFO, to walk us through the financial results of our second quarter. Darin? Darin Harper: Thank you, Tarun, and good afternoon, everyone. Overall, our financial position remains strong, underpinned by a business model that consistently delivers high returns on new unit investments, strong unit level economics, disciplined cost control and a robust free cash flow generation. The leadership team and Board remain focused on executing against our priorities to drive both top line growth and sustained cash flow. We are confident in the levers available to further improve operating performance and enhance shareholder value. So turning to a more detailed view of our financials. In our second quarter of fiscal 2025, comparable store sales decreased 3% versus the prior year period. We updated you on our last call that comps for the first 5 weeks of the quarter were down 2.2% versus the prior year period. We were negatively impacted in the second half of the quarter by the July 4 holiday falling on a Friday this year versus a Thursday in the prior year. And our same-store [Technical Difficulty] Operator: We seem to have lost the connection with the speakers. We'll reattempt to rejoin them shortly. [Audio Gap]. Ladies and gentleman, the speakers have rejoined us. Please continue. Darin Harper: All right. Sorry for that technical delay, everyone. Picking up where I left off. We're confident we are focused on the right priorities in the second half of 2025. And as a reminder, we are lapping particularly soft numbers in the balance of the year. During the second quarter, we generated revenue of $557 million, net income of $11 million or $0.32 per diluted share. Adjusted net income of $14 million or $0.40 per diluted share and adjusted EBITDA of $130 million, resulting in an adjusted EBITDA margin of 23%. As a reminder, reconciliations of all non-GAAP financial measures can be found in today's press release. We generated $34 million in operating cash flow during the second quarter, ending the quarter with $12 million in cash and $443 million in total liquidity, combined with the availability under our $650 million revolving credit facility, net of $14 million in outstanding letters of credit. Year-to-date, we have generated $130 million of operating cash flow. We ended the quarter with net total leverage ratio of 3.2x as defined under our credit agreement. Year-to-date, in 2025, we have invested a total of $193 million in capital additions on a gross basis or approximately $110 million on a net basis when factoring in payments from landlords. Details of which can be found in our table in our 10-Q filing. As we mentioned to you before, we are focused on converting our significant operating cash flow to free cash flow through more strict management and capital spend, eliminating ineffective and inefficient spend. We're committed to demonstrating our ability to generate free cash flow while continuing to invest in double-digit new store growth, new gains, other high ROI initiatives and a more diligent remodel program. In the quarter, we closed on a sale-leaseback transaction for the real estate of 2 open and operating Dave & Buster's stores and entered into a build-to-suit takeout commitment for additional real estate assets of future Dave & Buster's and Main Event stores with an institutional real estate investor. In the quarter, we received approximately $77 million in funds related to these properties. We are pleased with the outcome, the executional abilities of our team and the support of our real estate partners to close on this important transaction for our company. This transaction significantly enhances a long-term partnership with a very large real estate capital provider, solidifies a long-term funding vehicle for our robust pipeline of future new store openings, monetizes our real estate at attractive valuations underwritten to reflect our successful track record of new store openings and future earnings power of our superior 4-wall economics and ultimately provides a significant amount of liquidity for us to continue to make accretive investments to grow our business. Our new store development continues to deliver strong returns, and we have a solid pipeline of upcoming store openings. In the second quarter, we opened 3 new Dave & Buster's stores in Freehold, New Jersey; Wilmington, North Carolina; and Reno, Nevada. Already in the third quarter, we have opened 1 additional Dave & Buster's store in Spokane, Washington and 2 additional Main Event locations in Taylor, Michigan and Norman, Oklahoma. This takes our new store openings year-to-date to 8, and we now expect a total of 11 new store openings in fiscal 2025, the midpoint of our previously guided range of 10 to 12 new stores. With the opening of our second international franchise location in India in August, we expect 5 more international openings over the next 6 months. As a reminder, we have secured agreements for over 35 additional stores in the coming years. We see international franchising as a driver of highly efficient incremental growth, monetizing our brand around the world with minimal investment and risk. Now with that, I will turn the call back over to Tarun for some additional thoughts and materials before opening up the line for questions. Tarun? Tarun Lal: Thank you, Darin. Now I would like to walk through a short presentation to put some structure around my initial observations and the ultimate framework for our go-forward plan. So starting with a bit more detail on my initial observations, many of which should be stating the obvious to you as investors. We have a very strong iconic brand with excellent brand recognition in Dave & Buster's and of course, associated with that very strong brand awareness. Our customers love us. We provide a fun-filled customer experience and receive strong guest satisfaction scores, which translates into a loyal customer base. We have an exceptional business model with best-in-class scale and unit economics along with highly compelling new store economics. We made specific execution missteps that resulted in lack of awareness of our offerings and inconsistent operational execution. We have high confidence that we will improve performance in the near term by executing on focused improvements. Our value proposition remains highly attractive, and our back-to-basics approach has shown meaningful progress. I genuinely see our stock as materially undervalued in the public markets with significant upside potential. I'm truly excited with this opportunity to work together with an outstanding team and Board to unlock significant shareholder value in the near term. Moving to the next slide. In reviewing our performance, it became very clear where our approach was falling short. Starting with what was not working column on the left. So in marketing, we moved away from TV completely, and we had an unfocused promotional strategy going from a few targeted promotions to weigh too many promotions. In food and beverage, we leaned too heavily on appetizers and shareable and cut most of our highest revenue menu items. Operationally, we moved too fast, creating disruptions and breakdowns in communication between corporate and the field and a loss of focus on training. In games, we pulled back almost entirely on new games introductions, reducing them by almost 80%, along with a very complex pricing structure. These missteps limited our ability to drive traffic, sales and brand relevance. Our remodel program, while moving the needle, also missed the mark, overspending against plan with a prototype that underperformed potential with limited marketing support. Finally, poor CapEx discipline translated to significantly lower than normalized cash flow generation. Now turning the right-hand side of what has worked. Recently, we have made meaningful progress in several areas. In marketing, we reintroduced TV advertising and sharpened promotions with fewer, more focused offerings. In food and beverage, we improved attach rates with our Eat & Play combo and through stronger positioning of entrées and a revamped and successfully tested new menu. Operationally, we have simplified our initiatives, which I will touch on more in a later slide, and we have rebuilt our corporate field communication as well as our training teams, which I'm particularly passionate about given my background as an operator. In games, we have moved quickly to introduce 10 new titles in '25. With remodels, we have controlled spending, and we have a new prototype that we will be getting out in the market very soon that we are encouraged will drive better results at a fraction of the cost, and we will couple it with better marketing support to drive awareness with traffic to really showcase the newness of the asset. Finally, on cash flow, we have pursued a more capital-light new store financing, as Darin mentioned earlier, that will bring down upfront expenditure, and we have successfully cut low ROI and wasteful CapEx now. Together, these actions are strengthening our performance and positioning us for sustained growth. Moving to the next slide. On the back of the things that are working, on this next slide, we demonstrate progress made so far. Our back-to-basic strategy with Kevin drove a material improvement in same-store sales. It's still short of where we ultimately want to be, but has been a significant stabilizer. Our food and beverage and special events business are turning solidly positive, driven by our winning promotions, menu revamp and investment in field sales managers. Our company continues to benefit from the recent and significant improvements in our special events business, which drives awareness, subsequent trips and deeper brand engagement. While our overall same-store sales special events revenue has been up 6% year-to-date, the Dave & Buster's brand comparable special events revenue was up nearly 10% year-over-year and 20% over 2023 in the second quarter. We continue to achieve sizable 40%-plus returns on our new stores, and we have opened 22 since the start of fiscal 2024. While we did not execute our remodel program to date as we did like, these new assets are outperforming non-remodel stores by 700 basis points, which continues to highlight the opportunity to do more remodels at an appropriate cost and with the right elements. Moving to the next slide. As you all know, our company unveiled a comprehensive strategic plan at our Investor Day in 2023. I believe this plan had the right ideas. We just attempted to implement too much at the same time. I strongly believe that focus on prioritized execution is key. The areas that I am most focused on at the moment are: one, marketing, where we look to drive incremental traffic by improving consideration and frequency by improving the overall marketing message through an optimized media mix and leverage our large national sports viewing platform; two, food and beverage, improving all aspects of the menu and attach and spend per customer; three, operations, continue to repair communication between the corporate and the field, reemphasize training and reenergize the focus of the field to provide a high-quality guest experience. Four, games, introduce a marketable lineup of 10 or more new games each year. We scrambled in fiscal 2025, 2026 and beyond will be awesome. We will push harder to include exclusive titles and more culturally relevant IP. And finally, 5 remodels, modernize and refresh the look and feel of units and improve the layout to increase traffic and overall productivity. Moving to the next slide, what are the immediate near-term goals. I want to take this opportunity to make it very clear, and this is internally too, that my near-term goals are to grow same-store sales and generate and grow free cash flow now. We will do this by narrowing our focus to the 5 areas outlined on the prior page. And I'm just reminding relaunching our marketing engine by implementing an effective integrated marketing strategy and continuing to press on the success of local store sales managers and simplifying our value messages. Two, transform our food and beverage offerings with the launch of our Back to Basics menu nationwide this quarter; three, improving operations with a renewed focus on delivering an exceptional guest experience; four, refreshing our games offering to continue to introduce over 10 new marketable games to the midway each year; and finally, revamping our remodel program with a new prototype and appropriate marketing support. I also wanted to share with you all that we are not waiting to make changes and implement our refocused strategy. We are making changes and implementing them real time. So coming up, we have a strong fall campaign, and we are excited to have launched our new fall season pass, giving guests unlimited daily gameplay, exclusive food and beverage discounts and 3 value-packed options to choose from. Building on the success of our summer pass, this program creates even more reasons to visit Dave & Buster's throughout the season. With everyday value and experiences that bring people together, we are reinforcing Dave & Buster's as a go-to destination for fun this fall. We're also putting the final touches on our winter pass that we will debut in the fourth quarter. Our recently launched football watch offering complete with specials like 10 for 10 wings, continued enhancements to the leaderboard competition on our arcade floors while continuing to run our very popular evergreen promotions of the $19.99 Eat & Play combo sets us up for good momentum. Capping off the fall football festivities is our latest midway challenge, the 2-minute drill, where we invite football fans and gamers to compete for national and local leaderboard positions each week, looking to break single season passing records over the course of the season. We will be debuting our new back-to-basics menu in October and are doubling down on the rollout of our very profitable human crane to additional Dave & Buster's and the main event stores. We will also be launching our revised remodel program in the coming weeks. Moving to the next slide. I wanted to touch briefly on our financial position and leave you with a few key takeaways from my position. We have a strong cash flow and a strong balance sheet. This business will generate cash flow and here is the profile of the cash flow generation. We have a very strong balance sheet with no near-term maturities and significant liquidity to invest in our strategy. Moving to the next slide. I also wanted to touch briefly on our current valuation. Comparing against our broad peer group, there's no other way to say it than this business is extremely undervalued today. Based on the strength of our brand, the basic economics of the business, the strong cash flow generation and the significant potential of the business, I'm very confident we are worth a lot more than we are today, which leads me to my final point in the presentation. As you all know, I personally signed up to a compensation package tied to a near-term achievement of $675 million of annual EBITDA. As you can see from this page, and as you all know well, I think the point is important to make, nonetheless, there is very meaningful upside in the price of our stock and the value of our business based on very achievable financial results in the near term. I'm personally highly motivated and aligned to drive this business forward, and I look forward to our shared success. And with that, operator, please open the line for questions. Operator: [Operator Instructions]. The first question is from Jeff Farmer with Gordon Haskett. Jeffrey Farmer: And welcome to Tarun. Good to have you on board. I might have missed this, but in the release, you noted that 3Q same-store sales to date are consistent with what you saw exiting Q2. The call did cut out, but did you guys mention those numbers more specifically, what those same-store sales trends look like? Darin Harper: No, we did not. We didn't quantify those. But -- but with 5 weeks into Q2 last year of down 2.2% and we printed down 3% for the quarter, you can kind of back into what the second half looked like. And our trends are pretty consistent with that in Q3. Jeffrey Farmer: Okay. I only bring it up because you mentioned July was sort of a little bit of a low watermark with the calendar shift. So I didn't know if things have gotten a little bit better. So I'll move on from that. Again, in the prepared remarks, you did call out value perception as one of the challenges that Dave & Buster's is facing. Can you just elaborate on that and what you think some of the opportunities are with value perception? Tarun Lal: Yes. Thank you for the question and for the welcome. We have a very strong value proposition. I just think that we have marketed in a way that has confused our customers. And so we are currently working on simplifying the messaging and that messaging should go out as we execute our next marketing window. So I think it's not about not having the right value. I just think that both our retail marketing and our general communication has created confusion on the value ladders, and we know how to fix this now. Operator: The next question is from Andy Barish with Jefferies. Andrew Barish: Welcome. I guess just -- this was the first quarter where the same-store sales were kind of close, but margins missed. So I'm just trying to get a sense of kind of where things shake out. I know the food mix is higher, which is lower margins. But is your impression, Tarun, that there is some reinvestment needed in the business and just kind of trying to gauge where -- what that means for kind of fourth quarter margins. I know 3Q is sort of the low of the year. But yes, just trying to level set on sort of where you think margins are near term in the business. Darin Harper: Yes. Andy, this is Darin. I'll take that question. Yes. So in the quarter, we had a few things at play. When you look overall at our cost structure and our cost increase year-over-year, 1/3 of our cost increase just in terms of just raw dollars is coming from new units. We've got another 1/3 that we were lapping a number of credits in the prior year and some other one-off items. There were some insurance adjustments in the prior year. There were some other franchise tax items impacting EBITDA in the prior year. And then we had some unusual sort of one-off legal type costs as well this quarter. And then on top of it, sort of the remaining 1/3 was a mix of -- there was some reinvestment in the game room floor and the stores from an RM perspective, particularly as we geared up for the summer of games when we rolled out all of our new games. We wanted to make sure that, that experience was tight and our games were operable. But we believe that's a bit of a high watermark on that and the second half of the year is not going to be at those levels, but that was some incremental cost. And then obviously, we had some incremental marketing costs as well in the quarter. So when we think about the second half of the year in terms of where we've seen sort of that EBITDA margin miss versus the prior year. We anticipate that, that will be very much moderated in the second half of the year, not only through, we believe, just more profitable top line performance, but also us not lapping some of these items from the prior year and not having some of these one-off items that impacted us for the quarter. Andrew Barish: Got you. Very helpful. And then can you just kind of give us a sense of sort of getting back on marketing and value with Eat & Play, where that has kind of mixed of late versus maybe versus historical levels or something kind of give us a sense of how the back to basics is working? Darin Harper: Yes, sure. So we've continued to experience some nice opt-in on the EPC. We're still at about 8% to 10% opt-in rate, which we like, which has -- which is higher than where things have been historically. And for a few reasons. Number one, I think we've done a really nice job with the offers within the Eat & Play combo. We're seeing food upgrades on 30% of our EPC mix, which we really like. We're also -- as mentioned before, we're now offering this Eat & Play combo on the kiosk. So for those guests, that might just be coming in intending just to play games, we're now presenting to them a very valuable offer on the kiosk, which is really driving some nice attach for us there that we really like. And so overall, we're really liking our performance. We're seeing a nice upgrade on the Power Card piece as well, including an all you can play upgrade and a $75 card upgrade. I mean that's representing almost 1/3 of our Eat & Play combo opt-ins as well. So, really liking that. And to Tarun's point, this is a really good value message that we know our guests like and our operators really like executing on as well. Operator: The next question is from Andrew Strelzik with BMO. Andrew Strelzik: My first one, Tarun, maybe if you take a step back, you mentioned in some of the prepared remarks some of the prior turnarounds that you led in your prior roles. And I guess I was wondering if you could maybe compare or contrast what you're seeing at Dave & Buster's with that prior experience. And I guess I'm wondering, in particular, it's such a different type of brand, different type of concept than in your prior roles. So I guess where do you see the similarities that you can draw on and maybe some of the differences that might take a little bit more learning? Tarun Lal: That's a great question, Andrew. So my view, Andrew, is that when it comes to business transformations, there are generally more similarities than differences. And if I really think about it from a short-term perspective, the brand has kind of lost its distinctiveness. There's generally a value perception at play. And so if you can kind of sharply communicate value in the short term through a really distinctive communication, you can drive some levels of same-store sales growth. But really, what is very important is that in the medium to short -- in the medium to long term, 2 things are very, very important. One is making sure that you have the right capability on the team and you have the right culture in the business, which is really guest-first culture, a true obsession with guests. And the second piece is really ensuring that your brand positioning is right, and there's clarity that your brand has that consumers truly understand. So in those areas, there is complete -- there is similarity between what I've done in the past and the challenge at Dave & Buster's. I think the one difference for sure is that there is additional complexity at Dave & Buster's because not only do you offer food and beverage here, not only do we offer food and beverage here, there's also a massive fun and entertainment business that's almost an anchor for us. So it's a different product for me that I'm trying to understand. And that's why I spent so much time in the field, like learning from the ground up. So I think the product is where the real distinction is. But as I said, in my mind, with most of these transformations, there are more similarities than differences. Andrew Strelzik: Okay. That's helpful context. And then maybe I wanted to dig in a little on your comments about the poor CapEx discipline and I'm curious about some of the ways you plan to evolve that. But in particular, I'd love to hear your thoughts on new store growth and continuing to open double-digit new stores at a time when you are trying to affect a lot of change and the comps have been under pressure. And I know the 40% returns, we've heard that number a lot over time. I think the investment community probably has a hard time with that number just given the performance over the last several years. So just would love to get your perspective on the CapEx evolution here and the new store growth. Tarun Lal: So Andrew, let me first request Darin to respond to one part of the question, then I'll share my thoughts on this too. Darin? Darin Harper: Yes. So as you noted, the 40% return is obviously -- and that's a year 1 cash-on-cash return that is very advantageous for us. We continue to have the ability to find great sites, staff them appropriately despite the focus on the core business and find really great partners to help us with our capital for ground ups. So I think we continue to feel like we can open these at $9 million to $10 million net CapEx each. And that's an area that, as we've discussed before, look, we can lever up or down there depending on the needs of the business. But where we currently sit with the returns, with the pipeline that we have in front of us and how we think about competitive positioning over the medium and long term, it's an area that we're still very, very bullish on. So with that, Tarun, any other context you want to provide? Tarun Lal: Yes. Thank you. Thank you, Darin. So just to add to that, Andrew, in my perspective, adding 6% to 7% of growth is, in my mind, not really a distraction. Clearly, our focus is on growing same-store sales growth. And so the core business is definitely our primary focus. And to that end, if you think about -- if you look at international, where I've spent a lot of my time, that offers tremendous growth opportunities. But like for me, the real focus is the core business in the U.S. And I strongly believe that we can get the core business humming and continue to add 6% to 7% growth through net new unit addition without distracting the team. And I believe this not only because of my past experience, but because I spent a lot of time in the field, this sort of growth really excites and energizes the team. Growth is -- it makes them feel like they're winning, and it's quite -- it's very motivating. So we will continue with this level of growth until we kind of feel that we are in a stronger position. We've got our momentum -- sales momentum back, and then we would explore whether we want to change this number or change this target in the future. Operator: [Operator Instructions]. The next question is from Jake Bartlett with Truist Securities. Jake Bartlett: Welcome, Tarun. I look forward to hearing from you over the next number of years. My question is on the strategic game pricing. We had done a check and just found a pretty big change in the pricing over the last -- I'm not sure how much time exactly, but at least the last few months and then even more recently, where the pricing has gone to one tier essentially. Part of the prior plan had been multiple tiers. And it seems like there's one level of kind of pricing across the system now. And it also seems like the average price per ticket is significantly lower than it had been under the prior plan. So the question is, one, what kind of impact is that having on the results kind of near term, and we look at positive food and beverage same-store sales, but negative same-store sales overall. Is that contributing to it? And then also why the change? There were some questions earlier about value. This seems like a pretty big step towards the value direction and just the thought process around it. Darin Harper: Yes. Jake, Darin. Yes, I'll take that. We -- going back to Tarun's comment on just the value proposition and the value perception with our guests, the game pricing was a really large focus of that. And to go back to last year, when you think about what the brand did in terms of increasing rate card pricing as well as increasing game level pricing at a time where there was not investment in the midway. It was really -- it was a combination that really led to a less than advantageous value proposition for the guest. And so what we did really starting in April was we started testing some various rate card optimizations where we really focused on the entry point for the rate card, how many chips that you got with some very defined objectives around value. And then we -- and the game level pricing, what we really wanted to do was allow the guest to spend the same amount that they've been spending, but have more time in the midway. We wanted to increase dwell time. We wanted their power card to extend longer and for them to enjoy their experience more because that was key findings that we got in consumer research after the fact. And then the last leg is managing margins through strategic win pricing. So we've done a number of different tests on that over the last several weeks, the last few months. And we think we're in a nice spot right now. We're starting to see growth in our average card loads, but also provide a much, much better value to the guest. And so look, this is an area that we're going to continue to be smart, continue to optimize. And I think there still is the opportunity for us to look at that different sort of regional pricing. But in terms of simplicity of rollout, simplicity of messaging, this was an area that we really wanted to focus on. Operator: The next question is from Eric Wold with Texas Capital Securities. Eric Wold: I just want to dig in a little bit on the kind of the same-store sales trends in the quarter. I know you kind of gave us the down 2.2% in the first 5 weeks. I know in the last call, you talked about some optimism around the Memorial Day holiday and kind of what you're seeing in June with some positive days in June. Maybe a little kind of what you saw kind of as you went into July, other than the calendar shift and maybe some comparisons with an earlier school start versus last year. Was there any shift in terms of spending habits or kind of the way the consumer is reacting that you kind of was different from what you were seeing in the last call, kind of really shift in terms of the way the consumer is spending once you were in the store? I know you don't break out attendance versus spend. But kind of once they were in there, were you seeing any kind of shift in terms of their habits once they're in the locations? Darin Harper: No, really didn't see any change in spending. That was pretty consistent. We -- I think as we continue to determine what the right messaging is, particularly in this environment, our learnings with the Eat & Play combo messaging as well as the summer of games, we think that resonated more with our guests than maybe the later summer leaderboard initiative. So those are learnings that we're grabbing hold of and optimizing in the second half of the year. Operator: The next question is from Brian Mullan with Piper Sandler. Brian Mullan: I wanted to come back to the marketing conversation. I don't want to belabor it, but just ask in maybe a different way. Tarun, I'm wondering if you could give your assessment, does this business need to significantly increase the dollar amount of marketing investments in order to really drive traffic back to the stores? I understand you're going back on TV, you're changing the messaging. Those are good things. But was there enough spend even prior to when the brand went off TV? Tarun Lal: I don't believe we need to change the run rate of investments in marketing just now. We have tried a different media mix, which is working. We will continue to further refine it to make the spend more effective. But I don't believe that we need to increase the dollar amount of spend at this point of time. Operator: The next question is from Brian Vaccaro with Raymond James. Brian Vaccaro: Congratulations on your new role, Tarun. I just wanted to follow up on the pricing changes that you mentioned earlier. I know it can be tough to quantify, but I guess, can you level set what level of check versus traffic growth we're seeing reflected in the down 3% comp this quarter? Maybe how that compares? Is there a meaningful change in check that we should be mindful of? And also as we think about the second half, how average check could trend given some of these changes that you've made? Darin Harper: Yes. Brian, yes, we didn't provide much -- any color there. But what I say is some of the things that we've done on the F&B side with respect to the attach on the Eat & Play combo, in particular, we're seeing more -- we're seeing check growth coming from that aspect of the business. I think more importantly, to the second half of your question, as we look at the second half of the year, look, I think that's going to continue to be a tailwind for us. We're rolling out a new menu in October system-wide that is going to be reintroducing a bunch of fan favorites historically. We've been testing that for a while and are seeing nice check growth there. And again, the nice thing is it's not due to price. Really, it's due to just driving guests towards entrées and some other menu options that are just driving check that we like. And then this work that we've done with the game pricing, we believe will provide a tailwind for us as well. So optimistic that we'll have some tailwinds on the check side in the second half of the year. Operator: The next question is from Mike Hickey with -- the Benchmark Stone Company. Michael Hickey: Welcome aboard here. Just a quick one on your strategic plan. We appreciate that you feel it was sound and it was just missed execution. And when you look back on the plan, I think one of the bigger takeaways for investors at the time was that you're targeting $1 billion in adjusted EBITDA. And if I heard you correctly, it looks like your comp plan is tied to $675 million in adjusted EBITDA, which is a pretty big disconnect from the original strategic plan. Could you just explain that and if the $675 million is the new target? Tarun Lal: So Mike, I'm not aware of the time line for the $1 billion. We can certainly connect separately on that topic. But I'm confident that the $675 million is a number -- is a target that we can hit within the time line that we have kind of committed to. So from my perspective and from this team's perspective, $675 million is a new EBITDA target. Operator: The next question is from Dennis Geiger with UBS. Dennis Geiger: Tarun, welcome. I'm curious if you could spend a few more minutes maybe just talking about how you think about maybe the brand-specific missteps, but more so the macro currently and the competitive environment and kind of really just looking ahead and thinking about the macro and how you think about the competitive environment broadly, perhaps relative to your plans? I'm sure the focus is to play your game and execute against the plans that you've outlined. But just how you think about those 2 dynamics within that context? Tarun Lal: Yes. Thank you, Dennis. So Dennis, yes, there are macro headwinds, absolutely for all businesses. But these come in cycles and businesses should be prepared for them. Consumers are looking for value for their money and brands and companies that deliver that prosper even in tough macro environment. So as I shared earlier, one of our priorities is simplifying our marketing message, simplifying our promotions and making it easy for guests to understand what the real value is. And essentially, with value, remember, it's all about trust. It's not how much you're paying only. It's about the value that you're actually receiving from the brand. So I really believe that a key part of the pivot that we are making is kind of really simplifying the messages and making it really transparent for our customers on what they are getting for the money they are spending. So that clearly is one key part of the pivot on marketing. I think the second part is really making sure that our brand comes across as being distinctive. And there are 2 components to that. One is the product. As I talked about earlier, we are kind of working on collaborations and partnerships that will give us IP rights that will allow us to offer unique games that only D&B and Main Event can offer. So that's one part that what is the product you're offering to your consumer. I think the second piece within that is how do you communicate that? And there's so much of communication going on now on both traditional media and the digital medium that if you're not distinctive and you don't stand out, you're basically wasting your dollars. So I think that's the second part of what we are working towards now. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tarun Lal for any closing remarks. Tarun Lal: Thank you, operator, and thank you all for joining. In closing, our business is built on a strong foundation, a resilient model, 2 brands that resonate with customers and experiences that foster loyalty. We delivered solid returns, disciplined operations and sustainable cash flow. Our leadership team, operators and Board are focused on driving growth and maximum value. We are confident in the opportunities ahead to further enhance performance and create long-term value for our shareholders. I look forward to meeting you in person and speaking with you again soon. Have a great evening. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: You're listening to Dave & Buster's live. Good afternoon, and welcome to the Dave & Buster's Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please note this event is being recorded. I would now like to turn the conference over to Cory Hatton, Vice President, Head of Entertainment Finance, Investor Relations, and Treasurer. Please go ahead. Cory Hatton: Thank you, operator. Welcome to everyone on the line. In connection with today's call, you can find our earnings release, October, and a supplemental deck titled September 2025 Investor Update. That has been posted to the Events and Presentations section of our Investor Relations website. Joining me in the room and on today's call are Tarun Lal, our Chief Executive Officer, and Darin Harper, our Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc. and is copyrighted. Before we begin the discussion on our company's second quarter 2025 results, I'd like to call your attention to the fact that in our prepared remarks, and responses to questions, certain items may be discussed which are not entirely based on historical fact. Any of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on these risks and uncertainties has been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings release this afternoon. And with that, let me turn the call over to Tarun. Tarun Lal: Thank you, Cory. Good afternoon, everyone, and thank you for joining our call today. I'm deeply honored to take the helm and collaborate with this talented team to drive innovation, growth, and the company's next chapter. Our brand strengths and unique national footprint provide a powerful platform to deliver meaningful social connections at scale. I have spent a lot of time over the past six months researching the space and analyzing this business, including meeting with many key members of the team and the Board, and this is prior to joining while I evaluated this opportunity. This pre-work has allowed me to align quickly on areas of success as well as missteps and develop my own views on the clear focus areas of near-term opportunity. Importantly, this largely aligns with the strategic plan put in place by Kevin Sheehan, our Interim CEO and the current Non-Executive Chair of our Board. Just a little bit about my past experience. I officially joined this iconic brand in July with more than thirty years of leadership experience at Yum! Including recent roles as President of the KFC U.S. Business, being the global COO of KFC, and Managing Director across key international markets. I've overseen marketing, operations, and development in multiple geographies across the world. I've built and developed high-performing teams and together with them, have led multiple successful turnarounds in key markets. As a team, we drove strong same-store sales and profitability and catalyzed breakthrough development of new stores. I am disciplined and tenacious and strongly believe that executional excellence behind a few big strategic priorities can unlock significant value creation. To that end, I am confident that my extensive U.S. and global experience uniquely positions me to drive strategic and operational excellence and financial success at Dave & Buster's. Dave & Buster's is a phenomenal business with very addressable challenges that I'm very confident we can overcome as a team. In my first several weeks here on the job, I've invested time training in stores and have gained what I believe is a solid understanding of our products. I've also developed a better appreciation of our team member and guest experiences. I have traveled across the country and witnessed firsthand the pride and dedication of our teams out in the field. The field, which is where the majority of our teams, our products, and our customers are, is the best training ground. There is no better way to learn than the ground up. My manager and trainer in my training store was Garrett, who graciously invested time with me and taught me everything from the most popular games to cooking the most popular items like wings and burgers, and making some of the guests' favorite cocktails like the Million Dollar Margarita. Spending time with our guests and team members reminded me that Dave & Buster's is more than just a business. It's a place where people connect, celebrate, and create lasting memories. I truly believe that the strength of our brands and the passion of our people give us a foundation to reach far beyond what we've already achieved. I look forward to shaping a vision that not only drives growth but also deepens our role as a destination where joy and connection thrive. As you may recall, the management presented a formal investor plan a few years ago. That I've studied in detail. My conclusion is that the principles and initiatives outlined in that strategy are generally right. However, the true measure of success depends not only on the strength of the ideas but on the quality and consistency of execution. I believe there has been a very clear executional failure that will be rectified. My intention is to build on the sound foundations of that plan, assess where we can raise the bar, and provide a clear focus that will allow us immediate and long-term growth and value creation, which we will get into a lot more detail with my presentation later on in the call. My immediate focus is clear. Reinforce our guest-first culture, deliver memorable experiences, and drive meaningful growth in sales, cash flow, and shareholder value. We have significant key strengths. We are a true category of one with no peer at our scale. Our million-dollar Midway appeals broadly across demographics, driving repeat visits while our unique ability to serve multiple occasions—play, watch, eat, and drink—creates meaningful social connections that keep guests coming back. Our challenges are also clear. Sharpening brand distinctiveness, improving retail marketing, strengthening value perception, and delivering an excellent customer experience across both F&B and games. Tackling these areas will be critical to unlocking the full potential of our business. With that, and before getting into more details on my initial observations and strategic plan updates, I would like to turn the call over to Darin, our CFO, to walk us through the financial results of our second quarter. Darin Harper: Thank you, Tarun, and good afternoon, everyone. Overall, our financial position remains strong, underpinned by a business model that consistently delivers high returns on new unit investments, strong unit-level economics, disciplined cost control, and robust free cash flow generation. The leadership team and Board remain focused on executing against our priorities to drive both top-line growth and sustained cash flow. We are confident in the levers available to further improve operating performance and enhance shareholder value. So turning to a more detailed view of our financials. Our 2025 comparable store sales decreased 3% versus the prior year period. Updated you on our last call that comps for the first five weeks of the quarter were down 2.2% versus the prior year period. We were negatively impacted in the second half of the quarter by the July 4 holiday falling on a Friday this year versus a Thursday in the prior year. And our same [Audio Interruption] Operator: Pardon me. This is the conference operator. Are we seeing you lost the connection with the speakers? We attempt to rejoin them shortly. Ladies and gentlemen, the speakers have rejoined us. Please continue. Darin Harper: All right. Sorry for that technical delay, everyone. Picking up where I left off. We're confident we are focused on the right priorities in the second half of 2025. And as a reminder, we are lapping particularly soft numbers in the balance of the year. During the second quarter, we generated revenue of $557 million, net income of $11 million or $0.32 per diluted share, adjusted net income of $14 million or $0.40 per diluted share, and adjusted EBITDA of $130 million, resulting in an adjusted EBITDA margin of 23%. As a reminder, reconciliations of all non-GAAP financial measures can be found in today's press release. We generated $34 million in operating cash flow during the second quarter, ending the quarter with $12 million in cash and $443 million in total liquidity combined with the availability under our $650 million revolving credit facility, net of $14 million in outstanding letters of credit. Year to date, we have generated $130 million of operating cash flow. We ended the quarter with a net total leverage ratio of 3.2 times as defined under our credit agreement. Year to date in 2025, we have invested a total of $193 million in capital additions on a gross basis or approximately $110 million on a net basis when factoring in payments from landlords. Details of which can be found in our table in our 10-Q filing. As we mentioned to you before, we are focused on converting our significant operating cash flow to free cash flow through more strict management and capital spend. Eliminating ineffective and inefficient spend, we are committed to demonstrating our ability to generate free flow while continuing to invest in double-digit new store growth, new games, other high ROI initiatives, and a more diligent remodel program. The quarter, we closed on a sale-leaseback transaction for the real estate of two open and operating Dave & Buster's stores, assets, and entered into a built-to-suit takeout commitment for additional real estate of future Dave & Buster's and Main Event stores with an institutional real estate investor. In the quarter, we received approximately $77 million in funds related to these properties. We are pleased with the outcome, the executional abilities of our team, and the support of our real estate partners to close on this important transaction for our company. This transaction significantly enhances a long-term partnership with a very large real estate capital provider, solidifies a long-term funding vehicle for our robust pipeline of future new store openings, monetizes our real estate at attractive valuations, underwritten to reflect our successful track record of new store openings and future earnings power of our superior four-wall economics, and ultimately provides a significant amount of liquidity for us to continue to make accretive investments to grow our business. Our new store development continues to deliver strong returns, and we have a solid pipeline of upcoming store openings. In the second quarter, we opened three new Dave & Buster's stores in Freehold, New Jersey, Wilmington, North Carolina, and Reno, Nevada. Already in the third quarter, we have opened one additional Dave & Buster's store in Spokane, Washington, and two additional Main Event locations in Taylor, Michigan, and Norman, Oklahoma. This takes our new store openings year to date to eight, and we now expect a total of 11 new store openings in fiscal 2025, the midpoint of our previously guided range of 10 to 12 new stores. With the opening of our second international franchise location in India, in August, we expect five more international openings over the next six months. As a reminder, we have secured agreements for over 35 additional stores in the coming years. We see international franchising as a driver of highly efficient incremental growth, monetizing our brand around the world with minimal investment and risk. Now with that, I will turn the call back over to Tarun for some additional thoughts and materials before opening up the line for questions. Tarun? Tarun Lal: Thank you, Darin. Now I would like to walk through a short presentation to put some structure around my initial observations and the ultimate framework for our go-forward plan. So starting with a bit more detail on my initial observations, many of which should be stating the obvious to you as investors. We have a very strong iconic brand with brand recognition in Dave & Buster's, and of course, associated with that very strong brand awareness, our customers love us. We provide a fun-filled customer experience and receive strong guest satisfaction scores, which translates into a loyal customer base. We have an exceptional business model with best-in-class scale and unit economics along with highly compelling new store economics. We made specific execution missteps that resulted in a lack of awareness of our offerings and inconsistent operational execution. We have high confidence that we will improve performance in the near term by executing on focused improvements. Our value proposition remains highly attractive, and our back-to-basics approach has shown meaningful progress. I genuinely see our stock as materially undervalued in the public markets with significant upside potential. I'm truly excited with this opportunity to work together with an outstanding team and board to unlock significant shareholder value in the near term. Moving to the next slide, in reviewing our performance, it became very clear where our approach was falling short. Starting with what was not working column on the left, so in marketing, we moved away from TV completely and we had an unfocused promotional strategy going from a few targeted promotions to way too many promotions. In food and beverage, we leaned too heavily on appetizers and shareables and cut most of our highest revenue menu items. Operationally, we moved too fast, creating disruptions and breakdowns in communication between corporate and the field, and a loss of focus on training. In games, we pulled back almost entirely on new games introductions, reducing them by almost 80% along with a very complex pricing structure. These missteps limited our ability to drive traffic, sales, and brand relevance. Our remodel program, while moving the needle, also missed the mark, overspending against plan with the prototype that underperformed potential with limited marketing support. Finally, poor CapEx discipline translated to significantly lower than normalized cash flow generation. Now turning to the right-hand side of what has worked recently, we have made meaningful progress in several areas. In marketing, we reintroduced TV advertising and sharpened promotions with fewer more focused offerings. In food and beverage, we improved attach rates with our eat and play combo and through stronger positioning of entrees and a revamped and successfully tested new menu. Operationally, we have simplified our initiatives, which I will touch on more in a later slide, and we have rebuilt our corporate field communication as well as our training teams, which I'm particularly passionate about given my background as an operator. In games, we moved quickly to introduce 10 new titles in 2025, remodels, we have controlled spending, and we have a new prototype that we will be getting out in the market very soon that we are encouraged will drive better results at a fraction of the cost, and we will couple it with better marketing support to drive awareness with traffic to really showcase the newness of the asset. Finally, on cash flow, we have pursued a more capital-light new store financing, as Darin mentioned earlier, that will bring down upfront expenditure, and we have successfully cut low ROI and wasteful CapEx now. Together, these actions are strengthening our performance and positioning us for sustained growth. Moving to the next slide, on the back of the things that are working, on this next slide we demonstrate progress made so far. Our back-to-basics strategy with Kevin drove a material improvement in same-store sales. It's still short of where we ultimately want to be, but has been a significant stabilizer. Our food and beverage and special events business are turning solidly positive, driven by our winning promotions. Menu revamp and investment in field sales managers. Our company continues to benefit from the recent and significant improvements in our special events business, which drives awareness. Subsequent trips and deeper brand engagement. While our overall same-store sales special events revenue have been up 6% year to date, the Dave & Buster's brand comparable special events revenue was up nearly 10% year over year and 20% over 2023, in the second quarter. We continue to achieve sizable 40% plus returns on our new stores, and we have opened 22 since the start of fiscal 2024. While we did not execute our remodel program to date as we did like, these new assets are outperforming non-remodel stores by 700 basis points, which continues to highlight the opportunity to do more remodels at an appropriate cost and with the right elements. Moving to the next slide, as you all know, our company unveiled a comprehensive strategic plan at our Investor Day in 2023. I believe this plan had the right ideas. We just attempted to implement too much at the same time. I strongly believe that focused focus on prioritized execution is key. The areas that I am most focused on at the moment are: one, marketing where we look to drive incremental traffic by improving consideration and frequency by improving the overall marketing message through an optimized media mix and leverage our large national sports viewing platform. Two, food and beverage, improving all of the menu and attach and spend per customer. Three, operations continue to repair communication between the corporate and the field, reemphasize training, and reenergize the focus of the field to provide a high-quality guest experience. Four, games. Introduce a marketable lineup of 10 or more new games each year. We scrambled in fiscal 2025, '26 and beyond will be awesome. We will push harder to include exclusive titles and more culturally relevant IP. And finally, five remodels modernize and refresh the look and feel of units and improve the layout to increase traffic and overall productivity. Moving to the next slide, what are the immediate near-term goals? I want to take this opportunity to make it very clear, and this is internally too, that my near-term goals are to grow same-store sales and generate and grow free cash flow now. We will do this by narrowing our focus to the five areas outlined on the prior page. And I'm just reminding, relaunching our marketing engine by implementing an effective integrated marketing strategy and continuing to press on the success of local store sales managers simplifying our value messages. Two, transform our food and beverage offerings with the launch of our back-to-basics menu nationwide this quarter. Three, improving operations with a renewed focus on delivering an exceptional guest experience. Four, refreshing our games offering to continue to introduce over 10 new marketable games to the Midway each year, and finally, revamping our remodel program with a new prototype and appropriate marketing support. I also wanted to share with you all that we are not waiting to make changes and implement our refocus strategy. We are making changes and implementing them real-time. So coming up, we have a strong fall campaign, and we are excited to have launched our new fall season pass, giving guests unlimited daily gameplay, exclusive food and beverage discounts, and three value-packed options to choose from. Building on the success of our summer pass, this program creates even more reasons to be with Dave & Buster's throughout the season. With everyday value and experiences that bring people together, we are reinforcing Dave & Buster's as a go-to destination for fun this fall. We're also putting the final touches on our Winter Pass that we will debut in the fourth quarter. Our recently launched Football Watch offering, complete with specials like 10 for 10 wings, continued enhancements to the leaderboard competition on our arcade floors, while continuing to run our very popular evergreen promotions of the $19.99 eat and play combo sets us up for good momentum. Capping off the fall football festivities is our latest midway challenge, the two-minute drill, where we invite football fans and gamers to compete for national and local leaderboard positions each week. Looking to break single-season passing records over the course of the season. We will be debuting our new back-to-basics menu in October and are doubling down on the rollout of our very profitable human crane to additional Dave & Buster's and Main Event stores. We will also be launching our revised remodel program in the coming weeks. Moving to the next slide, I wanted to touch briefly on our financial position and leave you with a few key takeaways from my position. We have a strong cash flow and a strong balance sheet. This business will generate cash flow, and here is the profile of the cash flow generation. We have a very strong balance sheet with no near-term maturities and significant liquidity to invest in our strategy. Moving to the next slide, I also wanted to touch briefly on our current valuation. Comparing against our broad peer group, there is no other way to say it than this business is extremely undervalued today. Based on the strength of our brand, the basic economics of the business, the strong cash flow generation, and the significant potential of the business, I'm very confident we are worth a lot more than we are today. Which leads me to my final point in the presentation. As you all know, I personally signed up to a compensation package tied to a near-term achievement of $675 million of annual EBITDA. As you can see from this page, and as you all know well, I think the point is important to make nonetheless there is very meaningful upside in the price of our stock and the value of our business, based on very achievable financial results in the near term. I'm personally highly motivated and aligned to drive this business forward, and I look forward to our shared success. And with that, operator, please open the line for questions. Operator: We will now begin the question and answer session. To ask a question, the first question is from Jeff Farmer with Gordon Haskett. Please go ahead. Jeff Farmer: Great, thanks. Thank you and welcome to Tarun. Good to have you on board. I might have missed this, but in the release, you noted that 3Q same-store sales to date are consistent with what you saw exiting Q2. The call did cut out, but did you guys mention those numbers more specifically, what those same-store sales trends look like? Darin Harper: No, we did not. We didn't quantify those. But with five weeks into Q2 last year of down 2.2% when we printed down 3% for the quarter, you can kind of back into what the second half looked like, and our trends are pretty consistent with that in Q3. Jeff Farmer: Okay. I only bring it up because you mentioned July was sort of a little bit of a low watermark with the calendar shift. So I didn't know if things had gotten a little bit better. So I'll move on from that. Again, the prepared remarks, you did call out value perception as one of the challenges that Dave & Buster's is facing. You just elaborate on that and what you think some of the opportunities are with value perception? Thank you. Tarun Lal: Yes. Thank you for the question and for the welcome. We have a very strong value proposition. I just think that we have marketed in a way that has confused our customers. And so we are currently working on simplifying the messaging, and that messaging should go out as we execute on the next marketing window. I think it's not about not having the right value. I just think that both our retail marketing and our general communication have created confusion on the value ladders. And we know how to fix this now. Jeff Farmer: Okay. Thank you. Operator: The next question is from Andy Barish with Jefferies. Please go ahead. Andy Barish: Hey guys and yes, welcome Tarun. I guess just this was the first quarter where the same-store sales were kind of close, but margins missed. So I'm just trying to get a sense of kind of where you know, kind of where things shake out. I know the food mix is higher, which you know, is lower margins. But is your impression, Tarun, that there is some reinvestment needed in the business and just kind of trying to gauge where that what that means for kind of fourth-quarter margins? I know 3Q is sort of the low of the year, but yes, just trying to level set on sort of where you think margins are near term in the business? Darin Harper: Yes. Andy, this is Darin. I'll take that question. Yes. So in the quarter, had a few things at play. When you look overall at our cost structure and our cost increase year over year, you know, a third of our cost increase just in terms of just raw dollars is coming from new units. We've got another third that we were lapping, a number of credits in the prior year and some other one-off items. There were some insurance adjustments in the prior years. There were some other franchise tax items impacting EBITDA in the prior year. And then we had some unusual sort of one-off legal type costs as well this quarter. And then on top of it, sort of the remaining third was a mix of there was some reinvestment in the game room floor and the stores from an RM perspective, particularly as we geared up for the summer of games when we rolled out all of our new games. We wanted to make sure that that experience was tight and our games were operable. But we believe that's a bit of a high watermark on that. And the second half of the year is not going to be at those levels, but that was some incremental cost. Then, obviously, we had some incremental marketing costs as well in the quarter. So when we think about the second half of the year in terms of where we've seen sort of that EBITDA margin miss versus the prior year, we anticipate that that will be very much moderated in the second half of the year. Not only through, you know, we believe just more profitable, top-line performance, but also us not lapping some of these items from the prior year and not having some of these one-off items that impacted us for the quarter. Andy Barish: Gotcha. Very helpful. And then can you just kind of give us a sense of sort of getting back on marketing and value with eat and play where that you know, has kind of mixed of late versus know, maybe versus historical levels or something kind of to give us a sense of how the back to basics is you know, is working. Darin Harper: Yeah. Sure. So we've continued to experience some nice opt-in on the EPC. We're still at about 8% to 10% opt-in rates, which we like, which is higher than where things have been historically and for a few reasons. Number one, I think we've done a really nice job with the offers within the eat and play combo. You know, we're seeing food upgrades on 30% of our EPC mix, which we really like. You know, we're also, as mentioned before, we're now offering this eat and play combo on the kiosk. So for those guests, that might just be coming in intending just to play games, we're now presenting to them a very valuable offer on the kiosk, which is really driving some nice attach for us there that we really like. And so overall, we're really liking our performance. We're seeing a nice upgrade on the PowerCard piece, as well, including an all-you-can-play upgrade and a $75 card upgrade. I mean, that's representing almost a third of our eat and play combo opt-ins as well. So really, really liking that. And to Tarun's point, this is a really good value message that we know our guests like. And our operators really like executing on as well. Andy Barish: Thank you. Operator: The next question is from Andrew Strelzik with BMO. Please go ahead. Andrew Strelzik: Hey, thanks for taking the questions. My first one, Tarun, maybe if you take a step back, you mentioned in some of the prepared remarks, some of the prior turnarounds that you led in your prior roles. And I guess was wondering if you could maybe compare or contrast what you're seeing at Dave & Buster's with that prior experience. And I guess, I'm wondering in particular, it's such a different type of brand, different type of concept than in your prior roles. So I guess, where do you see the similarities that you can draw on and maybe some of the differences that might take a little bit more learning? Tarun Lal: That's a great question, Andrew. So, you know, my view, Andrew, is that when it comes to business transformations, there are generally more similarities than differences. And if I really think about it from a short-term perspective, you know, the brand has, you know, kind of lost its distinctiveness. You know, there's generally a value perception at play. And so if you can kind of sharply communicate value, in the short term, through a really distinctive communication, you can drive some levels of same-store