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Steven F. Rossi: Good morning, and thank you for joining Worksport Ltd.'s fiscal year 2025 and Q4 2025 earnings call. I am Steven F. Rossi, Chief Executive Officer of Worksport Ltd. With me is our Chief Financial Officer, Michael D. Johnston. We will be reviewing the financial results for the quarterly period ending December 31, 2025, and our full fiscal 2025. These results were filed today at approximately 4:01 PM in our Form 10-K and can be downloaded from the link provided in the chat. On today's call, alongside our financial performance, we will review our operating execution across the flagship hard tonneau cover offerings, progress on the commercial launch of our SOLIS and CORE offerings, our capital position, and the key strategic priorities we are focused on as we move into 2026. Before we begin, I want to frame this call the right way. 2025 was a year of real top-line growth and significant margin improvement. Full-year net sales nearly doubled to $16,100,000. Gross margins improved 2,800 basis points to 28%, from 11% in 2024. Both are significant, as they were achieved through a combination of expanding our product offerings and increasing our presence in both direct-to-consumer and business-to-business sales channels. Our fiscal 2025 strategy is to expand our presence in multiple sales channels, introduce new products, and increase our market capture, resulting in a net operating loss and increased use of our cash otherwise generated from our growing operations. Our use of cash to support operations did not grow at the same rate as our net sales. To address our need for both operating and investing activities during fiscal 2025, we supplemented our cash flows with external capital. This strategy complements our intentions to capture more meaningful market share from our very large competitors. That is the right context for evaluating our results. That stated, we still have work ahead of us. We are evolving with additional product offerings and recently learned experience of navigating entry and growth in different sales channels. We have all the pieces in place to make the years ahead transformative, with a keen focus on lean operations and generating positive operating cash flows. Our time and investments through the end of fiscal 2025 have set the right foundation for fiscal 2026 and beyond. We successfully transformed the product capitalization to market delivery. We increased our brand and sales channel distribution presence with both direct-to-consumer and business-to-business customers. Most importantly, the lessons we learned along the way now create a clear pathway forward. Our prepared remarks will follow a slide presentation. After our prepared remarks, we will open the line for questions. At the end of today's call, our prepared remarks and presentation deck will be available for download, as always, at investors.worksport.com. And so with that, let's begin. Safe harbor statements. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the full year 2026, our expectations regarding financial and business trends, impact from the macroeconomic environment, our market positions, opportunities, go-to-market and growth strategies, and business aspirations, our product initiatives, and the expected benefit of such initiatives. These statements are only predictions that are based on current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results or events may differ materially. Therefore, you should not rely on any of these forward-looking statements. These forward-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other SEC filings. The forward-looking statements made in the earnings call are made only as of today's date. Worksport Ltd. assumes no obligation to update these statements. We will then address our risk profile, liquidity, and capital strategy to provide clear context on our financial profile. From there, we will walk through a detailed financial review, including full-year and sequential performance, margin expansion, net sales quality, and operating leverage. We will then cover our operational execution, including manufacturing scale-up, distribution expansion, and key product milestones across our tonneau cover product offerings. Next, we will review the commercial launch and positioning of SOLIS and CORE, followed by progress at our subsidiary, TerraVis Energy, and its AetherLux platform. We will also address multi-supply chain dynamics, tariff impacts, and our intellectual property strategy. Finally, we will conclude with our fiscal 2026 financials, including key milestones, our path to cash flow positivity, and the strategic priorities driving the next phase of growth. Let me start with four key takeaways. First, fiscal 2025 was a year of strong net sales expansion. Net sales increased 89.8% year over year to $16,100,000, following fiscal 2024 net sales of $8,500,000. The scale-up of our business over the last two years is clear. Last year's jump from $8,000,000 to $16,000,000 demonstrates a clear demand for our product offerings. Recent and forthcoming product launches provide fresh offerings to market participants. We are still growing and expanding our brand presence in the market across multiple sales channels. Second, our gross margin profile improved materially. Full-year gross margins moved to 28% in fiscal 2025 from 11% in fiscal 2024. On a derived basis, Q4 2025 gross margin was about 30% compared with roughly 11% in Q4 2024. Our margin expansion consistently grew as we enhanced our market presence in 2025. Third, we turned several long-running development programs into commercial activity. Our HD3 cover transitioned into production and began contributing to net sales in 2025. Our SOLIS and CORE product offerings launched commercially in December 2025. These are important developments, but investors should also understand that these launches came late in the year and did not significantly contribute to our fiscal 2025 financial results. Further, these efforts impacted our needs for operating cash flow without complementary liquidity conversion. We expect liquidity conversions from these efforts to otherwise enhance our financial production in 2026. Fourth, Worksport Ltd. has evolved from an emerging brand into a recognized player in the $4,000,000,000 tonneau cover market. Our product offering differentiation and focus on quality have allowed us to increase our market presence in the last two fiscal years. Our dealer network alone expanded sixfold in fiscal 2025, now encompassing over 550 locations across the United States and Canada. But with over 17,000 dealers nationwide, we have only just begun. We are targeting aggressive expansion in fiscal 2026, more on that later. Our brand identity matured. Our brand maturity is supported by our ISO 9001 certification, which we received in April 2025. This certification is not just a badge; it is the prerequisite for Tier 1 OEM relationships. We are actively pursuing those. As we enter fiscal 2026, Worksport Ltd. stands as the only company currently offering a fully integrated solar and energy storage ecosystem for the light-duty truck market. I will now address our risk profile directly. Our fiscal 2025 Form 10-K includes an explanatory paragraph along with management's assessment of the company's ability to continue as a going concern. This is a standard reporting requirement given our history of operating loss and as a growth-stage entity. Importantly, our growth has been outpacing our cost structure, reflecting improving operating leverage as we scale. With the foundational investments of 2025 now largely in place, our focus in 2026 shifts towards disciplined execution, monetization, and efficient capital deployment. Despite continued increases to one of our key raw components, aluminum, our margins continue to expand, and we expect our operating cash burn to normalize as production overhead is further absorbed by growing sales volumes in fiscal 2026. We are targeting and managing