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Operator: Ladies and gentlemen, good afternoon. Welcome, and thank you for joining the Exor Investor and Analyst Call. Please note that the presentation is available to download on Exor website www.exor.com under the Investors and Media, Events & Presentations section. Any forward-looking statements Exor management makes are covered by the safe harbor statement included in the presentation material. Please note that this conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to your host, CEO, John Elkann. Please go ahead. John Elkann: Good morning, good afternoon and good evening to all of you. Thank you for being here today with us. 2025 was a difficult year in many different ways for Exor and for our companies. But it also has been a year that has helped us be more focused and be more resilient, which enables us as a company to be better prepared for another difficult year, which will be 2026. Today, we want to talk to you about our companies. We have less of them and we have more in health care. We want to speak to you about Lingotto who has reached a very important milestone in '25, reaching EUR 10 billion of assets under management driven by performance, which is exactly in line with our intentions of building an investment organization interested in performance, not in gathering assets. And finally, our financials that on the back of disposals have provided us with a strong balance sheet and also the opportunity in '25 of doing a large buyback of EUR 1 billion, which if you add to the ones that we've done in prior years taking into account our large discount has allowed us to buy up to close to 15% of our shares. Our portfolio today reflects the latest disposal, which is JD, which we were able to conclude and the money got wired yesterday, and it reflects a Exor as we move towards '26, which would be one of less companies where we'll be able to focus particularly on our larger ones. And that's where I'd like to proceed. And I'd like to start with Stellantis who has been the one that has encountered both external difficulties and internal difficulties in the course of '25. It is resetting itself and under the leadership of Antonio Filosa, it is addressing the many challenges that is confronted with, both externally but also internally. We are getting to an important year in '26 with the Capital Markets Day, where Stellantis, end of May, will present its future, where it intends to be very clear about how it will improve as a company and make sure that it is and will remain one of the leaders in what is a defining industry. Ferrari, on the other hand, has already spoke about its future in '25 in the Capital Markets Day, where it is committed to growing, but growing in a way in which the uniqueness of what it does continues to be unique. And '26 is a defining year with the launch of the Ferrari Luce, the first-ever electric car, which will also happen in the end of May with the third act of the launch that started at the Capital Markets Day presenting the technologies of the Ferrari Luce, which then had beginning of this year with the interiors and finally, the final car, end of May in Rome. I would like now to pass to my colleague, Benoit, to speak to you about Philips, which is a company in which we continue to invest in '25. And today, is in terms of value, the second largest company for Exor. Benoit Ribadeau-Dumas: Thank you, John. 2025 was the last year of the '23, '25 plan that we underwrote in 2023 when we invested in Philips for the first time. So it was good to see at the end of this plan, the company delivering a strong performance, a solid performance with, in particular, a strong margin expansion, which is the result of the ambitious reorganization and productivity plans that have been launched by the CEO, Roy Jakobs. And second, we saw also in 2025, and it was long awaited a peak in the order intake after years of moderate growth and it was -- it is paving the way for a new momentum of the company. The stock price so far has not been following the performance. So we have decided to increase our stake last year to reach 90% -- 19% economic rights. Also, we were glad to see the company announcing earlier this year the new plan, the new 3-year plan for 2026, 2028, after a phase where the focus was on execution and on exiting the quality crisis of the Sleep and Respironics business. This is a renewed ambition for the company, which is now targeting mid-single-digit sales growth and mid-teens profit margin. Of course, continuing the efforts that they launched on quality and productivity enhancement, but also accelerating in the delivery of new products fueled by AI and fueled by the high level of R&D that this company has always been part of. So we are a happy shareholder of Philips, and we are looking forward to seeing their next progresses. Suzanne on CNH. Suzanne Heywood: Thank you, Benoit. So CNH had a challenging year in 2025 because of the downturn in the agricultural market. exacerbated, of course, by some of the geopolitical events that have been going on as well as some of the changes in tariffs and that is expected to continue into 2026 as already communicated by the company. At its Investor Day in May '25, CNH presented its path to 2030, and we think this is very important because it includes a number of different measures that will strengthen the company and enable it to come out of this downturn in a strong way. One is expanding the margins of the company through the cycle. And an important part of that is addressing some of the quality issues that it needs to address within the company. It is also looking to launch a series of new products new technologies, in particular, those around precision farming, which, of course, are very, very important for our customers and also a focus on costs, in particular, supply costs for the organization. The company has a lot to do, but it also has a lot to look forward to as it comes out of this cycle, given its tremendous lineup of products, both on the agriculture side and on the construction side, so we look forward to continuing to be a shareholder in the company. I also want to take this moment to do an update on Iveco. This is an important moment for Iveco. Last year, we celebrated with Iveco the first 50 years of its history. And this -- and last year, we also agreed and are participating in 2 extraordinary transactions in relation to Iveco. The first of these is the sale of Iveco Defence to Leonardo. This is the Iveco Defence business, and this transaction closed on March 18 with the expectation that the dividends will be distributed at the end of April. This transaction for Iveco Defence secures a future for the defense business within Iveco, secures a future for it now with Leonardo, which will give it increased scale. The remainder of the business, which is the trucks, buses and engines business will be combined with Tata Motors through a tender offer, which we're expecting to close at the end of the second quarter. The total valuation of both of these transactions will be EUR 5.3 billion. I want to take this moment to thank the 2 CEOs that have led Iveco through the period since it was spun out of CNH back in 2022, Gerrit Marx and Olof Persson, and of course, their management teams as well. We wish all parts of the Iveco business, a very successful next 50 years within their new ownership. I now pass back to John. John Elkann: Thank you, Suzanne, and it's also the opportunity for me to thank the leadership team and all their colleagues at Iveco and wish Iveco an important journey ahead as it opens for the new future with Leonardo and Tata. Coming back to Exor, if we look at our unlisted companies, they delivered mixed results. The good news is that our bigger companies in terms of value have performed better than our smaller ones. Welltec had an extraordinary year, while Shang Xia continued to have a difficult year. We expect the overall companies that we have as unlisted to present themselves in '26 with strong plans ahead and continuing to do in aggregate well. I would like now to speak about Lingotto which had a very important year in 2025. Lingotto was founded in '23 to really converge all the different investment activities that we were doing in partnering and directly in Exor. We now no longer have any investments outside of our companies, which are the ones in which we are involved in their governance. And everything we do outside will be carried forward within the investment strategies of Lingotto who today are 4. Of these 4, the one that has performed the best is the intersection fund led by Matteo Scolari and the overall aggregate returns of the 4 strategies have allowed ingot to reach USD 10 billion under management. What is encouraging is this has been driven by performance and what was really -- it was really what we expected when we founded Lingotto an organization, an investment management organization where the principle is what the organization cares about. And investing is what they do in order to grow through performance rather than gathering assets. The good news is on the interest of specific parties, which we've been very selective in allowing to invest alongside us, the quality of the investors and also the quality of what their mandate is, of which most are linked to societal causes are encouraging to see how we have alongside us very capable investors which invest for important causes. I would like now to pass it to Guido to walk you through our financials. Guido de Boer: Thank you, John. So on this slide, we recap what John, Suzanne and Benoit mentioned previously. So our NAV per share started the year at EUR 178 the biggest movers in a negative sense were 3 of our largest companies, Ferrari, Stellantis and CNH contributing in total for a EUR 25 per share decline in our NAV per share. This was partly offset by decent performance of our other companies, as John just highlighted, an outstanding performance at Lingotto, going up 40% in the year. And in addition, we invested EUR 1 billion in buybacks at over a 50% discount which contributed EUR 4.7 per share, and EUR 2.5 per share. So overall, we ended at EUR 164.4, so down for the year. If we look at our objectives, which are twofold. The first one is a relative performance metric where we look at NAV per share versus MSCI World Index. And the second one is an absolute performance measure, total shareholder return. So to first go to the relative one. In 2024, we actually had a pretty good year at 9% NAV per share growth at a very challenging benchmark, where the Magnificent 7 did great in the MSCI went up by 25%. 2025, we actually had a much easier comparable because those similar 7 companies did not perform as well. but we actually declined in NAV per share, as I just showed you. And on the back of an increase in the discount, our total shareholder return is below our NAV per share growth. So then moving to the measures that we track every year to make sure we operate in an efficient and disciplined way. The first one we track is free cash flow over dividend. As a measure of the financial health that we have in terms of cash flows. That is still at a very healthy level at almost 6x, notwithstanding a decline in the dividend of Stellantis. Management cost over GAV. So an indication of how efficiently we manage our overhead is world-class it went up largely driven by the decrease in GAV increasing it as a percentage. And also loan-to-value which measures how aggressively we are levered is down to 6.9%, notwithstanding the reduction in GAV. And that's primarily because we realized EUR 3 billion of proceeds from the sale of Ferrari shares. We reinvested that partially, but we also increased our cash position. So we're in a healthy place there. So if we look at our balance sheet, which is critical in these turbulent times, we are very strong. So our loan-to-value ratio is at 6.9%. Our bond maturities are very well spread out. We refinanced EUR 600 million in 2025. And now that has a maturity in 2035. We have a payment coming up of $170 million of a private placement, which we can finance out of our cash position. And on top of this low repayment requirement in the coming years, we have a EUR 1.1 billion credit facility, which we extended and doubled in the year. and we have a EUR 1.4 billion cash position as of December 2025. So in a very healthy position indeed. So these are the financial slides that I would like to present, and I want to hand over to John for the concluding slides. John Elkann: Thank you, Guido. We entered '26 with momentum. We have to complete the transactions that we have announced. On the back of those, as Guido mentioned, we will have been strengthening our balance sheet with close to EUR 3 billion additional resources. And if we look at the returns of what we have been divesting, we're speaking about 1.4x on cost. Now in moments like the ones we are living, which are uncertain times, what is key is to have liquidity and preserve capital. So we feel that having close to EUR 4 billion, as we conduct and conclude the transactions that I described puts Exor in a very strong position in an uncertain moment of time. I would like to conclude by giving you which are the priorities that we have as a company. We want to focus and focus particularly on our larger companies because that's where we believe the greatest value is. We want to continue to simplify our portfolio by conducting to closure the transactions that we have announced and continue to divest from our other assets. And we are committed to a strong balance sheet, which is even more valuable in moments like the ones we are living and be ready to deploy capital with discipline when the time is right. I would like to thank you all for your commitment. I would like to thank you all for believing in Exor. We realize that '25 was a difficult year on the back of a difficult year that '24 was. We are also very aware that the environment in which we find ourselves is uncertain in '26 but we do feel that the last 2 years have strengthened us and we enter this difficult year stronger than we were in the last 2 years. This is why I wanted to conclude with the quote that I have at the end of our letter which I deeply believe is one of the strengths that we have as an organization. Thank you, and we look forward to answering your many questions. Operator: [Operator Instructions]. We are now going to proceed with our first question. And the questions come from the line of Monica Bosio from Intesa Sanpaolo. Monica Bosio: Good morning, everyone, and good afternoon, everyone. I have basically 2, 3 questions. The first one is, obviously, cash is king in this tough environment. But maybe should we assume that no deal will be announced across the entire 2026 and that the time frame will be longer. And the last conference call, the company clearly stated its interest for 3 main sectors, the health care, the luxury and the technology with no clear priority. Are still the sector where the company wants to invest or maybe something else changed in the selection list. And another question is on deployment of the cash. Following the EUR 1 billion buyback in 2025. I was wondering if the company is willing to execute another buyback program in the future? And if yes, could the buyback be taken into consideration jointly with the new investments? Or could it be considered only in case no significant investments opportunities arise? John Elkann: [Foreign Language]. Monica, those were all incredible questions. The timing is really linked to making sure that we find the opportune investment. And I think that in times like the ones we're living on one side, one needs to be prudent. On the other side, one needs to be patient. And we want to make sure that we are sufficiently patient to capture the best possible opportunity. In terms of interest of sectors, we remain convinced that the sectors that you mentioned are interesting sectors, technology, luxury and health care with interesting valuations. But we also think that we should be open to other sectors and not preclude ourselves better opportunities if we were to find them. We also think that the companies that we own within the sectors in which we're present remain interesting, which is the reason why we have deployed money in '25 in Philips and bioMérieux. And if you add our investment in Institut Mérieux plus bioMérieux is de facto our fifth largest investment today. So the fifth most largest company if you combine Institut Mérieux with bioMérieux. In terms of buyback, as I mentioned, we have been aggressively buying back shares, EUR 2.5 billion in the last years, which is approximately close to 15% of our capital. and with wider discounts, which we look at very favorably because they are the opportunity to do buybacks, which is a way to invest in ourselves are opportunities that, of course, we will continue to look and look with discipline. As of now, we believe that, as you said, cash is king, and it is a moment where making sure that we do have a fortress balance sheet is important. And that is also the case for our companies. we believe that our companies are all with very strong balance sheets, which is the most important thing when you do enter in uncertain times as we have learned in the past. So as much as I feel bad about '24 and '25, I also realize that they have helped us both at Exor and our companies to enter these uncertain times much stronger. Operator: We are now going to proceed with our next question, and the question comes from the line of Martino De Ambroggi from Equita SIM. John Elkann: You must be happy about Iveco. Martino De Ambroggi: No. Not anymore. The first question is on Lingotto. Could you elaborate on what is the strategy going ahead? And I don't know if it's possible just to have a fair value, current fair value, considering what happened in the past few weeks in the market turmoil. I don't know if you have an indication you can provide. The second is on the additional divestitures because if I understood correctly, you were talking about more divestitures. Is there any clue on what could be a moving part going ahead? And third, I know I repeat basically every year the same question, but now it's quite a long time with a discount to net asset value, well in excess of 50% and this morning, even much, much higher. What are the 3 main reasons justifying such a high discount in your view? Just to have a very -- your personal impression. And last, the environment is getting worse and worse. Could you provide us an update on your view on the Stellantis environment and risks considering what is going to happen? John Elkann: There's a lot of questions. So Lingotto, the strategy is very much the one that was stated in the letter that I wrote as the founder of Lingotto in '23. So this is an organization that wants to attract exceptional investors and make sure that they can do what they love, which is investing. We have 4 distinct strategies, as we have described in the past, and those remain consistent with what the strategies are. which allows us to have a diversified sets of strategies, which are different from what we do directly as Exor and it allows the right discipline also being able to have selectively third-party capital from, as I mentioned before, very solid investors. In terms of the recent events, we don't comment on where we stand on mark-to-market. And if you look at the opportunity of the discount, we actually have viewed that in a positive way because it has allowed us to buy back shares as we've done in the past. I think that it is important to stress that in moments of uncertainty, you're better off being patient than rushing, which is why for any capital allocation. Is it in buying our own companies investing more in Lingotto strategies, investing in a new company or doing buybacks? We remain prudent but studious of what would be the different alternatives. Stellantis was able to raise through an hybrid issuance which increased already a strong balance sheet and the overall execution that is being carried forward is on the right track. Giving today any further information on Stellantis is not desirable because we are, as you know, in end of May, we will be assisting to the Capital Markets Day of Stellantis. Thank you, Luigi. Operator: We are now going to proceed with our next question. And the questions come from the line of Luuk Van Beek from Degroof Petercam. Luuk Van Beek: Yes, I have 2 questions. So first of all, have you reviewed your portfolio for the potential impact of higher energy prices and any other things that are happening in the world to see the exposure and the risk level? And the second question is on the discount to NAV. Do you consider to take any measures other than just executing the strategy and delivering and testing on that reducing the discount? John Elkann: Energy prices is premature to actually see the inflationary pressures. But that is definitely something that our companies are working actively in understanding the inflationary pressures that are happening and what type of impact that would have on some of their cost structure. We believe that the discount is actually an opportunity, and that's something that we have been able to capture in the past. Operator: We are now going to proceed with our next question. And the questions come from the line of Alberto Villa from Intermonte SIM. Alberto Villa: Actually, First of all, congratulations for the annual report. It is very clear and very nice also to read. So congratulations to the team. And secondly, going back to Lingotto, it's now more than 11% of your GAV thanks to the performance and looking at the composition of the investments. The vast majority, 70% is the intersection strategy. So the public investments that had a great 2025. I was wondering if in the future, you expect to maybe take advantage of the performance to reduce a little bit the exposure to Lingotto or maybe to mix a little bit more into the to shift a little bit more into the other strategies and how you feel about private markets? So there has been a lot of rumors about the outlook for these asset classes, especially in the U.S. So wondering if you want to share with us your thoughts on that. John Elkann: Thank you. And I will, with Guido, convey your message on our annual report. There was a lot of work in doing it. So our colleagues will be very happy that you appreciated it. Lingotto is made of different strategies. We had committed in '22 on the back of the disposal of PartnerRe, EUR 6.5 billion, which had been divided EUR 5 billion into 1 large investment and into 3 to 5 smaller investments. And we executed that with Philips being the large investments and LifeNet, TagEnergy, Clarivate and Institut Mérieux being 4 smaller investment, whilst EUR 1.5 billion would have been deployed in investments, which back then were Lingotto strategies and ventures, and that has been done. We've also said that as we would be realizing the investment in what used to be Exor Ventures now managed by Ora, we would be recycling it within the strategies of Lingotto. The actual exercise that we do internally the portfolio review is exactly meant on one side to try and see how we think about what we own and the opportunity ahead. As of now, we're not considering allocating more capital to Lingotto strategies, but equally, we're not considering reducing our exposure to Lingotto strategy. Alberto Villa: Any thoughts about the private markets situation? John Elkann: In credit? Alberto Villa: Yes. John Elkann: Luckily, we're not exposed to the credit market, and we are increasing our net cash position the actual environment, as you know, is very tight. Operator: We are now going to proceed with our next question. And the questions come from the line of [ Nicola Gude from Alexco Capital ]. Unknown Analyst: Sorry to come back to the discount theme. But I mean the discount today is such that the shares are at [ 0.44 ] on the dollar, which means if you invest $100 in your share, it's $125 of value and actually probably much more because the shares are depressed in the portfolio, too. And so obviously, compared to that, it's a high bar for the acquisition of a new company. And I guess, is there room to do both in the sense you're mentioning a firepower of $2.5 billion for an acquisition. But why not return, say, $1 billion here and now and then do a $2.5 billion acquisition or something along those lines? Why is there any -- why can't both be done at the same time, I guess, because that would certainly go a long way to create NAV per share, which is the objective at the end for shareholders. John Elkann: So as I mentioned, we haven't committed to no allocation as we speak. What we have committed to is to make sure that we have a strong balance sheet, and we have liquidity. As it pertains to how we will invest it everything is open, and we will make sure that we will be disciplined in how we proceed. Operator: [Operator Instructions]. We are now going to proceed with our next question. And the questions come from the line of Andrea Balloni from Mediobanca. Andrea Balloni: I have a couple. First one is on the potential share buyback. I understand the reason why this year, you are pretty cautious. What could trigger a different decision from a macro standpoint over the rest of the year? What would you consider to be a potential positive catalyst or trigger to start eventually a share buyback program? And my second question is on the potential investment that you are considering. You have mentioned a relevant size and also a material stake that may be taken by Exor. Yet, are you scouting among listed companies such as in the case of Philips or should we expect an investment in private companies? John Elkann: Those are very good questions. On the first one, Today, we have compounding uncertainties. We have uncertainties around the overall commerce that has been triggered by changes between tariffs and regulations. We have uncertainties linked to conflicts that are happening in different parts of the world. We have uncertainties linked to markets that are moving in different directions. And finally, we have uncertainties on the deployment of a substantial new technology, which is AI, which has the power of fire or electricity, hence going to impact in many ways, the way in which companies operate, both in what they do and how they do it. So this is an environment in which we believe that it's important to be prudent and patient in order to really make sure that we can take the best out of it and I remain optimistic about the future of Exor and our companies and in some ways, having had to go through very difficult internal and external situations in the course of '24 and '25 equipped us well to what is ahead. In terms of what are we looking for, we believe that Philips is a good example of the type of companies that Exor would be a good owner of. And that is a function of 3 things. One size we have said last year that we'd like to deploy more than 5% in one company. Second, we think that public markets offer interesting opportunities. And we believe that companies that have a large shareholder or a reference shareholder empirically have proven to perform better within their industry or within an index. And third, we think that the opportunity of sectors where some of these changes that we were describing before, can lead to improvement in these companies. Our role factors that we think describe Philips as a good example. And as of now, we have been, as Benoit mentioned, been very happily involved and the outcomes so far have been good for the company and for Exor. Andrea Balloni: And a follow-up, please. Would you consider to invest a part of this fire power in some of the investments you already have in the portfolio? I'm thinking about Stellantis, Ferrari and other companies, which had a very bad trend recently. I was wondering if you might consider to increase your stake. John Elkann: As I mentioned before, that's a very good question, and that's why today making firm commitments of capital where is where I'd like to be prudent and patient because where would we invest we'd invest in our companies. We know them well. That's what we did last year in Philips and bioMérieux. We would invest in Lingotto strategies. As of now, I said, there's no intention in doing that. We would invest in new opportunities and new Philips or we would be investing in ourselves through a buyback which, as most of you have told us, is definitely very attractive, and we would agree with that. And we think that the bigger the discount is, the more attractive it is. And we have been quite deliberate and decisive in doing that over the last years. So today, we want to make sure about 2 things. One, are we equipped Exor and our companies to go through turbulent times. We believe so. Secondly, are we sufficiently patient to try and understand what is happening in order to be able to underwrite within those 4 possible allocations of capital, what is the one where we as an organization and a Board feel that, that's the best usage of capital, which we want to be disciplined in doing in the best interest of our shareholders. Andrea Balloni: Thank you. Operator: This concludes the question-and-answer session on the phone. I will now hand over for the written questions. John Elkann: So we have a question from ING, which is about the economics of our investment in Lingotto and how Exor benefit -- how it -- benefits. I will pass it to Guido. Guido de Boer: Thank you, John. So we are an investor in ingot Lotos funds. So through that fund, we receive the returns after performance fees. What helps us is that we also own the asset manager, we have co-investors in Covéa and many others that help share the cost of the infrastructure. So in that way, it makes for us a very efficient way to invest behind some of the most talented investors in the world. So I hope that answers your question. There were some follow-up questions from another person on the assets under management for Lingotto. Would you like to take that? Or shall I -- so I wouldn't say that there is a maximum in terms of assets under management for Lingotto as a whole. For individual strategies, there are and they're depending on the type of strategy. For us, what is key is that like John mentioned earlier, the objective for Lingotto not to be an asset gatherer, but an investment manager that delivers outstanding performance. So we will be very cautious that we don't grow the capital too much that it goes at the expense of performance. So that is maybe a bit more philosophical answer, but I think that is critical behind our thinking on assets under management for Lingotto. So those were the questions that we had on the webcast. If there's nothing else or I don't know if you want to make any further remarks, John. John Elkann: Thank you, Guido. Thank you all, and we'll make sure to make '26 the best possible year out of very uncertain and difficult circumstances. Thank you. Operator: Thank you all for participating. You may now disconnect your lines. Thank you.
Operator: Ladies and gentlemen, good afternoon. Welcome, and thank you for joining the Exor Investor and Analyst Call. Please note that the presentation is available to download on Exor website www.exor.com under the Investors and Media, Events & Presentations section. Any forward-looking statements Exor management makes are covered by the safe harbor statement included in the presentation material. Please note that this conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to your host, CEO, John Elkann. Please go ahead. John Elkann: Good morning, good afternoon and good evening to all of you. Thank you for being here today with us. 2025 was a difficult year in many different ways for Exor and for our companies. But it also has been a year that has helped us be more focused and be more resilient, which enables us as a company to be better prepared for another difficult year, which will be 2026. Today, we want to talk to you about our companies. We have less of them and we have more in health care. We want to speak to you about Lingotto who has reached a very important milestone in '25, reaching EUR 10 billion of assets under management driven by performance, which is exactly in line with our intentions of building an investment organization interested in performance, not in gathering assets. And finally, our financials that on the back of disposals have provided us with a strong balance sheet and also the opportunity in '25 of doing a large buyback of EUR 1 billion, which if you add to the ones that we've done in prior years taking into account our large discount has allowed us to buy up to close to 15% of our shares. Our portfolio today reflects the latest disposal, which is JD, which we were able to conclude and the money got wired yesterday, and it reflects a Exor as we move towards '26, which would be one of less companies where we'll be able to focus particularly on our larger ones. And that's where I'd like to proceed. And I'd like to start with Stellantis who has been the one that has encountered both external difficulties and internal difficulties in the course of '25. It is resetting itself and under the leadership of Antonio Filosa, it is addressing the many challenges that is confronted with, both externally but also internally. We are getting to an important year in '26 with the Capital Markets Day, where Stellantis, end of May, will present its future, where it intends to be very clear about how it will improve as a company and make sure that it is and will remain one of the leaders in what is a defining industry. Ferrari, on the other hand, has already spoke about its future in '25 in the Capital Markets Day, where it is committed to growing, but growing in a way in which the uniqueness of what it does continues to be unique. And '26 is a defining year with the launch of the Ferrari Luce, the first-ever electric car, which will also happen in the end of May with the third act of the launch that started at the Capital Markets Day presenting the technologies of the Ferrari Luce, which then had beginning of this year with the interiors and finally, the final car, end of May in Rome. I would like now to pass to my colleague, Benoit, to speak to you about Philips, which is a company in which we continue to invest in '25. And today, is in terms of value, the second largest company for Exor. Benoit Ribadeau-Dumas: Thank you, John. 2025 was the last year of the '23, '25 plan that we underwrote in 2023 when we invested in Philips for the first time. So it was good to see at the end of this plan, the company delivering a strong performance, a solid performance with, in particular, a strong margin expansion, which is the result of the ambitious reorganization and productivity plans that have been launched by the CEO, Roy Jakobs. And second, we saw also in 2025, and it was long awaited a peak in the order intake after years of moderate growth and it was -- it is paving the way for a new momentum of the company. The stock price so far has not been following the performance. So we have decided to increase our stake last year to reach 90% -- 19% economic rights. Also, we were glad to see the company announcing earlier this year the new plan, the new 3-year plan for 2026, 2028, after a phase where the focus was on execution and on exiting the quality crisis of the Sleep and Respironics business. This is a renewed ambition for the company, which is now targeting mid-single-digit sales growth and mid-teens profit margin. Of course, continuing the efforts that they launched on quality and productivity enhancement, but also accelerating in the delivery of new products fueled by AI and fueled by the high level of R&D that this company has always been part of. So we are a happy shareholder of Philips, and we are looking forward to seeing their next progresses. Suzanne on CNH. Suzanne Heywood: Thank you, Benoit. So CNH had a challenging year in 2025 because of the downturn in the agricultural market. exacerbated, of course, by some of the geopolitical events that have been going on as well as some of the changes in tariffs and that is expected to continue into 2026 as already communicated by the company. At its Investor Day in May '25, CNH presented its path to 2030, and we think this is very important because it includes a number of different measures that will strengthen the company and enable it to come out of this downturn in a strong way. One is expanding the margins of the company through the cycle. And an important part of that is addressing some of the quality issues that it needs to address within the company. It is also looking to launch a series of new products new technologies, in particular, those around precision farming, which, of course, are very, very important for our customers and also a focus on costs, in particular, supply costs for the organization. The company has a lot to do, but it also has a lot to look forward to as it comes out of this cycle, given its tremendous lineup of products, both on the agriculture side and on the construction side, so we look forward to continuing to be a shareholder in the company. I also want to take this moment to do an update on Iveco. This is an important moment for Iveco. Last year, we celebrated with Iveco the first 50 years of its history. And this -- and last year, we also agreed and are participating in 2 extraordinary transactions in relation to Iveco. The first of these is the sale of Iveco Defence to Leonardo. This is the Iveco Defence business, and this transaction closed on March 18 with the expectation that the dividends will be distributed at the end of April. This transaction for Iveco Defence secures a future for the defense business within Iveco, secures a future for it now with Leonardo, which will give it increased scale. The remainder of the business, which is the trucks, buses and engines business will be combined with Tata Motors through a tender offer, which we're expecting to close at the end of the second quarter. The total valuation of both of these transactions will be EUR 5.3 billion. I want to take this moment to thank the 2 CEOs that have led Iveco through the period since it was spun out of CNH back in 2022, Gerrit Marx and Olof Persson, and of course, their management teams as well. We wish all parts of the Iveco business, a very successful next 50 years within their new ownership. I now pass back to John. John Elkann: Thank you, Suzanne, and it's also the opportunity for me to thank the leadership team and all their colleagues at Iveco and wish Iveco an important journey ahead as it opens for the new future with Leonardo and Tata. Coming back to Exor, if we look at our unlisted companies, they delivered mixed results. The good news is that our bigger companies in terms of value have performed better than our smaller ones. Welltec had an extraordinary year, while Shang Xia continued to have a difficult year. We expect the overall companies that we have as unlisted to present themselves in '26 with strong plans ahead and continuing to do in aggregate well. I would like now to speak about Lingotto which had a very important year in 2025. Lingotto was founded in '23 to really converge all the different investment activities that we were doing in partnering and directly in Exor. We now no longer have any investments outside of our companies, which are the ones in which we are involved in their governance. And everything we do outside will be carried forward within the investment strategies of Lingotto who today are 4. Of these 4, the one that has performed the best is the intersection fund led by Matteo Scolari and the overall aggregate returns of the 4 strategies have allowed ingot to reach USD 10 billion under management. What is encouraging is this has been driven by performance and what was really -- it was really what we expected when we founded Lingotto an organization, an investment management organization where the principle is what the organization cares about. And investing is what they do in order to grow through performance rather than gathering assets. The good news is on the interest of specific parties, which we've been very selective in allowing to invest alongside us, the quality of the investors and also the quality of what their mandate is, of which most are linked to societal causes are encouraging to see how we have alongside us very capable investors which invest for important causes. I would like now to pass it to Guido to walk you through our financials. Guido de Boer: Thank you, John. So on this slide, we recap what John, Suzanne and Benoit mentioned previously. So our NAV per share started the year at EUR 178 the biggest movers in a negative sense were 3 of our largest companies, Ferrari, Stellantis and CNH contributing in total for a EUR 25 per share decline in our NAV per share. This was partly offset by decent performance of our other companies, as John just highlighted, an outstanding performance at Lingotto, going up 40% in the year. And in addition, we invested EUR 1 billion in buybacks at over a 50% discount which contributed EUR 4.7 per share, and EUR 2.5 per share. So overall, we ended at EUR 164.4, so down for the year. If we look at our objectives, which are twofold. The first one is a relative performance metric where we look at NAV per share versus MSCI World Index. And the second one is an absolute performance measure, total shareholder return. So to first go to the relative one. In 2024, we actually had a pretty good year at 9% NAV per share growth at a very challenging benchmark, where the Magnificent 7 did great in the MSCI went up by 25%. 2025, we actually had a much easier comparable because those similar 7 companies did not perform as well. but we actually declined in NAV per share, as I just showed you. And on the back of an increase in the discount, our total shareholder return is below our NAV per share growth. So then moving to the measures that we track every year to make sure we operate in an efficient and disciplined way. The first one we track is free cash flow over dividend. As a measure of the financial health that we have in terms of cash flows. That is still at a very healthy level at almost 6x, notwithstanding a decline in the dividend of Stellantis. Management cost over GAV. So an indication of how efficiently we manage our overhead is world-class it went up largely driven by the decrease in GAV increasing it as a percentage. And also loan-to-value which measures how aggressively we are levered is down to 6.9%, notwithstanding the reduction in GAV. And that's primarily because we realized EUR 3 billion of proceeds from the sale of Ferrari shares. We reinvested that partially, but we also increased our cash position. So we're in a healthy place there. So if we look at our balance sheet, which is critical in these turbulent times, we are very strong. So our loan-to-value ratio is at 6.9%. Our bond maturities are very well spread out. We refinanced EUR 600 million in 2025. And now that has a maturity in 2035. We have a payment coming up of $170 million of a private placement, which we can finance out of our cash position. And on top of this low repayment requirement in the coming years, we have a EUR 1.1 billion credit facility, which we extended and doubled in the year. and we have a EUR 1.4 billion cash position as of December 2025. So in a very healthy position indeed. So these are the financial slides that I would like to present, and I want to hand over to John for the concluding slides. John Elkann: Thank you, Guido. We entered '26 with momentum. We have to complete the transactions that we have announced. On the back of those, as Guido mentioned, we will have been strengthening our balance sheet with close to EUR 3 billion additional resources. And if we look at the returns of what we have been divesting, we're speaking about 1.4x on cost. Now in moments like the ones we are living, which are uncertain times, what is key is to have liquidity and preserve capital. So we feel that having close to EUR 4 billion, as we conduct and conclude the transactions that I described puts Exor in a very strong position in an uncertain moment of time. I would like to conclude by giving you which are the priorities that we have as a company. We want to focus and focus particularly on our larger companies because that's where we believe the greatest value is. We want to continue to simplify our portfolio by conducting to closure the transactions that we have announced and continue to divest from our other assets. And we are committed to a strong balance sheet, which is even more valuable in moments like the ones we are living and be ready to deploy capital with discipline when the time is right. I would like to thank you all for your commitment. I would like to thank you all for believing in Exor. We realize that '25 was a difficult year on the back of a difficult year that '24 was. We are also very aware that the environment in which we find ourselves is uncertain in '26 but we do feel that the last 2 years have strengthened us and we enter this difficult year stronger than we were in the last 2 years. This is why I wanted to conclude with the quote that I have at the end of our letter which I deeply believe is one of the strengths that we have as an organization. Thank you, and we look forward to answering your many questions. Operator: [Operator Instructions]. We are now going to proceed with our first question. And the questions come from the line of Monica Bosio from Intesa Sanpaolo. Monica Bosio: Good morning, everyone, and good afternoon, everyone. I have basically 2, 3 questions. The first one is, obviously, cash is king in this tough environment. But maybe should we assume that no deal will be announced across the entire 2026 and that the time frame will be longer. And the last conference call, the company clearly stated its interest for 3 main sectors, the health care, the luxury and the technology with no clear priority. Are still the sector where the company wants to invest or maybe something else changed in the selection list. And another question is on deployment of the cash. Following the EUR 1 billion buyback in 2025. I was wondering if the company is willing to execute another buyback program in the future? And if yes, could the buyback be taken into consideration jointly with the new investments? Or could it be considered only in case no significant investments opportunities arise? John Elkann: [Foreign Language]. Monica, those were all incredible questions. The timing is really linked to making sure that we find the opportune investment. And I think that in times like the ones we're living on one side, one needs to be prudent. On the other side, one needs to be patient. And we want to make sure that we are sufficiently patient to capture the best possible opportunity. In terms of interest of sectors, we remain convinced that the sectors that you mentioned are interesting sectors, technology, luxury and health care with interesting valuations. But we also think that we should be open to other sectors and not preclude ourselves better opportunities if we were to find them. We also think that the companies that we own within the sectors in which we're present remain interesting, which is the reason why we have deployed money in '25 in Philips and bioMérieux. And if you add our investment in Institut Mérieux plus bioMérieux is de facto our fifth largest investment today. So the fifth most largest company if you combine Institut Mérieux with bioMérieux. In terms of buyback, as I mentioned, we have been aggressively buying back shares, EUR 2.5 billion in the last years, which is approximately close to 15% of our capital. and with wider discounts, which we look at very favorably because they are the opportunity to do buybacks, which is a way to invest in ourselves are opportunities that, of course, we will continue to look and look with discipline. As of now, we believe that, as you said, cash is king, and it is a moment where making sure that we do have a fortress balance sheet is important. And that is also the case for our companies. we believe that our companies are all with very strong balance sheets, which is the most important thing when you do enter in uncertain times as we have learned in the past. So as much as I feel bad about '24 and '25, I also realize that they have helped us both at Exor and our companies to enter these uncertain times much stronger. Operator: We are now going to proceed with our next question, and the question comes from the line of Martino De Ambroggi from Equita SIM. John Elkann: You must be happy about Iveco. Martino De Ambroggi: No. Not anymore. The first question is on Lingotto. Could you elaborate on what is the strategy going ahead? And I don't know if it's possible just to have a fair value, current fair value, considering what happened in the past few weeks in the market turmoil. I don't know if you have an indication you can provide. The second is on the additional divestitures because if I understood correctly, you were talking about more divestitures. Is there any clue on what could be a moving part going ahead? And third, I know I repeat basically every year the same question, but now it's quite a long time with a discount to net asset value, well in excess of 50% and this morning, even much, much higher. What are the 3 main reasons justifying such a high discount in your view? Just to have a very -- your personal impression. And last, the environment is getting worse and worse. Could you provide us an update on your view on the Stellantis environment and risks considering what is going to happen? John Elkann: There's a lot of questions. So Lingotto, the strategy is very much the one that was stated in the letter that I wrote as the founder of Lingotto in '23. So this is an organization that wants to attract exceptional investors and make sure that they can do what they love, which is investing. We have 4 distinct strategies, as we have described in the past, and those remain consistent with what the strategies are. which allows us to have a diversified sets of strategies, which are different from what we do directly as Exor and it allows the right discipline also being able to have selectively third-party capital from, as I mentioned before, very solid investors. In terms of the recent events, we don't comment on where we stand on mark-to-market. And if you look at the opportunity of the discount, we actually have viewed that in a positive way because it has allowed us to buy back shares as we've done in the past. I think that it is important to stress that in moments of uncertainty, you're better off being patient than rushing, which is why for any capital allocation. Is it in buying our own companies investing more in Lingotto strategies, investing in a new company or doing buybacks? We remain prudent but studious of what would be the different alternatives. Stellantis was able to raise through an hybrid issuance which increased already a strong balance sheet and the overall execution that is being carried forward is on the right track. Giving today any further information on Stellantis is not desirable because we are, as you know, in end of May, we will be assisting to the Capital Markets Day of Stellantis. Thank you, Luigi. Operator: We are now going to proceed with our next question. And the questions come from the line of Luuk Van Beek from Degroof Petercam. Luuk Van Beek: Yes, I have 2 questions. So first of all, have you reviewed your portfolio for the potential impact of higher energy prices and any other things that are happening in the world to see the exposure and the risk level? And the second question is on the discount to NAV. Do you consider to take any measures other than just executing the strategy and delivering and testing on that reducing the discount? John Elkann: Energy prices is premature to actually see the inflationary pressures. But that is definitely something that our companies are working actively in understanding the inflationary pressures that are happening and what type of impact that would have on some of their cost structure. We believe that the discount is actually an opportunity, and that's something that we have been able to capture in the past. Operator: We are now going to proceed with our next question. And the questions come from the line of Alberto Villa from Intermonte SIM. Alberto Villa: Actually, First of all, congratulations for the annual report. It is very clear and very nice also to read. So congratulations to the team. And secondly, going back to Lingotto, it's now more than 11% of your GAV thanks to the performance and looking at the composition of the investments. The vast majority, 70% is the intersection strategy. So the public investments that had a great 2025. I was wondering if in the future, you expect to maybe take advantage of the performance to reduce a little bit the exposure to Lingotto or maybe to mix a little bit more into the to shift a little bit more into the other strategies and how you feel about private markets? So there has been a lot of rumors about the outlook for these asset classes, especially in the U.S. So wondering if you want to share with us your thoughts on that. John Elkann: Thank you. And I will, with Guido, convey your message on our annual report. There was a lot of work in doing it. So our colleagues will be very happy that you appreciated it. Lingotto is made of different strategies. We had committed in '22 on the back of the disposal of PartnerRe, EUR 6.5 billion, which had been divided EUR 5 billion into 1 large investment and into 3 to 5 smaller investments. And we executed that with Philips being the large investments and LifeNet, TagEnergy, Clarivate and Institut Mérieux being 4 smaller investment, whilst EUR 1.5 billion would have been deployed in investments, which back then were Lingotto strategies and ventures, and that has been done. We've also said that as we would be realizing the investment in what used to be Exor Ventures now managed by Ora, we would be recycling it within the strategies of Lingotto. The actual exercise that we do internally the portfolio review is exactly meant on one side to try and see how we think about what we own and the opportunity ahead. As of now, we're not considering allocating more capital to Lingotto strategies, but equally, we're not considering reducing our exposure to Lingotto strategy. Alberto Villa: Any thoughts about the private markets situation? John Elkann: In credit? Alberto Villa: Yes. John Elkann: Luckily, we're not exposed to the credit market, and we are increasing our net cash position the actual environment, as you know, is very tight. Operator: We are now going to proceed with our next question. And the questions come from the line of [ Nicola Gude from Alexco Capital ]. Unknown Analyst: Sorry to come back to the discount theme. But I mean the discount today is such that the shares are at [ 0.44 ] on the dollar, which means if you invest $100 in your share, it's $125 of value and actually probably much more because the shares are depressed in the portfolio, too. And so obviously, compared to that, it's a high bar for the acquisition of a new company. And I guess, is there room to do both in the sense you're mentioning a firepower of $2.5 billion for an acquisition. But why not return, say, $1 billion here and now and then do a $2.5 billion acquisition or something along those lines? Why is there any -- why can't both be done at the same time, I guess, because that would certainly go a long way to create NAV per share, which is the objective at the end for shareholders. John Elkann: So as I mentioned, we haven't committed to no allocation as we speak. What we have committed to is to make sure that we have a strong balance sheet, and we have liquidity. As it pertains to how we will invest it everything is open, and we will make sure that we will be disciplined in how we proceed. Operator: [Operator Instructions]. We are now going to proceed with our next question. And the questions come from the line of Andrea Balloni from Mediobanca. Andrea Balloni: I have a couple. First one is on the potential share buyback. I understand the reason why this year, you are pretty cautious. What could trigger a different decision from a macro standpoint over the rest of the year? What would you consider to be a potential positive catalyst or trigger to start eventually a share buyback program? And my second question is on the potential investment that you are considering. You have mentioned a relevant size and also a material stake that may be taken by Exor. Yet, are you scouting among listed companies such as in the case of Philips or should we expect an investment in private companies? John Elkann: Those are very good questions. On the first one, Today, we have compounding uncertainties. We have uncertainties around the overall commerce that has been triggered by changes between tariffs and regulations. We have uncertainties linked to conflicts that are happening in different parts of the world. We have uncertainties linked to markets that are moving in different directions. And finally, we have uncertainties on the deployment of a substantial new technology, which is AI, which has the power of fire or electricity, hence going to impact in many ways, the way in which companies operate, both in what they do and how they do it. So this is an environment in which we believe that it's important to be prudent and patient in order to really make sure that we can take the best out of it and I remain optimistic about the future of Exor and our companies and in some ways, having had to go through very difficult internal and external situations in the course of '24 and '25 equipped us well to what is ahead. In terms of what are we looking for, we believe that Philips is a good example of the type of companies that Exor would be a good owner of. And that is a function of 3 things. One size we have said last year that we'd like to deploy more than 5% in one company. Second, we think that public markets offer interesting opportunities. And we believe that companies that have a large shareholder or a reference shareholder empirically have proven to perform better within their industry or within an index. And third, we think that the opportunity of sectors where some of these changes that we were describing before, can lead to improvement in these companies. Our role factors that we think describe Philips as a good example. And as of now, we have been, as Benoit mentioned, been very happily involved and the outcomes so far have been good for the company and for Exor. Andrea Balloni: And a follow-up, please. Would you consider to invest a part of this fire power in some of the investments you already have in the portfolio? I'm thinking about Stellantis, Ferrari and other companies, which had a very bad trend recently. I was wondering if you might consider to increase your stake. John Elkann: As I mentioned before, that's a very good question, and that's why today making firm commitments of capital where is where I'd like to be prudent and patient because where would we invest we'd invest in our companies. We know them well. That's what we did last year in Philips and bioMérieux. We would invest in Lingotto strategies. As of now, I said, there's no intention in doing that. We would invest in new opportunities and new Philips or we would be investing in ourselves through a buyback which, as most of you have told us, is definitely very attractive, and we would agree with that. And we think that the bigger the discount is, the more attractive it is. And we have been quite deliberate and decisive in doing that over the last years. So today, we want to make sure about 2 things. One, are we equipped Exor and our companies to go through turbulent times. We believe so. Secondly, are we sufficiently patient to try and understand what is happening in order to be able to underwrite within those 4 possible allocations of capital, what is the one where we as an organization and a Board feel that, that's the best usage of capital, which we want to be disciplined in doing in the best interest of our shareholders. Andrea Balloni: Thank you. Operator: This concludes the question-and-answer session on the phone. I will now hand over for the written questions. John Elkann: So we have a question from ING, which is about the economics of our investment in Lingotto and how Exor benefit -- how it -- benefits. I will pass it to Guido. Guido de Boer: Thank you, John. So we are an investor in ingot Lotos funds. So through that fund, we receive the returns after performance fees. What helps us is that we also own the asset manager, we have co-investors in Covéa and many others that help share the cost of the infrastructure. So in that way, it makes for us a very efficient way to invest behind some of the most talented investors in the world. So I hope that answers your question. There were some follow-up questions from another person on the assets under management for Lingotto. Would you like to take that? Or shall I -- so I wouldn't say that there is a maximum in terms of assets under management for Lingotto as a whole. For individual strategies, there are and they're depending on the type of strategy. For us, what is key is that like John mentioned earlier, the objective for Lingotto not to be an asset gatherer, but an investment manager that delivers outstanding performance. So we will be very cautious that we don't grow the capital too much that it goes at the expense of performance. So that is maybe a bit more philosophical answer, but I think that is critical behind our thinking on assets under management for Lingotto. So those were the questions that we had on the webcast. If there's nothing else or I don't know if you want to make any further remarks, John. John Elkann: Thank you, Guido. Thank you all, and we'll make sure to make '26 the best possible year out of very uncertain and difficult circumstances. Thank you. Operator: Thank you all for participating. You may now disconnect your lines. Thank you.
Operator: Welcome to the Sanara MedTech Fourth Quarter and Full Year 2025 Earnings Conference Call. Please note that this conference call is being recorded, and a replay will be available on the Investor Relations page of the company's website shortly. The company issued its earnings release earlier today. Before we begin, I would like to remind everyone that certain statements on today's call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For more information about the risks and uncertainties involving forward-looking statements and factors that could cause actual results to differ materially from those projected or implied by forward-looking statements, please see the risk factors set forth in the company's most recent annual report on Form 10-K. This call will also include references to certain non-GAAP financial measures. Reconciliations of those non-GAAP measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release available on the Investor Relations section of our website. Today's call will include remarks from Seth Yon, President and Chief Executive Officer; and Elizabeth Taylor, Chief Financial Officer. I would now like to turn the call over to Mr. Yon. Please go ahead, sir. Seth Yon: Thanks, operator, and welcome, everyone, to our fourth quarter and full year 2025 earnings call. Let me outline the agenda for today's call. I'll begin by reviewing several key financial accomplishments for the full year 2025. I'll then discuss our fourth quarter net revenue performance as well as our commercial execution across the three key initiatives, our commercial strategy. After this, I'll provide an update on a few other select areas of operational progress in the quarter. Elizabeth will cover our fourth quarter financial results in further detail and review our full year net revenue guidance for 2026, which we reaffirmed in our earnings release today. I'll then conclude our remarks with some thoughts on our positioning as we enter 2026, our strategic priorities for the year and our outlook before we open the call for questions. With that said, let's get started. Looking back at our financial performance for the full year 2025, I'd like to highlight several key accomplishments to demonstrate the significant progress we've made as an organization. First, we exceeded $100 million of net revenue for the first time in our company's history. Specifically, we generated $103.1 million of net revenue for the full year 2025, representing growth of 19% year-over-year. Importantly, we accomplished this impressive performance while maintaining the size of our field sales team with 40 representatives at the end of 2025. Our field sales headcount at the end of 2025 was essentially unchanged compared to the end of 2024, 2023 and 2022. Our performance demonstrates the strength of our hybrid commercial model, which includes both field sales reps and a growing network of independent distributor partners. Together, they raise awareness of our products and educate prospective surgeon customers on their benefits and clinical applications. Second, we drove significant improvements in our profitability profile on a year-over-year basis. Specifically, we expanded our gross margins by approximately 200 basis points to 93% for the full year 2025 and demonstrated notable operating leverage. We ultimately achieved a $1.5 million or 80% reduction in net loss from continuing operations and a $7.9 million or 86% improvement in adjusted EBITDA, resulting in $17 million for the full year 2025. Third, this performance, coupled with improvements in our working capital management, ultimately enabled us to generate $6.8 million of cash provided by operations for the full year 2025. This compares to $24,000 of cash used in operations for the full year 2024. In short, our financial results in 2025 reflect the fundamental strength of our surgical business and support our recent strategic decision to focus our resources and capabilities on the surgical market. Turning to an overview of our fourth quarter net revenue performance. Our team delivered solid commercial execution in the fourth quarter, generating net revenue of $27.5 million, representing growth of 5% year-over-year. Our net revenue growth was largely driven by sales of soft tissue products with modest contributions from sales of our bone fusion products as well. As a reminder, our net revenue in the fourth quarter 2024 benefited from approximately $1.8 million of BIASURGE sales due to the industry disruption caused by Hurricane Helene. Excluding the $1.8 million of BIASURGE sales related to this dynamic, our net revenue in the fourth quarter of 2025 increased 13% year-over-year. Importantly, our fourth quarter net revenue performance came in at the high end of both the preliminary range that we provided in our press release on January 23, 2026, as well as the expectations we shared on our third quarter's earnings call in November 2025. With these results as our backdrop, I'll now share on our commercial execution. In 2025, our team continued to drive momentum across the three key initiatives of our commercial strategy, which represents important drivers of our growth. As a reminder, these three initiatives are: one, strengthening our relationships with independent distributors; two, selling into new health care facilities; and three, expanding the existing health care facilities we serve. I'll now share updates on our progress across each of these initiatives, beginning with our relationship development with independent distributors. In 2025, we significantly grew our network of distributor partners. Specifically, we ended 2025 with over 450 contracted distributors compared to over 350 at the end of 2024. Given the significant progress we've made in expanding the size of our distributor network, our team has also focused increasingly on optimizing our distributor relationships. We are doing this by onboarding newly contracted distributors, training their sales representatives and partnering with them to educate prospective surgeon customers about the clinical benefits of our products. Our partnership approach to engaging and working with our distributor remains our core component of our commercial philosophy. We believe it's one of the items that differentiates Sanara in the market and provides important advantages for our organization going forward. Turning to our second commercial initiative, adding new facility customers. We continue to leverage our network of distributor partners to begin selling into new health care facilities where our products have been contracted or approved. I'm pleased to report that we achieved our stated target, which we initially provided on our first quarter earnings call in May 2025 of selling into over 1,450 health care facilities by the end of 2025. This compares to over 1,300 facilities in 2024. We continue to see significant runway to add new health care facility customers to our base over the coming years as our products were contracted or approved for sale in over 4,000 facilities at year-end. With respect to the third initiative I mentioned, penetrating our existing facility customers, we continue to drive adoption of our products by adding new surgeon users within the health care facilities we currently serve. In both the fourth quarter and full year 2025, we realized strong year-over-year growth in the size of our surgeon customer base. We continue to add new surgeon users ranging across a variety of specialties, including our traditional focus of spine and orthopedics as well as general, plastic and vascular surgery. Despite our progress in 2025, our surgeon penetration within the over 1,450 health care facilities we serve remains relatively low. With that in mind, we believe that the opportunity to go deeper within these existing facilities remains perhaps our largest untapped opportunity for future growth. In summary, our progress across each of the key commercial initiatives leaves us well positioned as we enter 2026 with multiple levers to drive continued growth in the surgical market. In addition to our commercial execution, the broader Sanara team made significant progress during the fourth quarter with respect to multiple areas of our strategy. I'd like to take a minute to highlight several important operational accomplishments. During the quarter, we continued to wind down the operations of Tissue Health Plus or the THP segment following our decision to cease operations, which we discussed in detail on our third quarter 2025 earnings call. I'm pleased to report that the THP wind-down process was substantially complete at the end of 2025, consistent with our previously stated expectations. From a financial perspective, total cash use related to THP over the second half of 2025 was $5.3 million, below the $5.5 million to $6.5 million range we shared on our second quarter earnings call in August 2025. As a reminder, the operations of THP, which were previously reported as the THP segment are classified as discontinued operations for the three months and full years ending December 31, 2025, and 2024. And importantly, we continue to anticipate no material cash spend related to THP going forward. With this in mind, we are entering into 2026 as a leaner, pure-play surgical company focused on continuing to bring innovative products to the operating room setting. In the fourth quarter, we also continued to support the future growth of our BIASURGE product by expanding into health care facility approvals. Most notably, we secured an innovative technology contract from Vizient. For those unfamiliar, Vizient is the largest group purchasing organization in the U.S. with an extensive client base of health care facility customers. Through Vizient's innovative technology program, Vizient works with councils led by hospital experts from its client base. These councils are tasked with evaluating products and assessing their potential to bring innovation to health care delivery. Following evaluation, our BIASURGE product was awarded an Innovative Technology contract as it was deemed to offer unique qualities and a potential benefit over other products available in the market today. As a reminder, BIASURGE is a no-rinse irrigation solution that enables surgeons to cleanse wound bed more efficiently than with saline alone. It also provides broad-spectrum antimicrobial effectiveness, helping to reduce the risk of surgical site infections. Beginning January 1, 2026, BIASURGE is now available to Vizient's network of health care facility customers. We believe this contract provides approximately 1,800 health care facilities with access to BIASURGE at contracted pricing and prenegotiated terms. All in all, it represents a significant opportunity to further expand BIASURGE customer base in 2026 in the coming years. In addition to these efforts, we continue to support our surgical product portfolio by expanding and enhancing our body of clinical evidence. Our products were featured in multiple peer-reviewed studies published during the first quarter. I'll take a moment to highlight two of them. A comparative peer-reviewed in vitro study featuring BIASURGE was published in the Journal of Arthroplasty. It evaluated the effectiveness of 9 commercially available irrigation solutions, including BIASURGE. Specifically, it assessed their ability to prevent the formation of biofilm on orthopedic implant materials by two common types of bacteria that are notorious for causing severe antibiotic-resistant infections in surgical wounds. The researchers also evaluated the cytotoxicity of each irrigation solution to ensure the patient's safety. In this study, BIASURGE exhibited high antimicrobial efficacy and low cytotoxicity. It is identified as one of the two irrigation solutions that were most effective in preventing biofilm formation among the 9 products tested. Our ALLOCYTE Plus product was also featured in a long-term clinical study published in the Journal of Spine and Neurosurgery. This study evaluated the outcomes of lumbar spinal fusion that used ALLOCYTE Plus as a stand-alone graft substitute. Ten patients were followed for 24 to 36 months, demonstrated successful solid bone healing within 6 months of receiving the operation. No adverse events, including complication, graft failures or revision surgeries were reported during the follow-up period. Importantly, these patients also demonstrated sustained improvements in both neurological and clinical outcomes as well. The study's findings support our position that ALLOCYTE Plus provides a safe, biologically active alternative to using traditional autogenous iliac crest bone grafts, which tend to be associated with the complications in donor site morbidity. Our R&D team also remains focused on expanding our IP portfolio to protect and advance our existing products. As a reminder, in 2024, we submitted 11 provisional patent applications covering innovations in proprietary antimicrobial and hydrolyzed collagen technologies, including novel formulations, treatment applications and key component advancements. Over the course of 2025, our team converted these 11 provisional patent applications into nonprovisional filings, a major step forward in the progress towards securing approval while also submitting the corresponding U.S. and PCT applications for international protection. In addition to this progress, we submitted an additional three provisional patent applications that protect specific components and compositional aspects of our CellerateRX Surgical product. We look forward to continuing to expand the breadth of IP protection as well as our future product development efforts related to our surgical products. Lastly, we continue to make progress in our efforts to expand our portfolio through our partnership with Biomimetic Innovations, or BMI, with the goal of bringing OsStic to the U.S. commercial market. As a reminder, during the first 9 months of 2025, BMI achieved all of the key product development, clinical, regulatory and medical education milestones outlined under our agreement. Based on our continued progress in the fourth quarter of 2025 and the initial months of 2026, I'm pleased to report that we remain on track to introduce the OsStic synthetic injectable bone bio-adhesive to the U.S. market in the first quarter of 2027. Given its status as an FDA-designated breakthrough device, we believe OsStic will be the first synthetic injectable bone bio-adhesive available in the U.S. once it receives regulatory approval. In preclinical mechanical testing, OsStic demonstrated bonding to bone that was 40x stronger than traditional calcium phosphate bone cement. We expect OsStic to represent a new anchor product for our bone fusion portfolio and look forward to bringing this innovative technology to support the more than 100,000 periarticular fractures that occur in the U.S. each year. In summary, 2025 was a significant transition year for Sanara MedTech. Perhaps most notably, Sanara transitioned to new leadership in both CEO and CFO roles to guide the next phase of our growth and development as an organization. As a company, we navigated the strategic realignment of our business to focus solely on the opportunities in the surgical market going forward. And in tandem, our team successfully executed our strategy in the surgical market, driving significant commercial, financial and operational progress across all major fronts. Our progress this past year is a credit to the remarkable team of individuals who work at Sanara MedTech. It also reflects our team's commitment to advancing the treatment of surgical wounds for the benefit of all the constituents in the health care industry, including patients, surgeons and health care systems. With that said, I'll turn it over to Elizabeth to cover our fourth quarter 2025 financial results in greater detail and review our full year net revenue guidance for 2026. Elizabeth Taylor: Thanks, Seth. I will begin by reiterating that the operations of THP, which were previously reported as the THP segment, have been classified as discontinued operations for the three months and full years ended December 31, 2025 and 2024. As such, unless noted otherwise, all commentary that follows is on a continuing operations basis. In our earnings press release issued today, we have included tables detailing our historical results of operations on a continuing operations basis in 2025, 2024 and 2023, which aligns with our reporting going forward. Given that Seth covered our net revenue results for the quarter, I'll begin with gross profit. All percentage changes referenced throughout my remarks compare to the prior year period, unless otherwise specified. Fourth quarter gross profit increased $1.6 million or 7% to $25.7 million. Fourth quarter gross margin increased approximately 175 basis points to 93% of net revenue, driven primarily by sales of soft tissue repair products and lower manufacturing costs related to CellerateRx Surgical. Fourth quarter operating expenses increased $2.8 million or 13% to $24.6 million. The change in operating expenses was driven by a noncash impairment charge of $1.8 million in the fourth quarter of 2025, which was related to a write-down of certain IP assets in connection with our strategic shift to focus on products in the surgical market and a $1.2 million increase in research and development expenses, which was primarily due to product enhancement initiatives associated with our soft tissue repair products. Operating income for the fourth quarter was $1.1 million compared to $2.3 million last year. Excluding the aforementioned $1.8 million noncash impairment charge in the fourth quarter of 2025, our operating income increased $0.6 million or 28% to $2.9 million. Other expense for the fourth quarter was $2.2 million compared to $1.3 million last year. The increase in other expense was primarily due to higher interest expense and fees related to our CRG term loan as well as higher share of losses from equity method investments. Net loss from continuing operations for the fourth quarter was $1.1 million or $0.13 per diluted share compared to net income from continuing operations of $0.9 million or $0.10 per diluted share last year. Adjusted EBITDA for the fourth quarter of 2025 was $4.7 million compared to $4.1 million last year. Turning to the balance sheet. As of December 31, 2025, we had $16.6 million of cash and $46 million of long-term debt. This compares to $15.9 million of cash and $30.7 million of long-term debt as of December 31, 2024. For the full year 2025, we were pleased to generate $6.8 million of cash provided by operating activities compared to $24,000 of cash used in operating activities in the full year 2024. The increase in cash from operating activities was driven in part by the reduction in net loss from continuing operations and improvements in working capital efficiency compared to the prior year. Importantly, we estimate that $6.8 million of cash generated from operating activities in the full year 2025 was inclusive of approximately $9 million of cash used in operating activities related to THP. As Seth mentioned, we continue to anticipate no material cash spend related to THP going forward. Turning to our net revenue guidance for the full year 2026, which we introduced via press release in January and reaffirmed in our earnings release today, we continue to expect full year 2026 net revenue to range from $116 million to $121 million, representing growth of approximately 13% to 17% compared to net revenue of $103.1 million for the full year 2025. Lastly, we would like to share a few additional considerations for modeling purposes. With respect to operating expenses, as Seth will discuss further, in connection with our enhanced focus as an organization on the surgical market, we are investing in our field sales team and R&D initiatives to lay the foundation for strong, sustainable growth in 2026 and the coming years. With $16.6 million of cash at December 31, 2025, combined with our expected cash flows from operations, we are comfortable with our balance sheet liquidity in 2026. From a modeling perspective, as a reminder, we typically pay employee commissions and annual bonuses in the first quarter of our fiscal year, requiring a higher outlay of cash. Lastly, given the proximity to the end of the first quarter and for avoidance of doubt, we would like to provide additional transparency regarding our expectations for the first quarter net revenue results. Specifically, we expect net revenue of approximately $26.7 million to $27.2 million for the first quarter of 2026, representing growth of approximately 14% to 16% year-over-year. With that, I will now turn it back to Seth for closing remarks. Seth Yon: Thanks, Elizabeth. Sanara MedTech is providing full year net revenue guidance in 2026 for the first time in our company's history. The decision to introduce net revenue guidance was made as a part of our commitment to provide increased transparency regarding our anticipated future performance. It reflects the significant scale we have achieved as a company in recent years as well as the evolution and development of our organization across multiple fronts. As Elizabeth mentioned, we are reaffirming our full year net revenue guidance today, which reflects growth of 13% to 17% in 2026. We look forward to delivering growth within this range and providing updates on our progress throughout the year. Before opening the call for questions, I'd like to share some closing thoughts on our positioning and strategic priorities as we enter 2026. In short, we like how we're positioned heading into this year. We are entering 2026 as a focused pure-play surgical company dedicated exclusively to the operating room setting with three anchor products, two currently in the market, CellerateRx Surgical and BIASURGE and one in our pipeline, OsStic. Our anchor products possess differentiated capabilities that enable them to satisfy clear clinical needs in the treatment of surgical wounds. They are not subject to reimbursement risk, and they collectively address a multibillion-dollar annual opportunity in the surgical market. To effectively capitalize on this opportunity, we've developed an effective time-tested commercial team, model and strategy that has enabled us to achieve significant commercial scale and momentum. And based on our historically strong margin profile and balance sheet condition as of December 31, 2025, we believe we have the resources necessary to achieve our primary strategic and financial objectives this year through focused execution and disciplined capital allocation. In terms of our strategic priorities for 2026, we are focused on the following three items: First, continuing to penetrate the surgical wound market by executing our commercial strategy with our existing products. Specifically, we remain focused on driving further progress in developing our distributor network, expanding our facility customer base and adding new surgeon users within the facilities we currently serve. These three initiatives have been the foundation of our commercial success in recent years, and we see substantial runway for continued growth across each of them as we move through 2026 and beyond. Second, pursuing targeted investments in our business to support our growth in 2026 and future years. Stepping back, given Sanara's broader scope of focus in prior years, the company historically pursued investments in opportunities outside of our core business in the surgical market. Going forward, we are committed to pursuing a focused approach as a pure-play surgical company. With that commitment, we are intent on supporting our surgical product portfolio and commercial distribution network with investments that will protect and enhance our position in the surgical market and prove to be truly impactful over time. Specifically, we are investing in our surgical field sales team and R&D initiatives to lay the foundation for strong, sustainable growth. With respect to our field sales team, as I mentioned earlier, the size of our team has remained essentially consistent for multiple years with roughly 40 sales representatives. During the first quarter of 2026, we are making targeted investments to expand our sales rep coverage in key territories across the U.S. We are currently focused on onboarding and training, and we expect these new reps to become increasingly productive as they develop over the balance of 2026. With respect to our R&D initiatives, we will continue our efforts to expand the portfolio of clinical evidence supporting our anchor products while bolstering our IP protection. In addition, we are investing in several longer-term product development initiatives with a focus on pursuing enhancements to strengthening our existing surgical portfolio and address the evolving needs of our customers. These investments are designed to deepen our competitive moat and ensure that we maintain our position as a leader in bringing innovative surgical products to the market. Lastly, we are focused on bringing OsStic to market through our strategic partnership with BMI and preparing for U.S. commercialization in the first quarter of 2027. We believe OsStic represents a significant opportunity to expand our presence in the bone fusion market and provide surgeons with a truly differentiated solution for periarticular fracture repair. In conclusion, we are committed to focused execution and targeted capital allocation across these three strategic priorities in 2026. We believe our successful execution on these items will position us for strong, sustainable growth this year as well as cash generation and profitability in the years to come. I'd like to close by thanking the entire Sanara MedTech team for their exceptional work in 2025. I'd also like to thank our shareholders and customers for their continued support and to those on today's call for their interest in Sanara MedTech. With that, operator, you may now open the call for questions. Operator: [Operator Instructions] your first question for today is from Yi Chen with H.C. Wainwright. Eduardo Martinez-Montes: This is Eduardo on for Yi. Congrats on all the progress in the year. I had a question on BIASURGE, following the Vizient contract effective January 1, how much of your growth in 2026 do you think is attributable to this new volume of GPO versus organic growth in existing accounts? And do you anticipate any other of these deals to materialize in 2026? Seth Yon: This is Seth. So I'll answer that question. First of all, the Vizient contract was a really significant thing for us to accomplish and to get on to that contract. To our knowledge, we're the only [ wash ] to have done that. It will still take a little bit of time to go out and educate at the facility level. And so we haven't given guidance specific to a product in past, just talking more about soft tissue repair, which BIASURGE would fall to. So our team is working daily inside those 1,800 accounts to continue to get access into those accounts and bring that technology to life. It was a major step forward for us as we think back to a soft launch in that product just a couple of years ago. You're doing that at a pretty slow pace, right? You have to do that one facility at a time. And now to have on contract 1,800-plus facilities, we think that gives us great runway to perform in 2026, but truly well beyond that as well. Eduardo Martinez-Montes: Got it. And then if I could ask another one on CellerateRX growth. So with this new study and cost effectiveness, do you see any opportunity for -- what do you think the impact on growth and maybe reimbursement in terms of cost effectiveness? And do you expect any other studies for CellerateRX to come out during this next year that could also bolster? Seth Yon: Yes. Well, first of all, we believe strongly in clinical evidence, specific to our anchor products, CellerateRX, BIASURGE and then soon to be OsStic as well once that commercializes. So we'll continue to put energy against that from all those different fronts, both scientifically, clinically and then economically. We feel really confident in that economic study that came out. We think that facilities will see great value in that as well to showcase a product that, again, is a supply cost inside the DRG. So I think it's really important to understand for everybody on this call, we don't have reimbursement risk with that product and won't into the future. That, again, is a supply cost. So I think it only strengthens our relationships inside the hospital with the clinical evidence that we have specific to Cellerate and now the economic evidence to come alongside of that is really significant. So we think it has an impact for our numbers going forward as a result of all of that research that's been done. Operator: We are currently seeing no remaining questions at this time. That does conclude our conference for today. Thank you for your participation.
