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Operator: Thank you for standing by, and welcome to EverCommerce Inc.'s fourth quarter 2025 earnings call. My name is Josh, and I will be your operator for today. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press 11 on your telephone, and wait for your name to be announced. To withdraw your question, please press 11 again. As a reminder, this conference call is being recorded today, 03/12/2026. I would now like to turn the conference over to Brad Korch, SVP, Finance and Head of Investor Relations for EverCommerce Inc. Please go ahead. Brad Korch: Good afternoon, and thank you for joining. Today's call will be led by Eric Remer, EverCommerce Inc.'s Chairman and Chief Executive Officer, and Ryan Siurek, EverCommerce Inc.'s Chief Financial Officer. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended December 31, 2025. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce Inc. website at evercommerce.com. The slide presentation and earnings release are also directly available on the site. Please turn to Page 2 of our earnings call while I review our safe harbor statement. Statements made on this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements except as required by law. We will also refer to certain non-GAAP financial measures in our comments today. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation. As a quick reminder, last quarter, we announced that we had closed on the sale of the Marketing Technology business. I will now turn it over to our CEO, Eric Remer. Please continue. Eric Remer: Thank you, Brad. On today's call, I will highlight fourth quarter and full year 2025 results and share some exciting AI developments across our company, including a deeper dive within our EverHealth vertical before turning the call over to Ryan to discuss our financial performance in more detail. 2025 was a year of tremendous positive change for EverCommerce Inc. We entered the year having just begun to stand up the vertical business units for EverHealth and EverPro, and throughout the year, we focused on product, people, process, and technology improvements across our business to better serve our customers and drive shareholder return. From an organizational standpoint, we ended 2025 with robust functional organizations in both EverPro and EverHealth that each had enhanced core competencies in the areas of product strategy and development, customer experience, and go-to-market, among others. In 2025, we sold our Marketing Technology Solutions business that had been a detractor to both growth and predictability. We acquired ZyraTalk, which has proven to be a strong foundation for our current and future AI product initiatives. We deployed nearly $85 million of capital to repurchase 8,200,000 shares of our common stock, and we repriced and extended our credit facility. In the midst of all of this positive progress and change across multiple aspects of our business, we met or exceeded our financial targets for the year, demonstrating our continued focus on financial performance. During the fourth quarter, EverCommerce Inc. generated revenue of $151.2 million, above the midpoint of our guidance range, representing 5.2% year-over-year growth. Adjusted EBITDA for the quarter of $44.2 million beat the top end of our guidance range, representing a 29.2% margin. I will expand more on our cross-sell motion in a few moments, but throughout 2025, we saw accelerated leading metrics compared to 2024. Finally, we repurchased 2,500,000 shares for $24.8 million during the quarter. EverCommerce Inc. is building the AI operating system for service SMB workflows. We offer tremendous value to our customers by providing the system of action necessary to run their businesses with tailored unique workflows. We provide end-to-end solutions to more than 745,000 customers across our three major verticals: EverPro for home and field services, EverHealth for medical practices, and EverWell for wellness service providers, with the two former verticals representing approximately 95% of consolidated revenue. Our large base of customers represents an immense embedded opportunity to provide value-added features and services like payments and customer rebates through our purchasing programs. On a pro forma basis, for the last twelve months, we generated $591.7 million in revenue, representing 6.4% year-over-year growth. We also generated a 30.7% adjusted EBITDA margin on an LTM basis. Finally, our annualized total payments volume, or TPV, expanded to $13 billion. There has been a lot of discussion about the impact of AI on software companies over the past several months. We see this moment in time as an opportunity to accelerate growth through advancements for our customers as well as our own operating leverage. We are in the business of simplifying and powering the lives of business owners whose services support us every day. This has been a mission statement for EverCommerce Inc. since its inception. When you look deeper at who our customers are, almost by definition, they are subscale operations: plumbers, HVAC technicians, electricians, health care providers, and salons that range from pure sole proprietor to ones with just a handful of employees. AI is not just an add-on for these customers. AI does not just save time or automate manual processes. AI is a force multiplier for our customers, providing a variety of growth opportunities and efficiencies. For example, an AI-based 24-hour receptionist that can schedule jobs, not replacing a human receptionist, but instead establishing an inbound call function that did not exist. Outbound calling can generate new business, billings and collection agents can run in the background to improve collections and working capital. Embedded ambient scribe increases time with patients in the exam room, and there are many more examples. Because we view AI to be such an important value creation driver for our customers, we have transformed our own business with an AI-first focus. We are not just bolting on third-party capabilities to our existing solutions. We are building native AI agentic features into our platforms. We are reimagining workflows and making significant investments to be at the leading edge of AI capabilities for our customers. The acquisition of ZyraTalk was a step-function move towards this goal, but our efforts began ahead of it and will continue for many years to come. Last quarter, we highlighted many of the live and in-development capabilities of EverPro. In a moment, I will highlight the same for EverHealth. As a reminder, our customers are small trades and small medical practices looking for simple yet vertical-specific workflows needed to run their businesses. Our small business customers are not likely to buy code their own solutions, and the hands-on service our customers provide are not likely to be replaced with AI. Further, we believe our targeted deep micro-vertical-specific expertise and embedded base of more than 745,000 customers puts EverCommerce Inc. in the driver's seat to be the natural provider of injected capabilities within the system of actions they already buy from us. Our solutions are affordable, with 93% of our customers spending less than $2,000 per year. We expect to both empower our customers with AI accelerants in their business and provide a path for continued ARPU acceleration in ours. Bottom line, we view AI as an enabler and accelerator, not a threat. We are already providing AI-powered revenue acceleration and better workflow capabilities to our customers, but it is just the beginning, with many more features in development. Looking inward for a moment, we will continue to use AI tools in our own operations, which we believe are table stakes in today's world to drive efficiency, speed, and cost savings. Turning to EverHealth. AI is becoming a core component of the EverHealth platform, enabling providers to automate administrative work, improve clinical workflows, and enhance financial performance. Within our core solutions, we are introducing AI-driven documentation capabilities that reduce documentation time per visit, surface structured clinical insights, and support better diagnostic decisions. The goal is simple: give physicians more time with patients while improving consistency and reducing administrative burden. Marketed as EverHealth Scribe to customers, it has already received a 99.1% satisfaction rate. Across a broad set of customers, we are seeing an average documentation time savings of eight minutes per patient. We are also applying AI to patient scheduling. Intelligent no-show prediction, automated call routing, and self-service booking tools can help practices optimize appointment utilization while improving patient access and reducing staff workload. We have already rolled out the no-show predictor to over 675 providers, resulting in increased revenue capture for our customers of around $1,000 per month per provider due to a 60% reduction in the patient no-show rate. On the revenue cycle side, we are building intelligent revenue cycle management and billing capabilities, including automated coding support, claim scrubbing, and AI-driven rejection analysis, which helps providers improve collection rates, reduce denials, and accelerate payment cycles. Another important area is integrated patient communication. AI-assisted message triage and smart document analysis allow practices to respond to patients faster while embedding workflow recommendations directly into the platform. Across all of these capabilities, the common thread is that AI is embedded directly into the workflow, helping our approximately 100,000 health care providers operate more efficiently and focus more time on care delivery. And internally, across our vertical, we are also deploying AI across sales enablement, customer support automation, and product development to drive structural leverage, improve workforce planning, and continue optimizing our cost structure. Overall, we see AI as a major opportunity to enhance the value of the EverHealth platform while driving meaningful efficiency gains for providers. Enabling customers for multiple solutions remains a key driver of growth for EverCommerce Inc. Multi-solution customers generate higher revenue, demonstrate stronger retention, and expand wallet share over time. Our strategy is focused on enabling payments at the point of initial cross-sell while also driving cross-sell into our existing customer base. Investments in onboarding automation and customer success are helping accelerate activation and utilization. At the end of the fourth quarter, 286,000 customers were enabled for more than one solution, reflecting 26% year-over-year growth. At the end of the fourth quarter, approximately 121,000 customers were active, utilizing more than one solution, reflecting 32% year-over-year growth. Enabling customers for more than one solution is the first step in the funnel that leads to increased revenue retention and ultimately profitability of these customers. We continue to focus the majority of our efforts in the front-book attach, or the enablement of payments at the point of initial SaaS sale, and we are also focused on our backward cross-sell motions. We are expanding our customer success capabilities to boost activation, retention, and wallet share, and we streamlined and improved our onboarding workflows. Over the trailing twelve months, net revenue retention was 96%, with multi-solution customers continuing to generate NRR above 100%. For each of the past several quarters, we have highlighted payment revenue growth in our fastest growing solutions. In our top six solutions, TPV grew 17.4% year over year and now represents 36% of total TPV, up from 32% in 2024. Comp solution payment revenue grew 5.9% year over year, now representing over 45% of total payment revenue. Highlighting the payment performance in our growth solutions is important; this is where we focus our investments. The improvements in cross-sell metrics I highlighted a moment ago are largely due to the gains in our top six solutions. The remainder of our payment business drives meaningful cash flow generation, at lower growth. As a reminder, we report payments revenue on a net basis and therefore it incrementally contributes approximately 95% gross margin within our core solutions. As such, payment revenue growth is a meaningful contributor to our overall adjusted EBITDA margin expansion. Before I turn to our fourth quarter results, I want to briefly address the leadership update. We are excited to announce that Matthew Feierstein, EverCommerce Inc.'s President, has added the role of EverPro's CEO. Matthew has been deeply involved in EverPro's strategy and operations plan for many years. With the foundational work of EverPro transformation behind us, Matthew is uniquely positioned, with more than sixteen years at EverCommerce Inc. and deep expertise in SaaS and payments, to focus on execution and growth across the EverPro business. Now I will pass over to Ryan to review our financial results in more detail, as well as provide first quarter and full year 2026 guidance. Ryan Siurek: Thanks, Eric. Total reported revenue in the fourth quarter was $151.2 million, up 5.2% from the prior-year period. Subscription and transaction revenue, our primary recurring revenue base, was $144.1 million. Pro forma revenue, adjusted for the acquisition of ZyraTalk, which closed in Q3 2025, was $591.7 million on an LTM basis, an increase of 6.4%, and $151.2 million for the quarter, an increase of 4.6%, both on a year-over-year basis. Adjusted gross profit in the quarter was $117 million, representing an adjusted gross margin of 77.5%. Fourth quarter adjusted EBITDA was $44.2 million, which was flat year over year, and an adjusted EBITDA margin of 29.2%. We have expanded margin by about 470 basis points since 2023, reflecting continued operational discipline and efficiency improvements. Now turning to adjusted operating expenses, which are reconciled in the appendix to this presentation. For the quarter, adjusted operating expenses were relatively flat year over year as a percentage of revenue, increasing slightly from 47.6% to 48.3%, representing targeted growth investments across our sales and marketing function. For the LTM period, as a percentage of revenue, adjusted operating expenses improved from 48.6% to 46.9%. Next, I will turn to some key liquidity measures, which include cash flow from operations. We continue to generate significant free cash flow as we invest to grow our business and invest in our AI-first products. As a reminder, cash flow metrics presented include both continuing and discontinued operations for all periods presented. Cash flow from operations for the year was $111.5 million as compared to the prior year of $113.2 million. The fourth quarter 2025 was impacted by the removal of our Marketing Technology Solutions business as a result of the sale on 10/31/2025. Levered free cash flow for the year was $79.6 million as compared to the prior year of $94.3 million, a reduction of $14.7 million, which includes an increase in capitalized software cost of $12.2 million related to our strategic capital investments in product. Adjusted unlevered free cash flow for the year was $130.5 million as compared to the prior year of $134.5 million. The consolidated increase in adjusted EBITDA for the year was offset by increases in transaction-related and other nonrecurring costs, and capitalized software for investments. We ended the quarter with $130 million in cash and cash equivalents and $155 million of undrawn capacity on our revolver, which will step down to $125 million in July 2026. As of December 31, we have $527 million of debt outstanding. Our total net leverage, as calculated for our credit facility, was approximately 2.2 times and continues to demonstrate our deleveraging from strong operational performance and free cash generation. We have $425 million of notional swaps at a weighted average rate of 3.91% that effectively hedge the floating-rate component of our interest cost through October 2027. Our long-term debt does not mature until July 2031, while our undrawn revolver capacity provides availability through July 2030, providing us with runway and financial flexibility for the foreseeable future. In terms of capital allocation, in addition to our focus on AI-first investments, in the fourth quarter, we repurchased approximately 2,500,000 shares for $24.8 million at an average price of $9.91 per share. Based on the shares repurchased through 12/31/2025, we have approximately $47.7 million remaining in our total repurchase authorization of $300 million through 2026. I would now like to finish by discussing our outlook for the first quarter and full year of 2026. For the first quarter of 2026, we expect total revenue of $145.5 million to $148.5 million and adjusted EBITDA of $39 million to $41 million. For full year 2026, we expect revenue of $612 million to $632 million and adjusted EBITDA of $183 million to $191 million. Our guide assumes typical seasonal performance, with certain portions of our business that result in stronger second and third quarter growth. We expect continued investment in areas that drive additional growth in the latter portion of the year, which include the AI-based features Eric discussed, our payments enablement investments, as well as our investments in our go-to-market organization. A key focus for 2024 and 2025 was transformation and optimization. While optimization becomes a standard practice, 2026 is about executing our playbook for durable growth by delivering enhanced customer experiences through AI-based products and workflows, go-to-market efficiencies, and continued operating leverage via operational excellence. While we do not provide specific cash flow guidance, I would like to note that with the successful sale of the Marketing Technology business, we expect less seasonal variability in cash flow from operations, with the caveat that our first quarter is historically burdened by higher cash outflows as compared to other quarters. As we begin the question-and-answer session, I would like to welcome Matthew Feierstein, EverCommerce Inc.'s President and the CEO of EverPro, as well as Evan Berlin, the CEO of EverHealth, to join us. Operator, we are now ready to take the first question. Operator: Thank you. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. One moment for questions. Our first question comes from Alex Sklar with Raymond James. You may proceed. Alex Sklar: Great. Thank you. First one, maybe, Eric or Matt, but just as you are building some of the more authentic functionality, and you have got ZyraTalk now in market, can you talk about what you have seen from a customer appetite for some of these solutions? And I realize there is some variety across the capabilities in your end markets. But how demonstrable have the ROIs been of what you have in market today in terms of helping drive adoption? Eric Remer: Thanks for the question. I think we will give a quick overview. Matthew will give some on EverPro, then Evan can talk about some of the penetration and interest we have seen with some of the AI integration and embedded capabilities that we have in EverHealth as well. Matthew, you want to kick off? Matthew Feierstein: Yeah, sure. Thanks for the question, Alex. At EverPro, we really think about AI and our journey there in three phases, and I am going to get to your question about ZyraTalk within my answer. First is the generative AI strategy that we have actually had in place for, you know, getting close to several years now, embedded in workflow. Across our invoicing solutions, across our customer experience solutions, we have seen really nice uptake thus far from our customers in each of those spots, including, you know, some revenue acceleration in our customer experience solutions where we started first. To your question about ZyraTalk, it is really as we think about the next pivot in our AI strategy from generative to voice, ZyraTalk is the interaction layer there. We are excited about the progress that we have seen to date. We have seen earlier integrations with our first systems of action than we expected, and from an early sales perspective, the uptake has been as strong as we would have expected but actually delivered earlier in the year. So again, nice progress from a ZyraTalk standpoint. And then third, we really think about the future of the agentic platform that we are building out. Obviously, ZyraTalk, we believe, gives us foundation for that, but we will be creating a centralized shared agentic platform across EverPro that really will scale agent capabilities across the portfolio and provide a lot of workflow automation for our end customers that ultimately we will monetize through premium feature add-ons, increased packaging, pricing, stronger retention, and ultimately, we help increase usage like payments driven by some of this automated job capture. So that, you know, I will pass it over to Evan for an EverHealth update. Evan Berlin: Yeah. Alex, thanks for the question. And Eric mentioned some of the metrics on the call, and we have them in the presentation. I think the one callout that I would make on the AI Scribe launch, which we put out a press release earlier this week on, we are still in beta going to general availability by the end of the quarter, the end of the first quarter, but we have been incredibly pleased with both the metrics that were mentioned on the call in terms of performance, and we actually have a waitlist with hundreds of providers that are interested in paying for that feature and getting going once we get to general availability. So quite pleased with the early progress and the rollout of that. We have a robust roadmap to continue to enhance those features from that one specific workflow across the balance of the year. Alex Sklar: Okay. Great color. I appreciate all of that. Maybe for you, Ryan, just in terms of the 2026 growth outlook, a little above 5% at the midpoint. It is kind of faster than where you just exited 2025. Can you just walk through some of those underlying assumptions as it relates to macro or NRR or new customer growth that are kind of underlying that growth cadence? Thanks. Ryan Siurek: Sure. Thank you for the question, Alex. I appreciate it. We feel good about the prospects for 2026. The assumptions that I outlined from a script perspective really relate to, you know, looking at where we exited the year, which we felt great about in terms of, you know, beating the consensus in our guidance with regard to revenue from a quarterly perspective, but then also the investments that we talked about from an AI perspective. We really focused in the latter half of 2025 on those investments, really from an AI point of view, and we will continue to do that in 2026. And we think that those investments, with regard to the things that both Matthew and Evan just talked about, will assist from a reacceleration perspective as we get through the rest of the year. So that is incorporated into the first quarter guide as well as our full-year guide from a revenue perspective. Alex Sklar: Alright. Perfect. Thanks, everyone. Operator: Thank you. Our next question comes from Aaron Kimson with Citizens. You may proceed. Aaron Kimson: Great. Thanks for the question. First one, I want to ask on payments revenue. It decreased from $29.4 million in Q4 2024 to $29.1 million in Q4 2025. You are giving the breakout of your top six payment solutions this quarter, which grew 6% year over year, and then payments revenue from other solutions, which declined about 6.5% year over year. How should we think about that year-over-year decline? Has any of the decline in the non-top-six solutions related to the Martech divestiture? Or is there something else going on there? Ryan Siurek: Thank you for the question. Appreciate it. Really not much in the way of payments revenue associated with Martech, so that is really not part of the explanation. The reason we gave the breakout in the slide and the dynamics is because there are really two parts, if you will, of our portfolio. We have a mature portfolio that is strongly cash-flow generating and allows us to continue to generate good cash flow for payments to fund other investments. Then we have a growth part of our portfolio, which is why we focus in on the top six solutions. That is where our time, effort, energy, and prioritization are focused in terms of the payments funnel for enablement, utilization, attach rate, making sure that our SaaS customers come on board, we are working to get them on board as quickly as possible. That is all part of the investments that we are making from a strategic perspective. So that is all kind of part and parcel to where we came out from a revenue perspective in totality. You will see that the top six solutions that we described—it is closer to 6% revenue growth on those—but it is based off of a TPV growth of more than 17% on a year-over-year basis. Aaron Kimson: Understood. And then second one is more high level. But much has been made about the end of the application software layer, at least the devaluing of the application software layer. What are the most important moats you see for your business as adoption of agentic AI accelerates in the coming years? Thank you. Matthew Feierstein: Yeah. I can certainly start from an EverPro perspective. When we think about ZyraTalk as the driver of our kind of voice AI layer, we have got millions of minutes of home and field services conversations that—again, I will not call it a moat, I will call it an advantage—in terms of data that we can use to train interaction and ultimately more successful engagement from that AI agent. So we certainly look at that as an advantage. The other thing we think of from an advantage standpoint is really our deep niche vertical expertise that comes in our workflows and in the data that we have around our customer base in those niche verticals. Looking at those two things together and playing that through the future agentic platform, I think those are advantages that EverPro will have with our customers and our ability to augment our existing products with these agents and ultimately drive growth for our customers and for us. Evan Berlin: And I think, Aaron, thanks for the question. It is a great one, obviously super timely. I think Matthew nailed it well. I think a lot of those same core themes are applicable to EverHealth. A couple of things I would add: the fact that we have got 100,000 plus customers in EverHealth is quite important in terms of an advantage for us to be able to build the embedded workflows that make our practices and our providers more efficient, drive revenue predictability for them, give them the opportunity to spend more time with patients, and drive better clinical outcomes. At the end of the day, if we can do that, they are going to rely on us as a core vendor and service provider and really partner to power their practice. I think the other thing is it is a highly regulated industry, and ultimately, our ability to deliver a digital end-to-end solution—obviously, that is compliant—is a huge advantage for those customers and obviously table stakes when they go to select a solution. Aaron Kimson: Great. Thank you, guys. Thank you. Operator: Our next question comes from Bill McNamara with Evercore ISI. You may proceed. Bill McNamara: Hi. This is Bill on for Kirk, and thanks for taking my question. If we could touch on the 600 customers currently using the no-show prediction tool, what level of incremental revenue per customer are you seeing? And how should we think about the magnitude and durability of that lift over time? Evan Berlin: Yep. Thanks, Bill. This is Evan. Great question. I think for that particular workflow, today it is not a feature that we are pricing a la carte. It is included in our packages, but I will tell you for the products where we rolled it out, we are in the midst of rolling out an updated package set which will have increased prices. So as we add new features, even if they are not monetized individually or from an a la carte standpoint, the overall ASP of new practices purchasing our EverHealth solutions is going to go up. So from that perspective, for that particular feature, that is how we see the monetization moving forward. Operator: Thank you. And as a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from Matthew Hedberg with RBC. You may proceed. Dan Bergstrom: Hey. It is Dan Bergstrom for Matthew Hedberg. Thanks for taking our questions. Just to build off an earlier question, looking at guidance for the first quarter and for the year, it implies building seasonality through the year, as you talked to in the prepared remarks. Maybe what are some confidence points around this? And then could you help us with the step down from Q4 as well? Ryan Siurek: Could you repeat the last part of your question? When you said help us with what? We did not hear that. Dan Bergstrom: Yes. I think Q1 guidance is lower than the Q4 revenue number, so just the step down. Ryan Siurek: Alright. Got it. I want to make sure. Yeah. Q4 was a good quarter for us, and we continue to look at that in the context of the growth on a sequential basis but also on a year-over-year basis. Q4 grew from $148 million to $151 million. Q1, typically, from a seasonality perspective, is lower. As we talked about in the script, Q2 and Q3 are usually better from a seasonal perspective overall. But we are also stepping off of Q4, in totality looking into the rest of the year as we make continued investments in payments and also in our go-to-market strategy. So we are making deliberate execution decisions at this point in time, and that is in part the things that we are focusing on from a Q1 perspective as we head into the rest of the year. We do expect reacceleration from Q1 through the rest of the year. That is also part of the full-year guide from a revenue perspective. And then from an adjusted EBITDA perspective, you will see that we are expecting margins to be, you know, strong, over 30%. But we expect to make continued investments in the AI platforms that we have just recently discussed as well. Dan Bergstrom: Thanks. That is helpful. And then nice to see EverHealth Scribe in beta here. I guess, could you help think of the timing around the AI product roadmap rollout for Pro and Health? Evan Berlin: Yeah. I can start. Thanks for the question. I think from a Scribe standpoint, we will be in general availability by the end of the quarter, in the next few weeks. We have a robust roadmap of features that are either in market, as Eric had talked about on the call in his prepared remarks, and/or are in development and will be rolled out across the year. So look for us to add, you know, continued context across that, including metrics, performance, and monitoring across 2026. We are excited about the progress thus far, and even more excited about what is to come. Matthew Feierstein: Yeah. And from an EverPro perspective, obviously, some of our generative components have hit the market. In the past year, some of them just rolled out at the end of Q4 into Q1. From an AI voice reception standpoint, as I mentioned earlier, traction with one of our core systems of action of getting that integration released and out to market, but the majority of the rest of the systems of action from a voice reception standpoint we expect in H2 and actually hope to beat that to market. And then, as I spoke to, really our shared agentic platform is a back-half-of-H2 component as well. Dan Bergstrom: Thank you. Operator: Thank you. I would now like to turn the call back over to Eric Remer for any closing remarks. Eric Remer: Thank you for that. Thank you again for joining the call today. As we look ahead to 2026, we remain focused on embedding AI across our platforms, expanding payment adoption, and continuing to drive operational efficiency. We believe these initiatives position EverCommerce Inc. to deliver durable revenue growth and strong free cash flow generation over time. I would like to thank our investors for their continued support and all of the EverCommerce Inc. employees for their hard work. Operator, this concludes our call. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Our conference will begin momentarily. Please continue to hold. Once again, greetings and welcome to the Vuzix Corporation Fourth Quarter and Full Year Ended December 31, 2025 Financial Results and Business Update conference call. At this time, participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. I would like to turn the floor over to Edward McGregor, Director of Investor Relations at Vuzix Corporation. Mr. McGregor, you may begin. Edward McGregor: Thank you, Operator, and good afternoon, everyone. Welcome to the Vuzix Corporation 2025 Fourth Quarter and full year ending December 31 financial results and business update conference call. With us today are Vuzix Corporation CEO, Paul J. Travers, and CFO, Grant Neil Russell. Before I turn the call over to Paul, I would like to remind you that on this call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements during the question and answer session. Therefore, the company claims the protection of the safe harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including, but not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, as well as changes in legal and regulatory requirements. In addition, any projections as to the company's future performance represent management's estimates as of today, March 12, 2026. Vuzix Corporation assumes no obligation to update these projections in the future as market conditions change. This afternoon, the company issued a press release announcing its final 2025 results and filed its Form 10-K with the SEC. So participants in this call who may not have already done so may wish to look at those documents as the company will provide a summary of the results discussed on today's call. Today's call may include certain non-GAAP financial measures. When required, reconciliation to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in the company's Form 10-K annual filing at sec.gov. It is also available at vuzix.com. I will now turn the call over to Vuzix Corporation CEO, Paul J. Travers, who will give an overview of the company's operating results and business outlook. Paul will then turn the call over to Grant Neil Russell, Vuzix Corporation's CFO, who will provide an overview of the company's fourth quarter and full year financial results, after which we will move on to the Q&A session. Paul J. Travers: Thank you, Ed. And thanks to everyone for joining us today. 2025 was an important year for Vuzix Corporation as we strengthened our financial discipline, improved the balance sheet, and sharpened the company's focus around our OEM and waveguide businesses. As we enter 2026, Vuzix Corporation is moving forward with a clear strategy focused on the areas where we can create the greatest long-term value. Our strategy is built directly on the core technologies, products, and capabilities we have developed over many years. Vuzix Corporation established its position through two closely connected strengths: advanced waveguides and enterprise smart glasses products. Together, those capabilities helped us develop deep technical know-how, real customer experience, and market credibility while also opening doors with larger organizations seeking a partner that understands not just optics, but the full product, deployment, and support equation. That foundation remains highly valuable and we are now building on it in a more focused and strategic way. Going forward, our branded enterprise smart glasses products business remains important and has room for lots of growth over the next five years. It gives us credibility. It gives us real-world customer insight. It helps validate use cases and open doors. But increasingly, we see it more as a strategic enabler for the larger opportunities ahead. Our long-term growth strategy is centered around our engineering services, which has expanded into two growth engines for the company: OEM products and waveguides, including the engineering services needed to support them both. The first leg of this strategy is growing our OEM products business across enterprise, defense and security agencies, and over time, the broader consumer markets where Vuzix Corporation can deliver complete smart glasses solutions as well as key optical components. The second leg of the strategy is capitalizing on our waveguide technology. Our scalable, cost-effective production of advanced waveguides positions Vuzix Corporation to play a central role in the next generation of AI- and AR-enabled smart glasses. These two growth engines are closely linked. Our OEM business is built on our core waveguide design and manufacturing technology, as well as the credibility we have earned over many years in enterprise smart glasses. Companies do not simply see Vuzix Corporation as an optic company with interesting IP. More and more, they see us as a partner that understands how these products need to work in the real operating environments, how customers use them, how they get deployed, and what it takes to support them successfully once they are. We believe that credibility is helping create pull for our OEM opportunities that develop around customized solutions for large-scale enterprises. And once we are in those discussions, we quickly see what differentiates Vuzix Corporation is our waveguide design know-how, high-volume manufacturing capabilities, and of course, our decades of making smart glasses products that we have developed and offered. This strategic shift also affects how we think about our own branded products. Historically, Vuzix Corporation had designed, built, and sold branded enterprise smart glasses. Going forward, we expect to be more selective in how we invest in that business. Rather than broadly funding entirely new enterprise product lines based primarily on our own market assumptions, we expect a greater portion of future product activity to be driven and funded by OEM customer demand. This demand for specialized AI smart glasses solutions in some cases will result in Vuzix Corporation branded offerings where appropriate. We believe our OEM business will become significant and will result in a more efficient and higher-probability path to growth as smart glasses technology continues to rapidly evolve. Expect our award-winning Ultralight platform, especially the Ultralight Pro, to be an important driver of that effort. The enterprise, along with the defense and security agency segments, are already taking shape, with active customer programs underway and visible demand emerging. In the enterprise OEM area, for instance, we are currently under contract with multiple large brands to develop custom smart glasses devices. One example is with a leading auto manufacturer to design a waveguide-based smart glasses solution for widespread use on their factory floors. We expect a derivative of this solution could carry the Vuzix Corporation brand to ultimately be sold into other enterprise market opportunities. Another good example of our expanding enterprise OEM business is Amazon. What began around maintenance use cases in distribution centers using off-the-shelf smart glasses is expanding, with a purpose-built pair of AI-driven smart glasses into additional areas that include server farms, warehousing, and robotics-related applications. We believe this kind of expansion in use cases is important because it shows how a single customer deployment can broaden into multiple operational areas over time, creating a deeper and more strategic relationship. On the defense and security agencies OEM side, we continue to see engagement growth, both in the number of active programs and in the maturity of those discussions. Importantly, this is no longer just early-stage outreach. We now have a mix of activity that includes active deliveries, contracted programs, proposal-stage opportunities, and additional programs that should expand over time. Collins Aerospace is a good example of that progress. We have started receiving production orders, giving us a solid proof point that our defense-related efforts with waveguides and projection engines are translating into real business. Beyond Collins, we are now actively engaged in opportunities with multiple government agencies, traditional defense contractors, and emerging new defense players. Overall, we believe our position in defense and government is substantially stronger today than it was a year ago, with a broader opportunity set and clearer paths to opportunities that should ultimately result in production programs. We also believe geopolitics is beginning to change how defense and security agencies think about wearable technology. For example, the battlefield and the broader security environments are evolving quickly. Drones have rapidly become a critical operational tool, and smart glasses are becoming an increasingly useful interface for helping operators see, control, coordinate, and respond in real time. More broadly, secure information access, situational awareness, and AI delivered through wearable displays are becoming increasingly relevant across defense, homeland security, and public safety use cases. We believe this shift in thinking will become an important driver of long-term demand for smart glasses and related head-worn systems. And that brings me to waveguides. During 2025, we completed the second and third tranches of Quanta's investment, bringing their total strategic investment in Vuzix Corporation to $20 million. That was important not only because of capital for our growth, but because it provided meaningful third-party validation of our waveguide roadmap, manufacturing capabilities, and our ability to support future smart glasses programs at scale. It is very clear that the main reason Quanta invested in Vuzix Corporation is to gain access to our high-volume waveguide manufacturing design capabilities. That said, Quanta is also interested in Vuzix Corporation's smart glasses industry expertise. That is another key strategic prize they gained access to with their investments. We also continued to strengthen our display ecosystem relationships. These relationships matter because the more third-party display partners we can support, the more ways we have to embed our waveguides into wearable products. Our recent collaborations with TCL, CSOT, Safflex, Himax, Avogent, and others matter because the industry increasingly recognizes that success in AI glasses and AR glasses will require the right combination of waveguides, display performance, manufacturability, and cost. Those pieces have to work together. We believe Vuzix Corporation is one of the few companies that can not only supply waveguides that are uniquely optimized for a given display, but also help design, develop, and build full smart glasses products and system solutions from the ground up. We believe our waveguide business represents the largest long-term opportunity for Vuzix Corporation. As display-based smart glasses become a true mass-market computing platform over time, advanced waveguides will become one of the key enabling technologies. In that scenario, the ultimate unit opportunity for waveguides could potentially be enormous. That is why scale matters. That is why manufacturability matters. And that is why Quanta matters. The waveguide market will not be won by having a good lab prototype. It will be won by having technology that performs, can be produced reliably, and can be cost-competitively priced now and more so in the future as volumes ramp. Vuzix Corporation has spent years building toward exactly that value proposition. We believe the broader consumer smart glasses market is now entering an important new phase. Much of the recent growth and attention has been driven by Meta, and that has been positive for the industry because it has helped to validate demand and increase awareness. But we are also starting to see the early signs of a broader market forming with additional technology and eyewear players intending to bring products, platforms, and ecosystem support into the category. On the Vuzix Corporation branded enterprise side, enterprise markets are becoming more mature and more ROI-driven. Customers are increasingly focused on implementing solutions that improve workflow efficiency, enable AI-driven hands-free operation, enhance safety, and produce measurable business value. Our enterprise products continue to demonstrate that Vuzix Corporation understands real workflows, real customers, and their real deployment challenges in maintenance, logistics, warehousing, inspection, and other industrial settings. We will continue to support and monetize the M400 platform and the recently introduced LX1 to the market. To be clear though, the maturity of the enterprise space is providing revenue, but more importantly, opening doors for Vuzix Corporation OEM solutions. Going forward, to support our business, we are allocating a majority of our planned resource and R&D spend toward waveguides, Quanta-related programs, DoD efforts, and funded OEM programs. This is intentional. We are putting our time, money, and talent behind the areas where we believe Vuzix Corporation has its strongest leverage and clearest strategic advantage. I would like to remind everyone that Vuzix Corporation has stayed in this market and continued building when many others, including better-funded players, have stepped back, stumbled, or disappeared. Over that time, we have continued innovating, serving customers, advancing our waveguides and manufacturing capabilities, and building what we believe is a very meaningful intellectual property position: more than 500 patents and patents pending worldwide. That investment in innovation represents a significant asset for the company. The smart glasses market is now moving in a direction that we believe increasingly values exactly those kinds of capabilities. AI is making smart glasses more practical. Customers are becoming more specific about what they need, and waveguide manufacturability and protected enabling technologies are becoming more central to success, not less. We believe that the perseverance Vuzix Corporation has shown over these many years has positioned the company to create meaningful long-term value for our shareholders. With that, I will turn the call over to Grant for the financial overview. Grant? Grant Neil Russell: Thank you, Paul. As Ed mentioned, the Form 10-Ks we filed this afternoon with the SEC offer a detailed explanation of our annual financials. I am just going to provide you with a bit of color on some of the full-year as well as quarterly numbers. For the fourth quarter ended December 31, 2025, we reported $2.2 million in total revenues as compared to $1.3 million for 2024, an increase of 76%. The revenue increase was primarily due to higher unit sales of our M400 smart glasses as well as significantly higher engineering services sales. For the full year ended December 31, 2025, Vuzix Corporation reported $6.3 million in total revenues as compared to $5.8 million for the prior year, an increase of 9%. Product sales increased by 4% year over year on greater unit sales of our M400 products. Sales of engineering services for the year ended December 31, 2025 were $1.6 million as compared to $1.3 million in 2024, an increase of 27%. For the full year ended December 31, 2025, there was an overall gross loss of $1.1 million as compared to a loss of $5.6 million in 2024. The reduced gross loss for 2025 was primarily a function of significantly lower inventory obsolescence reserves that were included in cost of sales in 2024. Research and development expenses for 2025 rose 31% to $12.6 million as compared to $9.6 million in 2024. The increase was primarily due to a $2.6 million increase in external development costs on our new LX1 smart glasses, which did not begin shipping until early 2026, and our waveguide products, and a $700,000 increase of depreciation expense related to underutilized new manufacturing equipment still being optimized before they are placed into full service, partially offset by a $900,000 decline in non-cash stock-based compensation expense due to the completion of the 2024 voluntary salary reduction program. For the fourth quarter ended December 31, 2025, research and development expenses were $4.5 million as compared to $2.0 million in 2024. The increase was largely driven by higher new product development costs related to the completion of the LX1. Sales and marketing costs for all of 2025 fell to $5.5 million from $8.2 million in 2024, a reduction of $2.7 million or 33%. The most significant factors for these expense reductions included a $1.2 million net decrease in bad debt expense, an $800,000 decrease in cash salary and benefits-related expenses driven by headcount decreases, and a $500,000 decrease in non-cash stock-based compensation expense, primarily due to the completion of the 2024 voluntary salary reduction program for equity. For December, sales and marketing expenses were $1.4 million as compared to $2.0 million in 2024. The decreases were primarily driven by a $400,000 reduction in bad debt expense and a $200,000 decrease in stock-based compensation expense. General and administrative expenses for the full year of 2025 decreased 32% to $11.6 million as compared to $17.2 million in 2024. The bulk of this decrease was due to a $4.9 million decline in non-cash stock-based compensation expense related to our 2024 cash salary reduction program in exchange for equity, which ended on April 30, 2025, and the termination of the company's original LTIP, which was canceled on June 16 after shareholder approval. For the fourth quarter ended December 31, 2025, general and administrative expenses were $2.3 million as compared to $4.3 million in the 2024 fourth quarter. The decrease was primarily driven by a decline in non-cash stock-based compensation expense. For the fourth quarter ended December 31, 2025, the net loss attributable to common shareholders was $8.7 million, or $0.12 per share, as compared to a net loss of $13.7 million, or $0.16 per share, for 2024. For the full year ended December 31, 2025, the net loss attributable to common shareholders was $32.3 million, or $0.42 per share, as compared to a net loss of $73.5 million, or $1.08 per share, for the full year of 2024. The decreased net loss was in large part attributable to a $30.1 million impairment loss that was recorded in 2024. Excluding this impairment write-off, overall net loss for 2025 still improved by over $11 million versus the 2024 year. We also ended the year with a stronger balance sheet. Our cash position as of December 31, 2025 was $21.2 million versus $18.2 million as of December 31, 2024. We ended 2025 with a net working capital position of $22.3 million and no current or long-term debt outstanding. Inventory levels improved, with our net inventory declining to $2.2 million as of December 31, 2025, as compared to $4.8 million at the end of 2024. Net cash flows used in operating activities declined to $8.8 million for the year ended December 31, 2025, as compared to $23.7 million for 2024, a decrease of $14.9 million. For all of 2025, we raised $24.4 million from financing activities that consisted of $10.0 million of additional investments by Quanta Computer, and $14.3 million of net proceeds received from equity sales under our ATM program during the year. Cash used for investing activities in 2025 was $2.6 million, down modestly from $2.9 million in 2024. Overall, we continue to control and reduce our operating expenses where possible. Following a 36% reduction in our cash expenses in 2024 resulting primarily from headcount reductions, we held our cash expense growth to just 4% in 2025 despite new product development spending and better positioning ourselves for general business growth in 2026. We remain confident that management's plans, along with potential further equity sales under our ATM program—of note, we raised an additional $6.0 million to date thus far in 2026—provide the company with more than adequate resources to move forward with its operating plan well through into 2027. With that, I would like to turn the call back over to the Operator for Q&A. Operator: Thank you. I will be conducting a question and answer session. We will now open for questions. Our first question today is coming from Christian Schwab from Craig-Hallum. Your line is now live. Christian Schwab: Great. Thank you. Hey, Paul, can you just give us an idea of what you expect for 2026? I know we have this movement in Amazon for purpose-built glasses. It sounds like numerous different opportunities within the defense industry and, you know, hopefully, eventually Quanta bringing a more meaningful program to the business. Can you give us an idea of what the range of outcomes for 2026 revenue would be and where you think the most significant portion of that revenue will come from? Paul J. Travers: I hate saying it this way, but I will spitball a little bit here for you, Christian. You should see the OEM, and in particular, alongside it the waveguide business, start to climb quarter after quarter throughout the year. And you should see it surpass the revenues on the enterprise, the pure Vuzix Corporation branded enterprise side of our business, before the year is up. So an exciting piece of our business right now. It is pretty amazing how the rate of new programs that we are bidding on and that we are winning are coming in the front door. So from that side, exciting stuff. Amazon is multiple different areas and it is a custom-built OEM-style device. This large car company, we expect, should be rolling in through to production by the end of this year also. You guys know we put press releases out about Collins, and they are in with Vuzix Corporation right now. And there is more than a handful of others that are in the queue. Some of these guys could represent some really significant business for Vuzix Corporation, well beyond what 2025's numbers were in the entire enterprise space. But it is going to grow through the year, we expect. Yes, you should see us stepping forward each and every quarter, but it is bumpy, the business, as you guys all know. So it is hard for us to predict exactly, other than to say that it is impossible to miss the fact that there is a wave of OEM business that is coming for Vuzix Corporation. Christian Schwab: And following up upon that, when can we see additional orders, whether they start small in 2026 and meaningfully expand in 2027? Would you anticipate throughout the course of the year that we could have, you know, three to six announcements regarding orders and go-to-market, with production in 2026? Or is that yet to be seen? Paul J. Travers: I think you would be seeing something like that, Christian. And I think you will also see some press releases announcing some great business partnerships that have developed that will not yet be product revenue-generating but will be the beginnings of it through the engineering services and work that needs to get done to get it to that point. So there is a lot. It should be an exciting year from the perspective of new business opening up for Vuzix Corporation. Christian Schwab: Great. No other questions. Thank you. Operator: You are welcome, Christian. Thank you. We have actually reached the end of our question and answer session. I would like to turn the call back over for any further or closing comments. Paul J. Travers: Thank you very much, Kevin, and thank you, everyone, for joining us today. We believe that Vuzix Corporation is entering 2026 with a very clear path to value creation through our OEM programs, the defense and government opportunities, and advanced waveguide technologies, supported by the enterprise smart glasses foundation we have built over many years. We strive to invest where our advantages are the strongest. We have strengthened strategic relationships. We have improved the structure of the business, and we believe the value we have built is becoming clearer both operationally and strategically. Still work to do, clearly, but we are encouraged by where we stand and by the direction we are heading. Thank you again for your continued support, and we look forward to updating you again next quarter and as 2026 unfolds. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
