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Operator: Ladies and gentlemen, hello and welcome to the Bnode First Quarter 2026 Analyst Conference Call. On today's call, we have Mr. Philippe Dartienne, CFO. Please note this call is being recorded. [Operator Instructions] I will now hand over to your host, Philippe Dartienne, CFO, to begin today's conference. Please go ahead, sir. Philippe Dartienne: Thank you. Good morning, ladies and gentlemen. Welcome to all of you and thank you for joining us. I'm pleased to present you our first quarter result as CFO of Bnode. With me, I have Alexandra and Antoine from Investor Relations. We posted the materials to our website this morning and I will walk you through the presentation and will then take your question. As usual, 2 question each, which ensure everyone gets a chance to be addressed in the upcoming hour. I will start with our quarterly financial results, then provide an update on the progresses on our key strategic initiatives during the quarter before concluding with our financial outlook. As you can see on the highlights on Page 3, our group operating income for the first quarter amounted to EUR 1.063 billion representing a year-on-year decrease of EUR 56 million or 5%. This performance reflects a combination of factors. First, as expected, we saw the impact of contract termination at Radial U.S., which were announced in the course of last year and already incorporated in our outlook we presented earlier this year. This termination resulted in a 11% year-on-year revenue decline or EUR 38 million and together with temporary top line pressure at Staci Americas largely offset by the 4% top line growth achieved at Paxon Europe. Second, in Belgium in addition to the revenue decline following the termination of the 679 contract, domestic mail volumes declined by 14.3%. This was only partially offset by a parcel volume growth of 9.1%. In our cross-border activities, we also recorded higher inbound volume from Asia, which supports overall parcel flows. Overall, and as expected, the accelerated decline in mail volumes and the termination of the 679 activities weighed on the EBIT on the bpost segment despite the positive contribution from our ongoing reorganization measures. That said, at Paxon despite a sharp contraction in top line, we were able to deliver EBIT growth reflecting a strong cost discipline in North America and solid operational execution in Europe. As a result, group adjusted EBIT reached EUR 33 million, down EUR 8 million compared to last year and broadly in line with our expectations. Before turning to the financial performance of our business units, let me highlight as shown on Slide 4, that beyond the evolution of EBIT, our adjusted net profit reflects a EUR 12 million improvement in financial results. This improvement was mainly driven by favorable noncash FX effects and higher net income from our treasury investment partially offset by higher interest expense related to the bonds issued in June last year. Let me now move to detailed performance of the 3 segments. I am now on Slide 5 covering the bpost segment. Revenues for the segment declined by EUR 21 million to EUR 524 million year-on-year. Domestic mail revenue decreased by EUR 21 million or 7.2%. Mail and Press volumes contracted by 14.3% in the quarter compared with minus 7.5% last year and in line with mid-teens volume decline guidance we provided earlier this year. This accelerated decline mainly reflects lower transaction mail volumes following the introduction of mandatory B2B e-invoicing as of the beginning of the year as well as the termination of several advertising contracts. Overall, the decline in mail volumes had a negative revenue impact of around EUR 40 million, which was partially offset by roughly half by positive price and mix effect of plus 7.1% or EUR 19 million. Parcels revenue increased by EUR 7 million or 5.8% year-on-year driven by volume growth of 9.1% partially offset by a negative price/mix effect of 3.3% during the quarter. On the volume side, the reported 9% growth corresponds to an underlying growth of around 5% after adjusting for the estimated volume loss linked to the strike in February last year when parcel volume declined by 12% in that month and over 2% in the full quarter. As observed in recent quarters, growth continued to be driven by strong performance of marketplaces. This dynamic weighs on product and customer mix and explains negative price and mix evolution of minus 3.3% despite underlying price increases. Finally, revenues from other activities including retail value-added services and personnel logistics declined by EUR 7 million year-over-year. This mainly reflects our revenue following the termination of the 679 activities at the beginning of the year as well as lower revenue from Fines solution partially offset by higher revenue at DynaGroup. Let's move to the P&L of bpost on Page 6. Including higher intersegment revenues from inbound cross-border volume processed through the domestic network, total operating income declined by 3.1% or EUR 17 million year-on-year. On the cost side, OpEx including D&A decreased by 1.2% or EUR 6 million mainly driven by 2 opposing effects. First, we recorded a reduction of approximately 1,260 lower FTEs and interim staff representing a decrease of more than 5% reflecting the benefits from the ongoing reorganization of our distribution rounds and retail offices. And second, this was partially offset by higher salary costs per FTE, up 2% year-on-year following the March '25 and '26 salary indexations. Despite last year EBIT impact of around EUR 6 million for the 2-week strike, EBIT declined by EUR 11 million year-on-year. This evolution was mainly driven by the anticipated acceleration of the structural mail decline and the termination of the 679 contract, only partially mitigated by parcel growth and the benefit of our reorganization measures. Moving on to Paxon on Slide 7. Broadly in line with the trend we observed in the fourth quarter, 2 main effects came into play during the quarter. At Paxon Europe, revenues remained broadly stable year-over-year. We recorded around 4% growth across European businesses and geographies with some activities still achieving high single-digit growth. This positive momentum was, however, offset by a negative performance at Staci Americas which is reported within Paxon Europe, following a contract termination in the fourth quarter. This resulted in a significant revenue decline during the quarter compounded by an adverse FX impact of EUR 5 million. At Paxon North America, revenues declined by EUR 39 million. At constant exchange rate, this corresponds to an 11% decrease driven by 3 factors: revenue churn from contract termination announced last year together with mid-single-digit negative same-store sales evolution partially offset by the in-year revenue contribution of around EUR 27 million from new customers, of which 40% are Radial Fast Track clients. Let's move to the P&L of Paxon on Slide 8. Against this backdrop, total operating income declined by 9.3% or minus EUR 40 million year-on-year. Operating expenses, including D&A, decreased at a faster pace down 10.4% or EUR 44 million. This cost reduction was primarily achieved in North America driven by lower variable OpEx in line with the revenue evolution at Radial U.S. while maintaining a solid variable contribution margin. These effects were further reinforced by fixed costs and headcount actions. As a result, adjusted EBIT increased by EUR 4 million to EUR 11 million in the quarter with growth recorded in both Europe and North America. In Europe, this reflects top line growth combined with productivity gains. In North America, EBIT growth was driven by cost containment measures, which more than offset the ongoing top line pressure. Turning now to Landmark Global on Slide 9. At Landmark Europe, revenues increased by EUR 8 million or plus 10% year-over-year. Once again this quarter growth was driven by strong increase in volume from Asia across all major destinations, most notably Belgium supported by large Chinese e-commerce platform as well as the United States. In addition, other European lanes continue to grow as well. At Landmark North America, excluding unfavorable FX effect, revenue was slightly up year-over-year. This reflects on one hand, soft volume growth in the context of a macroeconomic slowdown and on the other hand, a negative mix effect with higher share of domestic volumes and lower Canada to U.S. volumes. Overall, Landmark Global operating income increased by EUR 5 million or plus 3.4% year-on-year. As shown on Page 10, OpEx and D&A increased by 7.7%. This was primarily driven by high transportation cost linked to volume growth including increased inbound volume with Belgium as [indiscernible] destination. In addition, the quarter was impacted by unfavorable phasing cost effects both in transport and payroll, which we expect to reverse over the coming quarters. As a result, adjusted EBIT decreased to just under EUR 15 million. This decline mainly reflects the temporary cost phasing effect, which offset the underlying profitable growth in Europe and to a lesser extent, in North America. Moving on to Corporate segment on Slide 11. The adjusted EBIT improvement is driven primarily by cost development. Strengthened cost management and a 1% FTE more than absorbed the 2% salary indexation resulting in an improved adjusted EBIT of EUR 3 million to minus EUR 9 million. Let's now move to the cash flow on Slide 12. The net cash inflow for the quarter amounted to EUR 110 million compared with EUR 91 million last year. This improvement mainly reflects favorable working capital movements and continued CapEx discipline. Overall, the key drivers were as follows. Cash flow from operating activities before changes in working cap amounted to EUR 114 million representing a EUR 17 million decrease year-on-year mainly driven by lower EBITDA. Change in working capital and provision contributed to EUR 74 million. The EUR 29 million positive variance year-on-year mainly reflects 2 effects. First, the settlement of a client balance; and second, the payment of a cash advance in the context of the 679 activities transferred to BNP Paribas Fortis. While a small part of these activities are still partially subcontracted to bpost, we received a working capital injection in return. It's important to note that this movement is expected to reverse over the course of the year. Net cash outflow from investing activities amounted to EUR 21 million, driven by CapEx for parcels. lockers and capacity expansion investment in our domestic fleet and international e-commerce logistics. This element largely explains the evolution of our free cash flow for the quarter. Finally, the net cash outflow from financing activities totaled EUR 57 million, broadly in line with last year and primarily reflecting payments related to lease liabilities. Let me now briefly turn to our strategy and transformation update. I'm on Page 13. Two months ago we outlined our annual plan and key priorities for the year. Today, I will share a few updates and Chris will provide you a more comprehensive review when we present our half year results in August. Let me start with bpost with transformation efforts around 4 priorities area. First, the shift in our operating model. We are making progress on the key tracks of our future operating model notably through the rollout of dense and nondense distribution rounds as well as optimized correct model, which correspond to 2 complementary round types and a further centralization and automation of mail preparation. These are designed to deliver operational efficiencies with FTE savings and space consolidation and optimization. As planned, this model was implemented during the first quarter in 5 distribution offices out of a national network of a bit less than 160 offices. We are progressing with the phased rollout over the coming quarters with a clear acceleration from Q3 onwards targeting around 50 distribution offices by year-end. In parallel, we continue to execute the reorganization of distribution offices and their delivery rounds together with the delivery of associated FTE savings. On the full year plan, around 140 organization leading to approximately 1,150 lower FTEs. We delivered close to 40 reorganizations in the first quarter, fully in line with our planning. Importantly, the April strike has not impacted this transformation stream and execution remains on track. For perspective, we completed 138 reorganization last year, which are now clearly delivering results and contributed as observed in this quarter of a reduction of around 5% or approximately 1,260 FTEs within the bpost business unit. Second, scaling out our out-of-home network. Building on the strong acceleration achieved last year where rollout already significantly increased, we continue to make solid progress on scaling out-of-home with the installation of 155 parcels, lockers or bbox, again fully in line with the annual plan and we also secured over 200 locations for future installations. As a reminder, our objective is to grow the APM network by 35% by year-end, which will bring us almost 1 year ahead of the ambition presented at the Capital Market Day. To date, we have a total of more than 2,700 lockers installed compared to around 1,250 at the end of '24 and around 2,550 at the end of '25. As a result, during this first quarter we doubled the number of parcels delivered through the bbox network compared to last year. In parallel, bpost continued to improve customer convenience by scaling same-day locker delivery notably when home delivery is unsuccessful, which translate into higher NPS and improved profitability compared with next-day availability at post offices. Third, asset utilization optimization. We are actively exploring opportunities to improve the utilization of our assets and in particular our transport fleet, which is today primarily used during night hours. As part of this effort, we launched a pilot transport of the future aimed at testing the creation of a stand-alone transport activity serving both internal and external customers. The pilot was initially designed around 20 trucks and 40 volunteer drivers, but interest has significantly exceeded expectation demonstrating strong engagement from the field and validating the relevance of the concept. The objective is to generate additional revenues, improve utilization of the fleet and drivers and progressively expand our service offering. Finally, strengthening our B2B offering. As previously communicated, we recently launched an Innight delivery solution for our B2B customers initially based on the bbox, parcel, locker model. This quarter we have upgraded the offering by expanding it through 2 additional logistics subsidiaries within the Bnode Group turning it to a multi-model solution, including options such as car boot delivery and on-site deliveries. Overall, this initiative reflects our continued progress in reshaping the bpost operating model, improving capital and asset efficiency and reinforcing our value proposition to boost consumer and business customers. Moving on to Paxon North America. At this stage, top line expansion in Paxon North America is progressing in a more challenging demand environment with same-store sales softer than initially anticipated while new customers contribution are progressively building up. In response and in order to remain on track to deliver our EBIT objective, we are implementing additional cost actions. These measures are not only designed to offset the near-term top line pressure, but also to further strengthen Paxon North America competitiveness in the market. We have already made significant progress on variable cost where discipline remains very strong and where we continue to maintain a record high variable contribution margin. Building on this, the focus is now on fixed cost. The additional actions include optimizing our real estate footprint, reducing discretionary spending and rightsizing nonoperational fixed overhead to better align our organization with our volume. Following the actions already taken on both variable and fixed operation FTEs, we are now focusing on the nonoperational fixed cost base. Let me now shift to Paxon Europe. The launch of our Forward plan marks the next steps in accelerating top line growth building on the now fully integrated and consolidated commercial platform that brings together Staci, Active Ants and Radial Europe led by Staci's commercial know-how. The plan is designed to amplify existing customers' momentum while expanding across products, geographies and customer relationship supported by more structured and disciplined sales execution. In practice, this includes improved account coordination and closer executive level engagement ensuring we continue to deepen relationship with our core customers and capture the full value of those partnerships. At the same time, we are strengthening lead generation, leveraging our rebranding and continuing to invest in the development of our sales team to support incremental and sustainable growth. Finally, I will conclude this section with Landmark Global where our focus in the first quarter remained twofold: expanding volume through new cross-border lanes while strengthening transport cost management. On the growth side, by leveraging agility and rapid opportunities capture in a challenging macroeconomic environment, we saw a strong acceleration of volumes towards the U.S. notably fueled by continued momentum on the China to U.S. lane. U.S. is, therefore, increasingly becoming a key destination alongside Belgium and Canada. And in Europe, we also see a solid pipeline of new lanes originating from Spain and the Netherlands. This leads me to the outlook update for '26 on Slide 14. As a reminder, 2 months ago we introduced our '26 adjusted EBIT guidance in the range of EUR 165 million to EUR 195 million. Based on our first quarter performance, group results are broadly in line with our internal plan and our expectation at this stage of the year. Since then, however, we have been impacted by industrial action at bpost in April. As a result, while we are maintaining the adjusted EBIT guidance that we introduced 2 months ago, we are today more exposed to the lower end of the range. This reflects an estimated direct EBIT impact from the strike of around EUR 15 million. Beyond this, fuel price development are currently not considered as a material risk for the group as we are largely insulated through a combination of pricing mechanism, contractual pass-throughs or internal cost hedging measures depending on the entity. That said, continued vigilance remains of course required as the current outlook does not reflect potential indirect and long-term commercial impact resulting from the April strike nor does it factor potential effects relating to the current geopolitical situation in Iran. This could include industrial disruption linked to fuel shortages, higher energy cost as well as a broader impact on inflation, consumer confidence, disposable income and spending and therefore, on the top line development. Overall, while we remain within our community guidance range, the April strike put significant pressure on the guidance. And although this has been widely and intensively covered by Belgium media, for those less familiar with the situation beyond our own market, let me briefly summarize what happened and the impact identified to date. In April, bpost experienced a 5-week nationwide strike in Belgium, which significantly disrupted our sorting and delivery operations. The impact was most pronounced in Wallonia and in the Brussels region. As a result, we accumulated a backlog of more than 16 million letters and 0.7 million parcels. In addition, we estimated a loss of approximately 3.2 million parcels volume mainly due to customers diverting shipments to competitors. The strike was triggered by employee opposition to certain elements of the ongoing transformation plan, in particular proposed adjustment to starting hours, which shifts up to 2 hours later in the morning. These changes are aimed at enabling later parcel cut-off times and better aligning our operation with customer requirements in an increasingly competitive parcels market. From a financial perspective, our current assessment is that the direct EBIT impact of the strike is estimated around EUR 15 million expected to materialize in the Q2 result. This estimate excludes any potential future indirect impact and mainly reflects 3 direct elements: revenue losses in both Mail and Parcels including quality-related penalties, incremental costs linked to contingency measures and the cost associated with clearing the accumulated backlog. Our operational and commercial teams are currently fully mobilized to clear the backlog as quickly as possible while actively working to rebuild customer confidence and address the reputational impact resulting from the strikes. As mentioned, while we consider this estimate to be robust for the direct impact, it does not capture potential longer-term and indirect impact. which is why we continue to closely monitor the situation. With this, I'm now ready to take your questions. As usual, 2 questions each. Operator, please open the line. Operator: [Operator Instructions] The next question comes from Michiel Declercq from KBC Securities. Michiel Declercq: I have 2, please. The first one is on the strikes in Belgium. I appreciate the direct impact of EUR 15 million. But is there a bit more color that you can give on those quality penalties and these contingent measures? How we should look at that when these costs will be booked? Will that also be Q2 or I think it will also be a bit later in the year for the quality penalties? That's 1 angle of course. Secondly, you also have the commercial impact. You had strikes last year. The lasting impact remains a bit more limited I would assume looking at the volumes in the remainder of 2025. But now second year on a row and a bit of a bigger strike, let's just say. What has been your feedback here from customers? You say that you estimate to have lost 3.2 million parcels to competitors this quarter, which I assume is 3% to 4%. Will they be coming back or how have your discussions with these customers been? So that would be my first question. And then secondly, we have seen in the news that Amazon is also opening its supply chain logistics network. I'm just wondering if you look a bit at the Amazon offering today in the U.S., how does this overlap with your existing activities at Radial and Landmark and how you are looking at this given that the same-store sales at Radial are already down mid-single digits in the recent quarters. So any comment on that would be useful. Philippe Dartienne: Okay. Thank you, Michiel, for your question. So strike direct impact, they will mostly be booked in the second quarter. The top line impact is in the month of April. Pure technically there were 2 days of strike in the month of March, but it's really immaterial. Most of it is in the month of April so the loss of revenue will materialize definitely in the second quarter. The contingency cost that we had to support was some storage cost. I'm sure you have read in the newspaper that we had some of our customers ask us to store the parcels in a location because their own warehouse were totally full. So there are some costs associated with that. Sometimes we have redirected some parcels to some of our subsidiaries to deliver the parcels. These are extra cost that we have supported. And there will be also a bit of the cost linked with the decrease of the backlog where we are injecting roughly 200 temporary workers on top of the usual one to decrease the backlog as soon as possible. So this is a bit what it entails in terms of direct cost and contingency costs. When it comes to the commercial aspect of it, I will be as transparent as I used to be. Our customers were not delighted to say the least, especially in the context that you rightly mentioned. We already had a strike last week like last year once again and customers have indeed diverted their volumes. Now it's really up to us to demonstrate that from an ongoing basis, we are capable of coming back to a high level quality service as we used to do when we are not on strike. And I think it will be a discussion customer by customer and a decision customer by customer at the speed at which they will reinject volume into the network. They are already reinjecting volume into the network, no discussion, but some customers have not returned back. And as I said, it will be a more one-on-one discussion with each of them. So the commercial impact will be seen on one hand in the second quarter by the speed at which the customer come back and at which level and potentially more longer effect as some customers have definitely opted for a dual-carrier strategy while some of them were only mono-carrier with us prior to this strike. So it's up to us and it's really the willingness of the management and the people on the ground to deliver as much qualitative service as possible and as soon as possible. As we speak right now, we could say that we are back in full operation. There is no strikers anymore since roughly a week so we are in full operational mode. Your question on Amazon, yes, but it's not the first time that a major player is developing this kind of activities. It will be 1 more competitor than we had in the past. We had some big retailer chain not so long ago who decided to do the same. So fundamentally, I don't think it will have a direct impact on us. Indeed, you pointed out the same-store sales evolution, the negative one. Indeed, it was in the first quarter more than what we had anticipated. And you will be reminded that same-store sales evolution has been negative for multiple quarters in a row. We told that Q3, Q4 last year we had reached the bottom, but it seems that it's not the case and we had, as you mentioned it, a mid-single-digit decrease again in the first quarter of '25. I hope this answers your question. Michiel Declercq: If I can ask a small follow-up on the strikes. I know commercial impact you won't see or have visibility on that in the short term or maybe a bit of course. But on the indirect costs for the storage and the quality penalties, is it fair to assume that we will get a number on that during the second quarter results? Philippe Dartienne: It's already partially included. Frankly, in the impact, the biggest part is relating to the lost volume and the related EBIT and not so much about those contingency costs because those measures that have been put in place are rather limited if you look at the total operation cost. Operator: The next question comes from Frank Claassen from Degroof Petercam. Frank Claassen: My first question is on Paxon on the financial performance. If I look at Q1, minus 9% on top line and 2.8% on EBIT margin yet if I recall well, one of the building blocks of your full year guidance was Paxon to reach low to mid-single-digit growth for the full year with a 6% to 8% EBIT margin. So I'm struggling to see how we can get there in the rest of the years because that's quite a gap. So could you elaborate how you think you can bridge this gap? That's my first question. And then secondly, on the automatic wage inflation in Belgium, you just made a step of 2%. When do you expect to see the next step and what is, let's say, baked into your current guidance on that one? Philippe Dartienne: Let me start with the second one and I will come back with the first one. So indeed, we learned late afternoon yesterday that there will be an additional 2% step increase. We had anticipated to have 1 in 2026. We had anticipated that to happen a bit later in the year. We had 1 month we have -- this step-up comes 1 month ahead of what we had in our forecast. Coming to Paxon, your point is absolutely right and we will not be able to catch up. We will not be able to catch up. Different reason to that one if you allow me to elaborate a bit. If we look at Radial U.S. or Paxon U.S., if you want; as I said, we are facing same-store sales which are significantly higher than anticipated. It depends if it's a negative, it goes up. Antoine will try to correct me, but I repeat to make sure that the message is clear. There is a decrease and the decrease is bigger than what we anticipated and it's across the board on all customers. The second point is that we were anticipating a pickup of the contribution of new customers especially in the second half of the year. We don't see it coming to the expected level. So we will be worse than one anticipated. This being said, there is a top line discussion. And there is a second one when it comes to EBIT contribution and cash contribution and there we believe that with all the measures that have already been taken and the ones that are in the pipe as we speak, we could be able to offset that negative evolution in terms of top line. What kind of measures are we talking about? Some of them we already mentioned them and now we are implementing them, Optimization of real estate footprint including sublease of underutilized facilities, divesting some noncore assets, reduction of discretionary spending travel and entertainment and also rightsizing fixed cost and headcount aligned to lower volume. Again there is nothing new on that one except the fixed cost one, as I said, that was not the primary focus over the last quarters, now it has become. So all in all, I do believe that those measures will be able to offset largely the decline or lower the development -- the top line development at a lower than anticipated -- the lower top line development. That was for Radial. Staci Americas, indeed we are low in the top line evolution. We lost a major customer at the end of 2025, which is materializing in the Q1 result. So 2 elements on that one and I don't want to oppose them, but I want to make the comparison. As much as I said that at Radial, we see a lower revenue contribution from the pipeline development, it's not the case in Staci Americas. The pipeline of Staci Americas is very strong and we believe that it will be able to offset part of the losses of the volume related to the departure of 1 customer combined with fixed cost measures to protect the top line evolution to a lesser extent than Radial, but it will contribute as well. So to summarize, we have to recognize that, yes, we are a bit behind. This being said, element that I really want to point out is that all over the place within the Paxon world, the profitability is and remain very high. Variable contribution at Radial, you might tell me, Philippe, you tell us that. Since I will be close to 4 years in bpost, I'm telling you that every quarter, but it's reality and it's still there. So this is an achievement. And also despite a lower top line development, when you look at the Paxon Europe environment, we see still significant or very strong gross margin in the existing business, which is very reassuring. It's very, very robust. And we also see thanks to the fact that in Europe, the 3 former brands are now being operated together so Staci, Active Ants and Radial. We see a pickup on the performance in Central Europe mainly by operating all these 3 brands on the same territory altogether. So it's a bit of mixed bag, but there is still very good and reassuring positive element. Operator: The next question comes from Henk Slotboom from the IDEA!. Henk Slotboom: I've got 1 clarification question and 1 other question. The