Operator: Good morning, ladies and gentlemen, and welcome to the Aimia Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions]. Also note that this call is being recorded on March 24, 2026. I would now like to turn the conference over to Joe Racanelli. Please go ahead, sir. Joseph Racanelli: Thank you, operator, and good morning, everyone. Joining me on today's call are our Executive Chairman, Rhys Summerton, and Aimia's President and CFO, Steven Leonard. Before we begin, I want to make sure that everybody is aware that we issued our financial results for the fourth quarter earlier this morning. All of our materials, including the news release, MD&A and financial statements are available from our website and SEDAR+. We will be using a presentation today. And for those listening to our discussion by phone, a copy of that presentation is available from the IR section of our website. Some of the statements made on today's call may constitute forward-looking information, and future results may differ materially from what we discuss. Please refer to the risks and uncertainties that may affect our future performance referenced in our presentation as well as in our MD&A. In addition, we will be making note of GAAP and non-GAAP financial measures. Reconciliation is provided in the appendix of the presentation. And following today's presentation, please reach out to us if you have any outstanding questions or require any clarification of what we discuss today. With that, I'd like to turn the call over now to Rhys. Please go ahead, Rhys. Rhys Summerton: Yes. Thanks, Joe, and good morning, everyone. I think the transformation of Aimia into a useful permanent capital vehicle continues into the fourth quarter. We made progress against our 3-step strategy most notably for a permanent capital vehicle, what's important is that we continue to grow the cash position, and we generated a very strong EBITDA results in our core businesses. And overall, we achieved the guidance for the year. We continued with the momentum into the new year by entering into a definitive agreement that will result in the divestiture of our special chemicals core holding. The pending completion of the Bozzetto sale and the net proceeds it will generate will put us firmly on track towards our goal of enhancing shareholder value through making accretive investments in undervalued companies. In light of the developments in the Middle East and the timing of the Bozzetto transaction, the planned new investments could not have been more fortuitous. I'll expand on our progress against our strategy as well as our near-term priorities later in the presentation. But for now, I'll hand over to Steve to review the financial results in detail. Steven Leonard: Thank you, Rhys. I'd like to begin my remarks with an overview of our consolidated results. As you'll note from Slide 7, our results in the fourth quarter of '25 were marked by mixed performance when compared to last year. But when you take into account the backdrop of heightened geopolitical and economic uncertainty, it becomes clear that we delivered strong results in Q4. By case in point, our gross profit, cash flow from operations and adjusted EBITDA in Q4 '25 were at or slightly below results from last year. I would draw everyone's attention to a couple of items. First, our consolidated revenues were down in Q4 '25 due to lower volumes and pricing pressures in both core businesses, which I will provide more color in a few minutes. Gross profit margins held due to improvements in mix, resulting in adjusted EBITDA down $0.6 million for the quarter. Second, included in the increase in SG&A costs in Q4 '25 was driven by a combination of factors. These included $2.9 million of costs related to the Bozzetto transaction and $1.2 million related to a litigation settlement agreement with a former company executive claim launched in 2020. Excluding these one-off amounts, SG&A expenses declined on a year-over-year basis. And finally, our net loss for Q4 '25 included a noncash goodwill impairment charge of $14 million at Cortland. Turning to the performance of our core holdings, starting with Bozzetto on Slide 8. In Q4 '25, Bozzetto generated $84.2 million of revenue, a decrease of 1.9% when compared to last year. On a constant currency basis, Bozzetto's revenue was down 9.8%. The year-over-year variance was due to lower volumes sold by Bozzetto but Bozzetto's Textile and Water Solutions sectors. Two contributing factors were lower Textile Solutions sales into Bangladesh due to political instability in the country and Chinese competitors driving lower pricing in Water Solutions in markets where Bozzetto serves. Weaker results for Bozzetto's Textile and Water Solutions were partially offset by improved pricing and product mix experience from the dispersion solutions sector, where Bozzetto-focused on growing sales of agrochemical and plasterboard solutions. Q4 '25 Bozzetto generated adjusted EBITDA of $15 million, which represented a margin of 17.8% in the same period last year, Bozzetto generated adjusted EBITDA of $13.4 million and a margin of 15.6%. While year-over-year comparisons of Bozzetto results are favorable, quarter-over-quarter comparisons better illustrate some of the macroeconomic headwinds that Bozzetto faced over the past year. Turning to Cortland on Slide 9. Cortland generated $34.3 million of revenue in Q4 '25, down 17% from last year. Although Cortland results in Q4 '25 were impacted by unfavorable market conditions, including the effects of U.S. tariffs on global trade, particularly in marine and shipping rope sales. I should point out that Cortland's revenue in the comparative period last year was boosted by strong project sales in North America within the offshore energy sector that did not reoccur this year. On a constant currency basis, Cortland's revenue declined by $7 million or 16.9%. The decline in Cortland's top line numbers, coupled with an increase in SG&A costs, resulted in a decrease in adjusted EBITDA to $4.1 million. The $1 million in SG&A costs was driven by a combination of factors, including increased compensation and benefits expense related to Cortland's efforts to grow its sales force and strengthen customer relationships in key markets. This increase was partially offset by lower selling expenses due to reduced sales volumes. Subsequent to quarter end, Cortland made a management change and appointed Wolfgang Wandl as CEO. Given the increased focus on growing sales and operational excellence, we are optimistic Wolfgang will lead Cortland to its full potential. We ended the year with $109 million in cash, up from $106 million at the end of Q3. Slide 10 shows a waterfall of cash movements in the fourth quarter. Key drivers to the increase in liquidity included $19.4 million of cash flow from operations and an $8.8 million tax refund from Revenu Québec related to a tax audit of a former subsidiary. Cash flows in the fourth quarter included $6.9 million of interest payments against our 9.75% senior notes, $3.6 million of common share buybacks, including tax. $7.9 million of principal and interest payments on Bozzetto's credit facilities and $5 million of capital expenditures. Turning to Slide 11. Looking at our liquidity more closely, it shows a breakdown of our cash position by segment at the end of December. I'd like to make clear that our liquidity in the coming months will be impacted by the proceeds from the Bozzetto divestiture, which we expect at the end of Q2 of this year. We expect the net proceeds in the range of $265 million to $271 million. We anticipate our liquidity will be offset by the redemption of the senior notes and if all the notes are redeemed, that would be $142.6 million. Over the next 12 months, our cash requirements will include $7 million of operating expenses at the holdco level. Slide 12 shows our results for 2025 tracked against the guidance we provided a year ago. We had forecasted that Bozzetto and Cortland would generate between $88 million and $95 million of adjusted EBITDA on a combined basis. Their combined results, which totaled $85.6 million were broadly in line with our expectations for the year. At the holdco level, we forecasted cost to be $9 million for 2025. As a result of cost-cutting initiatives we implemented over the past year, including reduced audit and professional fees, lower insurance costs and decreased director fees, we did better than our target for the year. Holdco costs for 2025 were $7.7 million. We remain committed to reducing holdco cost to or below 1.5% of NAV. I should point out that in light of the planned sale of Bozzetto, we are not providing guidance for 2026. Key development subsequent to quarter end was our announcement of the signing of the definitive agreement to divest Bozzetto. While we have discussed some of the details previously, I think it would be helpful to review the salient aspects of the transaction and provide an update on the recent developments. As summarized on Slide 14, the sale of Bozzetto will generate proceeds in the range of $265 million to $271 million. We anticipate the transaction closing in Q2 as we await final regulatory approvals. As we have disclosed previously, we expect the use of the net proceeds towards making investments in undervalued companies with an ultimate goal of acquiring controlling interest in these investments. In addition, we will be reducing our debt by making an offer for our senior notes -- senior notes to be redeemed at principal value plus accrued interest. With more than $500 million of capital tax carryforwards at December 31, we do not anticipate paying any taxes on the gain from this transaction. Slide 15 illustrates the cash waterfall on the main transaction components. Although the Bozzetto transaction is dominated in euros, we have presented it in Canadian dollars, our reporting currency. As you can see, Bozzetto was valued at an enterprise value of $411 million. Taking into consideration Bozzetto's net debt, the value of minority interest and transaction costs, the sale of Bozzetto will generate net proceeds in the range of $265 million to $271 million. Amounts presented in the waterfall are subject to closing adjustments on net debt, working capital and currency rates. I should also note that we entered into a hedging strategy in February to mitigate the impact of major foreign currency volatility. We have hedged approximately 50% of the net euro proceeds into Canadian dollars, which essentially represents the par value of the senior notes if they were all redeemed after the divestiture closes. Slide 16 presents our cash position on a pro forma basis, taking into account the impacts associated with the Bozzetto divestiture on our liquidity as at December 31. As a reminder, our cash position at year-end was $109.2 million. This pro forma walk takes the estimated net proceeds from the Bozzetto sale, less $50 million of cash held by Bozzetto at December 31, and the use of $143 million towards the redemption of our senior notes, if all our shareholder -- all our noteholders accepted the offer. Once these items are taken into account, we derive $185 million of cash on a pro forma basis as of December 31. As noted earlier, this total is subject to the final closing adjustments. That concludes my prepared remarks. I would like to turn the call back over to Rhys to review Aimia's near-term priorities and outlook. Rhys Summerton: Good. Thanks, Steve. So Slide 18, I think it is -- we're going to just look ahead in the near-term activities. So we anticipate the Bozzetto transaction will close in Q2. There's the customary closing conditions and regulatory approvals, which Steve alluded to. And then within 30 days of closing, we will make an offer to purchase all the senior notes. The purchase offer is a requirement of our indenture agreement, which is triggered by the sale of Bozzetto. The offer to noteholders will be made at par value of the notes plus any accrued interest. And that value at 31 December 2025 was $142.6 million. The holders will retain the option to continue to hold the notes until maturity in January 2030. So there will be a decision that noteholders will have to make. In tandem with the offer to redeem the senior notes will begin to deploy the net proceeds towards the exciting part of Aimia's future, which is making investments in companies that we find that we believe would be undervalued and would be consistent with our strategy. So we've already identified a number of target companies. We won't share obviously any of the details with you, but I think we'll give a broad sketch or outline of that. So the companies we're looking at, we'll definitely have to get control of them. We'll look for things that have got strong dependable cash flows. They have balance sheets which are not just strong, but they are essentially net cash position balance sheets. And they'll be undervalued on a relative basis with a strong valuation or asset underpinned to them. So just to highlight on Slide 19, the impact of the early redemption of the senior notes -- these notes, they bear interest at 9.75% coupon and they consume $13.9 million of cash annually, and that cash comes from the holdco right at the center. Early redemption will result in cumulative cash savings to maturity in January 2030 of approximately $56 million if all of them are redeemed. It's worth remembering that we generated a gain of $53.8 million and annual cash savings of a further $5 million when we completed our substantial issuer bid last year when we exchanged our preferred shares at a discount to the face value of the senior notes. So with that out of the way, Slide 20 talks about the progress against our 3-step strategy. So remember those 3 steps reduce the holdco costs reduce the share price discount that it trades at and deploy the capital effectively. It's been less than a year since we introduced this strategy. On the holdco cost side, we reduced holdco cost to $7.7 million in 2025, surpassing our target, which was $9 million. So we did better there. And Steve and the team did a good job in reducing that number. And to put it into context, we're down from $12 million in 2024. On the share buybacks, we continued with our share buybacks. We've spent more than 3.6 million worth of shares in our NCIB in the fourth quarter at an average price of $2.80 per share. And more significantly, the sale of Bozzetto puts us on the cusp of being able to deploy the capital effectively executing on the final part of our strategy and the most important part, which will create value. We are excited about the path ahead, clearly. Once the Bozzetto divestiture closes, we'll have a strong cash position importantly, depending on the success of the redemption of the notes, we'll have no debt at the center. And the underlying companies will have net cash as well and we have more than $1 billion of tax losses -- tax loss carryforwards to utilize. So we are very aligned, both as a Board, as the executives of the company and the shareholders to take Aimia forward. As sanguine as we are about our prospects, I want to remind everyone that this process will take some time. So we've been at it for less than a year. The turnaround is gaining a lot of momentum. The team is executing very well, and we are very well placed to start executing on the next part of our strategy. Slide 21 talks about the progress in the NCIB. This, you can see, takes us all the way to the 28th of February 2026. So after year-end. We've continued to buy back shares from the start of the strategy. We've reduced the share count by over 10%. And we will continue with this until our current NCIB approval runs out in June, and then we will look to reinstate that at the next AGM. Going on to our summary and outlook slide. As you have heard, the fourth quarter was marked by progress against our 3-step strategy. We had solid financial results, even though there's been geopolitical uncertainty around the world. Our focus in the coming months will be to sustain the momentum that Aimia has. In particular, our priorities in the near term will center on closing the Bozzetto transaction, which we said will be in the second quarter, redeeming the outstanding senior notes and then starting the process to invest in new undervalued companies that meet the criteria that we specified earlier. We also have worked on secondary listings of Aimia. We have a listing now on the JSE, and we look to add one more additional listing of Aimia in another market. And this is all part of our strategy, which will become clear in the time ahead of how we plan to invest in undervalued companies. Finally, I want to point out that AGM materials will be mailed to investors in the coming weeks in advance of the shareholder meeting. This year's meeting will be held in Toronto on May 13. And I hope to meet as many of you in person as possible. I'm hoping that we can double the attendance from last year. Thank you for your time today, and we'll open the call to questions. Joseph Racanelli: Go ahead, operator, if you wouldn't mind pooling listeners for questions. Operator: [Operator Instructions]. Joseph Racanelli: Sorry, operator. Before we begin, Rhys, we did receive some questions, and I just want to ask those for you and Steve. And you talked about potentially monetizing some assets. Can you clarify which ones that you're considering? Rhys Summerton: Well, the balance sheet is now fairly transparent and the investments are easy to understand. So we have a few remaining smaller assets which we are going to look be in the process of monetizing. And those are some investments which we will redeem bringing in some of the cash into the center. We also have an investment in China which we don't believe is ready to be sold yet. But it is trending in the right direction. Performance has improved materially over the last year, and we think in the future, there will be an opportunity to exit that. But at this point, we are happy holders of that turnaround. Joseph Racanelli: Okay. Can you clarify a little bit in terms of your tax loss carryforwards? How would you utilize them with some of your planned investments? Do you need to acquire controlling stakes to utilize them? Steven Leonard: In each jurisdiction, there's particular parameters around utilizing the tax losses, the biggest parameter is change in control. So obviously, we're -- we have that top in mind as we make our -- as we deploy our investments and make our decisions going forward. I want to point out though, we were able to utilize our capital losses on the sale of the Bozzetto transaction. That's just another example of our ability to mitigate tax costs. Joseph Racanelli: And Rhys question for you, in particular, does Milkwood plan on adding or increasing its position in the company? Rhys Summerton: Yes, I don't think we'll make an answer about that now. We have a substantial investment already. I have material investment as well personally. And we'll have to see what happens in the next few days. But we increase our holding or our percentage of Aimia virtually every day because there's a share buyback going on and obviously, we're not sellers. But we'll see what happens with the market and where Aimia trades relative to its book value. Joseph Racanelli: Great. Operator, can you open the line to the person in queue, please? Operator: Certainly. First question from the phone is from Rob Byde at Zeus Capital. Robin Byde: Two from me, please. Firstly, on Cortland and EBITDA margins. You discussed in the statement, higher SG&A costs related to investments in sales and customer relationships. Are those investments now complete? And would you expect all other things being equal, the EBITDA margins in this division would now recover? And then secondly, just to press you a little bit more on acquisition strategy and targets. I know you can't give any precise details, but can you perhaps say anything on geographies and perhaps verticals? Rhys Summerton: Thanks, I'll give the question to you. The first one to Steve, and I'll take the second one. Steven Leonard: Yes. So in the quarter, in the fourth quarter, we had a little bit of -- as we highlighted some unusual items in the period on SG&A. But we decided in '25 to invest in our sales team in our getting to markets and establishing presence in different markets. So that has had a bit of a downward impact on EBITDA margins in '25. That work is done. We don't expect to be growing the sales force anymore. And we're starting to see some of the work that's been done behind that. coming through for '26. So we're expecting better margins in '26. Rhys Summerton: Thanks, Steve. The second question, some geographic indication of where we might make acquisitions. We look for value anywhere in the world. And at the moment, we've said it many times that the U.K., we think offers the best risk reward of any place that we look at. So the opportunities to deploy some of the capital in the short term, I think would make sense if valuations stayed where they are today in the U.K. That's where we see tremendous value. Balance sheets are not only strong, there's opportunities with companies with net cash on the balance sheet. There's good management teams. You don't overpay for management through SBC, which you get in the U.S. So we think it's a really good place to hunt for acquisitions. We also know the market very well. But that's kind of stage 1. Stage 2 as we get bigger and the investments work out, we would need to then look at Canada and the U.S. to utilize those tax losses. So to give you sort of a road map, we would say stage 1, look at things that have exposure to really the cheapest valuations with the best management and highest quality companies and stage 2, hopefully, the U.S. market sees some normality and valuations correct. And we'll be very well placed to start executing on our acquisition strategy in the U.S. and in Canada. Robin Byde: Well, that's great. Thanks very much. Operator: [Operator Instructions]. At this time, Mr. Racanelli, it appears we have no other questions registered. Please proceed. Joseph Racanelli: Great. Thank you again, everyone, for joining us. As mentioned, there are a couple of things to take note of, our upcoming AGM in May. And as well, if there are any additional questions as you review our material, please reach out to us. We'd be happy to answer any questions that you may have. Thank you again. Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.
Walter Hess: So good morning, everybody, here in Zurich and at the webcast. It's a pleasure for us to present our full year results 2025. With me today is Daniel Wuest, our CFO. My name is Walter Hess. I'm CEO. Let's go straight to the highlights of 2025. We delivered on our promises, and we met the financial targets 2025. We achieved 11.1% of revenue growth and minus 48% adjusted EBITDA. And with that, we achieved our guidance. The growth of Rx was 33.2% and of non-Rx, 7.1%. The digital services with a growth of 110%, so a remarkable growth rate again and a significant profitability contribution, it's a contribution margin free, which is more than 50% already of the total company. Our AI Health Companion, which we have started to launch in October last year as a beta version in our app has been adopted really very fast. Already every third app user is utilizing this AI health assistant. And with the strong liquidity position of CHF 160 million by end of the year, we are very confident to execute in 2026 and 2027 according to our plans. We are fully aware of the challenging and also critical market environment. However, we today focus on the future on our successful transition and on our path to breakeven and to cash generation. We do that by giving you an update on our strategy first, followed by a business update and then the financial update and outlook given by my colleague, Daniel, before we come to the Q&A session. There are some real important megatrends in health care, which have a big impact on our business. And we see us at the sweet spot of the 3 major megatrends. One is the demographic change, which gives a structural shift towards prevention and longevity, but mainly also towards a higher chronic care demand. It's the growth of the pharmaceutical market, a market which is not dependent on the business cycles as we see right now in this difficult environment worldwide. Last year, the market size in Germany of pharmaceuticals reached already EUR 62 billion. It's a huge potential for us being captured with electronic prescriptions. And the third megatrend is the digitalization in health care, which is even accelerated now by AI. And also there, we are at the forefront with our digital and AI health platform. How our response to these megatrends looks like, we would like to show you with a short video. It's a video about our health companion, which is live in the app already since last October. [Presentation] Walter Hess: As you can see, we are evolving from a transaction-led retail business into a health platform that orchestrates and covers the full customer and patient journey. By merging the online pharmacy with a marketplace not only for products but also for health services, digital health services and telemedicine orchestrated by the AI Health Assistant alongside with a state-of-the-art retail media business, we have created a platform which is unique and it's a novelty in Europe. This trustworthy and integrated platform with more than 12 million active customers, more than 1,000 marketplace sellers and more than 6,500 established doctors in Germany allows us to capture the full value of the entire journey. It makes our business fundamentally more defensible and less dependent on linear retail market growth. With the structural foundation now firmly in place, we are ready to ignite the platform flywheel and accelerate our scale at low marginal cost. And with that, let's move to the business update now. And of course, starting with Rx. What you see here is the sustained quarterly growth of our Rx business. And I can already confirm now that this will continue in Q1 2026. Last year, we achieved a growth rate of -- a growth of 33%, which leads to a 1.8% higher revenue in Q4 last year compared to the first quarter in '24, just when eRx started in the German market. If it comes to the quality of the eRx customers, I have to mention that the European and the German Court of Justice last year they confirmed -- reconfirmed that we are allowed to give bonus to our customers and patients. Therefore, we have restarted to do it in July last year with the result of increased retention and higher order frequency of new and of existing customers. And this led to a 3x higher retention rate and order frequency of customers that they are getting now also bonus with eRx compared with the customers, the previous customers that sent to us the paper prescriptions. Also, the average order value is growing quarter-by-quarter. In Q4 last year, the average order value of an eRx order was already at EUR 128. And just a few days ago, we have waited a long time. The doctors and insurance associations communicated that they have agreed now on a chronic care flat rate for doctors, and they will start 1st of July. But it's limited to a few diseases and to specific customer segment groups. In our view, it's a good start. It's a start in the right direction, in the direction of a more efficient and a more customer-centric health care in Germany. And it's a start of a catalyst, which is called repeat script, which we have already integrated in our product as we speak right now. It was important that in the first 5 to 6 quarters, we could -- we invested in creating awareness for the CardLink solution, the solution that customers, patients can read in prescriptions digitally. We have seen that the incremental cost of new customers that we had to find and to acquire via upper funnel channels like TV, out-of-home or radio were ineconomic with regard to the relation of customer acquisition costs to customer lifetime value. Therefore, we have started to shift, and we have done it in Q4. We have shifted and we have reduced the marketing spend into the Rx acquisition. And we have started to prioritize on performance marketing channels to ensure that we remain in the economic zone, which you see on the slide, it's the green zone with our customer acquisition costs in relation to customer lifetime value. But in addition, we have a growth lever, which is the direct bonus and the exemption from co-payment, which in combination, gives us the right mix to continuously grow with our eRx business. Let's come to the non-Rx business now. Here, you see we grew by 7.1% last year. If we talk only about the OTC and BPC business, the growth was 4.8%. But this growth came with the discontinuation with Zur Rose brand, which accounted for 2% to 3%. So effectively, the growth of the OTC and BPC business last year with the remaining brands was between 7% and 8%. It also came with an improved marketing performance, leading to higher customer retention and better customer lifetime value of our OTC and Beauty Personal Care customers. The digital services continue to grow remarkably with 110% on revenue growth with continuous really attractive margin. Both will go on also this year and beyond. On Slide #13, you see that our core brand, DocMorris, accelerated really rapidly last year and grew by more than 20%. So this shows a clear proof point for the successful execution of our brand strategy that we have defined at the beginning of last year. At the same time, our sub-brands, Medpex and Apotal were managed well and kept at a slight growth, contributing positively to the overall platform performance. Let's deep dive a little bit in the 2 parts of the digital services, as a TeleClinic, the telemedicine platform and the Retail Media business. TeleClinic first. The number of treatments in 2025 was 2 million, which is a growth year-over-year of more than 50%. A patient in an average had a doctor on the screen, in the app within 5 minutes. That's amazing. Imagine how long it takes until you have an appointment and you see a local doctor if you have an emergency. TeleClinic is available 24/7 with GPs and specialists. And almost half of all the treatments have been done outside the opening hours of the doctor practices that shows the importance of this telemedicine pillar as part of the health care of the standard health care in Germany, but also in other countries. As said before, so the number of doctors already reached more than 6,500 and is continuously growing. But the most important and the key success factor for TeleClinic is the strong partner network, which is secured by long-term contracts. It's with insurance, digital health providers and doctor associations. To expand this partner network is the most important key strategic priority in TeleClinic also for this year and the years after and also expanding the services they give to these partners, be it insurance companies or doctor associations. In 2025, TeleClinic achieved a revenue of EUR \26 million. But please be aware, this EUR 26 million, that's not comparable with retail revenue. Retail revenue with relatively low margins. Here, we talk about take rate revenue with much higher margins and a complete different value. TeleClinic is the leading platform for statutory and private health care in Germany. And telemedicine is a key pillar also for the new ministry in Germany. It's part of the coalition agreement. And now as they are preparing the digital -- the new digital strategy, so TeleClinic is part of the primary care, but also of the emergency care solution of the future regulation. You see it's still a huge potential for telemedicine in general. The market penetration of telemedicine is still below 0.5%. So we are still at the very beginning and already now EUR 26 million of take rate, mostly take rate revenue. In '26, we expect a mid-double-digit revenue growth and a further increase of the EBITDA margin. Our Retail Media business, we started with it 3 years ago, and we are meanwhile the leading retail media health care platform in Germany. We could prove to the advertisers and their brands, the brands you all know that by using our retail media platform, they can strongly increase engagement and strongly increase conversion and achieving really attractive RAS metrics. Last year, -- with Retail Media, we generated a double-digit euro million revenue with really high margin, even higher than with the telemedicine platform. And also in the upcoming years, '26 and further, we expect continued strong and profitable growth of our Retail Media business. So let's come back to the health companion, where we have launched our AI Health Assistant in last October in the app. Right now, we are rolling it out in all our web applications. So during March and April, you will see more and more visibility of the assistant also in our web. The health assistant is the central intelligence of our platform. Here you see on this slide, Slide #17, 3 specific use cases of our health assistant. In the area of the transactional AI commerce, we integrated conversational intelligence in our search bar in order to give personalized responses and recommendations to every customer and patient using our app. In the center, you see the AI assistant, providing AI-generated advice-oriented insights and becoming more and more a trusted health adviser for our customers and patients. And on the right-hand side, -- the assistant acts as proactive health orchestrator, seamlessly guiding the user, for example, from having a symptom to a doctor, be it the local doctor or a telemedicine doctor from TeleClinic, of course, or guiding them to a skin check service. And there, by the way, within only 2 months that we have this service live, we could detect already more than 200 skin tumors and melanomas with our service and our digital health assistant. So by managing health in one place as we do, the AI assistant helps to maximize the patient and customer lifetime value and accelerates our transition to a digital and AI health platform. So on Slide #18, we are really very proud that today, together with Google, we could announce an incredible strategic partnership. We have chosen Google in order to leverage on their cutting-edge AI capabilities and infrastructure. Google has chosen us in order to combine their most advanced technologies with our deep digital health care and pharmaceutical expertise. Together, -- in this partnership, we are defining and delivering new seamless health products in the future in order to make health care better and more accessible. One point which was really important for us and which we secured is that we keep the full sovereignty of our data while meeting also the highest requirements for data privacy and security. Let me conclude this first part with the strategy and the business update. We have spent the last few years in building this platform engine. Now we have started to drive it. Our strategy is set. Our positioning is unique, and our priority is on relentless execution, just to unlock the full value of our DocMorris platform. And with that, I would like to hand over to Daniel for the financial update and the outlook. Daniel Wüest: Thank you, Walter, and also a very warm welcome from my side to the people here in the room and the ones on the webcast. First of all, I want to provide you with some further insights on the financial performance of '25, but then much more important also to provide you with the outlook and the guidance and specifically how we will achieve EBITDA breakeven in the course of '26 and then subsequently, free cash flow breakeven in the following year, meaning in '27. Let's start with a quick look back on the financial year '25. As Walter already have mentioned it, we could secure comfortable and good top line growth of 11.1 percentage in local currency. And I'm very proud that all the business lines have contributed to this growth. Of course, Rx and Digital Services had the lion's share of the growth with Rx growing more than 33% and digital services above 110%. Reported revenues, which are the revenues without Apotal showed even a better performance and grew with 12.4% in local currency. There, you already see that the growth of Apotal was below the average of the group and also to a small part, also the growth of the segment EU. I'm very proud also that the gross margin of the group increased by 90 basis points to 22.2% despite the reallocation of marketing expenses from marketing into bonus and co-payment, which had an impact that will be directly deducted from sales and therefore, has a negative impact on the gross margin. And therefore, the 90 basis points are even more remarkable. As you know, we only started with the co-payment and the bonus basically from Q4 onwards and until Q3, we did a lot of additional upper funnel marketing spend. Let's quickly deep dive into the 2 segments, where I will focus on segment Germany because that's the lion's share of the contribution. You see segment Germany a growth rate excess of the group of 11.7% also fueled by Rx and digital services. Even here, the gross margin is even developed a little bit better, 10 basis points more with 100 basis points in addition and that also with the reservation that the payment of bonus and the co-bonus will have a negative impact on gross margin, but will then be reversed on the CM3 level contribution margin 3 level because it's just a reallocation of direct marketing spend to bonus and co-payment. Segment EU, a modest growth. I think we would have expected a little bit higher growth, but they managed also to improve the gross margin by 40 basis points. But unfortunately, given the low growth and the indirect cost base that didn't manage then to have a positive effect on the EBITDA level, while that's the reason why that segment EU is still slightly EBITDA negative. With that, let's come to our KPIs, which all look very promising and which kind of pleasant in our view. Let's start with the active customers. For the first time, we have also included the TeleClinic customers because that's a significant number of customers. But let's, first of all, stick to the online pharmacy customers, which showed a substantial increase of 700,000 from 10.3 million to CHF 11 million. You remember Walter said told you that the discontinuation of the Zur Rose brand, and you can assume that a few hundred thousand customers have been lost. We have not adjusted for that. And without that, the number would even look better. But we are very pleased what we see here. Also, TeleClinic increased the customers on the platform by 300,000 from 0.9 million to 1.2 million, and both numbers are on an ongoing basis, increasing. Also in relation to the app downloads, I think there's an active tracking of the app downloads. I think it's an indication, but definitely not the one and only. But also here, you see a decent increase of 200,000 app downloads compared to '24, and we reached 2.1 million app downloads in '25. Now let's come to the average order values or the basket sizes. First of all, on Rx, you see an increase of EUR 4, which is by itself already a remarkable increase. But you have also seen a few slides before that in Q4, the average order size was EUR 128. And you see really that in the first 3 quarters, the average basket size was much lower compared to Q4, where we really started our efficient and dedicated marketing, and that also tells you something about the quality of the newly acquired customers. One remark, please note that our basket size is calculated excluding VAT -- just for reasons, if you compare other baskets, you always have to make sure that if it's with or without VAT, given that the VAT in Germany is 19% that makes pretty some difference. If you gross it up our basket, then it would be much higher than the [ EUR 114 ]. On OTC, Walter mentioned it, we focused also on economic and customer lifetime value and the economy of the customers. Therefore, slight decline from 42% to 41%, but basically almost stable and nothing to worry about it. The order frequency also here, good development from 3.9 to 4.0x. OTC remained flat with 2.0 orders per year. The repeat order rate, which was already extremely or very high and decently high at 76%, further increased to 77%, which is also a very good value. And just all in all, shows the quality and the quality of our existing, but also of our new clients, which we have acquired during the last year. Now let's quickly talk about a few highlights or perceived lowlights based on the first reactions. I do not want to go you through line by line through the whole P&L. I think the top line and gross margin, we have discussed. Let's focus on the different cost pillars. Personnel expenses, there, I'm very pleased we could lower the respective ratio by 50 basis points. That's the first -- showing the first positive impact on our managing the indirect costs, which are basically to 100% personnel costs, but also shows the improved efficiency where we really go through the processes and kind of automatize and also using KI to better allocate resources, and that has already a very nice impact in '25 on the personnel cost ratio, and there will be some much further leverage in the coming years. Marketing expenses, as mentioned, rose by over CHF 11 million. And there, we are talking only direct marketing expenses. We have said we shifted basically from direct marketing, not completely, but partially to indirect marketing, which you see as a decline or lower revenues. And therefore, it's not only the CHF 11 million, but you have to add a small single-digit million to really see the full additional marketing impact, which has been done in '25. Distribution expenses, there, the ratio unfortunately went into the wrong direction. On an absolute level, that shows the increase of the -- the orders, which come with higher distribution costs. But on top of that, we have seen a substantial increase of logistic costs, transport costs, given kind of the high demand for logistic services, but we think that, that should be come to an end. And otherwise, if it will be ongoing, and we have already started with that, that we have to pass it to the clients with different models that either they pay for earlier delivery or other models just to kind of compensate for any potential further distribution and logistic cost increases. I think reported EBITDA was CHF 1.6 million lower than the adjusted EBITDA, where the adjustments come from. We have a net restructuring cost with the closure of -- that's net minus CHF 1 million because we could also sell the property, and therefore, it's only net minus CHF 1 million. We also adjusted CHF 2 million positive EBITDA contribution through the sale of the Swiss properties. And then we made additional provisions for legal cases in the magnitude of CHF 2 million. I think in our business, that's business as usual and nothing to worry because you notice that every second week there, someone is kind of putting a claim against the online pharmacies. And therefore, we have kind of just for the corporate practice some legal provisions in the amount of CHF 2 million. On the net financial result, that also seems to be kind of going completely into the wrong direction with CHF 12 million additional net financial result. But just to call you down, it's the CHF 12 million are all noncash. It's CHF 5 million FX impact on our intercompany loans. You know we fund those in Swiss francs and give the intercompany loans in euro to our companies. And at the end of the year, we have to kind of compare it then with the actual euro value. And as you all know, the euro substantially devaluated against the Swiss franc. There, CHF 5 million from that side. And last year, we had a positive effect of CHF 4 million. If you add it up, then you are at CHF 9 million. And the other CHF 3 million, which would then add up to the CHF 12 million, and that has a cash effect, but it will level out. That was the early repayment and repurchase of the '26 convertible bond because, as you remember, the offer was 103.5%, and we had to take that as a financial expenses. But on the other hand, we will save more than the CHF 3.5 million in this year because we do not have to pay the coupon of 6.875% of the '26 convertible bond anymore. So therefore, if you deduct the CHF 12 million, basically exactly the same net financial result. And just for your information, going forward, we have now redeemed the CHF 26 million fully 250 million outstanding, 3% coupon, 7.5% and then you have to add CHF 4 million to CHF 5 million of IFRS 16 financial expenses, and that brings you to roughly CHF 12 million of real cash out interest financial expenses for the coming future. Also on tax, you have seen we have not paid, but recorded CHF 12 million tax -- negative tax burden. Also there, no cash at all. There's 0 cash has gone out. It must be also somehow logical because we have recorded still a loss. The reason for that is that the deferred tax assets where we have tax loss carryforwards of several hundred million. And given a little bit lower growth in Rx and in some of our subsidiaries, that's just a manual thing, and we had to devalue the deferred tax asset, the positive ones, and that was this booking of this CHF 12 million, no cash effect at all. And given that it's based on a 5-year plan, the next year, we most likely have to do it the other way around, and then you will see there a positive contribution, but also with no tax effect. So far to the P&L, the balance sheet, I keep it very short. I think as a CFO, I'm very relaxed with this balance sheet. It has been substantially strengthened in last year with the rights issue in May, but then also with the partial refinancing of the '26 convertible bond so that we now have a very strong liquidity base of CHF 160 million. The net debt has been reduced to CHF 138 million and the equity ratio, which was strong already before, is now even stronger and amounts to 50%. As you may have read, we had redeemed the remaining CHF 22 million of the '26 convertible bond by beginning of March. And that's what I said as from now on, we only have the CHF 50 million and the CHF 200 million convertible bond outstanding, which are the only financial and interest-bearing debt besides the CHF 4 million to CHF 5 million lease payments, which we have also to pay on an annual basis. Let's have a quick look on the indirect cost and the net working capital. Indirect cost, everything goes into the right direction. From my view, not -- the arrow is not yet steep enough, but it will definitely steepen 7.2%. That's nothing you can be or I as a CFO can be proud of. But as I said in the past, you can be assured that this ratio will become significantly below 5% in our midterm plan, and you will see on an annual basis, further improvement on that area. Net working capital, also there, maybe -- that's because the liquidity position was so comfortable or is so comfortable, maybe not that focus by the end of last year. We had some overstocking of CHF 11 million, but that was based on a very strong Q4, which already started by the end of Q3, and we had really to overstock and the flu season also was kind of skewed towards the end of the year. We have done it a little bit too much. I think definitely CHF 5 million could have been less stocking. And then what's kind of -- I do not like very much is the CHF 9 million accounts receivable there, let's call it, sloppiness and I take it on my part, but that is also a nice asset to reverse in this year and the coming years. So far, everything on the cost, net capital and indirect cost side on track. And now let's go into details how we will achieve EBITDA breakeven in '26 and then subsequently free cash flow breakeven in '27. And we heard some complaints that we have now introduced CM3 contribution margin 3. I would say, okay, maybe the analysts have not yet in the spreadsheet, but I think it's the highest transparency you can really get from our end and what is CM3? CM3 is the last line of operating profit. You only have to deduct indirect costs and then you are at EBITDA. And I think that's definitely kind of, in our view, how we steer the company and how we -- and that's really the basis and the fundamental of our target and our mission to become EBITDA breakeven, and that's the reason why we want to share that with you. As you can see in '25, and you see the value of digital services, basically 3/4 or even more than 3/4 of CM3 contribution came from digital services, while the online pharmacy, that's Rx and OTC, BPC, including EU are keeping up substantially in the second half. That's the green part of the bar. For '25, we are very open and nice and even put the number on it, slightly grounded, but nevertheless, a very good indication. And then you see where -- why we are so confident that we will reach EBITDA breakeven. There will be a substantial contribution from digital services. As you know, they grow top line. And as Walter said, it's basically take rate equals gross margin, more or less the slight reduction equals EBITDA. But also the online pharmacy is substantially keeping up in '26. You see that the green bar, and they are almost on an equal level in absolute terms with digital services with the CM3 contribution, okay, they are on the top line much bigger, and that should not be a surprise. But having said this, in '26, even Rx, and that's really exceptional, will be CM3 positive. That's due to our very focused and increased marketing efficiency, which has been substantially double-digit negative still in '25. And you see the same pattern goes on for the first half in '27 and the first half '22. We will increase the CM3 margin by more than 300 percentage by 3 percentage points and more than double the CM3 contribution in absolute terms in 2026. And you see there will be -- there's not the end that will be ongoing also into '27. I think that's really important because if you now have CM3, you deduct the indirect cost and then your EBITDA level. And how that looks, we go even further into the detail on the next slide. That's the -- that's really kind of to the heart of what the CFO usually not any longer in Excel, but in sheets keeps and does not share with anyone. But here, you see the phasing of our EBITDA ramp-up. The basis is Q4 '25. In Q4 '25, we had still a negative EBITDA, but it was in the area of minus CHF 7 million, which is a huge positive development due to the rights issue, we had to report Q1 '25 EBITDA, which was minus CHF 16 million. Q4, we were down at minus CHF 7 million. And Q4 is really the run rate for our journey -- EBITDA journey in '26 with Q1 being somewhere in the area of Q4 because we see the same trends, the same patterns, the same dynamics, improvement in Q2, which is usually the first 2 quarters are not the best ones. It has some seasonality in our business, but not too much because there is additional measures included. Then Q3, we are, at this point in time, confident that we will reach EBITDA breakeven and Q4 will then be EBITDA positive. And this altogether, you will see first half the lion's share of the negative EBITDA contribution and the second half of the year, there we will hopefully see kind of a positive EBITDA contribution. And that leads us -- that's a little bit that will come now later to our guidance, but you see that it's minus CHF 10 million to minus CHF 25 million is our guidance for the EBITDA. As I said, -- it's CM3, that's the bridge, the minus CHF 48.2 million. Then the CM3 contribution, I said more than double. That's -- we haven't put the numbers there, but you also have something to calculate. And then the indirect costs where we are really working hard and try to bring them down, but that's according to budget, still some negative contribution, and that will lead us to the EBITDA guidance, which you see on the screen of minus CHF 10 million to minus CHF 25 million. I think CM3 is a very important pattern to get there, but also in combination with operational and marketing efficiency. And then we will also very tight CapEx management and also on the indirect costs. You see we have many layers where we can play and really optimize to get -- to achieve our target, first of all, in '26 to become EBITDA breakeven in the course of '26. But then with the same patents and instruments, we will become free cash flow positive also in the course of '27. That brings me now to the guidance for First of all, for '26, the short-term guidance, we have pretty broad guidance on the top line, mid-single digit to low teens. Reason for that is that we achieve EBITDA breakeven also with relatively modest growth, which is more the left side of the mid-single digit. But we also see patterns that we could even become EBITDA breakeven with accelerated growth. And that's the reason why we just want to keep the flexibility to play EBITDA versus growth, especially on the marketing side, and that's one explanation for the rather broad guidance. And as you know, we try to definitely come out at the right end of the guidance. But given, let's say, the different patterns, we will then have to narrow it during -- in the course of the financial year '26. As a soft guidance, how does that translate into kind of the business segments? Rx will be around 20%, which is kind of basically in line what Walter showed before. We cut the 20% noneconomic customers that comes with kind of a little bit lower but much more profitable growth on Rx. OTC, we stick to the mid-single digit as we have been before and as we have demonstrated that, that's possible. And digital service, there we will see mid-double digit growth as digital service combined and with a substantial increase of the EBITDA margin of the already very high EBITDA margin, but there will be further appreciation of the margin. I talked about EBITDA, minus CHF 10 million to minus CHF 25 million. That's kind of -- that also needs to be said an improvement of 300 basis points or 3 percentage points of the EBITDA margin. That's coming from the wrong direction, but I think it's still substantial, such kind of relative increase. And then CapEx, roughly CHF 30 million, maybe rather at the high end and we are positive that could be maybe slightly lower as we have seen in '25 with CHF 27 million. That will lead us to our ultimate goals, EBITDA breakeven and free cash flow breakeven in '26 and '27. And with this 2 years, taking into consideration that we have to really drive profitability, maybe a little bit against growth. The midterm guidance, we are very pleased that we basically can confirm the midterm guidance, which we put out in -- ahead of the rights issue. Of course, it's not 20% CAGR anymore. It's 15% CAGR anymore. But I think the most -- the best or the most impressive thing in my view is that we can keep the 8%. We can even stay more behind it because given that the relative growth of Rx goes down, and that makes the relative weight of digital service even bigger at the back end. And therefore, the business mix is really in favor of us with kind of having OTC, which is very important also for customer acquisition for Rx, but also for our TeleClinic and Retail Media business. Rx, which is decently growing and then digital services with high EBITDA contribution and high growth, which will have a higher relative share at the back end of our 5-year business plan, meaning that this is true for 2030, basically covering 5 years. CapEx has also been reduced by CHF 5 million. I think we are comfortable with CHF 30 million average CapEx rate. And I think that's basically the guidance where we are -- what we are aiming for and where we are kind of being measured to. And before I hand over to Walter because he's already jumping up, just 2 subsequent events, which you have seen on the convertible bond, I've already talked about. The closure of Ludwigshafen, which we announced also today, just some -- I cannot say, highlights, but some financials to that. We will have onetime restructuring costs between EUR 3 million to EUR 4 million. If you take the midpoint, then you should be at the right spot. But these are we are talking euros. Out of this [ EUR 3 million ] to EUR 4 million, EUR 2 million have an impact on EBITDA because these are severance payments and the remaining part is below EBITDA. That's kind of onerous contracts because we have lease agreements which we have to -- due to IFRS immediately to write off, but that will be an impairment between EBITDA and EBIT. We will adjust for that, roughly EUR 2 million. But I think the very positive effect is that we will have at least from '27 onwards, EUR 2 million -- in excess of EUR 2 million annual recurring savings because we are moving the 3.5 million parcels from Ludwigshafen to Heerlen, where we have ample of capacity. There will be better capacity utilization in Heerlen. The handling and packaging is 2x more efficient than in Ludwigshafen because we are in Helen fully automated. And therefore, I think the EUR 2 million is a baseline annual savings, but there is definitely potential for more to come. And then last but not least, current trading, I said, we have seen the positive trend from Q4 ongoing in Q3. Everything is according to plan, meaning budget. And also, I think that gives us a lot of comfort to kind of handle and managing this challenging but very exciting times ahead of us until we are free cash flow breakeven. Thank you very much for your attention, and I'm happy to hand over to also again. Walter Hess: Yes. Thank you, Daniel. So just before we close and open the Q&A session, -- in the last 2 years, we have not only built the platform engine, as shown before, we have also built a high-performing leadership team, as you can see here on the slide, a leadership team that bridges the gap between traditional retail excellence and disruptive health tech and AI innovation. And I can assure you also in the name of the whole team that we are fully committed to execute the defined goals and to transform our platform into tangible shareholder value. It's not only at the level of the management, it's also a change which is mirrored at the Board of Directors. And therefore, we have informed that we nominate 3 new members of the Board that we will present to the AGM. It's Thomas Bucher, a well-known, seasoned CFO with a lot of experience in listed and private companies. It's Nicole Formica-Schiller. She's an expert in AI and digital health transformation, but also regulation on a European and the German level. And she has also a wide network in Germany, in the health care sector and a deep understanding of the regulatory landscape in Germany. And it's Thomas Reutter, an experienced corporate and capital markets lawyer. So these board nominations ensure that management and Board is perfectly synchronized with the company's vision and AI-first platform strategy and also shall provide the necessary stability to the company. And with that, we are at the end of the presentation. We had to tell you a lot to give you a lot of information. But now let's immediately move to the Q&A session. Operator: [Operator Instructions] Walter Hess: Okay. We will share the mic. Laura Pfeifer-Rossi: Here is Laura Pfeifer, Octavian. I have a question on your sales outlook for this year. So what is the primary swing factor within your guidance range? Is it mainly driven by uncertainty around Rx growth? Or is it rather related to OTC performance? And maybe specifically on OTC, could you elaborate on what you are currently observing in terms of competitive dynamics? Walter Hess: To the first and second part. Daniel Wüest: No, I think, Laura, the swing factor is definitely Rx, which -- and as I said, we have kind of -- we play operating profit against growth. And given that the co-payment and the bonus, which have been developing not in the entire group because we only did kind of a pilot with some selected Rx customers developed very well in Q4, and we rolled out kind of this concept to the whole DocMorris just recently. That really is kind of the swing factor and also the reason for the wide range of the guidance. I think you can assume that OTC, BPC, that's the mid-single digit, meaning something between 3% and 7%, not much deviation. Also, the absolute volume is high. The digital services, double-digit -- mid-double-digit growth and -- but on a relatively low revenue -- absolute revenue level and the swing factor is really Rx, whether that's kind of let's say, 10% or 40%. But that's not that you take that as just to show you what kind of the volatility could be on Rx. Walter Hess: Yes. And you mentioned the competitive landscape and the price pressure. I guess you meant there, in the course of last year, we have adapted our pricing strategy, improved our strategy. You have seen the improvement in the gross margin. That's a result of it. But in general, we don't see now a change on prices or price levels in the market. In our market, pricing, the pressure is always on, but not now a big change with new market entrants coming in. Urs Kunz: Urs Kunz Research Partners. Regarding midterm, is that around 2030. And then on your midterm growth target of 15%, I still find that a little bit high, the OTC part is growing at mid-single digit, I guess, in your outlook in midterm. And I guess on the digital service side, I don't know if you can have this mid-double-digit range also percentage range all the way in the midterm future. So that -- if I then go back to the Rx that should be higher than 20% Rx growth to reach this 15%. Am I right about that? Daniel Wüest: Yes, you are perfectly right. And I think what you need to really consider given EBITDA breakeven and free cash flow, as said that we have to limit the growth and really play on our marketing efficiency. And that's also why we stated in the guidance that the fine print in the [indiscernible] that it's back-end loaded in '26 and '27, you will definitely see lower Rx growth than what will then come again from '28 to '30 onwards. And if you said it's substantially about 20%, and I will -- I can sign into that. But it will be 20% in the first 2 years, but then we will substantially be keeping up again. Urs Kunz: And where do you take how this belief that it's higher than 20%. It's just that you put in more marketing again then or you see the market growing faster after 27% in online? Daniel Wüest: Yes. I think it's really kind of the -- that we then have other or once we are free cash flow positive, we can then really also not that we fall back in the old patterns that you won't see then kind of us spending all of a sudden CHF 30 million in TV again. But I think with the bonus and the co-payment that's a very strong instrument. But as said, at some point in time that you are in balance with growth and profitability, we have, for the time being, still certain limitations and there, you can definitely kind of play that even more aggressive. Walter Hess: And sorry, what we also will see is a platform dynamic kicking in. So you have seen the partnership also with Google. So where we have joint development teams also with them, developing new services, adding services to the platform. And this will drive traffic, will drive engagement, will drive loyalty. So we will see the effects there definitely within even 1 to 2 years already. Urs Kunz: Midterm is 2030 or? Daniel Wüest: 2030. Sibylle Bischofberger Frick: Sibylle Bischofberger, Bank Vontobel have 2 market questions. First, I remember the market share of online pharmacies was about 5, 6 years ago, about 1.3% in Germany. How has it developed? How much is the market share now? And how much do you want -- how much growth do you expect in the next couple of years? And the other interesting market, telemedicine, you mentioned 0.5% market share. Where do you expect it to be in the next couple of years? Walter Hess: So on the Rx, yes, it was 1.3 5, 6 years ago. It went down before eRx started to 0.75%. And since eRx was available now also for online pharmacies, it went up to roughly 1.7%. And where will it go? That's the 1 million question. So we have, for our assumptions, taken a really conservative view in our midterm plans of 5% to 6% in 5 years. But frankly speaking, we think it will be more. It will ramp faster. But in our plans, we did not go now more aggressive than 5% to 6%. And on telemedicine, so yes, the share as shown, the penetration is lower than 0.5%. TeleClinic is roughly at 0.3% so has about 60%. And where will it go? So it depends on how fast the digital strategy of the ministry will be defined and will go live and how prominent telemedicine will be in this different kind of future care pillars. And it's too early to say where it goes. But anyway from 0.5, it will definitely go northwards, definitely. And remember, it's -- we have 2 kind of businesses. We have a retail business, but we also have a digital service business with completely different metrics, valuation, et cetera. And there is a strong growth really already going on and will continue. Daniel Wüest: And I think if you are interested, I recommend you to read Page 175 of our financial report where all the details in relation to the goodwill impairment is, which we honor past. But there you have kind of the assumption, the current market share of telemedicine and Rx and what our underlying assumptions are. It's in Rx 1.7% and in 2030, 5%, 1.7% to 5%. And that's the overall market share. I think then for the whole market. And telemedicine, it's even more astonishing, 0.5%. And in 5 years' time, the penetration should be 1.6% -- that's what we base our goodwill impairment test, and you could also assume that, that's basically then somehow reflected in our business plan. Walter Hess: So no more questions here in the room in Zurich. So let's move to the webcast and adding questions from there. Operator: We have one question from Gian Marco Werro from ZKB. Walter Hess: Yes. Hi, Gian Marco. Please go ahead. Gian Werro: Hello. Thank you. I hope there's no echo on your side. So first question is the growth outlook for TeleClinics. You mentioned mid-double-digit revenue growth. Why not 80% or 90% again this year because the penetration is still so low? Do you not do more marketing also there? Because in my view, it's really so such a comfortable way to get a doctor appointment in Germany, and there must be a huge demand from the doctor and from the patient side. So from a top line perspective. And then the profitability of the overall services business, is that still fair to assume that you are meaningfully above the 55% EBITDA margin for this business? And you mentioned you want to increase the margin for TeleClinic, but can you give us a bit more detail about your margin improvement target also for the whole services business, that would be interesting. And then just a third question, if I may, if I have the opportunity, the logistic cost is just something -- I mean, you already elaborated on it. But don't you see risk of patients ordering then less or if they have to pay really then for even more for the delivery services, especially considering your growth expectations in Rx and OTC. Walter Hess: To the first question, the growth rate. So you can consider that the growth in absolute values remains at more or less the same level. And then you have to take in consideration that you always have to integrate new network partners, larger ones. And once you integrated them, the growth curve starts to slow down and then you integrate new ones. At the moment, the regulator is justifying the new digital strategy. And for example, the doctor associations -- we talked to several of them. They are ready, but they just want to wait until they know now what the regulator regulates -- and so this is the dynamic of the growth that we have predicted for this year. If it comes to the margin, you mentioned 55%. So some of the services are even higher. Some of the services are below this 55%. And I think -- yes. Daniel Wüest: I think on the margin, not sure where this 55% are coming from. I think as of currently, TeleClinic has margins in the low 30s that will substantially increase over time over the next 5 years to the figure you -- you mentioned, I would say that's kind of 45%, 50%, that's kind of a reasonable run rate. And on the other hand, Retail Media, that's also very highly profitable. That one is already on higher EBITDA margins, but will also kind of in a balanced model will be somewhere around 50% EBITDA margin. And I think that's the mix. You will see this year an overproportional increase of EBITDA contribution given that we do not have a triple-digit growth at TeleClinic. And I think it's always kind of 1 year, a little bit less growth, but then substantial improvement of profitability. The next year, strong growth, maybe a little less profitability than 1 year of consolidating everything, increasing margin. And I think that's -- but the overall pattern and growth pattern is very strong, but it's not a linear line. It's kind of some years with a little bit hold back on the top line, but push the bottom line and therefore, even faster. Walter Hess: And your third question about logistics, do you refer to what to the closing of Ludwigshafen or... Daniel Wüest: No, to the logistic costs. And I think there, Gian-Marco, it's not that we say, I think we do it a little bit more professional, not saying that you have now to pay EUR 2 more. I think you have definitely other measures. First of all, kind of not reducing, let's say, the order that you can say, okay, if you order until 5, you get it next day, you can even lower your logistic cost if you say, okay, if you order until 4, then you get it next day because that has already another price tag on the -- with the carrier. And you could also play then with the basket size, which is kind of then free of shipping just to balance this logistic cost. And we see it in the whole market. You see, for example, DM free of delivery charge is EUR 60, our friendly competitor and -- and thus, we are much lower. But I think you have many things to play and to optimize your logistic costs. And it's not a problem of DocMorris, it's kind of the whole online and not even Rx and OTC online, but the online industry, and we will just follow the market and to not getting -- being hit by higher logistic costs. Operator: And we have one more question from Jan Koch from Deutsche Bank. Jan Koch: Two questions. The first one is on your 2026 guidance, which essentially only implies less than 4% sequential growth per quarter. Why is this the case? And given that your group guidance is quite wide this year, is there a scenario where you accelerate Rx growth in 2026? And then secondly, you mentioned a strong liquidity position of CHF 160 million. But if I take the CHF 160 million at the end of 2025 and consider that you paid back the CHF 20 million convertible and consider a negative free cash flow in probably in the mid- to high double digits in 2026, you will start 2027 with probably less than CHF 100 million. Free cash flow is still expected to be negative next year, and you might have to refinance your 2028 convertible next year as well. So how do you plan to achieve this? Are you open to sell a minority share in TeleClinic? Walter Hess: Yes. Let me take the first question and then Daniel, the second one. So on the sequential growth, as we have shown before, the guidance, we have given us some space so that we can maneuver between growth and marketing spendings. And this is also what we see in the first quarter that it goes in a really good direction already. And -- if it continues like this, so we can go more to the upper end, but we want to be flexible in reacting. And for us, the priority this year is completely on becoming breakeven in the course of the second half year, possibly on the second half year in total. And therefore, we need this flexibility and we take for us this flexibility. And on the second question. Daniel Wüest: Yes. I think just to start top down, you're right with the CHF 160 million, you have to deduct the CHF 20 million or CHF 22 million, but let's deduct the CHF 20 million, that makes it easier for calculation. That's CHF 140 million. And you are also right that you can assume for this year and next year, negative free cash flows, but they will be substantially even already this year lower than last year and in '27 that the indication that in the course, of course, we aim for as low as possible negative free cash flow, but that should be not kind of the 2 figures added up should still leave us with a very comfortable remaining cushion of liquidity until we will become then for the full year free cash flow positive in '28. In relation to the refinancing of the '28 maturity, I think once we have demonstrated and shown that we are on the right path, -- that's then something which we will tackle by then. It's clear that we do not fully redeem the CHF 200 million, and it's also clear that it does not make sense from just -- at least that's what I learned at university, okay, acknowledging that was some time ago, but that the fully debt financed balance sheet is definitely not an efficient balance sheet. And I think let's take it one step after the other, and we have ideas. And you referred to kind of -- if I'm right, selling a minority stake of TeleClinic. And I think, of course, that it's a very valuable asset, which we have in our hand, but it's extremely valuable within our platform and therefore, definitely not any or the first priority to monetize TeleClinic at this point in time. Jan Koch: Understood. And one follow-up, if I may. Are you going to report EBITDA in Q3 and Q4 this year again so that we can track your progress? Daniel Wüest: Let's see. I think could well be. I think that -- and I think it would be important that at least we give you a very good indication where we are heading to. And I think this nice picture, which we draw in our presentation, you can basically on a quarter-by-quarter basis, track us and see whether the 2 guys in front of you have not only overpromise, but also deliver on that. But we have to see, but most likely, yes. Walter Hess: Okay. Then we come. Daniel Wüest: I just want to say that's the benefit of lunchtime. Walter Hess: Last question. Unknown Analyst: Not going to look. No. On the AI companion digital assistant. As I understand, you're not getting any money for it. Marketing and any plan that on later stage you get some money out, because you mentioned these 100 people they got saved from cancer. At the end, I think somebody is happy to pay something.. Walter Hess: Did anybody say we do not get any money out of it? I cannot remember. No, it's what we see and we measure very carefully, of course. We see an impact -- a positive impact on traffic already. We see a positive impact on engagement already. We see the conversion rates going up as soon as we can take someone by the hand and guide through the platform. And we see a significant increase of conversion rate. And this brings us already additional money. And as you have seen on the platform, the marketplace, this marketplace is a marketplace also for health services. And on a marketplace, you want to earn money. And we are filling this marketplace also with health services, and we will get additional margins, revenues and margins from there as well. Okay. So with that, we come to the end. Thanks a lot. It was a little bit long. Sorry for that, but we had a lot of information for you. Thank you for joining, and we wish you all a pleasant and happy day. Bye-bye. Thank you.