Operator: Good day, ladies and gentlemen, and welcome to Zedge, Inc.'s earnings conference call for 2026. During management's prepared remarks, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the appropriate key. After today's presentation by Zedge, Inc.'s management, there will be an opportunity to ask questions. To ask a question, please press star then 1 on your touch-tone phone. To withdraw your question, please press star 2. I will now turn the call over to Brian Siegel. The floor is yours. Brian Siegel: Thank you, operator. During today's call, Jonathan Reich, Zedge, Inc.'s Chief Executive Officer, and Yi Tsai, Zedge, Inc.'s Chief Financial Officer, will discuss Zedge, Inc.'s financial and operational results that were reported today. Any forward-looking statements made during this conference call during the prepared remarks or in the question-and-answer session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results in the future to differ materially from those discussed on today's call. These risks and uncertainties include, but are not limited to, specific risks and uncertainties disclosed in Zedge, Inc.'s periodic SEC filings. Zedge, Inc. assumes no obligation to update any forward-looking statements or to update the factors that may cause actual results to differ materially from those that they forecast. Please note that our earnings release is available on the Investor Relations page of the Zedge, Inc. website and has also been filed on Form 8-K with the SEC. Finally, on this call, we will use non-GAAP measures. Examples include non-GAAP EPS, non-GAAP net income, and adjusted EBITDA. See our earnings release for an explanation of our use of these non-GAAP measures. I will now turn the call over to Jonathan Reich. Jonathan Reich: Thank you, Brian, and good afternoon, everyone. Let me start with what stood out to me this quarter. The quality of our monetization continues to improve, and this is leading to record results. We achieved record levels of revenue and average revenue per monthly user in our seasonally strongest quarter, driven by continued advertising optimization, record active subscription numbers, and record Zedge Premium GTV. What that tells me is that the investments we have made in optimizing our ad inventory and subscription offerings continue to pay off. Although MAU contraction remains, we are focused on acquiring higher value users and monetizing our audience more effectively. That makes the core marketplace more resilient and durable. Turning to innovation, starting with DataSeeds. It remains early, and we are excited about this market and its incredible growth potential. The appetite for AI training data is virtually insatiable, and we are productizing offerings we believe can meet the needs of model builders and doing so intelligently and cost effectively. This is in contrast to the many venture-funded startups in this market, many of which are overcapitalized and burning money like there is no tomorrow. Data is the fuel that powers AI models, and we do not believe this is a bubble. Our challenge is in making the right bets, continuing to grow our library of relevant content, and executing well in a rapidly developing market. We are witnessing continued inbound interest and have started building an outbound pipeline. Some of our customers have returned, placing new, larger orders after proving that we were able to meet their highly discerning needs with high-quality outcomes. Enterprise customers tend to scale relationships over time based on consistent and reliable performance. Our operational focus is on building a high-quality outbound pipeline and on better qualifying inbound requests. Not every opportunity converts, and not every deal is feasible. Being selective, focusing on those needs that we can meet, and executing well on the opportunities we pursue is critical to building long-term credibility in the enterprise market. In addition, we are building an off-the-shelf, or OTS, catalog to drive down cost and accelerate order delivery. Our production cloud is growing as well, with a set of vetted production teams that we can call on to create datasets as needed. Revenue remains lumpy at this stage, but engagement trends are encouraging. Our priority is building the infrastructure, supply depth, and operational rigor required to support larger, more consistent opportunities over time without getting too far ahead of ourselves and hurting profitability. Our innovation team is humming. We recently launched two more alpha products, bringing us halfway toward our goal of introducing up to six this fiscal year. As expected, not every initiative will make the cut, but we learn from each new launch. Syncat, our first release under the product innovation team framework, did not deliver the KPIs we were shooting for, and we are ceasing development of this product. Our framework is simple: prequalify, develop rapidly, test quickly, measure objectively, and invest in the winners. Adopting this operating mentality is challenging and requires great discipline and the ability to avoid getting attached to a product because of personal affinities. Turning to Emojipedia, we continue to face structural headwinds tied to the evolving field of search, and we recorded a non-cash impairment this quarter to reflect the likely impact of these changes. The business remains profitable, and the cost structure, which had always been efficient, is aligned accordingly. GuruShots appears to be stabilizing and is being operated conservatively following last year's restructuring as we evaluate longer-term options. From a capital allocation standpoint, we generated solid free cash flow even after investing in DataSeeds, TapeDeck, and other innovation priorities. Cash strengthened to $19,100,000 with zero debt. Our free cash flow yield remains in the double digits, and we are now paying a quarterly dividend while continuing to invest in innovation and repurchasing shares when the market conditions are right. Stepping back, our priorities are straightforward: strengthen monetization in the marketplace, build DataSeeds deliberately, and expand our innovation pipeline in a disciplined way. We believe that balance positions us well for the remainder of fiscal 2026. With that, I will turn it over to Yi. Yi Tsai: Thank you, Jonathan. Total revenue for the second quarter was $8,300,000, up 18.3% from last year. Remember, historically, Q2 is our seasonally strongest quarter due to the holidays. There are a couple of items of note in the quarter's results. First, Zedge Marketplace revenue was up over 21% year over year, driven by strong advertising CPMs and subscription revenue. Consistent with Jonathan's comments earlier and on our last call, Emojipedia was a significant drag on top-line growth, and, when combined with year-over-year declines at GuruShots, was a material drag on our overall revenue growth rate. That said, GuruShots continues to stabilize on a sequential basis. Advertising revenue was up 18.3% for the quarter as strong growth in the Zedge Marketplace was offset by lower ad revenue at Emojipedia. Zedge Plus subscription revenue increased 33% year over year, and our net active subscriber base grew 49%, reaching nearly 1,200,000 subscribers. We continue to optimize our subscription plans and are seeing the benefits of those changes. Deferred revenue, which primarily represents subscription-related revenue, reached $6,000,000, up 5% sequentially and 39% year over year. This is an important metric as it reflects future revenue that essentially carries a 100% gross margin. Zedge Premium GTV was up 15.7% from the year-ago quarter, and op amount increased 47.6%, continuing the shift toward higher value users and improved monetization efficiency. This quarter, note that our digital goods and services revenue includes contributions from both GuruShots and DataSeeds, with a vast majority being generated by GuruShots at this stage, as we recognized minimal DataSeeds revenue in the quarter. We expect to see DataSeeds increase its contribution in 2026. Cost of revenue was 6.8% of revenue, which was up from 6.4% last year due to the reduction in partner discounts from Google Cloud Services as well as the introduction of TapeDeck licensing fees and DataSeeds production costs. SG&A decreased about 6% to $6,700,000 for the quarter. This reflects the net savings from our restructuring, partially offset by investment in ramping DataSeeds and TapeDeck. GAAP loss from operations was $2,900,000 compared to a loss of $2,200,000 last year. This quarter, we took a $3,700,000 asset impairment charge related to Emojipedia, while last year we had $1,300,000 in restructuring charges. GAAP net loss and loss per share were $2,300,000 and $0.18 compared to a loss of $1,700,000 and a loss per share of $0.12 last year. On a non-GAAP basis, net income was $800,000 and EPS was $0.06 compared to a loss of $200,000 and a loss per share of $0.01 last year. Cash flow from operations was $900,000 and free cash flow was $800,000 for the quarter. Adjusted EBITDA for the quarter was $1,100,000 versus -$100,000 last year. From a liquidity perspective, we ended the quarter with $19,100,000 in cash and cash equivalents and no debt. In addition to our dividend payouts, we still have about $500,000 available under our current buyback authorization. I want to point out one item as we look to our Q3. Last year, we had a one-time benefit to revenue of $450,000 related to an integration bonus from an ad partner that will not repeat this year. Thank you for listening to our second-quarter earnings call. We look forward to updating you again soon when we report results for 2026. Operator, please open the line for questions. Thank you. Operator: Ladies and gentlemen, we will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the star key. To withdraw your question, please press star 2. At this time, we will pause momentarily to assemble our roster. Our first question is coming from Allen Klee with Maxim Group. Your line is live. Allen Klee: Yes. Hi. Nice quarter. For DataSeeds, could you walk us through how you think about, as you get these, how long you think it takes to be able to deliver on a win, and how is this considered from a margin perspective potentially when it scales? And anything else related to the pipeline and the size of orders that might be in the pipeline? Thank you. Jonathan Reich: Hi, Allen. Thank you. A couple of different observations about DataSeeds. As we have said in the past, DataSeeds is a B2B offering, and from what we have seen, the progression of a deal depends on how well a proof of concept goes. If we deliver well according to spec in the time frames that we are given, the customer has interest in coming back to us. The growth of those deals is very much dependent on what the customer needs, whether it is a custom-made deal or whether it is an off-the-shelf deal. And we are still in the midst of refining that process to make sure that we are investing our resources in the right area with the right data, with the right prospects, and so on and so forth. In terms of margins, thus far, the margins have been attractive. We do have target margins, but margins are also dependent on what type of deal it is. Off the shelf will command a lower margin than custom made by and large, and, depending on whether or not there is a middleman—meaning a marketplace that is involved—that also impacts margin. So these are all variables that are being considered by us as we further invest in expanding this business. Allen Klee: Okay. And last quarter, I think you mentioned you were—so this makes perfect sense with you guys on photos with your having GuruShots. Did you also, I think, mention you might be looking at other types of data, and how are you thinking about that now? Jonathan Reich: Yes. We are focusing on multimodal data. That can be images, audio, and/or video. So we are focused on each of those verticals in terms of actual data. The typical entry point is based upon our reputation and business in the image space, but we have already completed one proof of concept on the video side, and we are speaking to several prospects about some audio work. Allen Klee: That is great. On your alpha product launches, you mentioned you launched two more to get to four out of six. Is there anything you can comment on the two new ones? Jonathan Reich: The two new ones literally are fresh out of the starting gate. What I can comment on thematically is these are being built off of a foundation that continues to evolve such that we can build things in a much more modular fashion, allowing us to accelerate and get stuff out the door sooner rather than later. We also are expanding and monetizing not only through subscription, which was Syncat-related, but also through advertising. And the refinement that we have in terms of even selecting what to produce next is continuing to improve. We have run stage-gate tests against a cohort of different ideas that we have researched using various industry tools, measuring where there is traction in the market, market sizing, and then taking a look at things like conversion rates and cost for acquisition, amongst other KPIs. After we have analyzed that data across a cohort of different ideas, we will select two winners, and then we start the development process. The goal is ultimately to have a foundation which allows for very fast turnaround so that we can build in a modular fashion as opposed to having to start from scratch every time we go out with a new app. Allen Klee: Right. And you are still seeing good momentum on subscription revenues. Is anything different in what is driving that, or the same trends? Jonathan Reich: What is driving it is really our ongoing investment in optimizing our subscription offering and trying to find those pockets of prospective subscribers that will be attracted to what we have to offer. Allen Klee: In terms of Zedge Marketplace, that is also doing very well. Talk a little bit about what has been driving that? Jonathan Reich: It goes without saying, our fiscal Q2 overlaps with year-end advertising spend. Furthermore, we have been doing a lot of work on the data science side in order to better segment users and optimize their performance from a monetization perspective. Allen Klee: And in terms of your active users, what is your strategy there on trying to increase that? Jonathan Reich: We have three tracks underway. Number one is marketing—primary marketing mechanisms that we have not used in the past, let us just say influencer marketing. Number two is we are testing new product features and capabilities that will draw back users on a daily basis. Just by way of example, we are going to be testing the notion of offering alarms such that you can wake up in the morning to an alarm, and a user would need to interact with the app in order to say the alarm is off. So product features. And then the third is that we have a data science project that we have initiated to help us better isolate prospective new users that we can bring into the app based upon the wonders of data science. Allen Klee: That is great. The marketplace where you are offering independent music makers royalties—could you talk a bit about how that is progressing? Jonathan Reich: Sure. First of all, as an aside, there was a really fantastic article that came out in Billboard magazine over the course of the last couple of days featuring TapeDeck and really touting the value that TapeDeck brings to the world of indie music. In terms of the actual product itself, the KPIs are trending in the right direction. We are slowing down in terms of ongoing product development and focusing our efforts more closely on expanding our music catalog. The need to find and build a music catalog that will be attractive to users, that is material in size, provides variety, and exposes users that are hyper-fans to their respective indie musicians is table stakes for the success of that business. That is where we are shifting our focus to because most of the product needs are completed at least for this phase of the rollout. Allen Klee: To what extent is discovery important for the success of this—as maybe people do not know the particular artist—and then if they can find him or her, they might get excited? How do you engage that, or how do you think about that? Jonathan Reich: Discovery is obviously important, and if one opens up the TapeDeck app, they can search their artists who will come back. If their artist is not there, it will recommend alternative artists, genres, and so on and so forth that align to that style. But what we have also started to do is to work directly with artists that are within TapeDeck in terms of promoting the app to their fan base. Allen Klee: Okay. Sounds good. Thank you so much. Operator: Thank you. As a reminder, ladies and gentlemen, if you have any questions, please press the appropriate key. As we have no further questions, this will conclude our question-and-answer session and our conference call. We thank you for attending today's presentation, and you may now disconnect.
Operator: Good day, and welcome to The Beauty Health Company 2025 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then two. Please note this event is being recorded. I will now turn the conference over to Mr. Norberto Aja, Investor Relations. Please go ahead. Norberto Aja: Thank you, Operator, and good afternoon, everyone. Thank you for joining The Beauty Health Company's fourth quarter 2025 conference call. We released our results earlier this afternoon via an earnings press release, which can be found on our corporate website at beautyhealth.com. Joining me on the call today is The Beauty Health Company's Chief Executive Officer, Pedro Malha, along with our Chief Financial Officer, Michael Monahan. Before we begin, I would like to remind everyone of the company's safe harbor language. Management may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including guidance and underlying assumptions. Forward-looking statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially. Listeners are cautioned not to place undue reliance on forward-looking statements. For further discussion of risks related to our business, please refer to the risk factors contained in the company's filings with the SEC. This call will present non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is in the earnings press release furnished to the SEC and available on our website. Following management's prepared remarks, we will open the call for a question-and-answer session. I will now turn the call over to our CEO, Pedro Malha. Please go ahead, Pedro. Pedro Malha: Good afternoon, everybody, and thank you for joining us today. The Beauty Health Company has built one of the most recognized platforms in professional skin health, and my first five months with the company have reinforced my conviction in the long-term opportunity ahead of us. But before we review the quarter, I would like to share a few observations here. My background is in global medtech businesses built around differentiated technology and disciplined commercial execution to drive growth. And what attracted me to The Beauty Health Company was the opportunity to bring the same model to the company. The foundation is already in place. We have a globally recognized brand, we have a large installed base of systems placed with providers around the world, and we operate a consumables model that, when executed well, generates meaningful operating leverage. So our task now is straightforward: to unlock the full economic potential of these assets. That means strengthening the commercial engine behind the platform with greater discipline and operating rigor consistent with established medtech companies. It all begins with activating the installed base, improving utilization, reinforcing the economics of our providers, and continuing to invest in clinically meaningful innovation. But before discussing the progress we are making, I think it will be useful to step back a little and look at the broader market. First, the fundamentals of the aesthetic category remain strong. Research shows that consumers continue to invest in their skin even when they pull back in other areas. Skin health is increasingly becoming a lifestyle category, one that is built around prevention, routine care, and clinically proven outcomes. We have seen this evolution before in areas like oral health or wellness, where treatments that once happened occasionally became part of everyday consumer behavior. We believe skin health is following a similar trajectory, which can make the long-term opportunity for this category significant. The market itself has expanded dramatically. According to industry data, the U.S. medspa market has grown from roughly 1,600 locations in 2010 to more than 13,000 today. At the same time, the consumer has evolved. We are seeing broader demographics entering the category: men, Gen Z, and younger consumers are engaging with treatments earlier. Today's consumers are seeking outcomes that look healthy, natural, and authentic. Also, consumers are more informed than ever before. They understand ingredients, treatment mechanisms, and outcomes. They are not simply purchasing a brand; they are looking for results. Providers have evolved as well. They are more focused on return on investment and are increasingly building treatment protocols that combine multiple modalities to deliver better clinical outcomes. Taken together, we believe that all of these trends are well aligned with our core product strengths. HydraFacial treatments are noninvasive, clinically credible, and repeatable. They also serve as an accessible entry price point for consumers into the aesthetic category, which helps to bring new patients into providers’ practices and creates opportunities for additional procedures. HydraFacial is also uniquely versatile. The treatment works across genders, ages, and skin types—a combination that very few technologies in the medical aesthetic space can match. Because our treatment is repeatable and easy to integrate, it also fits naturally into preventive skin health routines and combination protocols, which is exactly where the market is moving. So The Beauty Health Company is uniquely positioned at the intersection of clinical skin health and consumer aesthetics. However, our commercial model was built for an early phase of the market, one where the category was newer, competition was lighter, and placing devices was the primary growth driver. That playbook worked well for a long time, but markets mature, and we need to evolve our model ahead of that curve and shift it from a model of device placement to a model of device utilization, which is where we believe the long-term growth of the business is. Over the past year, the company strengthened its balance sheet, improved its cost structure, and restored financial discipline across the organization. Our fourth quarter results reflect that progress. At the same time, we hold the view that these results do not yet reflect the full potential of The Beauty Health Company. What they do demonstrate is that the foundation of the business has stabilized. For the fourth quarter, total revenue was $82.4 million, representing a decrease of 1.3% compared to the prior-year quarter, a meaningful improvement from the double-digit decline we experienced in Q3. Consumables revenue increased to $57.7 million from $56.7 million in the prior year, representing growth of 1.7% year over year and reinforcing the resilience of our recurring revenue model. Device revenue was $24.7 million, still down 7.9% year over year, but performance improved meaningfully here relative to the third quarter. These numbers still reflect some pressure in the capital equipment segment, which is consistent with the broader macroeconomic environment. That said, the trend is moving in the right direction, and the improvement we saw from the prior quarter is an encouraging sign that the capital equipment business is stabilizing. Adjusted gross margin expanded to 67.4%, while GAAP gross margin expanded to 64.4%, driven primarily by a favorable mix shift towards consumables revenue. Additionally, profitability improved significantly. Adjusted EBITDA was $15 million in the fourth quarter compared to $9 million in last year’s quarter, representing approximately 700 basis points of margin expansion. For the full year, adjusted EBITDA increased to $45.1 million compared to $12.3 million in the prior year—again, a significant improvement. So the results for this quarter highlight two important characteristics of our model. First, this business has meaningful operating leverage. Second, that leverage responds directly to disciplined execution. Operationally, we placed more than 1,000 devices in the quarter and ended the year with over 36,000 systems in our global installed base. That installed base is the strategic core of this company, and it represents a recurring revenue infrastructure that is already in place. While this base has already been built, we think it remains underutilized. We believe that even modest improvements in utilization can drive significant consumables revenue and margin expansion. So our job now is to unlock the full productivity of that installed base. Now, looking ahead, the message here is that we remain optimistic about the category in which we operate. Demand for non- or minimally invasive science-based treatments continues to grow globally. The market is shifting away from procedures driven primarily by short-term trends toward outcomes-driven protocols. The market is also shifting from individual treatments toward combination therapies and from soft marketing claims toward more clinically validated results. These trends favor companies with scale, clinical credibility, stronger provider education, and durable recurring economics, which is exactly where The Beauty Health Company is positioned. At the center of our strategy is a powerful commercial model. Our brand credibility drives consumer demand. Consumer demand drives patient traffic into providers’ practices. Patient traffic drives higher treatment utilization per device. Utilization drives consumables revenue, which is our margin engine. For providers, this generates additional revenue and motivates them to expand, upgrade, and deepen their relationship with us. Utilization is the center of gravity, and we believe that when utilization improves, it creates positive momentum across the model. To accelerate this flywheel, we are focused on three priorities: first, salesforce excellence; second, marketing discipline; and third, focused innovation. Starting with salesforce excellence, historically much of our commercial success was relationship-driven. That worked well in the early stages of the company, but the next phase of growth requires a much more structured, disciplined commercial approach. We are now transitioning to a value-based selling model, one where our teams clearly demonstrate how HydraFacial drives revenue, patient demand, and attractive returns for provider practices. That also means sharpening our clinical economic differentiation, improving how we segment and prioritize accounts, and implementing more structured sales plans. These plans focus not only on acquiring new practices but also on expanding utilization across our installed base and reactivating low-utilization accounts. We are also deploying stronger commercial tools and analytics so we can track activation, utilization, and retention across the installed base in real time. This gives us better visibility into performance and allows us to manage the business with greater precision. Second, marketing discipline. Our marketing strategy needs to be more focused on demand generation that directly supports provider growth. We are refining the positioning of HydraFacial as a clinical-grade skin health platform—one that is supported by science, outcomes, and stronger provider education. At the same time, we are activating an underleveraged asset in our portfolio, SkinStylus. It is a strong technology in the growing microneedling category that historically has never received the commercial focus it deserves, and we see a meaningful opportunity to expand its role within providers’ practices. We are also expanding consumer demand generation programs designed to bring new patients into providers’ offices and strengthen the economic value proposition for these providers. Additionally, we recently brought in a new Brand and Clinical Strategy Office with deep medtech experience to lead our brand and marketing strategy and strengthen the clinical positioning of our technology. Third, focused innovation. Innovation will remain disciplined and targeted at opportunities that strengthen our platform. This includes the development of a next-generation HydraFacial system designed to drive upgrades across the installed base and expand our market share. We are also investing in a much more selective portfolio of clinically backed boosters designed to increase booster attachment rates, improve provider economics, and expand treatment protocols. If we look back, HydraFacial has historically been viewed primarily as a single treatment, but we see it differently. We see HydraFacial as the foundation of a broader skin health platform—one that integrates devices, boosters, protocols, and complementary technology into a comprehensive ecosystem for providers and customers. We are also exploring selective commercial and technology external partnerships aimed at broadening our product ecosystem and enlarging our relationship and offering to providers. All in all, we believe that taken together, these initiatives will strengthen the installed base, expand HydraFacial’s role in providers’ practices, and accelerate the compounding economics of our model. This means that we will shift from a single-product company to a skin health platform. For that reason, 2026 will be an execution year, focused on stabilization and investment into the next phase of growth. With the operational changes that we are implementing, we expect to return to growth in 2027 and accelerate beyond that as innovation and product launches scale. The Beauty Health Company has one of the largest installed bases in the aesthetics industry, one of the most recognized brands in skin health, a proven device-plus-consumables model, and a global commercial infrastructure across North America, Europe, and Asia Pacific. These are proven and durable advantages. Our task now is to match those advantages with the commercial discipline and operating rigor of a best-in-class medtech company. Before I turn it over to Michael, let me quickly frame our expectations for the year. 2026 is likely to come in modestly below the prior year, but as our initiatives take hold, we expect momentum to build through the second half, positioning the company to exit 2026 on a stronger trajectory and setting the stage for returning to growth in 2027. I will now turn the call over to Michael Monahan to walk you through the financials and our 2026 guidance in more detail. Michael? Michael Monahan: Good afternoon, everyone. Key financial metrics for 2025 reflected meaningful improvement. Our global footprint surpassed 36,000 systems. We increased our adjusted gross margins from 62% to over 68%, and GAAP gross margins increased from 54.5% to 65.3%. We grew adjusted EBITDA from $12.3 million to $45.1 million, or 268%. We generated over $37 million in operating cash flows, and we strengthened our balance sheet by proactively restructuring our debt. Because of this, we exited 2025 a stronger company than we were a year earlier. These improvements did not happen overnight and are the result of the hard work of our dedicated teams. As we continue to stabilize the company and prepare to return to growth, we believe we are positioned to drive improved profitability and increased margins in the future. For the full 2025 fiscal year, net sales were $300.8 million compared to $334.3 million in 2024. Consumables revenue totaled $212.7 million, while device revenue was $88.1 million. We ended the year with an installed base of over 36,000 systems globally, which remains the foundation of our recurring consumables revenue model. We delivered adjusted EBITDA of $45.1 million, representing a significant improvement from $12.3 million in the year prior. The year-over-year change was driven by our continued focus on expense discipline and sustained margin improvement, demonstrating the operating leverage of our business model. On the balance sheet, we ended the year with approximately $232.7 million in cash, cash equivalents, and restricted cash compared to approximately $370.1 million at the end of 2024, representing a 37% decrease. The year-over-year change was primarily driven by the repurchase of convertible senior notes during 2025 which, along with the refinancing of our notes, significantly strengthened our capital structure and extended our debt maturity profile. For the fourth quarter, net sales were $82.4 million, a slight decrease of approximately 1.3% compared to the previous year. The year-over-year decline primarily reflects lower delivery system sales. We placed 1,032 delivery systems during the quarter compared to 1,087 units in the prior-year period. GAAP gross margin was 64.4% in the fourth quarter compared to 62.7% in Q4 of last year. The improvement in gross margin was primarily driven by lower inventory-related charges and a favorable mix shift towards consumables, partially offset by lower average selling prices on equipment. As planned, we successfully sold through the majority of our Elite FRC devices during the quarter, which are sold at a lower ASP than our new Syndeo devices. Adjusted gross margin was 67.4% in the fourth quarter versus 67.1% in the prior year. We continued to manage costs tightly throughout the quarter, with GAAP total operating expenses coming in at $52.9 million in Q4, down from $59.5 million in the prior year. Selling and marketing expenses declined to $23.5 million, reflecting lower headcount and disciplined spend management. Research and development expense was $1.7 million, up modestly year over year, reflecting professional services related to early-stage product investments. General and administrative expense declined to $27.7 million, driven primarily by cost controls, lower bad debt expense, and reduced expenses resulting from our shift from direct to distributor distribution in China. As a result, adjusted EBITDA for the quarter came in much stronger than the prior year at $15 million compared to $9 million in Q4 of last year. Net loss for the quarter improved to $8.1 million compared to a net loss of $10.3 million in the prior year. Moving to guidance, 2026 projections reflect the execution priorities Pedro outlined earlier. For the full year, we expect revenue in the range of $285 million to $305 million with positive adjusted EBITDA of $35 million to $45 million. At the midpoint, this implies revenue broadly consistent with 2025 when normalizing for our go-to-market change and softness in China, with a more back-half-weighted cadence as execution initiatives take hold. We believe this is the appropriate framing for 2026 given the work underway to strengthen the commercial foundation of the business, including sales execution, installed base activation, and targeted investments in marketing, education, and innovation. From a cadence perspective, we currently expect 2026 to be modestly below the prior year. This expectation reflects continued macro pressure in capital equipment, increased competitive activity that has lengthened the device sales cycle, the transition work underway within our sales organization, and ongoing adjustments in certain international markets, including China. It is also worth noting that fourth quarter results typically benefit from year-end ordering patterns, which do not repeat in the first quarter. As these actions take hold, we expect improving momentum in the second half, with the business exiting 2026 on a stronger underlying trajectory than where we began. We believe these actions will strengthen the underlying productivity of our installed base and reinforce the durability of our recurring consumables model, positioning the company for a return to growth in 2027. For the first quarter of 2026, we expect revenue of $63 million to $68 million and positive adjusted EBITDA of $3.5 million to $5.5 million. As a reminder, the first quarter is historically our lowest revenue quarter due to seasonal dynamics, including increased sales and marketing activity early in the year and typical ordering patterns among providers. Overall, our outlook reflects a disciplined approach, prioritizing operational execution while investing in long-term growth. With that, I will turn the call back to Pedro. Pedro Malha: Thanks, Michael. To close, our fourth quarter reflects meaningful structural progress in margins, profitability, balance sheet strength, and in the operating foundations of the business. Key characteristics that make The Beauty Health Company a compelling long platform remain unchanged: the scale, the brand equity, a recurring revenue model with operating leverage, and a global distribution. What is changing is the disciplined operational focus we are bringing to those assets. We believe that as utilization improves and innovation strengthens the platform, the compounding economics of this business will become increasingly visible. We expect 2026 to be the year we demonstrate that operationally, and 2027 is when we expect that progress to translate into sustainable revenue growth. We look forward to updating you on our progress in the next quarter. I will now turn the call back to the Operator for questions. Thank you. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We will now pause momentarily to assemble our roster. The first question will come from Alan Gong with J.P. Morgan. Please go ahead. Alan Gong: Hi, thanks for taking the question. So I guess my first is going to be on the guide. I think following, you know, you have been taking the last couple of years to really stabilize the underlying Syndeo business, and I understand that you are doing a pretty substantive overhaul of the underlying sales organization. But when I look at your outlook for next year, despite the fact that you have another year of, you know, sales declines on tap, it looks like you are still expecting to generate pretty good adjusted EBITDA. So just help me to right-set expectations for these investments into the sales force and this overhaul with being able to drive continued leverage. Pedro Malha: I will just—thanks for the question. So I will just summarize back on what we are guiding here. On revenue at the midpoint, we are expecting to be flat year on year once you normalize, actually, most for the China transition, and that is pretty intentional, the guide, because in the end, we view 2026 as an execution year. On adjusted EBITDA, that number means that at the midpoint of the guidance, this will be slightly below 2025 largely because of the reinvestment that we are doing into the business with an increase in R&D for basically fueling future innovation. So the expectation, and Michael alluded to this, is that, all in, the first half of the year we expect to be down mid-single digits, and in the second half, we expect to be flat. Without APAC, which is majorly a China impact here, the first half is expected to be down low single digits and the second half to be positive low single digits in terms of growth. The main drivers are actually both consumables and devices here as we ramp up towards the back half of the year. Michael, I do not know if you want to— Michael Monahan: Sure, Alan. I can add if you also wanted to know where, in the middle of the P&L, how we are thinking about the guide on the gross margin side. I would expect we modeled in gross margin for the full year to be relatively consistent with where we have been in 2025. The team has made a lot of improvements on the cost side of the business to get leverage within overall gross margin. We expect that to continue for the full year of 2026. On the OpEx side of the business, as you mentioned, we still are driving savings and cost efficiencies through the G&A line of the business, but we are reinvesting that back into the R&D line of the business into innovation for new products into the future. Alan Gong: Got it, thanks. And then I guess just on the underlying—I know you called out continued challenges on the capital side, but you clearly had a very, very strong systems placement performance to close out the year. So when we think about the underlying assumptions for the market, especially given all the volatility from a broader macro perspective, can you just help us with your underlying assumptions for trends throughout the year and in first quarter? Pedro Malha: Sure. So in terms of the overall, I will say end consumer signals that we are basing ourselves into, our data shows that the consumer is still spending but is being more select in choosing treatments that deliver clinically proven results at an accessible—we can call it accessible—price point. That actually is exactly the space that HydraFacial occupies. The aesthetics category has been pressured and has been pressured for the last couple of years, and this is mainly due to the tightness of credit and the capital spending decisions taking longer because of that. If these conditions improve, then we can see procedure volume pick up, and after that, we typically see device placements pick up as well. Our ability to return to growth is not relying on a change in these macro trends. Rather, it hinges on our ability to execute on our strategy. If you wanted to go down and dip a little bit to a lower level, in terms of the provider trends that are shaping this market: in the medical segment, which, by the way, is 70% in the U.S. of our business, medical spas occupy a large percentage of that segment and continue to be the engine of this market. We believe that this engine will continue to grow because they are indeed using HydraFacial as a way to bring patients in and upselling them into higher-ticket treatments. Plastic surgeons seem to be losing some traction, and dermatologists are more stable, but this is driven more by the specific patient skin treatments needed rather than just pure discretionary spending. At the high end, the more invasive side of aesthetics seems to be softening, while the noninvasive skin quality treatments like ours are holding up. If you look at the nonmedical segment, which is 30% of our business and includes day spas and single-room estheticians, we see that playing out more stable throughout the year. Operator: The next question will come from Oliver Chen with TD Cowen. Please go ahead. Jonah: Hi, this is Jonah on for Oliver. Thank you for taking our question. Would love to get additional color just around the churn trend that you saw in the quarter, and what is baked in, in terms of the trend rate in your guide? And how do you anticipate tackling the churn rate throughout the year? Another question is you mentioned men and Gen Z are the newer customers. How are you repositioning your marketing messaging, if at all, to target those new customers? Appreciate the color there. Thank you so much. Pedro Malha: No problem. Michael will take the first part of that question. I will take the second. Michael Monahan: Sure. Thanks for the question. Churn was a little bit higher than usual for the full year 2025, but it improved in Q4 both year over year and sequentially from what we saw in Q3. In the fourth quarter, it was about 1.1%. When you look versus the year prior, as I said, it was a little bit higher than that. In Q3, it averaged around 1.8%. So we are moving in the right direction. The driver of the churn is mostly our smaller accounts that do not have a business development manager assigned to them. We began over the last few months restructuring our inside sales and customer service teams to better meet the needs of these accounts. Our focus in 2026 is to potentially improve in that area. The guide, however, assumes that we will hold churn on a year-over-year basis flat, so our hope is that there is upside to the guide that we gave in that particular line item. Pedro Malha: In terms of segments that are moving in our way, as I mentioned in my initial remarks, the strategy is based on three assets. We have a great brand, a very large installed base, and a razor-razorblade model that basically means that every device we place can become an annuity from high-margin consumables that potentially can last many years. Our job as different customers and segments get into the fold is to unlock the full potential of these assets. To support this strategy, we have a market that is moving in various ways our way. As I mentioned, the medspas continue to grow. There is a set of new demographics entering the category, and we are building and addressing their needs and specific concerns in terms of skin health. We are seeing more and more consumers getting into treatments earlier in age, and they want to treat skin very much like a lifestyle routine, which is definitely positioning HydraFacial and The Beauty Health Company well to take advantage of this shift. We are indeed moving towards much more of an outcome-driven protocol, combination therapies, clinically validated results, which is exactly us. All in all, as more consumers and more demographics expand into the category, we are very well positioned to be at the forefront and to offer the exact solution that they are looking for. Operator: The next question will come from Susan Anderson with Canaccord Genuity. Please go ahead. Alex Legg: Hi, good afternoon. Alex Legg on for Susan. Thanks for taking our question. You hinted that you have a potential new system in the works as a focus of your innovation. Is there a timeline that you are targeting for that launch, if you are able to talk about it? And then what type of additional services would that system potentially offer? Pedro Malha: Thank you. Sure. Let me bring you back into our innovation strategy and the initiatives that we have to support that same strategy. We are improving—let me start by saying that we are improving the discipline around new product launches, period. We are not going to go and chase trends. Instead, we are going to invest in and launch products, technologies, and solutions that materially add value to our providers, that are differentiated versus our competitors, that provide outcomes consumers want, and that are accretive financially to our business in terms of margin. That is the framework we are using for innovation. Now, when it comes to the next-gen HydraFacial, the goal here is to build one that will give our existing more than 36,000 providers a compelling reason for upgrade and new providers a compelling reason to get into the HydraFacial universe. I do not want to go too much into the specific features of the next-gen HydraFacial device at this moment, but what I can tell you and commit is that we will launch a device that will materially advance the value proposition and the return on investment of HydraFacial to our providers. In terms of timeline, we are right now at the early stages of development, but the plans are to launch the next gen of HydraFacial in 2028, and we will keep you updated as we get closer to those timelines. Alex Legg: Thanks, Pedro. That is pretty exciting. And then just thinking longer term about sales between consumables and new device placements. Right now, it is around 70% consumables, 30% new devices. Is that the rate that we should think about it? Is there a different target that you are thinking about longer term? Thank you. Michael Monahan: We are not in a position to give a target right now. Our expectation is that as we move through not just this year and into next year, we return to device growth. We have not been able to give the specifics outside of focusing on growing both of those categories into the future. Later in the year and into next year, we will continue to provide updates on where we think that can be. Operator: The next question will come from Jon Block with Stifel. Please go ahead. Joseph Federico: Hey, everyone. Joe Federico on for Jon Block. Maybe just to dig a little bit deeper into the consumables performance in the quarter. EMEA has been pretty strong in terms of consumable sales over the past three or so quarters and in the back half of the year off of more difficult comps as well. Can you just give us some color on what is driving that? Is it just a healthier end market, or is there any sales execution drivers that can be replicated in some of the other regions? Any thoughts would be helpful. Pedro Malha: Sure, Joe. Overall, at the highest level in terms of the full-quarter performance, on consumables we grew low single digits compared to negative substantial growth in Q3. For the full year, we grew as well low single digits, but booster sales grew much more, and that is an important point—high single digits. If you want to break that out by region, in the U.S., looking at the larger provider groups and dermatology practices, both of these are growing, while small independent providers are still under pressure. You touched on a good point, which was EMEA, and within EMEA specifically, Germany is performing exceptionally well. The only pressure that we saw in the quarter when it comes to consumables performance was coming from China, as a direct result of the China transition. If you add this to the underlying trends driving this consumables demand, the core demand is still there. Consumers continue to prioritize our treatments as part of their skin health routine and also because of our price position versus other aesthetic treatments. The average spend per treatment in the U.S. in consumables is up 10% year over year, driven by our premium boosters and the strategy of the booster. Michael Monahan: If I could just add one thing additionally to that, EMEA was a little bit different than the other regions last year because they launched five new boosters throughout the year. Some of them got regulatory approval later. These were boosters that launched earlier in the Americas, and the booster growth that we saw there really demonstrates the power of innovation in this business. When you can launch new, innovative products, that can actually drive demand. Within EMEA, we saw that not just in the direct markets but also in the distributor channel, where we saw really good consumables and specifically booster growth. Joseph Federico: Okay, that is really helpful color. Thank you. And then maybe just a follow-up on guidance. The Q1 2026 revenue guidance at the midpoint implies a more sequential decline than we have seen over the past handful of years. The past couple of quarters’ actual performance has come in pretty solidly ahead of guidance and expectations. Should we assume any more conservatism to the guidance going forward, or is there a specific reason to point to for a more pronounced decline in Q1 quarter over quarter? Michael Monahan: The Q1 midpoint does assume a decline in the mid-single digits. It is primarily due to softness in the APAC region and equipment softness in the Americas. That is reason number one. The second point is on consumables revenue for Q1. We are projecting that to be lower year over year on a consolidated basis for a couple of reasons. First, distributor orders that came in in Q4—there is some timing a lot of times that happens with the distributor channel—they came in strong at the end of the quarter, so we are factoring in a bit of a decline in Q1 just due to timing. Also, overall, as Pedro mentioned, we are seeing lower Signature treatments due to macro pressures. Even though consumers who are coming in to get treatments are electing more boosters than they have in the past, which is driving up the overall treatment, we factored in that lower consumables revenue and treatments into the first quarter. I would suggest the way we guide is towards the midpoint, so we do not really factor in deliberate conservatism. That is what we are seeing in the business. We are obviously always striving to do as best we can, and if we can outperform, we will certainly do so. Joseph Federico: Great. Thank you for taking the questions. Operator: The next question will come from Bruce Jackson with The Benchmark Company. Please go ahead. Bruce Jackson: Looking at the strength in consumables this quarter, was there anything going on in terms of average selling price increases or additional upselling? Can you provide any color on that? And then given the importance of the boosters, what is the anticipated launch cadence for 2026? Pedro Malha: Bruce, in terms of the boosters themselves, roughly they are about a fifth of the treatments. A fifth of the treatments use a booster, and we are seeing that ratio keep improving. For Q4, booster revenue was up 7% year on year, driven by the clinically proven Hydrophillic and HydroLoc boosters launched in the medical channel. Providers and consumers saw the results, and that was a major engine of growth for boosters. This speaks exactly to the strategy that we are putting forward, which is we are going to be over-indexing in launching clinically differentiated boosters with a very disciplined cadence. We are also equipping providers with impactful marketing tools and continuing to invest in education. We are going to amp the post-sales onboarding, making sure that every provider knows how to maximize their return on investment. Finally, we are going to invest our marketing into driving consumer mindshare and investing in the brand. That is the backdrop of the Q4 performance—mainly heavy on the way boosters are taking share out of the main treatments. In terms of 2026, yes, we just spoke that Q1 will be pressured modestly with a modest decline versus prior year, but as Michael said, that is largely driven by the APAC region, the majority due to the change in China. As the year progresses, in terms of consumables, we expect to see modest growth in the Americas to happen. Operator: The next question will come from John-Paul Wollam with ROTH Capital Partners. Please go ahead. John-Paul Wollam: Great. I appreciate you guys taking my questions. If we could maybe start on the consumables side. I think April would have been kind of the first promo or busy season for consumables following the price increase. Just curious if you can talk about reception to the pricing increase and what that means for whether price might be a lever going forward. And just as a follow-up there, when you think about consumable utilization between your best partners and your worst, what is separating them? What does that difference look like? Michael Monahan: I can speak to a couple of those questions. On the price increase, we did the price increase on consumables at the beginning of Q3, so the third quarter was the first quarter where you saw the impact. We did a 5% increase, and we really did not have a lot of complaints or pushback on that. So far, that has been very successful for us. Going forward, the sales and marketing team continue to evaluate the overall pricing strategy. We do not have any plans at this point to make any changes, but we will keep you posted if anything changes there. Pedro Malha: I will just chime in in terms of what we see being the reasons why boosters get higher attachment rates in certain specific segments of customers versus others. Our data shows that a provider who understands how to use a booster uses roughly three times as many boosters as one that does not. That is exactly why we are investing in marketing and investing in education to these providers. John-Paul Wollam: Understood. And maybe, Michael, for you as a follow-up, as we think about OpEx—and you have done such a great job managing expenses—understanding the need to invest from here, but just curious as you think about some offsets to the investment: where are you in terms of maybe centralizing some international double costs, whether that is accounting, finance, anything of that nature? Are there still offsets that you see in terms of the OpEx line for the upcoming investments? Michael Monahan: Yes. In terms of shared service centers, we are creating them. That has been a process ongoing over the last year and will continue. We are continuing to see two things: we are making investments in the back-end system infrastructure that enables us to manage the global business effectively through shared service centers, which is helping us with cost. We expect that to be finalized more so by the end of this year. We made a lot of progress in some of the global entities the past year, and we have a few more to do this year and will continue to do that. Our guide this year assumes that G&A as a whole is stable to slightly up, and then there is additional reinvestment back into R&D. Over the long term, there is opportunity to continue to gain efficiencies in this business. Most importantly, when you look at the overall OpEx, there is a huge opportunity as we return to growth to get leverage out of that fixed-cost infrastructure going forward. As we continue to get more focused on system innovation and processes—we have done a lot of work there—we are positioning the company, in our view, to start to have a lot more of that gross profit drop down to adjusted EBITDA when we return to growth. John-Paul Wollam: Really helpful. Thanks, and best of luck going forward. Operator: This will conclude our question-and-answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect. Pedro Malha: Goodbye.