clarification question relates to what you just talked about, the impact on margins and the mitigation impact on margins. We are talking about margins in the U.S. and not about the absolute EBIT I assume. Philippe Dartienne: On one, it's yes and no, Henk. So we maintained the margin. But if we compare to the guidance that we had that expected a development of the top line, since there will be less top line, it will be additional EBIT contribution to offset that one. So it's a bit yes to both in fact. Henk Slotboom: Okay. That's clear. Then on Landmark and that's basically 2 questions folded into 1. The higher transportation costs, Philippe. I thought that the organization was structured in a way that there are back-to-back agreements. So you know on forehand roughly what you're going to pay, what you have to ask your clients based on your estimated costs. The transportation cost impact, didn't you use a fuel surcharge for example or something like it? You're an asset-light player in that field or is this reflecting the disadvantage of an asset-light model that when capacity is scarce, we saw a lot of disruption in sea transport, in air freight and that sort of things that you end up paying a higher cost price anyhow no matter what to get the stuff from for example China to Europe. That's the first question. And connected to it, is it fair to assume that Landmark had a bit of tailwind in Europe because the French have introduced the EUR 2 levy per product line already in January whereas the rest of the EU is doing that as of 1st July. So I've been hearing a lot of stories about Chinese taking their goods to Schipol Airport, Amsterdam and Liege in Brussels instead to avoid this hassle of the EUR 2 and to avoid the EUR 2 as a whole. Perhaps you can highlight that. Philippe Dartienne: Sure. I will start with the second one. Indeed, you are well informed. We see in Liege, I was just right before this call with our guy in charge of the inbound volume in Belgium, we see an increase of activity in Liege. But what we are seeing is that the planes are coming, that they are offloaded, but the containers are directly loaded to trucks to go either to France, go to the Netherlands or to Germany. So we might have a small ripple effect in our last mile activities in Belgium because we only do that in Belgium. But I would not say that it's significant, but it's a fact. This being said, it's also something we are contemplating since we are the operator. We are the incumbent in Belgium, can our activity and the transport one could play a role into capturing part of those volumes. But most of them, as you rightly pointed out, are not directed to the Belgium market. They are mostly directed to the non-Belgium market. So that's for the EUR 2 taxes. When it comes to Landmark and transport cost, I would like to broaden a bit the debate and also emphasize the fact that Landmark is managing the transport for all the group for Bnode. Of course transport for Belgium last mile is limited because we do the last mile activities. But for all the fulfillment activities within the Paxon world, it's managed through Landmark and the one who are benefiting -- everyone is benefiting from the good condition that we could get. So it's important to notice that that activity is not only limited to Landmark business unit. Now your question about transportation cost and the fact that they are evolving upwards due to different elements, it's really a pass-through for us and we do not see an EBIT impact from that. Operator: The next question comes from Marc Zeck from Kepler Cheuvreux. Marc Zeck: Really on, let's say, consumer sentiment or the impact of higher energy prices on the consumer. Could you elaborate a bit what you currently see both for the U.S. and Europe in your business? You talk about, let's say, lower same-store sales in the U.S. for Radial. Do you feel like this is related to the energy price increases and therefore drain on consumer finances and therefore mostly concentrated in March and looking forward maybe in April or have you seen lower same-store sales for the entirety of Q1 that obviously includes then January and February as well? And what you can see in your European business not only Paxon, but maybe also Landmark Global and the parcel business in Belgium. How did March compare to January and February? Was there any impact from higher fuel prices on the consumer and what do you see currently for April? That would be the first question. Second question, if you could elaborate a bit on why you don't see a material impact from Amazon in the U.S. I guess from what we can get from Amazon's press release, it's at least to me not entirely clear where they are actually really competing. Do you feel like they are opening up really contract logistics proper 3PL services in the U.S. or it's more like warehousing with not too much direct management of inventory there. So I could guess that if it's just warehousing, there wouldn't probably be much of an impact. But if they do proper 3PL contract logistics as well, I can imagine that maybe that is a bit higher. So it would be great to hear your thoughts on what you believe Amazon is actually doing in the future. Philippe Dartienne: Okay. It's going to become an habit. I will start with the second and we'll continue with the first one. So I'm not in the shoes of Amazon. So I recommend you to direct your question to them on that one because I don't want to speculate on what they are doing. What I'm telling you is that we do not see impact from that at least so far. They have always operated their warehouse sometimes themselves, sometimes outsourcing to contract logistic players. They have been active in transport. They are permanently starting testing or going with new activities around the 3PL. That's true. But so far, we don't see any impact from that and again I cannot speak for Amazon. When it comes to the consumer sentiment, I don't have the figures for the U.S., but I think the same-store sales is a good proxy for measuring what is happening there. As I said, 7 quarters in a row, then the same-store sales is going down and it even accelerated in the first quarter of this year. I don't know what the next -- the further part of the year will bring us. As I said, we already thought that at the end of Q3, Q4 we had reached the bottom. We have been proven wrong on that one. So it's difficult to speculate on that. When it comes to Europe, I have the consumer sentiment numbers in front of me. And if we ended up the last quarter of last year something which is, I would say, breakeven; slightly positive in November, very slightly positive in December. The beginning of the year was -- Jan and Feb were more positive, but we saw a total flip of that consumer confidence in the month of March and even more so in the month of April. So again in terms of trend, it's difficult to speculate. But currently, we see a downwards trend. Operator: The next question comes from Marco Limite from Barclays. Marco Limite: I've got couple of follow-ups on your strikes in Belgium. So first question will be I mean what sort of confidence have you got in terms of the strikes to be totally over or do you see a risk of the strikes coming back? And to what sense negotiations and discussions are sort of stopping you to go through your transformational change, operational changes you wanted to make. So what is, let's say, also the negative impact from implementing your operational changes slower than what you had thought maybe at the start of the year? And the second question is on your volume growth in April. I appreciate you quantifying the hard numbers. But if you could give us a bit of color of what has been the volume growth or the volume decline in April for parcel volumes in Belgium? And have you seen, let's say, the growth rate picking up in May post end of strikes? Philippe Dartienne: Again I will start with the second one. Thank you for your questions, Marco. Volumes decline that we have seen in the month of April is around 25% and it's still too early to comment on what is happening in May. When it comes to the strike and the risk associated with them so I just want to remind that several elements. So there is in the mind and I don't want to speak for them. But based on what my colleagues are telling me while discussing with our social partners is that there is a clear understanding of the need to change the business model. They clearly understand the fact that the mail is no longer bringing growth. It's declining at high pace and it will not come back. They totally acknowledge it as well as that the change in the demand from the customer, they totally acknowledge it. What is very difficult for them from a human standpoint for all the affiliates and all our colleagues. If we look back 3 to 4 years back when we still had the press concession, we had colleagues who were waking up at 3 or 4 in the morning coming back at the office to be able to have delivered all the press and the magazine prior to 7:30 in the morning. Those volumes are gone because the press concession ended up and we are no more except in Wallonia still for until the end of this year. We are no more distributing those volumes. So that was already a first shock for them, which is impacting their life because we have that concept which is very usual in the mail business, which is when your job is finished, you can go. So those guys have since years not to say decades used to have a life organized about you start early, but you also finish early and if you want to have some activities after your hours or potentially if you decide to go for a second job, you had plenty of time to do it because most of these people, especially the one distributing the press; around 11, 12 in the day, they were done and they could do revert to other activities either professional or leisure or going and pick up the kids at school. Then there has been a second element to that one is with declining mail volumes, the number of people that we need in our distribution network is decreasing. I mentioned the fact that last year we have been able to reorganize the offices. It has always been done over the last 15 years the reduction, the adjustment of the FTEs in the distribution network, but it accelerated I think over the last 2 years. Last year we reduced the headcount by more than 1,000 employees. We will continue doing the same in 2026 and people understand that. It's a mechanical consequence of the evolution of the business, but it's not easy to take it on board. Also, the way we reorganize the offices with the combination of some routes, we have some dense and non-dense routes. We also want to extract more efficiency on that part. So it's an additional pressure on these people who sometimes in some offices when we adjust the headcount, it could lead to reduction of 15% to 16% of headcount in 1 particular distribution office. So it's tough on people, we have to recognize that. But there is a very clear understanding and no discussion on the need for change and the society is changing. Again the fact that we want for some of our colleagues to delay the start of their day to be able to deliver the parcels -- to accept parcels, the cutoff time in the sorting center a bit later. Again it's a disruption into their private life. We have to recognize it. I do believe that it will take maybe a bit of time, but people will adjust to that one. I think I would be more worried if there would be a strong opposition on the need for change than, I would say, the short-term impact of the direct impact on their private life if I could say so. So can we guarantee that strikes are over? No. Also, what I see is that our colleagues have at heart the willingness to serve the customer in a qualitative way and I don't think it has changed during the course of the strike. That gives a bit of time for people to swallow, digest, adjust and I'm very confident for the future. Marco Limite: Can I sneak another question, please? So you have kept today the guidance despite a EUR 15 million EBIT negative from the strikes plus wage increased 1 month before, let's say, your business plan, which from memory I think is about low single-digit million higher OpEx per month. So rough numbers, you now have got EUR 20 million EBIT headwinds compared to your original guidance, but you're still holding on the old guidance. Does this mean that beyond -- I mean you think you are sort of tracking or you were tracking at the upper end of the guidance and therefore minus this EUR 20 million, now you are at the low end of the guidance or how do you justify you keeping the guidance? Philippe Dartienne: Thank you for your question. Indeed, we maintain the guidance; but as we said, we are more exposed to the low end of it. I think during the presentation and with the question of your colleagues, I had the opportunity to emphasize on the reaction on the cost side that we are putting in place everywhere. Good example again in Belgium, the reorganization has not stopped in the first quarter. They have not even stopped during the strike meaning that all this positive evolution in the cost development mean being more efficient. We are still planning and confident that we could execute them. For all the other entities especially on Paxon, those guys are really committed to compensate the temporary shortfall or the slower development of the top line by cost measures and we have levers. It's not just a task that we put in an excel spreadsheet. We have detailed plans at various entity level, which lead us to believe that it could materialize. And hence, we have concluded that at this stage based on the direct impact, we still maintain our guidance though guiding more to the low end of it. Operator: Ladies and gentlemen, there are no further questions. So I will hand it back to Philippe to conclude today's conference. Thank you. Philippe Dartienne: We would like to thank you, everybody, in the call for having taken the time to be with us and for your very pertinent questions. As a reminder, bpost NV will hold its AGM next Wednesday and our second quarter results will be released on August 7. In the meantime, we look forward to staying in touch. And thank you very much and have a great day. Operator: Thanks for participating to the call. You may now disconnect.
Operator: Welcome to Tobii Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to CEO, Fadi Pharaon; and Interim CFO, Asa Wiren. Please go ahead. Fadi Pharaon: Good morning, everyone. This is Fadi Pharaon speaking to you, CEO of Tobii. I'm joined today by Asa Wiren, our Interim CFO; and Rasmus Lowenmo Buckhoj, who leads our Communications team. And thank you, everybody, for joining our Q1 2026 earnings call. So let's start with the quarter. Q1 was a quarter with clear areas of progress, but also challenges that we are addressing. As you can see, the reported net sales decline year-on-year was 17%. However, organic sales actually increased by 5%. We additionally had an improved gross margin for the group by 7 percentage points. And furthermore, during and shortly after the quarter, we secured strategically important design wins. All of these developments together show that despite currency and timing-related headwinds, we continue to see underlying momentum in parts of our business. We've continued our disciplined focus on cost reduction and operational efficiency. So during this quarter, we reached SEK 48 million in cost reductions if you compare to Q2 2025. Since that point, we've actually achieved SEK 120 million in total cost reductions, which actually exceeds our previously communicated target of SEK 100 million. And still, we have one more quarter to go in that program. If we move to free cash flow, that was positive for the second consecutive quarter now at SEK 17 million. And our cash position stands at SEK 39 million, even after repaying the SEK 39 million of deferred COVID-related taxes and the SEK 47 million of our previously utilized revolving credit facility. We've also agreed on a revolving credit facility with our bank for an amount of SEK 25 million. Let's now review the performance of our three business units. For those who are new to the call, Tobii has 3 business units, each addressing different use cases and customer segments. If we start with Products & Solutions at the top here, it's a unit that delivers vertical solutions to thousands of customers annually. The portfolio ranges or the segment, I would say, ranges from university research labs to enterprises and PC gamers. So in Q1 of 2026, Productd & Solutions represented 48% of Tobii's net sales. The EBIT for the segment was negative SEK 12 million. And this was partly due to the strengthening of the Swedish krona and partly due to delayed implementation of the 5-year plan policy in China, which has affected our sales in that market. At the same time, though, we saw organic growth in EMEA and the U.S. markets as well. During the quarter, we also launched a new rental model for our wearables portfolio. And the aim of that is to lower the initial barrier for customers who want to evaluate how eye tracking and attention computing can actually create value in their operations. In addition, we have launched a Remote Live review for Tobii Glasses X, a feature which I will return to a bit later in the presentation and talk more about. If you go to the second row, which is the Integrations business unit, that unit serves customers who embed Tobii's technology into their own offerings. There you can see segments like Assistive & Augmentative Communication solutions as well as XR technologies. This business, as we know, can be lumpy, and we've seen that bookings and revenue recognition may vary significantly between the quarters. So for Q1 2026, the Integrations represented 25% of Tobii's net sales and the EBIT was positive SEK 5 million. After the end of the quarter, we secured a design win with a global technology provider to integrate Tobii's Webcam eye tracking software into one of their premium tablets. And on the third row then, the Autosense business unit, which develops and provides Driver and Occupant monitoring solutions to automotive OEMs as well as Tier 1 suppliers. And in Q1 2026, Autosense represented 27% of Tobii's net sales, which actually is a significant increase compared with last year. And this was mainly driven by revenues related to the DMS technology licensing agreement, which was signed in Q4 2025. The Autosense EBIT was negative SEK 21 million, and this was mainly due to project mix and timing effects, and also will come back to that. Autosense won a new design win. And here, we will be providing our Driver monitoring system to a premium sports car European OEM. Additionally, we'll also be extending an existing DMS design to a new commercial vehicle platform. Now in regards of the Integrations and Autosense design wins I just mentioned, we are very pleased to secure deals with globally recognized brands. However, these wins are not expected to be financially meaningful, but they are very strategically important because they demonstrate the continued relevance of Tobii's technology in demanding customer environments. And this will strengthen our credibility with other global customers, and it reinforces actually our position as a leading innovator in efficient computing. Now continuing with Autosense, I'd like to share that we are managing a dynamic and developing sales pipeline and supported by continued customer engagement and increasing market relevance for Driver and Occupant monitoring solutions. And considering that, let me shed some light on Autosense staged business model. In the short term, customer programs will or may generate nonrecurring engineering, we call NRE funding, which supports custom development and integration and validation work. Now the larger long-term opportunity typically comes later. And that's when the awarded vehicle platforms enter the production. And then revenue is then generated through licenses that are tied to vehicles that are using our technology. Also, good to note that the tenders take place usually 2 to 3 years ahead of start of production. With that, I'd like to invite Asa to walk us through the financials, please. Asa Wiren: Good morning, everyone. Let's take a look at Tobii's financials for the first quarter of 2026. I'd like to highlight three areas to start with. Net sales amounted to SEK 164 million, which is a decrease compared to the previous year. However, last year included nonrecurring revenue of SEK 27 million and the stronger Swedish krona had a negative impact of SEK 15 million. Adjusted for these factors, we had organic growth of 5% and the gross margin, as Fadi mentioned, increased to 84% compared to 77% last year. Operating profit EBIT was minus SEK 28 million, a decrease of SEK 40 million compared to the same period last year. This decline is not only due to lower net sales, but was also affected by increased depreciation of SEK 20 million and an impairment of SEK 6 million. Free cash flow for the quarter improved by SEK 31 million despite the lower sales. The main explanations are improved working capital, reduced operating costs and lower investments. Let's also look at developments over the past 2 years with Autosense fully included from the second quarter of 2024. When reviewing performance, looking at net sales, it's important to note that the Swedish krona has strengthened during the period. The quarters from Q2 2024 to Q2 2025, each included a portion of nonrecurring revenue linked to the image business following the acquisition of FotoNation. And Q2 2025 was affected by the volume transaction by -- with the Dynavox transaction. Turning to EBIT. There was -- we also see an impact from other operating income and expenses that vary between quarters. In Q1 2025, for example, we divested some noncore patents, SEK 15 million, and operating profit in the fourth quarter of 2025 was significantly negatively affected by goodwill impairments. During 2024, 2025, the savings program was executed which reduced noncash operating costs by SEK 263 million. Furthermore, the savings program launched in the third quarter of 2025 has reduced costs by SEK 120 million over 3 quarters. Altogether, the company's cost structure has improved significantly over the past two years. For example, administrative costs per quarter have been reduced by approximately SEK 20 million. Today, we see a more rightsized and cost-conscious Tobii. So a few words about the Products & Solutions business area. Fadi previously reported on market development, which are reflected in the figures as lower sales compared to the previous year. The gross margin stands at a strong 71%, thanks in part to a more efficient delivery organization. The savings measures implemented have reduced OpEx by approximately SEK 25 million compared to last year. As a result, EBIT is broadly in line with the previous year, minus SEK 12 million. As regards to Integrations, we see a decline in net sales as last year's quarter included nonrecurring revenue of SEK 27 million. Gross margin has increased slightly. And here, too, OpEx has fallen by over SEK 10 million. Integrations delivered a positive operating profit of SEK 5 million. The Autosense business unit reports its highest ever sales, SEK 45 million, thanks in part to the DMS license agreement announced in the fourth quarter of 2025. Costs have also been substantially reduced, but are offset by higher depreciation triggered by license sales. The Autosense business mainly consists of two different revenue cost models linked to what Fadi previously described. One is the NRE project part where revenue and costs are recognized as the project advances, so-called percentage of completion. And another part, the product project development, where relevant time and expenses are recorded as assets on the balance sheet. Once license revenue starts coming in, these costs are gradually written off as depreciation, which shows up in the financial results. This also explains the gross margin of 100%. We see the effects of this in the quarter as depreciation increased by SEK 20 million compared to last year, partly as a result of the DMS deal. So finally, let's spend a moment on our cash flow and balance sheet. Free cash flow improved, as mentioned earlier, by SEK 31 million compared to 2025. Our cash balance at the quarter end was SEK 39 million. During the quarter, SEK 39 million was repaid to the Swedish tax agency, the COVID-related tax reliefs, and the credit facility was repaid by SEK 47 million. After the end of the quarter, an agreement was reached with the company's bank for a credit facility of SEK 25 million. We assess that this is sized according to our operational needs. Given the debt structure in the coming years, there remains a risk that Tobii may not have sufficient financing for the coming 12 months, addressing this is our top priority. And by that, I'll hand over to Fadi for some final comments. Fadi Pharaon: Thank you, Asa. But before I go to the final comments, I just will talk like a little bit about thought leadership and product innovation. And I'd like to take a moment to highlight one example of how we continue to expand the practical value of Tobii's technology. So we recently launched the Remote Live View for Tobii Glasses X. And in simple terms, this capability means that it allows a remote expert or a researcher or a trainer to actually see what the person wearing their glasses sees and importantly, also understand what that person is actually looking at. And it's a distinction that matters because if you look at traditional video, we can show the scene. But when you add eye tracking, it gives that element of attention and gives the context to the human behavior in real time. So this feature opens up several important use cases. A remote technical support, a field technician can share both their visual environment and their attention with an expert who is located elsewhere. If you look at the field of auditing and assessment, maybe a facility inspections or insurance claims, you can have a central expert team who can support more accurate documentation and support decision-making remotely. If you go to research or UX studies, we can have distributed teams who can monitor data collection live and help ensure that the quality of the data is maximized. So the customer value is quite straightforward, less need to travel, reduced downtime and improved operational efficiency. And the reason I'm highlighting this example is because it illustrates the range of our offering from capturing attention data to enabling real-time insight and better decisions in operational workflows. And this is an important part of how we see the long-term value of attention computing. Okay. So now let me summarize the quarter. Q1 was a quarter with clear areas of progress, but also challenges, which we are addressing. The reported net sales declined, but the organic sales and the gross margins increased, and we continue to see constructive customer dialogues across the business. Our focus now is on converting these dialogues into commercial wins and revenue growth. We also continued to execute on our cost reduction program, and we've exceeded our previously communicated targets. The free cash flow, very important for us, was positive for the second consecutive quarter in a row. And we've also renewed our revolving credit facility, which gives us continued liquidity flexibility. Now let me address the topic that I know remains important to investors and all stakeholders, which is our debt profile and financing situation. And this is in relation to the obligations that we have beginning in 2027 and continuing through 2029. During the quarter, the Board and management's strategic review has led to concrete discussions with external parties, including evaluation of various structural or transactional alternatives such as business divestments, partnerships or capital raising. Now these discussions are ongoing, and there's no guarantee that this will result in any transaction decision or other actions. And I fully respect your eagerness to know more, but we will not be commenting anything more about this topic during the Q&A. Now as I now have had 100 days in the role as CEO of Tobii, I think it would be a good time to share some of my early impressions of the company. My conclusion is that Tobii has valuable strengths. It has differentiated technology, deep competence in eye tracking and visual computing and strong positions in customer categories where these capabilities matter. We also operate in a market environment that continues to broaden as we see more categories and customers who actually understand the value of attention, behavior and human machine interaction through eye tracking and related technologies. We believe that this relevant can expand further with the increasing adoption of AI and robotics. Because once you have a better understanding of human attention and intent, that actually could help make human machine interaction more natural, efficient and effective. So from a strategic standpoint, I believe Tobii is well positioned in an area that is seeing increasing relevance. At the same time, we have to be clear about where we are today. Our reported sales declined, and that's clearly not where we want to be. So this means we need to improve how we convert our strengths into commercial results. We need better sales execution, sharper prioritization and a higher pace of product renewal. We need to bring the right products to market faster and execute with greater consistency in how we capture this demand. This is a core priority for me and the leadership team. Now in the near term, our focus is very straightforward: improve the execution, continue improving on the cash profile of the business, maintain our cost discipline and prioritize the areas where we see the strongest potential to create customer and shareholder value. In the longer term, our ambition is for Tobii to translate its technological leadership and market relevance into a stronger, more scalable and more sustainable business. I believe the opportunity is real, and we have to earn the right to capture that opportunity by delivering better outcomes. Thank you very much. And Rasmus, I hand over to you, so we can open the Q&A, please. Rasmus Buckhoj: Thank you, Fadi. Thank you, Asa. Now before we open for questions, I would like to briefly set expectations for the Q&A. We, of course, welcome your questions as always, and we will aim to be as transparent and helpful as possible in our answers. At the same time, there are certain areas where we will not be able to provide detailed information such as individual customer relationships, specific project revenues or other commercially sensitive details. This is to respect our confidentiality commitments and to ensure that we communicate in a consistent and fair manner to all stakeholders. And where we cannot go into that level of detail, we will do our best to provide relevant context at an aggregated level. And with that, we're happy to take your questions. Rasmus Buckhoj: We will begin going through the written questions that have been submitted. And we will start with a question from [Jeppe]. The Autosense SCDO design win date back to when Xperi still owned Autosense. Given the lack of new OEM design wins for SCDO, should this be interpreted as an indication that competitive intensity is higher than expected with peers offering solutions that match or even exceed yours? Fadi Pharaon: Thank you for the question, [Jeppe]. I