initial signals of operating cash flow positivity in 2026, more on that later. We remain transparent regarding our use of the at-the-market offering program, otherwise known as an ATM. In 2025, we raised approximately $500,000 in net proceeds via the ATM. In November 2025, we amended our agreement to permit sales of up to an additional $4,000,000 to ensure tactical flexibility. We recognize the impact of dilution on our shareholders. We all feel it the same. Our strategy is to use the ATM only as a secondary tool. We evaluate and select the capital tools that are most advantageous to operating while being mindful of our shareholder responsibilities. We have historically prioritized the use of certain capital events, such as the high-impact warrant inducement completed in December 2025, which brought in $6,400,000 at a fixed price. Every dollar of capital raised in fiscal 2025 has been tied directly to current and future operational return on investments, specifically doubling our overall production capacity and strategically controlled R&D investments. With that, I will hand it over to Mike. Michael D. Johnston: Thanks, Steve. Let's take a deeper look at the net sales growth. Net sales growth is driven by the rapid scale of our made-in-America hard tonneau covers. In fiscal 2025, our hard tonneau covers segment generated $15,700,000 in net sales, while our soft cover segment contributed net sales of $500,000. The shift toward our hardcover product offerings is intentional. It reinforces our commitment to quality production while supporting higher market price points and better margin profiles. On a sequential basis, Q4 2025 net sales were $4,700,000 compared to $5,000,000 in Q3 2025. In 2025, management responded to continued pricing pressure of our raw material components by implementing a product price increase for both direct-to-consumer and business-to-business customers. The 5.4% sequential decline is attributed to the product price increase and directly impacted our promotional marketing efforts, which in turn both increased our marketing spend and decreased our sales volume. The impact is further amplified by the large contribution of the direct-to-consumer sales channel to net sales. Despite the price increase, our sales channels are stable and are on track to continue growth in fiscal 2026, more on this later. In 2025, our operational KPIs remained strong. We maintained a gross margin of 30.1% in Q4, which is a significant improvement over the 26.4% we recorded earlier in 2025. This sequential stability proves that our manufacturing processes are mature and can handle product mix shifts without significant margin erosion. Gross margin expansion is the most critical metric for our fiscal 2026 outlook. Our fiscal 2025 gross margin was 28%. Our fiscal 2024 gross margin was 10.7%. The expansion to nearly 30% in the latter half of fiscal 2025 was driven by two factors: higher capacity utilization at our New York factory and becoming more efficient with our production efforts. We plan to continue our focus on margin expansion and have set a stable target of 35% gross margin in fiscal 2026. We will continue to employ lean manufacturing principles while adding to our product portfolio and maximizing our production capabilities. Passing it back to Steve to talk about net sales mix and unit economics. Steven F. Rossi: Thanks, Mike. The quality of net sales-generating products also improved in fiscal 2025. Online retailer net sales increased 142% to $11,900,000 from $5,000,000 in 2024. Online retailers represented 74% of total net sales in 2025 compared with just 58% in 2024. Distributor and jobber net sales increased to $4,200,000 from $400,000 the year before. Most notably, there were no private label sales in fiscal 2025, whereas private label represented $3,100,000, or 37% of net sales, in fiscal 2024. Every product that left our factory last year had a Worksport Ltd. label on it. We are proud of that. That strategic shift matters because our decision to focus on proprietary production efforts complemented our resulting margin expansion. We are no longer responding to the same sales channel mix demand that characterized fiscal 2024. The net sales mix in fiscal 2025 can be attributed to demand for our own branded products, especially through e-commerce and growing indirect distribution relationships. A mix within both channels complements our strategy to grow our brand without significant channel concentration or specific customers. We reduce customer concentration risk this way. Geographically, net sales remain overwhelmingly U.S.-based. U.S. net sales were $16,000,000, up 91% from fiscal 2024. That concentration is not surprising given our current sales channel footprint and market strategy. However, it does indicate meaningful room to broaden distribution over time, especially to international markets. Operator, am I still coming through clearly? Operator: Yes, you are. You can continue at geographically net sales. Steven F. Rossi: My apologies, everyone. Geographically, net sales remain overwhelmingly U.S.-based. U.S. net sales were $16,000,000, up 91% from fiscal 2024. That concentration is not surprising given our current sales channel footprint and market strategy. However, it does indicate meaningful room to broaden distribution over time, especially to international markets. Okay. Chime in if I do not. I apologize for the unstable internet connection at times. Let's discuss the hard metrics of our production. Our primary production facility is located in West Seneca, New York, and is currently capable of producing over 125 units within a single eight-hour shift. In August 2025, we announced our strongest four-week production run since domestic operations began. Our unit economics have improved dramatically. In early 2024, our overhead absorption was a headwind due to low volumes. Today, we approach phase one output levels, so fixed costs are being allocated across a much larger base. To reach company-wide cash flow breakeven, we calculate that we need to sustain a quarterly revenue level between $9,000,000 and $11,000,000 at about 35% gross margin. This quarterly revenue target is highly influenced by the underlying sales mix between direct-to-consumer and indirect distribution but is also influenced by our product mix. At our current growth rate, we are aggressively closing that gap and anticipate achieving net sales of $9,000,000 a quarter within the balance of this year. Mike will comment on our OpEx and cash position. Michael D. Johnston: Strategic focus as we enter fiscal 2026 includes diligent monitoring of our cash operating expenses. In fiscal 2025, our general and administrative expenses were $14,800,000. The $3,100,000, or 26%, increase was related to increased employment as we expanded our operations and further developed our product offerings. Excluding non-cash items, our growth in operational expenses is trending below our revenue growth. We have successfully insourced several business processes that were previously handled by high-cost third-party consultants, reducing our professional fees as a percentage of net sales. This is the definition of operating leverage. Our infrastructure is strong, and now every additional dollar of margin contribution has an even greater potential to impact our bottom line. Our net cash used in operating activities for fiscal 2025 is $17,200,000 compared to $10,100,000 in 2024. This increase reflects scaling our inventory resources as we began to offer additional products to the market in Q4 2025, while also supporting our continued growth in multiple sales channels for our legacy tonneau cover offerings. At 12/31/2025, we had approximately $9,500,000 of inventory, 56% of which were raw materials. We are well positioned as we begin fiscal 2026 with diversified product offerings for multiple sales channels and expect higher liquidity to reinvest in our production efforts: $5,950,000 in cash and $3,400,000 available on our revolving line of credit as of 12/31/2025, a