sales growth. But really, what is very important is that in the medium to long term, two things are very, very important. One is making sure that you have the right capability on the team and you have the right culture in the business, which is really guest-first culture. A true obsession with guests. And the second piece is really ensuring that your brand positioning is right. And there's clarity that your brand has that consumers truly understand. So, you know, in those areas, there is similarity between what I've done in the past and the challenge at Dave & Buster's. I think the one difference for sure is that there is additional complexity at Dave & Buster's because not only do you offer food and beverage here, not only do we offer food and beverage here, there's also a massive fun and entertainment business that's almost an anchor for us. So it's a different product for me that I'm trying to understand, and that's why I spend so much time in the field, like learning from the ground up. So I think the product is where the real distinction is. But as I said, in my mind, with most of these transformations, there are more similarities than differences. Andrew Strelzik: Okay. That's helpful context. And then maybe wanted to dig in a little on your comments about the poor CapEx discipline. And I'm curious about some of the ways you plan to evolve that. But in particular, I'd love to hear your thoughts on new store growth and, you know, continuing to open double-digit new stores at a time when you are trying to affect a lot of change and the comps have been under pressure. And I know the 40% returns. We've heard that number a lot over time. I think the investment community probably has a hard time with that number just given the performance over the last several years. So just would love to get your perspective on the CapEx evolution here and the new store growth. Thank you. Tarun Lal: So, Andrew, let me first request Darin to respond to one part of the question, then I'll share my thoughts on this too. Darin? Darin Harper: Yeah. So the 40% return is obviously very, you know, that's a year one cash on cash return, you know, that is very advantageous for us. We continue to have the ability to find great sites, staff them appropriately, despite, you know, the focus on the core business. And find really great partners to help us with our capital for ground up. So, you know, I think we continue to feel like we can open these at 9 to 10 million net CapEx each. And that's an area that, as we've discussed before, like, we can lever up or down there, depending on the needs of the business. But where we currently sit with the returns, with the pipeline that we have in front of us, and how we think about competitive positioning over the medium and long term, you know, it's an area that we're still very, very bullish on. So with that, Tarun, any other context you want to provide? Tarun Lal: Yeah. Thank you, Darin. So just to add to that, Andrew, in perspective, adding 6% to 7% of growth is, in my mind, not really a distraction. Clearly, our focus is on growing same-store sales growth. And so the core business is definitely our primary focus. And, you know, to that end, if you think about international, you know, where I've spent a lot of my time, that offers tremendous growth opportunities, but like, you know, for me, the real focus is the core business in the U.S. And I strongly believe that we can get the core business humming and continue to add 6% to 7% growth through net new unit addition without distracting the team. And I believe this not only because of my past experience but because I spent a lot of time in the field. This sort of growth really excites and energizes the team. You know, growth is a, you know, it makes them feel like they're winning. And it's quite motivating. So, you know, we will continue with this level of growth until we kind of feel that we are in a stronger position. We've got our sales momentum back. And then we would explore, you know, whether we want to change this number or change this target in the future. Andrew Strelzik: Great. Thank you. Operator: Ladies and gentlemen, in the interest of giving everyone an opportunity to ask a question, please limit your questions to one. The next question is from Jake Bartlett with Truist Securities. Please go ahead. Jake Bartlett: Great. Thank you so much for taking the question and welcome, Tarun. I'm looking forward to hearing from you over the next number of years. My question is on the strategic game pricing. We've done a check and just found a pretty big change in the pricing over the last, I'm not sure how much time exactly, but at least the last few months and then even more recently. Where the pricing has gone to one, essentially. Part of the prior plan had been multiple tiers, and it seems like there's one level of kind of pricing across the system now. It also seems like the average price per ticket is significantly lower than it had been under the prior plan. So the question is, one, what kind of impact is that having on the results kind of near term, and we look at positive food and beverage same-store sales, but negative same-store sales overall. Is that contributing to it? And then also, why the change? There were some questions earlier about value. This seems to be a pretty big step towards the value direction, and just the thought process around it. Thank you. Darin Harper: Yeah. Hey, Jake. Darren. Yeah. So I'll take that. Going back to Tarun's comment on just the value proposition and the value perception with our guests, the game pricing was a really large focus of that. And to go back to last year, when you think about what the brand did in terms of increasing rate card pricing as well as increasing game level pricing at a time when there was not investment in the Midway. It was really a combination that really led to a less than advantageous value proposition for the guest. And so what we did really starting in April was we started testing some various rate card optimizations. Where we really focused on the entry point for the rate card, you know, how many chips that you got with some very defined objectives around value. And then the game level pricing, what we really wanted to do was allow the guest to spend the same amount that they've been spending, but have more time in the midway. We wanted to increase dwell time. We wanted their power card to extend longer, and for them to enjoy their experience more because that was key findings that we got in consumer research after the fact. And then the last leg is managing margins through strategic win pricing. So we've done a number of different tests on that over the last several weeks, the last few months. And we think we're in a nice spot right now. We're starting to see growth in our average card loads but also provide a much, much better value to the guests. And so look, this is an area that we're going to continue to be smart, continue to optimize. And I think there still is the opportunity for us to look at that different sort of regional pricing. But in terms of simplicity of rollout, simplicity of messaging, this was an area that we really wanted to focus on. Operator: The next question is from Eric Wold with Texas Capital Securities. Please go ahead. Eric Wold: Thanks. Good afternoon. I just want to dig in a little bit on the kind of the same-store sales trends in the quarter? And you kind of give us a, you know, the down 2.2 the first five weeks. I know in the last call, you talked about some optimism around the Memorial Day holiday and kind of what you're seeing in June with some positive days in June. Maybe a little, you know, kind of what you saw kind of as you went into July. Other than the calendar shift and maybe some comparisons with, you know, an earlier school start versus last year, was there any shift in terms of spending habits or kind of the way the consumers are reacting that you kind of, you know, was different from what you were seeing in the last call and that you're kind of shift into the way the consumer is spending once you were in the store. I know you don't break out attendance versus spend. But kind of once they were in there, were you seeing any kind of shift in terms of their habits once they're in the locations? Darin Harper: No. Really didn't see any change. In spending. That was pretty consistent. I think as we continue to determine what the right messaging is, particularly in this environment, our learnings with the eat and play combo messaging as well as the summer of games. We think that resonated more with our guests than maybe the later summer leaderboard initiative. So those are learnings that we're grabbing hold of and optimizing in the second half of the year. Operator: The next question is from Brian Mullan with Piper Sandler. Please go ahead. Brian Mullan: Hey, thank you. I wanted to come back to the conversation. I don't want to belabor it, but just ask in maybe a different way. Tarun, I'm wondering if you could give your assessment. Does this business need to significantly increase the dollar amount of marketing investments in order to really drive traffic back to the stores? You know, I understand you're going back on TV. You're changing the messaging. Those are good things. But was there enough spend even prior to when the brand went off TV? Tarun Lal: I don't believe we need to change the run rate of investments in marketing just now. We have tried a different media mix which is working. We will continue to further refine it to make the spend more effective. But I don't believe that we need to increase the dollar amount of spend at this point of time. Operator: The next question is from Brian Vaccaro with Raymond James. Please go ahead. Brian Vaccaro: Hi, thanks and good evening and congratulations on your new role Tarun. I just wanted to follow-up on the pricing changes that you mentioned earlier. I know it can be tough to quantify, but I guess can you level set what level of check versus traffic growth we're seeing reflected in the down 3% comp this quarter? Maybe how that compares? Is there a meaningful change in check that we should be mindful of? And also as we think about the second half, how average check could trend given some of these changes that you've made? Darin Harper: Yeah. Hey, Brian. Yeah. We didn't provide much, any color there. But what I say is some of the things that we've done on the F&B side with respect to the attach on the eat and play combo. In particular, we're seeing check and growth coming from that aspect of the business. I think more importantly, to the second half of your question, we look at the second half of the year, look, I think that's going to continue to be a tailwind for us. You know, we're rolling out a new menu in October system-wide. That is going to be reintroducing a bunch of fan favorites historically. We've been testing that for a while and are seeing nice check growth there. And again, the nice thing is it's not due to price, really, it's due to just driving guests towards entrees and some other menu options that are just driving that that we like. And then this work that we've done with the game pricing, we believe will provide a tailwind for us as well. So optimistic that that will have some tailwinds on the check side in the second half of the year. Operator: The next question is from Mike Hickey with the Benchmark Stonix Company. Please go ahead. Mike Hickey: Hey, guys. Hey, Tarun. Welcome aboard here. Just a quick one on your strategic plan. We appreciate that you feel it was sound, and it was just misexecution. And when you look back on the plan, I think one of the bigger takeaways for investors at the time was that you're targeting $1 billion in adjusted EBITDA. And if I heard you correctly, it looks like your comp plan is tied to $675 million in adjusted EBITDA. Which is a pretty big disconnect from the original strategic plan. Could you just explain that? And if the $675 is the new target? Thanks. Tarun Lal: So Mike, I'm not aware of the timeline for the billion-dollar, you know, we can certainly connect separately on that topic, but I'm confident that the $675 million is a number is a target that we can hit within the timeline that we have kind of committed to. So from my perspective and from this team's perspective, $675 million is a new EBITDA target. Operator: The next question is from Dennis Geiger with UBS. Please go ahead. Dennis Geiger: Great. Thanks and Tarun welcome. I'm curious if you could spend a few more minutes maybe just talking about how you think about yeah, maybe the brand-specific missteps, but more so the macro currently and the competitive environment and kind of really just looking ahead and thinking about the macro and how you think about the competitive environment broadly, you know, perhaps relative to your plans. I'm sure the focus is to play your game and execute against the plans that you've outlined. But just how you think about those two dynamics within that context. Thank you. Tarun Lal: Yeah. Thank you, Dennis. So, Dennis, yes, there are macro headwinds, absolutely, for all businesses. But these come in cycles, and businesses should be prepared for them. Consumers are looking for, you know, value for their money. And brands and companies that deliver that prosper even in tough macro environments. So as I shared earlier, one of our priorities is simplifying our marketing message, simplifying our promotions. And making it easy for guests to understand, you know, what the real value is. And essentially, with value, remember, you know, it's all about trust. You know, it's not how much you're paying only. It's about the value that you're actually receiving from the brand. So I really believe that a key part of the pivot that we are making is kind of really simplifying the messages and making it really transparent for our customers on what they are getting for the money they are spending. So, you know, that clearly is one key part of the pivot on marketing. I think the second part is really making sure that our brand comes across as being distinctive. And there are two components to that. One is the product. As I talked about earlier, we are kind of working on collaborations and partnerships that'll give us IP rights that'll allow us to offer unique games that only, you know, D&B and Main Event can offer. So that's one part that, you know, what are the products you're offering to your consumer. I think the second piece within that is how do you communicate that. And, you know, there's so much communication going on now on both traditional media and the digital medium that if you're not distinctive and you don't stand out, you know, you're basically wasting your dollars. So I think that's the second part of what, you know, we are working towards now. Operator: This concludes our question and answer session. I would like to turn the back over to Tarun Lal for any closing remarks. Tarun Lal: Thank you, operator, and thank you all for joining. In closing, our business is built on a strong foundation, resilient model, two brands that resonate with customers, and experiences that foster loyalty. We delivered solid returns, disciplined operations, and sustainable cash flow. Our leadership team, operators, and Board are focused on driving growth and maximum value. We are confident in the opportunities ahead to further enhance performance and create long-term value for our shareholders. Look forward to meeting you in person and speaking with you again soon. Have a great evening. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Ahmed Moataz: Hello, everyone. This is Ahmed Moataz from EFG Hermes, and welcome to IDH's first half of '25 results conference call. I'm pleased to be joined with Dr. Hend El Sherbini, Chief Executive Officer; Sherif El Zeiny, Chief Financial Officer; and Tarek Yehia, Director of Investor Relations. As usual, the company will start with a brief presentation, and then we'll open for Q&A. IDH, please go ahead. Tarek Yehia: Good afternoon, ladies and gentlemen, and thank you, Ahmed, and thank you, everyone, for joining us for IDH second quarter analyst call. My name is Tarek Yehia, am I am HR -- IDH Investor Relations Director. Joining me today, we have Dr. Hend El Sherbini, our CEO; Mr. Sherif El Zeiny, our CFO. Dr. Hend will begin the call with a summary of the latest period main highlights. After that, I will discuss in more details the main macroeconomic and geopolitical trends seen across our market. Mr. Sherif will offer a deeper analysis for our financial performance. We will then end the call with Q&A. I will hand over the good to Dr. Hend. Hend El Sherbini: Thank you very much, Tarek, and good afternoon, everyone. I'm Dr. Hend El Sherbini, CEO of IDH. At the halfway point of what has so far been a very remarkable year, we are pleased to report another strong set of financial and operational results. Our performance in the first 6 months of 2025 highlights once more the effectiveness of our growth and investment strategies, which are enabling us to capture broad-based growth across our markets while driving sustained margin improvement. Our results for the period have also been supported by improving operating conditions across our footprint. We're particularly happy to see that our home and largest market of Egypt has remained on an improving trajectory in recent months, with the pound strengthening notably as investor confidence recovers further. In light of these results and the progress made on our strategic priorities, we are very pleased to announce that our Board of Directors has approved the distribution of the cash dividend for the year ended 31st of December 2024 of $0.017 per share to shareholders. This decision, which, as you may remember, had been deferred earlier in the year follows a careful assessment of market conditions and the company's cash flow needs for strategic investments. The Board is confident that the company's strong financial performance in the first half of 2025 and its robust liquidity position now support this distribution, reflecting our continued commitment to delivering shareholder value. Turning to our performance in more detail. In the first half of the year, we reported consolidated revenue of EGP 3.5 billion, an increase of 42% from the same period of last year. Revenue growth for the period was dual driven as our test volumes increased 10% versus last year, and our average revenue per test was 29% compared to the first half of 2024. In the last 6 months, we performed just under 20 million tests, recording test volume growth across all 4 of our currently operational markets. This is a particularly remarkable achievement considering the price adjustments rolled out at the start of the year across multiple markets to keep up with rising inflation. Meanwhile, we also succeeded in further expanding our average test per patient metric, which reached a new record high of 4.6 tests versus 4.3 tests this time last year. In Egypt, we continue to invest significantly to maintain our leadership position and remain the go to provide for patients nationwide. During the first 6 months of the year, we opened up 49 new locations to better serve patients within and outside greater Cairo. Our efforts have delivered immediate results with tests and patient volumes rising 9% and 3% year-on-year, respectively. And our top line, reaching EGP 3 billion, up 43% versus the same period of 2024. While we continue to grow our physical footprint, which as of the 30th of June 2025, saw us operating 636 locations nationwide, we are also investing in strengthening other patient touch points. In particular, we were very happy to see our house call service contributes to 20% of our Egypt revenues, standing above its average contribution over the last several years. The service continued growth has come as a direct result of our strategic investments over the last 4 years as part of our post-pandemic growth plans. Meanwhile, our radiology subsidiary Al-Borg Scan continued its steady growth with scan volumes returning to year-on-year growth in the second quarter of the year, following Ramadan related slowdown in March. We expect to see an acceleration in scan volumes and revenues in the second half of 2025 supported by improving market conditions and Al-Borg Scan's growing popularity within its catchment areas. During the first -- the second quarter, we completed a landmark acquisition to further strengthen our radiology offering, more specifically in June, we acquired CAIRO RAY for Radiotherapy, an established radiotherapy service provider in East Cairo. The transaction, which was completed for a total consideration of EGP 400 million will see IDH add radiotherapy to our patient offerings. Over the last 18 months, a key priority for all of us at IDH has been the launch and ramp up of our Saudi operations. I'm pleased to report that our results coming out of the Kingdom remains strong and encouraging, fueling our optimism for what's to come. The second quarter of 2025 Biolab KSA revenue surpassed the SAR 1 million mark expanding by 31% versus the prior quarter. Similarly, on a year-to-date basis, we saw revenue reached SAR 1.9 million, supported by rising test volumes. This growth continues to highlight the effectiveness of our ramp-up strategy in the market, which aims to accelerate revenue growth and establish Biolab KSA as a key player in the large, but highly fragmented Saudi diagnostics market. On this front, in early July, we inaugurated our third branch in the country located in Al Hamra District in Riyadh. Meanwhile, we continue to press forward with our other growth initiatives as part of our ramp-up plans. These have included an aggressive on-the-ground marketing campaign to raise brand awareness, strategic discounts to build momentum as well as exploring potential partnerships with health care operators. As always, a key focus for IDH remains driving profitable growth with our first half results pointing to widespread improvements across all key metrics. More specifically, during the current reporting period, we saw our gross profit margin expand 5 percentage points versus last year, and our adjusted EBITDA margin expanded 7 percentage points compared to last year. These remarkable improvements come as we continue to press ahead with our cost optimization efforts, which have seen our cost of goods sold and our SG&A outplayed as the share of revenue declined by combined 9 percentage points versus the first half of last year. Our bottom line profitability has also displayed sustained improvements when controlling for the substantial FX gains recorded in the comparable period of last year. In fact, during the period, we saw our adjusted net profit more than doubling year-on-year and yielding an associated margin of 16% versus 7% last year. As with the last quarter on the profitability front, a key highlight of 2025 so far has been our Nigeria operations during -- turning EBITDA positive. We expect Echo-Lab's profitability to continue improving as operating conditions stabilize and our revamped strategy in the country deliver results. Before handing the call over to Tarek, I would like to quickly touch upon our full year guidance in light of our most recent results. As previously stated, given the relatively stable market conditions enjoyed up to this point, in our first half results, we see our full year revenue growth coming in at around 30% for 2025. Meanwhile, on the profitability front, we see EBITDA margin coming in north of 30% for the year as our proactive cost control efforts continue to mitigate against inflationary pressures in Egypt and Nigeria. With that, I'll hand the call over to Tarek and Sherif, who will dive deeper into key trends across our chosen markets and our financial results for the period. Tarek? Thank you, very much. Tarek Yehia: Thank you, Dr. Hend. As Dr. Hend mentioned during her presentation, the first 8 months of 2025 has been characterized by relative stability and positive in our chosen markets. In Egypt, we are continuing to see slower inflation compared to prior years, with the [ last trading ] for July coming in a low of 13.9%. Decreasing inflation pressure has been supported by relative strengthening of the EGP versus dollar as well as increased ForEx inflows into Egypt as investment confidence recovers and remittance continuing to rise. In fact, in recent weeks, we have seen the EGP trading constantly below the EGP 49 to the dollars, values foreseen last year. Following rate cuts in April, May and in August for accumulative of 5.5 basis points, the main operating rate in Egypt currently stands at 22.5%. Improving macroeconomic conditions are set to be combined by further interest rate cuts in the coming months. This has undoubtedly helped prop up local investment activity and drive further recovery in consumer spending. Similar to Egypt, Nigeria has also seen relatively stable in the first part of 2025. Inflation has come down from last year highs, and this is expected to support the gradual recovery in consumer spending. Over in Jordan and Saudi, the economic situation remains largely stable despite increased regional uncertainty in the final weeks of the second quarter. Turning quickly to our latest results. Egypt continued to post strong growth in line with recent trends. Meanwhile, in Jordan, revenue posted solid year-on-year growth in both EGP and local currency terms, supported by a promotional campaign organized by Biolab, which saw test volume grew an impressive 21% versus last year. In a market where volume-driven growth is the key for long-term sustainability, we were very pleased to see Biolab's strategy pay off so successfully. In our third largest market of Nigeria, Echo-Lab is now firmly EBITDA positive, a direct result of our revamped turnover strategy kicked off last year. We are excited for our Nigerian subsidiary to build on the progress made thus far and fully capture the vast upside offered by local radiology markets. Finally, as Dr. Hend already mentioned, our newest market of Saudi Arabia is ramping up very encouraging as we had hoped at the start of the year. In the coming months, we expect to see further acceleration in the revenue growth, fueled by the launch of new locations, starting with Biolab KSA branch, which was started in early July. Finally, in Sudan, operations continue to be significantly impacted by ongoing conflict with no notable updates to report. I will now hand the call over to Mr. Sherif who will provide a more detailed overview of our cost profitability for the 6 months period. Thank you. Sherif Mohamed El Zeiny: Thank you, Tarek. Good afternoon, ladies and gentlemen, and thank you for your time today. As Tarek mentioned, during my presentation, our focus will be on cost and profitability before opening up the floor to your questions. In line with guidance -- with our guidance, profitability for the first half of the year has continued to improve, supported by our group-wide efforts to boost operational efficiency and keep spending at bay. On the efficiency front, the single biggest focus areas since the start of last year has been digitalization as we work to integrate new solutions into all aspects of our business. By successful leveraging these tools, we are supporting our group-wide decision-making process, ensuring that everyone across the organization is taking data-backed decisions to drive IDH forward. In parallel, we are also keenly focused on keeping costs down. Our efforts here have translated in a 9-percentage-point drop in our total cost to revenue ratio for the period compared to last year. This is a very impressive result, especially when considering the continued inflation pressure faced across some of our largest markets. The most notable decline was seen in our raw material expenses as the share of revenue, which stood at 19.6% in the first half of 2025 down from 21.5% last year. The decline reflects our proactive inventory management strategy, which sees the company leverage its scale to secure advantageous price for its testing kits. Meanwhile, total wage and salaries as a share of revenue stood unchanged at 26.5% in Half 1, '25. This reflects the successful introduction of salary adjustments to retain key staff and to -- and the continuation of our efforts to optimize headcount. As you can see in the bottom right chart, increased efficiencies have translated in notable expansion in both our gross and adjusted EBITDA margins for the 6 months period. More specifically, we saw our gross profit margin reached 42% versus 37% in Half 1 '24, where our adjusted EBITDA margin stood at 34% in the current period versus 27% in '24. Beyond this, it's worth mentioning that advertising expense rose 23% year-on-year as we continue to invest in supporting our ramp-up in Saudi Arabia, while doubling down on advertising efforts in Egypt. Finally, it's worth remembering that while our cost base is largely EGP denominated, some costs are linked to the dollar, and therefore, have increased year-on-year following the pound's float in March '24. As Dr. Hend already outlined, the contractions recorded at our bottom line margin reflects the high base effect from the substantial ForEx gains recorded last year. Controlling for this, our adjusted net profit expanded 214% year-on-year with an adjusted net profit margin of 16% versus 7% last year. Throughout the first 6 months of the year, we kept a healthy working capital position, supporting our operational efficiency. As mentioned in previous calls, our working capital management has been and will continue to be a key area of focus for us. Similarly, we saw our cash conversion cycle improve further to reach 138 days in June '25 versus 155 days at the end of '24. During the 6-month period, we saw provisional charges for doubtful accounts came in relatively unchanged at EGP 14 million. On the one hand, this reflects increased revenue, while on the other hand it reflects -- increased revenues, while on the other hand, it reflects improving economics conditions as the rollout of new incentives for IDH staff boost collection rates. It is also important to mention that as expected, we saw a decline in days inventory outstanding, reflecting accelerating sales during the second quarter of the year following the seasonal Ramadan slowdown in March. Finally, as June '25. Our total cash reserves stood at EGP 1.7 billion with a net cash balance of EGP 337 million. Thank you for your attention. We now welcome any questions you may have. Thank you. Ahmed Moataz: [Operator Instructions] We'll take the first line of questions from Matthew. Unknown Analyst: Can you hear me fine? Ahmed Moataz: Yes. Please, go ahead. Unknown Analyst: So Matthew from Confluence investors. We've been an impact fund focusing on Africa and the emerging markets. Long-time follower of the company and very good results. I've got 2 questions and 1 comment. The first question is about the -- about Saudi Arabia that in the numbers of tests these seem to be flat Q1 to Q2, while the number of patients seem to have a significant increase. Could you explain that discrepancy? Hend El Sherbini: So yes, you're right. I mean, we've seen an increase in number of patients and a flat number of tests, and this is because of the corporate side. So we've been working on the B2B there. And the B2B, the number of tests per patient is much lower than when you're working with the B2C, like what we've been doing before. Unknown Analyst: Got it. Okay. And then second question is around Egypt and around the cost base. So you alluded to this before, but some of your costs are, if not dollars, then certainly dollar linked. Are you able to, for Egypt, give us some more guidance around what proportion of the COGS and what proportion of the SG&A are USD linked? Hend El Sherbini: So when we're talking about the linking to the dollar, it's -- we're only talking about the raw materials that we -- that is linked to the dollar, which is around 20% of our COGS. Unknown Analyst: Right. And none of the overheads, you think? I mean, obviously, there's a bit of flow through, but... Hend El Sherbini: No. So 20% of revenue is linked to the dollar because these are the raw material costs. Unknown Analyst: And my final one, sorry, taking a lot of the floor, is a comment, which is, as the scans get to be larger and larger portion of Egypt, will you consider splitting out the financials of the pathology side to the scans? Hend El Sherbini: Yes, we want to do that, and we're working on doing this, yes. Unknown Analyst: Okay. I realize you already do a lot of disclosure, but that would be great. Congratulations on great results. Hend El Sherbini: Thank you very much. Ahmed Moataz: Okay. [ Fawad ] has a couple of questions on the chat. I'll read them one by one. Could you please explain the rationale for opting to return capital to shareholders through dividends rather than payback? The former are tax inefficient for most shareholders and those who want to can manufacture their own tech? Yes, that's the question. Hend El Sherbini: I mean this has been a requested by many shareholders, including Actis. So given the situation in Egypt now and the stability of the Egyptian pound, we -- the Board has taken the decision to distribute the dividends away from the money that is needed for investments, and this was the rationale behind that. Ahmed Moataz: Understood. The second question, could you elaborate on the initiatives taken to improve results in Nigeria since last year? Specifically, what was the driver of decreasing patient numbers, but increasing tests per patient? Sherif Mohamed El Zeiny: Yes. It's -- the improvements cames in Nigeria because we worked on everything. But in the revenue side, we increased the revenue and also in some brands who were not working properly, we already made the renovations and now we are getting much better results than before. Also the cost each one and we enhanced the headcount. And we did a lot of things that eased the consumption and everything. But for the number of tests, we already made much more contracts like before, like Saudi Arabia B2B, we have now -- they were counting on walk-in patients, but now we have lots of contracts working and it will increase more after that. Ahmed Moataz: Understood. There's a final question on the chat is, could you please provide more color on the promotional push in Jordan? Hend El Sherbini: So yes, the Biolab in Jordan has been conducting the promotional campaigns with discounts in order to increase the tests -- the number of tests. And this has definitely improved the revenue and the number of tests done in Jordan. Ahmed Moataz: Understood. We'll move on to 3 questions from the line of [ Farooq Maya ]. The first one, there has been a ramp-up in branch openings, plus 80 year-on-year, but branch efficiency, which is calculating it based on patients per branch is being held back as a consequence. How do you ensure that each branch meets the minimum return on investment and/or payback, and is cannibalization a concern? Hend El Sherbini: So this year, I mean, we've been focusing on opening branches in hospitals. So this is hospital management and clinics. We're managing clinics, labs in clinics and labs in hospitals. And this is why you can see the increased number of branches opened this year. Ahmed Moataz: I think you got muted. I'm not sure if you finished answering the question or not. Hend El Sherbini: Excuse me? Ahmed Moataz: No worries. I thought you got muted in the middle of the question, but yes. Hend El Sherbini: So maybe I can repeat that. So we opened 85 hospitals and clinics that we manage. I mean, we did -- we are managing branches inside hospitals and clinics of a total of 85 this year. So this is why there is an increased number of branches opened this year rather than opening our own branches with our own CapEx. Ahmed Moataz: Good. And for the other part of the question, is cannibalization a concern, and have the new branches being opened more or less been meeting the minimum return on investment that you internally target? Hend El Sherbini: Yes, sure. I mean you can see this from the results in the top line and in the bottom line, which explains -- which answers this question. Ahmed Moataz: Okay. Second question, has radiology business kept up with the business plan 5 years ago when it was launched? What contribution can this make in the coming 3 to 5 years? And what learnings from this new business is useful for the new Saudi business? Hend El Sherbini: So the radiology -- the Al-Borg Scan, the 5-year plan that was put for the Al-Borg Scan is to have it 5% of the total revenue of Egypt, which is the case right now. So we've reached the -- our target of 5%. And we're still aiming at increasing the percentage of revenue coming from the Al-Borg Scan where we're opening a new branch in New Cairo where we're increasing efficiency, increasing utilization and so on. But this has nothing to do with Saudi Arabia because Saudi Arabia, here, we're talking about pathology business rather than radiology. Ahmed Moataz: Understood. And last part of this question, what was the rationale of the recent acquisitions that you've done? Hend El Sherbini: There is a shortage of radiotherapy in Egypt. So this comes that there is an increased demand and shortage of radiotherapy machines. We were looking at having a new branch for Al-Borg Scan in New Cairo. So this recent acquisition will encompass both, Al-Borg Scan branch in New Cairo as well as 2 radiotherapy machines with a very attractive price. So when we looked at the price offered, or the price for this new branch, it was the same price as if we were doing a new Al-Borg Scan alone -- stand-alone branch. So I mean, it complements what we're doing. There is a high demand for it and as well as the geographical place, which we were looking for. Ahmed Moataz: There's a follow-up on, if you can share any KPIs on the CAIRO RAY acquisition, specifically revenue, operating income, EBITDA? And if you can also share some info on their balance sheet health, and lastly, the growth outlook of the business? Hend El Sherbini: I can definitely send you the business plan that we have for CAIRO RAY. We're not going to be able to share it now, but we can -- Tarek can definitely share it with Farooq. Is it Farooq who is asking this question? Ahmed Moataz: This is actually, [ Zohaib ]. I can send you his e-mail after the call. Hend El Sherbini: Okay. Ahmed Moataz: Darren Smith is asking, could you please provide color on the 30% EBITDA margin guidance given that in the first half, you've already achieved 34%? Would that mean that you expect the second half to be much weaker? And lastly, he is congratulating you on the results and the great -- and it's great to see dividends as well. Hend El Sherbini: So we were planning -- we are looking at around -- in the first -- in the 30s up 32%, 33% EBITDA margin, and this is what we communicated to the market before. Does it mean that we are looking at slowing down the operation, but it's rather the investments and the money that is -- the cost that is being in the second half of the year. But -- so it's more or less what we communicated before to the market, in the north of 30% EBITDA margin. Ahmed Moataz: Understood. [ Fawad ] is asking, could you elaborate on the digitalization initiatives undertaken across the business? Sherif Mohamed El Zeiny: Actually, we are doing lots of digitalization in all our business aspects. For the time being, we are implementing Salesforce, which is -- will, of course, help us a lot for the sales side, for the revenue sides. Also, we are implementing this -- the tool of SAP, which is SAP advanced tool of reporting and analysis. And this is very important. We are working in the data, having a very strong data warehouse, which will integrate all our business together from LMS, from SAP, S-A-P, ERP from the Salesforce, from all our business. And also, we are working on having a very online banking system with the banks and make reconciliation and so on. We're already making -- a big part of it already implemented, and we are doing the reconciliation with the banks because it's a headache because we are having a huge number of branches, and we have to make sure that our cash is already deposited into our accounts or our banks on a daily basis. So this was really huge efforts, but now we are much better, and we are continuing. So we have lots of projects. I have mentioned part of them. But digitalization is part, of course, also for the business, we have AI. We are managing to make some -- we have some use cases for serving the reports on -- through our AI system and so on. Hend El Sherbini: We've also implemented an app for the house call team. It's like the Uber experience where the patient, when he orders a house call, he can track the phlebotomist while coming to his house so that makes it easier for them to book an appointment and follow the appointment until you get the results online. Ahmed Moataz: Very clear. For the time being, we received one more question in the chat. [Operator Instructions] How many of your new branch openings in the first half of '25 were under the new management product, which is -- I think he's referring to the ones opened in clinics and hospitals. And within those, do you have a profit-sharing arrangement? Or how does it work? Hend El Sherbini: So we opened 85 hospital managed labs and clinics where we are managing the hospital labs and the labs inside clinics. And we do this through revenue sharing with the hospitals and the clinics. Ahmed Moataz: Understood. Yes. One more question. Are there any new markets that you're actively considering to enter? Hend El Sherbini: We are always looking at new markets. So we're looking at other countries in the Middle East as well as in Africa, but there is nothing concrete for the moment. Whenever we have something concrete, we'll definitely share it with the market. Ahmed Moataz: Understood. We've actually received more questions from [ Farooq ]. I'll give it to you one by one. There has been very good OpEx controls recently. How much more trimming is there still available within costs? And his second question is, what is the outlook and potential of home services? How much bigger could it be as a percentage of revenue? Hend El Sherbini: So we're always continuing -- we're always looking at optimization. One of the things that we're working on right now and the shared is the digitization of the business. And this will definitely bring more cost optimization in terms of manpower, in terms of other efficiencies that we'll see one by one. So this is one initiative that we're working on. Regarding, of course, the material, we're always also working with our suppliers, looking at new suppliers as well to try to decrease the cost of goods. So these are the 2 main components of our cost, the manpower and the kits or the kits and the consumables. So both of them we're working to optimize them as we go on. Regarding -- your second question was? Unknown Executive: Outlook for the households. Hend El Sherbini: For the household outlook. So now it's around 20%. And as you remember, during COVID when I was asked this -- if I think this will continue to be part of our -- a big part of our revenue pre-COVID, I was always telling people that I think it's going to be -- the house call is going to increase even pre-COVID, and this is what happened. So we're now at 20% of revenue. I gave them actually a target of 40%. So I gave the house call team a target of 40%. This is a bit aggressive. However, I think we can go up to 40% at a point of our revenue coming from house call. We're working on improving the service. As I said, we digitize it. We are optimizing it now. We're trying to make it even better so that people can use it more and more. Ahmed Moataz: Understood. We haven't received any further questions. So I don't know if you have any concluding remarks. Otherwise, I can end the call now. Hend El Sherbini: No, there is no concluding remarks. I only thank everyone, and I thank the team here in IDH. I thank everyone who is listening to us and game us questions. Thank you very much. Ahmed Moataz: Thank you very much to IDH's management and to all participants. This concludes today's earnings call. Have a good rest of the day, everyone. Hend El Sherbini: Thank you, Ahmed. Tarek Yehia: Thank you very much. Ahmed Moataz: Thank you.
Operator: Good morning, and welcome to the Coda Octopus Group's Third Quarter Fiscal 2025 Earnings Conference Call. My name is Melissa, and I will be your operator today. Before this call, Coda Octopus issued its financial results for the third quarter ended July 31, 2025, including a press release a copy of which will be furnished in a report filed with the SEC and will be available in the Investor Relations section of the company's website. Joining us on today's call from Coda Octopus are its Chair and CEO, Annmarie Gayle; its interim CFO, Gayle Jardine; it's President of Technology and Director, Blair Cunningham. Following their remarks, we will open the call for questions. Before we begin, Geoff Turner from, Investor Relations team will make a brief introductory statement. Geoff, please go ahead. Geoffrey Turner: Thank you, operator. Good morning, everyone, and welcome to Coda Octopus Third Quarter Fiscal 2025 Earnings Conference Call. Before management begins their formal remarks, we would like to remind everyone that some statements we are making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as may be required by law. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including, but not limited to, risks and uncertainties identified in our Form 10-K for the year ended October 31, 2024, and Forms 10-Q for the first, second and third quarters of our fiscal 2025 year. You may get Coda Octopus Securities and Exchange Commission filings free by visiting the SEC website at www.sec.gov. I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of the Coda Octopus website. Finally, as a reminder, this is our third quarter fiscal 2025 reporting and all comparisons, unless explicitly stated otherwise, are with our third quarter fiscal 2024. Now I will turn the call over to the company's Chair and CEO, Annmarie Gayle. Annmarie? Annmarie Gayle: Thanks, Geoff, and good morning, everyone. Thank you for joining us for our third quarter fiscal year 2025 Earnings Call. Despite the challenging global policy environment, our revenue in the third quarter 2025 increased by 29% and I believe that we have delivered a solid set of results. For those who are new to the Coda Octopus story, our business is made up of 3 discrete business operations, the Marine Technology Business, the Marine Engineering Businesses and our recently added Acoustics Sensors and Materials business unit. Within our group, our core business is the Marine Technology business. This business generates most of our revenue. And in the third quarter, it generated 56.4% of our net revenue. It is around this business that we're building our growth strategy. The Marine Technology business operates in the subsea market and is home to key disruptive underwater technologies. These technologies are bringing the smartphone revolution on the water by providing a comprehensive real-time information platform which allows our customers to make real-time decisions and also significantly reducing the cost of these operations while increasing safety. The specific addressable markets that we operate in are the imaging sonar market and diving market. It is these market segments that our growth strategy is built around. Turning to our imaging sonar the Echoscope. The Echoscope is a real-time 3-dimensional volumetric imaging sonar that can generate real-time dimensional images underwater in zero visibility water conditions. This is widely used in the commercial offshore marine market for a range of underwater applications. A significant part of our annual revenue is derived from the commercial offshore marine market. To achieve the growth that shareholders want to see from our company, we have to increase our market share for underwater imaging sensors in the defense space. There are many ongoing defense programs globally where new classes of underwater vehicles are being adopted. Significant budgets are appropriated for this. The Echoscope's uniqueness of being a single sensor for multiple on-the-sea activities presents a significant advantage over other technologies. It allows the consolidation of multiple sensors into a single power efficient unit without compromising the various missions to be executed by the customer. We recently launched our next generation of ultra small form factor 3 dimensional sonars, the NANO GEN Series. The 3 dimensional sonars within our NANO GEN Series are a shade bigger than a smartphone and have been specifically designed for the small class of underwater vehicles, drones and diver wearable applications. Our second key technology is the DAVD, the diver augmented vision display system. The DAVD provides the real-time information platform for diving operations, increasing safety and efficiency. The addressable market for DAVD includes both the defense and commercial driving sectors. The untethered variant addresses the special forces type of divers and we believe constitutes the largest addressable market for the DAVD technology. Following the successful conclusion of the funded DUS Hardening Program, in the third quarter, we delivered the 16 DAVD untethered system to the Navy for use by the special forces. This now allows select group of special forces personnel to start evaluating the DAVD technology on live missions. We are providing all support required to ensure the success of this program and the rollout of the technology to the special forces market. We also delivered the final deliverables under the funded DAVD untethered system hardening program to the foreign Navy sponsor. This now puts this foreign navy in a position to start using the technology in live missions. Now turning to third quarter highlights. Relating to our core business, the Marine Technology business. This business sells its products and solutions worldwide and increased revenue in the third quarter by 30.7%. Key highlights include 57.7% of revenue generated by this business relates to Echoscope and 42.3% relates to DAVD. Hardware sales increased by 103.6% and were $2.7 million compared to $1.3 million in the third quarter 2024. Hardware sales to Asia decreased by approximately 27.9% and were $1.1 million compared to $1.5 million in the third quarter 2024. This resulted in lower commission costs. Rental assets were significantly underutilized in the third quarter resulting in lower units of rentals and associated services. This also impacted on the gross profit margins of this business. This reflects the change in U.S. policy on funding for offshore renewables, which caused many projects to be shelved as reported by Shell, Orsted and BP. Now turning to highlights relating to the Marine Engineering business. In the third quarter, our Marine Engineering Business revenue decreased by 33.2% caused by delays in receiving contract awards. Gross profit margin in the third quarter 2025 was 58.9% compared to 62.6% in third quarter 2024, which reflects the mix of engineering projects in the period. This business has long-standing relationships with prime defense contractors and has served the defense market for over 48 years. It is reliant on receiving funding on the defense programs. During the third quarter, it continued to see an increase in the level of inquiries on the defense programs. However, many programs are still waiting for funds to be appropriated under the federal budget, and therefore, this affected contract awards to the engineering business in the period. The success of the marine engineering business is predicated on increasing the number of programs to which it supplies proprietary parts. Now turning to highlights relating to the newly acquired business unit, Precision Acoustics Limited. In the third quarter, this newly added business unit contributed 20.6% to our net revenue and 18% to our operating income. This business unit has added some diversification and resilience to our revenue structure. We continue to be very pleased with this acquisition, which we made in October 2024 and reiterate that it positions the group to collectively respond to larger defense requirements, particularly in the underwater acoustics space. We continue to make it our priority to focus on executing against our growth strategy. And in the third quarter, we saw an increase in sales of both Echoscope and DAVD. Blair Cunningham, our President of Technology, who is the market maker for our technologies will be updating you on progress and various milestones around our core technologies. Blair will also be available to answer any questions you may have about our technologies, so please use the opportunity to raise such questions during the Q&A session, if you have any. I will now turn the call over to Blair Cunningham. Blair Cunningham: Thank you, Annmarie, and good morning, everyone. Today, I will focus on progress that we have made around our core technologies, Echoscope and DAVD. The Echoscope, our flagship technology, the Echoscope continues to represent the largest opportunity for scalable growth, particularly within the defense and security market. This sector is undergoing a transformational shift driven by the increasing deployment of next-generation underwater vehicles and platforms, including manned, unmanned, surface, subsurface and fully autonomous robotic systems. The latest generation of underwater vehicles, including drones, is trending towards smaller form factors, creating newer opportunities in the subsea market. To meet this demand, we've spent the last 2 years developing a new series of compact real-time 3D imaging sonars, supported by a significant investment in our next-generation custom technology chipset. This breakthrough IP investment has enabled us to miniaturize our advanced imaging technology for key defense and commercial applications. The first products in this line are now on the market, and I commend our R&D team for their exceptional work in making this possible. Designed to meet the evolving needs of underwater vehicles and platforms in the defense sector, we are excited to report that we have now launched our ultra compact real-time 3D imaging sonars, the Echoscope PIPE NANO GEN Series. These next-generation sonars enable small platforms to enhance situational awareness and consolidate multiple sensors into a single power efficient unit, delivering both 3D spatial awareness and forward-looking obstacle avoidance. Beyond subsea vehicles, the NANO GEN SERIES is also ideal for diver wearable systems, diving platforms and a wide range of underwater robotics. We've already concluded several successful trials in the quarter with our NANO GEN Series sonars, with key defense customers who are excited about the technology and have started to look at this integration into programs. Looking ahead, I will personally be involved in 3 additional trials in Q4 with both the U.S. and international naval forces, including integration into subsea vehicle platforms and special forces diver systems. This level of engagement reflects the strong market interest we anticipated and validates the strategic importance of this product line. Our Ship Hull scanning solution developed under a multiyear funded defense program received additional funding this quarter, marking a key milestone in the continued validation and deployment of this technology. This expanded investment includes the integration of another variant of our real-time 3D imaging sonar, Echoscope PIPE CIVS, which is used for close-in inspection missions. The original SLIDE platform has been significantly enhanced to support a wider range of diver missions. In addition to its core applications for ship hull scanning, the platform now includes capabilities for infrastructure inspection and sea dive mapping, enabled by forward and downward-looking imaging functionality. This expansion follows successful trials and continued confidence from the defense customers. The integration of our CIVS close-up visualization sonar has demonstrated exceptional performance in delivering real-time close range imaging, critical for detailed target detection and conducting complex inspection tasks in confined or challenging under water environments. A final Phase 3 evaluation is scheduled for October with the original U.S. defense customer, focused on validating the ship hull scanning solution in operational conditions. A second SLIDE system was delivered during the quarter to a foreign Navy as part of a larger DAVD special forces development program. This international deployment utilizes the same technology platform, including our DAVD Diver augmented vision display software and support seabed and infrastructure mapping applications. These 2 deployments now with distinct defense customers mark a critical transition of our technology from R&D to real-world operational use. We believe our integrated diver SLIDE solution offers the most advanced capability available today for diver-based underwater inspection and mapping. The unmanned underwater vehicle market valued at $4.8 billion in 2024 is projected to reach $11.1 billion by 2030, driven by the growing complexity of maritime threats and the demand for cost-effective, low-risk technologies. As a result, ROVs, UUVs and underwater drones are becoming critical components of modern defense strategies worldwide. In general, the Echoscope currently accounts for approximately 80% of Marine Technology business revenues. With the launch of the NANO GEN Series and strong ongoing customer engagement, we are well positioned to capture significant value in the expanding defense and underwater robotics markets. DAVD, the other significant pillar of our growth strategy is the DAVD, diver augmented vision display, a cutting edge of mounted reality technology, purpose built to enhance divers safety, performance and situational awareness and low visibility and technically demanding underwater environments. The DAVD Untethered System, which represents the largest growth opportunity for this transformative technology achieved 2 critical milestones during the quarter. For context, in the U.S. alone, there are 14,000 divers within the potential community of government and defense users for the untethered system. Firstly, the initial order of 16 complete DAVD Untethered Systems received in Q1 was successfully delivered in Q3 and is now ready for fleet evaluation by U.S. special forces. These systems are the combination of extensive field testing and direct feedback from operational divers, funded under the DUS Hardening program. The advancement in this specific deployment is the system's seamless integration with the U.S. Navy's Mark 16 underwater breathing apparatus. This integration allows real-time life support data, including system status and alerts to be projected directly into the DAVD augmented reality head-up display. The second key milestone achieved during the quarter was the completion of all remaining system component deliveries to the foreign Navy sponsor of the DUS Hardening program. This marks a significant step forward in demonstrating international alignment and growing global interest in our data technology. Together, these milestones validate the technological maturity of both the DAVD tethered and untethered systems and marks a critical inflection point in our trajectory from development and field testing to active fleet evaluation and operational deployment. Importantly, both U.S. and international program partners remain committed to comprehensive fleet evaluations and live mission evaluations throughout the year, underscoring the strategic relevance and near-term potential of our data technology in next-generation underwater operations. In Q3, we received an initial order for DAVD systems from a major European Navy with extensive diving operations and regional influence, an organization we've been actively supporting. In Q4, I would personally lead our team in supporting this navy during real-world dive missions in operational waters, deploying our latest DAVD tethered systems alongside the Echoscope underwater inspection system, a rapid response, mobile inspection and mapping platform designed for seamless DAVD integration. Notably, this is the same UIS configuration used by the U.S. Navy supervisor of salvage and the U.S Army Corps of Engineers during the Francis Scott Key Bridge collapse response. This upcoming deployment further underscores the operational maturity and versatility of both the DAVD and Echoscope UIS technologies as well as our continued support for frontline military and infrastructure response missions worldwide. Finally, we are pleased to report a significant increase in active development programs centered around our DAVD technology, reflecting strong momentum in expanding DAVD Systems capabilities, integrating DAVD with additional platforms and broadening support, of course, a wider range of operational environments. Among the most notable new programs, DAVD, along with the newly launched Echoscope PIPE NANO GEN Series is being integrated into the U.S. Navy's Deepsea expeditionary with no decompression or DSEND system. The DSEND system features a lightweight, hardened atmospheric dive suite designed for extreme underwater missions, the suite incorporates rotating detachable joints to provide divers with increased dexterity, flexibility and maneuverability in challenging environment. This program is sponsored by the Office of Naval Research in collaboration with 3 U.S. Department of Defense entities, NAWC, NUIC and NSWC. DAVD is being leveraged as a critical life support and visualization component of the DSEND system, enhancing diver safety and mission effectiveness by delivering real-time life support data via the DAVD Head of Display and 3D situational awareness through the compact Echoscope PIPE NANO GEN sonar mounted directly to the DSEND suit. This initiative exemplifies the growing recognition of DAVD and Echoscope technology as mission-critical tools in the evolving landscape of advanced military diving and underwater operations. We are currently awaiting the outcome of 4 additional U.S. Department of Defense proposals, all of which are in the final evaluation stages are anticipated to move forward into immediate execution upon award. Each of these proposed programs focuses on the integration of our DAVD system and Echoscope sonar technologies with robotics platforms, further expanding our role in the evolution of autonomous and semi-autonomous underwater systems. The timing of these opportunities aligns perfectly with 2 major recent milestones. The finalization of the DAVD untethered system and the launch of our new Echoscope PIPE NANO GEN Series, a suite of compact real-time 3D imaging sonars optimized for small and robotic platforms. These pending awards reflect the growing demand for underwater, vision and augmented reality technologies in next-generation defense systems, and we are well positioned to support this strategic shift. I will turn the call over to Annmarie and I will be available to take your questions during the Q&A session. Annmarie Gayle: Thank you, Blair. Let me now turn the call over to our interim CFO, Gayle Jardine, to take you through our financials for the third quarter 2025 before I provide my closing remarks. Gayle? Gayle Jardine: Thank you, Annmarie, and good morning, everyone. I will now take you through our third quarter fiscal 2025 financial results. For reference, all income statement comparisons are with third quarter fiscal 2024, and all figures are in U.S. dollars. Starting with revenue. In the third quarter of 2025, we recorded total revenue of $7.1 million compared to $5.5 million in the third quarter of 2024, an increase of 29.0%. Our core business, the Marine Technology business generated revenue of $4.0 million compared to $3.0 million, representing a 30.7% increase over the third quarter of last year. Our Acoustic Sensors and Materials business, which was added to our group in October 2024, recorded revenue of $1.5 million. Our Marine Engineering business or Services business generated revenue of $1.6 million compared to $2.4 million, representing a 33.2% decrease over the third quarter of 2024. In summary, our net revenue increased by 29%, and the newly added business, Precision Acoustics added 20.6% to our consolidated revenue in the third quarter of 2025. Moving on to gross profit and margin. In the third quarter of 2025, we generated gross profit of $4.8 million compared to $4.0 million in the third quarter of 2024. Consolidated gross margin was 68.3% versus 73.9% in the third quarter of last year. In our Marine Technology business, gross margin decreased to 77.0% in the third quarter of 2025 compared to 82.9% in 2024, reflecting the mix of sales with more units of hardware sales compared to rental sales. The Acoustic Sensors and Materials business realized gross margin of 54.8%, a little lower than the previous 2 quarters, reflecting increased commission costs and mix of sales. Our marine engineering business gross margin decreased to 58.9% in the third quarter of 2025 versus 62.6% in the third quarter of 2024, again, reflecting