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics, Inc. fourth quarter and full year 2025 conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call may be recorded today, Thursday, 03/12/2026. I would now like to turn the conference over to CFO, Anthony J. Bergmann, for the forward-looking statement. Please go ahead, sir. Anthony J. Bergmann: Thank you, and good afternoon, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. Statements may include statements regarding, among other things, the safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, and our financial position, and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change above a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. With that, I will turn the call over to Linda, CEO. Linda Marbán: Good afternoon, everyone, and thank you for joining us on Capricor Therapeutics, Inc.’s quarterly conference call. For our investors, collaborators, the team here at Capricor Therapeutics, Inc., and especially the Duchenne muscular dystrophy patient community, thank you for your continued support and belief in our mission. We entered 2026 with a clear focus as we work to advance Garamia cell for potential approval for Duchenne muscular dystrophy in the United States. As we announced earlier this week, we were very pleased to report that the U.S. Food and Drug Administration has stated that our response to our complete response letter is complete and has therefore been accepted, our previously submitted biologics license application, or BLA, for review. The agency assigned a PDUFA target action date of 08/22/2026. Clearly, this represents a significant regulatory milestone for Capricor Therapeutics, Inc., of course, for all of those who have DMD. The BLA seeks full approval of deramycin. While we have not yet had detailed label discussions with the FDA, our goal will be to position deramycin to treat as many eligible patients as possible, consistent with the clinical data generated over more than a decade of development where both skeletal and cardiac muscle function have shown stabilization. If approved, deramycin has the potential to become the first therapy designed to address both skeletal and cardiac disease manifestations of Duchenne muscular dystrophy. We believe that distinction is highly meaningful, particularly given that cardiomyopathy remains one of the most serious and life-limiting aspects of this disease. Our highest priority as an organization is execution, working closely with the FDA, preparing for a potential commercial launch, and continuing to build the capabilities required of a world-class commercial-stage biotechnology company. We believe the strength of our data, our manufacturing readiness, as well as strong balance sheet position us well for this next phase of growth. Our current corporate mission is to build an infrastructure to launch and commercialization of deramycin as well as to expand our pipeline to treat other indications. Now let me turn to a brief summary of the HOPE-3 trial, the top-line results of which were released in late 2025 and is one of the strongest data sets generated in this disease to date. The entire HOPE-3 data set was submitted to the FDA as the response to our CRL and was contained in our CSR. These data will now serve as the foundation for potential approval as well as for the preparation for commercial launch. For those of you who have not been following our story, here is a brief recap of the HOPE-3 clinical trial. HOPE-3 is a pivotal Phase 3 multicenter, randomized, double-blind, placebo-controlled study evaluating deramycin in the treatment of Duchenne muscular dystrophy cardiomyopathy. The study enrolled 106 patients and met its primary efficacy endpoint on the Performance of the Upper Limb, otherwise known as the PUL, as well as all Type 1 error-controlled secondary endpoints. The key secondary endpoint of left ventricular ejection fraction showed a 91% slowing of disease progression in all evaluable patients regardless of cardiac disease status and importantly achieved statistically significant results. Furthermore, the results were even stronger in specific patients with a diagnosis of cardiomyopathy, achieving a p-value of 0.01. Over the last decade, it has become apparent that cardiomyopathy is one of the leading causes of mortality in Duchenne, and stabilizing cardiac function has remained a major unmet need with current guideline-directed care to include standard cardiac medications which are somewhat effective but do not work long term and certainly are not addressing some of the root causes of the cardiac dysfunction. The statistically and clinically significant preservation of left ventricular ejection fraction in patients treated with deramycin observed in HOPE-3 underscores the potential of deramycin to address the DMD-associated cardiomyopathy. In addition to the earlier reporting of the positive top-line results which I just highlighted, yesterday, we presented additional data from the HOPE-3 trial in a late-breaking oral presentation at the 2026 Muscular Dystrophy Association Clinical and Scientific Conference. This data was of great significance not only from a clinical trial perspective, but to the patient community because it highlights the effectiveness of deramycin in multiple endpoints, all pointing to the direction of stabilization of the disease process associated with DMD. I would like to provide a few highlights here. One of the most important was an improvement in a direct activity of daily living and one that is also correlated with quality of life. We show that there was a statistically significant improvement in a measure of upper limb function analyzed in a home-based setting using a validated and published patient-reported outcome measure, the DVA, or Duchenne Video Assessment. The DVA was developed by frustrated caregivers and professionals who were concerned that clinic-based assessments did not tell the whole story, especially in a pediatric population. So they developed a DVA to track their sons at home. The measure we specifically used was called EAT 10 BITE, and it is manifest exactly as it sounds and represents not only the ability to self-feed, but also to move one's arm between table and mouth. Caregivers would video their sons during the task at prescribed times post-infusion of daratumumab and then the videos were analyzed by a core lab and scored based on ability and compensatory measures. The DVA assessment of E10 BITE supports the clinic-based measure of the Performance of the Upper Limb and is supportive of the observed efficacy of deramycin that we have seen clinically. These data will also support payer discussions as it is a measure of feels, functions, survives. We also showed images of the hearts of a treated patient as opposed to a placebo patient in the analysis of cardiac fibrosis. This is measured by MRI, using a dye called gadolinium that can distinguish between healthy tissue and scar tissue. The data showed that there was significant reduction in fibrosis in the hearts of those that were treated with deramycin compared to placebo. For cardiologists, this is one of the most encouraging aspects of the HOPE-3 data because there is the aggregation of scar that ultimately leads the heart to fail and life to end for those with DMD. These data will also be used in our labeling negotiations. It is important to begin treating the fibrosis as soon as it is evident, which can be many years before there are functional implications. Remember, the heart is a terminally differentiated organ, so once a cardiomyocyte is lost, it cannot be easily replaced. Therefore, preservation of functional muscle and attenuation of fibrosis is one of the main goals in treating Duchenne cardiomyopathy. We were delighted to share these results with the Duchenne community as one of only four late-breaking presentations at the Muscular Dystrophy Association Conference yesterday in Orlando. The full HOPE-3 dataset has now been submitted for publication in a major peer-reviewed academic journal. One of the most important features of deramycin is, of course, its safety profile. To date, we have completed more than 800 intravenous infusions of deramycin across multiple clinical studies, and the therapy continues to demonstrate a consistent safety profile. There is evidence of long-term safety in our open-label extension studies. Some of our young men participating in our HOPE-2 open-label extension study have been receiving continuous infusions for up to five years, and with over 100 patients in our collective open-label extension studies at the time. Deramycin offers the potential opportunity for functional stabilization and also a well-tolerated safety profile. Taken together, we believe deramycin will become an important and foundational therapy for the treatment of Duchenne muscular dystrophy. We believe the HOPE-3 results provide compelling evidence supporting deramycin's potential benefit in Duchenne and further strengthen our confidence in the therapeutic profile of this product candidate. The consistency of the data across both cardiac and skeletal muscle-related measures supports our view that deramycin may offer a differentiated and meaningful therapeutic approach for patients living with this devastating disease. Turning now to the regulatory pathway, following receipt of the complete response letter in July 2025, we were able to complete our response based on the results from the already completed HOPE-3 trial. Through both formal and informal interactions with the FDA, we aligned that the HOPE-3 data would be sufficient to support resubmission and we have now submitted that dataset in its entirety. The FDA classified the submission as a Class II resubmission and assigned a PDUFA target action date of August 22, 2026. Importantly, at this stage, the FDA has not identified any potential review issues in its communication to the company, which we view as encouraging. We also expect to be eligible to receive a priority review voucher upon approval of daratumumab. As these vouchers are transferable and can be monetized through sale, they represent a potential source of meaningful capital that could further strengthen our financial position as we execute on our strategy. At the same time, we continue to make meaningful progress operationally. Our in-house GMP manufacturing facility located in San Diego successfully completed its FDA pre-license inspection in connection with the BLA review process last year. All Form 483 observations were addressed, and the facility is operational and positioned to support a potential initial commercial launch. That facility can meet the commercial demand of approximately 250 patients per year. However, our current plan is to begin stockpiling commercial doses as soon as we finalize our label with the FDA. In addition, we are now well underway with an expansion to the second floor of that same facility, which will add approximately six additional clean rooms. At full capacity, this expansion is expected to support treatment of approximately 2,500 patients per year or roughly 10,000 doses annually. Our current projections are that the new facility will come online and be able to support commercial manufacturing in late 2027. Commercial readiness activities are also continuing to advance. We are cognizant that the DMD community is anxiously waiting for approval and launch. Due to the unmet need and our desire to have product to those who need it, our hiring plan is based on preparing across key areas relevant to launch including patient support, market access, reimbursement planning, and physician education. Capricor Therapeutics, Inc. is at a transformational point, and as a result, we are not simply preparing for only the launch of deramycin for DMD, we are building to operate as a world-class commercial biotech company. That means maintaining a disciplined approach to execution, investing in our pipeline, and ensuring that our infrastructure can support both potential commercialization for DMD and beyond. On the scientific front, we continue to strengthen the foundation supporting geromycel. In the fourth quarter of last year, we published a peer-reviewed paper in Biomedicine describing germany cells' anti-fibrotic and immunomodulatory mechanisms of action including the release of exosomes and soluble factors that suppress fibrotic gene expression. These findings were reproduced across more than 100 manufacturing labs supporting the biologic, consistency, and potency of the product. As we move toward approval in Duchenne, we are also beginning to lay the groundwork for potential expansion into other diseases, focusing initially on Becker dystrophy while engaging with regulatory authorities in Europe and Japan with the goal of bringing deromyosil to as many patients as possible globally. Please stay tuned for more updates on this as we move through 2026. Now let me turn briefly to our exosome platform. The Phase 1 COVID vaccine study under Project NextGen with the National Institutes of Allergy and Infectious Diseases remains underway. Preliminary results indicate the Stealth X vaccine has been well tolerated and demonstrated a favorable safety profile across all doses tested thus far. However, limited neutralization was observed in early results at the tested dose levels, which may reflect prior vaccination or infection in trial participants. Preclinical data in naive and primed animal models continue to support the of the Stealth X COVID vaccine. Final results from the trial, the cellular response data, are expected in 2026. NIAID has requested exploration of expanded dosing range at higher dose levels and the potential use of adjuvants. At this time, we are evaluating how these options may fit with our broader pipeline development strategy and will provide additional updates as they become available. Importantly, this program demonstrated the safety of Stealthex exosomes and supported the continued development of our broader engineered exosome delivery platform. It also enables us to expand our manufacturing capabilities to support future exosome programs. We are continuously advancing our StealthX platform, focusing on muscle targeting and capable of delivering multiple payloads including siRNA, proteins, small molecules. The platform is being applied across several therapeutic programs currently progressing toward IND-enabling studies with a target IND filing in 2027. From a financial perspective, we ended last year in a very strong position. As of 12/31/2025, our cash position was approximately $318,000,000. This balance was significantly strengthened in the fourth quarter through a successful financing completed in late December, which included participation from dozens of new institutional healthcare-focused investors who we believe share our long-term vision for the company. Based on our current operating plan, we believe this capital is sufficient to support the business into 2027. Importantly, this outlook does not include any additional sources of capital including potential product revenue, or the potential monetization of a priority review voucher should we receive one upon approval. Earlier this week, Capricor Therapeutics, Inc.’s common stock was approved for uplisting to the NASDAQ Global Select Market, NASDAQ's highest listing tier. We believe this milestone further enhances our visibility within the institutional investment community as we move into what we believe could be a transformational period for the company. Overall, we believe Capricor Therapeutics, Inc. enters this next chapter from a position of strength with our BLA under review, positive pivotal clinical trial data, manufacturing commercial readiness underway, additional pipeline opportunities beyond geramycin, and the capital required to execute on our priorities. Most of all, we remain focused on what matters most, bringing forward a potentially transformative therapy for patients and families affected by Duchenne muscular dystrophy. With that, I will now turn the call over to AJ to review the financial results. AJ? Anthony J. Bergmann: Thanks, Linda. For a brief overview of our financial position, which Linda summarized somewhat a moment ago, cash, cash and marketable securities totaled approximately $3,181,000,000 as of 12/31/2025, compared to approximately $151,500,000 as of 12/31/2024. In December 2025, we completed a public offering resulting in net proceeds of $162,000,000, and in addition, the company drew down approximately $75,000,000 under our ATM program in December 2025. Revenue for 2025 was $0 compared to approximately $11,100,000 for 2024. Revenue for the full year ended 12/31/2025 was also $0 compared to approximately $22,300,000 for the full year ended 12/31/2024. As a reminder, our prior year revenue was primarily derived from the ratable recognition of our upfront and developmental milestone payments under our U.S. distribution agreement with Nippon Shinyaku, all of which has now been fully recognized and was recognized as of 12/31/2024. Total operating expenses for 2025 were $29,200,000 compared to approximately $18,800,000 for 2024. Total operating expenses for the full year ended December 2025 were approximately $108,100,000 compared to approximately $64,800,000 for the full year ended 12/31/2024. The year-over-year increase was primarily driven by continued investment in clinical, regulatory, and manufacturing activities as well as infrastructure expenditures supporting our Duchenne program. Net loss for 2025 is approximately $30,200,000 compared to a net loss of approximately $7,100,000 for 2024, and net loss for the full year ended December 2025 was approximately $105,000,000 compared to a net loss of approximately $40,500,000 for the full year ended December 2024. Based on our current operating plan, as Linda mentioned a moment ago, our financial resource—we believe our available cash, cash equivalents, and marketable securities—will be sufficient to fund anticipated operating expenses and capital expenditures into 2027, and this expectation does exclude potential milestone payments under our agreements with Nippon Shinyaku as well as any strategic uses of capital that are not included in our current base case assumptions. And with that, we are ready to open the line up for questions. Operator: Thank you. We will now open for questions. Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Ted Tenthoff from Piper Sandler. Your line is now open. Edward Andrew Tenthoff: Hi, guys. Sorry about that. I was on mute. So firstly, congrats on all the really exciting progress, you know, this year, this week. Great to see you down at MDA, excited about some new data coming out of that, and, obviously, the BLA acceptance. Are you guys anticipating any AdCom, anything along those lines? And what commercial prep are you doing in preparation for potential deramycin approval? Thank— Linda Marbán: Hi, Ted. I have to say it was great to see you in Orlando and, you and I have been tracking each other for more than a decade on this. And so I am very proud of what we are accomplishing together. Thank you so much for your years of good support. To answer your question, in terms of an AdCom, I have been getting a lot of questions about that. Certainly, they have not made any moves towards that at this point. I do not think anybody has had an AdCom in about a year. And I do not know if they are going to be putting one in place. I think with the departure of Vinay Prasad, it is a little bit up in the air as to what is happening within CBER and what their manifest will be. Either way, we will be prepared. Good news about the HOPE-3 data is it is so very strong. That I really would be delighted whether I presented at an AdCom or we directly to PDUFA without it. In terms of your second question, in terms of commercial readiness, look, deromyophil has been in development for a long time. This data is extraordinary. Skeletal and cardiac disease attenuation and even improvement in those with cardiomyopathy and a product that is very safe and can be foundational and used with pretty much anything else that we can think of that is approved or coming along for DMD. So we are going to be building our own commercial program to support NS at this point. So that we make sure that everything from market access, payers, and all of the other aspects of commercial planning is done with the same precision that we have done the development of deromyosil to this point. Edward Andrew Tenthoff: That is great. And one quick clarification, if I may. When it comes to the actual label, I know this is something that will be negotiated later in the review process. Do you believe the current label would be for the original cardiomyopathy, DMD cardiomyopathy submission, or would this be now for DMD more broadly? Just appreciate any clarity on that. Thanks. Linda Marbán: Thanks, Ted. So I think this, again, is the biggest question that we all have. We have broached this with FDA both in formal and informal meetings, really since the issuance of the CRL last July. They have been relatively noncommittal, saying that they will discuss it during labeling. We certainly believe that the data supports a label both for DMD in terms of some the skeletal muscle ramifications related primarily, I would guess, to upper limb loss, which starts very young, and/or to the treatments and attenuation of Duchenne cardiomyopathy. So that is our plan internally. Obviously, we will keep the street updated as we enter into those conversations with FDA. Currently, we believe that that would be the best path forward both for the therapeutic and also for the regulatory pathway. Edward Andrew Tenthoff: Great. Thanks. Well, either way, a big win. For the boys and for Capricor Therapeutics, Inc. Thanks so much. Linda Marbán: Thanks, Ted. Operator: Our next question comes from the line of Leland James Gershell from Oppenheimer. Your line is now open. Leland James Gershell: Thank you for taking our question and appreciate the updates yesterday at MDA. Just wanted to ask, could you, Linda, refresh us on the import of the two different cohorts of HOPE-3 as you had material that was made at two different facilities. I think in the past, you had said that Cohort B had been more of a regulatory focus. Just wondered where we stand today in terms of how the FDA will consider those two different cohorts and, you know, in the context of the pooled analysis, as they go through their review? And also wanted to ask if you have any expectation around the timing that we should see a peer-reviewed publication of the HOPE-3 data? Thank you. Linda Marbán: Well, thanks, Leland. Yeah, I have not thought about the two cohorts in a while, so the FDA has not mentioned it in any conversation since probably 2024 when we decided to, under their recommendation, file the biologic license application for the cardiomyopathy based on the HOPE-2, HOPE-2 OLE and natural history data. You know, they then agreed that we would pair Cohort A and Cohort B and consider them as one trial because of the nonclinical comparability of the product. So they have not talked about it, and we have not talked about it. They have all of the raw data now. The good news is, and what I feel very confident in is that Cohort B, independent of Cohort A, was statistically significant in both skeletal muscle performance, Performance of the Upper Limb, and in the cardiomyopathy ejection fraction. That would be the more important cohort to look at because that was what their question was originally—was that product comparable. It certainly is comparable in terms of its biologic activity. So we will keep everybody updated if there are any more questions on the cohorts, but as far as we know, they consider one clinical trial, one cohort, and the manufacturing facility here in San Diego passed PLI, so we are manufacturing ready. In terms of an update on an academic publication, I know you are an academic scientist as well as I was, and we both know that one of the reasons people are in academia is because time is not of essence. So, you know, the academic review is ongoing and we will keep the community updated as soon as it is ready to be published or published. Leland James Gershell: Great. Thanks very much. Linda Marbán: Thanks, Leland. Operator: Our next question comes from the line of Joseph Pantginis from H.C. Wainwright. Your line is now open. Joseph Pantginis: Hey there. Thanks for taking the question. So two questions, if you do not mind, Linda. So first, I know you have not had labeling discussions yet, but could you just sort of describe a before and after snapshot of—did you have prior labeling discussions ahead of the CRL? And how you think that may be similar or different. And then second, and this is strictly from a devil's advocate standpoint, could you envision any scenario where this might be a conditional approval? Linda Marbán: So I can answer your second question first because it is easy. No. There is no way this would be a conditional approval. There would be no need for a confirmatory trial on a randomized, double-blind, placebo-controlled trial that has primary and key secondary and Type 1 error-controlled endpoints. I cannot imagine any scenario what they would make it conditional upon. But I will keep you updated on that. In terms of labeling conversations, we did not get that far before the CRL was issued. Last time was actually right before we would have begun them. So we do not have clarity there. The only tea leaves I can read is that they knew that HOPE-3 was powered and primary efficacy endpoint was Performance of the Upper Limb. They knew that we had filed a cardiomyopathy BLA under the existing data. When they gave the CRL and then we had the Type A meeting, they wanted to see the HOPE-3 data unaltered in terms of its primary. So we believe that they will consider both the skeletal muscle aspects of the disease as well as the cardiomyopathy in the labeling. I suppose, you know, they can ask for anything. It is the FDA. And so we will keep the street informed as we get information ourselves. My current belief is that the data is very strong. It supports labeling for both cardiomyopathy and skeletal muscle myopathy, and that is what we are planning for internally at this point. Joseph Pantginis: Appreciate the comments, and here is to the end of the potential FDA drama. Operator: Our next question comes from the line of Kristen Brianne Kluska from Cantor. Your line is now open. Kristen Brianne Kluska: Hi, everyone. Thanks for taking the questions, and nice to spend time with the broad Capricor Therapeutics, Inc. team this week in Orlando. So with the Class II resubmission, can you just help us understand what parts of the review are going to be new versus what parts are already considered checked off with the first process—so, for example, like on manufacturing, mid and late-cycle review meetings, etc.? And then just on capacity, wanted to confirm in your prepared remarks you said it could support 250 patients per year, with potential stockpiling, but then you are expanding to reach 2,500 patients per year. What will you need to show to the FDA to get the expansion up and running? Like, is there any comparability work or runs that you have to do to show them it is the same material, etc.? And then last question for me just on MDA. Obviously, a lot of doctors there. We talked to plenty ourselves, but curious what your takes were from these communications. This is really your big showing of the HOPE-3 data since it came out in December. So curious what the feedback is. Were there people even that were skeptical in the past that, now that you have this data, were willing to take a closer look? Anything you could share would be really helpful. Thanks again. Linda Marbán: Yeah. So thanks. So this is obviously our first go-around with the CRL and a resubmission. What I can tell you is that we know the manufacturing facility passed pre-licensing inspection. All 483s were signed off on, and so we are good to go there. We anticipate there will be several CMC-related questions that come across as we go through this resubmission process just because there were a few loose ends, none of them that were areas that would be a major concern or slow things down. They just want clarification. We think that the nonclinical and other aspects of the BLA have already been signed off on, so we do not anticipate any changes there. Obviously, the only thing that was really cited in this complete response letter that was now officially resubmitted was the HOPE-3 data. So we assume that clinical and stats will be the focus of the new review. Yeah. So, we very strategically built the new clean rooms in the same building as the 250-capacity clean room. So it does reduce the regulatory requirements if it is on the same street address as the original facility. You obviously have to demonstrate, you know, in PPQ runs that the product is the same and passes all of your requirements. I think they come and do another inspection, but they would be slated to do an inspection in early 2027 anyway. As part of, you know, there is general maintenance on manufacturing plants. So I am not anticipating a long run-in terms of getting approval of the site based on sort of those components or that situation. But we will obviously keep you updated as to how that goes. I know Marty Makari has spoken publicly, and I know Vinay Prasad prior to his exit also spoke publicly that they were thinking they would reduce the number of PPQ runs that are necessary from three to one, which, obviously, if that actually is put into place, could significantly reduce the time that a manufacturing facility would need to come online. So we are going very fast and anticipate getting those doses out to commercial community as quickly as the FDA will allow us. Yeah, thanks, Kristen. And let me just say it was wonderful to see you in Orlando, and I appreciate you turning out and spending some time with our team. The event we hosted was exactly what I had hoped for, which is that physicians and investors and patients and everybody could be together to learn about dirhamia cell. And you are correct. You did speak to physicians who I think are echoing now what you just alluded to, which is that the HOPE-3 data has solidified belief in this product across physicians, across patients, really across the entire community. It is, you know, I have said now a few times, randomized, double-blind, placebo-controlled, hits primary endpoint, hits secondary endpoints, hits Duchenne video assessments, which went along with the Performance of the Upper Limb, as I said in prepared remarks. And so yes, I think physicians who before were hopeful are now convinced and looking forward to putting their patients on. We are getting a lot more questions about prescribing availability, launch than we ever have. So we are on fire here getting this product ready for approval and for launch. Kristen Brianne Kluska: Thanks, Linda. Linda Marbán: Thanks, Kristen. Operator: Our next question comes from the line of Madison El-Saadi from B. Riley Securities. Your line is now open. Madison El-Saadi: Hi, Linda and team. Congratulations on the data, and thanks for taking our question. Your partner has previously said that they expect to transition all clinical trial patients to commercial drug within one quarter of launch. So should we think of these, call it, 100 patients as kind of the base case for how many patients may be treated with deromyosil in 2026, assuming approval? And then to follow that, as you know, there are 7,000 to 8,000 DMD boys, maybe more, with cardiomyopathy, and just given the data we saw in this subgroup, you know, it is hard to imagine there being a circumstance in which a patient does not go on this drug. I guess, how do you scale beyond the 2,500 capacity? Is that something you guys are thinking about? What would it cost—do you have the cash? Maybe if you could just kind of help illustrate what that road map may look like. Thanks. Linda Marbán: Yeah. Madison, thanks so much, and also great seeing you in Orlando. Thanks for making the trip. Always great to spend time together. So in terms of the OLE patients, yes, we have over 100 OLE patients on daratomycinol now. They all will be anxious to continue. We have seen that from the HOPE-2 OLE guys that have gone on for years. We anticipate all of them wanting to come over to commercial product. We have not figured out a launch date yet, we just got the PDUFA date. So I do not want to give a year or a timeline as to when, but yes, we will transfer all of them over as seamlessly as possible. That is why we are focusing internally on access at this point so that that can happen seamlessly. There are, Madison, a lot of young men that have been waiting in the wings for deramycin that did not qualify for our trials for whatever reason. And I am getting a lot of calls now from—so we will prioritize getting geromyosil to any and all of those that need or as quickly as possible. And I will say that that is my mandate and why we are taking on manufacturing as aggressively as we are. To that end, pertinent to your question, yes, we are now poised and, in fact, ready to go forward with another manufacturing build-out in San Diego County very close to our current footprint that will be able to accommodate many more thousands of patients per year. We wanted to make sure that we completed our response. We want to make sure that we are proceeding well towards PDUFA before we invest that capital. But we now have internal confidence that that will happen. So we are actively planning to expand manufacturing to accommodate the needs of any and all of those that would like to have it. At diromycin. Madison El-Saadi: Got it. Thanks. Linda Marbán: Thanks, Madison. Operator: Our next question comes from the line of Catherine Clare Novack from Jones Trading. Your line is now open. Catherine Clare Novack: Hi. Good afternoon. Thanks for taking my question. One thing we heard over and over at the meeting was about how patients with DMD do better with earlier intervention. Just thinking about how you can make the case based on HOPE-III that it is a benefit to treat, you know, even before the development of cardiomyopathy, thinking that, you know, since virtually all DMD patients will eventually develop cardiomyopathy, and not thinking of it as then a separate indication, but as part of DMD as a whole. You know, what in the application supports that? And then can you remind us of the status of the European rights deal with NSF? Linda Marbán: Yeah. Thanks. You know, we, of course, are laser focusing on those younger kids and those earlier in the disease process. As we have said and sort of have been stating for a long time, it is very safe. The infusion protocol is really easy. Even a little guy could sustain it very well. And, yes, the data that we have seen has been highly supportive of starting as young as possible. Getting a prevention label is very difficult until you can show prevention, which takes years. We are comfortable right now with the treatment of cardiomyopathy. The good news is because these kids now, most of them start getting MRI at a very young age. As soon as they see one segment of scar, the cardiologists want to get them on deromyophil, and so that will be a way that we will get more and more active in sort of the younger kids and moving towards that prevention target. Of course, if they go on for the attenuation of skeletal muscle function myopathy, then we will be able to track their hearts and be able to ultimately—physicians will use it with skeletal muscle as well as cardiomuscle myopathy independent of progression of the disease. So we have been negotiating with NS Pharma for a while for rights to Europe. Honestly, we have not been focusing on it internally. There was clearly a lot going on here with the CRL and getting the HOPE-3 data ready and submitted. And now that we have a PDUFA date, and I feel like we are on a good pathway there, we can take a little bit of a breath and start focusing on our outside-of-U.S. activities. They do have the rights to Japan, so we are going to start working with PMDA and getting that going in 2026. And then in terms of Europe, we are evaluating those now, and we will see sort of where the road map takes us. And we will provide updates as they become available. Catherine Clare Novack: Got it. Thank you. It was great seeing you and great hearing all these updates. Looking forward to the year. Linda Marbán: It was great to see you as well. Stay well, and see you soon. Operator: Our next question comes from the line of Gubalan Pachayapan from ROTH Capital. Good afternoon, team, and thanks for taking our questions. So a couple from us. Your line is now open. Gubalan Pachayapan: Firstly, you mentioned the Duchenne Video Assessment. Can you maybe tell us how many patients were included in the deramio cell arm and how many in the placebo arm? And also related to that, can you also comment on the inter-rater reliability of DVA? Because it is my understanding that it is rated by both caregivers and professionals. And then is there a reason why the sample size is low for the late gadolinium enhancement secondary endpoint? And maybe one last question from me. So the most recent PRV, as you probably know, was sold for a very high price of $205,000,000. And we are also aware that there is a new sunset date, which is 09/30/2029. But do you think because the new sunset date is a little longer than three years from now, this is going to ease up some pressure from the buyers—maybe that could impact the price that you will be selling your PRV for? Any thoughts on that? Thank you. Linda Marbán: That is right. So the DVA is actually a qualified and validated assessment tool that has been published, and not only been used by us but by others and not only by those with Duchenne muscular dystrophy but in other disease states. So it really is quite rigorous in its measurements. The recorders, or the video takers, are trained in how to do it, what to do, then they are sent to a facility where they are read by a blinded, trained reader and the data is then delivered blinded to the company and ultimately treated like any other data set. So it really is highly valuable data that is collected in a home-based setting. In terms of the number of patients, that were in the DVA was about 50 patients in each group, so 50 in the treatment and 50 in the placebo group. Yeah. So, we added LGE measurement for Cohort B only. When we were designing Cohort A, there had been some press around gadolinium and the fact that it might aggregate in the brain, especially of young children, and could be a safety—so we decided not to look at scar in Cohort A. During the time between Cohort A and the initiation of Cohort B, that was considered not to be a safety risk. And the value of the data collected would be highly necessary to sort of show the correlation between function and scar. The data is beautiful, and having been somebody that has worked in MRI for many decades, I am really excited by this data as are the cardiologists. So it is only those in Cohort B that were eligible for the gadolinium enhancer, and then they also had to have certain levels of kidney function. So that is why those numbers are relatively small. But that dataset is small but mighty. Yeah. If I had a crystal ball, I would be a really wealthy woman. But all that being aside, I do not know. I certainly know that PRVs tend to be valuable. It really depends on how motivated the buyer is to get it when they come available, and we certainly are going to get the maximum price for our PRV should we be able to receive one. Gubalan Pachayapan: Alright. Congratulations. Thank you. Thanks. Operator: Our next question comes from the line of Matthew J. Venezia from Alliance Global Partners. Your line is now open. Matthew J. Venezia: Hi, guys. Congrats on the progress, and thanks for my questions. First, I think I asked this question about six months ago, but how have the conversations at the FDA with you guys changed, if at all, since being—Prasad left the agency once again? And another talking about the age of the patient, it seems to be a drug where early intervention and a disease where early intervention is paramount to treatment. Do you expect a specific age on your label? Do you expect that to come up in labeling discussions with the FDA? I know, like, you guys had four plus on their label. But is that something that you expect to be ironing out with the FDA in your labeling discussions? And just the final question, the StealthX platform—is there a specific time within second quarter when we can expect P1 trial results, or is that kind of just up to NIAID? Linda Marbán: Thanks, Matthew. Good to talk to you. So far, nothing. We got our letter reopening the file, setting our PDUFA date, and that was almost in conjunction with his leaving. So, really, we have had no change in any interaction whatsoever at this point. Yeah. I do not know. We did not ever have a four plus. I do not know who that was. That was not us. Age is a possibility. We have treated down to age eight in our clinical trials. So we have not gone younger than that. We do not know, again. You know, I know everybody is hypothesizing about labeling discussions to build their models, and I certainly am doing the same myself. I do not know if there will be an age cutoff or a function cutoff. As soon as we have clarity, though, we will let you know. I would say in building your models that the youngest we have actually treated to this point are those that are ambulant and down to age eight. Yeah. It is—I was just going to say you take the words from my mouth. It is an NIAID situation, so that data trickles in really slowly. We are super anxious to see the cellular response. We are really interested to see if there is a T-cell response. COVID is kind of a crazy virus to try and get on top of these days because pretty much everybody is either had it or been vaccinated multiple times. And so we are looking forward to seeing that data to continue to work with NIAID. But most importantly, and I will take—thank you so much for asking me—we are very excited about our pipeline right now. We now have the opportunity to deploy on it. We were able to build out manufacturing for this vaccine. We know how to do it now. We know how to, you know, load the exosomes, target the exosomes. And so while the vaccine program is important, it really was that learning experience that is now driving us towards a therapeutic exosome platform, and stay tuned for more information on that as we progress through 2026. Matthew J. Venezia: Alright. Wonderful. Thank you, guys. Again, and congrats on the progress. Linda Marbán: Thanks. Operator: I will now turn the call back to Capricor Therapeutics, Inc. management for closing remarks. Please go ahead. Linda Marbán: Thank you so much for joining us today. Thank you for those of you that attended the Muscular Dystrophy Association and took some time to be with Capricor Therapeutics, Inc. at that event. I will say that it gave me incredible joy and pride to be at that event and see how prominently Capricor Therapeutics, Inc. was featured at MDA, but also in the hearts and minds of those with DMD. We really feel like we have the opportunity now to meaningfully improve their lives and look forward to continue on that journey with them and with all of you. So we look forward to seeing you out in the community, and thank you so much. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Leila: Good afternoon, everyone. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to Ulta Beauty, Inc.'s fourth quarter and fiscal 2025 earnings call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley F. Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, you may begin. I am so sorry, everyone. I am going to have to take that back again. One moment, please. At this time, I would like to welcome you to Ulta Beauty, Inc.'s fourth quarter and fiscal 2025 earnings call. This conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. At this time, I would like to turn the call over to Ms. Kiley F. Rawlins, Senior Vice President of Investor Relations. Ms. Rawlins, please proceed. Kiley F. Rawlins: Good afternoon, everyone, and thank you for joining us for a discussion of Ulta Beauty, Inc.'s results for the fourth quarter and fiscal 2025. Hosting our call today are Kecia L. Steelman, Chief Executive Officer and Chris Del Orfus, Chief Financial Officer. During today's webcast, a presentation is being displayed live and will be posted to our website at ulta.com/investor shortly after the webcast concludes. As a reminder, today's earnings release and the comments made by management during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, factors identified in the earnings release and in our most recent 10-Ks and 10-Q filings. The company undertakes no obligation to revise any forward-looking statements. To allow us to accommodate as many questions as possible during the hour scheduled for this call, we respectfully ask that you limit your time to one question with no more than one follow-up question. As always, the IR team will be available for any follow-up questions after the call. I will now turn the call over to Kecia. Kecia L. Steelman: Thank you, Kiley, and good afternoon, everyone. I am excited today to be joined by Ulta Beauty, Inc.'s new CFO, Chris Del Orfus. Welcome, Chris. We are so thrilled to have you as a part of the team. As I reflect in the past twelve months, I am incredibly proud of the Ulta Beauty, Inc. team and all we have accomplished. We closed the year strong, delivering full-year financial performance ahead of our plans while making important guest-facing investments to position our business for future growth. For the year, we grew net sales by nearly 10%, to $12.4 billion, delivered operating income of $1.5 billion or 12.4% of sales, and EPS of $25.64. Today, I will start by briefly highlighting our fourth quarter and holiday performance and then discuss our full-year performance and the progress we made against our Ulta Beauty unleashed strategy before sharing more details on our plans and priorities for fiscal 2026. Our team stayed focused on executing and caring for our guests, delivering stronger-than-expected fourth quarter sales, and continued market share gains in mass and prestige beauty. Successful events fueled all of our performance including Black Friday and Cyber Monday, along with key post-holiday events like our fan favorite Love Your Skin and Jumbo Love promotions. Holiday served as a culmination of our efforts to advance the business throughout 2025. We developed a thoughtful cross-functional holiday strategy supported by outstanding in-store and digital execution, bold and relevant marketing campaigns and activations, and compelling holiday assortment and gift sets. Guest engagement was high, and many guests leaned into the convenience of our omnichannel buy-anywhere, fulfill-anywhere capabilities during the busy holiday season. Our store and digital teams executed with excellence, delivering record-breaking holiday performance. We introduced a fun holiday marketing campaign focused on the Twelve Days of Giftmas featuring celebrity brand founders, which drove meaningful gains in awareness and brand love scores. We drove comp growth across all categories and made gifting easy with a curated and powerful holiday assortment, impactful newness, and a leading fragrance offering. Our relentless commitment to operational excellence had store teams quickly restocking after high-volume holidays to serve guests and maximize selling opportunities, while our supply chain teams leveraged recent distribution center upgrades to increase our delivery speed to guests. Turning to our full-year performance, fiscal 2025 was a year of strategic investment and deliberate transformative change for Ulta Beauty, Inc. Change that challenged us to sharpen our focus, strengthen our capabilities, and position our business for sustainable, profitable growth in the rapidly evolving beauty market. We began the year with a clear vision on how we intend to unleash the power of our model, build on our foundational advantages, and reassert our leadership position in beauty through the execution of our Ulta Beauty unleashed strategy, with a clear focus on three priorities: driving core business growth, scaling new businesses, and realigning our foundation for the future. Paired with the collective commitment and agility of our teams, we turned vision into reality and made exceptional progress across each pillar of our strategy, reigniting our growth, strengthening our core, and delivering better-than-planned financial performance. Let me briefly highlight the advancements we made during the quarter. We elevated our execution and more consistently delivered a differentiated omnichannel guest experience, further solidifying Ulta Beauty, Inc. as the unmatched beauty destination for all guests. This came to life through a recommitment to best-in-class execution and stronger merchandise in-stock, incremental investments in payroll hours to support the guest experience, more than 100,000 in-store events which included brand launches, brand education, and celebrity appearances, and highlighted our differentiated in-store experience, ongoing digital upgrades that added guest-friendly features like Replenish and Save and Wish List, and expanded convenience through features like Split Card, and increased personalization through the power of AI in our automated marketing engine that delivered relevant, dynamic, and timely content across the customer journey. We strengthened and modernized our assortment and merchandising strategy, accelerating pipeline momentum and delivering a powerful wave of newness that included more than 100 new brands this year, including Moroccanoil, Amika, Medicube, Isima, Drake's Better World Fragrance, and Tir Tir among many more. Key elements that supported our merchandising evolution included thoughtful, purposeful collaboration with our brand partners to fuel the innovation pipeline with new products like Fenty's Diamond Collection and Morphe eyeshadow palettes, a new elevated go-to-market approach that established tighter collaboration between our merchandising, marketing, and store teams and helped drive operational excellence, marketing leadership, and compelling merchandising innovation, a bold new marketing strategy with reimagined events like our Only at Ulta event, which highlighted our differentiated exclusive assortment, and powerful cultural activations like our sponsorship of the Cowboy Carter tour in conjunction with Beyoncé's Sacred Hair Care launch, and elevating our brand-building capabilities enabling us to build stronger portfolios of exclusive brands and products that drive meaningful differentiation and new member acquisition. Noteworthy successes in 2025 include Sacred, which became our largest prestige hair care launch in history; prestige skincare K-Beauty brand Peach & Lily; influencer-founded makeup brand DIBS; and Gen Z's most loved fragrance brand NOISE. We built and expanded into new growth channels through our international expansion beyond the U.S. with nearly 100 stores in five countries. This included our acquisition of Space NK, a luxury beauty retailer operating more than 80 stores in the U.K. and Ireland, the opening of nine stores in Mexico via our joint venture partner Grupo Axo, and the opening of two stores in the Middle East through our franchise partner Alshaya. Our newly launched marketplace, a curated online offering that allows guests to explore a complementary array of beauty, wellness, and lifestyle products on ulta.com and our app; the assortment includes more than 200 established and emerging brands and 5,000 SKUs. Our wellness initiative included the addition of nearly 30 new brands in our core wellness assortment and nearly 40 new brands in our marketplace assortment, along with an expanded store presence in more than 400 stores. And new UB Media capabilities like the addition of connected TV and streaming audio products that drove engagement and incremental ad revenue. We made notable progress aligning our foundation to support future growth through important leadership changes to ensure our team was positioned to meet the needs of our evolving business, and ongoing cost optimization efforts, including investment in AI and automation, like testing new conversational AI capabilities for our guest services team, which streamline and increase resolution efficiency and quality, as well as the implementation of an AI-powered order management system to optimize fulfillment across our network, enabling our expansion of ship-from-store and reducing out-of-stocks and markdown risk. Finally, and perhaps most importantly, we reignited our culture and reinvigorated our brand, and our guests, associates, and brand partners took notice. We did this through decisive organizational changes that accelerated decision-making and aligned teams and resources around guest-centric goals; adopting a winning mindset as we stacked key successes and built momentum throughout the year, we steadily reignited our collective spirit or as I like to say, we got our swagger back; and a new marketing brand equity campaign, Beauty Happens Here, and bold and fresh marketing activations which placed Ulta Beauty, Inc. at the center of exciting cultural moments like Lollapalooza and Coachella; and a renewed enthusiasm for the magic of our mission to bring the power of beauty to life for all ages and all life stages. By nearly all measures of success, our team delivered against our plans. During fiscal 2025, we drove 5.4% comparable sales growth and positive comp growth across all categories. We strengthened conversion in stores, increased transactions, and drove improving NPS scores. We grew our loyalty program by 5% to a record 46.7 million active members, driven by strong growth in reactivated members and strong retention of existing members. We gained market share in both mass and prestige beauty. We delivered greater app engagement with approximately 60% of online sales made through the app and drove active app users up 15% year over year. And we drove significant EMV and reached record levels of unaided awareness. While the guest-facing investments we made this year pressured profitability, the steady progress and results driven in fiscal 2025 reinforce our expectations that these investments position us to return to sustainable, profitable growth and to deliver against our long-term financial targets in fiscal 2026 and beyond. Before I turn to our plans and priorities for 2026, let me first touch on our view of the consumer, the current beauty landscape, and our expectations going forward. Throughout 2025, we closely monitored consumer behavior and observed continued resilience, a strong focus on value and affordability, and increasing discernment in spending decisions. At the same time, engagement with the beauty category remained healthy, and the landscape remained competitive. We expect these themes to continue into fiscal 2026, though we are increasingly mindful of rising global conflicts that could impact economic conditions. Absent increased broader macro disruption for the year, our expectation for the beauty category growth is in line with the average historical growth rate with expected growth in the 2% to 4% range. As we turn to fiscal 2026, the Ulta Beauty unleashed strategy will continue to guide our priorities as we build on the successes of fiscal 2025. Chris will highlight our financial outlook, but let me touch on our priorities and plans for 2026. First, our core business in the U.S., which now includes more than 1,500 stores and a robust digital offering, is our top priority and we continue to see significant opportunity to unlock further growth. In 2026, we will continue to enhance our brand-building efforts to further elevate and differentiate our assortment, strengthen our position as the retailer of choice to launch, build, scale, and globalize across the full low-to-luxury portfolio. We will continue to strengthen our appeal to meet guests' evolving beauty needs with innovative and relevant newness like the record-breaking launch of Rare Beauty by Selena Gomez and the exclusive launch of Balmain's new scent, Dustin de Balmain. We will continue to invest in the heart of our experience—our stores—to extend our competitive advantage and capture key growth opportunities. We will build on our progress across our digital platforms with new capabilities and stronger guest engagement through personalization, as we leverage greater automation and real-time content to tailor the guest experience and provide even more value to our loyal members. And we are pleased to announce today an expanded strategic integration with TikTok. Next week, we will launch Ulta Beauty, Inc. on TikTok Shop where guests can purchase immediately as they engage with content from Ulta Beauty, Inc. and our brands on the platform. We are excited about the opportunities both social and AI-enhanced commerce platforms are providing us to bring our undeniably Ulta Beauty, Inc. experience and assortment to life. We will initially launch with a thoughtfully curated assortment of only adult brands which will add another exciting tool to our brand-building playbook. Next, in order to maximize key incremental growth opportunities and remain resilient in a rapidly changing world, we will work to scale our new businesses. We intend to continue our international expansion in the U.K., in Mexico, in the Middle East, through our existing partners. We will thoughtfully expand our wellness and marketplace assortment to drive new member acquisition and spend per member and add new UB Media capabilities to collectively fuel incremental profit growth. Finally, turning to our third area of focus, aligning our foundation for the future by optimizing our way of working and streamlining our cost structure. In 2026, we plan to continue our supply chain transformation efforts with the rollout of increased automation in existing facilities and start-up construction of a new regional distribution center in the Northwest later this year that will expand network capacity and increase fulfillment speed. We plan to invest in systems and processes to drive sales and inventory through new merchandising transformation efforts. And we will continue to further our mission to support human possibility by expanding our AI capabilities to support the guest experience, drive associate productivity, and empower smarter decision-making. Beauty is deeply personal, and we believe leveraging new AI capabilities will enable us to deliver relevance, inspiration, and expertise seamlessly across the guest beauty journey. Powered by our loyalty ecosystem, rich first-party data, and convenient omnichannel footprint, we are engaging with industry leaders to explore how we can further leverage AI to amplify what makes Ulta Beauty, Inc. distinct. All of these efforts will support our ongoing cost optimization efforts to fuel investment and support profitable growth. As we close out a strong fourth quarter in a transformative year, I want to thank our associates, guests, brand partners, and shareholders for their continued trust and partnership. As I reflect on my first year as CEO, I am proud of the progress that we made to deliver on our commitments, strengthen our strategic position, and invest in capabilities that will drive our next phase of growth. We are optimistic about the opportunities ahead while remaining mindful and cautious as we navigate an environment with ongoing global uncertainty and potential economic volatility. Looking forward, we will control what we can control, put our prior strategic investments to work as we focus on strong execution, innovation that creates real value for our guests, and disciplined, returns-driven capital allocation. I am excited about what the future holds for Ulta Beauty, Inc. We have ambitious plans, and I am confident that we have the right team, the right model, the right strategy, and the swagger to continue to win in the beauty category and create value for our shareholders. I will now turn it over to Chris to cover some of the specific financial results and our 2026 outlook. Chris? Chris Del Orfus: Thanks, Kecia, and good afternoon, everyone. Before I discuss our recent financial results and our outlook for fiscal 2026, let me first say how excited I am to join Ulta Beauty, Inc. Over the last three months, I have enjoyed getting to know the Ulta Beauty, Inc. team and gaining a deeper appreciation for the company's strategic positioning, financial strengths, and its strong people-focused culture. Ulta Beauty, Inc. is a beloved brand operating in an attractive and resilient category. Our Ulta Beauty unleashed strategy is fueling market share growth, driving guest engagement, and furthering our differentiation in a competitive category. We have more than 60,000 talented associates who bring our brand to life and serve our guests with passion and commitment every day. We have strengthened our foundation, invested in key capabilities, and maintained a solid financial foundation with strong operating cash flow that enables value creation and also provides us with financial flexibility to pursue growth opportunities and weather dynamic macro environments. I am excited and optimistic about the future of Ulta Beauty, Inc., and I am energized to serve as a strategic partner to Kecia and the rest of the executive team to ensure we build on our momentum with a strong focus on driving long-term sustainable growth and maximizing value creation. So with that, let us get into our results. Starting with the quarter, net sales for the quarter increased 11.8% to $3.9 billion compared to $3.5 billion last year. During the quarter, we opened five new and remodeled 18 Ulta Beauty, Inc. stores. We also opened two new and relocated one Space NK store. For the year, we opened a total of 63 net new stores, relocated six stores, and remodeled 42 stores, in line with our previously provided guidance. We ended the year with 1,505 Ulta Beauty, Inc. stores and 86 Space NK stores. Comparable sales for the period increased 5.8% driven by a 4.2% increase in average ticket and a 1.6% increase in transactions. Looking at the cadence of sales through the quarter, comp sales were fairly consistent, reflecting both a strong holiday season and the lapping of softness in January. I would note that we did see some impact from the weather at the end of January this year. From a channel perspective, both store and digital channels contributed to comp growth, with e-commerce sales delivering mid-teen growth and comp stores increasing sales in the low single-digit range. Turning now to sales by category. The skincare and wellness category increased to 24% of sales and the makeup category decreased to 35% of sales, primarily reflecting the impact of Space NK which has a higher mix of skincare sales than our Ulta Beauty, Inc. business. Fragrance was the strongest performing category again this quarter, delivering double-digit comp growth fueled by newness from established brands including YSL and Prada as well as exclusive brands such as NOISE, SNF, and Summer Mink by Drake, coupled with strong performance of holiday gift sets. New co-branded TV campaigns, expanded space in stores, and better in-stocks successfully positioned Ulta Beauty, Inc. as the fragrance destination this holiday season. The hair care category delivered its best comp performance this year with comp growth for the quarter in the high single-digit range, primarily driven by strong performance from new brands including Amika and Moroccanoil and exclusive Sacred, which continued to build sales momentum after a fantastic launch in April. The skincare and wellness category delivered mid single-digit comp growth driven by prestige skincare and wellness. K-Beauty brands Medicube, Anua, and Peach & Lily and new brands, Dermatology and Personal Day, drove strong guest engagement, while highly giftable launches from Therabody, Nodpod, and Saje, which is exclusive to Ulta Beauty, Inc., delivered strong growth in wellness. We took market share in the makeup category with low single-digit growth in total supported by positive comps in both mass and prestige makeup. Mass makeup growth was driven by compelling newness from brands like L'Oréal, Morphe, and Ulta Beauty Collection, while prestige beauty benefited from newness from Kylie Cosmetics and MAC. Finally, services delivered mid single-digit comp growth driven by increases in salon and specialty services, including ear piercing and makeup services. Gross margin for the quarter decreased 10 basis points to 38.1% of sales. The decrease was primarily due to channel mix and deleverage of store fixed costs and other revenue. These headwinds were mostly offset by lower inventory shrink and leverage of supply chain fixed costs, reflecting efficiencies from our supply chain optimization efforts. Our team's relentless focus on reducing inventory shrink has delivered meaningful benefits every quarter this year. Our investments in fixtures and process improvements, targeted efforts in high-risk markets, and focused associate training have resulted in shrink reductions across every category. Moving to expenses, SG&A increased 23% to $1.0 billion. SG&A growth was primarily driven by higher incentive compensation, including rewarding our frontline and field associates reflecting strong financial performance versus our targets this year, compared to lower incentive comp in fiscal 2024. The impact of Space NK and investments we made to support our Ulta Beauty unleashed strategy also contributed to SG&A growth. Excluding the impact of incentive compensation and Space NK, SG&A growth for the quarter was about 17%. As a percentage of sales, SG&A increased 230 basis points to 25.7%. Consistent with our investment strategy, expenses deleveraged across most components of SG&A with the exception of store payroll and benefits which were approximately flat as a percentage of sales. Operating profit was $477 million or 12.2% of sales, and diluted earnings per share for the quarter was $8.01 per share. Now to recap fiscal 2025, on a full-year basis, net sales increased 9.7% or $1.1 billion to $12.4 billion. Comp sales increased 5.4% driven by a 3.3% increase in average ticket and a 2% increase in transactions. Gross margin increased 30 basis points to 39.1% of sales. The increase was primarily due to lower inventory shrink and higher merchandise margin, which were partially offset by channel mix and the deleverage of other revenue. SG&A expense increased 17.4% to $3.3 billion. The growth was primarily driven by higher incentive compensation, the impact of Space NK, and investments we made to support our Ulta Beauty unleashed strategy. Excluding the impact of incentive compensation and Space NK, SG&A growth for the year was about 13%. Operating profit was $1.5 billion or 12.4% of sales, and diluted EPS increased 1.2% to $25.64 per share, above our previously provided guidance. Moving to the balance sheet and our capital deployment strategies, we ended the year with $494 million in cash and short-term investments and $62 million in short-term debt, primarily related to Space NK. Total inventory increased 10.8% to $2.2 billion, primarily reflecting additional inventory to support new brands, the acquisition of Space NK, and the impact of 60 net new Ulta Beauty, Inc. stores. The increase also reflects inventory investments in key categories to improve in-stock levels and support strategic growth opportunities. Our business generated more than $1.5 billion in cash from operations for the year, which supported reinvestment of $435 million in capital expenditures and $890 million in share repurchases. To summarize our fiscal 2025 performance, the strategic investments and actions taken as part of the Ulta Beauty unleashed strategy enabled us to accelerate top-line growth, capture market share faster than expected, and ultimately exceed the commitments we made at the start of the year. I want to express my sincere gratitude to our teams for delivering this outperformance and positioning us well as we enter fiscal 2026. As we look to fiscal 2026, we are focused on expanding our market share, driving returns from the investments we have made over the last few years, and importantly, returning to profitable growth. Our 2026 plan is aligned to our long-term targets and reflects several key financial goals anchored in our value creation principles, including disciplined cost management which helps fuel investment to support a strong growth profile. For the year, we anticipate net sales will increase between 6% to 7% with comp sales growth between 2.5% and 3.5%. We are planning on operating profit to grow in line or faster than net sales, and we expect diluted EPS will increase more than operating profit. For modeling purposes, we expect net sales will be between $13.1 and $13.2 billion, primarily driven by comp sales growth and the impact of 50 to 60 net new company-operated stores. Overall, we are planning stronger sales growth in the first half of the year as we benefit from the acquisition of Space NK and lap easier comp growth comparisons in the first quarter. We expect gross margin will be approximately flat as benefits from higher merchandise margin driven primarily by greater inventory productivity will likely be offset by deleverage of store fixed costs and other revenue. We will continue to invest in growth opportunities, but we are planning SG&A growth to be in line with to slightly below net sales growth and significantly lower than fiscal 2025, enabled by productivity programs and disciplined investment prioritization. Keep in mind, we expect to realize double-digit SG&A growth in 2026 as we will not lap the acquisition of Space NK and the annualization of investments until 2026. We expect operating profit will increase between 6%–9% resulting in operating margin being flat to up 20 basis points. Primarily reflecting the anticipated pace of SG&A growth, we expect operating profit growth will be stronger in the second half of the year. We expect these plans, combined with the ongoing efforts to enhance inventory productivity, will continue to generate strong operating cash flow which will enable reinvestment to support future growth and also support our intent to return approximately $1.0 billion of capital to shareholders through our stock repurchase program. We expect capital expenditures for the year will be between $400 million and $450 million, primarily to expand and refresh our store portfolio as well as investments in digital and information technology capabilities and supply chain optimization to support the guest experience and drive further operational productivity. Reflecting these assumptions, we anticipate diluted EPS will be between $28.05 and $28.55 per share, representing growth between 9.4%–11.4%, respectively, including the impact of share repurchases and an assumed tax rate between 24.2%–24.4%. In closing, the execution of our Beauty unleashed strategy in 2025 enabled us to accelerate top-line growth and deliver stronger performance than planned. Building on this foundation, we have developed a plan for fiscal 2026 that delivers against our long-term financial targets, including market share expansion, profitable growth, and strong cash generation which support attractive EPS growth and compelling value creation. I will now turn the call over to our operator to moderate the Q&A session. Leila: We will now open for questions. To join the queue to ask a question, please press 5 on your telephone. Again, that is 5 on your telephone to ask a question. Please limit to one question before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Your first question will come from Christina Kattai with Deutsche Bank. Christina Kattai: Hi, good afternoon. Thank you for taking the question. I wanted to start by asking on the composition of the comp. Can you talk about pricing and what you are seeing from the brands? Because the 4.2% ticket was very strong. On the other hand, transactions decelerated, especially when looking on a two-year stack. Maybe can you touch on the dynamics there and just how you are thinking about it in 2026 as it unfolds? Thank you. Kecia L. Steelman: Hi, Christina. Thanks for the question. You know, we see pricing increases every year. They typically impact about 10% to 15% of the overall assortment. And we are really planning for normalized pricing environments in fiscal 2026. You know, we will continue to work with our brand partners and navigate potential pricing increases, but we are not seeing or hearing anything that is outside of the normal territory. Christina Kattai: Okay. And then just a question on SG&A. It came in a little bit higher. Can you maybe touch on how much of that was incremental marketing and how you are thinking about the wraparound effect of that in 2026? And then as we think about the, you know, if you could touch on the promotional backdrop in beauty across the industry. Just what are you seeing with the cost of customer acquisition? We would love to get your thoughts there. Thank you. Kecia L. Steelman: Chris, why do you not start? Chris Del Orfus: Yes. So regarding SG&A, obviously, we were pleased with the performance in Q4 and the ability to over-deliver both sales and EPS above the high end of our guidance. We also delivered our operating at the high end of our guidance. So if you think about it, we over-delivered sales above the high end of our guidance by about $85 million, and we had flow-through of EPS upside similar to our margin rate. So we did make some investments in SG&A in between there. A few things I would point to. One, we had to absorb higher incentive comp on the over-performance. The second thing to note is, of course, there are some variable costs that are attributed to the increased sales, for example, increased tasking in stores. In addition to that, we did make some investments to support the outperformance and growth, most notably marketing, some media investments, not only help 2025, but position us nicely as we look into 2026. So we are definitely pleased with how we finished 2025, and we think that positions us as we move into 2026 as you can see from the guidance we provided. Kecia L. Steelman: Yes. And then just a little bit on promotionality. We do not have any plans to accelerate promotion, but we recognize that the environment is competitive, it is dynamic, and there is an increased focus right now out there on value. But, you know, it is one of the levers that we can pull into. And, you know, with us having such a strong loyalty base, our investments that we have made in personalization, along with other ways that we have invested to really be relevant and top of mind for that guest, we currently do not have any elevated promotionality built into the current plan or in the guidance. Christina Kattai: That is great. Best of luck. Kecia L. Steelman: Thank you. Leila: Your next question will come from Christopher Michael Horvers with JPMorgan. Christopher Michael Horvers: Thanks, and good evening, everybody. I just want to jump back on your comments earlier about the backdrop, Kecia. In a 2% to 4% industry growth, is that a deceleration versus 2025? And then to what extent are you baking in the geopolitical backdrop? Obviously, a lot changed in the past two weeks. You know, did you take that into account when you were thinking about the sales outlook for the year and including your own share gains? Kecia L. Steelman: Yes. Let me—thanks, Chris, for the question. You know, it is very close to 2025. We—you know, the comp guidance really reflects a normalization and a fact that, you know, we are going to be increasingly having some challenging comps as we move through the year. We have, you know, adjusted for dynamic operating environments. We are staying really focused on controlling what we can control. You know, just a little color on how we looked at when we were building, you know, the 2.5%–3.5%, there were really four areas that we looked at. The first was really on consumer demand. You know, we are cautious about how the consumer demand could evolve given the macro pressures and rising conflicts, but, you know, beauty has been a resilient category to these macro pressures. So we see that beauty engagement is going to continue to be healthy in 2026. The second—I touched on this just earlier about the promotional environment. There are no plans for us to accelerate promotion, but, you know, it is going to be competitive out there. And, you know, I want to continue to focus on driving share and growth, and we are going to stay close to it, but we always want to look at market share and top-line healthy growth as a measure to our success. And then pricing, you know, I talked on that. We do not see anything that is going to be out of the ordinary within pricing. And then, you know, the growth of the category is between that 2% to 4%. But just as a quick reminder, you know, we are going against some easier comps in the first half versus the second half of this year, and we are just continuing to focus on controlling what we can control and making sure that we have a plan that gives us the ability to continue to take share and to build a strategy around numbers that we feel like, you know, regardless of the economic environment that we can continue to hit. Christopher Michael Horvers: Got it. And then, I guess, you launched Rare Beauty to start the year. And so can you talk about what the early response is to Rare Beauty? How should we size it in terms of an analog? Is this something like Kylie? Is this something like when you launched Fenty? Typically, you talked about, you know, 25% to 30% of sales growth is newness. How should we think about Rare, you know, relative to that number and relative to other analogs when you launched some significant brands? Thanks so much. Kecia L. Steelman: Absolutely. So, you know, just to maybe start with your last point, when you look at 2025, you are right. Twenty percent to 30% of our growth is coming from newness. We were a little on that higher end of the scale in 2025. So we are closer to that 30%. You know, Rare, well, it came out of the gates very strong and we are thrilled because it, you know, makeup having this halo impact in makeup is fantastic for us. It is one brand and we carry, you know, 600 brands in the assortment. What we are—what I can share about quarter-to-date trends so far is that we are pleased with February. We are still early in the quarter and, you know, we do have easier compares as I mentioned, you know, earlier in Q&A that we are going against easier numbers in the first half comp. But, you know, we have this embedded already in our guidance of the 2.5% to 3.5%. But, yes, we were thrilled with what we saw with Rare coming out of the gate strong. You know, Lauren and team had done a great job with newness and the cadence of newness in 2025. We like what we see with the cadence of newness in 2026. But, you know, it is one brand. It does not change the entire course of our business at the same time. Hopefully, that answered your question. Christopher Michael Horvers: Understood. Thanks so much. Leila: Your next question will come from Sydney Wagner with Jefferies. Sydney Wagner: Hi. Thanks for taking our question. Can you just give us a little bit more of an update on what you are seeing in terms of the competitive environment? We have seen some pushing from mass retailers into prestige. I am just curious what you think about are the most important elements of the business to maintain your competitive moat in the category, and what helps you continue to win new brands? Thank you. Kecia L. Steelman: Thanks for the question, Sydney. You know, beauty has always been a competitive category. But, you know, I would say that this is what we do. This is what Ulta Beauty, Inc. is about. We cover everything from low to lux and everything in between. And when you add wellness into this mix, you know, we are a trusted, you know, location with expertise that is broad in a curated assortment, with our leading loyalty program, with this omnichannel activation that we are continuing to invest in. You know, we just announced today about our TikTok, which I think is going to be another quiver for us to continue to engage with new guests. You know, we just are leaning into what makes us different which again I do believe it is that low to lux with services and wellness all captured into it. We have been talking a little bit more about leaning into our brand-building capabilities. We are bringing, you know, an elevated focus on how do we continue to engage with newness and exclusivity which continues to, you know, separate us from everyone else. But, again, you know, a lot of people want to get into beauty because it is an attractive category because of the margins, etc. But this is what we do, and we are just going to double down on the strength and the power of this model. The Ulta Beauty unleashed plan, I could not be more pleased with how we were performing against the plan in 2025. We are just going to continue to double down and really start to reap the reward of the investments that we made in 2025 and harvest that in 2026. And I would just say, you know, stay tuned. We are pleased with the progress we have made and I feel like we are focused on the right strategies for us to continue to be a share gainer in the future. Leila: Next question will come from Oliver Chen with TD Cowen. Oliver Chen: Hi, Kecia and Chris. As we think about makeup next year, what do you see happening relative to mass and prestige? And is the comp going to be pretty modest in makeup and outperform in fragrance? The related product question is K-Beauty and wellness. I know you have a lot of really good talent in wellness and you are thinking about that category more dramatically. Does that—when you put that space in, you know, how does it interplay with the categories that currently exist? And K-Beauty might be a massive megatrend, so would love your take. And Chris, a follow-up: On the comp store sales guidance, what do you need to leverage your fixed costs? And, historically, it has been higher than mid single digits, but what should we know in terms of deleverage on the 2.5% to 3.5%? And then your promotional question on guidance, were you saying promos this year ahead will be flat to last year, or are you giving yourself some breathing room to have higher promos than last year? Although I know you are working on many efficiencies around simplified, better promotions. Thank you. Kecia L. Steelman: Alright. Well, thanks, Oliver. I will start. Yes. You know, we are focused on everything from low to lux and everything in between. I think it gives us a strategic advantage that we do carry across all price points, especially if there could be potential pressures on the consumer's wallet in the future. In regards to K-Beauty and wellness, one of the things that I am very pleased with is that Lauren and team are working on SKU rationalization and making sure that, you know, unproductive SKUs—that we are really leveraging and bringing in both wellness and K-Beauty. One of the things that we are really focused on is this authenticity and quality of the brands. You see a lot of K-Beauty in and out, and it is almost like fashion that you see. We are really leaning into, at Ulta Beauty, Inc., the efficacy of the products and making sure that the products really give the results. We want to do all of the research for the guests. So when they come in, they buy K-Beauty products that are known and trusted, that they actually work, and that has been working really well for us. And I would say that same philosophy is true for wellness. One of the things that I am very excited about is in regards to our marketplace. And if you think about marketplace, you think about it as mezzanine into our existing store. So it is a complementary assortment that does not, you know, take away from what you could buy in store today, but it is, you know, another item that you could add to your basket. So we are taking that approach really from end to end with K-Beauty, with wellness, with marketplace, and everything from low to lux and everything in between. Chris Del Orfus: Yes. On the store fixed cost and the deleverage, maybe what I would share is, one, as you heard, we are planning gross margin flat year over year. So we have multiple levers that we use to try and manage that. So we see opportunity in merchandise margin. We are continuing to drive supply chain optimization as well and we will still continue to benefit from shrink. I think the other thing I would point to is the new stores is obviously still an important component to driving growth. And what we are also doing is we are rolling out new store formats, a smaller format this past year, about 25% of our stores with that new format. In 2026, we expect more like 15% to be the small store format. So it is not just about driving top line, it is also about how we execute putting new stores in market. And we think that will be an element that helps us. The deleverage there is really modest and manageable, and we will manage things holistically across gross margin. Leila: Your next question will come from Susan Anderson with Canaccord Genuity. Susan Anderson: Hi. Thanks for taking my questions. I was wondering maybe if you could talk about the timing of the new DC in the Northwest. And I guess how should we think about the cost there? And then I do not know if I missed this or not, but maybe if you could talk about too, just the drivers of the op margin being better in the back half. Is that just when the efficiencies start to roll in, I guess? And then are you guys assuming, like, gross margins pretty flattish throughout the quarters? Kecia L. Steelman: Yes. Thanks for your question, Susan. I will start, and then I will kick it over to Chris. You know, when we talked about the new DC, it will not be up and functioning until 2027, but these things take a while to, of course, get out of the ground, especially when you are building from ground level up. We have those dollars built into our CapEx plan. So they are both in the long-term algorithm and what we are expected to spend is already in this year's guidance too with the cost to get that building started. And then, Chris, I will turn it over to you. Chris Del Orfus: Yes. So on the progression of operating margin, the primary driver is—right—we are absorbing Space NK. So you have that impact. Really SG&A. There are two key factors. First of all, in the first half of the year all the way up until Q3. The second one is the annualization of the investments we made in the back half of 2025. Then as you move into the second half, you cycle over those. And in addition, especially with Space NK, right, the holiday season, it tends to be higher sales, and you should get the leverage from the SG&A there. So those are the key drivers. Our productivity was active in 2025 and will progress throughout the year. I would more point to those two factors as the big factors that impact the timing of operating margin first half versus second half. Susan Anderson: Okay. Great. Thanks for the details. Good luck with the year. Leila: Your next question will come from Katharine Amanda McShane with Goldman Sachs. Katharine Amanda McShane: Hi, good afternoon. Thanks for taking our question. So our question centered around SG&A as well. Totally understand the different laps that we are encountering here in 2026. But if we were just to focus on how you are spending around marketing, I know that was part of the Unleashed plan to spend more on marketing. Could you maybe talk a little bit more about plans for that, just how the dollars look maybe versus what you spent in 2025? And what that could look like going forward. Chris Del Orfus: You know, so we would not share that level of detail, but what I could share is a couple things. One is our SG&A growth profile, right, that we outlined was either in line with sales to slightly below sales. Again, that does include us absorbing Space NK and the annualization of investments. We have been very targeted with our investment priorities. And so one of the top areas that we have continued to prioritize is personalization, which will certainly be a core part of our marketing investment. So we are still investing to grow within that plan in addition to having the carryover investment that we put into place in 2025. I will also point to—you heard me say, in Q4, we did invest on the upside sales performance. That did include some marketing and media that we have some benefit as we rolled into 2026. So we feel really good that we actually have a very disciplined approach on SG&A. We are prioritizing growth investments in key areas and making intentional choices of where not to invest, and certainly marketing and personalization remains our high priority. Leila: Thank you. Your next question will come from Mark R. Altschwager with Baird. Mark R. Altschwager: Good afternoon. Thank you for taking my question. First, just following up on the comp guide, the 2.5% to 3.5%—that is a touch below the long-term framework. So I was hoping you could just give us a little bit more detail on the factors driving that. Just conservatism to begin the year or just anything you are seeing in the environment that is leading you to take a more cautious approach to that today. Kecia L. Steelman: Well, I will say that our initial plan is, you know, and I shared this in the comments, Mark, that, you know, we want to be a market share gainer. So we are looking at that as we are planning—we built this plan is that we do not want to cede market share. So, you know, I think that this plan we feel is a thoughtful plan that is one that we can, you know, continue to build the expense portfolio around. If there is potential upside, I am going to love that. We have had, you know, this last year, we had a strategy that was working. It was laid out well. We outperformed our initial guidance that we shared in 2025. And we beat and erased throughout the year. And we exceeded on all metrics. You know, I am confident that we have got a plan for 2026 that allows us to hit our targets and continue to invest in the business. It will allow us to continue to be a share gainer and be, you know, I would say fiscally responsible in our investments. Some of the, you know, numbers that Chris shared, we are getting some of our expense rates in line. We have been in this heavy, heavy investment cycle for many years, and it is time for us to start to reap some of the rewards of those investments, and that is what this plan is allowing us to do. Mark R. Altschwager: Makes a lot of sense. And then, Kecia, just to follow up, wondering if you could share any more learnings you have had so far on Space NK, and any update to how you are thinking about unit growth there and geographic expansion to new markets? Thank you. Kecia L. Steelman: Yes. Thanks, Mark. Well, what I will say is that we are pleased with the performance. They have a nice growth in sales. We feel great about the growth strategy. You know, I do not want to give—I am not going to give specifics on where we see the growth, but we view this asset as additive to our core business. We see opportunities to really leverage each other's strengths—access to new brands, clienteling strategies, loyalty programs—and there is the ability for us to continue to grow in a nice market of the U.K. for us. So, you know, it is still a little early to say, like, how we feel like we can totally unlock the entire—all the value in Space NK, but we like what we are seeing so far and we are really pleased with the acquisition. Acquisition. Thank you. Leila: Your next question will come from Olivia Tong with Raymond James. Olivia Tong: Great. Thanks. You have talked in the past about leveraging investments. So can you talk about the level of investment spend for 2026, the initiatives that you have planned this year versus last year, where that leverage is coming from? And then as you look at the margin improvement, what do you think is the right level longer term now that the business is on a better track? What is the right investment level to get back to sort of a steady-state comp growth more in line with the long-term algo? That is my first question. And then the second one is just around the consumer environment being a challenging—you know, new challenges to the consumer environment that we perhaps did not have a couple of weeks ago. And can you talk about your flexibility and the flexibility in the model to make potential pivots, adjustments if necessary? You know, you have obviously done a lot to promotional cadence, but it seems like the state of the consumer is evolving. Just wanted to get a little bit more detail on that. Thank you. Chris Del Orfus: So maybe I will start with the second part of your first question on how we think of margin. Look. What I would share is the way we think of this is we are looking to deliver consistent, profitable growth. To maximize value creation, what we want to do is maximize profit growth. Margin is a part of that, of course. But I can do that driving incremental top line or through margin leverage. So every year—and this is what is reflected in our current guide—we will have a plan that has a strong productivity goal that is going to fuel targeted and high-ROI investments in a disciplined way. So it will not be at the expense of margin. If I see investment opportunities throughout the year, as Kecia said, if we have upside and can increase our operating profit in the current year while continuing to also support future growth momentum, you get a double benefit and can do that preserving margin. That is what I will do. And that will support kind of consistency of growth and then a flywheel of value creation. With that said, again, every year we will have an element of leverage that we are building into our plan. And we can, as we move throughout the year, figure out how to best optimize profit growth within that while maintaining discipline on margin. So that is what you see embedded in our plan this year. I did talk about—you asked about how much investment. It is hard to answer because we have said we would grow SG&A in line with sales to slightly below. But the product of the investments in there is actually more than that because we do have productivity initiatives. Supply chain optimization, in particular, has been positive for us. We are focused on inventory productivity, among other things. So we feel really good about the areas that we are investing in this year and the guide that we set up within that framework that is in line with our long-term value creation algorithm and basically being a compounder of double-digit earnings growth. Kecia L. Steelman: Yes. I would just add that, you know, we have the leadership and the team in place that can and will pivot as needed. The fact that we do carry low to lux, it gives us the ability to also flex as the consumer, you know, flexes with us. And we have better insights into the category and can leverage AI to make really good strategic business decisions to help us drive this business. You know, while it is a competitive environment, we are playing to win and to continue to take share. Olivia Tong: Great. If I could follow up on some of the newer categories—health and wellness, marketplace, international. How do you think about further expansion in year two on those and adjustments that you need to make in year two and the level of investment in those initiatives going forward. Kecia L. Steelman: Well, on international expansion, you know, we are planning on continuing to open stores in our partnership with Grupo Axo and with Alshaya. You know, right now, we are looking at this as more of an asset-light approach on how we can continue to grow globally. And, you know, it is an important category for us because we do want to be a global beauty retailer. We are making smart decisions on investment categories like wellness, and there was the opportunity for us to continue to leverage SKU rationalization to have more productive items that are in our store. Four-wall productivity is something that Chris and I are really leaning into. We want to make sure that we are leveraging that fixed cost base of our 1,500 stores out there to continue to drive profit through the stores and through our P&L. So, you know, we are making good business decisions with a strategic lens that have both, you know, short-term and long-term implications on how we can really optimize this model. Alright. Well, with that, I think that that would be the last question that we had. I just want to thank everyone for joining us today. I want to thank our associates once again for delivering against our ambitious plans for 2025 and for their dedication in representing the Ulta Beauty, Inc. brand to our guests each and every day. We are confident in our strategy, we are focused on operational excellence, and committed to delivering sustainable growth even in this dynamic environment. We look forward to updating you on our progress on the next earnings call on June 2. I want to thank you all and have a great evening. Thank you. Leila: Thank you for joining. This concludes today's call. You may now disconnect.