Operator: Good morning, and thank you for joining the Lument Finance Trust Fourth Quarter 2025 Earnings Call. Today's call is being recorded and will be made available via webcast on the company's website. I would now like to turn the call over to Andrew Tsang, with Investor Relations at Lument Investment Management. Please go ahead. Andrew Tsang: Good morning, everyone, and thank you for joining our call to discuss Lument Finance Trust's Fourth Quarter and Full Year 2025 Financial Results. With me on the call today are Jim Flynn, our CEO; Jim Briggs, our CFO; Greg Calvert, our President; and Zach Halpern, our Portfolio Manager. Last evening, we filed our 10-K with the SEC and issued a press release to provide details on our recent financial results. We also provided a supplemental earnings presentation, which can be found on our website. Before handing the call over to Jim Flynn, I'd like to remind everyone that certain statements made during the course of this call are not based on historical information and may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports filed with the SEC, in particular, the Risk Factors section of our Form 10-K and Form 10-Qs. It is not possible to predict or identify all such risks and listeners are cautioned not to place undue reliance on our forward-looking statements. The company undertakes no obligation to update any of these forward-looking statements. Further, certain non-GAAP financial measures will be discussed on the conference call. Presentation of this information is not intended to be considered in isolation nor as a substitute for financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the more comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC. For the fourth quarter and financial -- fiscal year of 2025, we reported GAAP net loss of $0.17 and $0.14 per share of common stock, respectively. For the fourth quarter of fiscal year 2025, we reported distributable earnings of approximately $0 and $0.14 per share of common stock, respectively. In December, we declared a quarterly dividend of $0.04 per common share with respect to the fourth quarter, bringing our cumulative declared dividends for 2025 to $0.22 per common share. And then last Thursday, we declared a quarterly dividend of $0.04 per common share with respect to the first quarter of 2026, unchanged from Q4's quarterly dividend. I will now turn the call over to Jim Flynn. Please go ahead. James Flynn: Thank you, Andrew. Good morning, everyone. Welcome to the Lument Finance Trust earnings call for the fourth quarter of 2025. We appreciate everyone joining us today. Taking a quick look at the market, the U.S. economy continues to remain resilient, although growth is moderating and uncertainty has increased modestly due to evolving monetary policy, fiscal dynamics and geopolitical risks and considerations. While the Federal Reserve began easing in 2025, the forward path of rates is expected to remain gradual and data dependent with inflation and labor market trends continuing to influence policy. Within commercial real estate, capital market conditions have improved with increased liquidity across both securitized and warehouse financing channels. However, transaction activity remains below historical averages as buyers and sellers continue to navigate pricing discovery and an elevated cost of capital environment. In multifamily, fundamentals are stabilizing following the peak of the recent supply cycle. New deliveries remain elevated in certain Sunbelt markets but are now expected to decline meaningfully into late '26 and '27, due to the sharply reduced starts over the past 18 months. As a result, rent growth remains modest, but is showing early signs of reacceleration in supply-constrained markets, while occupancy has remained relatively stable overall, albeit with some continued pressure in a few high delivery regions. Importantly, structural demand drivers for rental housing remain intact. Affordability constraints in the single-family housing market, coupled with the limited for-sale inventory and still elevated mortgage rates continue to support rental demand and long-term multifamily fundamentals. From a financing perspective, lower short-term interest rates relative to peak levels, combined with the still positive forward curve are constructive development for our borrowers. While debt service coverage remains under pressure for certain transitional assets, the modest easing in index rates and improved operating trends are helping to stabilize credit performance across the sector. The CRE CLO market remains an important source of liquidity with issuance volumes in 2025 exceeding $30 billion and a solid pace of activity continuing into 2026. Investor demand for floating rate exposure remains healthy, particularly for well-structured transactions backed by institutional quality collateral. Spreads have tightened modestly, reflecting improved sentiment, though they remain wide relative to long-term averages. Asset management -- active asset management remains our top priority. We continue to work closely with borrowers to drive outcomes that preserve capital and enhance long-term value, including modifications, extensions and asset level strategies where appropriate. Given the still uneven operating and financing environment, particularly for assets impacted by the recent supplier capital structure challenges, we remain proactive and disciplined in managing each position. During the quarter, portfolio credit metrics improved sequentially, primarily driven by the acquisition of additional performing assets associated with our recent CLO execution. At the same time, we increased reserves on select challenged legacy positions to reflect updated expectations and current market conditions. We have remained active in executing our financing strategy, taking advantage of improved but still selective capital market conditions while maintaining a disciplined approach to leverage and cost of capital. As referenced on last quarter's earnings call, in November of 2025, we entered into an uncommitted master repurchase agreement with JPMorgan Chase, which provides the company with up to $450 million borrowing capacity to finance first mortgage loans, controlling loan participations and other commercial mortgage loan debt instruments secured by commercial real estate. Further, in early December, we entered into a new loan agreement with Northeast Bank that provides the company with up to $50 million in advances to finance portions of our investment portfolio. This match term financing facility provides us with additional flexibility to resolve our REO holdings and achieve positive asset management outcomes. On the same day, the Northeast Bank facility closed, we executed the LMNT 2025-FL3 CLO transaction, a $664 million transaction with an effective advance rate of 88% and a weighted average cost of funds of approximately 191 basis points over SOFR, excluding fees and transaction costs. The initial collateral pool consisted of 32 first lien floating rate mortgage loans with participation secured by 49 multifamily and commercial real estate properties located across the United States. A portion of the collateral was owned by LFT prior to the closing and the remaining collateral was acquired by the company at fair market value plus accrued interest from an affiliate of Lument Investment Management LLC, the company's external manager. The weighted average collateral spread of the entire pool was approximately 321 basis points over 1-month SOFR. The FL3 CLO includes a 30-month reinvestment period, which allows us to redeploy loan principal repayments into new loan investments until June of 2028. In February, we redeemed the remaining outstanding loans and notes of LMF 2023-1 financing transaction and refinanced the underlying pool with our existing warehouse facilities. Given the relatively high weighted average cost of capital and the low current leverage of LMF, the redemption provided the company the ability to redeploy a portion of its investable capital into levered loan assets at more attractive financing terms over time. Finally, subsequent to quarter end, we also amended the terms of our existing secured corporate term loan, extending the maturity date to 2030 and providing us with an incremental $2.3 million of liquidity before fees and deal expenses. The term loan going forward bears an interest rate of 9.75%. During Q4, we generated approximately $104 million of payoffs with proceeds primarily used to reduce securitization liabilities. We also deployed approximately $400 million into loan assets, largely in connection with the FL3 transaction. We ended the year with approximately $23 million of unrestricted cash, combined with our available warehouse capacity, we believe our liquidity position remains appropriate to support portfolio management, asset resolution and selective capital deployment. Our near-term focus remains on active asset management, efficient resolution of legacy positions, and disciplined balance sheet management. While we are encouraged by improving conditions across commercial real estate credit markets, the recovery remains uneven and will likely take time to fully normalize. We continue to expect a market characterized by selectivity with outcomes increasingly differentiated by asset quality, sponsorship and capital structure. Against this backdrop, we remain cautious and highly selective in deploying capital with a focus on strong credit fundamentals, structural protections and risk-adjusted returns. We believe this approach positions us well to navigate the current environment while preserving flexibility to capitalize on opportunities as market conditions continue to evolve. With that, I'd like to turn the call over to Jim Briggs, who will provide us details on our financial results. James Briggs: Thanks, Jim. Good morning. Last night, we filed our annual report on Form 10-K and provided a supplemental investor presentation on our website, which we'll be referring to during our remarks. Supplemental investor presentation has been uploaded to the webcast as well for your reference. On Pages 4 through 7 of the presentation, you'll find key updates and an earnings summary for the quarter. For the fourth quarter of '25, we reported net loss to common stockholders of $8.9 million or $0.17 per share. We also reported distributable earnings of approximately $0. There are a few items I'd like to highlight with regards to the Q4 P&L. Our Q4 net interest income was $5.3 million, a slight improvement from $5.1 million recorded in Q3. The weighted average coupon of our loan portfolio declined sequentially to 717 basis points compared to 777 basis points in the prior quarter due to lower spreads on newly acquired loans and a decline in the SOFR benchmark rate. The ending outstanding UPB of the portfolio increased due to the execution of the previously discussed FL3 CLO transaction in December, which we acquired approximately $383 million in assets from an affiliate of our manager. Total operating expenses, including fees to our manager, were elevated quarter-on-quarter at $3.8 million versus $3.1 million in the prior quarter, primarily attributable to onetime legal expenses related to REO assets, the previously mentioned FL1 redemption in November, as well as the financing initiative we elected not to proceed with after securing more attractive terms with the previously mentioned facilities. Primary difference between reported net income and distributable earnings for the fourth quarter was primarily attributable to $8.6 million of unrealized provision for credit losses, $200,000 realized loss on the sale of REO and approximately $296,000 of depreciation on REO. As of December 31, we had 8 loans risk rated 5. All of these are collateralized by multifamily assets. Greg will provide a bit more detail in his remarks. With respect to the allowance for credit losses, we evaluated these 8 risk-rated 5 loans individually to determine whether asset-specific reserves were necessary. After an analysis of the underlying collateral, we recorded a provision for credit losses in the quarter of approximately $8.6 million. Our specific allowance for credit losses has increased as a result to $17.6 million compared to $8.3 million as of September 30. And our general allowance for credit losses decreased $5 million -- decreased to $5 million from $5.7 million in the prior quarter, primarily driven by certain transfers to specific evaluation, payoffs during the quarter and changes to the macroeconomic forecast. We ended 2025 with unrestricted cash balance of $23 million and FL3 -- the CLO we closed in December was fully deployed. As Jim referenced earlier, FL3 provided effective leverage of 88% at a weighted average cost of funds of SOFR plus 191 basis points. The company's total book equity at the end of the quarter was approximately $219 million. Total book value of common stock was approximately $159 million or $3.03 per share, decreasing sequentially from $3.25 per share as of September 30. I'll now turn the call over to Greg Calvert to provide details on the company's investment activity and portfolio performance during the quarter. Greg? Greg Calvert: Thank you, Jim. During the fourth quarter, LFT acquired or funded $400 million of loan assets, the majority of which were obtained as initial collateral for the FL3 transaction. During the period, the company experienced $104 million of loan payoffs. As of December 31, our total loan portfolio consisted of 61 floating rate loans with an aggregate unpaid principal balance of approximately $1.1 billion, a weighted average floating rate of 333 basis points over SOFR and an unamortized aggregate purchase discount of $1.7 million. The weighted average remaining term of our book as of quarter end was approximately 21 months, assuming all available extensions are exercised by our borrowers. 100% of the portfolio was indexed to 1-month SOFR and 93% of the portfolio was collateralized by multifamily properties. As of December 31, approximately 83% of the loans in our portfolio were risk rated at 3 or better compared to 46% as of September 30. Our weighted average risk rating quarter-over-quarter improved to 3.2 from 3.6. This is primarily driven by the acquisition of additional loans for the period from an affiliate of the manager in connection with the FL3 transaction. During the period, we transitioned 1 loan with a UPB of $9.8 million from a 5 risk rating as of September 30 to a 4 or better rating as of December 30 due to an execution of a loan modification, which included a partial paydown of the loan by the borrower in exchange for an extension until Q4 2026. As of December 31, 2025, we had 8 risk-rated 5 loans with an aggregate principal amount of approximately $117 million or approximately 10% of the unpaid principal balance of the quarter end investment portfolio. These included one loan in maturity default that was downgraded to a risk rating of 5 during the quarter with a balance of $22 million collateralized by a multifamily property in Arlington, Texas; 1 loan in monetary default that was downgraded to a risk rating of 5 during the quarter with a balance of $18 million collateralized by a multifamily property in Tampa, Florida; 3 loans in maturity default that continue to be risk rated 5 with an aggregate principal balance of $40 million collateralized by multifamily properties in Philadelphia, Colorado Springs and Cedar Park, Texas; and 3 loans in monetary default that continue to be risk rated 5 with an aggregate principal balance of $38 million collateralized by multifamily properties in Des Moines, Iowa, Tallahassee, Florida and Ypsilanti, Michigan. During 2025, the company foreclosed on 4 REO assets. In late December, we sold one of the properties located in San Antonio, Texas to a third party for $8.2 million and recognized a $500,000 loss in the fourth quarter on the sale. As of December 31, our REO was comprised of 3 multifamily properties. Two of these remaining properties are located in San Antonio and the other is in Houston, Texas. As of quarter end, the properties had a weighted average occupancy rate of 69%. Achieving positive asset management resolutions and maximizing recovery values remains our priority. With that, I will pass it back to Jim Flynn for closing remarks and any questions. James Flynn: Thank you, Greg. Thank you all for joining, and we appreciate your continued partnership and support. And with that, I'd like to ask the operator to turn the call over to questions. Operator: [Operator Instructions] Your first question comes from Jason Weaver with JonesTrading. Jason Weaver: I was wondering, can you give some context on how you view the risk reward and opportunity today for new capital deployment against the last few weeks' backdrop of elevated rate volatility? James Flynn: Sure. I mean, obviously, the very current market environment has created some incremental challenges when reviewing the assets. But the starting point is still what is focused on the sponsor in the market, what the expectations are for growth in that market and what the supply dynamics are along with the demand. So that is certainly an evaluation or part of the evaluation kind of the geopolitical volatility here. But we do still firmly feel resolved in the strength of the multifamily market and have to take a bit of a longer view. Our deals are typically structured with interest rate caps. So on the short-term basis, we're protecting ourselves during the initial term of the loan. But we do stress those scenarios, but I think the most important aspects of evaluating the risk around sponsor and market still carry the day even in the most volatile of times. And then structurally, you do your best to protect yourselves both from a leverage standpoint and an interest rate volatility standpoint with structure and caps. But again, sponsor market are going to be critical to that. Certainly, the hope is that over the 2- to 3-year period of a bridge loan that you have some stability return to the market, hopefully sooner than later, but it's obviously a consideration as we deploy capital. And again, I think it makes those first components even more important. Jason Weaver: Got it. And to that point, with the new CLO closed, is there an updated comfort zone for leverage over the near term? James Flynn: On a loan level basis? Is that what you mean or... Jason Weaver: Yes. Well, just overall, really. James Flynn: I mean on the loan level basis, I would say, on average, over the last couple of years since, call it, '23, really '24, average leverage at the asset level has declined relative to historical bridge lending activity. So you're seeing particularly on the lease-up side, construction deals coming on construction, but you're seeing regularly seeing assets in the 60s and low 70s, pretty much across the board. And you're seeing very few in the -- up in the -- into the 80% or higher range. So you've come down pretty meaningfully from what we were seeing in the late teens and early 2020s on a loan level basis. And overall, I mean, corporately, we've been around the same leverage. The leverage available in CLOs is slightly higher than historic norms that obviously we would want to take advantage of. But aside from that, we're not anticipating any material changes to the fully deployed leverage of the LC vehicle. Operator: The next question comes from Chris Muller with Citizens Capital Markets. Christopher Muller: So it looks like nonaccruals as a percent of the portfolio improved in the quarter, which I assume is mostly due to the $400 million of new loans. What was the balance of nonaccruals at year-end? And do you guys have how much of a drag on earnings those assets are? James Briggs: Chris, the nonaccruals, which we touched on in the footnotes individually is -- let me just quickly add this up. I don't have -- sorry -- the drag is about $0.02 and the UPB is $102 million. Christopher Muller: Got it. And then I guess on a similar note, how are you guys thinking about the path to dividend coverage this year? And I guess how it's related is, can you guys get there by cleaning up the existing portfolio in REO? Or do we need to see some portfolio growth to get back to that $0.04 level? James Flynn: So that is the primary topic that we've been focused on and focused on with our Board. The short answer is it's probably a little bit of both. I think on a fully deployed level, we feel that the dividend would be more than covered. What we've looked at is the timing for -- the anticipated timing that we see on the horizon for some of these assets, including those, but also some other payoffs that are anticipated, and then redeploying that capital into newer performing assets, along with the potential for a future financing -- of a future portfolio level financing, whether that be a new CLO, which certainly we'd like to be able to do. But if not a CLO, some broader performing loan portfolio financing to basically have 2 large vehicles similar to the current CLO that we have outstanding. So when we put together kind of the schedule of the timing for resolution and payoffs in the portfolio, the redeployment into performing loans and the potential for more attractive financing in the future, we weigh those things together and feel that it's appropriate to keep the dividend where it is and move through this year and move back toward full coverage of that dividend. Operator: The next question comes from Lee Zulch with Overcap. Lee Zulch: Could you give some color on Q1 2026? James Flynn: I mean I can't give you too much, obviously, as that's forward-looking. But our -- most critically, I suppose I would say is our asset management and where we see resolutions and asset performance, and it's in line with our expectations on a timing standpoint, as we kind of evaluated the plan for the dividend and earnings release, et cetera. So that's kind of, I guess, what I would say, where we've had the ability to redeploy capital with payoffs, we've been able to do so successfully with new performing loans. And obviously, the flurry of new financing activity between the CLO, the 2 warehouses, the refinancing of the term loan have all stabilized the credit side of our balance sheet. And now we're really fully focused on resolving some of these legacy assets that have been on the books for a while, and they're moving forward. We'd like to see everything move a little bit more quickly, but they are moving according to plan and relatively on schedule. I would just mention as well as Jim Briggs mentioned in the earnings call, we did call that 2023 financing transaction with that at a higher cost of funds. Operator: Thank you. As there are no more questions, I will pass back to James Flynn for any closing remarks. Please go ahead. James Flynn: Thank you. Again, thank you for your participation and continued interest in the platform, and we look forward to speaking to you again next quarter. Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Walter Hess: So good morning, everybody, here in Zurich and at the webcast. It's a pleasure for us to present our full year results 2025. With me today is Daniel Wuest, our CFO. My name is Walter Hess. I'm CEO. Let's go straight to the highlights of 2025. We delivered on our promises, and we met the financial targets 2025. We achieved 11.1% of revenue growth and minus 48% adjusted EBITDA. And with that, we achieved our guidance. The growth of Rx was 33.2% and of non-Rx, 7.1%. The digital services with a growth of 110%, so a remarkable growth rate again and a significant profitability contribution, it's a contribution margin free, which is more than 50% already of the total company. Our AI Health Companion, which we have started to launch in October last year as a beta version in our app has been adopted really very fast. Already every third app user is utilizing this AI health assistant. And with the strong liquidity position of CHF 160 million by end of the year, we are very confident to execute in 2026 and 2027 according to our plans. We are fully aware of the challenging and also critical market environment. However, we today focus on the future on our successful transition and on our path to breakeven and to cash generation. We do that by giving you an update on our strategy first, followed by a business update and then the financial update and outlook given by my colleague, Daniel, before we come to the Q&A session. There are some real important megatrends in health care, which have a big impact on our business. And we see us at the sweet spot of the 3 major megatrends. One is the demographic change, which gives a structural shift towards prevention and longevity, but mainly also towards a higher chronic care demand. It's the growth of the pharmaceutical market, a market which is not dependent on the business cycles as we see right now in this difficult environment worldwide. Last year, the market size in Germany of pharmaceuticals reached already EUR 62 billion. It's a huge potential for us being captured with electronic prescriptions. And the third megatrend is the digitalization in health care, which is even accelerated now by AI. And also there, we are at the forefront with our digital and AI health platform. How our response to these megatrends looks like, we would like to show you with a short video. It's a video about our health companion, which is live in the app already since last October. [Presentation] Walter Hess: As you can see, we are evolving from a transaction-led retail business into a health platform that orchestrates and covers the full customer and patient journey. By merging the online pharmacy with a marketplace not only for products but also for health services, digital health services and telemedicine orchestrated by the AI Health Assistant alongside with a state-of-the-art retail media business, we have created a platform which is unique and it's a novelty in Europe. This trustworthy and integrated platform with more than 12 million active customers, more than 1,000 marketplace sellers and more than 6,500 established doctors in Germany allows us to capture the full value of the entire journey. It makes our business fundamentally more defensible and less dependent on linear retail market growth. With the structural foundation now firmly in place, we are ready to ignite the platform flywheel and accelerate our scale at low marginal cost. And with that, let's move to the business update now. And of course, starting with Rx. What you see here is the sustained quarterly growth of our Rx business. And I can already confirm now that this will continue in Q1 2026. Last year, we achieved a growth rate of -- a growth of 33%, which leads to a 1.8% higher revenue in Q4 last year compared to the first quarter in '24, just when eRx started in the German market. If it comes to the quality of the eRx customers, I have to mention that the European and the German Court of Justice last year they confirmed -- reconfirmed that we are allowed to give bonus to our customers and patients. Therefore, we have restarted to do it in July last year with the result of increased retention and higher order frequency of new and of existing customers. And this led to a 3x higher retention rate and order frequency of customers that they are getting now also bonus with eRx compared with the customers, the previous customers that sent to us the paper prescriptions. Also, the average order value is growing quarter-by-quarter. In Q4 last year, the average order value of an eRx order was already at EUR 128. And just a few days ago, we have waited a long time. The doctors and insurance associations communicated that they have agreed now on a chronic care flat rate for doctors, and they will start 1st of July. But it's limited to a few diseases and to specific customer segment groups. In our view, it's a good start. It's a start in the right direction, in the direction of a more efficient and a more customer-centric health care in Germany. And it's a start of a catalyst, which is called repeat script, which we have already integrated in our product as we speak right now. It was important that in the first 5 to 6 quarters, we could -- we invested in creating awareness for the CardLink solution, the solution that customers, patients can read in prescriptions digitally. We have seen that the incremental cost of new customers that we had to find and to acquire via upper funnel channels like TV, out-of-home or radio were ineconomic with regard to the relation of customer acquisition costs to customer lifetime value. Therefore, we have started to shift, and we have done it in Q4. We have shifted and we have reduced the marketing spend into the Rx acquisition. And we have started to prioritize on performance marketing channels to ensure that we remain in the economic zone, which you see on the slide, it's the green zone with our customer acquisition costs in relation to customer lifetime value. But in addition, we have a growth lever, which is the direct bonus and the exemption from co-payment, which in combination, gives us the right mix to continuously grow with our eRx business. Let's come to the non-Rx business now. Here, you see we grew by 7.1% last year. If we talk only about the OTC and BPC business, the growth was 4.8%. But this growth came with the discontinuation with Zur Rose brand, which accounted for 2% to 3%. So effectively, the growth of the OTC and BPC business last year with the remaining brands was between 7% and 8%. It also came with an improved marketing performance, leading to higher customer retention and better customer lifetime value of our OTC and Beauty Personal Care customers. The digital services continue to grow remarkably with 110% on revenue growth with continuous really attractive margin. Both will go on also this year and beyond. On Slide #13, you see that our core brand, DocMorris, accelerated really rapidly last year and grew by more than 20%. So this shows a clear proof point for the successful execution of our brand strategy that we have defined at the beginning of last year. At the same time, our sub-brands, Medpex and Apotal were managed well and kept at a slight growth, contributing positively to the overall platform performance. Let's deep dive a little bit in the 2 parts of the digital services, as a TeleClinic, the telemedicine platform and the Retail Media business. TeleClinic first. The number of treatments in 2025 was 2 million, which is a growth year-over-year of more than 50%. A patient in an average had a doctor on the screen, in the app within 5 minutes. That's amazing. Imagine how long it takes until you have an appointment and you see a local doctor if you have an emergency. TeleClinic is available 24/7 with GPs and specialists. And almost half of all the treatments have been done outside the opening hours of the doctor practices that shows the importance of this telemedicine pillar as part of the health care of the standard health care in Germany, but also in other countries. As said before, so the number of doctors already reached more than 6,500 and is continuously growing. But the most important and the key success factor for TeleClinic is the strong partner network, which is secured by long-term contracts. It's with insurance, digital health providers and doctor associations. To expand this partner network is the most important key strategic priority in TeleClinic also for this year and the years after and also expanding the services they give to these partners, be it insurance companies or doctor associations. In 2025, TeleClinic achieved a revenue of EUR \26 million. But please be aware, this EUR 26 million, that's not comparable with retail revenue. Retail revenue with relatively low margins. Here, we talk about take rate revenue with much higher margins and a complete different value. TeleClinic is the leading platform for statutory and private health care in Germany. And telemedicine is a key pillar also for the new ministry in Germany. It's part of the coalition agreement. And now as they are preparing the digital -- the new digital strategy, so TeleClinic is part of the primary care, but also of the emergency care solution of the future regulation. You see it's still a huge potential for telemedicine in general. The market penetration of telemedicine is still below 0.5%. So we are still at the very beginning and already now EUR 26 million of take rate, mostly take rate revenue. In '26, we expect a mid-double-digit revenue growth and a further increase of the EBITDA margin. Our Retail Media business, we started with it 3 years ago, and we are meanwhile the leading retail media health care platform in Germany. We could prove to the advertisers and their brands, the brands you all know that by using our retail media platform, they can strongly increase engagement and strongly increase conversion and achieving really attractive RAS metrics. Last year, -- with Retail Media, we generated a double-digit euro million revenue with really high margin, even higher than with the telemedicine platform. And also in the upcoming years, '26 and further, we expect continued strong and profitable growth of our Retail Media business. So let's come back to the health companion, where we have launched our AI Health Assistant in last October in the app. Right now, we are rolling it out in all our web applications. So during March and April, you will see more and more visibility of the assistant also in our web. The health assistant is the central intelligence of our platform. Here you see on this slide, Slide #17, 3 specific use cases of our health assistant. In the area of the transactional AI commerce, we integrated conversational intelligence in our search bar in order to give personalized responses and recommendations to every customer and patient using our app. In the center, you see the AI assistant, providing AI-generated advice-oriented insights and becoming more and more a trusted health adviser for our customers and patients. And on the right-hand side, -- the assistant acts as proactive health orchestrator, seamlessly guiding the user, for example, from having a symptom to a doctor, be it the local doctor or a telemedicine doctor from TeleClinic, of course, or guiding them to a skin check service. And there, by the way, within only 2 months that we have this service live, we could detect already more than 200 skin tumors and melanomas with our service and our digital health assistant. So by managing health in one place as we do, the AI assistant helps to maximize the patient and customer lifetime value and accelerates our transition to a digital and AI health platform. So on Slide #18, we are really very proud that today, together with Google, we could announce an incredible strategic partnership. We have chosen Google in order to leverage on their cutting-edge AI capabilities and infrastructure. Google has chosen us in order to combine their most advanced technologies with our deep digital health care and pharmaceutical expertise. Together, -- in this partnership, we are defining and delivering new seamless health products in the future in order to make health care better and more accessible. One point which was really important for us and which we secured is that we keep the full sovereignty of our data while meeting also the highest requirements for data privacy and security. Let me conclude this first part with the strategy and the business update. We have spent the last few years in building this platform engine. Now we have started to drive it. Our strategy is set. Our positioning is unique, and our priority is on relentless execution, just to unlock the full value of our DocMorris platform. And with that, I would like to hand over to Daniel for the financial update and the outlook. Daniel Wüest: Thank you, Walter, and also a very warm welcome from my side to the people here in the room and the ones on the webcast. First of all, I want to provide you with some further insights on the financial performance of '25, but then much more important also to provide you with the outlook and the guidance and specifically how we will achieve EBITDA breakeven in the course of '26 and then subsequently, free cash flow breakeven in the following year, meaning in '27. Let's start with a quick look back on the financial year '25. As Walter already have mentioned it, we could secure comfortable and good top line growth of 11.1 percentage in local currency. And I'm very proud that all the business lines have contributed to this growth. Of course, Rx and Digital Services had the lion's share of the growth with Rx growing more than 33% and digital services above 110%. Reported revenues, which are the revenues without Apotal showed even a better performance and grew with 12.4% in local currency. There, you already see that the growth of Apotal was below the average of the group and also to a small part, also the growth of the segment EU. I'm very proud also that the gross margin of the group increased by 90 basis points to 22.2% despite the reallocation of marketing expenses from marketing into bonus and co-payment, which had an impact that will be directly deducted from sales and therefore, has a negative impact on the gross margin. And therefore, the 90 basis points are even more remarkable. As you know, we only started with the co-payment and the bonus basically from Q4 onwards and until Q3, we did a lot of additional upper funnel marketing spend. Let's quickly deep dive into the 2 segments, where I will focus on segment Germany because that's the lion's share of the contribution. You see segment Germany a growth rate excess of the group of 11.7% also fueled by Rx and digital services. Even here, the gross margin is even developed a little bit better, 10 basis points more with 100 basis points in addition and that also with the reservation that the payment of bonus and the co-bonus will have a negative impact on gross margin, but will then be reversed on the CM3 level contribution margin 3 level because it's just a reallocation of direct marketing spend to bonus and co-payment. Segment EU, a modest growth. I think we would have expected a little bit higher growth, but they managed also to improve the gross margin by 40 basis points. But unfortunately, given the low growth and the indirect cost base that didn't manage then to have a positive effect on the EBITDA level, while that's the reason why that segment EU is still slightly EBITDA negative. With that, let's come to our KPIs, which all look very promising and which kind of pleasant in our view. Let's start with the active customers. For the first time, we have also included the TeleClinic customers because that's a significant number of customers. But let's, first of all, stick to the online pharmacy customers, which showed a substantial increase of 700,000 from 10.3 million to CHF 11 million. You remember Walter said told you that the discontinuation of the Zur Rose brand, and you can assume that a few hundred thousand customers have been lost. We have not adjusted for that. And without that, the number would even look better. But we are very pleased what we see here. Also, TeleClinic increased the customers on the platform by 300,000 from 0.9 million to 1.2 million, and both numbers are on an ongoing basis, increasing. Also in relation to the app downloads, I think there's an active tracking of the app downloads. I think it's an indication, but definitely not the one and only. But also here, you see a decent increase of 200,000 app downloads compared to '24, and we reached 2.1 million app downloads in '25. Now let's come to the average order values or the basket sizes. First of all, on Rx, you see an increase of EUR 4, which is by itself already a remarkable increase. But you have also seen a few slides before that in Q4, the average order size was EUR 128. And you see really that in the first 3 quarters, the average basket size was much lower compared to Q4, where we really started our efficient and dedicated marketing, and that also tells you something about the quality of the newly acquired customers. One remark, please note that our basket size is calculated excluding VAT -- just for reasons, if you compare other baskets, you always have to make sure that if it's with or without VAT, given that the VAT in Germany is 19% that makes pretty some difference. If you gross it up our basket, then it would be much higher than the [ EUR 114 ]. On OTC, Walter mentioned it, we focused also on economic and customer lifetime value and the economy of the customers. Therefore, slight decline from 42% to 41%, but basically almost stable and nothing to worry about it. The order frequency also here, good development from 3.9 to 4.0x. OTC remained flat with 2.0 orders per year. The repeat order rate, which was already extremely or very high and decently high at 76%, further increased to 77%, which is also a very good value. And just all in all, shows the quality and the quality of our existing, but also of our new clients, which we have acquired during the last year. Now let's quickly talk about a few highlights or perceived lowlights based on the first reactions. I do not want to go you through line by line through the whole P&L. I think the top line and gross margin, we have discussed. Let's focus on the different cost pillars. Personnel expenses, there, I'm very pleased we could lower the respective ratio by 50 basis points. That's the first -- showing the first positive impact on our managing the indirect costs, which are basically to 100% personnel costs, but also shows the improved efficiency where we really go through the processes and kind of automatize and also using KI to better allocate resources, and that has already a very nice impact in '25 on the personnel cost ratio, and there will be some much further leverage in the coming years. Marketing expenses, as mentioned, rose by over CHF 11 million. And there, we are talking only direct marketing expenses. We have said we shifted basically from direct marketing, not completely, but partially to indirect marketing, which you see as a decline or lower revenues. And therefore, it's not only the CHF 11 million, but you have to add a small single-digit million to really see the full additional marketing impact, which has been done in '25. Distribution expenses, there, the ratio unfortunately went into the wrong direction. On an absolute level, that shows the increase of the -- the orders, which come with higher distribution costs. But on top of that, we have seen a substantial increase of logistic costs, transport costs, given kind of the high demand for logistic services, but we think that, that should be come to an end. And otherwise, if it will be ongoing, and we have already started with that, that we have to pass it to the clients with different models that either they pay for earlier delivery or other models just to kind of compensate for any potential further distribution and logistic cost increases. I think reported EBITDA was CHF 1.6 million lower than the adjusted EBITDA, where the adjustments come from. We have a net restructuring cost with the closure of -- that's net minus CHF 1 million because we could also sell the property, and therefore, it's only net minus CHF 1 million. We also adjusted CHF 2 million positive EBITDA contribution through the sale of the Swiss properties. And then we made additional provisions for legal cases in the magnitude of CHF 2 million. I think in our business, that's business as usual and nothing to worry because you notice that every second week there, someone is kind of putting a claim against the online pharmacies. And therefore, we have kind of just for the corporate practice some legal provisions in the amount of CHF 2 million. On the net financial result, that also seems to be kind of going completely into the wrong direction with CHF 12 million additional net financial result. But just to call you down, it's the CHF 12 million are all noncash. It's CHF 5 million FX impact on our intercompany loans. You know we fund those in Swiss francs and give the intercompany loans in euro to our companies. And at the end of the year, we have to kind of compare it then with the actual euro value. And as you all know, the euro substantially devaluated against the Swiss franc. There, CHF 5 million from that side. And last year, we had a positive effect of CHF 4 million. If you add it up, then you are at CHF 9 million. And the other CHF 3 million, which would then add up to the CHF 12 million, and that has a cash effect, but it will level out. That was the early repayment and repurchase of the '26 convertible bond because, as you remember, the offer was 103.5%, and we had to take that as a financial expenses. But on the other hand, we will save more than the CHF 3.5 million in this year because we do not have to pay the coupon of 6.875% of the '26 convertible bond anymore. So therefore, if you deduct the CHF 12 million, basically exactly the same net financial result. And just for your information, going forward, we have now redeemed the CHF 26 million fully 250 million outstanding, 3% coupon, 7.5% and then you have to add CHF 4 million to CHF 5 million of IFRS 16 financial expenses, and that brings you to roughly CHF 12 million of real cash out interest financial expenses for the coming future. Also on tax, you have seen we have not paid, but recorded CHF 12 million tax -- negative tax burden. Also there, no cash at all. There's 0 cash has gone out. It must be also somehow logical because we have recorded still a loss. The reason for that is that the deferred tax assets where we have tax loss carryforwards of several hundred million. And given a little bit lower growth in Rx and in some of our subsidiaries, that's just a manual thing, and we had to devalue the deferred tax asset, the positive ones, and that was this booking of this CHF 12 million, no cash effect at all. And given that it's based on a 5-year plan, the next year, we most likely have to do it the other way around, and then you will see there a positive contribution, but also with no tax effect. So far to the P&L, the balance sheet, I keep it very short. I think as a CFO, I'm very relaxed with this balance sheet. It has been substantially strengthened in last year with the rights issue in May, but then also with the partial refinancing of the '26 convertible bond so that we now have a very strong liquidity base of CHF 160 million. The net debt has been reduced to CHF 138 million and the equity ratio, which was strong already before, is now even stronger and amounts to 50%. As you may have read, we had redeemed the remaining CHF 22 million of the '26 convertible bond by beginning of March. And that's what I said as from now on, we only have the CHF 50 million and the CHF 200 million convertible bond outstanding, which are the only financial and interest-bearing debt besides the CHF 4 million to CHF 5 million lease payments, which we have also to pay on an annual basis. Let's have a quick look on the indirect cost and the net working capital. Indirect cost, everything goes into the right direction. From my view, not -- the arrow is not yet steep enough, but it will definitely steepen 7.2%. That's nothing you can be or I as a CFO can be proud of. But as I said in the past, you can be assured that this ratio will become significantly below 5% in our midterm plan, and you will see on an annual basis, further improvement on that area. Net working capital, also there, maybe -- that's because the liquidity position was so comfortable or is so comfortable, maybe not that focus by the end of last year. We had some overstocking of CHF 11 million, but that was based on a very strong Q4, which already started by the end of Q3, and we had really to overstock and the flu season also was kind of skewed towards the end of the year. We have done it a little bit too much. I think definitely CHF 5 million could have been less stocking. And then what's kind of -- I do not like very much is the CHF 9 million accounts receivable there, let's call it, sloppiness and I take it on my part, but that is also a nice asset to reverse in this year and the coming years. So far, everything on the cost, net capital and indirect cost side on track. And now let's go into details how we will achieve EBITDA breakeven in '26 and then subsequently free cash flow breakeven in '27. And we heard some complaints that we have now introduced CM3 contribution margin 3. I would say, okay, maybe the analysts have not yet in the spreadsheet, but I think it's the highest transparency you can really get from our end and what is CM3? CM3 is the last line of operating profit. You only have to deduct indirect costs and then you are at EBITDA. And I think that's definitely kind of, in our view, how we steer the company and how we -- and that's really the basis and the fundamental of our target and our mission to become EBITDA breakeven, and that's the reason why we want to share that with you. As you can see in '25, and you see the value of digital services, basically 3/4 or even more than 3/4 of CM3 contribution came from digital services, while the online pharmacy, that's Rx and OTC, BPC, including EU are keeping up substantially in the second half. That's the green part of the bar. For '25, we are very open and nice and even put the number on it, slightly grounded, but nevertheless, a very good indication. And then you see where -- why we are so confident that we will reach EBITDA breakeven. There will be a substantial contribution from digital services. As you know, they grow top line. And as Walter said, it's basically take rate equals gross margin, more or less the slight reduction equals EBITDA. But also the online pharmacy is substantially keeping up in '26. You see that the green bar, and they are almost on an equal level in absolute terms with digital services with the CM3 contribution, okay, they are on the top line much bigger, and that should not be a surprise. But having said this, in '26, even Rx, and that's really exceptional, will be CM3 positive. That's due to our very focused and increased marketing efficiency, which has been substantially double-digit negative still in '25. And you see the same pattern goes on for the first half in '27 and the first half '22. We will increase the CM3 margin by more than 300 percentage by 3 percentage points and more than double the CM3 contribution in absolute terms in 2026. And you see there will be -- there's not the end that will be ongoing also into '27. I think that's really important because if you now have CM3, you deduct the indirect cost and then your EBITDA level. And how that looks, we go even further into the detail on the next slide. That's the -- that's really kind of to the heart of what the CFO usually not any longer in Excel, but in sheets keeps and does not share with anyone. But here, you see the phasing of our EBITDA ramp-up. The basis is Q4 '25. In Q4 '25, we had still a negative EBITDA, but it was in the area of minus CHF 7 million, which is a huge positive development due to the rights issue, we had to report Q1 '25 EBITDA, which was minus CHF 16 million. Q4, we were down at minus CHF 7 million. And Q4 is really the run rate for our journey -- EBITDA journey in '26 with Q1 being somewhere in the area of Q4 because we see the same trends, the same patterns, the same dynamics, improvement in Q2, which is usually the first 2 quarters are not the best ones. It has some seasonality in our business, but not too much because there is additional measures included. Then Q3, we are, at this point in time, confident that we will reach EBITDA breakeven and Q4 will then be EBITDA positive. And this altogether, you will see first half the lion's share of the negative EBITDA contribution and the second half of the year, there we will hopefully see kind of a positive EBITDA contribution. And that leads us -- that's a little bit that will come now later to our guidance, but you see that it's minus CHF 10 million to minus CHF 25 million is our guidance for the EBITDA. As I said, -- it's CM3, that's the bridge, the minus CHF 48.2 million. Then the CM3 contribution, I said more than double. That's -- we haven't put the numbers there, but you also have something to calculate. And then the indirect costs where we are really working hard and try to bring them down, but that's according to budget, still some negative contribution, and that will lead us to the EBITDA guidance, which you see on the screen of minus CHF 10 million to minus CHF 25 million. I think CM3 is a very important pattern to get there, but also in combination with operational and marketing efficiency. And then we will also very tight CapEx management and also on the indirect costs. You see we have many layers where we can play and really optimize to get -- to achieve our target, first of all, in '26 to become EBITDA breakeven in the course of '26. But then with the same patents and instruments, we will become free cash flow positive also in the course of '27. That brings me now to the guidance for First of all, for '26, the short-term guidance, we have pretty broad guidance on the top line, mid-single digit to low teens. Reason for that is that we achieve EBITDA breakeven also with relatively modest growth, which is more the left side of the mid-single digit. But we also see patterns that we could even become EBITDA breakeven with accelerated growth. And that's the reason why we just want to keep the flexibility to play EBITDA versus growth, especially on the marketing side, and that's one explanation for the rather broad guidance. And as you know, we try to definitely come out at the right end of the guidance. But given, let's say, the different patterns, we will then have to narrow it during -- in the course of the financial year '26. As a soft guidance, how does that translate into kind of the business segments? Rx will be around 20%, which is kind of basically in line what Walter showed before. We cut the 20% noneconomic customers that comes with kind of a little bit lower but much more profitable growth on Rx. OTC, we stick to the mid-single digit as we have been before and as we have demonstrated that, that's possible. And digital service, there we will see mid-double digit growth as digital service combined and with a substantial increase of the EBITDA margin of the already very high EBITDA margin, but there will be further appreciation of the margin. I talked about EBITDA, minus CHF 10 million to minus CHF 25 million. That's kind of -- that also needs to be said an improvement of 300 basis points or 3 percentage points of the EBITDA margin. That's coming from the wrong direction, but I think it's still substantial, such kind of relative increase. And then CapEx, roughly CHF 30 million, maybe rather at the high end and we are positive that could be maybe slightly lower as we have seen in '25 with CHF 27 million. That will lead us to our ultimate goals, EBITDA breakeven and free cash flow breakeven in '26 and '27. And with this 2 years, taking into consideration that we have to really drive profitability, maybe a little bit against growth. The midterm guidance, we are very pleased that we basically can confirm the midterm guidance, which we put out in -- ahead of the rights issue. Of course, it's not 20% CAGR anymore. It's 15% CAGR anymore. But I think the most -- the best or the most impressive thing in my view is that we can keep the 8%. We can even stay more behind it because given that the relative growth of Rx goes down, and that makes the relative weight of digital service even bigger at the back end. And therefore, the business mix is really in favor of us with kind of having OTC, which is very important also for customer acquisition for Rx, but also for our TeleClinic and Retail Media business. Rx, which is decently growing and then digital services with high EBITDA contribution and high growth, which will have a higher relative share at the back end of our 5-year business plan, meaning that this is true for 2030, basically covering 5 years. CapEx has also been reduced by CHF 5 million. I think we are comfortable with CHF 30 million average CapEx rate. And I think that's basically the guidance where we are -- what we are aiming for and where we are kind of being measured to. And before I hand over to Walter because he's already jumping up, just 2 subsequent events, which you have seen on the convertible bond, I've already talked about. The closure of Ludwigshafen, which we announced also today, just some -- I cannot say, highlights, but some financials to that. We will have onetime restructuring costs between EUR 3 million to EUR 4 million. If you take the midpoint, then you should be at the right spot. But these are we are talking euros. Out of this [ EUR 3 million ] to EUR 4 million, EUR 2 million have an impact on EBITDA because these are severance payments and the remaining part is below EBITDA. That's kind of onerous contracts because we have lease agreements which we have to -- due to IFRS immediately to write off, but that will be an impairment between EBITDA and EBIT. We will adjust for that, roughly EUR 2 million. But I think the very positive effect is that we will have at least from '27 onwards, EUR 2 million -- in excess of EUR 2 million annual recurring savings because we are moving the 3.5 million parcels from Ludwigshafen to Heerlen, where we have ample of capacity. There will be better capacity utilization in Heerlen. The handling and packaging is 2x more efficient than in Ludwigshafen because we are in Helen fully automated. And therefore, I think the EUR 2 million is a baseline annual savings, but there is definitely potential for more to come. And then last but not least, current trading, I said, we have seen the positive trend from Q4 ongoing in Q3. Everything is according to plan, meaning budget. And also, I think that gives us a lot of comfort to kind of handle and managing this challenging but very exciting times ahead of us until we are free cash flow breakeven. Thank you very much for your attention, and I'm happy to hand over to also again. Walter Hess: Yes. Thank you, Daniel. So just before we close and open the Q&A session, -- in the last 2 years, we have not only built the platform engine, as shown before, we have also built a high-performing leadership team, as you can see here on the slide, a leadership team that bridges the gap between traditional retail excellence and disruptive health tech and AI innovation. And I can assure you also in the name of the whole team that we are fully committed to execute the defined goals and to transform our platform into tangible shareholder value. It's not only at the level of the management, it's also a change which is mirrored at the Board of Directors. And therefore, we have informed that we nominate 3 new members of the Board that we will present to the AGM. It's Thomas Bucher, a well-known, seasoned CFO with a lot of experience in listed and private companies. It's Nicole Formica-Schiller. She's an expert in AI and digital health transformation, but also regulation on a European and the German level. And she has also a wide network in Germany, in the health care sector and a deep understanding of the regulatory landscape in Germany. And it's Thomas Reutter, an experienced corporate and capital markets lawyer. So these board nominations ensure that management and Board is perfectly synchronized with the company's vision and AI-first platform strategy and also shall provide the necessary stability to the company. And with that, we are at the end of the presentation. We had to tell you a lot to give you a lot of information. But now let's immediately move to the Q&A session. Operator: [Operator Instructions] Walter Hess: Okay. We will share the mic. Laura Pfeifer-Rossi: Here is Laura Pfeifer, Octavian. I have a question on your sales outlook for this year. So what is the primary swing factor within your guidance range? Is it mainly driven by uncertainty around Rx growth? Or is it rather related to OTC performance? And maybe specifically on OTC, could you elaborate on what you are currently observing in terms of competitive dynamics? Walter Hess: To the first and second part. Daniel Wüest: No, I think, Laura, the swing factor is definitely Rx, which -- and as I said, we have kind of -- we play operating profit against growth. And given that the co-payment and the bonus, which have been developing not in the entire group because we only did kind of a pilot with some selected Rx customers developed very well in Q4, and we rolled out kind of this concept to the whole DocMorris just recently. That really is kind of the swing factor and also the reason for the wide range of the guidance. I think you can assume that OTC, BPC, that's the mid-single digit, meaning something between 3% and 7%, not much deviation. Also, the absolute volume is high. The digital services, double-digit -- mid-double-digit growth and -- but on a relatively low revenue -- absolute revenue level and the swing factor is really Rx, whether that's kind of let's say, 10% or 40%. But that's not that you take that as just to show you what kind of the volatility could be on Rx. Walter Hess: Yes. And you mentioned the competitive landscape and the price pressure. I guess you meant there, in the course of last year, we have adapted our pricing strategy, improved our strategy. You have seen the improvement in the gross margin. That's a result of it. But in general, we don't see now a change on prices or price levels in the market. In our market, pricing, the pressure is always on, but not now a big change with new market entrants coming in. Urs Kunz: Urs Kunz Research Partners. Regarding midterm, is that around 2030. And then on your midterm growth target of 15%, I still find that a little bit high, the OTC part is growing at mid-single digit, I guess, in your outlook in midterm. And I guess on the digital service side, I don't know if you can have this mid-double-digit range also percentage range all the way in the midterm future. So that -- if I then go back to the Rx that should be higher than 20% Rx growth to reach this 15%. Am I right about that? Daniel Wüest: Yes, you are perfectly right. And I think what you need to really consider given EBITDA breakeven and free cash flow, as said that we have to limit the growth and really play on our marketing efficiency. And that's also why we stated in the guidance that the fine print in the [indiscernible] that it's back-end loaded in '26 and '27, you will definitely see lower Rx growth than what will then come again from '28 to '30 onwards. And if you said it's substantially about 20%, and I will -- I can sign into that. But it will be 20% in the first 2 years, but then we will substantially be keeping up again. Urs Kunz: And where do you take how this belief that it's higher than 20%. It's just that you put in more marketing again then or you see the market growing faster after 27% in online? Daniel Wüest: Yes. I think it's really kind of the -- that we then have other or once we are free cash flow positive, we can then really also not that we fall back in the old patterns that you won't see then kind of us spending all of a sudden CHF 30 million in TV again. But I think with the bonus and the co-payment that's a very strong instrument. But as said, at some point in time that you are in balance with growth and profitability, we have, for the time being, still certain limitations and there, you can definitely kind of play that even more aggressive. Walter Hess: And sorry, what we also will see is a platform dynamic kicking in. So you have seen the partnership also with Google. So where we have joint development teams also with them, developing new services, adding services to the platform. And this will drive traffic, will drive engagement, will drive loyalty. So we will see the effects there definitely within even 1 to 2 years already. Urs Kunz: Midterm is 2030 or? Daniel Wüest: 2030. Sibylle Bischofberger Frick: Sibylle Bischofberger, Bank Vontobel have 2 market questions. First, I remember the market share of online pharmacies was about 5, 6 years ago, about 1.3% in Germany. How has it developed? How much is the market share now? And how much do you want -- how much growth do you expect in the next couple of years? And the other interesting market, telemedicine, you mentioned 0.5% market share. Where do you expect it to be in the next couple of years? Walter Hess: So on the Rx, yes, it was 1.3 5, 6 years ago. It went down before eRx started to 0.75%. And since eRx was available now also for online pharmacies, it went up to roughly 1.7%. And where will it go? That's the 1 million question. So we have, for our assumptions, taken a really conservative view in our midterm plans of 5% to 6% in 5 years. But frankly speaking, we think it will be more. It will ramp faster. But in our plans, we did not go now more aggressive than 5% to 6%. And on telemedicine, so yes, the share as shown, the penetration is lower than 0.5%. TeleClinic is roughly at 0.3% so has about 60%. And where will it go? So it depends on how fast the digital strategy of the ministry will be defined and will go live and how prominent telemedicine will be in this different kind of future care pillars. And it's too early to say where it goes. But anyway from 0.5, it will definitely go northwards, definitely. And remember, it's -- we have 2 kind of businesses. We have a retail business, but we also have a digital service business with completely different metrics, valuation, et cetera. And there is a strong growth really already going on and will continue. Daniel Wüest: And I think if you are interested, I recommend you to read Page 175 of our financial report where all the details in relation to the goodwill impairment is, which we honor past. But there you have kind of the assumption, the current market share of telemedicine and Rx and what our underlying assumptions are. It's in Rx 1.7% and in 2030, 5%, 1.7% to 5%. And that's the overall market share. I think then for the whole market. And telemedicine, it's even more astonishing, 0.5%. And in 5 years' time, the penetration should be 1.6% -- that's what we base our goodwill impairment test, and you could also assume that, that's basically then somehow reflected in our business plan. Walter Hess: So no more questions here in the room in Zurich. So let's move to the webcast and adding questions from there. Operator: We have one question from Gian Marco Werro from ZKB. Walter Hess: Yes. Hi, Gian Marco. Please go ahead. Gian Werro: Hello. Thank you. I hope there's no echo on your side. So first question is the growth outlook for TeleClinics. You mentioned mid-double-digit revenue growth. Why not 80% or 90% again this year because the penetration is still so low? Do you not do more marketing also there? Because in my view, it's really so such a comfortable way to get a doctor appointment in Germany, and there must be a huge demand from the doctor and from the patient side. So from a top line perspective. And then the profitability of the overall services business, is that still fair to assume that you are meaningfully above the 55% EBITDA margin for this business? And you mentioned you want to increase the margin for TeleClinic, but can you give us a bit more detail about your margin improvement target also for the whole services business, that would be interesting. And then just a third question, if I may, if I have the opportunity, the logistic cost is just something -- I mean, you already elaborated on it. But don't you see risk of patients ordering then less or if they have to pay really then for even more for the delivery services, especially considering your growth expectations in Rx and OTC. Walter Hess: To the first question, the growth rate. So you can consider that the growth in absolute values remains at more or less the same level. And then you have to take in consideration that you always have to integrate new network partners, larger ones. And once you integrated them, the growth curve starts to slow down and then you integrate new ones. At the moment, the regulator is justifying the new digital strategy. And for example, the doctor associations -- we talked to several of them. They are ready, but they just want to wait until they know now what the regulator regulates -- and so this is the dynamic of the growth that we have predicted for this year. If it comes to the margin, you mentioned 55%. So some of the services are even higher. Some of the services are below this 55%. And I think -- yes. Daniel Wüest: I think on the margin, not sure where this 55% are coming from. I think as of currently, TeleClinic has margins in the low 30s that will substantially increase over time over the next 5 years to the figure you -- you mentioned, I would say that's kind of 45%, 50%, that's kind of a reasonable run rate. And on the other hand, Retail Media, that's also very highly profitable. That one is already on higher EBITDA margins, but will also kind of in a balanced model will be somewhere around 50% EBITDA margin. And I think that's the mix. You will see this year an overproportional increase of EBITDA contribution given that we do not have a triple-digit growth at TeleClinic. And I think it's always kind of 1 year, a little bit less growth, but then substantial improvement of profitability. The next year, strong growth, maybe a little less profitability than 1 year of consolidating everything, increasing margin. And I think that's -- but the overall pattern and growth pattern is very strong, but it's not a linear line. It's kind of some years with a little bit hold back on the top line, but push the bottom line and therefore, even faster. Walter Hess: And your third question about logistics, do you refer to what to the closing of Ludwigshafen or... Daniel Wüest: No, to the logistic costs. And I think there, Gian-Marco, it's not that we say, I think we do it a little bit more professional, not saying that you have now to pay EUR 2 more. I think you have definitely other measures. First of all, kind of not reducing, let's say, the order that you can say, okay, if you order until 5, you get it next day, you can even lower your logistic cost if you say, okay, if you order until 4, then you get it next day because that has already another price tag on the -- with the carrier. And you could also play then with the basket size, which is kind of then free of shipping just to balance this logistic cost. And we see it in the whole market. You see, for example, DM free of delivery charge is EUR 60, our friendly competitor and -- and thus, we are much lower. But I think you have many things to play and to optimize your logistic costs. And it's not a problem of DocMorris, it's kind of the whole online and not even Rx and OTC online, but the online industry, and we will just follow the market and to not getting -- being hit by higher logistic costs. Operator: And we have one more question from Jan Koch from Deutsche Bank. Jan Koch: Two questions. The first one is on your 2026 guidance, which essentially only implies less than 4% sequential growth per quarter. Why is this the case? And given that your group guidance is quite wide this year, is there a scenario where you accelerate Rx growth in 2026? And then secondly, you mentioned a strong liquidity position of CHF 160 million. But if I take the CHF 160 million at the end of 2025 and consider that you paid back the CHF 20 million convertible and consider a negative free cash flow in probably in the mid- to high double digits in 2026, you will start 2027 with probably less than CHF 100 million. Free cash flow is still expected to be negative next year, and you might have to refinance your 2028 convertible next year as well. So how do you plan to achieve this? Are you open to sell a minority share in TeleClinic? Walter Hess: Yes. Let me take the first question and then Daniel, the second one. So on the sequential growth, as we have shown before, the guidance, we have given us some space so that we can maneuver between growth and marketing spendings. And this is also what we see in the first quarter that it goes in a really good direction already. And -- if it continues like this, so we can go more to the upper end, but we want to be flexible in reacting. And for us, the priority this year is completely on becoming breakeven in the course of the second half year, possibly on the second half year in total. And therefore, we need this flexibility and we take for us this flexibility. And on the second question. Daniel Wüest: Yes. I think just to start top down, you're right with the CHF 160 million, you have to deduct the CHF 20 million or CHF 22 million, but let's deduct the CHF 20 million, that makes it easier for calculation. That's CHF 140 million. And you are also right that you can assume for this year and next year, negative free cash flows, but they will be substantially even already this year lower than last year and in '27 that the indication that in the course, of course, we aim for as low as possible negative free cash flow, but that should be not kind of the 2 figures added up should still leave us with a very comfortable remaining cushion of liquidity until we will become then for the full year free cash flow positive in '28. In relation to the refinancing of the '28 maturity, I think once we have demonstrated and shown that we are on the right path, -- that's then something which we will tackle by then. It's clear that we do not fully redeem the CHF 200 million, and it's also clear that it does not make sense from just -- at least that's what I learned at university, okay, acknowledging that was some time ago, but that the fully debt financed balance sheet is definitely not an efficient balance sheet. And I think let's take it one step after the other, and we have ideas. And you referred to kind of -- if I'm right, selling a minority stake of TeleClinic. And I think, of course, that it's a very valuable asset, which we have in our hand, but it's extremely valuable within our platform and therefore, definitely not any or the first priority to monetize TeleClinic at this point in time. Jan Koch: Understood. And one follow-up, if I may. Are you going to report EBITDA in Q3 and Q4 this year again so that we can track your progress? Daniel Wüest: Let's see. I think could well be. I think that -- and I think it would be important that at least we give you a very good indication where we are heading to. And I think this nice picture, which we draw in our presentation, you can basically on a quarter-by-quarter basis, track us and see whether the 2 guys in front of you have not only overpromise, but also deliver on that. But we have to see, but most likely, yes. Walter Hess: Okay. Then we come. Daniel Wüest: I just want to say that's the benefit of lunchtime. Walter Hess: Last question. Unknown Analyst: Not going to look. No. On the AI companion digital assistant. As I understand, you're not getting any money for it. Marketing and any plan that on later stage you get some money out, because you mentioned these 100 people they got saved from cancer. At the end, I think somebody is happy to pay something.. Walter Hess: Did anybody say we do not get any money out of it? I cannot remember. No, it's what we see and we measure very carefully, of course. We see an impact -- a positive impact on traffic already. We see a positive impact on engagement already. We see the conversion rates going up as soon as we can take someone by the hand and guide through the platform. And we see a significant increase of conversion rate. And this brings us already additional money. And as you have seen on the platform, the marketplace, this marketplace is a marketplace also for health services. And on a marketplace, you want to earn money. And we are filling this marketplace also with health services, and we will get additional margins, revenues and margins from there as well. Okay. So with that, we come to the end. Thanks a lot. It was a little bit long. Sorry for that, but we had a lot of information for you. Thank you for joining, and we wish you all a pleasant and happy day. Bye-bye. Thank you.
Operator: Thank you for standing by, and welcome to the Tuas Limited Half Year Financial Year 2026 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Richard Tan, CEO. Please go ahead. Richard Tan: Good morning, and thank you for joining us. I'm Richard Tan, Chief Executive Officer of Simba Telecom, the principal operating entity of the Tuas Group. Also on the call today are Mr. David Teoh, Executive Chairman of Tuas Limited; and Mr. Harry Wong, Chief Financial Officer of Simba Telecom. It's a pleasure to present the financial results for Tuas Limited for the half year ending 31st January 2026, covering the period which started 1st August 2025. Let me briefly outline today's agenda as shown on Slide 2. We'll begin with Harry, who will walk through the financial performance and key metrics for the year. I'll then provide an update on our operational progress, status of M1 acquisition and outlook for FY '26. We'll conclude with a Q&A session to address any questions you may have. Please note that all financial figures discussed today are denominated in Singapore dollars. With that, I will now hand over to Harry to take us through the numbers. Harry Wong: Good morning, everyone. My name is Harry Wong. CFO of Simba Telecom. I'll be presenting the financials of the Tuas Group. On Slide 3, you'll see that we achieved a notable improvement in the financial results during the first half of FY '26 when compared to that of FY '25. Revenue for the half year is $91.9 million, up from $73.2 million for the same period last year. Pre-acquisition costs amounting to $10.5 million was incurred. Excluding this, the underlying EBITDA increased 27%, up from $33.1 million to $42.1 million. We achieved a half year positive statutory net profit after tax of $8.2 million, which is a significant improvement on the prior period's profit of $3 million. Next, we look at the revenue and EBITDA on Slide 4. Revenue for the half year ending 31 January 2026 increased 26% compared to that of FY '25. With increased scale of the business, EBITDA margin has improved to 46% of revenue. Gross mobile ARPU for the year was 9.61%. The key driver of the EBITDA uplift is the increased subscriber base for both the mobile and broadband products. Our mobile plans include generous roaming data at every price point and broadband plans provide exceptional value including premium Wi-Fi 7 routers and home phone lines as part of the package. Slide 5 shows our sustained mobile subscriber growth since FY '23. As of 31 January 2026, we had about 1.412 million subscribers, representing a 13% increase over the past half year. Slide 6 shows the broadband subscriber base. As of 31st January 2026, we had approximately 46,000 active services. We have gained traction in this segment, and we have added 20,000 subscribers over the past half year. We proceed on cash flow on Slide 7. We continue to show positive cash flow. Opening cash and term deposit balance was $80.7 million. Net cash generated from operating activities was $50.1 million. The main cash outflow comes from acquisition of plant and equipment and intangible assets of $18.9 million, largely mobile network and some fixed broadband infrastructure. We raised funds from capital markets of $260 million in support of the M1 acquisition. This brings the ending cash and term deposits to $478 million as of 31st January 2026. Again, positive cash flow after CapEx for the year is a welcome achievement. I should note that pre-acquisition costs that have been accounted for in this half year has not become liable for payment during the first half or since then. This explains a good portion of the positive cash flow outperformance compared to EBITDA. With this, I will let Richard proceed with the business updates. Richard Tan: Thank you, Harry. Singapore's mobile market remains highly competitive. And over the past financial year, Simba has continued to focus on delivering stronger value across all price points. This strategy has clearly resonated with consumers, as reflected in our robust subscriber growth. We have further enhanced our mobile offerings by adding 2 popular roaming destinations, Japan and Australia as inclusions in the APAC tier to our higher-value plans. This enhancement is an important part of supporting our continued growth in the mobile segment. To serve our expanding customer base, Simba continues to invest in network coverage and overall user experience. I am pleased to share that we have achieved another significant milestone. We have surpassed IMDA's regulatory benchmark of 95% 5G outdoor coverage, well ahead of the 31st January 2026 deadline. Slide 9 highlights the reasons behind the strong momentum in our fiber broadband business. The accelerated growth is driven by a clear, simple and compelling value proposition through 10 gigabit per second symmetrical speeds complemented by a premium Wi-Fi 7 router, modem and the home phone line included as standard. We are also proud to share that Ookla has awarded Simba, both the fastest download speeds and most reliable speed titles for the second half of CY '25. Most listeners would have used Ookla to do a speed test on your connectivity and they are widely regarded as an accurate global leader in Internet testing and network intelligence. This recognition is a testament to our engineering excellence and our unwavering commitment to delivering the best possible service experience for our customers. Moving to Slide 10. We appreciate shareholders' patience as we await IMDA's decision on our proposed acquisition of M1. This is a significant transaction involving critical national infrastructure and on a combined basis, it will create Singapore's second largest mobile customer base. Both Keppel and Simba continue to work diligently through the regulatory process and we remain fully committed to securing the necessary approvals. And finally, the business outlook. The first half of the year has established a solid platform for us with sustained growth across both our mobile and fiber broadband segments. In line with this expansion, Simba's stand-alone CapEx for the full year is expected to range between $50 million and $55 million. We will continue to prioritize margin optimization and maintain disciplined cash management as we scale. I'll now hand back to the moderator for the Q&A session. Operator: [Operator Instructions] Your first question comes from [ Raj Ahmed ] from Citigroup. Siraj Ahmed: It's Siraj Ahmed. Can you hear me okay? Richard Tan: Yes. Siraj Ahmed: Just I have maybe 3 questions. The first one just on the -- maybe a multipart question on subs momentum. Pretty strong pickup in momentum in the half. Just keen to understand what drove that from your perspective, especially given your advertising and marketing spend is actually down year-on-year? Richard Tan: Okay. So obviously, the momentum has been strong for the first half. And in part, I think, it was -- you could say that it was due to our announcement of the M1 acquisition because people are seeing us in different light. They know that we are a serious player and we are here to stay, and we have been delivering very good value for -- across all of our service plan. So this has resonated obviously across the -- our customer base as well as people who have not come aboard yet. So we saw a very strong momentum for the first half of the year. Siraj Ahmed: And Richard, just because I'm into the stock as well, just in terms of first quarter versus second quarter, is there some seasonality or some sort of events that supports 1Q? I know 1Q is quite strong. 2Q is strong as well, but it was down quarter-on-quarter. Is this something that impacts from like a seasonality perspective? Richard Tan: This is the typical seasonality effect because, as you all are well aware, the November and December traveling period is always very strong in terms of people leaving Singapore for their holidays. So a lot of people will sign up prior to that. And then they will return. Everyone goes back to work and school back in January. So you are obviously noticing the seasonality effect. Siraj Ahmed: Right. Actually, that's a good segue for my question on -- just in terms of the current environment with fuel and everything like that. And given that traveling is a big part of your value prop as well. Are you seeing any sort of -- anything that you can call out based on current trends that you're seeing on that impacting... Richard Tan: The trends will be very similar to previous years. And we expect second year to -- second half of the year to continue to exhibit good growth as well subject to the usual seasonality effects that we have seen over the past 3 to 4 years. Siraj Ahmed: All right. Helpful. Last one. In terms of just the gross margin, it seems like the network, the COGS has gone up quite a bit. Gross margin is down year-on-year. And is there some one-off in that, that we should be considering? Richard Tan: Well, the -- what we have been focusing on more is the EBITDA margin and the EBITDA margin has actually grown by 1 percentage point. So I think that's the main thing to focus on. Operator: Your next question comes from Darren Odell from Peloton Capital. Darren Odell: Congratulations on a strong result again. Just in relation to -- on the cost, the $10.5 million one-off cost in relation to M1 acquisition. I was just wondering -- it was quite large. I was just wondering if you're able to break that down in more detail, please? Richard Tan: We are not providing any breakdown as of now, but it is a mixture of legal due diligence, tax due diligence, financial due diligence and financial advisory. So I think in the -- considering the size of the transaction it is actually very, very reasonable. Darren Odell: And just in relation to just broadband connections, which have obviously been very strong in the last half. What's the sort of backlog look for that? Or do we expect the same sort of momentum to continue in number of subscribers or to be increasing? How should we be thinking about that in the future? Richard Tan: What I can say right now is that we are working very, very hard to build on the momentum that we have established and the fact that Ookla has given us the award, puts us in a very, very good position to build on that momentum. Operator: Your next question comes from James Bales from Morgan Stanley. James Bales: I guess I'd like to build on those questions about the acceleration in mobile and the strength in broadband subs. You talked about it being a question of brand awareness, durability, value that is in the consumers' mind. Should we extrapolate that the acceleration that you've seen in the first half is sustainable throughout the year and into FY '27. Richard Tan: So to be specific, are you referring to mobile or fiber broadband? James Bales: Well, I'm referring to both. So I guess I'm a bit surprised on broadband, where there's a 2-year term. It's a commoditized product, all selling the NetLink service. How you've managed to scale that so fast and whether we should expect that, that continues in the same sort of way. Richard Tan: So I think you will have seen that our value proposition is very strong. We have included a lot of value and the router that we are offering, it's a really good relative product, no compromises because, for example, it has a true 10 gigabit a second Ethernet port. And we have also added home phone line as well. So with the awards that I've mentioned from Ookla, that puts us in the very good position and people have been signing up through word of mouth. They have experienced very, very good service from both Simba, and the performance has been great. And obviously, we've been spending on marketing as well to ensure that the awareness is built up across the board. So with that with that foundation laid, that has put us in very good standing in terms of continued growth for broadband. Mobile, I think we are very well established across all segments. And we have seen good gains in these different segments, which I have alluded to, and these include, for example, the mass market and foreign [ router ] segment is something that we have always been very strong in. So without a doubt, our penetration is now deeper. Our growth is more broad-based, so that gives us also a good foundation for continued mobile growth. James Bales: That's really good context. And then I guess the other question I had was around M1 deal completion. This has taken a lot longer than you thought. Can you help us understand the -- in your mind, what's changed? And you would have expected that this deal completed last year or in January when you first announced it. Can you help us understand why it's taken longer and whether your confidence in closing it has changed at all? Richard Tan: Well, as I've indicated in my presentation it is an important transaction. What I did not say for example, is that this is the first time that the market is undergoing consolidation. So obviously, there are all aspects of the matter that IMDA will need to weigh upon. So I'm not surprised, and we are -- both parties, meaning Keppel and Simba are working diligently to gain regulatory approval as we go through the process. Operator: [Operator Instructions] Our next question is a follow-up from [ Raj Ahmed ] from Citigroup. Siraj Ahmed: It's Siraj again. Just, Richard, just on a follow-up to James' question on the time line. Is there any sort of indication that's been given to you on potential completion time lines? Or is it just open-ended from your perspective? Richard Tan: I don't think it's appropriate for us to set any expectations with regards to the time line. All I would say right now is that the engagements on a joint basis with the regulator, they are ongoing. So I think that's very important in terms of keeping the dialogue going. Siraj Ahmed: Okay. Got it. On that as well, there was a -- I think there's a 6-month sort of agreement with Keppel in terms of the deal completing. Is that -- I'm guessing that's -- I think that in sort of end of March, I think, I'm guessing that's been extended. Is that fair, given both of you are talking with IMDA? Richard Tan: We are aware of it, and both parties are working to extend it. Siraj Ahmed: Okay. Last one, just on CapEx. I know that sometimes there is seasonality. I think first half was only $19 million. You're reiterating the CapEx guidance. I'm just wondering whether -- is it sort of -- you're keeping the second half seasonality because of the deal -- impending deal? Or is it just timing related? Richard Tan: A lot of it is timing related because we initially spent more on CapEx, for example, building out our 5G coverage. But obviously, we are keeping in mind the need for us to continue to support our growth, and that is why we're keeping to the $50 million to $55 million CapEx expectation for the financial year. Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Tan for closing remarks. Richard Tan: Thank you all for your time and for engaging in our business update. The Board and management of Tuas Limited deeply appreciates your continued support. We look forward to delivering further value and growth in the months ahead. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, welcome to Nexteer Automotive Group Limited 2025 Annual Results Conference Call. [Operator Instructions] I would now like to turn the conference call over to Investor Relations Director, Mr. Tony Wang. Please go ahead. Tony Wang: Okay. Thank you, Jamie. Again, welcome, everyone, to our earnings call for the full year of 2025. We made the announcement of our annual results this evening, Hong Kong time. Before we begin today's call, I would like to remind you that this presentation contains a safe harbor statement. For additional information, please refer to the content in the second page of our slides. The presentation accompanying today's call are available on our company's website. Please visit nexteer.com to download slides if you have not done yet. Joining us today are Robin Milavec, Executive Board Director, President, CTO and Interim Global COO; Mike Bierlein, Senior Vice President and CFO. Starting the presentation, Robin and Mike will provide the business and financial highlights, respectively. And then we will open the lines for your questions. Please follow the limit of 2 questions per person. With that, let me turn the call over to our President, Robin. Robin Milavec: Thank you, Tony, and hello to everybody online today. I'll begin with an overview of our business performance and strategic progress, and then I'll hand it over to Mike Bierlein, our Chief Financial Officer, and he will walk you through our financial results and 2026 outlook. So starting with Slide 4 in our deck, let me start with a high-level overview of our full year business highlights. This reflects 5 key milestones demonstrating Nexteer's focus on long-term profitable growth. First is revenue. Our total revenue reached nearly $4.6 billion increasing 7.2% compared to 2024. And as a result, we achieved record revenue for a third consecutive year. This reflects sustained above-market growth driven by new and Conquest business wins. Second is program launches. We successfully launched 57 customer programs with particularly strong momentum in APAC, reflecting our deepening engagement with both global and Chinese OEMs. Third is new business bookings. We achieved customer program bookings totaling $4.9 billion, including new Steer-by-Wire wins with 2 leading Chinese NEV OEMs. The business development on Steer-by-Wire is well on track, along with the solid execution by our team in 2025. Fourth is revenue in our Asia Pacific division. APAC revenue reached a record of approximately $1.5 billion. This represents a 9.8% increase year-over-year, making the fourth consecutive year of record revenue in this region. This milestone highlights a remarkable organic growth trajectory with revenue surging from about USD 1 billion to USD 1.5 billion in less than 3 years. In 2025, Nexteer China and Nexteer India, each achieved record revenue, reflecting continued growth and strong regional execution. And finally, enhancing shareholder returns. We are glad to announce that the Board of Directors has approved a $46 million dividend subject to the approval of the shareholders in the upcoming Annual Shareholders Meeting. This dividend amount is more than double that of last year and represents a total of 45% payout ratio of the 2025 net profit attributable to equity holders which is an increase from 35% we had in 2024. These milestones collectively demonstrate Nexteer's ability to grow above market, while maintaining financial discipline. As I mentioned earlier, we successfully launched 57 customer programs across multiple product lines, regions, customers and vehicle segments. 42 of these were new or conquest wins and 36 were for electric vehicle platforms, demonstrating strong executions as bookings convert into revenue. Today, rather than walking through a detailed launch list line-by-line, this slide simply highlights the selection of major program launches that illustrate our new bookings wins that are translating into tangible growth. First, we achieved the initial launch of our Modular Column EPS or mCEPS in the EMEASA region. While Nexteer's mCEPS was first introduced in China, leveraging our industry-leading EPS building blocks. This successful EMEASA launch further enhances our competitiveness and our regional footprint. Second, we delivered the first Dual Pinion EPS program launch with a leading Chinese OEM. Following the inaugural Dual Pinion EPS launch in EMEASA, we have secured additional orders from multiple Chinese domestic OEMs and other European OEM over the past year. The customer demand for this product is strong, driven by the need for cost-effective speed-to-market solutions combined with Nexteer's proven steering, reliability and performance. At the same time, despite the emergence of Dual Pinion EPS, we have built a very solid and growing Rack EPS business foundation in China. Nexteer Technologies have been adopted across numerous mainstream and premium EV models with customers, including Xiaomi, XPeng, Li Auto, Zeekr, Chery, Changan, and others. Overall, the strong launch momentum across gear-based EPS platforms, including our single pinion, dual pinion and Rack EPS products continue to reinforce Nexteer's market leadership, particularly in the China market. Out of the 57 program launches, 48 of those were in APAC, supporting both Chinese and global customers. This, again, is another proof point of Nexteer's strategic targeting and capitalizing on the region's growth opportunities. This robust launch pipeline reflects increasing diversity across products, across customers and regions which is critical to our long-term success. Looking ahead, we are particularly excited about 2 Motion-by-Wire related product launches beginning in 2026. Turning now to new business awards. We secured $4.9 billion in customer program bookings in 2025, reflecting strong commercial momentum across products, regions and customers. These wins include several breakthrough awards and important first, underscoring our leadership in advanced steering technologies. Most notably, we secured Steer-by-Wire program with 2 leading Chinese new energy vehicle OEMs. And these cover both the handwheel actuator as well as the roadwheel actuator applications. These awards further reinforce Nexteer's leadership in next-generation Motion-by-Wire technologies. Let me expand a little bit more on these 2 customers. So building on our first Steer-by-Wire win with a leading Chinese OEM in the second half of 2024, we successfully secured a second award with this customer in 2025. This follow-on win demonstrates growing customer confidence and an expanding adoption of by-wire technology across the OEM's upcoming vehicle platforms. In addition, we secured our first Steer-by-Wire booking with another leading Chinese OEM, including, again, both the handwheel actuator and roadwheel actuator applications. This program is expected to launch as early as next year, reflecting a short lead time from a business award to production and strong execution capabilities. Beyond Steer-by-Wire, we continue to expand our dual pinion and rear wheel steering business across APAC and EMEASA, deepening relationships with existing Chinese OEMs, while also securing a new European-based OEM. These wins highlight not only the scalability of our dual pinion product technology, but also our ability to deliver cost-effective, lightweight rear wheel steering solutions that enable up to 12 degrees of rear wheel steering turning angle and supporting a broader growth pipeline. We also earned our first Column Assist EPS win with a market-leading OEM in India. This marks an important milestone for Nexteer in 1 of the world's fastest-growing automotive markets. This win demonstrates our ability to localize proven global electric power steering technologies and compete effectively on cost, quality and reliability in a highly value-focused market. Another important first is that we earned the first high output Column Assist EPS win with a leading Chinese OEM. This represents an important expansion of our Column EPS portfolio into higher performance and load applications. This win highlights our ability to extend Column EPS technology beyond the traditional output range to meet more demanding vehicle requirements. We continue to capture the global expansion of Chinese OEMs as they grow their presence in Europe and South America, by leveraging our strong China relationships and global footprint to support customers with consistent scalable steering solutions across regions. Importantly, this trend allows Nexteer to extend China originated wins into incremental global revenue opportunities. And lastly, we successfully conquested a new Power Column business for full-size truck platform in North America, strengthening our leadership position in this region as well. Looking at bookings across product lines and regions, over 75% of Nexteer's bookings were in our EPS product line and nearly half or 45% of our bookings were secured in the APAC region. Overall, this diversified portfolio indicates our technology is becoming the product of choice by many domestic and global OEMs. On the next slide, this highlights that customer diversification remains a core growth pillar for Nexteer. We partner selectively with OEMs to align with the long-term industry mega trends, including electrification, autonomy and connectivity. And today, we serve more than 60 OEMs globally. Over the last year, we've expanded our customer base by winning programs across a broad range of customer models from leading domestic OEMs in China to the market leader in India, to premium EV manufacturers in North America as well as an emerging autonomous mobility company. Importantly, these wins span a wide mix of technologies, including our Rack EPS, Column EPS, Dual Pinion, Rear Wheel Steering, Driveline and Columns and Intermediate Steering Shafts. This demonstrates our ability to deploy the full Nexteer portfolio. It positions us to capture growth from established volume leaders, while also participating in the emergence of new mobility players which are reshaping the industry. While every competitive situation is different, our success consistently comes down to a few core strengths. We bring world-class product and process technologies. Our quality and reliability performance as measured by our customers remains strong and continues to improve. We listen carefully to understand what each customer truly values. And as the Tier 1 in our space was experienced as a global OEM in our early history, we truly understand how critical speed, agility and mindset are in responding to those needs. And finally, flawless execution from development through launch remains a defining differentiator. Together, these capabilities underpin our ability to win, scale and grow profitably across a diverse and evolving customer base. We also continue to make disciplined progress in expanding our manufacturing and technical footprint across Asia Pacific to support long-term growth and localization. This slide shows the time line on how APAC steering production and validation has expanded in the past 5 years. In January of 2025, we opened our state-of-the-art Changshu Manufacturing and Testing facility in China, strengthening our ability to support the growing demand from Chinese OEMs, while aligning with China's focus on high-end intelligent and sustainable manufacturing. That expansion is complemented by our Asia Pacific technical center in Suzhou, which brings comprehensive engineering, validation and corporate functions together in 1 location, enabling faster development cycles and closer proximity to our customers. We have also expanded our India Technical Center near Bengaluru with additional physical validation capabilities, enhancing localized engineering support in that region. Looking into 2026, we've opened our first manufacturing facility in Rayong, Thailand, which has begun production with an initial focus on Column Assist EPS to support growing demand across Southeast Asia. And finally, we broke ground on new smart manufacturing facilities in both Liuzhou and Suzhou, further expanding capacity for advanced steering technologies, including EPS and Steer-by-Wire. Together, these initiatives reflect our disciplined approach to scaling capabilities and supporting customers across the region. On this next slide, I'd like to update the status of 1 of our most important Motion-by-Wire development portfolio products, which is electromechanical breaking or EMB. Nexteer publicly debuted EMB at the 2025 Shanghai Auto Show. We leveraged our technology building blocks to create a modular high-precision braking system to strategically expand into Motion-by-Wire chassis control. Following the Winter Test on EMB 1 year ago, a second round of winter vehicle tests were completed in Yakeshi, China during the period between December of 2025 and March of this year. In this event, we had more than 17 OEM customers that were engaged and had given very positive feedback on the vehicle performance through the on-site test driving and technical review. Meanwhile, our customers were surprised by the rapid pace of our EMB product development progress. Right now, we're developing highly automated production line to accelerate our industrialization process. And we also will continue to optimize the function, performance and durability of the EMB product. We're looking to secure our first business booking of EMB with the Chinese OEM in the course of this year. This next slide highlights how we are capitalizing on Motion-by-Wire and MotionIQ to enable Intelligent Motion in the vehicle. First, we're integrating smart chassis technologies, including steer-by-wire, rear wheel steering and brake-by-wire, with the electric powertrain architectures. This system-level integration allows us to deliver precise coordinated motion control across the vehicle, while supporting OEMs efforts to simplify platforms and scale advanced architectures. Second, we're embedding software-defined vehicle and AI capabilities directly into motion control. Through MotionIQ, we combine proven safety critical algorithms with flexible software tools enabling OEMs to develop, tune and update motion functions more quickly, while retaining control over vehicle differentiation. And third, these capabilities support autonomous vehicle applications, including Robotaxi and ADAS Level 3 Plus. Our Motion-by-Wire, hardware and software foundation enables the redundancy, the precision and the control required for higher levels of automation. Now I'll hand it over to Mike Bierlein for the financial review. Michael Bierlein: Thanks, Robin, and good day, everyone. Nexteer delivered a record year in 2025 with full year revenue reaching $4.6 billion. On an adjusted basis, excluding foreign exchange and commodity impacts, revenue increased 6.9% year-over-year outperforming the market by approximately 320 basis points. Importantly, all 3 regions delivered growth, supported by strong production schedules. Profitability continues to improve. EBITDA grew 11.2% year-over-year, with margins expanding by 40 basis points. We generated positive free cash flow of $124 million, and our balance sheet remains strong, ending the year with $414 million of net cash. From a growth and visibility standpoint, we secured $4.9 billion of customer program bookings during 2025, including 2 Steer-by-Wire program awards reinforcing our long-term growth outlook. Finally, reflecting our confidence in Nexteer's financial strength, our Board approved a $46 million dividend representing a 45% payout ratio, up from 35% in 2024. This confirms our commitment to disciplined capital allocation and increasing shareholder returns. This slide highlights our key financial metrics for 2025: revenue, EBITDA, net profit and free cash flow, and demonstrate solid improvement across our core earnings profile. Revenue reached $4.6 billion in 2025, up 7.2% year-over-year, reflecting favorable volumes and execution on New and Conquest program launches. EBITDA increased to $472 million representing an 11.2% increase versus 2024, with margins expanding to 10.3%, driven by favorable volume and improved operating performance. Net profit attributable to equity holders was $102 million or 2.2% of revenue compared to $62 million in 2024. This includes a $24 million of net impairment costs driven by customer program cancellations. While we recognized a similar net impaired cost of $23 million a year ago. Adjusting for these onetime items, our net income would be $126 million or 2.7% for the year of 2025. Free cash flow was $124 million in 2025 compared to $166 million in 2024. Improvements in EBITDA were offset by a onetime favorable tax benefit received in 2024 and by net investment in working capital to support growth. Overall, 2025 represents a year of improved earnings quality, supported by stronger volumes and operating performance. This slide shows a walk of 2024 revenue to 2025 revenue. Favorable foreign exchange increased revenue by $15 million, driven by the euro strengthening compared to the U.S. dollar. As noted here, the largest driver of the year-over-year increase in revenue was represented by volume, pricing and others, which provided an uplift of $293 million, driven by strong customer schedules and above-market growth in all 3 segments. APAC continued to lead with revenue growth, mainly with the China OEMs. Finally, commodity prices reduced slightly, causing a year-over-year revenue decrease of $1 million. This slide shows our year-over-year revenue growth versus the market in 2025, adjusted for foreign exchange and commodity price changes. On a global basis, Nexteer delivered 6.9% adjusted revenue growth year-over-year, outperforming the market by approximately 320 basis points. Looking at the regions. North America revenue increased by 4.4% year-over-year and 5.4% above market as our customer programs continue to perform well in the market. APAC continued to lead with 10.2% year-over-year growth and 3.1% growth over market, underscoring the strength of our regional execution and customer portfolio. EMEASA delivered strong growth with 8.5% year-over-year revenue increase and 9.5% above market, supported by program ramp-ups. This slide summarizes our 2025 revenue performance by region and highlights both the mix and growth dynamics across the business. Starting on the left. Total revenue increased from $4.3 billion in 2024 to $4.6 billion in 2025. From a mix standpoint, North America remains our largest region at 50% of total revenue, with APAC at 32%, and EMEASA at 17%. Overall, the regional mix remains balanced with continued structural growth in APAC. Turning to the regional growth performance on the right. North America revenue of $2.3 billion increased 4.4% year-over-year. APAC delivered strong growth of 9.8% or 10.2% excluding FX and commodity impacts supported by sustained momentum from New and Conquest program launches over the past several years and our leading position with the Chinese OEMs. EMEASA revenue increased 11.4% year-over-year or 8.5% excluding FX and commodity impacts driven primarily by Conquest program volume ramp-ups. This slide walks through the year-over-year change in EBITDA from 2024 to 2025. EBITDA increased from $424 million in 2024 to $472 million in 2025, representing an 11.2% year-over-year increase with margins expanding from 9.9% to 10.3% of revenue. Starting with the key drivers. Volume and mix contributed $59 million, reflecting higher revenue and improved operating leverage across the business. These gains were partially offset by $10 million related to troubled supplier costs as well as $10 million of net tariff impact, both of which pressured year-over-year performance in North America. Restructuring cost was $9 million in 2025, which was equal to our restructuring cost in 2024. Restructuring costs were primarily to support a further 15% reduction in U.S. salaried employment in 2025, as we continue to focus on optimizing our cost structure to improve margins and costs related to the transfer of the Columns operation from the U.S. to Mexico, which is nearing completion. All other performance factors contributed $9 million, reflecting continued improvement in manufacturing and material performance more than offsetting price reductions and economics. This slide highlights our EBITDA and margin performance by region in 2025 compared with the last year. Starting with North America. EBITDA was $174 million in 2025 compared with $178 million in 2024. EBITDA margin declined from 8.1% to 7.6%, as margin improvement initiatives were more than offset by troubled supplier and net tariff costs. APAC EBITDA increased to $243 million up from $230 million in the last year, driven by continued strong revenue growth, EBITDA margins remained robust at 16.6%. APAC continues to deliver solid earnings growth and margin performance supported by increased scale and operating execution. In EMEASA, EBITDA increased significantly to $69 million, up from $36 million in 2024. EBITDA margins expanded from 5% to 8.6%, driven by improving operating efficiency and revenue growth, reflecting meaningful year-over-year progress in the region. This slide shows our EBITDA to net profit walk for 2025. Overall, the year-over-year $48 million in EBITDA increase is driving the net profit increase from $62 million to $102 million. Depreciation and amortization totaled $309 million in 2025, broadly flat versus last year. D&A includes depreciation of plant, property and equipment as well as amortization of intangible assets. The results include a $24 million net program impairment charges recorded in 2025. And $23 million in 2024, primarily related to North America EV program cancellations and volume reductions. We continue to work with our customers on cost recoveries related to these programs. Operating profit increased to $163 million, up from $115 million last year, reflecting the stronger EBITDA performance. Below operating profit, JV earnings increased modestly, driven mainly by contributions from our Chongqing operations. Income tax expense increased to $55 million compared with $42 million last year. This increase was primarily driven by improved profitability. Our U.S. operations remain in a valuation allowance position, driving our effective tax rate to be elevated at 33% for 2025 compared to 36% in 2024. As our profitability continues to improve in the U.S., our effective tax rate will continue to reduce. For 2026, the forecast for effective tax rate is slightly below 30%, and our long-term effective tax rate remains in the high teens. Moving to the balance sheet and cash flow. On the left of the slide, you can see our full year 2025 cash flow performance compared with 2024. Cash from operating activities of $405 million in 2025 was $41 million lower than 2024, as increased EBITDA was offset by a onetime favorable tax benefit in 2024 and by a net investment in working capital to support growth. Cash used in investing activities totaled $281 million in 2025, largely in line with the last year. Overall, free cash flow was strong at $124 million. We ended 2025 with $501 million of cash on hand and gross debt of only $50 million with finance leases of $37 million, resulting in a net cash position of $414 million at year-end. Total liquidity stood at $833 million comprised of $501 million of cash and $332 million of committed credit facilities, providing significant financial flexibility. Turning to our 2026 operating considerations. Despite expectations for modestly lower global OEM production in 2026 we remain on track to deliver another year of record revenue. We expect above-market revenue growth in 2026 of approximately 200 to 300 basis points, driven primarily by continued growth in APAC, particularly in China as we continue to expand with both global and domestic OEMs. From a profitability perspective, we expect continued margin expansion benefiting from net performance improvements and increased volume leverage. Our Motion-by-Wire portfolio continues to build momentum with additional order opportunities anticipated and initial revenue recognition expected to begin in 2026, marking an important milestone in the commercialization of this technology. At the same time, geopolitical risks persist, including ongoing conflicts and trade tensions, we remain vigilant and continue to actively manage these risks through close engagement with customers, suppliers and our global operating footprint. Nexteer's long-term investment opportunity remains compelling, supported by above-market revenue growth, continued margin expansion through operational efficiency and execution, our leading position in Motion-by-Wire technology and a strong balance sheet, enabling strategic investments and increasing shareholder returns. In closing, Nexteer has a well-defined strategy focused on technology leadership, portfolio alignment with megatrends, disciplined cost management and targeted growth in China and emerging markets. Thank you for joining us today. Operator, Jamie, please open the line for Q&A. Operator: [Operator Instructions] And our first question today comes from Shelley Wang from Morgan Stanley. Shelley Wang: I have 2 questions. The first is about our new products. And it's good to see the progress on the Steer-by-Wire project wins. And then, I was wondering, like, in the long term, are we more focused on the Steer-by-Wire itself or we target to provide like the integrated solutions, maybe including the Steer-by-Wires like EMB. And then if it's the integrated one, then what's our advantage if comparing to other chassis suppliers and the start-up? So this is my first question. And my second question is about the impairments and the compensation. And because from the financial statements, we see we booked $54 million customer compensation in 2024, but only $8 million last year. So are we expected to receive more compensation this year? Or the $8 million is for the project installations last year? Yes. So that's my second question. Robin Milavec: Okay. Thank you, Shelley. This is Robin. I'll take the first question that you had, and then I'll turn it over to Mike to address your second question. So in terms of the new product strategy, certainly, we've been developing our Steer-by-Wire product for a number of years now, and we are beginning to see traction in the market, especially in the China market with Steer-by-Wire, new business wins, production launches that will start this year. And as a part of this by wire technology, our intention is to be a chassis Motion-by-Wire supplier. So that is the reason for the recent development of our electromechanical braking system. And that is a critical milestone in the Chassis-by-Wire system that we need to fulfill. So I would indicate that the advantage that we will have in this market, obviously, when you think about braking, we don't have a long history of braking as a company. However, we are very experienced in safety-critical vehicle systems, and the EMB product has -- shares a lot of commonality with electric power string in terms of the electric motor, the actuator, the electronics, the software, all of that is very scalable, and it builds on those critical technology building blocks with the EPS. So we see a lot of potential to increase our scale and really drive competitiveness by having both the Steer-by-Wire and the EMB products together. In addition, we don't have a lot of legacy investments in hydraulic braking. So we're really free from the past legacy of this older technology that will be phasing out and we are entering in this technology shift in the industry to electric braking. So we believe that is also an advantage for us. And the third advantage I would highlight is the close partnership that we have developed with the China OEMs. I noted that we had 17 customers evaluating our Brake-by-Wire vehicles in our Winter testing. There is significant interest from many of the China OEMs to support Nexteer, and we believe that relationship will lead to business sourcing for both Steer-by-Wire and EMB, and that will enable us to enter the braking market globally at some point in the near future. With that, let me hand it over to Mike for part 2 of your question, Shelley. Michael Bierlein: Thanks for the question, Shelley. So in terms of the impairments, it's certainly a challenging situation in North America with the changing, say, demand and support from government programs to support the electric vehicles. So each of our 3 major customers within North America determined to cancel or significantly reduce volumes on their EV truck and SUV platforms. And that happened towards the end of the year of 2025. We did record $32 million of impairments between write-offs for our engineering intangible assets as well as write-offs for some specific, say, machinery and equipment. We did recover $8 million that netted us down to $24 million on a P&L impact for the year. And because these program cancellations happen toward the end of the year, we were not able to fully negotiate the recoveries with our customers, and we do expect to receive recoveries yet in 2026. Now we also have to deal with challenges across our supply chain. And certainly, we have costs that our partners and our supply base have incurred relative to these program cancellations as well. But to answer your question, yes, we do expect to recover this further cost to offset these write-offs in 2026. Operator: And our next question comes from [ Jiayi Shi ] from Guotai Haitong Securities. Unknown Analyst: And I'm just wondering how much would you estimate the growth of revenue of each area in 2026 and the EBITDA margin of each area? Michael Bierlein: Thanks, Jiayi, for further questions. And certainly, considering the dynamic environment that we're facing in 2026, there has been certainly a mix of impacts on our revenue outlook forecast. As I mentioned, we are expecting our revenue to grow on a year-over-year basis, above market by 200 to 300 basis points. And with that, we are, at this point, anticipating a global market volumes to be lower by about 1% for the year. And I think that the 1% really depends on how this geopolitical conflict between the U.S., Israel and Iran ends up playing out over the years -- over the year. Hopefully, the conflict ends sooner. Our forecast is, of course, assuming a short-term conflict with that. So from a volume perspective, we are seeing that most of our growth over market will be in Asia Pacific. So you can think about, the 200 to 300 basis points growth being largely in Asia Pacific. From an earnings profile. We do see a continued margin expansion. And if you think about breaking that down then by region, I continue to challenge our Asia Pacific region to maintain profit margins in around the 16% to 17% EBITDA range. And we continue to see improvement and momentum in our EMEASA segment. So you can expect added improvements in EMEASA as well as we see improvements in North America as we have these onetime charges related to troubled suppliers and net tariff costs within North America. Operator: [Operator Instructions] And at this time, I'm showing no additional questions, we would like to thank you for the questions and today's participation. If there are any further queries, please contact us at investors@nexteer.com. The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines. Robin Milavec: Thank you, gentlemen.