total liquidity position of over $9,300,000. Given our projected margin expansion and the expected revenue contribution from SOLIS and CORE in 2026, we believe this provides sufficient runway to reach initial operational cash flow positivity within 2026. Our expectation is to monitor our results and use our existing liquidity resources in a manner that both supports operational goals and decreases the need to seek financing through ongoing capital. I will now turn the call back to Steven to discuss our operational execution and product commercialization. Steven F. Rossi: Thanks, Michael. The financial results Michael just detailed are the output; the input is our operational execution on the factory floor and throughout our distribution network. Fiscal 2025 was about proving that Worksport Ltd. can manufacture in the United States with rigorous quality control. Quality is top of mind for us as we continue to achieve manufacturing milestones. Our initial ISO 9001 certification evidences our commitment to a quality product and demonstrates our ability to scale reliably even with our abbreviated active product production history. Our business-to-business sales channel is still in its infancy. During fiscal 2025, we rapidly expanded our footprint. In the third quarter alone, we grew our national dealer network by 42%. By mid-2025, our partner dealer network exceeded 550 locations across the United States, a nearly sixfold increase from the start of the year. This includes our strategic partnership with Patriot Automotive Technologies, which will support our efforts to accelerate our national penetration. Our tonneau cover business is systematically becoming a moat. By manufacturing high-quality hardcovers in New York, enforcing strict minimum advertised price policies to protect our dealers' margin, and supporting them with aggressive marketing, we are becoming a vendor of choice in the business-to-business sales chain. In November 2025, we announced a major expansion at our R&D facility in Ozarks, Missouri. This facility serves two vital roles. First, it is the primary assembly, testing, and distribution hub for our SOLIS solar-integrated covers and CORE portable energy products. Second, it effectively doubles our R&D footprint. By separating our high-volume tonneau cover production in New York from our complex clean tech assembly in Missouri, we have de-risked the commercial launch of SOLIS and CORE. This geographical diversification also improves our logistics network, allowing us faster shipping to the critical Midwest and Southern markets. Our tonneau cover portfolio has never been stronger. By mid-2025, the premium AL4 achieved an 80% rollout, covering 20 of the 25 targeted vehicle models. In late October, we began production of the HD3 heavy-duty tonneau cover, which entered commercial sales in November. The HD3 is strategically priced for the business-to-business dealer network, protecting dealer margins while strengthening relationships within the jobber community. With a tiered lineup from entry-level SC3 soft-folding tonneau covers to premium AL4 and the professional HD3, we are now positioned to capture demand across the full $4,000,000,000 tonneau cover market. Importantly, with a now mature product lineup, ISO-certified manufacturing, strengthened branding, and the investments made throughout 2025, we believe Worksport Ltd. is entering a new phase. We are operationally ready to scale. As we move into 2026, our focus shifts towards monetization and expansion. Prioritizing the largest revenue opportunities through national distribution, deeper penetration of our dealer network, and initial expansion into international markets such as Europe and Australia. In parallel, we will seek to advance OEM-level relationships with leading automotive manufacturers including Ford, General Motors, and Ram, along with upcoming debutantes like Slate EV. A bonus note: in 2026, we plan to launch a next-generation cover that we believe will help shape the future of Worksport Ltd.'s hardcover product lineup, featuring patented capabilities not currently offered by competitors. Early feedback from select partners and prospective customers has been highly encouraging, with many labeling this new cover as a game changer. We expect this product to see strong adoption within our sales channels and contribute meaningfully to net sales as we scale. Additional details, including product specifications and preorder campaign outcomes, are expected in early 2026. In late Q4 2025, we marked the commercial launch of our SOLIS and CORE product offerings. This is an important milestone for us as it validates our successful development journey of a long-running R&D program. The product positioning is clear: SOLIS is a solar-integrated folding tonneau cover aimed at power generation on-vehicle. CORE is a portable energy storage system for mobile, off-grid, backup, and vocational use, and is designed for both function as a standalone or to integrate with SOLIS. We initially disclosed pricing direction during our Q3 2025 prepared remarks: the CORE starter kit at $949 and the SOLIS beginning at $1,999 and moving to $2,499 depending on fitment. We also described an initial rollout plan for 1,000 CORE units and 900 additional battery packs and a limited SOLIS release, representing about $2,500,000 of near-term initial revenue opportunity. The key 2026 question is not whether these products launched. It is how fast they scale with acceptable margins and working capital discipline. Let's touch on TerraVis Energy. TerraVis Energy continues to deliver breakthrough innovation. In February 2025, we announced that AetherLux can operate in temperatures as low as negative 57 degrees without energy-intensive defrost cycles, the only heat pump in the entire world that has been tested to achieve this feat. Importantly, AetherLux is not limited to extreme climates. Our proprietary ZeroFrost technology has been tested to eliminate frost cycling altogether, a common source of energy loss, system strain, and inconsistent performance in everyday winter conditions, including major markets like Toronto here in Canada or New York. This enables more consistent efficiency, improved comfort, and reduced mechanical wear across a broad range of environments. AetherLux Pro has undergone due diligence and some site visits from multibillion-dollar corporations and U.S. government entities, including the Department of Energy's NREL Alaska laboratory. While tonneau covers drive the current revenue, TerraVis Energy's intellectual property represents a compelling opportunity tied to the global shift towards clean energy products, including high-efficiency HVAC. In late Q1 2026, we selected an established manufacturing partner. The product is expected to achieve certification in 2026 and is currently being evaluated by multiple government entities. Management believes this intellectual property represents a compelling addition to our overall value proposition. Before closing, I want to address the macroeconomic environment, specifically tariffs and supply chain risk, which remain top of mind for many investors. Our soft tonneau covers, along with a small percentage of raw material used for our hard folding tonneau covers, are sourced from China. While we experienced overall increased input costs during fiscal 2025 as a result of tariffs on imported goods, these cost increases did not impact our soft tonneau covers as no additional components were sourced during that time period. Our hardcovers are made in the USA. In fiscal 2025, domestic aluminum prices increased by more than 35% and are up over 50% since the start of fiscal 2024, driven by supply constraints and primarily tariff-related pricing pressures. In response, we implemented a pricing adjustment across our tonneau cover portfolio. While this led to a temporary decline in sales volume in Q4 2025, demand has started to stabilize across each of our sales channels. While also offering higher-margin products, we are regaining momentum