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to Abacus Global Management, Inc.'s fourth quarter and full year 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the call over to Robert Phillips, Abacus Global Management, Inc.'s senior vice president of Investor Relations and Corporate Affairs. Please go ahead. Robert Phillips: Thank you, operator. And thank you everyone for joining Abacus Global Management, Inc.'s fourth quarter and full year 2025 earnings call. Here with me today are Jay Jackson, Chairman and Chief Executive Officer, Elena Plesco, Chief Capital Officer, and William McCauley, Chief Financial Officer. This afternoon at 4:15 p.m. Eastern Time, Abacus Global Management, Inc. released its fourth quarter and full year 2025 results. This afternoon's call will allow participants to ask questions about our results. Before we begin, Abacus Global Management, Inc. refers participants on this call to the investor webpage ir.abacusgm.com, for the press release, investor information, and filings with the SEC for a discussion of the risks that can affect the business. Abacus Global Management, Inc. specifically refers participants to the presentation furnished today on Form 8-Ks with the Securities and Exchange Commission, and to remind listeners that some of the comments today may contain forward-looking statements and as such will be subject to risks and uncertainties, which if they materialize, could materially affect results. For more information on the risks, uncertainties, and assumptions relating to forward-looking statements, please refer to Abacus Global Management, Inc.'s public filing. During the call, we will reference certain non-GAAP financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under U.S. generally accepted accounting principles or GAAP. Please see our public filings for additional information regarding our non-GAAP financial measures, including references to comparable GAAP measures. I will now turn the call over to Jay Jackson, Chief Executive Officer. Jay Jackson: Thank you, Rob, and good afternoon, everyone. Abacus Global Management, Inc. closed the year by delivering another exceptional quarter, our eleventh consecutive quarter of beating consensus. Today, I want to walk you through how we are executing against our vision and what the path forward looks like grounded, not in projections, but in what I would call our proof point: a track record of consistent, measurable outperformance. Eleven quarters ago, we made specific commitments to our shareholders about how we would scale the business. Every quarter since, we have delivered. Let me put that in concrete terms. We have exceeded guidance and beaten consensus every single quarter. Over that span, we have tripled adjusted net income and adjusted EBITDA, expanded margins from 48% to 60%, and grown our asset base more than 35-fold, from under $100 million to nearly $3.6 billion. We have executed disciplined capital allocation with ROE and ROIC consistently at 20% or higher. These are not aspirational figures, they are results, consistently delivered, independently verified, and compounding quarter after quarter. That track record is precisely why you should have confidence in what comes next. Today, we are initiating our full year 2026 outlook for adjusted net income of $96 million to $104 million. This range implies another year of exceptional double-digit growth, up to 22%, compared to full year 2025 adjusted net income of $85.7 million. This guidance is built on the same execution discipline that has defined every quarter of our public history. Before I walk through our next set of goals, I want to ground this discussion in what makes the Abacus Global Management, Inc. business model fundamentally differentiated. First, our assets are mortality-driven and completely uncorrelated to macro markets. They exhibit what we call positive theta, positive accretion over time. As the insured ages and mortality probability increases, asset value naturally appreciates. There is no interest rate sensitivity, no credit cycle dependency, and no reliance on market sentiment. Second, Abacus Global Management, Inc. is a data-driven business that is insulated from AI disruption, and in fact, positioned to benefit from it. We own proprietary mortality data that AI platforms need to source. As AI adoption accelerates, we become a more valuable data provider, not a displaced one. Third, our assets are backed by regulated A-rated insurance carriers, providing certainty of payment upon maturity. These are contractual obligations from some of the most creditworthy institutions in the financial system. Fourth, they are self-liquidating. Unlike real estate and private equity, we do not need to find a buyer or manufacture an exit. The asset matures by design. Fifth, typical unlevered, uncorrelated returns range from 8% to 12% with limited downside risk, a profile that is exceptionally rare in today's environment. This is why institutional capital continues to flow into the space. The return profile is predictable, durable, and genuinely diversifying. During periods of market uncertainty, our origination business actually accelerates because we provide liquidity to policyholders when they need it most. In 2025 alone, Abacus Global Management, Inc. paid nearly a quarter of $1 billion to policyholders. Here is the broader reality. There is approximately $5 trillion in permanent life insurance outstanding in the United States today. Roughly 75% of policies held by individuals 65 lapse without ever paying a claim. Most policyholders do not realize that life insurance is personal property with meaningful market value, often worth significantly more than surrender value. Millions of Americans unknowingly walk away from six- and seven-figure assets simply because they do not know an active secondary market exists. That is a massive, structurally underserved addressable market. And that is exactly what Abacus Global Management, Inc. was built to capture. So where are we going? Today, I am laying out the path from where we are now, a company that has tripled its revenue over the last two years, to become a mid-cap company, specifically a business operating at approximately $450 million in EBITDA with 70% recurring revenue over the next five years. For those newer to the Abacus Global Management, Inc. story, our strategy is built on four integrated verticals, each one feeding and strengthening the others, creating a flywheel where we control the entire asset value chain. Vertical one, Abacus Life Solutions, the foundation. Abacus Life Solutions is our origination engine and foundation of the entire platform. In a highly regulated industry, we have established ourselves as a clear market leader. In Q4 alone, we deployed a record $230 million of capital, bringing our full year 2025 deployment to over $580 million. Working with 78-plus institutional partners and over 30,000 financial advisers, we expect this momentum to continue accelerating in 2026. This segment delivers consistent, realized earnings while feeding the asset pipeline across all four verticals. Critically, it also generates approximately 10,000 excess leads per month, individuals seeking insurance-related advice who do not qualify for our core business but represent significant wealth management opportunities. That organic lead flow is the engine powering our private wealth vertical, without the expensive customer acquisition costs typical of the industry. Vertical two, Abacus Asset Group, the growth engine. Our asset group is the primary growth engine. We now manage over $3 billion in fee-paying AUM across our longevity funds and ETFs. In 2025, we generated nearly $34 million in management fees, and our longevity funds alone have attracted $630 million in capital inflows. Our new longevity interval fund, which we expect to launch this year, along with our asset-based finance strategy, are creating clear, executable pathways to reach $5 billion in fee-paying AUM by year-end 2026. This is not a stretch target. It is a natural extension of the institutional demand we are already seeing. Vertical three, data and technology are competitive moat. Our data and technology division, now operating as Abacus Intel, continues to grow at strong multiples, adding another durable leg to our recurring revenue strategy. Our flagship product, mVerify, has achieved 4x growth and now tracks nearly 3 million lives, an over 300% year-over-year increase, across 100-plus institutional systems, delivering 97% coverage with less than 1% error rate. To put this in perspective, government mortality systems such as Social Security can lag by up to nine months and carry lower accuracy. Our system identifies mortality events in approximately 48 hours with near complete accuracy. That data advantage is a genuine competitive moat. It enhances our underwriting, asset management, and wealth management capabilities simultaneously. Let me be clear how we leverage AI. We are not using AI to manage portfolios. We are using AI and large language models to aggregate, structure, and interpret health and medical data from policyholders and direct consumers. The result? Broader datasets delivered in usable, summary formats that accelerate underwriting, enhance fraud prevention, and optimize pension liability analysis faster than traditional methods. We are targeting over $3 million in technology revenue for 2026, with significant M&A upside as we expand into insurance, pension, and mortgage verticals. Today, we are already monetizing this data externally, packaging mortality analytics for state pension funds and generating recurring SaaS-like revenue streams. Vertical four, Abacus Wealth Advisors is our client-facing distribution channel, and we expect dramatic acceleration in 2026. Our team build-out and acquisition strategy are ahead of schedule. Over time, we expect private wealth to represent approximately 30% of our recurring revenue mix, supported by organic lead flow from our core business, not expensive external acquisition. And already putting that strategy into action. In a recent development, Abacus Global Management, Inc. has agreed to deploy approximately $50 million to acquire a minority position in Manning & Napier, a proven wealth advisory platform with over $18 billion in AUM, more than fifty years of trusted investment management, and historical EBITDA in excess of $25 million. This investment creates compelling, mutually reinforcing synergies across three dimensions: converting Abacus Global Management, Inc.'s existing policyholder relationships into managed wealth accounts in the Manning & Napier platform, sourcing new life insurance policies through Manning & Napier's adviser network, and accelerating distribution of Abacus Global Management, Inc.-related alternative investment products to Manning & Napier's client base. This investment represents a defining moment in Abacus Global Management, Inc.'s evolution from a life solutions originator to a fully integrated, longevity-focused alternative asset management platform. Combined with our proprietary LifeArc data and actuarial capabilities, the partnership completes the Abacus Global Management, Inc. flywheel, connecting our life solutions origination engine, our growing asset group, and now a dedicated wealth distribution channel. We are not simply acquiring a minority stake. We are building a longevity-focused wealth ecosystem that we believe will generate significant and durable value for our shareholders. With all four verticals now in place and executing, let me walk you through what the long-term financial picture looks like. This is illustrative, but it is grounded in the same execution discipline that has defined the past eleven quarters. Here is the pathway. Our 2028 milestones are targeting EBITDA growth to $250 million while maintaining approximately 50% margins, supported by $30 billion in total AUM. Recurring revenue divisions from 16% of revenue today to 60% of our total revenue mix. As we execute this shift, we align significantly closer to a peer set that commands materially higher valuations, and we expect that valuation gap to narrow accordingly. Our 2030 milestones: EBITDA approaches $450 million supported by $50 billion in AUM, recurring revenue divisions represent 70% of total revenue. That is an approximate 14x increase in AUM and a 3.5x increase in EBITDA from today, while maintaining approximately 50% EBITDA margins throughout. Our long-term goal is to extend this trajectory, and we are looking at approximately $2.5 billion in revenue, $1.5 billion in EBITDA, and roughly $150 billion in assets under management. These targets are not aspirational. They are backed by live pipelines, executed contracts, and the same underwriting discipline this team has demonstrated for two decades. Before I turn it over to Elena, I want to touch on capital allocation because it is central to how we create shareholder value. We deploy capital where risk-adjusted returns are highest, whether it is acquiring policies, funding asset management growth, or repurchasing shares. Following our Q3 earnings, we announced a $10 million buyback program. Most recently, we authorized an additional $20 million share repurchase program on top of that, in addition to paying a dividend derived from our recurring net income. This capital return to shareholders through both dividends and share repurchases reflects our continued confidence in the trajectory of this business. When the market presents opportunities to buy our own stock at, we believe, a significant discount to intrinsic value, we act. When policy acquisition spreads are attractive, we deploy there. It is dynamic, it is disciplined, and it is designed to maximize long-term shareholder value. I also want to address our securitization strategy because it represents an important lever for scaling capital efficiency. In October, we launched our inaugural securitization. That transaction was fundamentally about education, getting institutions, rating agencies, and market participants comfortable with the asset class and its structural characteristics. The underlying asset in our securitizations is a life insurance policy issued by an A-rated carrier that is cash reserved with a default ratio of near zero. This is a consistent, high-quality asset that institutions want to own. And critically, the yield is uncorrelated, mortality-driven, not debt-driven, like traditional private credit. That uncorrelated return profile is exactly what institutional portfolios are seeking in today's environment of elevated rates and credit uncertainty. Securitization creates additional financing and distribution channels, particularly with banks and insurance companies, while improving our capital efficiency and scalability. We expect this pattern to grow into a meaningful and recurring channel going forward. I will now turn the call over to Elena Plesco to walk through our investment performance and detailed KPIs, and then over to William McCauley for the financials. Elena Plesco: Thanks, Jay. I want to use my time today to walk through the current investment environment, how our balance sheet performed, and how we are continuing to build Abacus Global Management, Inc. as a durable, scalable investment platform with growing fee-related earnings, one where we see a clear path for recurring revenue to grow from approximately 16% of total revenue today to 70% over the next five years. We ended 2025 in an environment that reinforces the core thesis behind everything we do at Abacus Global Management, Inc. Traditional asset classes, equities and fixed income, have become increasingly correlated. As a result, institutional allocators are actively searching for return streams that behave differently. That search is structural, not cyclical. It is driven by pension funds, insurance companies, and endowments that need to meet long-duration liabilities with assets that are not tied to the same macro forces. Longevity-linked and asset-backed strategies fit squarely in that gap. Our returns are driven by actuarial outcomes and contractual cash flows, not by market sentiment or broader economic cycles. And it is why institutional demand for our strategies continues to grow. Turning to the performance of our balance sheet. For Q4, our annualized portfolio turnover was 2.6x, above our long-term target of 1.5x to 2.0x, driven by meaningful capital inflows into our longevity-based funds and execution of our first securitization. What matters most is what that number represents: a disciplined, repeatable cycle of originating at attractive cost basis, adding value through underwriting and seasoning, and monetizing at the right time. During Q4, the policies we sold were held for an average of 116 days compared to 269 days for policies still on our balance sheet. Over the last two quarters, we have acquired a larger than usual number of policies referencing an older insured population. We did not deem those assets to need incremental seasoning. Thus, a portion were also sold last quarter. The economics support that. Our average realized gain was 27% for the quarter and 32% for the full year. These margins reflect rigorous origination, accurate actuarial targets, and patience, while exceeding our target of 20%. Portfolio quality continues to be strong. Assets seasoned beyond 365 days had a weighted average life expectancy of 45 months and a weighted average insured age of 88 years, versus 49 months and 86 years for last quarter, respectively. These positions reflect conviction in our underwriting, and we expect them to generate attractive returns as they continue to season. During Q4, we deployed $230.7 million in capital off our balance sheet, bringing full year deployment to $580.8 million, up 82% year over year. Our origination platform reviewed more than 10,000 qualified policies during the year, and we remain highly selective. Our close rate of 12% vis-à-vis qualified policies reflects the selectivity we apply at the front end, which is ultimately what protects margins over time. As we enter 2026, our capital deployment pipeline is robust. Our longevity business remains the core of Abacus Global Management, Inc. At the same time, one of my priorities since joining has been to expand on that foundation in ways that are deliberate and additive. We launched our asset-based finance strategy led by Monty Cook, our head of private credit. Monty and I have partnered on strategies like this over a decade, and we designed our ABF strategy specifically to leverage what Abacus Global Management, Inc. already does well. Asset-based finance involves lending against or investing in pools of tangible and financial assets. Insurance-related structures, equipment, receivables, consumer credit, and other contractual cash flows. These investments generate current income, offer structural downside protection, and exhibit low correlation to traditional markets. What makes our positioning distinct is the intersection of three things. First, our longstanding relationships with insurance carriers and institutional investors, both clients of our longevity platform and natural allocators to asset-backed strategies. Second, over two decades of experience structuring and managing complex, data-driven asset pools where performance depends on granular analytics and disciplined risk selection. And third, our proprietary technology, including the actuarial modeling and insurance analytics infrastructure we have built through Abacus Intel, which gives us a differentiated risk assessment framework we intend to bring to ABF from day one. This is not a departure from our strategy. It is an extension of the same origination philosophy: identifying contractual, asset-based cash flows where we have a structural or informational edge, applied to a broader opportunity set. Asset-based finance is a $22 trillion market, and we believe this strategy will be a critical part of our AUM expansion story. When I step back and look at the business today, the story is straightforward. We have a core origination engine in Web Solutions that continues to perform at a high level, supported by disciplined underwriting and consistent monetization. On top of that, we are developing a scalable asset management platform designed to generate growing fee-related earnings for our longevity funds, ETFs, the ABF strategy, and continued expansion of our distribution capabilities. As of year-end, fee-paying AUM was approximately $3.3 billion and management fee revenue was $33.8 million. We are targeting more than $5 billion in fee-paying AUM by 2026, and we see a path to $50 billion by 2030. That trajectory is driven by three things: continued expansion of our existing strategies, the launch of new strategies like asset-based finance, and the strategic expansion of our wealth management and advisory capabilities. Growing fee-related earnings is a central priority, and it goes hand in hand with growing AUM. As we scale fee-paying assets across our strategies, we generate contractual, high-margin management fee income without requiring additional balance sheet capital. I mentioned at the top we see recurring revenue growing to 70% of total revenue over the next five years. That shift is intentional, and it is the single most important strategic objective for the company. It is about building a fee-related earnings base on top of a proven origination engine and positioning Abacus Global Management, Inc. to be evaluated the way other scaled alternative asset managers are evaluated. We are executing on this deliberately, step by step, with a long-term perspective, and we believe that approach will continue to create value for our shareholders. With that, I will turn it over to William McCauley. Thank you, Elena, and hello, everyone. William McCauley: As Jay mentioned, we closed out 2025 with another exceptional quarter of revenue growth and profitability. Our performance continues to be driven by the strength of our highly efficient origination while we also remain focused on expanding our verticals that we believe will contribute significant earnings growth over time. In 2025, capital deployed increased 82% to $230.7 million compared to $126.5 million in the prior year. As of 12/31/2025, supported by continued policy origination and capital deployment, Abacus Global Management, Inc. holds 804 policies with a balance sheet value of $469.8 million. Total revenue in the fourth quarter grew 116% to $71.9 million compared to $33.2 million in the prior year period. Our growth was primarily driven by strong performance in Life Solutions, higher asset management fees, and contributions from our technology services business. We continue to see substantial growth from within our asset management segment as we expand our product offerings and the demand for uncorrelated assets increases. For the full year 2025, revenue increased 110% to $235.2 million compared to $111.9 million in the prior year. Our Life Solutions segment continues to generate revenue growth at an impressive rate while we focus on diversifying our revenue mix moving forward into 2026 and beyond. Turning to expenses, total operating expenses excluding unrealized gains and losses from changes in the fair value of debt were approximately $41.1 million for 2025 compared to $45.5 million in the prior year. The year-over-year decrease was primarily driven by a drop in non-cash stock-based compensation partially offset by an increase in SG&A expenses. The increase in SG&A expenses is related to the acquisitions at 2024 and in mid-2025, along with increased marketing spend to strengthen our growth profile. On an adjusted basis, excluding non-cash stock compensation, business acquisition costs, amortization, and change in fair value of warrant liability, net income for 2025 grew 71% to $23 million compared to $13.4 million in the prior year. For the full year 2025, adjusted net income grew 84% to $85.7 million compared to $46.5 million in the prior year. Adjusted EBITDA for the quarter grew 132% to $38.6 million compared to $16.6 million in the prior year. Adjusted EBITDA margin was 54% for the quarter compared to 50% in the prior year. And for the full year 2025, adjusted EBITDA increased 115% to $132.6 million compared to $61.6 million for the prior year. Adjusted EBITDA margin for 2025 was 56% compared to 55% for the prior year. We are committed to growing the business responsibly, which is demonstrated in our ability to grow both revenue and EBITDA by over 100% while maintaining our EBITDA margins. GAAP net income attributable to stockholders for the quarter was $7.2 million compared to a net loss of $18.3 million in the prior year, primarily driven by the increase in revenue from our Life Solutions and asset management segments along with a decrease in SG&A expenses. Turning to our balance sheet metrics. For the full year 2025, adjusted return on equity and adjusted return on invested capital were both at 20%, underscoring our highly profitable business model. As of 12/31/2025, the company had cash and cash equivalents of $38.1 million, balance sheet policy assets of $469.8 million, and outstanding long-term debt of $405.8 million. As Jay mentioned in his remarks, in an effort to provide more insight into our business, we are initiating our full year 2026 outlook for adjusted net income to be between $96 million and $104 million. This range implies growth of up to 22% compared to full year 2025 adjusted net income of $85.7 million. In summary, we are very pleased with our strong performance in 2025 as we delivered exceptional top-line growth and significantly expanded profitability on an adjusted basis and maintained our EBITDA margin. We remain highly enthusiastic about the growth opportunities ahead and are well positioned to execute on our long-term plans. I will now turn it back to our CEO, Jay Jackson, for closing comments. Jay Jackson: Thanks, Bill. Let me close with this. We have conviction in our business model, we have confidence in our execution, and we have clarity on the path forward. The current market environment is playing directly to our strengths, and eleven consecutive quarters of outperformance are the proof. We recognize the disconnect between our fundamentals and our current valuation, but also view it as one of the most compelling opportunities in front of us. As we have discussed with our investors over the past several months, the challenge is not performance, it is perception. The real opportunity lies in helping the investment community fully understand what Abacus Global Management, Inc. is today, a data-driven platform operating across life insurance, asset management, technology, and wealth management, with a recurring revenue model, institutional-grade assets, and a track record that stands on its own. We are addressing that gap as it continues to close through transparent communication, proactive investor engagement, and relentless execution across every vertical of our business. That is our mandate for the next two to three years: continue delivering results while closing the education gap in the broader investment community. We are confident that as understanding deepens, the valuation will follow. Our dividend and expanded share repurchase programs send an unambiguous message. We have the financial strength, the cash flow generation, and the conviction to invest aggressively in growth while simultaneously returning meaningful capital to our shareholders. We do not ask investors to choose between growth and returns. We are delivering both. As we look ahead, our priorities remain clear and unchanged: deliver strong, consistent financial performance, deepen institutional adoption of longevity-based assets, educate the market on the massive, structurally underserved opportunity in front of us, and create enduring, compounding value for every shareholder. I am proud of what this team has built. The results speak for themselves. Our job now is to keep delivering. We will now open for questions. Operator: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. First question comes from Patrick Davitt with Autonomous Research. Please go ahead. Patrick Davitt: Hi. Good afternoon, everyone. You mentioned in the deck that you expect to do another securitization in the first half, and I think you said last quarter you could have done a bigger one. So could you expand on how the investor demand side of the equation has evolved since then? And what that could mean for the size and frequency of these going forward. Thank you. Jay Jackson: Sure. Thank you, Patrick. The demand has continued to be there and, in fact, increase, and we are in, you know, process in Q1 of measuring that demand against building another product to put out via a securitization. And, you know, within that process, I think the demand has met or exceeded our expectations. And particularly in this market, right, one of the things we found really interesting is that with some of the recent volatility in the markets, the underlying asset that we have has actually increased in demand. But to couple that, or to go with that, it is interesting too. You know, we have seen uptick in origination as well. So as individuals may seek capital from their life insurance policies, you know, we are kind of seeing a positive response. So I think with the markets as they are today, you know, relatively around some uncertainty and some volatility, that has presented, I think, more opportunity for us to potentially do something even more sizable. We are still targeting first half versus Q1, but, you know, we feel pretty good about the outcome there. Patrick Davitt: Is it fair to assume it could be bigger than the first one just based on what you said last quarter or too early to say? Jay Jackson: That is yes. I think that is certainly the goal, and the target would be bigger. The first one was $50 million, and,you know, as we look forward, whether that is $100 million or larger, you know, those are some of the areas that we are targeting. And, you know, the demand is certainly there. I would add one thing as well. Whether it is in the securitization, which is great, you know, overall, I, you know, I like to point you to the fund flow. You know, if we look at, you know, the new inflows for, you know, Q4 that we reported, I mean, north of over $400 million should also give you a pretty good indication of the demand that we are seeing for the underlying asset. Patrick Davitt: Yep. And as a follow-up, I have a question on capital. I think you might have answered this in point two on Slide seven, but wanted to hear it from you. Before the stock sell-off last year, you know, episodic equity raises were a more consistent part of the growth algorithm. So now that your stock price has recovered, is that something we should keep in mind? Or do you think that the organic capital generation has kind of reached an escape velocity in terms of being able to address Life Solutions growth without equity raises. Jay Jackson: Yeah. We do not have any intent to put out more equity to fund balance sheet purchases related to policy purchases. You know, for us, you know, we are beating that velocity, and, again, driven by the demand for the asset from our own funds as well. So, you know, we are in a really good spot here and, you know, expect that to continue. And that is why when we put out our guidance for 2026, we are what we believe to be very optimistic. And so we expect that to continue. And from a fund flow perspective and what drives those capital needs, we are in a great spot here, and there is not any need to go to equity markets. Operator: The next question comes from Crispin Love with Piper Sandler. Please go ahead. Crispin Love: Thank you. Good afternoon, everyone. Appreciate taking my question. So on capital deployed, definitely a big quarter there, $230 million. I think that is 125%-plus growth versus just last quarter. And while Life Solutions revenue was strong, and, of course, it matched that growth too, can you walk through that a little bit? Did it come at a lower margin and how was that capital deployed different than past quarters? Just curious if there is any major differences. Jay Jackson: Right. No. There was not anything different. Now there was some, when we look at that gross capital number, you know, there was I think it was $408 million total of gross inflows. One thing that, yeah, you are right to pick up on at least from, you know, how we break that down, there was a little over $100 million that just on the ETF side. So, you know, that would contribute to typically those ETFs have a lower management fee as well as additional recurring revenue fees just in general. And so then when we then look at just the longevity market asset, or just in general inflows, you know, those were higher than Q3. You know, I think what we saw there was that it is some of it is just allocating that capital during the quarter. Right? And so you did see that we also had some excess cash there as we were, you know, finishing out the quarter. And so I think that, you know, those will kind of couple themselves together again a little more closely as we get into, you know, Q1, Q2. But, otherwise, you know, it was really successful. We were able to put a large piece of that capital to work, effectively right away. We are meeting certainly the demand that we have with our origination, and you saw a pretty significant uptick in capital deployed as well, which we were, you know, I think one of the highlights of the quarter is when you look at the capital deployed number of over $230 million. Crispin Love: Great. Thank you, Jay. No. That makes a lot of sense on the ETF side. And then you have talked about five-year path to $450 million adjusted EBITDA. I think you had a little over $130 million in 2025. So if I am doing the math right, I think that is compounding adjusted EBITDA about 28% per year. Can you just discuss how you expect to get there? Is that all organic? Are there acquisitions involved? And then is asset management the overwhelming driver of that growth? Jay Jackson: For sure. And I am glad you asked that because, you know, one of the things we highlighted in the call here was that if you look back over the last three years and I sat back with most of our shareholders and said we expect a 3x growth top and bottom line, you probably would not have taken us very seriously. And yet here we are again looking forward three and five years out with similar aspirations. And that is why we put that illustrative target out there, and partly driven by a couple of things. One, let us not forget we do have a massive addressable market with the underlying Life Solutions business. But even beyond that, when you look at some of the key drivers there, absolutely, it is driven by asset management. It is driven by wealth management. And, you know, there is a blend of organic as well as acquisition. And when I think about the acquisition piece, you know, we highlighted a minority investment in just a terrific firm, a fifty-year firm, in Manning & Napier, where, you know, culturally, you know, we see things a lot of the same way. And that is a first entry point for us. And I think when you start to look at the synergies that we are going to, that we have with that firm already and some of the things I believe we are going to be able to do to jointly grow together, things like, you know, increasing assets under management for both parties by having both a distribution agreement and, you know, being able to monetize the lead generation that we are able to generate from our platform through Manning is incredibly exciting. And I think when you look then at the growth of our business and how we are able to achieve these growth numbers, it is what we are doing really well going forward is capitalizing on the life cycle of our clients. And we are generating significant value for them in both policy purchases and policy payouts. And now we are going to monetize that over time. And so, you know, the growth of this asset driven by our data, specifically longevity and lifespan data and how that applies to financial planning, yes, we are very excited about how that growth is going to continue. And now looking forward, I also think that, you know, it is, as I said in prior calls, we saw both ways from a build-it and buy-it. So I think we will see some of that happen internally. And then, in addition to that, you know, finding phenomenal companies that we can invest in such as Manning & Napier and continue that growth. Crispin Love: Great. Thank you, Jay. Appreciate taking my questions. Operator: The next question comes from Andrew Scott Kligerman with TD Cowen. Please go ahead. Andrew Scott Kligerman: So maybe kind of further to the earlier capital question. In terms of equity issuance, would the founding holders have any appetite to do it this year, or do they have more of a sense that they want to wait and see if the price stabilizes? What is the thinking there? And just further elaborating on that question as well. In terms of capital demands, it sounds like you did a really interesting acquisition with Manning. What is the pipeline like there? Is there, you know, any way, Jay, that you could kind of size it to get a sense that, you know, maybe you might need to issue equity to do some of the deals. It sounds like they have all been very impactful. Jay Jackson: Sure. Thank you for that. Good questions. We will start with the initial question related to, you know, we are predominantly insider-owned. So we remain that way. Myself and three other partners and as well as a large shareholder, the five of us own about 58%, almost 60%, of the outstanding shares. I think it is a fair question. You know, just because we have seen a recent performance in the stock price, I would just like to highlight that when you look at the valuation of our business, it is why we are buying back our stock because we still feel it is dramatically undervalued on a comparative basis. I mean, when you look at businesses on an equivalent basis that have put up these types of numbers in 2025, they do not trade at single-digit multiples. Yet here we are. And I think that when you look at this from a perspective of how we feel about the stock, just look at the numbers we put out, some of these targets for 2028. Again, they are illustrative, but, you know, we are talking about effectively 2x over the next three years just in EBITDA while maintaining similar margins. So I think, you know, over time, you know, we have got a business here where some of the founding members have held their shares for 22 years. And I think that as you, you know, at a thoughtful basis, if we were to ever do anything, it would be something that would be to meet excess demand for the stock. And if that were to happen, you know, we would certainly consider that as those folks are thinking about things like retirement and other things. And this happens in all companies. Right? Like, you know, as people kind of age up, you want to be able to do this in an organized way. What I can assure you is that if there were to be a consideration related to some equity being sold by insiders, it would be in a controlled fashion. It would be in an organized fashion. And but to highlight even more so, let us look at the numbers where we are today. There is not a huge incentive for us to do that. Right? Like, you know, we see a lot of runway left here, and we think that we should be taking advantage of that. The second part of your question was what our pipeline looked like. And yeah. You know, you bring up an interesting point as we evaluate, and we have spoken about this for a year, about opportunities that we think would be really good fits both culturally and financially for Abacus Global Management, Inc. where you can find true synergies. Right? Like, let us take a quick look at the Manning & Napier opportunity. This is a strategic alliance where we are going to help generate new private wealth clients through our own client base. Secondly, we are going to source new policies from their current client base. So that feeds the origination machine. Right? And then we are looking at our own asset management portfolios. These are terrific alternative asset management funds that are now going to be available to Manning & Napier clients. Those are the types of successes that we want to point to and why these synergies we think would be very appealing. In addition to that, are there other firms that might meet that type of description? Of course, there are. And,you know, we are engaged in those kinds of conversations, but it has got to be accretive to shareholders. Right? Both financially as well as synergies. And, you know, there are firms out there. We are just very, very patient, very diligent. But I can tell you that there is a pipeline, and we are excited about it. How would we use capital to best fill that pipeline or to work through that pipeline? I think that, you know, we would use the best resources possible to us. If it were equity, I think it would be a blend of equity and really smart debt structuring. But there are a lot of options open to us. Let us keep in mind, we have a very profitable balance sheet. And we can utilize that capital in the most strategic way that we think will drive long-term returns. And that is what we were saying earlier. Right? Like, we want to use the capital in the best way possible, whether that is buybacks, whether that is buying policies, or whether that is acquisitions or investments. And I think that, you know, Q4 and 2025 and what we are putting out for 2026 demonstrates that. Andrew Scott Kligerman: That was helpful, Jay. And then on the KPIs, I mean, the turnover ratio at 2.6, terrific. Number of days the policy held 116, terrific again. I mean, really good changes there. Kind of curious on the days held 269, which upticked a little bit. What is kind of the backdrop to that? Why holding those policies a little bit longer? Jay Jackson: Yeah. And if you compare it to the prior quarter, we had held some policies a little bit longer to maximize revenue. And for us, it is simply about managing the best opportunistic return that we can. And so many times when you see that movement a little bit, whether held slightly longer or not, it is a smaller percentage of the book, but that is an aging part of the book, and you want to maximize returns. I think that you can look in the Q this quarter and even the K, and you will see things like maturations. These are matured contracts where we were able to effectively collect on the entire claim. And in those circumstances, those returns are substantially higher. So, you know, some of those contracts are best seasoning whether that is an additional quarter or not, and some are best to be optimized within that quarter. So, you know, it is a very thoughtful strategy of looking at it going, do I pick up an ROE of, let us say, 20 or do I hold this for maybe something larger another quarter? And in Q3, what you saw was those trade spreads went up pretty high. That was one of the KPIs that you had not mentioned yet, but the KPI was 37% in Q3 and then, you know, 26% in Q4. And I think that, you know, you are going to see some of that, and that is part of just being really good stewards of capital and maximizing returns. Operator: The next question comes from Timothy D'Agostino with B. Riley Securities. Please go ahead. Timothy D'Agostino: Congrats on the year. I guess focusing on Abacus Intel quickly. You had mentioned in your prepared remarks about how governments are using the data. And on Slide 19, you kind of lay out 100-plus governments and union systems. But you also talked about, and I can see in the slide, the market opportunities, whether that be TPA, pension funds, insurance, mortgage lenders. I guess what I am trying to understand is, with this data and advocacy, how do you provide value to those different opportunities and why they would want to partner with you. I guess trying to get an overall kind of high-level understanding of why Abacus Intel can provide value to these opportunities. Jay Jackson: Sure. I mean, at a high level, when you look at pension funds, for example, one of the resources that Abacus Global Management, Inc. provides is called mVerify, or mortality verification. We are able to verify when a mortality occurs in the United States within 48 hours with nearly 100% accuracy, around 97%. And that is incredibly valuable data for a pension fund, so they no longer continue to make those pension fund payments. Therefore, you know, what that really helps is them manage their own balance sheet much stronger because they do not have money going out that is really hard to reclaim. And then you can apply that against different types of agencies, right, to have a better understanding from an insurance company point of view, you know, how their mortality curves might adjust based on real-time mortality information. The reason why that is so valuable is that it is really hard to get that information from other sources. Even the Social Security Administration, you know, that can take months, if not years, to get that data. And most of the time, it is not very accurate. It is, you know, half as accurate. So, you know, that is where those sources of demand are. You know, we have been speaking to even larger institutions, and as we look into 2026, we expect the Abacus Intel business to continue to grow. I would add one piece that is really valuable. We use that data. Right? It helps us build better prediction models around our own investments. So, you know, being able to capitalize and understand how longevity and how that life arc of an individual is managed. Right? One of the things we started saying is that lifespan is not a straight line, it is an arc of possibilities. We have a program coming out called LifeArc, which that LifeArc program helps us better understand what someone’s mortality distribution curve looks like. And we are going to apply that LifeArc to financial services. Right? If the number one fear is running out of money in retirement, should not people have a better understanding of how long they are going to be in retirement, and capitalizing on that longevity and health data? And that is the type of data that I think, in a much larger scale, that Abacus Intel is going to play a major part in. Timothy D'Agostino: Okay. Great. Thank you so much for the color. It is super helpful. Then I guess, a quick second question for me. In the third quarter earnings presentation for the Abacus Asset Group, you have laid out $4 billion-plus in fee-paying AUM by year-end 2026. That number is obviously, or your guide has increased to $5 billion for year-end 2026. Is that primarily due to the capital inflows you saw in Q4 2025, that $275 million, or was there something else? Just trying to understand what gives you confidence in increasing that number between the earnings calls. Thank you. Jay Jackson: Sure. Yeah. Thank you for asking. And yes, it is driven by what we deem to be visible demand. And so when we see the type of demand that we saw in Q4, then we are looking at the demand in 2026 and match that with, you know, a keen understanding that when you have volatile markets, demand increases for this kind of asset, gave us a lot of comfort around increasing that number. And then you tie into not just new funds, products, and the rollout of additional potential securitizations. We feel comfortable around that number. Timothy D'Agostino: Okay. Great. Thank you so much, and congrats on the year again. Jay Jackson: Thank you. Operator: The next question comes from Michael John Grondahl with Northland Securities. Please go ahead. Michael John Grondahl: Hey, guys. Congratulations. And just wanted to circle back to the capital deployed, $230 million. I think you did that securitization late October. Was any of the $230 million for the securitization you have already done, and is any of that can be broken out for a future securitization? Any way to think about that? Jay Jackson: The second part of that question—sorry, Mike. You cut out a little bit on my line. Michael John Grondahl: Any of the $230 million that can be used in a future securitization. Are you able to bifurcate it in that way? Jay Jackson: Yeah. No. The way to look at it is that, yes, in Q4, when we are looking at total capital deployed, that would include the $50 million that we had in the securitization. But in addition to that, it was still a record quarter for us. Yeah. Right? And I think that is part of the power of the securitization. Right? Like, you know, you just kind of have this really consistent model that you can deploy capital with at a very effective and cost-effective structure. As far as bifurcating that capital deployed into additional securitizations, I would just kind of point to our balance sheet at this point, which is, you know, north of $450 million of policies on the balance sheet. And we have excess capacity to do additional securitization. So I think that we are really well positioned as we look forward to additional securitizations. We already have the inventory built up on our balance sheet for that. Michael John Grondahl: Got it. Great. And then just one more. With Manning & Napier, does that sort of replace your ABX Wealth Adviser strategy? There was some thought that you would be hiring some of your own advisers and grow it out that way. How do we think about it now? Jay Jackson: Yeah. I think it certainly complements everything that we thought we were going to do. And I think just one big takeaway here is, you know, we definitely walked before we ran here. Right? You know, we made, I feel like, a very thoughtful, intelligent, conservative investment into a well-established firm to really take a moment and show that, and demonstrate that, the model that we are putting together for our wealth management division is executable. And I think that is just so valuable in the way that we structured this initially. So, you know, this investment makes a ton of sense for us. How we might move forward with our own advisers within that platform, I think it makes sense for us at this point to focus on the investment that we made and prove that that is successful and show some wins and successes, and then we will continue to build the platform from there. But, you know, make no mistake. This is going to be an important platform for us on a go-forward basis because if you think about it, it feeds so many other things. Right? It feeds origination. It feeds asset management. It feeds the Abacus Intel from the longevity data. So, you know, I think it is a really important stage for our growth, and this is just the first step. Michael John Grondahl: Thanks a lot, guys. Good luck in 2026. Operator: This concludes the question and answer session. I would like to turn the conference back over to Jay for any closing remarks. Please go ahead. Jay Jackson: Well, thank you to all of our shareholders. 2025 was a year in which I believe that we solidified our shareholder base, solidified our story and our communication, and solidified our growth. And we are in a position where, looking forward, as great as the last two and three years have been, we are excited about the next three years. And we hope that when you start to see these numbers and see the direction of where this company is headed, and where we can achieve with the foundation of our business, we are excited about what the next three years can bring to us and our shareholders as well. So thank you all. We look forward to answering any additional questions. Please feel free to reach out to our IR department if you have any additional questions. And we look forward to another great quarter. The conference has now concluded. Operator: Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and thank you for standing by. Welcome to Allogene Therapeutics, Inc. Fourth Quarter 2025 Conference Call. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Christine Cassiano, Chief Corporate Affairs and Brand Strategy Officer. Ms. Cassiano, please go ahead. Christine Cassiano: Thank you, Operator, and welcome, everyone, to Allogene Therapeutics, Inc.'s conference call. After the market closed, Allogene Therapeutics, Inc. issued a press release that provided a business update and financial results for the fourth quarter and year-end 2025. This press release and today's webcast are available on our website. Following our prepared remarks, we will host a Q&A session and will aim to keep the call under an hour. I am joined today by Dr. David Chang, President and Chief Executive Officer; Dr. Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer; and Geoffrey Parker, Chief Financial Officer. During today's call, we will be making certain forward-looking statements. These may include statements regarding the success and timing of our ongoing and planned clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities, the safety and efficacy of our product candidates, commercial market forecasts, and financial guidance, among other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change. A description of potential risks can be found in our press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and Allogene Therapeutics, Inc. disclaims any obligation to update these. I will now turn the call over to David. David Chang: As we close 2025 and enter what we expect to be a defining year for Allogene Therapeutics, Inc., the environment around us is shifting. Cell therapy has entered a phase defined by evidence, where progress will be measured not by speculation and promises, but by data and disciplined execution. That shift plays to our strength. Our focus in 2026 is straightforward: delivering meaningful clinical milestones with rigor and speed. This is a year of critical proof points—proof points that could validate our allogeneic platform not merely as an alternative but as the imperative path to making cell therapy scalable, accessible, and deliverable at biologic-like scale. First, with SemiCell and ALPHA-3, we are asking a bold but important question that could redefine the management of large B-cell lymphoma. Can we intervene earlier, making CAR T truly accessible in the community setting, meaningfully improve outcomes, and alter the course of disease without disrupting the physician's practice? The goals of this study are not about incremental improvement in a late-line setting. It is about shifting the paradigm in the first-line treatment and demonstrating that SemiCell can reduce the risk of relapse and improve the cure rate. Importantly, it is about expanding access to community cancer centers that historically have been excluded from offering CAR T—bringing advanced cell therapy to where most patients are treated, off-the-shelf, at biologic-like scale. Second, with ALLO-329, we are extending the promise of allogeneic cell therapy to autoimmune disease. ALLO-329 is a purpose-built, dual CD19/CD70 CAR designed specifically for immune-mediated conditions, incorporating our Dagger technology to potentially reduce or maybe eliminate traditional lymphodepletion. We expect to report proof-of-concept data in June 2026, and assuming continued progress, another clinical update by the end of the year. We are entering this execution-focused period from a position of financial strength, having extended our runway into 2028. That gives us the ability to advance ALPHA-3 and RESOLUTION with focus and discipline. We have built a broad and innovative clinical pipeline, but we recognize we cannot advance everything at once. Discipline requires prioritization. Today, we are concentrating our resources on the programs where allogeneic CAR T has the greatest potential to demonstrate what this modality can achieve when developed around its inherent advantages: scalability, accessibility, and ultimately, the potential for durable cure. At the same time, we believe that as the field recognizes that allogeneic CAR T can deliver at scale with rigor and practicality, it will unlock new opportunities to expand the platform into additional settings and indications. With that, I will turn it over to Zach to walk through the clinical progress in more detail. Zachary Roberts: Thanks, David. As David outlined, the second quarter is defined by two key programs: SemiCell and ALPHA-3, and ALLO-329 in RESOLUTION. I will concentrate on the clinical execution behind these studies, and what we expect to learn in the months ahead beginning with ALPHA-3. ALPHA-3 is the first randomized study in lymphoma designed to test whether early MRD-guided consolidation with an allogeneic CAR T can prevent relapse. Patients who achieve remission after standard first-line therapy undergo highly sensitive ctDNA testing. Those who are MRD positive and therefore at high risk of relapse are randomized to observation or treatment with SemiCell. In April, we plan to report results from the interim futility evaluating MRD clearance in 24 patients—12 each in the SemiCell-treated arm and the control observation arm—along with early safety data. We will also outline the anticipated timeline and key inflection points as the study progresses. We have anchored expectations around what we and many clinicians believe would be a meaningful threshold at 25% to 30% absolute delta in MRD clearance between arms. Achieving that outcome would have the potential to alter disease and meaningfully improve the rate of cure of large B-cell lymphoma in the first-line setting. At the upcoming analysis, we also intend to provide preliminary safety data and additional perspective on how the use of SemiCell is being implemented in community settings. We now have over 60 active sites across the U.S. and Canada, with engagement with health authorities and clinical site start-up activities underway in Australia and South Korea. The level of real-world integration of SemiCell as consolidation into routine practice across both academic and community centers underscores what we believe is a core advantage of the off-the-shelf model and its potential to expand access beyond traditional CAR T delivery hubs. I will now spend a few minutes on ALLO-329, our first-in-class, dual CD19/CD70 allogeneic CAR T therapy designed specifically for autoimmune disease. ALLO-329 was engineered for this setting from the outset. It targets CD19-positive B cells and CD70-positive activated T cells, both of which contribute to autoimmune disease. Our Dagger technology is designed to endow the cells with a kind of built-in lymphodepletion to enable optimal cell expansion and persistence while potentially reducing or eliminating the need for conventional cytotoxic lymphodepletion. The Phase 1 RESOLUTION trial is a 3+3 dose-escalation study enrolling patients across multiple rheumatology indications, including systemic lupus erythematosus, lupus nephritis, scleroderma, and inflammatory myositis. The study is evaluating several dose levels beginning at 20,000,000 CAR T cells in two parallel dose-escalation cohorts—one that includes cyclophosphamide only and one without any traditional lymphodepletion. Twenty million cells is a small number, but one that we selected based on our conviction that the Dagger technology in ALLO-329 could drive meaningful in vivo expansion. For context, competitive programs in autoimmune disease are evaluating doses of autologous CAR T cells that are up to five to 10 times higher than our starting dose, and other allogeneic cell therapy programs are exploring cell doses nearly 50 times higher. In June, we expect to report initial proof-of-concept translational data as well as early clinical signals from the first dosing cohort with and without lymphodepletion. As an off-the-shelf allogeneic CAR T product that does not require any degree of patient HLA matching, ALLO-329 persistence in patients treated with minimal or no lymphodepletion at this low starting cell dose would be a strong validation of the Dagger effect in autoimmune patients. Assuming continued enrollment and follow-up, we anticipate providing an additional clinical update later this year. The opportunity in autoimmune disease could be significant. But success in this space requires tolerability, outpatient feasibility, and scalability, particularly as treatment moves into rheumatology practices. ALLO-329 was engineered with those requirements in mind. Across both programs, our focus remains on disciplined execution, with the goal of generating data that clearly define the role of allogeneic CAR T in earlier-line oncology and in autoimmune disease. With that, I will turn the call over to Jeff. Geoffrey Parker: Thank you, Zach. As we prepare for multiple clinical catalysts in 2026, our financial position is aligned with our strategic priorities. We have been deliberate in concentrating our resources behind ALPHA-3 and RESOLUTION while maintaining balance sheet strength and operational flexibility. As of 12/31/2025, we had $258.3 million in cash, cash equivalents, and investments. In February, we received an additional $23.7 million previously held in escrow related to Servier's favorable arbitration outcome with Selecta. We have also made prudent and opportunistic use of our ATM equity facility, and have raised an additional $20.7 million year to date. As a result of these actions, we have extended our cash runway into 2028, which we believe covers the time frame we currently estimate is needed to complete enrollment in the ALPHA-3 trial. R&D expenses for the fourth quarter were $28.6 million, including $2.5 million of non-cash stock-based compensation. For the full year 2025, research and development expenses were $150.2 million, which includes $12.9 million of non-cash stock-based compensation expense. G&A expenses for Q4 2025 were $13.8 million, including $5.6 million in non-cash stock-based compensation. For the full year 2025, G&A expenses were $56.8 million, which includes $24.7 million of non-cash stock-based compensation expense. Net loss for the fourth quarter was $38.8 million, or $0.17 per share, including non-cash stock-based compensation expense of $8.1 million. For the full year 2025, net loss was $190.9 million, or $0.87 per share, including non-cash stock-based compensation expense of $37.6 million and non-cash impairment of long-lived asset expense of $2.4 million. Guidance for operating cash expense in 2026 is expected to be approximately $150 million. GAAP operating expenses are expected to be approximately $210 million, including estimated non-cash stock-based compensation expense of approximately $35 million. These estimates exclude any impact from potential business development activities. With pivotal data from ALPHA-3 approaching in April, proof-of-concept data for ALLO-329 expected in June, and cash runway now extended into 2028, we believe we are well capitalized to execute through these important inflection points. Our focus remains clear: advance high-impact programs, manage capital responsibly, and position Allogene Therapeutics, Inc. for long-term value creation. We will now open for questions. Operator: At this time, please press 11 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press 11 again. Our first question comes from Tyler Van Buren with TD Cowen. Your line is open. Tyler Van Buren: Hey, guys. Thanks for taking the question and looking forward to both data updates next quarter. Could you elaborate on the safety parameters you will be looking at with the data update next month and what the bar is to support broad uptake in the community setting, and perhaps more importantly, how investigators in the community setting have already responded to incorporating SemiCell as a seventh cycle of treatment in the frontline? David Chang: Okay, thank you very much. I will ask our CMO, Zach, to elaborate on the safety aspect. Zachary Roberts: Hey, Tyler. Thanks for the question. We plan to provide some high-level safety information—enough for everybody to understand how well this is being tolerated. It is unlikely we will go into very, very minute detail, but certainly serious adverse events in both arms, the sorts of adverse events that would lead to hospitalization—those sorts of things—which absolutely feeds into your second and third questions. What is the bar that we need to hit for safety? We believe that this is best delivered as an outpatient. Therefore, this needs to be a therapy that can be delivered as an outpatient and does not lead to rehospitalization due to adverse events. And finally, can this be done in the community? Absolutely, it is being done in the community currently, and we look forward to sharing all of the safety aspects that are allowing this to be taken up in the community by physicians. Operator: Next question comes from Biren N. Amin with Piper Sandler. Your line is open. Biren N. Amin: Yes. Hi, guys. Thanks for taking my questions. I wanted to focus on the recent ZUMA-7 MRD analysis that were published last month, where ExaCell observed a treatment difference of 20% on MRD negative, which translates to about an EFS benefit of around 27 months versus the control group. Given you are expecting a 25% to 30% difference on MRD conversion, what read-throughs do you have from the ZUMA-7 data and your confidence on stopping at your interim EFS analysis? And on the interim EFS analysis, if you could maybe just walk us through how many events you need and what are the assumptions on hazard ratio that could lead to an early stoppage. And lastly, when can we expect interim EFS data? Thank you. David Chang: Hey, Biren. Thanks for pointing out that recent MRD data analysis coming from a subgroup of patients who were involved in the ZUMA-7 study. We view this study to be very consistent with how we have been looking at the MRD clearance and its correlation to the clinical outcome. Besides the study, an earlier study that we have been talking about is INVIGO 11, where MRD clearance difference of 11% led to a very meaningful clinical difference. So what has been reported with ZUMA-7 is very consistent, and I believe it validates the guidance that we have been providing, which is 25% to 30% MRD clearance difference at the futility interim analysis that we project to share in April. This is highly consistent, and we do believe that 25% to 30% is going to translate to very meaningful clinical difference in the outcome. With respect to your second question—how much can we speculate or model out about how the MRD clearance may translate to the EFS interim analysis—I would say it involves too many assumptions and speculations, and it is a little bit too early to talk about it. But internally, we are constantly reviewing the data and our functions. So stay tuned. Biren N. Amin: Great. Thank you. Operator: Our next question comes from Michael Yee with UBS. Your line is open. Michael Yee: Yes, guys. We have two questions. One was your thinking—first question is your thinking around the interim analysis and what would define whether you took that interim analysis on EFS. In other words, if the MRD conversion is super high, is that what would drive your thinking to take the EFS? So that is the question number one. And then question number two is on autoimmune. We wanted to understand target product. When you get your data coming up, is this to be a low lymphodepletion, a no-lymphodepletion type program? What are you trying to envision with the profile of that product? Thank you. David Chang: Yes, two great questions. In terms of this being somewhat similar to what Biren was trying to get at, one thing is that there is not enough data out there to see how MRD clearance relates to clinical outcomes such as event-free survival—whether this is a linear relationship, meaning that if there is a greater difference in the MRD clearance, there will be a greater difference in the clinical outcome. That kind of data, while plausible, is—there is such paucity of the data—so we cannot really establish that other than saying it is possible that if we see greater MRD clearance difference, that may translate to greater clinical benefit. To the point about how that may put us in the timing of interim EFS analysis: interim EFS analysis is an alpha-spending analysis. It is the primary endpoint analysis at a smaller event rate, and there is always the possibility that interim may cross the statistical boundary. That is part of the reason that we do the interim analysis—not just us; everybody who does interim analyses faces this. But let us stay tuned. Our focus right now is the MRD clearance that we promised to communicate in April. With the second question on the target product profile with the autoimmune program, our CD19/CD70—as Zach has covered in his prepared statement—this is a highly differentiated program that is endowed with a Dagger that may enable ALLO-329 to work at low or no lymphodepletion. So in the ongoing study, the baseline case that we are testing is low lymphodepletion, which is essentially using cyclophosphamide only. Standard lymphodepletion involves both cyclophosphamide and fludarabine. We took out the fludarabine altogether, and we lowered the cyclophosphamide dose to only one day infusion. That is the baseline case that we are testing. Also, we are testing, as part of the study, no lymphodepletion. The target product profile we are trying to get to is providing a meaningful B-cell depletion that is leading to reset of the immune system at cyclophosphamide alone. We think that will be the base case, and we will see if we can get to that without any lymphodepletion. That would be a great win—not just for the field, but for patients and everything that people are trying to do with B-cell depletion in the autoimmune space. Operator: Thank you. One moment for our next question. Our next question comes from Salveen Richter with Goldman Sachs. Your line is open. Salveen Richter: Good afternoon. Thanks for taking my question. On the overall SemiCell market opportunity and commercial positioning, CD3 bispecifics move to the frontline. This could influence MRD positivity rates or directly exclude patients from SemiCell eligibility. Just curious to get your thoughts on the evolving LBCL landscape and how you see SemiCell positioned long term? Thank you. Zachary Roberts: Hey, Salveen, this is Zach. Great question. It has been an interesting few years as these bispecifics have been approved in late lines and now are moving into frontline. I think if the early Phase 1 data in untreated patients is consistent with the overall Phase 3 readouts, there is a likely outcome that a certain percentage of patients may be cured with these very intense upfront regimens. So there is a possibility that there will be fewer MRD-positive patients. However, I think we very much need to wait for those final data before we begin to consider how the market opportunity may evolve—and not just efficacy, but also safety and the pace at which these complex and expensive regimens are taken up in the community. Our initial feedback is that not everybody is going to be lining up to be giving these very, very complex regimens that often require hospitalization for step-up dosing and so forth. We are watching this space very carefully, but we believe that the MRD positivity rate is largely going to be unchanged for the next many years. Operator: Thank you. One moment for our next question. Our next question comes from Matt Phipps with William Blair. Your line is open. Matt Phipps: And the update on timeline staying on track. When you look at that Foresight CLARITY data that looks at rates of MRD positivity post R-CHOP, are there any patterns around high-risk baseline characteristics such as double-hit, triple-hit genetics or, you know, IPI in the 4s, or something that you see in those patients that do not reach MRD clearance? And maybe you can remind us how SemiCell performed in those types of subgroups in your previous last-refractory trial? Thank you. Zachary Roberts: Great question. This is Zach again. Absolutely, there does appear to be differential MRD positivity rates according to the baseline risk, which is of course no surprise. MRD positivity at the end of treatment is an extremely high risk for disease progression, and it is precisely disease progression that was used to generate those risk stratification tools. So it is very consistent that if you have high-risk disease at the time of diagnosis, you are more likely to be MRD positive at the end of frontline treatment, and of course then you are more likely to experience a relapse. The beauty of ALPHA-3, however, is that there are lots of examples out there where patients who even have low-risk disease turn out to be MRD positive at the end of treatment. These are the patients that keep oncologists up at night because you think that the patients are going to do very well, and then they end up experiencing relapse. One of the things that we find so exciting about ALPHA-3 is that everybody gets a shot at upfront cure, and we do the risk stratification at the end of treatment and then escalate care accordingly with a consolidation dose of SemiCell. Looking back at our Phase 1 experience, we definitely saw good activity across the risk spectrum. So we do not anticipate there being gross disparities in the risk profile of these patients in the context of ALPHA-3. Operator: Thank you. One moment for our next question. Our next question comes from Samantha Semenkow with Citi. Your line is open. Samantha Semenkow: Hello? Hi. This is Ben on for Sam. Thanks so much for taking our question. Can you talk about expectations for the observation arm in the ALPHA-3 study? What is the expected rate of spontaneous MRD conversion, and if there is any data you could help us to triangulate this? Thank you. Zachary Roberts: Hey, Ben. This is Zach again. Great question. We get asked this one quite a lot. We have long assumed that the number of patients who are clearing MRD without further treatment will be a nonzero number. We have modeled it at about 20%. So in the 12-patient arm that we will be revealing next month, we are talking about two to three patients that we expect to potentially have an MRD conversion from positive to negative. This comes back to the fact that no test in medicine is perfect. There are false positives and false negatives with every single test that you can perform, including PET scan. In fact, one of the reasons that MRD is so exciting and we believe will transform care of these patients is because the false positive and false negative rates of the MRD test are significantly better than they are for PET scan. This is why when we are talking about the efficacy that we hope to see next month in April, it is relative to the spontaneous clearance rate. So when we talk about 25% to 30%, we expect that improvement over the baseline clearance rate because patients, of course, are eligible to spontaneously clear in both arms. So we should expect that 20% distributed in both arms.
Operator: Good afternoon, everyone, and welcome to the Nephros Inc. Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I would like to turn the floor over to Kirin Smith, Investor Relations. Please go ahead. Kirin Smith: Thank you, Jamie, and good afternoon, everyone. This is Kirin Smith with PCG Advisory. Thank you all for participating in Nephros' Fourth Quarter and Fiscal Year 2025 Conference Call. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Nephros. I encourage you to review Nephros' filings with the Securities and Exchange Commission, including, without limitation, the company's Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Factors that may affect the company's results include, but are not limited to, Nephros' ability to successfully, timely and cost effectively market and sell its products and service offerings, the rate of adoption of its products and services by hospitals and other health care providers, the success of its commercialization efforts, and the effects of existing and new regulatory requirements on Nephros' business and other economic and competitive factors. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live call today, March 12, 2026. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. I would now like to turn the call over to Nephros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead. Robert Banks: Thank you, Kirin. Good afternoon, everyone, and thank you for taking the time to join us today. 2025 was a great year, and I'm extremely proud of the team and all their amazing accomplishments. I've been excitedly awaiting this day so I can share with you the results of the great things that have happened since our last full year's recap. Clean water is essential for health care, hospitality, food services and everyday life. We have the right products to address these needs and have been doing so successfully in patient care situations. We've made great progress in non-patient care applications over the past year. We look forward to developing channels to penetrate other markets, such as residential and commercial through key relationships that we are creating. Over the past several years, we've built a clear strategy to deliver on that message. And today, the strategy is anchored around 3 core pillars: products; services; and education. Together, these pillars are driving our growth and positioning Nephros as a leader in water safety solutions. Our first pillar, Products is our differentiated portfolio. It remains the foundation of our success. Nephros develops advanced filtration technologies designed to remove bacteria, viruses and other contaminants that threaten water safety. These products are trusted in hospitals, laboratories and commercial facilities where reliability is critical. Innovation continues to expand our reach. Recent product launches allow us to address new high-impact applications, including ice machines, drinking fountains, bottle filling stations and sterile processing environments. These are everyday touch points where water safety matters. By delivering filtration solutions that are both high performance and easy to deploy, we are expanding our addressable market well beyond traditional patient care applications. This product innovation pipeline is a key driver core to our continued growth. In 2025, we launched our second pillar, Services. While products start the relationship with customers, Services sustain it. Water filtration systems require regular replacement, monitoring and installation expertise. Historically, this has been fragmented and difficult for facility operators to manage. Nephros is solving that problem. Under the leadership of our service organization, we've expanded our installation and replacement capabilities, enabling us to provide customers with a complete lifestyle -- life cycle solution. This includes rapid product delivery, professional installation, scheduled replacement programs and ongoing technical support and training. By offering these services directly, we reduced barriers to adoption and strengthen long-term customer relationships. Most importantly, this model supports recurring revenue to programmatic filter replacements, which creates a more predictable and scalable business. Our newest and recently launched pillar is the strategy around Education. It represents one of the most exciting developments for our company. We've touched over 1,000 people through our webinar series and conducted numerous site-based training sessions. Water safety is becoming an increasingly important topic across health care, hospitality and public facilities. However, many organizations lack the expertise needed to manage waterborne pathogen risks effectively. To address this gap, we launched the Nephros Water Institute, this institute is dedicated to expanding knowledge around waterborne pathogen mitigation, facility water safety programs and compliance-driven filtration solutions. Through education and engagement with industry stakeholders, we are establishing Nephros as a trusted authority in water safety. This initiative does more than just share knowledge, it builds a long-term demand for filtration, services and compliance solutions. In other words, education strengthens our entire ecosystem. The impact of this 3-pillar strategy is already visible in our financial performance. In 2025, Nephros delivered 33% revenue growth, reaching $18.8 million in total revenue, while continuing to scale our operations. We also reported net income of approximately $1.2 million, marking our second consecutive year of profitability, a significant milestone for the company. These results reflect strong order reactivity, growth in active customer sites, expansion of service capabilities and increasing demand for our solutions. At the same time, we remain debt-free and financially disciplined with approximately $5.4 million in cash at the year-end. Looking forward, we believe Nephros is positioned at the intersection of several powerful trends, increased awareness of waterborne pathogens, rising regulatory expectations around water safety, aging infrastructure in health care and hospitality and a growing need for a reliable filtration solution. Our integrated strategy, products, services and education, allows us to address all 3 challenges simultaneously. It also creates a business model built not just on filter sales, but on long-term relationships and recurring value creation. I'd like to thank the entire Nephros team for their hard work and commitment. Now let me turn it over to our CFO, Judy Krandel to go over the financials. Judy? Judy Krandel: Thanks, Robert. I will now provide a closer look at Nephros' financial performance in the fourth quarter and full year of 2025. We reported fourth quarter 2025 net revenue of $4.7 million a 22% increase over the corresponding period in 2024. And for the full year 2025, net revenue grew 33% to $18.8 million from $14.2 million. This increase was primarily driven by higher programmatic revenue, reflecting strong reorder activity and the addition of several new active sites. In addition, we experienced solid growth in our emergency response business as well as significant growth in service revenue. Active customer sites continued to grow, and we're just over 1,680 as of the end of 2025 as compared to just over 1,500 as of December 31, 2024. Gross margin was 62% for both of the years ending December 31, 2025 and 2024, respectively. Gross margin for the fourth quarter of 2025 was 58% compared with 64% in the fourth quarter of 2024. Although, we achieved higher margins during the first half of fiscal 2025, those margins eroded somewhat during the second half of the year, primarily due to the impact of tariffs. Since April 2025, we have been subject to a 15% tariff on all goods imported from Italy which was reduced to 10% as of February 22, 2026. While this reduction provides some near-term relief, U.S. tariff policy remains unpredictable, creating uncertainty around potential future margin impacts. Research and development expenses for the years ended December 31, 2025 and 2024, were $1.3 million and $0.9 million, respectively. R&D expenses for the fourth quarter of 2025 were $0.4 million compared with $0.3 million in the fourth quarter of '24, an increase of 57%, primarily due to higher headcount and bonuses. Selling, general and administrative expenses for the year ended 2025 were $9 million compared with $7.7 million in 2024, an increase of 17% due to an increase in bonuses and sales commissions. Selling, general and administrative expenses for the fourth quarter of 2025 were approximately $2.3 million compared with $1.9 million in '24, an increase of 24% due primarily to an increase in bonuses and sales commissions. SG&A expenses in the fourth quarter also had some onetime expenses associated with product development and market analysis work. Net income for the year ended December 31, 2025, was $1.2 million compared with $0.1 million in '24. Net income for the fourth quarter of '25 was $0.1 million compared with $0.3 million during the same period in 2024, primarily reflecting the decline in gross margins and increase in bonuses and sales commissions. Our improvement in 2025 net income was largely due to our increased sales revenue. We are extremely pleased to report positive net income for the second consecutive year, the only 2 in the company's history. Adjusted EBITDA in the fourth quarter was a positive $131,000 compared to positive $481,000 during the same period in '24. For the full year 2025, adjusted EBITDA was a positive $1.6 million versus positive $548,000 in 2024. Net cash provided by operating activities was $1.6 million for the year ended December 31, 2025, compared to net cash used in operating activities of approximately $0.5 million for the year ended December 31, '24. Net cash provided by operating activities in '25 was primarily due to net income of approximately $1.2 million, an increase in accrued expenses of approximately $1 million, an increase in accounts payable of approximately $0.3 million, offset by an increase in accounts receivable of approximately $0.6 million and an increase in inventory of approximately $0.7 million. Net cash used in operating activities in '24 was primarily due to an increase in accounts receivable of approximately $0.3 million, a decrease in accounts payable and accrued expenses of approximately $0.2 million each, offset by an increase in inventory impairments and write-offs of approximately $0.3 million. Our cash balance on December 31, 2025, was $5.4 million compared to $5.2 million as of September 30, 2025, and $3.8 million as of December 31, 2024, and we continue to be debt-free. Please refer to today's press release for more details about the calculation of adjusted EBITDA and its reconciliation to GAAP net income or loss. And additional information about our results can be found in our filing on Form 10-K, which we filed earlier today. I will now turn the call back to Robert for some closing remarks. Robert, please go ahead. Robert Banks: Thank you, Judy. In closing, Nephros is proving that a focused, disciplined company with the right technology and strategy can create meaningful impact. We are improving water safety. We are expanding into new markets, and we are building a durable platform for long-term growth. Thank you for your time today and your continued interest in Nephros. This concludes our formal presentation remarks. We'll now take time for questions from the audience. Operator, please open the call for questions. Operator: [Operator Instructions] And our first question today comes from Anthony Vendetti from Maxim Group. Anthony Vendetti: Yes, a couple of questions. One is on the programmatic sales, what percent of revenues for the fourth quarter and the full year were programmatic sales? And do you have an outlook on how you expect that to evolve in 2026? And then your active customer sites, do you have a count on that number as of 12/31, '25? Robert Banks: Yes, certainly, I'll answer the second part, first and then turn it over to Judy for the other -- for the first part of your question. Programmatic sales, just under 1,700. So that was 1,681 sites, and that's a significant and steady growth, well above what we were when we finished the year ahead. And it's really due to some efforts that we're making for customer retention, and also outreach in areas of conferences, trade shows, but most of that new business is coming from customers who tell a friend, who are happy and delightful what they've experienced with us, the problems we've solved and then they have a neighboring facility or related and they let them know. So we pick up that business as well. So really proud of that active sites number. And as it continues to grow, it just reflects the excellent work from our sales women and men who have been doing a great of selling our products. Judy? Judy Krandel: Yes. We don't give out exact numbers. But Anthony, the fourth quarter, what's programmatic was certainly 90% plus of our business, which is similar for the year. Emergency response was helpful and did grow, but sort of high single digits, similar type number. Anthony Vendetti: High single-digit growth in programmatic sales. Okay. Judy Krandel: No, no, you talked -- I mean I think you wanted to know what percent, if I recall, apologize, of our sales were programmatic versus emergency response? Anthony Vendetti: Yes, yes. Okay. Okay. And emergency response, what was the number you cut out for a second. Judy Krandel: Okay. Yes. High single digits, round figures similarly -- was a little less in the fourth quarter than it was for the full year, but somewhat similar. Anthony Vendetti: Okay. Okay. Great. And then just maybe just on an even higher level. Just as -- I think, obviously, I'm sure you agree, clean water, whether it's hospital-based or outside of the hospital is probably a growing trend and a growing need worldwide. I'm just wondering, as you look towards the other opportunities outside of medical, in the commercial space, whether that's hospitality or restaurants. Can you talk a little bit about that pipeline potential and how you see that sort of evolving either in '26 or over the next couple of years? Robert Banks: Sure, certainly. When you think about the business, the core business of Nephros, getting it start in dialysis and then really focusing on the hospital market, patient care, those are areas that are highly regulated. We've got different rules and joint commissions and inspections, all really drive action. Testing occurs and there are results and problems that need to be solved. Once you step outside of the patient care world, you don't have those same regulatory environments that are driving the growth. And that's why this pillar I introduced recently, the education is so important. We've got to let different people in different markets know why it's important, why it matters, the impact to their facilities and really the return on investment for -- investing in the Nephros filtration as a medical device in a nonmedical application. So I see that growth happening as the education improves as we get more and more people that we touch via outreach. And that's the main barrier you're selling against doing nothing. The second barrier that we have to overcome is the -- what may be perceived complexity around installation. It's not just as simple as when you walk up to your refrigerator, or a filter and then your sink, where you twist it off and put a new one on. There's some cleaning and sanitations involved. So that's why our services group and portfolio is so important. We start to remove the barriers for why someone might be interested in a solution because they may not be interested in going through some of the, I guess, work required in order to get an effective result from the filtration system. So as we grow and build those markets, we create an ecosystem of people that understand that there is a solution. They don't have to handle and deal with microplastics or other problems they might be dealing with, and we have the answers for those. Building that whole solution from just you've got a problem, here's your problem, here's how you can solve it to let us implement that solution for you and take care of it going forward, is how we're growing that business. If you remember, it took a while, even after some of the regulations in the hospital market for us to really capitalize on that and grow that hospital business. And it's -- I anticipate it will take the same as we're going into the non-healthcare, non-patient care market as we work to build those markets up. Anthony Vendetti: Okay. So if I had to sum it up, you would say this is a multiyear strategy to build these other verticals. Robert Banks: Yes. But we've been starting on this for some time already. We're not entering it fresh in '26. So as those markets in past mature, we already have seen a few of those in some of the big areas. It's not a significant part of our business right now. I anticipate it will be a larger and larger portion going forward. Operator: [Operator Instructions] Our next question comes from Ralph Weil from R. Weil Investment Management. Ralph Weil: I really -- it must have been an accident or a b*** call, but since I didn't have a question prepared, can you just -- and I know you're talking about the new markets and what you're doing there and how you're going about it with the education, et cetera, et cetera. Can you elaborate a little more on some of the successes that you may have had so far? And I know it doesn't come easily when you're trying to penetrate new markets. But can you -- just comment a little about the successes so far. Robert Banks: Yes. So you're referring to the education successes or just anything, in general? Ralph Weil: Yes. No, we're in the newer markets, I mean, hospitals have been your big market and medical facilities. In the newer markets that you've entered, can you comment just a little more on where you may have seen successes on which you're basing your optimism going forward. And I really didn't press the button. But since it was a b*** call. Robert Banks: I understand, Ralph. So if I can try to address that. If you think about where we've been focusing, we're in a hospital in patient care. So non-patient care applications where we've found some successes. We were looking at areas where there's large populations of people. We've got a party that's interested in keeping the mass of people under them, healthy. If you think of correctional facilities where if someone gets sick or ill, they can spread and contaminate to other places, schools and universities where there are groups of people in one room or one area. Not to say that a school is similar to a jail, but where you've got large groups of people who might be susceptible to different pathogens spreading. We've also seen in some aviation facilities where governments are concerned about what might be passed through water there. And I'm really surprised that the number of just drinking water fountain applications where people have felt that may have been shut down since COVID where they're facing the risk -- situation where they either rip them off the wall, which is very expensive or try to get them running again. We're able to go in, clean them up and reopen fountains that have been shut down for quite some while. So wherever we see large numbers of bottle fillers and drinking fountains, those are also the targets. I think some of the newer non-patient has also been sterile processing. Facilities that have instruments and probes and other stuff that go -- that come in contact with humans by rinsing them with water that's free of viruses and the toxins and other potential contaminants, we are finding a good amount of success there. Some of the newer areas, which are starting to gain traction are eyewash stations, shower -- emergency showers, those types of applications that are found outside of patient care as well when you have water sitting stagnant where bacteria have a chance to grow. So it's very numerous. It's not one area. It's lots of pockets here and there, which is why the education part of what we're doing is so important. Really getting the word out and letting people know where and how what we're doing can help with what they are trying to do and the mission that they're trying to accomplish, meaning we've had hundreds -- over 1,000 people attending these seminars that we're hosting, and I encourage anyone who is interested to listen and find out, you'll see an interaction and a level of transparency and information sharing that you don't get from any of the other related types of parks. So it really does showcase Nephros as being experts in the field and willing to talk agnostically about how to solve some of these problems, which people really appreciate to come back, they trust us, whether it's a property management company or others who have just people under their responsibility that they don't want to get in the situation where they're contaminated. So it's really exciting. It's been really refreshing and fun. It's been us learning how to speak something other than hospital language. And I think the team has really risen to the occasion and been doing a fantastic job of making that education inroads and penetrating other areas. Operator: [Operator Instructions] Robert Banks: Okay. So it looks like there is not any other calls in the queue. So just to close it out, I just want everyone to know, I'm extremely excited about Nephros products. and what the future holds. Just thank you so much for your support and believing in Nephros. And please stay tuned and give us a call and reach out if you do have any questions or want to know more. Thank you and have a great rest of your evening. Operator: And with that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
Operator: Greetings. Welcome to the Champions Oncology Third Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Rob Brainin, CEO at Champions Oncology. You may begin. Robert Brainin: Good afternoon, and thank you for joining us for our third quarter fiscal 2026 earnings call. I'm Rob Brainin, CEO of Champions Oncology, and I'm joined today by our CFO, David Miller. Before we begin, I'll remind everyone that today's remarks may include forward-looking statements. Actual results may differ materially, and additional information can be found in our filings with the SEC. Before I walk through the quarter, let me briefly highlight 3 key takeaways. First, we delivered another quarter of strong operational performance, including record services revenue and our third consecutive quarter of positive adjusted EBITDA. Second, while quarterly revenue can fluctuate in our business, we remain on track for full year revenue growth and full year positive adjusted EBITDA while continuing to invest in both our data platform and our discovery therapeutics subsidiary. And third, we're beginning to see early momentum in our data business, including new deals closed during the quarter and additional revenue expected in the fourth quarter. Overall, we're pleased with the progress we're making as we scale the core services business while booting the longer-term growth opportunities in data and drug discovery. Turning to the quarter in more detail. We delivered another quarter of record services revenue, underscoring the strength of our core translational oncology services platform and the resilience of our customer relationships. Our PDX Bank remains a true differentiator in the market. And as customer budgets stabilize, we continue to see bookings convert into revenue. I also want to thank our operations team who delivered this growth without material additions to headcount. That reflects the operating leverage in our model and our ability to expand margins as we scale. As we've said repeatedly, this is a somewhat lumpy business. Quarterly revenue can fluctuate depending on the timing of study progression and completion. During the quarter, we saw strong conversion of previously booked work, including some backlog from prior quarters, which benefited revenue in the period. Looking ahead, we would expect revenue to normalize somewhat as studies move through their various stages. That said, the underlying demand for our services remains healthy, and our focus continues to be on expanding the pipeline of future work through increased commercial engagement. This quarter, despite strong services performance, our year-over-year revenue showed a slight decline due to the large data deal we closed in the third quarter last year. Importantly, our services revenue came close to fully offsetting that comparison. Stepping back from the quarter-to-quarter noise, which is why we manage the business on an annual basis, we remain on track for full year revenue growth and full year positive adjusted EBITDA. all while continuing to invest in both our data business and Corellia without dilution of Champions' shares. That balance, growth and investment, coupled with disciplined focus on the bottom line is central to how we're managing the company. While EBITDA remains somewhat suppressed in the near term as we continue investing in these growth drivers, we expect the payoff from those investments to begin showing up in fiscal 2027 with more meaningful acceleration in fiscal 2028, which brings me to an update on our data business. Although we did not recognize data revenue in the third quarter, we are beginning to see tangible signs of momentum in our data business. During the quarter, we closed a 6-figure data deal that we expect to recognize in Q4. We're beginning to see traction with smaller transactions, which is important in building a broader and more diversified data business customer base with the potential to lead to larger deals in the future with those customers. And we continue to progress the large data deal we originally announced in Q3 of fiscal '25 with incremental revenue expected from that deal in the fourth quarter. While I need to reiterate that this is still early, these developments are encouraging. Customer engagement remains strong, and we are spending significant time and strategic discussions with partners who recognize the value of combining deep biological annotation with clinically relevant tumor models. The opportunity here remains substantial, and we are building it deliberately and thoughtfully. Turning to Corellia, our wholly owned target discovery subsidiary. We continue to generate attractive data that is being well received by potential venture capital funding partners and licensing counterparts. The feedback we're receiving is positive, and we believe the science is compelling. As we've communicated previously, we have included the funding of Corellia in our initial fiscal 2027 budgeting assumptions. However, if we're successful in closing an external funding round, the EBITDA currently being invested in that business would be redeployed toward other growth initiatives, particularly in data and/or flow through to the bottom line. I know a common question is the expected timing of funding for Corellia. At this point, I do not have a specific estimate as to when an external financing may occur. These processes take time, particularly in the current biotech funding environment. What I can say is that the discussions are ongoing, engagement remains quite active and the underlying data being generated on an ongoing basis continues to strengthen the investment case. Stepping back, Champions today is a stronger, more diversified company than it was 2 years ago. We have a differentiated and deeply characterized tumor bank that anchors our services platform, a growing radiopharmaceutical capability that enhances our competitive positioning, a data platform that is beginning to generate commercial traction and has significant long-term potential and a therapeutic subsidiary with scientific validation and external interest, where we believe we will soon be positioned to capture some of the return for the investments we have made. These growth vectors are separate but interrelated and our objective remains to maximize shareholder value across all 3 while maintaining disciplined capital allocation. Importantly, we are demonstrating that we can invest in the future while maintaining positive adjusted EBITDA today. That combination is critical. As we move through the fourth quarter, our focus remains on execution, delivering strong service performance, advancing data opportunities, progressing Corellia discussions and finishing the fiscal year with positive adjusted EBITDA and annual growth. Looking ahead, we believe the investments we are making today in these value drivers position Champions to deliver stronger growth and expanding profitability in the years ahead. With that, I'll turn the call over to David to walk through the financial results in more detail. David Miller: Thank you, Rob, and good afternoon, everyone. Before I dive in, just a quick reminder that our full results will be filed on Form 10-Q with the SEC before March 17. And as always, I'll reference certain non-GAAP metrics with reconciliations to GAAP included in our earnings release. Total revenue for the quarter was $16.6 million compared to $17 million in the prior year period, a decrease of approximately 3%. However, the mix of revenue this quarter is important to understand. Our core study revenue reached a record $16.6 million compared to $12.6 million in the year ago period, representing growth of approximately 32%. This performance reflects strong study execution and conversion of previously booked work during the quarter. We did not recognize any data revenue from our nascent data platform this quarter compared to $4.5 million in the prior year period, which accounts for the overall year-over-year revenue decline. As we have discussed previously, data revenue will vary from quarter-to-quarter at this stage of the platform development. We anticipate it will become a more meaningful and regular contributor to our results over time. It is also worth noting that study revenue in the quarter benefited in part from strong study completion timing, which will normalize in the near term before continuing to grow as bookings expand. As a result, quarterly revenue can fluctuate as studies move through different phases of execution. Taken together, this revenue performance and continued operating discipline supported our third consecutive quarter of positive adjusted EBITDA coming in at $575,000, while our GAAP loss from operations for the quarter was approximately $275,000. Importantly, on a year-to-date basis, we remain on track to achieve full year positive adjusted EBITDA. Turning to margins. Cost of sales for the quarter was $8.8 million compared to $6.6 million in the prior year period, resulting in a gross margin of 47% compared to 61% last year. It's important to highlight that more than $2 million of cost of sales in the quarter was attributable to outsourced laboratory work primarily related to radiolabeling workflows. As we continue bringing this work in-house, we expect these costs to decline and margins to improve. At current revenue levels, had this work been performed internally, our gross margin would have been in excess of 50%. It is also worth noting that prior year margins benefited from the data license transaction recognized in that period. Operating expenses for the quarter were $7.2 million compared to $5.3 million in the prior year period. The increase reflects investments aligned with our strategic priorities. Research and development expenses increased as we invested in sequencing and related activities to support the continued development of our data platform. Sales and marketing expenses increased as we expanded both our data business development team and our commercial POS team supporting both platforms. And G&A expense increased primarily due to leadership transitions and investments in IT infrastructure. While these investments increased operating expenses in the near term, they are intended to support future revenue growth and operating leverage. Turning to cash flows. Net cash used in operating activities for the quarter was $1.4 million, primarily driven by changes in working capital, including a decrease in deferred revenue related to the timing of billings during the quarter. We ended the quarter with $7.1 million in cash and no debt, and our cash balance remains within our projected range for the quarter. Looking ahead, our focus remains on consistent execution, driving revenue growth, improving both gross and operating margins and continuing to invest in the strategic capabilities that support our long-term growth. As we are now in our fourth and final quarter of fiscal year 2026, our next earnings call will be in July. With that, we'll open the call for questions. Operator: [Operator Instructions] And there were no questions currently from the lines. I will now hand the call back to Rob Brainin for closing remarks. Robert Brainin: Yes. Thank you all for listening in today. Like we said, we're pleased with the progress we're making. Look forward to sharing with you another update in July to give you an update on that continued progress. Have a wonderful day. Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, everyone, and welcome to the Aris Mining Fourth Quarter and Full Year 2025 Earnings Call. We will begin with an overview from management. [Operator Instructions] The conference is being recorded. [Operator Instructions] Please note that the accompanying presentation that management will refer to during today's call can be found in the Events and Presentations section of Aris Mining's website at aris-mining.com. Also, Aris Mining's fourth quarter 2025 financials have been filed on SEDAR+ and EDGAR and can also be found on their website. I would now like to turn the conference over to Mr. Neil Woodyer, Chief Executive Officer. Please go ahead. Neil Woodyer: Thank you, operator, and welcome to our Q4 and full year 2025 earnings call. Joining me today are Doug Bowlby, Oliver Dachsel, Cam Paterson, Dustin VanDoorselaere, Corne Lourens and Alejandro Jimenez. I'd like briefly to introduce two leaders joining us on our call for the first time. Firstly, Dustin, SVP, Operations, joined last year and brings decades of experience across underground and open pit mining, exploration and construction. Secondly, Corne Lourens, SVP, Projects, has worked with me for decades, including Endeavour Mining and Avnel Gold. He now leads our expansion and growth projects in Colombia and Guyana. Dustin and Corne bring complementary expertise as mining engineer and metallurgists and are working closely together across our operations and project portfolio. Before we begin, please note the forward-looking statement disclaimer on Slide 2. Looking now at Slide 3. 