Operator: Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Public Power Corporation conference call to present and discuss the full year 2025 financial results. At this time, I would like to turn the conference over to Mr. Georgios Stassis, Chairman and CEO; Mr. Konstantinos Alexandridis, CFO; and Mr. Ioannis Stefos, Chief Investor Relations Officer. Mr. Stefos, you may now proceed. Ioannis Stefos: Hello, everyone, and thank you for joining today's conference call for PPC's full year 2025 results. We will begin with an overview of the group's results from our Chairman and CEO, Georgios Stassis, followed by a review of the financial performance for the period by our Group CFO, Konstantinos Alexandridis. After the conclusion of the presentation, we will open the floor for your questions during the Q&A session. The IR team will be available after the call for any follow-up discussions. With that, I will now turn the call over to Georgios. Georgios, please go ahead. Georgios Stassis: Hello, everyone, and thank you for joining us for today's earnings call. PPC had a strong performance for another year, in line with the strategic targets set in the business plan with adjusted EBITDA increasing to EUR 2 billion and net income at EUR 0.45 billion, demonstrating the extent of the transformation and the growth that has been achieved during the last years. This significant growth in profitability has allowed us to keep increasing dividend distribution in line with our plan, which provides for further improvement of shareholders' remuneration with a gradual increase of dividend to EUR 1.2 per share in 2028. Investments stood at EUR 2.8 billion, with the majority allocated to renewables, flexible generation and distribution projects, supporting a further step-up in profitability going forward. Despite high CapEx, our balance sheet position remains solid with a net debt-to-EBITDA ratio at 3.2x at the end of 2025, providing the necessary room to implement our investment plan in the next years. Moving to Slide 7. The last years have been directing capital towards renewable energy, flexible generation and distribution. As a result of these investments, we have been able to increase both the regulated asset base, as we will see later, but also the renewables and flexible generation capacity, which now represents 80% of our total capacity. In this way, year after year, we are increasing our renewables footprint, combining it with flexible generation assets, while at the same time, we have made significant progress in phasing out lignite, a process which is at the final stage, with the last unit of 700-megawatt plan to cease its operation by the end of this year. Deep diving now to Generation business on Slide 8. As you can see, we have increased the total installed capacity to 12.4 gigawatts, led by the continuous rollout of new renewable projects, which has outweighed the reduction of lignite capacity during the last year. Our total generation output has remained practically stable, however, with increased participation of renewables on the back of reduced production from lignite and oil. More specifically, renewables output increased to 6.9 terawatt hours, driven by wind and solar generation, reflecting the addition of new capacity, which outbalanced the weak performance of large hydro power plants for last year. As a result, renewables increased its share to 33% of our total output. On the flip side, lignite generation declined at 2.7 terawatt hours and oil at 3.6 terawatt hours, corresponding to 13% and 17% of total output, respectively. 2026 is a milestone for PPC generation activity since it marks the end of lignite-fired generation after many decades, making PPC coal-free. Last, gas generation had no change versus 2024, being, however, a very important component of our energy mix today, corresponding to 37% of our total output. As a result, CO2 Scope 1 emissions declined by 0.5 million tonnes compared to last year. And going forward, we expect further improvements since we will cease our lignite operations by the end of the year. Now moving to Page 9. Let me briefly describe the progress in renewable projects that we have achieved in the fourth quarter of 2025. Executing our strategic plan with discipline, we completed the construction of an additional 800 megawatts of capacity across Greece and abroad. The majority of these additions were solar projects, which exceeded the 700 megawatt in total, complemented by the first 59 megawatts of battery energy storage installed in Greece and Romania as well as 36 megawatts from a wind farm in Northern Greece. In summary, 546 megawatts of renewable projects across various technologies were completed in Greece, along with 272 megawatts internationally in the fourth quarter, leading to total additions for 2025 at 1.7 gigawatts, as we will see in more detail in the following slides. Going to Slide 10, let's see in more detail the additions that we concluded in the fourth quarter of 2025. First, in Greece, major projects totaling 550 megawatts were completed since the November Capital Markets Day. Specifically, we completed the last 30 megawatt of a 550-megawatt solar project located in the former lignite area of Ptolemais in Northern Greece. In the same region, in cooperation with RWE, we completed the final 623 megawatts of a 938-megawatt solar project. In the Ptolemais region, again, in the former lignite area, we completed the first 125 megawatt of a 490-megawatt solar project. The second 125-megawatt cluster is currently under construction, and the third cluster is scheduled to begin construction later this year. For wind, we successfully completed 36.4 megawatts in Central Greece in the region of Fokida. And last, an important milestone was also the completion of our first battery project in Greece in the former lignite areas of [ Ptolemais ] as well. Outside of Greece, in the fourth quarter, we added 272 megawatts of capacity from renewable projects, mainly solar across Southeast Europe, as depicted in detail in Slide 11. Starting with Romania, we completed solar projects of 215 megawatts in total in various locations, along with 9 megawatts of batteries, which will enable us to enhance dispatch optimization and capture value from balancing services and price arbitrage. At the same time, we completed 17.5 megawatts of photovoltaics in Italy and 30 megawatts in Bulgaria, increasing our footprint in these countries. Overall, as you can see, we keep a good pace of additions, delivering significant renewable capacity while continuing to expand our construction pipeline. All of the above are summarized in the next slide, Slide 12, which shows that we remain on track to achieve our 2028 renewables target of 12.7 gigawatt, as presented in our last Capital Market Day. We have added 1.7 gigawatt in 2025, standing now at a total of 7.2 gigawatts. And we have another 3.7 gigawatts that are either in construction, ready to build or in the tender process, having secured, in essence, 86% of the capacity that we target for 2028. There has been further progress in our pipeline also in terms of maturity, having moved during the fourth quarter -- last fourth quarter, approximately 600 megawatts into the under construction and ready-to-build stages from the permitting and engineering stage. And this process of adding new capacity, maturing additional projects is something that we have been doing many quarters now, and we will continue to do so as we advance multiple projects across Greece and internationally. Let us now move to Slide 13, which provides key highlights of our retail activity and the overall environment in Greece and Romania. Electricity demand was slightly decreased in both countries by minus 1.3% in Greece, reflecting milder average temperatures compared to 2024 and by 0.6% in Romania. Our electricity sales decreased by 1.9% compared to 2024, primarily driven by lower demand in Greece and a slight market share reduction in both countries. Deep diving in the retail activity in Slide 14, despite this intensely competitive environment throughout 2025, we successfully defended our market share while expanding beyond the commodity segment, demonstrating our ability to diversify and deliver impactful results. Customers remain our top priority. This is reflected in our strong top line performance across all customer satisfaction metrics and the continued improvement in the quality of our customer base. Notably, bad debt exposure decreased by 14%, as shown in the bottom right graph, driven by improved penetration and more effective management of higher-risk customer segments. On top of various targeted propositions that we launched during the year, SME, family and other and as artificial intelligence continues to shape market developments; we launched in Greece a virtual assistant support our customers. This is the first AI-powered digital assistant in the market, designed to elevate the customer experience by providing clear explanations of bill charges in simple language. For our activities in Romania, 2025 was a transitional year following the lifting of the price caps. As competition has been growing, we focus on protecting and strengthening customer relationships through targeted retention actions. Looking ahead, we expect 2026 to remain highly competitive. We will continue to focus on delivering value, strengthening customer engagement and maintaining resilience in an evolving market landscape. Just a few words for several synergy streams in the retail activity that we set up in 2025, we are in Slide 15. Kotsovolos has been key for this, providing the opportunity to launch a broad range of initiatives. Our collaboration has evolved from establishing a strong in-store presence and developing dedicated PPC shop-in-shop corners featuring our products to extending field services coverage that delivers essential energy solutions to customers and households, services that are fundamental to everyday living. Looking ahead to 2026, we plan to further strengthen our footprint within PPC shops while expanding our product and service portfolio to reach additional customer segments, addressing a broader spectrum of needs. Next, in Slide 16, a few words of certain KPIs of our Distribution business. We continue to invest significantly in 2025 with CapEx increasing by 2% year-on-year, in line with our strategy to enhance and digitalize our electricity distribution networks. The total regulated asset base now stands at EUR 5.7 billion from EUR 4.9 billion last year, mainly driven by the increase in Greece following material investments. The strong investment activity is also reflected in the improvement of the reliability indices of our networks in both Greece and Romania, while smart meters penetration continues its upward trend with further room to grow, especially in Greece. Turning to Slide 17. We can see how the implementation of our strategic initiatives, combined with active engagement have resulted to actual progress in several ESG ratings and scores within 2025. Specifically, our efforts have been recognized by S&P Global, EcoVadis, MSCI, ATHEX ESG and ISS, all of which upgraded PPC's ratings and scores. These improvements reflect tangible progress in several key areas such as environmental management, renewables portfolio expansion, corporate governance, ESG integration and transparent reporting. These advancements underscore our commitment to sustainability, mitigating business risk and fostering long-term value for all stakeholders. Let me now pass it on to Konstantinos for the financial performance analysis. Konstantinos Alexandridis: Thank you, George, and good afternoon to all. Moving next to Slide 19 for an overview of the trends for the main energy-related commodities. To begin with TTF, gas prices in early 2025 were initially strong, supported by reduced Ukrainian transit and cold weather conditions before easing as demand weakened and geopolitical concerns softened. Subsequently, prices declined under the milder weather conditions, strong LNG inflows and lower storage targets from EU with a brief rebound driven by firmer demand and tighter Norwegian supply. Later in the year, gas prices remained broadly stable before falling to their lowest levels towards year-end. Overall, gas prices recorded a moderate year-on-year increase of 5%. Turning to carbon. EUA prices opened the year sharply, but reversed after mid-February, pressured by declining gas prices and uncertainty around U.S. tariffs. Prices later recovered on the back of easing trade tensions and a U.S.-China agreement, although gains driven by geopolitical developments proved short-lived. The market remained relatively balanced for a period before a rally emerged towards September driven by compliance buying with prices peaking towards the end of the year. Overall, carbon prices also recorded a moderate year-on-year increase of 12%. Finally, looking at power prices, they spiked early in 2025, driven by higher TTF and EUAs, easing later in Q1 on the weaker demand and the higher solar performance. Prices rose in Q2, tracking TTF and EUAs, but stayed stable in June, though elevated despite geopolitical tensions, thanks to record renewables output. In the second half of 2025, weather-driven demand and lower renewable output led to a steady rise in prices. Moving now on Slide 20, where we can see the key financial figures for the period, showcasing the strong financial performance recorded in 2025 with increased revenues mainly due to higher power prices and the contribution of Kotsovolos. Adjusted EBITDA reached EUR 2 billion, up by 13% year-on-year, an uplift driven by higher contribution of integrated activities in our two key countries, Greece and Romania. Adjusted net income post minorities stood at EUR 0.45 billion from EUR 0.36 billion in 2024, up by 23% year-on-year. The proposed dividend for 2025 is EUR 0.60 per share from $0.40 per share in 2024, demonstrating our strong commitment towards the increase of distributable profits for our shareholders and in line with our commitment in the latest Capital Markets Day. A more detailed overview of EBITDA and net income evolution will follow later in the presentation. Investments at EUR 2.8 billion, focusing mainly on renewables, flexible generation and distribution. Free cash flow continues to be driven by elevated investment levels in line with our business plan. Net debt at EUR 6.5 billion at the end of December 2025, with net debt-to-EBITDA ratio at 3.2x as anticipated, given the progress in our investment plan. Proceeding to Slide 21 for the revenues evolution of the group, which recorded an 8% increase. The largest part of this increase is driven by energy sales, which are up by approximately EUR 0.5 billion as a result of higher power prices we experienced both in Greece and Romania for the full year. The rest is mainly driven by sales of merchandise coming from the operations of Kotsovolos, which have a full year effect in 2025. These two factors have been able to more than offset the impact of our revenues from volume decline related to market share reduction and a slightly reduced electricity demand in both countries, as George mentioned before. All this resulted to a total revenue of EUR 9.7 billion in 2025, up by EUR 0.7 billion versus 2024. Moving to Slide 22 for the EBITDA performance by business activity. As you can see in the left side of the slide, EBITDA has recorded a 13% increase year-on-year with the integrated business being the key driver for this growth. I will provide more color on this in the coming slides. International contribution at 22%, mostly driven by Romanian operations, which stood at EUR 440 million. Next, on Slide 23, a few words on the evolution of the integrated business. The improvement that has been recorded versus last year has been taking place on the back of improved performance in the retail business and green and energy mix throughout our footprint as we increase renewables capacity. In addition, this improvement has been also supported by the reduction of fixed costs associated with lignite activity as we progress with the phasing out of the relevant units. All these factors have been the basis of our commitments in our Capital Markets Day some months ago to improve our profitability in the integrated business by EUR 0.2 billion year-on-year. Now proceeding to Slide 24 for a view of the distribution activity. With regards to Greece, the demand decrease of 1.3% versus 2024 negatively affected the approved network usage revenues that will be compensated in 2027. In Romania, the Distribution business marked a slight decrease versus full year 2024, but this was driven by seasonal effects. Adjusting for construction works that have already been included in the 2026 allowed revenues, the 2025 performance would be higher than last year. Proceeding to Slide 25 for a deep dive on the EBITDA-to-net income bridge. The improved performance in terms of EBITDA that we've discussed in the previous slides has also been reflected in the bottom line with adjusted net income after minorities standing at EUR 448 million, that is a 23% increase versus last year. In terms of EPS, the year-on-year increase is slightly higher, reaching the 24% given the ongoing share buyback program. Adjustments included in the net income includes special one-off items with the largest being the provision for incentives for volume direct exit schemes that we implemented, the PPAs revaluation as well as the incremental depreciation from the asset revaluation of December 2024. Moving on to Slide 26 for the analysis of the investments. We continue to keep a high level of investments reaching EUR 2.8 billion in 2025 despite the reduction of 9% year-on-year. Importantly, 87% of our investments are directed to our distribution networks, renewables and flexible generation in line with our strategic priorities. Distribution has been the largest component, reflecting our focus on network utilization and resilience in both Greece and Romania. At the same time, we are significantly expanding our renewables footprint along with increased investments in flexible generation to support the stability and monetizing the surplus of generation. Geographically, the majority of investments are concentrated in Greece, accounting for 72%, while Romania represents a growing share of 23%. Overall, our investment program is clearly aligned with the energy transition, strengthening our asset base and supporting long-term earnings visibility. Let's now move on to Slide 27 for the free cash flow analysis of the group. The strong operational performance, combined with the positive working capital resulted to a significantly positive FFO of EUR 1.9 billion. The change in working capital had a positive impact of EUR 161 million over the period, supported mainly by CO2 and our hedging activities. With regards to CO2, we had a positive impact in 2025, which is mainly attributed to timing of payments and the overall working capital management. With regards to our hedging activities, initial margin requirements related to new positions declined, mainly as an effect of lower and less volatile gas prices towards the year-end, while at the same time, prior periods positions continued to wind down. Looking at the trade receivables and excluding state-related entities, we had a positive change in working capital by EUR 70 million, partially offsetting the increase of trade receivables from the state-related entities. We have been working with the state to reduce the overdue amount, and we expect in the first half of this year to have positive results. Finally, within category Other, we had a negative impact of EUR 92 million as a result of last year's overperformance in December '24, where some payments were shifted to 2025. Overall, free cash flow is in line with our estimates, given the significant capital deployment that we are doing throughout Southeast Europe and across technologies. Turning to Slide 28. Let me walk you through our debt profile and liquidity position. Despite the acceleration of our investment program, liquidity remains robust, supported by a well-balanced mix of fixed and floating rate debt. We also maintained strong liquidity headroom with $4.6 billion of undrawn committed credit lines as of year-end 2025. At the same time, ongoing refinancing initiatives and favorable interest rate trends have contributed to a reduction in our average cost of debt, which stood at 3.8% by the end of 2025. Our debt maturity profile remains well spread with no material concentration risks. Over the next 3 years, maturities amount to $2.6 billion, including $500 million related to our sustainability-linked bond maturing in July 2028. In October 2025, we successfully issued a EUR 775 million green bond due in 2030 priced at 4.25% coupon with strong investor demand and 3.4x oversubscription. The proceeds were used to redeem in full the aggregate principal amount of sustainability linked senior notes due in 2026 and support eligible green investments in line with our financing framework. The remaining maturities primarily relate to long-term loans and committed facilities, which we expect to refinance in the normal course of business. Finally, our credit profile remains at BB- with both rating agencies with S&P recently revising the outlook to positive, while Fitch affirmed the stable outlook. Next, on to Slide 29 for the net debt evolution and our leverage position. Net debt and consequently, net leverage increased in 2025 as anticipated, reflecting the acceleration of our investment program in line with our business plan. Net leverage currently stands at 3.2x and is expected to evolve in line with our plan. We remain fully committed to our financial policy, including the 3.5x ceiling we have set. Let me now pass it on to Georgios for his concluding remarks. Georgios Stassis: Thank you. Now moving on Slide 31. Before I conclude my presentation, let me reaffirm our guidance on key figures for this year. Our expected adjusted EBITDA is at EUR 2.4 billion, and we anticipate more than EUR 700 million in terms of adjusted net income after minorities, leading to an EPS of EUR 2.1, demonstrating a 58% increase versus 2025. We are on very good track to achieve these targets for several reasons, as we saw at the right-hand side of the slide. First, we have been experiencing mild weather conditions in the first quarter of 2026 so far, which have led to improved margin in our retail activity. Second, wind conditions have been quite strong from the beginning of 2026, benefiting our assets both in Greece and Romania, which combined with better hydrological conditions in Greece, contribute to a good start of the year. And third, we are at a quite advanced maturity stage for the 1.8 gigawatts of new renewables that we are targeting to conclude in 2026, being already at an approximately 50% readiness. Moreover, we feel very comfortable in delivering our targets for 2026 as well. Once again, we highlight our strong commitment for our dividend policy that is expected to reach EUR 0.80 per share from $0.60 per share in 2025, an increase of 33%. In our concluding slide, Slide 32, let me now wrap up with a few final points. Overall, we are delivering on our strategy with strong execution across all key pillars. Our 2025 performance reflects the benefits of our integrated business model. We continue to deploy capital in a disciplined manner with EUR 2.8 billion invested in renewables, flexible generation and distribution, supporting our future growth. We have made significant progress in our renewables installed capacity, adding 1.7 gigawatts in 2025. And at the same time, we are building strong visibility on our targets going forward, with 86% of the capacity that we target for 2028 being already secured. Our transition away from lignite is progressing as planned with full phaseout expected by end of this year, further improving our environmental footprint. This shift is strengthening the resilience and flexibility of our portfolio, enhancing our position in a challenging and evolving energy landscape. We are very confident in delivering our 2026 targets, and we prepare ourselves to be able to meet our targets beyond this year, aiming at sustainable value creation for our shareholders, our customers and the market in which we operate. Thank you all. And now looking forward to get your feedback and your questions. Operator: The first question is from the line of Di Vito Alessandro with Mediobanca. Alessandro Di Vito: I have three. First question is on the general energy outlook. I wanted to understand which could be the implications for PPC in case the current escalation in Middle East extends for a longer period of time? And on this matter, if you could remind us the sensitivity you have to power prices. The second question is around the political debate to lower power prices in Europe. I wanted some color on your contribution to this debate. And if you see the risk some political intervention, both at national and at European level? Third question is on your procurement strategy. I wanted to understand if the current disruption in LNG supplies could affect the procurement for your CCGT plants or for your gas supply clients? And maybe just the last one, a clarification during the explanation of the guidance, I heard 2026 net income above EUR 700 million. So I wanted to understand whether this is confirmed or not. Georgios Stassis: Okay. Thank you very much for the questions. Now let me start from the general outlook. Of course, we cannot estimate how this will end and when it will end. And nobody is able to do that right now. However, there are -- because we have some experience now and our experiences from 2022, where we had a major energy crisis and impacting very much also our continent. I want to outline some points. First of all, we do not have any physical delivery issues because we are not procuring from that area, from the Strait of Hormuz. While in 2022, you remember when the pipe was interrupted, we had to handle physical delivery problems as well, which was really a big mess. But we are not in this situation. Therefore, and as far as I understand, this is the situation of Asia, in particular, or some other companies, maybe in Europe, but not ourselves. And then, of course, you may understand that then we need to handle the issue of prices. Today, we think that -- I mean, if we take the today news, every day is a new situation, of course, it is at 60 -- around 60, 62, 63 in the gas TTF. Gas is of our interest. So if you remember, 2022, we handled prices of 350. So I hope we will not see these prices, of course. But still, it is -- we have the experience and the management to handle the situation, first point. Second point, we are -- I mean, we are -- we have an overall portfolio that has -- part of it is fixed. Our fixed customers is already fully hedged. So there's no impact in that situation. And of course, one could question if things go really high, how this will pass into the market. I believe that starting from as you know, from 2023, there was a European directive, which defined when Europe will be considered on crisis and has the limit reaching gas prices at 180. So we are far away from that level, thankfully. And I don't think we will be needed right now to handle any situation like that. In any way, however, this, because of our vertical integration is not -- has been proven also in the past that we never had a problem into managing this situation. If even in the scenario of infra marginal caps, it simply means that we will not have, let's say, huge windfall profits. And those will be used by the governments of Europe to be -- to supporting the citizens of Europe. So what I'm trying to say is that point one, right now, we are not in this situation at all. I'm not sure if we will be. And if and if we will go in a very extreme situation, the tools are available to be used also at the European level, have been used in the past, and we proved that we were not affected by that, and we don't believe we'll be affected as well. Now the other thing is that the timing of this crisis is coming in a period of time, which is spring. And this is very important because we just closed winter. And this is a period of time where renewables are boosting very much. We are mostly of low prices. So I think that there is time in front of us before we move to the heart of the summer where we will have another peak or when we will reach the point that the European storage facilities will start to be having the need to be, let's say, filling up. And that would be possibly an issue which will impact 2027. We don't believe we will have a major impact in 2026 also in such a situation right now. So we wait and see how the situation will develop. But I think we are extremely protected as PPC right now, having worked in our overall vertical integration and our own capability to manage our overall customer base. Now going -- to the second part of your question about the discussion that has emerged in Europe about the energy prices, this is a valid point, I believe. It is a concern for everybody. And I believe it is also a valid point for the industry, which is an important parameter. I have the impression that -- I mean, we will know today, tomorrow, how things will develop in the council, but I have the impression that mostly the discussion will focus around an ETS reform for the future. As you may be aware, ETS is supposed to be formed in July, and there is today already taken decisions from the past to remove quantities from the ETS market from the quote that would tighten the market further and would result in a price increase in ETS. I see personally that there is room in the discussion of the European leaders to make this transition smoother and not so steep in the coming years. And I think, and this is the most important thing, that this is exactly how we were forecasting the development to happen even before this discussion becoming relevant. If you look on our slides on the Capital Market Day in November, you will see that the kind of path we have for ETS prices are reasonable because we were assuming from that time that we don't believe that the current situation will be activated in the sense that we don't believe we will see crazy prices of the ETS market. So we have already budgeted with a very smooth pattern from 2026 to 2028, even beyond 2030. And I think the conclusion of the discussions in Europe will more or less go in that direction. And then having said that, there is another element as well, which is very important, which is our region, because we put all this into a perspective, but we need to think of our region as well because every geography is different. In the Southeast European region, the corridor between Italy, Greece, Bulgaria, Romania, Hungary, Poland, up to Ukraine, Moldova, all these kind of countries, Croatia; this is a corridor which is very tight from the capacity point of view. And on top of that, it has very old fleet. So because you have a sensitivity, even in our calculations with a lower EPS from our projections, we don't see the dam changing significantly because the assets that will be activated are quite mature and old fleet and into an area which is having a very old fleet. For all these reasons, I believe that we have been very prudent in managing our assumptions. And I think gradually, we are going in that direction. So we feel that not only for 2026, we are absolutely certain that we will deliver properly, but also for the coming years, we will be in line with our projections. Last, procurement. I didn't quite understood the last part of your question, but I can tell you that we don't feel any procurement issue as a result of the crisis right now in the rate. But if you can elaborate more of what you meant, I will be able to answer. Alessandro Di Vito: Yes. No, I think you already answered. I was asking about your procurement strategy and whether you would be affected by the disruption in the Middle East. But you already said that the fixed portion of supply is secured and you have no procurement from Middle East. The last question was on the net income for 2026, whether it is going to be around EUR 700 million or above EUR 400 million during the presentation, I had above, but I just wanted to make sure about the detail. Georgios Stassis: Okay. Listen, we just closed the year at EUR 450 million net result. I can tell you certainly that we will be in the area of 700. I could even tell you that we're having a good year today. So I would be most probably able to verify a number higher than this. But of course, we have -- we are in an environment of huge volatility. So the only thing I can confirm is the 700 level right now. Operator: The next question is from the line of Nestoras Katsios with Optima Bank. Nestor Katsios: Congratulations for your great set of results. So two questions from my side. The first one has to do with the data centers. Is there any update with your discussions on the data center front? And the second one is about [ Ptolemais ] 5. I understand that you will shut down this year. Are there any final investment decision for the future of [ Ptolemais ], I mean, some gas plant? Georgios Stassis: Okay. Let me start from the last because I think it's the easiest. I mean, for [ Ptolemais ] 5. I think we have already announced that we will convert it to gas, and we are already working in that direction. I think we will see it already in operation in gas from 2028 because we are already working in that direction. We have already secured the equipment we need. And I think we have sufficient time to do this transformation by 2028 early. So this is for [ Ptolemais ]. Now for the data centers, for those of you who are following our company, you may remember that we have announced our intention to develop a data center last April. It's almost a year, not even a year yet. And I told you from that day that I would expect -- I was expecting end of '26 to have some sort of real development. And this is our vision right now. However, we are in discussions with hyperscalers and those discussions are going a little bit better from what I thought. So I mean, we have progress. We have significant progress, but we are not there yet. This is the thing I can say right now. Operator: The next question is from the line of Karidis John with Deutsche Bank. John Karidis: I have four quick ones on just the telco business, please. The first question is, what was the CapEx in FY '25 in millions rather than billions? Secondly, how many customers did you have at the end of 2025? And how many do you have now? Thirdly, during the CMD, I asked you about the timing of the launch for voice services, and you said very soon. Could you please update me on that, hopefully, give me something like a date? And then lastly, a year ago, I asked you whether you were interested in mobile, and you said you were not. Has your view changed there at all? Georgios Stassis: Thank you very much for the questions. I can tell you that we have spent around EUR 200 million until now on this project. We have delivered more or less a network of 1.7 million, but only 1 million is commercially available. First, you create the backbone and then you make the remaining pieces. So very recently, we launched at the end of last summer, the service with a footprint of 500,000, let's say, households passed. And very recently, we opened from 500,000 to 1 million. I can tell you that we are currently connecting around 200 customers per day. This is the current pace we have. So you can calculate. I think we are quite happy with that because in that level, I think this in the coming months because it's too young, not even 6 months that we are working on that. In the current pace, we will probably reach a level of 250,000 in the coming months. And when we will open the remaining 500,000 and so on and so forth, I mean, going gradually as per our plan to 3.5 million; this means that with this trend, we will be reaching a level of around 700, 800 customers, maybe more per day. So we are very happy. We are learning as well from that. As you might have noticed, we are not pushing a lot advertising because we want to have a very good service on our customers. But very shortly, we will start pushing more commercially. So I'm expecting these numbers to pick up. But so far, so good. I mean, we are doing very well. We are very happy, and we will reach the target -- the number of target customers we have in our mind by the end of '28, beginning of '29. About voice, I think we are ready to launch it probably in June, June, July, we will launch voice. About mobile, we are not investing in mobile because our project is a very specific project. That's why we are so relaxed. I mean we are doing this -- we found this opportunity to roll out this fiber project only in Greece. It's not a big project for us versus our total CapEx. And we are in line exactly with the numbers we want to have day by day. So we will go gradually. We are not investing in the mobile. I can verify this 100%. Thank you. John Karidis: I'm sorry, could you please tell me how many customers you had in total at the end of 2025? Georgios Stassis: We have more than 12,000 customers. Operator: The next question is from the line of Walker-Hunt Ella with Citigroup. Ella Walker-Hunt: My first question relates to hedging. So in terms of power price exposure, could you tell us what's your hedge position at the end of the year? So how much in terms of terawatt hours have you sold forward and what duration? And then my second question is about the full-year results. So if you -- if we look at it on a quarterly basis, so the fourth quarter earnings were actually down almost 20% if you compare to the last year. So I was just wondering, what was driving that earnings contraction in the fourth quarter? Georgios Stassis: Okay. The first part -- what was the first part? The hedging, the hedging, we are at a level of more than 40% to 45% right now for the year for everything, all our position, not accounting the fixed customers, of course, that we have 100%, as I told you, on our fleet. Now for the fourth quarter, I mean, we navigated -- I mean, we have a sort of -- every year a sort of seasonality, and we are trying to govern the company also taking into account the market in general. So we chose to support more our customers at the end of the year. And -- but still, we brought our results. So -- but this has happened in many of our years, I mean, in the past years. There is a thin line where you need to keep the pace of growth in a reasonable level. And from quarter-to-quarter, we have and we have had differences like that in the past. This is normal. In the contrary, you will see that if you will compare this quarter, this current quarter when we will announce it because it's going well. With the quarter of last year, you will find exactly the opposite. But it is part of our -- the nature of our business. Operator: The next question is from the line of Pombeiro Mafalda with Goldman Sachs. Congratulations on the results. Mafalda Pombeiro: I only have two left, if possible. The first one would be any indication or guidance on the net debt levels for 2026, if you can share at least the main moving pieces? And the second one is just a clarification. Out of your retail sold volumes, could you please -- I understand that the part that is fixed contract fixed customers. So what percentage is that of the overall sold volumes? Georgios Stassis: Our fixed part is around 20%. And now Konstantinos will take the first one. One second, give us. Konstantinos Alexandridis: Yes. So the way we have set up the business plan that we discussed back in November is asking for additional investments. So we do expect that the more we are progressing, of course, leverage ratio will remain at the area of 3.3x to 3.4x. So that would be at an area in terms of net debt close to EUR 7.5 billion to EUR 7.7 billion. Operator: The next question is from the line of Anna Antonova with JPMorgan. Anna Antonova: Just a few from our side. So first, on the CapEx outlook for this year for 2026. I see that last year, you spent just a little bit lower than you guided below the EUR 3 billion. Is the CapEx for this year still expected around your target, which I think from the end of last year was EUR 3.8 billion? That's the first question. Georgios Stassis: Yes. We -- of course, from last year, the big deliveries of renewables started to arrive in our company. On the other hand, last year, we did our CapEx also with an acquisition. as we have noticed. But the last quarter, we brought 800 megawatts. So it's ramping up. And right now, we are going to deliver 1.8 gigawatt, and it's going fantastic. So we are able to confirm exactly our CapEx for this year. Anna Antonova: The second question is on the outlook for hydropower this year. I remember you commented during the call that in Q1, the weather conditions were quite favorable. So if you could maybe comment where you currently see the upside for hydro generation for this year compared to last year's maybe level, which was, I think, 3.4 terawatt hours. Georgios Stassis: Yes. Finally, we are having a good year on hydro after several years. We had the 3 bad years on hydro levels, and this is coming back this year. So I mean, I cannot predict exactly, but it's going to be for sure, more than last year. Operator: We have a follow-up question from Anna Antonova, JPMorgan. Anna Antonova: Just a quick follow-up question. So with all the events happening this year and higher power prices and kind of regulatory debate in Europe, can you comment if you see any downside to your targets for this year from the current conditions, both on the financials and on especially the lignite phaseout? You mentioned earlier the event of 2022, and I remember that at that time, the lignite decommissioning was a bit delayed due to everything that has been happening. So do you expect kind of any potential risks to the targets for this year? Georgios Stassis: Yes. And what was the lesson in 2022? We kept lignite because why? Not for economic reasons, because of lack of physical deliveries at that time in 2022. And what was the lesson? It was still more expensive than anything else. So we are not intending to keep it back by no means, especially now that we don't have any physical delivery issues. Other than that, I mean, knock wood, this is going very well this year. If it wasn't the Iran conflict, we would be able to be more optimistic, but we stay at this level right now. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Stassis for any closing comments. Thank you. Georgios Stassis: Maybe we have a question. Operator: Yes. We have one more question from Mr. Alderman Richard with BTIG. Richard Alderman: Can you hear me? Georgios Stassis: Yes, please go ahead. Richard Alderman: Just one follow-up question on the hedging there. Just so we don't misunderstand what you're saying about the gas element of the hedging within your retail book, are you essentially hedged for what you see would be your average demand through the rest of the year from your retail book at this point? And then obviously, if there are variations within that and that costs you more, you would pass that through to customers who are not on fixed contracts. I'm just trying to understand... Georgios Stassis: This is indeed -- this is exactly correct what you said. Richard Alderman: Okay. Because there's been some discussion in the market as to whether you had exposure to that, but that's reassuring to hear. Operator: Ladies and gentlemen, there are no further questions now. I will now turn the conference over to Mr. Georgios Stassis for any closing comments. Thank you. Georgios Stassis: I think 2025 has been an important year. because this company proved that it reached a level of significant net result versus the past years. 2026 will be another year like that. Our growth is very important versus last year. And we feel confident we are exactly on target, maybe a little bit more. We will see how the year will develop. But so far, so good. So we are excited with the development of the company. We are already working very much for 2027, 2028. I believe 2026 is secured. And I think the coming years will be very interesting. Thank you.
Operator: Ladies and gentlemen, welcome to the Drägerwerk Full Year 2025 Earnings Call. I'm Moritz, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stefan Drager, CEO. Please go ahead, sir. Stefan Dräger: Very good afternoon, and thank you for joining our conference call on our financial results for the fiscal year 2025. I have with me today Gert-Hartwig Lescow, CFO, as well as Tom Fischler and Nikolaus Hammerschmidt, both Investor Relations. We would like to take you through the results with the presentation that we made available on our web page this morning. Following the presentation, we will open the floor to your question. Let's get started on Page 5 with the business highlights. In 2025, we continued our successful course and generated the highest net sales in our company's history. Both divisions and all regions contributed to this. At around EUR 3.5 billion, net sales were slightly above our last forecast and around EUR 25 million above the level of the exceptionally strong coronavirus year 2020. Unlike during the pandemic, this is a new record that we achieved entirely without a special economic situation. Thanks to the operating momentum, our earnings before interest and taxes also developed very well. EBIT rose by more than 20% to around EUR 233 million despite difficult conditions. The EBIT margin increased by roughly 1 percentage point to 6.7%, also exceeding our last forecast. This shows that we are making progress in improving our profitability. Order intake also developed very well as with net sales, both divisions contributed to growth. This underlines the continuing demand for our Technology for Life and gives us a positive outlook for the future. Positive is also the key word with regard to our cash flow development, which Gert-Hartwig Lescow will explain later. We have also performed well on the stock market. Last year, our common shares rose by more than 1/3, while our preferred shares even increased by almost half and were included in the TecDAX. This means that we are once again one of the 30 largest listed technology companies in Germany. This listing increases our visibility on the capital market and could make us even more attractive to investors. In mid-January, we published our preliminary business figures for 2025 and our forecast for 2026. Our shares then rose significantly again and reached their highest level since July 2017. This shows that investor confidence in Dräger is higher than it has been for a long time. Our first goal remains to increase profitability such that our EBIT margin is the same as the last digit of the calendar year as we have more goals that are strategic to steer the company. We are strengthening our innovative power and expanding our competence in the systems business and further expanding our services and recurring business. In our Medical division, we are particularly driving forward the marketing of network solutions. To this end, we launched a large marketing campaign in 2025. Our goal is to strengthen Dräger's position as the leading provider of connected solutions in the hospital sector. That said, we are also launching a big wave of SDC-based solutions. That is service oriented device connectivity, the new standard for interoperability of medical devices according to IEEE 11073. It creates new functionalities and therefore, added value. With our new Silent Care Package, for example, we contribute to solving one of the biggest problems in the ICU by reducing the alarm noises. In the Safety division, connectivity is becoming more important, too. Our fire ground monitoring system, for example, helped us to win the Paris Fire Department as a new customer in 2025. Speaking of firefighting, we also received the important approval for our PSS AirBoss SCBA, in North America, reaching a milestone for strengthening our position in this key market. In addition to our core business, we are consistently investing in new business opportunities in areas such as clean tech and defense. Last year, our defense business grew significantly. We are well on track to triple our defense sales to more than EUR 300 million by 2028. I will talk about the other highlights on the past fiscal year, the dividend and the outlook at the end of our presentation. I would first like to explain in more detail on Page 6, what challenges we had to overcome last year. So Page 6, headwind compensated. Ladies and gentlemen, 2025 was a very successful year, particularly in light of the difficult condition. In 2024, we have benefited from positive one-off effects from the sale of a nonstrategic business activity that was the smoke and fire alarm systems in the Netherlands and some real estate loss in the United States. This has boosted our EBIT by around EUR 22 million. In the past year, we missed these effects and also faced strong headwinds from tariffs and currency. The tariffs imposed by the U.S. government had a negative impact of roughly EUR 26 million on our EBIT. Around EUR 21 million out of this was attributable to the Medical division and around EUR 5 million to the Safety division. In addition, EBIT was impacted by currency effects initiated from the White House and propagated over the world totaling to around EUR 45 million. Thereof, EUR 28 million were attributable to the Medical division and around EUR 16 million to the Safety division. So overall, we had to compensate opposing effects of more than EUR 90 million. The fact that we even overcompensated these effects is a clear proof of our resilience. We were, therefore, able to improve our profitability even under difficult conditions. Let's take a look at the margin development of recent years on Page 7. Following the significant loss in '22, we have shifted our focus from net sales growth to earnings growth. We have thus set ourselves the goal of increasing our EBIT margin by an average of 1 percentage point per year from 2024. The focus on profitability in accordance with our corporate objective #1 has worked well so far. After the strong turnaround in '23, we were able to improve our EBIT margin by roughly 1 percentage point in both '24 and '25. While positive one-off effects, in particular, contributed to the improvement in '24, the improvement in '25 came mainly from the operating business. This is a development that we very much welcome. And we have our strategic, our corporate objective 2 is innovation and our corporate objective 3 is systems business and recurring business. Now I would like to hand over to Gert-Hartwig to explain our business development further. I will then turn back with the dividend and the outlook. Gert-Hartwig? Gert-Hartwing Lescow: Thank you, Stefan. I would also like to extend a warm welcome to everyone joining this conference call for our results for the fiscal year 2025. Please turn to Page 6 for a view on the Dräger Group. As usual, I will be stating currency-adjusted figures, and I will be referring to growth rates. As Stefan mentioned, demand for our Technology for Life remains strong. Overall, orders increased by 7.7% to around EUR 3.6 billion. In Q4, orders rose by 5.6%. Both divisions contributed to growth in both reporting periods. Net sales climbed by 5.3% in the full year and by 8.7% in the fourth quarter. This was due to good development in both divisions and all regions. Like for orders, the Americas region and the EMEA region were the biggest growth drivers. At around EUR 3.5 billion, net sales -- reached 2025, the highest level in the company's history. In addition to the high order intake, this was mainly due to the strong year-end business. Benefiting from the record net sales in December and the margin improvement in the Medical division, our group's gross margin rose slightly by 0.3 percentage points to 45.2% in the full year. Functional expenses rose by 4.6% in 2025 after they had been positively impacted by one-off effects of around EUR 32 million in the prior year. These effects included the net sale of a nonstrategic business in the Netherlands and the sale of real estate in Spain and the U.S. Excluding these one-off effects, the increase in functional expenses in 2025 was only 2.5%. This increase is attributable to higher personnel expenses, which went up due to collective wage increases in Germany and higher number of employees, among other things. Despite the missing positive one-off effects in '24 and the negative currency and tariff effect in '25, our EBIT increased by more than 20% to around EUR 233 million. Consequently, our EBIT margin rose from 5.8% to 6.7%. The mentioned headwinds were overcompensated by the high order intake, the strong net sales momentum and the improved gross margin. In addition, the strong year-end business contributed to the resilient development. Our EBIT improved by around 37% in the fourth quarter, while the EBIT margin declined to 13.7% from 10.6% in that period. The full year EBIT development is in line with our medium-term goal to increase the EBIT margin by 1 percentage point per annum on average. Guided 2026 EBIT margin includes an additional margin improvement on the higher end of the guidance range. The result of the strong increase in earnings, our DVA in 2025 improved by roughly EUR 36 million to around EUR 9 million. Let us now take a closer look at the development of the 2 divisions, starting with the Medical division on Page 10. Following a slight increase in the prior year, our order intake in the Medical division rose by roughly 9% in 2025. This was primarily due to the high demand for our anesthesia machines, ventilator services and consumables. In addition, we received a major multiyear order for hospital infrastructure systems for Mexico, which significantly supported the above-average growth in the Americas region. Demand also developed positively in the other regions, particularly EMEA. In the fourth quarter, order intake rose by 2.2% as the decline in APAC and EMEA was overcompensated by significant growth in Americas and a high demand in Germany. Driven by growth in all regions, net sales in the Medical division increased by 7.4% in 2025 after decline in the prior year. In Q4, net sales rose by 13%, thanks to considerable growth in EMEA, Americas and Germany. Net sales in the APAC region were around 3% below the prior year level. Our gross margin in the division rose by 0.6 percentage points to 43.6%. The negative currency and tariff effects were overcompensated by the favorable product and country mix. In Q4, on the other hand, the gross margin decreased by 0.6 percentage points due to higher inventory write-downs. Functional expenses climbed by 5.7% in 2025, having been positively impacted in the prior year by one-off effects of around EUR 15 million from the sale of real estate and the adjustment of the product. Without these effects, the increase in 2025 amounted to only 3.7% with higher personnel expenses being the main cause. The EBIT of the Medical division doubled to EUR 57 million after a decline in the prior year. Consequently, the EBIT margin rose from 1.5% to 2.9%. In Q4, the EBIT increased significantly to by around 40% to roughly EUR 80 million, thanks to the strong year-end business. As a result of the strong increase in earnings, our DVA in the Medical division improved considerably in 2025 from around minus EUR 50 million to minus EUR 23 million. I will now turn to our Safety division, which delivered another good performance. We are now on Page 11. Our Safety business continues to grow. Order intake rose by more than 6% in 2025. This was primarily due to the high demand for engineered solutions and gas detection devices. In addition, respiratory and personal protection products as well as alcohol and drug testing devices contributed. The EMEA and Americas regions recorded a significant increase in orders, while the APAC region also developed positively. In Germany, demand declined after we had received a major order for NBC protection filters in the prior year. However, industrial demand in Germany is also generally restrained at present. Net sales increased by 2.6% in the fiscal year, driven by positive development in the EMEA and APAC regions. In Germany, net sales were roughly on par with the prior year, while the Americas recorded a decline. In Q4, net sales rose by just under 3% as the decline in the Americas and Germany was overcompensated by the growth in EMEA and APAC. Our gross margin in the division remained stable at 47.3% in 2025 with the negative currency and tariff effects being offset by the more favorable product mix and price adjustments. In Q4, the gross margin slightly decreased by 0.2 percentage points. Functional expenses went up by roughly 3%, having been positively impacted from the prior year by one-off effects of around EUR 17 million from the sale of a nonstrategic business area and from the sale of real estate. Excluding these effects, functional expenses fell by 0.4%. The capitalization of development costs led to a reduction in functional expenses in the reporting year. The EBIT of the Safety division increased in 2025 by 6.4% to around EUR 176 million, while the EBIT margin rose from 11.3% to 11.9%. In Q4, the EBIT climbed by around 33% to roughly EUR 77 million as a result of the strong year-end business. The EBIT margin also improved significantly by 4 percentage points to 16.5%. Our DVA in Safety division increased by around EUR 9 million to around EUR 113 million, coming from around EUR 104 million in the prior year. All in all, a very positive development in our Safety business. Let's move on to some key ratios on Page 12. Thanks to the strong growth in earnings, our cash flow from operating activities improved significantly by around EUR 71 million to around EUR 238 million in 2025. At the same time, outflow from investing activities rose from just under EUR 55 million to around EUR 98 million. Among other things, this was due to a supplier loan granted and the purchase of further shares in an investment. Moreover, the sale of our fire alarm systems business in the Netherlands and the sale of the property in the U.S. have led to a considerable inflow in 2024. All in all, our free cash flow amounted to around EUR 140 million, which is a considerable improvement of around EUR 60 million compared to the prior year. Since free cash flow was on par with net profit, the cash conversion rate amounted to 100%, the level we also expect for the current year. As a result of the decrease in free cash flow, cash and cash equivalents rose significantly by about EUR 22 million to EUR 282 million. This led to a considerable decline in net financial debt by around 25% to EUR 123 million. That said, the ratio of net financial debt to EBITDA declined from 0.5 to 0.3, keeping our leverage at a very healthy level. With regard to net financial debt, we expect the figure to increase in the current year. A large distribution center is currently being built in Lübeck where we intend to consolidate various logistics warehouses in the future. Dräger will rent the property on a long-term basis, which under IFRS results in a higher lease liability. This, together with higher investments is in turn a key driver for the higher expected net debt in 2026 with an increase of around 4% to EUR 1.7 million capital employed -- EUR 1.7 billion capital employed rose much lower than our EBIT. Therefore, our 12 months return on capital employed went up from 12.1% to 14.2%. Net working capital was around 2% higher than in the prior year at around EUR 755 million. Due to the good business development, in particular, our equity ratio stood at around 52% as of December 31, coming from roughly 50% at the end of the prior year. Let's take a closer look at our EPS on Page 13. With the increase in earnings since 2022 that Stefan Drager mentioned at the beginning of his presentation, our EPS has also improved continuously over the past years, coming from around minus EUR 3.50 per share in 2022, earnings per common share climbed to more than EUR 7.40 in 2025. At the same time, earnings per preferred share rose from around minus EUR 3.40 to roughly EUR 7.50 per share. Again, this clearly underlines the progress we are making in improving our profitability. Now I hand back to Stefan Drager for the outlook, starting with our dividend proposal on Page 14. Stefan Dräger: Thank you, Gert-Hartwig. Well, in line with our dividend policy, we intend to distribute around 30% of our net profit to our shareholders. Since our net profit has increased significantly, we will also increase the dividend significantly again for the third time in a row since 2023. We intend to propose a dividend of EUR 2.21 per common share and EUR 2.27 per preferred share for our Annual Shareholders Meeting in May. Our equity ratio is clearly over 50%. Provided that the equity situation remains as positive as it is now, we will continue to distribute at least 30% of our net profit in the coming years. That said, let's move on to our outlook for 2026 on Page 15. Ladies and gentlemen, with good demand, record sales and significantly improved earnings, 2025 was a very successful year. This is even more apparent when you consider the headwind from a difficult economic environment. Our operating business is showing good momentum. Both order intake and order backlog are at a high level. We, therefore, want to increase net sales again in the current fiscal year. In 2026, we expect an increase in net sales from 2% to 6% of net of currency effects at an EBIT margin between 5% and 7.5%. Both divisions are likely to contribute to net sales growth and a positive EBIT. We will continue to counter the U.S. import tariffs by raising prices. In the past fiscal year, we developed a package of measures to compensate for some of the customs duties. We expect this compensation to be more effective during the course of the 2026 fiscal year than before. For '26, we expect the level of custom duties at group level to be similar to the prior year overall. The burns in the Medical division are likely to be significantly higher than in the Safety division where we have more possibilities to concentrate and forward with improved prices. The corporate planning, therefore, the net sales and EBIT forecast for '26 are based on the assumption that custom duties will remain at the level of the reporting date for the annual financial statements. However, when we recall the Greenland discussion over a certain weekend in this spring, this is not guaranteed and it motivates us to further pursue increased profitability to be able to live through the challenges and uncertainties. When it comes to the war in Iran, we do not see any material impact on our business so far. We are present in the Middle East with our own Dräger people in Saudi Arabia and Dubai. Our local employees are doing well so far. In general, the region remains a growth market for us. Risks from the war depend heavily on its duration and regional extent and its impact on the global economy. We are able to mitigate this through our high level of diversification. We are very broadly positioned in terms of markets, products, geographies, business mechanics and customers. This strengthens our resilience and gives us a positive outlook to the future. With this, I would like to end the presentation and hand over to the operator to open the floor for your questions. Operator: [Operator Instructions] And the first question comes from Oliver Reinberg from Kepler Cheuvreux. Oliver Reinberg: Firstly, just on the Middle East situation as you just confirmed that you don't expect any kind of larger impact. Can you just confirm that there's also not any kind of expected impact from the developments basically in terms of supply chains and inflation? That would be question number one. Secondly, can you just provide an update on the ventilation market? We have seen quite some changes basically with Mindray -- I am sorry, with Medtronic and Bayer actually exiting the market. And I think Mindray is now entering in the U.S. market. I mean it's also a high base. Do you continue to expect actually significant growth in this market segment? Any update on the developments here would be helpful? And then thirdly, as you called out corporate objective #3 to increase the kind of recurring business at Dräger, can you just provide some kind of flavor where do you stand these days percentage-wise? And any kind of targets that you can share in that regard? Stefan Dräger: Well, on the Middle East, yes, I confirm that we do not see a material impact of the war on our business at the moment in the foreseeable future. Including the supply chain, there is no -- not to our knowledge, a significant impact on any specific component of production that we can see so far. We have taken some measures in the past to work with our suppliers more carefully with whom we work and have some reasonable stocking levels for our inventory for components. So we, of course, cannot compensate for all seasonal effects, and we will remain interdependent from the world and the supply chain. However, I confirm there is no impact that we can see from the current conflict in the Middle East. What I do see though is that the energy prices will remain worldwide on the current level and not return to the level they were like 6 weeks ago, including the electricity gas and fuel at the gas station. However, our sensitivity to energy in real is quite limited. So that has no material effect on our outlook and prognosis. Your second question, Mr. Reinberg, on the ventilation. So yes, there are 2 major players have exited the market. And, yes, Mindray is there. We, on the other hand, we do not see a significant effect or even, I would say, threat from Mindray having a more comprehensive offer in the U.S. Where we see more and we see they are more active is in Africa in remote regions where they have also political -- Chinese government has political influence in financing some of the African governments or very obvious direct influence and control on government and purchasing decisions. There, we are out. On the more developed markets I won't say it is a significant new development or a threat. On a global scale, yes, it is a good copy of Dräger with similar offerings and a similar portfolio on both the geographical scale and portfolio. So it is a very viable market companion, not only on ventilation, but in many modalities to watch geographically mostly in Africa. Your question on our corporate objective #3, which is developing the business model further from transaction-based device selling towards interoperability and systems business competence and actually doing, including recurring businesses, services based on contracts instead of transactions. Yes, we can say that last year, we crossed the EUR 1 billion threshold in services and some countries in Europe, our sales, the majority already is in services more than in devices, including our home market in Germany, but some other European countries as well, services sales is greater than devices. Oliver Reinberg: And can you share any kind of targets like where you want to go with this kind of offering? Stefan Dräger: Yes, the goal is to grow this further as it is a good way to defend our business over a business that is purely on cost like some of the business mentioned from Mindray in Africa where the decision is not alone, they have a larger share of mind, they are more deeply entrenched with the customer in offering the service. It is -- we have a better understanding of the customer needs and it's more challenging to replace the assets on a pure device that is -- the trend is that it may become a commodity. Operator: And the next question comes from Harald Hof from mwb research. Harald Hof: As we talked about the Iran conflict already, just 2 questions left from my side. The first one is talking about the tariffs. The situation has changed significantly. So what does this mean for Dräger? And will you apply for reimbursements? And the second question is how has the defense activities developed so far in 2026. Gert-Hartwing Lescow: Happy to. So firstly, there is a couple of developments firstly, the court decided that the tariffs that the Trump administration has put in place is not legal. And we have, in fact, also filed for a reimbursement. As of today, it is open, how fast the courts will decide and when or if we will in fact be paid out. And secondly... Stefan Dräger: It's not part of the plan. Gert-Hartwing Lescow: It's not part of the plan at this point. So if there was a significant payment that would be upside, so to speak and the signals have been mixed, how quickly that can happen. I think you've read the news, to courts as far as I remember, have decided they are not allowed to delay it, but so far, nothing has happened. So there is a chance that we can recollect some of our tariffs. Having said that, given that the previous tariffs have been declared illegal, the Trump administration has put in place another set of tariffs which are a little bit lower by 5 percentage points, but there are in fact for full year instead just 2/3 of the year. And if that is -- when those run out after 150 days, there are other potential tariffs to be enacted the one that may run. The so-called Section 122 tariffs may be replaced by Section 301 and Section 222 and we would expect that, that will actually take place in the second half of the year. So when it comes to effective tariff burden, we still assume that they will remain in place. And as we have seen earlier this year, and as Stefan Drager pointed out, sometimes, there is even a discussion about additional Greenland tariffs or not. But so far, we expect actual tariff burn to be of the same magnitude as last year. Stefan Dräger: Okay. And your other question on the defense business. Well, in general, we benefit in both divisions. The medical also benefits if there is the need, for instance, to additionally serve 1,500 wounded soldiers that come per day from the Eastern front. They're currently preparing and planning for that needs capacity in the German hospital system or the field hospitals or hospital war ships. But that is regular medical equipment. But we say we would not directly classify that as defense business. What we do call such is part of the safety portfolio that can be specific products for personal protection like the classical gas mask for a soldier or gas detection equipment, filters for military vehicles to protect those who protect us in our freedom to operate our democracy. And last year, around the same time of the year, we predicted that would actually more than triple until the year 2028 to approximately EUR 300 million. Well, already last year, we saw a good development, and we crossed the EUR 100 million threshold with these elements of the portfolio. And we confirm that we think in 2028, it can be EUR 300 million because there are quite some opportunities out there. Harald Hof: Just a quick follow-up. When talking about tariff reimbursement, do you communicate volume? How much is the figure that could be reimbursed? Stefan Dräger: We communicated that we paid the EUR 26 million. Gert-Hartwing Lescow: That's actually the net effect. So to the degree that it will be the net effect, it will be in that order. The gross effect is in turn higher runs around EUR 30 million, and that would be the impact if we get full reimbursement without the need to pass on anything to customers in that context. And as I said, at this point, we view that as perhaps not speculative, but we have not received a clear indication that we should account for that in the near future. But we'll keep you posted, obviously, when that situation changes. Operator: And the next question comes from Pierre-Yves Gauthier from AlphaValue. Pierre-Yves Gauthier: My question relates to your capital spending. You had quite a big surge in '25. Is that likely to last? Or is it some sort of a bump that we will not see in '26, '27? Gert-Hartwing Lescow: The part of the higher investment are due to a loan, which actually has to be accounted for to one of our suppliers, which have to be accounted for under IFRS as an investment. I'm not sure whether that is -- that actually was one of the reasons for the bump. And that we do not expect in '26 nor later. We do, however, as I pointed out in the presentation, have to account for an investment for a rental agreement. Again, that's due to the statement. So all in, we expect an increase in the investment volume from around EUR 103 million to EUR 110 million to EUR 130 million. And the substantial portion is, in fact, the long-term rental agreement, which is as these things are not cash effective for the full amount in the period of '26, but over the course of the rental agreement. Operator: And we do have a follow-up question from Oliver Reinberg from Kepler Cheuvreux. Oliver Reinberg: Three, if I may. One on China. Can you just provide an update what you see there on the ground? I mean, it's not a huge market, but any kind of pickup would be helpful to just get the latest dynamics here. Secondly, I think Q1 nearly comes to an end. Any kind of light you can share how you started into the year? And then last question, just on currencies. I mean, if -- I think in the last call, we guided for quite a significant impact. If currencies stay where they currently are, can you just give us any kind of flavor what kind of isolated margin impact you have? Stefan Dräger: I can -- Stefan speaking. I can pick the start in '26, where we started with a good order backlog after the order intake at the fourth quarter was also very good. And so with this, we had a good start in '26 and the order intake and sales at this moment is according to our expectations and planning. So it's on the way to deliver on our forecast and prognosis. Gert-Hartwing Lescow: And with regards to the FX development, in addition to the headwind that we had in '25, we overall see a further deterioration, but not by another similar amount. Our currency headwind when we look at net sales is around 1 percentage point. And when it comes to the EBIT margin, it's between 30 to 60 basis points. Stefan Dräger: I think Mr. Reinberg, this is important to figure in when you compare our actual '25 result, in particular, the EBIT margin and the prognosis for '26 because the prognosis for '26 and the whole planning for '26 is based on less favorable exchange rates. So if these develop and they would be the same as last year's actual exchange rates, then the outcome, of course, would be better than the current forecast and prognosis. But it's -- from our perspective, not safe to assume that it would be the same. So we have our best guess included into the planning. And that is the major reason if you wonder why our forecast does not show a stronger improvement because our goal is to improve our profitability by 1 percentage point per year. So on average, that is unchanged. Oliver Reinberg: China? Stefan Dräger: Yes, China, we didn't touch China. There is no relevant news on that. That is relatively stable and continues to be on a much lower level than it used to. Operator: [Operator Instructions] So it looks like there are no further questions. So I would like to turn the conference back over to Stefan Drager for any closing remarks. Stefan Dräger: We thank you very much for all of you being with us today during our annual results conference for '25. Thank you for your questions and the interaction. We look forward to meeting you again either online or preferably at some point in time in the not-too-distant future in person. Have a pleasant afternoon and evening. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Good day, and thank you for standing by. Welcome to the Transgene 2025 Annual Results and Prospective for 2026 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Lucie Larguier. Please go ahead. Lucie Larguier: Well, thank you, Nadia, and hello, everyone. So I'm Lucie, Chief Financial Officer at Transgene, and I'm with Dr. Alessandro Riva, our Chairman and CEO today. We will review the progress over 2025 and answer any questions you may have. Before I turn the call over to Alessandro, I'd like to remind everyone that today's discussion contains forward-looking statements which are subject to multiple risks and uncertainties. [Operator Instructions] With this, I now turn the call over to Alessandro. Alessandro Riva: Thanks, Lucie, and good morning, good evening, good afternoon, everyone. So 2025 has been a year of meaningful clinical progress for Transgene. As you all know, we advanced our individualized neoantigen therapeutic vaccine, INTV, TG4050, supported by compelling clinical and translational data in head and neck cancer that reinforce our confidence in its potential to prevent relapse in patients. I would say that there were 3 crucial moments this year that confirm our conviction that the myvac platform can bring benefit to patients. First of all, our Phase I data being presented already at ASCO in the same section as 2 Phase III trials in head and neck cancer. Second, the immunogenicity data that we present at the SITC conference in November in the United States of America; and third, the completion of EUR 105 million fundraising that provides financial visibility until the first quarter 2028 to support our priority programs. With these 3 major achievement, Transgene is on track to continue building the scientific and operational capability to execute our strategy. Now on Slide 5. TG4050, the first INTV based on our myvac platform is currently being evaluated in international randomized Phase I/II clinical trial in the adjuvant treatment of HPV-negative head and neck squamous cell carcinoma, a setting with significant unmet medical need as more than 30% of patients relapse after 3 years despite the recent advances in the innovation with checkpoint inhibitors. At ASCO, we presented Phase I data showing that all patients with HPV-negative cancer who received TG4050 after surgery and the standard chemo radiotherapy remained disease-free after at least 2 years of follow-up. Importantly, the trial met all endpoints for both safety and feasibility. This 100% disease-free survival rate compared with 3 relapses observed in the control arm provides the first clinical evidence supporting TG4050 potential to prevent cancer recurrence in early head and neck cancer patients. In November, at the Society for Immunotherapy of Cancer Annual Meeting, we presented a compelling translational data that further strengthened the clinical proof of principle for TG4050. In particular, the data showed that TG4050 induced neoantigen-specific T cell responses in 73% of evaluable patients. Importantly, these responses were durable, persisting 24 months after the start of treatment and showed cytotoxic and effector phenotype markers up to 1 year after the end of treatment. Together, these findings demonstrated that TG4050 can generate potent and long-lasting immune responses capable of targeting and eliminating tumor cells contributing to the prevention of relapses. In January 2026, a comprehensive analysis of the Phase I clinical and translational data was published on the preprint platform of [ Med Archive ] and is currently under review by peer-review journal. I'm on Slide 6 now. Let me now turn on the ongoing Phase II part of the Phase I/II trial. The randomized Phase II part of the trial is in the same setting as the Phase I. All patients are close to being randomized, and this will be a key operational milestone for the program. The primary endpoint on the Phase I/II study is 2-year disease-free survival that is very well recognized by the health authorities being an important and critical milestone, and we expect this efficacy readout once all patients reached 2 years of follow-up from randomization. In second half 2026, we also expect to share the first immunogenicity data from patients from the Phase II cohort of the Phase I/II study. For the Phase I part of the study, we plan to report 3-year follow-up data on disease-free survival in second, third quarter 2026, followed by 4-year follow-up in second, third quarter 2027. Beyond head and neck cancer, we are working to broaden the spectrum of opportunity for myvac across additional solid tumor types where significant unmet medical needs remain. The platform, as you know, is designed to generate individualized neoantigen therapeutic vaccine tailored to each patient's tumor mutational profile. As mentioned, we are currently in the start-up phase of the new Phase I trial in a second not yet disclosed indication in early treatment setting, and our goal is to initiate this trial in 2026. We are actively optimizing our manufacturing process, improving turnaround time and preparing for increased production volumes. Importantly, part of the proceed is dedicated to advancing industrial and regulatory readiness, including the alignment with the FDA and the EMEA requirements as we move toward late-stage development. Now turning on Slide 7, BT-001, which is our intratumor administered oncolytic virus developed with our partner, BioInvent. At ESMO 2025, we presented a poster data evaluating BT-001 in combination with pembrolizumab in patients with advanced refractory tumors. This data shows positive abscopal and sustained antitumor activity in both injected and non-injected lesions. The immune-mediated tumor shrinkage observed is consistent with our mechanistic hypothesis. BT-001 in combination with pembrolizumab can convert cold tumors into immunologically active hot tumors. This data supports further development of BT-001 and you should be hearing from us about this development in the next couple of months. Now I would like to turn over to Lucie for the financial update. Lucie? Lucie Larguier: Thank you, Alessandro. So if we look at our financial position and what happened in 2025, we can definitely say that the most significant financial event of the year was the successful fundraising in December 2025 and through which we raised approximately EUR 105 million. And together with the conversion of EUR 39 million debt with TSGH into equity, Transgene strengthened its balance sheet, reduced its financial liabilities. The company is now virtually debt-free, and we are now ready to move and fund it until early 2028. If we look at our cash burn over last year, it was approximately EUR 38.2 million. So it reflects the investment in our Phase II trial, the fact that we manufacture and enroll patients into this Phase II in head and neck cancer. So I think that -- and I'm convinced that with the budget that we have, the money that we have, we have funded to deliver on key milestones, which include the development of 4050, the myvac platform, the planned Phase I trial in the second indication and also the work on manufacturing and process optimization, preparing late-stage development. So Alessandro, if you want to comment on outlook. Alessandro Riva: Yes. Thank you, Lucie. As we look ahead, our priorities as you know, are very clear. We remain focused on TG4050, our first INTV vaccine from the myvac platform. We intent being to continue to establish Transgene as a key player in the INTV field that is growing across the community, and it attracts a lot of interest. With the progress we have made so far and with the finance sources that Lucie just mentioned, we believe that we have what do we need to execute on the next phase of development. So overall, when we look at the next 24 months that are covered by our recent fundraising, we see a clear path of execution, multiple meaningful milestones and the financial visibility, as mentioned to support them throughout early 2028. Before opening the Q&A, let me also mention that we'll be participating in investor access events in Paris on April 9 and to the Life Science Conference in Amsterdam on April 16. And we would, of course, be very pleased to meet with those of you who may be attending. With that, the team and I will be happy to take your questions. Operator, please up to you. Operator: [Operator Instructions] And now we're going to take our first question. And it comes from the line of Chiara Montironi from Van Lanschot Kempen. Chiara Montironi: I actually have a couple. So the first one, how should we be looking at the 3 years DFS data that are approaching in Q2, Q3, given that the primary endpoint and the benchmark are 2 years? What do you expect to see here? And what will be a good result? And the second question is on the immunogenicity Phase II data in H2 '26? At which follow-up will be those data, we'll be able to see the induction of the immune response also to understand that these immune responses are durable? Alessandro Riva: Thank you, Chiara. So first question is on 3-year disease-free survival data. First of all, we plan to send an abstract for the ESMO conference in Q3 2026. And what we should expect, of course, we don't know because we have not analyzed the data. I mean the base case scenario is, of course, that we continue to see that the 2 curves stay separated throughout the additional follow-up. So that's the base case scenario. The best case scenario, which is which is not good for patients that have been randomized to the observation is to serve more relapses in the arm that did not receive the TG4050. And therefore, this scenario will show a larger magnitude of the separation of 2 curves. And that's what -- and of course, there is a worst-case scenario that is that we start to observe relapses in TG4050. So -- but in the base case scenario, in best case scenario, this is going to be quite good for the program and of course, for patients. Then in terms of the immunogenicity data of the Phase II study, we expect to start having the first set of data by the end of 2026. And of course, we will start to analyze the patients that were randomized first, right? So therefore, we expect that those patients have at least 1 year kind of follow-up with the potential to show durability over 1 year in the Phase II study. And of course, this will be important to start also to strengthen the data that we have presented earlier in 2025 with the Phase I. Hopefully, this is clear. Operator: And the question comes line of Dominic Rose from Intron Health. Dominic Rose: It's Dominic here. I've got a couple as well. My first question is, how do you think the GMP manufacturing reconfiguration will change the ability to get a deal done towards the end of the year? So how impactful is that versus getting new data? And my second question is what, if anything, do you hope to learn this year from the Moderna data readouts? Alessandro Riva: Okay. So the first question is around the GMP manufacturing. So as you know, it is important to continue to optimize manufacturing for an individualized antigen therapeutic company like Transgene. So we plan to have full GMP manufacturing by 2027, Q3 2027. And of course, having a full GMP manufacturing is an important value creation for myvac program and, of course, we strengthened the [indiscernible] from pharmaceutical companies for the simple reason that having a GMP manufacturing allow us or the potential partner to move forward to a potential pivotal trial. So that's the reason why we are investing significantly on the GMP. Again, it is critical to succeed in the individualized neoantigen therapeutic vaccine. And then the second question was around Moderna data. I mean, I guess you're referring to the Phase II that they've already published, but also the potential Phase III in adjuvant setting melanoma. So first of all, I mean, the long-term follow-up data set that they have published just recently, I would say, confirm what they've already published a few years ago in terms of the efficacy of their INTV in adjuvant setting melanoma. And of course, they clearly say that they will disclose the Phase III data always in adjuvant melanoma by the end of the year, beginning of 2027. And of course, for the INTV community, the Phase III data will be quite important because if the data is positive, the data will continue to derisk the INTV approach. And of course, if the data is negative, then as you know, Transgene has a different technology with a different vector. And we think that we will have to wait our data set in head and neck, specifically the randomized Phase II study before making any conclusion because, again, our technology is different from Moderna one. But of course, for patients for the field, we hope that the melanoma data, Phase III is going to be positive, right? So -- but of course, we have to wait. So -- and from a bio and tech point of view, right? So as you know, they are doing some changes in their leadership and they have recently also announced that they plan to close their Phase II trial in the [indiscernible] cancer because the competitive landscape has changed significantly. And therefore, what they said, of course, they do some reprioritization and now they are staying focused on pancreatic cancer and colon cancer, and we don't know the data, the studies are still ongoing. And again, of course, we hope for all it will be there for all the studies that are in the INTV field in early setting because, again, all the data points will help to continue to derisk the field and, of course, for biotech companies to continue to accelerate the development. Lucie Larguier: So we have received a few questions on the chat. So I'll take and read [indiscernible] question, [indiscernible] from Biomed Impact. So the question is regarding the new indication, TG4070 program as shown on the website, could you give us more information, solid tumors as far as I understand, will the population of patients be homogenic or will you address several types of solid tumors, single or multiple injections? Alessandro Riva: So this is going to be one indication. It's not a basket protocol. It's going to be randomized Phase I study in a new indication that, I would say, very similar to what we did in head and neck, same type of methodology, but in another indication, where the medical need is quite significant. And the indication will be very different from head and neck from a biological standpoint and also in terms of the potential of being immunogenic tumor. And I cannot disclose exactly what we are going to plan. So we are in the kind of waiting for the regulatory feedback on the final protocol. And as soon as we have, of course, the approval from the agencies, we're going to disclose the indication and the time lines associated to. We're very confident that this study can start this year. Lucie Larguier: So we had a question from [ Jamie Land ], but I think with [indiscernible] from all investment, I think we've answered it given the current landscape. I also have a question from Martial Descoutures, ODDO BHF, which is, as you expand myvac platform, thanks to the additional tumor types, how do you see the long-term value? Could we think that you will look for partners in the future? Or could we think that you will continue alone for the long term? On TG4050, what level of efficacy could you consider as clinically relevant in the Phase II? Alessandro Riva: So let's start from the last question perhaps. So everything that is similar to what we have observed in the randomized Phase I makes a lot of sense for patients. And you know what we have disclosed and the disease-free survival curve. So having a flat curve without any relapses by itself is very important for early setting head and neck cancer patients. So we hope that we are going -- as I said also answering the question from Chiara, we hope to see the same kind of shape of the curve, the same type of separation and of course, the same durability of the plateau that we are observing in the Phase I study. So in terms of the long-term strategy for Transgene related to myvac, so I would say that, first of all, our priority is to continue to create value for patients. So -- and of course, by doing that to stay very open on potential opportunities in terms of having a kind of constructive dialogue with the scientific community with the pharmaceutical companies. And we think that, of course, as we generate more data in terms of Phase II, in terms of optimization of the manufacturing, in terms of showing that we are able to do a second indication with a manufacturing process that is even better than what we have used in the Phase I and the Phase II study. So all this kind of value creation activities and catalysts will help significantly to attract the interest of pharmaceutical companies. So the objective that we have is ultimately to bring the organization to a kind of starting block for launching a potential pivotal trial. And we hope that if we demonstrate that in the next 24 months, we can generate interest from potential partners and working them together to launch a potential Phase III trial. So value creation first dialogue in parallel with the industry and third potential collaboration to continue to accelerate our program. Lucie Larguier: Okay. We have a quick few follow-up questions from [indiscernible] from [ All Invest ]. So any update on the media conference where you plan to report Phase I data, particularly the 3-year survival. Should we assume it's ASCO? Should we expect Phase II patient randomization to be completed during Q2 2026? And finally, how should we think about the timing for initiating a Phase I trial in a new indication this year? Alessandro Riva: So I mean the 3 years survival data for the Phase I study of TG4050 will be potentially that's our plan presented at ESMO. And of course, this requires that ESMO accept our abstract. So we plan to submit it and then we'll keep you posted whether this is accepted and ultimately disclosed and presented at the ESMO meeting. So that's your first question. So the second question related to the randomized Phase II trial. So I mean, the randomization will -- I mean, will be completed certainly by Q2, right? So that's our plan, right? So -- and of course, we will obviously sign an announcement as soon as we have this milestone completed, but we are kind of optimistic that really we are close to the final recruitment. And then the third question, there was another one. Lucie Larguier: How should we think about the timing for initiating a Phase I trial? Alessandro Riva: Yes. As we mentioned, it's going to be in 2026. As soon as we have the formal approval from the health authorities, we're going to move forward. Lucie Larguier: And I think that we have at least -- I don't have additional questions, a few wins. Thank you very much, everyone, for your questions. Alessandro Riva: Thank you for the questions. So just to close, I mean we think that 2025 was a year of strong progress for Transgene. As I mentioned, we continue our journey to continue to establish Transgene as a key player in this field of individualized neoantigen therapeutic vaccine that can be potentially transformative for patients and can, as you have seen, can go beyond one single indication. Looking ahead, we are confident in our strategy in the transformative potential of the myvac platform. And with the financial visibility until early 2028 and a clear path to clinical readouts, so we are very well positioned to deliver meaningful value for patients and shareholders alike. We are grateful for your, of course, continued support and looking forward to keep you updated on our progress. With this, I would like to conclude today's call. Have a great rest of the day and talk to you soon. Operator, please? Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good day, and welcome to the Noah Holdings Limited Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Dorian Chiu . Please go ahead. Dorian Chiu: Thank you, Rocco, and good morning, and welcome to Noah Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me on the call today are Ms. [ Nora Wang ] Co-Founder and Chair Lady; Mr. Zander Yin, the Co-Founder, Director and CEO; and Mr. Grant Pan, the CFO. Mr. Yin will begin with an overview of our recent business highlights and strategic developments, followed by Mr. Pan, who will review our financial and operational results. After management's prepared remarks, we will open the call for questions. Before we begin, please note that today's discussion will contain forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially from those expressed in such statements. Potential risks and uncertainties include but are not limited to those described in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Nora undertakes no obligation to update any forward-looking statements, except as required by law. Without further ado, I would now turn the call over to Mr. Yin. Please go ahead. Thank you. Zhe Yin: [Interpreted] Good day to everyone, and thank you for joining us today. 2026 marks the 21st year since Noah was established. In a market environment defined by continuous evolution and restructuring, our strategic direction has never been clearer. We remain firmly focused on serving global Chinese high net worth and ultra-high net worth clients operating through licensed local entities to provide compliance, long-term wealth management services across multiple jurisdictions. More importantly, we are completing a critical transformation evolving from a wealth management institution primarily driven by product sales into a comprehensive platform, centered on asset allocation, global structuring and AI systems. In 2025, this transformation began to yield tangible operating results. This is not a really temporary business adjustment, but the fundamental reconstruction of our operating model. For Noah 2025 represents an important milestone. Looking at our full year results [indiscernible] quality of our profitability is improving at a faster pace than the stabilization of our revenue structure. For the full year, net revenues were RMB 2.6 billion, broadly flat year-over-year. However, operating profit was RMB 777 million, up 22.5% year-over-year with operating margin improving to 29.8% and non-GAAP net income increasing 11.2% year-over-year to RMB 612 million. Excluding the impact of nonoperating items, adjusted non-GAAP net income was approximately RMB 753 million. What matters most at this stage is not the absolute scale of our profitability but the improving underlying structure. This profit growth was not driven by one-off factors, but by optimized cost structure, enhanced operating efficiency and the ongoing shift in revenue mix toward investment-related businesses. This reflects how our profitability is shifting from cyclical volatility towards structural stability. This is a quantitative change, not simply quantitative growth. From a business perspective, while our domestic and overseas business segments are moving at different paces, they are pulling in the same direction. Investment capabilities are becoming the primary growth engine. Net revenues from our overseas wealth management business were RMB 550 million in 2025 and down 18.8% year-over-year, mainly due to a decline in insurance product distribution revenue. However, overseas AUA grew to USD 9.5 billion, up 8.6% year-over-year. Notably, transaction value of U.S. dollar-denominated private secondary products tripled year-over-year to USD 950 million. The number of overseas registered clients approached 20,000, up 13.2% year-over-year, of which active clients exceeded 6,200, up 12.4% year-over-year. Net revenues from Olive, the overseas asset management business RMB 550 million for the full year, up 26.3% year-over-year, mainly driven by higher management fees resulting from AUM growth. Overseas AUM reached USD 6.1 billion, up nearly 4% year-over-year, accounting for 30% of total AUM. Net revenues from Glory Family Heritage, our integrated services business were RMB 180 million for the full year, up 28.8% year-over-year. Despite a highly competitive market environment, we achieved breakthroughs in sales through new channels. Domestically, sustained recovery in the Asia market helped improve our performance. RMB-denominated private secondary products maintained growth momentum from the second quarter onwards, which helped partially offset the impact of declining management fees from maturing RMB-denominated private equity products. Noah Upright, our domestic public securities business recorded net revenues of RMB 570 million in 2025, up 15.9% year-over-year with transaction value for RMB-denominated private secondary products reaching RMB 11.2 billion, up 107.2% year-over-year. Gopher, our domestic asset management business recorded net revenues of RMB 690 million for the full year down 10.3% year-over-year, mainly due to lower management fees resulting from maturing RMB-denominated private equity products. In the primary market, Gopher completed RMB 5 billion of private equity asset exits and distributions in 2025. Glory, our domestic insurance business recorded net revenues of RMB 19 million for the full year, down 56.5% year-over-year. The decline in revenue was expected and aligned with our plans and ongoing strategic transformation. Overall, our performance clearly shows a business shifting toward investment and asset allocation capabilities. It is this long-term vision that has systematically rebuilt our overall structure over the past few years. What we have accomplished is not simply business expansion, but a fundamental reconstruction of our operating model. Today, we are building a global wealth management operational system composed of 3 core platforms, all operating under a unified management framework. ARK serves as the client onboarding and execution platform, with licenses in Hong Kong, Singapore and the United States, it operates compliantly within local regulatory framework. ARK is responsible for account management, trade execution, product distribution and AI wealth advisory services, providing clients globally with a consistent, seamless and compliant experience. Olive serves as our investment and asset management platform across Hong Kong, the United States, Singapore, Japan and Canada. It has the capabilities to source global assets, establish and manage funds across multiple jurisdictions and execute long-term asset allocation strategies. It is a key foundational piece for our long-term value creation and revenue stability. Glory serves as our asset structuring and risk management platform covering major markets, including China, Hong Kong, Singapore and the United States. It offers insurance, trust and identity planning services that deliver risk isolation and asset protection through structuring solutions and supports the long-term transfer of family wealth. Supporting these 3 core platform is our cross-jurisdiction compliance architecture anchored by our 4 major booking centers. Shanghai serves as a domestic client onboarding hub for RMB asset allocation, Noah Upright fund distribution and Gopher asset management. Hong Kong functions as the cross-border connector for securities and insurance, serving as the bridge between China and global markets. Singapore is our center for overseas asset allocation and family structuring and our primary pilot regions for AI wealth management. The United States serves as a key hub for BPC and capital markets activity. In particular, our investment capabilities in the technology sector are an important contributor to future revenue growth and innovation. I want to emphasize that all booking centers are independently operated by locally licensed entities and conduct business within their respective regulatory framework, cross-regional collaboration is primarily limited to research and information support with no direct cross-jurisdiction business activities. This strict compliance boundary is the institutional foundation for our steady growth. The [indiscernible] more visible in our operating result. So headcount declined by 11% year-over-year, while revenue remained stable, reflecting improving operational efficiencies. Over the long term, AI brings much more an improved operational efficiency, it is also reconstructing how we operate by embedding AI into key areas such as client engagement, content generation and operational processes, we have established [indiscernible] collaborative operational-driven model in certain regions. This reflects our transition away from headcount expansion to systems that drive both scale and service quality. Looking ahead to 2026, we will remain prudent, but highly focused on our clear strategic direction, while revenue may still fluctuate due to structural adjustments, the proportion of investment-related income is expected to rise as profit margins remain stable or improving gradually. Furthermore, our AI capabilities will evolve beyond system efficiency gains and scale into broader operational validation. We are still in the midst of our transformation, but the logic behind our long-term operational model is stronger than ever. At its core, this transformation is not about changing product form or expanding services. It's about fundamentally reconstructing what drives our growth. Historically, our industry has relied heavily on the individual capabilities of relationship managers. Today, we are building a human machine collaborative operational-driven model centered on asset allocation, where AI empowered relationship managers and our global platforms amplifying their capabilities. 2025 marks the starting point of this model, where it will gradually reflect in our operating results. The transformation is ongoing, but our strategic direction is firmly set. We will continue to execute this long-term strategy prudently and compliantly. Thank you. I will now hand the time over to CFO, Pan, to review our financial performance in more detail. Qing Pan: Thank you, Zander. And good morning, everyone, for the comprehensive strategic overview and good day to everyone, who joined us today. I would like to focus on 2 key financial messages. First 2025 delivered strong operating profit growth and structural margin expansion, driven by a clear shift in our revenue mix. Investment-related income increased significantly during the year, while we deliberately reduced our reliance on insurance-related revenue. This reflects our continued transition toward a more investment-led business model, with improving earnings quality and great margin resilience. Second, the Board has approved our dividend proposal, including a special dividend, bringing total payout to 100% of full year non-GAAP net income for the third consecutive year. This reinforces the consistency and visibility of our shareholder return policy. Together, these developments underscore our transition towards a more investment-driven, globally diversified and resilient operating model. For the full year 2025, net revenue was RMB 2.6 billion, broadly stable year-over-year. Operating profit increased to RMB 777 million, representing growth of 22.5%. Operating margin expanded to 29.8%, compared with 24.4% in the prior year. Non-GAAP net income reached RMB 612 million, up 11.2% year-over-year. This improvement was primarily driven by structural cost optimization and enhanced operating efficiency rather than short-term factors. In the fourth quarter, revenue was RMB 733 million, up 12.5% year-over-year. Operating profit reached RMB 258 million, representing a significant increase of 87.3% and operating margin expanded further to 35.2%. This reflects strong operating leverage as performance-based income starting to materialize, supported by a more scalable and disciplined operating structure. During the year, we continued to optimize our revenue structure. Investment products commissions increased by 79.7% year-over-year and performance-based income rose by 78%. At the same time, overseas revenue contribution increased to 49% of total net revenue. This shift towards investment-driven and globally diversified revenue streams has enhanced earnings quality and supported structural margin expansion. To provide a clearer view of our core performances, I would like to address 2 nonoperational items that affected our reported fourth quarter GAAP results. First, under income from equity in affiliates, we recorded a loss of approximately RMB 120 million. This was primarily driven by mark-to-market accounting adjustments related to share price volatility of a specific listed investment. It's important to emphasize that this represents accounting reflection of market movements and does not impact our core wealth management operations. Second, regarding the legacy Camsing credit fund arrangements, several cases reached procedural milestones this quarter as certain clients opted for arbitration. In line with our prudent financial policy, we recognize contingent expenses of approximately RMB 50 million. Total provisions now stand at RMB 505 million, representing about 63% of the unsettled principal. Based on current benchmarks and the progress of these cases, we believe the existing provision level is appropriate and covers a substantial portion of the potential exposure. Based on the information currently available, we do not anticipate significant additional provisions. If we exclude these 2 nonoperational items, adjusted full year non-GAAP net income would have been approximately RMB 753 million, which we believe more accurately reflect our underlying operational efficiencies. In terms of balance sheet, as of December 31, 2025, cash and short-term investments totaled RMB 5.0 billion. The asset liability ratio stood at 15% and the company carries 0, no interest-bearing debt. Our current ratio was 4.5x. This debt-free structure provides strong financial flexibility and reinforces the resilience of balance sheet. From a financial perspective, our AI strategy is centered on productivity enhancement rather than heavy capital expenditure. We are already seeing measurable results in our cost structure. In 2025, total headcount decreased by 11% year-over-year when net revenue remained stable at RMB 2.6 billion. This indicates a meaningful increase in output per capita. AI-driven tools now support a substantial portion of client engagement, automated reporting and routine workflow tasks that previously required a lot of manual intervention. In our view, AI functions as structural efficiency multiplier. It enables us to scale global operations while maintaining disciplined cost control and consistent service quality. As of year-end, shareholders' equity stood at about RMB 9.9 billion. At our current market capitalization, the company is trading at roughly 0.57x book value with operating return on equity close to 8%. When market valuation may fluctuate, our focus remains on building long-term intrinsic value through disciplined execution and continued global expansion. Our strong cash position and operating cash flow provide both confidence and flexibility to deliver attractive and sustainable shareholder returns across market cycles. Driven by our solid performance and healthy liquidity position, the Board has approved a total dividend of RMB 612 million, equal to 100% of 2025 non-GAAP net income. This consists of 50% regular dividend and a 50% special dividend. Subject to shareholder approval at the 2026 AGM, this will mark our third consecutive year of full payout. At current market prices, the implied dividend yield is approximately 11%, including RMB 50 million in share repurchase completed in 2025, total cash return yield reachs approximately 12%. This payout is fully supported by our core operations and strong balance sheet. It represents approximately about 80% operating profit and is covered multiple times by RMB 5.0 billion in cash and short-term investments. In short, we're rewarding shareholders for their trust while maintaining a fortress balance sheet that supports our continued global growth. In summary, revenue remained resilient throughout the year as we executed a deliberate shift towards more investment-driven income stream. At the same time, operating profit delivered strong double-digit growth, supported by structural margin expansion and continued improvements in efficiency. Our AI initiatives are now translating into tangible productivity gains, strengthening our operating leverage and scalability. In our industry-leading capital return policy highlighted by 100% payout and the introduction of special dividends also reflects both operational strength and confidence in the sustainability of our model. So with these foundations firmly in place, Noah has emerged leaner, more efficient and structurally stronger. We remain fully committed to disciplined execution and the creation of sustainable long-term shareholder value. Thank you. And we will now open the floor for questions. Operator: [Operator Instructions] Today's first question comes from Helen Li at UBS. Heqing Li: [Interpreted] I have 2 questions. The first question is on private credit risk. How much in third-party private credit product has Noah distributed today? Have you seen any client redemption in this area? How do you assess the overall risk profile of this product? One area of concern in the private credit market has been potential disruptions from AI given that a meaningful portion of the underlying portfolio companies are software firms. Noah maintained the investment team in Silicon Valley [indiscernible] how much direct investment or co-investment does Noah currently have in the private credit space. What percentage of the underlying assets are software companies and what percentage of those could potentially be vulnerable to AI-driven disruptions and how do you view the risk in this segment? My second question is on transaction value and onetime commissions. In the fourth quarter, onetime commission declined sharply year-on-year. Looking more closely at transaction value, both domestic and overseas insurance product sales weakened significantly, how do you see the run rate trend heading into '26? Amidst the recent capital market pullback, how has client sentiment towards investment products evolved? Are clients adopting the risk of [indiscernible] and reducing their allocation to investment products and finally, what's the current [indiscernible] in terms of the investment strategy for the remainder of this [indiscernible]. Zhe Yin: [Foreign Language] Zhe Yin: [Interpreted] Let me do the translation here. First of all, we must emphasize that the company doesn't run any or only own any asset that is related to the product that Helen just mentioned. So what we've been doing at Silicon Valley is mainly invested or partner with some key major name that's their PE product or in some VC funds. And that's why we don't see a much impact of our business because when we review the AUA here, those assets are only representing a low single-digit amount of our AUA. The company has been -- has a concern on the related asset class at a very early stage, that's why we have been advising our clients to have a proper position in a very early stage. And regarding the second question on our commission. So because we must emphasize that being in the wealth management business, we are not a single product sales driven business, but we've been trying to provide a safe and structural services for our clients. So yes, we do see the drop in insurance sales that we also believe that because a lot of our existing clients, they have already had enough coverage from insurance products. And that's why when we've been reviewing our business under Glory, what we've been emphasizing that we are providing a global solution to our clients, but not just selling single insurance products. And regarding the investment incentive among our clients, we don't see any drop in demand. We understand that there's risk in the market. However, we actually see clients, still have a very high interest in investing the wealth, particularly in AI-related products. So we will still keep an eye on that and do the right advice to the client. Jingbo Wang: [Foreign Language] Jingbo Wang: [Interpreted] Thank you, Chair Lady. So what we wanted to emphasize that is that Noah -- the company has established for many years, and we have substantial experience in handling different types of economic cycles. So for the recent situation, we were talking about this PE risk [indiscernible] alternative investment product related to social media assets, we can use an example from [Technical Difficulty] product. We look at it as -- I mean, under all the normal criteria is the return should be 5%, now it's over 93%, which is we have seen this situation in China, in Mainland China before, where -- that's why we've been taking early position to advise our clients. Depends on the risk appetite, whether they would prefer to have more midterm risk appetite? Or they are more risk reserve, now that we've been taking advice in an earlier stage. So since the beginning of this month, we've been -- we are advising our RMs to talk to different clients, depends on their asset allocation, and also their risk appetite. And we believe that our clients' experience is still a very prudent situation, and we don't see any [indiscernible] at the moment. And as we mentioned about our experiences within the Mainland market, we also one of our advantage or strength is that we know Chinese high net worth and these families charateristic and what they are vulnerable to and how they would like to treat their investment portfolio. And that's why we've been strictly choosing or strictly been allocating which PE we should go to. And that's why from the very beginning, the company has been providing rather more suitable to what our clients need when selling these type of products. And regarding your second question about our sales and insurance products, I think we do admit that in the past, the company is a more product-driven selling company, which when the investment product is very welcoming all the insurance product is very welcoming, then it becomes the key driver of the company's growth. However, what we want to emphasize is today, we have formed our global 3-layer systems, as what CEO mentioned in his speech, that we have all this in Glory. We are forming this platform, the ecosystem, being a wealth management company that we are providing total solutions. So now it's not about what to sell, but about how to help our clients to do the wealth management. So we are now providing plan. For example, if they have enough protection from insurance product, then what we may do is more about, could be the identity planning, could be providing trust services. So it's about wealth management being as a whole and with the support of AI, we firmly believe that we now have a very firm structure and is more enabled to perform better being a wealth management company, which -- that's why a simple answer is hard to just direct answer to say whether insurance product will be a lead or not. It is not the focus anymore. Operator: Our next question today comes from Calvin Leon with Citi. Calvin Leon: [Interpreted] This is Calvin from Citi. My first question is about AI. Can management share our strategy and investment on AI going forward? And how would this be reflected in Noah's operating or financial metrics? And my second question is on shareholder return. Noah has maintained a high payout ratio in 2025. And looking ahead, what is the plan and considerations on payout ratio and share buyback? Zhe Yin: [Foreign Language] Zhe Yin: [Interpreted] Let me do a translation here. So we must emphasize that we embrace AI not because this is propaganda, that is the trend currently. But it's really about how it's been able to enhance the efficiency of the company. So in the past, with our analysts when they review our business model, they may use a method to count how many RMs we hire and then just do a multiple and believe that, that is a growth engine. However, under the AI enhanced system. We believe that the -- right now, it's not about how many people we hire, take Singapore offices, for example, we've been adopting this AI method for 9 months now. What we see is our human resources have dropped, but at the same time, AUM has increased by 3x in the past 9 months. It's about efficiency. It's about quality that we've been able to deliver to our clients. And apart from that, with the AI in mind, we may also able to further develop our business by reaching to the EAM on the multifamily office business so that we've been able to provide a system to work with this independent third-party channel, just like what we've done with -- under Glory, we've hired different commission-based broker to do the insurance business since the second quarter last year. And to answer your question, maybe currently, it's not about if we've been able to use a financial indicator to show the efficiency or really quantitative return from using AI. However, we believe that the one key factor, you can look at is how many clients we've been able to cover. The company has a record of over [indiscernible] client on our record. We may not be able to cover all of them in the past. But with the help of AI, that has enhanced our efficiency. We believe that this is a very good opportunity that we've been able to talk to all our potential clients -- or who should be our clients on our list again. And -- but we must emphasize, the company is still very cautious about client's privacy. So when doing investment planning suggestions, we would be rather more prudent because we don't want to have any clients and privacy issues been a concern to the company. So at the moment, we will say it's more about efficiency, but I would say the company with [indiscernible] internally all the clients -- all our employees can use and also the AI RM, that is the translator for CEO just now, that providing -- already providing service to internally and externally to clients that we have already seen the efficiency that AI has been bringing to the company. And what we've been now promoting is a program called RM100, which -- what would -- about this program is that, we asked our RM to handpick around 100 clients, they would like us to serve intensively. And for the rest of the clients supposingly on their book, then they have to hand it out to our AI wealth management department, which the core belief behind this is that we hope that through the support of AI, we can enhance quality and which the RMs when they have handpicked their client, they can better serve his own clientele. And that ultimately is about the income can be increased and ultimately, that drives our profits in the future. So -- and to your question about buyback and dividend and shareholder return, because we have confidence in driving our future growth. And also, we know the financial industry very well and we also know how to best allocate our resources. And that's why the company believes that we have a very high confidence in continuing to return our -- or to reward our shareholders. Qing Pan: I just want to add up to the information that we actually have, since the repurchase program, we have repurchased about 4.3% of the total shares outstanding. And obviously, we have been very disciplined in terms of execution of dividend policy. I believe that with adding this year's dividend to the accumulated dividend out, the number is already crossed the RMB 2 billion threshold. So that's actually a very impressive return. I guess not just in Chinese ADR, but probably on many of the listed companies. So we are actually giving out about $1.32 per ADS this year. So that's something, as Chair Lady just mentioned, that we're pretty confident that we'll be able to generate the same level of cash flow and continue to reward our shareholders. Operator: And our next question comes from Peter Zhang with JPMorgan. Peter Zhang: [Interpreted] Thanks for giving me the opportunity to ask questions. This is Peter Zhang from JPMorgan. I have 2 questions. First is, we noticed that the fourth quarter revenue was mainly supported by the strong performance fee we wish to understand what's the drivers behind? And can this revenue segment to be sustainable into 2026. Secondly, given which management can help to describe what's the quarter-to-date operating trend for Noah, including client activity, client investment behavior, wealth management sales -- product sales volume as well as revenue trend. In addition, the market has been quite volatile in first quarter, we wish to understand whether this has any implication on your equity affiliate income items. Zhe Yin: [Foreign Language] Zhe Yin: [Interpreted] Let me do a simple translation first. Honestly, it's hard to precisely predict the trend in the future. However, we must emphasize that it's about the structure. We've been focusing in investing within PE in previous years and believe that with this structure, we've been promoting investment products, this should bring carry to the company in the future for long-term growth. And for your second question regarding equity in affiliates, yes, we do still see some pressure during Q1. However, we must emphasize that this is only a nonoperational impact. So it shouldn't be really affecting the cash flow or our operation. And for Q1 operation, if Pan would like to... Qing Pan: Sure. I just want to add a little bit more on the carry. I think Peter particularly mentioned about the Q4 carry income, 2/3 of the carry actually came from an exit from U.S. dollar-denominated funds in Silicon Valley. And the rest actually came from the domestic products, from the RMB private hedge fund. So I guess that's a pretty balanced return. But obviously, as Zander just mentioned, it's quite difficult to forecast a particular timing of carry, but we are seeing that the AUM accumulated rather good opportunities for continuous return performance fees, hopefully. And yes, I think for the first quarter, obviously, you cannot share too much information about the first quarter actual operations. But we're seeing, I guess, at least the stabilization of client sentiment toward investments, and two is, obviously in terms of the tension, I guess, especially Mid East, people are a little bit more risk-averse, and they tend to actually put items or investments in more liquidity position and a more diversified portfolio. And that's exactly our point of view that we'll try to market to our client diversify across asset classes and also regions. Operator: And our next question comes from [ Yumin Tang ] with CICC. Yumin Tang: [Interpreted] My first question is that we noticed a meaningful expansion [Technical Difficulty] operating margins. Could management provide some color on what the notable increase in our operating margin and moving forward, how do you view our capacity to maintain effective cost structure and my second question, what were the primary drivers behind the significant widening of investment losses from equity in affiliates in the fourth quarter? Qing Pan: So yes, I want to just give a little highlight on the operational margin. Obviously, one is as a result of continuing optimization in terms of cost of, obviously, human resources related in terms of salary and bonuses, especially in mid-back office streamlining, as we just discussed the utilization of AI as well as the continuing streamlining processes. So as a result of the reduction of headcounts, the total actual cost related to staffing decreased about 10% with the help of obviously, carrier income, we're seeing a pretty healthy margin. And 30% is actually the operational margin we always try to aim for. So that will continue to be reflected in our strategy in 2026. And also in terms of your question on the affiliated equity performance. We're obviously seeing a lot of pressure in the fourth quarter, but hopefully, it will be able to stabilize in the first quarter. Operator: Thank you. That concludes our question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks. Dorian Chiu: Thank you. And thank you everyone for joining us today. And if you have further questions about the company, please feel free to reach out to the IR team here and have a good day, everyone. Operator: Thank you. That concludes today's conference call, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.
Operator: Welcome to ACCESS Newswire Inc.'s fourth quarter and year ended 2025 earnings conference call. Charlie Torenzio: My name is Charlie Torenzio, and I lead product in our PR Optimizer team here at ACCESS Newswire Inc. I joined in 2019 from the Newswire.com business. I have led the PR Optimizer team along with marketing, brand, and product strategy, and I am fortunate that many of the talented people I worked alongside then are still building with us today. Their passion and commitment have been a driving force behind everything we have accomplished. From day one, the ACCESS Newswire Inc. team welcomed us as partners, and bringing our teams together has made us a stronger, more innovative company. This past year has been transformational, from our rebrand to the product advancements we have brought to market, and I can tell you we are just getting started. Our focus is clear: give the world’s largest brands the tools they need to lead in public relations storytelling and investor relations communications. And we are building that future right now. Before we begin, I would like to remind everyone that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships, and any other statements that may be construed as predictions of future performance or events are forward-looking statements. These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such statements. We will also discuss certain non-GAAP financial measures which are provided for informational purposes and should be considered in addition to, not as a substitute for, GAAP results. With that said, I will turn the call over to our Founder and Chief Executive Officer, Brian Balbirnie, and our Chief Financial Officer, Steve Knerr. Brian Balbirnie: Thank you, Charlie. Not only has it been a pleasure getting to know you since the Newswire acquisition, but having you as part of the team in a product leadership capacity has ignited so many things that we wanted to do here for years. For those of you that do not know, along with our development team, Charlie is leading the transformation of our subscription product innovation, putting us in an amazing place not only to compete for wallet share, but also to have a seat at the table in first-to-market innovation. Morning, everyone, and thank you for joining us today to review ACCESS Newswire Inc.'s fourth quarter and full year 2025 results. Steve and I are grateful for your continued engagement and support as we close out what has been a truly transformational year for this company. Our fourth quarter results cap off a year defined by strategic focus, operational improvement, and meaningful progress in building a subscription-first business, delivering consistent year-over-year revenue, meaningful expansion in profitability, and continued operational discipline, all while investing in the platform innovations that position us for an exciting 2026. Revenue for the quarter came in at $5,800,000, up approximately $100,000 sequentially and essentially flat year over year. Adjusted EBITDA increased slightly to $881,000 from $871,000, representing 15% of revenue. Gross margin continued to be strong at 77%, up from 75% in the same quarter of last year. Before I hand it to Steve, I wanted to highlight a few metrics that demonstrate the continued health of our business. Total active customers grew to 12,802, up 4% year over year, from 12,004 in Q3. Average recurring revenue per subscription customer also increased year over year from $10,008.44 to $12,005.34, up 16% year over year, reflecting continued upsell success and platform adoption. Looking at the prior quarter, we saw an 8% increase in ARR sequentially. Steve will now discuss the fourth quarter and year end in 2025 for you. Then I would like to come back on and discuss what we have been up to in Q4 and what we have been doing here in Q1, about our product enhancements and what is in store for our customers into 2026. Steve, I will hand it over to you, sir. Steve Knerr: Thank you, Brian, and good morning, everyone. As Brian mentioned, this has been a transformational year for us. And Q4 was another quarter of generating solid operating margins and cash flow. I will now discuss some of the details which led to these results. Total revenue for Q4 2025 was $5,800,000, a decrease of $27,000 compared to the same period of 2024, making revenue for the full year of 2025 $22,600,000, a decrease of $438,000, or 2%, from $23,100,000 in 2024. Core press release revenue is up approximately 2% from the same quarter of the prior year, and 1% for the full year of 2025 compared to 2024. The increase for the quarter is due to higher volume; however, volume was slightly lower on a full-year basis compared to the prior year. The increase in press release volume was more than offset by a decrease in Pro Plan revenue, webcasting, and IR website revenue. Overall revenue from subscriptions increased to 53% during the quarter, compared to 45% during the same quarter of the prior year. Gross margin percentages improved during the fourth quarter and full year of 2025, increasing to 77% for both periods compared to 75% and 76% for the fourth quarter and full year of 2024, respectively. The increase in gross margin percentage is primarily due to lower headcount due to increased efficiency within our operational teams and systems, partially offset by increased distribution costs as we continue to expand our distribution footprint. Gross margin for Q4 2025 increased $107,000, or 2%, to $4,500,000, and gross margin for the full year decreased $126,000, or 1%, to $17,300,000, primarily due to the decline in revenue for the year. Moving down the income statement to operating loss, we posted an operating loss of $761,000 for Q4 2025, and $1,900,000 for the full year of 2025, compared to operating losses of $14,300,000 and $16,300,000 during the same periods of 2024. The primary reason for the decrease in operating loss is related to an impairment loss of $14,150,000 recorded during 2024 related to reducing the estimated useful life of the Newswire trade name as a result of our rebranding during 2025. Removing impairment losses, total operating expenses increased $446,000, or 10%, during Q4 2025 as compared to the same quarter of the prior year. This increase is primarily the result of the one-time cost associated with the settlement of a contract of approximately $336,000 and an increase in advertising and trade show expenses as we launched PressRelease.com and focused on our new branding. For the full year of 2025, total operating expenses decreased $674,000, or 3%, as compared to 2024, primarily due to a decrease in headcount in our sales and marketing teams earlier in the year as well as lower product and development consulting expenses. Operating expenses for the full year of 2024 also included a benefit to stock compensation expense of $340,000 related to the resignation of an executive officer. During 2025, we recorded an impairment charge of $250,000 related to our right-of-use asset and leasehold improvements due to a sublease we executed in December. Execution of the sublease will save us approximately $80,000 per quarter. As previously noted, in 2024, we recorded an impairment charge of $14,150,000 associated with the Newswire trade name. On a GAAP basis, we reported a loss from continuing operations of $509,000, or $0.13 per diluted share, during Q4 2025, compared to a net loss of $11,000,000, or $2.85 per diluted share, during Q4 2024. For the full year of 2025, net loss from continuing operations was $1,600,000, or $0.40 per diluted share, compared to a net loss of $13,300,000, or $3.47 per diluted share, in 2024. Again, the decrease in loss from continuing operations was primarily a result of the impairment charge recorded during 2024. There is no activity for discontinued operations during 2025 other than adjusting income tax expense related to the sale of the compliance business. During 2024, we recorded income from the compliance business of $750,000, net of taxes, which was approximately $0.19 per diluted share. For the full year of 2025, net income from discontinued operations was almost $6,000,000, or $1.51 per diluted share, compared to $2,500,000, or $0.65 per diluted share, for 2024. Looking to some non-GAAP metrics, Q4 2025 EBITDA was $251,000, or 4% of revenue, compared to $770,000, or 13% of revenue, for Q4 2024. Full year 2025 EBITDA was $1,300,000, or 6% of revenue, compared to $840,000, or 4% of revenue, for 2024. Adjusted EBITDA increased to $881,000, or 15% of revenue, for Q4 2025 compared to $871,000, also 15% of revenue, for the fourth quarter of 2024. For the full year of 2025, adjusted EBITDA increased to $3,200,000, or 14% of revenue, compared to $1,800,000, or 8% of revenue, in 2024. Non-GAAP net income for Q4 2025 was $675,000, or $0.17 per diluted share, compared to $819,000, or $0.21 per diluted share, in Q4 2024. For the full year of 2025, non-GAAP net income increased to $2,200,000, or $0.57 per diluted share, compared to $720,000, or $0.19 per diluted share, during the full year of 2024. Turning our attention to the cash flow statement and balance sheet, we ended the quarter with $3,000,000 of cash on hand. Adjusted free cash flow for Q4 2025 was $467,000 compared to $413,000 for Q4 2024. For the full year of 2025, adjusted free cash flow was $1,300,000 compared to $2,800,000 during 2024. The year-to-date amount for 2025 includes over $2,200,000 paid in taxes, primarily related to the sale of the compliance business, compared to only $342,000 paid during the prior year. Our deferred revenue balance, which is revenue we generally expect to recognize over the subsequent year, increased $522,000, or 11%, to $5,300,000 as of 12/31/2025, compared to $4,700,000 as of 12/31/2024. I will now turn it back over to Brian, who will provide some updates on the business, customers, and subscriptions, and some new product development we have planned for 2026. Brian? Brian Balbirnie: Thanks, Steve. Q4 capped off a year that I believe will define ACCESS Newswire Inc.'s future. We did virtually everything that we said we would do. We transformed the business, redefined the core offerings, and moved the business to majority recurring subscriptions, emerging leaner, more profitable, and a more innovative company. Now it is time to grow. For the full year 2025, as most of you know, we accomplished the following: completed the strategic rebrand to ACCESS Newswire Inc.; divested our legacy compliance business, sharpening our focus; reduced debt by over 83%; reduced OpEx, something we will continue to do into 2026; retooled our entire back-office systems and processes end to end; grew subscription revenue to approximately 53% of total revenue in 2025; increased ARR per subscriber by 16% year over year as we talked about previously; deployed our AI editorial validation internally, saving 5% of editorial time per release; launched our ACCESS EDU and Bateman Study competition; launched a sister brand, PressRelease.com, with single-circuit distribution that began marketing efforts here in Q1. This, coupled with the following updates here in Q1, have us hitting on virtually all cylinders: launching our AI validation that we previously released to our editors in a customer-facing environment now called ACCESS Verified; social monitoring, a key new component of our subscription set that has set forth the path to see ARR increases at the beginning of Q2. This was initially released to thousands of EDU subscribers in 2025. ARR increases of approximately 25% will be seen beginning Q2; Marketplace, the beginning of several partnerships we believe will drive further awareness to our brand with companies like Hootsuite and many others to follow here in the coming quarters; and another one that I am a big fan of is “Kill the Report.” Our first version of this industry-leading news distribution report gives our customers the ability to see real insights into their story by way of peer content comparisons, brand sentiment, engagement potential, LLM citation scores, and recommendations. We have several levels of advancements planned here for release throughout 2026. The takeaways are twofold: customers will get better insight—no BS—reporting, and we will all see engagement and ARR lift, having an incremental add-on to this current customer subscription. There is so much planned we will talk about in the coming months on our Q1 call, all of which are part of our 2026 strategic goals and continued product innovation and brand development as an industry leader. We continue to believe this will move us towards our double-digit growth and further ARR projections. Speaking of subscribers and ARR updates, we ended Q4 2025 with 974 subscribing customers, from 972 at the end of Q3 and 965 from Q4 of last year. We adjusted and corrected our targets to 1,200 subscribers at the end of the year after accounting for the compliance business divestiture. We are not pleased with our churn and where we are today. We saw a slow second half 2025. We sold 90 new customers in Q4 with an average ARR of $12,009.91. So we are seeing ARR strong. We are doing some things to change subscription platforms, pricing, and what we believe will be go-to-market here in the back half of the year. Equally important, our ARR per subscriber to end the year came in at $12,005.34, which represents meaningful value expansion per customer and speaks to the depth of our platform adoption and cross-selling ability. I think this is why it is vital for us to continue to innovate things like social monitoring, Kill the Report, and the Marketplace I just discussed a few minutes ago. At the end of the prior quarter, we were at $11,006.51. This ultimately resulted in 8% sequential ARR growth and 16% year over year, as Steve and I said earlier. We expect subscription counts and the ARR per subscriber to both accelerate in 2026, driven by new product suites launched at the end of the year and into this year, as we continue to focus on our trade-up and trade-in strategies. Additionally, as we monitor the economic landscape here in Q1, we are testing lower subscription commitments to see if scaled user adoption exists and what products resonate best with the market. Having virtually a fixed-cost application and product offering allows us the flexibility to mix and match solutions that find the best fits for new businesses, scale-up brands, and enterprise. We think the first half of the year will tell us enough to understand where we need to optimize as necessary. We look at economic factors in the industry, and we use those economic factors to make decisions on budgets for our customers, and this is why we think there could be an opportunity for a differentiation in our subscription products. New product launches in Q4 and into Q1 2026. To expand on what I said earlier, one of the most exciting chapters in ACCESS Newswire Inc.’s story is now underway. The investments we have made throughout our 2025 year in platform infrastructure, AI, and integrations are now converting into customer-facing products. I want to walk you through what we have launched that I briefly talked about earlier and what is coming here in Q1 and into the rest of the year. Our ACCESS PR subscription platform now has real-time social monitoring. In late Q4, we completed this major upgrade into our ACCESS PR subscription, integrating real-time monitoring and sentiment analysis across more than 30 social media platforms. Customers can now track mentions, measurements, earned media value, and understand brand sentiment impact not only for them, but the competitive core of what they are going to market against, all within the same dashboard they use to distribute their press releases today. This upgrade was launched here in Q1 and has defined ARR lift beginning in Q2 next month as we talked about earlier. Outside of prepared remarks, just to tell you something competitively as you look at this, if we think about the other three newswires, not any one of them, in a single platform, offers not only media pitching, monitoring database, but social all in one system. They tend to allow you to log in to different platforms, and we think that is the significant advantage for us as we go to market fully now after the total addressable opportunities for us. These key capabilities include real-time brand monitoring across 30-plus social media and digital channels; sentiment scoring; automated alerts for brand and campaign activity; earned media value analytics tied directly to press release distribution; and our Kill the Report. Marketplace add-ons include integrating one of the world’s largest social media management platforms, Hootsuite, enabling customers to schedule, publish, analyze content across multiple networks, and distribute with Hootsuite in a matter of seconds, all automated through their ACCESS PR subscriptions. This product directly addresses one of the most requested features from our enterprise and scale-up customers, and we expect this to be a meaningful driver to our ARR expansion and new customer acquisition this year. To further expand on what I call Kill the Report, it is an AI-powered, real-time prompting and alert-based brand activity and content performance engine. It measures your distribution reach. This product is directly in response to long-standing industry frustration, which is misleading distribution metrics that all of the press release service providers provide today and have for 80 years. We believe this is a differentiation that the market has never seen, and ACCESS Newswire Inc. is meaningfully passionate about having this competitive product replacement for a typical distribution report—something that will measure your brand in the future and beyond. It gives you a point-in-time report builder that executes real summaries by one click. It is full data transparency. All metrics surface directly from our customers, eliminating implied, opaque reporting. What this really means is there is no implied “this is your traffic,” there is no implied “this is your total audience.” It is real analysis done at the captured moment of the five days, at the one-week marker of 30 days, and custom reporting if you wish. We made good on our commitment to Kill the Report. This agentic, AI-driven reporting system replaces the outdated static distribution report that I just talked about with a living, real-time intelligence layer for our customers. We are not only planning to make this product optional as an upgrade, but also anticipate several meaningful quarterly updates and advancements to drive further value to our customers. This is going to be done in our platform in real time with our agent builder solution that is a big competitive advantage for us that we will talk about in the coming quarters. Our AI editorial assistant became customer-facing. As many of you know, we have done it internally for a while. This gives our customers the ability to create and draft their story or press release and allow our ACCESS Verified systems to analyze content, analyze compliance, and market data trends to ensure that the press release adheres to all of our distribution partners’ requirements as well as our editorial standards. It provides comments and suggestions to the customer on what they can do to improve, all in real time, or they have the option to bypass. Still, regardless, we will never ever defer human editorial eyes at least twice on every press release. ACCESS Verified gives our customers the ability to scale and rank and understand the sentiment before submission. We think it is going to be a significant driver. To be fair to our customer in the advancement, it also gives us a significant competitive advantage where we then have fixed-cost distribution scale, where we can handle growth without any incremental cost, further boosting our gross margins like we have from 75% to today at the end of the year at 77%. The customer-facing AI editorial assistant offers automated content review for accuracy, tone, and compliance before submission. This provides proprietary, AI-driven recommendations that improve clarity, SEO, and LLM impact, and wire-readiness. Misinformation and disinformation has been big for us for years, and there are also flags that continue our commitment to content integrity, not only for the markets, but for our customers and our brand itself, as well as providing real-time readability scoring with peer benchmarking. We have already four or five versions of this slated for this year of upgrades that customers will continue to get, and we love the feedback from them because it helps drive that product even more for them. Early customers have said this has been exceptional for them. It has saved them significant time, it has cut additional review cycles, improved confidence scoring, and provided better engagement for them. As we continue to see that, look for some white papers coming that will talk about how this is leading the industry rather than following. Something else that we have mentioned in the past very briefly, and you may have seen a lot of it on LinkedIn and social media channels, was PRSSA. The Public Relations Student Society of America every year has something called the Bateman Competition, and this year’s Bateman product company selected was us, ACCESS Newswire Inc. Out of that, we built something quick to market in less than 90 days in Q4 called ACCESS EDU. It was to address the Bateman competitors, which were the several schools we will talk about in a second, but it gave real-life students in the classroom the ability to use our product to not only teach from a professor standpoint, but also arm these seniors with the ability to understand public relations as it sits from a technology, storytelling process, media pitching process, and everything else. The result: we expanded the program to over 2,000 students over 100 universities, many of which were a part of the PRSSA Bateman study I just spoke about. It kicked off here at the beginning of this quarter. These students had full access to our PR platform, including the new social monitoring and AI editorial tools as part of their competition campaigns. The initial service is dual purpose: it gives back to the next generation of communication professionals while creating a pipeline of future ACCESS customers who graduate with hands-on experience on our platform. We view the EDU program as a long-term growth channel and brand-building investment that will compound over time. Early indications have been strong, as we have seen handfuls of schools and their PR agencies enter into our pipeline in the current quarter, as well as closed deals in this first quarter as well that we will talk about next quarter. We look forward to sharing the Bateman winner as we go through judging here in the next couple of weeks, and stay tuned for the press release on what that is going to look like. We are also going to plan to release several upgrades to our EDU program. This is not just about Bateman. This is about institutionalizing ourselves within the education system to be a part of the syllabus for the PR schools. Live classroom training and certifications for graduating students will be had from ACCESS Newswire Inc.’s infrastructure. This will drive future revenues in many ways. One, graduating students will carry their certificates into the workforce and bring ACCESS’s platform with them. Second, our platform is the leading peer tool, gaining university department trust. With that opportunity will come licensing from other departments within the university systems’ educational platforms to use our public relations storytelling platform. For context, there are almost 50 schools, 2,600 students. There were 350 faculty members and teachers, and PR professionals totaling another 128 that are associated with the schools and this agency relationship that have all been using our tools for the better part of the last four months. The potential value here for us in moving all schools into our ARR model, as well as thousands of students as they move into their careers, gives us the potential to be their PR solution of choice through the certification program we just talked about. Although significant brand was built from Q4 and early into Q1, we feel strongly that this EDU program is a long-term investment, as we just said, where we will begin to see revenue contributing mid-2026. Lastly, PressRelease.com, which we talked about on our last call briefly, has an entirely new concept. We expect to see the brand continue to gain traction beyond the small contributions it had in Q4. We saw about 100 new customers and about $40,000 in revenue for about a four- or five-week period. Half of those customers came back to repurchase, which is a good indicator for us. Going into this year, we expect the brand and its personality—the Press Release Parrot—will come to life as not only the first single-circuit press release platform available to purchase right online, but our technology will also allow us to do this and be agile enough to transition as the most predominant wire service available today. We have a competitive advantage to scale up this new business. When maturity and need arises, our ACCESS main brand will be there to convert these customers into subscriptions and full ARR. Today, PressRelease.com is our feeder for new customers that want to start with just one press release. If I move along to trends in 2026 and outlook, the combination of Q4 financial performance and our new product momentum gives us real confidence heading into 2026. We entered the year with revenue growth, expanding gross margins, and an ARR base that is growing in both volume and value per customer. Albeit some of these metrics are not as high as we would all like, we are building significant confidence within our organization and in our customer install base that we can continue to see this growing and growing. Our ARR per employee continued to trend upwards this year. It is a metric that we look at internally. The divestiture of the compliance business combined with our team’s rebuilding efforts in sales and the productivity gains from our AI automation position us well to achieve more in the future. To summarize our position entering into 2026, we delivered on almost every major operational commitment we made at the start of the year, absent our number of subscribers. Our ARR per subscriber exceeded $12,500, up 16% year over year as we said—a clear sign that our platform value is resonating. We have launched and are launching five meaningful product capabilities that expand our TAM and increase subscription values. The balance of these we will talk about on our next call. We also entered 2026 with a clear balance sheet and a focused team that is ready to execute on growth, rather than divestiture and retooling the business. Looking ahead in 2026 as well, our focus is clear and centered on top-line growth driven by subscription expansion, new product monetization, and enterprise customer acquisition. Subscription customers: we are targeting to reach up to 1,500 customers by the end of 2026. ARR per subscriber: we expect to continue to expand on our enterprise base, and we will message this new test that we are doing on a small start-up/scale-up brand subscription. Adjusted EBITDA: we expect to move adjusted EBITDA margins into the mid- to high-teens by the second half of this year as we have messaged and analyst recommendations show. Product momentum: full monetization of the enterprise bundle, all AI editorial systems, and the Kill the Report platform through Q1 and into the full year. What this essentially means is $10,000 to $12,000 subscriptions become $14,000 to $15,000 fairly quickly when customers upgrade to these new features. We have a backlog of significant product advancements that are going to continue to be had that will evolve our subscription business to be entirely different than it is today, than it will be by 2026. ACCESS Newswire Inc. is becoming a stronger, more predictable, and more profitable business. We said we would transform, and we did. Now it is time to grow. It is on us, and we are ready. Something else I want to touch on is the state of the SaaS software industry. In the last couple of months, collectively, we have seen billions of dollars in market cap value wiped away from large enterprises like Adobe, Microsoft, and Salesforce, in combination. I only bring this up because of a couple of reasons. One, the AI advancements happening so quickly today, some of which recently have been geared towards user-based SaaS businesses. These are the companies that sell an application of software in a SaaS model to a customer on a seat or per-user basis, and like many of our competitors that do that in the public relations industry, we do not do that. We sell a subscription on a one-to-one basis to an enterprise or to a customer, a business, and there is not additional cost per user. Although the markets and investors have weighed heavily on companies that have that model because AI is eroding that, we are insulated from that. We feel strongly that our subscription model that we began with two years ago is something that is viable, that the market is accepting, and the financial community also understands as well. That puts us in a really good position to have one recurring fee per customer regardless of users or usage or anything else, and it is a model where we can deliver sustained gross margins and accelerate adjusted EBITDA with scale. We cannot thank you enough for your time today. With that, I will turn the call back over to the operator for the question-and-answer session. Operator? Operator: Thank you. Ladies and gentlemen, at this time, we will be conducting our question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Please lift your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Mike Grondahl with Northland Securities. Your line is live. Mike Grondahl: Hey, Brian. The press release notes that you anticipate generating incremental revenue through premium subscription tiers and per-release pricing. Could you give a couple examples of those? Brian Balbirnie: Yeah, absolutely, Mike. Thank you for the question. We will break it up into a couple of different parts. The first part: today, customers are purchasing both a fixed-fee subscription model, which includes their news distribution, media monitoring, database, analytics, and pitching. Those subscribing customers that have upgraded to a, call it, a Plus/Pro version of their subscription will now include their social media monitoring as well. So the lift in ARR is $200 additional per month for those customers. That is the incremental. So when we talked earlier in the call about adding additional products throughout the year, we are confident and believe that the same model will hold throughout the year as we continue to add on vital components to them that they will continue to upgrade to take advantage. On a single press release, the second part of the customer that cannot commit to a complete subscription for the year has the option to license or buy or use any one of our products in a singular form. They are now given the option to add social monitoring and add a distribution report on a per-product basis. This gives them the option to try, test, and use the solution without the commitment, and then gives us the opportunity to build the pipeline to convert them to subscription customers later. The “Kill the Report” that we have been using for the last couple quarters will be one of those marquee products here beginning in a couple of weeks. Customers will get their traditional distribution report because that is what the industry is used to, and we will guide them down the path of the more interactive report that we will be showing on our website here by the end of the week. Folks will be able to upgrade to that again on a pay-per-use basis or a subscription basis as well. Mike Grondahl: Got it. And then could you talk a little bit about volume trends and pricing trends that you are seeing on the newswire side? I think you said volumes were still down 1% year over year. And maybe that was revenue. But just talk about those two trends a little bit. Brian Balbirnie: Yeah. We are holding price. We have actually done very well. We continue to do renewals and new deals at higher per-press-release prices than the prior year. I think that is a maturity and a branding exercise. We went through a number of years, like everybody else did when they started in this industry. You have to build brand. You have to build trust, credibility, and follow-through execution, and we are long past that now. So we have a seat at the table to take meaningful price and share. Good news for us is, because of some of the AI advancements we have done, because of the fixed distribution costs for the most part that we have, volume indicates significant expansion in gross margin and EBITDA margin for us. So now the focus is back on volume growth—storytelling for our customers—that is aided by several different things in the market. One, and not to continually use the words AI or LLM, but every natural language processing system needs more content to ingest, and that content needs to come in different mediums: press releases, blogs, posts, and white papers. So the more content customers are doing, the more chances that they are going to see their citations and their web content and their press releases appear at LLM searches. We are advocating to our customers that the more content is better, so we are going to begin to see volume increases as a result of this. We are testing with a partner our product at the end of the year that will give our customers the ability to make their website and their newsrooms LLM-ready so that they become indexed like they were on Google and how they have been on Google for years. That dynamic and world is changing. So there is a lot that is going to happen there. We see volumes increasing rather than being flat or single-digit in the market. To be fair to all of us, as much as it is for us, that is for everybody—that is the industry as a whole—and that is one of the reasons why we released PressRelease.com, to give those early customers beginning to tell their stories and understand what public relations is the ability to buy a single circuit for a least cost to get involved and then grow there. We saw a good percentage of those customers—40-plus percent of our new PressRelease.com customers in Q4—come back and repurchase. Those are good indicators for us, and again, we continue to increase those prices over the period, which is a strong indicator that the market is there. Mike Grondahl: Got it. And then lastly, just how should we think about OpEx in 2026 relative to 2025? Brian Balbirnie: Yeah. Look, I think that there is further optimization that we can do. As Steve mentioned in some of his prepared remarks, we were fortunate enough to exit a lease that we had two years left on. There are some incremental savings there. It is about $320,000 a year in savings. We will get there. We have some additional G&A and other OpEx savings that we are going to monetize throughout the year by efficiencies in technology, efficiencies in workflow automation, and systems that we are streamlining. Steve and I and the management team continue to look at it, and we will be at it again today trying to find the next layer of savings. So we expect them to hold to what they were or be below what they were in 2025. Mike Grondahl: Thank you, guys. Brian Balbirnie: Thank you, Mike. Operator: Thank you. Our next question is coming from Jacob Stephan with Lake Street Capital Markets. Jacob Stephan: Hey, guys. Nice quarter. I guess just to start out, maybe I am wondering if you could break down the KPIs and give a little bit more detail here. I know you guys had 47 new customers; you noted 45 came from EDU customers. In the slideshow, you had 974 subs, and I understand the math—you know, 974 plus 45—but I am wondering if you could break that down on the EDU customer side a little bit. Are those actual universities, or are these students? Help me think through that. Brian Balbirnie: Yeah. Those are actual universities. Our objective with the EDU program is that we felt strongly that, if you think about the typical school that you went to, there is a degree-focused public relations and communications department within every school. The PRSSA teams are very involved in that school at the university. But we looked at it beyond that. So those numbers are just those schools within the universities that have deployed our programs and a teaching exercise to their senior students to be able to use media monitoring, pitching database, and how to write a press release and a story. When we look beyond that, the opportunity for us is, if you go down the hall or across the university campus to the engineering department or the nursing program or any other degree program, they also have their own public relations teams there doing their work. By research, we have been able to identify that there are at least eight schools within each university that have a public relations department that do not know about us and are now being introduced to us from the public relations professors at that part of the school. So the opportunity is significant for us. We are going to invest sales and marketing there. As we round out the Bateman program here in the next couple of weeks and select a winner, we are going to expand that. The second part is these students—the 4,300 and change—they are registered in our platform as EDU students. They are free. We do not account for them in our customer numbers or our subscription numbers. They are using the product on behalf of the university, and they will be converted at the end of the year at graduation to an individual plan with the option for a monitoring component to take with them into their career-focused areas. Our hope is we are going to get a percentage of those to convert into customers. They will go into private practice, public relations firms, go into enterprises in the public relations or marketing departments, and bring our tools with them as their certifications will illustrate. We think it is a long investment into something that we will start to see incremental growth. But you are right, you did the math on the numbers from the press release to the prepared slides today. That number is those EDU customers. Jacob Stephan: Okay. And then maybe just on the ARR front, you guys said that the ARR does not include EDU. Obviously, nice improvement there. But are these customers higher ARR or lower? Brian Balbirnie: Yeah. The EDU customers through the Bateman program are a $0 ARR model. We agreed with PRSSA, as a method of the program, to provide those subscriptions to them during the period at no cost. When Bateman is over, they convert. We have already converted a couple of them in the last couple of weeks. We have several proposals out for others. We have closed two PR firms this quarter as a result of some of the efforts that the Bateman program has done. So we will see the monetary side of this happening in this quarter. Jacob Stephan: Got it. That is helpful. And then I just wanted to touch on the gross margin improvements year over year. I am wondering if you could break down the 200 bps-plus improvement year over year. I know AI has been a huge focus for you guys. How much of that is AI-driven? How much do you feel like is more scale and kind of the ARR expansion? Brian Balbirnie: Yeah. I think ARR expansion is a contributor. I think AI is a contributor. I would say that I do not know that scale yet is the contributor to the influence of that. I would say it is fifty-fifty. I think our ARR increasing is helping. I think efficiency gains and distribution fixed costs are contributing. We have been negotiating those contracts for years to get us to a position that, when scale does happen, the flowback to gross margin contribution is even more. As we talked about earlier in the call, in a question from Mike, as we see the industry wanting to tell stories more, utilize press releases as a foundation to have LLM indexing, and volume starts to increase, we are doing that from a fixed AI cost. We are doing that from fixed distribution cost. We are doing that from a fixed editorial cost. So the more volume that comes, the incremental gross margins will illustrate themselves and show. That is one of the reasons why we put AI to work both in a customer and in a back-office usage pattern. But I think it is important from a customer perspective to know that our editorial human eyes will always be there. This is curation and quality content, and we want to be sure that we uphold that responsibility to our customers and the market—how we keep our distribution. AI is a great efficiency gain for us, and we are beginning to see even more and more improvements there, but it will never replace the human curation portion of that. Jacob Stephan: Got it. And then maybe just one last one for me, kind of a broader picture question. What aspects of the overall product strategy are changing—the go-to-market strategy? What do you feel like is going to be the biggest contributor to hitting that 1,500-subscriber number at the end of the year? Brian Balbirnie: I think there are a couple. This industry is moving very rapidly. Not only is it moving rapidly from an economic perspective that we can talk about, it also is moving from an innovation perspective. A lot of companies are left behind because their technology stacks are in a position that they cannot innovate at the pace of which a good many of us can, and us being the predominant one. We spent the last year after divestiture of our compliance business retooling our stacks, building to be very agile, and building an automation management system on top of that so we can pivot and change our applications and customer outputs for deliverables within seconds rather than months or quarters like the competition does. We see that as a big innovation for us that we are going to be able to do more in our platform than most can in this industry. What I will lead you down the path to, Jacob, really is that, at the end of the day, the storytelling process is more than just a press release. It is a message. It is a snippet on social media. It is a podcast. It is a blog post. It is an LLM citation and a trusted article that somebody from ChatGPT or Perplexity picks up. There needs to be a curation platform for that. Today, when we look at our network of our competitors, everybody does a really good job of doing one or two of these elements, and that is not to discredit them or take anything away from our competition. But we also do that, and we do it in a way that gives our customers the ability to create a story, share it on social, pitch media, and do everything from one single interface. I would say 20% of the competitive marketplace landscape today does that. The next innovation for us in the second half of the year is going to give the ability for customers—like the presentation you saw today was done with our own technology. We built that presentation for today’s earnings call in about eight minutes, taken from content that Steve and I drafted in our prepared remarks. We are looking at products and tools like that which will take our business from the public relations departments and investor relations departments down the hall to the MarCom side where budgets are larger. That is why partnerships with Hootsuite and others are very critical for us. As we begin to pull in some of the real-time posting of what Hootsuite has been able to do and others to integrate fully into our platform, it is going to give us a position to go in selling an enterprise communications tool platform to not only PR and IR, but also the marketing departments as well. In the second half, you are going to see our plan take on a very different ARR of component selections and product advancements. We spent a good amount of time in the last six months prebuilding, testing, and using customer feedback to make those products and components much stronger. We could not be more excited about that. The public relations and investor relations space is large. The TAM is still there like it was years ago. It has not changed. For us to move out of it and down into marketing takes the total addressable market and multiplies it by four or five. That is where we are focused—to go down that hall and build strategy and thought leadership there. Jacob Stephan: Great. Very helpful. I will leave it there. Thanks, guys. Operator: Thank you, Jacob. Next question is coming from Brock Irwin with Clever Investing. Your line is live. Brock Irwin: Hello. I am afraid you could not hear me. Sorry, I was on mute. Hey, guys. I hope you are doing well. I can really sense the excitement from what you guys are working on and the building for the future, so I think this is an interesting transformational time for the company to be sure. Just a couple of questions from me. The first is it looks like you guys repurchased a small number of shares in Q4. Is it possible you can disclose if you continued repurchasing in Q1? Also, how do you think about the pace of repurchases relative to other investments you might be making? Brian Balbirnie: Yeah, it is a great question, Brock. Nice to hear from you. Yes, we did purchase a small amount of shares during Q4 under the previously announced repurchase plan of $1,000,000. There is a good portion of that plan that is still left that will be resuming here shortly. The commitment for the repurchase is still consistent. We have not wavered from that. There is still three-quarters of that amount still sitting there that is earmarked for us to execute against, and we have every intent to continue to do that. When that plan is filled and completed, as you know, the board will look at other options for part of our capital allocation strategy. If additional repurchase plans will be needed and/or advantageous for us to do so, we will make that decision at that point. The 10-K will illustrate to you today when it is filed this afternoon there were 18,000 shares—or 20,000 shares—that were repurchased during the fourth quarter, and you should expect the remaining of those to be repurchased here in the first half of the year. Brock Irwin: Awesome. Okay, cool. Another thing you touched on in your prepared remarks was the churn and customers falling off of those subscriptions. Can you just talk a little bit about what you are doing to address that? What are you learning from your customers, and what are maybe some improvements you can make to improve those metrics? Brian Balbirnie: Yeah. In November of last year, we reset our customer experience teams. We put a new manager on top of the team, rebuilt some of the processes internally to ensure what we call internally “time to value” is measured more accurately—meaning the customer is trained, supported, and made sure they are using the platform to begin to feel the value of it sooner than later. I will tell you this: like everybody else, we are going to give you the facts as they are and not have excuses. The true reality is that 70% of the churned customers in our subscription business is due to credit card failures and payments. It is not due to application use or application problems. When we looked at just our meaningful churn, it is a fraction of what it is in printed form. But look, to be honest with you, churn is churn, and we report it as such. There are mechanisms that you can do from a payment perspective. As you know, we are a B2B business, not an e-commerce business. We are finding out that the majority of subscriptions are purchased much more in an e-commerce way than any other way. So we are retooling some of our Magento front-end systems and credit card intel/knowledge to be able to be predictive and understand the risks of taking credit cards, what kinds of credit cards they are, and how those payments work. Our sales team, beginning in Q1, began removing monthly options to customers and going to quarterly or annual payments. That will help further reduce the credit card issues that we have had in the past. Make no mistake, that is what those are. We are doing a lot here at the end of Q4 and into Q1 to help change some of that. Steve and I meet with our director of operations that runs CX and our sales leaders every week to discuss customer usage, customer training, and customer feedback loops to be sure that we are being reactive and doing everything that we can do to reduce that churn. We are confident that we are going to do that, but we have had some issues there in the past three or four months. There is no doubt. Brock Irwin: Okay. Great. I appreciate the answers. Thanks. Operator: Thanks, Brock. As we have no further questions in the queue at this time, I would like to turn the call back over to Mr. Balbirnie for any closing remarks. Brian Balbirnie: Ali, thank you as well. As always, thank you again to everyone else for joining us today. We are energized by the fourth quarter milestones and the progress made throughout 2025. The product momentum we are bringing into 2026. ACCESS Newswire Inc. is positioned well for the future, with a scalable platform, expanding recurring revenue, innovation and new products, and a focused team dedicated to execution and growth. We appreciate our shareholders, partners, and customers for the continued trust and support in 2025. With a year of transformation, 2026 will be a year of growth, and we look forward to updating you next quarter. Thank you. Operator: Thank you. Ladies and gentlemen, this concludes today’s call. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good afternoon, ladies and gentlemen, and welcome to the TELA Bio, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, participants are in listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Louisa Smith from Investor Relations. Louisa Smith: Thank you, Jonathan, and good afternoon, everyone. Earlier today, TELA Bio, Inc. released financial results for the fourth quarter and full year ended 12/31/2025. A copy of the press release is available on the company's website. Joining me on today's call are Antony Koblish, Chief Executive Officer, Jeffrey Blizard, President, Roberto E. Cuca, Chief Operating Officer and Chief Financial Officer, and Jim Hagen, Senior Vice President of Strategic Operations and Marketing. Before we begin, I would like to remind you that during this conference call, the company may make projections and forward-looking statements regarding future events. We encourage you to review the company's past and future filings with the SEC, including, without limitation, the company's annual reports on Form 10-K and quarterly reports on Form 10-Q, which identify the specific risk factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors may include, without limitation, statements regarding product development, pipeline opportunities, sales and marketing strategies, and the impact of various additional risk factors as identified in our regulatory filings. With that, I would now like to turn the call over to Antony. Antony Koblish: Thank you, Louisa, and good afternoon. Thank you for joining TELA Bio, Inc.'s fourth quarter and full year 2025 earnings call. For today's call, I will open with a summary of what we accomplished in 2025 and thoughts on our forward-looking strategy. Jeff will then walk through the foundational changes implemented in the commercial organization and how we anticipate they will impact our future performance. Roberto will review our financials, and then we will open it up for Q&A. 2025, and the third and fourth quarters in particular, were periods of meaningful strategic change across the entire organization. Following Jeffrey Blizard’s appointment as President in June, we undertook and executed a significant rebuild of TELA Bio, Inc.'s commercial foundation while maintaining commitment to improve our operating discipline and continuing to advance our pipeline strategies. We made meaningful changes to drive 16% full-year growth and achieved record fourth quarter revenues. The ability to maintain that momentum while executing such fundamental change in the organization is a testament to the caliber of our team, and the value proposition of the OviTex product portfolio. We enter 2026 with the largest, most effective field team in the company's history, and the commercial strategy designed to drive durable, predictable growth. Demand for our products remains strong, and the opportunity in hernia repair and plastic reconstructive surgery has not diminished. The foundational changes we undertook in 2025 were aimed at ensuring we have the commercial infrastructure to consistently and effectively capture that demand. Revenue growth in 2025 was fueled by strong performance in our European business, further adoption of our IHR, LPR, and LiquiFix product lines, and the continued contribution of our tenured reps in the U.S. The strategic investment we have made in high-caliber candidates with the right profile has been an underlying tenet of the commercial rebuild. A meaningful portion of our approximately 90-person sales force is still early in their tenure, 40% of the reps having joined TELA Bio, Inc. in the last six months. This has not been a function of rep turnover, but rather an investment in commercial expansion, and in recruiting talent with the right profile for the sales model we are building. We already see the newest reps meaningfully outperform their predecessors in the early stages of their onboarding, and we are encouraged by their promise to execute our commercial strategy more effectively. In the fourth quarter, we accelerated efforts to bolster our U.S. commercial team by advancing recruitment to meet our sales headcount target and by putting the infrastructure in place to support those new hires. That included investing in training, rolling out new sales enablement tools, launching a new U.S. sales leadership structure, and redesigning the 2026 compensation plan to align with our growth strategy and expectations. Heading into 2026, we are focused on two strategic growth priorities. First and most importantly, we are committed to sustaining the momentum we achieved in 2025 and achieving further U.S. and European sales growth through improved talent, processes, and commercial leadership. Jeff and his team have made incredible progress so far, and this will continue to improve as the new commercial organization matures and tenured sales reps begin to hit their stride. Again, I will let Jeff provide further detail on the specifics, but I am confident in the new commercial foundation we have laid. And second, we have been and will remain hyper-focused on offering the best soft tissue reconstruction product portfolio on the market. Product innovation is at the core of TELA Bio, Inc.'s identity, and we anticipate announcing additional product launches throughout the year to drive greater share gains in the expansive U.S. market. Demand for our innovative solutions is there, and I believe we have built a commercial infrastructure supported by an expanding portfolio that can consistently capture that demand. To that end, we were pleased to announce the promotion of Dr. Howard Lang to Chief Medical Officer effective March 1. Howard joined TELA Bio, Inc. nearly two years ago and has been integral in how we engage the surgical community. With over 30 years in plastic and reconstructive surgery, he understands this market from the inside out: the procedures, the unmet needs, and what surgeons are looking for. As TELA Bio, Inc.'s CMO, he will drive surgeon awareness, support clinical education, and help generate, disseminate, and translate the growing body of data behind OviTex into a broader market understanding and acceptance. On the European side, our teams are stable, tenured, and delivering above plan. The competitive market in Europe differs from the U.S. with pricing and bundling dynamics, and we are encouraged to see rapid adoption of OviTex in the U.K. and The Netherlands. We are winning share based on patient preference and the efficacy of our products in these markets, not because of pricing discounts or volume requirements set by hospital administrators. Moving forward, we have a purposeful investment plan to expand our presence within Continental Europe and see it as a meaningful contributor to growth in the coming years. Overall, Q4 results reflected a commercial organization in transition; we remain proud of all this team has accomplished and will continue to accomplish. We executed a major commercial upgrade in the back half of 2025 while simultaneously achieving several other milestones for the company. In that six-month period, we launched OviTex LTR, a new addition to our portfolio that offers durable support during healing and provides surgeons with a tissue-based alternative to synthetic mesh. We enrolled the first patients in our hiatal hernia trial ECHO, which will strengthen our clinical evidence base and deepen our access to alternative surgeon call points for a primarily robotically performed procedure. We reinforced and upsized our debt facility to strengthen our balance sheet for the road ahead. And finally, we upgraded our board of directors with new expertise. In summary, 2025 was a year of deliberate foundational change that required discipline and conviction. That is behind us, and we enter 2026 with our eyes toward the future. With that, I would now like to turn the call over to Jeff for a more in-depth review of our commercial strategy and restructuring. Jeffrey Blizard: Thanks, Tony. As Tony laid out, I do not want to lose sight of the fact that amid transformational reorganization, we grew revenue by 16% and delivered our third straight quarter of sequential growth. We exceeded $80 million in total sales for the full year 2025, all while maintaining operating discipline and improving our operating leverage. The changes that we undertook since coming on board last June could create a significant disruption in productivity and growth in any organization. That did not happen here. It speaks volumes to the commitment of the entire TELA Bio, Inc. team and the dedication to the patients and customers we serve. I would like to take some time to provide a detailed review of the specific changes in our commercial organization that Tony referred to. I will also highlight the progress we made year to date because of these changes and how they set us up for meaningful inflection moving forward. Number one, we upgraded and redesigned the U.S. commercial leadership team. By implementing a new sales general manager structure, we brought decision-making closer to the customer and empowered teams to respond to customer needs in real time. Two, concurrently, we addressed silos within the commercial organization that had been slowing cross-team collaboration. We strengthened our sales leadership bench by upgrading five key senior roles. These changes were implemented to increase accountability in the field, improve coordination across our hernia and PRS segments, and drive more consistent execution across our commercial footprint. Three, we have rolled out formal promotion pathways within the commercial organization, creating vertical career mobility that rewards our top performers and incentivizes meaningful contribution within the organization. Four, we redesigned the sales talent profile in the U.S. and accelerated our hiring. We hit our 76 territory manager target back in the third quarter. And as of today, we have 88 quota-carrying territory managers in the U.S. with one additional hire imminent and five open positions that we are actively sourcing. This means we will not require any further incremental hiring for the remainder of the year. The team that we need to hit our 2026 targets is largely in place. Tony touched on how we evaluate our field teams by distinct cohorts, and how we assess their performance by tenure and productivity ramps. Roughly 40% of the U.S. field team has joined us in the last two quarters. They are in the early phases of their ramp up, and we expect that they will contribute incrementally each quarter of this year as they build out account relationships and gain clinical familiarity. An additional cohort, those who have been with us between six and eighteen months, have gained meaningful traction and the vast majority have reached a productivity inflection point. They are actively building account relationships while improving clinical acumen. We expect their contribution to ramp meaningfully each quarter. And finally, we have maintained a very solid base of tenured reps who, on average, deliver over $1 million per year, and consistently meet or exceed targets on a monthly, quarterly, and annual basis. This cohort accounts for approximately 35% of our current rep count. Five, as part of the redefinition of our sales talent profile, we have shifted our approach to recruitment. We have been very successful not only in our ability to retain top performers, but in our ability to attract and hire strong candidates. We increased our investment and focus on sales training with a goal of reducing time between hiring and commercial effectiveness. The candidates we are bringing in demonstrate stronger performance and higher scores on all evaluation criteria versus any prior cohort. The profile we are recruiting combines high intellect, perseverance, the ability to build deep and lasting relationships, and develop strong clinical acumen over time. This is a change from our previous recruiting strategy, which placed greater emphasis on years of soft tissue sales experience. The caliber of our newest reps is beyond anything that TELA Bio, Inc. has ever seen, becoming a destination now for candidates who fit a clear profile for success in the commercial model that we are building. Naturally, as we place less emphasis on prior soft tissue experience, there is a ramp-up period while new hires come up to speed through our clinical education programs. What we are seeing, however, is that with our investment in sales training, this new profile of rep gains clinical proficiency quickly. And once they do, their drive and hustle translate into a higher level of contribution than prior cohorts. While we are still expecting most new hires to reach full productivity within six to nine months, we believe their impact at maturity will be greater. Six, we have developed and rolled out a new sales enablement that draws on better market insights to help our sales leaders and reps better prioritize and target their activity. Seven, we have designed and implemented a new 2026 compensation program that incentivizes deeper penetration at target accounts. This represents a change in our geographic coverage, where we are now matching rep density with high-volume institutions to cultivate multiple users per site. Instead of a wide and shallow approach, we are going deeper to generate sustainable recurring revenue opportunities. Our new comp plan is now explicitly aligned around that strategy. Additionally, this philosophy expands beyond the comp plan itself. It also minimizes the geographical areas that reps need to cover, maximizing efficiency and supporting better operating expense optimization. As part of this renewed approach, we are also ensuring meaningful executive presence in the field. Tony was calling on strategic accounts as recently as last week, and others and I are doing the same. It is a signal in the organization and to our customers about where our priorities lie: building deeper, more meaningful physician relationships. Eight, we have adjusted our sales and marketing focus to center on the mechanism of action of OviTex and the science that fundamentally differentiates our portfolio. Surgeons have embraced our data and the long-term patient outcomes it demonstrates. The source material, OviTex, and the way it integrates within the body differentiates us from any Gen 1 biologics, synthetics, or biosynthetics, and it is foundational to why surgeons adopt OviTex. We also increased our sales and marketing focus on LiquiFix. With great support from our partners at AMS, LiquiFix is not only a better fixation solution, we have seen it open doors with hernia surgeons who may not yet be familiar with OviTex. And finally, number nine, we instilled spending discipline within the organization, which has allowed us to fund more customer education and training events. This helps us meet customers where they are in their adoption life cycle while simultaneously improving operating margins. So how does this all come together with respect to driving revenues? For the full year 2026, with each of the three cohorts performing as expected, we are confident that we will grow revenue over 2025 by at least 8%. And for the first quarter, much of which is already completed, we expect that we will deliver revenue of approximately $18.5 million. The breadth of change that we executed in six months was significant, and we recognize what it takes to sustain this level of momentum going forward. Our goal is to have everything in place by the end of Q1, so that 2026 reflects the full benefit. We are well on pace, and as of today, all significant material changes have been implemented across the entire organization. We set our revenue guidance to account for some of the inherent variability that may arise given the scope, scale, and speed of changes I have just laid out. We believe that, particularly in the second half of this year, the annualization of our commercial restructuring and the ramp of our newest cohort, combined with the pipeline and clinical investments, position us to be able to deliver achievable, sustainable results moving forward. I will now turn the call over to Roberto for further details on the fourth quarter and full year financial results. Roberto E. Cuca: Thank you, Jeff. Revenue for the fourth quarter of 2025 increased 18% year over year to $20.9 million and grew 16% for the full year to $80.3 million, with revenue from OviTex growing 12% and OviTex PRS growing 20% for the year. The growth was primarily due to the addition of new customers, growth in international sales, and the U.S. launch of larger PRS units. Growth was partially offset by a mix shift in our hernia product line as we saw an increased share of smaller-sized IHR units. OviTex unit sales grew 20% for the quarter and 22% for the year, while PRS unit sales grew 12% for the quarter and for the year. LiquiFix revenue more than tripled over 2024, reflecting early commercial traction as we expand adoption alongside our core OviTex portfolio. European sales accounted for 15% of total revenue, or $12.1 million, in 2025, a 17% increase from $10.3 million in 2024, reflecting the traction we are seeing in key markets and our continued investment in expanding access globally. Gross margin was 66% for the fourth quarter and 68% for the full year, compared with 64% and 67% for the prior-year periods, respectively. The improvement was driven by lower excess and obsolete inventory expense as a percentage of revenue. Sales and marketing expenses were $14.5 million in the fourth quarter and $63.2 million for the full year, compared to $14.0 million and $64.6 million for the prior-year periods, respectively. This was mainly due to commissions rising with stronger revenue in both periods, offset by lower compensation, severance, consulting, and travel costs for the year. General and administrative expenses were $3.8 million for the fourth quarter and $15.7 million for the full year compared with $3.6 million and $14.7 million for the prior-year periods, respectively. R&D expenses for the fourth quarter were $2.1 million and for the full year were $9.2 million compared to $2.0 million and $8.8 million for the prior-year periods. Loss from operations was $6.6 million in the fourth quarter of 2025 and $33.8 million for the full year, compared to $8.4 million and $34.1 million in the prior-year periods. Net loss was $9.0 million in the fourth quarter and $38.8 million for the full year compared to $9.2 million and $37.8 million in the prior-year periods. We ended 2025 with $50.8 million in cash and cash equivalents, having further strengthened our financial flexibility by refinancing our debt facility and raising incremental equity capital. As Jeff described earlier, for 2026, we anticipate revenue growth of at least 8% over 2025 and Q1 2026 revenue of approximately $18.5 million. We expect that operating loss and net loss will continue to decline for both the year and over the quarters of the year, although there is likely to be some step up from the just-past fourth quarter to the first quarter, particularly in light of the revenue progression that we typically see over this period. With that, I will hand the call back to Antony for closing remarks. Antony Koblish: Thank you, Roberto. As we have done in prior quarters, I would like to end with a patient story to ground us in the impact of our mission. A 57-year-old patient actively being treated for chemo required treatment for hernia repair in the intercostal region. The surgical team, concerned about where the hernia was located because it was near chest tubes, decided that OviTex Core, with the four layers being thin enough, unlike a traditional biologic, would provide less seroma and was the best choice because of Core's resorption profile and its optimal size. The patient underwent an underlay procedure. The surgeon said that the patient is doing great and is extremely pleased to have OviTex Core available for this very sick patient. The surgeon commented, in quotes, “We believe that OviTex is the only product that can be used in conjunction with the use of chemotherapy due to the way it rapidly incorporates, its porous nature, and its functional remodeling of healthy tissue.” This is another great example of how OviTex can be used in the most complex of cases with excellent outcomes. Before we open the line for questions, I want to take a moment to recognize the entire team. In the back half of 2025, this organization undertook a fundamental rebuild of our commercial structure while continuing to grow revenue, serve customers, and maintain operating discipline. To sustain momentum through the transition of this magnitude reflects the quality of the team and the strength of the products. The changes we made in 2025 were difficult but necessary, and we enter 2026 with the strongest commercial team the company has ever had. I look forward to what is ahead for TELA Bio, Inc. Jonathan, please open the line for questions. Operator: Certainly. We will now open for questions. Our first question for today comes from the line of Caitlin Roberts from Canaccord Genuity. Your question, please. Caitlin Roberts: Hi. Thanks so much for taking the questions. Sure. I guess starting off with the fiscal year top-line guidance for at least 8%, just a little bit more color on why it was below what you noted on the Q3 call. And if you could provide some cadence to that guidance for the year, that would be great. Antony Koblish: Yes. I will start it off, and then I will turn it over to Roberto. So our thought here is, given the change that we have implemented—wholesale change across almost every dimension—that we thought it would be prudent to set the guidance where we did. There are so many new reps and new moving parts that are in place right now. We want to give ourselves the best chance to do a great job this year. And given that our territory manager breakeven point remains about six months to nine months, and we have hired so many new reps, we are scaling into and cascading into the year. We just think there are a lot of variables, and we wanted to make sure that we are giving ourselves plenty of room to allow these reps to mature and drive. We really like the contribution from the 40% new reps so far. It looks like they have stepped up quite a bit as a percent contribution over Q4, but we want to make sure that we are giving ourselves that time and flexibility. There are some other factors that we have in place that give us confidence to do a good job this year. And that is the fact that, for the first time in the company's history, we are right on the mark with the number of reps we wanted to hire and at the right time. In the past, we have been stuck between 63 and 68 reps. I feel like that was where we were stuck no matter where our target is. But this new commercial leadership team has done a great job of getting those folks in place. We have a product that we think is powerful that is going to launch April 1 fully. It has been in limited release. It is our long-term resorbable OviTex product, which should give us a great matchup with the leading biosynthetic out there, Phasix. And I do think that is going to be mostly additive to the portfolio along with some cannibalization from our permanent portfolio. I think one of the foundational drivers that we can rely on going forward is European performance. This has been very consistent, and I do think that they are going to allow themselves to grow consistently over time, and we very much look forward to adding PRS to their portfolio for sales, hopefully by the end of this year or early next year. One of the big factors that we have here, Caitlin, in this guidance set is contract conversion. Our salesforce has been very focused on getting contracts in place, and we have not done as well at executing into those agreements. So we are going to shift that focus toward contract execution. And we do know that there is a high degree of contracting complexity, which does affect timing, which is another factor of safety as to why we built the guidance the way we did. Contract implementation varies from hospital to hospital. Even if you have a GPO contract in place, we are learning that every day. And the way contracts are written in the U.S. further complicates things with market share and cross-product portfolio bundling and rebate structures. So there is some complexity there. We want to make sure that we give ourselves the time to execute into the contract footprint that we already have in place. Hopefully that gives you a flavor of what we are trying to do here. On a bigger picture, we have a lot of factors of safety built in and a lot of potential upside, but we want to be prudent. Roberto E. Cuca: Let me just add two things, Caitlin. You asked about cadence for the year. We do expect the cadence for the year to be similar to that in prior, undisrupted years, where you see a step up from the first to the second quarter, a smaller step up from the second to the third, and then a bigger step up again from the third to the fourth quarters. The step up from the second to the third being smaller is driven primarily by the summer holidays. And we expect to see that pattern slightly amplified by the addition of all the sales reps that have come in over the course of the end of the fourth quarter and through the first quarter, who begin becoming productive in about six months. So we do still see that the most recent cohorts of sales reps hit breakeven just under six months, and then what Jeff and Jim call breakout between six and nine months, so they become more than just breakeven positive. Antony Koblish: And all of these factors, Caitlin, also add to the frustrations that everybody has had, including us in the past, about our forecasting accuracy. So we want to make sure—again, the word is prudent—that as we are going through all of this, we feel very confident that we will come out the other side with a much more forecastable business. But until we get there, we think it is best to be prudent. Caitlin Roberts: Understood. And maybe just one more from me. I think, Tony, you touched on the contracting. How many IDNs or GPOs have you transferred to really recategorize OviTex? You talked about that the last couple of quarters. What are your expectations to continue doing that this year? Jim Hagen: Hey, Caitlin. It is Jim. I will take that one. I think as Tony just said, our contracting focus—while we continue to drive a focus on the RTM category, especially into site-level agreements—the team did a really nice job in 2025 of getting many of those agreements signed. 2026 is an execution year. We have to translate that, move it through the hospital processes. Where we have a lot of surgeon advocacy, we have to work it through the admin process and translate that signature now into patients and revenue. Antony Koblish: I think, as new opportunities present themselves, such as Vizient—that has been delayed—we are certainly going to go for that, but we have more than enough footprint that we have to start executing on, as Jim said, before we just continue to drive agreements. We will continue to do both, but we have to focus on execution within the agreements we have. Caitlin Roberts: Understood. Thanks so much. Operator: Thank you. And as a reminder, ladies and gentlemen, if you do have a question, please press star-one on your telephone keypad. Our next question comes from the line of Frank Takkinen from Lake Street Capital Markets. Frank Takkinen: Great. Thank you for taking the questions. I wanted to follow up on the Q1 guidance a little more. Obviously, I heard all the comments about the changes you have made with the commercial organization and the disruption that has caused. But I was just curious if there was anything else specific to call out with Q1. I know typically the seasonality is kind of up a few percent or down a few percent in some instances, depending on the year, but just the double-digit down quarter over quarter. Curious if there is anything beyond the Salesforce comments you have made going on here. Antony Koblish: I will start, Frank. I think my whole monologue on prudence for the year is transferable to Q1 as well. We have one dynamic that has added to the general slow start that you see in hernia and plastic and reconstruction, which is typical in January and February. Part of what Jeff and Jim have done is the territories have been restructured to be smaller, to go deeper, which means there has been some splitting of territories. And what we are encouraging is salesforce efficiency, which will help from time spent selling to T&E expense. We are going to concentrate density of reps in smaller areas, preferably adjacent to high population areas that are already successful with us. That means we may abandon a little bit of the hinterlands and the smaller hospitals that are out in the perimeter. Not fully abandon, but de-emphasize a little bit. So that is going to cause a little bit of loss as we go through these shifts of splitting territories and creating more efficient density in the network. We wanted to make sure that we gave ourselves some room to work through that, which should mostly be taken care of through the end of the first quarter, and we should start to see some signals that we are coming out of that transition phase in Q2. Does that make sense, Frank? That is in addition, I think. Jeffrey Blizard: Yep. That is perfect. I appreciate that. And then I just want to add one more point onto Tony and the word disruption. It is something we have avoided here. We did not call this a reorganization. Really, the focus has been on restructuring—right people in right roles—and making sure that we can have a focus on these key customers in key cities and also those academic programs that are hubs in key cities. What we found, in not only the challenges in January that most companies were faced with, was over a thousand square miles of geography in the U.S. was impacted by that blizzard, and we saw a number of elective procedures be impacted by that. So we have heard that from other programs and other companies that have had similar situations. Frank Takkinen: Yep. That is helpful. And then as we think about exiting this period where we are maybe returning to a steady-state growth rate, how do you view the steady-state growth profile of TELA Bio, Inc. over a longer period of time? Antony Koblish: I think the markets that we serve are kind of mid-single digits. We have been above market-rate growth since inception. And I think we anticipate that we will be able to significantly outgrow the market. The other interesting thing, as you look at the data that we are presenting here, is that our units for both PRS and hernia are high. Our growth rate on hernia units I think is 20% or 22%—22%, right? So that is a very good sign for the long haul, given that that is the bulk of the procedures. Making inroads into those smaller-piece procedures is super important. It does have an impact with mix shift and top-line revenue, but that should straighten out as well. We certainly believe that once we get to steady state, we should be back into the double-digit growth or beyond. This is a way for us to give ourselves the time to clear the decks. We have never done a change that is so comprehensive that it affects territory planning and compensation plans to drive that. This is so comprehensive; we are just giving ourselves the room to get back to that double-digit-plus growth. I think we have a great shot at getting there in the second half of this year, hopefully. Frank Takkinen: Got it. That is helpful. Then if I could just squeeze one more in. As it relates to your point on unit growth, that has been really solid, obviously, and in both product categories. What is your latest thought on how we should think about when ASPs in hernia could start to flatten out and stabilize? Antony Koblish: That is a good question. I was looking at that before the call to prepare. One of the metrics I look at is what type of hernia procedures we are doing. I think for the longest time, we were about a 70% ventral company, and that is shifting. I think we always had about 10% to 15% of inguinal. But right now, I am just thumbing through it. I will go by memory, and Jim can correct me if I am wrong. But I think we are at about 50% of our business right now as ventral, and 25% of our business is inguinal. Fourteen percent is hiatal. So we were really a 10% to 14% company on both inguinal and hiatal in the past, before this shift of getting more involved in the fat part of the bell curve of hernia procedures. But now we are already down to 50% from 70% on ventral, and we are up from 10% to 12% inguinal up to 25%. So it is hard for me to say where that balance goes. There are almost a million inguinal done a year. So we are going to keep mining that until we hit some kind of a steady state. It is going to have to do with the mix between inguinal and ventrals. Jim Hagen: The comment I would say on this one, Frank, is not just the type of hernia, but the modality of the procedure. As we see procedures moving away from open into laparoscopic and robotic procedures, we are well positioned. That is also why you see our LPR portfolio outpacing much of our growth, along with IHR. I do think surgeons are voting with their preferences, using us more where procedures are going, which is laparoscopic and robotic for us. So that ASP shift, to Tony’s point, is going to continue. We are going to continue to see more of our volume moving to those lower pieces, with an ASP that is a bit lower than we historically had been with the large open. But as I think Roberto will continue to remind everyone, that does not impact gross margins. Antony Koblish: Just to put a little finer point on it, Frank, what we are seeing is the start of robotic surgery making more and more inroads into the open complex cases. And so we are there, ready to serve those cases beautifully with our LPR product. And certainly, our inguinal product is robot compatible as well. So we are well positioned for how the hernia market is evolving. How long that takes is hard to say. But I do think the future is going to be higher unit growth volume, more procedures, but smaller pieces, and I think you are going to start to see our 1s, 2s, and Core start to give way to inguinal and LPR, and hopefully, in the future, LiquiFix being the main unit drivers going forward. We will certainly get all the opens that we can with our older portfolio. And one more thing to add—I am sorry, a little stream of consciousness here—but the long-term resorbable hernia product has zero permanent polymer in it. And a lot of these old-time surgeons do have an allergy to putting anything permanent. Our product works beautifully in these cases, and many, many surgeons do use it. But there is a category of surgeon that wants nothing permanent. So our long-term resorbable product, I think, has a shot at opening up some of those more difficult complex trauma, complex abdominal wall cases down the line in the future, but that remains to be seen. I think the global trend is toward robotic for everything and smaller pieces, which favors our LPR product portfolio. Frank Takkinen: Got it. Very helpful. I appreciate the color. Thanks, guys. Jeffrey Blizard: Thanks, Frank. Operator: Thank you. And our next question comes from the line of Michael Sarcone from Jefferies. Your question, please. Michael Sarcone: Good afternoon, and thanks for taking the question. Just a follow-up on one of the first questions—and not to belabor this—but when you provided that kind of ~15% directional outlook in mid-November, you mentioned there was some built-in cushion in there. Just trying to get a better sense for what changed, understanding you are trying to be even more prudent and you want to de-risk the guide. But did anything else change over the last three months around expected rep productivity ramp or anything like that? Just trying to get a bridge from the 15% to the 8%. Jeffrey Blizard: I like both of those points. I would say one of the biggest things is really the tenure Jeff and I had in role. We started in June. We had that call in the fall. We were in the midst of the change. I think what we have learned since then is it was a sizable change. There were multiple things we put on the field organization at the same time, while we concurrently were hiring rapidly into the organization. So I would say our assumptions changed from when we had the Q3 call to now just appreciating the change curve it takes to move an organization through all of that is a bit longer and more complex, I think, than when we originally planned it out. It is not saying it is not going well. It is actually going very well. But to Tony’s prudence point, we are going to give ourselves some more time to work through that change curve, get new reps up to speed and up to efficiency where we need them, and get our legacy team in the U.S. through that change curve of new leadership, new comp plan, and new territory alignments, so everyone is then hitting full stride in the second half of the year. Michael Sarcone: Got it. That is very helpful. Thank you. And then maybe just one on the new kind of account targeting strategy. You talked about deeper penetration in existing accounts. Can you talk to us about some of the methods you plan to use to broaden out that penetration of the existing account? Jeffrey Blizard: Sure. It is Jeff. So the problem statement that we analyzed over the last few months was too many reps were dependent on one surgeon in one location. And for us too, we talk about terms like stickiness to our business. In order to do that, especially in larger programs that have anywhere from three to seven, sometimes even nine, general surgeons or multiple plastic surgeons per site, we could not rely on just one user. With the way that the comp program was set up and the goals and objectives in 2025, the need for our territory managers to be spread far and thin was so that we could gain distribution, and they could work their comp program to the best of their ability. We realized that was a limiting factor. That meant product was in hospitals without patients being covered, and that meant users were identified without another person on staff that had bought into the product with a proposal that this was a better device or product than the ones they were using. Having this as a focus point allows us to do better in servicing, teaching, and training programs how to handle the product, being present and being bedside so that patients can receive optimal outcomes. And then the compensation plan was built around that specifically. Smaller geographies, as opposed to what we had—reps that were driving in the car three to five, sometimes even six hours in the great state of Texas—that found themselves racing across the state to deliver product or be present for that one physician and that one program. We know that this density rule will work, as well as having in many of those large cities, as I mentioned earlier, an academic hub where now we can put people in to help support our fellows and our residents that are being trained in this next generation of surgeons. Jim Hagen: Michael, the only thing I will add to that in terms of how we are doing this is leveraging the full portfolio. As we just talked about on Frank’s conversation, we grew historically through large open procedures with 1F and 2F. As we think about building depth within a hospital, we are talking about more users within that specific site. LiquiFix is an example. It gives us a new opportunity to engage a surgeon who may not fully believe in OviTex but wants an alternate fixation technique. That is a new in for us. Driving IHR and LPR lets us go after those surgeons who are more proficient on the robot or focusing on the robot. So our portfolio allows us to engage with more users within a specific hospital, and that is what we are asking our field team to do: leverage the full bag, drive more users per site—one of the key metrics we are going to measure them on this year. That creates a stickiness for us. That is what allows us to go after the higher-ceiling accounts and drive a deeper share within those accounts, which for us, to Tony’s point, enables a more predictable top-line revenue. That is part of that formula. Jeffrey Blizard: And I will just put a fine point on the end of Jim's comment. If you are wide and shallow and you have one surgeon four hours away who is using your product, it is pretty easy to dislodge that surgeon from his usage habits and patterns when you are not fully present and you have competitive reps looking to lever you out with contracting and rebates. We have to get five and six users in a smaller geography. That is really what we are setting ourselves up to do. You become much harder to knock down. Michael Sarcone: Great. Thank you. Operator: Thank you. And our next question comes from the line of Matthew O’Brien from Piper Sandler. Your question, please. Matthew O’Brien: Good afternoon. Thanks for taking the questions. I do not know, Roberto, or if somebody else can maybe talk a little bit about the impact of weather in Q1 because the number is so low versus what we were kind of expecting. And I get it is Q1 and everything, and you are still going through this transition. But it is just so low that it then requires you to start putting up some numbers, especially in the back half of the year, that we have seen out of the companies. It requires a lot of faith that you can be able to do that. So maybe just talk about those two components there: the weather impact in Q1 and what you are seeing that gives you confidence and should give confidence that the back-end-loaded guide is achievable? And then I do have a follow-up. Jim Hagen: Matthew, it is Jim. I will take the first half of that. I would say it is two variables external to us in Q1. We are trying not to focus on external variables, but they are real sometimes. One, feedback from our field team is just volumes in January were low. I think there was just a market lull coming out of the holidays, with insurance premiums resetting. That was a real impact. And as Jeff talked about, the impact of the storms on the East Coast with major population density did shuffle some elective procedures. Some were lost—cases were not happening. Some others got deferred out past Q1. We do not have firm guidance for you on what percentage impact that had to us. What we are trying to focus on is more of what our controllables were in Q1, which is really where we spent that time on hiring, getting new people into the organization, getting them trained up and going, along with what we just talked about, which is that mix shift from shifting accounts from lower-ceiling accounts and lower-density areas to higher-ceiling accounts and more populous areas. I would say that probably had the more material impact—those are the things we can control—for the performance from Q4 to Q1. That is where our focus is. Antony Koblish: And, Matt, we have snapped back quite well after fourth quarters. I think it was 2024 Q4; we had a little bit of a raid on our salesforce, and we snapped back very effectively in Q1 of 2025. We have enough factors of safety built in with the new product launches, having a fully staffed salesforce at 90 reps or a little over 90 reps in the next couple of weeks here. We have never been at that scale, and we have never been fully to our hiring plan this early in the game. That is by design. The talent of the reps, getting them through that six-month bed-in period where they get productive—there are a lot of factors that are going to help us and give us tailwind in the second half of the year. Roberto E. Cuca: And with regard to the back half versus first half and confidence with regard to that, we have always grown quarter to quarter across the year. We have built our quotas and expectations for our existing reps, our tenured reps, and for new reps based on that sort of growth. So even if we had not added the number of reps we did in the first quarter, we would expect to see growth across the year that would have led to that step up from the first half to the second half. That will be amplified by the addition of these new reps who are going to hit breakeven in about six months and then start breaking through and becoming meaningfully productive in that second half. You have to remember, 40% of our salesforce has been onboarded for less than six months. Antony Koblish: And these are high-quality reps that we have hired, and we are going through the process now of getting them embedded and up and running. Matthew O’Brien: Okay. I appreciate that. Then a follow-up is—and I am just trying to square all the different numbers here between the LiquiFix and the OUS growth—and the quarter was actually really good. When I start to carry that forward, I start to get some softer OviTex numbers for the full year versus what you have been doing. I am not sure that makes a lot of sense just given the sales expansion. And yet I know you want to be conservative. It just leads you to the conclusion that there is something else going on that is not quite squared away yet. So I do not know if there is a way you can walk us through what you are expecting—OviTex versus PRS versus other revenue and OUS. But just help me understand how the different product lines are going to play out here in 2026. Roberto E. Cuca: Thanks. I will start, and I will let Jeff and Jim jump in, and Tony. One thing to remember is that Europe is purely OviTex sales—purely hernia sales. So as we get solid growth from Europe, that is all going to be dropping to the hernia bottom line. We do expect to see PRS sales grow over the course of the year, in part from the launch of larger pieces and potentially new technologies. So it is not that we see either one of those softening up. And we expect to see LiquiFix continue to grow strongly, although it is going from a much smaller base, so it will have a smaller revenue-line impact. I will let Jeff and Jim add anything to that. Jeffrey Blizard: I think we are blessed with AMS’ focus on us as a partner. They have made a huge investment in their clinical team to help us with product evaluations and trials. They have matched us. As fast as we are trying to get our organization set, so have they. I would say that, with this focus we have—and we teased a little bit about it in the last quarter earnings—that we are headed toward an academic program that is brand new to us in 2026. So having the right leader, who we have at MRSA Conrad, focused on that, and having a partner with AMS that drives that product adoption in the general surgery residency and fellowship as well as plastics, that is all, again, new. Jim Hagen: And then considering what the back half of this year looks like for new product launches, as well as not necessarily any more organizational disruption—that came earlier from you guys—but more as nuance changes, always adapting and changing with the business so that when we identify needs, we solve for it. Jeffrey Blizard: Matt, I think what you are saying is you are looking at all the potential growth drivers, and it does not make sense that our OviTex business would grow less. So I am just going to sum it up and just stick with the word prudent. Give us a chance to metabolize these territory changes, the new reps, the new products, all of it. Prudence. Matthew O’Brien: Understood. Thank you. Jeffrey Blizard: I do not see the hernia or PRS business collapsing in any way. Operator: Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Antony Koblish for any further remarks. Antony Koblish: Thank you, Jonathan. Thank you. The changes we made were thorough. I hope you got a sense of that. We have never cleared the decks to this level. In the past, the changes have been a little from this place, a little from that piece—incremental—because we were striving to go wide and make numbers. We are taking a step back from that to recast this in absolutely the right way across every dimension, whether it is comp, focus, population density, rep density, everything. I think we have it set up correctly for the long haul. There is going to be much less disruption from this point forward. We have it locked in the way we want it now, the way Jeff and Jim want it. Now we just have to operate the machinery in the right way. We really appreciate your interest. Stay patient, and we look forward to what is ahead. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Good day, everyone, and welcome to MaxCyte, Inc.’s fourth quarter earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. To participate, you will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note, this conference is being recorded. I will now turn the call over to Erik Abdo with Investor Relations. Please proceed. Erik Abdo: Good afternoon, everyone. Thank you for participating in today’s conference call. Joining me on the call from MaxCyte, Inc., we have Maher Masoud, President and Chief Executive Officer; Douglas J. Swirsky, Chief Financial Officer; and Sean Menargas, Senior Director of Business Development. Earlier today, MaxCyte, Inc. released financial results for the fourth quarter and full year ended 12/31/2025. A copy of the press release is available on the company’s website. Before we begin, I need to read the following statement. Statements or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance, are forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Except as required by applicable law, the company has no obligation to publicly update any forward-looking statements whether because of new information, future events, or otherwise. I will now turn the call over to Maher Masoud. Maher Masoud: Thank you, Erik. Good afternoon, everyone. Thank you for joining MaxCyte, Inc.’s fourth quarter and full year 2025 earnings call. 2025 presented a challenging operating environment. It was also a year of meaningful progress for MaxCyte, Inc. We continue to sign new Strategic Platform Licenses, SPLs as we call them, and support customers in advancing drugs to the clinic. We acquired SecurDx, and successfully integrated the business into MaxCyte, Inc. We made meaningful changes to right-size spending and strategically improved our operations. And most recently, we launched a new product, the ExPERT DTX, that will allow us to work with developers earlier in research and development discovery. Let me start by reviewing our financial results. Consistent with the preliminary financials we announced in January, MaxCyte, Inc. reported $33 million of total revenue for the full year, which included $29.6 million of core revenue and $3.4 million of SPL program-related revenue. We grew our instrument installed base to 857, up from 760 at the end of 2024. Douglas will discuss fourth quarter and full year performance in greater detail. MaxCyte, Inc.’s results were within the range of expectations that we had updated you with in August. As previously discussed, the business was impacted by program consolidation and rationalization across some of our SPL customers, which included a 15% decline in purchases and leases from our largest customer reorganizing manufacturing and managing inventory. Now let me give you a little more detail on the launch of our new ExPERT DTX, which I mentioned earlier, and I am very excited to discuss. Even as we faced headwinds in 2025, our focus remained on innovation and leading the market with groundbreaking platforms. In February, we announced the launch of ExPERT DTX, a modular 96‑well electroporation platform designed for research and drug discovery applications. We are very excited about what this product represents for MaxCyte, Inc. The DTX enables labs to transfect primary cells and cell lines across up to 96 samples in a single three‑minute run, with consistent well‑to‑well performance that effectively eliminates transfection as an experimental variable. It is one of the most cost-effective 96‑well electroporation solutions on the market, with detachable eight‑well strips that can be processed with unique parameters, giving researchers the flexibility to test different cell and cargo combinations in parallel while reducing waste. The software is also differentiated. DTX Designer allows users to design experiments remotely and upload workflows when the system is available, maximizing instrument pipeline. That is a real practical advantage for labs running multiple back-to-back experiments. What makes the DTX strategically important is its full compatibility with the rest of the ExPERT platform. A researcher can optimize a process on the DTX in discovery and transfer it directly to MaxCyte, Inc.’s larger scale electroporation, the ATx, STx, or GTx, for scale-up into cGMP-compliant manufacturing without reoptimization. That is a powerful value proposition, which allows us to engage with customers at the very earliest stage of the workflow and provide a seamless path from discovery through to the clinic and commercialization, all on a single platform, which is the epitome of a therapeutic platform. We built this product around our customers’ needs, and we believe it will be additive to both instrument and Processing Assemblies, PAs, revenue in 2026 and beyond, as well as allow us to grow our SPL customers. We have built years of electroporation know-how and expertise into DTX, and I am confident we launched a product that will allow researchers to seamlessly progress from discovery to the clinic onto our GMP ExPERT platform. Turning to our guidance. As we enter 2026, the challenges that impacted growth in 2025 will have an impact on 2026. For our 2026 guidance, we expect total revenue to be in the range of $30 million to $32 million, consisting of $25 million to $27 million of core revenue, and $5 million of SPL program-related revenue. Given the timing of purchases and leases, we expect Q1 to be our lightest quarter for core revenue with a back half–weighted year. Included in our guidance is the impact of a recent notice received from an SPL customer terminating their license for reasons unrelated to our platform’s performance, along with approximately $4 million in core revenue headwind from select SPL customers, which began to impact our revenue in 2025, which I will provide further detail. We continue to believe that the headwinds facing our business are a result of the conservation of capital by biotechs in the cell therapy space, rationalization of customer programs in ex vivo cell therapy, and inventory management at our largest customer, which we expect to stabilize in 2026 and grow from that new base. There has been no fundamental change in the demand for our technology and the differentiation of our technology competitively. While these short-term headwinds influenced our revenues last year and the first half of this year, we are more excited than ever about our SPL programs and the business model, which is seeing multiple programs progressing deep into the clinic and much closer to potential commercialization. As I mentioned, embedded within the core revenue guidance, we expect revenue from SPL customers, including our largest customer, to be a $4 million headwind relative to 2025. This is about half from processing assemblies, and half from leases, a result of two factors. First, our largest customer reorganized our supply chain in 2025, impacting inventory management of PAs. Additionally, in 2025, due to manufacturing site reorganization, there was a reduction in leases midyear, so the full-year lease revenue for this customer has a difficult comparison to last year. Following in-depth conversations with this customer, we expect both PAs and leases will stabilize during 2026. Second, other SPL customers rationalized programs in 2025. On a net basis, we lost six SPL clinical programs during the year. The annualized revenue from the discontinued programs, including leases and PAs, will not recur in 2026, reflecting the headwind mentioned earlier. Twelve clinical programs we currently support are across 11 SPL partners, highlighting continued investment on the lead asset. This rationalization is part of our business model as we expect a certain number of biotech programs to discontinue. But we are consistently signing new SPLs and supporting later-stage clinical programs, which will eventually be commercialized utilizing our platform. In the last 24 months, we signed 10 new SPLs, and are now supporting more later-stage programs than ever. Also embedded within our core revenue guidance, we expect revenue growth for our non-SPL customers, which is inclusive of growth from SecurDx. With regards to SPL program-related revenue, as I shared, we are guiding to $5 million in 2026. Note, we received a seven-figure milestone payment from a clinical customer that began dosing patients in a pivotal study in the first quarter. The balance of the SPL program-related revenue guidance includes approximately $2 million of expected royalty revenue from our commercial-stage customer as the therapy ramps throughout the year. Despite these near-term headwinds, we are very encouraged by the medium-term opportunity, with five clinical programs to enter pivotal studies over the next 18 months and potentially receive commercial approval in 2027 or 2028. As I mentioned, one of these five programs began dosing patients in its pivotal study in 2026, triggering the milestone payment I referenced earlier. These programs include zuma‑cell from CRISPR Therapeutics, for B‑cell malignancies; Wu‑CAR‑T‑007 from WuXi‑GENE, for hematologic malignancies; Asia‑cell from Imugene for hematologic malignancies; and two programs from undisclosed SPL partners. I believe up to four of these programs will be pivotal by the end of the year. Outside the wave-two programs I just covered, there are another seven active clinical programs in earlier stages of development that continue to pursue FDA approval beyond 2028, and can represent meaningful core revenue and SPL program-related revenue for MaxCyte, Inc. over time. Across these programs, the total milestone opportunity exceeds $110 million. Today, we have received over $30 million in total milestone payments from our SPL customers, highlighting the strength of our portfolio-based, program-driven business model. We have 31 SPL agreements, including four new SPLs in 2025. Eleven SPL customers we work with have current clinical and commercial programs, while another eight are active in preclinical development, most of which we believe will become clinical SPL customers. However, 12 of the SPL agreements are with biotechs that are no longer active, having exited ex vivo or ceased operations. The 12 that are no longer active are part of our business model, as we do not expect every SPL we sign to result in a commercial program. There is meaningful revenue opportunity from newer SPL customers advancing toward entering the clinic. As I mentioned earlier, despite significant consolidation in 2025, SPL customers continue to advance assets on our platform, including up to six programs in late-stage preclinical development expected to enter the clinic within the next six to 18 months. This reflects continued expansion of our SPL portfolio beyond our current later-stage programs. Today, we support one commercial therapy, CASGEVY, and we remain very encouraged by the opportunity for the drug to continue to scale, with both Vertex and CRISPR recently reiterating CASGEVY’s multibillion-dollar potential. During Vertex’s most recent earnings call, it reported $116 million in CASGEVY revenue for 2025, including $54 million in the fourth quarter. Vertex noted that 147 patients with sickle cell disease or transfusion-dependent beta thalassemia globally had their first cell collections in 2025, and 64 patients received CASGEVY infusions, with 30 of those occurring in the fourth quarter. The momentum in patient collections is notable, and Vertex has indicated they expect a meaningful CASGEVY ramp in 2026 versus 2025. Despite the possibility of short-term quarter-to-quarter variability as the drug scales, we are optimistic about where this therapy is headed and truly believe in its transformative potential for patients around the world. To wrap up on the SPL portfolio, while any individual program carries risk, the multiple shots on goal we have across the same indications and across many different indications give us a high probability of generating meaningful core revenue with regulatory milestones and commercial revenues over time. We are now seeing the growth in commercial royalties starting to materialize in our revenue. This reflects the strength of our innovative business model, and we expect this trend to continue in the coming years as additional therapies are commercialized by our SPL customers. That conviction is what drives the decisions we make about how to operate this business. Moving to SecurDx, I believe 2026 is the year where the SecurDx opportunity starts to become more visible. We spent 2025 integrating the business, building the commercial pipeline, and working with early customers. The regulatory environment continues to evolve in our favor. Off-target risk assessment is becoming increasingly important to the FDA and other global regulatory agencies when reviewing gene-edited therapy. Our three assays—screening, nomination, and confirmation—serve both ex vivo and in vivo developers, which means SecurDx’s addressable market extends well beyond our legacy electroporation customer base. We acquired a relatively new start-up with an emerging and leading technology. Despite 2025 coming in lower than expectations, we expect year-over-year growth for SecurDx assay services and licenses in 2026. I remain very optimistic about SecurDx’s commercial potential and expect it to be a growing contributor to revenue in the years ahead. I want to underscore that we are entering 2026 with a fundamentally different cost structure than in prior years. While we are still investing at a rate that allows us to launch new products like ExPERT DTX, we have reduced annual cash burn by over $16 million and have put MaxCyte, Inc. on a dramatically different spending trajectory than what was planned in the prior operating model. This is the direct result of the restructuring and cost-efficiency actions we took in 2025. We do not expect to meaningfully grow our operating expenses from here, and we see a clear path to reducing cash burn further as revenue growth returns. We have a strong and healthy balance sheet, which allows us flexibility in capital allocation and investment decisions. Finally, as previously announced, Parmeet Ahuja will be joining MaxCyte, Inc. as Chief Financial Officer, succeeding Douglas J. Swirsky effective March 30. Parmeet brings more than two decades of finance leadership experience at Agilent Technologies, a global life sciences tools company. Over his career there, he held a number of senior roles spanning financial planning and analysis, operational finance, internal audit, and enterprise financial services. In particular, he led FP&A for Agilent’s global operations and supply chain organization and earlier headed controls, audit, and SOX, working directly with the board’s audit committee on risk and controls. Parmeet also most recently led Agilent’s investor relations function, giving him direct experience communicating with the investment community. We are excited about the breadth of his operational finance and governance experience as we continue to scale the company and strengthen our financial infrastructure. I want to thank Doug for his contributions to MaxCyte, Inc., and will now turn the call over to Doug to discuss our financial results. Doug? Douglas J. Swirsky: Thank you, Maher. Total revenue for the full year was $33 million compared to $38.6 million in 2024, representing a 15% decline. Total revenue in Q4 2025 was $7.3 million compared to $8.7 million in Q4 2024, representing a 16% decline. The decline in total revenue was driven by decreases in both core revenue and SPL program-related revenue. In Q4 2025, we reported core revenue of $6.8 million compared to $8.6 million in the comparable prior-year quarter, representing a decrease of 22%. Within core revenue, instrument revenue was $1.8 million compared to $1.6 million in Q4 2024. License revenue was $2.0 million compared to $2.6 million in Q4 2024. And PA revenue was $2.3 million compared to $4.2 million in Q4 2024. For the full year 2025, we reported core revenue of $29.6 million compared to $32.5 million in 2024, representing a decrease of 9%. Within core revenue, instrument revenue was $6.8 million compared to $7.1 million in 2024. License revenue was $8.9 million compared to $10.3 million in 2024. And PA revenue was $11.9 million compared to $14.0 million in 2024. These declines were partially offset by $0.8 million of assay service revenue from the acquisition of SecurDx and a modest increase in other service revenue. Total revenue for SecurDx was $1.1 million in 2025, including assay services and licenses. Of note, 47% of our core business revenue was derived from SPL customers in 2025, which compares to 55% in 2024. The year-over-year decrease reflects the impact of program exits and reduced purchasing activity from our large commercial-stage partner. SPL program-related revenue was $0.5 million in Q4 2025 compared to $0.1 million in Q4 2024. For the full year, SPL program-related revenue was $3.4 million as compared to $6.1 million in 2024. As it relates to SPL program-related revenue for 2025, $2.3 million was from milestone payments, and $1.2 million was from royalties. Moving down the P&L, gross margin was 78% in Q4 2025 compared to 74% in Q4 2024. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 78% in Q4 2025, compared to non-GAAP adjusted gross margin of 84% in Q4 2024. Total operating expenses for Q4 2025 were $9.0 million compared to $19.3 million in Q4 2024. Part of these savings is attributable to the cost initiatives we took in 2025, which began to materialize in 2025. Excluding a non-cash goodwill impairment of $3.6 million in the fourth quarter, operating expenses decreased more substantially from the prior-year quarter. The overall decrease in operating expenses was primarily driven by the restructuring and cost-efficiency actions we took in 2025. We ended 2025 with combined total cash, cash equivalents, and investments of $155.6 million and no debt. Our very strong balance sheet positions us well moving forward, providing us with flexibility to continue to invest strategically for our business, customers, and shareholders. Finally, we anticipate at least $136 million in cash, cash equivalents, and investments at the end of 2026. This represents a significant reduction in cash burn from prior years, a result of the restructuring and cost-efficiency actions we took in 2025. Let me close my remarks by saying it has been a privilege to serve as MaxCyte, Inc.’s CFO. I know that the company is in good hands with Maher and the rest of the team, including Parmeet. I will now turn the call back over to Maher. Maher Masoud: Thank you, Doug. It has been a pleasure working with you as our CFO as well. I want to thank everyone at MaxCyte, Inc. for their hard work and dedication in 2025. I look forward to executing on our plan in 2026. With that, I will now turn the call back over to the operator for the Q&A. Operator? Operator: Thank you so much. And as a reminder, to ask a question, simply press 11 to get in the queue and wait for your name to be announced. To withdraw yourself, press 11 again. One moment for our first question. Our first question comes from the line of Dan Arias with Stifel. Please proceed. Dan Arias: Hi, guys. Thanks for the questions. Maher, I have to say I really do not like the trajectory of the business right now. Pretty much all the commentary coming out of life sciences companies points to biopharma getting better this year and not worse. Our data points and others seem to suggest the same. When you look at the industry data that is out there on the emerging modality space, cell therapy trial activity seems to be increasing pretty significantly. Trial totals are way up. And so I appreciate the idea that there is some hangover from a tough ’25. But why is the core business expected to decline more this year than it did last year? Are you losing share somewhere? Because if not, then it really suggests that there is something else going on that we do not fully understand. And then ultimately, the question becomes, how do you grow this business again? Maher Masoud: Thank you for that, Dan. Look, I appreciate the question and the head-scratcher. The headwinds we are facing are $4 million, and it comes down to it is not a deterioration of our business in any way. It is not changing the fundamentals of our business in any way. We have about a $4 million headwind that we face from the customers that we lost last year. That is affecting our revenues this year, and most of it in the first half of the year. So that comes, as I mentioned, pretty much half and half. Half from the leases that we lost from those SPL customers that will not recur this year, and the other half really is from processing assemblies, a lot of it being from our largest customer that went through management and inventory management of their current PAs that they have in stock, where they are drawing down from those PAs. And on top of that, from midyear, we lost some licenses for that largest customer where they reoptimized their manufacturing footprint to go from a few manufacturing sites to a little bit less than that. And that has affected our revenues for 2026. This is not a case of capital spending in the market that is affecting us. I think we saw that more so in early 2025. That is not the case here. I really believe that this is just short-term headwinds. And in terms of where we see the rest of the year and going into 2027 and 2028, then look, if you take a step back, I believe we are going to be supporting roughly four pivotal-stage programs this year, and then five in the next 12 months. We have another seven behind it as well coming in right now that potentially can become pivotal as a second wave there. That bodes extremely well for 2027 and 2028. We also have the launch of the ExPERT DTX, as I mentioned. We are seeing a lot of good traction. We launched it less than a month ago. We are seeing a lot of good traction with customers and potential customers. We believe it will be a growth driver for us in the second half and in future years. In addition to that, we are seeing the ramp of CASGEVY. As I mentioned, we expect it to ramp throughout the year. That is the only commercial product we are supporting now, but we expect many others, especially because right now, as I mentioned, we are supporting more later-stage programs than ever before, Dan. So this bodes very well for us going to the end of the year, in 2027 and 2028. We are continuing to sign new SPLs. We feel confident we continue to sign new SPLs. I feel very good about this, Dan. Dan Arias: Does the outlook for core revenues assume that the industry demand dynamic improves over the course of the year? Or would that be upside to what you have baked in today? In other words, is your 4Q outlook at the industry level similar to what you have today, excluding the individual customer dynamic that you referenced there? Maher Masoud: That would be upside to what we have right now. So this is not a case where we are waiting for industry to come back for us to meet our core revenue guidance. That will all be upside from here, Dan. I feel very good where we are. I mean, the current guidance with the current situation we are in right now, if there is further industry demand, that is upside from where we are guiding to this year. Dan Arias: Okay. Thank you. Maher Masoud: Thank you, Dan. Operator: Thank you. Our next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group. Please proceed. Matt Hewitt: Good afternoon. And, Doug, it has been a pleasure working with you and best of luck in your future endeavors. Maybe first up, could you talk—I realize you just launched it last month—but given that this was built, the DTX that is, was built with the customer in mind, I assume that you had been working with them or at least they had maybe trialed it or kicked the tires a little bit. What does that pipeline look like, and how quickly do you think you could see that start to trickle into the revenues? Maher Masoud: We see it trickling into revenues in the second half. Anytime we launch a new product, we need about a quarter or two quarters to really build up the pipeline for that product. That is true of any product you launch. But it is already in the hands of multiple beta users. It has been in the hands of multiple beta users. When we launched this product, we did it the right way. We actually listened to our customer needs. We went through the typical NPI process where we understand the user criteria, the customer criteria, the application criteria, and we built it with that in mind. So we see the trickling starting in the second half, but we are also seeing right now some DTXs being sold in the first quarter before it is even over. So it is obviously starting to make traction there as well, Matt. But we see significant traction happening in the second half and then in future years as well. I feel very good where it is. It really is a platform that allows us to go from discovery all the way to cGMP with the same protocols. That is a true therapeutic platform that none of our competition has. Matt Hewitt: Got it. And then maybe just a reminder, given that you have four partners that could be going into pivotal studies this year, how do you account for or how do you factor that into your guidance? What kind of a haircut do you take on the potential for those milestones? Thank you. Maher Masoud: We already received one milestone, a seven-figure milestone, in Q1 this year. You can haircut it by saying there might be at least one more, but we anticipate four more. One other customer is currently in pivotal, about to dose patients, that will result in another milestone as well. So at the very least, looking at two of those four, with potential for four this year. It is more of a timing issue. If the remaining two do not come in this year, that is just because those milestones happen in the first quarter or very early part of next year. But that is how you would haircut it. The very least will be two of those four, but potential for four this year. Matt Hewitt: Got it. Understood. Thank you. Maher Masoud: Absolutely. Thank you, Matt. Operator: Thank you. One moment for our next question. That comes from Matt Larew with William Blair. Please proceed. Jacob: Hi. This is Jacob on for Matt. Thanks for taking the questions here. I just want to touch on the SPL cadence. I do not know if you mentioned on the call, but typically, you guide to three to five per year, and you typically have signed or at least announced one by the end of the first quarter. I think the last signing was in October 2025, and biotech funding trends and the whole market environment have really been improving since then. So just curious on your visibility and confidence into the cadence of SPL signings throughout 2026 and maybe what you are expecting for this year and in perpetuity. Maher Masoud: We have guided to three to five in the past. That is a number where, on average, that is something we sign in any given year. We feel good about signing at least three this year as well, and that three-to-five frames with some years where we have more than that and some years less than that. We foresee that we will sign the first one—I have Sean Menargas here with me and will put pressure on him—in the very early part of the second half of the year, possibly even before that. But I feel very good where we are. We are still the only company that can assign these licenses, and there is a good reason for it. What we provide is a differentiator. What we provide is really a platform that allows companies to go into clinical and commercial and scale and have a therapeutic that has the best chance of going through clinical development. We have done it with CASGEVY. We have signed 31 of these agreements. We signed four last year. I feel very good this year. We will continue to sign more, and do the same in the foreseeable future. And the DTX also adds to that. As I mentioned earlier, the DTX begins to seed that aspect of future SPL partners and customers for us. So I feel very good where we are. The timing of Q1, having not signed one, is just a matter of timing of when we are working with our customers in the research process, not in any way indicative of a reason why we have not signed one, if that makes sense. I am going to turn it over to Sean. Is there anything that you have to add in terms of where you see the signing? I am putting pressure on you here, but do you feel comfortable with this year as well? Sean Menargas: Thanks, Maher, and thanks for the question, Jacob. I do strongly believe it becomes a timing aspect as well. Just to frame your preference, our research customers turn into our SPL customers from there, and these can take 12 to 18 months depending on their development stage, so it becomes a timing aspect as well. But in the last 24 months, we have signed 10 SPL partners. Almost all of them are in the clinic or at least approaching the clinic from there, so looking to continue to add through this year. Jacob: Got it. Thanks. And I did just want to quickly go back to the launch of the DTX platform. You have covered it in pretty good detail so far. It sounds like feedback, traction, early contributions have all been really good. But is there any way you could quantify what you are expecting in the back half, or is it more just kind of a slow trickle and really expect material contributions in 2027? Maher Masoud: It is too early in the process. It has been a month since we launched it, and it will probably be more than a trickle in the second half. That is where you begin to see meaningful revenues in the second half and a lot more so in 2027. I will update throughout the year. Again, we are seeing very good traction at the beta sites. We are seeing good traction even outside the U.S. We have seen sales in Asia‑Pac as well. It is something that we truly believe differentiates us from any other platform. There are similar 96‑well discovery platforms out there, but none that can optimize the cGMP system like this one can, and none that can do it on a well‑to‑well basis with the same consistency, and really none that can do it where we have built into this our 20‑plus years of electroporation know‑how into this platform to make it streamlined for customers. So I feel very, very good about this, Jacob. Very good. Jacob: Great to hear. Thanks, guys. Maher Masoud: Absolutely. Operator: Thank you. Our next question comes from Mark Massaro with BTIG. Please proceed. Vivian: Yes. This is Vivian on for Mark. Thanks for taking the questions. I just had two clean-ups on the 2026 guide. Just what is baked in as far as SecurDx contribution? And then I also think you have called out royalty contribution for the first time in the guide. So could you speak to your level of visibility and confidence in that, given it is from a partner therapy? Thanks. Maher Masoud: On SecurDx, we do not break it out in the guidance, other than the fact we see material growth year over year for SecurDx in 2026 versus 2025. Significant growth there from what we had last year. Obviously, last year’s revenue for SecurDx was a bit disappointing, but it was part of our integration. We bought an early start-up. We are still integrating it, and we are still ensuring that we are building up the processes there, really building up the platform there. So we see meaningful growth this year, and that is part of our guide. In terms of royalties, we finally broke out the royalty revenue. I mentioned earlier, we expect approximately $2 million of revenue from commercial royalty, and that will ramp up throughout the year as that product ramps itself. We feel fairly good about that. That is based on forecasts we have seen with that product from public forecasts as well as what we are seeing so far early this quarter. But we expect that ramp to happen over the year. We will continue from here on out to guide for milestones and royalty on a separate line as well. Vivian: Okay. Perfect. And then I just had one follow-up, kind of higher level. I think you have previously mentioned the dynamic that customers are opting for in vivo therapies over ex vivo. So could you discuss how you are seeing an opportunity for more complex edits longer term and maybe over what time frame would you expect that customer appetite to transition to ex vivo edits? Maher Masoud: We have been seeing the complexity of editing increase over the years. This is no longer the single‑base CAR‑T therapy. We are now seeing edits of five, six edits. I see what you are getting at regarding in vivo versus ex vivo. We are still a huge believer in the actual cell therapy space. In fact, we are seeing that start to return as well. We have had some headwinds there, but if you look at our programs, we have allogeneic programs, we have autologous programs, all progressing. The SPLs that we are signing right now are cell therapy programs, some of which are even coming back where at one point they were not in the clinic and now they are coming back to the clinic. I am a huge believer in the cell therapy space. I think as these therapies become far more complex, as we are seeing, it lends itself to cell therapy, especially cell therapy electroporation. You can control the safety, you control the dose, and the science is catching up. Our platforms are built for that. That is exactly what it is. So we are seeing that come back. That is what makes me feel very good about going into the second half of the year. It makes me feel even better about 2027 and 2028. That complexity lends itself to our business, and it lends itself to what we have built over the last decade. And we are seeing that traction start to come back to cell therapy. Vivian: Okay. Perfect. Thanks for taking the questions. Maher Masoud: Excellent. Operator: Thank you. Our next question is from Matt Etoge with Stephens. Please proceed. Matt Etoge: Hey, good afternoon. Thanks for taking my questions. Maybe to follow up on Dan and Jacob’s questions. We have seen funding pick up in the space in general. So I just want to get your sense of what you are hearing from customers in terms of the macro environment, what you are seeing in terms of demand. How should we think about the recent funding backdrop flowing through potential demand throughout FY ’26? Maher Masoud: Great question. As I mentioned, this is not so much anymore a demand issue or customer funding issue. This is about the headwinds we saw, and that is what affected us in Q1. This is more of a second‑half‑weighted guide that we are giving in that core revenue of $25 million to $27 million. We are sitting here right now about one week away from quarter end. This is not official guidance, but looking at where we are on the core, we see that upticking into Q2 and then being more second‑half weighted. I feel comfortable that $6 million on the core is appropriate for Q1, and none of that is contingent upon an upside in capital spending or customer demand. That is just where we sit right now. I feel extremely good where we are at the guide. I feel good where we are in Q1. This is a case of just building back a new base from the SPL customers that we lost in 2025. We found a new base here. Our largest customer is optimizing the processing assemblies, and they are drawing down from the inventory they have. We found a new base there. I feel very good about the year as it transpires. I appreciate it. I will leave it there for now. Thank you. Operator: Thank you. And as a reminder, if you have a question, please press 11 to get in the queue. We have a question from Chad Wiatrowski with TD Cowen. Please proceed. Chad Wiatrowski: Congrats, Doug. Look forward to seeing what your plans are going forward. Just one on the DTX. You have mentioned a few orders already flowing through here in the first quarter. When you are thinking about those couple of orders, but also the bolus more in the second half, are those mostly existing customers enjoying the convenience of that? Or is this something that enables more newer customers? And how do you expect that mix to play out through the year? Maher Masoud: Great question. The current customers are going to be the easiest ones to convert over because they are going to enjoy the aspects of it. Those are the ones we are approaching. But this is a mix of both. It is not just for current customers; it is also for new customers. Because this is a 96‑well discovery platform that can now allow you to transfect primary cells, this can be used for early discovery for the in vivo space as well. So this is, in essence, a platform we have never had before, which we are targeting for our current customers now, but we are prospecting for future customers as well. We are seeing that in the early placements. Actually, one of those early placements is a new customer. It is not a current customer. So it is a mix of both, but we are being very smart about it and ensuring that we work with our current customers because that is also where you learn about some of the things you may have to make improvements on any time you launch a product. I have said it earlier: innovations are hard. We are going to continue to innovate this product. We are going to continue to launch new products in the coming years. This is one of many to come. Operator: Thank you. This concludes our Q&A session. I will now pass it back to Maher Masoud for closing remarks. Maher Masoud: Thank you, operator, and thank you, everyone, for joining us on today’s call. I feel very good about 2026, just as good as, if not better than, the future years and what we are building here. I look forward to talking to all of you in the next three months on our next earnings call. Operator: This concludes our conference. Thank you for participating. You may now disconnect.