heading into 2026, into Q2 2026. Our portable energy products are currently manufactured using foreign lithium-ion supply chains. The current tariff environment has required adjustments to our price and go-to-market strategy. That said, we believe our unique SOLIS plus CORE system will be well received once proper commercialization of the product is achieved across all sales channels. We are also actively evaluating opportunities to transition towards a more domestic supply chain for the CORE over time. We continue to manage these risks proactively and strategically. As of 12/31/2025, we hold 24 issued utility patents and 50 issued design patents and registrations globally, with 95 utility and design applications currently pending. In addition, we have 43 trademark registrations and 15 pending trademark applications in various jurisdictions worldwide. We take a clinical approach to intellectual property enforcement and ensuring that our first-mover status in the solar tonneau space is defended against both domestic and international imitators. We are really excited about our recently submitted patent application for the AetherLux ZeroFrost system. Our intellectual property portfolio continues to serve as our defensible competitive advantage. Now to Mike. Michael D. Johnston: To reiterate the scalability of our product offerings, in fiscal 2025, our net sales grew by nearly 90%. During that same period, our core manufacturing and distribution matured and expanded to complement our customer demand across all sales channels. In fiscal 2026, we do not anticipate the need for major step-ups in each channel. We have the floor space, we have the machinery, and we have the ISO certification. Focus is now exclusively on increasing throughput and optimizing our sales funnel. This is the classic S-curve of growth. The heavy lifting of building the platform is done, and we are now entering the phase of accelerated market capture. Steven F. Rossi: Looking ahead to 2026, we have set clear, measurable milestones. One, initial SOLIS and CORE ramp-up and margin contribution. Two, full rollout of the HD3, AL4, and AL3 lines to all 550-plus dealer locations. Three, launch of the game-changer hard folding tonneau cover, expected to be a best seller. For the second half of the year, we target aggressive dealer network expansion to 1,500 locations through new distribution partnerships expected later this year, operational cash flow positivity, B2B and OEM partnership expansions for the SOLIS and CORE by getting our system to additional customers via synergistic partnerships with other businesses. Michael D. Johnston: Our path to net cash flow positivity is driven by three pillars. First is net sales volume. Reaching a $9,000,000 net sales quarterly threshold that meaningfully produces contributions in excess of operational needs depends on a combination of sales volume mix and product mix. It is also impacted by our production efficiency. We plan to monitor these components regularly and anticipate reaching this target outcome in fiscal 2026. Second is margin mix. Increasing overall production provides margin lift as we use our resources more efficiently to support our sales growth. We also have diversified our product offerings, some of which provide more meaningful margin lift. Both product mix and sales channel mix will directly impact our ability to maximize margin efficiencies. Third is capital efficiency. We plan to concentrate our efforts on performance marketing efforts that reinforce our brand rather than solely focusing on brand impression to drive sales volumes. We also plan to monitor our need to incur additional costs to increase our visibility and impression given our size and the stage of our operations. We enter fiscal 2026 with a stronger cash position and double the availability on our line of credit facility when compared with the start of fiscal 2025, providing us the stability to execute this plan. Steven F. Rossi: We are entering fiscal 2026 with a focused plan to continue our accelerated growth strategy, but with a focus on leveraging our previous investments in brand awareness as well as commercialization of additional product offerings. We believe this approach will continue to generate margin lift and provide additional operating cash flows. For 2026, we expect revenue of $35,000,000 to $42,000,000 with gross margins of approximately 35%. Some highlights. Our guidance includes a full year’s impact of three product offerings launched in late fiscal 2025. Our guidance includes the introduction of our game-changer product offering in early 2026. Our guidance reflects our commitment to driving efficiencies within operations as our company and our product offerings mature in the market. Our guidance assumes continued growth in our business-to-business sales channel, a market which grew during 2025 to be 26% of our sales mix. Some important notes. We remain focused on metrics such as EBITDA and positive operating cash flow within a strategy that includes responsible management of our liquidity. We plan to update investors as we continue to evaluate how the combination of sales mix and product mix impact key performance indicators. Our guidance excludes contributions from AetherLux, which is expected to reach commercial readiness in 2026. Our guidance also does not assume upside from a potentially faster-than-expected ramp-up of SOLIS and CORE. Our guidance excludes potential impacts that may arise from the current geopolitical environment. For example, our guidance assumes that aluminum prices stay stable at the current prices and do not decrease back to a more normal baseline. Why Worksport Ltd.? Why now? To our investors, I encourage you to consider the transformation we have achieved. Just two years ago, Worksport Ltd. was a pre-revenue development-stage company. Today, we have demonstrated our ability to scale and grow, growing net sales from approximately $1,500,000 in 2023 to $8,500,000 in 2024 to $16,100,000 in 2025. Over that same period, gross margins improved from 11% to 28%, exceeding 30% in late 2025. At the same time, we have significantly strengthened the foundation of our operations. We expanded our sales channel positioning, reduced our indebtedness, and brought multiple products to market including HD3, SOLIS, and CORE. We also continue to invest our efforts to develop our AetherLux product, which may serve as a long-term value driver. Our efforts with our intellectual property provide a comfortable competitive advantage. With these milestones achieved, we can now focus on execution, scaling throughput, and driving towards sustained profitability. Thank you. This marks the end of our presentation. Turning the call back to the Operator for Q&A. Operator: Worksport Ltd. is now opening for Q&A. We welcome live questions from analysts attending the call. Faran Ali: Investors attending the call can write their questions within the Q&A section of the Zoom call or email us at investors@worksport.com. We have Scott Buck here. Scott, you can go ahead with your question. Hi. Good afternoon, everyone. Thanks for the time. Scott Christian Buck: Steven, how should we think about the difference between the high end and the low end of the 2026 revenue guide? What needs to go right to end up closer to that high end? Steven F. Rossi: We have considered a lot of different things, bottom-up and top-down. Top-down faces the market and its demand. Fuel prices and purses get tighter, right? We are hoping that the economy stays strong. We are hoping that base fuels and energy stay affordable and do not pinch the pocket. We are hoping that the consumer stays active in the market. Tonneau covers are a must-have, but if people are more budget conscious, premium tonneau covers and CORE-type products might be something that is not purchased as actively. We might feel economic constraints. From the bottom-up, we are very cognizant. Domestic inflation as a result of global tariffs has been significant. A 50% increase on American aluminum