the mix of engineering projects during the third quarter 2025. Now looking at our operating expenses. Total operating expenses for the third quarter of 2025 increased to $3.4 million compared to $2.7 million in the third quarter of 2024. The main factors for the increase in total operating expenses with the addition of Precision Acoustics Limited into the group, which added 16.0% to these costs as well as the weakening of the U.S. dollar against the British pound and Danish krone, which impacts costs when translated into U.S. dollars from the base currencies for reporting purposes. Our selling, general and administrative costs in the third quarter of 2025 totaled $2.9 million, an increase of 32.8% from $2.2 million in the third quarter of 2024, reflecting the addition of the new business unit to the group as well as the contingent liability accrual for year 1 earn-out related to the acquisition of Precision Acoustics Limited and exchange rate adjustment charges. As a percentage of revenue, our selling, general and administrative costs for the third quarter of 2025 were 40.6% compared to 39.5% in the third quarter of 2024. Operating income in the third quarter of 2025 was $1.38 million compared to $1.39 million in the third quarter of 2024, a decrease of 0.8%. Operating margin was 19.5% compared to 25.4% in the third quarter of 2024, which we attribute to the increase in cost of revenue and operating expenses for the reasons explained earlier. Pretax income in the third quarter of 2025 was $1.5 million compared to $1.6 million in the third quarter of 2024. Net income after taxes in the third quarter of 2025 was $1.28 million or $0.11 per diluted share compared to $1.27 million also $0.11 per diluted share in the third quarter of 2024. Focusing now to our balance sheet. As of July 31, 2025, with $26.2 million in cash and cash equivalents on hand and no debt. This represents an increase of $3.7 million from October 31, 2024, with the comparable figure was $22.5 million. Finally, to summarize the financial impact in the current quarter of the introduction of the Acoustic Sensors and Materials business into the group, it contributed 20.6% of revenue and gross profit margin was $0.8 million or 54.8%. That completes my financial summary. So let me turn the call back over to Annmarie for her closing remarks. Annmarie Gayle: Thank you, Gayle. I'm very pleased with the increase in revenue in the third quarter 2025 and our overall financial results. I'm also pleased with the progress we're making against our key milestones for growing our business. Some of these include the delivery of the 16 DAVD systems for the U.S. Special Forces evaluation. The delivery of the final DAVD deliverables to the foreign navy sponsor under the funded DUS Hardening Program. We believe the Hardening Program has been a success, and we are starting to see the positive results of this. The launch of our NANO GEN Series sonars which together with our existing sonar range puts us in a position to address the sizable portion of the imaging sonar market. The receipt of our first order from a foreign navy for the DAVD untethered system, this order, which is for 2 systems is from a very influential European navy. We are very pleased with this as we believe this will be the precursor to broader adoption by this influential European Navy. We continue to work to create stable, long-term shareholder value and execute against our strategy to grow the business which is our single biggest priority as a group. In terms of cash deployment, we will continue to prosecute our M&A strategy in fiscal year 2025 and are continuing to build our M&A pipeline. Through our strategy, we aim to pivot the revenue model of the Marine Technology business to a multiyear multiple sales model as we've started to see with DAVD product line. To conclude, we would like to thank our shareholders for their continued support. We're now happy to answer any questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Unknown Analyst: This is Kevin for Brian. With the launch of the Echoscope PIPE NANO GEN Series and its trials during the quarter, what type of feedback have you guys received so far? Annmarie Gayle: Blair, would you like to take that, please? Blair Cunningham: Certainly, Annmarie. Thank you very much, and thank you again for the question. I think the most striking feedback from all of the customers that have seen the system is the remarkable reduction in form factor, size and weight, which is critical as we can outline for the new vehicles that are coming into the market. So really, that's been transformational. Many of these customers are familiar with the Echoscope performance so that we were delivering the same again, but in a much, much, much smaller form factor. So I think everyone is very excited to look for new opportunities of where they can now integrate the Echoscope into their platforms where perhaps size or weight perhaps that prevented them from doing so in previous development organizations. Annmarie Gayle: And just to like to add to that, the DSEND program, which Blair cited earlier that's a very, very good example of the sonar actually being in a diving suit with our previous generation of sonars that wasn't possible because of the form factors. So really being able to reduce the sonar to the size of almost a smartphone really opens the aperture for our business and the potential for opportunities to expand opportunities base. So we're very, very excited about this because our previous generation of sonars is a bit bigger, would be locked out of applications like the DSEND. So opening the aperture and getting more -- reducing the form factor of sonar and therefore, having the opportunity to broaden the scope of what we can do on smaller vehicles is a seismic move forward for our business. Unknown Analyst: Great. And then congrats on all the progress on the DAVD -- the untethered DAVD program. During the March conference call, you commented the company is targeting $4.5 million in DAVD related revenue. Can you talk about what transpired since then that target in the press release today is $3.5 million to $4 million? Annmarie Gayle: Well, we're still -- I mean we think we're going to hit $4 million in DAVD revenues so for this fiscal year, which we think it's really, really significant given that last year, we did $1.2 million. So still seeing really significant move forward with the DAVD product line, and I feel very, very happy with this year potentially hitting $4 million in revenue being $1.2 million last year at the same time. So really happy about that. Operator: [Operator Instructions] Our next question comes from the line of Richard Deutsch with Private Investor. Unknown Attendee: Yes. And congratulations to your R&D team over the past few years. I followed the progress, and it's vast. In fact, that's one of the hard parts of understanding your company is how many opportunities you have with the technology that you've produced. So I have a few questions, but I'll start off with one. In terms of your exposure to China or countries that we're not looking to do business with, what should we be thinking about in terms of sales opportunities or lost opportunities? And also the supply chain in terms of getting critical components, parts and supplies. That's my first question. Annmarie Gayle: Well, thank you very much, Richard, for that question. In terms of supply chain, we're really not exposed to China at all. So most of our products components are originating mainly from Europe so we don't really have any exposure in terms of supply chain in China, not significant at all. In terms of selling to China, really, that was an issue from more than 5 years now that because for the U.K. government, for example, has made it really difficult to get export licenses to China. So for a long time, that market is rather tame for this business due to the barriers to import products into China. So although we have a strong presence in Asia, China is not our biggest target market, although there are lots of opportunities in China, it's not the biggest target market for our business. Unknown Attendee: Okay. And one more here on your technology. I've been impressed at how superior it appears to be over many years and the developments you keep making just keep pushing that envelope forward. But I've been surprised we've had quarter after quarter of sales that have not really expanded very much. So I want to know, is Echoscope still your main short-term revenue driver in terms of overall revenues? And why has it taken so long? And what are the impediments or the opportunities short term in the market considering your technological advances. I don't understand why the sales have been not going up faster. Annmarie Gayle: Okay. So just to remind you, in this quarter, the Marine Technology business sales went up by 30.7%, I believe, and hardware sale component also went up significantly. And I think, yes, by 103.6% and within that mix, it's mainly Echoscope and DAVD. So that's the first thing to see that we do believe that we're making good progress. In the quarter, the disappointing part of our quarter is really about rentals where rentals have decreased largely because of the shift in funding opportunities for offshore renewables. And while we believe that in the longer run, that will be offset by more projects for oil and gas, it still takes time to spin up a development. So overall, I think that we're making good progress. But really, as I've emphasized over and over for the business to grow, we do, I mean, a sizable part of our revenue comes from the commercial offshore marine market. The model for that market is different because then often a sale is a single sale or rental, really, the opportunity for sizable or scalable growth lies in the defense space. And that's a process. It's not an event. I believe we're making all the right progress to get the technology into programs where the technology is being looked at for integration into these broader programs. And last quarter, I did report on some significant findings for some of the defense programs that have evaluated the Echoscope technology and concluded the Echoscope is superior in terms of its performance and capabilities. So I do believe we're making progress in really, where it matters is the defense market because there, first of all, there's budget, and then there's opportunity for multiple sales, recurring sales. And that's what we're targeting. And we're starting to see some of that from the DAVD product line where we're seeing year in, year out budget now being appropriated for that line of products with pull-through Echoscope sales. So overall, I feel the pace is a bit slow, but that is not unusual for programs that they take a longer time in evaluating the technology and once it's really then adopted, that's when we start seeing the sales that we would like to see. And a critical juncture we've reached in this quarter also is the successful conclusion of the hardening program for the DAVD where I think that program is 2 years ago, it started where the whole purpose of that was to deliver prototypes for evaluation by operational divers in the special forces and really getting feedback and refining the technology, we have now delivered what we believe is the refined product for this key market. So I do believe that we're making really good progress against the key milestones that are important for the growth of the business. Unknown Attendee: And just one final question. Your M&A program is interesting, but I wonder why -- we'd like to hear what your thoughts are on the stock buyback program as your company is extremely attractive itself as an M&A target. I'd like to hear what thoughts are about reducing the shares through a stock buyback program. Annmarie Gayle: Sorry, I'm not sure what the question is. Unknown Attendee: The question is, what status and thoughts do you have about a stock buyback program for Coda shares? Annmarie Gayle: Well, that's something for our Board to think about. And I'll raise that with our Board, but really that's really a board decision on stock buybacks. So right now, I feel very much in terms of our M&A program, we're building a pipeline of opportunities for the business and looking for value-accretive technologies that may be highly complementary to the dated product line. That's our thinking on our M&A strategy for the time being. Unknown Attendee: Really stunningly great work that you guys are doing. Looking forward to continuing to follow you. Operator: There are no other questions at this time. I'll turn the floor back to Ms. Gayle for any final comments. Annmarie Gayle: Okay. Thank you, operator. Thank you for attending today's call. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Operator: We have started now the webcast, so you're ready to begin. Thank you very much. Unknown Executive: Dear ladies and gentlemen, welcome to Solidcore H1 2025 Financial Results Webcast. Today on the call, we have the company's CFO, Evgenia Onuschenko; and the CEO, Vitaly Nesis. Our presentation will be followed by the Q&A session and you can submit your text question online using the webcast platform. Now over to Evgenia. Thank you. Evgenia Onuschenko: Thank you. Ladies and gentlemen, thank you very much for joining our call today. I'll begin with a brief overview of our half year financial results, followed by an update on our key development projects and the company's outlook. But first, the safety update. We are pleased to report that we recorded no fatal accidents or lost time injuries among either our employees or contractors. This result is consistent for several years already and reflects our commitment to ensuring a safe working environment at all our operations. Next, please. So turning to the financial and operational highlights. Let me first provide a brief overview of the macroeconomic context. In the first half, the gold price averaged just over $3,000 per ounce. That's almost $500 higher than the 2024 average, an increase of about 18%. It provided a strong cushion against the temporary sales challenges we faced in the first half. On the currency slide, the tenge averaged 512 to U.S. dollar. Compared with the last year, it depreciated by 14% and offset the effect of domestic inflation, which is running close to 12% now. Our performance in the first half of the year was shaped by 2 main factors, most significantly by the delays in processing of Kyzyl concentrate at the third-party plant in Russia and obviously, by gold price. Both our operations performed in line with the plan, but because of the delay in toll processing of our concentrate, that meant that a significant portion of sales was pushed into the second half of the year. So as a result, our financial metrics showed a marked year-on-year decline. However, now when the stockpiling of the Kyzyl concentrate has started, we expect to see a strong rebound in operating cash flow in the second half. Despite the temporary challenges in concentrate shipments, our business demonstrated resilience. Revenue reached $325 million. EBITDA margin was 47%. We delivered roughly $100 million in underlying net earnings. And we ended the second quarter with a solid net cash position of $143 million. Next, please. So looking at production, total gold equivalent output fell 50% year-on-year. Varvara run according to plan with a modest 9% decrease, driven by the planned decline in Komar and third-party ore grades, which naturally led to lower sales volume. At Kyzyl, we mitigated part of the impact by redirecting some concentrate sales for alternative channels, including China and a local producer. But our biggest customer is still Kazakhstan's largest state-owned gold refinery, which then sells the gold on the -- to the National Bank of Kazakhstan. Next, please. As I mentioned before, revenue is expected to be materially weighted towards the second half of the year. The good news that as a result, we will benefit from even higher gold price we are seeing now. At Varvara, stronger commodity prices helped to partially offset lower grades and volumes. Next, please. So our total metal and circuit inventory increased by 170,000 ounces by end of June, mainly represented by gold and concentrate at Kyzyl. Most importantly, concentrate processing and sales stabilized in the third quarter. We delivered 48,000 ounces to Amursk in July and August and bringing concentrate inventory levels down to about 170,000 ounces. We expect the release of the majority of accumulated concentrate by year-end, but portion of stockpiles will be carried into 2026. So as a result, our full year production guidance has been revised down by 11% to 420,000 ounces. Next, please. So turning to costs. Total cash cost increased mainly for 2 reasons. So first, the deferral of Kyzyl sales, which meant that costs were spread over fewer ounces sold. And second, domestic inflation combined with higher mining taxes linked to the gold price. Looking ahead, as sales normalize, we expect total cash cost to come down in the second half and finish near the upper end of our original guidance range of $1,000 and $1,100 per ounce. Next, please. At the asset level, Kyzyl cash cost in the first half weren't really representative because of the deferred sales. At Varvara, total cash costs were 14% higher year-on-year, mainly due to the planned decrease in grades. Next, please. All-in sustaining cash cost dynamics was driven by the same factors as TCC, plus higher sustaining capital expenditure for fleet renewal and more capitalized stripping at Komar mine. For the full year, we expect all-in sustaining cash cost to land within the revised range of $1,450 to $1,550 per ounce or about $100 higher than our original guidance, and this is mainly due to a stronger than budgeted tenge exchange rate and lower projected sales at Kyzyl. On the next slide, you can see the all-in sustaining cash cost by asset, which illustrates exactly what I've just explained. Next, please. Adjusted EBITDA for the first half was $152 million, of which like $125 million was contributed by Varvarinskoye mine. The EBITDA margin stood at 47%, so still demonstrating solid profitability despite the significant reduction in ounces sold. The reconciliation shows that while higher gold prices obviously helped a lot, this was more than offset by the reduction in sales volumes and high per ounce cash costs. Next, please. We closed the second quarter with a solid net cash position. Our operations generated $75 million in operating cash flow before working capital changes, while about $160 million remained tied up in working capital and $145 million were allocated to investments. Next to balance sheet. So our balance sheet continues to demonstrate resilience and financial flexibility. Gross debt stood at $208 million with an average interest rate of 5%. As of the end of June, we held approximately $350 million in cash, and we had $139 million of undrawn credit lines. In July, we further enhanced liquidity by signing a $100 million credit facility with ING Bank, which is expected to refinance some of our maturing debt facilities. And thanks to significant the stockpiling in July and August, Solidcore ended like summer with approximately $535 million in cash and a net cash position of $250 million. Next, turning to our investment program. Growth remains our #1 priority. So in the first half, we spent $128 million on capital expenditure. About half of that went into the Ertis POX project, which is now moving into full-scale construction. We also invested approximately about $11 million in renewable energy projects at Varvarinskoye. And the rest, around 30% was spent on sustaining operations through technical upgrades, fleet renewals and capitalized stripping. Overall, our capital expenditure program strikes the right balance between growth, green initiatives and keeping our operations running sustainably. Looking ahead, next year, we will move into a more capital-intensive phase with the advancement of the Ertis construction and preparation of the definitive feasibility study for the Syrymbet project as well as preparation for the underground mining at Kyzyl and the potential launch of the new solar plant project at Kyzyl. So now let me update you on our growth projects. At Ertis POX, basic engineering is now 85% complete with the detailed engineering already launched. Procurement is progressing. The autoclave was delivered to Pavlodar port. So construction of the autoclave foundation is underway and expected to finish in the fourth quarter. The Syrymbet project received a positive state expert review for temporary facilities. Basic engineering has started like with process design specification expected in the fourth quarter this year. The Board has approved investment into the pre-feasibility study and the approval is expected in the second half next year. Turning to Bai Tau Minerals exploration portfolio. The geological and technological studies continue with the mineral resource estimate expected in the first half of 2026. We will be ready to make a final investment decision in the second half of 2026. In the meanwhile, we acquired a 10.7% stake in Besshoky, which is the flagship copper project in the Bai Tau exploration portfolio for $15 million from minority shareholders. The acquisition of 51% interest in Tokhtar pending regulatory approval. Apart from then, we are looking at some early-stage exploration projects and continuing our near-mine exploration campaigns, which we expect will translate into resource and reserve growth. Next, at Ertis POX, construction continues to advance. Work on the autoclave foundation and POX frame is underway as well as preparation for on-site roads, as you can see from the photos. The project remains on schedule, and it is an important step in removing our dependence from third-party concentrate processing and offtake. With the completion of the bankable feasibility study, our discussions with potential lenders are now entering the active phase. So we are aiming at signing the facility documentation in the second quarter next year. Turning to guidance for the year. We maintain our revised production guidance of 420,000 ounces, which reflects the concentrate deferrals. Total cash cost guidance remains on track. All-in sustaining cash cost guidance has been revised upward, as I mentioned before, due to currency effects and lower projected sales at Kyzyl. Capital expenditure guidance is unchanged at $300 million. So going forward, given the current record price and the strong sales in the second half, we expect a substantial positive free cash flow from operations for the full year. And here on the last slide, you can see the sensitivities of our key metrics to possible changes in the macroeconomic parameters. To conclude, we expect the second half to show a substantial improvement over the first half. We are confident that the release of Kyzyl concentrate will restore sales volume and return us to the positive free cash flow. Thank you for your attention. And with that, we will be happy to take your questions. Vitaly Nesis: Hello. This is Vitaly Nesis, the CEO of Solidcore. Will the efforts from the drilling campaign replenish the year's production? I think if we include the Tokhtar, which hopefully will be on our balance sheet by the end of the year, we will replenish the production. Does management believe that there is an increased risk of a hostile takeover of the company as the share price seems to be lagging behind the price of gold? I personally believe this risk is de minimis because we have a very strong and committed shareholder Oman Investment Authority. And as far as I understand from communication with other significant institutional shareholders, they fully understand the reasons for the lower share price and are prepared to wait out, not ready to sell at these price levels or even at the level significantly above the prices. Are there already plans and contracts with alternative buyers for the Kyzyl concentrate? Yes, we are working closely with Kazakhmys. We have successfully delivered a trial a lot of concentrate to one of their copper smelters, and we plan to expand our cooperation in the fourth quarter. Clearly, the alternatives for almost POX would present a major risk mitigation opportunity for the company. What KPI to be achieved for solid quarter pay dividend in 2025? As we have mentioned before, it's not about financial KPIs, it's about our progress towards the resolution of the situation with the shares locked in Russia under NSD. This is the barrier to paying a dividend. And unfortunately, this barrier will not be removed this year. Can you please provide an elaborate answer regarding what exactly happened in the most cost and why? Well, in a nutshell, the start-up of the new circuit took significantly longer than originally expected. Why this happened? My best guess is the sanctions against Russian mining minister play a big role. In terms of the cash going down, well, yes, it did go down. On the other hand, as a result of this delay in monetization of concentrate, we now hopefully will be able to get higher prices for our material so we inadvertently became the net beneficiaries of the gold price dynamics. So no course for worrying too much. When you sell the stockpiles, will you get the spot price? Yes, we will get the spot price. Can you provide an environmental permit time line for the POX facility? Now we expect to get the full final permits in the first quarter of the next year. What are your expectations for an underground transition at Balkhash? When do you expect feed and what studies will be required prior to that? When do you expect to begin development and produce the first underground ore? The feed is completed. We are now in the process of basic engineering. Now we expect to start underground development at the end of 2026, mine first underground ore in 2030. What is current expected timing for the feasibility study ahead of 2026? Do you expect to develop this on your own or in partnership? The pre-feasibility study has been completed. We are now in the middle of definite feasibility study, which will be completed in the second quarter of the next year, paving the way for the final Board decision. And we will manage the project. I'm not sure what definite mineral is. We will manage this in partnership with our partners, Lancaster Group, but they will definitely take a passive role in terms of project development, project execution [ process ]. I already mentioned the nature of the delay in terms of processing agreement in Russia, that's the start-up of POX-2 line at Amursk. And any new gold assets that you are looking at? Unfortunately, the recent explosion in gold price drove the expected valuations of the potential gold targets skyward and some of the M&A opportunities we've been actively looking at are now priced at the levels that we believe are not appropriate. So M&A is currently -- I wouldn't say on the back burner, but I just don't think we'll be able to clinch any significant new deals this year. Evgenia, over to you. Evgenia Onuschenko: Okay. You've mentioned the expected CapEx increase in 2026. Can you provide an approximate estimate, please? We are looking at roughly $400 million, maybe $450 million next year, but we will provide our capital guidance for the next year closer to the -- like in the fourth quarter as usual because we're still finalizing our plans. Does management consider gold price hedging as an option for Solidcore? No. We prefer to have full upside -- to keep full exposure to the gold price upside. Is there any discussion to achieve a secondary listing on either London Stock Exchange or another exchange? Our priority at the moment, we are more focused on completing our -- like the main development projects. And also, first, we need to remove our links with the Moscow Exchange. So we initiated the final exchange offer, and we plan a final buyback this year. This is the important step before we think about any potential new listing on the international markets. Is there any effort to capture more analyst coverage of the stock? Yes, it is one of our priorities. I think we expect maybe 1 or 2 new initiations and coverage next year. And I think with that, I will probably finish the Q&A session. Is there any other questions from our webcast call? Unknown Executive: No, I believe that nothing is left. Laura, there are no more questions, so you can proceed with finishing the call, please. Operator: All right. Thank you very much.
Operator: Good morning, ladies and gentlemen, and welcome to the Bango plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However the company can review all questions missed today and we'll publish all those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Bango plc. Paul, good morning, sir. Paul Larbey: Good morning, and welcome, everybody, and thank you so much for your time this morning to go through our first half '25 results. So myself will walk you through an overview of Bango, highlights of the half, a lot more details on the financials. And then, I want to talk a little bit more about the DVM opportunity, in particular. At this time, I'm going to zoom in on what's happening in each geographical region from a telco perspective, just you can see the different dynamics of the geographies in which the DVM is gaining great success and then we'll end with a quick highlights and outlook. As always, these are more beneficial, I'm sure, if they're interactive. So please do submit Q&A as we're going. We'll sort of keep them to the end. I'll try and address them all again. And if there's anything you've submitted that we think we've answered, we'll sort of address those again if it's not clear. So just as a reminder, when we -- you'll see this, we'll cover as we go through the presentation. We have Bango in -- Bango has really, sort of, two distinct businesses. The transactional business, which is primarily the direct carrier billing business, that's where you can purchase something, pay for it on your mobile phone, here, the example obviously been PokeCoins in Google Play Store, but also physical goods from Amazon in Japan, for example. And then on the other side, the subscription business, very much focused on the Digital Vending Machine. That's really our market-leading platform for bundling of subscriptions, allowing anybody who has a subscription service to distribute that through a channel. Two very different business models, common technology platform in the middle. But On the transactional business, it's where it's a percentage of the retail price. And in the Digital Vending Machine, that's that SaaS model with that setup and one-off fee plus the license fee that generates that ARR that we've seen increase through the period. So two businesses, very much we'll cover both as we go through the deck. Underpinning both of those, if you step back and think of a very simple position, we're in the fortunate position where if you look at the customers, the companies that are connected to the DVM, it's sort of all the logos you would ever want to see, right, some of the biggest companies in the world, some of the biggest telcos, some of the biggest content providers and actually some of the largest of the West Coast technology providers all use the DVM to help them scale their business. And really, the fundamental and very simple value proposition is you connect once and you access many. And that doesn't matter whether you're on the payment side of the business on DCB or the Digital Vending Machine. By connecting once into Bango, we give you access to hundreds of people on the other side of that equation. So if you're a content provider, you get access to hundreds of telcos. If you're a telco, you get access to hundreds of content providers. And you can see there the speed and scale is really how we've been differentiating, especially on the DVM side of the business, where we can launch services quicker than anybody else in the market. Disney there in 4 weeks, NBA in 3 weeks and, with Verizon we launched over 40 in 20 months. So really that, that speed and scale is what the platform is really about. But as we go through the deck, you'll see it's going way beyond that and the value that the platform provides goes beyond that. But I think that's a good element to keep in your mind as we go through the rest of the presentation. We're all about being the place where people subscribe and our strategy for growth, as you'll see, if you read the RNS, is broken down into what internally we call the 4Es. So that's Expand, that's continuing that growth in the telco sector. Enhance is about looking at how we use the data we have in the platform to differentiate the content providers. That's one of those sort of strategies that's sort of more in the sort of mid- to long term. We're very early in that enhancement at the moment, where we're looking at what data we have and how we can add value to the content providers because ultimately, we'd like to monetize both halves of the marketplace, both the reseller as well as the content provider. Explore is all about looking at new verticals. You obviously announced at the back end of last year, Continente in Portugal, actually retailer, lots more pipeline developing in those markets, and we certainly see great interest. And I'll share a little bit later some survey results we've done with different content providers and so you can see the sort of verticals that they're looking to move to after telcos. And then Extract, that's about making sure we manage that payments business for cash and profit. And you'll see in the first half, we obviously finished the migration and integration of the DOCOMO digital business. So that's well and truly behind us now, and Matt will talk about the financial impact of that a little more as we go through the rest of the deck. So just in summary, and I'll turn it over to Matt. You see a great set of financials for the half. You see both the total revenue and the transactional revenue continue to see good growth around 30-ish percent CAGR over the past 3 years. Matt will talk a little bit more about the dynamics of that transactional business between those high cost of sales routes and the core revenue, but the core business really continuing to see good growth at around 10%. DVM business, again, continuing to scale, 49% growth CAGR over the period. And that sort of top line growth, coupled with the optimizations we've made in a cost perspective, see that increasing level of EBITDA. So significant EBITDA growth year-on-year from first half '24 into first half '25. Well, that DVM business is really driving that growth in the ARR business. That's up 20% year-on-year. Net revenue retention, that's a measure of the growth in existing customers. That should be our -- our aim is that also should be above 100%. It's naturally a little bit lumpy, especially in the small business depending where customers are. But keeping that above 100% shows that existing customers are growing, and we continue to have no churn once networks and customers are live. And that's a really, really solid part of the business is this continuous growth, because of the way the license structure is tiered as we manage more and more subscriptions for our customers. Momentum is building in the funnel. We had seven new DVM deals in the first half of the year. We added another one, obviously, we saw with MTN at the back end of last week, and the funnel is really, really well populated for 2025. And our focus is really getting those deals through the funnel as fast as we can, so we can get them live, get them integrated and get them launched. And that's really what will sort of continue to drive that growth of the business moving forward in addition to the growth in existing customers. So with that, I will turn you over to Matt to run through the financials. Matthew Wilson: Super. Thanks, Paul. Good morning, everybody. Welcome to the earnings call for Bango's first half results, 2025. Overall, a solid period, reflecting both the financial discipline and the continued execution of our growth strategy. We've made strong gains in recurring revenue. Our gross margin has expanded and our operating expenses have reduced. All three of those pillars helping deliver a 66% increase in adjusted EBITDA. Thanks, as always, to the Bango team globally for making this happen, and I'm pleased to now walk you through the highlights for the period. Starting with the top line. Revenue grew 5% to $25.2 million and building on a consistent trajectory of growth since 2022. It's important to also highlight the quality of that growth. Our annual recurring revenue increased 20% year-on-year to $15.6 million, and net revenue retention remains strong at 108%. That tells us two things. One, new customers continue to come on board; and two, existing customers continue to spend more. And couple that with the fact that churn across live DVM customers continues to be 0, and it highlights the attractiveness and sustainability of the DVM model as it embeds itself deeper and deeper into the global subscription economy. Moving to the next slide and looking at our transactional business. Revenues held steady at $16.4 million, in line with last year. On the surface, whilst flat, if we look deeper, I believe the underlying picture is a stronger one. In June, I introduced the split of core transactional routes against those higher cost of sales routes acquired from DOCOMO Digital. Both channels have shown different trends in the first half, but the underlying health of transactional payments remains strong. Our core transactional business, which is both more profitable and strategically more valuable, grew 10% year-on-year, adding $1.2 million and rounding off a strong first half. That sales growth was unfortunately offset by the volatility we've seen in the high cost of sales routes as we guided to in June. It's important though to stress with those routes operating at low single-digit margins, the impact on adjusted EBITDA of those movements is minimal. We continue to actively manage these routes with a clear ambition of improving their profitability even if that means stepping back from some lower quality revenue. Overall, with the migration from DOCOMO from the Frankfurt data center now complete, the transactional business is back on a firmer footing, providing stable cash flows and still growing in its core areas. Moving to DVM and one-off. Revenue increased 15% to $8.9 million, reflecting strong momentum in both new customer wins and expansion with existing customers. As Paul mentioned before, we secured seven new DVM customers during the period, including our first in Korea, our first telco in Japan, and further expansion in the U.S. and Europe. The number of active subscriptions managed by the platform has also more than doubled to over 19 million. This underlines the scalability of the DVM model and why we are increasingly being recognized as the standard in subscription model. Turning to Slide 11 on costs. We continue to be very focused on discipline and efficiency. Our core administrative expenses, which is a better indicator of the controllable costs in our business, decreased by $2.2 million over the last 12 months, equivalent to a 9% reduction. On a cumulative basis over the last 2 years, those expenses have reduced by nearly 20%. Despite the FX headwinds in 2025 from a weaker U.S. dollar, we expect to maintain that year-to-date cost reduction for the full year with a further reduction in fiscal year '26. Isolating some of the movements in the statutory reporting, we incurred $1.8 million of cash exceptionals. This includes $1.3 million of one-off restructuring costs to deliver our efficiency initiatives as well as $0.5 million data migration and asset write-down charges associated with DOCOMO Digital. We expect exceptional costs to continue in the second half, but to cease in fiscal year '26. D&A increased by $1.2 million year-on-year as past R&D investments comes online and begins generating revenues. We have not reached the peak yet in the D&A cycle, as it catches up with historical spend, but this will naturally come down as we reduce our CapEx spend going forward. And one can see from the bottom chart, this continues to come down. Consensus estimates forecast a 7% reduction in CapEx this year and a further 14% in fiscal year '26. So putting it all together across the P&L, gross margin improved by 350 basis points to 84.3%, driven by strong core transactional performance, savings from procurement initiatives and an increased weighting of higher-margin DVM activity. The strong performance across recurring revenue, gross margin, and operating efficiency drove a 66% increase in adjusted EBITDA versus the prior year period, reflecting the benefit of higher-margin revenue and disciplined cost control. Adjusted EBITDA margin rose from 17% to 27%. Finance charges increased, reflecting the current debt profile as well as lease interest from our new head office in Cambridge. That's a strategic investment to support growth and talent retention for Bango in the future. While we still reported a net loss of $3.2 million, this narrowed by $1 million versus last year, clear evidence that the operational leverage is delivering. And absent anything unforeseen, we would expect to report positive profit for the year in fiscal year '26. On cash, the story is very much one of investment and transition. As the DVM matures, we continue to put capital into R&D, though at a lower level than last year. Working capital movements and one-off exceptionals from the efficiency initiatives and the refinancing this year, impacting cash generated from operations as expected. We made a big step forward with the refinancing of the capital structure in June, securing a $15 million revolving credit facility with NatWest and an enhanced loan facility with NHN. That significantly strengthened our balance sheet and gives us flexibility to keep investing whilst driving efficiency. Net debt increased to $7.3 million for the half, in line with our expectations, and we ended with $4.6 million of cash on balance sheet. Finally, looking ahead, our priorities are clear: reduce net debt, continue to expand margins and deliver recurring revenue growth. With the refinancing in place, liquidity is strong and net debt will start to reduce in Q4 as the efficiency savings and seasonal inflows materialize. Strengthening the balance sheet was a key focus in H1. And with that delivered, attention turns to driving profitability. Gross margins are improving, core administrative expenses are falling and R&D CapEx is declining as the investment cycle peaks. Those efficiency gains will keep showing through in adjusted EBITDA and particularly cash EBITDA as we look forward to 2026. On the top line, the DVM pipeline remains strong and transactional revenue has a natural weight into the second half. Clearly, the timing of new DVM launches will be a key driver of the full year results, but the momentum we've built so far gives us confidence. Overall, we're currently on track to deliver revenue and EBITDA in line with expectations. And I'll now hand over to Paul to walk you through the DVM opportunity. Paul Larbey: Thanks, Matt. So I thought this is a good place to start. Just a reminder, we've shown this before about the way that bundling itself is evolving. It's moving from -- on the very left, what we call sort of a Basic Bundle that's where one particular content service is tied to a particular mobile or telco plan, into really the area of sort of Multi-party bundling, where there's more choice, you can pick, you can add perks, you can upgrade and downgrade subscriptions all the way through to we see with Optus and SubHub where you have that sort of almost that marketplace or that app store for subscriptions that we call Super Bundling. And as a reminder, the Digital Vending Machine supports all of these different models, but the value that we add really increases as you move out of Basic Bundles into those Multi-party Bundles. And that's where we're seeing some great success at the moment. And we'll talk a little bit about more about the capability we're adding into the vending machine to make those even easier for telcos who are looking to launch those services moving forward. If we step back and look at the market size, you can see that the market is continuing to grow. The overall subscriptions market is continuing to grow. You see that has a CAGR of around 6%, where we see actually an increasing portion of that is being bundled particularly through telcos. So the CAGR for the telco bundle piece is close to 10%. So the bundling growth is faster than the overall subscription market growth. And then the final 80% of CAGR, that's that evolution from a Simple Bundle into the Multi-party or Super bundling, and that's growing much faster. So you see the subscription market is growing, an increasing portion is being bundled through telcos and those telcos are increasingly moving to more complex bundles. And that's really where the Digital Vending Machine starts to add significant value. So that's the market that we're operating in. On the other side of that, you have obviously the content providers. And back in June this year, we published a survey. You may have saw if you follow us on LinkedIn or any of our material, we published a report called Gravity Shift. And Gravity Shift basically interviewed 200 senior execs from all sorts of content owners and with all sorts of different subscription services to really understand what their plans were for us for sort of secondary channels or distributing subscriptions through channels. And you see over 90% of those are looking to use these additional channels. So rather than just go direct to consumer, looking to grow their base by distributing subscriptions through a channel like a telco. And when you look into the channels they're looking to use, you can see it's not just telcos, it's moving into retailers and banks as well. And that's a significant step-up in both retailers and banks. And I think that's largely because we're seeing more and more telcos already having launched these services. So the subscription brands are looking for alternative channels. And that very much aligns with what we see from a sales perspective and in the pipeline is that moving to retailers as well as financial services products. And you can see the reason why they want to do, why they want to do this, and it's largely complexity. It's complex. It takes time. How can I simplify all this? And that's really what the Digital Vending Machine does is take that complexity, we make it simple. And as you've seen from some of the examples I gave earlier, we're making very quick to launch these new services. And the speed and scale is really what is -- as I said at the start, what it's been about so far. And you can see all the examples there. You can also see what Verizon has seen and the benefits that the telcos are seen in terms of reducing churn and the ambition that the telcos have to get more and more of their customers using bundles, because for them, it's the best way to grow revenue and reduce their churn. But back in February this year, we launched, what we call, the world's first super bundling subscriptions hub, and that's going way beyond just optimizing that connectivity to the entire life cycle of a product. And we continue to innovate all these ways. It's all about from onboarding and having test partners or content providers and telcos who come into the platform and self-certified. It's about having a pre-canned user interface. We call that the CX. That went live with Altice in the U.S. this year. That's our version. If you're a customer, that's your way of accessing the Digital Vending Machine through this user interface, which the telco can put their own brand, their own colors and choose their own layer, all through a configurable product and very much into these offers, the creation of these offers and how do you define these offers, how do you publicize them, how do you distribute them, and how do you manage the complexities that come with those offers in terms of rules, upgrades, downgrades, what happens if you cancel one product, what was the impact on another product. All that complexity we've been sucking into the Digital Vending Machine. And that does two things. It really allows these offers to be launched a lot more quickly, but it also makes customers very, very sticky. It means, we're not doing the connectivity. We're doing a lot of that complex logic that was historically sometimes done in the telco's back office system. So the value that the telco -- well, the Digital Vending Machines deliver is increasing all the time, and that's providing the ability to launch services more quickly and making it a sticky relationship with the telco. So talking about telcos, I thought it would be good to look at different geographies, because the dynamics we see globally are very, very different. So I thought it would be useful just to do a bit of a world tour of what we see. But before we do that, let's step back and look at what drives growth. So we drive growth in two ways. We drive growth by winning new DVM customers, the logos, the likes of MTN that we announced last week. And then by existing customers growing and existing customers growing two ways. They grow by getting existing of their customers to take on more bundles and more offers in effect, moving from maybe having one subscription to two or three as a user and then by them getting new consumers to adopt bundles and bring those into the bundling. You see that the Verizon quote and the demand to get 50% of their customers into that MyPlan bundling. So those are the way that we grow in DVM, it's new logos and then new more subscriptions, and that's either from new customers or from existing customers taking more and more subscriptions. So we look at the U.S. and Canada, I think this is by far been our largest market. And that makes sense, because it's actually the largest market for digital subscriptions by revenue. So it makes sense that it will be our largest market. It also is a market where a lot of telcos and particularly regional cable operators are struggling as people look to cancel their cable package, TV package, cord cutting that's called if you look around in the press, people basically taking a broadband-only subscription and then getting their entertainment through third-party services. And so it's a natural next step for those guys as they look to differentiate and reduce churn that they look to third-party subscription bundling as a way of compensating that. The U.S. is really made up of about 10 major national telcos. There's sort of tens of midsized and really thousands of small regionals. So it's quite a diverse market. Likewise, somewhat similar in Canada, although a little more concentrated, we have sort of three nationals and sort of tens of regionals. And we've built a really good position in that marketplace. We have 6 out of the top 8 in the U.S., including the DISH announcement that we made last week and the Altice announcement earlier in the year. In Canada, we do bundling for all three of the nationals as well as a number of the regionals as well. And so really, we have a really strong position there. So in the U.S. and Canada, really, the growth in terms of new logos and new wins is largely going to be with those smaller regional telcos. So for that, that's where the all-in-one super bundling solution makes sense for having that user interface, that sort of zero-touch access is a way of bringing on these smaller telcos with less and less work and less and less effort so they can launch more quickly. And then really, the big growth in U.S., Canada is going to come from existing customers. So that 6 out of the top 8 as they look to step through the tiers bringing on more customers. And that's where that offer management functionality really makes sense, allowing us to create these complex bundles. We're at the start of a new sort of football season, sports bundles are always very popular and big drivers. You saw that in the DISH announcement. And that's really one way of sort of ensuring getting these services launched more quickly so we can drive more and more subscriptions through the platform. Shifting south, we got to some of the Latin America. That's a region very much dominated by large telco groups. It's one of the largest bundling markets for SVOD. There's more SVOD bundled through telcos in that region than in the other regions. And local language content is particularly important. That's provided sometimes by the global players like Netflix, but also by specialist players like the ViX service from Televisa. If you look at where we are in that market, we've been doing simple bundles in that market for quite a while, particularly with Amazon and as well as some other partners. And so we have sort of bundling connectivity to 80% of the telcos in that market. The DVM is being very heavily used by Liberty Latin America across the region. And then, we work with TelevisaUnivision to help them scale their local language service mix across the different telcos. You can see we have a great embedded base, and it's a case of building on that base and converting those simple bundles into DVM and multi-party bundles. That's really where the new logos will come from is that conversion from the simple bundling we do at the moment into the more complex bundling solutions where the DVM really adds great value. It's a big prepaid market. So some of the top-up features we've been developing where we can really manage the top-up and again, take that top-up complexity out of the telco system, manage that in the DVM, allows us to launch prepaid bundles a lot quicker and also makes it a very, very sticky solution with customers. Closer to home, if we look across EMEA market, obviously, Europe is very much dominated by a few large telco groups. Middle East is really -- there's very limited complex bundling at the moment in the Middle East. It's very much still, very much a DCB focused market. We're seeing signs that starting to evolve, but it's certainly one of the least developed markets. And in Africa, there's huge demand, but the economics are very, very different. And you can see that in the chart at the bottom, you look at what the price of our network premium subscription and more ARPU between the U.S., South Africa and Nigeria, you can see it changes pretty rapidly. So from $25 then to $10 in South Africa down to sort of $5. So the unit economics in Africa are very, very different, but the demand and the volume and the number of subscribers is very, very high. So where are we in those regions? Obviously, in Europe, BT/EE, and Liberty Global were some very early DBM customers. We're seeing them both of them increasingly look to use the DBM more in sort of a marketplace type office, almost moving out of multi-party into sort of super bundling. You'll have seen that with the Telenet Marketplace announcement as well as what EE are doing with some of the marketplace work. And last week, we got our first win in Africa, I'd say, with the MTN Group. They operate across 16 different markets in that region. We'll start with the rollout of a global SVOD in South Africa, and then we'll expand into other markets. And then each market will add on more content providers. So there's certainly lots of opportunity for us a really good entry into a market that has say very different economics versus some of the rest of the world for everybody, both the content provider and telco. And obviously, we're in the middle of that. So our strategy really is to continue with Europe all the work in the groups. We're starting to see a long last the large telco groups move out of the studying phase into the execution bundling. We had a win in the first half with an operator in the Benelux region. We're starting to see other opportunities drop through the pipeline. Obviously, we want to drive customers in Africa. So big numbers of customers there, big demand. So we want to get those services launched and deployed to as many countries as possible as quickly as possible. And that's where eDisti is quite helpful with some of these marketplace solutions like the likes of Telenet are doing is to bring in other merchants more quickly. So the eDisti solution we have really plays well into those marketplace offers. Finally, in Asia Pacific, obviously, again, a very mixed market. We sort of broke it for simplicity on here into sort of two, you have the mature markets Japan, South Korea and Australia, very high disposable income and really a big adoption of digital services and the subscription economy in general. And then growth markets like India and Indonesia, et cetera, with the sort of a rapidly expanding sort of mobile-first digital customer and price sensitivity is really, really key in those markets. And that actually drives more. So the more -- and so vaguely, the more price-sensitive markets are, the more creative of these bundles are that are put together for customers. So generally, that works in our favor. So where are we at the moment? We obviously have a strong DCB position across that market, particularly in Japan. And obviously have Benefit One, that employee benefits provider, we announced a few years ago. We added the first telco in Japan for DVM in the first half of this year. And really, what we want to do with digital benefit is exactly what we did with DCB in Japan, is establish that position, that beachhead position and grow from it. And that's the way that market historically works. You build up that position, you build that position of trust, become known as a company in that region and then business continues to grow. And likewise, very similar in Korea. So that's why we were really pleased to get our first win in Korea with KT. And actually they launched their first AI subscription service only a few days ago at the back end of last week. In the growth markets, which include, we launching both gaming in Indonesia as well as with the social media platform in India. So very much more of that simple bundling some level, but certainly with ambitions to grow into that multi-party. Multi-party, that's really how we'll sort of grow in this region. It's capturing the prepaid users in the growth markets and looking at AI subscriptions in these developed markets and basically building a reputation in those countries like Asia and Japan and Korea. So we replicate what we've done in DCB with Digital Vending Machine. So finally, before we shift to Q&A, just a brief outlook if we look at sort of the transactional business, then we've obviously completed that migration as we've talked about, DOCOMO Digital integration now fully behind us. We have that volatility in those high cost of sales routes that Matt talked about, but the core business really continues to grow well. And then additionally, you'll see the gross margin increase with some of the cost of sales reduction activities that we've undertaken. So business, as Matt said, is very much moving into that sort of strong cash generation business and more than we're very pleased with the growth level that we see in the core transactional routes. In DBM, seven new customers in the first half, we now have probably 6 out of top 8 service providers in the U.S. First customers in Korea, first telco customer in Japan, new Western European customers and our first DVM customer in Africa, literally that we announced back end of last week. Put all that together, you see some great DVM growth, the ARR growth, in particular, that net revenue retention showing the growth from existing customers. All of that, coupled with the cost savings that we've been implementing, delivering good EBITDA growth in excess of 60%, and we're really on track to deliver revenue and adjusted EBITDA in line with market expectations and really moving into 2026, where all those cost savings, you get a full year of benefit, even more revenue growth as those DVM wins this year start to move into the growth phase. And you can see we're in a business that set a significant cash generation with a very different-looking P&L in 2026. So with that, I'll stop and turn back and we'll go back for Q&A. Operator: Perfect. That's great. If I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I would just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But Sukey, at this point, if I may hand over to you just to chair the Q&A with the team. And if I pick up from you at the end, that would be great. Thank you. Sukey Miller: Thanks, Jake. I'll start by apologizing for the dub of the hazard horn, which you could hear earlier in the call, that was announcing the sandwich fan. It's not a new bundle theme [indiscernible] random enjoyed. And as always, we're really keen to hear from investors and anyone who's interested in Bango. So on bangoinvestor.com, we have a Q&A functionality. So thank you to everyone who's been using that. It's proving very effective. And to everyone who's submitted their questions today, we appreciate those. So let's dive straight in. I'll start with one for you, Paul. We've had lots of questions about announcing deals and news flow ranging from there's not enough to there's too many and comments about the lack of commercial details in announcement. So could you provide a comment on this, please? Paul Larbey: Yes, sure. So I guess the one thing I've learned is, as far as communications go, you can never please sort of everybody and people digest information in different ways. So if it doesn't meet the way that you personally like it, I apologize for that, but everybody is different. So what we try to do, especially with RNS is, is basically, I would say, they almost split in two. With deals that are very large initial revenue. For example, remember, a couple of years ago, we had that one of the top 3 telcos in the U.S. with the starting ARR was sort of $2 million. We announced that on a no-names basis. So generally, we're giving the commercial -- we're talking about the commercials, we will be restricted from talking about the operator that is launching those services as part of the contract. So that's one category for announcement where it's very large immediate revenue, and that's generally announced on a no-names basis. And the second category, which is where I think most of the wins fall into are where deals that have huge potential, but generally start off a lot smaller, right? MTN and the announcement being a great example of that, huge potential, but obviously starting with South Africa and more particular SVOD provider in South Africa. And those will be announced as soon as we can. So we're restricted often by the timing from the partner that we signed the deal with. And we will generally announce those as an RNS reach, if we think they are particular interest to investors. So if you look at the two, we did last week, DISH and Sling TV, I think that's a really, really interesting stuff. Firstly, they're one of the top 8 operators in the U.S. So that's 6 out of the top 8 and DISH is obviously one of those. So it's very relevant for that. But also, it's an interesting model, because they have DISH TV. They have Sling TV, which is also a content provider. And then they have Boost Mobile, which is our MVNO. So very different elements of the group. So for us, that's quite an interesting model to see how that evolves, because they sit on both halves of the Digital Vending Machine, depending on which sort of part of that overall group that you're talking to. So for me, that's really interesting. And then MTN obviously was the entry into a new market, right, into Africa and our office customer win in Africa. So we thought that was relevant and interesting to investors. And then, there'll be others which we don't see, where we did a press release with Telkomsel in Indonesia, an announcement with a partner Magyar to launch Netflix in Hungary. And those are announcements where they're just sort of deal wins. We do general press releases of those, because we benefit commercially from that, right? The only reason for announcing deals is not just for investors, it's also to generate the commercial momentum as well. And so those two we didn't announce as RNSs, because we didn't think they were as interesting for investors and want to keep the news flow as far as RNSs go, a bit more focused on the deals that we think we are interested. So that's the model we follow. And I say, if you want to find out more, you will have seen on the previous slide, there's tons of ways you can keep in touch with what we're going on. RNS reaches are just one small part of it and say again, those we do as and when we acquire and when we think it's interesting. Sukey Miller: As a related follow-up, the releases last week had a very positive impact on share price. It's increased recently. There were a number of comments about what the Board is doing to increase the share price. Paul Larbey: Yes. I think if you look last week, obviously, I think some good news that most of the investing last week was all retail driven. That tends to be very news flow driven. And I think hopefully, the retail market saw to the same way we did is the opportunity with both DISH and MTN in terms of what those can deliver