Operator: Welcome to the Braze, Inc. fiscal fourth quarter 2026 earnings conference call. My name is Leila, and I will be your operator for today's call. After the speakers' presentation, we will conduct a question-and-answer session. I will now turn the call over to Christopher Ferris, Vice President of Braze, Inc. Investor Relations. Christopher Ferris: Thank you, operator. Good afternoon, and thank you for joining us today to review Braze, Inc.'s results for the fiscal fourth quarter 2026. I am joined by our Co-Founder and Chief Executive Officer, William Magnuson, and our Chief Financial Officer, Isabelle Winkles. We announced our results in a press release issued after the market closed today. Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement. During this call, we will make statements related to our business that are forward-looking under federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding our financial outlook for the first quarter and the fiscal year ended January 31, 2027, the anticipated benefits from and product advancements due to the combination of Braze, Inc. and ongoing developments in Braze AI technology, our expectations concerning new customer verticals, our anticipated customer behaviors, including vendor consolidation and replacement trends and their impact on Braze, Inc., our potential market opportunity and our ability to effectively execute on such opportunity, the execution and anticipated benefits of our share repurchase program, and our long-term financial targets and goals, including our expectations regarding our profitability framework. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, both available on the Investor Relations section of our website. I would also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal fourth quarter 2026 performance in addition to the impact these items have on the financial results. Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. GAAP included in our earnings release under the Investor Relations section of our website. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the financial measures of financial performance in accordance with U.S. GAAP. I will now turn the call over to William. William Magnuson: Thank you, Chris, and good afternoon, everyone. Today, we reported outstanding fourth quarter results that further validate our product leadership, go-to-market approach, and financial strategy. In Q4, we generated $205,000,000 of revenue, up 28% year over year and 8% from the prior quarter. Organic revenue growth accelerated year over year for the third straight quarter while we continued to drive operating efficiency in our business. Trailing twelve-month dollar-based net retention showed strength as well, inflecting positively during the quarter to reach 109%. Two milestones underscore this momentum in our business. During the quarter, we surpassed $1,000,000,000 in remaining performance obligations as customers increasingly commit to Braze, Inc. for their long-term customer engagement needs. And early in fiscal 2027, we passed $800,000,000 in annual recurring revenue, demonstrating continued strong demand for the high ROI delivered by our platform. We are incredibly proud of these achievements, and I thank our team across the world for their tireless efforts over the past year. For the full fiscal year 2026, we delivered 24% year-over-year revenue growth and $28,000,000 of non-GAAP operating income, with operating margins expanding nearly 400 basis points over the prior year. This performance demonstrates our ability to deliver on our profitability framework even while accelerating our investments in Braze AI and completing the successful transformation of last summer's acquisition of OfferFit into the rapidly growing Braze Decisioning Studio. We also realized $42,000,000 of non-GAAP net income in FY 2026, up from $18,000,000 last year, and generated $58,000,000 of free cash flow, providing us with the financial flexibility to invest thoughtfully in shaping the future of customer engagement. Our financial strength has also enabled Braze, Inc. to initiate its first share repurchase program, a milestone that reflects our high conviction in our long-term growth opportunity. Isabelle will provide more details on this program later in the call. Our business momentum accelerated in the fourth quarter as brands look to transform their businesses with AI and further leverage their ongoing investment in first-party data and direct-to-consumer relationships. Q4 bookings rose over 50% year over year, as we established a new high watermark for average sales price and saw particular strength in the enterprise. Net customer additions increased by 81 sequentially, up 14% year over year. $500,000-plus customers increased by 30 sequentially, up 35% year over year. Additionally, million-dollar-plus customers rose 28% year over year, up from 18% year-over-year growth in Q4 of last year. Large deal velocity was also impressive as we signed 29 deals of $500,000 this quarter, including 7 $1,000,000-plus deals and an expansion that increased our eight-figure customer count to four. Notable new business wins and existing customer expansions include Dis-Chem, GoodNotes, ID.me, King, Life360, Mytheresa, Power Us, realestate.co.nz, Shell Mobility and Convenience, and ThriftBooks, along with many others. While new logo wins were strong, upsells also showed strength, as existing customers expanded across channels, adopted new Braze AI capabilities, and deepened their integrations with the Braze Data Platform. This expansion of our land-and-expand strategy to include growth in data integrations and AI workloads is a testament to both Braze, Inc.'s composable design and our position as mission-critical infrastructure for our diverse and demanding global customer base. Competitive takeaways from the legacy marketing clouds in the fourth quarter continue to validate the market's preference for Braze, Inc.'s AI-driven omnichannel approach to deliver on modern customer engagement use cases at scale. This quarter, brands across diverse industries and geographies migrated from legacy platforms to Braze, Inc., including a global heritage footwear brand, a global genealogy company, a leading American cybersecurity company, an American department store chain, an American financial solutions company, a European travel insurance provider, a European national lottery, a luxury hotel group based in APAC, and a large Latin American bank. Looking ahead, we are well positioned to capitalize on the momentum we have been building over the past several quarters. Our go-to-market motion under the leadership of Chief Revenue Officer, Ed McDonald, who joined in late Q2, is operating at a high level, delivering a meaningful improvement in sales productivity. Pipeline generation was also strong in the fourth quarter, indicating robust market demand for our AI-driven solutions, particularly in the enterprise. The field of customer engagement is moving faster now than it has in years, and Braze, Inc. continues to be perfectly positioned to turn AI disruption into opportunity. By driving platform innovation in tandem with the evolving craft of engagement, Braze, Inc. has been actively redefining the front door to marketing technology for most of the last decade. This innovative leadership continues to drive share gain in the enterprise and it is why both our customer community and broader partner ecosystem continue to compound with ambition and optimism. Our competitive position rests on four foundational strengths that position us to capitalize on AI-driven disruption. First, the Braze Data Platform and customer engagement stack serve as critical infrastructure for our customers, delivering secure and reliable performance at massive scale. Unlike applications that manage workflows and tasks that are ultimately executed by humans, Braze, Inc. has always been a platform wielded by small teams of builders to directly execute massive, complex workloads. During calendar year 2025 alone, we powered 4.5 trillion messages and Canvas actions, processed over 25,000,000,000,000 data points, executed 3,100,000,000,000 AI decisioning inferences, and made 8,700,000,000,000 updates to our user profile system of record. This execution capability provides brands with confidence to deploy business-critical programs for entire global audiences, confidence that no point solution can match. Second, our vertically integrated data and decisioning architecture allows for capabilities that no one else can replicate. The Braze Data Platform feeds real-time context into control planes like Canvas and Decisioning Studio, then serves as a substrate for agentic AI execution. This tight integration between data infrastructure and AI decisioning combined with the most comprehensive set of marketing, conversational, and product channels on the market delivers differentiated outcomes rooted in real customer data, not just generic LLM outputs. Third, our composable AI architecture is compounding the value of our deep infrastructure and comprehensive platform. At our Forge customer conference in September, we announced the upcoming betas for both Braze AI Operator and the Agent Console to be available in Q1 and Q2. Last month, we beat those delivery timelines by months and launched both Operator and Agent Console into general availability. Leveraging the flexibility of composable data and the power of composable intelligence, these products have been able to quickly spread their wings and capability because they wield the differentiated power, performance, and scale that Braze, Inc. has delivered for years. The excitement from customers and partners around both launches has been palpable. Agent Console is seeing rapid uptake across a wide array of use cases, and Braze AI Operator is accelerating and evolving for thousands of Braze dashboard users every week, automating campaign, Canvas, and agent creation, deepening quality assurance checks, and uncovering data insights through simple conversational prompts. Operator is first trained with Braze, Inc.'s documentation, use case libraries, and source code and then enhanced by a comprehensive knowledge of each customer's data models, brand strategy, and integration details, enabling each Braze user's Operator to answer difficult questions and execute complex tasks as it navigates the dashboard in front of their eyes. Operator also integrates with Snowflake's Cortex to drive analytics insights that feed back into campaign strategies, and its skills continue to advance rapidly, including the recently trained capability to build directly inside the Agent Console. While eager beta testers of the Agent Console repeatedly asked us for more templates, we leaped over their request for faster horses and instead delivered a powerful prompt-to-agent capability that turned simple inspiration into sophisticated agents, each specifically configured according to a customer's Braze integration and existing marketing programs. These agents are already being deployed to enhance customer journeys in Canvas and to drive data enrichment workloads in the Braze Data Platform's Catalog feature. And all of this works in tandem with Braze AI Decisioning Studio, which harnesses modern reinforcement learning to achieve maximum performance in the most important parts of the user journey. Just as we delivered the most comprehensive solution for cross-channel marketing in the age of deterministic automation, we are building Braze AI to combine the flexibility of a composable architecture with the power of frontier AI across multiple fields of research to deliver a comprehensive solution for AI-driven customer engagement. Fourth, we believe Braze, Inc. occupies a unique position in the software landscape as a rare hybrid of a revenue-driving engine and mission-critical operational capability. Whether it is the urgency of responding to an evolving emergency, the pressure of publishing a message that will be read by hundreds of millions of people, or the criticality of executing deeply optimized marketing programs that drive a business's most important quarterly results, brands trust Braze, Inc. with their most important workloads because we provide the agility, observability, and reliability that business-critical infrastructure demands. In an environment where companies must maximize every dollar of uplift, this proven ability to deliver measurable ROI at scale makes Braze, Inc. an essential and highly optimized component of the modern enterprise stack, not a discretionary tool. We look ahead, Braze, Inc. will continue to invest with focus to remain at the frontier of consumer and technological change, turning disruption into opportunity as our customers transform their jobs, their businesses, and the experiences that they deliver to consumers. We are rapidly advancing our platform and enhancing our global customer community to scale agentic use cases across marketing programs, customer conversations, product experiences, and data workloads, enabling brands to turn context into connection and achieve in the AI era what they have been striving for all along: stronger business performance built on durable customer relationships. I will wrap my remarks by emphasizing what a great position we are in as we enter our next phase of growth in fiscal 2027 and beyond. Thank you for your interest and support. I will now turn the call over to Isabelle. Isabelle Winkles: Thank you, William. And thank you, everyone, for joining us today. We reported an outstanding fourth quarter with revenue increasing 28% year over year to $105,200,000, driven by a combination of existing customer contract expansions, renewals, and new business. Braze AI Decisioning Studio, formerly known as OfferFit, contributed $5,700,000 of revenue in the quarter. This implies an organic revenue growth rate of 24.3% year over year. We are excited to see continued strength from our core business as organic revenue growth accelerated for the third sequential quarter, and we realized robust bookings and strong demand signals for Decisioning Studio and our other AI products. As William mentioned, in February, Agent Console transitioned to general availability, and we are pleased to report immediate and persistent consumption of our Flexible Credits in its first month of release. In Q4, our total customer count increased 14% year over year to 2,609 customers as of January 31, up 313 from the same period last year and up 81 from the prior quarter. Our total number of large customers, which we define as those spending at least $500,000 annually, grew 35% year over year to 333, and as of January 31, contributed 64% to our total ARR. This compares to a 62% contribution as of the same quarter last year. As a reminder, a customer is counted when their service date is effective, not when a contract is signed. As such, some new logos won in the fourth quarter will appear in our customer count in 2027. Measured across all customers, dollar-based net retention was 109%, up from 108% in the third quarter of this year. Dollar-based net retention for our large customers was 110%, in line with the third quarter of this year. Expansion was again broadly distributed across industries and geographic regions. Revenue outside the U.S. contributed 45% to our total revenue in the fourth quarter, consistent with the prior quarter of this year and the prior year quarter. In the fourth quarter, our total remaining performance obligations were just over $1,000,000,000, up 30% year over year and up 16% sequentially. Current RPO was $642,000,000, up 27% year over year and up 12% sequentially. The strong year-over-year growth in RPO and CRPO was driven by four factors: strong Q4 bookings, healthy Q4 renewals, a large quarter for available renewal dollars, and a small increase in overall duration of contracts. Non-GAAP gross profit in the quarter was $138,000,000, representing a non-GAAP gross margin of 67.2%. This compares to a non-GAAP gross profit of $112,000,000 and non-GAAP gross margin of 69.9% in the fourth quarter of last year. The decrease in year-over-year margin percentage was driven primarily by higher premium messaging volumes and hosting costs, partially offset by improved efficiencies in personnel costs. Non-GAAP sales and marketing expenses were $70,000,000 or 34% of revenue compared to $60,000,000 or 37% in the prior year quarter. While the dollar increase reflects our year-over-year investment in headcount costs to support our ongoing growth and global expansion, the improved efficiency reflects our disciplined approach to investment as we continue to scale and expand our go-to-market organization. Non-GAAP R&D expense was $29,000,000 or 14% of revenue compared to $23,000,000 or 14% of revenue in the prior year quarter. The dollar increase was primarily driven by increased headcount costs to support the expansion of our existing offerings as well as to develop new products and features to drive growth. Our R&D expenditures reflect our intentional yet disciplined technology investment and are in line with our long-term non-GAAP R&D percent of revenue targets of 13% to 15%. Non-GAAP G&A expense was $25,000,000 or 12% of revenue, compared to $21,000,000 or 13% of revenue in the prior year quarter. The improved efficiency reflects increasing scale across public company expenses and the benefit of leveraging strategic locations for headcount expansion. Non-GAAP operating income was $15,000,000 or 7% of revenue compared to a non-GAAP operating income of $8,000,000 or 5% of revenue in the prior year quarter. Non-GAAP net income attributable to Braze, Inc. shareholders in the quarter was $11,000,000 or $0.10 per share, compared to $12,000,000 or $0.12 per share in the prior year quarter. Non-GAAP net income was negatively impacted by a $5,000,000 purchase accounting adjustment related to the deferred tax liability from OfferFit, the reinforcement learning engine company acquired in June. Excluding this one-time adjustment, non-GAAP net income and earnings per share were $16,000,000 and $0.15, respectively. Now turning to the balance sheet and cash flow statement. We ended the quarter with approximately $416,000,000 in cash, cash equivalents, restricted cash, and marketable securities. Cash provided by operations during the quarter was $19,000,000 compared to cash provided by operations of $17,000,000 in the prior year quarter. Including the cash impact of capitalized costs, free cash flow in the quarter was $14,000,000 compared to $15,000,000 in the prior year quarter, and as we have noted in the past, we expect our free cash flow to continue to fluctuate from quarter to quarter given the timing of customer and vendor payments. Before turning to guidance, I would like to take a moment to highlight the Board's $100,000,000 share repurchase authorization. This authorization reflects our confidence in our fundamentals, outlook, and disciplined approach to capital allocation. We believe the share repurchase represents an efficient and meaningful way to drive shareholder value. As we noted in our earnings release today, the repurchase program includes a $50,000,000 accelerated share repurchase transaction with respect to our stock, which we plan to enter into before the end of the first quarter. In addition, our guidance for share count and EPS includes only the estimated impact of the $50,000,000 ASR. For the first quarter of 2027, we expect revenue to be in the range of $204,500,000 to $205,500,000, which represents a year-over-year growth rate of approximately 26% at the midpoint. As a reminder, our first quarter contains three fewer days compared to the other three quarters of the year, which each contain 92 days. First quarter non-GAAP operating income is expected to be in the range of $10,000,000 to $11,000,000. At the midpoint, this implies a non-GAAP operating margin of approximately 5%. First quarter non-GAAP net income is expected to be $11,000,000 to $12,000,000 and first quarter non-GAAP net income per share in the range of $0.10 to $0.11 based on approximately 112,000,000 weighted-average diluted shares outstanding during the period. For the full fiscal year 2027, we expect total revenue to be in the range of $884,000,000 to $889,000,000, which represents a year-over-year growth rate of approximately 20% at the midpoint. Fiscal year 2027 non-GAAP operating income is expected to be in the range of $69,000,000 to $73,000,000. At the midpoint, this implies a non-GAAP operating margin of 8%, a more than 400 basis point improvement versus fiscal year 2026. Non-GAAP net income for the same period is expected to be in the range of $69,000,000 to $73,000,000 and net income per share is expected to be $0.61 to $0.65 per share based on a full-year weighted-average diluted share count of approximately 113,000,000 shares. It is an exciting time at Braze, Inc. We remain committed to delivering industry-leading customer engagement solutions powered by AI as we continue executing against our long-term financial targets. And with that, we will now open the call for questions. Operator, please begin the Q&A. Operator: We will now begin Q&A. For today's session, we will be utilizing the raise hand feature. If you would like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you have been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Our first question will come from Ryan MacWilliams with Wells Fargo. You may now unmute and ask your question. Ryan MacWilliams: Hey. Thanks for taking the question. For William, great to see three straight quarters of organic revenue reacceleration in the business. I know last year has benefited from some go-to-market changes along with moving past COVID-era customer renewals. But how do you feel about the underlying growth trajectory of Braze, Inc. from here? Has it improved more sustainably? And I know it is early, but how do you envision AI layering in to support growth trends? William Magnuson: Yes. Absolutely. Thanks, Ryan. It has been a great back half of the year heading into Q4. I think that the biggest difference in Q4 was also the differentiation of our AI roadmap, especially coming out of our Forge conference in September. It is clear that customers can see where we are going. They can see how our longstanding advantages are being made more and more capable with further investments in Braze AI. That helped with both win rates and deal velocity in Q4, as a lot of the competitor FUD just did not hold water against both our offering and our pace of new product delivery. We are also seeing stronger momentum with the partner ecosystem, including across both the global agency groups and the more focused regional players that are growing super fast through partnership with us. And our global sales leaders are moving with high velocity. And so I think that when we look at it all coming together, you have a robust product roadmap that is moving at pace. There is really exciting AI innovation that is not only bringing new capability, but it is also making our existing capability more accessible and more leverageable by our customer base. And we are out in front with that R&D advantage also being combined with a pricing model that has always been consumption based with a global go-to-market organization that operates in all the world's major markets. And a global customer community that has always been the world's most ambitious and creative marketers who have been on the leading edge of rapidly building with Braze, Inc. from the beginning. And so I think that this is just a great moment for all of our existing scale, performance, and innovation advantages to come together, and we are excited for this year. Ryan MacWilliams: Really appreciate the color there. And then for Isabelle, it seems like the initial full-year revenue guide is slightly stronger than past years. I would love to hear if there is any change to guidance philosophy here, and what were some of the key points that helped you build up to the full-year guide? Isabelle Winkles: Yes. Thanks for the question. So first of all, no change in the guidance philosophy. Really excited about the momentum that we saw in the business coming into Q4, coming out of Q4 in particular, as William mentioned, across a number of different dimensions. We are seeing more two-year contracts. We are seeing larger in-quarter contract sizes. Upsells continue to be really strong. There is real excitement around our AI capabilities, as William mentioned. Ongoing strength in the enterprise, ongoing strength in the Americas, which has been something we have been working on. And so there is just a lot of momentum across a number of different dimensions. I think as we mentioned, bringing Ed on in the middle of last year, he has been furthering our efforts across a number of different things that we have already put into motion. And it has been really great to see some of that success across verticalization. So, really excited for that, and you are seeing that in our guide. We are really comfortable with how we have guided for the year. Operator: Our next question will come from Scott Berg with Needham. Scott Berg: Hi, everyone. Really nice quarter, and my apologies, dialing in from an airport in case there is background noise. But first question I wanted to ask was off of a channel check or customer conversation, I guess, that we had during the quarter. We got to speak with one of your largest customers, and they noted to us that they had an internal project that spanned 18 months and over $10,000,000 in cost to try to actually replace their entire Braze, Inc. deployment at this well-known brand. But they killed the project because they were only able to achieve about a third of your functionality even after an 18-month time frame. I guess, William, as you think about a customer in this situation that might want to try to custom code their own platform with one of the generative AI, LLM models, what is most difficult to replace at the end of the day that makes a customer's approach to probably not feasible? William Magnuson: Yes. I touched on this in the prepared remarks, but I think that the meat of this answer lies in the combined requirement of, one, a tightly integrated high-performance infrastructure that encapsulates both the context and the intelligence layers; and, two, the comprehensiveness required to handle both the vastness of the modern enterprise data landscape on the ingestion side and then the complexity of customer journeys on the output or the interaction side. Within Braze, Inc., the Braze Data Platform is the dedicated context layer and Canvas provides the control plane. They work together to engineer the context that the Agent Console and other Braze AI capabilities harness to drive higher-performing personalization and orchestration decisions. For B2C audiences, which, of course, is where we primarily work, this has to happen at massive scale, and performance needs to be able to drive real-time interaction across an ever-growing set of channels and direct-to-consumer product interfaces. Over a third of Braze, Inc. customers use us for five or more channels. More than half of them use us for four or more. And amongst our $500,000-plus customers, more than 90% use our SDK. Over 80% use Currents to export the data that Braze, Inc. generates. And already 50% are now using Cloud Data Ingestion, which is our reverse ETL product that connects directly to cloud data warehouses like Snowflake, Databricks, and Google BigQuery. You overlay that with privacy, security, and regulatory concerns that are related to first-party data and communication consent. Then you add the operational demands that I also mentioned in the prepared remarks of things like demanding marketing schedules, the urgency of capitalizing on cultural moments or managing through emergencies. And then finally, just consider how much investment is already going into building these direct-to-consumer audiences and first-party datasets in the first place. The combined customer acquisition costs and the product investments for major consumer brands, consider the amount that that represents. That is the investment that is already made. Then customer engagement is a multiplier on that investment, and that means that even small basis points matter when it comes to performance. In finance, you understand the importance of having an edge in data, especially when it is driving decisions on large positions. I think sophisticated customer engagement is that same edge on a brand's customer acquisition investment. And we see time and again that settling for good enough just to save a little bit of money on the software line item is really throwing away enterprise value optimization. And so I know that is multifaceted, but I think that what you see in that anecdote that you shared is that there is a combination of the need for vertical integration, for reliability, for performance, and for comprehensiveness. And then you need to interface that with privacy, security, regulatory complexity, and the need for this to be operated in real time, and doing so with an external environment and complicated businesses and complicated consumer journeys. All that complexity needs to be managed. And that requires, I think, a professional focus on building the tooling and the platforms that address this problem. Scott Berg: Excellent answer. Well understood. Thank you. And then I guess from a follow-up perspective, I have been at the ShopTalk conference yesterday and today, and all have a big presence here, obviously. But there is a significant amount of brand momentum with new universal commerce protocol in a couple of different areas. I know you all had released your SDK for ChatGPT last fall to take advantage of some of the apps they were embedding in their platform. But as your customers use more of this UCP to capture transactions on these new channels and platforms, how do you all benefit? How do you capture some of that first-party data within that workflow or process? William Magnuson: Yes. So I think two things. One is that Braze, Inc. will always invest in every new consumer interface that helps us understand the customer and the customer journey better—any source of first-party data. And we will also invest in areas where we can communicate with customers and where we can help drive better personalization for the product experiences that are delivered to them. And, no matter what happens with consumer devices or app stores, the most valuable customers to a brand are going to continue to be those that they have a direct relationship with. Braze, Inc.'s bread and butter and focus has always been about helping brands expand and strengthen those audiences that they can access through direct-to-consumer interfaces, or other messaging channels that have low marginal cost that are dictated based off of user consent and the right to communicate with them, instead of needing to pay to acquire the right to put a message in front of their eyes over and over again, which of course is a great way to acquire customers, but cannot be how you run a business over the long term. And also managing the first-party data that contextualizes them and then orchestrating the product and messaging interactions that enrich those relationships over time. And so I think we are always on top of new innovations and developments and new direct-to-consumer interfaces of all kinds. We are always interested in how they can help us learn about customers better, communicate with them in new ways. And, of course, the more complex that landscape gets, the stronger the answer that I provided to your first question is. Because it means that there is even more complexity for where the data comes from. There is even more complexity for where the interactions are. And as I mentioned in response to Ryan, I think that when we look at agentic workflows, they are also characterized by moving even faster. And that is a place where our focus on performance that we have always historically had is going to be even more important competitively. Operator: Your next question will come from Raimo Lenschow with Barclays. Raimo Lenschow: Hey. Thank you. Can you hear me okay? Operator: Yes. We can hear you great. Raimo Lenschow: Okay. Perfect. Thank you. Can I start with DBNR? It got better to 109. You talked about it the last few quarters that it is a lagging indicator that kind of takes some time to improve, but it is really nice to see the improvement now. Can you talk a little bit about the journey we should expect from here? That is my first question. Second question is with Ed joining in Q2, normally, big changes to go-to-market happen more at the beginning of a new year. Is there anything we should be aware of as we go into this year in terms of changes that we should expect there? Thank you, and congrats from me as well. Isabelle Winkles: Yes. So on the DBNR, one thing that I had been providing is at least a directional view on the in-quarter organic number. And so over the last couple quarters, we had talked about it being a little bit below 107 and then a little above 107 and then continuing to kind of trend up from there. What I can say here is that the in-quarter organic is above where we are reporting. So I think the direction of travel here, we are very comfortable with what we are seeing. We are really excited about the momentum in the business that is driving this. And so it is a lagging indicator but I think we are comfortable that some of the troughing that we have experienced over the last couple quarters—we have talked about being through the belly of the beast—and we are, in fact, through the belly of the beast. So hopefully, that is some helpful color, though we do not specifically guide on the metric. And then with regards to Ed, look, I think in my last set of answers to questions here, I was indicating that Ed has been driving forward a number of initiatives that we had already put into motion. And so not a lot of massive changes. He is trying to be more effective and efficient about bringing on the new headcount and being rapid in the right areas, being disciplined about where that is being deployed, building out internal capabilities to help our sales team be more enabled and move more quickly. And he—you know, I think we said in the beginning, not only has he seen the movie, but he has seen the remake, and we are definitely seeing the impacts of that, and leveraging his relationships across the potential hires and prospects here. So nothing material that we need to call out, and he is moving things forward in a way that we feel really happy about. Operator: Your next question will come from Parker Lane with Stifel. Parker Lane: Hey, guys, thanks. Isabelle, maybe one for you on gross margins. If you look at premium messaging channel growth, you look at some of these new products you have and your comments about the immediate consumption of credits you see from Agent Console, what is the impact to the predictability of gross margins that you are seeing in the business? And what is the right way to think about not only the near-term picture, but sort of the mid-range picture for gross margins as well? Isabelle Winkles: Yes. So, look, we have talked about the evolution of the premium and how that mixes in. And just keep in mind that, really over the last couple of years, the only new channels that we have introduced are, in fact, these premium channels. So now we are introducing, certainly with the advent of Agent Console and some of the other features here, things that mix in with a slightly better margin. That said, it is starting off of a small base, and so it is going to take some time for all of that to kind of work itself in. And certainly, the premium messaging is still in demand by our customers. And so I do not think there is so much of an issue necessarily with predictability because we continue to look at that on a fairly detailed basis. But, certainly, we have got eyes on the direction of travel. And really, I think what is important is the 8% operating income margin that we feel really comfortable with for the year, and we are going to continue to manage to that. Parker Lane: Got it. Thanks. And, William, one for you. You talked earlier about AI not just helping in the form of new product, but making your existing capabilities more approachable and accessible. I was wondering if you could provide a concrete example or two of what you are seeing there. And where do you expect that to translate into business results? Is that better win rate, better utilization, less churn, all of the above? William Magnuson: Yes. So I think that when you look at the history of Braze, Inc., we more often are held back by making sure that our customer base can really flex into the full power and sophistication that Braze, Inc. has to offer. And one of the things that is most exciting to me about the Braze AI potential right now is that we are both making Braze, Inc. smarter and more powerful, and we are making it easier and faster to use. And so as we redefine that new front door to marketing technology again, the door is both easier to open and when you get to the other side, there is a lot more excitement and value generation there. And we are already seeing this in the Agent Console. I mentioned an example in the prepared remarks where we had a lot of customers who were working on building new agents within the beta test and were asking for more templates, more ideas, etc. And we actually went through and we had already been working on prompt-to-campaign, prompt-to-email generation, prompt-to-Canvas, where people can actually vibe-code their Canvases directly from the Braze Operator. And not only is it providing you advice, it is literally grabbing control of the dashboard and you watch it happen in front of your eyes. And so you are both having the Operator act for you, but you are also learning how to use it at the same time as you watch it. And that allows for marketers to then immediately go in and check things, tweak them, refine them, etc. I think as a platform that is used for publishing at massive scale or where there is a professional skill set of high consequence, when you are running marketing programs that you are relying on to hit your quarterly numbers or that need to go out to a 100,000,000 people around the globe in response to a critical emergency or to take full advantage of an evolving cultural moment or what have you, these are all places where you need to combine both rapid usability with high confidence. And being able to see the Operator building more confidence for people, speeding up their own workflows, and providing that inspiration with our existing feature set is incredible. Then when we go over to the Agent Console, where people are getting used to prompting, but there is still a lot to do there, and building a good agent does have a skill set around it. There is still some work that you need to do around the outputs from the agent and helping make sure that there is consistency and that you are getting the right context in the context window. And we have built incredible capability in Agent Console to manage that. Even more exciting is that Operator is helping write and inspire those agents for people. And so it is just driving faster adoption. It is driving higher levels of ability for people to be able to use new features that they maybe had not looked at before. And helping really build stronger confidence for them to use a system like Braze, Inc. that has always been a small number of builders and a small number of marketers wielding it at massive scale. And that has a stress and a pressure and a consequentialism to it that having that Operator assistant there with you really helps increase confidence and we think is going to drive a lot more usage. Operator: Your next question will come from Brett Huff with Stephens. Brett Huff: Good afternoon, and congrats on seeing in the financials stuff that I know you all have been working on kind of in the background for a long time. So nice to see that. Two questions. One big picture—I think this is for you, William. As you are hearing—as your conversations with folks you are selling to on AI, our checks tell us that data heterogeneity, lack of AI talent, governance issues are all roadblocks. At the same time, companies seem to want quick-hit ROI things that are happening in order to justify continued spend. How are you—how are those conversations going with Braze, Inc.? I think your point—more features, easier to get to—but is there some anecdotes there that give us a little bit of meat on the bone on that that we might be able to sort of get our head around? William Magnuson: Well, I think, first of all, every software investment decision being made right now, you have to have confidence that the company that you are spending the time to integrate with, to enable your teams on, and to build with and commit to has their arms around taking advantage of AI innovation. And so I think that is table stakes for everyone even if you, as a team, do not have confidence that you are going to be able to use it all on day zero, or maybe the incremental budget to drive new use cases is not there yet. There is simply no one that is making a switch in a software vendor right now without having the confidence that it is the right vendor for them to bet on as they move into this future being transformed by AI. And that is why, if you go back to my answer to Ryan's first question and talking about the strength in Q4, so much of that just came out of the confidence in the roadmap and the confidence in the beta test. We were able to show live demos of Operator and Agent Console. Now, obviously, they are out there in general availability, so it is even more palpable for everyone. And I think that a lot of the things that you just said are true. There is a lot of sources of anxiety around there. A lot of this is still dynamic. It is changing really fast. But at the end of the day, we already see Agent Console driving stronger performance in ongoing campaigns. These are not brand-new experimental use cases. The same customer journeys are actually just being executed on with higher performance. It is driving real revenue, real performance uplift. It is doing so in an environment that is easy to test and experiment and scale with. I mentioned Canvas as an important control plane. I think when you look at the difficulty of deploying AI in a lot of enterprises, a lot of it has to do with context engineering. It has to do with observability and governance and that control plane. And when you look at Braze, Inc., the Braze Data Platform is providing that context engineering. Canvas is providing that control plane. We have Decisioning Studio as another angle of being able to bring in agentic decision making over deep data science, when that reinforcement learning approach is the right AI technique to apply depending on where you are in the customer journey. And we have this full spectrum of the right solution and the right approach for the complex problem space of customer engagement, and we can help guide customers to that. And the vast majority of it is relying on the combination of a reliable, high-performance, stable, and secure infrastructure that Braze, Inc. has always maintained as a competitive advantage in our space. And now we are multiplying the value of that with our investments in Braze AI. Brett Huff: That is super helpful. Thanks for the insight. And, Isabelle, we are hearing more and more about verticalization, and we also got an update on the gross margin—sort of maybe we are going to get some tailwinds on that given the new AI products. Can you talk a little bit about long-term—any change in long-term sort of puts and takes on the gross margin pressures? And then should we think about any step change for verticalization spending, or is that just a matter of course? Isabelle Winkles: Yes. So I think on verticalization, I would just consider that kind of a matter of ordinary course. We are going to continue to expand slowly but methodically, just deepening our focus on some of the verticals. We already started this over the last couple of years, and I would just continue to expect that to expand. And then from a gross margin perspective, yes, look, we have been talking about the impact of some of the premium messaging. And then I did indicate that in my response to one of the last questions that some of these new products—and Agent Console—do mix in with a better-than-company-average margin. But it is obviously starting off from low and so will take a bit of time for that to kind of mix in more meaningfully. And so what we are really focused on is the operating income down to the bottom line, and we feel really good about that 8%. Operator: In the interest of time, please limit to one question. Our next question will come from Arjun Bhatia with William Blair. Arjun Bhatia: Perfect. Thank you, guys. William, maybe can we touch on—it seems like Agent Console is obviously getting a lot of traction, and I am just curious if you can kind of put that into perspective of when that might help monetization, which types of customers do you think will adopt that first? And then in the broader scheme of things, we are hearing a lot about obviously third-party agent proliferation. So I am curious how that mixes in with Agent Console and if you have any views on what access third-party agents would have to Braze, Inc. or not have to Braze, Inc., and the data that you store for your customers. William Magnuson: Yes. So I will just hit those topics one by one. So regarding Agent Console and pacing of adoption and revenue, as I shared in the prepared remarks, both Agent Console and Operator went into general availability months ahead of schedule, and we are already seeing great uptake on both. After just a few weeks, more than two-thirds of our customers are now actively using Operator, and we are watching Agent Console adoption grow week over week. But I think we are going to have a lot more to share about both of those at City x City London, which is our second-largest event of the year, just one month from now on April 23 at Olympia, London. And we are also lining up the entire company and our ecosystem to help push adoption. Agent Console is already showing material results for its beta testers and early adopters, and we are excited for it to spread rapidly across the customer base. But also remind you and everyone else quickly that Agent Console consumes Flexible Credits. So it is consumption-based pricing, but the revenue is recognized the same way that it is for messaging volumes, which is to say that it is ratably over the length of the contract. So we expect usage of Agent Console to be supportive of early renewals and upsells, but keep in mind that the consumption of credits does not lead to immediate revenue recognition in our contracting model. We do have the benefit that we have been shifting to the Flexible Credits model over the last few years, and the customers who have adopted the new credits plan—which has basically been the default for all renewals and new business over the course of the last couple of years, so it is already the majority of our customer base—already have credits that are ready to be used for Agent Console. We do have a portion of our customer base that is still on older pricing that we are working hard to move into this new world so that they can also rapidly adopt Agent Console. And that is something that we will be focused on throughout the year. With respect to looking at other tools, I think Braze, Inc. has always been built for composability and built for change. The combination of our composable architecture, our high-performance infrastructure, and our Flex APIs are not just a strong foundation that we use to build our own innovation. I think they are also really well suited for marketer workflows that are both transforming and inflecting through the use of other AI tools. We have always been architected to be composable, to be ecosystem-neutral, and to integrate with other best-of-breed tools across the modern marketing stack. And that is both for plugging in to enhance things like orchestration and predictive analytics decision making as well as personalization. It is also for evolving new channels, new use cases, new AI capabilities, etc. A few other things. I think we are also seeing that performance in the context layer is more important than ever with agent-to-consumer interactions. Agents move fast and they are tireless, and we think that that is a perfect match for the performance and reliability advantage that Braze, Inc. has always maintained over competing and homegrown products. And, as I mentioned earlier, we have always been a platform where leading-edge marketers with a builder mindset can deploy and optimize sophisticated strategies. And so I think what we are doing with Operator and Agent Console is simultaneously putting more power in their hands and making it easier to use. There are also big advantages to a tool like Operator being inside the Braze, Inc. dashboard information environment, having access to our internal use case libraries, the skills that we have built, the customer's dashboard information architecture, so that it can adapt recommendations and run the dashboard for them with knowledge of their specific Braze, Inc. integration. We actually had a really great anecdote on Braze Operator that was shared by a customer recently: they were working through a difficult challenge with Liquid that they had spent over an hour on using one of the big chat AI products, and Operator solved the problem for them in a minute because Operator had full knowledge of the way that Braze, Inc. uses Liquid, where it was in the dashboard, and the information architecture. And so I think being able to adapt both the context and the semantic layer and be able to train the Operator with the skills and the knowledge of the dashboard architecture is going to provide differentiation. But we have always been composable, built for change, and extensible. And so we are also already seeing a lot of customers that are using the Braze MCP Server and using our powerful and flexible APIs in order to innovate their own workflows outside of the ecosystem, and we embrace both of those through our composability. Operator: Your next question will come from Taylor McGinnis with UBS. Taylor McGinnis: Yeah. Hi. Thanks for taking my question. William, so I think there is a view out there that customer engagement and marketing is more workflow-heavy and lacking data moats that could make it more vulnerable to AI. You talked a lot about the context layer and what Braze, Inc. is doing there. But could you just maybe unpack that for us? What proprietary data moats does Braze, Inc. have, and does that give you an edge in creating some of the AI solutions you talked about, like Decisioning Studio and Agent Console? William Magnuson: Yes. So let me answer that on two dimensions. First, talking about context engineering with respect to Agent Console. And then second, talking about when I talk about us having a full spectrum of AI technologies and how we can compose them together to drive more innovation in the future. So first on the context engineering point, I think context engineering, of course, requires comprehensive rapid access to data. I think that underscores the criticality of the Braze Data Platform. And we were very happy to share some of the scale numbers on the Braze Data Platform recently—over 25,000,000,000,000 data points processed last year, and widespread adoption of the multitude of integration options that we have. And I think that is the beginning of the story because context engineering requires not just access to huge amounts of data quickly, but also deliberate design. And not just because of the cost and performance considerations of large context windows, but also because of the deliberate management of the attention of agents, which is a relatively new concept. We generally tend to think about data as just storage costs and latency and throughput. This idea of attention is really important as well because you can actually have context windows rot. And unless you can keep the agents focused, you start to see outcomes go down and the quality go down. And it sounds great to be able to dump a 200-page PDF brand book and every historical campaign result and every raw data point that you have ever seen about a user into a large context window and hope for the best, but that is not only slow and expensive. It also leads to lower-quality outcomes and higher volatility that creates both brand risk and lower performance. And so by taking the environment that we built in Braze AI with the Braze Data Platform, with Canvas and Agent Console, they are designed to solve that problem for customers. It lets them and their Braze AI Operator rapidly build, test, and scale new agent ideas that they have with tremendous promise to improve consumer experience, enhance their own bottom lines, and do so in a way where the context is being managed and governed in a way that is privacy- and regulatory-compliant, and it is being engineered in a way that it is managing the attention of the agents and it is doing so in a way that keeps performance, quality, and consistency top of mind. And so I think that whole problem space has a lot of additional complexity in it. We are working really hard to solve that for customers, and that is what is going to be able to drive both defensibility and rapid adoption. And then, going from there over to Decisioning, you have heard me speak about the full spectrum of AI technologies that Braze, Inc. is investing in. And I think that this is another advantage of both our R&D scale and the composable high-performance infrastructure that we are built on top of. When we look at Decisioning, there is another paradigm rising that relies on agentic intelligence overseeing deep data science that relies on reinforcement learning. And for those that maybe have not looked at Decisioning Studio closely in the past, this approach is similar to what personalizes your Instagram feed and injects ads into it. And it is the best way to enable the decisioning system to rapidly learn from past interactions across the rest of your customer base. You cannot just take, “Here are the last 10,000,000 push notifications that I sent, and how everyone responded to them and everything about them,” and jam it all into a context window and expect an LLM to be able to keep its attention in the right place and make sense of that. But by using decisioning and reinforcement learning around that, you are actually able to find those hidden points of resonance between the content and the engagement strategy and the individual customers and be able to drive that interaction. And that is also a field that is rapidly advancing. I have talked about how today it is best deployed to optimize the most valuable transition points in the customer journey, like when a free-trial streaming subscriber is upgrading to premium or when an on-demand or a banking customer adopts a new service or an add-on product that makes them more valuable and secure at the same time. So you want to bring that kind of heavyweight data science approach into those problems exactly because they are your most valuable and they are where you want to have the best performance uplift. But over time, we plan to continue to use decisioning science combined with agentic reasoning to increase the applicability of both approaches across more and more of the small moments in a customer journey as well so that customers can continue to harness these different approaches to AI and combine them together to get the best outcomes for consumers and for their businesses. And so, when we look broadly across the space, I think there is so much opportunity for additional value to be created out of depth. And, if you go back to the question from earlier about why it is hard to build Braze, Inc. and where that incremental value comes from, and think about the leverage that you get out of the investment made in building first-party audiences, combining together these optimizations and being able to compound them over time and to be deliberate about it is exactly how you drive additional bottom line. It is how you drive higher loyalty in your customer relationship and it is how you get competitive edge in these ruthless consumer markets. And so, we just believe that the brands that win these markets are going to be the ones that are arming themselves with the most sophisticated tooling and the strongest context engineering, not just trying to throw a whole bunch of data into a context window with a frontier model and hoping for the best. Operator: Your next question will come from Brian Peterson with Raymond James. Brian Peterson: Congrats, guys. Thanks for letting me take the question here. So, given the really good bookings this quarter, I am curious, has that changed your thoughts on sales hiring as you enter fiscal year 2027? And, Isabelle, if you could unpack some of the individual margin drivers by OpEx line and gross margin as we think about ramping into that 8% number for fiscal year 2027? Thanks, guys. Isabelle Winkles: Yes. So, just in terms of hiring—and we talked about this as we were closing out, getting into the end of the year last year—as we have seen rep productivity continue to improve through last year, we already put into our plan that we were going to hire incremental sales capacity. So that is underway and has been underway and continues to work productively. So definitely excited about that. And then as we think about kind of the pathway here to the 8%, look, I mean, the place where it is going to come out of mostly is, in fact, sales and marketing. We continue to expect to get efficiencies of scale there. And then G&A, as we continue to lean on some of these strategic locations, that is going to be helpful as well. R&D, we have said, is already kind of just operating where we expect it to. So we are really excited about the continued scale we are going to continue to get out of the sales and marketing piece. Operator: Your next question will come from David Hynes with Canaccord. David Hynes: Hey, guys, congrats on the nice quarter and the strong guide for fiscal 2027. Isabelle, I am going to pull on that bookings thread as well. When you talk about a 50% year-over-year increase in bookings, obviously, the timing of renewal cohorts can impact that math. I normally would not ask a bookings question, but since you shared the metric, I will a little bit. Any way to help us think about net new ACV growth? Is that growing faster than run-rate revenue growth? I am just trying to get a handle on the magnitude of the strength you saw in the quarter. Isabelle Winkles: Yes. I mean, look, I think both from renewal cohorts that then kind of added to through upsells as well as kind of the net new business, I think both were really strong. So I think overall, the momentum in the business in Q4 definitely kind of accelerated within the quarter. The renewals that we saw were very, very strong. And as we continue to work on the down-sell pressure that we had been seeing in years past, I think it is a combination of all of those things mixing together. Obviously, that strength in Q4 was certainly a part of the storyline going into this year and what helped us with the guide and our confidence in the outlook. Operator: Your next question will come from Nick Altmann with BTIG. Nick Altmann: Awesome. Thank you. Isabelle, can you just talk about what drove the strength in revenue this quarter? And just how much of the outperformance from Decisioning Studio is in subscription revenue versus professional services? Thanks. Isabelle Winkles: Yes. I mean, they mix in a little bit more with a little bit more professional services, but the reality is the proportion of professional services writ large across the company—the mix shift is not changing dramatically. And so we really sell professional services in order to sell more software. And as the bookings strength continues to be strong, there is some element of implementation and onboarding that is mixing into that. Obviously, we are also trying to bring in more partners to bring that in. So I would not read too much into the distribution between the two. The reality is that we truly sell professional services in order to sell more software. Operator: Your next question will come from Matthew Bensley with Cantor Fitzgerald. Matthew Bensley: Great. Thanks for taking the question. Maybe touching on the question about build-it-yourself earlier from a different angle. Are you guys using some of these AI coding tools internally to keep your advantage from a technical perspective and just evolve just as quickly as anybody else can? How is that, I guess, impacting the rapid adoption of some of this functionality? And, if anything, how does it impact your cost structure? William Magnuson: Yes. So I think that when we look at Braze, Inc.'s R&D overall, my major takeaway is just how excited I am that we have got in place a cadre of long-tenured leaders that have a ton of experience navigating through disruption. We were born in the disruption of smartphones. We have been in probably one of the most competitive software categories our whole existence. We have got a team that knows how to navigate disruption and knows how to win together, including both of our technical co-founders still here, both of the OfferFit co-founders still here, and a bunch of long-tenured R&D leaders that are driving ahead innovation pace and urgency, combined with experience of navigating disruption and really understanding our deep global customer community. And so, with respect to the adoption of agentic coding, you see it in the results: we released the Operator and the Agent Console months ahead of schedule. That was due to a combination of a strong beta test but also because of the velocity increases that we are seeing. Braze, Inc. engineering is also at all-time highs in pull requests per engineer per week and lines of code per week. But just like AI slop is not producing value for differentiated investment analysis, the volume of code is not the whole story there. The craft of building and scaling valuable software applications for professional workflows and enterprise workloads that are also transforming themselves is going to remain incredibly valuable—one that we are really excited to apply to customer engagement at scale. And I think that we are right in the throes of this, having fun with it. We are moving at pace, and we are really excited about what this means for our entire software category to go through another reinvention. A team that was born exactly because of the opportunity that came out of the disruption of mobile gets to see our product space transform again, find new opportunity. We get to do it this time with a global customer community, with a global go-to-market organization, with a lot more experience, but we are moving faster than ever. So it is just really exciting all around. Operator: Your next question will come from Brian Schwartz with Oppenheimer. Brian Schwartz: Thanks for taking my question and congrats on a strong finish to the year. William, I wanted to ask you a question again on the moat with AI. Maybe I would ask you the question in the form of the origin of the data model. So if you think about the outputs that are coming in your AI products and the decision engine, is it possible to think about what percentage of those—of the AI output—is coming from signals that are being trained on data specific and proprietary to Braze, Inc. versus those third-party foundation models in the market? Thanks. William Magnuson: Yes. So when you look at, for instance, everything going on in Decisioning Studio, those are reinforcement learning models that are proprietary to Braze, Inc. They are trained with our customers' data. The data is being fed through the Braze Data Platform. When you look at Agent Console, that is a combination of context engineering that is being done by Braze, Inc. that I spoke about earlier, but of course it is relying on the foundational models to be able to provide the broad-based reasoning and personalization capability. That is a big part of the distinction that I made earlier as well because there is no one size fits all. And while there is a lot of work that the foundational models can do and a lot of great opportunity for them to be able to do things like personalization once you already have a recommendation algorithm that has narrowed down the choices and you want to write an email that is maybe comparing the top choices for someone so that they can compare and contrast and you can drive up the conversion window, we have also found that being able to combine reinforcement learning with the intelligence that is in the foundational models is actually the best approach to not only get the highest performance, but to be able to improve it over time. I am sure you have seen in your own experimentation with LLMs that being able to continue to understand what is driving their performance and improve it over time is more of an art than a science. The explainability and observability within them and the attribution of what data really drives better outcomes for them is still a very hard, unsolved problem. Within Decisioning and within the reinforcement learning engine, we are able to actually see what data is moving the needle, and what can be thrown out, what can be optimized, and then go and search for more signals that are along the lines of the ones that are really driving better uplift, etc. So I think that is why we think that the right approach here is multifaceted. It is multifaceted both from a data source perspective, which is why you see the investment and the scale and the composability in the design of the Braze Data Platform, and then also one where you need to be using multiple approaches to assemble context and utilize your own bespoke training alongside, of course, the formidable intelligence that exists in the frontier models. Operator: Your next question will come from Sitikantha Panigrahi with Mizuho. Sitikantha Panigrahi: Thanks for taking my question. It is good to see some of this AI momentum. I want to ask specifically on OfferFit. It has been a year almost since acquisition. What kind of discussion you are having with your installed base? What kind of traction are you seeing cross-selling to the installed base? And then specifically, on the margin side, I know there are some plans there to improve it. What kind of progress are you making on improving margin for OfferFit? Isabelle Winkles: Yes. So I think just on the installed base, that is the primary area where the sales and the upsells are happening—is, in fact, within our installed base. There is a lot of momentum. The pipeline is strong. There is a lot of interest. And then on the margin front, yes, look. There is a growth element here where, as we bring on the necessary staff to enable the implementations and onboardings for customers buying it, we have to handle that expense. And that does mix into margins as well. But we are very focused on that, and we have been continuing to work on the product. And we are also working on expanding product tiers to include products that are a little bit more self-service, and those will also mix in with higher margins as well. So a number of things in flight to continue to work on that. But we are just excited overall for the momentum with our existing customers and how it is shaping up. Operator: There are no more questions at this time. I will now turn the call over to William for closing remarks. William Magnuson: I want to thank everybody for joining us today. As I mentioned, we are excited for City x City London in about a month, and then we will see you after Q1.
Operator: Good day, and welcome to the Smithfield Foods Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Julie MacMedan, Vice President of Investor Relations. Please go ahead. Julie MacMedan: Thank you, operator, and good morning, everyone. Welcome to Smithfield's Fourth Quarter and Full Year 2025 Earnings Call. Earlier this morning, we announced our results. A copy of the release as well as today's presentation are available on our IR website, investors.smithfieldfoods.com. Today's presentation contains projections and other forward-looking statements that are being provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all comments reflecting our expectations, assumptions or beliefs about future events or performance that do not relate solely to historical periods. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release, in our annual report on Form 10-K, our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or other factors. Please refer to our legal disclaimer on Slide 2 of the presentation for more information. Today's presentation will also include certain non-GAAP measures, including, but not limited to, adjusted operating profit and margin, adjusted net income, adjusted earnings per share and adjusted EBITDA. For a reconciliation of these and other non-GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our slide presentation on our website. Finally, all references to retail volume and market share are based on Circana, MULO+ data. With me this morning are Shane Smith, President and CEO; Mark Hall, CFO; Steve France, President of Packaged Meats; and Donovan Owens, President of North America Pork. I will now turn the discussion over to Shane. Shane? Shane Smith: Thank you, Julie. Good morning, everyone. 2025 was an outstanding year. Solid execution on our strategies drove record profits, expanded margins and increased cash flow. We set the foundation for multiyear growth while maintaining a very strong financial position, investing in our business and returning value to our shareholders. Last January, we returned to the U.S. equity markets through an IPO that reintroduced us as the new Smithfield. While our history spans 90 years, the transformation underway over the past decade has fundamentally reshaped Smithfield into a leaner, more profitable and strategically focused company. We streamlined our Packaged Meats portfolio, exited non-core and high-cost operations, accelerated automation and built an accountable culture focused on profitable growth. This hard work prepared us for the IPO. In 2025, our first year as a public company, we delivered on our commitments, record operating profit, record net income, strengthened margins and disciplined execution across all segments. Importantly, these results were broad-based, reflecting the power of our diversified product portfolio, our vertically integrated model and our relentless focus on operational excellence. The advantages of our model were clear in 2025, and we see further opportunities for coordination across the value chain. I'm pleased to announce that we have named Donovan Owens, President of North America Pork. Under Donovan's leadership, the Fresh Pork segment adjusted operating profit increased to $209 million in 2025 from $30 million in 2022. This performance demonstrates our improved agility, channel mix and disciplined operating focus. Under the new structure, Fresh Pork, Hog Production and Commodity Risk Management will report to Donovan. Donovan will also oversee our Mexico operations, which are an integral part of our North America growth strategy. We are excited about the opportunity to unlock additional synergies across our upstream businesses in this new structure. Now, I'd like to review our fiscal 2025 accomplishments in more detail. On a consolidated basis, adjusted operating profit increased 30% to $1.3 billion, with profit margin expanding to 8.6%, up from 7.2% in 2024. Each segment executed effectively. Packaged Meats delivered its fourth consecutive year of operating profit above $1 billion and its second highest profit year despite higher raw material costs and a cautious consumer spending environment. Fresh Pork demonstrated strong execution amid a compressed industry market spread and trade disruptions due to tariffs. And Hog Production achieved its highest profit year since 2014, reflecting improved operations and market conditions. Across the company, continuous improvement and productivity initiatives delivered meaningful cost savings. Our rock-solid balance sheet with net debt to adjusted EBITDA of just 0.3x at the end of the year provides us with the financial flexibility to support our growth strategies and return value to our shareholders. In 2025, we returned value to shareholders through dividend payments of $1 per share. Today, we announced a quarterly dividend of $0.3125 per share, and we anticipate paying annual dividends of $1.25 per share in 2026. In January, we entered into a definitive agreement to acquire Nathan's Famous for $102 per share. Successfully closing this acquisition will be immediately accretive and will secure a core national brand and create meaningful growth and synergy opportunities. In February, we announced that we have initiated the approval process to invest up to an estimated $1.3 billion over the next 3 years to build a new state-of-the-art packaged meats and fresh pork processing facility in Sioux Falls, South Dakota. Building this innovative new plant from the ground up will represent one of the largest investments in American agriculture and will modernize our manufacturing footprint and unlock long-term cost and efficiency benefits. Now, let's turn to our growth outlook for fiscal 2026. Protein demand is strong and growing across consumer demographics, value for its nutrition and health benefits. Pork, which is not our only protein, but is our primary offering, is well positioned within the protein complex. Pork presents a strong relative value to beef and its nutritional profile with lean cuts like pork tenderloin offers a superior nutritional alternative to chicken breast. Pork is also central to Asian and Latin cuisines, which are popular with U.S. consumers, particularly among Gen Z and Millennials. We believe all these factors serve as a long-term tailwind for pork, and we expect 2026 to be another year of increased profitability, driven by margin expansion, disciplined cost management and continued execution of our core strategies. Our 5 strategic priorities remain unchanged, increase Packaged Meats profit through mix, volume growth and innovation, grow Fresh Pork profit by maximizing the net realizable value across channels in a best-in-class cost structure, achieve a best-in-class Hog Production cost structure, drive operating efficiencies in manufacturing, supply chain, distribution, procurement and SG&A and evaluate synergistic M&A opportunities. First, in Packaged Meats, which is our largest and most profitable segment, we are meeting the demand for protein with convenience, flavor and value through our strong brand portfolio as well as our private label offerings. Our strategy to grow Packaged Meats operating profit centers on 3 levels: mix improvement, volume growth and innovation. So first, product mix. We remain focused on accelerating the shift toward higher-margin, value-added product categories and expanding unit velocity while reducing volume of lower-margin commodity type product categories. Coming out of 2025, we saw strong momentum in these value-added categories. In the fourth quarter, we grew units and market share in our core higher-margin focus areas of lunch meat and cooked dinner sausage, among others, and we expect these higher-margin categories to again achieve strong volume growth in 2026. Second, volume growth. We participate in 25 key Packaged Meat subcategories at retail, 10 of which are valued at over $1 billion. In 2025, we grew branded volume share in 6 of these $1 billion-plus categories. This volume growth reflected strong increases in our points of distribution led by our national brands. Looking ahead, we see continued white space opportunities to grow volume and increase market share in each of these categories. We are driving volume in today's economy by delivering quality protein at a good value. Our portfolio of quality branded products spans multiple categories and price points and is an important competitive advantage for Smithfield. A great example is lunchmeat. We are attracting and retaining consumers within our branded portfolio even as they trade up and down the value spectrum. If they choose private label, we benefit as well. Over the past several years, we have improved private label profitability, which represents just under 40% of our retail channel sales. We are also supporting our brands by investing in direct-to-consumer advertising and effective trade promotion. In 2025, we increased foodservice sales by 10%, driving higher sales volumes with both new and existing customers. Our success in foodservice reflects our position as a scaled, trusted provider of high-quality products as well as our ability to deliver value-added solutions that save our foodservice customers time and money. We are also very agile in helping foodservice customers launch limited time offers, which help drive traffic. In 2025, we introduced 57 new limited time offers, which gave consumers reasons to keep coming back. Despite food away-from-home inflation nearly double that of food at home, we successfully grew foodservice volume 2% in 2025. In 2026, we expect to increase Packaged Meats volume across the retail and foodservice channels, driven by product innovation, strong marketing, advertising and trade investment. Next, product innovation. Innovation is an important pillar of our Packaged Meats growth strategy. We focus on introducing new flavors, convenient and easily prepared offerings and premium offerings. We have numerous innovative product offerings planned for 2026 in the retail channel for our 3 national brands: Smithfield, Eckrich and Nathan's. So in summary, we expect to grow Packaged Meats profitability by focusing on 3 levers: mix improvement, volume and innovation. Now, let's talk about our second core growth strategy, increasing Fresh Pork profitability. We are focused on maximizing net realizable value across channels and continuing to improve operating efficiencies. 2025 was a dynamic year for Fresh Pork due to both compressed market spreads and trade disruptions. Historically, compressed market spreads, the price between hogs and meat significantly reduced profitability. However, our Fresh Pork team demonstrated agility and delivered strong profitability even in tighter markets due to our improved cost structure and diversified channel strategy. In 2025, Fresh Pork profitability was strengthened by sales and volume growth in the U.S. retail channel, with profit enhanced by value-added case-ready items. We also grew volume and profitability in our pet food and pharmaceutical channels, executing well on our next best sales strategy. In addition, we continue to deliver operating efficiencies and cost savings, which helped mitigate the impact of the compressed market spread on segment profitability. In 2026, our priorities include growing volume in the U.S. retail channel, emphasizing higher-margin, value-added, case-ready and marinated offerings, expanding adjacent channel opportunities such as pet food and pharmaceuticals, increasing automation, plant efficiency, yield optimization and supply chain savings and optimizing harvest levels across our network. By focusing on these priorities, we will continue to outperform the market. Now, to our strategy to optimize Hog Production. We continue to progress toward a best-in-class cost structure in Hog Production. In 2025, we outperformed the Iowa State benchmark for hog grower profitability, reflecting improved genetics, feed management and herd health. In 2026, we will continue to focus on improving our operations, including herd health and feed conversion. We're also excited about unlocking more opportunities across our Hog Production and Fresh Pork segments under Donovan's leadership. With respect to the number of hogs internally produced, in 2025, we produced 11.1 million hogs, which is down from 17.6 million at the high point in 2019 and from 14.6 million in 2024. This reduction reflects the transfer of 3.8 million hogs to our external joint ventures, which was consistent with our rightsizing strategy. Over the medium term, we continue to target producing approximately 30% of Fresh Pork's needs internally. We believe this will provide an optimal balance of assured supply and cost risk management. Next, our strategy to optimize operations and deliver operating efficiencies in manufacturing, supply chain, distribution, procurement and SG&A was a meaningful contributor to our improved profitability in 2025. In 2026, we are looking to accelerate the use of innovative technologies across all aspects of our business. We are increasingly leveraging advanced technology to become a more efficient business and to further strengthen our competitive position. We deploy this technology to drive innovation, productivity and optimize performance on our farms in our processing facilities and across our corporate functions. For example, we recently formed a co-sourcing partnership with a third-party technology provider that will provide the benefits of artificial intelligence and robotic process automation for administrative and transactional work in our finance operations. This partnership gives us immediate access to the latest technology and provides flexibility as technology change continues to accelerate. Finally, we continue to evaluate opportunistic M&A to support our growth strategies. In January, we entered into an agreement to acquire one of our top national packaged meats brands, Nathan's Famous. Successfully closing the acquisition will secure our rights to this iconic brand into perpetuity and enable us to maximize Nathan's Famous brand growth across the retail and foodservice channels. With this acquisition, we will own all our major Packaged Meats brands. We will remain disciplined in evaluating additional complementary and synergistic M&A opportunities. In summary, we have returned to the U.S. equity market well positioned to deliver reliable, repeatable earnings and cash flow growth. Our business model has never been stronger. Our high-performing vertically integrated model led by Packaged Meats provides a competitive advantage and supports sustainable margin expansion over the long term. We are investing capital in a disciplined manner to support our growth strategies, to generate attractive returns and to build sustainable long-term value for our shareholders. With that, I will turn it over to Mark to review our financials in more detail. Mark Hall: Thanks, Shane, and good morning to everyone joining the call. Our strong 2025 results reflect the consistent execution and resilience of our teams. We closed the year with an outstanding fourth quarter. Total company sales increased 7% for the fourth quarter and 10% for the year with growth across all segments, reflecting higher market prices across the pork value chain and Packaged Meats ability to maintain pricing discipline through innovation and brand power. Record fourth quarter adjusted operating profit of $402 million fueled our record full year 2025 adjusted operating profit of $1.3 billion. Full year adjusted operating profit margin increased an impressive 140 basis points to 8.6%. Fourth quarter adjusted net income from continuing operations attributable to Smithfield was $329 million, which was our second highest on record. This helped us deliver a record $1 billion for the full year. Adjusted diluted EPS for the fourth quarter was $0.83 per share, up from $0.52 per share in 2024 and for the full year was $2.55 per share, representing a 36% increase from 2024. Now, on to our fiscal year 2025 segment results. Packaged Meats delivered fiscal year 2025 adjusted operating profit of $1.1 billion, which was the second highest profit on record and an adjusted operating profit margin of 12.4%. This strong profitability in the face of raw material input cost increases of $525 million and a challenging consumer spending environment demonstrates the success of our Packaged Meats segment strategy. Packaged Meats fiscal 2025 sales of $8.8 billion increased by 5.3% compared to fiscal 2024. This was driven by a 5.6% increase in average selling price with roughly flat sales volume. Industry-wide, volume growth has been challenged due to inflation and consumers' tight budgets. As Shane mentioned, we were able to maintain volume through the power of our strong branded portfolio, complemented with private label options and our diversified product portfolio offering convenience, flavor and value. The higher average selling price was driven primarily by higher market prices across the pork value chain with key raw materials such as bellies, up 19%; trim, up 19% to 35%; and ham, up 9% year-over-year. Next, Fresh Pork. For 2025, we delivered $209 million in adjusted operating profit despite $135 million year-over-year decline in the industry market spread, truly an outstanding job by the Fresh pork team. As Shane mentioned, Fresh Pork executed well on maximizing the net realizable value of each hog and continue to deliver operating efficiencies and cost savings, which largely mitigated the impact of the compressed market spread and export market disruption on segment profitability. Fresh Pork sales of $8.3 billion increased 6% year-over-year, primarily driven by a 5.8% increase in the average selling price and roughly flat volume. The higher average selling price was driven primarily by higher market prices across the pork value chain. Turning now to Hog Production. Hog Production generated $176 million in adjusted operating profit, the highest since 2014. The strong results were driven by improved commodity markets as well as actions we've taken to optimize our operations. 2025 Hog Production sales of $3.4 billion increased by 13% year-over-year. This was despite a 23% or approximately 3.4 million head reduction in the number of hogs produced as part of our planned rationalization strategy. The sales increase was primarily due to higher external sales to our new joint venture partners, both from ongoing sales of grain, feed and other services as well as from the initial transfer of commercial hog inventories. Our average market hog sales price was up 8.9% year-over-year, inclusive of the effects of hedging. Adjusted operating profit for our Other segment, which includes our Mexico and Bioscience operations, of $45 million increased $10 million compared to 2024. We see the Mexico market as a big opportunity for future growth. Our corporate expenses came in $26 million below the prior year, reflecting our disciplined cost management strategies. In summary, we delivered a record 2025 operating profit and net income due to solid consistent execution across our operations. Next, let's review our strong financial position and cash flow generation. At the end of 2025, our net debt to adjusted EBITDA ratio was 0.3x, well below our policy of no less than 2x. Our liquidity at the end of the year was $3.8 billion, including $1.5 billion in cash and cash equivalents. This is well above our liquidity policy threshold of $1 billion. During 2025, we generated cash flows from operations of over $1 billion, and it would have been a record of nearly $1.3 billion when adjusted for the repayment of an accounts receivable monetization facility. Capital expenditures for 2025 were $341 million compared to $350 million for 2024. Approximately 50% of our planned capital investments each year are to fund projects that will drive both top and bottom line growth. This consists primarily of various plant automation and improvement projects, as we continue to lower our manufacturing cost structure and better utilize labor. Reinforcing our commitment to return value to shareholders, we paid $1 per share in annual dividends in 2025. And as Shane mentioned today, we announced that our Board declared a quarterly dividend of $0.3125 per share and that we anticipate paying annual dividends of $1.25 in 2026. Our ample liquidity, including sizable cash balance and robust cash flow supports our investment in business growth and shareholder return while maintaining a strong financial position. Now, on to our outlook for fiscal 2026. First, I'd like to share our thoughts on potential market tailwinds and headwinds that could impact our 2026 results. First, tailwinds. We expect protein to remain in high demand in 2026 and for pork to be well positioned as a healthy, affordable option for consumers. We also see raw material costs as a tailwind. While we expect input costs to remain elevated by historical standards, they should be slightly lower than in 2025. Our raw material assumptions are supported by the USDA outlook for pork production to be up 2.5% in 2026. That said, we're monitoring herd health as a key variable impacting the outlook for U.S. pork production and raw material costs. Potential headwinds that we're monitoring include a continued cautious consumer spending environment and a dynamic geopolitical environment. It's still too early to predict the full impact from the conflict in Iran, but there are 3 main components of our business that this could impact. First, the direct impact of fuel costs such as diesel; second, corn prices, which are tightly correlated to the oil markets; third, the petroleum-derived supplies that we use such as resin-based packaging. Based on what we know today, we believe our outlook incorporates identified risks, but it will depend on the duration of the conflict. With these assumptions as a backdrop, our outlook for fiscal 2026 called for continued margin expansion driven by the strategies Shane just reviewed. This includes continued innovation, improved asset utilization, accelerated automation initiatives and cost savings that will help us achieve another record-setting year. First, we anticipate total company sales to be up low single digits compared to fiscal 2025. Our outlook for segment adjusted operating profit is as follows: for Packaged Meats, we anticipate adjusted operating profit in the range of $1.1 billion to $1.2 billion. For Fresh Pork, we anticipate adjusted operating profit of between $200 million to $260 million. And for Hog Production, our anticipated adjusted operating profit range is $150 million to $200 million. As a result, we anticipate total company adjusted operating profit in the range of $1.325 billion to $1.475 billion, reflecting broad-based performance. Please note that our outlook reflects 53 weeks of operations in 2026 and does not include the impact of the proposed Nathan's Famous acquisition and investment in the new processing facilities in Sioux Falls, South Dakota. Our targeted capital spend for 2026 will be in the range of $350 million to $450 million. In addition, subject to permitting and other approvals, we expect to invest up to $1.3 billion over the next 3 years to construct the new state-of-the-art Packaged Meats and Fresh Pork processing facility in Sioux Falls. We currently anticipate groundbreaking to commence in the first half of 2027 and for operations to commence by the end of 2028. We'll provide more updates as we progress. In summary, 2025 demonstrated that our key strategies are working. We expect 2026 to be another year of increased profitability, as we continue to execute our core strategies. Now, I'll ask the operator to open up the call for Q&A. Operator? Operator: [Operator Instructions] And today's first question comes from Megan Clapp with Morgan Stanley. Megan Christine Alexander: I guess, maybe to pick up, Mark, where you left off there, I wanted to start with the Packaged Meats outlook specifically. You talked about low single-digit top line growth for the total company. I guess... Shane Smith: Megan, did we lose you? Megan Christine Alexander: Sorry, can you still hear me? Shane Smith: Yes, you cut out for a second, though, Megan. Megan Christine Alexander: Okay. Okay. I'll start over. So Packaged Meats outlook, I wanted to ask about that. As we think about the top line guide, you talked about low single-digit growth for the total company. Should we be thinking about Packaged Meats kind of in that range? And then, from a margin perspective, if we just kind of take the midpoint of your profit guidance, I think it does imply some modest margin expansion, but, yes, still kind of well below where you've been historically. And, Mark, you kind of talked about this a little bit in your remarks, but maybe you can just help us understand a little bit more of the puts and takes on margins, as we think about the year ahead in terms of input cost inflation, continued mix benefits, and then, anything you're taking into account on consumer demand given some of the macro factors? Mark Hall: Thanks, Megan, for the question. So just on the top line, it's important to note that the low single-digit revenue growth year-over-year includes $230 million of one-time inventory sales to the joint ventures in 2025 that, that won't repeat. So that's about 150 basis points. And then, consistent with the comments, we're looking for lower markets year-over-year with the USDA call for pork production to be up about 2.5% year-over-year. So that's going to have a ripple effect throughout the segment. And I'll let Steve talk specifically to the top line on Packaged Meats. Steven France: Thank you for the question. So I'd start out by saying that nothing has really changed with respect to our long-term outlook for Packaged Meats margins. In the short term, as Mark had mentioned, consumers are definitely stretched, and I would say that the grocery and foodservice industry are seeing people spend less or trade down to less expensive items or items that deliver more value. And think about the fact that in 2025, our raw material costs were up over $525 million. So although we do expect to see lower raw material costs, as Mark had mentioned, they're still going to be elevated versus historical norms. Now, despite some of these headwinds, we do believe that we are better positioned than most companies due to the family of brands and also the extensive product portfolio that we have. And as you know, we have a very successful private label business, which does provide us the ability to capture those consumers, as they move up and down those different price points. And by doing that, so when you think about the family of brands that we have and also the private label that we have, it actually helps to minimize some of the financial exposure that we have with consumers, as they do move up and down that pricing spectrum. Now, we are focused on building long-term value, but it's also about protecting our near-term profits. So that means we are investing in our brands. We're funding our innovation that aligns with consumer trends. We also continue to shift, as Shane had mentioned during his opening comments, shift our mix from commodity items to higher-margin value-added products. And then, we're also, of course, spending capital to expand on capacity where it supports our long-term growth and profitable growth. So as Shane and Mark had mentioned, for our outlook for 2026, at this point, it really reflects the best view that we have today. And it's really guiding our Packaged Meats profit to that $1.1 billion to $1.2 billion, which we believe represents a healthy level of profitability in the face of really cautious consumer spending, higher-than-normal raw material markets. And, of course, there's a big unknown tied to the Iranian war that's currently going on. So at the end of the day, we are very -- we still -- we are confident in the outlook that we have, and we'll be able to address some of these challenges as they come at us throughout the year. Megan Christine Alexander: Great. That's super helpful. And just a follow-up on Hog Production. So the guide for the year, $150 million to $200 million would suggest similar profitability to '25 at the midpoint. And the futures curve at this point does seem to imply similar producer profit levels as well. At the same time, you've talked extensively, including in the remarks here, about the structural improvements you're seeing in your own business and even talked about perhaps monitoring the herd health as a potential tailwind. So maybe you can just help us understand a little bit more about what's embedded in the guide from an industry perspective? And what you're seeing in terms of supply today and -- versus your own internal cost improvements? Shane Smith: Yes, Megan, when you look at supply, we don't see right now any material level of expansion taking place outside of productivity and improvements in health. And I think that's what the USDA is modeling it as well with their 2.5% increase. And as you know, when you look at last year, the real true impacts of the health across the U.S. industry really didn't become apparent until we were in -- really into the second quarter. So we're monitoring what's going on as a part of overall health and how that will impact meat in the back half of the year. We do think that the guide that we issued this morning encompasses what we see today from the grain markets, from the changes in diesel fuel that we're seeing have an impact on things like freight and animal movements. So we feel comfortable where we are. We think it feels like we're back in somewhat of a normal cycle in that Q1-Q4 versus Q2-Q3 scenario. And of course, as you know, we have different hedging strategies that we take advantage of throughout the year. So we're really comfortable with the guidance that we've issued today in hog production. To your point, we have seen some real structural changes in our business. And the genetics that we've talked about for the last couple of years, that really helped us in 2025. We saw a lean pig cost that was down probably 8% year-over-year, better feed initiatives and livability initiatives. Our overall feed cost was down over 5%. And so we're seeing all of those things manifest in the earnings. And so again, I think we're really comfortable with the guidance with what we see today. Operator: And our next question today comes from Ben Theurer with Barclays. Benjamin Theurer: Shane, Mark and team, 2 quick ones. So first of all, as we look into like the value chain as a whole, and we've kind of like talked a little bit about the Hog Production just now and before that about the Packaged Meat segment. So picking up on what's in the middle in the Fresh Pork segment. Clearly, it was, call it, potentially a somewhat challenging 2025 with all the trade restrictions, et cetera. But as we move into 2026 and as you kind of like pointed to the puts and takes, can you maybe elaborate a little bit more on the Fresh Pork business itself, what to think about, a, seasonality? And b, what are like the more Fresh Pork-specific risks and opportunities for 2026 in contrast to 2025? That would be my first question. Shane Smith: Yes. So, Ben, maybe I'll start and then hand over to Donovan. 2025, I'm really proud of how the Fresh Pork team executed. We saw $135 million degradation in the gross market spread, but yet our profits were only down about $17 million. And so we saw growth in retail and sales volumes. I think that was 4% in sales and 5% in U.S. retail channel volume, really leaning into the case-ready part of the business. But also looking at some of those alternative channels that we've discussed before with our pet food business and our pharmaceutical business. And so I would say the Fresh Pork team in the face of what was a really dynamic and ever-changing 2025 did an excellent job in executing that next best sales strategy. Donovan, do you want to add to that? Donovan Owens: Yes. I think Doug (sic) [ Ben ], and Shane, you said it well in your opening remarks. But yes, 2026 for Fresh was a challenging year. I think it led off with what Doug (sic) [ Ben ] might be referring to as the tariffs. So the tariffs started to have some impact. It had some impact on the year. But as we look at how we rebounded in our net realizable value efforts in 2025, they paid dividends. I mean, we focused on our core strategy of looking at our Fresh Pork, Fresh Pork value-added business, as Shane has mentioned earlier. Growing our Fresh Pork in that arena is going to be pivotal in 2026, as it was in 2025. So we're going to focus on our case-ready value-added pork. We're going to focus on our marinate offerings. We're also going to focus on our branded effort, branded fresh pork to tie into our Packaged Meats portfolio. So we want to connect the dots, Doug (sic) [ Ben ], on all of our business. I think that's been an opportunity for Smithfield for a while and leverage our strength of our Packaged Meats business and start putting our name on our Fresh Pork portfolio of Smithfield, not just a brand that we have to fight with other -- with our competitors in the industry. So look forward to it, Ben, sorry for that. I got your name mixed up. But nonetheless, 2026, I feel very confident that we will continue our strategy on fresh pork and look forward to improved results. Benjamin Theurer: Awesome. And then, real quick on the capacity expansion project, Sioux Falls. I think you said groundbreaking first half 2027. So probably within the CapEx of that $1.3 billion, probably nothing yet to be contemplated for 2026. But how should we think about the CapEx needs for that project splitting that into what would be '27 and '28? And how do you think about just the general timeline? If you could refresh me on that one, that would be much appreciated. Mark Hall: Yes. So, Ben, as you indicated, there is no capital included in our estimate of $350 million to $450 million for the current year. So there may be some incremental spending towards the end of the year, but the most significant portion of the spend will come in '27, '28 and a little bit of spillover into '29. So anticipate groundbreaking, as you said, in early 2027, hopefully, to have the first products running down the line at the end of 2028. And I would say that the capital spending will be paced pretty evenly throughout the construction period. Operator: Our next question today comes from Leah Jordan at Goldman Sachs. Leah Jordan: I wanted to follow up on Megan's question within Packaged Meats. Just seeing if you could provide more color on how we should think about the margin cadence in that segment as we go through the year. And any timing impacts we should keep in mind? I mean, we're going to be lapping some different input costs as we go through the year as well as potential shift in Easter and as well as the 53rd week. Steven France: Sure. Thank you for the question. So first, when you think about margins and also how that would potentially tie to promotions, what we're focused on is really -- it's on the quality merchandising side. So it's really going after the quality of it versus quantity because typically, if you're going after the quantity, you're going to run into some potential challenges from being unprofitable. But what we continue to see is improvement with our promoted volume sold as feature and display. And when we do that, that by far is the most impactful promotional vehicle. So we'll continue with our current promotional strategy, although the reality is we're not just counting on promotions to drive our volume, we're actually very fortunate because our consumers are incredibly loyal and our brands perform because people trust us to deliver that same great quality, flavor, value every time. And that consistency that we built over decades shows up in every product. And our customers and consumers know that they can count on us. So -- the other part of your question was, I guess, consistency. And when -- reality is when you look at the first half and second half of the year, it's -- even though we have some seasonality between different items, between seasonal hams, we also have growing items during the summer, but the reality is when you look at first half and second half, they're basically fairly equal from a profitability standpoint. Shane Smith: Leah, the only thing I would add there, and I think this was part of your question, we will see Easter a little earlier this year. So there will be some Q1 impact of last year we would have saw in Q2. And the 53rd week actually will fall at the end of December, which would be post-Christmas for us. Mark Hall: Right. So to Shane's point, on a segment profit margin perspective, it's a little lighter in the first and fourth quarters because of that seasonal ham influence. Leah Jordan: That's very helpful. And then just for a follow-up, I wanted to ask on the feed side, given lower feed costs were such a tailwind for you in Hog Production last year, and now, we've got maybe some potential headwinds emerging, so how are you planning for feed over the coming year? What have you locked in so far? And just any color around assumptions within the guidance range and your flexibility there? Should we see some movement? Shane Smith: Yes. On the feed side, and Leah, we don't necessarily talk specifically about our hedge positions, but we do use corn and soybean meal contracts to help lock in when we think it's advantageous. So -- but I would tell you, our overall feed strategy is more than just a grain. It's being efficient in what we do. It's about the livability, the animals coming out that we've been putting grain into. What I would tell you, as it relates to feed for 2026, we are seeing some increases, and those spikes coincide with what we see taking place in the Middle East. I think we've been very in front of that, I would say, as far as our hedging strategies and how we think about locking in those grain costs as we go forward. So I think, again, as I mentioned earlier, I think we're in a pretty good position, as we look at 2026 from where we stand on corn. And keep in mind, as we go through the year, the later in the year we get, the feed cost, that fed cost of corn really would show up in the back part of the year and into 2027. So I think from a 2026 standpoint, we're pretty well positioned. And we think, again, that guidance that we issued encompasses that variability that we think we'll see in corn. Operator: And our next question today comes from Heather Jones at Vertical Group (sic) [ Heather Jones Research LLC ]. Heather Jones: I wanted just to ask a quick clarifying question on the extra week. So I think you talked about expecting a low single-digit volume increase in -- on the Packaged Meat side in retail and foodservice. I was wondering, is that adjusted for the extra week? Or is it largely due to the extra week, so we should expect most of that increase in Q4? Mark Hall: That includes the extra week. So the extra week is falling after the Christmas holiday this year. So it's -- seasonally, it's a softer week in the year as all the loading has gone on leading up to the holiday season. So from a volume and profitability standpoint, it punches below the average week's weight. Heather Jones: Okay. So you're expecting growth in the other quarters as well, not just the Q4? Mark Hall: Correct. Heather Jones: Okay. And then, I just wanted to ask about the Hog Production outlook, and just, how you all are thinking about the cadence of that 2.5% growth? Because my understanding is that there was some expectation that there would be like an easy comparison because of the PED and PRRS we had in '25. But PRRS has hit pretty hard again. I think it's in the upper Midwest. And so I was wondering, do you think the 2.5% takes that fully into effect? And how you're thinking about industry volumes year-on-year as the year progresses? Shane Smith: Yes. If I understood your question correctly, we are hearing that same thing that you just mentioned that PRRS is really beginning to show up in the Midwest. But again, I think our guidance, as we've issued this morning, takes that into account, both from what we expect to see on a seasonality basis between Q1 and Q4 and in the middle part of the year as in Q2 and Q3. So we think from a disease standpoint, from a corn standpoint, transportation that we've got those things embedded. And of course, as we move through the year, things will become much clearer, and we'll continue to update that guidance as we move through the year. But as it sits today, we feel really comfortable with that range that we printed this morning. Operator: And our next question today comes from Chris Downing of Bank of America. Christopher Downing: This is Chris on for Pete. You noted that acquiring Nathan's will eliminate licensing fees and allow you to capture the full retail margin with immediate earnings growth expected. Can you quantify for us how much of the anticipated accretion comes from recapturing licensing economics versus incremental operating synergies? And how quickly those benefits should scale post close? Shane Smith: Yes, Chris, I'll begin, and maybe, I'll throw it over to Steve or Mark. As we're -- really kind of limited on what we can say and what we can share. Once we close this transaction, once we successfully close it, we'll be able to share a lot more detail on both our plans and some of the inherent numbers. But as it sits today, we're really limited in what we can share until the deal actually closes. Steve, do you want to add some things on Nathan's? Steven France: Yes, I can just add a couple of things. And first and foremost, we're very excited on the Packaged Meat side of the business about Nathan's and what that represents for the future of Smithfield. So we know the Nathan's brand incredibly well. Obviously, we've been making products for years and selling it into the retail channel. So there's virtually no integration risk, and that's a really big deal from an M&A standpoint. Owning the brand, that would let us scale, scale with utilizing our marketing, innovation and also distribution across retail. And then ultimately, we'd have access to that foodservice channel, which again would be a big plus for the total Smithfield business. I would like to share more about what we have planned. But at this point, since the deal is not finalized, I'm going to have to wait until the transaction closes. But it's a great question. We're very excited about the opportunity to purchase Nathan's. Shane Smith: Yes. And, Chris, the only other thing I would add to that is we do believe that the transaction will be immediately accretive to our earnings. And I think you can look at Nathan's disclosures and really get to the crux of your question about what that licensing fee has been. Operator: And our next question today comes from Max Gumport with BNP. Max Andrew Gumport: I was hoping to turn back to Sioux Falls. Obviously, it's a very big investment for the company. I realize it's early, but any color or quantification you can provide on the benefits that you will receive? It's replacing a very old plant. I think it's over 100 years old, so maybe particularly on the cost side, what this means for efficiencies, automations and cost savings? Shane Smith: Yes, Max. I'm really excited about this investment in Sioux Falls. And to your point, it's a large investment, but it's necessary. Sioux Falls is a key part of not only our Fresh Pork business, but also our Packaged Meats strategy in general. And so that facility is over 100 years old. And as you can imagine, there's a lot of upkeep on that facility. But not only that, the footprint of that facility makes it very difficult to implement some of the automation and technology that we as a company are really rolling out across our footprint. When this facility is done, it will be the largest fresh combined, Fresh Pork and Packaged Meats facility in our system. We are anticipating a best-in-class facility that will just deliver significant efficiency gains to both Fresh Pork and Packaged Meats. So I'm really excited about the investment. We're anticipating it's going to have a really strong intern investment, and we expect to see those benefits in year 1, as we move to that optimal production level. But the interesting thing about Sioux Falls for us is it's a key part of the country. There's a tremendous culture of Hog Production in that part of the country. And from a vertical integration standpoint, that plant is less than 1% vertically integrated. So this investment is not only good for us, it's good for South Dakota agriculture, the surrounding regions and American agriculture in general. And like I said in my opening comments, this investment really represents one of the largest single investments in American agriculture that I'm aware of. And so we, as a company, are extremely excited about the opportunity to do this. I think it's going to be transformative for us as a company. And I think it's going to lead the way in the industry, as it relates to cost structures, to competitiveness. And so I'm really looking forward to getting this project done. Max Andrew Gumport: Great. And then, on the first quarter, I realize we're essentially through the first quarter at this point already. So I was hoping maybe for a bit more color on any initial thoughts on the sales and profit realized, maybe you don't typically guide by quarter, but just given that there's essentially only a week left or so, maybe a bit of color on how the first quarter is looking. Mark Hall: Yes. It's really about continuing execution of our strategies, continue to improve that mix within the Packaged Meat side of the business, appealing to the consumer across that price spectrum, whether it's in our branded portfolio or in private label. And again, continuing optimization of our net realizable value within Fresh Pork. So we're seeing continued execution of our strategies, and we look forward to a solid first quarter. We'll be back in front of you in, what, about 5 weeks, I think, to report on the first quarter, but things are shaping up. Operator: We have time for one more question today. And our final question comes from Saumya Jain with UBS. Saumya Jain: Congrats on the quarter. A quick one. With more CapEx spend, as you noted in '27 and onwards, would you see more upgrades or bolt-ons on current facilities or acquisitions of new ones? And what would drive one versus the other? Mark Hall: Yes. So in terms of CapEx, again, the uptick in '27 and '28 is related to the Sioux Falls build-out. Our guide for this year is really in that $350 million to $450 million range. And what you've seen is over the recent past, we've really worked significantly to optimize our network and improve our cost structure. So most recently, we announced the closure of 2 lease facilities in Elizabeth, New Jersey and in Springfield, Massachusetts, and we're folding those into existing operations. So that along with the transfer of the $3.8 million head that Shane mentioned in Hog Production to our joint venture partners, it really brings reduced requirements for maintenance CapEx across the network. So we're going to continue to invest about half of that CapEx figure on growth capital and about the other half on infrastructure, so maintenance types of projects. But we have plenty of opportunities to invest in growth capital, drive capacity expansions and cost savings projects through automation. So again, the $350 million to $450 million is all encompassing on the base business with incremental spend related to Sioux Falls in '27, '28 and '29. Saumya Jain: Great. And then real quick, I noticed that the market share in the hot dogs Packaged Meat subcategory changed from third to fourth. So I guess just wanted to understand what was driving that last quarter. And how do you view your acquisitions of Nathan's then changing the competitive dynamic in the space? Steven France: No, it's a good question. So, as far as the total hot dog category, so this is for the total industry, obviously, we're seeing some historic beef markets, which is resulting in consumers seeking value or gravitating down to private label or value tiers. Now, keep in mind, when I say that, that even when they gravitate down into private label, we have the ability to capture that consumer with some of the private label products that we do produce or some of the regional brands that fit that value tier. Now, if you look at the total category, so not just where we were, but for the total hot dog category for the U.S., in Q4, the sales were down 5.2%. And for total 2025, sales were down 4.8%. Now, with all that said, despite some of the category declines and some of the consumer shifting, we're still able to grow our Nathan's volume share, unit share and dollar share in Q4. So we also increased our points of distribution by over 19% in 2025, and that's on the Nathan's brand. So that really highlights the strength of the brand and also consumer loyalty. So despite some of the category declines that we saw within the hot dog space, we're very comfortable with where we are from a Nathan's performance and also what we expect to see in 2026. Operator: That concludes our question-and-answer session. I'd like to turn the conference back over to President and CEO, Shane Smith, for closing remarks. Shane Smith: Thank you, and thanks to everyone who joined our call today. I want to thank all of our Smithfield Foods employees for their exceptional execution in 2025. It truly was an outstanding year, and we're proud that our strategies drove record results, but we're not stopping here. Instead, we're constantly challenging ourselves to grow our business and continuously improve our operations. I'm looking forward to speaking to you again when we report our first quarter results. Thank you. Operator: Thank you. The conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Operator: Good day, ladies and gentlemen, and welcome to Kingfisher plc Full Year 2025-'26 Results Presentation. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Thierry Garnier to start the presentation. Thierry Dominique Garnier: Good morning, and thank you for joining us today for Kingfisher's Full Year Results Presentation. Bhavesh and I will take you through our full year results, our outlook for the coming year and provide an update on our key strategic initiatives. Following this presentation will be the usual Q&A. So let's start with the key messages. 2025 was a strong year for Kingfisher as we continue to execute our strategy at pace and delivered on all our financial priorities. And there are three points I want to highlight. First, our strategic growth initiatives are driving market share gains, a key indicator of our progress. We grew market share across each of our banners in the U.K., France and Spain, and maintained share in Poland. Our sales growth was high quality, led by growth in volume and transaction. We delivered double-digit growth in both trade and e-commerce sales during the year, while our 1P commerce sales were strong. I am particularly pleased with our progress in our marketplaces now reaching GBP 518 million on a GMV basis and up 58% year-on-year. Second, we maintained strong financial discipline amidst significant cost pressure. We grew gross margin by 80 basis points in the year, leveraging Kingfisher scales and sourcing power and benefited from marketplace and retail media, both of which are gross margin accretive. We delivered strong growth in adjusted profit before tax and in EPS. When excluding the business rates refund at B&Q in the prior year, profit is up 13%. And our profit growth, combined with a sharp focus on working capital management enabled us to deliver strong free cash flow. Third, we delivered attractive returns to shareholders. We completed our GBP 300 million share buyback program in March. And today, we announced our fifth GBP 300 million share buyback program, reflecting the momentum in the business. We also announced today a dividend of 12.4p per share, in line with last year. And let me now hand over to Bhavesh for the financial review and outlook. Bhavesh Mistry: Thank you, Thierry, and good morning, everyone. Let me start with an overview of our performance for the year. Total sales for the group were GBP 12.9 billion, with like-for-like sales up plus 1.4%, excluding a negative calendar impact of minus 0.3%. Our sales growth was led by strong performance from our U.K. banners. Adjusted profit before tax was GBP 560 million, up 6%. Adjusted EPS was 23.8p, up 15%, underpinned by our strong earnings growth in the year and supported by a 6% uplift from our share buyback program. Free cash flow generation was GBP 512 million. We delivered this while also increasing CapEx by GBP 71 million as we stepped up our investment in our stores, technology and property. Net leverage now stands at 1.4x, and we maintain a very healthy balance sheet. Turning now to our markets. B&Q reinforced its market-leading position with total sales growth of plus 3.9% or plus 5.9% when we include marketplace GMV sales. Like-for-like growth is plus 3.3%, significantly outperforming a flat market with our market share at record levels. From a product category perspective, core remained resilient with 12 consecutive quarters of underlying like-for-like growth. Big-ticket delivered strong growth of plus 6% in the year and seasonal was plus 30% in Q1, benefiting from favorable weather, which we will lap this quarter. We successfully captured the transference of customers from Homebase to B&Q and acquired 8 of their stores, which our team rapidly opened in time for peak trading. TradePoint sales grew by plus 5.2%, fueled by our enhanced loyalty program and an increased investment in trade sales partners. E-commerce sales grew by plus 21.5%, supported by marketplace growth. B&Q's marketplace is gross margin accretive and generated GBP 15 million of profit in the year. Looking to the year ahead, we will further enhance our trade offering with investment in our people, our offer and our stores, and scale marketplace as we onboard cross-border vendors. You'll hear more on this from Thierry later on. Screwfix delivered consistently strong performance throughout the year with total sales growth of plus 4.5% and like-for-like growth of plus 3.2%, significantly outperforming the market. Our Screwfix team have executed at a high level, enhancing the customer proposition through targeted marketing and promotional campaigns, competitive pricing, range improvements and deeper engagement with trade customers via app-driven reward initiatives. Screwfix opened 27 stores on a net basis during the year, further growing our footprint and convenience for customers. Looking forward, our focus is on growing our share of the trade wallet. We also see further range and space opportunities. Our U.K. banners generated GBP 575 million in retail operating profit, representing 78% of our group total retail profit. Profit grew by plus 2.9% in the year or plus 9.4%, excluding the impact of last year's B&Q business rates refund. We delivered this profit growth despite the significant increases in wages, higher national insurance contributions and the impact from EPR packaging fees. In France, against a subdued consumer backdrop and a home improvement market decline of around minus 3%, we are encouraged to see both of our banners outperforming the market. Castorama like-for-like sales were minus 2.2% in a year of significant change, particularly from the restructuring of several stores. I'll speak more on the progress of our Castorama plan shortly. From a strategic perspective, Castorama delivered a rapid rollout of its trade proposition across the estate, introduced CastoPro zones in 50 stores and implemented a trade loyalty program. Trade penetration reached 9% by the end of the year, up from below 1% a year ago. Good progress was also made on marketplace with 1.6 million SKUs now available to customers. Brico Dépôt delivered total sales of minus 1.8% and like-for-like sales of minus 2.3%. Brico improved its price positioning by 2 points over the year and delivered strong progress in its trade proposition with trade sales up 26% and trade penetration increasing to 17% at the end of the year. This performance was driven by an expanded trade-focused range, investment in dedicated trade colleagues and enhancements to its loyalty program. Brico also successfully opened 1 store transferred from Castorama, doubling sales densities. We feel good about Brico Dépôt, a capital-light model with a clear customer offering of discounted prices and high product availability. Our French banners delivered GBP 97 million of retail operating profit with a margin of 2.5%, up 10 basis points year-on-year. This was a strong performance as both banners offset sales deleverage from a declining market and higher social charges through gross margin expansion and structural cost reductions. Turning now to an update on our restructuring plan for Castorama. Since the plan was announced in March 2024, the new management team has moved at pace to improve competitiveness and efficiency, delivering good progress despite a weaker market, which declined by over 7% in 2024 and a further 3% in 2025. We've already talked about our progress in trade and digital. In addition, the team undertook a significant number of range reviews, which benefited several core categories, including surfaces & décor, tools and tiling. We took cost price and supplier management actions, streamlining the head office organization and rationalized the distribution network space by 15%. The reduction since 2019 was over 35%. Our store restructuring and modernization program is delivering tangible results. Right-sized stores are seeing much higher sales densities, while revamped stores are outperforming the Casto average. The two franchise stores have returned to profitability. This progress has been delivered against a backdrop of significant people change, including a 50% refresh of store managers and regional directors and a 40% change in category directors. We will continue to drive this agenda at pace in 2026, positioning the business to fully benefit when market conditions improve. For France, overall, we remain confident in delivering our medium-term margin target of circa 5% to 7%, with the timing and trajectory of reaching this target dependent upon the pace of the market recovery. In Poland, we remain optimistic about the medium-term growth opportunities. Castorama is a market leader with potential to increase space whilst building on both trade and e-commerce. Poland experienced a slow start to the year with unfavorable weather and political uncertainty weighing on home improvement spending. Like-for-like was minus 1.1% for the full year, though conditions improved in Q4 with a return to growth in both the market and our business. We continue to make good progress with our strategic initiatives, about GBP 1 in GBP 3 comes from trade customers, supported by the rapid rollout of CastoPro zones in more than half of the estate, the recruitment of specialized sales partners and a new trade loyalty program. And e-commerce sales increased 30% year-on-year, benefiting from the launch of marketplace in January 2025. Poland generated GBP 87 million in retail operating profit, representing around 12% of group retail profit. During the year, we accelerated technology investment, resulting in a one-off circa GBP 5 million impairment of legacy systems. Excluding this charge, Poland retail profit was up and profit margin was broadly flat year-on-year. Iberia had an excellent year with plus 8.8% like-for-like growth, outperforming a growing market, driven by competitive price positioning and strong progress in trade. Moving now to our profit performance in the year. Adjusted profit before tax rose by 6% or plus 13% when excluding last year's GBP 33 million business rates refund at B&Q. A key driver of profit growth was gross margin expansion, which increased by 80 basis points, driven primarily by group buying and sourcing benefits, progress in marketplace and retail media with FX also providing a tailwind. We also delivered significant operating cost reductions. Some specific examples include a reduction in our supply and logistics network space of around 10% in France and nearly 30% in Poland, efficiencies in our stores from the rollout of self-service checkouts and the implementation of new store operating models and property cost reductions through store rightsizing and regears. For the year, we delivered 30 basis points of retail operating margin expansion to 5.7% and adjusted profit before tax of GBP 560 million. Turning now to our group cash flow. Starting on the left of this chart. We generated adjusted EBITDA of GBP 1.3 billion. Working capital delivered a net inflow of GBP 74 million, driven by higher payables and our focus on inventory management. Tax, interest and other items amounted to GBP 13 million, including a GBP 60 million benefit from tax prepayment true-ups, which we will lap in H1 2026-'27. CapEx spend totaled GBP 388 million, an increase of GBP 71 million as we continue to invest in technology and our stores. Together, these drove free cash flow of GBP 512 million. We returned GBP 474 million to shareholders through dividends and share buybacks, and total net cash inflow for the year was GBP 107 million. Our dividend payments and share buybacks in 2025-'26 build on our track record of attractive returns to shareholders. Over the past 5 years, we have returned GBP 2.4 billion, equivalent to around 40% of our market capitalization. Looking ahead, we'll continue to build on this track record with a proposed dividend of 12.4p per share to be paid in July and the launch of our fifth share buyback program of GBP 300 million commencing shortly. Looking ahead, we see further opportunities across gross margin, costs and working capital. On gross margin, we expect continued benefit from group buying and sourcing, marketplace, retail media and logistics efficiencies. On the other hand, we expect mix effects from our growing trade penetration and from maintaining competitive prices. We see further opportunities through cost action. At store level, we will deliver savings through operating model enhancements and technology. We also see additional opportunities from improving head office efficiency and to further leverage our shared services center. Inventory also continues to be a priority. Our supply visibility tool is enabling us to reduce lead times and minimum order quantities with our OEB vendors. Coming out of a strong year, we are confident in our ability to capitalize on the attractive growth opportunities in our markets and are well positioned to continue growing sales ahead of our markets, profit ahead of sales and to generate strong free cash flow. For the financial year '26-'27, with a mixed consumer environment, we expect adjusted profit before tax in the range of GBP 565 million to GBP 625 million, and are targeting GBP 450 million to GBP 510 million of free cash flow. We remain mindful of the heightened macroeconomic and geopolitical uncertainty in recent weeks. Where we stand today, we estimate that the in-year direct impact on energy and freight cost is limited. As you know, the situation remains fluid. In similar situations, our markets have behaved rationally on pricing and margin. We have a strong track record of maintaining competitive prices, managing gross margin effectively and flexing our cost base. You can expect us to maintain our disciplined approach. Let me now hand back to Thierry. Thierry Dominique Garnier: Thank you, Bhavesh, and I want to start by outlining the strategic growth drivers, which underpin our current performance and position us for future growth. You can see these priorities on this page. And let me start with trade. We continue to grow our exposure to trade customers, a segment that shops more frequently, spends more and exhibits more predictable purchasing patterns. Our trade strategy leverages our existing store footprint and supports both market share growth and higher store sales densities with little to no incremental CapEx. As a result, trade is both revenue and margin accretive at retail operating profit level. Screwfix treat penetration already stands at 75% across the rest of the group, trade sales grew by 23% and trade customers now account for GBP 1 in every GBP 3 of group sales. With this rapid progress, we are updating our medium-term ambition and now target GBP 5 billion of group sales from trade customers. So looking at some of our initiatives in a little more detail and starting with our stores. We are expanding dedicated trade space within our stores and now have trade zones live across all our banners. We made particularly strong progress in Castorama France during the year as we rolled out our trade proposition across the entire estate and opened 50 new CastoPro zones. We're also excited to announce our first stand-alone TradePoint store opening in London this week. We also continue to invest heavily in our people, 279 dedicated trade sales partners are enrolled across our banners, circa 3x more than last year. We are empowering our trade sales partners and see this as a key lever to unlock additional share of wallet. At Screwfix, our new rewards program provides an industry-leading proposition for our trade customers and is driving strong engagement via the Screwfix app. Customers who sign up to the program receive exclusive and personalized offers, but also surprise perks and gamified engagement. We now have 2.2 million active rewards customers showing higher frequency of visits and higher average order values. Screwfix is also a great example on how we have succeeded with an app-first approach with 41% of e-commerce sales now coming from the app. Another example of where our trade focus comes to life is Brico Dépôt France, a capital-light model with a strong discounter DNA. Trade customers like the efficient shopping experience, competitive pricing and high product availability. We trialed new Pro zones during the year and signed up over 210,000 trade customers to a Pro loyalty program. We also improved price competitiveness by 2 points and introduced bulk-buy discount. These actions enabled Brico Dépôt to grow trade sales by 26% and reached a trade penetration of 17% at the end of last year. We will further build on our trade proposition this year with more Pro zones and enhance our trade value offering through additional volume discounts. Moving now to the digital ecosystem we are building and it starts with a strong 1P e-commerce proposition with our stores at the center. In 2020, we made the strategic decision to leverage our store network to fulfill online orders. This enables us to offer market-leading fulfillment speed for click & collect and home delivery, while also driving incremental traffic to our stores. We continue to improve our core platform by transitioning of our e-commerce legacy systems towards modular and agile technology. This enables rapid feature innovation, faster site load times and market-specific feature deployment. We have developed a digital app store model to ensure excellent product availability for online orders, 94% of 1P orders are picked in-store and we offer rapid fulfillment options from store through our click & collect and home delivery propositions. All this, in turn, drives increased traffic, which supports the growth of our 3P marketplace. Our marketplace offers a broad choice with several million SKUs, which in turn generates more traffic to our websites and fuels additional 1P sales. Our stores also play a critical role for our marketplace. All stores accept marketplace returns and B&Q now offers in-store click & collect for marketplace items, driving additional footfall. Our loyalty programs provide us with rich customer data, enabling personalized offers and targeted promotions. The market is increasingly shifting towards mobile-first and app-based engagement, which provides us with access to data that allows us to improve and personalize customer interaction, and this leads us to monetization. With scale, traffic and comprehensive data, we can sell and grow retail media. As you know, there is lots of current news flow when it comes to agentic commerce. Our platforms are ready to connect to agentic commerce apps, and I will come back to this topic shortly. So to summarize, our digital ecosystem drives a virtuous cycle of value, leveraging our store assets, our web traffic and is powered by Kingfisher technology. So moving to Slide 22, which highlights our group e-commerce performance this year. Screwfix already generates 60% of sales from e-commerce. In the other banners, we grew e-commerce by 20%, and you can see progress in every one of our banners. At the group level, GBP 1 out of GBP 5 now come from e-commerce. Our target in the medium term is to reach e-commerce sales penetration of 30%, out of which 1/3 from marketplaces. So moving to our marketplaces, and I'm going to focus here on B&Q, which is most advanced and provides a clear blueprint for scaling across our other banners. We launched our B&Q marketplace in 2022 and have already achieved a cumulative GBP 1 billion of GMV sales since launch. We have scaled our platform significantly over the past 4 years, adding 2,800 vendors and 3.7 million SKUs while also improving convenience for our customers with the introduction of click & collect, a first for our marketplace in the U.K. B&Q's marketplace has generated GBP 50 million retail profit contribution last year and the marketplaces in France and Iberia have now reached breakeven early in their journey. So looking forward, we have ambitious growth plans, including the onboarding of more international cross-border vendors. And for context, cross-border accounts for broadly 50% of sales at mature pure-play marketplaces and only a few percent for us. An emerging income stream for us is the monetization of our customer data and our traffic. Our insight platform, Core IQ, underpinned by Kingfisher's first-party data enables us to monetize our data with our corporate vendors, having successfully built this capability in Castorama France, we plan to roll it out across all banners in 2026. So moving to retail media. We have brought capabilities in-house, build a group Center of Excellence, and each banner now has a dedicated retail media team. We have also started piloting advertising on digital screens in stores. While at an early stage, we are very excited about this new income stream as adoption of retail media is strong. We target 3% of our e-commerce sales as additional revenues with a significant drop-through to profit. Kingfisher is also a rapid adopter of AI. We see AI as a tailwind for our business and ourselves as leaders in this space. Our in-house AI agent, Hello Casto, was the first agentic agent in the global home improvement industry when we launched it in 2023, followed by Hello B&Q in 2025. Those early investments are paying off. We have seen an increase of over 60% of customers visiting Hello Casto online with conversion increasing by 95%. Last week, we announced a new strategic partnership with Google Cloud. Through this, we'll introduce AI-powered search across all our banner websites and apps, helping customers find products more intuitively. We have also done extensive work to enable AI agents to discover our products and to transact autonomously when this functionality becomes available in the U.K. and in Europe. This partnership will expand our capabilities further, allowing customers to complete purchases via Gemini and other AI agents. Underlying our business are strong own exclusive brands where we provide innovative solutions at affordable prices and which are accretive to our margin. In 2025, within our power tool categories, we launched our next-generation Erbauer range with best-in-class performance in power, in control and durability. Since launched, it has achieved plus 43% sales growth compared with the previous range, and Erbauer is now our #1 tool brand sold across the group. Our new Ashmead kitchen range delivers standout style at entry-level pricing. While our Pragma lowest-priced kitchen range, retails for less than EUR 200 and is 15% cheaper than branded alternatives. Our new kitchens have been a key driver of our strong big-ticket performance in the year. And alongside product innovation, we are developing a growing portfolio of complementary services that support customers with their project such as kitchen and bathroom design to rental, installation service and project finance. Our banners hold leading positions in their markets, each with a distinct model and clear customer proposition where attractive space opportunities exist that meet our investment criteria, we continue to complement our existing store estate. Our mid- to long-term ambition for store space remains at 1.5% to 2.5% sales contribution per annum, and 27 new store openings are planned for the coming year. We believe compact stores will play a more important role in the future across our markets, allowing us to meet customer needs in high-density urban areas and offering convenience and fast fulfillment through click & collect and home delivery. Let me now turn to Screwfix France, which is delivering plus 49% like-for-like store sales growth, in line with our expectation. Momentum continues across all KPIs with a 52% increase in unique customers year-on-year and growing national brand awareness. We continue to see good growth in our older cohorts after 3 years and particularly strong momentum in the north of France where we observe a network effect. So this performance gives us confidence in the future of Screwfix in France. The strategic growth drivers I have outlined underpin Kingfisher's attractive investment story. We have leading positions in our markets, and those markets have attractive structural growth drivers. We operate a diverse portfolio of banners, each with distinct formats and propositions that address a wide range of customer needs. Our strategic growth drivers are allowing us to grow our market share and give us confidence in our continued delivery against our financial priorities, growing our sales ahead of our markets, increasing our profit ahead of sales and generating strong free cash flow. So to summarize, '25-'26 was a strong year. We have clear and attractive growth drivers, and we are confident in our continued delivery in '26-'27 and beyond. With that, let's move to Q&A. Thank you, everyone. Operator: [Operator Instructions] I would like to remind all participants that this call is being recorded. We will take our first question from Richard Chamberlain with RBC. Richard Chamberlain: A couple of questions from me please to start. Can you hear me okay? Bhavesh Mistry: Yes, very good. Richard Chamberlain: Yes. Excellent, excellent. Yes. So first is on the space target you're setting out for the longer term. I think you're talking about 1.5% to 2.5% per year net. I wondered if you can just talk through what the key drivers of that space ambition will be? And also what would the gross space growth be in that scenario? That's the first question. Thierry Dominique Garnier: Thank you, Richard. So I think, first of all, indeed, that's our medium-term target. We believe that Screwfix first is our -- this area where we have a lot of potential. In the U.K., with a format like Screwfix City, but moreover in France. We know that today, we are happy with the store maturity, we will go for a large number of stores in France. In Poland, we have said that we'll probably cover about 50% of the city where we want to be. We have more store to open, not only big boxes as well as medium boxes, around 4,000 square meters of format, we really believe in and as well as smaller format, we call it Castorama Smart, about 2,000 square meters, a lot of potential in Poland. But in France, Brico Dépôt 1,000 is the format we are having high expectations upon that we have a few stores. We're still looking at the results, but it could be an attractive format as well as Iberia. So obviously, Richard, the expansion is not linear. Sometimes you have opportunities, sometimes you have up and down, but clearly, that's our medium-term target. Richard Chamberlain: Great. Very helpful color. And my second question is on the marketplace. Obviously, growth very strong last year. Can you give us a sense of how much that's being driven by newer vendors and how much by a sort of broader range of SKUs from existing vendors on the platform? Thierry Dominique Garnier: I think it's both. We are -- now B&Q, it's the third year in '25, will be the fourth year this year. So we keep increasing the number of SKU, if you compare year-on-year, the number of vendors. In the other countries, you have really a very strong scale up in France, in Poland, in Iberia, we really continue to grow the vendors. I think the big new things that started in '25 and that will be a bigger thing in '26 is what we call cross-border of vendors. In fact, today, when you look at the B&Q marketplace, we just have a few percent of our vendors that are not legally located in the U.K. And we know countries like Germany, for example, or other European countries, you have a very strong base of industrial vendors. It took us a while to find the tech solution to onboard and there is VAT and payment challenges. And now we are able to do that. So you will see a lot more cross-border vendors in the future. And for large marketplaces, I will not give you names, but you can guess the names, in Europe and in the U.S., it's broadly 50% of their vendors are not local vendors. So we feel that's a big opportunity for us looking forward. Bhavesh Mistry: Maybe a couple of things to add, Richard, why we like marketplace, it extends our ranges, lets us play in categories, we wouldn't align with our proposition, but it wouldn't make sense for us to stock directly. So things like white goods, bulky things that take a lot of space in stores, maybe lower margin cap products. But the other thing is marketplace that gets us to reach new customers, right? We have half of the customers that come to B&Q marketplaces are new to diy.com. And then they go on to buy 1P product as well. So we're attracting more customers onto our website to be able to sell them more 1P. Operator: Our next question comes from Tim Ramskill with Bank of America. Timothy Ramskill: I've got a few, so I'll maybe go one at a time. The first couple are kind of cash flow related. So I guess, you obviously highlighted the benefits delivered on inventory. But at the same time, looking at the balance sheet, that's sort of not immediately obvious numbers wise. So maybe you can just help me out. I think there may have been some Chinese New Year effects at play there. So maybe you can just sort of help us sort of square the kind of improvement of 5 days of inventory, please? Thierry Dominique Garnier: Maybe let me start and then we'll give you a few detailed color. I think we are very happy with our inventory program. You have seen it's not the first year we are decreasing our inventories days. I think number of days is really the way we are looking at it. And we had multiple programs from reducing the space of our DCs. And if you look at the past 5 years, we have been consistently reducing the number of DCs and the number of square meters, using better software to have real-time visibility on inventory across the group, from factories in China, ship DCs, providing real-time data to our vendors that allow us to negotiate lead time, minimum order quality. And now we are starting to really work on forecasting with AI and more software. So I would say, you have seen that in the past few years, and we are still very confident looking forward to work hard on our inventories and being able to reduce inventories. Bhavesh Mistry: Yes, not much to add. It's a key focus area for us. As Thierry said, we took out 5 days this year, 7 days last year. We expect continued steady progress. It's a key driver of our working capital improvement. And as Thierry mentioned, we try to focus on structural things, not tactical. So for example, we've got the supply chain visibility tool that we know where our stock sits. And so that means when we work with our factories in China, we can give them better data to better plan their production, and that means that we order less, we have shorter lead times. We order fewer sort of our minimum order quantity sizes are lower. So we're getting the product we need when we need it. That really helps. Just one example, but just gives you a bit of color on some of the structural initiatives that we're taking. Timothy Ramskill: Okay. Excellent. That's very helpful. The next sort of cash flow question was just a little bit around CapEx. Obviously, the guidance for GBP 400 million. What, if anything, is driving a little bit of a step-up? Is that just linked to the sort of store opening plans? And then maybe just some thoughts on how that sort of trends over the next few years, please? Bhavesh Mistry: Yes. So we spent GBP 388 million in CapEx this year, about 3% of sales, which is in line with our guidance. I guess the way we thought about it this year is as we navigated through, we had a good first half. And we're in constant dialogue with our businesses around where could we look for opportunity to deploy and invest more in our business first. That's the first pillar of our capital allocation strategy. That's what we focused on stores. So B&Q, for example, bought a freehold store that was opportunistic that came up, wasn't in our plan, but we felt the right thing to do. We also felt continued investment in maintenance of our stores. That's important. So customer-facing things like LED lighting, entrances, et cetera. So we sort of navigated through the year. And as we saw, we're having a good first half, we chose to take some of that performance and reinvest it, obviously, in the right project parts of the business that drive good returns and help our customer experience. Timothy Ramskill: Great. And then last one for me, if that's okay. Just in terms of marketplace, just help us think about how -- clearly, you've laid out ambition for where that gets to from a revenue contribution perspective. But what would be -- well, how do you expect to grow the costs to deliver that? So when should we start to see perhaps a sort of more dramatic drop-through to profitability? Just some parameters around that would be great. Thierry Dominique Garnier: Yes. Thank you, Tim. I think, first of all, I remind you that the market -- the B&Q marketplace delivered GBP 15 million of retail profit this year. So that starts to be meaningful. When I start from top line, the take rates, the commercial margin we are taking is around industry average for home improvement between 10% and 15%, and we are happy to see this margin across all our different countries. Then you have a bit of tech, but broadly, the investment has been done. We are working with Mirakl. So that's relatively -- it's a SaaS model. So we are -- it's really a small amount. They are small teams. If you take B&Q, we speak about 20 people for over GBP 400 million GMV. So the main variable is the marketing cost. And so when you start the marketplace, you want to be probably around 8% to 10% marketing investments. And then gradually, over time, you will decrease this marketing spend. And after a few years, you are at, let's say, a stable and standard level of marketing investment. So we are gradually decreasing our market investment. And overall, when you do the math, we are seeing very strong flows through to profit. To give you even more color, we will probably be able in the future to increase the take rates because we'll be able to sell more services to our vendors, retail media, fulfillment option, advisers. So a lot of things on the table as well on the take rates in the medium term. Operator: Our next question comes from Adam Cochrane with Deutsche Bank. Adam Cochrane: A couple of questions. First of all, you talked about the compact stores as being an area of growth. Can you just give us an idea of the dynamics on the compact stores. Are they -- despite a lower sales base, are they actually more profitable on a contribution margin than the larger stores? So where I'm going is, are they margin accretive across each of the different banners compared to where you currently are? Thierry Dominique Garnier: Maybe I'll start, and I think Bhavesh will give other views. I think firstly, you remember, we have started this journey a few years ago where we believe compact store format in DIY is an important trend. It's not an obvious format, there are countries that exist. When you look at France, we have in the market companies like Mr. Bricolage or Weldom that are, in fact, small format. In the U.K., you have less small format. So in the U.K., we have B&Q locals, and that's really a high street format. And we will start to open more B&Q locals this year, and we have a target in the medium term about 30 stores. We have a format that is called B&Q retail park, around 2,000 square meters. We have Screwfix City, very successful, and we believe we can open 100. We have Brico Dépôt 1,000 in France. I mentioned that it's a very important format for the future. In Poland, we have a great medium box, around 4,000 square meter, and we are working hard on the 2,000 square meter box that is not fully ready yet. And we are still working on our small format for Poland. And obviously, B&Q, we are as well very pleased with the medium box format. So I would say, on average, our medium box and smaller formats are in line or better than the average of their markets. There are a few exceptions. For example, if you tell me in Poland, smaller format, we are not up yet, so Brico Dépôt 1,000, there's still some improvement to do. But overall, what you see is sales density and profit in line or slightly better than the average. Bhavesh Mistry: And not much to add there, Adam. I think on B&Q Locals, we've got 11, 8 of them are working pretty well. The other 3 are not. Of the 8 that are working well, we look at what are the right ranges, what's the right delivery into a city center location, logistics, how are consumers engaging with us. So we're constantly learning as we build and adopt these. Adam Cochrane: And the second question I've got is, if we look at the B&Q performance as the year progressed, there may have been some drivers from Homebase customer transference. Did that make a material difference as each quarter went on? Can you just remind us of maybe when that annualizes? And the second part of that question is, if we assume that some of the B&Q like-for-like was from Homebase, and a decent proportion is coming through from the growth in trade, is there a question mark over the core U.K. DIY customer, which appears to be in reasonably low to mid-single-digit decline if you take into account the Homebase and your trade customer growth? And are you focusing so much on the trade customer that the DIY customer is getting less of a service than they were historically? Bhavesh Mistry: Let me -- thanks, Adam. Let me start with Homebase, and then I'll get Thierry answer the second one. So we haven't disclosed specifics on Homebase, but a couple of data points. Firstly, Homebase went to admin in November 2024, and then stores closed in January and February of 2025. And the way we sort of modeled and looked at it was one of the stores that are with -- B&Q stores that are within 20 minutes of a Homebase, and how are they performing versus the rest of the portfolio. And there -- that's where we did see an uplift. Obviously, the teams executed well. The 8 stores that we acquired, we made sure we're open for peak. We made sure we have the right product availability. As you know, we had a super strong seasonal last quarter 1. But Homebase was one of a number of drivers of B&Q's performance, right? We had good performance in big-ticket, continued growth in our core categories. We've got profitable growth in trade and e-commerce. And then obviously, the strong seasonal that you saw in H1. So yes, it benefited us, but one of many levers. Thierry Dominique Garnier: Yes, Adam, a few more comments. I think, first of all, we have to look at B&Q, including marketplaces. So we have indeed the store, we have trade, we have marketplaces. So when we add marketplaces, what we call the GMV, the B&Q sales growth is plus 5.9% in 2025-'26 versus the flat market. So yes, trade is growing. But you can't say that the rest of the perimeter is having difficulties. And it's all based on the same assets. So we are leveraging our assets to grow e-commerce and to grow trade. Another data I can give you is services installation. We're on 22% at B&Q. So clearly, we see a lot of good news on interaction with the customer. So you really have to keep looking at B&Q altogether, including marketplace. Bhavesh Mistry: And just to add, we performed above the market in the U.K. Well, that gives you a data point. Adam Cochrane: Okay. And final question is, you talked about growing sales ahead of the markets and profit ahead of sales. Your midpoint of the guidance implies a 6% increase in profits. Given that one number that today surprised me slightly was the OpEx growth, particularly in the U.K. is the implication to get to your midpoint that there's a low single-digit like-for-like in order to leverage that up to get to your 6% at the midpoint profit growth? Thierry Dominique Garnier: I think maybe to start, Adam, I think in the mixed consumer environment, we feel good with a 6% increase in the midpoint. We feel it's a good plan. It's predicated on continued progress in our strategy on trade and e-commerce and as well a lot of discipline on gross margin and costs. So in the current environment, we rather feel good around this midpoint guidance. Operator: Our next question comes from Grace Gilberg with Jefferies. Grace Gilberg: Can you hear me? Thierry Dominique Garnier: Yes. Grace Gilberg: Perfect, perfect. First one is around gross margin actually. I mean, obviously, it was a pretty good year in terms of your gross margin expansion and continuing in the second half after what was a pretty good first half, and that was quite impressive. You've mentioned that these have to do with primarily better sourcing as well as just getting better deals with your suppliers. How structural is -- or how structural are these gains? And what is -- what are the things that your suppliers are seeing that are having you to be able to have these better deals, for example? That's the first question. The second one is actually around France. It was a little bit weaker than the other two regions. Obviously, the market has been down, and it's very difficult to see, that hasn't been very helpful. But it seems from your perspective that the model is working particularly at Brico Dépôt. What are the benefits that we maybe haven't seen yet just because of the market? And what are you expecting to see going forward? I'll start with those two, and then I have one or two others. Bhavesh Mistry: Grace, so on gross margin, yes, look, we're really pleased with the performance in the year, right? We grew by 80 bps as we flagged. And as we look into the year ahead, we have different puts and takes. So on one hand, you're going to continue to see further expansion of marketplace, as Thierry mentioned earlier, that's margin accretive. We continue to look at the store as the heart of our digital ecosystem. So a lot of preparation and picking is done in the store. That means we need less logistics space. And so you'll see continued focus on logistics efficiencies. And then buying and sourcing was quite successful in this year that helped drive our margin, and we expect to continue to see that in the year ahead, particularly the insight that we get from our private label business. We look at something called should-costs. We understand the components of all of our products, and that gives us real data to negotiate with our branded suppliers. And that will continue. And then we expect further FX tailwinds based on our hedging. We hedge 100% of our committed orders into next year. So we have a pretty good read on FX. On the other hand, we have growing trade. We're really pleased with what we're doing with trade for all the reasons you heard us talk about. But at a gross margin level, it is dilutive. We always focus on maintaining competitive prices. And then freight is starting to turn into a headwind. So those are some of the pluses and minuses that we think about as we look at the year ahead on gross margin. Thierry Dominique Garnier: Now, I think to France, I think overall, I think we feel good about the progress in '25. Just to tell you what I have in mind. First, market was around minus 3%, so pretty difficult market. We did around minus 2%. So we overperformed the market. In a year where Castorama had significant disruption from store work, a lot of range reviews. We had a big head office restructuring. We were changing a lot of the team in the store. You heard in Bhavesh's comment that we changed about 50% of the store manager, 40% of the category manager. And as well in France, we have to remember that it's a lot of new tax and high wages in '25, like in the U.K. So in this environment, being able to gain market share in all banners, to have a profit up, to see the strategic progress on trade, on e-commerce, to deliver on the Casto plan, but as well on the Brico plan, to answer your question on Brico, probably the two biggest progress we made was continue to have an even lower price index because it's a discount -- discounter banner. And we did a lot, a lot of progress on the Pro sales. You saw that. And at the end, the team are in a good place. We see team engagement in France growing really in a strong position. So overall, I think it's a very strong year in a very difficult market. So indeed, we need the market to recover. But for me, the market recovery, the French market recovery is a question of time. Grace Gilberg: Okay. All clear. And then I suppose my last question is around the full year guidance for FY '27. Obviously, you do have some tough comparatives heading into Q1 given how strong B&Q was last year. And then many of your competitors have as well or just peers within the home market have cited that it's been pretty wet weather and hasn't been helpful for trading into the beginning of the year. What makes you confident in reaching your full year PBT numbers, given that you're facing some of these headwinds potentially? Bhavesh Mistry: Well, as you know, Grace, we don't provide current trading. So we don't guide for the current quarter. But factually, you're right, we had a very strong seasonal, so B&Q's Q1 seasonal last year was 30%. So it's a pretty tough comp to lap. But as we look ahead to sort of our guidance for the full year, we look at sort of what are of the drivers from a top line perspective. We've got a mixed consumer backdrop. But in the U.K., we expect continued momentum from our two banners, notwithstanding the tough comp in Q1 on Homebase transfers as we talked about earlier. Top line in France, it's still a weak market. It's improving, but very slowly. Savings rates are still elevated, 400 to 500 bps above the long-term average. So very much in France is focused on what we can control, differentiated proposition, discount proposition of Brico, all the heavy lifting we're doing at Casto. You heard us talk about in our prepared remarks. And then Poland was flat last year. Q4 was good, but I'd say we need to see more quarters of good sustained consistency in Poland. So that's sort of how we think about the top line when we set our guidance. And then we talked about in your earlier question, what things that we will continue to manage effectively got some puts and takes. And those will be the same things next year as we saw this year. And then continued focus on cost. We've got a track record of managing our costs pretty well. As and when trading environments change, we have the agility to flex our cost base. So those are some of the component parts that sort of set our full year guidance on profit and cash. Hopefully that adds. Thierry Dominique Garnier: Just to add a few words around general, how we feel, obviously, looking at the Middle East crisis. I think, obviously, we are very mindful. But we look at our top line first with resilient business. We have about 2/3 of our business is repair and maintenance, so less discretionary. We now have reached 30% of the group sales is delivered through trade. So as well more resilient. We really see the benefit of our strategy on e-commerce and trade. Looking again at B&Q in 2025, real growth, plus 5.9% in the flat market. So you start to see the benefit of the strategy. And as Bhavesh said, we have had a strong track record of discipline, margin management, cost management in all the past years. Operator: Our next question comes from Yashraj Rajani. Yashraj Rajani: I've got three, please. I'll ask them one by one. So the first one is on the cross-border vendor e-commerce, which you have fully highlighted. So is that just an element of introducing a different price point? Or do you think that you're missing something in the range architecture there, which is now being complemented with this cross-border vendor e-commerce? And how do you think about the right balance so that it doesn't cannibalize your own 1P sales? Thierry Dominique Garnier: So I think we -- thank you for the question, Yash, first of all. I think it's -- we really see that more as a range topic, as choice. In fact, we are already selling on our marketplaces, I think you should take the U.K., U.K.-based vendors. So you have a lot of very strong countries in the world with very strong industrial base. Germany, but even and as well China, we'll open gradually our marketplace to Chinese vendors. We see the potential here. But it's not around price competition. To give you another color, we are working hard on what we call buy box. And I will not enter into the tech detail, but we could do that off-line, if you want. That will allow us as well to have more price competition between the same SKUs from 2026. So cross-border is really around choice. Bhavesh Mistry: And what I said earlier, right? Yes, there's probably a little bit of cannibalization, but look at our 1P sales, it's stronger than our store sales. And 3P traffic brings new people to diy.com that we wouldn't otherwise get, and a lot of them go on to buy 1P product. So that's a benefit of having the choice that Thierry talks about. Yashraj Rajani: Sure, that's super helpful. And then the second question is, again, on France. So I appreciate you commented that the market is difficult, but there's obviously all the self-help initiatives that you highlighted. So even if you assume that the market stays where it is, what is the absolute margin improvement you can see from all the things that you control even if like-for-likes are negative? Thierry Dominique Garnier: Yes. I think, Yash, we are still confident in our 5% to 7% profit margin for France in the medium term. We always said part of it is really our self-help action, and we are progressing on this. To remind you as well that some of the self-help action, you have very short-term impact, when you do a head office restructuring, you have short-term impact. Some other, like range reviews or the store network restructuring, you need a bit of time to realize, to crystallize all the benefits. So one, self-help actions. Second part is the market improvement. Personally, I'm convinced that we'll see market improvement. It's a question of time, and we need both to achieve those 5% to 7%. Yashraj Rajani: Got it. Got it. Super helpful. And the last one from my end, maybe quite a topical one is the Middle East. So can you just sort of quantify any sort of freight headwinds or more broadly disruption that you're seeing, which would probably create some availability issues, if any? Or just anything else you'd like to highlight on the Middle East? Thierry Dominique Garnier: So maybe I'll start with supply chain, and then Bhavesh will come on the cost side. First, it's obvious that we have no operation in the region. We have nearly two suppliers in the region. So you see it's really a very, very limited direct impact. And before Bhavesh will comment on gross margin and costs, again, remind you that 2/3 of our business is repair and maintenance and 30% is trade. We are high expectation to deliver on our strategy on trade and e-commerce in 2026 and beyond. So we expect this to give us resilience looking forward. Bhavesh Mistry: Yes. I mean you heard me mention it in my prepared remarks, but the direct impacts, based on what we know today, and as you know, things are changing every day, but the impact for us is fairly limited energy. On energy, our quantum energy costs are less than 1% of our sales, and the majority of that is hedged. And then on freight, again, a small proportion of our COGS, about 20% of our COGS are sourced from Asia, and we typically lock in annual contracts with carriers. So those contracts have what we call like a fuel index, so there may be a little bit of a headwind, but we've locked in those contracts for the year. We looked at previous situations, the markets have behaved pretty rationally on pricing and margin. And we continue to stay focused on managing our margin and being super disciplined on cost. And so that's our focus, right, to continue to do that as we navigate our way through. Operator: Our next question comes from Mia Strauss with BNP Paribas. Mia Strauss: I just want to check a few. I think last year, you talked maybe about doing consumer surveys for your trade sales partners. And what sort of pipeline they're seeing over the next few weeks. Maybe if you can just give us a comment on that for the current year? Thierry Dominique Garnier: Yes, absolutely, Mia. And by the way, you will see that in the appendix of our document we released, Page 34. Indeed, we do a monthly survey for Screwfix. What you see on the Page 34 is that 93% of our trades people are working. So it's 2 points year-on-year. So slightly higher than last year. But we have a second category that is working and have more work to come, 79% of the survey and is 6 points up year-on-year. So we do this survey every month for the past few years. So it's pretty reliable. So we feel those results will remain strong. Mia Strauss: And then maybe just on your share of the trade wallet. What share do you currently have? And essentially, what is the realistic opportunity of what share you could get in the future? Thierry Dominique Garnier: I think Screwfix, our estimate is around 15%, 1-5. So for our trade business, you could say it's still relatively low, and that's why we believe we have a lot of opportunity ahead on Screwfix share of wallet on the range, the size of the range, B2B. We have a plan that will address more of this share of wallet growth in the future. And you have seen as well in the presentation, the rewards program. For all the big boxes, our estimate that is a few percent. Our share wallet in B&Q in France, in Poland is just a few percent of a very large market. Very often, the trade people, they already come to our stores, but mainly for urgencies. And that's why all this plan is finally leveraging your assets to sell more to people that are already in your stores through your loyalty program, traders sales partners. So we really feel starting from this very low base of share of wallet in our other big boxes, there is significant opportunities. Bhavesh Mistry: And look, in the U.K., it's a big market, right, it's GBP 30 billion, total trade market. TradePoint sales are close to GBP 1 billion. So a lot for us to still go after. Mia Strauss: That's helpful. And then maybe just for you, Bhavesh, on the free cash flow. So the guidance is a little bit lower year-on-year. And I think it's -- last year, you also talked about achieving over GBP 500 million over the full current year. I guess, last year, you saw about a GBP 91 million increase in payables. What was that from? And I guess, going forward, why is it a little bit lower? Bhavesh Mistry: So look, yes, pleased with our free cash guidance. We've delivered more than GBP 500 million over the last 3 years. And our focus this year will be continued on the profit drivers we talked about and working capital, and particularly inventory. So again, some of the stuff we mentioned earlier, some of the structural initiatives. We set a range of GBP 450 million to GBP 510 million, midpoint GBP 480 million. That's about GBP 30 million higher than the midpoint we set last year. And so confident that we'll continue to deliver cash flow well. We also still have spent more on CapEx this year. The question somebody asked earlier, as we saw and navigated through the year that we are trading well and had a good cash performance, we chose to redeploy some of that both in buying freehold, but also at our maintenance and tech. So we kind of navigate through the year. And then you always get fluctuations, right, in year-on-year. So sometimes one-offs. But over the medium term, we're still guiding to around GBP 500 million per annum free cash and have done that in the last 3 years. Mia Strauss: Great. Maybe just on the -- if we look back to '25, what was the reason for that significant increase in payables maybe? Bhavesh Mistry: I think timing, largely. We look -- as you'd expect any retailer, we kind of look at payment terms as well as something we navigate, but also, our sales was higher, right? So that sort of drives our payables. Operator: [Operator Instructions] Our next question comes from Georgina Johanan with JPMorgan. Georgina Johanan: Everyone, can you hear me okay? Thierry Dominique Garnier: Yes, Georgina. Bhavesh Mistry: Yes. Go ahead. Georgina Johanan: I've got three quick ones, please, really just following up some questions that have already been asked. The first one is very much appreciate that you prefer not to give current trading trends. But just in the context of maybe the consumer more broadly, particularly in the U.K., I think one of the early surveys that's been done since the start of the crisis and headlines around higher energy prices and so on, actually, we saw an 8-point fall in consumer confidence. So just wondering if you can kind of comment on how you're seeing consumer behavior rather than trading trends necessarily. The second one was, I appreciate you don't provide a like-for-like guidance, and of course, there are changes that will be made depending on trading performance. But if you were to see perhaps only a flat like-for-like this year, can you just confirm that you'd be able to hold profits in that scenario, please? And then finally, you very helpfully at the half year, I think, quantified some of the gross margin benefits from buying and sourcing initiatives. If I remember correctly, around 60 basis points. Is it reasonable to assume that you can actually achieve a similar level again in fiscal '27? And indeed, where did that land for fiscal '26 overall, please? Thierry Dominique Garnier: Thank you, Georgina. Let me start with the first one, and then Bhavesh will cover the two and three. So to be direct, indeed, we don't want to comment on the current trading. But I think it's an important topic, we have not seen up to now real impact on the customer. We have not seen a change of trend following the start of the Middle East crisis. Bhavesh Mistry: On your second question, we have different levers that we pull as we navigate through the year, margin, cost, investment in the business. We set our guidance range or profit range is the same as we said previously, GBP 60 million, around that midpoint, and we'll navigate and push and pull levers as trading evolves as you saw us do this year. On gross margin, I'm not going to quantify it, but I'd refer you to my previous response on the various puts and takes. We've got lots of things that are tailwinds, but we also have some things that are headwinds on gross margins. Operator: At this time, there are no further questions. I will now hand back to Thierry for closing remarks. Thierry Dominique Garnier: Just to thank you for joining us this morning, for your questions. Again, we are confident in our delivery of this year and our strategic progress. Confident in the fact we stay very disciplined on the thing we can control well as we did in the past. So again, thank you, and we are always available with the team if you have any questions. And for some of you, I think we'll meet in the coming days. Thank you very much. See you soon. Operator: Thank you for joining today's call. We are no longer live. Have a nice day.
Operator: Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference call is being recorded. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Head of Capital Markets. Please go ahead. Yuanting Shi: Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's Fourth Quarter and Full Year 2025 Earnings Conference Call. Our earnings release is now available on our IR website at investor.hesaitech.com as well as via Newswire services. Today, you will hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, our CFO, Mr. Andrew Fan, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release and SEC filings. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead. Yifan Li: Thank you, Yuanting, and thank you, everyone, for joining our call today. I'd like to start by taking a step back and looking at what we accomplished over the course of the year. 2025 was a defining year for Hesai. We achieved a milestone no other lidar company has reached, industry first full year GAAP net income of RMB 436 million. This was not just a year of growth, it was the year our technology leadership, operational scale and execution converged to set new standards for the industry. On the product front, we continue to lead the way. According to Gasgoo, ATX, our flagship ADAS lidar, largely contributed to our #1 position in 2025 with over 40% share of the long-range automotive lidar market. Meanwhile, our JT series entered mass production and shipped over 200,000 units in its first year alone, establishing clear leadership in Robotics as well. At the same time, we reinforced our financial position through a successful USD 614 million dual primary listing in Hong Kong, further strengthening our robust balance sheet and enhancing our capacity to support long-term growth. As we enter 2026, we are carrying significant momentum across markets. With demand accelerating across various key applications, we are raising our 2026 lidar shipment outlook to between 3 million and 3.5 million units. This reflects the massive scalability and resilience of our business. Now let's take a closer look at our business highlights, starting with our progress in the ADAS market. Currently, lidar is rapidly becoming what we call the invisible airbag, essential, affordable and increasingly standard. Over the past year, we have been a key force behind the broader rollout of lidar across the industry. We achieved 100% lidar adoption on best-selling models from partners, including Li Auto and Xiaomi, while also breaking into the sub RMB 100,000 price segment with Leapmotor. This marks a fundamental shift. Lidar is no longer a premium add-on, but a core safety feature in mainstream vehicles. Our momentum is also reflected in the strength and breadth of our partnerships. we have secured 2,026 design wins with key partners, including Li Auto, Xiaomi, BYD, Leapmotor, Great Wall Motors and Changan, many on an exclusive basis. Additionally, leading automakers such as BAIC and FAW Bestune are joining our SOP roster. Altogether, we have now secured ADAS orders from every one of the top 10 OEMs in China and have secured ADAS design wins with 40 automotive brands across more than 160 vehicle models, reinforcing our position as the partner of choice for world-class automakers. This leadership allowed us to go beyond a key milestone we first envisioned almost a decade ago, enabling 1% of all vehicles worldwide with 3D perception. With over 2 million cumulative ADAS lidars delivered, we are capturing over 40% of ADAS long-range lidar demand. This gives us significant manufacturing leverage and drives a powerful flywheel of innovation. To support accelerating growth at scale, we launched our revamped version of ATX lidar last November at our Tech Day event. Powered by our in-house FMC500 500 SoC, integrating MCU, FPGA and ADC; the revamped ATX features up to 256 channels, delivering enhanced performance, reliability and cost efficiency. With an order backlog exceeding 6 million units, it positions us strongly for the next phase of mass adoption and is expected to begin SOP in April 2026. While Level 2 drives volume, Level 3 is the value multiplier. In China, the regulatory environment has reached a pivotal inflection point. With Level 3 models now approved for public road deployment in cities such as Beijing and Chongqing, the industry is moving decisively from testing into real-world deployment. As responsibility shift from the driver to the OEM, zero failure has become a mandatory requirement. To manage complex driving scenarios, Level 3 systems need broader coverage with more lidars. This is where our FTX blind spot sensors come in, enabling full 360-degree perception. At the same time, Level 3 also demands better lidars, raising the bar on performance and reliability. Our ETX ultra high-performance long-range lidar is purpose-built for these demands. It offers around twice the detection range of ATX and will incorporate our proprietary SPAD, which eliminates the false triggers commonly seen in traditional SPAD architectures. ETX is expected to begin SOP by 2026. With recent multi-lidar design wins from Li Auto, Xiaomi and Changan, with SOP planned for 2026 to 2027, along with several late-stage Level 3 discussions underway with additional leading Chinese OEMs; we are seeing a meaningful increase in lidar content per vehicle as multi-lidar models typically feature 3 to 6 lidars per vehicle. This mirrors the evolution we saw in smartphone cameras, where increasing sensor count drove a steady expansion in total system value. We believe ADAS lidars is now entering a similar value creation cycle. Internationally, our business has also reached a critical inflection point. We are pleased to announce a strategic partnership with Grab, Southeast Asia's leading super app. With Grab as our exclusive regional distributor in Southeast Asia, we are combining Hesai's global lidar leadership with Grab's unparalleled local network to aggressively scale our footprint across the region. More significantly, we have been selected as the primary lidar partner for NVIDIA's DRIVE Hyperion 10 platform, which we view as a true game changer in how we scale globally. Historically, international expansion in automotive was a slow OEM by OEM process, often taking years of validation and negotiations. Integration into the Hyperion ecosystem enables a fundamental shift in our go-to-market approach from individual engagements to a scalable turnkey model. This positions Hesai as the default gold standard lidar choice for OEMs building autonomous driving systems on the NVIDIA platform. Additionally, we have joined NVIDIA Halo AI Systems Inspection Lab to further advance safety in autonomous vehicles and robotics. Building on our momentum, our exclusive multiyear design win with a top European OEM is progressing well, with sample deliveries firmly on track. More importantly, we've achieved a key breakthrough, unifying our high-performance lidar architecture across China and global markets with the ET series as a prime example, enabling a single platform to scale seamlessly worldwide. This unified architecture eliminates redundant development while combining China's operational agility and cost advantages with the most stringent global quality standards. In fact, Hesai is the only Asian lidar manufacturer with German VDA 6.3 process audit certification, a globally recognized benchmark for the industry's most rigorous production and quality standards. The result is a structurally advantaged one platform model, delivering superior cost, speed and global scalability that is extremely difficult to replicate, putting us firmly in the driver's seat of global expansion. Looking ahead, 2026 is going to be a pivotal year for the evolution of intelligence. As NVIDIA's CEO, Jensen Huang, described at this year's CES, we are entering the ChatGPT moment for physical AI, a shift from digital chatbots to kinetic work bots operating in our factories, streets and homes. If 2025 was the year AI learned to reason, 2026 is the year AI gains a body. However, for AI systems to truly reason about the physical world, it requires a grounding in geometric truth. While cameras provide the context or the what, lidar provides the sub-centimeter spatial accuracy, the where. This makes lidar an indispensable bridge between the carbon-based world and silicon-based intelligence. Without the spatial intelligence, physical AI remains blind to the loss of physics. This structural shift plays directly to our strengths and the results are already very encouraging. According to GGII, Yole Group and Frost & Sullivan, we now rank #1 across multiple major robotics lidar submarkets, spanning humanoid and quadruped robots, robotaxis, robovans and robotic lawn mowers. For example, our JT128 lidar showcased this leadership at the 2026 Spring Festival Gala. During China's largest broadcast, which peaked at 400 million viewers, dozens of unitary humanoid robots delivered a complex synchronized [ kung fu ] performance. By providing 360-degree blind spot-free precision perception and ultra-high reliability, JT128 lidar outperformed competing offerings, seamlessly integrating with [ Unitree ] AI algorithms to achieve ultra-low latency and eliminate cumulative motion errors, ensuring absolute stability. Beyond human robotics, we have also established a strong market position in robotic lawn mowers. We have secured orders from clients, including Dreame and MOVA, representing a backlog of over 10 million lidar units with strong follow-on potential as deployments scale. In Robotaxis, we now work with nearly every leading player, including Pony.ai, WeRide, Baidu Apollo Go, DiDi and others across North America, Asia and Europe. In Robovans, we have almost achieved full coverage of key players like Zelos, Neolix and Meituan. Beyond these segments, we are actively expanding lidar applications. Recently, we secured a design win for NIU Technologies next-gen electric 2-wheel model featuring our FTX lidar. With over 10 million electric 2-wheelers sold annually in China, this brings automotive-grade 3D perception to a massive market and unlocks a new intelligent category. Together, these fast-growing segments put us right at the heart of the robotics ecosystem, helping bring physical AI from concept to real-world action. After shipping nearly 240,000 robotics lidar units in 2025, we expect that volume to at least double in 2026. Lastly, I'd like to share what's next for Hesai over the coming decade and why we are genuinely excited about the opportunities ahead. The physical AI revolution is accelerating at an unprecedented pace, but many of its critical building blocks are still in their early stages, such as sensing, motion control, integrated AI-driven decision-making and full system orchestration. These gaps represent enormous white space opportunities, and they are exactly where we believe the next wave of transformative growth will unfold over the coming decade. Hesai is uniquely positioned to lead this next phase. We bring decades of expertise in lidar, automotive and robotics-grade hardware. Today, we are doing far more than building components. We are evolving into the key enabler of physical AI, digitizing the real world and redefining how humans and robotics perceive and act. This positions us at the forefront of the AI-driven fourth industrial revolution and perhaps more importantly, opens the door to a decade of exponential opportunity. Let's now move on to something more immediate. In the next few months, we will launch two groundbreaking products, each targeting an addressable market worth trillions of RMB. One is the eyes of physical AI, enhancing perception and situational awareness beyond what is currently possible. The other is the muscles, delivering precise powerful motion control for robots and autonomous systems operating effectively in the real world. Together, these products are expected to become Hesai's second growth engine. We anticipate initial revenue contributions beginning as early as 2026. Within 5 years, this business has the potential to rival or surpass our lidar segment and within a decade, to scale another tenfold. This is more than a product portfolio expansion. Guided by our mission to empower robotics and elevate lives, we are entering the next chapter of our growth story to become the key enabler of physical AI. If 2025 was a year of market validation and record performance, 2026 will be a year of acceleration and transformation. The opportunity ahead is massive, and we are ready to lead the way. With that, I will now turn the call over to Andrew to discuss our financial performance and outlook. Andrew, please go ahead. Peng Fan: Thank you, David, and hello, everyone. Let me start by walking you through our full year operating and financial performance and share our thoughts and outlook for 2026. To be mindful of the length of our call, I encourage listeners to refer to our earnings release for further details. 2025 was a pivotal year for Hesai, marked by remarkable progress in both our financial performance and operational execution. We delivered record net revenues of over RMB 3 billion or USD 433 million, representing an increase of 46% year-over-year. This performance was underpinned by a substantial ramp in our production volumes, with total shipments exceeding 1.6 million units, more than tripling from last year, including nearly 240,000 units from robotics lidar. This expansion reflects both robust demand across markets and our ability to execute consistently and reliably at scale across a broad range of applications from passenger vehicles, humanoid and quadruped robots to robotaxis, robovans, robotic lawn mowers and many more. Together, these have reinforced our position not only as a global volume leader, but also as the partner of choice for high-value, mission-critical applications. Beyond strong top line growth, we also significantly improved the quality of our financial performance. Gross margin remained healthy at over 40%, while operating expenses, excluding other operating income, came down RMB 88 million or USD 13 million despite substantial revenue growth. This reflects strong operating leverage supported by our disciplined cost management as well as efficiency gains enabled by AI across R&D, manufacturing and operations. These improvements flowed directly to the bottom line, enabling Hesai to achieve industry-first full year GAAP profitability with net income of RMB 436 million or USD 62 million. Full-year GAAP net income, excluding after-tax gains from equity investments of RMB 148 million or USD 21 million was RMB 288 million. or USD 41 million. On a non-GAAP basis, full year net income reached RMB 551 million or USD 79 million, with the difference from GAAP net income mainly driven by stock-based compensation. Excluding after-tax gains from equity investments, full year non-GAAP net income was RMB 403 million or USD 58 million. Kindly note that we have already delivered GAAP net income for 3 consecutive quarters and non-GAAP net income for 5 consecutive quarters, demonstrating the sustainability of our earnings performance. Just as importantly, this profitability was paired with strong cash generation. We delivered positive operating cash flow of RMB 117 million or USD 17 million during the year, marking our third consecutive year of positive operating cash flow, while our net assets grew to around RMB 9 billion or USD 1.3 billion. Today, we operate with the most robust income statement and balance sheet in the global LiDAR industry, reflecting our ability to scale technological leadership while maintaining a solid financial foundation. Building from this position of strength, we are entering 2026 with a dual focus, scaling lidar leadership while proactively expanding into new growth opportunities. We expect our core lidar business to deliver shipments of 3 million to 3.5 million units in 2026. This expanded scale will reinforce our operating leverage, supporting sustainable profitability and steady cash generation. At the same time, we expect to maintain resilient gross margins through ongoing innovation and disciplined operations. Additionally, and perhaps most excitingly, 2026 marks the beginning of commercialization for our new state-of-the-art products, which we believe will become the second growth engine for Hesai in the next decade. As we invest to advance these strategic priorities, we expect to drive a strong and resilient bottom line as we scale in 2026. For the first quarter of 2026, we expect net revenues to be between RMB 650 million and RMB 700 million or USD 93 million to USD 100 million, representing year-over-year growth of approximately 24% to 33%. We also expect revenue momentum to strengthen progressively each quarter throughout the year. To conclude, 2025 was a pivotal year that enhanced the quality and scale of our business. Building on this momentum, we are positioning to become the key enabler of physical AI, digitizing the real world, redefining how humans and robotics perceive and act. As we scale, our goal is clear: to build a globally competitive technology leader grounded in innovation and financial rigor, creating sustainable compounding value to our shareholders and the broader ecosystem. This concludes our prepared remarks today. Operator, we are now ready to take questions. Operator: [Operator Instructions] Your first question comes from Tina Hou with Goldman Sachs. Tina Hou: Congratulations on raising the volume guidance. And also, look forward to the new product launch. So my question is mainly focused on the Robotics business. Wondering if management can give us more details about the different verticals, including robotaxi, robovan as well as humanoid robot. How do you see the businesses pan out in 2026 and then beyond? Peng Fan: Thank you, Tina. It's Andrew here. I will take this question first. As David just quoted Jensen Huang's speech at CES, 2026 marks the ChatGPT moment for physical AI, where our lidar provides the crucial sub-centimeter special accuracy, serving as the indispensable bridge between the carbon-based world and silicon-based intelligence. Because of this structural shift, our Robotics business is truly blooming everywhere. We are incredibly proud to share that according to industry trackers, Hesai is now ranked #1 across major robotics lidar submarkets. Let me take a moment to walk you through the key Robotics verticals that may be of interest to our investors. First, humanoid and quadruped robot. We see humanoid and quadruped robotics as a significant long-term opportunity. At the core of this vision is the need for precise perception and action as any robot interacting dynamically with the physical world relies on accurate sensing. This makes lidar a critical and ultimately standard component for positioning, navigation and obstacle avoidance. We are currently ranked #1 in humanoid and quadruped robot segment according to GGII and have secured orders from leading players, including Unitree, HONOR Robot, Galbot, Magiclab and Vita Dynamics. We expect annual shipment in this segment to reach 5-digit levels in 2026. Our JT128 lidar was deployed across Unitree's robot at the 2026 Spring Festival Gala and was selected for its superior range and reliability, enabling large-scale synchronized movements with high precision and stability. Second, robotaxi. Hesai is the world's largest robotaxi lidar supplier according to Yole report. Our main and blind spotting lidars are widely deployed among Chinese leading players, including Pony.ai, WeRide, Baidu Apollo Go, DiDi and Hello. Globally, we have secured a supply agreement with a wide area of top autonomous driving companies across North America, Asia and Europe. In short, we collaborate with nearly every key player worldwide, an important differentiator from our peers. Whether ADAS or mechanical lidar solutions are selected by robotaxi customers, our revenue model scales with their fleet size, number of lidars per vehicle and ASP. As leading operators accelerate large-scale deployments, we expect exponential fleet growth to drive rapid revenue expansions for Hesai. For robotaxis, we anticipate 5 to 10 lidars per vehicle to ensure a full 360 degrees coverage. Thirdly, robovan. The robovan sector is undergoing a major transformation. No longer limited to closed campuses, robovans are increasingly operating on complex urban rails. Supported by favorable government policies and proven business models, the market is projected to scale from 5 digits to 6 digits of robovans in 2026. Each robovan typically features 2 to 6 lidars. Hesai is ideally positioned to capture this growth. We are the core LiDAR supplier for leading robovan players globally, including Zelos, Neolix, and Meituan and DoorDash, serving as the sole supplier for many. GII recently ranked Hesai #1 in lidar design wins for this sector. Several players that previously relied on competitors' products are switching to Hesai this year, underscoring our role as the go-to hardware partner in the accelerating commercial robovan market. Fourthly, robotic lawn mowers. The robotic lawn mower market is a major growth opportunity for our Robotics business. Global annual lawn mowers sales reached about 20 million units, yet lidar-equipped robotic lawn mowers account for just 1% to 2%, highlighting a huge untapped market as consumers adapt smarter, hands-free yard care. Hesai is moving aggressively to capture this space. Since launching the JT Series 3D lidar at CES 2025, cumulative deliverables have already exceeded 200,000 units by 2025, supported by strong global partnerships with leading brands, including Dreame, MOVA and Nexlawn. We recently secured a milestone agreement to exclusively supply 10 million JT lidars to Dreame and MOVA, ranked #1 globally by Frost & Sullivan for lidar robotic mowers in 2025. This record-setting order signals a fundamental industry shift, establishing lidar as the standard for high-end smart yard products and ushering in a new era of outdoor robotics perception. As a quick summary, across these diverse applications, our Robotics business sits at the heart of the ecosystem, consistently delivering relatively higher ASPs and strong margins. After shipping 200,000 Robotics lidar units in 2025, accelerating momentum across these segments gives us full confidence that volumes will at least double in 2026. In the long term, new types of robots will begin to adopt lidar. For example, new technologies, 2-wheel scooters recently integrated our FTX lidar for autonomous operation. The robotics market could have a TAM several times larger than ADAS. After all, you can drive only one car, but in the future, 10 robots could be working alongside you. Tina, that's my answer to the question just raised. Operator: Your next question comes from Tim Hsiao with Morgan Stanley. Tim Hsiao: This is Tim from Morgan Stanley. Congratulations on the strong results and sustained industry leadership. I just want to have a quick follow-up questions also about robotics market because the market is apparently very interesting, exciting and highly focused by investors. But we noticed that the founders of Hesai have also invested in a company called Sharpa, which has been gaining a lot of attention recently. So just want to understand how should we view the relationship between Hesai and Sharpa? And is there any opportunity for business cooperation with Hesai within that year? And how does management view the future technology and supply chain synergies between the two entities? That's my question. Yifan Li: Thank you, Tim. Thank you for the question. And it's actually a great topic, and I also wanted to offer from my side. First, I want to clearly define the structural relationship. Hesai and Sharpa are two fully independent operating entities. There is no relationship of equity subordination or operational control between them. What were the co-founders of Sharpa were responsible solely for strategic guidance at Sharpa as a core shareholder role, and we do not hold executive position for actual operational growth. Our primary and full-time identities remain the CEO, CTO and the Chief Scientist of Hesai, and our focus and energy are dedicated to Hesai. Sharpa possesses its own mature and independent team. While looking ahead, we remain open to future collaborations where it makes strategic and commercial sense as it can create an actually compelling win-win dynamic. Both companies can apply their technologies in real-world scenarios while benefiting from shared insights and industry-leading expertise. For example, as an AI robotics company, Sharpa may utilize Hesai's products while Hesai as a hardware innovator may explore deploying humanoid robots in its automated production line over time. At the same time, Sharpa's progress in AI could broaden the perspective of founders and the Hesai team and potentially inform our long-term innovation road map. That said, I want to emphasize that the coordination, if any, in the future; will be conducted strictly on fair and market-based terms with the objective of maximizing long-term value for Hesai's shareholders. Based on our preliminary estimate of the future humanoid robotics market and the growth of Hesai, such operation will only contribute a small portion of our business. As Hesai continues to evolve into a key enabler of physical AI, digitizing the real world, redefining how human and the robotics perceive and act, we remain focused on executing our core strategy. This includes strengthening our leadership in lidar, advancing our next-generation eyes and muscles product portfolio and driving sustainable long-term growth by building out the Hesai ecosystem. We believe the addressable market we're targeting over time expand well beyond the traditional lidar segment, and we're truly excited about the journey ahead. This is hopefully helpful information to help you understand what Hesai and Sharpa each are trying to do and the possible synergies and the collaborations between the two entities. Thank you, Tim, for the question. Operator: Your next question comes from Jeff Chung from Citi. Ming Chung: This is Jeff from Citi. First of all, congratulations, fantastic results. So my first question is that we have the first quarter revenue guidance. So could you give us more color on the first quarter volume guidance? And separately, we recognize Hesai did a great job with the sequential OP margin improvement in the past 4 quarters. Could you give us more color on the first quarter and the full-year GP margin and OP margin guidance? Peng Fan: Thank you, Jeff. I will take this question, and I'll try to address our 1Q and the full year guidance for 2026 to the extent I can. For the first quarter of 2026, we expect the total revenues to be between RMB 650 million to RMB 700 million, representing a solid year-over-year growth of approximately 24% to 33%. On the volume side, we anticipate total shipments to be in the range of 400,000 to 450,000 lidar units, including around 100,000 units from Robotics. We have delivered GAAP net income for 3 consecutive quarters and non-GAAP net income for 5 consecutive quarters and expect to maintain this momentum. It is important to note that due to typical automotive industry seasonality and the timing of the holidays, we do expect a sequential decrease in deliveries compared to the seasonal high we saw in the fourth quarter last year. This is entirely consistent with our historical patterns. However, the fundamental demand for our lidars remains exceptionally strong in 2026, and we expect both revenues and shipment volumes to increase sequentially over the course of 2026. We are highly confident in our accelerating momentum and our ability to maintain a healthy financial profile as we execute our 2026 road map. Looking ahead to 2026, we see it as a true inflection point. On one hand, we anticipate strong demand for lidar in both passenger vehicles and robotics, which is expected to drive meaningful increase of our full year 2026 revenues. Correspondingly, we are raising our shipment guidance to a record 3 million to [ 3 ] million units for this year, with both ADAS and Robotics lidars expected to roughly double year-over-year. While volume is scaling rapidly, we do anticipate a potential decrease in blended ASP. That's mainly due to, first, modest volume-based pricing and standard annual decline for our larger order strategic OEM customers. That's mainly for the ADAS products. And secondly, a shift in product mix towards certain lidar products with a relatively lower unit prices, such as the AT series, FT series and JT series, typically around 1 to couple of hundred U.S. dollars each. Though these products will account for a larger share of deliveries and revenue compared with our traditional high ASP Robotics products such as Pandar and XT Series. That said, we are highly optimistic about our top line and margin resilience because of several strong positive catalysts accelerating in 2026 and 2027. First, lidar is rapidly transitioning from an optional add-on to a standard configuration, successfully penetrating the mass market for vehicles priced between RMB 100,000, which will continuously drive up overall the penetration rate. Second, Level 3 vehicle deployment in China will drive multi-lidar setups, pushing lidar content per vehicle to as high as $500 to $1,000 range. We have already secured multi-lidar design wins with our core customers, including Li Auto, Xiaomi and Changan, featuring 3 to 6 lidars per vehicle, with SOP planned for 2026 to 2027. Third, our overseas ADAS business is expected to start contributing in as early as 2026, marking the beginning of global ADAS lidar mass adoption with international ADAS programs typically carrying higher ASPs. We expect our partnership with NVIDIA to roll this game forward. Fourth, our Robotics business continues to gain momentum across diverse applications and customers, and it typically carries a relatively higher ASP and margin compared to ADAS. Finally, our newly second growth engine, the eyes and the muscles of physical AI, will serve as a powerful new driver for our long-term growth. Stay tuned for two new products that we plan to launch in the coming months, each targeting at RMB 1 trillion TAM. On the profitability front, through continued cost optimization across ASIC design, supply chain and manufacturing and with the launch of our FMC500 SoC to improve cost structure in ADAS products, we expect our group blended gross margin to remain resilient in 2026, despite a strong increase in ADAS lidar shipments. As a result, we are confident that the profits from our core lidar business will continue its solid growth trajectory. Additionally, and perhaps most excitedly, 2026 marks the beginning of commercialization for our new state-of-the-art products, which we believe will become the second growth engine for Hesai in the next decade. In short, we are entering 2026 with accelerating shipments, robust revenue growth, a highly disciplined margin profile, solid bottom line increase and exciting new growth engines. Jeff, that's my answer to your question. Thanks for that. Operator: Your next question comes from Aaron Wang with Jefferies. Weijie Wang: This is Aaron from Jefferies. I just have a quick question on our guidance. Last year, we had a profit guidance for the full year. I was wondering if the company will also provide a full year net income guidance for 2026. Peng Fan: Thank you, Aaron. Given the differences in compliance requirements and listing rules between the U.S. and Hong Kong market, as you know, we just listed in Hong Kong, and to align with the best disclosure practices for dual listed companies; we have decided not to provide specific full year net income guidance at this time. However, I want to emphasize that this adjustment in disclosure does not reflect any lack of confidence in our business. On the contrary, underpinned by our solidified customer base, undisputed industry dominance and a disciplined cost structure, we are fully confident in maintaining our growth trajectory of revenues, shipments and profits in 2026. At the same time, we highly encourage investors to look forward to our new business initiatives. We are investing strategically in these areas, and they are expected to become Hesai's second growth engine. Aaron, that's my answer to your question. Operator: Your next question comes from Nora Min with UBS. Nora Min: This is Nora from UBS. Thank you for trusting me with the most exciting question. So what is the master plan behind this non-auto, non-lidar new product? Would you share with us a bit of timeline, a bit of progress, a bit of more detail? Peng Fan: Thank you, Nora. Our guiding mission has always been to empower robotics and elevate lives. We have never defined ourselves solely as a lidar company. So as Jensen Huang and David repetitively mentioned, we believe 2026 will be the ChatGPT moment for physical AI. We are entering an era where AI will truly understand the rules of the physical world and learn to interact with it, which will trigger a big bang in robotic applications. The physical AI revolution is accelerating at an unprecedented pace, but many of its critical building blocks are still in their early stages. These gaps represent enormous white space opportunities. Hesai is repositioning its role in the new era as a key enabler of physical AI, digitizing the real world, redefining how humans and robotics perceive and act. In the next few months, we will launch two groundbreaking products, each targeting a mass trillion RMB market. First, the eyes, enhancing perception and situational awareness beyond what is currently possible; and second, the muscles, delivering precise, powerful motion control for robots and autonomous systems. Regarding the financial outlook of these two new products, we anticipate initial revenue contributions from these new products beginning as early as 2026. Within 5 years, we expect this business to rival or even surpass the scale of our current lidar segment. Within a decade, it has the potential to scale another tenfold lidar -- larger. As we expand into the broader physical AI ecosystem with our upcoming eyes and muscles products, our core advantages come from strategic foresight and a decade of lidar mass production experiences. We tackle challenges head on, refining our products to lead in performance, quality and cost simultaneously. Building the muscles of physical AI naturally extends our expertise in materials, simulation, design and precision manufacturing, backed by our proprietary ethics, in-house production and rigorous quality management to deliver reliability, scalability and extreme performance at scale. For the eyes, our strength comes from world-class software and algorithm capabilities seamlessly integrated with our hardwares. Years of R&D in 3D risk construction and rendering recently earned us an award at the September 2025 SIGGRAPH Challenge, a premium global event showcasing the pinnacle of computer graphics. We are truly excited to bring these best-in-class algorithms to life in our soon-to-launch hardware tools. Together, all these capabilities let us push physical boundaries and raise performance ceilings, supporting our new positioning as Hesai evolves into a key enabler of physical AI, digitizing the real world, redefining how humans and robots perceive and act. Nora, that's my response to your question. Operator: Your next question comes from Jessie Lo with Bank of America Securities. Yu Jie Lo: This is Jesse from Bank of America Securities. Congrats on the great results. So my question is surrounding the NVIDIA cooperation. So following the announcement of us selected as the partner for NVIDIA DRIVE AGX Hyperion 10, what are the next steps? Or what could we expect to see in the coming years? And what differentiates us from the peers in this collaboration? Yifan Li: Yes. This is David. Maybe I will offer some insight and our interpretation of such a collaboration. So first of all, I wanted to just help people understand the NVIDIA -- the platform is beyond only the computational hardware. It's the full stack solution, meaning it's the hardware, the software and the data. And then we are the selected partner for lidar. What that means is that, obviously, in the end, NVIDIA has customers and the customers will ultimately decide the vendor. But as we are already selected by NVIDIA. It just makes this process a lot easier in the following way. And the first is that the system, the sensor setup, the computation is already a complete system, and that's proven. Obviously, let's say, somehow you wanted to pick a different vendor who's not on the list, it just make it harder for you to verify that. And then that's actually the smaller part of the problem. The much bigger problem is the rest, including training the model and also data collection and the verification of such a system, right? You can imagine for NVIDIA to provide such a full stack solution to all the robotaxis and the Western OEMs that they're working with you need a large amount of data they already have for the project we already have with NVIDIA, that's with Hesai lidar. So now let's say, for whatever reason, obviously, I will not understand or support, but they have to use a different lidar. And then you immediately have to face the challenge that what do you have to do with the model we train and the data we collected for the past actually years of collaboration. So it's not impossible, it just make it very inefficient if you had to do that. So -- and that's one of the reasons that we are super excited and definitely honored to be in this program. And we're also motivated to work alongside with NVIDIA when they are working with customers globally, promoting such a unified solution. And to me, this actually is the smartest way to push the autonomy because in the end, it's less important if you have different components. It's important that if you have one solution that works and then try to utilize and not reinvent, we will utilize the same solution with all those customers. And I do believe NVIDIA also shared the same vision, and that's why we are now working very closely with them in supporting them with our latest sensors and in qualifying them in different parts of the world and try to develop and accelerate the programs they already have and the new programs that they will be signing. Operator: Your next question comes from [indiscernible] with CICC. Unknown Analyst: This is Dani from CICC. Congrats on your strong results last year. I have two questions for you. The first one is about the price. What's your outlook on the trend of your ASP decline? And my second question is, could you please share more color on your methods for further cost reduction? Peng Fan: Thank you, Dani. We wouldn't suggest our investors read too much into total and blended ASPs. It's really just a simple math, and the decline is mainly driven by product mix. ADAS lidars, which are generally lower priced than our Robotics lidars, are taking a bigger share. As Level 3 ramps up, our blind spotting FTX lidars, which are lower priced than long-range ATX lidars, will push blended ASP down further. So this isn't really about price, it's mostly about mix. That said, ADAS lidars follow the typical annual automotive price declines. For example, ATX is expected to carry a price tag around $150 in 2026, which is already near an optimized cost structure. So we expect the future declines to narrow. Over time, this will be offset by structural growth, more lidars per vehicle and high-performance, higher-priced L3 products like ETX as well as expansion beyond China. Looking ahead, we see clear and durable pathways to further reduce lidar costs driven by scale, technology and manufacturing excellence. First, scale is a powerful lever. After delivering 1.6 million units in 2025, tripling year-over-year, we are guiding 3 million to 3.5 million units in 2026. This step-change in volume will meaningfully dilute fixed costs and strengthen our supply chain leverage. Secondly, our proprietary technology, chip technology is structurally lowering our BOM. With 100% in-house development of core modules and our FMC500 SoC integrating MCU, FPGA and ADC functions, we are replacing costly discrete components with a highly efficient single-chip solution, reducing cost while improving performances. Meanwhile, our in-house fab integration is expected to ramp by 2026, further improving our cost structure. Finally, our highly automated in-house manufacturing drives compounding efficiencies. By standardizing core architectures and continuously improving yields, we expect to maintain a healthy margin profile in the future. Thank you, Dani. Operator: Your next question comes from Frank Tao with CMBI. Ye Tao: I'll add my congrats on the upbeat shipment volume guidance as well. Could management share with us your outlook for the operating expenses in the year of 2026? Peng Fan: Thank you for raising this question. We are very pleased with our progress in expense management, as we guided at the beginning of last year. For year 2025, our operating expenses actually came down by RMB 88 million despite our substantial revenue growth. This clearly reflects the strong operating leverage in our business, supported by our highly disciplined cost management. A key driver behind this is that AI is at the heart of how we work. We firmly believe that any company not fully embracing AI in 2026 will inevitably be left behind by the market. Because of this, we will continuously and aggressively embrace AI to boost our operational efficiency, transform our workflows and strengthen profitability. So far, this proactive approach has already delivered tens of millions of renminbi in measurable cost savings and significantly improved our productivity. Looking ahead to 2026, we anticipate a modest mid-teen increase in overall OpEx, primarily due to RMB 200 million invested in new eyes and muscles products in R&D. Otherwise, excluding new business spend, OpEx is expected to be well managed, flat or even down in single digits in 2026, demonstrating our discipline and AI adoption. Thank you. Operator: That concludes our question-and-answer session. I'll now hand back to Yuanting Shi for closing remarks. Yuanting Shi: Thank you once again for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you, and goodbye.