because of foreign tariffs is definitely not what I think the intention was with foreign tariffs. If it goes to 55%, 60%, 70%, it erodes margin and leads to price increases that ultimately the average consumer pays, and that $1,000 product turns into an $1,100 product, which might have some dropouts in terms of conversions, if that makes sense. We are hoping that everything stays stable on the bottom-up cost side and supply chain, and that everything stays strong on the consumer side and the economy continues to show signs of strength. Scott Christian Buck: Great. That is very helpful. And then I wanted to ask about the heat pump business. How do you envision the monetization there? Are you going to manufacture and market and sell, or potentially license that technology, or could that even be a potential divestiture down the road? Steven F. Rossi: We have considered and had meaningful conversations about almost all options, from divestitures to licensing. When we released SOLIS, the quality of customer that reached out to us via LinkedIn and emails was huge—various OEMs—and we were so excited. I can say that it shadows the interest in terms of what came from AetherLux. The global billion- and trillion-dollar entities that reached out to Worksport Ltd. and TerraVis Energy—being interested in helping bring the product to market or M&A and these types of things—continues to be significant. We are going to explore all options, but what I think is important for you as an analyst and any investor shareholders to know is we know how to bring something from nothing to market. If nothing were to happen or we chose the path of bringing product to market and you were to say build it, stock it, and sell it, we know how to do that, and we have shown that from our ramp in sales. A product that is something for everybody, like the heat pump, has a much larger—it dwarfs the tonneau cover market. I think it is— Scott Christian Buck: On sales and marketing expense, a nice step up in 2025. Should we continue to see that move higher in 2026, or have you reached kind of a steady state there on the marketing budget? Steven F. Rossi: Steady state. We are going to tighten up. We front-loaded expenses for marketing and branding, and we are going to try to tighten that up for this year. Scott Christian Buck: Okay. Perfect. Well, congrats on all the progress, everyone. Looking forward to 2026. That is all I have. Faran Ali: Thank you, Scott. Steve, we have a question from the audience, Will L. His question is if there are any new relationships with truck lines. I am assuming he means OEM trucks, like a partnership and plan. Steven F. Rossi: OEM discussions are always active. We know all the major automakers, and we think that there is a right time for that. We are mature now, and that is what ISO is for. We do have relationships. As they become material, we will announce them, and I think OEM is definitely in the cards for us this year. Operator: Fantastic. Faran Ali: There is another question about the SOLIS and CORE and if we can comment on the current sales as well as sales forecast. Steven F. Rossi: We have 1,000 CORE products and almost 1,000 additional batteries because it is an unlimited energy system. Sales initially have been pretty strong, but you have to think that when we received the product from contract manufacturing is when we received assets to be able to make marketing. We did not have prototypes. If you are going to make one, you are going to make 1,000, if that makes sense. All the marketing assets have just been released. To that extent, interest and sales were okay for January, February, and March, but we only just released all the right marketing assets to get it to dealers, to get it online, to get it on our website—the videos and these types of things. We have always expected that there would be a 90- to 120-day delay to get the product really cooking. We will have more news in the second half of this year, or at least in Q2 and beyond. Faran Ali: Awesome, Steve. We are going to take one more question here. There are a lot of other questions that are left unanswered. I encourage investors to email me at fali@worksport.com. But we will take this question regarding the strength of intellectual property regarding AetherLux and if we anticipate any competitors in the shadow with the same technology. Steven F. Rossi: So far, we do freedom-to-operate reviews. We do patent checks. We do disclosure checks. We check the market. We are fairly thorough. We have on-staff legal expertise in patents. We think that we have a very strong IP asset in the making with the AetherLux patent. We think it is very defensible. We protect our intellectual property with vigor, and we do not think that anything like this exists that we have been able to find or hear about. There has been nothing close to it, and no other government entity or other business, including other manufacturers that we have spoken to—global manufacturers—none of them have said that they have anything close to this type of technology. We remain very enthusiastic about the opportunity for AetherLux. Faran Ali: Fantastic. Thank you again, Steve and Mike, for the presentation. I have put my email in the chat for any remaining questions, which is fali@worksport.com. If you would like to meet with management one-to-one, feel free to email us; we are happy to get that scheduled. Thank you for being an investor, and have a great day. Operator: Thank you, everyone.
Operator: Welcome to the Veritone Inc. Preliminary Unaudited Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. [Audio gap] I would now like to turn the conference over to Cate Goldsmith, Investor Relations. Please go ahead. Cate Goldsmith: Thank you, and good afternoon. After the market closed today, Veritone issued a press release announcing its preliminary unaudited financial results for the fourth quarter and full year ended December 31, 2025. The press release is available on the Investor Relations section of Veritone's website. Joining us for today's call are Veritone's President and Chief Executive Officer, Ryan Steelberg; and Chief Financial Officer, Mike Zemetra, who will provide prepared remarks. Please note that certain information discussed on the call today will include forward-looking statements. This includes, without limitation, statements about our business strategy and future of financial and operating performance. These forward-looking statements are subject to risks, uncertainties and assumptions that may cause the actual results to differ materially from those stated. Certain of the risks and assumptions are discussed in Veritone's SEC filings, including its annual report on Form 10-K. These forward-looking statements are based on assumptions as of today, March 26, 2026, and Veritone undertakes no obligation to revise or update them, except as may be set forth in a subsequent press release related to the company's audited Q4 and full year 2025 financial results. During this call, the actual and forecasted financial measures we will be discussing include non-GAAP measures. Reconciliations of these measures to the corresponding GAAP measures are included in the press release we issued today. Finally, I would like to remind everyone that the call today is being recorded and will be made available for replay via a link on the Investor Relations section of Veritone's website at www.veritone.com. Now I would like to turn the call over to our President and Chief Executive Officer, Ryan Steelberg. Ryan Steelberg: Good afternoon. I'm excited to provide an update on our preliminary Q4 financial results, discuss the strategic deal announced today with Oracle and provide more strategic insight into some of our newer and exciting business opportunities, including our material progress with certain hyperscalers. Because we are discussing preliminary results, we will not hold a question-and-answer session following our prepared remarks today. Our preliminary Q4 results, which we [ first ] today have a fairly wide