to the business over time, right? Those are both deals that will grow and grow over time. Just a reminder, the Board and all employees are very big shareholders overall. We're all invested and interested in the share price. In terms of what actions we've taken, I think we appointed Canaccord as a second broker. We've seen some great traction from that, both in the U.K. as well as in the U.S. One of the reasons we picked Canaccord as the second broker was because of their reach into the U.S. market. We obviously added West to the register a year or so ago, and we have great interest from other investors. And this is the start of what proved to be a very long 8 to 9 days where we're meeting not just existing institutional holders, but well in excess of 20 non-holders. So we've got a very, very busy 8 to 9 days. So there's certainly interest from institutions. And I would say more demand than certainly, I remember for many years, and we have a busy 8 to 9 days ahead of that. Sukey Miller: Moving on to DVM specifically. How many DVM customers are there? And can you comment on where they are in the implementation phase? Paul Larbey: Yes, sure. So they're all in different phases of implementation phase. So I think we ended last year with 27. We added 7 in the first half. We've just added another one with MTN, I guess 35. And with some of these, it depends on the count or when you count the group or each individual countries, we're counting MTN as a group in that particular number. And they're all very much in sort of different phases. And obviously, some are very much in that growth phase where they're starting to move through the tiers. Other is in that implementation phase. We were asked on a call this morning what's the driver for that implementation phase. And really it's twofold. The technical implementation is sort of a matter of weeks. You get these things into live generally a matter of weeks. The complex part or the things are delayed are two things. Firstly, it's the commercial agreements between the telco and the content provider. And secondly, it's fitting this into the telcos' marketing plans. And those two tend to be the driver of launches. That's why we like things like football seasons and Christmas and things like that, because they are very hard deadlines that are removable. So the DISH launch is a great example of that, very hard deadline in time for the new football season. And so we actually saw those things move very, very quickly from contract signature to launch, because there was that very, very hard deadline. So certainly, so much of it is outside of our control, but the bit that is the technical piece is sort of a matter of weeks. Sukey Miller: Related note, is near-term growth driven more by new partners or expansion of existing ones? And the reported reach, what's the conversion rate into active subscriptions? Paul Larbey: Matt, you want to take the first part? Matthew Wilson: Yes, I'll take the first part. So as I mentioned in the presentation, we're in the privileged position here of being able to have growth coming from both new partners and existing customers. And you can see that in both the metrics that we're reporting. Obviously, important to strike that balance, but we're not dependent on one particular lever. So the net revenue retention of 108%, the key there is it continues to be over 100% shows that the customers are growing as they scale the license tiers. When a customer scales the license tier will obviously be dependent on the commercial contract with that partner. So that can be quite lumpy. So I wouldn't focus on is net revenue retention 159% or 108%. The key is that it's over 100% that shows that the existing customers are growing. And then the ARR growth of 20% year-on-year also supports the any addition of new logos. So we've got both pillars driving that overall growth, and we're not dependent on any one, which is a great position to be in. Paul Larbey: And in terms of how that converts into number of subscriptions, it's very, very low. I don't think there is a standard answer for that. Hopefully, you saw some of the geographic differences that I talked about in the presentation. And it's largely, I would say, driven by the telco sort of marketing campaigns, so things like start of football season, back-to-school, Christmas. And generally when we sort of see the growth rate increase and then maybe after that campaign, it drops back to a more normal level until the next level. So it's very -- it's hard to predict and very, very driven by the telcos marketing campaigns. What we're trying to do in the product is make as much information available to the telcos so they can really target those marketing campaigns and make them a lot more direct. And that's the bit that we can influence and that's what we're focusing on. Sukey Miller: There's a question about beyond telcos. How are the non-telco partners progressing? Paul Larbey: Well, as you see, hopefully, you saw from the survey, right, there's definitely now an increasing interest from the content providers to move into those verticals. Now a lot of the telcos are in progress. And banks and retailers are the two that sort of come at the top, and we see a good pipeline in both of those. We also have some other more interesting and different verticals that we're talking to customers as well. We'll see whether they're going to -- which of those is going to be successful. For us it's, telcos remains a priority. That's where the bulk of the subscriptions that bundled go through. Banks and retailers absolutely are probably the next two, but there are others as well. So you'll see more as we go throughout the year, but our primary focus is on the telco. And you can see outside of the U.S., there's lots of green space and white space for us to expand into and bring new logos onto the platform. Sukey Miller: In terms of scaling DVM growth, which regions are the focus? I know you touched on it in the presentation, which regions are the focus for new partner wins in the next 12 to 18 months? And then, how do you see the competitive landscape evolving and the biggest risks within that? Paul Larbey: So I think for sure, new part of wins we see sort of outside the U.S. where a lot of it is done. I think, there's also a question about we've done 6 of the top 8, what about the last 2. I think they're certainly not out of reach. One of those doesn't really do that much bundling, so maybe less of a criteria. So there's still a little bit to go in the U.S. But really, the growth in terms of new logos we see will come in sort of Asia and Europe in particular and Africa, we'll see how that goes and sort of how that expands. Sukey Miller: And the MTN South Africa announcement, which was issued last week, are the margins comparable to other markets? Or are they lower given that subscriptions are less expensive in these regions? Paul Larbey: So I think, it depends on MTN margin, because DBM is a high-margin business. So DBM is and will always remain a high-margin business. But obviously, economics and the deal structure are very different in that particular region, but there's very, very high volume. So the margins will remain high, close to 100% for the DBM license. But the way the deal is structured and the way the economics put together are slightly different just given the different economics that people like Netflix, telco and ourselves sort of feel in that region. Sukey Miller: And are we expecting to roll out MTN in South Africa? Paul Larbey: Yes, certainly, I think that's where it's going to start with an SVOD service in South Africa and then it will move into other countries. And then, each country will be adding more and more services. So great opportunity, certainly a lot of demand. It's a case of sort of rolling out in that region and getting what is quite heavy prepaid market live as quickly as we can. Sukey Miller: Question on the pricing model. How does the pricing model work for both segments, transactions, and DBM? And are you intending to split out EBITDA reporting for both segments? Matthew Wilson: Sure. I'll take that one. So as we discussed in the past, the transactional segment is based on a percentage of end user spend and that percentage can obviously vary depending on the commercial arrangement or whether it be for physical goods or digital goods. For the DBM, this is a mixture of one-off integration fees initially and then each partner will then be subject to a recurring license fee stream. And that license fee revenue is basically linked to the number of subscriptions to the platform. And typically, we talk about customers scaling the license tiers. So each contract would have bundling for particular license fees dependent on the number of subscriptions. So as those customers grow and more subscriptions come up to the platform, then the license fee will also increase. And then, in terms of reporting segments separately, I completely agree with this. We've obviously got two very different business units within Bango, each that has their own sort of different drivers. And so, I think the intention definitely is to start reporting these separately from next year to provide better visibility on the overall business to investors. Sukey Miller: And on the B2 -- different business in DVM and transactional. What's the competition we face for each of those? Paul Larbey: Yes, sure. I think first thing, we talked about that transaction and that DCB business. A lot of the core deployments, I think most of our growth, while we're all launching new telcos and new merchants, the growth really comes from existing customers. And so competition has historically been from operators looking to do it themselves or to use an integrator, which the two global integrators are ourselves. So that's where that market sits. On the Digital Vending Machine on the bundling side, really our biggest competition is people looking to do themselves and that build versus buy business case is always the first thing we go through with any new customer. And really, as you move from simple bundles to multi-party and as you bring on more content providers, that equation bias is very much in our favor and it becomes very much a very simple buy decision about that. There are other companies in the market that have a product that does similar things. Amdocs being the most obvious one with own market -- own products. They are obviously a big OSS, BSS provider for telcos with a bundling or so, but other side. And so I think it's always good in the market for our competition. We're very different than Amdocs in terms of scale, size, pricing model, product capability, number of merchants integrated, et cetera, et cetera. And so, I think there is -- in some ways, it's great to have competition and they're great to compete against because we are so different. Sukey Miller: How sensitive are the number of subscriptions we manage by DVM to changes in consumer spending? Paul Larbey: Yes. I guess a couple of ways. Firstly, the license fee that we charge is not based on the retail price of a subscription. It's based on just the number of subscriptions. And secondly, actually, what we see is generally with a squeezing consumer spending, everybody becomes a bit more creative in terms of the offers that they get together. So it drives more discounts, more bundling. So somewhat ironically, that sort of works. It works in our favor because telcos get more creative. They want to protect their core telco pricing and really sort of put some really good offers into the market. So ironically, it's sort of almost the opposite that you would expect. Sukey Miller: Question on operating profit margin is, following in the first half from FY '24, what are the expectations for operating profit and future margins? Matthew Wilson: Sure. So as you've seen in the results for this period, we've got a nice balance of growth coming from recurring revenue. We've got gross margins expanding, and we've got cost reducing, and that's really supporting, as I mentioned, the 66% increase in adjusted EBITDA. You've seen the adjusted EBITDA margin move from 17% to 27% off the back of that. So there's a high level of operational gearing in the business. So as revenue improves, that will all drop through. So whilst we've got an operating profit margin loss for this year, we can expect to be positive next year. And I see -- so just reading the Q&A, there's a separate question on when I mentioned we expect to be profitable next year on what basis. So just to be clear, bottom of the P&L, net profit for the year, absent anything unforeseen, we'd expect the benefits of everything that we've been doing over the last couple of years to show a bottom line profit in fiscal year '26. Sukey Miller: We have a question about when Bango will achieve tangible growth? Matthew Wilson: I can take that one. I think obviously, delivering a 66% increase in adjusted EBITDA, I would suggest that, that was tangible growth. But look, I think as I just mentioned in the previous question, the nice thing that we're facing here is that we've got different pillars all supporting growth, so be it revenue, be it margin expansion, be it cost reduction. We're not dependent on any one single pillar. So we're seeing those all align now. And I think the real benefits will be apparent as we move into fiscal year '26, because we'll also move away from some of the legacy exceptional costs that obviously have been weighing on the bottom line as well. So as we continue to mention, the outlook for fiscal year '26 should be one of material cash generation. Sukey Miller: You mentioned having no churn, which is great. How simple is it for customers to cancel contracts in either segment? Would you have advanced notice? Paul Larbey: So yes, there were some advanced notice. I mean, I think the contractual cancellation is one thing. You then have the challenge of migrating the services from whatever system to the other. And what we've seen increasingly is on the DCB churn, there's very, very low churn. It's very rare that people -- it does happen, but it's very, very rare. On the DVM side, and that's why we're doing things like this offer management and this prepaid, not only to get services launched more quickly, but to embed the DVM more deeply in the telcos back office system. So while contractual churn, I think, is sort of one question, the actual practical churn is much, much harder than anything that's written in the contract. And that's really the value of the DVM and the more subscriptions that get on to it, more users that are using it, the bigger you are in the growth curve, the harder it gets. Sukey Miller: Why does Bango have such a high cost structure? Matthew Wilson: Yes. So look, historically, we've obviously had the integration of the Document Digital acquisition, which has naturally made that cost base elevated. You can see in the numbers, and that's part of the reason why we've introduced this core administrative expenses metric, because that does show the level of core controllable costs, and that has been coming down, 20% cumulatively in the last 24 months and 9% this year. That naturally does get distorted by the things like depreciation and amortization rising and the exceptional costs. As I talked about before, those exceptional costs should cease next year so that we can remove that from the cost base. The D&A is yet to peak. Naturally, we've made a lot of investment historically, and so there is that lag effect for D&A to catch up, but we are approaching that peak. I'd like to say towards the end of next year, and you can see the R&D CapEx investment continuing to trend down. And so the D&A will follow that soon after. Sukey Miller: Related to the quote around Verizon in the presentation, what is the timeline for Verizon to reach their targeted penetration of having all their subscribers under the model? Paul Larbey: Yes, I think that's probably a better question for the Verizon results call. But I think the key element there is you clearly see their ambition, you see their ambition impacting other players in the market as we see more and more launches in that market. So I think the timing is always very, very hard to predict. I think its endpoint is inevitable quickly is the challenge and the answer to the question, none of us know is how quickly we'll get there. But clearly, there's a drive on our side. There's a drive from the content owner side and there's a drive from the telco side. So everybody is pushing in the same direction. So I'd say it's not a question of if, it's a question of when. Sukey Miller: Thank you. That concludes the Q&A. So I'll hand back to Jake. Operator: Perfect, guys. That's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you afterwards. But Paul, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great. Paul Larbey: Yes, sure. Thanks again, everybody, for taking your time and for all the Q&A. We had loads come in there. And I think we've answered certainly all of them. I really do appreciate that level of engagement, and we want to keep that moving, right? That's why we launched our Investor hub, where you can register, receive updates and ask questions against RNSs and see our answers online and see answers to questions other investors have raised online. So I really encourage everybody, especially on the retail side to join that investor hub. It's a great way of keeping up to date of what's going on in the company, and you can see some other ways of doing that as well. But that investor obviously really should be, I think everybody's go-to place for asking questions or finding out more about what's going on in the company. And that's what we tried to do today, is lay out not just what happened in the first half, but what we're seeing in some of the different geographies and what we're seeing in terms of the future of the company. And I think if you look at the future, as Matt said, we've got sort of great top line growth in the transactional business in those core routes. The DBM growth continues to grow. Cost base is coming down, the R&D CapEx base is coming down, giving significantly improved profitability, no matter which line in the income statement we measure on. And that will result in significant cash generation and a reduction in that net debt in 2026. So I think come the end of 2026, the businesses will be in a very, very different shape than it is today. I think we're in a great position of the market. And I'm looking forward to what will be a busy 8 to 9 days talking to institutions. But during that period, please do engage with us on investor if you've got any questions. And thanks again for your time. And for those shareholders, thank you for your ongoing support. Operator: Perfect. Paul, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Bango plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
Operator: Good morning, ladies and gentlemen, and thank you for joining us today for MindWalk's First Quarter Fiscal 2026 Earnings Call. We appreciate your time and interest in MindWalk, formerly ImmunoPrecise Antibodies. Today's call will be led by our CEO, Dr. Jennifer Bath and Interim CFO, and Joe Scheffler, They will provide a review of our financial performance, strategic initiatives and key operational highlights for the first quarter. Please note that a copy of today's presentation, along with our final financial statements will be available on our company's website for your reference. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements. These are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Factors include, but are not limited to, global, political and economic conditions changes in the market dynamics and other business risks. Unless otherwise noted, all financial figures discussed today are in Canadian dollars. These statements are made as of today, and we undertake no obligation to update them, except as required by law. For a more detailed discussion of risks and uncertainties, please refer to our filings with the SEC, including our most recent Form 20-F and other periodic reports. I would now like to turn the call over to MindWalk's President and CEO, Dr. Jennifer Bath. Jennifer Bath: Thank you, Jordan, and good morning, everyone. For transparency, our first quarter results include contributions from our Netherlands operations, which we owned during the period. Six days into the second quarter, we completed the divestiture of those operations generating $16.1 million in net proceeds. Going forward, we will classify results related to these operations as discontinued operations. This sales strengthened our balance sheet and allowed us to concentrate resources on strategic high priority and high-margin initiatives. Against this backdrop, our Q1 performance was exceptionally strong. On a total operations basis, we reported record revenue of $7.6 million, up 45% year-over-year. Gross profit rose to $4 million, with margins expanding to 53%. Operating loss narrowed to $2.7 million. Adjusted EBITDA loss was cut in half year-over-year to $1.4 million and net loss improved to $3 million. General and administrative expenses declined underscoring our operational discipline. Cash ended the quarter at $5 million plus an additional $16.1 million received in proceeds from the divestiture. Importantly, within that performance, continued operations contributed $3.2 million in revenue, up 28% year-over-year. This demonstrates that even excluding the Netherlands site, our core bio-native AI platform continues to deliver sustainable results. These results give us the foundation to move decisively into our next chapter, our rebranding. The rebranding is much more than a name change. It unifies our legacy companies, ImmunoPrecise Antibodies, BioStrand and Talem under 1 identity, MindWalk. We also introduced our new ticker, HYFT, or H-Y-F-T, highlighting the foundational role of our hip technology and redefining biologics discovery. Our new identity reflects our evolution into a bio-native AI platform company operating at the intersection of AI, multi-omic data and advanced laboratory research. Inspired by Charles Darwin's daily thinking path, MindWalk embodies the spirit of curiosity and discovery, revealing hidden biological patterns and transforming them into impactable medicines. At the core of this transformation is our BioIntelligence ecosystem, integrating bio native AI powered by $25 billion proprietary HYFT connections, generating insights for more clinically viable therapies, a multi-omic platform unifying sequence, structure and function and literature to break down silos and enable hyperscale exploration, an advanced lab with a proven track record, over 15 molecules accepted into clinical trials and over a 98% success rate in our B-cell technology, supporting therapeutics diagnostics, vaccines and peptides. This is not only a brand evolution, but it's also a business transformation from primarily wet lab services to a scalable intelligence model platform model. This opens new pathway through Software-as-a-Service, Data-as-a-Service, asset generation and large-scale partnerships. To summarize, our rebrand reflects 3 milestones, a unified brand identity, IPA BioStrand and Talem are now MindWalk, a business model shift from services to an integrated platform-driven bio-native AI company, a new NASDAQ ticker HYFT, underscoring the role of the HIT technology across our vertical AI stack. With a stronger balance sheet, scalable growth opportunities and a track record of execution, we are confident in our ability to deliver sustainable value for shareholders. With that, I'll turn the call over to our Interim CFO, Joseph Scheffler, to review the financials in more detail. Joseph Scheffler: Thank you, Jennifer. As a reminder, the Netherlands operations were divested 6 days into Q2, generating $16.1 million in net proceeds. Beginning this quarter, results from those sites will be classified as a discontinued operation and will no longer contribute to our revenue or expenses going forward. Revenue for the first quarter was $7.6 million, up 45% year-over-year, driven by both project and product revenue growth. Gross profit improved to $4 million or a 53% margin compared to $2.4 million or 45% margin last year. Operating loss, excluding amortization and nonrecurring charges, narrowed to $2.7 million versus $4.2 million a year ago. Adjusted EBITDA loss improved to $1.4 million compared to $2.8 million last year, reflecting stronger operating leverage. We also saw progress in expenses. General and administrative costs decreased year-over-year, underscoring our focus on cost discipline. Net loss improved to $3 million compared to $1 million last year. Sales and marketing increased as we invested in digital campaign to support growth initiatives. Turning to the balance sheet. We ended the quarter with $5 million in cash. Excluding the $16.1 million in proceeds from the Netherlands divestiture received post quarter. The stronger capital position enhances flexibility to advance growth opportunities, including Software-as-a-Service, Data-as-a-Service and translational programs, such as our dengue vaccine initiative. In short, we delivered record revenue, higher margins, disciplined expense control and improved operating results while reinforcing our balance sheet. I'll now turn the call back to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Swayampakula Ramakanth. Swayampakula Ramakanth: This is RK from H.C. Wainwright. So first of all, congratulations on the divestiture and also the rebranding of the company, which squarely now says that you are kind of an AI tech bio company. So a couple of questions, mostly on the financials of the company. In terms of the $4.3 million or so that was outside of the continued operations. What portion of that $4.3 million comes from the -- from any products that you continue to carry or also from the AI assets that you currently carry? Jennifer Bath: RK, thanks for joining us. And I appreciate your question. So regarding the revenue from discontinued operations, and which portion comes from products and services we continue to carry. So actually, there are very few products and services, we do not continue to carry on our full end-to-end spectrum of capabilities. There's really one service in particular that we currently will not be moving forward and utilizing, but we have several alternatives to that one that for us our alternatives that are preferable from a scientific perspective. That also was not a major cash generator. So with regard to products and services, I think really the main thing that is remaining with that group, which actually was a decent proportion of the revenue and profit margin this last quarter was the off-the-shelf products. And partially why we saw an increase for that for discontinuing ops is we really made a push to make sure that in that first quarter of this year that we got as much of those products out there as possible and that we really focused on rev rec and on billing in order to close those things out under at the time of the IPA name. So there's very little that we're not carrying forward with regard to our ability for products and services. And importantly, none of the AI products or services are going with that group. And a physical product that has been made as an asset to the company is retained by us and any service that includes any sort of software, artificial intelligence is housed entirely with the RemainCo. Swayampakula Ramakanth: Okay. And then in terms of the gross margin contribution, which is pretty good, especially showing an expansion of about 50-plus percent. How much of that contribution comes from the continued operations? And how should we think about gross margin from here onwards with the continued operations? Jennifer Bath: Yes, That's a great question. So first of all, with regard to gross profit, Canada is a relatively strong contributor there, although as previously detailed all of our wet lab sites have been profitable. Canada a little bit more strongly. When it comes to the actual gross profit margin, we definitely have strong gross profit margins coming out of Canada, and as you have seen with BioStrand as well. So BioStrand has historically been pushing over 90% gross profit margins within the company. That's a big focus for us as we continue to go forward and look at the growth of BioStrand relative to the remainder of -- or its contribution overall relative as a percent of overall revenue. So we didn't see that hit really hard this quarter. You saw a little bit fourth quarter too. We talked a little bit about that. And I think that's an important thing to just touch on briefly here because one of the things that you saw in the fourth quarter that we touched on was a little bit of research and development. And so their products and services, their offerings, their applications and their software all have very, very hefty profit margins. And when we don't see quite as much of a contribution, one thing to keep in mind is they have offered some slight discounts or research and development in the process of pilot studies and bringing on larger companies. So one thing we didn't include, for instance, today in our commentary with our press release or here in the script is that BioStrand has very recently signed on one of the top 10 pharmaceutical actually as one of our first large software-as-a-service model companies. And in so doing in that initial onboarding, we did some R&D and some discounts with them to get their seats in there and really get them utilizing that Software-as-a-Service. So overall, going forward, what are we looking for a gross profit margins. We're looking for real growth. Out of that, we're looking for a stronger contribution from BioStrand overall relative to our total operations and an increasing impact then on our gross profit margin percentage as we continue on forward with these continuing operations. Swayampakula Ramakanth: Okay. So 2 more questions on the operations side of things. So with the dengue vaccine development, what's the strategy going forward I know you stated that you are starting some preclinical programs. So what's beyond that? Jennifer Bath: Fair question. All right. So what is beyond that? There's a couple of different things. And if you don't mind, I'd like to just start overall with that philosophy because I think that philosophy drives where we're going. The differentiator in this vaccine from our perspective is so incredibly strong. So just to put a little bit of context here, what people typically do in building a vaccine for a virus is really, I think, what many today with our capabilities in AI and in silico technologies in general would otherwise be considered to be incredibly antiquated. So if you look at the existing vaccine out there so much respect for Takeda, but across the board with different viruses, we see that an entire virus is used, that's just attenuated, right? So it's no longer causing disease, but you put the entire virus in the individual just to expose them to that. Sometimes we put entire proteins in. And most people experience that during SARS-CoV-2 vaccinations, where the mRNA effectively went in your body and then it was translated into an entire protein. Problem there is you're exposing the immune system to so many different things it doesn't need to see, so many different things that will not help you instead of being very specific in drilling into the single part that has the highest potential to assist you. So I won't get into how we did that, but that's what we did. And as -- and so you're 100% right, RK. Right now, what we've done is moved into the manufacturing and then the preclinical trials. So what we're looking at with these preclinical trials has very much been shaped by the partners we've been working with and speaking to. And so what we're pulling out of this first round of preclinical trials is basically looking at one arm of the immune system, the humoral arm that generates antibody production. And we're asking ourselves a question, can we generate antibodies in these preclinical trials that have the supporting evidence to show that the vaccine neutralizes the virus. The next step with that, while, one, certainly being that, we are actually working really close with the NIH, the arm of the NIH that deals with infectious disease and allergies. And this is certainly an area that they have of interest. We actually also have a couple of different partners that we've been speaking with on where to go with these particular results. So a couple of other things that we will be doing, we will be running some safety and tolerability analysis on these products to ensure their safety and tolerability and the translation into humans. We also will be doing something a bit unusual in looking also at the other arm of the immune system instead of just looking at can antibodies prevent a virus from entering a cell. We're also asking the question, can we stimulate a specific subset of T cells to go in, hunt down and kill the cells that are already infected. And that would prevent the virus from replicating in those cells and furthering infection. So we're really looking at a very unique approach. So those next steps involved in large part contributions from those partners who are interested in moving this product forward. In particular, some partners are definitely further analysis in the preclinical stage, but some of these partners, including the NIH, have a much stronger interest in taking this type of a project forward into Phase I clinical trials. So for clarity, we are looking to have this move forward into Phase I clinical trials. We're very focused on the partners that are interested in sponsoring it. We ourselves are not looking to fund or sponsor the Phase I clinical trial ourselves. We're only looking to take some of the downstream recognition and capital as that continues to advance. Swayampakula Ramakanth: Okay. And the last question from me. As I would imagine, the whole rebranding is behind trying to ensure yourselves to be seen more like a tech by a company rather than the CMO or CRO, which you had been carrying for so long. So to be true to that, if that's what you're looking to get to, would you be trying to generate an internal pipeline for the company itself to work on? Or is it going to be more of trying to identify partners with whom you can collaborate to help them progress their pipeline. So which direction do you plan to take company forward? Jennifer Bath: That's a great question. That is a great question because the branding, it just touches so much of what we do and where we're going. And it's true, if we just look at the surface level, this rebranding is about unifying our image because it's been -- it's harder from the outside looking in, when we've got all these different websites, right, to really understand who we are and what we're about. But the short answer to your question is we're absolutely doing both. So one really important thing to touch on, we talked a little bit about in our third quarter is that we have integrated many of these in silico applications into our wet lab. With our partners right now that are currently -- again, 19 of the top 20 pharma, we have over 750 active clients. With each of those partners, when they come in to run a therapeutic program with us, it is no longer an option to pick and choose. That in silico component is a part of that program and it's a part of that program because the outputs are so much stronger. When historically, with our competition and in the industry, people have focused on discovery with a little bit of data, right, trying to get a little bit of maybe functional data upfront you hear. We certainly started talking about that pretty early on, and then you saw just kind of take off an industry, everybody going and talking about function first or function forward, right, kind of jumping on to what we were doing early on. The reality is today, you can go into the discovery component of a campaign and you can say, "You know what, I'm not going to spend 2 years learning everything about it, tell me which ones will develop well, which ones are going to be safe?" Start with [$200,000] for all we care, ask every question you need to ask in the first week and then move forward with the best candidates. And that's why we're not giving people the option anymore. That integration is imperative to making better drugs without increasing the risk, without making dramatic increases to the cost, they are simply more successful when they're data-driven. And so this is definitely a part of that integration. We want our clients to understand the importance of moving along with technologies that can be life changing for these technologies. To your question, though, on partnerships, too, I do want to point out, it also enables the conversations with technology companies, hardware companies as well as these pharmaceutical companies to help them understand what our real differentiator is, right? So we don't want with regard to those initial partnerships discussions, people are getting lost in the services. We provide solutions, but at the heart of that is the HYFT technology with LensAI, we want those technology partners to be wide aware of that. And I think from an investor perspective, that is such an important thing for people to focus on right now, watch for fact, watch for these partnerships for people who really see this rebranding, which again, is in its infancy here, this is our soft rollout. This is really going to ramp over the next couple of months. It's definitely thanks to, obviously, our Head of Sales, Lori Anderson, She's doing an amazing job there. But it's already garnering intra. People are seeing it and turning their heads and it's starting and enabling a lot of new conversations. So I would definitely watch for that. But lastly, RK, your question about internal products. Once we saw what we were able to do, especially in the vaccine space, of course, we have some therapeutics too. But in this vaccine space with regard to those patterns, when we realized there was one, what we call a strict HYFT pattern that would be the fundamental pattern that was likely the original pattern, the optimized pattern that tells us what the function of a molecule is. When we realize there was one strict HYFT pattern for every single virus for us, this was a game changer. That has continued to bear fruit. We are addressing some additional targets. This is not a lofty expenditure for us. But it is something where we feel very strongly after watching these results literally 100 different pages of data results turning off with the dengue vaccine, we do believe it is such a major differentiator that it is imperative for us to move a few others forward so that people can see what a differentiator this is. So in summary, you'll be seeing both. You'll be seeing the full integration. You'll be seeing this enhancing partnership work. I would watch for partners very specifically interested in what this technology is capable of and then internal platform product development as well. Operator: I'll now hand the call back to Dr. Jennifer Bath, our CEO, for closing remarks. Jennifer Bath: Thank you very much, Jordan. So to conclude, this was a strong first quarter for MindWalk. On a total operations basis, we achieved record revenue, expanded gross margins and delivered meaningful improvements across operating loss, adjusted EBITDA and net loss. Our continued operations also grew by 28% year-over-year, underscoring the strength of our bio-native AI platform. Strategically, we sharpened our focus through the Netherlands divestiture, fortified our balance sheet with $16.1 million in proceeds and completed the soft launch of our rebranding to MindWalk, uniting our legacy businesses under one identity. We advanced our dengue vaccine initiative into preclinical manufacturing and further validated LensAI demonstrating its ability to derisk biologics development. With a stronger capital base, a scalable platform and a proven ability to execute, we are confident in our trajectory, and we remain committed to creating long-term value for our shareholders. Thank you.
Operator: Good afternoon, and welcome to the Itaconix plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to John Shaw, CEO. Good afternoon, sir. John Shaw: Good afternoon. John Shaw, CEO of Itaconix, and welcome to our report on our interim results for 2025. In terms of our highlights, it's a very important half year for us for the long-term development of Itaconix into a large, highly profitable specialty ingredients company. Our H1 highlights are really around our financial results in a couple of different areas. We recorded record revenues, record gross profits, near neutral adjusted EBITDA, and we still have plenty of resources for additional growth. On our commercial progress side, we made a major step towards reaching profitability from both the revenue growth side and the revenue base we have in place for landing and expanding new customers. Finally, we're also setting up future growth with 2 major new initiatives that advanced in the first half with both our SPARX program, our Bio*Asterix program. Our path to being a large specialty ingredient company centers around the value and potential for itaconic acid. Itaconic acid is a natural molecule. It's a metabolite actually produced in our bodies in the natural world through biochemistry. Its value is derived from its unique combination of 3 functional sites that are one more than acrylic acid has. These sites offer multifunctional benefits for polymers made from itaconic acid, which is what we do. Its value is also derived from how safe it is to handle and use relative to the building blocks it can replace such as styrene and acrylic acid. It's produced readily available by industrial fermentation. It has been used for many years across many industries at lower levels in polymers. We make it into our polymers on it. What we do is we purchase itaconic acid, bring it into our facility here in the U.S., and we process it using our proprietary technology to itaconic polymers that are key ingredients in our wide range of everyday products. We have a large technology platform for itaconic acid where we can use it across many different application areas. Right now, we are focusing on 3 areas on scale -- mineral scale inhibition, particularly for preventing the detrimental effects of calcium scale in your home and in your detergent industrial applications. Second, in importance for us is odor neutralization, where we bind zinc into our polymer and that polymer because highly effective for getting water-soluble zinc to act as a neutralizer on contact. And third, we use our underlying monomers and binders to make paints and coatings. There are a wide range of other potential applications we can pursue in the future. But for right now, we're focusing on the scale inhibition, odor neutralization and specialty monomers. Within our wide range of applications, we are focusing -- we're doing this under 3 business opportunities. First of all is our industrial performance -- is our Itaconix performance ingredients where we produce and sell itaconic polymers produced here and sold around the world. Second of all, and very important to our growth for the performance ingredients is we have identified certain segments within the detergent market, the home detergent market, where we believe both our ingredients and other key ingredients are enabling a new generation of better products. And we are facilitating getting these out onto the market by doing formulation work for brands. For that, we get paid $1 per pound for the additional ingredients that we sell. So think of it as being a value-added reseller of the other ingredients that we do. But the core of it is to bring better products in the certain segments that we have identified, get it to brands better and faster to get them on the market. And then finally is our Bio*Asterix building blocks. These are specialty monomers that we are using and making available to be able to get used more broadly in paints and coatings over the next few years. Where we've gone with this now is the capabilities that we have, we are now leading consumer product wins for brands in all the right places across a broad range of brands and product categories that are found in pretty much every major retailer in North America and Europe and expanding around the world. So we have great technology. We've turned them into great specialty ingredients. We found ways to get them into the market faster, and we are winning out in the marketplace in all the right places. So Laura will go through the financial aspects of how we're performing to date and our future on it. Laura Denner: I'm Laura Denner. I'm the Chief Financial Operator -- Officer here at Itaconix. I'm thrilled to be able to share with you more detail on the results for our first half of 2025. There's been a lot of positive progress made in the first 6 months of the year. So to get into it, the overview for the first half, sales were at $4.8 million, up by 73% from H1 2024. This half revenue also marks a record half for us in the business. We beat our last record half by 20%, which occurred in H1 2023. This half, we also saw a strong gross profit of $1.7 million. This was due to maintaining our overall target gross profit margins at 35%. This in a consistent cost base for the period, we were able to improve our EBITDA losses to $200,000, which was an improvement from $800,000 from H1 2024. Lastly, the group ended the period with ample net working capital at $6.6 million with the resources that we need for growth. So as we turn to top line growth, we saw growth in H1 2024 in both our Itaconix Performance Ingredients and our SPARX formulated solution. Performance Ingredients contributed $3.3 million for the half. These revenues increased by 51% from H1 2024. This is largely due to the efficacy of our cleaning polymers in enabling next-generation detergent formulations. These polymers have an average gross profit margin of 45%. We anticipate strong growth in this business unit and to maintain similar gross profit margins in the near term. Our SPARX formulation solutions grew to $1.5 million, which was a growth of 156% from H1 2024. This growth is related to our efforts in rebuilding our North American detergent sales, where we work with contract manufacturers and brands to supply turnkey solutions. These revenues do complement our performance ingredients and yield an average gross profit margin of 13%. We anticipate that in North America, these sales will continue to grow with North American detergent sales and margins will be maintained at about 10% to 15% in the near term. Lastly, BIO*Asterix has generated some small volume e-commerce sales. We are seeing a lot of interest in these new building blocks, and we don't anticipate seeing a lot of commercial volumes in the next -- in the near term. Overall, the efforts made in converting our sales pipeline into revenue over the last 12 months has increased our sales by $2 million. All this done while maintaining our overall desired gross profit margin at 35%. Next, we'll look at sales by geography. Sales in North America were $3.3 million. This made up 68% of total sales. These sales were comprised of Performance Ingredients and SPARX formulation solutions. Over the last 3 halves, we've seen strong recovery in that North American detergent market with existing customers growing revenues utilizing our flagship polymer TSI 422. This one has excellent multifunctional performance, and it offers cost advantages. Another reason for the growth we saw was the utilization of our SPARX program. This is helping us bring formulations to market faster. We have 2 examples of this in the North American market. One was with a contract [ tabulator ] and one with a contract formulator blender. These started at relatively small to moderate revenues about 18 months ago, and they are now our top 2 customers in the region. Both of these made up about 14% of revenues each, and this is really showing our land-and-expand strategy in action. So turning our attention across the pond. Revenues in Europe and globally were $1.5 million, which was about 32% of our sales. Formulation work is done -- typically done a little bit differently here. Brands and contract manufacturers tend to do their own formulating work. This is different than in the North American market where we act as a partner. Growth in this region is from our competitive advantage of our polymers for bringing scale inhibition in dishwashing and laundry detergents. An example in Europe of our land-and-expand methodology is illustrated by the success with our customer who is an integrated contract manufacturer. They represented about 21% of the group's sales. This sales growth is due to their ability to win bids with a multitude of private label brands because our polymers are providing that key claim for their formulations. So next, we'll look at the makeup of revenues by customer type. We work through 3 main channels: one, direct sales to brands. Second, we go sales through partners and distributors; and last is sales through contract manufacturers. So sales to contract manufacturers is our primary avenue. This comprised 85% of our sales for the half. Working with contract manufacturers, we can provide strong technical support and bringing formulations, ingredients and claims marketing together faster. So in North America, we have higher visibility through our SPARX program. We are able to engage with brands and contract manufacturers and act as a collaboration partner. This gives us a better visibility on demand for our ingredients, and we're able to better estimate the underlying demand for the end merchandiser or brands. We estimate that no one brand was responsible for more than 15% of our total revenues for H1 2025. So I think one of the most thrilling advancements we've made was the progress towards profitability. Not only did we have the strong revenue growth and -- but we also maintained our price discipline. We continue to price to the value of our ingredients. This is really what allowed us to maintain that gross profit margin of 35% for the period. Gross profits for the period were $1.7 million, which was an increase of about $600,000 from H1 2024. Next, we were able to improve our cost base. We reduced group expenses by about $200,000 for the half. Our current cost base provides us with sufficient resources for this next phase of growth that we're going into. So now shifting our focus to cash usage for the period. We did invest in capital spending, which I'll cover in a moment. But our working capital did consume some additional cash resources as we pivoted to mitigate potential risks that might develop as a consequence of the U.S. international trade relations. We work with raw material suppliers to increase our raw material inventory and also understand the ever-changing landscape of import tariffs. So as a recent, we still believe that there is a favorable assessment to the impacts of these tariffs on our raw materials. Most of our raw material pricing does not appear to be materially affected by these current import tariffs, but the strategic decision did increase inventories for the period, and it increased our working capital days from 83 to 87 days. We anticipate over the next half that we'll bring these inventories down unless we start to see some unfavorable trade negotiations starting to develop. So another important part of here at Itaconix is during the first half of 2025, we did invest in additional fixed assets. These additions were made to support our production needs as well as our growing workforce. This investment in fixed assets did impact our fixed asset turn ratio from 11x in the full year 2024 to 9x, which was still well above the industry comparatives of 2x. So with a significant investment in our property, plant and equipment for Itaconix, we still have an attractive fixed asset utilization for our specialty ingredients. And we have sufficient capacity in the plant, and we can dynamically enhance this ratio to meet our near-term revenue demands. So another key investment made during the period was in our intangible assets. Advances were made in the development work for our BIO*Asterix s building blocks as we bring these new itaconic polymers to market in our paints, films and coatings. Another area of focus was the development work done in our performance ingredients. These investments, along with our patent portfolio, which includes 16 different patent families is a critical piece to the value of Itaconix. So next, why Itaconix? So we've made some exciting progress in the half on our path towards being a profitable specialty ingredient company. We've ticked quite a few boxes, I think. One, we've executed on our land-and-expand demand generation for revenue growth. We've offered a wide range of valuable ingredients at attractive gross profit margins. We have effective use of capital in our fixed asset turn and our working capital utilization. Next, we have a growing base of intangible assets and a broad patent portfolio. Next, we have the cash to continue on our growth path. And last, we are focused on our future growth and achieving break-even profitability. So overall, I think we're well positioned with the right resources and a good customer base to get us there. So I'll turn it back over to John Shaw to kind of share with you a little bit about our growth path. John Shaw: Thank you, Laura. So our growth path is being defined in the 3 areas -- 3 business areas, where our -- the way we grow is we find an opportunity, we turn that opportunity into a particular product or service. We get traction for it. We get growth for it and then we get our performance ingredients to be a standard ingredient in the future in a wide range of formulations. I'm going to move right to left on it because our building blocks of BIO*Asterix, we're just in the very early stages of an opportunity. Over the next couple of years, we expect to advance into getting initial traction there and growing it. That is a 3- to 5-year growth plan on it. Within Performance Ingredients, we are advancing our way into a high-growth phase, and we're working in using our SPARX formulated solutions services to accelerate getting new winning formulations out in the market faster. And then ultimately, that's driving the use of our performance ingredients as standard ingredients in a wider, wider range of formulations. So to talk about performance ingredients itself, first and most important, our scale inhibitors where we have great value in detergents. And so the scale inhibitors, what we need to be doing now is to expand from North -- our success in North America to continue expanding into Europe. We are doing that. We're finding traction there. And our growth path is to continue that expansion to get our scale inhibitors to be standard formulations -- standard ingredients in a wide range of detergent formulations, and that's our next stage of growth. We are also, though, however, investing in a new round of polymers where we think we can make additional improvements in our scale inhibitors to meet future needs and even being better polymers out. We think that's another 2 to 3 years out. So we think we're in a very good place. Scale inhibitors is going to drive our growth. It has driven our growth. It's going to continue to drive our growth. The next area where we need to perform is in odor neutralizers. We have an excellent odor neutralizer. Odor control is getting more attention as ever, particularly in fabric detergents. And as you can see with Croda, -- our new agreement with Croda, there's growing interest in getting better ingredients on the market for odor control. We have an excellent product for doing that. We've expanded our product line to include a dry form, and we are going to continue to push traction across -- both through Croda and through our direct efforts across a wider range of applications on it. On formulated solutions, -- our SPARX program is very important for us where we have identified certain specific product opportunities in detergents and dish and fabric detergents where we believe both our own ingredient and other key ingredients available on the market are driving -- are going to drive success. We've identified those. We've identified the formulas. We have them out in the market and are talking to brands about them, the brands that brings brands coming to us so that they can get a better formulation out on the market. And we do it so that they can get there faster and better through the innovation that we offer. We have over 10 relationships right now in various stages of development across brands and detergent makers that we'll have, we believe, 10 new products on the market by the end of this year. We already are probably looking at about another 8 for 2026. So we're very excited about the work that we're achieving and what we're going to be doing next year. Finally, we're just starting our process of getting specialty itaconic monomers out onto the market. We did launch our e-commerce site to make research quantities available to development labs in North America. We plan to expand the distribution of those monomers into Europe. Then we're also going to increase the volumes that we have available beyond the research quantities. And then most importantly is to find a partner to actually pull an end product through to the market that is based on our monomers and our binders to show the value that they have. Exciting area along -- that will be a long development range on it, but we started the path on it. In terms of questions that we think about for investors, one is the profitability. We are at -- we've made a major step towards profitability with the growth that we've had. I think even more importantly, we have done work to restructure our customer base from where we were 1.5 years ago when we decided we needed a better customer base and a more profitable customer base for our performance ingredients. We made a step in that direction that resulted in a reduction in our revenues last year. But as you can see from the results of the first half, I think our efforts have been highly successful to get a very broad profitable consumer -- customer base for our future growth, and we see the revenue potential in our pipeline to cross over into profitability. Regarding production capacity, we did complete improvements to our production line this spring to meet our needs for 2026, and we are working on improvements to our production line right now to meet all our current plans for 2027. We have mentioned that in the future, when we become a fully standardized scale inhibitor in detergents and we get into one or more of the major players, the volumes are far beyond what we think we would ever do here in Stratham. And we also want to be able to have a second site. So a number of years out, it's -- we're starting to look at it. It's not imminent on it, but we are starting to think about where and what we would do in the terms for that. We do not need cash for that right now. When we do get there, we expect that we'll have many funding opportunities to do it on it, but it is something we're starting to plan on because of the progress that our scale inhibitors are making into larger and larger accounts. In terms of broader revenue opportunities, new applications, we're going to stay fairly focused on where we are. We have some opportunities in sustainable leather. Those are in play, but we don't -- we are not expecting any major volumes out of those now. There are some other small applications opportunities that are brewing, but our focus is on where we are right now. In terms of new products, we're going to focus on another generation of scale inhibitors, some improvements we can make that we believe the market will -- is looking for on it. But our other programs in terms of our super absorbent program, as we've mentioned in the past, it's there. We're continuing some work on it. We do not see the relative advantages that we can have in the marketplace for revenues. We think that the areas we're focusing on right now are better. So our outlook remain -- for 2025 remains very positive. We have the revenues, we have the profitability to meet all of our expectations for 2025 and to be in excellent position for 2026, to meet our expectations for 2026. So in terms of the overall summary of where we are, we are making -- we have an excellent proprietary technology platform that's going to generate a broad range of valuable ingredients that deliver performance, affordability, renewability to a broad range and growing range of consumer end products. We see very little competition and that we can now focus in on the areas that we have right now with low capital intensity to be able to achieve our near-term and long-term objectives to being a large specialty ingredient company. So it's a very exciting time for us. I think the progress that we've made over the last 18 months has put us into an excellent position for our next stage of development. Thank you. Operator: [Operator Instructions] I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by investor dashboard. John and Laura, as you can see, we received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Laura Denner: So the first question that we have that was pre-submitted. The company has seen impressive growth over the past year. Does it still aim to reach $100 million in turnover? If so, what is the realistic time scale for this? John Shaw: We have -- we are developing the product portfolio. We have the technology platform to be $100 million. We are advancing products to be there to be a $20 million, $30 million, $40 million, $50 million product, I believe, with our scale inhibitors, and we are adding new products on top of it. So I think we have clearly the technology platform to do it. With our scale inhibitor, we have the specific product to get a major portion of the way there. With our odor neutralizers, we have a very nice addition to it and now starting the path with our specialty monomers to compete in the butyl acrylate market and the special needs of butyl acrylate market. I think we now have all the product plays in place to get there. The specific time frame, don't know. It really depends in terms of how long it takes to get our monomers into use on it but that's still our growth and expectation. Laura Denner: The next pre-submitted question, please advise latest breakeven and profit time line expectations. John Shaw: I believe I addressed that in the presentation. We are one more revenue step away -- one more major revenue jump away from reaching that. We have those opportunities in our pipeline, both for expanding our existing customers and additional new opportunities. I can't give you the specific time frame of it, but I think we are approaching that threshold. We are very much at the threshold of achieving that. Laura Denner: Next pre-submitted question was regarding CEO's recent quote, "We have all the capacity we need to meet our needs over the next 12, 18, 24 months. That being said, we are going to start taking a look at our production footprint and what it could look like in the few years out based on some very sizable opportunities and projects in our customer pipeline." Is it possible to give some more insight to this segment of the business or the high-growth areas? John Shaw: I think I've addressed some of this in the presentation. As our scale inhibitor advances to being a standard ingredient and as we're working our way through the private label formulators and the purpose-driven brands, we are getting interest with the large global players. And when we get there, those are very large volumes. When we get to those volumes, where -- we will need another plant and where we put it depends on exactly which player comes through when. But when we do get there, it will be the types of volumes that we believe will be very easy for us to get financing for a larger plant... Laura Denner: So the next pre-submitted question, despite a stellar past year, the share price is still subdued. What is the company doing to attract new private investors? John Shaw: We are -- I believe we're exiting a period of restructuring where the revenue decline that we had last year was concerning to people about the validity of our long-term story. With the results that we have out in the first half and to be able to demonstrate that we have, in fact, restructured our customer base to have a better customer base and a more profitable customer base and a customer base that has all the revenue potential to meet our near and midterm objectives, I think we're now in a position to be more aggressive at getting awareness out of exactly where we are and where we're going. Laura Denner: Next pre-submitted question is in regards to the OTC share trading platform. There has not been a trade on this platform since the 28th of February 2025. What can be done, if anything, to raise Itaconix' profile and number of trades? Friends, no director trade/purchases since early 2024. Will this change? John Shaw: The OTC listing is very important for a large percentage of our shareholder base that are in the U.S. It does allow us to -- our U.S. shareholders to hold their shares in their brokerage accounts and to buy and sell shares on it. That being said, our -- in terms of the dynamics of focusing in on our Investor Relations and what I just spoke about earlier about being in a position to get our story out, we are going to focus in the near term on the U.K. market, but do see opportunities to start addressing the markets outside of the U.K. It is relatively more expensive from an Investor Relations standpoint to access some of those. But the OTC listing did achieve our objective of being able to allow the large number of U.S. shareholders to be able to hold their shares in their brokerage accounts like U.K. investors are allowed to do so that there's some parity and quality there. Laura Denner: So one of the questions that came in from [ Alex A ], why is SPARX' gross profit margin only 13%. John Shaw: The SPARX program is a formulation and value-added reseller program, where we draw brands into next-generation formulations better and faster than any other approach we know of. So 13% is a value-added reseller. This is the margin that we're getting on our services and on the reselling of other non-iconic ingredients into these formulations is very attractive. And you can think of it as a very efficient and funded sales and marketing program. It's the best, fastest way that you can get brands to get better consumer products that we -- that our ingredients enable. It's the best, fastest way to get them out there, and it's been very successful at it. And we're generating profits by doing it. Laura Denner: Another question on our SPARX program from [ Kevin R ]. How are the 10 new SPARX products due out this year progressing? John Shaw: Some are already out on the market. We have some in -- they're in the dish area and in the laundry area. The 10 are either already on the market or they're going into production. And I think we've shipped the ingredients already for those to make it out there. So there are fundamentally new -- there's some new dish detergent formulas out in the market, next-generation ones and also in the fabric area. We expect those to advance into some other areas early next year. Those are in process, but they are not ready to go into production. So the SPARX program is doing everything that we wanted to do, and we think it will continue to do it well over the next 2 years. Laura Denner: Another question submitted during the presentation was from [ Sid B ]. Is Itaconix targeted or suited for small brands, private label offerings, they are cleaning and premium products? John Shaw: A major target for us and our customer base is built around -- right now, it's built around purpose-driven and private label brands where we bring competitive formulations that they may not have available to them to allow them to compete against the larger global brands. So that is the core target of what we do in both Europe and in North America is to give the second and third tier brands all the competitive position they need to compete on the retail shelf. Laura Denner: So another pre-submitted question. Can you advise on where we are in regards to staffing or filling of the current positions being advertised? John Shaw: We have expanded our organization, we've expanded our marketing capabilities, and we've added to our research and development capabilities. But most importantly is our production staff. So we do run 24 hours a day, multiple days a week, and we have 2 full production crews for that. We are always advertising to add people to that to make sure we're in a position we always have staffing available. So we're in a pretty good position right now, but a lot of work was done over the last year to rebuild the organization, so we have reliable fulfillment. Laura Denner: One of the pre-submitted questions, what sort of time scale are you looking at for the next edition of the BIO*Asterix product range? How has the initial response been to the e-commerce site? John Shaw: The e-commerce side is doing everything we had hoped it to do, which is it's -- it's like getting paid for advertising. It gets us out in front of a lot of universities, a lot of industrial labs. We got the first -- I think we got the first order within a matter of weeks of being out there. It is generating inquiries about the use of itaconic monomers on it. And we see that continuing on. The next phase of development for us, as I mentioned earlier, is actually to drive -- is to partner with someone to pull a BIO*Asterix-enabled end product onto the market so that the rest of the world can see exactly what you can do, the special things that you can do with our monomers on it. So that is probably the next phase for us is to find a partner and to get an end product out on the market to energize the entire process. Laura Denner: Another pre-submitted question. Can you advise on what impact the following will have on demand for itaconic ingredients, increased revenue streams in 2026 from June 13 to June 2025, 8 new cosmetic ingredients were notified with the Chinese National Medical Products Administration, notification to 2025... John Shaw: I'm familiar -- the very important step that we received in the beauty side of it is that our hair styling polymer was listed on the China inkey list on it. So we had sodium polyaticonate listed on the China Inkey. The other ones in that release were not our products. The sodium polyaticonate was ours. That was a very valuable step. We spent a considerable amount of effort to get on to it because the global companies really don't want to look at your ingredient unless you have a China inkey name on it. So even immediately after getting that, I think we got an order from a distributor out of Europe because we're able to achieve that. So -- but it was just one product, the other ones were not ours. Laura Denner: So in the last question -- another pre-submitted question. In the last presentation, you talked about the current superabsorbent ingredients we have available with the comparable market performance, but the cost was an issue. Can you elaborate on why it is so more costly? And are you looking for ways to remedy this? John Shaw: As a company, what we look for is when the 2 carboxylic acid groups that you have from itaconic acid bring some value beyond the single carboxylic acid group that acrylic acid has. That is extraordinarily true in the performance ingredients that we have. It is also true in certain aspects when you get into paints and coatings. Superabsorbents is the last big segment within the acrylic acid market. And the 2 carboxylic acid groups, we do not believe brings any additional value. So we're on a straight chemistry to chemistry basis. As I've spoken about before, our underlying monomer, the pearl is produced by fermentation. Acrylic acid is produced by synthesis of fossil fuels. Fermentation will always be more expensive than chemical synthesis from a fossil fuel. Second of all, from the polymerization process, our entire polymerization, the entire potential for itaconic polymers comes from how difficult itaconic acid is to polymerize. Acrylic acid likes to polymerize. So it's a faster -- it's an underlying faster process on it. So we have a more expensive pearl and a more expensive process to make a string of pearls on it. So we never expect our superabsorbent on a straight cost basis to compete against a fossil fuel-based acrylic acid superabsorbent. What there is, is there is a small segment of the market that's potentially to access to be able to do it. But for right now, relative to the opportunities that we see for unique functionality that we can use in paints and coatings and in water solubles, we're focusing there. We are continuing to work, though, to find that 1 or 2 brands within the superabsorbent side, some purpose-driven brands that would be able -- would be willing to pay a significant premium over -- for a superabsorbent over what you can do with an acrylate-based superabsorbent. We continue to look for that. When we find it, we will pursue it, but we're not there yet. And our focus right now is on being profitable and working on areas that we think have the best opportunity for us to be -- to grow in the next 18 months -- 24 months. Laura Denner: Another pre-submitted question. Itaconix was a project partner in a funded grant looking into new branched polymers. Can you advise on this? And if there is any potential future commercial advantage to this research or any further progress in this area? John Shaw: This is a U.K.