think very important to bear in mind that Tobii Autosense is not an SCDO unit. Tobii Autosense is a DMS and OMS provider. Single camera and SCDO is one of the innovations we've had. And as we just released this morning with the quarter, we received actually a new DMS win and extended another one with an existing customer. So it is, for sure, a competitive market, but it's also a market that is quite big to absorb multiple players. We've been -- if I look at SCDO in particular, which is part of our offering, it's been quite successful in the premium segment. It's been validated in the market. And as I mentioned a bit earlier, we're seeing quite a lot of buzz now in the pipeline post the launch of SCDO in the market from other potential customers that we are working with. And we are working as hard as we can to ensure that we translate that pipeline into further steps into what everybody would like to see, which is, of course, a contracted end or design win. Rasmus Buckhoj: Thank you. Another question also from [Jeppe]. Tobii often emphasizes that single camera interior sensing delivers very high value. However, since competitors such as Seeing Machines and Smart Eye also have single camera interior sensing in production, I don't see the Autosense has any clear advantage. Could you elaborate on this? Fadi Pharaon: I see the advantage of Tobii Autosense in our capabilities with visual computing. This is where we have the algorithms. This is where we have the capability to create fantastic data collection and ensure that there are as few false alarms as possible. Single camera is an innovation that we are very proud of, and it's one kind of delivery systems. We are also open to work with multiple cameras. Single camera advantage is that when it fits the OEM's choices for the use cases, it can actually translate in quite significant cost savings because then you don't need other types of sensors, for instance. And of course, you save money on the amount of cameras that needs to be put on. But we are not defined only by the single camera innovation we have put forward in the market. Again, if you look at the majority of our existing contracts, they are actually DMS and these work with multiple cameras. Rasmus Buckhoj: Thank you. Question from [Per B]. Which are the top 3 risks of not meeting the Tobii objectives you see going forward? And how will you mitigate? Fadi Pharaon: Thank you, [Per]. Well, I mean, the most obvious first risk is, of course, that we wouldn't have a strong enough operational cash flow to sustain our business operations. And that risk has been mitigated for two years now. Clearly, a large part of that comes from our cost and operational efficiencies, which today have yielded an accumulated savings, I would say, about SEK 380 million by now. And as you can see, I mean, we are very proud of the fact that we have now two consecutive quarters of positive cash flow. So mitigations are in place. But more important for us and the mitigation is also to continue increasing the sales. We don't see that cost efficiencies is what will determine the future of Tobii, but rather our growth in an expanding market. The second risk I would bring up is, of course, the debt obligations that we have starting in 2027 and run to 2029. And I've already commented that in my previous input, and I cannot add anything more to that. Rasmus Buckhoj: Thank you. Another question from [Jeppe]. While Tobii has surpassed 1 million vehicles on the road, its competitor, Seeing Machines reported today that its Q1 2026 deliveries alone exceeded that number. How can a small player compete in the automotive industry? Fadi Pharaon: Yes, absolutely. I mean we are the challenger in the automotive industry, and we have never claimed otherwise. I think where we are really focusing on is the strength of our innovation that was proven by single camera, for instance. But coming back to what the talent that we have, visual computing and data collection and data management, is where we'd like to continue delivering. And if you could look at the track record, we've been doing well in the premium segment. So of course, with the previous large win with the premium automotive player in Europe and the one we announced this morning is premium sports car OEM, we are actually living up to very high and technically stringent and quality requirements. And this is where we would like to place our future and work with anybodies who see a way to bring in-cabin sensing to have more value to their own customers. Rasmus Buckhoj: Thank you. We have a question from Jacob. Has the majority of the DMS licensing deal been recognized during Q1 '26? Or is there an equally big part in Q2 '26? How should we think? Asa Wiren: Thanks for the question, Jacob. Since we don't mention the exact numbers, I can say it will be about the same in Q2 as in Q1. Rasmus Buckhoj: Thank you. We have a question from [Emil]. Why does Autosense have no hardware revenue? And should investors expect that to remain the model going forward? Fadi Pharaon: Thank you, [Emil]. Well, our focus and our strength lies in developing software that accumulates visual computing and that can actually work with different sets of hardware that's out there in the industry. Of course, compatibility with the chipset platform that OEM chooses and the ECUs that are in the car. This is our forte, and this is where we see the largest expansion for us considering what we are doing. So yes, we are continuing to focus on providing software stacks. And we, of course, in that collaborate and partner with relevant hardware providers who can act as well as partners in enlarging our own pipeline. Rasmus Buckhoj: Thank you. A question from [Per B]. Where do you see Tobii in 5 years still as an independent company or acquired by a larger player? Fadi Pharaon: I would like to see that Tobii succeeds with all of the plans that we have in motion. I think an incredible amount of development -- positive development has been done on the metric of cost efficiency and operational efficiencies. Very important for us and the leadership team is to focus on our sales conversion, ensuring that we bring that sales growth that we all want to see and that we grab a larger share of a growing and expanding market. Rasmus Buckhoj: Thank you. A question from [Emil]. How much of the Q1 Autosense revenue was recurring or license-based versus one-off engineering or milestone revenue? Asa Wiren: Thank you, Emil, for the question. And not going into too much details in this call, I refer to Page 9 in the quarterly report, where you can see the split between hardware, software, services and by time of sales category. So you can find the details not only for Autosense, but for all the segments on Page 10. Rasmus Buckhoj: Thank you. Looking to see if we have any additional questions. We have a question from [Bo Engvall von Scheele]. How many Autosense design wins totally are from SCDO? Fadi Pharaon: Thank you, Bo Engvall. So SCDO has been our prime initiative and we have one large European -- premium European auto manufacturer who has adopted that. We've done the homologation. It's been installed and the models are actually going out in the market. So it's valid. And if we remember, I would say, by summer last year, there was skepticism in the industry about getting a single camera DMS and OMS to work because nobody has done it before. But with the support of our premium Automotive, that has actually proven to work. It is launched, and that has garnered us now much more interest. And that's why I was referring to the pipeline that we are working upon and building to a pyramid. So of course, our focus is to conclude more deals, be it DMS on single camera or DMS and OMS on multiple cameras. But for sure, single camera is now of interest in many parts of the pipeline. Rasmus Buckhoj: Thank you. And we have a question from [Emil]. When will investors get a concrete outcome from the strategic review? Fadi Pharaon: I've already referred to the statement. And as I said before, we will not be adding any more flavor to that. Rasmus Buckhoj: A question from [Anders]. Could you elaborate on the smart glasses business and if possible, give Tobii's effort in this segment? Fadi Pharaon: So of course, smart glasses is -- multiple parts of the industry are looking on that, a lot of ideas. What's important for us is to understand how eye tracking plays a role. There are multiple use cases one could think of, but we are interested to ensure that we find use cases that can scale. So we are, of course, in -- clearly through the XR business, that's what we do every day in dialogues with different providers of smart glasses. And once something materialize into a commercial deal, of course, we will communicate that at that point. Rasmus Buckhoj: Thank you. Are there any additional questions? There does not appear to be any additional questions. And we will, therefore, hand over to Fadi for closing. Fadi Pharaon: So I would like to thank the entire team of Tobii and the Board of Tobii for all the incredible support and for the hard work that's been put as a relative newcomer to the company, I'm extremely excited to what's ahead of us and the transformation we're doing. And I'd like to thank all of our shareholders and people who have also called in today for all the support in that journey as well. And with that, we wish you an excellent day.
Operator: Welcome to Tobii Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to CEO, Fadi Pharaon; and Interim CFO, Asa Wiren. Please go ahead. Fadi Pharaon: Good morning, everyone. This is Fadi Pharaon speaking to you, CEO of Tobii. I'm joined today by Asa Wiren, our Interim CFO; and Rasmus Lowenmo Buckhoj, who leads our Communications team. And thank you, everybody, for joining our Q1 2026 earnings call. So let's start with the quarter. Q1 was a quarter with clear areas of progress, but also challenges that we are addressing. As you can see, the reported net sales decline year-on-year was 17%. However, organic sales actually increased by 5%. We additionally had an improved gross margin for the group by 7 percentage points. And furthermore, during and shortly after the quarter, we secured strategically important design wins. All of these developments together show that despite currency and timing-related headwinds, we continue to see underlying momentum in parts of our business. We've continued our disciplined focus on cost reduction and operational efficiency. So during this quarter, we reached SEK 48 million in cost reductions if you compare to Q2 2025. Since that point, we've actually achieved SEK 120 million in total cost reductions, which actually exceeds our previously communicated target of SEK 100 million. And still, we have one more quarter to go in that program. If we move to free cash flow, that was positive for the second consecutive quarter now at SEK 17 million. And our cash position stands at SEK 39 million, even after repaying the SEK 39 million of deferred COVID-related taxes and the SEK 47 million of our previously utilized revolving credit facility. We've also agreed on a revolving credit facility with our bank for an amount of SEK 25 million. Let's now review the performance of our three business units. For those who are new to the call, Tobii has 3 business units, each addressing different use cases and customer segments. If we start with Products & Solutions at the top here, it's a unit that delivers vertical solutions to thousands of customers annually. The portfolio ranges or the segment, I would say, ranges from university research labs to enterprises and PC gamers. So in Q1 of 2026, Productd & Solutions represented 48% of Tobii's net sales. The EBIT for the segment was negative SEK 12 million. And this was partly due to the strengthening of the Swedish krona and partly due to delayed implementation of the 5-year plan policy in China, which has affected our sales in that market. At the same time, though, we saw organic growth in EMEA and the U.S. markets as well. During the quarter, we also launched a new rental model for our wearables portfolio. And the aim of that is to lower the initial barrier for customers who want to evaluate how eye tracking and attention computing can actually create value in their operations. In addition, we have launched a Remote Live review for Tobii Glasses X, a feature which I will return to a bit later in the presentation and talk more about. If you go to the second row, which is the Integrations business unit, that unit serves customers who embed Tobii's technology into their own offerings. There you can see segments like Assistive & Augmentative Communication solutions as well as XR technologies. This business, as we know, can be lumpy, and we've seen that bookings and revenue recognition may vary significantly between the quarters. So for Q1 2026, the Integrations represented 25% of Tobii's net sales and the EBIT was positive SEK 5 million. After the end of the quarter, we secured a design win with a global technology provider to integrate Tobii's Webcam eye tracking software into one of their premium tablets. And on the third row then, the Autosense business unit, which develops and provides Driver and Occupant monitoring solutions to automotive OEMs as well as Tier 1 suppliers. And in Q1 2026, Autosense represented 27% of Tobii's net sales, which actually is a significant increase compared with last year. And this was mainly driven by revenues related to the DMS technology licensing agreement, which was signed in Q4 2025. The Autosense EBIT was negative SEK 21 million, and this was mainly due to project mix and timing effects, and also will come back to that. Autosense won a new design win. And here, we will be providing our Driver monitoring system to a premium sports car European OEM. Additionally, we'll also be extending an existing DMS design to a new commercial vehicle platform. Now in regards of the Integrations and Autosense design wins I just mentioned, we are very pleased to secure deals with globally recognized brands. However, these wins are not expected to be financially meaningful, but they are very strategically important because they demonstrate the continued relevance of Tobii's technology in demanding customer environments. And this will strengthen our credibility with other global customers, and it reinforces actually our position as a leading innovator in efficient computing. Now continuing with Autosense, I'd like to share that we are managing a dynamic and developing sales pipeline and supported by continued customer engagement and increasing market relevance for Driver and Occupant monitoring solutions. And considering that, let me shed some light on Autosense staged business model. In the short term, customer programs will or may generate nonrecurring engineering, we call NRE funding, which supports custom development and integration and validation work. Now the larger long-term opportunity typically comes later. And that's when the awarded vehicle platforms enter the production. And then revenue is then generated through licenses that are tied to vehicles that are using our technology. Also, good to note that the tenders take place usually 2 to 3 years ahead of start of production. With that, I'd like to invite Asa to walk us through the financials, please. Asa Wiren: Good morning, everyone. Let's take a look at Tobii's financials for the first quarter of 2026. I'd like to highlight three areas to start with. Net sales amounted to SEK 164 million, which is a decrease compared to the previous year. However, last year included nonrecurring revenue of SEK 27 million and the stronger Swedish krona had a negative impact of SEK 15 million. Adjusted for these factors, we had organic growth of 5% and the gross margin, as Fadi mentioned, increased to 84% compared to 77% last year. Operating profit EBIT was minus SEK 28 million, a decrease of SEK 40 million compared to the same period last year. This decline is not only due to lower net sales, but was also affected by increased depreciation of SEK 20 million and an impairment of SEK 6 million. Free cash flow for the quarter improved by SEK 31 million despite the lower sales. The main explanations are improved working capital, reduced operating costs and lower investments. Let's also look at developments over the past 2 years with Autosense fully included from the second quarter of 2024. When reviewing performance, looking at net sales, it's important to note that the Swedish krona has strengthened during the period. The quarters from Q2 2024 to Q2 2025, each included a portion of nonrecurring revenue linked to the image business following the acquisition of FotoNation. And Q2 2025 was affected by the volume transaction by -- with the Dynavox transaction. Turning to EBIT. There was -- we also see an impact from other operating income and expenses that vary between quarters. In Q1 2025, for example, we divested some noncore patents, SEK 15 million, and operating profit in the fourth quarter of 2025 was significantly negatively affected by goodwill impairments. During 2024, 2025, the savings program was executed which reduced noncash operating costs by SEK 263 million. Furthermore, the savings program launched in the third quarter of 2025 has reduced costs by SEK 120 million over 3 quarters. Altogether, the company's cost structure has improved significantly over the past two years. For example, administrative costs per quarter have been reduced by approximately SEK 20 million. Today, we see a more rightsized and cost-conscious Tobii. So a few words about the Products & Solutions business area. Fadi previously reported on market development, which are reflected in the figures as lower sales compared to the previous year. The gross margin stands at a strong 71%, thanks in part to a more efficient delivery organization. The savings measures implemented have reduced OpEx by approximately SEK 25 million compared to last year. As a result, EBIT is broadly in line with the previous year, minus SEK 12 million. As regards to Integrations, we see a decline in net sales as last year's quarter included nonrecurring revenue of SEK 27 million. Gross margin has increased slightly. And here, too, OpEx has fallen by over SEK 10 million. Integrations delivered a positive operating profit of SEK 5 million. The Autosense business unit reports its highest ever sales, SEK 45 million, thanks in part to the DMS license agreement announced in the fourth quarter of 2025. Costs have also been substantially reduced, but are offset by higher depreciation triggered by license sales. The Autosense business mainly consists of two different revenue cost models linked to what Fadi previously described. One is the NRE project part where revenue and costs are recognized as the project advances, so-called percentage of completion. And another part, the product project development, where relevant time and expenses are recorded as assets on the balance sheet. Once license revenue starts coming in, these costs are gradually written off as depreciation, which shows up in the financial results. This also explains the gross margin of 100%. We see the effects of this in the quarter as depreciation increased by SEK 20 million compared to last year, partly as a result of the DMS deal. So finally, let's spend a moment on our cash flow and balance sheet. Free cash flow improved, as mentioned earlier, by SEK 31 million compared to 2025. Our cash balance at the quarter end was SEK 39 million. During the quarter, SEK 39 million was repaid to the Swedish tax agency, the COVID-related tax reliefs, and the credit facility was repaid by SEK 47 million. After the end of the quarter, an agreement was reached with the company's bank for a credit facility of SEK 25 million. We assess that this is sized according to our operational needs. Given the debt structure in the coming years, there remains a risk that Tobii may not have sufficient financing for the coming 12 months, addressing this is our top priority. And by that, I'll hand over to Fadi for some final comments. Fadi Pharaon: Thank you, Asa. But before I go to the final comments, I just will talk like a little bit about thought leadership and product innovation. And I'd like to take a moment to highlight one example of how we continue to expand the practical value of Tobii's technology. So we recently launched the Remote Live View for Tobii Glasses X. And in simple terms, this capability means that it allows a remote expert or a researcher or a trainer to actually see what the person wearing their glasses sees and importantly, also understand what that person is actually looking at. And it's a distinction that matters because if you look at traditional video, we can show the scene. But when you add eye tracking, it gives that element of attention and gives the context to the human behavior in real time. So this feature opens up several important use cases. A remote technical support, a field technician can share both their visual environment and their attention with an expert who is located elsewhere. If you look at the field of auditing and assessment, maybe a facility inspections or insurance claims, you can have a central expert team who can support more accurate documentation and support decision-making remotely. If you go to research or UX studies, we can have distributed teams who can monitor data collection live and help ensure that the quality of the data is maximized. So the customer value is quite straightforward, less need to travel, reduced downtime and improved operational efficiency. And the reason I'm highlighting this example is because it illustrates the range of our offering from capturing attention data to enabling real-time insight and better decisions in operational workflows. And this is an important part of how we see the long-term value of attention computing. Okay. So now let me summarize the quarter. Q1 was a quarter with clear areas of progress, but also challenges, which we are addressing. The reported net sales declined, but the organic sales and the gross margins increased, and we continue to see constructive customer dialogues across the business. Our focus now is on converting these dialogues into commercial wins and revenue growth. We also continued to execute on our cost reduction program, and we've exceeded our previously communicated targets. The free cash flow, very important for us, was positive for the second consecutive quarter in a row. And we've also renewed our revolving credit facility, which gives us continued liquidity flexibility. Now let me address the topic that I know remains important to investors and all stakeholders, which is our debt profile and financing situation. And this is in relation to the obligations that we have beginning in 2027 and continuing through 2029. During the quarter, the Board and management's strategic review has led to concrete discussions with external parties, including evaluation of various structural or transactional alternatives such as business divestments, partnerships or capital raising. Now these discussions are ongoing, and there's no guarantee that this will result in any transaction decision or other actions. And I fully respect your eagerness to know more, but we will not be commenting anything more about this topic during the Q&A. Now as I now have had 100 days in the role as CEO of Tobii, I think it would be a good time to share some of my early impressions of the company. My conclusion is that Tobii has valuable strengths. It has differentiated technology, deep competence in eye tracking and visual computing and strong positions in customer categories where these capabilities matter. We also operate in a market environment that continues to broaden as we see more categories and customers who actually understand the value of attention, behavior and human machine interaction through eye tracking and related technologies. We believe that this relevant can expand further with the increasing adoption of AI and robotics. Because once you have a better understanding of human attention and intent, that actually could help make human machine interaction more natural, efficient and effective. So from a strategic standpoint, I believe Tobii is well positioned in an area that is seeing increasing relevance. At the same time, we have to be clear about where we are today. Our reported sales declined, and that's clearly not where we want to be. So this means we need to improve how we convert our strengths into commercial results. We need better sales execution, sharper prioritization and a higher pace of product renewal. We need to bring the right products to market faster and execute with greater consistency in how we capture this demand. This is a core priority for me and the leadership team. Now in the near term, our focus is very straightforward: improve the execution, continue improving on the cash profile of the business, maintain our cost discipline and prioritize the areas where we see the strongest potential to create customer and shareholder value. In the longer term, our ambition is for Tobii to translate its technological leadership and market relevance into a stronger, more scalable and more sustainable business. I believe the opportunity is real, and we have to earn the right to capture that opportunity by delivering better outcomes. Thank you very much. And Rasmus, I hand over to you, so we can open the Q&A, please. Rasmus Buckhoj: Thank you, Fadi. Thank you, Asa. Now before we open for questions, I would like to briefly set expectations for the Q&A. We, of course, welcome your questions as always, and we will aim to be as transparent and helpful as possible in our answers. At the same time, there are certain areas where we will not be able to provide detailed information such as individual customer relationships, specific project revenues or other commercially sensitive details. This is to respect our confidentiality commitments and to ensure that we communicate in a consistent and fair manner to all stakeholders. And where we cannot go into that level of detail, we will do our best to provide relevant context at an aggregated level. And with that, we're happy to take your questions. Rasmus Buckhoj: We will begin going through the written questions that have been submitted. And we will start with a question from [Jeppe]. The Autosense SCDO design win date back to when Xperi still owned Autosense. Given the lack of new OEM design wins for SCDO, should this be interpreted as an indication that competitive intensity is higher than expected with peers offering solutions that match or even exceed yours? Fadi Pharaon: Thank you for the question, [Jeppe]. I think very important to bear in mind that Tobii Autosense is not an SCDO unit. Tobii Autosense is a DMS and OMS provider. Single camera and SCDO is one of the innovations we've had. And as we just released this morning with the quarter, we received actually a new DMS win and extended another one with an existing customer. So it is, for sure, a competitive market, but it's also a market that is quite big to absorb multiple players. We've been -- if I look at SCDO in particular, which is part of our offering, it's been quite successful in the premium segment. It's been validated in the market. And as I mentioned a bit earlier, we're seeing quite a lot of buzz now in the pipeline post the launch of SCDO in the market from other potential customers that we are working with. And we are working as hard as we can to ensure that we translate that pipeline into further steps into what everybody would like to see, which is, of course, a contracted end or design win. Rasmus Buckhoj: Thank you. Another question also from [Jeppe]. Tobii often emphasizes that single camera interior sensing delivers very high value. However, since competitors such as Seeing Machines and Smart Eye also have single camera interior sensing in production, I don't see the Autosense has any clear advantage. Could you elaborate on this? Fadi Pharaon: I see the advantage of Tobii Autosense in our capabilities with visual computing. This is where we have the algorithms. This is where we have the capability to create fantastic data collection and ensure that there are as few false alarms as possible. Single camera is an innovation that we are very proud of, and it's one kind of delivery systems. We are also open to work with multiple cameras. Single camera advantage is that when it fits the OEM's choices for the use cases, it can actually translate in quite significant cost savings because then you don't need other types of sensors, for instance. And of course, you save money on the amount of cameras that needs to be put on. But we are not defined only by the single camera innovation we have put forward in the market. Again, if you look at the majority of our existing contracts, they are actually DMS and these work with multiple cameras. Rasmus Buckhoj: Thank you. Question from [Per B]. Which are the top 3 risks of not meeting the Tobii objectives you see going forward? And how will you mitigate? Fadi Pharaon: Thank you, [Per]. Well, I mean, the most obvious first risk is, of course, that we wouldn't have a strong enough operational cash flow to sustain our business operations. And that risk has been mitigated for two years now. Clearly, a large part of that comes from our cost and operational efficiencies, which today have yielded an accumulated savings, I would say, about SEK 380 million by now. And as you can see, I mean, we are very proud of the fact that we have now two consecutive quarters of positive cash flow. So mitigations are in place. But more important for us and the mitigation is also to continue increasing the sales. We don't see that cost efficiencies is what will determine the future of Tobii, but rather our growth in an expanding market. The second risk I would bring up is, of course, the debt obligations that we have starting in 2027 and run to 2029. And I've already commented that in my previous input, and I cannot add anything more to that. Rasmus Buckhoj: Thank you. Another question from [Jeppe]. While Tobii has surpassed 1 million vehicles on the road, its competitor, Seeing Machines reported today that its Q1 2026 deliveries alone exceeded that number. How can a small player compete in the automotive industry? Fadi Pharaon: Yes, absolutely. I mean we are the challenger in the automotive industry, and we have never claimed otherwise. I think where we are really focusing on is the strength of our innovation that was proven by single camera, for instance. But coming back to what the talent that we have, visual computing and data collection and data management, is where we'd like to continue delivering. And if you could look at the track record, we've been doing well in the premium segment. So of course, with the previous large win with the premium automotive player in Europe and the one we announced this morning is premium sports car OEM, we are actually living up to very high and technically stringent and quality requirements. And this is where we would like to place our future and work with anybodies who see a way to bring in-cabin sensing to have more value to their own customers. Rasmus Buckhoj: Thank you. We have a question from Jacob. Has the majority of the DMS licensing deal been recognized during Q1 '26? Or is there an equally big part in Q2 '26? How should we think? Asa Wiren: Thanks for the question, Jacob. Since we don't mention the exact numbers, I can say it will be about the same in Q2 as in Q1. Rasmus Buckhoj: Thank you. We have a question from [Emil]. Why does Autosense have no hardware revenue? And should investors expect that to remain the model going forward? Fadi Pharaon: Thank you, [Emil]. Well, our focus and our strength lies in developing software that accumulates visual computing and that can actually work with different sets of hardware that's out there in the industry. Of course, compatibility with the chipset platform that OEM chooses and the ECUs that are in the car. This is our forte, and this is where we see the largest expansion for us considering what we are doing. So yes, we are continuing to focus on providing software stacks. And we, of course, in that collaborate and partner with relevant hardware providers who can act as well as partners in enlarging our own pipeline. Rasmus Buckhoj: Thank you. A question from [Per B]. Where do you see Tobii in 5 years still as an independent company or acquired by a larger player? Fadi Pharaon: I would like to see that Tobii succeeds with all of the plans that we have in motion. I think an incredible amount of development -- positive development has been done on the metric of cost efficiency and operational efficiencies. Very important for us and the leadership team is to focus on our sales conversion, ensuring that we bring that sales growth that we all want to see and that we grab a larger share of a growing and expanding market. Rasmus Buckhoj: Thank you. A question from [Emil]. How much of the Q1 Autosense revenue was recurring or license-based versus one-off engineering or milestone revenue? Asa Wiren: Thank you, Emil, for the question. And not going into too much details in this call, I refer to Page 9 in the quarterly report, where you can see the split between hardware, software, services and by time of sales category. So you can find the details not only for Autosense, but for all the segments on Page 10. Rasmus Buckhoj: Thank you. Looking to see if we have any additional questions. We have a question from [Bo Engvall von Scheele]. How many Autosense design wins totally are from SCDO? Fadi Pharaon: Thank you, Bo Engvall. So SCDO has been our prime initiative and we have one large European -- premium European auto manufacturer who has adopted that. We've done the homologation. It's been installed and the models are actually going out in the market. So it's valid. And if we remember, I would say, by summer last year, there was skepticism in the industry about getting a single camera DMS and OMS to work because nobody has done it before. But with the support of our premium Automotive, that has actually proven to work. It is launched, and that has garnered us now much more interest. And that's why I was referring to the pipeline that we are working upon and building to a pyramid. So of course, our focus is to conclude more deals, be it DMS on single camera or DMS and OMS on multiple cameras. But for sure, single camera is now of interest in many parts of the pipeline. Rasmus Buckhoj: Thank you. And we have a question from [Emil]. When will investors get a concrete outcome from the strategic review? Fadi Pharaon: I've already referred to the statement. And as I said before, we will not be adding any more flavor to that. Rasmus Buckhoj: A question from [Anders]. Could you elaborate on the smart glasses business and if possible, give Tobii's effort in this segment? Fadi Pharaon: So of course, smart glasses is -- multiple parts of the industry are looking on that, a lot of ideas. What's important for us is to understand how eye tracking plays a role. There are multiple use cases one could think of, but we are interested to ensure that we find use cases that can scale. So we are, of course, in -- clearly through the XR business, that's what we do every day in dialogues with different providers of smart glasses. And once something materialize into a commercial deal, of course, we will communicate that at that point. Rasmus Buckhoj: Thank you. Are there any additional questions? There does not appear to be any additional questions. And we will, therefore, hand over to Fadi for closing. Fadi Pharaon: So I would like to thank the entire team of Tobii and the Board of Tobii for all the incredible support and for the hard work that's been put as a relative newcomer to the company, I'm extremely excited to what's ahead of us and the transformation we're doing. And I'd like to thank all of our shareholders and people who have also called in today for all the support in that journey as well. And with that, we wish you an excellent day.