revenue range of between $18.1 million to $30 million. The range is almost entirely driven by a single transaction, which we completed and signed in Q4 2025. The transaction was a complex multiparty nonmonetary transaction, which included an on-prem sale of our aiWARE [indiscernible] and application software at a price of $12.9 million. In exchange, we received certain intangible rights and direct and preferred access to a significant number of customers who control a variety of digital data sets for future use in VDR and AI model training at a fixed revenue share of 50% which is a significant improvement over our current margin on VDR today. While the contracted price of the software was $12.9 million, from a pure GAAP accounting perspective, it is very challenging to arrive at the appropriate fair value of the sale as the realization of the data rights is prospective, considering the relatively new, albeit fast-growing market of data sales and VDR. As a result, the stand-alone selling price of the software could be discounted substantially from a revenue perspective. It is important to note that the $12.9 million price was included in our previous range of Q4 revenue guide, but it could end up in the lower end of this range, it is very binary. That said, we are actively working with internal and external resources to ensure the value is fairly reflected in our Q4 2025 results, which we expect will be completed by the time we file our 10-K. Irrespective of the final GAAP accounting conclusion, I would like to explain why this deal is so strategic for Veritone, and why we are confident that we will ultimately turn this $12.9 million face value active deal into something far greater. Veritone currently holds exclusive and nonexclusive rights and relationships to monetize some of the most valuable and iconic sports, entertainment, public safety and news data sets from content and IP owners, such as the NCAA, CBS News and other franchise customers. However, the demand for VDR-specific content has increased substantially, and the content demands have varied widely. We do not have universal access to unlimited amount of data suppliers under contract with Veritone today. Case in point, in fiscal 2025, we were forced to turn down more than $10 million worth of bona fide data orders because we could not source the volume or specific type of content or data in the time frames our hyperscaler and motor developer partners required. Hence, why this strategic deal is part of the solution going forward in addition to our normal business development efforts. As a result of this deal, we now have preferred access to potential VDR customers, who control more than 50 million hours of monetizable data sets today. To put this into perspective, the entire marquee catalog of the NCAA video library is less than 1% of this size. And just to cite one example of these new customers from this transaction, which we recently signed an agreement with is a major fast food franchisee to provide Veritone with access to their catalog of multi-camera video surveillance footage, data that is in high demand by hyperscalers for frontier and world model development. Our forecasts have conservatively estimated the overall library of data sets from this transaction for potential VDR customers could generate over $100 million in VDR revenue over the next 3 years. In addition, we have a fixed margin on this data that is significantly better than our historical VDR margin. While the corresponding revenue may ultimately recognize over time from an accounting perspective, we now have access to a significant amount of valuable data sets that can be monetized through our VDR platform with no upfront cash expenditure to obtain them. We expect to begin monetizing this data set as early as Q2 2026. I know I have spent a lot of time discussing this transaction, but we want our investors to have a detailed understanding of the situation as well as the significant opportunity. Next, and I am so excited about this, I would like to introduce and discuss the groundbreaking agreement we just announced with Oracle, a deal that has been in the works for almost a year. The Oracle deal is a multiyear strategic partnership to accelerate the deployment of Veritone's aiWARE platform, application and data services via the Oracle Cloud Infrastructure, or OCI. With built-in and substantial financial cash incentives that allow Veritone to scale its cloud infrastructure at a more efficient cost for compute and storage. Under the terms of the agreement, Oracle Cloud Infrastructure will become the cornerstone of Veritone's next generation of AI solutions for commercial, public sector and high-growth Veritone data refinery markets. As the demand for scalable and secure AI infrastructure reaches unprecedented levels, Veritone will leverage OCI's high-performance AI super clusters to power its aiWARE platform and data solutions. This partnership ensures that Veritone's customer base can harness the transformative potential of AI with superior price performance, security and data sovereignty provided by Oracle's distributed cloud. Signing and collaborating with Oracle represents a pivotal milestone in Veritone's mission to help enterprises find their truth in their data, and Oracle's financial commitments in this partnership validate our leadership in managing unstructured data and our commitment to providing some of the most robust AI solutions in the market. By migrating critical workloads to OCI, we are unlocking new levels of scalability for Veritone data refinery and providing our public sector and commercial customers with the performance and security they require to stay ahead in an AI-driven world. Please check out the joint press release on our investor site to learn more. On to our core operating business. Over the past two years, we have been on a disciplined journey to realign Veritone around a singular clear vision, reestablishing aiWARE as the essential orchestration and intelligence layer for enterprise and public sector AI and unstructured data. Today, I am proud to announce that, that transformation of Veritone is complete. We have reshaped this organization into a focused platform-driven company, and we are now executing from a position of operational, financial and technical strength. In 2024, we started to reposition the company. In 2025, we validated that model, and today, we are no longer managing through a transition. We have exited non-core assets, we've simplified our operating structure and aligned our resources behind scalable, platform-driven revenue streams. We are now deploying capital, expanding our platform and driving the kind of operating leverage that defines the market leader. The most significant evidence of our progress is the Veritone data refinery or VDR and more importantly, those hyperscale leading customers that we are now serving. What began as a unique platform capability organically built has evolved into a scaled token production engine that is now powering the world's major hyperscalers and foundational model developers. Our strategy was to convert proprietary unstructured data sets into reoccurring revenue, and that strategy has been validated at the highest levels. We are now actively engaged with under contract to and generating revenue with all major players, including NVIDIA, Amazon, Google and Meta, among others. Now that we have increased our access and supply of rich data and have established contracts with all major hyperscalers, we see a clear opportunity to deepen and expand our engagement across each and every one of these partners. With hyperscalers expected to spend approximately $700 billion in combined CapEx in 2026 according to S&P, Veritone stands to capture an increasing share of that investment as a leading provider of clean, model-ready training data. On the supply side, we are effectively enabling enterprises to treat their unstructured audio video images and text as a renewable monetizable asset class to meet this AI demand. As