-based research project that was run out of the U.K. some number of years ago. There is no activity in that area nor are we pursuing anything in the drug delivery area. Laura Denner: Another pre-submitted question. How are the Itaconix products going down with the new customers? Any chance of getting some feedback with testimonials? John Shaw: The best testimonials is to see them show up on ingredient lists, and they are showing up in more and more ingredient lists. One of the difficulty we have in our Investor Relations is that every one of our customers thinks that we're the special sauce and they don't really want to let other people know about it. It's been an ongoing problem when you have a great specialty ingredient. So we are looking to that. But today, our brands are reluctant to advertise with their special sauces. Laura Denner: Another pre-submitted question. Any interest [Technical Difficulty] from agricultural fertilizer companies who can use itaconic acid in maize or... John Shaw: Crop micronutrients is an area that we've looked at. It's a fairly long path to do it. So we are not pursuing anything in crop production right now. I have worked in that area. In North America, you need to go state by -- it is a state-by-state regulation process to get into crops on it. And it's a very long process and a very dedicated effort. For right now, we're focused on becoming profitable at a $20 million, $30 million, $40 million, $50 million company with the products that we have right now. It is a great opportunity in the future. But for right now, we're going to -- we're focusing our resources on being profitable and hitting our near-term revenue potential. Laura Denner: Another pre-submitted question. Any update on sustainable fashion? John Shaw: We have a number of customers that have used and are looking to use our polymers in sustainable leather. That is -- we work with them. We don't have as much line of sight into what their activities are in the marketplace, but there clearly are formulations that they have that they are promoting to their customers on it. In terms of the specific dynamics of what's going on in end markets for sustainable leather, we don't have that insight on it. But we have well established -- we do have customers that have well-established formulations for more sustainable tanning processes using our product, and we're ready to serve them as soon as those formulations go into commercial use. Laura Denner: We had several questions about the share price. With the share price so undervalued, what do you anticipate the company moving to profitable position to turn the share price around? John Shaw: Our focus is on profitability. We believe that when we get into profitability that we will open up the potential for a wider number of institutional investors to look at us. We have come through a difficult period in 2024 with a down year on it. So we have rebuilt it, and we're ready to go out and tell a better story -- our story to it to a wider audience. I do think profitability will open up a broader range of potential investors. Laura Denner: So during the presentation, [ E&T ] asked 3 customers cover 49% of turnover, if I read it right. Is some industries that can be dangerous and the loss of 1 or 2 of these would be hurtful. Are you sure you are using -- keeping these 3 customers? You did let go a major customer last year due to smaller gross profit on these sales. If these sales were still profitable, albeit at a smaller percentage, would the overall result have been better and bring you closer to breakeven? John Shaw: We are achieving 45% gross profit margins in our Performance Ingredients. That's well -- I mean, that's a very attractive performance ingredients business. We were not there a couple of years ago on that. So the customers that we have now are allowing us to have an overall 45% gross profit margin on it. And they have pricing that we've -- stable pricing we've given to them. So we do not -- we think we're in a fundamentally different position than we were 2 years ago with our customer base on it. It's not -- we believe we are going to keep those customers. More importantly, to look at is what a little sliver they were 3 quarters ago. They were a little sliver of our revenues, and they've expanded to that. Remember, in our existing customer base right now, there are some slivers in our first half revenues, similar slivers that we expect to expand into similar percentages. So on a percentage basis, as we grow, we think that 14% of revenues will come down dependence on any one customer. But that's because what it shows is we land and expand and there are lots of little slivers in our first half revenue results that we expect to expand. Laura Denner: Submitted question by [ Sid B ]. Do you see Itaconix becoming a reliable partner to the world's largest cleaning brands? Or do you see Itaconix sticking to the Tier 2, 3 brands? John Shaw: We very much want to -- we very much have a significant calling effort on the global leaders. They know about us. They know about how our chemistries work. They can see that our chemistries are working in the marketplace. We have projects progressing significant sized projects with them. It just takes them out. It takes time. The reason to focus on these smaller brands is to get to a profitable stage and to get your ingredients ubiquitously out onto as many product labels as possible so that there's high certainty that your product is going to work, that you've been delivering and fulfilling customer needs for multiple years and that your product works on it. We are absolutely going after -- we're absolutely going after the larger players. And I think over time, we will be successful. Our scale inhibitors are that good. Laura Denner: [ Tony P ] asked during the presentation, any markets beyond the U.S. and Europe? John Shaw: We are approaching global markets. We do have Croda working in odor control around the world. I believe they have revenues in Asia, Europe, elsewhere. We do have Nouryon working on hair styling. They have revenues around the world on it. We have started -- we have serviced a detergent customer in Australia. We believe we'll start expanding into parts of Asia with some revenues. So yes, the issue with the scale inhibitor remember, though, is that we are a replacement for phosphates. In other parts of the world, if regulatorily, you're allowed to use phosphates, a lot of times people are using them. So we need to make sure that people are trying to move away from phosphates because that's where an alternative. But we definitely are -- as we've spoken in prior presentations, we've expanded our regulatory footprint to cover the world. We have China, South Korea, Australia, New Zealand, Japan. We have the global footprint that we -- regulatory footprint that we need, and we are active. But from a resource standpoint, we still want to make sure that we reach the next level of revenues, and it's going to come in North America and Europe. Laura Denner: Another pre-submitted question would be can the remaining $5.7 million in cash equivalents takes Itaconix to cash profitability? John Shaw: Yes. We believe we have all the resources we need to reach profitability. Laura Denner: That's it for questions. John Shaw: Excellent questions. Thank you, everybody, for submitting those questions. Happy to answer them. So you understand in depth what a great position we're in on it and really appreciate your support, particularly over the last 12 to 18 months where we did go through that difficult process of restructuring our customer base. We're in an excellent position and look forward to reporting great results to you in the future. Operator: John and Laura, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of Itaconix plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Martin Sorrell: So good afternoon from London. Good morning in New York, wherever you are. I'm joined in London by Radhika, our CFO; Scott Spirit on my right, Chief Growth Officer; and Jean-Benoit, our Chief Operating Officer on the extreme left. We have Bruno Lambertini, who runs our Marketing Services business from Miami. I think he's still in Miami. Thanks for getting up relatively early this morning, Bruno, for being with us on this call and where's to heart is in Amsterdam. So we're going to cover the results. Radhika is going to cover the results for the first half of 2025, then Scott is going to talk a little bit about what we see going on in the market and with clients. Wes is going to cover artificial intelligence and its impact on our business currently and in the future. And then I'll just do a brief summary and outlook before we take any questions if there are any. So Radhika, over to you. Radhika Radhakrishnan: Thank you, Martin. Good morning, good afternoon, and thank you for joining us today. I will start with the financial headlines for 2025. Performance in the first half was impacted by volatile global macroeconomic conditions, tariff uncertainties and larger tech clients, which represent almost half of our revenue, continuing to prioritize capital expenditure on expanding AI capacity. Net revenue was GBP 328.2 million, down 10% on a like-for-like basis and 12.7% on a reported basis. Operational EBITDA was GBP 20.8 million, delivering a 6.3% margin in the period. Adjusted operating profit was GBP 16.4 million and adjusted earnings per share was 0.2p compared to 1.2p in the prior period. We closed the period with a net debt of GBP 145.9 million compared to GBP 182.9 million at 30th of June 2024, an improvement of GBP 37 million. The month-end average net debt for the period improved by GBP 52 million, about 27% from GBP 196 million to GBP 144 million. The company generated GBP 16 million of free cash flow in the first half of 2025, reflecting strong focus on working capital management. Leverage was 2x pro forma 12-month operational EBITDA versus 2.2x this time last year. Moving now to the income statement. Revenue of GBP 360.4 million, down 11.9% like-for-like and 14.7% reported. Net revenue decline reflects the general client cautiousness given the wider challenging macroeconomic conditions. We continue to have a disciplined approach to cost management. Personnel and operating expenses were reduced by 11.2%, and the number of months at the end of the period was around 6,900, 4% lower than December 2024. A cost reduction plan is being actioned in the second half of 2025 to align our personnel cost to revenue ratio down from 76% towards the industry averages of 65%. Operational EBITDA was GBP 20.8 million with a 6.3% margin, down 190 basis points like-for-like and 170 basis points on a reported basis. Finally, net finance expenses, which mainly relates to the long-term loan increased primarily due to adverse foreign exchange movements, partially offset by the reduction in the interest rate. Looking at our 2 practices now, Marketing Services and Technology Services. We reorganized into 2 practices at the beginning of the year, 1st of January, with Marketing Services reflecting the legacy content and DDM practices. My comments here are all on a like-for-like basis. Net revenue in Marketing Services was GBP 299 million, down 6.4%, reflecting the timing of new business wins and ongoing client cautiousness. Technology Services was GBP 29.2 million, down 35%, reflecting longer sales cycle and reflecting the revenue reduction by a major client, although this will cycle out in the second half of this year. From a regional perspective, the Americas, which includes Technology Services, was down 9% and accounts for 79% of our revenue mix. EMEA declined 13% and Asia Pacific declined 15%, accounting for 16% and 5% of the mix, respectively. Moving on to operational EBITDA by practice on the next slide. Again, my comments are on a like-for-like basis. Marketing Services operational EBITDA was GBP 28.5 million, down 14% with a 9.5% margin. The revenue shortfall was partially offset by the reduction in the number of months and other cost efficiencies. Technology Services operational EBITDA was GBP 2.6 million, down 57% with an 8.9% margin. This was primarily impacted by longer sales cycles for new business. And as I previously mentioned, the revenue loss from a key client, which will cycle out in the second half of this year. Moving to the next slide. We continue to maintain a strong balance sheet with sufficient liquidity and long-dated maturities. We ended the period with net debt of GBP 145.9 million, an improvement of GBP 37 million from GBP 182.9 million as at the end of first half 2024. Leverage is 2x against 12-month pro forma operational EBITDA, an improvement from 2.2x as at 30th of June 2024. There is headroom against the key covenant of 4.5x pro forma operational EBITDA. The EUR 375 million term loan matures in August 2028 and the GBP 100 million RCF remains undrawn, GBP 80 million of which facility extended to February 2028 on the same terms. I'll now move to the cash flow side. There was a working capital inflow of GBP 19.2 million in the first half of 2025 compared to GBP 4.2 million in the prior half year, reflecting the strong focus on working capital management. Capital expenditure of GBP 2.1 million is primarily related to IT equipment. Interest paid includes the lower cost of our term loan, while lower tax paid reflects our performance in 2024. Restructuring and other one-off expenses include GBP 6.3 million of restructuring payments and finance transformation projects of GBP 2.6 million. Free cash flow rose to GBP 16 million compared with GBP 3.1 million in the first half of 2024. We can now move to the net debt bridge slide. Net debt, as I mentioned before, was GBP 142.9 million as at 31st of December, which translated to GBP 160.4 million at the closing exchange rates. The group generated GBP 16 million of free cash flow in the period, contributing to the closing net debt position of GBP 145.9 million, which is 2x leverage against 12-month pro forma operational EBITDA. Turning now to the guidance for the remainder of 2025. Full year like-for-like net revenue is now expected to be down by mid-single digits. However, we continue to target like-for-like operational EBITDA to be broadly similar to 2024. We expect a stronger second half performance with a greater weighting than in the prior year, enhanced by the impact of new business revenue, including wins already secured and further incremental cost reductions, which are currently being actioned. We forecast a net finance cash charge of around GBP 29 million and an effective tax rate of 30% to 32%. Our expectations for net debt for the year-end is in the range of GBP 100 million to GBP 140 million as we continue to focus strongly on cash flow management. As net debt is reduced and falls below GBP 100 million, our capital allocation policy will return cash to shareowners through a mixture of dividends and share buybacks. With that, I will hand over to Scott for the market update. Scott Spirit: Thanks, Radhika, and thank you for joining us, everyone. In the past 2 years, we've had some challenges, which have impacted both our growth and our margins. In 2023, the tech companies unexpectedly pulled back aggressively with significant redundancies and cost cutting, addressing their expansion post COVID. Meta referred to this as a year of efficiency and others followed suit. Sales and marketing expenditures were reduced across the board, having historically posted strong double-digit growth. This approach to cost discipline continued in 2024, driven by their strategy to invest significantly in CapEx, primarily hardware and software related to artificial intelligence. In 2024, the hyperscalers, Google, Meta, Amazon and Microsoft increased CapEx investment 56% to almost $250 billion. And this meant further pressure on operating and marketing budgets in '24 with Amazon flat and Google and Meta both down. This affected our competitors, too, but given we have almost 50% of our revenues in technology, it had an outsized impact on our ability to grow. The relationship with Mondelez ended in '23. And in 2024, First American, a tech services client, saw very significant pressure on their business given higher interest rates and as a result, decided to ramp down the work streams they had with us. High interest rates and economic uncertainty led to client caution, which impacted our project-based business, especially our ability to win new remits locally. We paused our M&A strategy in 2022 after 30-plus transactions in 5 years, the scale of which posed some challenges for us from an integration perspective and a need to focus internally. And finally, with declining revenues, despite cuts and cost controls, our staff cost ratios remained in the high 70s versus an industry average of 65%. And the challenges we've had with our revenue trajectory have made it difficult to align costs with revenues. The first half of 2025 has continued to be challenging, but we've been addressing these issues to rebuild our foundations for growth and have seen progress, which makes us more optimistic moving forward. Firstly, the pace of tech client spend cuts has slowed. Whilst the investments in CapEx continue to grow at a significant pace, the operating expense cuts I mentioned earlier have stabilized with the declines in sales and marketing expenditures moderating towards the end of 2024 and stabilizing so far in 2025, particularly at Google, our largest client, as they start to invest in differentiation for their AI products in a highly competitive market and illustrate some ROI on their CapEx investments. Second, we continue to innovate our product. We originally launched our AI platform, Monks.Flow at CES in January 2024. And over the course of the past 2 years, we've continued to innovate, win awards, bring onboard partners such as NVIDIA, Adobe and Runway and implement at scale with existing clients such as Google, BMW, SC Johnson and Amazon. We've also developed and started to convert a specific AI-focused sales pipeline, and there'll be more of this later from Wes. Thirdly, with client wins. The whopper client losses are mostly out of our comparables, and we've had a stronger pipeline and new business performance recently, starting with General Motors a year ago, and we've had a regular cadence of significant wins, including T-Mobile, Amazon, PIF and more recently, a leading U.S.-based FMCG, which we will announce soon. Whilst the overall number of months has declined, we have continued to hire and increase talent across country regional management, capabilities growth and client leadership, talent who are now driving those new business wins. And we've also made hires with an operational focus on the optimization of pricing, utilization, billability and improving our margins and getting staff cost ratios in line. Finally, on centralization and cost control, from an integration perspective, the mergers are all now fully integrated, and we go to market as a single brand, amongst. We have centralized key functions such as finance, legal, HR and IT, and the company operates on the same platforms such as Slack, Salesforce, Workday and Google Workspace. Our migration to a single ERP is well underway and will be completed in early 2026. We've simplified the business around marketing and technology services, and we have a clearly articulated organizational structure based around geographical leadership and capability expertise. We have and continue to implement cost controls with the goal of getting our staff cost ratios in line with those industry averages. So overall, with positive new business trends and some stabilization in tech company spend, continued progress in our AI product offering and a strong focus on cost, we anticipate an improved performance in H2. We reiterate our EBITDA guidelines for 2025 and are set up well for 2026. From a client perspective, we have a really compelling client list with some of the world's leading and most innovative companies. In 2024, 9 of them are what we call whoppers, that's with revenues of $20 million plus, which is a differentiator for a company of our scale. Most of our direct competitors have a much more fragmented client list with smaller relationships. As you can see, we continue to have a significant presence in the technology industry. You can also see the GM win has positively impacted our auto share and other recent wins have been in telco, financial services and FMCG. These are strong relationships that help us attract and retain talent to work on them. The continued softness we're seeing in technology client spend, the First American decline in our tech services practice have had a negative effect on the average revenue size of our top 10, 20 and 50 clients. But this is primarily driven by reductions in spend rather than lost business. With that, I'll hand you over to Wes, who will update you on our artificial intelligence initiatives. Wesley ter Haar: Thank you, Scott, and hi, everyone. I'll spend 10 to 15 minutes on the AI update. As we just heard, we are seeing compression in the traditional parts of the advertising and marketing services business. I think where we differ is a very aggressive focus on the opportunity that AI disruption offers and the strategic changes we're making to our full company, team size, organizational structure, operating model because by doing that, we believe we can take full advantage and capitalize on these trends. So talked about earlier, we're in the midst of reshaping our business to be fully AI-enabled. I actually just came out of the session here in our local office. The current cost reduction exercise is a part of this approach. That improves our prospects heading into H2. We also believe it sets us up well for next year as it will allow us to continue to build on our own transformation. That means strengthening even further our new capabilities, scaling out Monks.Flow, which I'll talk about in a moment, and then also the ongoing upskilling of our workforce. If we go to the next slide, we said on day 1, Slide 1 of our very first AI update nearly 3 years ago that AI changes the economics of advertising. The services we launched then are the key drivers of our new business growth today. So we have our consulting revenue, which is up strongly year-over-year, admittedly from a small base, but we expect the interest in this service to continue. We've also added 2, to Scott's point, whopper clients in the last 12 months, where we have both GM and the FMCG mentioned earlier, choosing amongst really clearly because of our industry-leading AI offering. And the reason that we are fasting first when it comes to that offering is that we believe AI is eating the agency business. We don't believe that's controversial to say. It collapses the cost of creativity, collapses the cost of media management. And whether agency leaders admit that or not, clients know that, that is true and they want it. We estimate about 65% of the task agencies get paid for currently could be done by AI agents within today's technology. And keep in mind that today is the worst that technology will ever be. One of the most powerful go-to-markets we've seen is our agencies, the agents go to market with a very clear promise. We're going to help you reduce the cost of the full marketing supply chain by adopting AI quickly and adapting to it from an organizational perspective. We can go to the brave slide. We call this the brave slide as it takes a certain level of [ bravery ] for clients to fully commit to this level of change. But those that do, which means where do you have people in the lead, but are you offloading more and more manual efforts to Agentic workflows? Where do you put people in the loop versus in the lead? And how do you get to mass marketing as a service? We're on that road map with quite a few clients now, and we expect that to take 2 to 3 years at most. The conversation we have quite often with analysts, especially is where does the money go? We're seeing it play out in a few different ways. So for our most forward-thinking clients, they are moving away from paying for time and material, the idea that the hours a person spent on something is a good proxy for value feels quite outdated, which means we're actively initiating a shift to value-based models. That means annual recurring revenue for our software, output-based billing for our services. And if you look at our current revenue, that's relatively small as a percentage today. We do see that as a way to align our business with the future broader shift of corporate spending, which clearly is towards AI automation and intelligence and away from the human hour. The other areas where we see the money moving is partly in consulting services and partly in system integration. A key part of our strategy here is monetizing partnerships with some of the world's largest technology companies. At the enterprise level, you're talking about the NVIDIAs, the Google Clouds, the AWSs and Adobes of the world. We're also very well connected to the emerging layer, think about newcomers like Runway and Luma. There really is no future for marketing services where there's no deep technological expertise and really operating as what I would call a system integrator for the AI economy to get the scaled impact. Both of these, of course, consulting and system integration are core capabilities for Monks, which makes us a change agent, and I would say, choice for the modern marketer. That is reflected back at the industry reputation level. So last year, we were the first ever AI agency of the year with Adweek. This year, we are the first ever AI pioneer at the one show. We most recently added AI awards from Digiday. If we go to the next slide for some of our work with Headspace, which is very practical, very viable and sellable for our clients. We also just got note of another AI award that's still under embargo, but we should be able to communicate relatively quickly, specifically for Monks.Flow as a technology solution. What this confirms is that we are innovating at a substantially higher clock speed than our competitors in both the agency and the consulting landscape. And while change of this magnitude is never easy, and I think I can speak for our whole team that we would like nothing more than to move faster with this change. The markets where we are most progressed in our own transformation are showing positive results. What are positive results, significant increase in year-over-year pipeline and a clear up-leveling of our strategic importance to our clients. I think that strategic importance is quite interesting to illustrate it. Members of our team have been the key AI speaker at well over 50 client and industry events since our last session together. I think we're broadly seen as the strategic partner that is both very transparent about what's happening and can help you go through that transformation because of 2 reasons. And this really comes down in a very simplified way to why clients are choosing Monks. One is our agents and one is our expertise. So if we start with agents, we were the first to launch an AI solution for marketers with Monks.Flow. We called it Flow for a reason because we have been very consistent in our strategy that this is about transforming workflows. The importance of this was recently confirmed by MIT. They launched a report that said 95% of Gen AI pilots fail. And why do they fail? Because people were using generic tools, which might be slick enough for a demo, but are way too brittle for enterprise adoption at scale. If we go to the next slide, that's where the Monks.Flow ecosystem really shines. A large technology client just put Monks.Flow through a very rigorous testing and benchmarking process, and we're proud to say they are now recommending it strongly to their teams across the globe, which really shows that we are able to not just compete but beat industry peers, making [indiscernible] GBP million plus AI investments. If we go to the next slide, I think another important note for anybody that was at Cannes Lions this year, you'll know we were also the first to launch fully functioning AI agents as part of Monks.Flow across the marketing supply chain, which was easier for us to do because of our focus on workloads. It's made it a very natural evolution. It means that we are now packaging our talent and our machines. We call this a new T&M model as managed services to deliver faster, better, cheaper and more for our clients. This is a very popular package flow adaptation, which really solves a lot of speed, scale and spend and complexities that many organizations still struggle with. We have them across the big 6, right insight, strategy, media management, performance, we're currently in a weekly launch cycle. The team is working at a really high velocity. If you want to see the next big Monks.Flow update, we'll be launching that at CES, and it will make it even easier for brands to move from agencies to agents across the big 6, insight, strategy, creative, versing variations and adaptation as sort of the scale push and then media deployment and performance. But it isn't just about technology. When you think through this from an expertise perspective, clients are really looking for 2 areas of expertise. One, the expertise to make change happen. That means providing our consultative services and ability to identify and prioritize AI use cases, then actually model and drive a change agenda across an entire organization. We combine that essential capability with deep, deep marketing expertise, which is really required to support the CMO, right? Consultancy or tech alone doesn't really work. We understand the jobs to be done because we spent well over 2 decades doing them, which makes us the best partner to bring this level of change to bear. When you bring these capabilities together, you get some really interesting outcomes. So what we'll show here in a moment is recent Agentic filmwork for Google Pixel. It showcases the power of Gemini's LLM stack and the Veo 3 video model. All of these are truly best-in-class. And the video will show isn't just fully AI generated. So all the output you're seeing is AI and also proves our past and kind of value when it comes to AI output. A large percentage of the pre, post and actual production work was also done by AI agents, help with scripts, storyboarding, territorial thoughts and choices, brand alignment, et cetera, et cetera, was done with Agentic workflows. Let's look at a quick video. [Presentation] Wesley ter Haar: Thank you. Well, it's interesting depending on the size of our client organization, this type of solve can save millions, tens of millions, potentially hundreds of millions while still delivering at the highest creative standards that our industry expects. And that combination of agents and expertise is why clients trust Monks to help them navigate the most important shift they've seen in their business for perhaps a generation. And I'll end with a question that's driving all of these efforts. Do you think the future of media marketing and advertising involves more AI services and spending or less? Our belief is very clear, and it's driving every decision we need to make. And with that, I will hand it back to Sir Martin. Martin Sorrell: Thanks, Wes. Thanks, Radhika, and thanks, Scott. So just a brief summary before we take any questions. First, on net revenue in the first half of 2025 was down 12.7% in reported currency and 10% like-for-like. For the full year 2025, our net revenue is expected to decline by mid-single digits on a like-for-like basis, primarily due to the macroeconomic uncertainty around tariffs as well and continued client caution. From an EBITDA point of view, in the first half, we were at GBP 20.8 million, which was in line with expectations. And we maintain our full year target for EBITDA for this year, which is expected to be broadly similar to 2024 on a like-for-like basis, driven by the phasing of new business revenue that we've mentioned and further incremental cost reduction actions, which are being implemented. Wins such as General Motors, Amazon, T-Mobile, PIF and a leading U.S.-based FMCG company that we will announce shortly are expected to ramp up in the second half of 2025, supporting a greater second half weighting this year than usual. Free cash flow in the first half was GBP 16 million versus GBP 3 million -- just over GBP 3 million in the first half of 2024, and we maintain our 2025 target net debt range of GBP 100 million to GBP 140 million. The company paid a first-time final dividend of 1p per share for last year on the 10th of July, and that amounted to just over GBP 6 million, and the Board will consider an enhanced final dividend for 2025 if the second half performance and liquidity targets are delivered. As Wes has gone through, we're seeing our AI initiatives produce even more effective and efficient solutions for our clients. And this capability is driving significant new business opportunities for us and broaden relationships with our existing clients. But we maintain a disciplined approach to managing our cost base and continue to focus on greater efficiency and greater utilization, billability and pricing. And finally, we remain confident in our strategy, in our business model and in our talent, which together with the scale client relationships position us very well for growth in the longer term. So with that as a summary, have we got any questions? Operator: [Operator Instructions] Martin Sorrell: No questions, operator? Okay. Thank you... Operator: We seem to have no questions coming through, Mr. Martin. Martin Sorrell: Thank you very much. Thanks, everybody, for joining us, and we will see you for our third quarter in a couple of months. Thank you very much. Thank you.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time I would like to welcome everyone to Hain Celestial's Fiscal Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Alexis Tessier, Head of Investor Relations. Please go ahead. Alexis Tessier: Good morning, and thank you for joining us for a review of our fourth quarter and fiscal 2025 results. I am joined this morning by Alison Lewis, our Interim President and Chief Executive Officer; and Lee Boyce, our Chief Financial Officer. Slide 2 shows our forward-looking statements disclaimer. As you are aware, during the course of this call, we may make forward-looking statements within the meaning of federal securities laws. These include expectations and assumptions regarding the company's future operations and financial performance. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations. Please refer to our annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed from time to time with the SEC as well as the press release issued this morning for a detailed discussion of the risks. We have also prepared a presentation inclusive of additional supplemental financial information, which is posted on our website at hain.com under the Investors heading. As we discuss our results today, unless noted as reported, our remarks will focus on non-GAAP or adjusted financial measures. Reconciliations of non-GAAP financial measures to GAAP results are available in the earnings release and the slide presentation accompanying the call. This call is being webcast, and an archive will be made available on the website. And now I'd like to turn the call over to Alison. Alison Lewis: Good morning, everyone, and thank you for joining the call today. I will start today's call by providing a brief commentary on the quarterly results and then share my observations since taking on the CEO role at the beginning of the last quarter. I'll then walk through the decisive actions we're taking to reshape our business and the turnaround strategy designed to strengthen our foundation and win in the marketplace. Then Lee will provide a review of our fourth quarter results in more detail along with our outlook. We are disappointed with Q4 performance, which came in well below expectations on the top and bottom line driven by shortfalls in both the North America and international segments. In North America, velocity challenges and distribution losses in snacks weighed on performance. And in International, there were external factors affecting results in the quarter, including category-wide softness in wet baby food and unusually warm weather, which negatively impacted soup. Despite these short-term challenges, International remains a bright spot, and we gained market share across our total U.K. business last year. This business has clearly not been performing. At a high level, previous leadership focus had leaned heavily towards building structure, strategy and process, but we now need to dial up execution and delivery. Hain built a global operating model designed to support a much larger business which had the side effects of both inflating our cost structure and slowing down decision-making rendering us less nimble and less profitable. Compounding the issue, the company did not implement significant pricing actions in the most recent years when industry inflation was still running at a high pace, relying solely on productivity improvements to offset higher costs. As a result, many of the levers to drive growth such as innovation and e-commerce were shortchanged and have not delivered at the rates required to win in our categories. We now must reshape the business in order to improve our trajectory and unlock Hain advantages in the better-for-you space. Our immediate priorities are clear: optimizing cash, deleveraging our balance sheet, stabilizing sales and improving profitability. We have already begun to drive changes and have recently hired an interim Chief Business Transformation Officer, [ Sara Turchwell ], who brings to our business a track record of success from private equity. Sara will steer our cost reduction, streamlining and restructuring efforts. We are implementing what we refer to internally as our no regrets moves and taking decisive steps across our cost structure and operating model. We are taking aggressive cost actions and are committing to an incremental 12% cost reduction in our people-related SG&A. Fundamental to achieving these cost improvements is the unwind of much of our global infrastructure, reducing complexity in our operations and moving to a leaner and more nimble regional operating model. This model has a smaller center to prioritize speed, simplicity and impact across the organization and will result in a cost structure that is better aligned with the current realities of our business. We have restored regional ownership empowering teams that are closest to the consumer to make decisions while placing governance, compliance, people and process efficiencies at the center. As part of this effort, we have moved to two innovation hubs, one in North America and one in International, and we are already seeing the benefits in terms of speed and output, which I'll speak to in a moment. Additionally, supply chain management, along with other functions that are inherently local will move to the regions. We are removing layers and increasing spans across the top of the organization and will drive a more effective operating model in the process. Amidst the challenges in the North America business, we took decisive action to ensure greater accountability and faster execution by eliminating the President of North America role at this time. Given that brand strategy and commercial activation are squarely in my wheelhouse, I am managing the North American region as we fully address the areas of underperformance and expedite change. Our goal with these operating model changes is to reduce duplication, drive faster decision-making and align execution closer to consumers and customers. Beyond the benefits from reshaping our operating cost structure, we are scrutinizing every dollar of spend for strategic benefit and ROI across our P&L levers, while maintaining our consumer-focused investments. We anticipate implementing additional cost savings initiatives following the conclusion of our previously announced strategic review. We are confronting our challenges with urgency and determination, laying the groundwork for a leaner, faster and more execution and delivery focused company. By sharpening our priorities and taking immediate actions to strengthen financial health, streamline operations and energize our brands, we are positioning Hain to compete and win in the marketplace. Our recovery is guided by a clear set of choices and actions that balance near-term financial health with long-term growth. Our turnaround strategy is focused on five key actions to win in the marketplace, streamlining our portfolio, accelerating brand renovation and innovation, implementing strategic revenue growth management and pricing, driving productivity and working capital efficiency and strengthening our digital capabilities. Complexity in our business across our operating model and our portfolio has hampered our ability to move with speed. We are committed to reducing complexity in the operating model, as I just discussed, as well as in our portfolio. We are exiting unprofitable or low-margin SKUs, enabling us to focus resources on brands and categories with the highest growth and margin potential. In tea, for example, we closed fiscal 2025 with 91 different blends of tea across all of our SKUs. Over the next 2 years, we will reduce the number of blends to less than 55, simplifying our internal processes, capturing efficiencies across the value chain and driving margin expansion. To ensure this discipline is sustained, we are embedding portfolio management reviews to assess, add or retire SKUs continuously to maximize portfolio simplicity and value versus relying on large episodic rationalization efforts. In addition, we are exiting or selling businesses where we are structurally disadvantaged or do not have a right to win. Alongside the previously announced decision on personal care, we made the strategic decision to exit the meat-free category in North America. Following several years of declines in the category and a comprehensive internal assessment, we are discontinuing the Yves product line and will be permanently closing its manufacturing facility. Not only is this action accretive to the business, but it will enable us to sharpen our focus and resources on growing our highest potential brands and categories. As a reminder, we have significant strategic review work underway with Goldman Sachs with the goal of maximizing shareholder value. We continue to evaluate the exit or sale of businesses where we are structurally disadvantaged and are exploring other alternatives that will simplify our portfolio. We also expect to have further opportunity to refine our operating model based on the outcome of this work. While we are not yet in a position to share definitive news here, we are making strong progress, and we'll provide an update when we have news to share. Across the business, we have not innovated with the speed or at the level necessary in categories where new news is important. This has been particularly evident in our North American snacks category, where we have fallen behind the competitive set. Going forward, innovation will be a much larger part of our story as we aim to significantly increase our contribution from innovation to growth. In fiscal 2026, we have new products launching across our portfolio. In Garden Veggie, we're revamping our better-for-you credentials and dialing up the flavors with the product renovation of our core straws and puffs, expect elevated taste with new and improved salt profiles along with real cheese, real veggies, no artificial colors or flavors and amplified better-for-you attributes like avocado oil. Further, we have new breakthrough packaging to boost findability, build momentum and win with consumers. Also in snacks is an exciting new format for Hartley's with Juicy Jelly pouches in the U.K. This new format opens on-the-go occasions, including lunch boxes. Juicy Jelly pouches are not only delicious, but made with real fruit juice, no refined sugar or artificial sweeteners and no artificial colors or flavors. Juicy Jelly pouches launched in several key retailers earlier this month, supported by a high reach consumer marketing campaign, featuring out-of-home, sampling events, social and influencers. While it's too soon to comment on in-market results, retailer orders have been stronger than expected. In beverages, Celestial Seasonings recently launched the first phase of our Anytime Wellness platform, marking Celestial's entry into the sizable nonsleep wellness segment. The launch included four added benefit teas for all day enjoyment, She-Well, Good Vibes, Detox Blend and a Variety Pack. In the Meal Prep category, Greek Gods Yogurt will be building upon strong momentum and expanding into the fastest-growing single-serve segment in the second quarter, introducing a product with more live and active cultures than leading competitors across flavors. New Covent Garden, the U.K. #1 chilled soup brand launched a 1 kilogram value pack in three flavors. Designed to recruit larger families, the innovation is proving to be nearly 50% incremental to the category and over 70% incremental to Hain, and is being supported by a comprehensive media campaign with a reach of over 10 million consumers. We are encouraged that we now have one of the strongest innovation pipelines in our recent history, due in part to the operating model changes to empower our regions. We believe that innovation, combined with the shift in our marketing strategy to focus on digital and social should drive excitement and meet consumer needs in the market. As discussed, Hain's limited pricing actions in the last few years did not keep pace with inflation, meaning our productivity was absorbed by inflation rather than being invested in the business or used to expand margins. This year, we have revenue growth management initiatives actioned or planned across nearly the whole portfolio. In the international business, we successfully implemented pricing late in the fourth quarter to offset inflation. We are in the process of doing the same in our North America portfolio. And we have seen strong retailer acceptance of our August pricing actions across our tea, baby and kids categories. We recently rolled out pricing across our Meal Prep portfolio effective later in Q2. We are currently working on revenue growth management actions for snacks with premiumization and price pack architecture initiatives to be implemented throughout this fiscal year. In addition, we have made significant headway in reducing ineffective trade spend. We now have a more robust process to ensure that the investment produces the expected return, and we expect to deliver a reduction in our trade spend at a percent of sales of more than 50 basis points in the coming year. Generating operational productivity and improving working capital has generally been a bright spot for Hain, and both will continue to be contributors to our cash flow going forward. In fiscal 2025, we again delivered strong productivity at $67 million or 5.5% of COGS. We have a robust pipeline for fiscal 2026, and we expect to deliver more than $60 million in gross savings before inflation. Further, in North America, we are reshaping our DC network to drive greater efficiency. From a working capital perspective, we overdelivered our accounts payable improvement target in fiscal 2025 and expect to achieve further improvement this year. For fiscal 2026, we also have building blocks in place to achieve a material reduction in inventory levels this year, including resetting weeks of coverage for both raw and pack and finished goods that should generate meaningful cash benefits. E-commerce continues to be one of the fastest-growing channels in our categories, yet our capabilities have not kept up. We are accelerating our investment in e-commerce and expect to grow at or above category rates in fiscal 2026. We have strong green shoots that we need to scale. In North America, we grew 10% in fiscal 2025 behind assortment and content improvements at some key retailers. And in the U.K., soup is the fastest-growing category online in our portfolio where we grew online share from 31% to 34% in fiscal 2025. Our shift into digital and social first marketing is continuing to accelerate, driving improved ROIs and reach. In North America, we are seeing return on ad sales meeting or exceeding industry benchmark. And in the International segment, our social reach is 3x that of 3 years ago, reaching 80 million impressions per month. In summary, we are taking decisive actions to optimize cash, deleverage our balance sheet, stabilize sales and improve profitability. We are creating greater financial flexibility by rapidly resetting our cost structure to better align with the current business. We are implementing a leaner and more nimble regional operating model that prioritizes speed, simplicity and impact over global infrastructure. Our focused turnaround strategy is anchored on five actions to win in the marketplace and drive growth; aggressively streamlining our portfolio by exiting or selling businesses where we are structurally disadvantaged or simplifying our portfolio; accelerating brand renovation and innovation, meaningfully increasing our innovation renewal rate; implementing strategic revenue growth management and pricing with initiatives actioned or planned across nearly the whole portfolio; driving continued productivity and working capital efficiency; and enhancing our digital capabilities to grow our e-commerce business ahead of category growth rates. Some people have asked if I will manage the business with a light touch given my interim role? This is not the case, which is clear to all who know me. I have rolled up my sleeves and I am fully immersed in the operations. I am identifying opportunities, challenging assumptions and making bold moves where they count. I am here to put Hain on a path to unlock its full potential through the turnaround plan I have outlined, along with our strategic review so that the business is well positioned to be led by whomever the Board appoints as permanent CEO. I want to thank the entire Hain team for their continued hard work and energy as we reshape the business for success. Though the path to sustainable growth will take time, we are swiftly taking action that is stabilizing our business performance while delivering cash and paying down debt, strengthening our financial health. I'll now hand the call over to Lee to discuss our fourth quarter financial results and outlook in more detail. Lee Boyce: Thank you, Alison, and good morning, everyone. For the fourth quarter, we saw an organic net sales decline of 11% year-over-year. Decline was driven by lower sales in both the North America and International segments. The decline in organic net sales reflects 11-point decrease in volume mix and flat pricing. Adjusted gross margin was 20.5% in the fourth quarter, a decrease of approximately 290 basis points year-over-year. The decrease was driven by lower volume mix, cost inflation and higher trade spend, partially offset by productivity. SG&A decreased 7% year-over-year to $67 million in the fourth quarter, driven by a reduction in employee-related expenses. SG&A represented 18.6% of net sales in the quarter as compared to 17.3% in the year ago period. During the quarter, we took charges totaling $5 million associated with actions under the restructuring program, including employee-related costs, contract termination costs, asset write-downs and other transformation-related expenses. To date, we have taken $88 million in charges associated with the transformation program, which is comprised of $85 million of restructuring charges and $3 million of expenses associated with inventory write-downs. Of these charges, $31 million were noncash. In order to accelerate the initiatives to streamline our operating model that Alison discussed, we are increasing the scope of the previously announced restructuring program. Restructuring charges, excluding inventory write-downs are now expected to be $100 million to $110 million by fiscal 2027, up from our previous expectation of $90 million to $100 million. These charges are excluded from adjusted operating results. Interest costs fell 6% year-over-year to $13 million in the quarter, driven by lower outstanding borrowings and a reduction in interest rates. We have hedged our rate exposure on more than 50% of our loan facility with fixed rates of 7.1% based on our newly amended credit agreement. We continue to prioritize reducing net debt over time. Adjusted net loss which excludes the effect of restructuring charges amongst other items, was $2 million in the quarter or $0.02 per diluted share as compared to adjusted net income of $11 million or $0.13 per diluted share in the prior year period. We delivered adjusted EBITDA of $20 million in the fourth quarter compared to $40 million a year ago. The decline was driven by lower volume mix as well as high trade spend, partially offset by productivity and a reduction in SG&A expenses. Adjusted EBITDA margin was 5.5%. Turning now to our individual segments. In North America, organic net sales declined 14% year-over-year. The decrease was primarily driven by lower sales in snacks, and, to a lesser extent, Meal Prep. Fourth quarter adjusted gross margin in North America was 19.2%, a 340 basis point decrease versus the prior year period, driven by lower volume mix, primarily in snacks, along with higher trade spend, partially offset by productivity. Adjusted EBITDA in North America was $10 million as compared to $21 million in the year ago period. The year-over-year decline resulted primarily from lower volume mix and higher trade spends, partially offset by productivity and a reduction in SG&A expenses, mainly due to lower employee-related costs. Adjusted EBITDA margin was 5.1%. In our International business, organic net sales declined 6% in the quarter, primarily driven by lower sales in Meal Prep and Beverages. International adjusted gross margin was 21.1%, approximately 270 basis points below the prior year period, primarily driven by cost inflation and lower volume mix, partially offset by productivity. International adjusted EBITDA was $21 million as compared to $27 million in the prior year period. The decrease was primarily driven by lower volume mix partially offset by productivity and net pricing. Adjusted EBITDA margin was 13.3%. Now turning to category performance. Organic net sales growth in snacks was down 19% year-over-year, driven by velocity challenges and distribution losses. While still declining, we did see improvement in velocities in the fourth quarter as compared to the third quarter. In Baby and Kids, organic net sales growth was down 9% year-over-year, driven by softness in purees in both North America segment, in part due to SKU reductions as well as in the International segment. On the other hand, we have continued to see strength in Earth's Best snacks and cereal, with dollar sales growth of high single digits and low 20%, respectively. In the beverages category, organic net sales growth was down 3% year-over-year driven by softness in tea in North America and private label nondairy beverage in Europe. Despite the category headwinds, our nondairy beverage brand, Joya again gained share in the quarter. And Celestial Seasonings bag tea gained distribution in the quarter, in part due to the launch of wellness innovation. In Meal Prep, organic net sales growth was down 8% year-over-year, primarily driven by softness in oils and nut butters in North America and meat-free products in the U.K. These impacts were partially offset by continued growth in Greek Gods in North America, which demonstrated high single-digit dollar sales growth in the quarter. Shifting to cash flow and the balance sheet. Free cash flow in the fourth quarter was an outflow of $9 million compared to free cash flow of $31 million in the year ago period. The decrease was primarily due to a decline in cash earnings. We continue to see improvement in our days payable outstanding. Days payable outstanding improved to 65 days from 37 days in fiscal year 2023 and 52 days in Q4 fiscal year 2024. We have made significant progress towards our goal of 70-plus days payable outstanding by fiscal year 2027. Days inventory outstanding remains an opportunity for improvement and is an area of focus for fiscal 2026. Days inventory outstanding were 88 days, up from 82 days in fiscal year 2023 and 79 days in Q4 fiscal year 2024. CapEx was $6 million in the quarter and $25 million for the year. As we look ahead to fiscal 2026, we expect capital expenditures to be approximately $30 million. Finally, we closed the quarter with cash on hand of $54 million and net debt of $650 million after we reduced net debt by $14 million