Operator: Good morning, ladies and gentlemen, and welcome to the HelloFresh SE Q1 2026 Results. [Operator Instructions]. Let me now turn the floor over to your host, Dominik Richter, CEO of HelloFresh. Dominik Richter: Good morning, ladies and gentlemen. Thank you for joining our Q1 2026 earnings call. Before my colleague, Fabien, takes you through our detailed financials, I want to spend a few minutes addressing our current standing, the progress we've achieved over the past 12 months and what this first quarter reveals about our trajectory for the remainder of the year. To be direct, we are in the midst of a deliberate transformation of the business. This process involves clear trade-offs, which are visible in our reported results today, but constitute a conscious choice to allow the business to be set up for long-term success. Over the past year, we've fundamentally overhauled our customer acquisition strategy, marketing spend and product proposition. We've made the conscious choice to walk away from unprofitable volume, tightened our marketing ROI thresholds and redirected capital from acquisition into product quality while restructuring our fixed cost base. None of this was accidental. It was a sequenced effort to fix the foundation even if it comes with a near-term trade-off to reported growth, but will allow for better revenue quality in the long run. The central question is whether this logic is working? I believe the evidence is clear that it is, and we've seen success in those metrics that are most associated with the long-term health of the business. First, let's take a look at our Meal Kits Products segment. One year ago, meal-kit revenue was declining at roughly 14.5% in constant currency in Q1. In Q1 2026, that decline narrowed to 8.5%, marking our fifth consecutive quarter of sequential improvement. The trajectory is moving clearly in the right direction. On efficiency, we have delivered structural improvements. Fulfillment costs as a percentage of revenue improved by 0.8 percentage points year-over-year. We reduced absolute marketing spend by EUR 62 million to about 21.8% of revenue. That's not a onetime squeeze, but a permanent shift in our operating cost discipline. Regarding the product, we've executed the most significant investment cycle in our history. Under the ReFresh, we have substantially broadened menu choice, doubling the recipes we offer in markets like the U.S. or the Nordics, while upgrading ingredient quality and expanding protein variety across all geographies. The sum of these investments leads to a materially better product value proposition, which will only compound from here as more and more initiatives come to life. That's the backbone of our strategy to drive higher customer lifetime value. Crucially, this means the quality of our revenue has improved. Our tenured customers are ordering more frequently and they're ordering higher baskets. Group level average order value rose EUR 4.2 in constant currency with meal kits specifically up 4.5%. Revenue retention and thus customer lifetime values of our tenured cohorts have been improving and trend at the best levels ever seen in the business. These are not temporary effects but rather the response of a healthy customer base to a fundamentally better product and a stronger value proposition. The sum total of these changes have to date most positively affected our tenured customers, which was clearly our primary focus area. However, it's not yet been enough to fully offset the impact of front-loaded product investments, inflation and the volume-led operational deleveraging. We expect the trend improvement for meal kits to continue going forward and also to see more proof of a return to eventual revenue growth by H2 when we will have the benefits of our product investments and the outstanding parts of the efficiency program materialize more forcefully in our P&L. I also want to address ready-to-eat and specifically factor U.S. directly. Again, our primary goal for 2026 is to return the RTE product segment to full year profitability on the basis of product excellence and strong operations. We are on a good trajectory to achieve this. The operational setbacks we faced in the U.S. last year, which impacted customer experience and retention, are now fully resolved. The underlying indicators have turned strongly. NPS is now trending at the highest level since 2023. Our tenured active customers grew double digits in Q1. A direct consequence of better product excitement among them and validation of our strategy to add more variety into the menus. RTE adjusted EBITDA losses also narrowed by about EUR 18 million in Q1. That's a 40% improvement year-over-year. This represents a very encouraging trend line in our P&L and is the result of improving both the unit economics and a more disciplined marketing investment approach. The remaining challenge now is rebuilding the active customer base, which reduced in the last 9 months due to those earlier mentioned operational issues and our subsequent response to not invest aggressively behind a product and supply chain that needed fixing. While conversions are improving, switching the acquisition engine back on does not happen overnight. It rather requires multiple touch points with consumers. New customer volume in Q1 was not yet enough to fully offset the gap in active customers accumulated over the past 12 months, which has come as a result of the aforementioned weaker retention and reduced new customer volume. However, we are now restarting the growth engine on top of operational confidence and strong ROI discipline. Outside the U.S., our RTE businesses in Australia and Canada continued to post healthy double-digit growth. Furthermore, our new production facility in Germany has opened and will soon be fully operational, providing the dedicated capacity needed to scale factor also in Europe in the second half of the year. In addition, we are excited about our product and menu expansion road maps, which should help to drive positive outcomes with regard to retention and order frequency of our tenured RTE customer base. We expect the combination of all of these improvements to flow through our P&L more visibly in the second half of the year. With that, let me come to the highlights of Q1. Revenue for the quarter was approximately EUR 1.7 billion, a 7.7% decline in constant currency, which was in line with our expectations. Meal kit revenue trends improved for a fifth consecutive quarter in a row, while RTE revenue trend showed a stable trend versus what we saw in Q4. Adjusted EBITDA came in at about EUR 24 million. To put this in context, severe winter storms in the U.S. and Europe, including a once in 75 years event in the U.S., disrupted our logistics and impacted adjusted EBITDA by approximately EUR 25 million. This is a one-off event that does not change the underlying trajectory of the operating model. Excluding this weather impact, our underlying adjusted EBITDA run rate was closer to EUR 49 million. This gives a much more accurate read of where the business structurally sits today. Fabien will bridge these numbers in more detail. Contribution margin for Q1 sat at 25.6%. We saw strong operational improvements on the fulfillment side, which were offset by our investments into better product value for consumers. That's a deliberate strategy, which will help us to divest from marketing and improve customer retention and order frequency in future quarters. Critically, we generated EUR 49 million in positive free cash flow, our fourth consecutive quarter of positive free cash flow despite the EUR 25 million impact from the adverse weather events. Finally, we're reconfirming our full year 2026 guidance, constant currency revenue decline of 3% to 6% and an adjusted EBITDA in the range of EUR 375 million to EUR 425 million. The delivery will be second half weighted. We front-loaded the ReFresh investments because we saw clear evidence that they were working. These costs hit the P&L now by the revenue benefits compound as retention and order frequency improve. In H2, the investment drag will moderate and structural savings from our efficiency program will flow through more fully. There are also variables we do not fully control such as consumer sentiment in North America and inflationary pressures. However, the leading indicators we track about the health of the business and our customer base, such as the customer order patterns I referenced and cohort retention, all point in the right direction. 15 years in, our mission to change the way people eat is more relevant than ever. By focusing on product quality, customer loyalty and cost discipline, we're building a business that creates lasting value. We're not only optimizing for the next quarter. We're building a company that earns its place on the dinner table every single week. Thank you. I will hand over to Fabien now. Fabien J. Simon: Thank you, Dominik, and good morning, everyone. Let me take you through the financial details of the quarter before we open for questions. You would have noticed that we have only a handful of slides this quarter, but I will make sure that I bring the necessary level of detail to understand how the trends that Dominik just described are showing up in our financials. So starting with revenue. The group net revenue was EUR 1.68 billion in Q1, a 7.7% decrease in constant currency. If you recall, in the previous quarter, Q4 2025, that figure was 9% negative in constant currency. But definitely, this represents another step in the right direction as we anticipated. As of next quarter, we will start reporting a full P&L split by product category. So allow me to already discuss with you the drivers for each of our key product categories now. Meal kits delivered close to EUR 1.2 billion in revenue, 8.5% lower than last year in constant currency. As Dominik noted, this is the fifth consecutive quarter of sequential improvement in constant currency rates. The makeup of this number is defined by the trajectory of orders and of AOV. Order growth in meal kits, while still negative, also improved sequentially for the fifth consecutive quarter. What we are seeing today is our tenured customer base ordering more on a per customer basis. On the other side, the cumulative impact of the marketing reduction over the past 18 months means that orders from recent customers are still down comparatively and more than offsetting the resilience in our tenure base. Average order value for meal kit was up 4.5% in constant currency, supported by fewer discounts and some marginal price increase and some positive mix. Ready-to-eat delivered EUR 466 million, which is lower than last year in constant currency by 6.9%. This is made up of average order value up by 1.4% in constant currency and lower order by about 8%. So let's pause for a second to understand the underlying drivers of order decline, which I believe is not necessarily fully understood by the market. First and most importantly, the cumulative impact of the preceding 9 months of operational issues precluded us from acquiring as many new customers as we would have liked while we were fixing those issues. Second, some underperformance in conversion in Q1 this year as we start to ramp up quality conversion, and we optimize our channel, our product and our marketing messages. Nevertheless, the tenured customer for ready-to-eat in Q1 displayed double-digit revenue growth, which is a great trajectory. But basically, because the category is in early stage, the conversions still represent an outside part of the revenue dynamics. So the takeaway on revenue is that the direction of travel on Meal Kits is improving as anticipated. On ready-to-eat, the slope of improvement is not yet visible in the revenue because the customer base entering this year was smaller than a year ago. The improvement will materialize progressively through the second half of the year as we rebuild the customer base on top of improving profitability. For contribution margin now. The contribution margin, excluding impairment and share-based compensation was 25.6%, down 1.4 percentage points year-on-year. I want to be specific about what drove that decline because the composition matters to understand how our strategy is being implemented. The first factor is the severe winter storms. EUR 25 million of nonrecurring disruptions that hit primarily in North America. I mean, I don't need to remind anyone, certainly not our U.S. listeners that the winter storm front in the U.S. was widely reported to be the heaviest winter storm in 75 years. This event affected ingredient delivery, wastage, increased credit and refund cost and disrupted last mile delivery operation. This is a weather event that has no bearing on the underlying structural margin trajectory. The second factor is deliberate. We have accelerated product investment ahead of the revenue curve, investment in higher quality protein, expanded meal choice significantly or onboarding of new ingredients have been rolled out across countries. Just to give an example, our customer in the Nordics can have 100 different recipes in their weekly menu, roughly doubling the size of the menu in 6 months. But these are recipes that now, for the most part, have a minimum of 200 grams of vegetables and fruits and better quality and better variety in their protein source. These investments increased gross cost in the near term. The returns come through higher retention, better frequency of orders and larger basket, i.e. better customer lifetime in subsequent period, especially as some of this investment compound and turn HelloFresh meals into being perceived as a higher value options. In this particular case of Nordics, I explained before, we registered a very encouraging positive total revenue growth in Q1 already. Overall, we still expect the impact of the product investment cycle in 2026 to take up approximately 150 basis points of gross margin, net of the impact of price increases. On the positive side, our efficiency program continued to deliver. Fulfillment costs declined 0.8 percentage points of the share of revenue when we exclude the impact of impairment and share-based compensation. This is a direct output of the network optimization and productivity improvements we have been embedded into the operating model. These savings are structural in nature. Marketing spend came in at 21.8% of revenue in Q1, down 30 basis points year-on-year with absolute spend reduced by EUR 62 million with only an 8% reduction in relative term in constant currency. So the marketing efficiency model we established in mid-2024 with tighter ROI thresholds, the elimination of unprofitable acquisition channels and a more disciplined and product-led approach to acquiring high-quality customers is now the baseline and it is embedded in how we operate. We do not expect to revert to prior spending levels, but we also do not expect to reduce marketing in 2026 in the same way we did in 2025. And this dynamic is particularly clear when you look at the meal kit product category, where absolute spend was down only slightly year-on-year and as roughly flat as a percentage of revenue. What is critical now from a marketing perspective is that the value of the product investment land well. This is not an overnight type of occurrence as word of mouth, public reviews, top of funnel and performance marketing, all need to work in unison to crystallize those advantages and become top of mind for new consumers. On ready-to-eat, spend was down. And it was down substantially year-on-year in both absolute and relative terms and this reflects 2 things: First, we are lapping an elevated Q1 2025 in terms of investment when we were running significant brand campaigns for Factor. Second, we have been deliberately conservative on acquisition spend while rebuilding the operational foundation. Now that the operational issues are behind and we were able to also invest in the product propositions, we will lean back into acquisitions progressively, but we will do so from a position of disciplined ROI, not volume at any cost. Remember, our primary goal for 2026 is to drive Ready-To-Eat back to sustainable profitability and establish the right foundation for long-term profitable growth. Group EBITDA was EUR 23.6 million absorbing, as I mentioned, EUR 25 million of weather-related disruption. [indiscernible] that, nonrecurring item, the underlying group adjusted EBITDA run rate was EUR 49 million. By product category, Meal Kit adjusted EBITDA was EUR 105 million, representing a margin of 9%. This reflects the weather impact, which fell disproportionately on North America and the front-loaded product investment cost. The weather adjusted Meal Kit adjusted EBITDA margin would be closer to 10.3%, still below last year 11.4%, primarily due to the deliberate product investment pull forward and the impact of volume-led operational deleverage. And that, as Dominik said, that is a trade we have made. Q1 is typically the quarter with the lowest margin. So we are confident we can finish the year with double-digit adjusted EBITDA margin for this product category. On Ready-To-Eat, the adjusted EBITDA loss narrowed to EUR 27.6 million from EUR 45.9 million in Q1 2025. I mean this is a EUR 18 million improvement or a 40% reduction of the loss. This is, in my view, the most compelling trend in the P&L right now. And the improvement has come from marketing efficiency, operational cost recovery and the resilient economics on the active customer base. And obviously, we want to maintain this momentum in the subsequent quarters. All-in costs of EUR 48 million are up modestly year-on-year, reflecting continued investment in IT and tech inflations, while personnel expenses has gone down. Free cash flow for Q1 was EUR 49 million. It reduced by EUR 18.8 million year-on-year, which is entirely explained by 2 items: Lower adjusted EBITDA, primarily weather-driven; and higher CapEx. Q1 CapEx was EUR 44 million, up from EUR 34 million a year ago. The majority of that increase reflects the Factor Europe facility investment in Germany. I mean this is a growth CapEx with a clearly identified strategic return. And going forward, we expect CapEx to normalize within our full year guidance range as the year progresses. The free cash flow this quarter was also supported by the positive inflow of operating working capital which was approximately EUR 30 million better than last year, of which 1/3 is structural and 2/3 is, phasing and therefore will be unwinds for you. On the outlook, I want to reconfirm what we had previously communicated for the group for 2026, which is constant currency revenue growth of minus 3% to minus 6%. Adjusted EBITDA in constant currency of EUR 375 million to EUR 425 million. I also acknowledge that if you take into consideration the result we are presenting today and the directional guidance I will communicate for Q2, we are looking at a second half weighted delivery, and I will explain that. Q2 still has 2 months to go, obviously. But for now, we expect the top line for the group to remain relatively stable in terms of rate of decline driven by some underperformance in Q1 conversion, which impacted -- the impact of the product investment in top line is also expected to be more tangible in the second half of the year. On the bottom line, we expect Q2 to be between EUR 30 million to EUR 40 million below Q2 2025. This is driven by primarily the fact that investment in product has been accelerated between H2 2025 and H1 2026. With the data we are seeing in terms of how product investments are resonating with existing customers and the learning from the peak period, we are expecting to hit the guidance for 2026. With that, I will open the line for questions. Thank you. Operator: [Operator Instructions] We have the first question coming from Joseph Barnet-Lamb from UBS. Joseph Barnet-Lamb: A couple of questions from me, please. You referenced pricing a few times in the release. I'm interested if you could give us some more color on what's driving the uptick in pricing? Is it just reduced discounting, pricing up as a response to inflation or some form of pivot in underlying approach to pricing? And then maybe a second question, you sort of referenced no improvement in underlying trends year-on-year in Q2. I'm interested as to why that's the case? I mean you referenced that the benefits of investment will kick in more in H2 than in H1. But regardless of investment, if you didn't have investment, comps are getting easier, would you not expect the underlying trend to be improving regardless of the timing and benefits of your investment program? I'm just interested as to why things are not getting better in Q2 versus Q1? Fabien J. Simon: [indiscernible] one and Dominik maybe can answer on pricing, or otherwise, I will. So on Q2. So I understand your question was more what is the fabric of our Q2 year-on-year? What I would say is most of what I've been describing for Q2 is something that we have been already anticipated where we gave the guide -- guidance for the full year. So it's not totally a surprise. What you see year-on-year is, I would say, 3 key components. You have the [indiscernible] as we expected, which we see impact on the P&L. And on the other side, you will see investment in products to increase the value propositions to our customers, which is hitting the P&L as we have been scaling that up from H2 to H1, which, of course, is giving a negative comparison to last year. But we still have the operational leverage, especially on meal kit. And I would say, last year, we were having a very meaningful reduction of marketing to offset that, which we don't want to do this year. And it is a choice we have been looking for supporting long-term growth. As a reminder, total company last year, we have been reducing marketing spend by more than EUR 200 million with an increase in ready-to-eat. So you can imagine the magnitude of the reductions we have had in meal kit, which is not happening this year, which is why you have an uptick of a lower EBITDA. But on a like-for-like basis, it is roughly where we expect it to be, which means that from Q3 already, we are expecting year-on-year improvement on our adjusted EBITDA trajectory. But what's important to notice as well, despite the numbers that we have just been talking about, we are expecting in Q2 on ready-to-eat most likely to be already on a positive trajectory as we continue to improve, and we will keep on a very solid double-digit adjusted EBITDA margin. Dominik Richter: Other question was on pricing. So the way I would be -- so on pricing, I wouldn't say there's a massive shift in strategy. There's 2 things that I would like to call out. Number one, yes, we have reduced some of the incentives. So that is then coming through in higher net AOVs. And secondly, we've taken sort of like some pricing action, but mostly in line with inflation, sometimes a little bit over inflation, but also giving more value to customers. So you see the net impact in our COGS line, but the gross impact of investments has actually been higher than what you in the COGS line because we've also got some pricing changes, but not across all geographies, et cetera. So that's not the hugest impact of what you see. The incentives definitely play a part here. Joseph Barnet-Lamb: And if I can have a quick follow-up, Fabien, on your point about Q2. You were breaking up a little bit, but it sounded to me like you were basically saying that it's due to sort of like a progressive reduction in marketing, leading to a compounding effect on your cohorts effectively. But firstly, is that what you were saying? And then secondarily, given the product investment, I would imagine that your lifetime value of your customers would be going up. And as such, I'm not entirely sure why marketing continues to reduce. Is it because you're seeing CACs trending up and as such, you're progressively reducing marketing further to compensate for that to get your CAC versus LTV lining up? Or is there another driver behind that, that I'm not quite understanding. Fabien J. Simon: I was maybe -- sorry, maybe I apologize if I was not clear on breaking up on my earlier comment. I was referring to still the dynamic of operational deleverage we still have on meal kit because we are still on negative order year-on-year. But last year, some of these declines were offset by a very meaningful reduction of our marketing spend. I was reminding how much we reduced overall marketing spend last year by about EUR 200 million and even more than that if we take meal kit alone, which do not have this year because we want to ensure we can support long-term conversion momentum. And on product investment, we -- it is clear that today, what we see is already a positive trajectory on tenured customers, which are ordering more than before, which is a very good news. What we don't see yet is the impact on ability to drive new conversions because we know this will take time. And that's why we believe that we probably need a still few quarters to be able to show that in the P&L and it's what we have anticipated from Q3 onward. Operator: And the next question comes from Nizla Naizer from Deutsche Bank. Fathima-Nizla Naizer: Great. I have 2 questions as well, please. First, just to clarify Dominik, did you mention in your comments that you would expect a return to overall revenue growth for meal kits in H2 based on the trends you all are seeing? Or just would that still be more for 2027 type of outlook? Any color on that return to growth trajectory based on the trends you all are seeing, whether it was for meal kit or for the group in H2 would be great? And second, one of the questions we're getting is on the health of the consumer, particularly in the U.S. with the worries around energy prices and cost of living going up. So just wanted to understand how you all are seeing an impact on that, whether you're offsetting it by other means? And if all of this is now baked into the outlook that you reconfirmed today, some color on that would be great. Dominik Richter: Sure, Nizla. So let me be clear. What I said is that in H2, you should see evidence more clearly for an eventual return to growth, also in line with Fabien's answer just now. So given sort of like the massive year-over-year reduction in marketing in Q1, some of that carries over into Q2, so where you don't see sort of like the revenue growth inflecting in Q2, but you should see more evidence for an eventual return to growth in the second half of the year. That's what I was referencing. On your question with regards to consumer health in U.S., I would say it's definitely not the sort of like best environment that we've been in. There's obviously definitely also on the part of consumers like a lot of fear of inflation coming back and other things. That's also why we want to be very strict in our ROI thresholds that we target with new customers and not overshoot, especially when a lot of the impact of our strategy is basically for consumers to order more over time. We want to make sure that as we switch