previously discussed, it is imperative that we remain very focused and cost-efficient on data acquisition. On the VDR supply side, in addition to data sets now available to us as a result of the strategic transaction I detailed above, we continue to sign and expand our portfolio of available data sets through other channels as well as to improve our capabilities to refine, process and prepare those data sets for licensing, distribution and sales. Historically, the sales and representation process has been heavily dependent on business development and manual efforts, which, despite being effective, has limited our ability to significantly accelerate the acquisition and distribution of our data set offerings and portfolio. That changes I'm excited to follow on the announcement we did a couple of weeks ago about the launch of the Veritone data marketplace built on aiWARE. Veritone has officially taken the next step in evolution of the AI supply chain. Leaning into the data economy, we recently announced the launch of the Veritone data marketplace, a platform designed to improve and streamline the data ecosystem without compromising on control, transparency or quality. This marketplace is the essential partner to our Veritone data refinery. While VDR acts the tokenization engine that makes unstructured data AI-ready, VDM, the Veritone data marketplace serves as the trusted and accredited distribution hub, ensuring those assets are monetizable, transactional and governed. We are particularly excited about the value this brings to both sides of the data licensing market. Rights holders with valuable archives and data sets now has a clear path to monetization with complete asset control. Simultaneously, AI developers gain access to a deep catalog of proprietary data spanning industries from entertainment to human behavior to robotics. These data sets can even be evaluated for metadata density and model fit before acquisition, ensuring they are optimized for foundational architectures. Previously available only to a limited group of customers the Veritone data marketplace is now available for content owners and AI developers to accelerate responsible AI development. We are proud to lead the charge in sourcing high-quality data ethically and delivering it through a governed, transparent marketplace that meets the needs of the hyperscaler community. Our public sector division is starting to execute on all cylinders delivering a strong 68% year-over-year growth. This success is built on three clear strategic pillars: First, high-impact applications. Our Veritone iDERMS suite is revolutionizing productivity, enabling mission-critical workflows that simply aren't possible without Veritone. This has dramatically expanded our addressable market across SLED, higher education, Fed SIV and international agencies. Second, unmatched deployment flexibility. aiWARE and iDERMS are designed for the most sensitive environments. We meet the strictest security and sovereignty requirements, whether deployed in government cloud or completely network isolated airgap environments. And now with Oracle, we will take that to an even higher level of performance and security, both domestically and globally. And third, a true open architecture. Unlike many of our competitors, aiWARE is a completely open platform, our ability to ingest data at scale and connect with any application or data set without vendor walk-in makes us the infrastructure of choice for federal AI monetization and the Department of [indiscernible] AI First strategy. This foundation has led to deep integration within the Air Force OSI and the JPS Trust modernization program. With our pipeline at record levels, our Q4 wins, including a major U.S. University, a top 5 share of department and another major state highway patrol truly validates that we are a trusted AI partner for the public sector. In commercial enterprise, we have successfully operationalized our data to AI flywheel. By connecting proprietary supply or surging AI demand, we built a scalable architecture where volumes drive value. More data attracts more buyers, which directly fuels our margin expansion and relicensing efficiency. The results speak for themselves. In Q4, our licensing team executed 224 orders, growing nearly 10% over the prior year. Our reach is truly global, providing critical media assets to top-tier firms like Google and Goldman Sachs, major studios like NBCUniversal and premier sport entities, including ESPN, the NFL and Tom Brady's Religion of Sports. This momentum directly feeds our high-margin software business. Software deal volume grew 14% year-over-year to 33 deals in Q4. We are seeing a powerful combination of retention and expansion, renewing core partners like Sony Pictures and Summit Media, while simultaneously landing new accounts like Snap and deepening our relationships with prestigious events like the London Marathon and Augusta National Golf Club. I'm incredibly proud of our hire division, now rebranded as Broadbean by Veritone, which delivered yet another strong year. Despite macro hiring headwinds, Broadbean maintained and contributed robust profit margins critical to Veritone's overall growth and success. To appreciate the scale that our Broadbean division manages, in 2025, Broadbean distributed over 7.6 million unique jobs, powering more than 40 million unique job ads. The result, we drove an impressive 132 million engagements in application and clicks directly into our customers' ATS and recruitment systems. Every month, an average of 30,000 unique HR professionals rely on our software to manage their talent acquisition. Other highlights include our Global Media Services unit, achieving a record-breaking year with double-digit year-over-year net revenue growth. In fact, Q4 was our strongest on record, making the first time we crossed the $10 million threshold for media under management. We've carried that energy directly into 2026. I'm thrilled to announce a major SaaS win with the U.K.'s Department of Work and Pensions. This partnership establishes Veritone as a cornerstone of U.K. Government recruitment, as our software will now power job advertising for the Ministry of Justice, DEFRA and the home Office. Furthermore, our first year in the Workday Platinum Partner Program was a Triumph, securing 59 new deals, a 30% increase over the previous year. With an expanding pipeline of Fortune and Forbes Global 500 brands, we are just getting started. As we look ahead, we are preparing to unveil our next-generation job management modules and our groundbreaking angenticAI Broadbean framework. This isn't just an upgrade, we believe it's a productivity revolution, again, for our tens of thousands of monthly Broadbean users. Looking forward to 2026. As we enter the year, our focus is simple, disciplined scale. We are focused on converting our $50-plus million VDR pipeline into recognized reoccurring revenue and expanding our public sector deployments. We will continue to allocate capital towards platform expansion, and we'll continue to evaluate selective strategic opportunities and partnerships that strengthen our data and orchestration moat. Veritone has moved past the transition. We have the platform, the partners and the financial foundation to lead the AI-driven data economy. Thank you. Now I'd like to turn it over to our Chief Financial Officer, Mike Zemetra. Mike? Michael Zemetra: Thank you, Ryan. Given the preliminary nature of our financial results, I will only be discussing our guidance for fiscal 2026 today as well as a few balance sheet updates. Our software products and services revenue pipeline and long-term outlook continue to be at [indiscernible]. Specifically, we continue to see strong demand across commercial VDR and the public sector. In 2026, hyperscalers, including Google, Amazon, Meta, NVIDIA and others have individually forecast to spend hundreds of billions of dollars in fiscal 2026 to power their AI initiatives, including further investments into their large language