in the quarter. Paying down debt and strategically investing in the business continue to be our priorities for cash. Our leverage ratio, as calculated under our credit agreement increased to 4.7x. Subsequent to the end of the quarter, we amended our credit agreement to provide increased financial flexibility. The amended agreement provides for a maximum net secured leverage ratio of 5.5x in the quarter ended September 30, 2025, and thereafter. Our long-term goal is to reduce balance sheet leverage to 3x adjusted EBITDA or less, as calculated under our credit agreement. Turning now to our outlook. Given the uncertainty in our business around the outcome and timing of the completion of our strategic review, we are not providing numeric guidance on fiscal year 2026 operating results at this time. That said, we do want to provide a little bit of color on our outlook. We expect aggressive cost cutting and execution against our five actions to win in the marketplace to drive stronger top and bottom line performance in the second half of the year as compared to the first half. For Q1, we expect net sales and adjusted EBITDA on an absolute basis to look similar to that of Q4 2025. Additionally, due to seasonality and consistent with prior years, we expect free cash flow in Q1 to be a net outflow. For the full year, we expect to deliver positive free cash flow on disciplined inventory management and continued progress on payables. We are committed to decisive and bold actions to improve our trajectory by streamlining our portfolio, accelerating brand renovation and innovation, implementing strategic revenue growth management and pricing, driving productivity and working capital efficiency and strengthening our digital capabilities. We are moving swiftly to strengthen our foundation and position Hain for sustainable growth. That concludes our prepared remarks, and we are now happy to take your questions. Operator, please open the line. Operator: [Operator Instructions] Our first question comes from the line of Andrew Lazar with Barclays. . Andrew Lazar: Alison, I think Hain talks in the release -- and you talked a lot about resetting the cost structure to create more financial flexibility. I seem to remember a real challenge under previous management was really that they had to use sort of a pay-as-you-go strategy when it came to brand reinvestment because sort of a onetime reset to reinvest, was really not doable given the leverage. It would seem Hain has maybe a similar issue now. So how do you manage this and the reinvestment needed in the context of a balance sheet that's really only become more strained over the last couple of quarters? Alison Lewis: Andrew, thanks for the question. Here's what I would say. I mean this is why we talk about driving financial flexibility aggressively against each lever of the P&L. There is money in the P&L that is there for reinvestment. We just have to make tough decisions, and we have to focus that investment against the things that drive the highest return in order to really get the flywheel going. So that is really why we're talking about that cost structure focus across each aspect of the P&L. And all of that gets focused against our five actions to win, which are the things that ultimately get that flywheel going in the right direction. Lee Boyce: So, I would just say, just building on that, part of this is -- and that's why we kind of announced this unlocking the operating model. So there are significant incremental savings coming out of that. And I think we kind of touched upon that as well. The other thing is it is the focus areas. The strategic revenue growth management, I mean we have not taken pricing historically. That is something we have really enacted with a lot more discipline. So we had taken pricing in Q4 in international, we've been taking pricing in North America. So it is a focus on all of those. And then secondarily, as we've announced with the credit agreement, we wanted to give ourselves more headroom within that agreement as well. So it's kind of all of that. That gives us more flexibility as we move forward as well. Andrew Lazar: And then based at least on how the portfolio is constructed currently, Lee, what's sort of the floor on EBITDA for fiscal '26 to sort of remain within your new credit agreement? Lee Boyce: So without giving a specific number, I think what you can look at is we -- as we closed out Q4, we had a 4.7x. And I'd just remind you, this is based on the bank defined EBITDA. We've got now a headroom of 5.5x. So you can kind of back into the 4.5x the bank adjusted number, and then you can see, I mean, we've got a comfortable cushion as we move forward during the year. Operator: Our next question comes from the line of [ John Salera ] with Stephens. Unknown Analyst: I appreciate all the details around some of the optimization efforts you guys have underway, but I would say some of the themes are similar to roughly what we heard 2 years ago at the Hain Reimagined at the Investor Day, with a focus on kind of innovation and operational simplification. So I was hoping maybe you could just give us some insights where the Hain Reimagined program fell short and what do you think will be different this time? And maybe if you guys are looking at things in a different way or have kind of a different angle or focus that you think will kind of jump start the business? Alison Lewis: Sure. Thank you for the question. I would start by saying, and I think I said this in the script that overall, there was a lot of work put against people, process and structure versus sort of unleashing that people, process and structure through decisions and actions. And so I think what you see differently now is some of the examples that we provided in the script where we have pricing against almost every category in our portfolio, both at the international and North America level that has a significant value to our P&L, our ability to generate cash. The second area I would say is in innovation. We have innovation against almost every single one of our categories, and I referenced some of those massive renovation in our snacks business which is getting at clean oils, getting at better salt flavor profiles, real cheese, more bold flavors, things that actually drive growth in the category. You see that in some of the convenience areas and yogurts getting into single-serve yogurt. So innovation is definitely something that has ramped up. And if you look at our pipeline, it's larger than it's ever been and you look at the level of launches that we're doing, it's larger than it's been in quite some time. These are categories that require new news, and that new news is going to make a difference on our business. The next area I would say that is different is if you look at how we are looking at our operating model and unleashing the local empowerment. At the end of the day, the business happens in our markets. And we are putting in place the resources to ensure that, that business can be unlocked in the market. I gave an example in the script of we've moved to two innovation hubs versus innovation being managed centrally, and we're already seeing the benefit from that. So making sure that we get cost out where cost doesn't matter and putting cost where cost does matter to drive that return. Another area I would speak to is just the continued driving supply chain productivity and working capital reduction. We've done very well on that but we're continuing to put pressure there. And we're into our multiyear journey on that and the fact that we're able to continue to drive productivity in the multiyear journey says that we're doing a lot of things right, and we will continue to pressure on that. So I think the biggest difference of what you see is sort of decisiveness and action and focus. The five actions to win really provide focus for the organization. And these are the five things we're doubling down, and we know that they are all difference makers on our business. Unknown Analyst: Got it. And then, Lee, if I could ask one just on kind of the cadence of leverage throughout the year. You had mentioned in 1Q, you guys expect free cash flow to be an outflow. I would assume that we would see leverage tick up maybe a little bit in 1Q and 2Q and then come back down in the back half of the year. Can you offer any thoughts on kind of the cadence? And maybe if you guys have in mind a quarter that you anticipate to be the high watermark for leverage in '26? Lee Boyce: Yes. So we're not -- again, we're not giving specific guidance. But you're right, there is an outflow in the first quarter. I guess the other thing I would just tie to is what we've said as we went through before, if you look at the action plans that we have in place, especially around the cost focus, you will see the benefits of that coming through in the second half more than in the first half. So I think you can think about it that way as you think around cash generation. The other thing is -- and again, I'm focused on the cash generation piece of this is really focusing on inventory as well. So we do see some big potential there, really through kind of more disciplined management of the inventory through a number of different levers. So as you go through the balance of the year, again, second half driven better performance by the initiatives that Alison went through, specifically and then driving the cost. And then from a kind of cash flow perspective, you'll learn a lot more of that as we get into the second half of the year. Operator: Our next question comes from the line of Matt Smith with Stifel Financial Corp. Matthew Smith: Alison, I realize it's still early days of the strategic review, but we have seen some incremental decisions in focus areas like exiting Yves and revenue growth management focus. The conclusions are likely still in process here. But from a process perspective, can you talk about what you're seeing out of the strategic review in terms of areas where you're incrementally more confident there is value-accretive potential? Alison Lewis: Yes. I can share certainly that we continue to make progress against our strategic review. As we've indicated previously, we're not providing any updates until we have updates to give. At the same time, you've noted that we are doing significant work to streamline our portfolio and back to decisive actions. We are taking decisive actions. The exit of Yves is a great example of that, where we were structurally disadvantaged in North America in that business. The continued work we do against our SKU reduction is another area where we're taking decisive actions to simplify our portfolio. And the third area, I would say, and something that -- we haven't talked about previously is what we're implementing, which is called portfolio management review, which is really looking very carefully on how we build long-term capability around adding SKUs, investing in SKUs or retiring SKUs, so that this doesn't become an episodic event in terms of SKU reduction, but becomes an ongoing thing to manage the most efficiency and effectiveness based on the number of SKUs in our portfolio. So that's really what we can talk about today. But again, the strategic review, we continue to make progress, and we will absolutely update you when we have an update to provide. Matthew Smith: And as a follow-up, Lee, realizing you're not giving specific fiscal '26 guidance. Does the improvement you expect in the second half require a change or an improvement in the trends within your categories? Or is it more reflective of Hain's initiatives? And how should we be thinking about the level of SKU rationalization this year? Like any quantification on the drag on sales from the business exits? Lee Boyce: Yes. So I'd say two pieces to that. I think for the second half performance, it's all of the pieces. So it's a streamlining portfolio. It is driving -- and we've talked about the brand renovation and innovation. So driving better top line performance through our focus on that. We do have probably the most robust innovation pipeline that we've had. Where we've done well is continuing to drive the productivity. So over the last few years, we've driven over $60 million a year, continuing to drive that. . I think that kind of one of the biggest step changes is the revenue growth management and the pricing where we haven't taken that historically. So driving that as well. And around the SKU work, we're not providing specific impacts on that. But I would say we are cutting a long tail on the SKU. So we've historically been prioritizing a bit more customer-focused innovation rather than consumer focused. So it's very consumer-focused. We have cut the tail in the past, but then we've allowed it to continue to grow as we've had incoming SKUs. So a lot more discipline around that. That will drive a significant margin improvement for us as well, be enabler for a margin improvement. So that's the way you should think around the SKU work in the portfolio optimization. Operator: Our next question comes from the line of John Baumgartner with Mizuho. John Baumgartner: I wanted to come back to snacks and the distribution losses you're seeing there. That's been a source of distribution growth for some time. What's, I guess, causing the shift now to declines? And how much of that is sort of initiated by Hain, whether it's reduction of SKUs or some of those tough decisions for reinvestment that you mentioned Alison? Alison Lewis: Yes. So I'm going to back up a little and talk a little more broadly about snacks. I think that's an important context for all of you to have. So clearly, the snacks performance has not been where we want it to be, let's put that out on the table. That is a fact. At the same time, what I would say is these are businesses where we actually have very good equity. We have 74% awareness versus a category average of about 45%. When you look at the category entry point, so all the attributes that bring people into the category, things like taste, things like variety, things like makes me happy, makes me feel good. We're in the top 2 or 3 in terms of rankings there. So these are businesses that actually have equity and have value. At the same time, these are businesses that require news. This is an impulse category. Impulse categories require continuous news. And so that is why we're hyper-focused on the product renovation work we're doing, getting us into new oils, getting us into bolder flavors, putting real cheese in our straws product. We're adding a fourth straw potato, which is the highest requested new vegetable flavor out there, getting us into the right packages. So we've been shy on multipacks and we've moved aggressively into multipacks, ensuring that we have the right marketing. So if I look back at January '25, we had 0 of our marketing in digital and social, we're now at 60% of our marketing in digital and social, which is critical for all businesses today, but particularly snacks business, where, again, there's so much competition. And then lastly, as you noted, on the distribution losses really doubling down our focus on ensuring that we can gain distribution, but the way that we gain distribution is by having the news and the things that consumers and shoppers want. What we've seen is our retailers are responsive when we bring them news. And while very early days, we are seeing some very preliminary green shoots as we get the right product in the right package at the right retailer. And we're seeing that, that velocity does start to improve, if I look on a period-to-period basis. Clearly, we have a lot of turnaround to do to get to overall growth in snacks, but that's where we're doubling down our focus. So I believe that answers your question on what it takes to actually not have distribution losses and to actually drive distribution and drive velocity against our snacks business overall. John Baumgartner: And a follow-up, looking at the private label, the nondairy beverages in Europe. That performance seems pretty well below where private label is performing at least in the retail takeaway data. Is that just a function of customer mix for Hain? Or is the business encountering some headwinds against sort of retaining customers? . Alison Lewis: Yes. So our nondairy business, I mean we did see some softness in the beginning of the fourth quarter, but we did exit the fourth quarter with growth in our nondairy business in Europe. As you know, the European business overall is heavily private label, and that also includes nondairy. At the same time, we are focused, and you'll see as we head into 2026, driving value and driving innovation in that area with new sort of plant-based cream new innovations in the Barista area. So again, what drives that growth is not different than what drives growth in other categories, which is bringing value to the consumer in form, in flavor, and we're focused on that as we go forward and believe that the growth on nondairy will continue, and that's an important part of our business, as you know, in our International segment. Lee Boyce: And we haven't been in a position of losing customers. I mean, I guess, overall, we feel good. We're continuing to kind of win in that space. And as Alison mentioned, it's both branded and private label. I mean the overall category is still in growth. We expect our business to continue to improve further in '26. So with new contracts and innovations and then continuing high productivity. So we feel very, very good about that business. Operator: [Operator Instructions] Our next question comes from the line of Anthony Vendetti with Maxim Group. Anthony Vendetti: Just on the people side. So you have a new regional operating model. How many regions do you have? How many people do you need to recruit or promote from it within to run those models? And then just on the time line for the divesting and restructuring. Do you have sort of a time line? Or is that ongoing? And then just an update, I know the executive search is ongoing for a permanent CEO. But is there an expected time line to make a decision there as well? Alison Lewis: All right. So let me talk a little bit about the operating model changes that we're talking about. So I think the first thing to say is we have two regions North America and International, and the majority of business in North America sits in the United States, and the majority of business in International sits in the United Kingdom, okay? So that's the first thing to say. The second thing to say is the model that we're employing and that we're talking about is ensuring that we have a lean center. So we had more of a global operating model. We're moving to what sits at the center is compliance, governance and anywhere we can drive people and process efficiency. But where the real work needs to happen is in the region. And so when we think about supply chain, that will no longer sit globally that sits in the region. And when we think about innovation, that doesn't fit globally that sits in the region. So that is where we really unleash for the people that are closest to the consumer and the customer. We unleash the power of that. And as I mentioned, in innovation, moving to these two innovation centers, we're already seeing the benefits of that in the changes that we've driven. In terms of the actual change itself, it's much more about and layers along with what I mentioned moving some of the resources to the regions. So it's not as much about hiring new people, it's much more about expanding the spans of individual leaders, decreasing the layers in the organization to drive speed and then at the same time, ensuring the center is very lean. Part of this operating model is obviously recognizing that our business has not grown at the level that we had anticipated. And so while we built structure for a much larger organization, anticipating a larger business, we have to have an operating model and a structure that's in line with the size of the business that we have. So I think that's the first on sort of the operating model question. I think your second question was around restructuring. And I just want clarity on that. Anthony Vendetti: Yes. No, I was just trying to figure out the timing, yes, exactly. Alison Lewis: We are moving now. Lee Boyce: So we're -- we are moving through that restructuring process. Alison Lewis: Right now as we speak. Yes, so it's now. So most of the change will be effective between October 1 and November 1. That's the timing that we're talking about, but we're moving through the change now. And then the last question, I will answer this because it's probably most appropriate for me to answer on the CEO question. So I mean, first of all, I think you know that I don't make the decision on the CEO, Lee doesn't make the decision on the CEO that the Board level decision. At the same time, what I can tell you is that the Board is moving in parallel with the strategic review for the CEO replacement. In terms of the timing of that, that obviously will coincide with as we, again, continue to move our strategic review forward. The reason for that, as you can likely imagine, is that we need to ensure that we bring in a CEO with the right capability, with the right experiences for what this business is going to be in the future. At the same time, as you've heard from me, I am 100% engaged. I am energized by the work that we're doing. I am fully committed, and I, along with the Board, are here to put Hain on a path to growth, to put Hain on a path where we can drive that flywheel and that sustainability of performance. So that is sort of what I can share with you at this time. Operator: Our next question comes from the line of Kaumil Gajrawala with Jefferies. Kaumil Gajrawala: I guess a question a lot of times with restructurings with a balance sheet like this is there's a desire to put a restructuring in place that doesn't necessarily rely on top line recovering. And so to what degree if all of these things that you talked about don't really come through in the way that you need -- you would prefer that it does? How much flexibility is it for the rest of the sort of P&L and balance sheet restructuring to work? . Alison Lewis: Well, I can talk a little bit about the top line is an important part of this. So obviously, when we talk about restructuring, and all the work we'll do against cost structure overall across all levers of our P&L, I mean we're doing that in the spirit of driving financial flexibility so that we can fuel the growth of the business. So the work we're doing is really twofold. One is building the financial flexibility. And then the second thing is investing for growth, and I spoke a lot about the things that we're doing around our product to have great food, whether it's renovating our existing products or innovating and driving innovation against our current categories. We talked about revenue growth management and investing in that capability. We're seeing the value of that with our ability to take pricing. But revenue growth management isn't just pricing. It's getting the price-pack architecture right. It's ensuring that we're continuing to drive strong returns from every promotion that we run in the marketplace. So again, that's an area that we're investing and that will drive top line growth and bottom line growth. We are looking at our marketing and ensuring that our marketing model is very social, digital first, and that we can protect that marketing investment, very important in terms of driving top line growth. So we are focused against not only sort of the restructuring that delivers financial flexibility, but also the areas that drive growth. And the final thing I'll just say is also on customer side, doubling down on e-commerce, which is a significant growth channel. It's a channel where we've done a great job over the last few years of getting our content and assortment right in that channel, but now we need to invest in that channel at sufficient level to really drive that search and drive that visibility and drive that real recruitment once you get a consumer to buy in an e-commerce channel. So that's what I would say in response to your question. I hope I had answered that somewhat appropriately... Lee Boyce: No. No, I would agree. I mean, obviously, then we are looking to control what we can control within kind of the middle and the lower part of the P&L. So especially, I mean, unlocking the savings, and we do see significant savings within the operating model itself. So that then does give us kind of the fuel and contingency as we move forward through the balance of the year. So that's why we're putting the restructuring in place. The other thing is, and we mentioned it, it's continuing where we've got a great track record is continuing to drive the productivity as well and support our gross margin. Operator: Our next question comes from the line of Jon Andersen with William Blair. Jon Andersen: I wanted to ask also for Lee. On the kind of the restructuring efforts around a shift from kind of global to more regional operating structure. Is that the basis of the majority of the people cost reductions that you talked about earlier? I think, about 12% or so. And is that all baked into the productivity number that you gave, the $60 million in productivity for 2026? And would that kind of build in '27 or too early to say? Lee Boyce: So a couple of things. The focus around the 12% that we gave is around SG&A. It's not actually that productivity number. So it's incremental to that productivity number. So it's around -- yes, the SG&A base. And then the way we would see that is really beginning to get that -- or it gets that full run rate by the end of this year. So I think we announced that we're working kind of -- working through that restructuring right now, but you'd get that full run rate by the fourth quarter. And again, it's people-related SG&A. So outside of the productivity number that we've done a good job of delivering. Jon Andersen: Okay. And would that kind of build sequentially through the year? Or is there a point in time where those benefits will kind of kick in? Lee Boyce: Yes. I mean it will build sequentially as you go through the year, but that's why I said by fourth quarter, you'd be at a full run rate by that. Jon Andersen: Okay. One of the other the five key actions is stabilizing sales. And I'm just wondering if you could talk a little bit more about that. Obviously, the levers you're pulling in innovation, et cetera, marketing are key to helping that happen, but you have quite a few offsets in SKU rat, and then just in some of the underlying headwinds you're experiencing currently. Do you have kind of a loose time frame in mind for where we might see sales begin to stabilize kind of on an aggregate basis? Alison Lewis: Yes. So you're absolutely right that the actions to win many of them are around how we accelerate sales. So if you think about renovation and innovation. If you think about revenue growth management and pricing. If you think about digital capabilities, e-commerce and digital first marketing, those are all really around accelerating sales. When we talk about simplifying our business and SKU rat, we are talking about taking out SKUs that quite frankly, are very small in terms of overall sales. And they add complexity to our business overall, but they don't add a lot in terms of the overall top line and quite frankly, in many cases, not to the margins or the bottom line either. So we're being very smart about how we balance sort of the SKU reduction with getting to a point where, as I noted, one of our priorities is stabilizing sales to get to that stabilized sales position and ultimately to a gross sales position, but we're coming from behind, so it starts with stabilization as we move through the year and then getting to growth ultimately as we look at our further out models. Operator: I will turn the call back over to Alison Lewis for closing remarks. Alison Lewis: Great. Well, thank you, everyone, for being with us today. I'd close by just saying, our priorities are clear. We are here to really ensure that we optimize cash, we deleverage our balance sheet, we stabilize sales, and we improve profitability. We've outlined our five actions to win, which are critical to both delivery of the top line and the bottom line, and we're moving aggressively against all actions associated with those actions to win. At the same time, we are building financial flexibility with things like the operating model reset, all of our productivity work, which really allow us to protect the investment in our business to ensure that we ultimately get the flywheel going. So thank you again for your time today, and we look forward to seeing you next quarter. Lee Boyce: Thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to VusionGroup H1 2025 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Olivier Gernandt, VusionGroup's Investor Relations Officer. Please go ahead, sir. Olivier Gernandt: Thank you very much, operator. Ladies and gentlemen, good afternoon, and welcome to our 2025 first half results presentation. With me today are Thierry Gadou, our Chairman and Chief Executive Officer; as well as Thierry Lemaitre, our Deputy CEO, Corporate and Finance. Thierry Gadou will make some brief opening remarks on the group's business performance, which we already presented to you at the end of July. Thierry Lemaitre will then make some detailed comments on our first half financial performance, and Thierry Gadou will conclude with some remarks regarding our full year outlook, which we are upgrading today. After these remarks, we will be happy to take your questions. As a reminder, some of the information to be discussed on our call today is forward-looking, and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on Slide 3 of this presentation. This evening's release was issued a short while ago and is available in French and in English on VusionGroup's website, vusion.com. The slides of this presentation can also be found on our website in the regulated information section. A replay and a transcript will also be available on our website after the call. And with that, it's my pleasure to hand you over to Thierry Gadou for his opening remarks. Thierry Gadou: Thanks, Olivier. Good afternoon, everyone, and thanks for joining our conference call. I'm very pleased to present to you along with Thierry Lemaitre, the second part of our H1 results, which is dedicated to the financial performance. I will, therefore, hand over to Thierry Lemaitre very shortly after just a brief reminder of the main highlights. So VusionGroup achieved an excellent first semester ahead of our guidance with 51% growth in adjusted sales at EUR 649 million. Order entries were up 22% for the first half and the VAS revenues doubled year-on-year at EUR 91 million. Thanks to our strong business model and operating performance, our profitability continued to increase sharply with a 300 basis point increase in EBITDA margin versus H1 last year. And we delivered a sharp increase in operating free cash flow, even when neutralizing the prepayments on large contracts as well as a strong increase in our net cash position. We are confident also in our growth visibility for the rest of the year and have therefore raised our revenue and profitability targets for the full year. I will come back on this last point. But before I hand over to Thierry Lemaitre for the detailed comments on our financial performance. Thierry Lemaître: Thank you, Thierry. Hi, everyone. Let me take you through the financials for the first half year. Let's start with revenues, which, as you know, increased by 51% in adjusted terms, driven by a strong traction in the U.S. showing 134% adjusted sales growth in H1. VAS revenues increased twice as fast as total revenues at EUR 91 million versus EUR 44 million in H1 2024. VAS revenues represent 14% of total revenues at the end of H1 this year versus 10% 1 year before, and this has, of course, a positive impact on profitability. Profitability, in fact, also increased, driven by the variable plus margin. The adjusted variable plus margin reached EUR 200 million in H1 this year, which is a 66% increase versus H1 last year. It is also almost 3 points more than the adjusted VCM rate last year. And this increase is mainly due to the positive mix effect which I mentioned before, between VAS and ESL for 2.5 points and also a continuous increase in the overall profitability of our solution for 0.7 points. The ForEx impact is limited at minus 0.3 points on the VCM rate, thanks to cash inflows and outflows in USD, almost balancing each other. On the adjusted EBITDA side, the trend is similar with 84% growth between H1 this year and H1 last year. The adjusted EBITDA margin grew 3 points and reached 16.7 points -- sorry, in H1 2025, driven by the variable gross margin improvement and the slight decrease of the OpEx ratio by 0.2 points. Below EBITDA, the financial result which is plus EUR 6.1 million in adjusted terms, thanks to the level of cash and the decrease of the interest rates, the financial income from cash investments exceeded the bank interest expenses and the group also incurred EUR 2.5 million exchange gains. This leads to a cash financial income amounting to EUR 6.3 million. As you know from the past semesters, the group is also booking IFRS restatements relating to the fair value of the warrants granted to Walmart and the IAS 21 impact regarding the unrealized ForEx impact on the intercompany balance between the U.S. and the parent company. They both impact the financial results and show a net noncash negative impact of EUR 20 million in the IFRS accounts. CapEx now, they reached EUR 98.5 million in H1, of which EUR 76 million were funded by customers. The CapEx funded by the group stands at EUR 22 million in H1 or 3.4% of adjusted sales. Let's now have a look at the impact on the cash flow. In H1, the group generated a significant EUR 120 million increase in its net cash position. The cash position exceeds the financial debt by EUR 513 million at the end of June, versus EUR 393 million at the end of December last year. This increase in the net cash position is mainly coming from the free cash flow, which reached EUR 192 million in H1 this year. We made the same exercise as the previous semesters and calculated what the free cash flow would have been without factoring in the downpayments and the manufacturing lines funded by the customers. And this shows a EUR 58 million restated free cash flow and a 53% adjusted EBITDA to free cash flow conversion. This calculation takes into consideration the operating working capital at the end of June, which is EUR 195 million or the equivalent of the last 21 days of the semester which is also 6% of the annual sales. The other items impacting the increase in the net cash position of the group are the cash impact of the financial income for EUR 6.3 million, the shares both in the BOE placement for EUR 16 million to investments that the group made in H1 from EUR 9 million; the dividends paid in H1 for EUR 9.6 million and some noncash expenses impacting the EBITDA and cash expenses relating to the performance share plans for a total of plus EUR 12 million. And the last item, the impact of the volatility of the euro-dollar exchange rate also significantly impacted the cash position in dollars for EUR 55 million. This is a negative impact and this is resulting from the conversion impact only because, of course, we will not convert these dollars in euros, but we will use them to pay future spend is in dollars. So there is no actual loss of value of the cash. If we now have a look at the trend and the coming trend because I understand the questions of some of you, we present on the following slide. The total free cash flow in H1 this year at EUR 192 million on H1 last year at EUR 203 million. Within the free cash flow, we highlight the operating free cash flow, defined as adjusted EBITDA minus CapEx funded by the group. We believe this is a good indicator of the cash flow of the group because it clearly shows the cash generated by the group before any timing impact of the working capital and the prefunded CapEx. It includes both the operating working capital, inventories, accounts receivables and account payables and the nonoperating working capital, which is mainly the down payments. It is also excluding the prepayment by customers of CapEx and the associated cash out related to this CapEx. This financial indicator increases significantly. It increased from EUR 31 million in 2023 to EUR 116 million in '24, and it increased by 147% in H1 from EUR 34 million to EUR 84 million. This financial indicator should keep on growing in H2, this year and beyond. What you can also see on the graph is that the impact of the down payments collected minus reversed and the customer funding CapEx, prepayment corrected minus the cash invested for CapEx is positive in H1 for EUR 108 million, but it is less than it was in H1 last year at EUR 169 million. This mainly comes from lower down payment collected in H1 this year, and this trend should continue as the group will consume down payments. So what is the medium-term trend? The group should keep on generating a positive operating free cash flow, consuming down payments, and the net cash position should remain positive. This positive net cash position is, of course, an asset to pursue the group's dividend policy and the funding of potential external growth projects. So as a summary, the first half year showed a very strong financial performance with significant revenue growth and profitability improvement and an increase in net cash position. I will now hand over to Thierry for the outlook. Thierry Gadou: Thank you, Thierry. And as I said earlier, as we speak, our visibility is quite high for the rest of the year. We increased our targets for the full year. Our new annual revenue target is now around EUR 1.5 billion on an adjusted basis compared to EUR 1.4 billion previously, which represents a 50% growth versus 40% previously. We also believe that we can exceed our initial target of 80% growth in VAS revenue for the whole year. We now also target an adjusted EBITDA margin increase by 200 to 300 basis points over the whole year compared to 100 to 200 basis points previously. This increase in profitability should be accompanied and Thierry has stressed this point just before by positive free cash flow generation for the full year. Finally and based on our strong backlog and pipeline, we're also confident on growth perspectives for next year. With this Thierry and I are happy to take questions. Operator: [Operator Instructions] And your first question today comes from the line of Benjamin Thielmann from Berenberg. Benjamin Thielmann: This is Ben from Berenberg. Three, if I may. So first one is on the target for 2025. So in H1, you had an adjusted EBITDA margin of 16.7%. I know you're raising the guidance. I was wondering if you could give us a little bit of color where exactly is the operating leverage coming from in the second half of this year? Is it mostly the VAS outgrowing significantly the ESL revenues? Or is it coming from both segments? That's the first question. Thierry Lemaître: Ben, yes, on this topic, I think that the trend that we saw in H1 will continue in H2. It's -- you're right, there is an overall positive impact coming from the VAS ESL mix, which is driving the variable plus margin up and also an overall improvement of the profitability of our offers driven by scale effect and cost optimization. So it's essentially driven by the variable plus margin and to a lower extent by the OpEx ratio. Olivier Gernandt: You said you had a second question, Ben. Benjamin Thielmann: Yes. Second question would be the typical question you guys get. Maybe an update on the Walmart situation. Can you give us any update how many ESL or for how many stores did you deliver ESL so far? How is the rollout going? Any issues in terms of execution that popped up in recent weeks? Thierry Lemaître: No, everything is going fine. We are always a bit reluctant to talk about nominative questions about our customers. But the program, this one is a bit more -- obviously, a bit more famous. So it's going well. Our 4 lines, by the way, or a set of lines of production are now as I speak, fully operational. And so the program is at a significant pace. And so there are -- there is significantly more now than 1,000 stores installed, and it's going fast and it's going well. So yes, that's what I can say. Benjamin Thielmann: Okay. Perfect. And then maybe a third question, if I may, is a general update on orders coming from EMEA clients. I mean EMEA has a little bit been under pressure over the last 12 months. So any color from what regions in particular or probably when we could expect new orders? I remember in the latest earnings call, you said that you expect that, let's say, the downturn in EMEA is over, you expect orders to grow in H2 year-over-year. Is that still the case? And yes, in what regions? Is it fair to say that you announced Eroski in Spain that this is something where we could expect more adoption to increase? Is it going to be in your home market? Is it going to be the U.K.? Any color on EMEA would be very helpful. Thierry Lemaître: Yes. So actually, there was already -- as I think we mentioned earlier in July, a growth in order entries in Europe. So the downturn, I think it's a little bit -- let's say, let's not forget there is comparison basis issues here because we've been growing extremely fast with very accelerated rollout previously, so it gives a comparison basis, which looks like a downturn. But I think the business in Europe is showing good momentum. There is an excellent pipeline where we've announced a number of deals including also in the U.K. As you remember, we are optimistic about new deals announcements in the near future. Our win rate is excellent. Of course, there are some macroeconomic headwinds in Europe, and everybody know that, that can slow a bit decisions, but we definitely aim at reversing the trend during the course of this semester. And yes, and I think the momentum comes, frankly, from many areas. There are, for instance, the Central Europe, Germany, U.K., but also the countries in which we have a very significant installed base are actually delivering growth because they have a lot of renewals of installed base to come. And since we have a lot of innovations over the past 5 years, it's a big -- it's a growth driver for us. So I would say, yes, the macroeconomic headwinds exist in Europe. It's slowing down investments in some cases, but there is a need for our solutions. And so the prospect is good for at least a part of our solutions, which really addresses the challenges, which is reducing cost and reducing OpEx for retailers, in particular. Benjamin Thielmann: And then maybe one last question. You mentioned that all the 4 EdgeSense manufacturing lines are now up and running. What would happen if you would sign another rollout in the U.S.? I mean I know Walmart is a different ballpark. But you could use those lines to also manufacture EdgeSense for a customer that is not Walmart? Or would you require a fifth line to achieve that? Because I would assume that all of the 4 lines you have now up and running, they're running at 100%, close to 100% utilization just for Walmart. So how would that work if another Tier 2 retailer in the U.S. would decide to install your ESL? Thierry Lemaître: Yes, you're right, Ben. Actually, those 4 lines, we consider that they are fully dedicated to Walmart. Just keep in mind that we have also invested to a much lower extent, but we have also invested in our own line of product channel, which means that it gives us the flexibility to have a kind of a buffer period between the time when [ DMS ] will invest themselves because the model is still the same. We want to remain really CapEx light. So by definition, it's up to DMS to invest. If by chance we were to sign a contract with a limited visibility, we still can't produce EdgeSense on our own manufacturing lines. Operator: [Operator Instructions] We will now go to our next question. And your next question today comes from the line of Flavien Baudemont from Bernstein. Flavien Baudemont: In the presentation, you said that your BCN margin improved by 250 bps. Can you please elaborate on that? What mainly drove this improvement is due to the volume increase in volume by ESLs or mainly because of the surge in nonrecurring VAS revenues? Then my second question is what did motivate you to increase revenue guidance? Is it because you are going to sell more asset to your main customers? Or -- is it something else? Or is it because something else? And lastly, I heard in the news that you were considering a dual listing in the U.S. Can you tell me if it's true or not? Thierry Gadou: Flavien, thank you for your questions. I'll take the first and the last questions. And just on the first question regarding the VCM rate improvement, so we mentioned actually, it's a combination of 3 items, 2 being positive, the first one, which is the mix impact. So of course, since we have 14% of our revenues, which are VAS instead of 10% last year, and we've got a much better margin on VAS versus ESL. It's driving the VCM rates up, and this is explaining approximately 2.5 points increase in the VCM rate this time. We also have globally a better economic environment for ESL and VAS. It's approximately plus 0.7 points. And then it's got the ForEx impact, which has a limited but a negative one, minus 0.3 points. So all in all, that is explaining the change in the VCM rate between H1 last year and H1 this year. The last topic regarding the dual listing. I don't know where it comes from, but actually, I can confirm that we are not working out this scenario currently. So we don't intend to get a double -- double listing -- dual listing in the U.S. And can you just remind us the second question? Olivier Gernandt: For the new guidance. Flavien Baudemont: I do, I wanted to understand why you increased your guidance what motivated to increase it? Thierry Lemaître: Well, I think we were ahead of our guidance already in H1. But as we explained in July, we wanted to carefully analyze the various effects which are not all going in the same direction of the dollar going down, which has an effect on our revenues because of the revenues in dollars, but at the same time, there is tariff. And so we were ahead in H1. So mechanically, we could have concluded that already in July, but there were a number of other effects that were -- took time to evaluate. And so it is not something really new, but it's just a careful evaluation of where we are now. And so we see now we are confident. On the same H2 roughly as was kind of anticipated plus a little bit more and then the advance that we have in H1. So that's why we waited until today to make it, but nothing really. Flavien Baudemont: And could it be linked to a contract announcement by the end of the year? Thierry Lemaître: No, because usually, the contract announcement don't impact the short-term revenues. So it would be totally -- but we have other entries on a daily basis. We have news on the business on a daily basis. So I mean -- but it would not be that because anyway, it would not have an impact on '25. There was anything very significant amounts, so that would not impact. Operator: [Operator Instructions] And your next question comes from the line of Gilles Crespel from Alizés. Gilles Crespel: I'll have only one actually. It's regarding the Walmart contract, not for spec -- I'm not looking for specific customer inflows. But I just wanted to confirm on the contract, that the midpoint of the contract. You remember that the way you accounted IFRS meant that the midpoint would be significant. And looking at the current ramp up of your deliveries, when would you expect this midpoint of the contract targeting, let's say, 4,600, I think, point of sales, and is it legitimate to expect it somewhere in Q1 or Q2 '26? Thierry Lemaître: Gilles, I think that you are referring to the impact of the weighted average price in IFRS. Gilles Crespel: Exactly. Thierry Lemaître: Okay. And we said that it should reverse in the course of H2 this year, and we confirm it is the case. Gilles Crespel: Okay. H2 '25? Thierry Lemaître: Yes, correct. Operator: We'll now take the next question. And your next question comes from the line of Laurent Gelebart from BNP Paribas. Laurent Gelebart: Laurent speaking. Three questions on my side. So the first one on the guidance upgrade regarding the turnover. Is it due to faster rollout with your main clients? Or it is basically broad-based within all your key clients? That's the first one. The second one is, can you comment on your deal with NielsenIQ, your partnership, how is it going? And if you see better traction on Captana? And the third one relates to your VAS upgrade regarding the guidance. So is it a recurring VAS or nonrecurring VAS. And last point, you said that today you are comfortable regarding your level of growth for next year. Can you elaborate a bit on what makes you comfortable for next year, please? Thierry Gadou: Well, I'll start with the last question because I think the answer is very simple. We have a very large backlog and a large pipeline, weighted pipeline, which makes us very comfortable on the growth perspective for next year. So that's very simple. We have strong visibility, and we are confident enough to make that statement of solid growth for next year. Regarding NielsenIQ, we're really -- we just signed it very recently a few months ago. So we are now entering pilot phases in some countries, and finalize -- working on the joint offering, et cetera. So we are more in the early stages of this partnership because it's a partnership that relies -- that includes developing joint offers. So it takes it of time. But we are -- it's moving well, and we are entering into operational pilots now. And yes, Captana, I think I gave a bit of color also in July. Captana is now implemented in a number of retailers in many countries. We have momentum. We're improving the solution a lot. And we have -- we mentioned a few developments in some accounts like Carrefour, but there are others and in several countries. So Captana is a very promising solution. and the partnership with Nielsen will also contribute to the growth and the rollout of this computer vision in retail. And yes, and the statement on VAS growing beyond the initial target is because our model is roughly -- is to bring value-added services on all our customers. When you grow a little bit faster, you always have also an impact on the VAS generally. So there is a natural impact -- positive impact of having an upgraded revision on the total revenue, and it implies also that we are positive on the VAS impact. Laurent Gelebart: And regarding the top line, is it due to a faster rollout at your main client or it's broad-based? Thierry Gadou: Yes. I mean, it's generally speaking, as I said, the -- it's all the clients, the ones who are really in the process of rollout tend to try to accelerate because they know the return is good. They have tested it. At scale, usually, they are in the process of rollout, so they can go maybe a bit faster. So it's that, but it's also some deals that we signed and some of them we announced, I said that we were optimistic in new deals also in the near future. So it's a combination of things where we now have sufficient visibility based also on the momentum, the reality of the momentum of H1. So I think we gave quite an aggressive, I mean, an ambitious target at the beginning of the year. We are revising it upwards. Now we are a few 8, 9 months into the year, so we have a bit more visibility. But it's a combination of factors, which are both on ESL and on VAS and so it's -- it's a bit of everything. There is not one element. Laurent Gelebart: Okay. And maybe a last one regarding the tariff situation in the U.S. I think you were trying to make your product exempted from potential tariffs. So could you elaborate on this? It has been changing or not? I mean -- and if you have tariffs, I mean, have you changed your mind on how to handle them? Thierry Lemaître: No. I think that currently, we still have an exemption due to the fact that the product coming from Mexico are complying with the USMCA law. So that's it, but there is not much more that you can do. So that's the situation so far. Operator: Your next question comes from the line of Benjamin Thielmann from Berenberg. Benjamin Thielmann: It's me again. Just one quick question. On your nonrecurring and noncash items in the P&L, which was EUR 21 million in H1 this year, and last year it was a little bit more than EUR 9 million. And I was wondering, it's written in the press release that most of that was related to IFRS 2. I was wondering whether any burn-outs related to your acquisitions that went into them as well? Because if I remember correctly, in H1 '24 last year, there were some burn-outs related to the acquisition of memory included. And I was wondering if that was the case this time as well? Thierry Lemaître: No, there is no such item this year. So it's entirely due to the way we need to account for the performance share plans under IFRS 2. Operator: We will now go to the next question. And your next question comes from the line of Valentin-Paul Jahan from Stifel. Valentin-Paul Jahan: Do you hear me well? Thierry Gadou: Yes. Thierry Lemaître: Yes. Valentin-Paul Jahan: Perfect. So I have 2 questions on my side, please. The first one on margins and the second one on capital allocation. So for the first one, just if you could please confirm that you spent around EUR 300 million in the 4 production lines currently dedicated to Walmart and which are amortized over 5 years, therefore, generating around 60 million depreciation that are not included in your VCM calculation right? Thierry Gadou: So we confirm that the total amount that is funded by Walmart is $320 million that it is not fully invested yet in H1, but it will probably be fully invested by the end of this year. And yes, it is amortized over 5 years. And of course, since it is amortization, by definition, it comes into the P&L on the depreciation and amortization expense line, so it's not included in the VCM. Valentin-Paul Jahan: Okay. Perfect. And about the capital allocation because you have a lot of cash currently and you will stay cash rich even if it could decrease a little bit due to the effect of unwinding effect of the working cap. But did you define an M&A budget? And how much is it if it is defined? And how fast you ideally would like to deploy it? And what will be the perfect target? I mean what kind of solutions or technologies are you looking at? And in which geographies you are targeted? Any granularity on the M&A policy would be helpful. Thierry Gadou: Yes. So I will answer on the first one, which is, I would say, the capital allocation policy, and I will leave Thierry elaborate on the kind of M&A or external growth project that you might consider. First of all, we said that our policy is to accelerate the growth when possible through external growth projects. We said that we always want to remain below 2x EBITDA. And so far, when you have a look at the project that we are considering, there is no project which is going to lead us to 2x EBITDA net debt. So we still have a very strong firepower to do some M&A deals that we do not consider to do in one time and that we need to not consider to do in 1 or 2 years. So we've got multiple projects, different sizes. And of course, some of them could be funded through that. But at the end of the day, it's really very unlikely that we reach 2x EBITDA in debt very soon. Thierry Lemaître: Yes. And regarding the, let's say, the potential things we're looking at, I mean, we've always been looking at the possibility of accelerating the development or the deployment of our strategy, we saw that obviously is it 2 years ago, 3 years ago with Memory and Belive. We look at things that essentially grow, I would say, the VusionData. So we have -- you remember, we have 3 main divisions, Vusion IoT, VusionCloud and VusionData. So it's essentially around the VusionCloud and VusionData. So essentially the vast area, which we want to accelerate, and there are 3 areas: the analytics world, retail analytics, retail media, which is a big topic coming -- going forward and obviously, AI. So all this is the core of what we look at with always the same sort of focus. We are about modernizing the physical part of commerce or the physical stores. That's what we do. We transform them into data assets into digitized assets into very automated data-driven. So that's still the same focus. There's no diversification away from that. We really focus on that, but we build the portfolio that allows us to really maximize the impact for our customers and also simplifies the digitization by bringing different parts that are worth more than some of the -- each individual part as a system, as a platform. So that's what we do. And so as we said -- as I said, Thierry mentioned it, we have firepower. We are able to do things. It's in no rush to do things, but we look at carefully in terms of geography, I would say, there is a strong focus in the U.S., but also we're not neglecting Europe as the last 2 acquisitions 3 years ago were in Europe. So there is a focus in the U.S. Operator: There are currently no further questions. I will now hand the call back to Thierry Gadou for closing remarks. Thierry Gadou: Thank you. And thanks to all for your participation. See you maybe this week for some of you at NRF Europe, which, for the first time, takes place in Paris. It's going to be a big event, and we are a big partner of that event. So it would be very visible if you join. And we'll meet again on October 22 for our Q3 sales figures. So have a good evening or afternoon. Thank you very much. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Sandrine Brunel: Good afternoon to all, and welcome to the Virbac 2025 Half Year Results Webcast. We are very pleased to have you join us. Today's call is hosted by myself. I'm Sandrine Brunel, Head of Corporate Communications; and Taron Hovhannissyan is Head of Finance, M&A and Investor Relations. The presentation will be given by Paul Martingell, our new Chief Executive Officer; and Habib Ramdani, our Chief Financial Officer; and Deputy Chief Executive Officer. Before we begin, I'll remind you that the slides and additional financial materials presented here are available in our Investors section of our corporate website. The replay of this meeting will be available at the conclusion of the meeting. [Operator Instructions] It's now my pleasure to turn the floor to Paul Martingell. Paul Martingell: Thank you, Sandrine, and good afternoon, everybody. It's really my pleasure to be here my first results presentation in Virbac. And especially to be here at a time where we're announcing a very, very strong and solid first half of the year, which, of course, has got nothing to do with me. It really is thanks to the continued strong performance and excellent work of Habib and all the team around the world at Virbac. I'm absolutely delighted and excited to join the company. As you can imagine, it's been some time that I've been having conversations with the company, reading about the industry and learning about the incredible world of animal health. And I couldn't be more excited to finally have joined. It's day 11 for me. So apologies if I'm not able to answer the most detailed questions, but I'm very, very lucky again to have such a strong team and especially to have Habib here with me today, who will be able to answer those questions. And in the future, I'm sure, and I look forward to having deeper discussions and conversations with you all. Just very, very quickly, I've had a career of over 25 years now across FMCG and Pharma Consumer Healthcare businesses. The last 11 years between Boehringer Ingelheim, the merger and integration with Sanofi Consumer Healthcare and then the acceleration and eventual value creation by spinning off that business into the propeller business unit. So a very interesting experience. I've had the pleasure and the privilege to work all over the world in the Americas, Asia and across Europe. And do hope that I can bring a little bit of that international perspective and flavor to this great Virbac business. But for now, my only priority is to onboard, to listen, to learn, to spend time with our team but also with other key stakeholders, including yourselves, I look forward to engaging with you to listening and hearing your perspectives on the industry and the Virbac business. And to engaging in the conversations that we need to have to see how we can continue. First of all, the great performance that Virbac has shown over the last years. It really is incredible to see. I think we've broadly doubled the size of this business over the last 10 years. And therefore, of course, my first priority is how we can continue and perhaps accelerate that great performance, but also how we can then shape this future into the 2030, 2035 horizon, given the exciting and dynamic changes happening in animal health. Again, I very much look forward to engaging with you much deeper in the future. But for today, it's really a pleasure to hand over to Habib who will take us through the majority of the presentation. I will be here, of course, for any Q&A, if you should have any questions later on. But again, thank you for your attention. Thank you for your engagement with Virbac and over to you, Habib. Habib Ramdani: Thank you, Paul, and we are extremely happy to have you on board to lead our next phase of development, Paul. So I'm going to take you, as usual, through our financial results as well as say a few words on strategy execution and perspective. And as it has been said, we'll end up the session with a Q&A. So very briefly a summary of what we have achieved in the first half 2025, you can see that we have delivered a very solid top line growth during the first half of 2025 with 5.6% of organic growth. And it's a very same top line development as well. It's same because it's a good mix between price impact at around 3% and volume impact at 2%. We have also had the benefit of contribution of new product launches. I will come back to that later on. And finally, this performance has been delivered with top line growth in all of our geographies with the exception of Pacific, I'm going also to come back to that. So that's for the top line. Regarding the EBIT adjusted, we have posted EUR 135 million of EBIT adjusted for the first half of 2025 and which translate into an 18.3% of EBIT adjusted as a ratio to top line. First, it's globally aligned with our expectations. So no surprise for us with that level. it is, although a bit decreasing versus last year, as you can see, by 2.4 points at constant exchange rate, and it's essentially linked to temporary effects and calendar effect as I'm going to go through in the next slides. The net result stands at EUR 82.2 million for the first half of 2025, which is slightly below last year, but again linked to the EBIT adjusted evolution as well. We have had financial cost increase for this semester linked to the exchange rate, notably the CLP, the Chilean Peso which has evolved negatively versus the Euro, and we have part of our Interco debt that is not covered. So we are having that impact for the first semester 2025. Let's move now to elements of balance sheet and cash flow. You can see at the bottom of the slide that our net debt stands at EUR 200 million, slightly above that, which is an increase of EUR 30 million, the consequence of three elements. First, our net cash flow is more or less at EUR 100 million, slightly below EUR 100 million. Evolution of our net cash flow is in line with the evolution of our operational results. And we have 2 further elements. The first one is the working capital requirements at EUR 72 million. It's the usual seasonality impact that we have. We have working capital requirements quite high during the first semester and then a positive development during the second part of the year, which is very typical for us. It happens every year, and we have seen that this year. Nonetheless, it's slightly below last year. Again, this is linked to some work that we are doing to maintain our level of stock inventory. That is an area of focus for the past years now. And finally, CapEx, you see that we have increased our level of CapEx, only double our level of CapEx spending when we compare the first half 2025 with the first half 2024; this is significant, yes, but it's deliberate. It's deliberate and it's linked to the rollout of all of our industrial transformation and the main projects that we are engaging in. Very briefly on the exchange rate impact, you see that we are having a negative impact on both the top line and the bottom line with a good portion of it coming from Latin America, as you can see on the slide, with the size of the bubbles. And in addition to impact in absolute value, we are also having an impact in our ratio of EBIT adjusted, which has been decreasing by 0.7 points linked to the evolution of the exchange rate. So this is for the big picture. I will move to sharing with you some insights on the revenue growth drivers. And then I will move to the P&L statements, balance sheet and cash flow and will move to the strategic elements. So top line, I share it slightly above 7% evolution and 5.6% growth at actual rates and perimeter, which means without the positive impact of the acquisition of Sasaeah in Japan. If we look at on this slide where this growth is coming from, from a geographical standpoint. We can see the very solid development of our top line in most of the geographies, nearly all of the regions with the exception of Pacific. We are decreasing by around 8% in Pacific. I've had the opportunity to comment on that at the end of the first semester. We have suffered from climatic and market conditions in Australia, notably which impacted our top line dynamic -- impacted the market and the top line dynamic. The market has started to rebound in the first semester. We have not really entirely benefited for that linked to some stock impact that we had with one distributor notably. But we are very confident that we will see a rebound during the next part of the year, and I'll come back to that in a minute. You can see that we have a very solid performance in the Americas, both North America and Latin America. North America is growing 6%. I'll come back to the performance of the U.S. in the next slide. So let me concentrate in Latin America. We have a very solid 8% growth in that region, which is fueled by our two main countries, Mexico and Brazil, Brazil has had a nice rebound during the second trimester, after our first semester that has been a little bit more difficult. We are benefiting from a nice dynamic in our Ruminant product portfolio in that country. I'll come back to Mexico in the next slide, but we're also having a good performance in Colombia. The only areas where we are lagging a little bit versus last year is Chile. But it's not a surprise. It's what we expected. We have notably one parasiticides product that is suffering against competition. We used to be in a monopolistic situation, and we are now facing another entrance, which has an impact on both the volume and our price, but again, not unexpected. Europe, 7.2%, very solid growth in Europe, a lot of countries, a lot of subregion in Europe are contributing quite nicely. This is the case for Western Europe with a nice development of our Ruminant portfolio as well as companion animal, the case for Central and Eastern Europe as well. We are also benefiting from the positive impact of the acquisition in Turkey, I will come back to that. So a nice performance overall in Europe with maybe the exception of France where we have a more stable dynamic for the first half, but I'll come back to that in the next slides. EMEA, which is India, Middle East and Africa for us a very, very solid excellent performance, 8%. India contributing nicely to that development. And finally, far east Asia, you see the double-digit growth, which is essentially attributable, obviously, to the acquisition of Sasaeah that has a nice impact, obviously, on that region. A part of that at constant perimeter, the top line growth is at around 3% for far east Asia, negatively impacted by the market conditions in Vietnam where there is a swinepox epidemic that is impacting the market and us. But apart of that, a good dynamic in the other countries and the renewed positive dynamic in China as well after a first semester that has been more at on. I wanted to take a few minutes to talk about some countries. The first three countries are the ones that are contributing the most in the top line growth in absolute value, Mexico, U.S.A. and India. And France and Australia are two countries from our top 5, where we've seen a stable growth for France. And as I mentioned, a decrease of our top line performance in Australia. So Mexico, 15% growth, a very nice development with a strong contribution of some of the product that we are targeting. You see pet food, 40%, Mexico in terms of pet food activity for us is part of our top 3 countries. We are delivering year after year and taking some nice position in that country. We're also having a development of our companion animal vaccines. As well as some swine vaccines that have been recently launched in Mexico. So a very good performance across the board. And looking forward, we expect also double-digit growth for the end of the year. U.S.A., 6% growth for the first semester. We will end up -- we expect to end up at a double-digit growth as well. It's actually 6%, but with a negative and temporary effect on the stock level at distributor. The sellouts are quite positive, would be at double-digit growth, slightly above 10% at constant level of stock at the distribution. And it's coming from the product that we are targeting dental, specialty and dermatology. So performance in U.S.A. that is quite aligned with what we've been doing in the past. India, 6.8% growth at constant exchange rates for the first half 2025. A strong performance here. We have a very diversified activity, a solid backbone in India on Ruminant, but we are a semester after semester diversifying our activities in India. And you can see that the growth is coming from all different angles. And in addition to the top line growth, we are also improving our profitability in that country. So a very solid performance, and we should expect a similar trend for the remainder of the year with one possible question mark linked to the indirect impact on the overall Indian economy and market linked to the tariff. So that's only question mark that we may have on that country. France, minus 0.4%, so more or less stable. We used to have some growth in that country. It's essentially linked to two product lines. One of them, we shared that earlier this year. On pet food, we have seen a slowdown of our pet food activity in France with notably one of our e-commerce partners that have seen some sales decrease, and we are also having some impact, we think during the first semester linked to the introduction of a new packaging. So as we moved from the old to the new packaging, it may have disrupted a little bit the supply chain. We have also an impact on vaccine. We are slightly decreasing on vaccine. We have had a very, very solid, extremely high 2024 years. You remember that we have had a strong rebound in vaccine especially during the first semester. So we are comparing to a very high base, and we have some competitors that have also returned to the market after some stock out on vaccine. Looking forward, we expect back to growth. We have some positive early sign of development -- redevelopment rebound of our pet food activity with some promotional activity that has been done to stimulate the demand with that e-commerce platform as well as now the new packaging introduction that is behind us. So that's for France. And finally, Australia, you see negative evolution of our top line. I commented about the overall market condition. There are signs of recovery that are quite positive with the price of meat as well as the climatic situation. So looking forward, we expect a progressive rebound of our activity in Australia. So this is a snapshot of some of the key countries from a contribution standpoint, and we thought it could be useful to say a few words on them. Let me move now after we've covered the performance by geography, let me move to the performance by segment and by subsegment within companion animals and farm animals, you see that farm animals continue to represent around 40% of our turnover, companion animals 60%. If we look at companion animals, where the growth is coming from, there are two central pillars that are powering the top line development for that semester, one of them is pet food, a strategic product portfolio that we have. You see a double-digit growth, we are benefiting from a nice development and compensating the situation in France with top line growth in many geographies, including Mexico and obviously, the benefit of the acquisition of Mopsan. We have also the specialties product line that is doing quite well. We are benefiting from some product launches that is fueling that subsegment, including Ursolyx and as well as Trilotab, which is a product against Cushing disease for cats and Ursolyx is a movement disorder type of products. So they are reinforcing our specialty franchise and contributing nicely to the top line growth, enabling us to have a double-digit top line growth. You see vaccines stable after a record year in 2024 with a very significant rebound again, especially in the first semesters. So we've been able to maintain the top line growth in vaccine. And then parasiticides, antibiotics, dermatology and others that are also contributing quite well between 3% to 6%. So a very solid performance, 5% at actual rate and 7% at constant exchange rates. Let me move now to farm animals. You see the nice dynamic in farm animals is powered fueled by a very strong performance in our Ruminants segment, which is also a testimony to our portfolio, the diversity of our portfolio. Ruminants has been doing quite well for that semester, and we expect it to continue. Also, it may a little bit slow down. and it's being driven by some of our product lines such as antibiotics with a double-digit growth, nutritionals as well as vaccines that have done quite well during the semester, we had some nice vaccines launch, and we won a tender in Europe for one of our vaccines, which has had a nice impact during that semester. You see aquaculture slightly below last year, essentially linked to the parasiticide product I mentioned earlier on which we have increased competition. but also a nice development, nice performance for farm animals segment overall, as you can see on the slide. Very briefly, the sales breakdown by region and segment has not fundamentally changed versus what we shared last year. So let me move now to the profit and loss statement. So you see the yellow line, which is our EBIT adjusted, which stands at 18.3% versus 21.4%. We have a slight decrease in the ratio of our gross margin on material costs when we compare the first semester of 2024 with the first semester 2025. We have also an increase of our expenses, personnel and external expenses. Part of it is linked to the acquisition of Mopsan, which obviously we acquired as well in infrastructure. And the rest is linked to some of our projects, the development of our activity, the reinforcement of some of our team in industrial and R&D as well. So overall, we are, as you can see on the slide, losing 3 points versus 2024, which is essentially linked to temporary effect versus last year. 2/3 of that decrease is linked to the gross margin where we have essentially 2 effects. The first one is linked to write-off, which is a typical element that we have within pharmaceutical companies. But we have had last year a level of write-off during the first semester of 2024 that has been quite low versus the level of write-off for the entire year. 30% of our write-off has been recognized in first half of 2024 and 70% in first half of 2020 -- in second half of 2024 last year, 30-70, whereas this year, we expect a much more balanced split of our write-off between the first half and the second half. So we see when you compare only the first semester, a significant increase of our write-off, but which is, again, only linked to a calendar effect versus last year. So that explains part of it. The second element is the fact that we have stopped, closed temporarily one of our manufacturing sites to operate a maintenance activity, which was anticipated, but which has an impact during the first part of the year in terms of fixed cost non-absorption, which obviously will reverse as we resume the production during the second part of the year. So those 2 are really temporary effects, which explain part of it. The remaining 1/3 impact is linked to the calendarization of our OpEx expenditure on sales, marketing and administrative as well as R&D, where we have slightly more balanced again, split of our cost in 2025 versus what we had in 2024. And to a lesser extent, we're also recognizing slightly more legal fees, temporary legal fees for that first semester. So when you put all of that together, that explains the decrease of our ratio of EBIT adjusted, but this is completely aligned with our internal expectation. And we are very confident that we will end up at what we have guided for the full year, which is 16%. So moving from 18.3% for the first semester to 16% for the entire year. If we go now down to the P&L statement, you see what I mentioned earlier, the financial costs, which are increasing versus last year, essentially linked to the negative impact on exchange rate for the CLP. And to contrary, you see the improvement of our tax cost, which is essentially linked to the decrease of our profits during the first semester. The effective tax rate is slightly increasing, by the way, when we compare first semester 2024 with first semester 2025, essentially linked to the mix of countries that we are having with notably the internalization or the acquisition of Sasaeah in Japan, the tax rate is slightly above what we have as an average for the group. Let me move to the net free cash flow. evolution, you see and we compare on that slide, the first semester 2025 with the first semester 2024. We have generated a net cash flow of slightly below EUR 100 million. I shared that earlier during the summary. We are spending slightly more than EUR 50 million in CapEx. Again, no surprise. That was expected. The working capital needs stand at EUR 72 million, which all in all, when you put all that together, we have a net debt situation that is moving from EUR 168 million to EUR 201 million. Nevertheless, our net debt on EBITDA ratio stands at close below -- significantly below 1 as of June 2025. So we continue despite the heavy investment that we are having, we continue to have a very favorable balance sheet situation, as you can see on the next slide with some very favorable ratio as well that put us favorably to consider some further acquisitions down the road. The shareholding structure has not changed fundamentally versus March 2025. last time we presented, the company continues -- the share continues to be owned at slightly more than 50% by the Dick family, having also slightly more than 66% of voting rights. So this is it for the financial results. I will move to the second part of that presentation. I'll take a couple of minutes as we have presented some short-term results. We wanted to take some moment to address also our midterm vision. As you know, we have a midterm vision that has been unchanged now for several years that represents our North Pole, our compass with a clear road map against which we are delivering with one clear target, which is to reach 20% EBIT adjusted as a ratio to net revenue by 2030. And we are on route to deliver that with the expected 16% at the end of this year of EBIT adjusted as a ratio to revenue, which again has been unchanged since January 2025 when we first shared it with our expectation for the 2025 years. So these slides summarize our strategic framework. At the heart of it, at the center lies obviously our portfolio, where we have defined the how to win and the where to play. We continue to have 3 main levers for our transformation, the how to win, which are innovation, acquisition and competitivity, competitiveness. Innovation, you know that we made the decision a few years back to increase our level of spending in R&D to accelerate that as a ratio to revenue, moving from around 6.5% to around 8.5%. So we will end the year at around 8.5% as a ratio to revenue of R&D spending, which enable us to increase the number of projects that we had within our portfolio. Acquisitions, we've been quite active recently with 3 main acquisitions in the last 18 months. We continue -- that continues to be an area of priority for us, an area of focus. We have the team in place. We continue to be looking for programmatic M&A, small to midsize, and we complement that by a dynamic licensing that we are doing, and I'm going to comment that on the next slide to illustrate that on the next slide. And finally, competitivity, competitiveness, we are relentless -- we have a relentless focus on competitivity, leveraging our transformation, all of our industrial projects as well as implementing in all of our manufacturing site competitivity program in order to boost our gross margin. So those are really the 3 key levers. We are applying them on the where to play, which is defined by geography, spaces and segments. So on geography, we continue to try to improve our positioning in all countries where we are present with a specific focus in U.S.A. and China, the 2 major countries. We're trying to enrich our portfolio of products available for the Chinese market and to develop as well as we have had the opportunity to share and illustrate in the past few years our North America business by leveraging our current product, but also innovation as well as entering in 2 new segments, pet food and food producing farm animals in the U.S. From Species, we have 2 backbones, as you know, companion animals and ruminants. We continue to be extremely focused on those 2 backbones for us. You have seen the nice growth of our ruminant activities during the first semester. We have also had a nice growth on our companion animal segment. And we have 2 ventures that we are continuing to nurture aquaculture and swine. And in order to power that, we are also focusing on 2 important dimensions, process, digitalization with some transformation program. I had the opportunity to talk about ERP manufacturing execution system in the past, rollout that we are doing, modernization of those systems, and I'll come back to that on the next slide. And most important, our teams, our people, our talent, we remain committed to nurture the Virbac culture by working on our purpose, by working on ethics and by working on as well great place to work. So I wanted to illustrate a bit of our progresses that we have made during the first semester of 2025 along the dimensions of that strategic framework. First, portfolio, product launches. We've had an excellent contribution of some of our new products. I mentioned that Trilotab, Ursolyx, our swine vaccine that have been rolled out after having been launched in Asia that have been rolled out in other countries, including Mexico, as you have seen, we have also that new product that have benefited from a tender in Europe that has fueled the growth. So we have had a nice contribution in the first semester from product launches, and we expect more to come with 2 key products to be launched. Vikaly, obviously, our medicalized pet food. We've had the opportunity to talk about it. That's a unique type of product that we are going to launch in the coming weeks in Europe. Innovation. Our R&D pipeline is progressing well. It doesn't mean that we don't have setback, obviously, and that's part of R&D. We all know that. But globally, we are making some good progress. We are very proud to share with you that we have launched our first Chinese product developed in China. That was part of our strategy to accelerate the enrichment of our portfolio in China, and we've been able to launch the first product developed in China for China. And as we are working on innovation, new product, we are also managing life cycle of our existing products. And our R&D teams in some geographies are quite busy with submission of updated R&D and regulatory files based on the local requirements for product approval renewals. Industrial transformation. I will be very brief. We have some key projects. You know that we have increased our level of investments. We are working on many of them in parallel with our biology unit, French logistics center and globally, we are making some good progress. Acquisitions. We have nothing announced as part of merger and acquisition for the first semester. We are working, nevertheless, on some topics. We continue to be busy. It continues to be a priority for us. But obviously, we need to be too dense. And we are also working on continuing the integration of our recent acquisitions. We've been nonetheless, very active in licensing. As you can see on the slide, we had a very extremely solid first semester, much higher than what we had in the recent past with 9 commercial licensing deals that have been signed and 3 technological licensing deal as well. Digital infrastructure rollout. I mentioned it, we have finalized. We have had the go-live for our major industrial transformation with ERP, Manufacturing Execution System and Laboratory Information Management System in France and U.S. And we are rolling out the wave 2 with an ambition to deploy these core model in all of our countries in the coming years. And Great Place to Work. This is a key focus that we have. Each country is rolling out its own action plans, and we are working globally with a strong focus on diversity and inclusion. I wanted to end this presentation before moving to guidance with a quick word on integration, M&A integration. We are very, very proud of the progresses that we are making on 2 fronts, Japanese acquisition and Turkish acquisition. You can see on Japanese acquisition, we are moving ahead on a lot of HR topics with a leadership now fully in place to drive our business in Japan. We are making some good progress in packaging harmonization as well to provide one single entity, Brand image in Japan following the acquisition of Sasaeah. And what is quite remarkable is the fact that we are able, at the same time, to ensure business continuity and even business acceleration. And you see that we are ahead of our objective for the Japanese entities with 6% ahead of our budget. So we are delivering a very strong first semester while progressing on the integration, which, as you can imagine, is not necessarily a very easy one. Turkey. We mentioned that we made a strategic acquisition. It's a long-term acquisition. Turkey market is an important market for Europe. It will continue to grow. We have that conviction. And through the acquisition of Mopsan, we have considerably secured and solidified our position in that market. You can see on the slide that we are also progressing, making nice progress in terms of integration in all dimensions, IT, HR, and we are also delivering some strong results at the end of the first semester. So let me finish by sharing with you our renewed confidence on our full year 2025 guidance. We, by the way, share it first in January. If I remember well, we have confirmed it in March and now in July and now in September, we expect top line growth, net revenue growth of 4% to 6% with an additional point linked to the acquisition of Sasaeah, so 5% to 7%, including Sasaeah at constant exchange rate. We expect an EBITDA margin at around 16% at constant exchange rate, might be a little bit below that. Due to the negative impact of exchange rates, it's still tough to anticipate fully for the full year, but at constant exchange rate, we confirm the 16% and net debt evolution at around 80% is also confirmed. So this is it for the end of June results presentation, and I'm very happy to open the Q&A session. Sandrine Brunel: Thank you, Habib. Thank you, Paul. Wow, the Q&A session is definitely open. We have, if not 16, it will be 17 questions, a lot. So Taron, perhaps you can start. Taron Hovhannissyan: Yes. Let's start with the question. The first one is coming from Laurent Gelebart. The question is, what is the total impact of semester 1 gross margin OpEx from the deferred costs? Is it around plus or minus EUR 10 million? Habib Ramdani: Yes. What we have shared is 2/3, that's what I mentioned, 2/3 of the decrease versus last year is linked to the gross margin and a good portion of that is linked to the temporary effect. I can try to be a little bit more specific. The impact of the temporary stop of the manufacturing site is a few million euro for the first semester. And it's also a few million euros of write-off impact that we are having. Again, when we compare to 2024, that was exceptionally low in the first semester of 2024. Taron Hovhannissyan: Next question still from Laurent is what is the impact of ForEx on the EBITDA margin? Should we anticipate 70 percentage points similar to H1? Habib Ramdani: Yes. So Laurent answered himself the question. It's 70 basis points impact of exchange rate on the margin. So moving from 19% to 18.3%, just to make it simple. And it's difficult to really anticipate what we will have because obviously, it could change on a month-to-month basis. So between 0 to 70 points, it's something that we could be having for the entire year, yes. Taron Hovhannissyan: Next question is from [ Vincent Norman ]. He asks for, can you comment on the impact of R&D spending in H1 '25 compared to H1 '24? Is this acceleration in R&D spending in line with your medium-term plans? Or have you been forced to accelerate spending to meet deadlines? Habib Ramdani: Yes. No, it's completely in line. We have 0.4 points more of R&D as a ratio to net revenue when we compare the first half 2024 to the first half 2025. So we have a slight acceleration of R&D spending. We guided for 0.3 points more for the full year. So with 0.4 points for the first semester, we are perfectly in line with what we expect for the full year. Sandrine Brunel: Thank you, Habib. A question for Paul from Sarah Thirion. Does Paul Martingell, support ambition of a margin around 20% by 2030? Or should we assume adjustments for this forecast in the coming months? Paul Martingell: Thank you very much for the question. Again, it's my 11th day, beginning of my third week. So far too soon for me to think about changing anything at all. What I do believe from all the conversations with the team with the investors is that our commitment towards the 20% in 2030 is really essential to prove the credibility of our team and the sustainability of our growth. And of course, we want to be a top line and a growth story, but that needs to be healthy growth. And so I believe that the 20% 2030 target is clear, has been shared and is what we will continue to work with. I don't believe in any reason to change that. It's a great signal of operational excellence and healthy growth in the future. Taron Hovhannissyan: Great. Next question is coming from [indiscernible]. The margin degradation in H1 is an increase in R&D efforts as a percentage of revenues. Is this a one-off effect? Or is there a shift from what had been previously announced? Habib Ramdani: No, no. It's -- again, it's -- this increase is perfectly in line with what we have stated for the full year. We said that we will increase for the full year, again, our R&D as a ratio to net revenue by 0.3 points to move to 8.5 and the 8.5 has been announced a few years back. So we finished the year 2024 at 8.2, and we said we will continue to 8.5, for the full year, so 0.3 points more. And we have done for the first semester, 0.4. So it's perfectly aligned with what we have said and with the vision to reach the 8.5 of R&D investment to revenue. Sandrine Brunel: Thank you, Habib. So Sarah, we already answered the question you asked. So we go to the question of Drew. Drew, it's a question for you, Paul. Could you provide some context on how you would think about the future M&A? It might be too early, but any early thoughts on product lines, geographies, size and maximum balance sheet leverage would be useful. Paul Martingell: Very good. Well, a little bit like the question to Habib earlier. It may have answered itself. It's definitely too early for me to come in with any strong perspective. I'm here to listen, to learn. I will be putting a lot of focus right now, of course, apart from just listening and learning on our execution in market with our customers, with the vets on our operational excellence. That's probably where I can add most value in the very short term to try to continue our momentum. But in every conversation I've had, it's been very, very clear that acquisitions should and will remain a very, very strong part of our Virbac growth model. And I know the team has been working very hard. We've had conversations in the last week already about certain targets and certain opportunities. As Habib said, it always takes 2 to tango, but I can see already, and we've already spent time on M&A as a key potential driver to accelerate our growth and to also make strategic plays in certain areas, which you're already aware of. So there wouldn't be any surprise there in where we're looking. And we'll, of course, continue to update you as anything progresses. Sandrine Brunel: Thank you, Paul. So Taron, I'll let you ask the 6 or 7 question of our friend, Christophe Genet. Taron Hovhannissyan: Yes. Let's tackle them one by one. First one is, can you elaborate a bit on India contribution on profit? Is higher than group average? When do you see the subsidiary in 2030? Habib Ramdani: Thank you, Christophe-Raphael. So I cannot be very specific because we are not disclosing that type of information. What I can say, and we've been stating that in the past is India used to be below the average, and they've done a remarkable journey of improving the profitability in India year after year with the benefit of the top line growth and a strong focus on procurement and gross margin locally. So they are gradually improving, contributing to the improvement at group level as well, and they are not very far from the group average as we speak. Taron Hovhannissyan: Next question is similar to the India contribution profit. What is the EBIT contribution for the U.S. subsidiary? And can you update us on the remaining carryforward tax loss credit? Habib Ramdani: Yes. So here as well, we are not sharing that level of details. But the U.S. is one of the key drivers for profitability improvement at group level. We've been able -- and we've shared that in the past, we have more or less a fixed cost structure at the level of the manufacturing site, commercial organization as well. So any additional top line translate nicely into bottom line. So over the past... [Technical Difficulty] Sandrine Brunel: We have technical issue. We are working on it. It's okay. Habib Ramdani: Yes. So we're back. Sorry, we had a technical issue that has been fixed by the team. Thank you for that. So I think I was cut off when I was answering the question regarding the deferred tax. So yes, we continue to have that. It has not been recognized in our balance sheet. If you remember, we depreciated it. We have never recognized them again in our balance sheet. So we will be able to benefit from that as we make profit in the U.S. It's been 2 years now that we have made slight fiscal tax profit in the U.S., and we've been able to reverse part of it, and we will continue to do that in the future, so that will have a positive slight impact on our tax income as we move forward. Taron Hovhannissyan: Similar question. Can you share the top 5 subsidiaries in terms of EBITDA contribution? Habib Ramdani: We cannot. It's not an information that we are sharing. But I mean, as you can imagine, many of the top 5 countries in top line are also top 5 countries contributor in bottom line given the size of the top line. Taron Hovhannissyan: What should we expect in CapEx for full year 2025 and for 2026? Habib Ramdani: Yes. We have stated that we'll be above EUR 100 million for 2025. You've seen that we are slightly above EUR 50 million. So we will be above EUR 100 million for the year. And that will be the same for 2026 and maybe a few years down. We have a very heavy CapEx program with some important industrial projects that we are moving forward. So nothing has really changed on that front. Taron Hovhannissyan: Is it possible to have an update of pet food manufacturing of the new pet food manufacturing site? Habib Ramdani: Yes, we are -- so we have submitted all of the administrative requests for the new pet food site that we want to build to internalize our pet food production in France, in the south of France. So all submissions have been made. We have received positive acceptance of all of those files. And we are now in a classical, I would say, legal phase in France, where we have some associations that have submitted some legal claim that are currently being reviewed, which is a classical phase after you submit all of your administrative filing in France. And in the meantime, we are very much working towards getting ready to lay the first stone of that project. So finalizing all of the contracts and getting ready for that. We'll have some more updates before the end of the year on that front. Taron Hovhannissyan: Last question from Christophe Ganet. For H2, how do you see the market evolution and your expected price effect? Habib Ramdani: I mean we don't have a crystal ball. I would love to have a very confident answer on that question. What we've seen is on the data that we have is a continued dynamic Q1 market. We have received recently -- very recently, we are still analyzing them, but a very dynamic Q2 as well. So a little bit surprising with the level of dynamism. It's fueled by some innovation that have been launched by some of the animal health players, notably monoclonal antibodies and isoxazoline, the combination that are performing quite well. So in that market, we are slightly below, but we don't fight with the same arms. We don't have those products and the market does not capture some of our product ranges such as pet food, which is not part of that and where we have a very strong development as well as some pet care products that are key central for us are not part of that. So if we restate for that, we think we are very close to that market. But it's quite dynamic, 6%, 7%. We don't expect that to remain. We think it will ultimately stabilize at 4% to 5%, but we've not yet seen that for the first semester. Thank you. Sandrine Brunel: And we continue. We have still 1, 2, 3, 4, 5, something like that -- more than 5. The question is from [indiscernible]. Can you provide more details on the phasing of stock [ restriction ], product lines and geographies that are concerned as the production of the antigen, which was temporarily stopped, resumed. Habib Ramdani: So here as well, we -- I won't be too specific on the write-off. What is important is that, I mean, all companies have a certain percentage of their revenue that are written off every year. We are not different from the other. You can also have some good years and some more difficult years. It's a mix of quality. It's also for the quality and the safety of our product. If some production doesn't meet our guidelines, we won't release them, and we will written them off. And you have some type of production that are more exposed to that, such as the vaccines biology product, it's more difficult than some nonliving type of product, if I may say. You can also have part of it that is linked to forecasting, launch of new product and you don't necessarily anticipate or some market evolution. We have, for instance, some write-off in Australia linked to the situation that I've shared with you. So it's a combination of different nature. What is important here is more the phasing, and that's why we are talking about it. In the past, we are not really talking about it because, again, it's part of the business. And obviously, we are trying to optimize it and to decrease the percentage of it year after year gradually. It's also part of the improvement of our profitability. But here, we are really talking about it because of the phasing. And again, last year was very unusual, 30% first semester and 70% second semester. And this year, we expect it to be more balanced. So it triggers an impact on our profitability, which is temporary. Sandrine Brunel: So what do you estimate the annual revenue shortfall to be? Habib Ramdani: No, we don't have any shortfall in revenue. It's a stock that we have that are written off, but there are no impact on the top line. Taron Hovhannissyan: It doesn't mean necessarily revenues, but on the margin, general loss, how much it would be? Habib Ramdani: Yes, we don't communicate the overall percentage of our write-off. Taron Hovhannissyan: Next question is from [ Emily Pesci ]. Could you give us your point of view on the mitigation of tariffs this year and in 2026? You have communicated a gross figure. What is your view on the net impact, please? Habib Ramdani: For the tariff. For the tariff. Yes. So yes, we've shared that based on current available information, we expect the tariff impact to be at around EUR 4 million annual impact on our activity, which is shared that 80% of our revenue in the U.S. is made -- will be made at the end of 2026. It's slightly below for 2025, but 80% at the end of 2026 will be made by products being produced locally in the U.S. So the impact that we have is on the 20% remaining and on the 80%, it's some raw material or excipients that we are using for the production that are being sourced from outside of the U.S. So this is the EUR 4 million impact. It's a gross impact. It's true. We may benefit from price increase to compensate for that. I say may benefit because we are not alone in the market. We are also very careful and very prudent in the positioning of our product versus the competition. So it's a product-by-product decision that shall be made to see how and whether we can offset all or part of that tariff increase. So it's linked to the competition. So it's difficult to come up now with an answer. What we can say is that we are trying to increase our price whenever it's possible to compensate for any impact, inflation impact and also tariff impact. Taron Hovhannissyan: Can you remind us about your ForEx coverage and cost impact? Habib Ramdani: Yes. So we are -- first, we have a natural hedging on the P&L, profit and loss. In many countries, we are producing locally. In many countries, we have local activities, local sales force. In some countries, we even have local R&D, for instance. So this provides us with a sort of a [ natural hedging ] which is working certain years quite well, some other years, not as well. This year, it was working a little bit less because we have been impacted in some countries where we are also benefiting from product coming from outside of the country in different currencies. So that [ hedging ] -- natural hedging that we have depending on the years is protecting us more or less. So that's on the P&L. Then we are obviously having an overall [ hedging ] strategy on the cash flow that we have between the different subsidiaries that we have to protect the cash flow, the flow of cash based on the buying in some currency in some countries. We are doing all of that centrally for most of the countries, not all of them, but most of the countries. And it's a yearly [ hedging ] strategy that we are having on the cash flow between the different Virbac affiliates. And finally, we have some coverage as well on the balance sheet linked on the debt. We have some cross-currency swap that we are implementing. So I mentioned the Chilean peso. We are financing from France, our Chilean affiliate and part of that intercompany financing is protected through cross-currency swap. Given the price of that financial instruments, we have not covered 100%, but we are covering around 50%, 60% of the exposure. And the rest is not a cash impact. It's [indiscernible]. It's not a cash impact. Sandrine Brunel: Still another question from Amy Lee. It's for you, Paul. What are your key focus in the next 6 months? Paul Martingell: Well, thank you. Definitely, my first and absolute focus is really on learning; learning this business, this industry and of course, the wonderful and very successful world of Virbac. So I'll be spending a lot of time in the next 3 to 6 months visiting our affiliates around the world. As you know, this is an industry with quite a lot of difference between different markets, India, Japan, Brazil, France, U.S.A. So really important that I spend time in the local markets, visiting customers, visiting vets really out there with our teams in the field, something that I believe very, very strongly in keeping an external focus. At the same time as visiting our affiliates, I'll be engaging with as many stakeholders as possible. And as I said, that will include this group here where I would really love and enjoy to connect with you and listen to your perspectives on the industry, on the market and on, of course, Virbac and what we can do in the future. Then absolute focus #1 is really, of course, trying to continue to drive the strong momentum that we've been delivering over the recent years and in the first half of the year. So really, how can we stay very focused after all the important investments we've made in CapEx, in R&D, in licensing to really make sure we execute with excellence, that we're really close to our customers, that we're really on top of making every single launch and every activity we do as big as possible to have the continued momentum, the continued space to reinvest to continue to grow in the future. So for now, it will really be a little bit, I would say, back to basics on execution focus and driving momentum. Of course, over the following perhaps 6 to 12 months, I look forward to perhaps engaging with you and sharing with you our thoughts and our vision perhaps more towards 2035 and how we might want to evolve our current strategy towards -- to continue the strong and impressive growth this business has shown over the last 10 years where we've doubled the size of the business, what would it take and what can we do to look at a vision and ambition like that for the future. So that's really where I'll be putting my time and effort in the coming weeks and months. Taron Hovhannissyan: Great. Next question from [ Vincent Norman ]. Can you be more precise about some setbacks with R&D pipeline? Any major R&D program impacted? Habib Ramdani: I mean it's part of the day-to-day R&D. All companies that have R&D knows that you are facing difficulties, you overcome them, you find new solutions. So what I wanted to say is that it's not like we have 100 projects in our pipeline. It's not like 100 projects are moving exactly the way you wanted. I cannot be more specific. We are not providing a lot of details, as you know, on what we have in our portfolio. But we will, as usual, in March, provide a yearly update on our whole portfolio. So stay tuned. Taron Hovhannissyan: Next question from [indiscernible]. What about this one-off legal expenses that increased notably in H1? Is this related to the launch of future products? Or is it linked to more litigation? And if it is related to the later, what does it consist of? Habib Ramdani: Yes. No, it's there as well. type of litigation that all companies are having. We are mentioning it because we have a slight increase. I think it's EUR 1.2 million more first semester. So it plays also a role in the dilution of our profitability, and we know that it's temporary and it's versus 2024. But it's a little bit like the write-off. Every semester, every year, you have legal fees for some litigations that we may have in some of our countries. Sandrine Brunel: Gentlemen, we have a question from Emily about transparency. So because of transparency, I'm going to transmit you the question. Can we expect more transparency on financial disclosure margin-wise per division in '26? Habib Ramdani: I mean we are already providing a lot of information from a top line and the overall margin at group level. For competitive reason, you can imagine that there are elements of our performance that we don't want to share publicly. Anyhow, whenever there is something material that is happening or whenever we have an evolution, we try to be extremely transparent in the elements that explain that evolution. So we are perfectly aligned with the regulation in terms of what we are sharing, and we don't expect to provide -- go into more granularity as we move forward. Taron Hovhannissyan: So last question from Laurent Gelebart. Could you comment on your licensing and commercial deals, big stuff? Habib Ramdani: Sorry. Taron Hovhannissyan: Big stuff. Habib Ramdani: No, there as well. It's -- we mentioned it because we have never had really the opportunity to talk about licensing. It's -- we've said in the past at some occasions that it's a nice add-on to what we are doing. The team in all of our geographies are very much involved in that as well to identify opportunities. It's product that we add to our local pipeline. So it could be one product in one country, which is a good complement to our portfolio. We have the commercial infrastructure. So obviously, it has a nice impact on the bottom line. So a part of the 9, for instance, there is one nice product on which we have had some good results in some countries, and we've negotiated successfully with the owner of the product to extend based on the success that we had in some countries, he was willing to provide us with the license in some other countries. So it's also a testimony to the quality of the work that the team is doing. And on the technological licensing, it's quite important to rejuvenate our portfolio. And here, I can be a little bit more specific because one technology license is a monoclonal antibodies on which we have made a publication on our website. So it's not for tomorrow, it's not for the day after. It's quite a long-term perspective for that new technology, but we are very happy to have been able to secure that, which again will be a nice add-on to our R&D portfolio. Sandrine Brunel: Thank you very much. We have still 73 colleagues, analysts, investors that are connected. We have -- we went through the list we received in the questions section or in the chat section. So we may have come to the end of the meeting, dear friends unless you have still questions to ask, perhaps I let you a couple of seconds to see if something is moving on the chat. If not, I want to thank you all on behalf of the Virbac teams for your attendance and loyalty to our company and wish you a very good day and a good week as well. Thank you, Paul. Thank you, Habib. Paul Martingell: Thank you very much. Habib Ramdani: Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to the Bango plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However the company can review all questions missed today and we'll publish all those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Bango plc. Paul, good morning, sir. Paul Larbey: Good morning, and welcome, everybody, and thank you so much for your time this morning to go through our first half '25 results. So myself will walk you through an overview of Bango, highlights of the half, a lot more details on the financials. And then, I want to talk a little bit more about the DVM opportunity, in particular. At this time, I'm going to zoom in on what's happening in each geographical region from a telco perspective, just you can see the different dynamics of the geographies in which the DVM is gaining great success and then we'll end with a quick highlights and outlook. As always, these are more beneficial, I'm sure, if they're interactive. So please do submit Q&A as we're going. We'll sort of keep them to the end. I'll try and address them all again. And if there's anything you've submitted that we think we've answered, we'll sort of address those again if it's not clear. So just as a reminder, when we -- you'll see this, we'll cover as we go through the presentation. We have Bango in -- Bango has really, sort of, two distinct businesses. The transactional business, which is primarily the direct carrier billing business, that's where you can purchase something, pay for it on your mobile phone, here, the example obviously been PokeCoins in Google Play Store, but also physical goods from Amazon in Japan, for example. And then on the other side, the subscription business, very much focused on the Digital Vending Machine. That's really our market-leading platform for bundling of subscriptions, allowing anybody who has a subscription service to distribute that through a channel. Two very different business models, common technology platform in the middle. But On the transactional business, it's where it's a percentage of the retail price. And in the Digital Vending Machine, that's that SaaS model with that setup and one-off fee plus the license fee that generates that ARR that we've seen increase through the period. So two businesses, very much we'll cover both as we go through the deck. Underpinning both of those, if you step back and think of a very simple position, we're in the fortunate position where if you look at the customers, the companies that are connected to the DVM, it's sort of all the logos you would ever want to see, right, some of the biggest companies in the world, some of the biggest telcos, some of the biggest content providers and actually some of the largest of the West Coast technology providers all use the DVM to help them scale their business. And really, the fundamental and very simple value proposition is you connect once and you access many. And that doesn't matter whether you're on the payment side of the business on DCB or the Digital Vending Machine. By connecting once into Bango, we give you access to hundreds of people on the other side of that equation. So if you're a content provider, you get access to hundreds of telcos. If you're a telco, you get access to hundreds of content providers. And you can see there the speed and scale is really how we've been differentiating, especially on the DVM side of the business, where we can launch services quicker than anybody else in the market. Disney there in 4 weeks, NBA in 3 weeks and, with Verizon we launched over 40 in 20 months. So really that, that speed and scale is what the platform is really about. But as we go through the deck, you'll see it's going way beyond that and the value that the platform provides goes beyond that. But I think that's a good element to keep in your mind as we go through the rest of the presentation. We're all about being the place where people subscribe and our strategy for growth, as you'll see, if you read the RNS, is broken down into what internally we call the 4Es. So that's Expand, that's continuing that growth in the telco sector. Enhance is about looking at how we use the data we have in the platform to differentiate the content providers. That's one of those sort of strategies that's sort of more in the sort of mid- to long term. We're very early in that enhancement at the moment, where we're looking at what data we have and how we can add value to the content providers because ultimately, we'd like to monetize both halves of the marketplace, both the reseller as well as the content provider. Explore is all about looking at new verticals. You obviously announced at the back end of last year, Continente in Portugal, actually retailer, lots more pipeline developing in those markets, and we certainly see great interest. And I'll share a little bit later some survey results we've done with different content providers and so you can see the sort of verticals that they're looking to move to after telcos. And then Extract, that's about making sure we manage that payments business for cash and profit. And you'll see in the first half, we obviously finished the migration and integration of the DOCOMO digital business. So that's well and truly behind us now, and Matt will talk about the financial impact of that a little more as we go through the rest of the deck. So just in summary, and I'll turn it over to Matt. You see a great set of financials for the half. You see both the total revenue and the transactional revenue continue to see good growth around 30-ish percent CAGR over the past 3 years. Matt will talk a little bit more about the dynamics of that transactional business between those high cost of sales routes and the core revenue, but the core business really continuing to see good growth at around 10%. DVM business, again, continuing to scale, 49% growth CAGR over the period. And that sort of top line growth, coupled with the optimizations we've made in a cost perspective, see that increasing level of EBITDA. So significant EBITDA growth year-on-year from first half '24 into first half '25. Well, that DVM business is really driving that growth in the ARR business. That's up 20% year-on-year. Net revenue retention, that's a measure of the growth in existing customers. That should be our -- our aim is that also should be above 100%. It's naturally a little bit lumpy, especially in the small business depending where customers are. But keeping that above 100% shows that existing customers are growing, and we continue to have no churn once networks and customers are live. And that's a really, really solid part of the business is this continuous growth, because of the way the license structure is tiered as we manage more and more subscriptions for our customers. Momentum is building in the funnel. We had seven new DVM deals in the first half of the year. We added another one, obviously, we saw with MTN at the back end of last week, and the funnel is really, really well populated for 2025. And our focus is really getting those deals through the funnel as fast as we can, so we can get them live, get them integrated and get them launched. And that's really what will sort of continue to drive that growth of the business moving forward in addition to the growth in existing customers. So with that, I will turn you over to Matt to run through the financials. Matthew Wilson: Super. Thanks, Paul. Good morning, everybody. Welcome to the earnings call for Bango's first half results, 2025. Overall, a solid period, reflecting both the financial discipline and the continued execution of our growth strategy. We've made strong gains in recurring revenue. Our gross margin has expanded and our operating expenses have reduced. All three of those pillars helping deliver a 66% increase in adjusted EBITDA. Thanks, as always, to the Bango team globally for making this happen, and I'm pleased to now walk you through the highlights for the period. Starting with the top line. Revenue grew 5% to $25.2 million and building on a consistent trajectory of growth since 2022. It's important to also highlight the quality of that growth. Our annual recurring revenue increased 20% year-on-year to $15.6 million, and net revenue retention remains strong at 108%. That tells us two things. One, new customers continue to come on board; and two, existing customers continue to spend more. And couple that with the fact that churn across live DVM customers continues to be 0, and it highlights the attractiveness and sustainability of the DVM model as it embeds itself deeper and deeper into the global subscription economy. Moving to the next slide and looking at our transactional business. Revenues held steady at $16.4 million, in line with last year. On the surface, whilst flat, if we look deeper, I believe the underlying picture is a stronger one. In June, I introduced the split of core transactional routes against those higher cost of sales routes acquired from DOCOMO Digital. Both channels have shown different trends in the first half, but the underlying health of transactional payments remains strong. Our core transactional business, which is both more profitable and strategically more valuable, grew 10% year-on-year, adding $1.2 million and rounding off a strong first half. That sales growth was unfortunately offset by the volatility we've seen in the high cost of sales routes as we guided to in June. It's important though to stress with those routes operating at low single-digit margins, the impact on adjusted EBITDA of those movements is minimal. We continue to actively manage these routes with a clear ambition of improving their profitability even if that means stepping back from some lower quality revenue. Overall, with the migration from DOCOMO from the Frankfurt data center now complete, the transactional business is back on a firmer footing, providing stable cash flows and still growing in its core areas. Moving to DVM and one-off. Revenue increased 15% to $8.9 million, reflecting strong momentum in both new customer wins and expansion with existing customers. As Paul mentioned before, we secured seven new DVM customers during the period, including our first in Korea, our first telco in Japan, and further expansion in the U.S. and Europe. The number of active subscriptions managed by the platform has also more than doubled to over 19 million. This underlines the scalability of the DVM model and why we are increasingly being recognized as the standard in subscription model. Turning to Slide 11 on costs. We continue to be very focused on discipline and efficiency. Our core administrative expenses, which is a better indicator of the controllable costs in our business, decreased by $2.2 million over the last 12 months, equivalent to a 9% reduction. On a cumulative basis over the last 2 years, those expenses have reduced by nearly 20%. Despite the FX headwinds in 2025 from a weaker U.S. dollar, we expect to maintain that year-to-date cost reduction for the full year with a further reduction in fiscal year '26. Isolating some of the movements in the statutory reporting, we incurred $1.8 million of cash exceptionals. This includes $1.3 million of one-off restructuring costs to deliver our efficiency initiatives as well as $0.5 million data migration and asset write-down charges associated with DOCOMO Digital. We expect exceptional costs to continue in the second half, but to cease in fiscal year '26. D&A increased by $1.2 million year-on-year as past R&D investments comes online and begins generating revenues. We have not reached the peak yet in the D&A cycle, as it catches up with historical spend, but this will naturally come down as we reduce our CapEx spend going forward. And one can see from the bottom chart, this continues to come down. Consensus estimates forecast a 7% reduction in CapEx this year and a further 14% in fiscal year '26. So putting it all together across the P&L, gross margin improved by 350 basis points to 84.3%, driven by strong core transactional performance, savings from procurement initiatives and an increased weighting of higher-margin DVM activity. The strong performance across recurring revenue, gross margin, and operating efficiency drove a 66% increase in adjusted EBITDA versus the prior year period, reflecting the benefit of higher-margin revenue and disciplined cost control. Adjusted EBITDA margin rose from 17% to 27%. Finance charges increased, reflecting the current debt profile as well as lease interest from our new head office in Cambridge. That's a strategic investment to support growth and talent retention for Bango in the future. While we still reported a net loss of $3.2 million, this narrowed by $1 million versus last year, clear evidence that the operational leverage is delivering. And absent anything unforeseen, we would expect to report positive profit for the year in fiscal year '26. On cash, the story is very much one of investment and transition. As the DVM matures, we continue to put capital into R&D, though at a lower level than last year. Working capital movements and one-off exceptionals from the efficiency initiatives and the refinancing this year, impacting cash generated from operations as expected. We made a big step forward with the refinancing of the capital structure in June, securing a $15 million revolving credit facility with NatWest and an enhanced loan facility with NHN. That significantly strengthened our balance sheet and gives us flexibility to keep investing whilst driving efficiency. Net debt increased to $7.3 million for the half, in line with our expectations, and we ended with $4.6 million of cash on balance sheet. Finally, looking ahead, our priorities are clear: reduce net debt, continue to expand margins and deliver recurring revenue growth. With the refinancing in place, liquidity is strong and net debt will start to reduce in Q4 as the efficiency savings and seasonal inflows materialize. Strengthening the balance sheet was a key focus in H1. And with that delivered, attention turns to driving profitability. Gross margins are improving, core administrative expenses are falling and R&D CapEx is declining as the investment cycle peaks. Those efficiency gains will keep showing through in adjusted EBITDA and particularly cash EBITDA as we look forward to 2026. On the top line, the DVM pipeline remains strong and transactional revenue has a natural weight into the second half. Clearly, the timing of new DVM launches will be a key driver of the full year results, but the momentum we've built so far gives us confidence. Overall, we're currently on track to deliver revenue and EBITDA in line with expectations. And I'll now hand over to Paul to walk you through the DVM opportunity. Paul Larbey: Thanks, Matt. So I thought this is a good place to start. Just a reminder, we've shown this before about the way that bundling itself is evolving. It's moving from -- on the very left, what we call sort of a Basic Bundle that's where one particular content service is tied to a particular mobile or telco plan, into really the area of sort of Multi-party bundling, where there's more choice, you can pick, you can add perks, you can upgrade and downgrade subscriptions all the way through to we see with Optus and SubHub where you have that sort of almost that marketplace or that app store for subscriptions that we call Super Bundling. And as a reminder, the Digital Vending Machine supports all of these different models, but the value that we add really increases as you move out of Basic Bundles into those Multi-party Bundles. And that's where we're seeing some great success at the moment. And we'll talk a little bit about more about the capability we're adding into the vending machine to make those even easier for telcos who are looking to launch those services moving forward. If we step back and look at the market size, you can see that the market is continuing to grow. The overall subscriptions market is continuing to grow. You see that has a CAGR of around 6%, where we see actually an increasing portion of that is being bundled particularly through telcos. So the CAGR for the telco bundle piece is close to 10%. So the bundling growth is faster than the overall subscription market growth. And then the final 80% of CAGR, that's that evolution from a Simple Bundle into the Multi-party or Super bundling, and that's growing much faster. So you see the subscription market is growing, an increasing portion is being bundled through telcos and those telcos are increasingly moving to more complex bundles. And that's really where the Digital Vending Machine starts to add significant value. So that's the market that we're operating in. On the other side of that, you have obviously the content providers. And back in June this year, we published a survey. You may have saw if you follow us on LinkedIn or any of our material, we published a report called Gravity Shift. And Gravity Shift basically interviewed 200 senior execs from all sorts of content owners and with all sorts of different subscription services to really understand what their plans were for us for sort of secondary channels or distributing subscriptions through channels. And you see over 90% of those are looking to use these additional channels. So rather than just go direct to consumer, looking to grow their base by distributing subscriptions through a channel like a telco. And when you look into the channels they're looking to use, you can see it's not just telcos, it's moving into retailers and banks as well. And that's a significant step-up in both retailers and banks. And I think that's largely because we're seeing more and more telcos already having launched these services. So the subscription brands are looking for alternative channels. And that very much aligns with what we see from a sales perspective and in the pipeline is that moving to retailers as well as financial services products. And you can see the reason why they want to do, why they want to do this, and it's largely complexity. It's complex. It takes time. How can I simplify all this? And that's really what the Digital Vending Machine does is take that complexity, we make it simple. And as you've seen from some of the examples I gave earlier, we're making very quick to launch these new services. And the speed and scale is really what is -- as I said at the start, what it's been about so far. And you can see all the examples there. You can also see what Verizon has seen and the benefits that the telcos are seen in terms of reducing churn and the ambition that the telcos have to get more and more of their customers using bundles, because for them, it's the best way to grow revenue and reduce their churn. But back in February this year, we launched, what we call, the world's first super bundling subscriptions hub, and that's going way beyond just optimizing that connectivity to the entire life cycle of a product. And we continue to innovate all these ways. It's all about from onboarding and having test partners or content providers and telcos who come into the platform and self-certified. It's about having a pre-canned user interface. We call that the CX. That went live with