back on the acquisition engine that we are cautious and do not invest aggressively into a consumer sentiment that is very much weakening when a lot of the return should come from better lifetime retention, better frequency, higher AOVs, et cetera. So I would say we don't see it massively right now, but we definitely see some of the indicators. We see a lot of the research et cetera, coming, and we want to be cautious in that environment. Operator: And the next question Comes from Andrew Ross from Barclays. Andrew Ross: A couple for me, please. So first 1 is to come back on the Q2 guidance where, to be clear, I think you're guiding to revenue declining in constant FX, similar to what it did in Q1. And to be clear, are you saying that meal kits should also decline at a similar cadence in Q2, like we did in Q1? If that is the case, can you just remind us again why has been no sequential improvement in meal kits in Q2? I hear you in terms of having had less marketing last year, maybe that's flowing through in cohorts. But historically, you've always pointed to each quarter about year-on-year trajectory meal kits gets a couple of points better. And you'd always kind of point to that continuing sequentially throughout this year. So why is meal kits not improving in Q2 is my question? And then the follow-up to that is, you said on the Q2 guidance that most of the softer outlook was anticipated when you reported for Q4. What was not anticipated? And can you give us some sense as to what's happening in April? Fabien J. Simon: Andrew, on the outlook -- so you had 2 questions was more around top line, the other one more around the bottom line. I think on the bottom line, I've answered already the question, which is we are expecting, as I've said, a double-digit adjusted EBITDA for meal kit, but lower than last year because of the phasing of product investment and the operational leverage where we don't have a similar level of marketing reductions than last year. I think it's pretty simple. On the top line, indeed, we are expecting a similar rate than what we have seen in Q1. With meal kit, and it's probably similar across the category with meal kits around same level, maybe slightly better because if you strip out the fact that we are going to stop delivering to Italy and Spain in Q2. They were still in our Q1 number, but they will not be in Q2. So if you factor on that we might have another slight improvement, which, of course, we would like because then we'll be able to say 6 consecutive quarters of improvement. But it's not always completely linear by quarter, but it's what we are expecting for Q2, while on ready-to-eat, we know it's going to take a bit more time, as Dominik described, and we think Q3, Q4 will be more defining trajectory for our ready-to-eat segment. Andrew Ross: Okay. That's helpful. And then on the second question in terms of what you had not anticipated in terms of the Q2 outlook when you reported the Q4 results? Dominik Richter: So I think I was answering to Nizla's question before. Obviously, since we've reported that, everything going on in the Middle East sort of like inflation, customer sentiment, those are things that I think at this time, we're not sort of like as clear, I think there's still obviously, a lot of distribution of outcomes over the course of the year. But those are definitely things that let us also take somewhat more conservative stance and making sure that we only invest behind strict ROI discipline as we restart the acquisition engine. Andrew Ross: So you are seeing some softening in trends on the back of Middle East conflict, or it's more in anticipation, but you could see some softening? Dominik Richter: That's not something that we see right now. But in anticipation, also in anticipation, obviously, if sort of like inflationary pressures kick in or not, I think if you have sort of like any more uncertainty, then obviously, it's the prudent approach to take a more conservative stance even though right now in the business, I don't really see it. I do see it as leading indicators from consumer research, et cetera. I don't see it in the data right now. But against that environment, we feel it's prudent to have a strict and disciplined ROI approach. Andrew Ross: Okay, cool. And one more follow-up, I really do apologize. But just on this Q2 outlook for meal kits not being better Q1. I hear you on the impact of shutting down Italy and Spain, but didn't Q1 also have a negative impact from weather? I appreciate those not necessarily the same magnitude, but I still would have expected that Q2 would improve. In this is obviously a very important number for investors who are looking for stabilization in trends in the meal kits, but it's not continuing to improve. I guess, is a big focus. I just want to make sure we're 100% clear on this. Fabien J. Simon: Yes. So let's be clear on meal kits. We are expecting further improvement as the year pass, but of course, the improvement is not always linear, and I don't want to come to too much detail, but sometimes you have a big quarter [indiscernible] where you have not fully on the same month as mostly go. There we are on track with what we were expecting. And that's for me the most important message. Operator: That concludes our Q&A session, and I will hand back to Dominik Richter for some closing words. Dominik Richter: Thank you so much for attending our call. I think to sum up, we feel that the primary objectives that we're focused on making sure that our tenured customers are happy that they're ordering more that we can basically price better with them because they get better value in the product. I think all of those metrics are pointing in the right direction. We obviously still need to work hard now to get the acquisition engine back on. We will do that in a -- with a strict ROI focus, especially within the environments that we're in and some of the uncertainty over the course of the year when it comes to macroeconomic environment, consumer sentiment, et cetera. But we do feel that those are metrics that we're focused on that are the defining metrics for a long-term, healthy business are very much trending in the right direction and we look forward to updating you in August about the progress that we will achieve in Q2. Thanks a lot.
Operator: Good afternoon and welcome to the Trevi Therapeutics First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Various remarks that management makes during this conference call about the companys future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's most recent annual report on Form 10-K, which the company filed with the SEC on March 17, 2026, as updated by our subsequent filings. In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so even if its views change. I would now like to turn the conference call over to Jennifer Good, Trevi's President and CEO. Please go ahead. Jennifer Good: Good afternoon, and thank you for joining us for our first quarter 2026 earnings call and business update. Joining me today on this call are my colleagues, Dr. James Cassella, our Chief Development Officer; Farrell Simon, our Chief Commercial Officer; and David Hastings, our Chief Financial Officer. Dave and I will make some initial comments, but are going to keep them brief as we have a robust presentation this Thursday at our Investor and Analyst Day. After our comments on the quarter, the team is happy to answer any questions you may have. 2026 is an important year of execution for the company, and the team is focused on delivering. Following our positive FDA meeting in the first quarter to align on our IPF-related chronic cough program, the team has finalized the study protocols for our Phase III trials and has been busy identifying global sites for both pivotal studies. We expect to initiate the first of those 2 studies this quarter, followed by the second study in the second half of this year. After gaining alignment with the FDA in our end of Phase II meeting, we now intend to submit a meeting request and protocol to the FDA to discuss our non-IPF interstitial lung disease or non-IPF-ILD-reated chronic cough program. We intend to propose an adaptive Phase II/III study to confirm dose and powering assumptions in the Phase II study prior to rolling into 1 pivotal Phase III study for approval. If all goes as proposed to the FDA, we expect to initiate this trial in the second half of the year. This non-IPF-ILD population will mimic the patient profile of patients in our IPF trial as it will include patients who have established lung fibrosis and chronic cough. There are a lot of synergies with our IPF studies as these patients with non-IPF-ILD are seen in the same care centers by the same pulmonologists. So as we negotiate CDAs, contracts and budgets for the initiation of our IPF-related chronic cough trials, we have this trial in the scope so that we can act quickly once we have alignment with the FDA on the protocol. Finally, for refractory chronic cough, we also expect to initiate a Phase IIb parallel arm dose-ranging trial with 3 doses and placebo this quarter as well. The protocol is finalized and has been submitted to regulatory authorities, and we are actively qualifying sites for this trial. This trial includes a sample size reestimation or SSRE, which will read out when 50% of the patients complete the trial and is in place to confirm powering assumptions and adjust the sample size if necessary. We expect the SSRE readout in the fourth quarter of this year. One final update I would like to give is on the advancement of our intellectual property portfolio. We own the worldwide rights for our drug and are acutely focused on prosecuting incremental patent coverage in addition to the patents that have already been issued. This quarter, we had our core method of treatment patent issued for IPF-related chronic cough in Europe as well. This patent had already been issued in the U.S. and provides protection through 2039. We filed additional applications this year in the U.S., which, if issued, would extend the patent coverage through 2046. We will keep you updated as incremental IP evolves. Before I close, I want to note there are 2 important meetings this month where we hope to see many of you. The first is our Investor and Analyst Day this Thursday, May 7, from 10:00 a.m. to 12:00 p.m. Eastern Time, followed by an optional lunch in New York City. At this event, we plan to lay out details for the next clinical trials, the projected time lines for each of our chronic cough programs and discuss incremental data we have developed as we continue to analyze our existing clinical trial data. We also will share commercial learnings based on recent market research and hear from KOLs on their perspective. So it should be an informative event. We will post the webcast and slides after the event for those of you that are unable to join us. Second, we will also be very active at the American Thoracic Society or ATS meeting this year, with all 6 of our submissions being accepted for either presentations or posters. We will also be holding an investor analyst event at ATS, where Jim and Dr. Philip Molyneaux, the lead investigator on our CORAL trial, will summarize and share the various data being presented at the conference. This event will be a lunch meeting being held on Monday, May 18. If you plan to attend ATS, please reach out to us as we would love to have you join. In closing, we are focused on executing against our plan of becoming the leader in chronic cough, providing therapy for these patients where there are no good options and in the process, creating meaningful value for patients and our shareholders. I will now turn it over to Dave for his remarks, and then we are happy to answer your questions. Dave? David Hastings: Thanks, Jennifer, and good afternoon, everybody. My brief remarks today will focus on our most important financial metric, which is our cash position and the runway it provides. We ended the first quarter of 2026 with approximately $172 million in cash, cash equivalents and marketable securities. This balance does not include the $162 million in net proceeds from our underwritten common stock offering completed in April 2026. The offering was well received, and we appreciated the strong support and participation we got from our current shareholders, and we are grateful that we were able to attract new investors to Trevi. Additionally, with the completion of this offering, we accomplished 2 major objectives. One, we removed any financial overhang when we reached critical high-value clinical endpoints; and two, we extended our cash runway into 2030. Included in this runway guidance is the funding of our development program in patients with IPF-related chronic cough potentially through FDA approval. And we also expect these cash resources will enable the company to fund and report top line data from the planned Phase IIb clinical trial and potentially a subsequent Phase III trial for the treatment of patients with non-IPF-ILD-reated chronic cough, and it funds the planned Phase IIb trial for the treatment of patients with RCC. Our planned spending of these resources also include pre-commercial activities but does not include any expenses related to the commercial launch of Haduvio or any other clinical trials. So with that, I believe we are now well positioned to execute our clinical trials with funding through critical value inflection points. Operator, we can now open the call for questions. Operator: [Operator Instructions] Our first question comes from the line of Roanna Ruiz of Leerink Partners. Roanna Clarissa Ruiz: A couple for me. First one, I was curious, what is your goal for the upcoming meeting with the FDA to talk about the protocol for your Phase IIb in non-IPF-ILD chronic cough? And if you could elaborate like anything you expect that might be up for discussion with the FDA versus more straightforward questions? James Cassella: Roanna, this is Jim. Thanks for the question. So basically, that meeting is designed to discuss our intention for the ILD program. We will be submitting the full Phase IIb/III protocol with that for discussion and really talk about our intentions on using that in an sNDA strategy so that we would support approval with that adaptive Phase II/III design. So there's going to be details about our patient population, how we're going to use the Phase II for our dose selection, confirmation and defining the dose for going into Phase III and then pulling up the results from the Phase II part of that study with the interim analysis to confirm our power assumptions and for the Phase III component. Roanna Clarissa Ruiz: Makes sense. And then a quick follow-up. Thinking about RCC Phase IIb potentially ramping up as well and moving forward in non-IPF-ILD. Could you talk a bit about how you plan to balance resources and prioritize things as you have many really interesting things going on and moving forward? James Cassella: Yes. It's -- we don't like a lot of sleep. We have things under control. I -- this is not my first time running multiple programs with a small team. We use our internal expertise. We have leveraged very experienced CRO, one that I've worked with from my last NDA, have a lot of years of experience with them. So it's a really tight team. Our vendors that we selected are really here to support us across all of our programs. So I think we're in a good position to be able to do these things. I have no questions that we have the capabilities and the intellectual horsepower to get these things done. And we have been working with [ small and ] small companies for almost 40 years now. We know how to manage the resources to get these things done. Jennifer Good: I would add to, Jim, Roanna, we have added probably 10 people in the last -- since getting our Phase IIb results. We added a really experienced pulmonologist. We've added several clinical people. So 10 people for us is a lot of hiring. And so we have tried to scale appropriately to address the business of these trials. Operator: Our next question comes from the line of Judah Frommer of Morgan Stanley. Judah Frommer: Two for us. I guess, just from a competitive standpoint in RCC, we have a P2X3 readout coming midyear. Just curious how you think the landscape evolves for Haduvio kind of along the spectrum of possible outcomes for that P2X3 readout. I guess, if results are unexpectedly strong, what does that do for your opportunity in RCC? What does it do maybe for enrollment in the RCC trial? Jennifer Good: Farrell, why don't you answer the competitive landscape and Jim can talk about enrollment? Farrell Simon: Yes, Judah, thank you for the question. When we look at the competitive landscape, especially Camlipixant, which we'll be reading out soon in the next couple of weeks, we're hoping that they are successful here, right? This is a large unmet need patient population with no approved therapies and definitely a category that can support multiple modalities. We have strong differentiation with our central and peripheral mechanism of action. And I think what we'll take you through on Thursday in the Investor Day is exactly how that positions us for success. I'll turn it over. I'll just say, on the flip side, if Camlipixant is unsuccessful in that space, I think we'll have to take a look at what is our competitive positioning, but we have a really strong efficacy and see what the Phase IIb results say and see what the commercial opportunity lies ahead. But it's still a large unmet need patients are waiting for us. And I'll turn it to Jim. James Cassella: Yes. On the enrollment side, we have our investigators signed up for that study. There's a lot of excitement. There's a lot of patients available to us. Irregardless of what happens in that environment, we're strongly supported by the investigators that we have for the study who really talk about a lot of patients being available and interested in being in our study. I think our different mechanism, the data that we've shown, the strength of the data that we have out there still is really the absolute driving force for the interest in being in our study. Jennifer Good: And [ R2b ] will be done by the time they ever got approval. So it might be a Phase III issue to deal with. But yes, thanks for the question. Judah Frommer: Great. And then just maybe more high-level philosophical just on the ILDs with kind of more inhaled formulation drugs kind of entering or late stage in kind of the IPF and PPF space, right? A common AE in a lot of those trials is cough. So just curious how you think the opportunity for Haduvio could be impacted by maybe more inhaled therapeutics in the PF space. Jennifer Good: We get this question a lot. I think, obviously, we're treating more of a chronic cough that's more systemic. Now whether the hypersensitization intertwined with them taking these inhaled products and you might be able to settle that down, that's something that's going to have to be learned over time. I do think these different therapies are helpful. They'll define the market. They create options, but we can lay alongside all of these. That's why Jim has been busy doing these DDI studies. But whether we can sort of help with the cough due to their delivery system, I think that will have to be discovered. Operator: Our next question comes from the line of Alexa Deemer of Cantor Fitzgerald. Alexa Deemer: Congrats on the great quarter. So for the guidance for the data readouts for the upcoming program, so this begins in the second half of 2027. And I just wanted to ask if there are any other data updates planned we can expect before that? Jennifer Good: Yes. I mean we have the SSRE, the sample size reestimation, at the halfway point of the RCC trial. We should get that in by the fourth quarter of this year. We'll have to see how enrollment unfolds, but that's what we're working towards. So that's a pretty insightful readout on the RCC trial, I think. Otherwise, our current plan is second half of '27, but I want to echo what Jim said, I've been going to a lot of these investigator meetings as well. There is a lot of interest and attention on this -- on our programs. So the team is, I think, setting us up for success here. So we'll continue to update you guys as we move through the trials, but we are definitely moving along nicely. Operator: Our next question comes from the line of Serge Belanger of Needham & Company. John Gionco: This is John on for Serge today. So just a couple from us. First, I might be jumping the gun here a little bit, but on the SSRE and RCC coming up later this year. Curious what some of the key checkpoints will be that you're looking for during this analysis. I would imagine it might look somewhat similar to the IPF one done during Phase II. And in the event of requiring additional patients, just curious how you might expect that to look? And then secondly, on the IP front, I believe you have patents issued through 2039. Curious if and where you'd look to expand that portfolio ahead of the potential commercialization of Haduvio. Jennifer Good: Yes. Jim, do you want to do the SSRE? James Cassella: So the SSRE is exactly what we did with CORAL. It will be at the halfway point, looking for conditional power of 80%. If the numbers are below that, if the conditional power at that point is below 80%, we will upsize proportionately. And like we had in the CORAL design, if there's futility, it will be recognized too. That's going to be down in that 30%, 40% range. So I think conditional power. So it's really what you expected from CORAL is going to be carried over to here, and we'll be reporting whether or not we have to stay the same or upsize. Jennifer Good: Yes. And your second question, John, about IP. So -- we are in an interesting position now. We've got the [indiscernible] base core patents issued in IPF. And now we're also -- we have a good view of what our label is going to look like. So now we are starting to prosecute the different sort of label enablement patents. So things that we're zeroing in on the label, like the final titration schedule, like how you dose adjust it with food or hepatic impairment. Jim is running a lot of different Phase I studies. Those tend to be quite rich for IP. So our goal at this point, now that we've got a nice broad sort of method of treatment patent around treating cough in these indications, now we'll start building around the label. We'll keep patent applications open. So as we complete development work and learn new things, we're able to file incremental IP around them. So our goal would be when this drug actually launches that we've got multiple patents around the original base patent. Operator: Our next question comes from the line of Ryan Deschner of Raymond James. Ryan Deschner: You have some very interesting dyspnea data coming up at ATS later this month in Orlando. How impactful do you think dyspnea is as a quality of life metric for IPF chronic cough patients? And how relevant is potential modulation of dyspnea for the RCC and non-IPF-ILD indications? And I have a follow-up. Farrell Simon: Yes, Ryan, this is Farrell. Thank you for the question. We've actually done a lot of research with physicians and with payers around this point. When you look at the top 3 most common complaints from these patients, whether it's IPF or ILD, dyspnea is in that top 3. It's cough, dyspnea and fatigue at the top 3. So it doesn't change our commercial thesis, but what it can do is definitely complement the speed of uptake of the product and also, I think, just the adoption from patients because it's going to be helping them across more than one of the experiences that they have at [ Impax ]. Jennifer Good: And payer conversations, right? Farrell Simon: And payer conversations, it will help in payer conversations. It will help justify additional value. Ryan Deschner: Got it. And then how do you plan to try to minimize placebo in the RCC clinical program? And if high potential placebo is much of a concern in the IPF chronic cough and non-IPF-ILD indications? James Cassella: Ryan, it's Jim. So I think we have solid data from our CORAL study in the IPF population, came in with under 20% placebo response. I think that was expected. I also think that, that's probably in the world of chronic cough, that's probably one of the more well-behaved populations and expect to see something like that going forward. I think there's precedent here in the RCC world that the placebo response could be a little bit more variable and a little bit more ranging. We are doing everything in this trial to really control for things that can contribute to a placebo response. I think a lot of it is having an extremely well-controlled trial. So we're doing our best there. I think we are incorporating at the advice of some of the experts in the RCC space, a placebo run-in period to try to mitigate any of the response there. The idea there is to look for stability around lower end of cough response. So we are incorporating those things. And of course, just sort of the rules of thumbs that I'm bringing in from my CNS background where placebo response is always a big concern is really about trial conduct and making sure that you don't set false expectations that you don't overpromise and things like that, that can help contribute to the overall placebo response. Operator: Our next question comes from the line of Debanjana Chatterjee of Jones. Debanjana Chatterjee: Congrats on all the progress. So looking forward to ATS, what are some of the most exciting developments we should look forward to? And I have a quick follow-up. Jennifer Good: Jim and I will both be there. We're looking at each other. Jim, you go ahead and hear the offer on a bunch of them. James Cassella: So, it's -- I think we have some exciting updates in the oral presentation that will be given by Dr. Philip Molyneaux. I mean that's going to be some new sub-analyses from our CORAL study. I think there's also going to be some interesting presentations and posters on cost-outs, our analysis of the cost-outs were both CORAL and RIVER. And it was brought up earlier, but I think our breathlessness data being presented by Don Mahler, who is really one of the key experts in this space is really going to be exciting poster to get out that initial analysis that really shows some benefit here on the breathlessness piece of things. So I think those are highlights. I think that really add some new information into the data flow for us. Jennifer Good: Appreciate the color. And just a quick follow-up. So I know, of course, FVC is not an endpoint that you are pursuing. But like given that you'll be following the IPF patients like 52 weeks at least, right, in the Phase III program, do you expect to see some trends there? And even if that's kind of like a safety endpoint? James Cassella: So we are following FVC. We have it at baseline. We have it throughout the 52-week time period. We will be able to look to see what's there. Our ends are very different than what you would expect from an IPF trial because FVC is highly variable, and I think that drives the size of those trials. But all I can promise you is that we will see what we see and report it out. Operator: Our next question comes from the line of William Wood of B. Riley Securities. William Wood: Congrats on a nice quarter. So just curious when we're thinking about the peers P2X3 readout coming up. I was curious if there's anything specific that you might be looking for in that trial regardless of whether it's positive or negative in terms of taking forward to the FDA that you think they could really improve your learnings on your own trials? Jennifer Good: I mean I'm just going to jump in, Jim, you add any color. Thanks for the question, William. I don't think so. P2X3s have had to kind of chase this path of the highest level of coughers and placebo run-ins and highly adjudicate the indication. We've shown data that our drug works broadly in IPF chronic cough and refractory chronic cough across different cough counts. So I think that we have to be a lot less fussy with who goes into the trial and how we get results. We'll obviously be interested in the placebo effect and how they've controlled that. But those trials were upsized. The bigger trial was upsized twice, and that's always tricky. I think they're also managing a much tighter response. So we'll look at it. We're interested. I agree with Farrell. I hope they see some results for patients. but they are guiding towards about a 15% to 20% placebo-adjusted change in their calls. We would expect much better performance of our drug. So we really are looking to be best-in-class and the most refractory patients for our drug. So it's more, as Farrell mentioned, just how we position the drug and where we go. But I would say nothing that really impacts our program. We'll learn more from our Phase IIb than we'll probably learn from their Phase III data. William Wood: Got it. That's helpful. And then one brief quick add-on. Just in terms of sort of setting our expectations for the -- for your KOL event coming up as well as at ATS, is there anything specific that the FDA may be looking for in terms of guiding for your non-IPF-ILD-related chronic cough trials that you may be highlighting at these really sort of bolster moving into this and/or certain subsets of populations as you look to meet with them in the second half. Jennifer Good: Well, we are having an ILD expert in the U.S., Dr. Toby Maher, who runs a big ILD center. He's going to speak there. He's got to join us by Zoom because he has clinic. But one of the topics we've asked him to cover is why in his judgment, an IPF and an ILD patient is the same or not the same as it relates to cough. So you'll hear straight from one of the experts here. Toby has been involved in our program from the beginning. He knows our drug quite well. He actually sat on our FDA call with us. So you'll get some independent insights from really one of the leading voices in the ILD space on Thursday. Operator: [Operator Instructions] our next question comes from the line of Kaveri Pohlman of Clear Street. Kaveri Pohlman: Just like a follow-up on the previous comments you made on the Phase IIb RCC trial design. I was wondering how you are thinking about enrolling a truly addressable patient population to fully derisk the program, particularly given the expectations that many of patients may be P2X3 antagonist experience in real world. And broadly, just like on a high level, there appears to be an increasing focus on the development progress in IPF and non-IPF-ILD. Obviously, alongside continued efforts in RCC. How do you think about the relative opportunity across these indications in the context of the evolving treatment landscape? And what key challenges in RCC will need to be addressed to fully realize its potential? Jennifer Good: There were a lot of questions there to disentangle. So I'll just kind of start from a strategy perspective. Trevi has always been led as an IPF sort of and then adding an ILD-led strategy, primarily because of our commercial strategy, specialty, high pricing, specialty sales force. So that was always our focus. I think as the RCC competitive landscape sort of fell away and really there wasn't much left, some of the experts came to us asking us to please try our drug in RCC, we did and got very strong data. So I think definitely a commitment to RCC, but it is sort of the third leg of the stool here. With regard to the variability in the program and P2X3 responders, anything, Jim, on that? James Cassella: I think are you asking there's going to be people who have experienced with P2X3 that may be entering our trial. I mean, I think the key there is if they meet the eligibility requirements and they've been off their P2X3 for an appropriate period of time, they still have the requirements to get into the study, they're fair game for coming in. I mean we want people with various experiences. We know this is a refractory condition, and people have tried a lot of different things. And they may or may not have succeeded on a P2X3, but if they meet our entry criteria, they'll be coming into the trial. So I don't think it really differentiates from any other type of therapy that they've tried in the past. They will meet the eligibility requirements for being off of the P2X3 for a certain amount of time. Operator: I am showing no further questions at this time. This concludes our question-and-answer session. I would now like to turn the conference back to Jennifer Good for closing remarks. Jennifer Good: We appreciate you joining us for today's call and look forward to hopefully seeing many of you later this week and this month. Thank you. Operator: This concludes today's conference call. Thank you for attending. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Veolia publication of Q1 Financial Information Conference Call with Estelle Brachlianoff, CEO, and Emmanuelle Menning, CFO. [Operator Instructions] Estelle Brachlianoff: Thank you very much, and good morning, everyone. Thank you for joining this conference call to present Veolia, because you know the line is a little bit blurred. So I thought you had finished your introduction. No anyway, I will go on. I'm accompanied by Emmanuelle Menning, our CFO, to present Veolia's Q1 key figures. I will start on Slide 4 by highlighting the key achievements of the first quarter. We delivered a strong Q1, resilient growth and solid EBITDA progression, fully in line with our annual guidance in spite of a difficult environment. Our unique multi-local model has proven its value again, combining resilience with growth potential based on a sustained demand for essential services, which has led to limited impact from the Middle East conflict and even future opportunities. I will come back to that in a minute. We are continuing our strategic transformation towards international markets and technology-driven solutions with new tuck-ins in Q1. I will also come back to innovation after our dedicated day recently held in London as it is core to our strategy, fueling growth and efficiency targets for years to come beyond the GreenUp plan. I, of course, will fully confirm our 2026 guidance as well as our GreenUp trajectory. These results demonstrate that Veolia's business model and strategy is robust, diversified and well positioned to navigate uncertainty while capturing growth opportunities in essential environmental services. Now let's look at the specific numbers for Q1 2026, and I'm on Slide 5. Revenue reached EUR 11,427 million -- so EUR 11.4 billion, up 2.1% at constant scope and ForEx and excluding energy prices. This represents resilient growth in a geopolitical wait-and-see environment and very comparable to the second half of 2025. Our EBITDA came in at EUR 1.766 billion, up 5.1% at constant scope and ForEx and up 5.8% when including tuck-in acquisition. And I recall, without any contribution of Suez synergies that we enjoyed during the previous quarters. This performance is therefore excellent, especially in a complex macro and geopolitical environment. Particularly noteworthy is our EBITDA margin expansion of 73 basis points year-on-year, reaching 15.5%. This margin improvement is fueled by our strategic choices and operational efficiency. Current EBIT reached EUR 971 million, up 7.2% at constant scope and ForEx, demonstrating strong operational leverage. Our net free cash flow improved significantly by EUR 144 million compared to Q1 2025, driven by strict management of both capital expenditure and working cap requirements. Net financial debt stood at EUR 20.8 billion, which is fully under control. And this result gives me strong confidence for the full year 2026. I'm now on Slide 6 and wanted to recall what makes Veolia truly unique, which is our positioning that combines both resilience and growth. We are an international environmental services leader operating in 44 countries across 5 continents, which gives us the firepower to lead in technology and innovation, thanks in particular to our 14 R&D centers and over 5,000 patents. We rank in the top 3 in Europe, the Americas, Asia and the Middle East, which gives us pricing power. But no capital employed in a single country exceed 10% outside the U.S. in order to derisk the group. This is a choice. Our customer base is diversified, roughly 50-50 between municipal and tertiary and industrial clients. Our multi-local delivery model is anchored in local communities. That means we have no impact from tariffs, no impact on margin rates for ForEx volatility, only translation effects and no dependency on subsidies or government contracts. Our long-term contract on an average of 11 years in duration with 70% being inflation indexed. We estimate that 85% of our business is macro immune and commodities are essentially pass-through in our contracts. By the way, and in addition to what I already said, we offer a unique way of integrating solutions combining waste, water and energy services. This combination of growth potential and resilience is rare in today's markets. Slide 7. Given the current headlines, I want to address the Middle East situation directly. I believe it is a perfect illustration of the multiple strengths of our business model. We can see this first with the sustained demand for social services. In the region, we maintain constant and direct daily connection with local authorities and clients to ensure the continuity of critical services. This includes operating desalination units, for instance, which can account for up to 95% of the water supply. These direct contacts confirm that our partners are already preparing for the post-crisis phase and require partners like Veolia to be by their side. Furthermore, our multi-local model ensures our direct financial exposure remains very limited with EUR 1.3 billion revenue in 2025 and capital employed around EUR 300 million in the region, which is less than 1% of the group's total. Consequently, the local impact on Veolia has been largely neutral, only limited operational disruption like a little bit lower hazardous waste volumes and a slowdown or I going to say more a delay in water technology projects being signed. Regarding consequences on other geographies, we are well protected against rising costs. Our long-term index contract covers 70% of our contracts and covers all our cost base with some lag effect. For the remaining 30%, we have proactively already put in place specific fuel surcharge when needed, particularly in the waste business, and we've secured key supply. I'm on Slide 8. In a way, this crisis in the Middle East highlights the power of our unique Veolia offer and explains why it may even lead to a few opportunities. Our proprietary solutions help secure access to water supply, which is as critical as oil, if not more, as we see now. Our solution give access to an untapped reservoir of local energy at fixed price instead of import. You can imagine how important it is and lots of people realize it. In addition to that, our solution can contribute to securing supply chain, thanks to the circular economy. And those solutions can as well depollute industrial sites and protect human health. You will understand, I'm sure, why I'm very confident about our future performance as we have built with Veolia a unique positioning as the environmental security powerhouse, addressing critical needs for our clients. Slide 9. Our international footprint has largely contributed to our good results in Q1. I would like to highlight the continued standout performance in our region outside of Europe, which grew by a strong 3.1% and even 5.3% at constant ForEx. I will insist on the performance of the U.S.A., which grew by 7.5% at constant ForEx in spite of extreme cold weather conditions, which impacted hazardous waste volumes in January and February. The demand for our services is very strong. We also passed the main steps in the Clean Earth acquisition process, which secures the closing at midyear as announced. The Water Technologies segment performed quite well, up 4.3%, excluding the project business line, which was penalized or even more like delayed in signing by the crisis in the Middle East and continued to deliver a remarkable EBITDA growth in this segment. In Europe, we grew by a solid 3%, anchored by strong performance of Central and Eastern Europe, the U.K. as well as Spain, all enjoying strong commercial momentum and positive weather. Finally, France and Hazardous Waste Europe was resilient in spite of adverse weather conditions, which has penalized a bit waste activities. I expect Hazardous Waste Europe to grow faster in the coming quarters without the Q1 disturbances. Looking out at our top performance by business line on Slide 10, we see resilient growth and solid EBITDA progression across all our activities. Our stronghold activities, municipal water, solid waste and district heating generated EUR 8.4 billion in revenue, up 2.5% at constant scope and ForEx and excluding energy price. Our booster activities, Water Tech, Hazardous waste and Bioenergy, generated a little bit more than EUR 3 billion in revenue, up 2.2%, including tuck-ins. You have to remember again that Q1 was quite specific with negative impact from the Iran war on the delay of signing specific projects with Water Tech, added to extreme weather events and timing effect in Hazardous Waste. The demand for our booster activities keeps being very strong. If we were to exclude Water Technology project delay, our boosters would have grown by 4.6%. The combination of Strongholds and Boosters now represents already 30% of our revenue, demonstrating our strategic evolution towards high-growth, higher-margin activities while maintaining the stability of our core business. Emmanuelle will give you all the details by activity in a moment. I'm now on Slide 11. Veolia continues its transformation as set up in GreenUp towards more international, more technology-driven activities, which is our Boosters. We are very active, sorry, in strategic portfolio management with EUR 8.5 billion of assets, which will have rotated over 4 years. You remember that 2025 was a pivotal year as we successfully achieved the Suez integration, but we've also crystallized strategic moves with 2 major acquisitions signed or closed. First, EUR 1.5 billion invested in Water Tech to enhance our combined technology portfolio capabilities. We have already extracted 1/3 of the planned EUR 90 million synergies, which is EUR 30 million, including EUR 10 million in Q1. And of course, $3 billion with the acquisition of Clean Earth in the U.S. We have obtained both the antitrust clearance and our shareholders' approval on Monday, which means we are fully on track to close the deal midyear. Both acquisitions already create value, but also will enhance the group's profile going forward. Lastly, we announced EUR 2 billion of nonstrategic asset divestitures in the 2 years following the Clean Earth closing. Process has started with clear list and various scenarios. We have already achieved several small and medium divestments of mature assets or not in the top 3, which you know are some of our criteria, and we will continue pruning our portfolio. On Slide 12, I would also like to say a few words about our exciting growth ambition related to innovative offers through 2030, which we have explained in a dedicated session last April. I will start with our new offer dedicated to AI industries, covering data centers and chips manufacturing. Those industries are in high demand to secure steady water supply for cooling systems, continuity of supply of untapped water and they use a large amount of high-quality solvent and acids. Data centers are starting to see resistance from local communities to be granted permits given the intensity and resource consumption. Our DATA CENTER Resource 360 new offers help secure local acceptance and license to operate with recycled water technologies and heat recovery as seen in our recent contract with AWS in Mississippi. We already grew very quickly in those AI industries from $150 million in 2019 to $560 million in 2025, and we're now targeting approximately $1 billion by 2030. We have a unique set of assets and technologies to support this growth. Patented technologies such as electrodeionization for ultra-pure water, ZeeWeed membranes for water recovery, without mentioning a new Taiwan-based electronic-grade sulfuric acid recovery, which is really promising, but also a worldwide installed base of hazardous waste treatment facilities. In addition, we'll soon have a presence in all 50 states of the U.S. with the Clean Earth acquisition. I'll remind you that the offer we launched in 2024 on PFAS is already very successful, and I'm very confident we'll reach our ambitious EUR 1 billion revenue by 2030. We had 0 revenue in 2022 to EUR 259 million in 2025, which is up 25%. And our recent acquisition of soil remediation specialists in Australia at a very reasonable multiple will complement nicely our comprehensive solution portfolio and offer duplication opportunities. This innovation-driven growth are testimony of the group transformation towards more value-added offer and services as an environmental security powerhouse. On Slide 13, we will also derive from digital and AI, innovative tools and an increasing contribution to our efficiency plan. In 2025, 23% of our operational efficiencies were already derived from AI and digital, and we aim at 50% by 2030. This is by scaling up AI-based tool we've already tested to maximize plant productivity, to reduce energy or chemical consumption or to help detect leaks. Our Talk to My Plants tool dedicated to plants maintenance operator is particularly very promising. It is a very exciting journey, and we are only on the very beginning here. Slide 14. I just want finally to fully confirm our 2026 guidance, which is reminded fully on this slide, in particular, with EBITDA to grow 5% to 6% organically and current net income by 8% at constant ForEx and before PPA. And this is, of course, excluding Clean Earth. Additionally, assuming a mid-2026 closing, the Clean Earth acquisition will be accretive to current net income from 2027 before PPA, confirm as well our GreenUp trajectory. This reflects our confidence in our business model and strategic execution. Emmanuelle, the floor is yours to elaborate on Q1 results. Emmanuelle Menning: Thank you, Estelle, and good morning, everyone. Revenue in Q1 amounted to EUR 11.4 billion, up 2.1%, excluding energy prices. Organic growth of EBITDA was 5.1%, in line with our annual guidance, which is an excellent performance as we no longer benefit from the synergies. And our EBITDA margin continued to increase by 73 bps to 15.5%. We continue to enjoy a strong operating leverage, leading to a 7.2% progression of current EBIT. Net free cash flow increased by EUR 144 million, thanks to tight CapEx control. And net debt landed at EUR 20.8 billion, including the seasonal reversal of working cap. ForEx impact on EBITDA was EUR 33 million as forecasted due to a lower U.S. dollar, British pound and LatAm currencies. ForEx is moving, notably due to the crisis in the Middle East and the final impact on 2026 EBITDA is hard to predict. It will be lower than initially expected with the current exchange rate. We will see, but remember that as a multiple -- multi-local group with very limited international trade, ForEx does not impact our businesses or margin rate and ForEx has a very limited impact at net income level. Moving to Slide 17, you can see the revenue and EBITDA evolution by geographies. As Estelle mentioned earlier, growth outside Europe was quite satisfactory at plus 3.1% and even plus 5.3%, including tuck-in. Most regions registered mid-single-digit growth. U.S.A. grew by plus 5.2% and 7.5%, including tuck-in in spite of adverse weather conditions, which impacted hazardous waste volumes in January and February and hazardous waste in the U.S. grew by 5.7%. Pacific grew by plus 8.1%, including the successful acquisition in Australia, which strengthens our leadership in hazardous waste and PFAS treatment. Africa/Middle East revenue increased by plus 4.4%. And by the way, Middle East succeeds to be up plus 3% in a complex geopolitical context. Water Technologies was quite resilient, excluding projects and progressed by 4.3% like last year. And as I remember, 70% of our activities are recurring corresponding to products, services and chemicals, while 30% is more volatile by nature, what we call projects. In Q1, projects were impacted by several booking and milestone delays due to the Middle East crisis, and we forecast this to continue in Q2. Above all, Water Technologies continued to deliver a strong EBITDA growth, fueled by our business refocusing and efficiencies and synergies. Europe grew by 3%, excluding energy prices, fueled by favorable weather in urban heating and by good water activities. And finally, France and Hazardous Waste Europe were resilient. Now let's take a look at our performance by business. I will start with water. It represents 40% of our revenues and 50% of the group EBITDA. Water revenue was up by 2%. Water operation benefited from good indexation in Europe and in the U.S., except in France, due to the lower electricity prices. Volumes were on a very good trend, up 1.1% in France, 2.4% in Central Europe, 2.9% in U.S. regulated. And as I just explained, the underlying growth of Water Technologies, excluding the timing of project delivery remained quite strong at 4.3%. Moving to waste, representing 35% of our revenues. Waste activities succeeded to stay flat despite an helpful macro and are very comparable to previous quarters. Indeed, excluding external factors as weather recycled or electricity prices, waste revenue was up plus 1% at constant scope and ForEx. Starting with solid waste, we did not experience in Q1 any significant impact of the higher diesel costs. In terms of diesel price increase, I remind you that it's pass-through. The group diesel purchases for the waste activity amounted last year to EUR 218 million, half for multiple contracts with automatic pass-through in indexation formula with 3 to 6 months lag and half for C&I clients with immediate fuel surcharge. In terms of volumes and commercial developments, performance was mixed in Europe, slight volume decrease impacted by bad weather, icy road and frozen waste. Good incinerators availability rates and activity continued to progress in the rest of the world. Hazardous waste grew by plus 1.7% and plus 6%, including tuck-in. Europe was slow due to the combination of adverse weather and maintenance outage timing with rebound planned in Q2. Growth remained strong in the U.S., plus 5.4% with average price increase of 3.6% and volume up despite unfavorable weather conditions. For Q2, we expect further price increases alongside fuel surcharge and better volumes. The performance of last year's tuck-in in the U.S., Brazil and Japan was very good. Finally, moving on to energy, I'm on Slide 20. Regarding the evolution of gas and fuel prices, I remind you that our energy business model is very strong as we demonstrated in 2022 and 2023, it is regulated and our margins are protected. We can also marginally take advantage of higher electricity prices and volatility of our midterm. For 2026, we are largely hedged in terms of gas, CO2 cost and electricity revenue. Energy prices were down as expected, but to a much lesser extent than last year. Excluding the energy price impact, Q1 growth was quite good, plus 4.1%, thanks to good volumes, helped by a colder winter and with a resilient activity for the booster. The revenue bridge on Slide 21 explains the driver of our resilient growth in Q1. ForEx impact amounted to minus 2.3% due to U.S. dollar, GBP, Argentinian peso and yen. Scope was positive by plus EUR 69 million, including hazardous waste tuck-in. We expect the consolidation of Clean Earth in the second semester 2026, and we are pleased to have now obtained both the antitrust clearance and on very shareholder approval. The impact of energy prices was as expected, more than divided by 2 compared to Q1 last year. Recyclate prices were almost neutral and the weather effect amounted to plus EUR 66 million due to a colder winter in Europe, partially offset by adverse weather impact for waste activities. The contribution of commerce volumes and pricing was plus 1.6%. Pricing in water and waste remains sustained, contributing to plus 1.4%. Let me walk you through the EBITDA bridge, which illustrates our strong operational performance. We experienced ForEx translation impact of EUR 33 million. It's important to remember that ForEx has no impact on our margin rate. It's purely translation effect since our revenues and costs are in the same currency in each of our countries. Scope effect from tuck-ins contribute positively plus 1% EBITDA increase, showing good revenue to EBITDA conversion and fueling future EBITDA growth. Energy and recycled material prices had an impact of minus EUR 16 million. Weather effect contributed positively to 1% EBITDA growth. And the most impressive component is our growth and performance contribution of 5.1%. This breaks down into EUR 62 million from net efficiency gain with a very good retention rate, thanks to action plan implemented across Europe. And we have also EUR 10 million from water technology synergies. The volumes and commerce contribution was limited and in line with revenue. This represents organic growth of 5.1% at constant scope and ForEx, which is quite good. As mentioned, we do not benefit anymore from the 1.5% contribution of the Suez synergies. A few highlights on the efficiency gain. I am on Slide 23. We delivered EUR 96 million of efficiency gain in Q1, in line with our annual target. Two important characteristics you need to consider regarding efficiency. First, efficiency was indeed a permanent lever for value creation. It's embedded into our operation. Efficiency gain at Veolia are not discretionary cost-cutting program, but they come from a very diversified series of initiatives in our thousands of plants. In case of headwinds, we can and we know how to boost efficiency program as we demonstrated in the past by specific plan like the one we have conducted in China, in Spain and in France. Second, digital and AI gain, which already accounted for 23% of our recurring operational efficiency in 2025 will continue to increase, and we have set an objective of 50% of digital gain in 2030. Let's now analyze our performance below EBITDA. I am on Slide 24. Going down to current EBIT, this slide illustrates perfectly the operational leverage of our business model, 2.1% revenue growth, 5.1% EBITDA growth and 7.2% EBIT increase. Current EBIT grew to EUR 971 million at a faster pace than EBITDA. And let me highlight amortization and OFA, which were slightly up at constant scope and ForEx and industrial capital gain provision were stable, showing a continued strong quality of results. Now free cash flow generation, which is key and net financial debt, I am on Slide 25. I am satisfied with the progression of the net free cash flow of EUR 144 million, which we achieved despite the seasonality of working capital. And thanks to a tight CapEx control, you see a strong discipline on industrial investment at minus EUR 860 million compared to more than EUR 1 billion last year. Limited increase of taxes and financial charges linked to Water Technology acquisition. Working cap reversal was close to last year. Net financial debt is, therefore, well under control, reaching EUR 20.8 billion, and this increase of EUR 1.1 billion is due to the seasonality of working cap and financial investment for minus EUR 172 million. Our net debt is 85% fixed. Our net group liquidity is very solid, EUR 6.7 billion, and our balance sheet, therefore, remains very strong. Both rating agency confirmed strong investment-grade rating beginning of 2026. Before concluding this slide reminds you of our 2026 guidance, which Estelle fully confirmed earlier, continued solid organic revenue growth, excluding energy prices, our EBITDA organic growth between 5% and 6% current net income of minimum 8% at constant ForEx, excluding Clean Earth, which we will close mid-'26, leverage ratio equal or slightly above 3x with Clean Earth acquisition. And as usual, our dividend will grow in line with our current year. As you see, we are very confident for 2026. We delivered a strong Q1, resilient growth and solid EBITDA increase. fully in line with our annual guidance. Thank you for your attention. Estelle Brachlianoff: Thank you, Emmanuelle. And now we are ready, Emmanuelle and myself to take the questions you may have. Operator: [Operator Instructions] First question comes from Ajay Patel from Goldman Sachs. Ajay Patel: I have 2 areas I wanted to dig a little deeper. Firstly, on cost cutting and the retention rate over this quarter was quite a bit higher than you normally guide. I just wondered how should we think about that in the context of the full year? And then I guess maybe alongside that, you talk of AI increasingly becoming a proportion of the overall cost-cutting efforts increasing in size. I just wondered, is the retention rate on the cost savings that you make on the AI side higher than that of maybe the non-AI side? Just to understand if there's any dynamic there that we should understand? And then the last one is just referring to the bridge on Slide 22. If you could help us with the volumes and commerce element being a limited contribution. Just what headwinds maybe break out a little bit more of the headwinds that you experienced over Q1? And how should we think about that variable over the course of the year? Estelle Brachlianoff: Thank you for your question. So first on cost cutting, you're right. It's EUR 62 million out of EUR 96 million basically that we've retained, so which is higher than the usual, don't translate it into times 4 for the entirety of the year. Our good target is usually between 30% and 50%. But it's fair to say in the recent quarters, we've been more around the 40% to 50% than the lower part of the range. That's a good proxy for me. With regard to your second half part of the first question on AI. You're not wrong. As in our AI cost cutting is mainly on operational things, like that's why I mentioned the example of AI helps us to reduce energy consumption to help us increase the plant efficiency and so on and so forth. And this type of gains are typically more retained than what would be, say, SG&A type of a cost cutting. So you're right. The more we can retain of the cost-cutting gain or efficiency plan, the happier we will be. There always will be some leakage, let's call it that way, because it's part of our business model with our customer. When we renew contracts, we give some productivity back to the customer, and then we find other ways of gaining productivities in the years following the renewal of the contract. That's why there will always be some type of leakage. And of course, we try to retain the maximum possible. In terms of the second part of your question, I would not highlight anything which would look like -- I mean, there is no slowdown in revenue. When you look at H2 2025 and Q1 2026, we are exactly in the similar type of range of 2-point-something revenue, excluding energy price. In the pluses and minus of this quarter in terms of commerce, so commerce is very good. No question about that, retention of our contract or renewal of our contract is very good. On the plus side, we had a little bit of weather effect in Eastern Europe. On the minus side, we had a little bit of weather effects on the negative side in the U.S. and in Europe on haz and waste. You may have noted that there was 2 times a week or 1.5 weeks of the Eastern parts of the U.S. being totally blocked by minus 15, minus 20 degrees Celsius type of temperature with everything being closed. Of course, that means less volume in the end. The trucks are not even allowed to be driven into any type of road. So that's why pluses and minuses, but nothing which looks like a slowdown. And April is good. The demand of our services is sustained. And again, the same type of pace in revenue as we had enjoyed in the second part of last year. Ajay Patel: May I add one more question? It was just the other thing just on the opening comments, I think then we were talking about that conflict at the moment. Just wondered if -- what -- how does the disruption work in your business model in terms of if a certain component doesn't turn up on time or there are some restrictions on how you operate in terms of some form of rationing. I know that we're not at this level yet, but if these types of impacts happen, are they passed through? Or is there some exposure on that side? I didn't quite necessarily get that from when I was listening to the presentation. Estelle Brachlianoff: So when it comes to the Middle East activity, we have not seen disruption in supply chain. The thing we've seen is like a few days on and off in the refineries, which were nearby our sites. Therefore, a little bit less activity from one day to the next. But we don't depend on very sensitive component with our chemicals, which only go through -- a lot of it goes through the Strait of Hormuz, if it's your question. We are very decentralized in our supply chain. So we have -- we have, of course, some centralized procurement, but we usually are more on a regional basis anyway. So honestly, we have not seen any disruption, and I don't anticipate any disruption in the supply of everything Veolia needs to operate. We cannot hear you. The line is super blurred. We cannot hear you. Emmanuelle Menning: I think, Arthur, please go ahead. Arthur Sitbon: Yes. Can you hear me well? Emmanuelle Menning: Yes, perfectly, please. Estelle Brachlianoff: Apparently, the only line which doesn't work well is that of the operator, which is not exactly helpful, but we'll try to go ahead anyway. Please go ahead. Arthur Sitbon: So the first one would be just on the headwind to waste organic growth that you mentioned related to bad weather in Europe in January, February and plant outage. I was wondering if you could quantify that negative effect on EBITDA in Q1. And I was also wondering, basically, more generally speaking, how should we expect waste volumes to look later in the year, in particular, you're mentioning a bit of a slow start in January, February. How was it looking in March and April? I suspect you already have some indications of trends for those 2 months. And the second question is just on what's happening in the world at the moment, which is higher inflation due to the geopolitical uncertainty. I was wondering about the sequence of events for Veolia. Is it possible that basically you have a slightly weaker end to 2026 because of the slower volumes and higher costs and then a recovery or a more positive effect in 2027 with your inflation clauses that you flagged that have a little bit of a lag? Estelle Brachlianoff: Thank you. So I guess I would like to highlight, by the way, some opportunities, and I will start with that. What we discover, we discover or the