models. According to Fortune Business Insight, the global AI training data set market size was valued around $3.6 billion in 2025 and is projected to grow from $4.4 billion in 2026 to $23.2 billion by 2034, a CAGR of 23%. From a model training perspective, we believe we are well positioned to exploit this potential revenue opportunity as more mature models are now investing heavily in rich video data, where we believe Veritone has a clear competitive advantage. As of today, our near-term sales pipeline in VDR alone is over 50 million and continues to grow. One of our most important learnings in 2025 was to expand the range of data set availability for our VDR customers and to improve the velocity to deploy these data sets. As Ryan mentioned, we have been able to secure millions of dollars of potential VDR revenue in fiscal 2025 simply due to the fact that we could not readily source the content requested by our VDR customers in a timely fashion. To address this in 2026, we will be focused on the most efficient and cost-effective ways to increase the supply of data, and we will also be investing in the engineering and product around VDR, including Veritone Marketplace, where our aim is to deepen our competitive moat with exclusive access to thousands of more data providers. As Ryan discussed, as a result of our Q4 strategic data set transaction, we now have access to customers who control more than 50 million hours of valuable video data sets, including with some of the largest retail, travel, entertainment and fast food providers in the world. We believe these near-term strategic decisions will enable us to continue to grow our VDR revenue in fiscal 2026 and beyond at or above the current 23% projected CAGR for spending on large language models through fiscal 2034. In the public sector, the TAM for digital evidence management solutions today exceeds $10 billion and is growing at double-digit rates. In fiscal 2026, we are targeting our public sector to grow between 60% to 70% year-over-year. This growth is forecasted to come from expanded offerings under existing federal contracts including those with the DLA and OSI and from new international deals across Western Europe. Collectively, our backlog and sales pipeline across our core AI platform is in excess of $200 million today. And as Veritone remains uniquely positioned to capture even more opportunity in the data as a currency market, we expect that pipeline and our potential to monetize our trove of tokenized audio and video content to increase further. On the OpEx side, we are forecasting relatively flat sales, marketing and G&A expenses in fiscal 2026 as compared to 2025 with forecasted spending across these areas as a percentage of total revenue expected to show improvements year-over-year. We are projecting research and development expenses to be slightly higher year-over-year on an absolute dollar basis, starting in Q1 and throughout fiscal 2026 as we continue to invest in our VDR and public sector revenue initiatives, including the Veritone marketplace and planned new software product features and enhancements in 2026. Note that consistent with 2025, we expect revenue to grow sequentially quarter-over-quarter in 2026 with Q1 2026 revenue approximating Q1 2025. This is partly driven by the public sector, where we see a higher revenue ramp starting late in the first half of 2026 from our existing larger federal deals, coupled with the timing of certain international contracts we expect to announce in the coming year. In addition and based upon the discussion and timing of certain VDR deals, including the signing of several large hyperscalers in late Q1 2026, we expect to see a more pronounced revenue ramp in VDR starting in Q2 and throughout the second half of 2026. The key risk to our revenue projections are the consumption-based nature of [ VDR ] coupled with the timing of government-based contracts and decision-making. In addition, the visibility into our VDR pipeline is typically 2 to 3 months in advance of delivery and decision-making on the nature and volume of content may change depending on the customers' need anticipated impact on its trading models. Given these factors, coupled with the complexity of government decision-making, especially during [ war ] time, we will only be providing financial guidance for the fiscal year 2026, which we plan to update on our next earnings call. More specifically, in fiscal 2026, we are expecting revenue to be at $130 million to $145 million, which at the midpoint represents a 47% increase year-over-year from the low end of our 2025 to eliminate financial range. We are expecting the public sector revenue to grow between 60% to 70% year-over-year and the remaining growth that comes from our commercial enterprise sector, predominantly from VDR. Our Veritone higher products and services are included in this growth, and we expect H1 to be flat to slightly down year-over-year given the current macroeconomic [ hire ] environment. Our managed services is expected to be up year-over-year by 10% to 15%, [indiscernible] due to the recent improvements we are seeing on the representation side of our business. We expect gross margins to fluctuate between 60% to 65%, driven by the forecasted mix of revenue in the period and non-GAAP net loss to be between $13.5 million to $22.5 million, which at the midpoint represents a 54% improvement year-over-year at the low end of our preliminary 2025 financial range. The change is reflective of the timing shifts in revenue, the previously discussed planned increase in research and development coupled with the compression in gross margins due to the mix of VDR in 2026. We believe we are still on the path to profitability, which is the earliest would be in Q4 2026 and is highly dependent on the planned compound growth of VDR in the public sector throughout fiscal 2026. Finally, I want to highlight several material improvements we have made to our balance sheet. In Q4, we retired 100% of our senior secured term debt and repurchased approximately 50% of our then outstanding convertible notes. This has resulted in a 90% reduction in our annual debt carry costs from roughly $14 million to just $800,000. We closed fiscal year 2025 with unencumbered cash and cash equivalents of $27.7 million, free of any restricted covenants. $45 million and 1.75% convertible debt and 92.6 million shares outstanding. We expect to provide a full financial release for Q4 and the full year 2025 once we finalize our fiscal 2025 results, which we expect to furnish when we file our 2025 annual report on Form 10-K. That concludes my prepared remarks. Ryan? Ryan Steelberg: Thank you, everyone, for your time today. Veritone has come a long way in just a very few short quarters. Over the past two years, we have focused the business around aiWARE, our core platform, which powers really our entire corporate and product offering strategy. We are very excited about the scale that we are beginning to experience. For example, VDR has evolved in a true production engine, and we are engaged with all of the major hyperscalers, which is a tremendous accomplishment. The strategic data set transaction and our partnership with Oracle are additional proof points of our success, and they're expanding our access to high-value data and giving us the infrastructure to scale more efficiently going forward. As we move into 2026, we are focused on disciplined scale by converting our pipeline into revenue, expanding our data supply and continuing to build on the operating leverage we have created. We have the platform, the partners and the foundation in place. Now it's about execution and scaling into what we believe is a very large opportunity. Demand remains strong. Our pipeline continues to grow, and our engagement with hyperscalers is as strong as it has ever been. I appreciate everyone's time today, and we look forward to speaking with you next quarter. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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