Altice in the U.S. this year. That's our version. If you're a customer, that's your way of accessing the Digital Vending Machine through this user interface, which the telco can put their own brand, their own colors and choose their own layer, all through a configurable product and very much into these offers, the creation of these offers and how do you define these offers, how do you publicize them, how do you distribute them, and how do you manage the complexities that come with those offers in terms of rules, upgrades, downgrades, what happens if you cancel one product, what was the impact on another product. All that complexity we've been sucking into the Digital Vending Machine. And that does two things. It really allows these offers to be launched a lot more quickly, but it also makes customers very, very sticky. It means, we're not doing the connectivity. We're doing a lot of that complex logic that was historically sometimes done in the telco's back office system. So the value that the telco -- well, the Digital Vending Machines deliver is increasing all the time, and that's providing the ability to launch services more quickly and making it a sticky relationship with the telco. So talking about telcos, I thought it would be good to look at different geographies, because the dynamics we see globally are very, very different. So I thought it would be useful just to do a bit of a world tour of what we see. But before we do that, let's step back and look at what drives growth. So we drive growth in two ways. We drive growth by winning new DVM customers, the logos, the likes of MTN that we announced last week. And then by existing customers growing and existing customers growing two ways. They grow by getting existing of their customers to take on more bundles and more offers in effect, moving from maybe having one subscription to two or three as a user and then by them getting new consumers to adopt bundles and bring those into the bundling. You see that the Verizon quote and the demand to get 50% of their customers into that MyPlan bundling. So those are the way that we grow in DVM, it's new logos and then new more subscriptions, and that's either from new customers or from existing customers taking more and more subscriptions. So we look at the U.S. and Canada, I think this is by far been our largest market. And that makes sense, because it's actually the largest market for digital subscriptions by revenue. So it makes sense that it will be our largest market. It also is a market where a lot of telcos and particularly regional cable operators are struggling as people look to cancel their cable package, TV package, cord cutting that's called if you look around in the press, people basically taking a broadband-only subscription and then getting their entertainment through third-party services. And so it's a natural next step for those guys as they look to differentiate and reduce churn that they look to third-party subscription bundling as a way of compensating that. The U.S. is really made up of about 10 major national telcos. There's sort of tens of midsized and really thousands of small regionals. So it's quite a diverse market. Likewise, somewhat similar in Canada, although a little more concentrated, we have sort of three nationals and sort of tens of regionals. And we've built a really good position in that marketplace. We have 6 out of the top 8 in the U.S., including the DISH announcement that we made last week and the Altice announcement earlier in the year. In Canada, we do bundling for all three of the nationals as well as a number of the regionals as well. And so really, we have a really strong position there. So in the U.S. and Canada, really, the growth in terms of new logos and new wins is largely going to be with those smaller regional telcos. So for that, that's where the all-in-one super bundling solution makes sense for having that user interface, that sort of zero-touch access is a way of bringing on these smaller telcos with less and less work and less and less effort so they can launch more quickly. And then really, the big growth in U.S., Canada is going to come from existing customers. So that 6 out of the top 8 as they look to step through the tiers bringing on more customers. And that's where that offer management functionality really makes sense, allowing us to create these complex bundles. We're at the start of a new sort of football season, sports bundles are always very popular and big drivers. You saw that in the DISH announcement. And that's really one way of sort of ensuring getting these services launched more quickly so we can drive more and more subscriptions through the platform. Shifting south, we got to some of the Latin America. That's a region very much dominated by large telco groups. It's one of the largest bundling markets for SVOD. There's more SVOD bundled through telcos in that region than in the other regions. And local language content is particularly important. That's provided sometimes by the global players like Netflix, but also by specialist players like the ViX service from Televisa. If you look at where we are in that market, we've been doing simple bundles in that market for quite a while, particularly with Amazon and as well as some other partners. And so we have sort of bundling connectivity to 80% of the telcos in that market. The DVM is being very heavily used by Liberty Latin America across the region. And then, we work with TelevisaUnivision to help them scale their local language service mix across the different telcos. You can see we have a great embedded base, and it's a case of building on that base and converting those simple bundles into DVM and multi-party bundles. That's really where the new logos will come from is that conversion from the simple bundling we do at the moment into the more complex bundling solutions where the DVM really adds great value. It's a big prepaid market. So some of the top-up features we've been developing where we can really manage the top-up and again, take that top-up complexity out of the telco system, manage that in the DVM, allows us to launch prepaid bundles a lot quicker and also makes it a very, very sticky solution with customers. Closer to home, if we look across EMEA market, obviously, Europe is very much dominated by a few large telco groups. Middle East is really -- there's very limited complex bundling at the moment in the Middle East. It's very much still, very much a DCB focused market. We're seeing signs that starting to evolve, but it's certainly one of the least developed markets. And in Africa, there's huge demand, but the economics are very, very different. And you can see that in the chart at the bottom, you look at what the price of our network premium subscription and more ARPU between the U.S., South Africa and Nigeria, you can see it changes pretty rapidly. So from $25 then to $10 in South Africa down to sort of $5. So the unit economics in Africa are very, very different, but the demand and the volume and the number of subscribers is very, very high. So where are we in those regions? Obviously, in Europe, BT/EE, and Liberty Global were some very early DBM customers. We're seeing them both of them increasingly look to use the DBM more in sort of a marketplace type office, almost moving out of multi-party into sort of super bundling. You'll have seen that with the Telenet Marketplace announcement as well as what EE are doing with some of the marketplace work. And last week, we got our first win in Africa, I'd say, with the MTN Group. They operate across 16 different markets in that region. We'll start with the rollout of a global SVOD in South Africa, and then we'll expand into other markets. And then each market will add on more content providers. So there's certainly lots of opportunity for us a really good entry into a market that has say very different economics versus some of the rest of the world for everybody, both the content provider and telco. And obviously, we're in the middle of that. So our strategy really is to continue with Europe all the work in the groups. We're starting to see a long last the large telco groups move out of the studying phase into the execution bundling. We had a win in the first half with an operator in the Benelux region. We're starting to see other opportunities drop through the pipeline. Obviously, we want to drive customers in Africa. So big numbers of customers there, big demand. So we want to get those services launched and deployed to as many countries as possible as quickly as possible. And that's where eDisti is quite helpful with some of these marketplace solutions like the likes of Telenet are doing is to bring in other merchants more quickly. So the eDisti solution we have really plays well into those marketplace offers. Finally, in Asia Pacific, obviously, again, a very mixed market. We sort of broke it for simplicity on here into sort of two, you have the mature markets Japan, South Korea and Australia, very high disposable income and really a big adoption of digital services and the subscription economy in general. And then growth markets like India and Indonesia, et cetera, with the sort of a rapidly expanding sort of mobile-first digital customer and price sensitivity is really, really key in those markets. And that actually drives more. So the more -- and so vaguely, the more price-sensitive markets are, the more creative of these bundles are that are put together for customers. So generally, that works in our favor. So where are we at the moment? We obviously have a strong DCB position across that market, particularly in Japan. And obviously have Benefit One, that employee benefits provider, we announced a few years ago. We added the first telco in Japan for DVM in the first half of this year. And really, what we want to do with digital benefit is exactly what we did with DCB in Japan, is establish that position, that beachhead position and grow from it. And that's the way that market historically works. You build up that position, you build that position of trust, become known as a company in that region and then business continues to grow. And likewise, very similar in Korea. So that's why we were really pleased to get our first win in Korea with KT. And actually they launched their first AI subscription service only a few days ago at the back end of last week. In the growth markets, which include, we launching both gaming in Indonesia as well as with the social media platform in India. So very much more of that simple bundling some level, but certainly with ambitions to grow into that multi-party. Multi-party, that's really how we'll sort of grow in this region. It's capturing the prepaid users in the growth markets and looking at AI subscriptions in these developed markets and basically building a reputation in those countries like Asia and Japan and Korea. So we replicate what we've done in DCB with Digital Vending Machine. So finally, before we shift to Q&A, just a brief outlook if we look at sort of the transactional business, then we've obviously completed that migration as we've talked about, DOCOMO Digital integration now fully behind us. We have that volatility in those high cost of sales routes that Matt talked about, but the core business really continues to grow well. And then additionally, you'll see the gross margin increase with some of the cost of sales reduction activities that we've undertaken. So business, as Matt said, is very much moving into that sort of strong cash generation business and more than we're very pleased with the growth level that we see in the core transactional routes. In DBM, seven new customers in the first half, we now have probably 6 out of top 8 service providers in the U.S. First customers in Korea, first telco customer in Japan, new Western European customers and our first DVM customer in Africa, literally that we announced back end of last week. Put all that together, you see some great DVM growth, the ARR growth, in particular, that net revenue retention showing the growth from existing customers. All of that, coupled with the cost savings that we've been implementing, delivering good EBITDA growth in excess of 60%, and we're really on track to deliver revenue and adjusted EBITDA in line with market expectations and really moving into 2026, where all those cost savings, you get a full year of benefit, even more revenue growth as those DVM wins this year start to move into the growth phase. And you can see we're in a business that set a significant cash generation with a very different-looking P&L in 2026. So with that, I'll stop and turn back and we'll go back for Q&A. Operator: Perfect. That's great. If I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I would just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But Sukey, at this point, if I may hand over to you just to chair the Q&A with the team. And if I pick up from you at the end, that would be great. Thank you. Sukey Miller: Thanks, Jake. I'll start by apologizing for the dub of the hazard horn, which you could hear earlier in the call, that was announcing the sandwich fan. It's not a new bundle theme [indiscernible] random enjoyed. And as always, we're really keen to hear from investors and anyone who's interested in Bango. So on bangoinvestor.com, we have a Q&A functionality. So thank you to everyone who's been using that. It's proving very effective. And to everyone who's submitted their questions today, we appreciate those. So let's dive straight in. I'll start with one for you, Paul. We've had lots of questions about announcing deals and news flow ranging from there's not enough to there's too many and comments about the lack of commercial details in announcement. So could you provide a comment on this, please? Paul Larbey: Yes, sure. So I guess the one thing I've learned is, as far as communications go, you can never please sort of everybody and people digest information in different ways. So if it doesn't meet the way that you personally like it, I apologize for that, but everybody is different. So what we try to do, especially with RNS is, is basically, I would say, they almost split in two. With deals that are very large initial revenue. For example, remember, a couple of years ago, we had that one of the top 3 telcos in the U.S. with the starting ARR was sort of $2 million. We announced that on a no-names basis. So generally, we're giving the commercial -- we're talking about the commercials, we will be restricted from talking about the operator that is launching those services as part of the contract. So that's one category for announcement where it's very large immediate revenue, and that's generally announced on a no-names basis. And the second category, which is where I think most of the wins fall into are where deals that have huge potential, but generally start off a lot smaller, right? MTN and the announcement being a great example of that, huge potential, but obviously starting with South Africa and more particular SVOD provider in South Africa. And those will be announced as soon as we can. So we're restricted often by the timing from the partner that we signed the deal with. And we will generally announce those as an RNS reach, if we think they are particular interest to investors. So if you look at the two, we did last week, DISH and Sling TV, I think that's a really, really interesting stuff. Firstly, they're one of the top 8 operators in the U.S. So that's 6 out of the top 8 and DISH is obviously one of those. So it's very relevant for that. But also, it's an interesting model, because they have DISH TV. They have Sling TV, which is also a content provider. And then they have Boost Mobile, which is our MVNO. So very different elements of the group. So for us, that's quite an interesting model to see how that evolves, because they sit on both halves of the Digital Vending Machine, depending on which sort of part of that overall group that you're talking to. So for me, that's really interesting. And then MTN obviously was the entry into a new market, right, into Africa and our office customer win in Africa. So we thought that was relevant and interesting to investors. And then, there'll be others which we don't see, where we did a press release with Telkomsel in Indonesia, an announcement with a partner Magyar to launch Netflix in Hungary. And those are announcements where they're just sort of deal wins. We do general press releases of those, because we benefit commercially from that, right? The only reason for announcing deals is not just for investors, it's also to generate the commercial momentum as well. And so those two we didn't announce as RNSs, because we didn't think they were as interesting for investors and want to keep the news flow as far as RNSs go, a bit more focused on the deals that we think we are interested. So that's the model we follow. And I say, if you want to find out more, you will have seen on the previous slide, there's tons of ways you can keep in touch with what we're going on. RNS reaches are just one small part of it and say again, those we do as and when we acquire and when we think it's interesting. Sukey Miller: As a related follow-up, the releases last week had a very positive impact on share price. It's increased recently. There were a number of comments about what the Board is doing to increase the share price. Paul Larbey: Yes. I think if you look last week, obviously, I think some good news that most of the investing last week was all retail driven. That tends to be very news flow driven. And I think hopefully, the retail market saw to the same way we did is the opportunity with both DISH and MTN in terms of what those can deliver to the business over time, right? Those are both deals that will grow and grow over time. Just a reminder, the Board and all employees are very big shareholders overall. We're all invested and interested in the share price. In terms of what actions we've taken, I think we appointed Canaccord as a second broker. We've seen some great traction from that, both in the U.K. as well as in the U.S. One of the reasons we picked Canaccord as the second broker was because of their reach into the U.S. market. We obviously added West to the register a year or so ago, and we have great interest from other investors. And this is the start of what proved to be a very long 8 to 9 days where we're meeting not just existing institutional holders, but well in excess of 20 non-holders. So we've got a very, very busy 8 to 9 days. So there's certainly interest from institutions. And I would say more demand than certainly, I remember for many years, and we have a busy 8 to 9 days ahead of that. Sukey Miller: Moving on to DVM specifically. How many DVM customers are there? And can you comment on where they are in the implementation phase? Paul Larbey: Yes, sure. So they're all in different phases of implementation phase. So I think we ended last year with 27. We added 7 in the first half. We've just added another one with MTN, I guess 35. And with some of these, it depends on the count or when you count the group or each individual countries, we're counting MTN as a group in that particular number. And they're all very much in sort of different phases. And obviously, some are very much in that growth phase where they're starting to move through the tiers. Other is in that implementation phase. We were asked on a call this morning what's the driver for that implementation phase. And really it's twofold. The technical implementation is sort of a matter of weeks. You get these things into live generally a matter of weeks. The complex part or the things are delayed are two things. Firstly, it's the commercial agreements between the telco and the content provider. And secondly, it's fitting this into the telcos' marketing plans. And those two tend to be the driver of launches. That's why we like things like football seasons and Christmas and things like that, because they are very hard deadlines that are removable. So the DISH launch is a great example of that, very hard deadline in time for the new football season. And so we actually saw those things move very, very quickly from contract signature to launch, because there was that very, very hard deadline. So certainly, so much of it is outside of our control, but the bit that is the technical piece is sort of a matter of weeks. Sukey Miller: Related note, is near-term growth driven more by new partners or expansion of existing ones? And the reported reach, what's the conversion rate into active subscriptions? Paul Larbey: Matt, you want to take the first part? Matthew Wilson: Yes, I'll take the first part. So as I mentioned in the presentation, we're in the privileged position here of being able to have growth coming from both new partners and existing customers. And you can see that in both the metrics that we're reporting. Obviously, important to strike that balance, but we're not dependent on one particular lever. So the net revenue retention of 108%, the key there is it continues to be over 100% shows that the customers are growing as they scale the license tiers. When a customer scales the license tier will obviously be dependent on the commercial contract with that partner. So that can be quite lumpy. So I wouldn't focus on is net revenue retention 159% or 108%. The key is that it's over 100% that shows that the existing customers are growing. And then the ARR growth of 20% year-on-year also supports the any addition of new logos. So we've got both pillars driving that overall growth, and we're not dependent on any one, which is a great position to be in. Paul Larbey: And in terms of how that converts into number of subscriptions, it's very, very low. I don't think there is a standard answer for that. Hopefully, you saw some of the geographic differences that I talked about in the presentation. And it's largely, I would say, driven by the telco sort of marketing campaigns, so things like start of football season, back-to-school, Christmas. And generally when we sort of see the growth rate increase and then maybe after that campaign, it drops back to a more normal level until the next level. So it's very -- it's hard to predict and very, very driven by the telcos marketing campaigns. What we're trying to do in the product is make as much information available to the telcos so they can really target those marketing campaigns and make them a lot more direct. And that's the bit that we can influence and that's what we're focusing on. Sukey Miller: There's a question about beyond telcos. How are the non-telco partners progressing? Paul Larbey: Well, as you see, hopefully, you saw from the survey, right, there's definitely now an increasing interest from the content providers to move into those verticals. Now a lot of the telcos are in progress. And banks and retailers are the two that sort of come at the top, and we see a good pipeline in both of those. We also have some other more interesting and different verticals that we're talking to customers as well. We'll see whether they're going to -- which of those is going to be successful. For us it's, telcos remains a priority. That's where the bulk of the subscriptions that bundled go through. Banks and retailers absolutely are probably the next two, but there are others as well. So you'll see more as we go throughout the year, but our primary focus is on the telco. And you can see outside of the U.S., there's lots of green space and white space for us to expand into and bring new logos onto the platform. Sukey Miller: In terms of scaling DVM growth, which regions are the focus? I know you touched on it in the presentation, which regions are the focus for new partner wins in the next 12 to 18 months? And then, how do you see the competitive landscape evolving and the biggest risks within that? Paul Larbey: So I think for sure, new part of wins we see sort of outside the U.S. where a lot of it is done. I think, there's also a question about we've done 6 of the top 8, what about the last 2. I think they're certainly not out of reach. One of those doesn't really do that much bundling, so maybe less of a criteria. So there's still a little bit to go in the U.S. But really, the growth in terms of new logos we see will come in sort of Asia and Europe in particular and Africa, we'll see how that goes and sort of how that expands. Sukey Miller: And the MTN South Africa announcement, which was issued last week, are the margins comparable to other markets? Or are they lower given that subscriptions are less expensive in these regions? Paul Larbey: So I think, it depends on MTN margin, because DBM is a high-margin business. So DBM is and will always remain a high-margin business. But obviously, economics and the deal structure are very different in that particular region, but there's very, very high volume. So the margins will remain high, close to 100% for the DBM license. But the way the deal is structured and the way the economics put together are slightly different just given the different economics that people like Netflix, telco and ourselves sort of feel in that region. Sukey Miller: And are we expecting to roll out MTN in South Africa? Paul Larbey: Yes, certainly, I think that's where it's going to start with an SVOD service in South Africa and then it will move into other countries. And then, each country will be adding more and more services. So great opportunity, certainly a lot of demand. It's a case of sort of rolling out in that region and getting what is quite heavy prepaid market live as quickly as we can. Sukey Miller: Question on the pricing model. How does the pricing model work for both segments, transactions, and DBM? And are you intending to split out EBITDA reporting for both segments? Matthew Wilson: Sure. I'll take that one. So as we discussed in the past, the transactional segment is based on a percentage of end user spend and that percentage can obviously vary depending on the commercial arrangement or whether it be for physical goods or digital goods. For the DBM, this is a mixture of one-off integration fees initially and then each partner will then be subject to a recurring license fee stream. And that license fee revenue is basically linked to the number of subscriptions to the platform. And typically, we talk about customers scaling the license tiers. So each contract would have bundling for particular license fees dependent on the number of subscriptions. So as those customers grow and more subscriptions come up to the platform, then the license fee will also increase. And then, in terms of reporting segments separately, I completely agree with this. We've obviously got two very different business units within Bango, each that has their own sort of different drivers. And so, I think the intention definitely is to start reporting these separately from next year to provide better visibility on the overall business to investors. Sukey Miller: And on the B2 -- different business in DVM and transactional. What's the competition we face for each of those? Paul Larbey: Yes, sure. I think first thing, we talked about that transaction and that DCB business. A lot of the core deployments, I think most of our growth, while we're all launching new telcos and new merchants, the growth really comes from existing customers. And so competition has historically been from operators looking to do it themselves or to use an integrator, which the two global integrators are ourselves. So that's where that market sits. On the Digital Vending Machine on the bundling side, really our biggest competition is people looking to do themselves and that build versus buy business case is always the first thing we go through with any new customer. And really, as you move from simple bundles to multi-party and as you bring on more content providers, that equation bias is very much in our favor and it becomes very much a very simple buy decision about that. There are other companies in the market that have a product that does similar things. Amdocs being the most obvious one with own market -- own products. They are obviously a big OSS, BSS provider for telcos with a bundling or so, but other side. And so I think it's always good in the market for our competition. We're very different than Amdocs in terms of scale, size, pricing model, product capability, number of merchants integrated, et cetera, et cetera. And so, I think there is -- in some ways, it's great to have competition and they're great to compete against because we are so different. Sukey Miller: How sensitive are the number of subscriptions we manage by DVM to changes in consumer spending? Paul Larbey: Yes. I guess a couple of ways. Firstly, the license fee that we charge is not based on the retail price of a subscription. It's based on just the number of subscriptions. And secondly, actually, what we see is generally with a squeezing consumer spending, everybody becomes a bit more creative in terms of the offers that they get together. So it drives more discounts, more bundling. So somewhat ironically, that sort of works. It works in our favor because telcos get more creative. They want to protect their core telco pricing and really sort of put some really good offers into the market. So ironically, it's sort of almost the opposite that you would expect. Sukey Miller: Question on operating profit margin is, following in the first half from FY '24, what are the expectations for operating profit and future margins? Matthew Wilson: Sure. So as you've seen in the results for this period, we've got a nice balance of growth coming from recurring revenue. We've got gross margins expanding, and we've got cost reducing, and that's really supporting, as I mentioned, the 66% increase in adjusted EBITDA. You've seen the adjusted EBITDA margin move from 17% to 27% off the back of that. So there's a high level of operational gearing in the business. So as revenue improves, that will all drop through. So whilst we've got an operating profit margin loss for this year, we can expect to be positive next year. And I see -- so just reading the Q&A, there's a separate question on when I mentioned we expect to be profitable next year on what basis. So just to be clear, bottom of the P&L, net profit for the year, absent anything unforeseen, we'd expect the benefits of everything that we've been doing over the last couple of years to show a bottom line profit in fiscal year '26. Sukey Miller: We have a question about when Bango will achieve tangible growth? Matthew Wilson: I can take that one. I think obviously, delivering a 66% increase in adjusted EBITDA, I would suggest that, that was tangible growth. But look, I think as I just mentioned in the previous question, the nice thing that we're facing here is that we've got different pillars all supporting growth, so be it revenue, be it margin expansion, be it cost reduction. We're not dependent on any one single pillar. So we're seeing those all align now. And I think the real benefits will be apparent as we move into fiscal year '26, because we'll also move away from some of the legacy exceptional costs that obviously have been weighing on the bottom line as well. So as we continue to mention, the outlook for fiscal year '26 should be one of material cash generation. Sukey Miller: You mentioned having no churn, which is great. How simple is it for customers to cancel contracts in either segment? Would you have advanced notice? Paul Larbey: So yes, there were some advanced notice. I mean, I think the contractual cancellation is one thing. You then have the challenge of migrating the services from whatever system to the other. And what we've seen increasingly is on the DCB churn, there's very, very low churn. It's very rare that people -- it does happen, but it's very, very rare. On the DVM side, and that's why we're doing things like this offer management and this prepaid, not only to get services launched more quickly, but to embed the DVM more deeply in the telcos back office system. So while contractual churn, I think, is sort of one question, the actual practical churn is much, much harder than anything that's written in the contract. And that's really the value of the DVM and the more subscriptions that get on to it, more users that are using it, the bigger you are in the growth curve, the harder it gets. Sukey Miller: Why does Bango have such a high cost structure? Matthew Wilson: Yes. So look, historically, we've obviously had the integration of the Document Digital acquisition, which has naturally made that cost base elevated. You can see in the numbers, and that's part of the reason why we've introduced this core administrative expenses metric, because that does show the level of core controllable costs, and that has been coming down, 20% cumulatively in the last 24 months and 9% this year. That naturally does get distorted by the things like depreciation and amortization rising and the exceptional costs. As I talked about before, those exceptional costs should cease next year so that we can remove that from the cost base. The D&A is yet to peak. Naturally, we've made a lot of investment historically, and so there is that lag effect for D&A to catch up, but we are approaching that peak. I'd like to say towards the end of next year, and you can see the R&D CapEx investment continuing to trend down. And so the D&A will follow that soon after. Sukey Miller: Related to the quote around Verizon in the presentation, what is the timeline for Verizon to reach their targeted penetration of having all their subscribers under the model? Paul Larbey: Yes, I think that's probably a better question for the Verizon results call. But I think the key element there is you clearly see their ambition, you see their ambition impacting other players in the market as we see more and more launches in that market. So I think the timing is always very, very hard to predict. I think its endpoint is inevitable quickly is the challenge and the answer to the question, none of us know is how quickly we'll get there. But clearly, there's a drive on our side. There's a drive from the content owner side and there's a drive from the telco side. So everybody is pushing in the same direction. So I'd say it's not a question of if, it's a question of when. Sukey Miller: Thank you. That concludes the Q&A. So I'll hand back to Jake. Operator: Perfect, guys. That's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you afterwards. But Paul, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great. Paul Larbey: Yes, sure. Thanks again, everybody, for taking your time and for all the Q&A. We had loads come in there. And I think we've answered certainly all of them. I really do appreciate that level of engagement, and we want to keep that moving, right? That's why we launched our Investor hub, where you can register, receive updates and ask questions against RNSs and see our answers online and see answers to questions other investors have raised online. So I really encourage everybody, especially on the retail side to join that investor hub. It's a great way of keeping up to date of what's going on in the company, and you can see some other ways of doing that as well. But that investor obviously really should be, I think everybody's go-to place for asking questions or finding out more about what's going on in the company. And that's what we tried to do today, is lay out not just what happened in the first half, but what we're seeing in some of the different geographies and what we're seeing in terms of the future of the company. And I think if you look at the future, as Matt said, we've got sort of great top line growth in the transactional business in those core routes. The DBM growth continues to grow. Cost base is coming down, the R&D CapEx base is coming down, giving significantly improved profitability, no matter which line in the income statement we measure on. And that will result in significant cash generation and a reduction in that net debt in 2026. So I think come the end of 2026, the businesses will be in a very, very different shape than it is today. I think we're in a great position of the market. And I'm looking forward to what will be a busy 8 to 9 days talking to institutions. But during that period, please do engage with us on investor if you've got any questions. And thanks again for your time. And for those shareholders, thank you for your ongoing support. Operator: Perfect. Paul, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Bango plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.
Ahmed Moataz: Hello, everyone. This is Ahmed Moataz from EFG Hermes, and welcome to IDH's first half of '25 results conference call. I'm pleased to be joined with Dr. Hend El Sherbini, Chief Executive Officer; Sherif El Zeiny, Chief Financial Officer; and Tarek Yehia, Director of Investor Relations. As usual, the company will start with a brief presentation, and then we'll open for Q&A. IDH, please go ahead. Tarek Yehia: Good afternoon, ladies and gentlemen, and thank you, Ahmed, and thank you, everyone, for joining us for IDH second quarter analyst call. My name is Tarek Yehia, am I am HR -- IDH Investor Relations Director. Joining me today, we have Dr. Hend El Sherbini, our CEO; Mr. Sherif El Zeiny, our CFO. Dr. Hend will begin the call with a summary of the latest period main highlights. After that, I will discuss in more details the main macroeconomic and geopolitical trends seen across our market. Mr. Sherif will offer a deeper analysis for our financial performance. We will then end the call with Q&A. I will hand over the good to Dr. Hend. Hend El Sherbini: Thank you very much, Tarek, and good afternoon, everyone. I'm Dr. Hend El Sherbini, CEO of IDH. At the halfway point of what has so far been a very remarkable year, we are pleased to report another strong set of financial and operational results. Our performance in the first 6 months of 2025 highlights once more the effectiveness of our growth and investment strategies, which are enabling us to capture broad-based growth across our markets while driving sustained margin improvement. Our results for the period have also been supported by improving operating conditions across our footprint. We're particularly happy to see that our home and largest market of Egypt has remained on an improving trajectory in recent months, with the pound strengthening notably as investor confidence recovers further. In light of these results and the progress made on our strategic priorities, we are very pleased to announce that our Board of Directors has approved the distribution of the cash dividend for the year ended 31st of December 2024 of $0.017 per share to shareholders. This decision, which, as you may remember, had been deferred earlier in the year follows a careful assessment of market conditions and the company's cash flow needs for strategic investments. The Board is confident that the company's strong financial performance in the first half of 2025 and its robust liquidity position now support this distribution, reflecting our continued commitment to delivering shareholder value. Turning to our performance in more detail. In the first half of the year, we reported consolidated revenue of EGP 3.5 billion, an increase of 42% from the same period of last year. Revenue growth for the period was dual driven as our test volumes increased 10% versus last year, and our average revenue per test was 29% compared to the first half of 2024. In the last 6 months, we performed just under 20 million tests, recording test volume growth across all 4 of our currently operational markets. This is a particularly remarkable achievement considering the price adjustments rolled out at the start of the year across multiple markets to keep up with rising inflation. Meanwhile, we also succeeded in further expanding our average test per patient metric, which reached a new record high of 4.6 tests versus 4.3 tests this time last year. In Egypt, we continue to invest significantly to maintain our leadership position and remain the go to provide for patients nationwide. During the first 6 months of the year, we opened up 49 new locations to better serve patients within and outside greater Cairo. Our efforts have delivered immediate results with tests and patient volumes rising 9% and 3% year-on-year, respectively. And our top line, reaching EGP 3 billion, up 43% versus the same period of 2024. While we continue to grow our physical footprint, which as of the 30th of June 2025, saw us operating 636 locations nationwide, we are also investing in strengthening other patient touch points. In particular, we were very happy to see our house call service contributes to 20% of our Egypt revenues, standing above its average contribution over the last several years. The service continued growth has come as a direct result of our strategic investments over the last 4 years as part of our post-pandemic growth plans. Meanwhile, our radiology subsidiary Al-Borg Scan continued its steady growth with scan volumes returning to year-on-year growth in the second quarter of the year, following Ramadan related slowdown in March. We expect to see an acceleration in scan volumes and revenues in the second half of 2025 supported by improving market conditions and Al-Borg Scan's growing popularity within its catchment areas. During the first -- the second quarter, we completed a landmark acquisition to further strengthen our radiology offering, more specifically in June, we acquired CAIRO RAY for Radiotherapy, an established radiotherapy service provider in East Cairo. The transaction, which was completed for a total consideration of EGP 400 million will see IDH add radiotherapy to our patient offerings. Over the last 18 months, a key priority for all of us at IDH has been the launch and ramp up of our Saudi operations. I'm pleased to report that our results coming out of the Kingdom remains strong and encouraging, fueling our optimism for what's to come. The second quarter of 2025 Biolab KSA revenue surpassed the SAR 1 million mark expanding by 31% versus the prior quarter. Similarly, on a year-to-date basis, we saw revenue reached SAR 1.9 million, supported by rising test volumes. This growth continues to highlight the effectiveness of our ramp-up strategy in the market, which aims to accelerate revenue growth and establish Biolab KSA as a key player in the large, but highly fragmented Saudi diagnostics market. On this front, in early July, we inaugurated our third branch in the country located in Al Hamra District in Riyadh. Meanwhile, we continue to press forward with our other growth initiatives as part of our ramp-up plans. These have included an aggressive on-the-ground marketing campaign to raise brand awareness, strategic discounts to build momentum as well as exploring potential partnerships with health care operators. As always, a key focus for IDH remains driving profitable growth with our first half results pointing to widespread improvements across all key metrics. More specifically, during the current reporting period, we saw our gross profit margin expand 5 percentage points versus last year, and our adjusted EBITDA margin expanded 7 percentage points compared to last year. These remarkable improvements come as we continue to press ahead with our cost optimization efforts, which have seen our cost of goods sold and our SG&A outplayed as the share of revenue declined by combined 9 percentage points versus the first half of last year. Our bottom line profitability has also displayed sustained improvements when controlling for the substantial FX gains recorded in the comparable period of last year. In fact, during the period, we saw our adjusted net profit more than doubling year-on-year and yielding an associated margin of 16% versus 7% last year. As with the last quarter on the profitability front, a key highlight of 2025 so far has been our Nigeria operations during -- turning EBITDA positive. We expect Echo-Lab's profitability to continue improving as operating conditions stabilize and our revamped strategy in the country deliver results. Before handing the call over to Tarek, I would like to quickly touch upon our full year guidance in light of our most recent results. As previously stated, given the relatively stable market conditions enjoyed up to this point, in our first half results, we see our full year revenue growth coming in at around 30% for 2025. Meanwhile, on the profitability front, we see EBITDA margin coming in north of 30% for the year as our proactive cost control efforts continue to mitigate against inflationary pressures in Egypt and Nigeria. With that, I'll hand the call over to Tarek and Sherif, who will dive deeper into key trends across our chosen markets and our financial results for the period. Tarek? Thank you, very much. Tarek Yehia: Thank you, Dr. Hend. As Dr. Hend mentioned during her presentation, the first 8 months of 2025 has been characterized by relative stability and positive in our chosen markets. In Egypt, we are continuing to see slower inflation compared to prior years, with the [ last trading ] for July coming in a low of 13.9%. Decreasing inflation pressure has been supported by relative strengthening of the EGP versus dollar as well as increased ForEx inflows into Egypt as investment confidence recovers and remittance continuing to rise. In fact, in recent weeks, we have seen the EGP trading constantly below the EGP 49 to the dollars, values foreseen last year. Following rate cuts in April, May and in August for accumulative of 5.5 basis points, the main operating rate in Egypt currently stands at 22.5%. Improving macroeconomic conditions are set to be combined by further interest rate cuts in the coming months. This has undoubtedly helped prop up local investment activity and drive further recovery in consumer spending. Similar to Egypt, Nigeria has also seen relatively stable in the first part of 2025. Inflation has come down from last year highs, and this is expected to support the gradual recovery in consumer spending. Over in Jordan and Saudi, the economic situation remains largely stable despite increased regional uncertainty in the final weeks of the second quarter. Turning quickly to our latest results. Egypt continued to post strong growth in line with recent trends. Meanwhile, in Jordan, revenue posted solid year-on-year growth in both EGP and local currency terms, supported by a promotional campaign organized by Biolab, which saw test volume grew an impressive 21% versus last year. In a market where volume-driven growth is the key for long-term sustainability, we were very pleased to see Biolab's strategy pay off so successfully. In our third largest market of Nigeria, Echo-Lab is now firmly EBITDA positive, a direct result of our revamped turnover strategy kicked off last year. We are excited for our Nigerian subsidiary to build on the progress made thus far and fully capture the vast upside offered by local radiology markets. Finally, as Dr. Hend already mentioned, our newest market of Saudi Arabia is ramping up very encouraging as we had hoped at the start of the year. In the coming months, we expect to see further acceleration in the revenue growth, fueled by the launch of new locations, starting with Biolab KSA branch, which was started in early July. Finally, in Sudan, operations continue to be significantly impacted by ongoing conflict with no notable updates to report. I will now hand the call over to Mr. Sherif who will provide a more detailed overview of our cost profitability for the 6 months period. Thank you. Sherif Mohamed El Zeiny: Thank you, Tarek. Good afternoon, ladies and gentlemen, and thank you for your time today. As Tarek mentioned, during my presentation, our focus will be on cost and profitability before opening up the floor to your questions. In line with guidance -- with our guidance, profitability for the first half of the year has continued to improve, supported by our group-wide efforts to boost operational efficiency and keep spending at bay. On the efficiency front, the single biggest focus areas since the start of last year has been digitalization as we work to integrate new solutions into all aspects of our business. By successful leveraging these tools, we are supporting our group-wide decision-making process, ensuring that everyone across the organization is taking data-backed decisions to drive IDH forward. In parallel, we are also keenly focused on keeping costs down. Our efforts here have translated in a 9-percentage-point drop in our total cost to revenue ratio for the period compared to last year. This is a very impressive result, especially when considering the continued inflation pressure faced across some of our largest markets. The most notable decline was seen in our raw material expenses as the share of revenue, which stood at 19.6% in the first half of 2025 down from 21.5% last year. The decline reflects our proactive inventory management strategy, which sees the company leverage its scale to secure advantageous price for its testing kits. Meanwhile, total wage and salaries as a share of revenue stood unchanged at 26.5% in Half 1, '25. This reflects the successful introduction of salary adjustments to retain key staff and to -- and the continuation of our efforts to optimize headcount. As you can see in the bottom right chart, increased efficiencies have translated in notable expansion in both our gross and adjusted EBITDA margins for the 6 months period. More specifically, we saw our gross profit margin reached 42% versus 37% in Half 1 '24, where our adjusted EBITDA margin stood at 34% in the current period versus 27% in '24. Beyond this, it's worth mentioning that advertising expense rose 23% year-on-year as we continue to invest in supporting our ramp-up in Saudi Arabia, while doubling down on advertising efforts in Egypt. Finally, it's worth remembering that while our cost base is largely EGP denominated, some costs are linked to the dollar, and therefore, have increased year-on-year following the pound's float in March '24. As Dr. Hend already outlined, the contractions recorded at our bottom line margin reflects the high base effect from the substantial ForEx gains recorded last year. Controlling for this, our adjusted net profit expanded 214% year-on-year with an adjusted net profit margin of 16% versus 7% last year. Throughout the first 6 months of the year, we kept a healthy working capital position, supporting our operational efficiency. As mentioned in previous calls, our working capital management has been and will continue to be a key area of focus for us. Similarly, we saw our cash conversion cycle improve further to reach 138 days in June '25 versus 155 days at the end of '24. During the 6-month period, we saw provisional charges for doubtful accounts came in relatively unchanged at EGP 14 million. On the one hand, this reflects increased revenue, while on the other hand it reflects -- increased revenues, while on the other hand, it reflects improving economics conditions as the rollout of new incentives for IDH staff boost collection rates. It is also important to mention that as expected, we saw a decline in days inventory outstanding, reflecting accelerating sales during the second quarter of the year following the seasonal Ramadan slowdown in March. Finally, as June '25. Our total cash reserves stood at EGP 1.7 billion with a net cash balance of EGP 337 million. Thank you for your attention. We now welcome any questions you may have. Thank you. Ahmed Moataz: [Operator Instructions] We'll take the first line of questions from Matthew. Unknown Analyst: Can you hear me fine? Ahmed Moataz: Yes. Please, go ahead. Unknown Analyst: So Matthew from Confluence investors. We've been an impact fund focusing on Africa and the emerging markets. Long-time follower of the company and very good results. I've got 2 questions and 1 comment. The first question is about the -- about Saudi Arabia that in the numbers of tests these seem to be flat Q1 to Q2, while the number of patients seem to have a significant increase. Could you explain that discrepancy? Hend El Sherbini: So yes, you're right. I mean, we've seen an increase in number of patients and a flat number of tests, and this is because of the corporate side. So we've been working on the B2B there. And the B2B, the number of tests per patient is much lower than when you're working with the B2C, like what we've been doing before. Unknown Analyst: Got it. Okay. And then second question is around Egypt and around the cost base. So you alluded to this before, but some of your costs are, if not dollars, then certainly dollar linked. Are you able to, for Egypt, give us some more guidance around what proportion of the COGS and what proportion of the SG&A are USD linked? Hend El Sherbini: So when we're talking about the linking to the dollar, it's -- we're only talking about the raw materials that we -- that is linked to the dollar, which is around 20% of our COGS. Unknown Analyst: Right. And none of the overheads, you think? I mean, obviously, there's a bit of flow through, but... Hend El Sherbini: No. So 20% of revenue is linked to the dollar because these are the raw material costs. Unknown Analyst: And my final one, sorry, taking a lot of the floor, is a comment, which is, as the scans get to be larger and larger portion of Egypt, will you consider splitting out the financials of the pathology side to the scans? Hend El Sherbini: Yes, we want to do that, and we're working on doing this, yes. Unknown Analyst: Okay. I realize you already do a lot of disclosure, but that would be great. Congratulations on great results. Hend El Sherbini: Thank you very much. Ahmed Moataz: Okay. [ Fawad ] has a couple of questions on the chat. I'll read them one by one. Could you please explain the rationale for opting to return capital to shareholders through dividends rather than payback? The former are tax inefficient for most shareholders and those who want to can manufacture their own tech? Yes, that's the question. Hend El Sherbini: I mean this has been a requested by many shareholders, including Actis. So given the situation in Egypt now and the stability of the Egyptian pound, we -- the Board has taken the decision to distribute the dividends away from the money that is needed for investments, and this was the rationale behind that. Ahmed Moataz: Understood. The second question, could you elaborate on the initiatives taken to improve results in Nigeria since last year? Specifically, what was the driver of decreasing patient numbers, but increasing tests per patient? Sherif Mohamed El Zeiny: Yes. It's -- the improvements cames in Nigeria because we worked on everything. But in the revenue side, we increased the revenue and also in some brands who were not working properly, we already made the renovations and now we are getting much better results than before. Also the cost each one and we enhanced the headcount. And we did a lot of things that eased the consumption and everything. But for the number of tests, we already made much more contracts like before, like Saudi Arabia B2B, we have now -- they were counting on walk-in patients, but now we have lots of contracts working and it will increase more after that. Ahmed Moataz: Understood. There's a final question on the chat is, could you please provide more color on the promotional push in Jordan? Hend El Sherbini: So yes, the Biolab in Jordan has been conducting the promotional campaigns with discounts in order to increase the tests -- the number of tests. And this has definitely improved the revenue and the number of tests done in Jordan. Ahmed Moataz: Understood. We'll move on to 3 questions from the line of [ Farooq Maya ]. The first one, there has been a ramp-up in branch openings, plus 80 year-on-year, but branch efficiency, which is calculating it based on patients per branch is being held back as a consequence. How do you ensure that each branch meets the minimum return on investment and/or payback, and is cannibalization a concern? Hend El Sherbini: So this year, I mean, we've been focusing on opening branches in hospitals. So this is hospital management and clinics. We're managing clinics, labs in clinics and labs in hospitals. And this is why you can see the increased number of branches opened this year. Ahmed Moataz: I think you got muted. I'm not sure if you finished answering the question or not. Hend El Sherbini: Excuse me? Ahmed Moataz: No worries. I thought you got muted in the middle of the question, but yes. Hend El Sherbini: So maybe I can repeat that. So we opened 85 hospitals and clinics that we manage. I mean, we did -- we are managing branches inside hospitals and clinics of a total of 85 this year. So this is why there is an increased number of branches opened this year rather than opening our own branches with our own CapEx. Ahmed Moataz: Good. And for the other part of the question, is cannibalization a concern, and have the new branches being opened more or less been meeting the minimum return on investment that you internally target? Hend El Sherbini: Yes, sure. I mean you can see this from the results in the top line and in the bottom line, which explains -- which answers this question. Ahmed Moataz: Okay. Second question, has radiology business kept up with the business plan 5 years ago when it was launched? What contribution can this make in the coming 3 to 5 years? And what learnings from this new business is useful for the new Saudi business? Hend El Sherbini: So the radiology -- the Al-Borg Scan, the 5-year plan that was put for the Al-Borg Scan is to have it 5% of the total revenue of Egypt, which is the case right now. So we've reached the -- our target of 5%. And we're still aiming at increasing the percentage of revenue coming from the Al-Borg Scan where we're opening a new branch in New Cairo where we're increasing efficiency, increasing utilization and so on. But this has nothing to do with Saudi Arabia because Saudi Arabia, here, we're talking about pathology business rather than radiology. Ahmed Moataz: Understood. And last part of this question, what was the rationale of the recent acquisitions that you've done? Hend El Sherbini: There is a shortage of radiotherapy in Egypt. So this comes that there is an increased demand and shortage of radiotherapy machines. We were looking at having a new branch for Al-Borg Scan in New Cairo. So this recent acquisition will encompass both, Al-Borg Scan branch in New Cairo as well as 2 radiotherapy machines with a very attractive price. So when we looked at the price offered, or the price for this new branch, it was the same price as if we were doing a new Al-Borg Scan alone -- stand-alone branch. So I mean, it complements what we're doing. There is a high demand for it and as well as the geographical place, which we were looking for. Ahmed Moataz: There's a follow-up on, if you can share any KPIs on the CAIRO RAY acquisition, specifically revenue, operating income, EBITDA? And if you can also share some info on their balance sheet health, and lastly, the growth outlook of the business? Hend El Sherbini: I can definitely send you the business plan that we have for CAIRO RAY. We're not going to be able to share it now, but we can -- Tarek can definitely share it with Farooq. Is it Farooq who is asking this question? Ahmed Moataz: This is actually, [ Zohaib ]. I can send you his e-mail after the call. Hend El Sherbini: Okay. Ahmed Moataz: Darren Smith is asking, could you please provide color on the 30% EBITDA margin guidance given that in the first half, you've already achieved 34%? Would that mean that you expect the second half to be much weaker? And lastly, he is congratulating you on the results and the great -- and it's great to see dividends as well. Hend El Sherbini: So we were planning -- we are looking at around -- in the first -- in the 30s up 32%, 33% EBITDA margin, and this is what we communicated to the market before. Does it mean that we are looking at slowing down the operation, but it's rather the investments and the money that is -- the cost that is being in the second half of the year. But -- so it's more or less what we communicated before to the market, in the north of 30% EBITDA margin. Ahmed Moataz: Understood. [ Fawad ] is asking, could you elaborate on the digitalization initiatives undertaken across the business? Sherif Mohamed El Zeiny: Actually, we are doing lots of digitalization in all our business aspects. For the time being, we are implementing Salesforce, which is -- will, of course, help us a lot for the sales side, for the revenue sides. Also, we are implementing this -- the tool of SAP, which is SAP advanced tool of reporting and analysis. And this is very important. We are working in the data, having a very strong data warehouse, which will integrate all our business together from LMS, from SAP, S-A-P, ERP from the Salesforce, from all our business. And also, we are working on having a very online banking system with the banks and make reconciliation and so on. We're already making -- a big part of it already implemented, and we are doing the reconciliation with the banks because it's a headache because we are having a huge number of branches, and we have to make sure that our cash is already deposited into our accounts or our banks on a daily basis. So this was really huge efforts, but now we are much better, and we are continuing. So we have lots of projects. I have mentioned part of them. But digitalization is part, of course, also for the business, we have AI. We are managing to make some -- we have some use cases for serving the reports on -- through our AI system and so on. Hend El Sherbini: We've also implemented an app for the house call team. It's like the Uber experience where the patient, when he orders a house call, he can track the phlebotomist while coming to his house so that makes it easier for them to book an appointment and follow the appointment until you get the results online. Ahmed Moataz: Very clear. For the time being, we received one more question in the chat. [Operator Instructions] How many of your new branch openings in the first half of '25 were under the new management product, which is -- I think he's referring to the ones opened in clinics and hospitals. And within those, do you have a profit-sharing arrangement? Or how does it work? Hend El Sherbini: So we opened 85 hospital managed labs and clinics where we are managing the hospital labs and the labs inside clinics. And we do this through revenue sharing with the hospitals and the clinics. Ahmed Moataz: Understood. Yes. One more question. Are there any new markets that you're actively considering to enter? Hend El Sherbini: We are always looking at new markets. So we're looking at other countries in the Middle East as well as in Africa, but there is nothing concrete for the moment. Whenever we have something concrete, we'll definitely share it with the market. Ahmed Moataz: Understood. We've actually received more questions from [ Farooq ]. I'll give it to you one by one. There has been very good OpEx controls recently. How much more trimming is there still available within costs? And his second question is, what is the outlook and potential of home services? How much bigger could it be as a percentage of revenue? Hend El Sherbini: So we're always continuing -- we're always looking at optimization. One of the things that we're working on right now and the shared is the digitization of the business. And this will definitely bring more cost optimization in terms of manpower, in terms of other efficiencies that we'll see one by one. So this is one initiative that we're working on. Regarding, of course, the material, we're always also working with our suppliers, looking at new suppliers as well to try to decrease the cost of goods. So these are the 2 main components of our cost, the manpower and the kits or the kits and the consumables. So both of them we're working to optimize them as we go on. Regarding -- your second question was? Unknown Executive: Outlook for the households. Hend El Sherbini: For the household outlook. So now it's around 20%. And as you remember, during COVID when I was asked this -- if I think this will continue to be part of our -- a big part of our revenue pre-COVID, I was always telling people that I think it's going to be -- the house call is going to increase even pre-COVID, and this is what happened. So we're now at 20% of revenue. I gave them actually a target of 40%. So I gave the house call team a target of 40%. This is a bit aggressive. However, I think we can go up to 40% at a point of our revenue coming from house call. We're working on improving the service. As I said, we digitize it. We are optimizing it now. We're trying to make it even better so that people can use it more and more. Ahmed Moataz: Understood. We haven't received any further questions. So I don't know if you have any concluding remarks. Otherwise, I can end the call now. Hend El Sherbini: No, there is no concluding remarks. I only thank everyone, and I thank the team here in IDH. I thank everyone who is listening to us and game us questions. Thank you very much. Ahmed Moataz: Thank you very much to IDH's management and to all participants. This concludes today's earnings call. Have a good rest of the day, everyone. Hend El Sherbini: Thank you, Ahmed. Tarek Yehia: Thank you very much. Ahmed Moataz: Thank you.