general public realizes when it comes to the one in the Middle East is the dependent on imports is never a good idea. We rely on supply of water, otherwise, nothing happens. And everybody is super concerned by their health and that of their kids. That's exactly what Veolia offers solutions to. So in a way, in my opinion, the crisis reveals anything but the strength of the business model of Veolia and its positioning. To answer specifically your question, there is no slow start to the year in terms of volume when it comes to say economy underlying this, even in waste in the first part of the year. We haven't seen that. The only negative, again, was weather related. There's a number of days where we cannot even circulate it. Our customer could not. So they haven't generated waste, and that was it. But don't take it as a start [Audio Gap] as a slowdown in or a slow start to the year in terms of underlying trend because I think that would be a mistake. So the underlying trend is exactly the same as the end of last year. That's exactly what we've seen to answer your second part of your question in March and April, which were exactly good. When you exclude the weather effect elements, which were a few days here and there and even 2 weeks in the U.S. that's the only component. But again, the demand is sustained. So the volumes are there, and they are coming back once you can transport them, if I may. In terms of the impacts beyond the Middle East itself of the Middle East crisis on costs, if I understand your second question. As we've demonstrated through the war in Ukraine in a way, we have the ability to pass on the cost to protect our margin. We've demonstrated it. There is a little bit of lag effect, but we have a little bit of positive as well in terms of commodities and things like that. So that's why I can confirm fully our guidance for the year. So we will maintain our 5% to 6% EBITDA margin growth for the year. Operator: So I think the next question is coming from Philippe Ourpatian from ODDO. So let's move to Olly from Deutsche Bank. Olly Jeffery: Two questions for me, please. One is just on the free cash flow. There's a bit of improvement versus Q1 last year. Does this put you on track, do you think, to see a similar improvement for the full year for net free cash flow versus 2025, so we can see a bit more meaningful growth there? And then just coming back to the inflation point, I mean, presumably with inflation expectations where they are currently, and we could see those continue to increase perhaps. If there's any benefit from that with your tariff indexation, presumably the bulk of that would start to come through in 2027. If you could just confirm the mechanics of that again, that would be very helpful? Estelle Brachlianoff: Emmanuelle, on free cash flow. Emmanuelle Menning: Yes. Olly, so as mentioned, we are very satisfied with the progression of free cash flow beginning of the year. As you have seen, it has increased by plus EUR 144 million. And part of it come from the very strong discipline we had on CapEx. I mentioned it. We spent EUR 860 million when it was more than EUR 1 billion last year. You know that we are very committed to have a strong free cash flow generation to be able to cover our dividend. We are fully committed, and we have a lot of action regarding that, working on the time to invoice, putting control our CapEx, improving the collection. So our target remains for the year to have a strong free cash flow to be able to cover our dividend. And as you may see, we have a very strong liquidity, EUR 6.7 billion and a very strong balance sheet for 2026. Estelle Brachlianoff: So our aim is always to grow free cash flow on a yearly basis. We don't give guidance because there is seasonality in this in Veolia. But of course, we always try to do our best to improve the free cash flow generation of the group, which allow us then to decide where to invest. I remind you that it's free cash flow after growth investments, by the way, which is in our hands. In terms of inflation, maybe I was not clear enough. So Emmanuelle, do you want to get to have a go at that and fuel surcharge maybe? Emmanuelle Menning: Yes. So your question, Olly, was on the impact of inflation and fuel surcharge. So as mentioned by Estelle, you know that we -- our model is well protected against cost increase. We have 70% of our portfolio, which benefits from indexation formula, and we have 30%, which -- where we have strong pricing power and where we can do price surcharge. Coming to the specific element on inflation, we showed in the past that our model was very strong and able to pass the cost to our clients in 2022, 2023. And what we have done since the beginning of the year is to be very agile and very reactive on the 30%, specifically on the fuel surcharge. We start beginning of March. It has been put in place. We can have a small time lag, but it's very efficient. We demonstrate -- you may remember that in 2022, '23, we are able sometimes to do 3 to 4x increase when it was necessary. So it's fully put in place. The element to have in mind is that for our municipal clients, which is 50%, we may have a time lag of 3 to 6 months. But we have put in place all our action plan, as mentioned before, to have really strong discipline on cost to not accept automatically the increase of our supplier to have restricted move or the placement if it's not necessary and of course, to increase our strategic inventory when necessited. Estelle Brachlianoff: So for the 70%, which is indexed, if there is a little bit of lag effect on the revenue, there could be a lag effect on our supplier in a way in our cost base in other terms to protect our margin. And for the fuel surcharge, it's already in place. And if you have to do 2, 3 this year or 1 will be enough, we will see, but it's already in place now as we speak. I would like to highlight again, if I may. I said it in my speech first, the type of discussion we have with customers is not only about cost protection. Actually, it's quite the opposite. And I just wanted to share this with you. It's incoming calls on can you help us with energy efficiency? Of course, energy is higher in price. Therefore, can you help me with that? It's -- can you help me with securing local sources of energy? It looks like you do that, Veolia. Can you help me with that because it helps. Same with circular economy. When you recycle, it avoids importing from far away and be dependent, therefore, from the ups and downs of commodity prices. So all that means we have a lot of incoming calls of customer where for them, the war means I want more of Veolia type of services, starting in the Middle East, by the way, where they already are preparing for the postwar and discussing about how can we be even more resilient going forward and in terms of the infrastructure reconstruction or depollution of sites. Operator: The next question comes from the line of Philippe ODDO. Philippe Ourpatian: Not Philippe ODDO, I will be more rich than I am. But Philippe Ourpatian from ODDO. Just one question. Most of my questions have been already answered. Concerning the divestments, you mentioned in your slide that 3 operations means the top 3 program have been already signed or being closed in the coming months, I would say. Could you just give us, as you have also mentioned that there is your plan and several scenarios are prepared, could you have the idea -- could we have the idea of what's the amount of divestments already under bracket secured versus the EUR 2 billion targeted? Without mentioning any specific operation, but just to give us where you are exactly '26 and '27 because I do suppose that it's already started and you have some discussion and some assets which have been already determined to be divested... Estelle Brachlianoff: Thanks for your question. A few things. We said we will divest EUR 2 billion in the 2 years following the closing. So we're talking about from now until mid-'28. So we have plenty of time and given our balance sheet is compatible with the time scale I just gave. In terms of what we've already done of the criteria, as said, non-top 3, so things which we are #5, #6 on the market, and we don't see any possibility to be up very, very quickly. Mature as in we don't see how we can grow the EBITDA or the EBIT even with our best efforts going forward or nonstrategic like we've done with SADE, which was an activity in construction, we didn't want to go on with. So that's the typical criteria. That's typically in the criteria of what we've already like signed and closed, secured. We're talking about smaller and medium objects, which are listed there, plastic in Korea, industrial cleaning in Belgium. So altogether, it will be a bit in excess of EUR 100 million, EUR 200 million, this type of order of magnitude, if I remember well. In terms of the larger objects, I will consider them secured when they are signed and when they will be signed, they will be announced. And you will have to wait until that date to have them secured. But I'm very confident I'm very confident because we've done a few market testing. And we have alternatives in case for whatever reason, one doesn't go ahead in the type of price range we were expecting. So we have plan A and plan B, if you want. So we will secure this EUR 2 billion in good condition in the 2 years following the closing. Philippe Ourpatian: May I have an additional comment because it's very interesting what you said concerning your capacity to choose some assets. In order to do EUR 2 billion, what's going to be your, let's say, global potential of divestment? Are we discussing about EUR 3 billion, EUR 4 billion, EUR 5 billion means the bucket of -- or the basket of potential disposal regarding the size of your group and the numbers of subsidiary you have around the world? Just to have an idea about where we are exactly when you mentioned 2, you can pace your calculation on how much more than that? Estelle Brachlianoff: We have enough headroom to be able to be very confident. That's the only thing I can say. But those businesses, it always is a choice. The businesses which are plan B are businesses we like. They are on the money. They are a little bit less interesting than others. So we have no problem in selling them, but they still are good businesses. So we don't have any problematic one in the list. Therefore, like I guess, like we have sufficient security on the achievement of this program, I can tell you. Emmanuelle Menning: Just one element I wanted to share with you. So we told you already a very clear plan. We know what we want to do. We have different scenarios, allowing us to be agile. There is no pressure on timing because our balance sheet is very strong. We don't need to do the divestments to be able to finance Clean Earth. That's not the issue. And you may have seen that in terms of transactions delivery and execution, we have been showing an amazing track record. So not under pressure of time. We also shared with you before that we will divest part of the EUR 2 billion will be a business which will be divested. The other one will be and 1/4 and 1/3 will be linked to the portfolio cleaning that we have also launched before and that we will continue. So we don't need to do everything everywhere. We have a very clear picture on where we want to do, on where we want to go and a very good track record in terms of execution. Estelle Brachlianoff: Just to illustrate what we said by portfolio pruning, we said plastic in Korea. It doesn't mean that we don't like plastic or we don't like Korea, but it looks like plastic in Korea, we were not in the top 3 and not being able to get in the top 3. That's why we sold it. In terms of our industrial cleaning activities in Belgium, it was more of the nonstrategic criteria here. Industrial cleaning is not a priority for the group. And therefore, have no ability to be duplicated anytime soon in nearby geography. So we decided to sell it each time with value-added sales. So it was a good sale for us. So that's -- I think it gives you an idea of what Emmanuelle said by the smaller ones, which are more portfolio pruning type of activities of disposal. Operator: So I think next question is coming from [indiscernible]. Unknown Analyst: Yes. May I ask what is the impact of the delays in terms of projects in the Middle East in terms of EBITDA impact or the order of magnitude? Estelle Brachlianoff: So basically, Water Tech EBITDA has progressed very, very, very well in the first quarter, like it had been in the quarters before. So the answer -- the short answer to your question is none. As we always said, projects are lower margin type of activities within Water Tech. It's only 25% of the business. We like it because it fuels potential buy of membranes and stuff like that in the end, positive margin still, but lower than the average. So the answer is none, roughly. Very nice improving of the EBITDA in the first quarter in Water Tech. So again, Water Tech, excluding project was plus 4.2% revenue increase, which is very nice. EBITDA increased by even more than that. Thanks to, again, the usual cost efficiency and so on and so forth, added to the EUR 10 million synergies we've delivered in the first quarter in addition to the EUR 20 million we already had delivered for the second part of last year. So no impact is the answer. And I'm very confident again that it's only delays in signing, and we still have discussion with the customers about not only signing whenever they will be able because the world will be like a bit more under control. And we even have specific orders like of mobile units and stuff like that in emergency type of situation in the Middle East in Water Tech. So it has created even some opportunities. Operator: Next question is Alex from Bank of America. Alexandre Roncier: Two follow-ups and one question on guidance, please. The first follow-up on the weather headwinds for waste. I don't think that was a specific item that was disclosed in the revenue bridge before and maybe because the impact was just always much smaller than this quarter. But is that something we need to consider on a more recurring basis given climate change around the world? And similarly, on phasing, just to expands on some of the earlier question, should we not see good volumes in Q2 to catch up on the missed rounds you've had in Q1, which would then normalize in Q3? Second follow-up on disposals. Why not perhaps rotate capital more rapidly? I think you mentioned that you had a lot of headroom beyond the EUR 2 billion of asset disposal target. But if these assets are not # 3 -- well, I'm sorry, top 3 mature and nonstrategic, why not also increase the pace of disposals and perhaps get money back to shareholders or even create plenty of headroom for yourself to do some more strategic acquisition? Question and last question on guidance. Given the operating leverage of the business, revenue up 2%, EBITDA plus 5%, EBIT plus 7% is the plus 8% net income guidance not too conservative for the year? Or are there any below-the-line items we need to be mindful of? Estelle Brachlianoff: Okay. So weather on the bridge, Emmanuelle? Emmanuelle Menning: Yes. Alex, so regarding the bridge on the column weather, we have always -- we have the same methodology than before. It's just that in the past, we are not facing this type of weather conditions. So you had in the past, mainly in the weather column, the energy impact almost all time. And you had one or twice some effect from waste when it was the case, but it was more an exception than the rules. You were mentioning the impact of volume. So you're right, we benefit in Q1 in terms of -- of weather from good impact on energy. So we'll not have that in Q2. We will not have this positive effect, but we will benefit from a form of rebound as we will not have, as we had in Q1, the weather impacting -- having impact on icy road, icy waste, no project on some remediation. So we'll have a formal rebound in Q2. That's for sure. And we are starting to see that in April, which is positive. And as we are speaking a bit on the month of April, what we could see is that we have plus and minus. On the waste, as mentioned, there will be -- so yes, we had more outage in Q1, and we'll not have that in Q2, Q3, Q4. We'll not have the negative impact of the [indiscernible]. We'll have a slight -- we may have a slight fuel surcharge or delay, but between 3 and the 6 months like we have mentioned. On the energy side, we had the positive effect of weather that we had in Q1 are not going to be in Q2. And we may have a small impact on energy prices, as I mentioned, linked to fuel surcharge. But we have opportunities for the non-top which has been hedged that we are -- we have full visibility of the energy margin. On the waste business, we have part of the electricity, we are hedging 85%. So for the 15%, we can have a positive impact. Also positive impact, as mentioned before by Estelle potentially on the recyclate, notably on the plastic side. It's marginal because you know that we have put in place back-to-back to contract. And on water, we spoke already about the Water Technology timing effect on project top line. And we see the good trend we have seen on water, especially in terms of pricing and in terms of volumes, we don't see any change of trend in April. Estelle Brachlianoff: So altogether, April will be -- has been good. And we haven't seen any change in underlying trends. You have the ups and downs of weather, but apart from that, nothing specific. And no, there is no -- it was really exceptional in waste. It never happens. It happens every -- I don't know, like 5 to 10 years, this type of circumstances, it was really, really exceptional. So I don't anticipate that it will come again very much. In terms of the capital allocation, yes, we have headroom. That's a question you always ask, what about we sell this and that and then we give money back to the shareholders. I'm really keen on, one, we still create value with those assets by increasing, thanks to our operational efficiency, thanks to everything we are doing. We are creating value. Shall I remind that we've increased the dividend quite a lot in the last few years and the net result by basically 12% year-on-year in the last 2 years and double the net result in the last 5 years. So this creates value. So we already are giving to the shareholders like some element via dividends. We have topped up that starting last year by first in the history of the group, which was the share buyback to avoid the dilution program. So I guess I'm very focusing on delivering shareholder value, but I think we do create shareholder value with the business model we have. In terms of the -- will we stop there irrespective of the -- I mean, irrespective of the buying opportunity, we are doing the pruning of portfolio anyway. The non-top 3 is a strategy which was in the GreenUp plan. You may remember that. So we've tried in typically in the plastic in Korea, I just mentioned, we've tried for 2 years to try to see if we could be in the top 3. We didn't manage to be successful. Therefore, we decided to sell it. That's more the way to see it. There is an up or out strategy here, which we are implemented. And yes, I can confirm that we are very confident about the 8% net income. But Emmanuelle, do you want to elaborate on that? Emmanuelle Menning: Yes, with pleasure. So you know that when you look at our performance this year, very strong performance with the increase of EBITDA of 5.1%, as mentioned before, without the synergies, meaning that we are cruising at the same pace, showing that our strategic decision to go for faster growing and higher-margin activity is delivering results. Down the line, we will, of course, continue to benefit from our operating leverage. We have shown that before, plus 2.1% revenue increase, plus 5.1% EBITDA increase and plus 7.2% EBIT increase. So as you see, we keep a tight cap -- tight control on CapEx so that our DNA will not increase significantly. Our total cost of financing, which decreased slightly in 2025 will only grow in 2026 a bit linked to the financing, for instance, of Water Tech acquisition we did last year in June. And we believe we can sustain a tax rate between 25% and 26%, meaning that we are fully confident to confirm our target in terms of current net income for the year. Operator: I think the next question is coming from [indiscernible]. Unknown Analyst: It's just a follow-up as most of the questions have been already answered. I want to have more clarity on the net income guidance because you signaled that the closing for Clean Earth is expected on June after the 2 major steps in the AGM and the antitrust clearance. So can you help us quantify the expected net income effect from the integration for 2026 as you signaled the 8% growth is ex Clean Earth with a positive contribution from 2027. So what is the expected net income effect that you expect to have from the integration of Clean Earth for '26? Estelle Brachlianoff: So I will refresh what we've said in a way, which we can confirm on when we've announced the acquisition of Clean Earth, which will be assuming it's midyear. Therefore, since we publish, so we can have -- if we were to do accounts at midyear with everything and dividend and so on and so forth, which is not the case, it would be a different story. But basically, given the fact that it's likely to be midyear, it means it will be accretive before PPA, the Clean Earth acquisition from 2027 and accretive even after PPA by from 2028. The PPA, we don't know yet what it's going to be. So we have a few uncertainties on dates on things like PPA. So we cannot give you numbers, but it will be accretive very soon in a way before PPA from year 1 and even after PPA from year 2. That's what we've announced, and we're confident we will deliver. In terms of integration, you remember, we plan over 4 years of synergies. So we have not included any synergies in 2026. It will start in 2027. But again, all that depends on the date and the detail of it. Of course, if we are able to manage some synergies this year, we will be very happy with it. But it is not what we've included in our business plan or what we've announced so far. [Technical Difficulty] We talk about access to local sources of energy, when we talk about securing supply chains, this is exactly what Veolia offers to its customer. And if anything, the crisis in the Middle East is reinforcing the importance of our services and the demand for our services. So I'm very confident not only in confirming the guidance for this year, but in the years to come. And the last point is, of course, we'll have various opportunities, myself, Emmanuelle and the Investor Relations team to see some of you in the roadshows to come. So I'm sure you will have plenty of opportunities to ask a detailed question. And see you otherwise in July for H1 results. Thank you very much. Emmanuelle Menning: Thank you.
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Dave's financial results for the first quarter ended March 31, 2026. Joining us today are Dave's CEO, Mr. Jason Wilk; and the company's CFO and COO, Mr. Kyle Bauman. By now, everyone should have access to the first quarter 2026 earnings press release, which was issued today after the market closed. The release is available in the Investor Relations section of Dave's website at investors.dave.com. This call will also be available for webcast replay on the company's website. Please be advised that today's conference is being recorded. [Operator Instructions]. Certain comments made during this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. The company undertakes no obligation to revise or update any forward-looking statements, except as required by law. The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, non-GAAP gross profit, non-GAAP gross margin, adjusted earnings per share and compensation expense, excluding stock-based compensation as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation tables and other important information in the earnings press release and Form 8-K furnished with the SEC. I would now like to turn the call over to Dave's CEO, Mr. Jason Wilk. Please go ahead. Jason Wilk: Good afternoon, and thank you all for joining us. 2026 is off to a strong start at Dave. Revenue grew 47% year-over-year to $158.4 million and adjusted EBITDA grew 57% to $69.3 million at a 44% margin. On the strength of this trend and what we're seeing thus far in Q2, we are raising full year guidance across all 3 dimensions. There are 3 key takeaways I want every investor to take away from this call. The first is credit performance resulting from Cash AIV 5.5 drove our lowest Q1 loss rate on record. Our 28 days past due metric, which we believe investors should use to assess true credit performance at Dave is down to 1.69%, marking a 1 basis point improvement year-on-year and down 85 basis points from 3 years ago. This result underscores how much control we have over our credit outcomes as a result of years of significant investment in training in our models. T he second is we once again demonstrated the durability of our growth algorithm to sustain mid-teens member growth and low double-digit ARPU growth. Despite the usual Q1 seasonal tax refund season and expanded refunds compared to years past, we were still able to grow ARPU 24% year-over-year and monthly transacting members by 18%. We now have a total of 2.99 million MPMs, which is still a small fraction of the overall $185 million customer TAM, and we believe we're still early in our journey to drive incremental ARPU. Lastly, we launched our new Pay in 4 credit product. We officially put our newest product in the hands of a small group of members to trial. I want to congratulate the team on their hard work for reaching this milestone. Turning to our growth pillars, starting with member acquisition. We added 695,000 new members in Q1, up 22% year-over-year at a customer acquisition cost of $18. That CAC is flat year-over-year and improved 11% sequentially, which is better than expected given Q1 is typically our most challenging quarter for marketing efficiency due to tax refund dynamics reducing credit demand. Our gross profit payback period improved to nearly 3 months in Q1, which gives us increasing confidence to continue scaling member acquisition throughout 2026. Moving to our second pillar, engagement through ExtraCash. Originations reached $2.1 billion, up 37% year-over-year, driven by growth in MTMs and average origination size. MTMs grew 18% as a result of improving conversion and reactivation alongside strong retention rates. Average ExtraCash size increased 10% due largely to the impact from Cash AI V5.5, which was deployed in late Q3 of last year. Sequentially, origination size was modestly lower at 212, reflecting the impact of higher tax refunds late in the quarter. That dynamic has already begun to reverse. Average size rebounded to 214 in April. We expect origination sizes to improve with continued V5.5 model optimizations and the forthcoming V6 model that we expect to begin testing within the next couple of months. Moving to our third pillar, deepening engagement. Dave debit card spend was $534 million in Q1, up 9%. Growth here continues to be attributed to the natural synergy of ExtraCash and Dave Card as there have been no new initiatives aim at debit volume growth while we focus our efforts on new credit products to drive deeper engagement. Before turning it over to Kyle, I want to provide a few strategic updates. Starting off with our new Pay in 4 card product, which we're officially calling Dave Flex. Dave Flex is designed as a responsible alternative to traditional credit cards with balances paid back in up to 4 simple installments aligned with your paycheck date. No compound interest, no late fees and no credit check. We believe this product is competitively positioned against the predatory fees of subprime credit cards and the heavy friction associated with BNPL since Dave Flex can be used at any online or offline merchant without the need to reapply with each use. Dave Flex supports each element of our growth pillars as we expect it to be a driver of customer acquisition, expand our credit capabilities and deepen engagement of existing members. Importantly, Dave Flex uses cash AI to power 100% of the underwriting, giving us a meaningful edge over incumbent credit card products that rely on FICO, which we believe will lead to greater customer access and superior credit performance. As promised, we began testing Dave Flex with existing members last month. Early engagement has been encouraging, and we plan to share more once we have more data on performance. We do not expect Dave Flex to contribute meaningful revenue in 2026, and it is not embedded in our guidance. Our focus this year is to test and learn and optimize member lifetime value before scaling in 2027. We believe products like ExtraCash and Dave Flex, which levers short duration credit to drive share of wallet is what really differentiates Dave from our scaled neobank competitors. The bulk of our road map is staffed on our responsible short duration credit initiatives, which we believe will further enable us to achieve our medium-term growth algorithm. As such, we have updated our strategic statement to better capture our focus, which is that Dave is a U.S. neobank pioneering innovative credit products for everyday Americans. Next, regarding our partnership with Coastal Community Bank, which remain on track to begin transitioning ExtraCash receivables to the new off-balance sheet funding structure this summer, which will begin unlocking meaningful liquidity and reduce our cost of capital. Lastly, on the DOJ matter, we have no material update and continue to vigorously defend our position. In closing, 2026 is off to a tremendous start. We are executing well against our stated growth algorithm and credit performance is excelling. I want to thank our team who make all of this possible. With that, I will turn the call to Kyle. Kyle Beilman: Thanks, Jason, and good afternoon, everyone. Q1 was a strong start to the year, marked by durable revenue growth, disciplined marketing investment and continued strong credit performance. Together, those factors drove another quarter of outsized adjusted EBITDA and EPS growth and support the guidance raise we are announcing today, our eighth consecutive quarter of increasing guidance on all metrics. Today, I will cover the key drivers underlying the quarter, credit and provision mechanics, an update on capital allocation and our revised outlook. For a more detailed review of our KPIs, please refer to the earnings supplement on our IR website. Revenue was $158.4 million, representing 47% growth year-over-year. Growth was driven by 18% MTM growth and 24% ARPU expansion, both ahead of our medium-term growth algorithm. Underneath those headline numbers, new member conversion, dormant member reactivation and retention all contributed and repeat originations from members with an average tenure of close to 2 years continue to anchor the book. For those newer to the Dave story, Q1 is seasonally our softest quarter, driven by tax refunds, which temporarily reduced demand for ExtraCash. As a result, the number of ExtraCash disbursements declined 5% sequentially, consistent with the range we have observed in every Q1 since 2021. This was the primary driver of the 3% sequential decline in revenue. Average ExtraCash size was down modestly from $214 to $212 sequentially, reflecting higher-than-normal tax refunds per member. It's worth noting that Q1 of last year benefited from the step-up in ExtraCash approval limits we implemented as part of our fee model transition. Both average origination size and disbursement volume have rebounded in April, and we expect continued expansion in Q2 and beyond. In terms of forward-looking color on top line drivers, in addition to the optimism we have about the potential impact of Cash AI V 6.0, we also have a series of initiatives aimed at improving average origination sizes, monetization rates and therefore, ARPU in the near term. The first is removing our $15 fee cap for new members, which enables more members to achieve higher limits now that the risk is appropriately monetized. Second, we addressed a common member pain point, where if you hadn't utilized your entire ExtraCash limit, the additional amount wasn't accessible within that pay period. This new feature, which we are calling second draw, solves that problem and enables members more flexibility, which we believe should help with overall credit utilization and therefore, average origination size. Second draw is now available to all eligible members as of last month. Now turning to credit and provision. As Jason noted, the underlying credit picture continued to improve meaningfully in the first quarter. Our 28-day past due rate of 1.69% was a Q1 record, improving both sequentially and year-over-year, even with originations up 37%. This was the first quarter we have seen EPD improve year-over-year since transitioning to the new fee model. When we moved to that structure, we deliberately expanded the credit box while Cash AI iterated. 3 quarters of optimization later, loss rates are back below where we started. That momentum has continued into Q2 and should expand upon rolling out CashAIV6.0 over the coming months. On provision for credit losses, the sequential increase was mechanical and calendar driven. The underlying book performed 10% better than Q4 on a 28 DPD rate basis. The metrics that incorporate credit performance, DPD rate, net monetization rate and revenue per origination net of losses, all improved sequentially and year-over-year, which we believe is a more meaningful signal. Consistent with the expectation we set last quarter, Q1 ended on a Tuesday, typically the intra-week peak in outstanding receivables. Higher ExtraCash balances at the measurement date mechanically drive a higher loss reserve even when the underlying loss content on those receivables is trending lower. Had Q1 ended on the prior Friday, the provision would have been approximately $5 million lower and non-GAAP gross margin would have been approximately 75% Importantly, because Q1 already absorbed the elevated reserve with that Tuesday watermark, we do not expect Q2 ending on a Tuesday to adversely impact provision in the same way it did in Q1. Furthermore, Q3 and Q4 ending on a Wednesday and Thursday, respectively, should provide a tailwind for loss provision as a percentage of originations and gross margin in those periods. Non-GAAP gross profit was $114.4 million, up 37% year-over-year. Non-GAAP gross margin was 72%, which is consistent with the low 70s framework we guided to in March, and we expect Q1 to represent the low point for the year. Given the improving DPD trend and more favorable calendar dynamics ahead, we now expect non-GAAP gross margin to expand into the mid-70s for the balance of the year. In terms of marketing, Q1 was our seasonal low by design. We moderated investment given the typical softness in ExtraCash demand during tax refund season. For the balance of 2026, we plan to expand marketing spend above fourth quarter 2025 levels while maintaining our discipline on investment returns. On fixed costs, compensation expense grew 1% year-over-year and 11% sequentially. We typically see a modest bump in Q1 related to seasonally elevated payroll taxes. Additionally, we began making targeted investments in product development headcount as previously communicated. To size that investment, we expect to move from under 300 employees as of the end of last year to around 325 by the end of this year, representing an annualized incremental expense of approximately $10 million. We continue to run a highly efficient platform with what we believe is one of the strongest revenue per employee businesses in the industry. As revenue scales throughout the balance of the year, we expect operating leverage to continue to build thereafter. Pulling it all together, adjusted EBITDA was $69.3 million, up 57% year-over-year at a 44% margin. That is approximately 300 basis points of year-over-year margin expansion and consistent with our commitment to deliver ongoing annual EBITDA margin improvement. GAAP net income was $57.9 million, up 101%. Adjusted net income was $52.3 million, up 61% and adjusted diluted EPS was $3.64, up 64%, reflecting the combined benefit of operating performance and the reduction in share count from Q1 repurchases. Given that our share repurchases in Q1 occurred entirely in March, Q2 will begin to experience a full quarter's benefit of their impact. In terms of capital allocation, Q1 was a meaningful quarter for per share value accretion. We deployed $194.9 million into share repurchases and restricted stock unit net settlements, reducing our basic share count from 13.6 million at year-end 2025 to 12.7 million at the end of Q1, a reduction of approximately 6% sequentially. In early March, we completed $200 million zero coupon convertible notes offering, generating $175.7 million of net proceeds. We simultaneously repurchased $70 million of common stock in a privately negotiated transaction with the convertible note holders and continued buying shares in the open market for the remainder of the quarter. We have approximately $113.3 million in remaining capacity under our share repurchase authorization, which we expect to continue to utilize opportunistically. Our capital priorities remain the same. First, invest in organic growth where we are generating returns that are multiples of our cost of capital; second, operationalize the coastal funding structure; third, return capital through share repurchases using our excess cash when risk-adjusted returns exceed those alternatives. Our objective is simple. We intend to allocate capital to maximize value for shareholders, and Q1 was a strong proof point of us doing it at scale. We remain on track to transition ExtraCash receivables to the coastal off-balance sheet funding structure this summer. At full implementation, we expect to unlock over $200 million in incremental liquidity, reduce our cost of capital and repay our existing credit facility. As a reminder, the fees paid to Coastal under this arrangement will be recognized as an operating expense that will burden non-GAAP gross profit and gross margin but will be added back for adjusted EBITDA purposes. Now turning to guidance. Based on Q1 results and the trajectory we see in the business, we are raising 2026 guidance across all 3 metrics. We now expect full year revenue of $710 million to $720 million, representing growth of approximately 28% to 30%. Additionally, we are raising adjusted EBITDA guidance to $305 million to $315 million. Lastly, we are raising adjusted diluted EPS to a range of $16.25 to $16.75, up from $14 to $15. This represents year-over-year growth of approximately 43% to 47% on a tax rate adjusted basis, reflecting both strong operating performance and a meaningful reduction in share count from Q1 repurchases. All figures assume a 23% effective tax rate. The execution we have demonstrated over the last several years, consistently raising guidance while improving credit and scaling originations has carried into 2026. Cash AI continues to sharpen. Our competitive position continues to strengthen, and we believe we have a clear and executable path to deliver on our medium-term growth algorithm while creating outsized shareholder value. With that, we will conclude our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] And our first question comes from Andrew Jeffrey with William Blair. Andrew Jeffrey: I wanted to ask about, Jason, maybe your comments around focusing on engagement, particularly in the context of Dave Card volume, which -- the growth of which deceled a little bit this quarter. It sounds like that's less at least of a near-term focus for you in terms of engagement as you turn your eyes to Flex and Cash AI 6.0. I wonder if you could just kind of unpack that a little bit for us. Jason Wilk: Yes, sure. Thanks for the question. So look, when I think about deepening engagement, specifically through card, we believe have a much differentiated offering through the Dave Flex product, just given our advantages in underwriting, but also the fact there's just far less friction associated with winning card spend when we're provisioning credit versus asking someone to switch their direct deposit. We found there's very little differentiation amongst all the scaled neobanks on debit card offerings. And therefore, we're going to maintain the natural synergy between ExtraCash and the debit card to drive natural volume there, but we do think there's a massive opportunity with Dave Flex to make that a scaled product and be a real differentiator amongst our peers. Andrew Jeffrey: Okay. Yes, I look forward to that product rolling out. And one follow-up, if I may. Just where do you think over time, engagement goes? You got about a 20% MTM to MAU attached this quarter, somewhere in that neighborhood. Where can that go and over what period of time? And I assume that could be a pretty important ARPU driver along with some of the other initiatives you called out on the call today. Jason Wilk: Look, as stated on the call, I think we're doing really well against our stated growth algorithm, which is to grow MTMs mid-double digits and ARPU low double digits, and we're doing very well there, exceeded both those targets within the quarter. And as I mentioned, a lot of room to run given we're 2.99 million MTMs against the total 10 million member TAM. And we just know that from a sort of credit share of wallet, there's a tremendous opportunity for us to continue to do more for this customer and ExtraCash is largely used for nondiscretionary expenses. And while we think there's still a ton of room to run with that product to drive more MTMs and optimize that product for more ARPU, just think the opportunity with things like Dave Flex to drive more of that discretionary spending to win more of the daily engagement and expand into that credit wallet, just a huge opportunity. Operator: Our next question comes from Ryan Tomasello with KBW. Ryan Tomasello: Following up on the Flex Pay in 4 product, maybe if you could just give us an update on how you're thinking about monetization rates relative to ExtraCash as well as the credit component, how that might compare given the higher advance rates, higher advanced limits and longer duration? And then as a follow-up on that, I think the intention you've mentioned is to focus initially on existing customers for the Pay in 4 product. But as you lean into more external growth eventually, do you think that you can maintain that sub-$25 or so CAC level? Or might higher LTVs on that product justify a step-up in CAC for the Flex product? Jason Wilk: Sure. Well, answering the last question, I mean, we've said pretty repeatedly, we're not focused on the lowest dollar CAC. We look at the best and most attractive returns. And so we would expect to spend against Flex acquisition where we see positive returns that we like. It's too early to tell on that given we're not actually testing in market for new users at this point, but we do anticipate testing this year to understand how it does with paid advertising and what kind of growth algorithm we can have for that product in 2027. As far as the economics, we are in market testing a higher monthly fee than ExtraCash. And then we plan to have -- we are in market testing a per spike transaction fee with that product as well. No late fees, no compound interest on the product. You can apply with no credit check using Cash AI. I think one thing we are willing to share right now is that everything so far on the adoption points to incrementality with regard to total originations per customer, meaning we are seeing natural synergy between this product and with ExtraCash. And so there should be some -- definitely ARPU lift is what we're seeing. It's what we expected with the product, given how we've seen people interact with BNPL within our customer cash flow data. But nonetheless, still positive to see the initial signs are there, and our hypothesis is turning out to be true there. Ryan Tomasello: Great. And then one of your large neobank peers has signaled a renewed push into the cash advance space I believe with a modestly lower cost product, they're also expanding into the enterprise earned wage access category. Curious if you've seen any measurable impact there from those competitive dynamics? And if you can just give us your thoughts on whether the enterprise EWA category competes with the direct-to-consumer cash advance product and generally how you view that strategy as a potential tack on today's product pipeline at some point? Jason Wilk: Well, look, we still view our ability to underwrite external primary accounts via Plaid to be a differentiator amongst our scaled neobank competitors, which require a direct deposit into their account to access credit. We've said before that we believe the TAM of people willing to connect a bank account to get access to credit is far wider than those willing to switch their bank account. And therefore, we think that it's hard to compare the product on apples-to-apples because even if that product may be slightly cheaper, there's a massive tax on the user in the sense that they have to switch their direct deposit, which has a lot of friction. When I think about the enterprise opportunity, I mean it's certainly an interesting differentiated way to acquire customers, but it's a very different value prop and that this is customers being able to access their earned wages every single day. We look at Dave as the ability to capture a much larger paycheck before at the beginning of your pay period to go cover things like rent or gas or groceries. And so the use case is different, and we do view those to be pretty complementary products. those enterprise businesses have been around for a decade plus, and we just haven't seen anyone really crack significant scale there, and it certainly has had no bearing or impact on our business. Operator: Our next question comes from Joseph Vafi with Canaccord. Joseph Vafi: Terrific results once again here in the quarter. Congrats. I thought maybe we'd look at -- maybe look at customer acquisition through a little bit of a different lens here. Obviously, there's sales and marketing spend for customer acquisition. Just wanted to kind of also drill down into your credit algo and how much of a factor that is, is in driving -- as that continues to improve and you're on Cash AI V6, how much that is a driver in customer acquisition because obviously, if someone applies, they may or may not get approved and how that really kind of is part of growth in MTM. And I have a quick follow-up. Jason Wilk: Yes. Thanks. As mentioned, the quarter was better than expected from a marketing perspective. I mean CAC was -- came in less than we thought it was going to, which we thought was impressive given the elevated tax refunds that we did see. And that just gives us more confidence given the shrinking payback period that we have a lot of confidence going into the rest of the year to continue to deploy marketing dollars efficiently and at scale. With regard to Cash AI V6, I wouldn't think about it in the terms of this is going to approve more customers that otherwise would be rejected. It's more so the people that we do approve we are able to get incremental credit from there. And we do see that benefit conversion, which helps with CAC from a first-time credit active perspective. And so one of the things we mentioned or that Kyle mentioned on the call was removing that fee cap for new customers. We're already seeing the benefits there of it resulting in more customers getting approved for higher amounts, and that has compounding effects on first-time conversion, retention, et cetera, and just incremental to LTV and marketing spend all around. Joseph Vafi: Sure. And then just a follow-up... Kyle Beilman: Let me just jump in and add something real quick there. I mean everything that Jason said is true, but it also applies to the overall book. And so the better that we can get with underwriting and improvements that we expect from Cash AI V6 that all those benefits and higher limits and therefore, a better value prop increases customer retention and reactivation as well and supports overall customer growth. And so it's both new users and existing user benefits that we expect to see as we continue to make improvements on Cash AI. Joseph Vafi: Sure. That makes sense. And then maybe just on removing that fee cap, how much price sensitivity was there? And maybe kind of drill down a little bit more on your thoughts there on removing that would be helpful. Jason Wilk: I'll pass to Kyle on that one. Kyle Beilman: Yes. I mean, Joe, I think we've seen over the last couple of years as we've made pricing optimizations that as we move on price and therefore, increase spreads, we're able to open up the credit box and that sort of increase in limit and value prop is much more valuable than the customer than the incremental cost associated with it. And so that's the same dynamic that we're seeing play out here with eliminating the fee cap as we can generate the incremental spread there with the removal of that cap and therefore, increase the limits, we're seeing benefits to conversion, as Jason mentioned. So all facts and kind of data points over the last couple of years kind of speak to that dynamic where limit matters more than price, and we're trying to find the sweet spot there at all times to maximize the customer experience while ensuring that we are compensated well enough for the incremental risk that we're taking on. Operator: Our next question comes from Devin Ryan with Citizens Bank. Devin Ryan: Jason and Kyle, congrats on the strong quarter here. Just want to touch on capital. Obviously, the offering this quarter bought back a lot of stock with the coastal transition coming, that's $200 million of liquidity. When we think about kind of the uses of liquidity and kind of excess cash, you obviously can pay down the existing facility. Beyond that, should we just think about kind of free cash generation as just being pegged towards buybacks? Or is there anything else we should be thinking about with that because obviously, beyond the $200 million, you're generating another couple of hundred million dollars or more a year as well. So a lot of capacity there. Jason Wilk: Thanks, Kevin. I'll pass to Kyle on that one. Kyle Beilman: Devin, look, I think you keyed in on the point there. I mean the company at this point is substantially free cash flow generative. We're unlocking a significant amount of capital with the migration to the coastal funding arrangement, and that gives us a lot of dry powder from a capital allocation perspective. And as I mentioned in my remarks, we continue to see share repurchases as a very attractive way for us to continue to deploy capital. That's at the sort of top of the list from a capital allocation prioritization perspective. And we have looked at various M&A opportunities over time, and we'll continue to evaluate that landscape if there's anything that's overall additive to our strategy. But I would say, by and large, very much oriented towards share repurchases for use of excess cash. Devin Ryan: Got it. And then just another follow-up here on ExtraCash. Obviously, strong demand against what's typically kind of a seasonally softer quarter, and it seemed like this year was actually even a heavier tax refund season than prior year. So I think kind of the results are even more notable against that backdrop. So can you just talk about some of the trends that you saw with your customers? Were there any new factors driving demand? Was it just all kind of cash AI 55 expanding the credit box and kind of doing what it does? Or were there other factors? And then also, what does that imply for kind of the snapback into the second quarter once we move beyond some of these seasonal dynamics? I heard, obviously, what you guys said in the prepared remarks, but any other color there would be helpful as well. Jason Wilk: Yes. Thanks, Devin. For your point, we mentioned that there has been a snapback in April with respect to average origination size. As far as Q1, obviously, we have a massive data set with over 7 million customer connected accounts we can peer into to understand what's happening with the economy with respect to our consumer. And we're just seeing everything pretty consistent. Income is holding up. If anything, income is up a little bit year-over-year. Spending is pretty flat year-over-year, no evidence of trade down behavior. to call out, restaurant has been gaining some share of food and drink spend at the expense of groceries, but no signs of increasing credit or leverage. And as we saw, we had record Q1 performance and investors really take that away as a big positive for the business and shows the strength of Cash and having control of our credit box. Kyle Beilman: Maybe I'll jump in with just one more sort of anecdote there, Devin. I mean if you look back to the sort of sequential trend, whether that's on ARPU or the amount of ExtraCash originations per MTM, the Q1 '26 versus our Q4 '25 trend was very similar to what we saw in years past. Last year was a little different given that we had introduced the new fee model and the higher thresholds in Q1, so that obfuscated some of that impact, but this Q1 largely mirrored the last several years before last year. And so it was pretty much business as usual for us and very much in line with expectations from tax refunds. Operator: Our next question comes from Jeff Cantwell with Seaport Research. Jeffrey Cantwell: Can you tell us what provision expense would have been in the quarter if not for the timing impact? How much was that impact this quarter? Can you maybe size that? And then assuming the macro remains fairly steady, should we expect to see that normalize from here? Or is there anything else to flag as you look out to the remainder of this year? Jason Wilk: Thanks, Jeff. I'll let Kyle take this one. Kyle Beilman: Jeff, thanks for the question. So as I mentioned in the remarks, the provision dynamic from, say, the quarter closing on a Wednesday versus the prior Friday was about a $5 million swing to gross profit. So that's, I think, a pretty strong indicator of what it would have looked like as the provision as a percent of originations and it would have brought the gross margins back into the mid-70s. Look, I think we tried to do our best to signal this impact coming in Q1. We know about the sort of calendar dynamic swings, obviously, well ahead of time and gross margin performance was still well within our expectations of the low 70s -- we do expect Q1 to represent the low watermark for the year and expect gross margins to be in the mid-70s for the rest of the year. And then in terms of overall credit performance, we would expect that to -- on a DPD rate basis to be at least as good as where we were last year, if not better. So I think all signs point to improving gross margins and all else equal, timing dynamics aside, provision as a percentage of originations coming down. Jeffrey Cantwell: Got it. Got it. And then looking at CAC this quarter, it was $18. That's down a couple of dollars versus the previous quarter and flat versus last year. I guess my question is that when you think about the pay in the card, -- just given the competitive dynamics of that space, the BNPL space, is there any reason to suspect that you're contemplating changes in CAC in order to drive new customer growth from that channel? Or how should we be thinking about CAC in the context of the new product launch? Jason Wilk: Thanks. As I mentioned, to put the other questions here, we're going to invest in growth in Flex Card where we see positive economics and returns. So if that comes at a higher CAC than $18, it doesn't really matter to us because we're solving for returns, not for lowest dollar CAC. And so we're very interested to see what the returns look like. From a competitive landscape, while BNPL is quite competitive as a merchant checkout, a direct-to-consumer offering where you can actually buy now, pay later or whatever you want without the need to reapply is not that competitive. And so we are excited to start to penetrate that TAM and be one of the first to have scaled advertising against that message. A lot of the pay in for card type competitor products are largely cross-sold products and people that were already acquired through BNPL channels. And given our advantages within Cash AI to underwrite new customers based on cash flow data as well as our advantages in having a strong brand with very scaled marketing channels and messages, we feel confident that there's a lot of opportunity there. And I think I mentioned this on previous calls, but we really think that target here to disruptive subprime credit cards, which is monetizing customers on being late with late fees, compound interest and those products is the exact opposite with responsible credit offering, payments tied back to your future paycheck dates with no late fees. And so excited to get this out there and think there's a lot of opportunity to make this a marketing machine. Operator: Our next question comes from Hal Goetsch with B. Riley Securities. Harold Goetsch: Can you just give us maybe a hint on where you think share count will be for maybe the next couple of quarters with all the buyback activity and the timing of it? Jason Wilk: I'll let Kyle get on this one. Kyle Beilman: Thanks, Hal. We're not providing any specific guidance on the buybacks at this point. Of note, I would say our revised guidance on adjusted EPS does not contemplate buybacks for the duration of the year. But as I alluded to earlier, I would expect us to continue to be forward leaning on the buyback with the excess cash that we're generating. So yes, no specific numbers there for you, but I would expect some impact from future repurchases if things continue to sort of play out the way that we expect them to. Harold Goetsch: And perhaps maybe you could remind us maybe how much you -- given your cash flow underwriting, what percentage of your customers are using BNPL maybe the other prominent 6 to 7 logos that are out there in the United States. Do you have kind of a rough number of what percentage of your active customers are using BNPL? Jason Wilk: We see around 50% of people will engage with it at some point during a quarter. And so we know the demand is there and early signs that we -- as I mentioned earlier in the questions here that we are seeing this as an incremental credit opportunity with respect to origination sizes given that's how we already see people use DNPL today. And so we like the ability to see the opportunity to displace that DNPL activity. But importantly, our customers are either not approved for subprime credit cards or they are having a terrible experience because they're massively overpaying in fees. credit card interest rates in the U.S. are being collected over $100 billion a year, credit card late fees over $20 billion. And just like Dave was invented to disrupt traditional overdraft fees, we see the opportunity here to really change the industry. And so just a lot of excitement. We don't really think about it being directly competitive with the existing BNPL given the merchant checkout, heavy friction, et cetera, if that makes sense. Harold Goetsch: That's terrific. And would you say the key takeaway on Flex is that you're probably the only BNPL company that has payments triggered on pay days because the other BNPLs, they don't know when they get paid. Is that right? Jason Wilk: That's correct. Harold Goetsch: Yes. Terrific. Jason Wilk: And Hal, same goes for subprime credit card companies, too. They're just leveraging antiquated FICO models for underwriting. They're all collecting on the exact same day, and we can be highly customized here knowing what your paycheck date is given the income visibility and prediction algorithms with C AI gives us a huge advantage when you are underwriting a customer like we are, the everyday American consumer collecting on their right paycheck data is a huge advantage for settlement efficiency. Operator: Our next question comes from Jacob Stephan with Lake Street Capital Markets. Jacob Stephan: I want to ask a little bit on dormant reactivation. You guys kind of talked about that being one of the drivers of the MTM growth this quarter. But can you help us kind of piece out what's driving the reactivation, C AI or reengagement marketing? And as kind of a follow-up to that, is there a way to frame maybe how large the reactivation cohort was as a percentage of Q1 MTM adds? Jason Wilk: I'll pass to Kyle on that one. Kyle Beilman: Jacob, so in terms of the size of that opportunity, it's about 11.5 million dormant customers that we have to sort of continue the opportunity to drive reengagement and reactivation with. And the interesting data point there is we grew total members by about 17% and are growing MTMs faster than that. So I think that just kind of speaks to the activation of the base that we've been able to kind of chip away at over time through these reactivation initiatives. It's life cycle marketing, it's improvements to cash AI and the value prop of our limits relative to other alternatives out there to increase consideration when people are coming back into the category. That's really big for us. It's promotions. I mean it's a whole sort of slew of different initiatives that the team has been driving to increase that reactivation number, and it continues to be a really important part of the MTM mix. We don't quantify that portion of the overall MTMs in a given period. But again, it's a very valuable customer pool that we have to fish in on a regular basis and an important part of the MTM growth story that we're super focused on. Okay. Jacob Stephan: And maybe as a second follow-up, as it relates to the removal of the $15 fee cap, can you just remind us the MTMs, those are essentially grandfathered into the old fee cap, the $15 fee cap and any reactivated members essentially, would they be subject to removal of the cap? Or how does that work? Kyle Beilman: The fee cap would only -- or the removal of the fee cap would only apply to new customers who are onboarding on to Dave for the first time. So that's where the focus of this fee change is. Again, we don't quantify how big that portion is of the MTM base, but we would expect it to be supportive of incremental ARPU throughout the year as more and more of Dave's new customers become a bigger portion of the overall MTM base over time. Jacob Stephan: Okay. So just to clarify, anything over and above the 14.5 million total members essentially would be on the new fee cap or the no fee cap model? Kyle Beilman: Correct. Jacob Stephan: Thank you. Jason Wilk: Thank you. Operator: This concludes the conference. Thank you for your participation. You may now disconnect.