2025 was a pivotal year for Aris Mining. Gold production increased 22% year-over-year and gold prices increased 48%, resulting in $909 million gold revenue, up 82%. $464 million adjusted EBITDA, up 185%; $241 million adjusted net earnings, $1.28 per share, up 265% Importantly, we transitioned to generating free cash flow while continuing to invest in growth. Operations generated $322 million of cash flow after sustaining capital and taxes, fully funding our growth initiatives and $127 million in net cash flow. Looking ahead to 2026, our operations and growth projects remain on track. Segovia second mill ramp-up progressing well with further production growth expected. Marmato Gold mining zone development ahead of schedule with the new CIP plant on track for its first gold pour in Q4 of this year. Toroparu pre-feasibility study targeted for H2 of this year and Soto Norte environment license application is planned for Q2 of this year. Turning to Slide 4. We delivered on 2025 guidance, producing 257,000 ounces of gold, above the midpoint of guidance. Segovia production increased 21% year-over-year. Marmato delivered steady performance and exceeded guidance. Segovia owned mining all-in sustaining cost $1,534 per ounce, up just 3% year-over-year. CMP source gold all-in sustaining margin, 44%, above our 35% to 40% guidance range. Turning to Slide 5. For 2026, production guidance is 300,000 to 350,000 ounces. At the midpoint, this represents more than 25% growth year-over-year. Once Segovia and Marmato are fully ramped up, we expect 500,000 ounces of annual production. At 4,400 gold, Segovia is expected to generate $650 million in all-in sustaining margin this year. Marmato cost guidance will be provided after the CIP plant reaches commercial production. With that, I'll pass to Cam now to review our financial performance. Cameron Paterson: Thank you, Neil. Turning to Slide 6. Aris Mining reported record financial performance in 2025, driven by production growth, strong gold prices and solid cost controls. For the full year 2025, we reported gold revenue of $909 million, up 82% from $499 million in 2024, driven by higher realized gold prices and increased sales volumes. Adjusted EBITDA after normalizing for noncash and nonrecurring items of $464 million compared to $163 million in 2024. The 185% increase demonstrates the substantial leverage to higher gold prices, adjusted net earnings of $241 million or $1.28 per share, up from the $56 million or $0.35 per share in 2024. To put this into perspective, please turn your attention to the graph on the right-hand side. Aris Mining generated higher adjusted EPS in each Q3 and Q4 last year than for the full year of 2024. That is the $0.36 in Q3 and the $0.46 in Q4 were both in excess of the $0.35 per share for the full year of 2024. We closed the year with cash balance of $392 million, up from the $252 million at the end of 2024, further enhancing our strong liquidity position. Please turn to Slide 7 for a discussion of the key cash flow drivers. As Neil mentioned in his initial remarks, we transitioned to generating free cash flow in 2025 after our significant investments in growth. For the full year, we generated $127 million of free cash flow, which reflects $322 million of operating cash flow after sustaining capital and income taxes, which was partially offset by $196 million invested in growth capital, which included $128 million at Marmato for the construction of our CIP processing plant, major equipment procurement and delivery, underground mine and surface infrastructure development and additional expansion-related expenditures, $39 million at Segovia for underground mine development, completion of the mill expansion, new equipment to support the ramp-up and other activities and $17 million at Soto Norte and $12 million at Toroparu for the technical studies delivered last year and other site-specific expenditures. In addition to free cash flow generation of $127 million, our cash position was further increased by $150 million of proceeds from the exercise of warrants, which expired in July last year, and $13 million of proceeds from the sale of the Juby Gold Project. This was partially offset by $77 million of debt service and repayment and $60 million in cash used for our acquisition of the remaining 49% interest in Soto Norte in Q4 of 2025. With current gold prices significantly exceeding our average realized price in 2025 and meaningful expected gold production growth, as just mentioned by Neil, Aris remains well positioned to generate robust cash flows to organically fund all growth initiatives. I'd now like to hand the call over to Dustin to discuss our operating results. Dustin VanDoorselaere: Thank you, Cam. Turning to Slide 8. As Neil mentioned at the beginning of the call, Aris reported consolidated gold production of 257,000 ounces in 2025, representing a 22% increase over 2024, driven by the expanded Segovia mill and above guidance performance at Marmato. For the full year 2025, gold production at Segovia totaled 228,000 ounces, an increase of 21% compared to 188,000 ounces in 2024. The improvement reflects a 17% increase in milling rates following the successful commissioning of the second mill in June 2025, on time and within budget, along with a higher average gold grade of 9.8 grams per tonne and stable steady recovery of 96%. Segovia's strong operating performance in 2025 in conjunction with materially higher realized gold prices throughout the year delivered strong financial results. Segovia's AISC margin totaled $421 million, up 158% compared to 2024. Owner mining contributed $281 million or 67%, while our CMP business contributed $140 million, delivering an AISC sales margin of 44% and exceeding the guidance range. As reflected in the chart on the bottom right, rising realized gold prices and continued cost discipline continued to drive AISC margin expansion at Segovia. In Q4, Segovia generated an AISC margin of $2,346 an ounce compared to $1,157 an ounce a year ago. Moving to Slide 9. Segovia produced 63,137 ounces of gold in Q4, approximately 4% lower than Q3 due to unscheduled maintenance in November. We experienced 6.5 days of total downtime due to an issue with the older mill, which reduced throughput in November to 2,244 tonnes per day. Normal operations resumed in December and throughput increased to approximately 2,600 tonnes per day. Segovia's production ramp-up is back on track and continues to progress as planned. Year-to-date, I'm pleased to report that production at Segovia is above budget, marking a strong start to 2026. It's also worth highlighting that the mill feed gold grade has increased over the course of the last year to 10.1 grams per tonne in Q4, bringing the full year average grade to 9.82 grams per tonne, 4.4% higher than the feed grade of 9.41 grams per tonne in 2024, while recoveries remained consistent at 96% throughout the year. Our owner mining AISC averaged $1,534 an ounce for the full year, up 3% from $1,486 per ounce in 2024, demonstrating solid cost control. Segovia's total AISC comprised of owner mining and our CMP business was $1,705 per ounce in 2025, up 13% from $1,507 an ounce in 2024. This increase was primarily driven by higher cash costs, reflecting a 48% rise in gold prices, which elevated CMP purchases, royalties and social contributions. Sustaining capital per ounce also increased, reflecting higher development and infrastructure investments to support the ramp-up of the expanded mill capacity. These increases were partially offset by owner mining cash cost improvements from higher gold ounces sold, spreading our fixed costs over more ounces. Operationally, this year's focus is on connecting 3 of Segovia's 4 underground mines via one main underground haulage circuit while also developing ramps to surface. These measures are expected to increase productivity through increased haulage and hoisting capacity, which in turn enables Segovia to consistently run at 3,000 tonnes per day. With that, I'd like to pass it over to Corne for an update on Marmato. Cornelius Lourens: Thank you, Dustin. Moving to Slide 10. At Marmato, construction of the CIP plant and development in the bulk mining zone are advancing well. Development in the bulk mining zone is ahead of schedule, materially reducing execution risk. Development of the main decline to the bulk mining zone is over 1,000 meters advanced, which equates to a completion rate of 60% and is on schedule for completion in Q3 2026. The new decline will significantly improve access and haulage efficiencies, enabling higher mining rates and lower cost as processing capacity expands. I'm also pleased to report that the decline has advanced beyond the connection point to the underground crosscut with completion of the crosscut expected in April 2026. As illustrated in the project design on the bottom left side of this slide, the Los Indios crosscut will be connecting the upper part of the bulk mining zone with the main decline, which will establish an additional access and ventilation pathway, facilitate ore and waste haulage between existing and new infrastructure and support the initial production ramp-up. We're also building a 10,000-tonne mill feed storage facility at the intersection of main decline and crosscut, which enhances operational flexibility as it provides 2 days of mill feed at our run rate of 5,000 tonnes per day. On surface, the main civil, mechanical and electrical works are advancing with foundations for the mills, tailings thickener and leach and CIP tanks completed. Major equipment for first gold, including the primary crusher, SAG and ball mills and filter presses are ready to be moved from storage in Cartagena and [indiscernible] to Marmato site starting May. Subsequent to December 31, 2025, the company received the $40 million installment deposit under its precious metals stream financing following achievement of the 50% completion milestone. The proceeds will be recognized in the first quarter of 2026. The remaining $42 million installment deposit is payable upon achievement of the 75% completion milestone. During most of 2026, owner mining rates are expected to average approximately 900 tonnes per day, reflecting the throughput capacity of the existing flotation plant sourced primarily from ore development and stopes in the upper parts of the bulk mining zone. Construction activities are progressing as planned, and we remain on schedule for the first gold in Q4 2026, followed by a staged production ramp-up to steady-state operations. Aris Mining plans to exit 2026 operating the 5,000 tonnes per day design capacity CIP plant at approximately 3,000 tonnes per day. Production is expected to increase through 2027 with throughput increasing approximately 4,000 tonnes per day by mid-2027 and reaching the full 5,000 tonnes per day design capacity by the end of 2027 when the paste backfill plant is fully commissioned. Turning to Slide 11. You can see the recent images of the project, which illustrate many of the activities I just mentioned. The progress reflects the tremendous effort and dedication of our teams and contractors working on site. I would like to thank everyone involved for the continued commitment to safety in advancing the project. On surface alone, more than 2.8 million work hours have been completed to date. That's a significant milestone and a testament to the scale of work currently underway. We also invite you to watch the latest construction update video, which is available on our website and provides a closer look at the progress being made on the project. With that, I'd like to pass it over to Oliver for an update on our capital market activities. Oliver Dachsel: Thank you, Corne. Now moving to Slide 12. Last month marked a significant milestone for Aris Mining as we uplisted our common shares from the NYSE American to the main board of the New York Stock Exchange. At the same time, we changed our U.S. ticker symbol to ARIS, aligning it with our ticker symbol in Canada. We believe this move to the NYSE is an important step in the company's evolution, enhancing our visibility among U.S. and global institutional investors. It also better reflects the growing scale and quality of our portfolio while underscoring our ambition to scale Aris Mining into a leading gold mining company in South America. We expect that the transition to the main board will also help us further enhance the trading liquidities of our shares. As shown in the photo on this slide, members of the Aris Mining management team had the honor of celebrating this milestone by ringing the closing bell at the NYSE on February 19. Before I hand over the call back to Neil for some closing remarks, I'd like to briefly touch on our capitalization. Our strong operational and financial performance has increased our adjusted EBITDA to USD 464 million in 2025. As a result, total leverage has decreased further to 1x, which is 2 turns lower compared to Q4 2024. As Cam mentioned, we ended 2025 with a cash balance of $392 million, bringing our net debt to $86 million. With strong liquidity, low and decreasing financial leverage, no meaningful debt maturities until October 2029 and stable credit ratings at B1 / B+ / B+. Our balance sheet is in excellent shape to support our growth strategy. With that, over to you, Neil. Neil Woodyer: Turning to Slide 13. 2025 was a pivotal year for Aris Mining. We delivered full year guidance and completed the Segovia processing plant expansion on time and on budget. We continued advancing the Marmato expansion. We published major technical studies for Soto Norte and Toroparu. We acquired the remaining 49% of Soto Norte for $80 million. We reached an amicable arbitration settlement with the Colombian government, the first time the Colombian government has achieved an arbitration settlement. With 100% ownership of Segovia, Marmato, Toroparu and Soto Norte, we have a strong platform across Colombia and Guyana. We're on track to grow production to 500,000 ounces in the near term. Advancing Toroparu and Soto Norte create a pathway to 1 million ounces per year. Fewer than 15 mining companies globally produce more than 1 million ounces annually. With our asset base, balance sheet and cash flow, Aris has a clear path to join that group. Thank you for joining us today. And operator, could you please open for questions? Operator: [Operator Instructions] The first question comes from Carey MacRury with Canaccord Genuity. Carey MacRury: Congrats on a great 2025. Maybe just starting with Segovia. We're almost through the first quarter here. Can you just give a bit of color on how the ramp-up is going, how we should be thinking about throughput in Q1? Dustin VanDoorselaere: Carey, the ramp-up is going very well. I mean we're having a strong Q1, as I said in discussion. Moving forward, I think, as you know, our mill has been proven and run at 3,000 tonnes a day in 2025 on different occasions. Our bottleneck is mine production, which is really dependent on underground development. So as I mentioned, we're working on the haulage drifts underground, pushing them to connect the 3 main mines, Silencio, Providencia, and Sandra K and then also working on service ramps in both Silencio and Providencia, which will take the limit of the shaft haulage. So we're expecting by Q4, we should be steady into that 3,000 tonne a day run rate, and it's just a steady-state push until then as this new development comes online. Carey MacRury: So any guidance on what we should expect for Q1? Is it like $2,500 or... Dustin VanDoorselaere: We were running around 2,600 at the end of Q4, and we're pretty much the same going through Q1. Carey MacRury: Okay. And then just on the contractor mining partner margin, obviously tracking above guidance. Is -- should we expect that to continue in the short term? Or are there reasons that might come down? Dustin VanDoorselaere: Look, our guidance this year, we're going to run about 35% contractor mining as a total of our mix. And again, it's very variable on gold price and on the mix from the different types of suppliers, internal, external and third parties. But right now, everything is looking to be on track and run pretty steady with the way it ran last year. Carey MacRury: Okay. And then maybe one last one. What should we be thinking about for growth capital for Marmato and some of the other projects? I know you're talking about moving forward with some work at Toroparu. Just any guidance on capital would be helpful. Cornelius Lourens: So Carey, if I understand correctly, estimated cost to complete for Marmato. Carey MacRury: Correct. Cornelius Lourens: So just to give you a background, the total spend up to end of 2025 is approximately $180 million since construction started. Our current 2026 budget is about $220 million, and that implies a total cost -- project cost of roughly $400 million. The increase of $35 million from the March 2025 estimate of $365 million includes and it reflects an expanded preproduction mainly underground, where we include the Los Indios crosscut that connects up to the main decline that enables us to access more faces and ore for the 5,000 tonnes per day rate. And it includes a 10,000 tonne underground storage facility that enables us to better absorb surges for the process facility at the 5,000 tonnes per day and then a $12 million input into a tailings storage facility to ensure that we have sufficient CapEx for the increased throughput rate. Overall, we remain on schedule for the CIP plant to be completed in Q4 2026. Carey MacRury: And any other growth capital at the other projects? Cornelius Lourens: For Toroparu? Carey MacRury: Both. Cornelius Lourens: That remains as per the Soto Norte PFS, it's similar CapEx. There's no change there. And in Toroparu, with the Toroparu PEA, we're looking at $820 million in the PEA. And we're advancing well with the current PFS study to be completed Q3 2026, and it's tracking well in terms of CapEx. Operator: The next question comes from Don DeMarco with National Bank Financial. Don DeMarco: I'd just like to follow up on the last question. I didn't quite catch how much CapEx is remaining to finish the Marmato development through the end of the year. Wondering if you could just repeat that. Just how much CapEx is left to spend? I know the budget was $290 million as at March 1 last year, netting out what's been spent so far. Just wondering how much is left? Douglas Bowlby: Sure. Doug Bowlby speaking. Yes, the budget amount for this year is $220 million, as Corne was mentioning. And so when we add that to the $180 million that was already spent, that got us to the grand total of $400 million from Marmato, but it's $220 million is the total capital budget for 2026. Don DeMarco: Excellent. Okay. And so the -- we see that it's laid out the trajectory of the increasing throughput in the CIP plant. You got 3,000 tonnes per day by the end of this year, 5,000 tonnes per day by the end of next year. With the development in the bulk mining zone ahead of schedule, is there any -- are you feeling optimistic about this ramp-up of the plant? And is there any chance to maybe accelerate reaching some of those milestones sooner? Douglas Bowlby: We'd be very happy to achieve the milestones. We believe they're realistic and we believe they're achievable. Operator: I would now like to turn the conference back over to Mr. Woodyer for any closing remarks. Neil Woodyer: Well, thank you, operator, and thank you, everybody, for attending and your questions. And if you have any additional questions, then please take them offline to Oliver, and we'll get back to you as soon as we can. And again, thank you very much for your time today. Cheers. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good afternoon. Welcome to Identiv's presentation of its fourth quarter and fiscal year 2025 earnings call. My name is John, and I will be your operator this afternoon. Joining us for today's presentation are the company's CEO, Kirsten Newquist; and CFO, Ed Kirnbauer. Following management's remarks, we will open the call for questions. Before we begin, please note that during this call, management may be making references to non-GAAP financial measures or guidance, including non-GAAP adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses. In addition, during the call, management will be making forward-looking statements. Any statement that refers to expectations, projections or other characteristics of future events, including future financial results, future business and market conditions and opportunities, strategic partnerships and collaborations and any related benefits and attributes and future plans, strategies, opportunities and goals is a forward-looking statement. Actual results may differ materially from those expressed in these forward-looking statements. For more information, please refer to the risk factors discussed in documents filed from time to time with the SEC, including the company's 2024 annual report on Form 10-K and second quarter 2025 Form 10-Q and the 2025 annual report on Form 10-K, which will be filed with the SEC in the future. Identiv assumes no obligation to update these forward-looking statements. I will now turn the call over to CEO, Kirsten Newquist, for her comments. Ms. Newquist, please proceed. Kirsten Newquist: Thank you, operator, and thank you all for joining our quarter 4 and fiscal year 2025 earnings call. During the fourth quarter, we made meaningful progress across each pillar of our Perform, Accelerate and Transform strategy. Of particular note, we made significant advancements in the development of the specialized Bluetooth Low Energy, BLE, smart label in collaboration with IFCO, a leading global provider of reusable packaging solutions for fresh food. As announced on Tuesday, we signed a multiyear agreement with IFCO to manufacture and supply the specialized next-generation BLE smart label. This agreement represents a major milestone in our high-growth BLE strategy and reinforces Identiv's leadership in scalable BLE-enabled solutions for complex global industries. Our BLE smart label will be a key component of IFCO's digital platform designed to transform the global fresh grocery supply chain by delivering enhanced visibility, reducing waste and supporting a more sustainable circular food system. Under the multiyear agreement, Identiv will serve as exclusive supplier for committed manufacturing volumes. Following the development phase, IFCO will maintain exclusivity for these customized BLE labels as they are deployed across its global network of more than 400 million reusable packaging containers. Full-scale mass production is expected to begin later this year, subject to achieving final development milestones. Turning to our quarter 4 financial performance. I'm pleased to report that fourth quarter sales of $6.2 million exceeded our guidance with all other key financial metrics also coming in ahead of expectations. We saw continued strength in gross profit margin, reflecting the successful completion of our 2-year transition of production from Singapore to our new state-of-the-art manufacturing facility in Thailand. With the Singapore shutdown now complete, we have completed our second full quarter of operations entirely out of Thailand, which has structurally reduced our cost profile while increasing manufacturing efficiency and scalability. Our CFO, Ed Kirnbauer, will now provide a detailed review of our quarter 4 financial performance, and I'll return afterwards to share more on how we're progressing across our strategic initiatives. Edward Kirnbauer: Thanks, Kirsten. In the fourth quarter of 2025, we delivered $6.2 million in revenue, which exceeded our previously announced guidance range compared to $6.7 million in Q4 2024. The year-over-year decrease was as expected and due to the exit of lower-margin business, which we did not transfer to Thailand. Fourth quarter GAAP and non-GAAP gross margins were 18.1% and 25.6%, respectively, compared to GAAP and non-GAAP gross margins of negative 14.9% and negative 5.2%, respectively, in Q4 2024. Factors driving the expansion of gross margin included the elimination of direct labor and fixed manufacturing overhead costs associated with our discontinued Singapore operations and improved utilization of our manufacturing production facility in Thailand. As we mentioned on our November call, we stopped production of RFID inlays and labels in Singapore at the end of Q2 2025. Singapore facility shutdown activities continued through the fourth quarter of 2025. And as of December 31, 2025, it's now complete. GAAP and non-GAAP operating expenses for the fourth quarter of 2025, including research and development, sales and marketing, general and administrative and restructuring and severance totaled $5.8 million and $4.1 million, respectively, as compared to $5.6 million and $4.1 million, respectively, in Q4 2024. The year-over-year increase in GAAP operating expenses was driven primarily by higher strategic review-related costs incurred in Q4 2025 compared to the fourth quarter of 2024. Non-GAAP operating expenses in Q4 2025 were comparable to the prior year period as we continue a careful allocation of operating expenses as we execute on our P-A-T strategic initiatives. Fourth quarter GAAP net loss from continuing operations was $3.7 million or $0.16 per basic and diluted share compared to GAAP net loss from continuing operations of $4.3 million or $0.19 per basic and diluted share in the fourth quarter of 2024. This reduction in net loss was due to lower direct labor and overhead costs following the shutdown of our Singapore operations as well as $1.1 million of charges to cost of revenues recorded in the fourth quarter of 2024. These charges were primarily related to inventory written off after a customer phase out a legacy program earlier than expected. These cost improvements were partially offset by strategic review-related expenses incurred in the fourth quarter of 2025. Non-GAAP adjusted EBITDA loss for Q4 2025 was $2.5 million compared to $4.5 million in the fourth quarter of 2024. The decreased loss was a result from the production transition to our Thailand facility in 2025, the charge to cost of revenue in Q4 2024 and the disciplined spending of operating expenses as we executed on our P-A-T strategic initiatives, as mentioned earlier. In the appendix of today's presentation, we have provided a full reconciliation of GAAP to non-GAAP financial information, which is also included in our earnings release. Turning now to our fiscal year 2025 financials. Fiscal year 2025 revenue was $21.5 million, a decrease of $5.1 million compared to the prior year period, primarily the result of the intentional exit of certain lower-margin legacy business. Fiscal year 2025 GAAP and non-GAAP gross margin was 6.1% and 14.3%, respectively, compared to GAAP and non-GAAP gross margin of 1.3% and 8%, respectively, in fiscal year 2024. This year-over-year margin expansion reflects a more favorable product mix and significant operational efficiencies following the successful completion of our manufacturing transition to Thailand. GAAP and non-GAAP operating expenses for fiscal year 2025, including research and development, sales and marketing, general and administrative and restructuring and severance, totaled $23.5 million and $17.6 million, respectively, as compared to $28.3 million and $17.9 million, respectively, in fiscal year 2024. Fiscal year 2024 GAAP operating expenses included $5.3 million of incremental strategic review-related costs compared to 2025. Fiscal year GAAP net loss from continuing operations was $18 million or $0.79 per basic and diluted share compared to GAAP net loss from continuing operations of $25.9 million or $1.14 per basic and diluted share in fiscal year 2024. Non-GAAP adjusted EBITDA loss for fiscal year 2025 was $14.5 million compared to $15.8 million in fiscal year 2024. This relative stability in adjusted EBITDA despite lower year-over-year revenues was primarily driven by the reduction in manufacturing overhead and targeted allocation of operating expenses as we execute on our P-A-T strategic initiatives. Moving now to the balance sheet. We exited Q4 2025 with $128.9 million in cash, cash equivalents and restricted cash, which is a sequential increase of $2.3 million over the third quarter of 2025. This increase included an income tax refund of $2.9 million and a prepayment of $2.8 million from a new customer to procure product for their full 2026 projected sales volumes. Excluding these items, operating cash usage net of interest income for the fourth quarter was approximately $3.4 million. Our working capital exiting Q4 was $133.3 million. Our balance sheet remains strong as we move into 2026. In our 10-K filing, we will be providing a full reconciliation of full year cash flows. For completeness, we have included the full balance sheet in the appendix of today's earnings release. As we look ahead into 2026, we anticipate Q1 sales of $6.7 million to $7.2 million, which includes the benefit of one of our new customers ordering their full year volume in Q1. This would be an anticipated increase of 26% to 35% over the $5.3 million in sales that we reported for Q1 of 2025. Throughout 2026, we do expect some near-term variability in gross margins as we begin scaling production for the IFCO program and for another new customer in Q1. This reflects the typical dynamics of ramping production for large programs. It's important to note that the underlying cost structure improvements from our manufacturing transition remain in place. As these programs mature and volume scale, we believe they will support attractive long-term margin performance. From a cash usage perspective, we expect to use $14 million to $16 million in 2026, excluding strategic review-related costs. This includes the cash required to support ongoing operations, plus $3.5 million of capital expenditures primarily related to the IFCO production, $1 million increase in working capital to support growth and $1.5 million to purchase chips, locking in favorable pricing required to fulfill orders, which extend past 2026. This concludes the financial discussion. I'll now pass the call back to Kirsten. Kirsten Newquist: Thanks, Ed. As you just heard, we delivered results that exceeded our guidance and expectations, a solid step forward as we continued executing against our Perform, Accelerate and Transform strategy. Our mission is clear. We provide digital identities for billions of fiscal objects, enabling real-time intelligence for the world's most demanding industries. While there is more work ahead to reach our long-term financial goals, we are encouraged by the tangible progress we made in 2025. Perform. Under the Perform pillar, our focus is on strengthening and growing our core business while driving operational efficiency, scalability and margin expansion to create stronger long-term value for both our customers and our shareholders. In 2025, we achieved several important milestones that directly enhance the value we deliver. First, we completed a major 2-year manufacturing transformation. We moved production of all RFID tags, inlays and labels to our Thailand facility and fully shut down the Singapore site. This transition has lower costs and improved efficiency, increased margins and is enabling faster, more reliable product delivery. We also implemented new enterprise software systems, including a CRM platform and an MRP system to better integrate sales, demand planning and operations. These enhanced capabilities will increase visibility across the business and enable faster responses to customer needs, produce more accurate demand forecasting and generate higher product availability. As a result, we expect more efficient planning of raw materials and production, driving lower operating costs and supporting continued margin expansion. In addition, we completed our transition to a pure-play IoT company, fully separating from the physical security business sold to Vitaprotech after a 12-month transition period. This strategic focus allows us to concentrate all of our resources, innovation and capital on high-value IoT opportunities where we see the strongest long-term growth potential. On the commercial side, we completed the build-out of our team, adding market development and business development capabilities and reoriented the company around a stronger customer-centric operating mode. Throughout the year, we converted 29 new pipeline opportunities into sales, which generated $1.2 million in revenue with continued growth expected as these customers reach steady-state adoption. Our marketing communications function was rebuilt following the separation, culminating in the launch of our new corporate website in January, which more clearly communicates our technology leadership, market positioning and value proposition. I encourage all of you to check it out if you have not already done so. Looking ahead to 2026, our focus is on translating the stronger operational foundation into profitable growth. We are shifting to a make-to-forecast production model for key customers, supported by predictive demand planning that better aligns inventory with customer demand, lowers raw material costs through higher volume purchasing and improved factory utilization. Quarterly sales and operations planning sessions will align our sales operations and supply chain teams around a single demand plan and disciplined production execution, enabling better overall service for our customers. These capabilities position us to support large deployment customer programs such as IFCO and scale them more rapidly. With improved forecasting, shorter lead times and a more flexible manufacturing platform, we can respond more quickly to new sales opportunities and bring new products to market more efficiently. This combination of operational discipline and commercial focus enables us not only to operate more efficiently, but also to pursue growth opportunities more aggressively. We will also launch targeted cost reduction initiatives on key products and deepen engagement with key customers through strategic business reviews. Together, these initiatives will strengthen execution and ensure the operational investments of the past 2 years translate directly into faster growth and long-term value creation. Accelerate. Under the Accelerate pillar, our focus is on driving growth in high-value segments through innovation, particularly in BLE technology and multi-component manufacturing. In 2025, we made meaningful progress across our innovation pipeline. We advanced our BLE smart label programs, producing the first 30,000 units for IFCO proof-of-concept trials. These trials provided valuable feedback that is helping us refine the product design ahead of scale-up and mass production. We also shipped our first orders of Wiliot's next-generation Pixel. In addition, we completed 5 customer-driven new product development projects that are shifting to commercialization, including applications in wine authentication, medication compliance and water safety. We expanded our partner ecosystem through strategic agreements, including with InPlay, Tag-N-Trac, Novanta, Narravero, IFCO and Wiliot. These partnerships are a key component of our Accelerate strategy, aligning us closely with organizations building complementary elements of IoT-enabled solutions. We also finalized detailed BLE and high-value segment RFID road maps to closely align our innovation efforts with market opportunities, our core competencies and customer priorities. In 2026, we are working to build on this momentum. A major focus will be completing development for the IFCO BLE smart label program and ramping production to support more than 100 million units per year. In partnership with IFCO, we are expanding our capacity in multicomponent manufacturing to support these volumes. This program represents a transformational opportunity for both our business and the fresh food logistics industry as IFCO works to bring unprecedented digital visibility to the global fresh food supply chain, reducing waste and supporting a more sustainable circular food system. In terms of artificial intelligence, we are developing a BLE AmbientChat.ai demonstration platform to showcase the value of connecting the physical and digital worlds enhanced by real-time intelligence powered by AI. In addition, several programs from our BLE road map will advance this year, focusing on high-value applications across health care, industrial and logistics markets. In particular, we expect to commercialize our ID-BLU smart label, utilizing the next-generation InPlay chip later this year. Together, these initiatives are designed to accelerate growth in our high-value segments and maximize the commercial impact of our BLE and IoT innovation platforms. Transform. Our third pillar, Transform, focuses on expanding the business through strategic M&A that accelerates EBITDA breakeven, broadens our product portfolio, enhances technical capabilities and seeks to increase shareholder value. We have a dedicated team working with our financial advisor, Raymond James, to evaluate our strategic alternative. Transform remains a top priority this year. Our metrics. In 2025, we began reporting several new metrics to monitor our progress against strategic objectives. We learned a lot, made some refinements and have established targets for 2026. First, new sales pipeline and conversion rate. This metric tracks opportunities with new customers or customers we haven't sold to in over 2 years. By year-end, the pipeline included 101 opportunities, up 35% from the start of the year. As mentioned, throughout the year, we converted 29 of the opportunities totaling $1.2 million in sales. This represents a 28% conversion rate of the current pipeline or 16% when including opportunities that were lost or removed during the year. Our 2026 goal is to grow the pipeline to 125 opportunities and convert at least 35 by the end of the year. Second, new product development projects. This metric tracks the number of active NPD initiatives. These projects involve the development of entirely new RFID or BLE tags inlays or labels. As of the end of quarter 4, there were 18 active NPD projects, 10 customer-driven and 8 internally driven. We will continue to measure our NPD pipeline, but will not be setting a 2026 target as our focus will be to ensure enough resources are allocated to producing the multimillion volumes needed by IFCO. Third, NPD project completion. This metric captures the number of NPD projects completed within the quarter. In quarter 4, we completed 1 customer-driven project, bringing us to a total of 5 for the full year. The project completed in quarter 4 is for mass transit application. Our target for 2026 is to complete 5 to 7 NPD projects, including IFCO. We are pleased with the progress we made in 2025 advancing our Perform, Accelerate and Transform strategy. Our fourth quarter results show encouraging momentum, including gross margin improvement following the completion of our production transition to Singapore. In addition, the advancements that the Board has overseen in 2025 are not only related to operational and financial improvements, but it has also taken several shareholder-friendly actions to improve our governance profile over the past 12 months. Such actions include the declassification of the Board with each of the directors now being annually elected and enhancing the Board's collective expertise with the addition of Mick Lopez, a seasoned financial expert and former CFO. As we move into 2026, we are focused on building on the operational foundation established last year, scaling production for IFCO, expanding our customer base and launching new products. With our strategy in place and strong execution ahead, we believe we are well positioned to capture opportunities in the rapidly growing global IoT market. I want to thank our employees, customers, partners and shareholders for their continued trust and support. We are encouraged by our progress and excited about the opportunities ahead in the RFID and BLE markets. With that, I'd like to open the call for your questions. Operator, please open the question queue. Operator: [Operator Instructions] The first question comes from Jaeson Schmidt with Lake Street. Jaeson Schmidt: Just want to dig in a bit more on the IFCO opportunity. Obviously, it's noted that they have over 400 million units out there, and you guys are obviously scaling in anticipation to support a large number. But how should we think about this revenue opportunity from an ASP and gross margin profile standpoint? Kirsten Newquist: Yes, sure. So we're very excited about the IFCO project. We've been working on development for the past year, and so very thrilled that we were able to announce the signing of the agreement. We are scaling up to 100 million units of capacity per year and they do want to tag their full 400 million and growing plus of reusable plastic containers. They also have to replace approximately 10% of those per year. So there's the ongoing opportunity to continue to support their full pool of plastic containers. So we aren't talking specifically about the pricing or specific gross margin, but it is a higher price point than our average price per product, which I think we've previously told around $0.15. And it's also a lower price than we anticipate our standard BLE label, which we've publicly announced is going to be less than $1. So somewhere in that range. And obviously, gross margins, it is a true partnership with IFCO. They are investing CapEx along with us to scale up. They are committing to a certain volume. And so with that, we are -- the gross margin will be less than our target gross margin of 30%, but still a very, very great opportunity for us. Jaeson Schmidt: Got you. That's helpful. And just to clarify, are you guys sole sourced here? How many potential suppliers are there? Kirsten Newquist: It's an exclusive agreement. So this is an exclusive agreement. We will be developing this product exclusively for them, and then we will be the exclusive supplier for them over the term of the agreement. Jaeson Schmidt: Okay. Perfect. And then just the last one for me, and I'll jump back in the queue. When you think about your new opportunity pipeline, can you give us a rough sense of, sort of, how that breaks down by end market? Kirsten Newquist: Yes. So kind of in our current pipeline, so the customer-driven opportunities that we have in our pipeline, it's roughly 25% of them are for health care. I would say another probably 25% for logistics, probably another 25% for food and beverage and then the rest is a variety of applications. Operator: The next question comes from Tony Stoss with Craig-Hallum. Rian Bisson: It's Rian on for Tony Stoss. Just following up on the last question about your pipeline. I think last quarter, you said about 2/3 is at or above your 30% gross margin target. Any changes there? And if you could, what percentage of revenue in the December quarter were from these new opportunities? Kirsten Newquist: So anything that's in our NPD pipeline, those are being developed. So there would be nothing in our quarter 4 that is in our NPD pipeline. Those are new product development, they're in process. And I would still say that roughly 2/3 of the opportunities in the NPD pipeline would be in higher margin targets because these are more specialized, highly engineered products that we're developing. They're not from our standard product portfolio. So in order to accept them into the pipeline, we would want to see that margins would be slightly higher than average. Rian Bisson: Okay. Got it. And then one more on the IFCO deal. It was nice to see that supply agreement come in. It said there was a development phase that needed completion. I'm curious what kind of that looks like throughout the year. And it seems like the plan is still to ramp towards the end of the year towards the larger volumes. Kirsten Newquist: Yes. So we will be -- we are still in product development. We are still making final design changes to it. We will continue to be producing in lower volumes throughout the year for pilots and testing and so on. But the significant ramp-up will be at the end of the year, quarter 4. Operator: The next question comes from [ Rebecca Zamsky ] with B. Riley Securities. Unknown Analyst: I'm on for Craig Ellis. Could you provide some color on the relative contribution and the visibility of the gross margin drivers in 2026, whether that be the Singapore cost elimination, Thailand yield improvements, NPD mix shift and the IFCO ramp? Kirsten Newquist: I'm sorry. So just trying to clarify the question. So are you asking just about our kind of gross margin expectations as we go into 2026? Unknown Analyst: Yes. Like could you just like provide some color on the relative contribution of the gross margin drivers? Edward Kirnbauer: So you're asking about what we're expecting from a gross margin perspective as we move into 2026 as compared to... Unknown Analyst: Yes. Edward Kirnbauer: Okay. Thank you. Okay. Yes. So as we mentioned earlier on the call, we did finish the year at a non-GAAP 25.6% margin. But as we move into 2026, we do anticipate near-term variability as we start scaling for the IFCO project and as well as we have a -- we're onboarding a new customer in Q1. So that will -- in the near term, we're expecting some variability. But if you look at our current customer base, we're definitely seeing strength and improvement, and we expect expansion of the margin as we progress through 2026 with our current customer base. Operator: I'd like to turn the floor back to Kirsten Newquist for closing remarks. Kirsten Newquist: Okay. Well, thank you. Thank you, everyone, for joining. We are pleased to share our fourth quarter results and summarize our full year 2025. So thank you for joining us today, and we'll talk to you next quarter. Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the El Pollo Loco Holdings, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and there will be an opportunity to ask questions following the presentation. Please note that this conference is being recorded today, 03/12/2026. And now I would like to turn the conference over to Ira M. Fils, the company's Chief Financial Officer. Ira M. Fils: Thank you, operator, and good afternoon. By now, everyone should have access to our Fourth Quarter 2025 earnings, which can be found at elpolloloco.com in the Investor Relations section. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements, including statements related to our growth opportunities, strategic and operational initiatives, expectations regarding sales and margins, potential changes to our product platforms, capital expenditure plans, the ability of our franchisees to drive growth, expectations regarding commodity and wage inflation, remodel plans, and our 2026 guidance, among others. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect. We refer you to our recent SEC filings, including our Form 10-K, for a more detailed discussion of the risks that could impact our future operating results and financial condition. We expect to file our 10-K for 2025 tomorrow and encourage you to review that document at your earliest convenience. During today's call, we will discuss non-GAAP measures, which we use for financial and operational decision-making and as a means to evaluate period-to-period comparisons, and which we believe can be useful to investors in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in our earnings release, which is available in the Investor Relations section of our website. With respect to the adjusted EBITDA outlook we will be providing on today's call, please note we have not provided a reconciliation to the most directly comparable forward GAAP financial measure because, without unreasonable efforts, we are unable to predict with reasonable certainty the amount of or timing of non-GAAP adjustments that are used to calculate income from operations and company-operated restaurant revenue on a forward-looking basis. I would now like to turn it over to our CEO, Elizabeth Goodwin Williams. Elizabeth Goodwin Williams: Thank you, Ira, and good afternoon, everyone. I am pleased to report strong fourth quarter results that cap off a transformative second year in our brand turnaround journey. In Q4, we delivered a positive quarter of same-store sales growth, including stable traffic, despite the ongoing macroeconomic challenges that persisted across the industry. This top-line momentum, combined with our team's relentless focus on operational excellence, also enabled us to achieve better-than-expected restaurant-level margins. Before we move on, let me quickly recap what we accomplished in 2025. Building on the foundations we established in 2024, we made strategic investments and executed with discipline across our five pillars, achieving meaningful results that we believe position us for accelerated growth in 2026 and beyond. What began as a transformation effort has now evolved into sustained momentum that validates our long-term growth strategy for El Pollo Loco Holdings, Inc. During the year, we successfully expanded our restaurant-level contribution margins, again demonstrating our ability to drive profitability even while investing in customer value and traffic-driving initiatives. We accomplished this through a methodical approach to cost savings and enhanced labor productivity, including leveraging technology and industry best practices. We are also encouraged by the operational transformation that took hold in 2025, allowing our team members to focus more on guest-serving activities. In addition, we made substantial progress improving our unit economics by successfully reducing our new build cost with our iconic prototype design, and driving even higher cash-on-cash return by utilizing second-generation sites where available. As we look ahead, our priorities for 2026 are clear: to drive sustainable traffic growth across our system while maintaining the margin discipline and unit economic improvements we have accomplished over the past two years, and to thoughtfully grow El Pollo Loco Holdings, Inc. across the country. We will achieve this by continuing to execute against our five-pillar strategy. Ultimately, we believe our focused approach will accelerate our growth trajectory and further strengthen El Pollo Loco Holdings, Inc.'s position as the nation's favorite fire-grilled chicken restaurant. With that, let me provide you details on our pillars. At the heart of a brand that wins is a breakthrough culinary innovation. Together with value, innovation is critical in driving transaction growth, and I am thrilled to share the exciting momentum in our culinary pipeline. Leveraging our unique fire-grilled chicken platform that showcases premium quality at accessible price points, we are able to satisfy our legacy guest preferences while also introducing El Pollo Loco Holdings, Inc. to entirely new consumers across multiple occasions. Over the last eighteen months, we have identified the opportunities to bring more portable and craveable options to our menu. This is translating to improvements in our core customer feedback scores when asked questions regarding menu variety and “have innovative foods I want to try.” Before I discuss how we capitalize on this opportunity further in 2026, I want to take a moment to celebrate the success of our double chicken street corn and queso crunch burrito bowl that we launched in late September. These bowls were instrumental in driving our fourth quarter performance, exceeding our expectations in both guest response and sales contribution. The popularity of these hearty, value-driven, high-quality offerings was so positive that we made the strategic decision to keep both bowls as permanent menu items. This success continues to validate our approach to creating a menu that delivers superior value and portability while maintaining the full flavors and premium ingredients that differentiate El Pollo Loco Holdings, Inc. During the quarter, we also launched our $29.99 FAM Feasts, an eight-piece fire-grilled chicken meal with five tortillas, salsas, and churros, providing quality and value for families and groups. Turning to 2026, we are pleased with the momentum from our Double Pollo Salad that launched in January with fresh options to meet New Year resolutions. Featuring street corn, Mexican Caesar, and bacon ranch options, each salad delivers over 50 grams of protein with a double portion of our signature fire-grilled chicken. Given the consumer appeal of Street Corn and Mexican Caesar salads, both have earned a permanent placement on our menu and continue to resonate well with our guests seeking nutritious and craveable options with fresh ingredients. Building on our solid success, in mid-February, we launched Baja Double Tostadas, reimagining our beloved tostada with bold new flavors and notably a seasonal seafood option. Our Baja Double Tostadas featuring chicken and shrimp demonstrate our willingness to innovate across a core platform while maintaining our commitment to quality and flavor. While still early, the initial response has been very encouraging, with guests embracing both the limited-time seafood protein and enhanced flavor profile delivered through our lime crema sauce. In addition to new salads and tostadas, we also continue to promote our core fire-grilled chicken on the bone with the return of Mango Habanero Chicken, which was available for a short time, and also the continuation of our $29.99 FAM Feast. Turning to protein, we are proud of our position as a true protein leader. We further capitalized on the macro trend by launching our version of a protein menu, which is a collection of menu items with more than 20 grams of protein. We did this with a playful nod to the fact that we have been the legitimate place for protein for over fifty years. The February launch culminated with social media content illustrating a drumstick in a protein bar wrapper, messaging that our chicken is the original protein bar, a clever way to connect with today's youthful and protein-focused consumer mindset. The best part of our protein menu is it requires no new operational lift. Rather, it simply showcases what we are known for: high-quality, delicious chicken packed with protein. As we look toward our future innovation pipeline, we are excited about our upcoming Loco Tenders launch in a few weeks. Our all-white-meat, boldly seasoned tenders feature our signature dipping sauces: Pollo Loco Sauce, Baja Lime, and House Ranch. They also represent our entry into the rapidly growing chicken tender category. Loco Tenders provide a unique El Pollo Loco Holdings, Inc. twist on a classic tender, which we believe will make them a standout and have strong appeal for new and existing customers. We are currently in the final stages preparing for this launch. We are also testing new loaded quesadillas and a crispy grilled chicken sandwich that delivers all the crunch and flavor of a fried sandwich, but it is grilled, not fried. Both entrees are flavorful, portable, and under $10. Also in test are beverages with Horchata Iced Coffee, featuring our delicious horchata with notes of cinnamon and vanilla, and Cold Foam Coolers, which are aguas frescas topped with sweet, creamy cold foam. Both beverages are planned to launch later this year. These are just a few of the products across our innovation pipeline, which is the most robust we have delivered in years. To support all of this menu innovation and growth, we have implemented an internal process with several stage gates to ensure our restaurant operations are minimally impacted and that we can deliver the quality that defines El Pollo Loco Holdings, Inc. Best of all, our ability to foster innovation has been enhanced recently by our new culinary kitchen at the heart of our restaurant support center. Our menu innovation strategy works hand in hand with our targeted marketing efforts to further amplify the El Pollo Loco Holdings, Inc. brand and drive meaningful guest engagement. By emphasizing our unique heritage of fire-grilling chicken and actually cooking in our restaurants, we believe we have a true competitive advantage in the QSR landscape that few brands can claim. We stand firmly behind our commitment to quality, and while others might think our dedication to fire-grilled chicken is loco, we believe this passion is exactly what sets us apart. We are proud of what our Let’s Get Loco campaign accomplished in 2025. From a distinct tone and look in our advertising to leveraging our passion to build brand affinity, Let’s Get Loco positions us as an authority in authenticity. Beyond advertising, this came to life through our brand activations like our Loco AI Challenge, which invited fans to create chicken-centric content using AI, or our December Twelve Days of Pollo activation where we introduced fans to our Chicken in the Kitchen, which was our version of Elf on the Shelf. The momentum continued as we kicked off the New Year. We officially declared Monday as Leg and Thigh Day, a fun play on leg day at a gym. We did this by providing gym goers and Loco Rewards members a free Leg and Thigh Meal for the perfect post-workout meal. These buzz-building moments amplify our brand beyond the menu and create moments for real fandom and loyalty. In addition to larger brand activations, we have also shifted our local marketing approach to include more grassroots efforts to support our fundraising and catering program. This has been especially beneficial in new and growing markets and will become an increasingly important part of our marketing toolkit as we expand. We are focused on growing reach and frequency across all consumer groups, and while it is still early, the data suggests that we are seeing momentum with the younger consumer, particularly the 25 to 34 age bracket, driven by our brand relaunch and marketing efforts. There is still much work to do, but this is an early indicator our initiatives are gaining traction. Looking ahead, our integrated marketing and menu innovation strategy will continue to focus on our passion for chicken and our commitment to showcasing quality and affordability across multiple consumer occasions in a relevant way. Whether we are launching new menu innovations, creating memorable brand moments, or taking a local approach in new markets, our marketing will consistently reinforce our differentiator of fire-grilled chicken while meeting the evolving consumer demand for portable, flavorful, and protein-rich options. Shifting to a hospitality mindset, I want to highlight the immense focus we have placed on operational excellence to drive sustainable traffic growth. In 2025, we recognized an opportunity to invest in driving standards and accountability through third-party measurement and direct customer feedback and benchmarking. The investments we have made are being noticed by customers. Our overall satisfaction, or OSAT, scores are now outpacing the QSR industry, as measured by SMG, and we have shown improvement across all measures from accuracy, quality, friendliness, cleanliness, and speed. While this sequential improvement has continued into the first quarter, I do believe we still have room for improvement which will drive additional future growth. I want to give special recognition for the improvement we saw in friendliness, which was the largest sequential increase. This was made possible by our team members embracing our opportunity and delivering excellent service each and every day. I want to take a moment to say thank you to our restaurant team members and our franchise partners. We are excited about the opportunity to continue raising the bar. El Pollo Loco Holdings, Inc. is consistently recognized for our exceptional food; we are motivated to earn that same recognition for our operational excellence. With our focus on operational excellence and fundamentals, we are combining innovative tools and AI applications to further drive team member efficiency and customer experience. Throughout the year, we will continue to deploy tools, systems, and new ways of training that help us deliver a robust culinary calendar while also elevating customer service. I would like to note that these strategic investments in operations and technology will naturally translate to an elevated G&A in the near term, on which Ira will provide further detail in a moment. However, we view this investment as a critical foundation that will allow our brand to scale efficiently and maintain our high standards as we expand. This brings us to our next pillar, enhanced capabilities with our digital-first mindset. We are pleased that our digital business continued to gain momentum during the fourth quarter. Our more aggressive approach offering app-based promotions and targeted value through our Loco Rewards program drove significant engagement and transaction growth. As an example, our Twelve Days of Pollo campaign in December exemplifies this strategy perfectly, delivering exclusive daily deals. This limited-time promotional event not only generated immediate sales lift, but it also attracted new app users and increased the frequency among existing loyalty members, demonstrating the power of creating urgency and exclusivity within our digital ecosystem. We are pleased with the increased engagement, as both loyalty revenue and participation rate grew by more than 20% year over year. In January, we launched a program refresh that introduced Boost, seasonal offers exclusive to rewards members. We believe that these types of enhancements to the program will help us maintain our strong momentum in 2026. We have also continued to grow our reach and frequency through our third-party delivery partners, expanding our digital offers and utilizing paid advertising with these platforms. We successfully grew delivery by 12% year over year in 2025, and we will continue to focus on offers and advertising in 2026, as our data suggests that these transactions are incremental and do not cannibalize existing traffic. We also made several substantial technology investments in our restaurants in 2025 that will continue to enhance customer and team member experience in addition to productivity. As an example, in the last few weeks, we completed a project to upgrade all of our company and franchise restaurants to a cloud-enabled point-of-sale platform that is easier and faster for team members to use, and it unlocks insightful reporting capabilities. The importance of technology and AI is rapidly increasing across all facets of our business. Just about every project team depends increasingly on technology or a program’s success. With this rapid increase in technological needs and importance to operational excellence, we are investing in technology leadership with the addition of a new Chief Technology Officer, Vadim Harisher. Vadim joins us with a rich background from Taco Bell, Allergan, and Amgen. Together with a strong tech team already in place, Vadim will shape our technology investment to provide a powerful foundation to support our growth. As we pivot now to growth through new development, 2025 proves that we are a brand that is ready to grow again with a business model that supports sustainable expansion. We achieved our goal of opening nine new restaurants in 2025, including our 500th El Pollo Loco Holdings, Inc. restaurant in Colorado Springs. As a reminder, this is the largest systemwide unit growth since 2022, and we are just getting started. More importantly, we are not just opening restaurants; we are opening successful ones. The restaurants we have opened since 2024 are averaging over $2.0 million annually, driven by our strong franchise partners and our new restaurant training teams who bring our refined brand positioning to life for our customers every single day. In 2025, we opened restaurants in two new states, Washington and New Mexico, bringing our footprint to nine states in total. Of the nine restaurants opened, six were outside of California, and seven of the nine were built leveraging second-generation restaurant assets with significantly lower build costs than traditional ground-up units. Let me highlight a few standout locations that showcase the breadth of our success across the country. In Dallas, we opened a company-owned location in a former Arby’s site with a build cost of $1.4 million, with early sales results in line with our expectations. This is a perfect example of how we are derisking our capital outlay through second-generation SWIP. Our franchise partners have also delivered exceptional recent openings with strong performing locations in Colorado, Texas, and Washington. These second-generation site construction costs were typically in the low to mid-$1 million range, and all have been averaging above $2.0 million in annualized sales volume. These successes reinforce our confidence as we look toward 2026, where we are targeting approximately 18 to 20 new restaurant openings with three to four being company-owned locations. Similar to last year, the vast majority of the 18 to 20 new openings in 2026 are expected to be outside of California. This growth trajectory is being supported by key organizational enhancements, including our new VP of Franchise Recruiting, who will help accelerate our franchise development effort, and our robust investments in incremental field training and new store opening teams. Turning to our restaurant remodeling program, we continue to progress as planned. For the year, we completed the 69 planned remodels, and we continue to see consistent mid-single-digit sales lift in company-operated locations. For 2026, we plan to remodel 25 to 35 company-operated restaurants and 30 to 40 franchise-operated remodels, putting us on track to meet our goal of updating approximately half of our total system over four years. The combination of successful remodeling programs and the strong performance of recent openings has positioned us well for continued expansion in 2026 and beyond. We remain focused on disciplined growth that delivers strong returns while building lasting brand presence in new markets across the country. Before I turn the call over to Ira, let me provide you with one more update that is more long term in nature. In addition to the day-to-day hires we have made, we have also materially reshaped our board with substantial industry expertise over the past two years, with the addition of four new board members with extensive restaurant experience. These industry leaders are not only strengthening our corporate governance, but also providing valuable best-practice sharing and guidance on all topics, from marketing to operations and development strategies. With the support of our board and the momentum we have built across our strategic drivers, we have tremendous confidence in our ability to accelerate growth over the next several years. With that, let me turn the call over to Ira for a more detailed discussion of our fourth quarter financial results. Ira M. Fils: Thank you, Liz, and good afternoon, everyone. For the fourth quarter ended 12/31/2025, total revenue was $123.5 million compared to $114.3 million in 2024. Company-operated restaurant revenue increased 7.1% to $102.4 million from $95.6 million in the same period last year. The $6.8 million increase in company-operated restaurant sales was driven by 0.4% growth in company-operated comparable restaurant sales as well as $5.3 million of sales from the additional operating week in 2025. As a reminder, 2025 included 14 weeks compared to 13 weeks in the same period last year. The growth in comparable restaurant sales included a 2.7% increase in average check size partially offset by a 2.3% decrease in transactions. During the fourth quarter, our effective price increase versus 2024 was about 3.2%. Franchise revenue increased 15.5% to $13.0 million during the fourth quarter, driven by a 3.2% increase in comparable restaurant sales, $0.5 million from the additional operating week in 2025, $2.4 million in revenue recognized related to terminated franchise development agreements, and revenue associated with nine franchise-operated restaurant openings subsequent to 2024. The 3.2% increase in comparable franchise store sales consisted of a 2.4% increase in average check and a 0.8% increase in transactions. For the full year of 2025, our systemwide comparable store sales increased 0.1%, driven by a 0.7% increase in average check, which was partially offset, including Q3 true-ups, by a 0.6% decrease in transactions. As we move into 2026, we are pleased that our sales momentum has continued into the first quarter. Systemwide comparable store sales for the first quarter to date through 02/25/2026 increased 2.4%, consisting of a 1.8% increase in company-operated restaurants and a 2.8% increase in franchise restaurants. Turning to expenses, food and paper costs as a percentage of company restaurant sales decreased 70 basis points year over year to 24.4% due to higher menu pricing and approximately 100 basis points of commodity deflation during the fourth quarter, which was partially offset by higher discounting. We expect commodity inflation to be in a 1% to 2% range for the full year 2026. Labor and related expenses as a percentage of company restaurant sales decreased about 90 basis points year over year to 31.5% as we continue to benefit from improvements in operating efficiencies, primarily driven through enhancements in labor deployment and scheduling combined with continued use of technology and equipment to simplify team member roles along with menu price increases. Wage inflation during the fourth quarter was 0.6% for all our company-owned locations. For the full year 2026, we expect wage inflation of between 2% and 3% for all our company-owned locations. Occupancy and other operating expenses as a percentage of company restaurant sales increased 80 basis points year over year to 26.6%, primarily due to higher utilities, software maintenance fees related to our kiosk and new POS rollouts, higher rent, and higher liability insurance costs, partially offset by lower repairs and maintenance expense. Our restaurant contribution margin for the fourth quarter improved to 17.5% compared to 16.7% in the year-ago period. As we continue our path of margin improvement, we expect our restaurant-level margin for the full year 2026 to be between 18.0% and 18.5%. In addition, we expect our margins in 2026 to be between 17.5% and 18.0%. General and administrative expenses increased to $13.1 million compared to $11.1 million in the prior year. The increase was primarily due to $1.2 million in incremental labor and related costs, $0.7 million in severance and executive transition costs, and $0.8 million in other general and administrative costs, partially offset by $0.7 million in lower management bonus expense. As a percentage of sales, G&A increased to 10.7% or 100 basis points. As we move into 2026, to achieve our accelerating new store growth objectives, income taxes were $2.8 million for an effective tax rate of 30.0%. This compares to a provision for income taxes of $1.8 million and an effective tax rate of 23.5% in the prior-year period. We reported GAAP net income of $6.5 million, or $0.22 per diluted share, in the fourth quarter compared to GAAP net income of $6.0 million, or $0.20 per diluted share, in the prior-year period. Adjusted EBITDA for 2025 was $16.9 million compared to $14.3 million in 2024. Results for 2025 included 14 weeks of operation compared to 13 weeks in 2024. The impact of the extra week of operation increased adjusted EBITDA by approximately $0.77 million. Adjusted net income for the fourth quarter was $7.3 million, or $0.25 per diluted share, compared to adjusted net income of $5.9 million, or $0.20 per diluted share, in the fourth quarter of last year. Please refer to our earnings release for a reconciliation of non-GAAP measures. In regard to our remodeling efforts during the fourth quarter, we completed 25 franchise restaurant remodels and 10 company remodels, bringing our total completed remodels for the year to 17 company and 52 franchise remodels. In terms of liquidity, as of 12/31/2025, we had $51.0 million of debt outstanding and $6.2 million in cash and cash equivalents. Subsequent to the end of the fourth quarter, we paid down an additional $3.0 million on our revolver, resulting in our debt outstanding of $48.0 million as of 03/12/2026. With that, we would like to provide you with the following guidance for 2026: systemwide comparable store sales growth of 2% to 3%; the opening of three to four company-operated restaurants and 15 to 16 franchised-operated restaurants; capital spending between $37 million to $40 million; G&A expenses between $52 million to $54 million, excluding one-time charges and including approximately $6.5 million in stock compensation expense; adjusted EBITDA between $66 million and $68 million; and an effective income tax rate of approximately 29% before discrete items. In addition to our guide for 2026, we are introducing the following guidance for 2027 and 2028: systemwide comparable restaurant growth percent in the low single digits, systemwide restaurant growth percent in the mid-single digits, and adjusted EBITDA growth percent in the high single digits. This concludes our prepared remarks. We would like to thank you again for joining us on the call today, and we are now happy to answer any questions that you may have. Operator, please open the line for questions. Thank you. Operator: We will now be conducting a question-and-answer session. If you would like to ask a question, please press star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and the number two if you would like to remove your question from the queue. For participants using speaker equipment, please pick up the handset before pressing the star keys. One moment while we poll for questions. And our first question comes from Jake Rowland Bartlett with Truist Securities. You may proceed with your question. Jake Rowland Bartlett: Hi. First question was on the consumer. You guys are in a, I think because of your regional, you may have less weather than we have had on the East Coast. And one of the phrases that we talk about these days is underlying demand, and I think you guys might be in a good position to tell us about what you think the underlying demand is out there without weather. So what are you seeing? I know you are doing a lot to influence your results, which is encouraging, but I am hoping you can talk about your confidence in the consumer. Which direction you think the consumer has been moving in the last few months and few quarters? Elizabeth Goodwin Williams: Thanks for the question. The consumer is still looking for great food at a great value, wanting to have a meal that is healthy, better for them, quality ingredients, all indulgent at times, but wanting to do it within their budget. So certainly more budget conscious. We are seeing that we are able to serve that for the consumer. We are seeing increasingly the consumer in Q4 responding to value, particularly with our burrito bowls and with some of our offers in our app and then also with third-party delivery. And then as we have gotten into the beginning of this year, where we are predominantly on the West Coast, we are lapping some of the activity from last year where the consumer stayed home more, whether it was because they did not have the money to come out as much, but then there were also some of the events going around with just ice and everything else out there. We are not seeing as much of that this year. So the consumer is certainly still looking for a great experience at a great value. Jake Rowland Bartlett: Great. That is good to hear. The other question was it sounds like you are doing a lot. You are testing a lot. You are coming up with some nice menu innovation. You are adding a lot of items, or a number of new items, to the permanent menu, adding a little complexity. So I am wondering what you are taking off the menu, for instance, but also how you are going to market all this effectively. Seems like there is a lot to talk about and maybe a limited voice. So what is the approach to marketing in terms of trying to accomplish all that you are trying? Elizabeth Goodwin Williams: Sure. Thoughtfully pacing and sequencing is really key, and doing a lot of testing, which is what we are doing right now. If you think about having also a nice mix of products that we have had before that consumers love and then just doing a twist on some of those menu items. As an example, our tostadas that are wildly popular, the twist right now is a Baja Lime element with shrimp and with chicken, whereas in the past, we have done that with Mango Habanero or we have done that without flavoring. The same thing is true with the burrito bowl that we launched in Q4. We have a twist there with the Queso Crunch. We had always had burrito bowls on our menu; however, we innovated on two new flavors. Some have unique ingredients, some use ingredients we already have in the restaurant. When we made the decision to keep those on the permanent menu, what we did is we looked at the burrito bowl lineup and said, does this replace a burrito bowl on there? And indeed, it did. In many instances, as we are adding, we are also removing. Or as an example, on the Double Pollo Salad, we made an update to one of the salads where we made a small enhancement, but it was one in, one out in that sense. Jake Rowland Bartlett: Great. I appreciate it. Thank you. Elizabeth Goodwin Williams: Thank you. Operator: Our next question comes from the line of Todd Brooks with Benchmark. Please proceed with your question. Todd Brooks: Hey, thanks for taking my questions, and congrats on really strong results and solid momentum carried here into the New Year. So congrats on that. Two questions, if I may. One, you talked about work in getting the prototype cost down and the success with the second-generation locations, and you gave guidance for, I think it implies, 14 to 17 new franchisee locations in 2026. Liz, can you talk about the mix of growth with existing franchisees versus new-to-brand partners? And are we to the point yet that you feel like you are ready to give us color into what the franchising pipeline looks like so that we could start to understand what you are building on that to drive that flywheel of longer-term unit growth that you guys guided for for 2027 and 2028? Elizabeth Goodwin Williams: Sure. As we go along throughout the year, we will certainly provide more detail in the richness of that pipeline in terms of where those units are and with different franchise partners and company units. We figure at least 20% of those new builds will be with company capital. In terms of the franchise partners, I am excited because it is a lot of our existing franchise partners who have seen the improvement that we have made with the economics, and they have that enthusiasm and love for the brand. They know how to grow with the brand. They have the infrastructure to grow with the brand. So we have a healthy pipeline of existing franchise partners, but then there are also new franchise partners. As an example, we have new partners up in Washington that are driving growth, new partners in New Mexico as an example. So it really is a mix, and then we are not done. As I mentioned, we just brought on a new leader guiding our new franchise recruitment, and we have a good amount of interest, but I think there is more interest out there as we tell the story of the brand and we work our way across the United States. So the simple answer is it is a nice combination of new but also existing, complemented by corporate growth. Todd Brooks: Okay. Great. And my second one, and I will jump back in after this. I do not ever remember this type of annual guidance in the past, and certainly not a multiyear framework. It is great to get. Thank you for it. What are you seeing in the business that gives you the confidence to actually give us this, given the current consumer environment? Elizabeth Goodwin Williams: It is a great question. I, now concluding the second year of turnaround heading into year three, have a really terrific leadership team alongside me and also just a team around us. We have all been at this for decades, and we have seen a lot of restaurant growth, turnarounds, turbulent times, and we see in our business that we have worked through so much over the last couple of years. We have gotten this brand to a place that is so much healthier than where it was. We have stabilized and dramatically improved the margins and the profitability of the brand. We have figured out what works in terms of driving sales, what formula works when it comes to innovation or value. Now there is always the consumer element, which is the big surprise, like you mentioned. It is harder to predict what is going on with macros and consumers. But there are some fundamentals that I think I am more comfortable, and our leadership team is more comfortable, knowing the formulas that drive growth. As we look out to a longer term, we are able to make longer-term decisions, such as investing some very thoughtful G&A in places that we know are going to drive growth. When we put that all together, and you have a great CFO like Ira and a team with him, you feel more comfortable being able to articulate that two- to three-year plan. Todd Brooks: That is great. Thanks, Liz. Elizabeth Goodwin Williams: Thank you. Operator: Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please proceed. Jeremy Hamblin: Congratulations on a really strong year and the momentum you have in the business. I thought I would start by just understanding in terms of the system—really strong results from the franchise business in Q4, but about a 300 basis point difference between your company-operated locations and franchised on traffic—and wanted to get a sense for why you think that difference exists. It does sound like in Q1, that gap has closed, but likely still some sort of a gap there, given that franchise is trending a bit higher. Any color you might be able to share and what you might be able to learn from the franchise operators? Elizabeth Goodwin Williams: I would not read too much into it, as it does go back and forth from time to time or quarter to quarter. Sometimes some of the factors—we do pick it apart and look at it—can be geographies, but they also could be lapses in terms of amount of pricing that either franchise or corporate might have taken, and then lapping that and implications that has with transactions. It also, at times, can be the geography piece that has some of the weather implications as well. In addition, it can occasionally be operationally driven. I do think our franchise partners are terrific operators, and in some instances, they have operated more strongly than corporate restaurants. But I would not say in this case it is any one of those as the defining reason. It is usually a multitude of factors. Jeremy Hamblin: Understood. And then coming back to the point about menu innovation, that really stands out where it looks like you guys are testing more and more frequently. In terms of what is in place from a corporate level to drive that type of innovation, what has changed on that front? And in terms of thinking about what your pipeline looks like—right, you have had a lot of exciting launches and successful launches here—should we expect this type of innovation in the number of new products to continue here as you go into 2027 and 2028 as well? Elizabeth Goodwin Williams: I think we should expect that. We have a belief that the category loves innovation. The consumer loves to try new things, and we think that our brand leans into that exploration. Some of the things that we have done from the restaurant support center standpoint is to build back that muscle of being able to do innovation and do it well and within our operational footprint, because the worst thing is when companies go and try to do innovation, they do not do it well, and operationally, it just breaks the restaurant. Some of the things that we have put in place: we have an Op Services team that we did not have a couple of years ago, led by Rick Pepper—an outstanding team. They really work closely with our operations team to field test. I have talked many times about our culinary team led by Chef Rene. He does a fabulous job on the innovation side. That team was not as robust a couple of years ago. I spoke briefly in the prepared remarks about having a culinary kitchen. We recently moved our corporate headquarters after twenty years, and our number one priority in looking for space was having a culinary kitchen at the center—the heartbeat, really—of the support center. Even little things like that signal to the organization how much we care about culinary and about innovation. Jeremy Hamblin: Follow-on to that question. Just to confirm, you said that the full launch of tenders is coming in a few weeks, and then I wanted to get that confirmed. And then just thinking about when, with the chicken sandwich, the rollout of that. Elizabeth Goodwin Williams: We will see our tenders later this spring. We have not released the exact date yet, but later this spring. We are really excited. The sandwich is still in test, and we are testing other types of sandwiches. That is something we are looking at later this year, so in the second half of the year. Jeremy Hamblin: Got it. Last one for me. The balance sheet really improved in 2025, right? I think your net debt now is down to, like, $45 million. And you are continuing to build cash, or cash flow, I should say. Is the plan to get that down to no debt? And then after that point, as you have a bigger system in total, as you grow units, thinking about other things that you might be able to do with that cash flow on a go-forward basis, any insight you might be able to share into the multiyear plan on that? Ira M. Fils: That is a great question, Jeremy. Thanks. As we move into 2026, the good news of us being able to have so much cash available—we are turning around and investing that as we move into 2026. As Liz talked a lot about, we are increasing our pace of new unit development on the corporate side. We are investing as we are in this second year of our image and look and feel of the brand. We are upping the pace of our remodels. We are taking these dollars, and we are investing it into operational improvements in the restaurant to help us drive both sales and margins. We are going to spend a little more in CapEx this year, as we talked about, in 2026. That is one thing we are doing with it. As we continue to move forward, we will also be evaluating ways how we can, from a capital allocation standpoint, potentially return that to shareholders as well. We are comfortable with our level of debt, but we are also looking for ways to take those dollars and invest it in the business to continue to drive profit growth over time. Jeremy Hamblin: Great. Thanks so much, and best wishes this year. Elizabeth Goodwin Williams: Thank you. Operator: Our next question comes from Andy Barish with Jefferies. Please proceed. Andy Barish: Hey, good afternoon, guys. You guys are kind of in the, I guess, unenviable position of having reported after the Middle East stuff has erupted. Have you seen a consumer reaction with gas prices above $5 in California? Just wondering what you are willing to discuss there, given you guys have been one of the few, if only, reporters since everything started up. Elizabeth Goodwin Williams: Thanks for the question, Andy. Surprisingly, we have not. We are all very familiar that typically QSR and fast casual are tightly correlated with gas prices, so we watch closely, but I would not say we have seen anything of note as of late. Andy Barish: Good to hear. I know if it ever trickled through, or if it does, people adjust hopefully fairly quickly and get back to prior spending path, which I guess has been what we have seen historically, at least in terms of food away from home. On the same-store sales composition, can you go through that with us? I know traffic is a focus, but I am assuming pricing is going to be in line with inflation, which looks like it is two to three when you combine commodities and labor. Any more color on price? And then is the goal to get traffic positive this year? Ira M. Fils: That is always our number one goal, to drive traffic positive. We feel good so far about our trend that we have seen in the quarter. We were a little soft that first week of the quarter with some holiday timing and some weather issues, but we have been very pleased with the way the quarter has played out for us so far. To the second half of your question, we are going to keep pricing similar to last year. We were, I think, at about 3.5% last year, and our pricing will be similar to that as we move forward into 2026, obviously subject to how the year plays out. We feel that with a combination of the innovation that we have going and the products that we are bringing to bear and where the business is right now, we have the ability to take a little bit of pricing as we move forward this year. Andy Barish: Got it. And then on the assumption, starting in 2027, it looks like adjusted EBITDA growth will be higher than revenue growth on a high level. Is that still moving restaurant-level margins, or do you expect G&A to start to lever a little bit maybe in 2027 again after the spend in 2026? Ira M. Fils: Great question. We have always said we believe this business can get into the 18% to 20% range from a store-level margin standpoint. This year, we are guiding 18% to 18.5%. We believe we have continued opportunities to drive our margins higher, and that is reflected as we think about the 2027 and the 2028 guidance. That, in concert with making a lot of G&A investments this year, we will start to see some G&A leverage as we move into 2027 and 2028 as well. Elizabeth Goodwin Williams: Some of those G&A investments, as we remarked, are across the business in things like new unit development. As we are building corporate restaurants and also all the training to make sure franchise restaurants open successfully, we see those investments as having a direct payback. Technology—things that drive not only innovation but productivity—are also areas of investment. These are things that are very laser focused that, over time, have a strong return. Andy Barish: Great. Thanks for the color. Elizabeth Goodwin Williams: Absolutely. Thank you. Operator: Our next question comes from the line of Tania Anderson with William Blair. Please proceed. Tania Anderson: Hi. Good afternoon. I was just wondering if you could talk about the cadence of the openings this year. Ira M. Fils: The great news is we have already got two open so far this year. As we move forward through the year, it will be not as back-loaded as we had our openings last year, but typically, as you move forward, they will be a little back-loaded as we move through the year. We are excited. We have eight stores under construction right now, so we feel really good about our new unit development this year. Tania Anderson: Okay. And then previously, you talked about having some input and COGS initiatives that were going to happen this year. Can you talk about any specifics there? Ira M. Fils: This has been a multiyear project for us in regards to leveraging what we are buying to improve margins. As we think about the focus for 2026, it is taking things and having the supplier do some of the prep. We do a lot of prep today in our restaurants, and having our suppliers do some of that prep for us—taking some of that labor and complexity out of the restaurant. The combination of that will drive efficiency and margin for us. These are the main focus of our initiatives this year to help us drive the margin improvement. Tania Anderson: Okay. Thank you. Ira M. Fils: Thank you. Operator: Our final question comes from Matthew James Curtis with D.A. Davidson. Please proceed. Matthew James Curtis: Hi, good afternoon. I just wanted to ask about the new markets you have entered recently, like Washington and New Mexico, as well as some of the other openings outside of California. I was wondering if you could share what initial sales volumes have been like and what you have been doing to support these new openings, either in terms of marketing support or in other areas? Elizabeth Goodwin Williams: Great. Thanks for the question. We are really proud of these new openings, in particular Washington. In Kent, Washington, this unit has exceeded every expectation—well above our system average. Lines to the point where we have had to dial back some of our hours so that we could make sure we had chicken for everyone. We have not turned on the third-party delivery partners because we have so much demand in the restaurant. We want to serve the customers that are in front of us rather than even turning on delivery. This is the first unit in the state, but it shows you how much pent-up demand there is for El Pollo Loco Holdings, Inc. When we support the restaurant well and we find great franchise partners, it is a magical combination. The training that we are doing is many months in advance. We spend a lot of time with folks training. We send teams up to these restaurants, and there is a lot of ongoing support. New Mexico—also a new franchise partner—also performing really well, above average, so much so that the franchise partner has been looking for additional sites in the market because they have so much excitement and are very pleased with the results. I think that is the very testament that one unit is not enough; they want to do several in the DMA. To me, it is a testament of growing outside our home market. Matthew James Curtis: Okay. That is certainly encouraging to hear. So I guess the next obvious question is where do you think the pent-up demand is coming from, given that these are your initial sites in those states? Would this be basically demand coming from California expatriates or something else? Elizabeth Goodwin Williams: I think that certainly helps with the familiarity of the brand, but there is certainly not enough—as many people as might have left California, I do not think there is enough to substantiate all this demand. I think it is the fact that we really do not have a true national competitor. When you think about fire-grilled chicken, when we open in these markets, we serve our chicken in the delicious way that everyone knows and loves it. The same consumer type that loves the food, whether they are in California or Arizona or Nevada, they love it in New Mexico and Washington and eventually across the country. Back to your other part of the question in terms of how we are marketing things: we are using local marketing, we are using digital marketing—all different types of marketing tools—to drive awareness. Matthew James Curtis: Okay. Interesting. Thanks very much. Elizabeth Goodwin Williams: Thank you. Operator: Ladies and gentlemen, we have reached the end of today’s question-and-answer session. I would like to turn the call back over to Elizabeth Goodwin Williams for closing remarks. Elizabeth Goodwin Williams: Thanks again, everyone, for your interest in El Pollo Loco Holdings, Inc. We look forward to talking to you again next quarter. Have a great evening.
Operator: Thank you for your continued patience. Your meeting will begin shortly. Press 0 and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. Welcome to the Health Catalyst, Inc. Fourth Quarter and Year-End 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. We kindly ask that you limit yourself to one question. If you have any follow-up, please re-enter the queue. We ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press 0. I would now like to turn the call over to Matt Hopper, Senior Vice President of Finance and Investor Relations. Good afternoon, and welcome to Health Catalyst, Inc.'s earnings conference call for the fourth quarter and full year 2025. Matt Hopper: Which ended 12/31/2025. My name is Matt Hopper, Senior Vice President of Finance and Head of Investor Relations. With me on the call today are Ben Albert, our Chief Executive Officer, and Jason Alger, our Chief Financial Officer. A complete disclosure of our results can be found in our press release issued today as well as in our related Form 8-Ks furnished to the SEC, both of which are available on the Investor Relations section of our website at ir.healthcatalyst.com. As a reminder, today's call is being recorded, and a replay will be available following the conclusion of the call. During today's call, we will be making forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding our future growth, financial outlook for the first quarter and full year 2026, our ability to attract new clients and retain and expand our relationships with existing clients, market conditions, macroeconomic challenges, bookings, retention, operational priorities, strategic initiatives, growth strategies, the demand for, deployment, and development of our Ignite data and analytics platform and our applications, timing and status of Ignite migrations and associated churn and pressure from clients, the impact of restructurings, and the general anticipated performance of our business. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. Actual results may materially differ. Please refer to the risk factors in our most recent Form 10-Q for 2025 filed with the SEC on 11/10/2025, and our Form 10-Ks for the full year 2025 that will be filed with the SEC. We will also refer to certain non-GAAP financial measures to provide additional information to investors. Non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. A reconciliation of non-GAAP financial measures for the fourth quarter and full year 2025 and 2024 to their most comparable GAAP measures is provided in our press release. With that, I will turn the call over to Ben. Ben Albert: Thank you, Matt. Thank you to everyone for joining us today. Before we discuss the quarter, I would like to briefly acknowledge the recent leadership transition at Health Catalyst, Inc. I stepped into the CEO role last month following Dan Burton's departure as CEO and from the Board of Directors. I want to thank Dan for his many years of service, mission-driven foundation he helped build, and his support during this transition. We are focused on the future and on positioning Health Catalyst, Inc. for long-term success. There are significant opportunities ahead, and I am confident in strengths that continue to differentiate this company. Our mission, our people, and our core capabilities provide a solid foundation delivering meaningful value to our clients and shareholders. My priority is to build on these strengths, address our challenges with clarity and discipline, and move the company forward with a renewed sense of focus and execution. In my time as President and COO, I conducted a comprehensive review of the business. I have spent 25 years in this industry, and I bring the benefit of an outsider's perspective combined with an insider's understanding of our operations. That dual vantage point gives me clarity on where we are strong and where we need to change. Not only do I see clear value creation opportunities ahead, I also see areas where we can operate with greater focus, rigor, and accountability. We have already moved quickly to tighten leadership focus and execution discipline, including appointing general managers to lead our interoperability and cybersecurity businesses and transitioning our Chief Commercial Officer role to a strong internal successor who is already driving sharper commercial alignment. We have also opened searches for both a Chief Operating Officer and a Chief Marketing Officer to strengthen operational rigor and to clarify and elevate our position within the market. At the same time, we are reviewing our cost structure to ensure we are strategically allocating capital with increased discipline, and we are focused on expanding technology bookings and margins while driving cash flow generation as outcomes of this work. We are taking a fresh approach to how we execute, and I am confident that these actions will put the company on a stronger long-term trajectory. First, our core value proposition is strong. Our clients continue to rely on Health Catalyst, Inc. to manage costs, improve clinical quality, and drive consumer growth. We have a track record of delivering measurable outcomes, and when we are focused and aligned, we can create real value for our clients. Second, the review made it clear that we need to be more focused and more consistent in how we execute. We have allowed too much complexity into our go-to-market motions, our packaging, and our implementation and migration work. This has at times created friction for our clients and slowed our ability to deliver value. We will address this by aligning the organization around a smaller set of priorities, improving clarity across teams, and holding ourselves accountable for predictable, measurable outcomes. Third, we have a clear opportunity to sharpen and simplify our commercial story. Our solutions resonate most when we articulate them through the lens of the problems clients are trying to solve. We have not been consistent in how we describe the full value we can deliver across cost efficiency, clinical quality, and consumer experience. We will tighten our positioning, simplify how we package and present our offerings, and implement a more predictable and focused go-to-market motion that highlights what makes Health Catalyst, Inc. so compelling. We are refocusing on what we do best, a back-to-basics approach. At our core, we are built to deliver measurable outcomes across cost efficiency, clinical improvement, and consumer experience. While the market often thinks of us primarily as a data platform business, our data platform infrastructure has always been a means to an end. The real value of Health Catalyst, Inc. is in the IP, deep healthcare expertise, and high-value applications we have built or acquired over 15 years, grounded in thousands of improvement projects and billions of dollars in validated impact. That is who we are, that is what we believe the market needs, and that is where we will focus our energy. Additionally, as AI continues to play a bigger role, we expect our valuable data assets and expertise will become an increasingly important driver of competitive differentiation. With these learnings as our foundation, our priorities going forward are clear. We will strengthen and simplify our commercial engines to drive technology ARR bookings. We will improve retention through more predictable migrations and clear client value realization. We will increase efficiency and reduce time to value by eliminating operational complexity and scaling work through automation and global resources. And we will better leverage our IP, combining our data foundation with the expertise, content, and AI-enabled solutions that allow us to solve some of healthcare's most pressing problems. These actions begin now, and they will guide how we operate and execute throughout the year. We have also heard a consistent message from our investors. They want our business to be easier to understand with clearer indicators of performance and a more streamlined narrative about what we do and how we create value. I agree with that feedback. As part of our renewed focus and discipline, we will simplify how we communicate our business model, our priorities, and our progress so that our direction is easier to track and evaluate. As part of this work, we are also evolving the way we measure and communicate performance. We will focus on providing a new set of bookings and retention metrics that are easier to understand, align directly with our execution, and clearly reflect how we operate the business. You will see us simplify our reporting, improve transparency, and reinforce accountability through clearer indicators of progress. So while I have already executed an initial comprehensive review as President and COO, as CEO our review of opportunities ahead will not stop, and I will continue to evaluate all aspects of the business to ensure we are focusing on maximizing returns for our investors. This includes a detailed review of our product portfolio, our investment mix, and our cost structure. We are assessing where we can simplify and where we should concentrate our resources. This is a shift in how we have operated. We are changing, and we will be more focused and disciplined in how we allocate capital and build long-term value. Given this work, and the significant impact some of it may have on our financial results going forward, we are not yet in position to provide annual guidance. Today, we are sharing first quarter revenue and adjusted EBITDA guidance only. We believe this is the prudent approach to ensure we are providing initial transparency, and as we continue our strategic and operational review, we plan to come back to the market with our full-year revenue and adjusted EBITDA guidance no later than our first quarter earnings call in May. With that, I will turn the call over to our Chief Financial Officer, Jason Alger, to walk through the financial results. Jason Alger: Thanks, Ben. For the full year of 2025, we generated $311,100,000 in revenue and $41,400,000 of adjusted EBITDA. In the fourth quarter, we continued to demonstrate strong cost control and operating leverage even as we navigated a dynamic demand environment. From a growth standpoint, we finished the year with 32 net new logos, ahead of our target of 30 net new logos but below our initial expectation of 40 that we began the year with. These net new logos had an average ARR plus non-recurring revenue near the midpoint of the $300,000 to $700,000 range. Our TAC plus TEMS dollar-based retention closed the year at 90%. For the fourth quarter of 2025, total revenue was $74,700,000 compared to $79,600,000 in the prior-year period. Technology revenue was $51,900,000 and professional services revenue was $22,800,000. The year-over-year decline primarily reflects lower professional services revenue from reductions in our FTE service offerings and our exit of unprofitable pilot ambulatory TEMS arrangements. For the full year of 2025, as I mentioned, total revenue was $311,100,000, which represented 1% year-over-year growth. Technology revenue increased 7% year over year to $208,300,000, while professional services revenue declined 8% as we continue to prioritize margin improvement and resource efficiency. Adjusted gross margin for the fourth quarter was 53.5% compared to 46.6% in the prior-year period. For the full year of 2025, adjusted gross margin was 51.1%, driven by technology gross margin of 67.4% and professional services gross margin of 18.3%. These results reflect the benefit of restructuring actions implemented during the year, partially offset by migration-related cost headwinds. In the fourth quarter of 2025, adjusted operating expenses were $26,200,000, representing 35% of revenue, compared to $29,200,000, or 37% of revenue, in 2024. For the full year of 2025, adjusted operating expenses were $117,700,000, representing 38% of revenue, compared to $123,400,000, or 40% of revenue, for the full year of 2024. The year-over-year change reflects the continued impact of our restructuring actions, disciplined headcount management, and tighter control over discretionary spending. On a sequential basis, adjusted operating expenses declined by $2,000,000 compared to the third quarter of 2025, driven primarily by the full-quarter benefit of actions we initiated earlier in the year, including workforce optimization, professional services contract restructuring, and operating efficiency initiatives across the organization. From a GAAP expense standpoint, we would note that we did incur impairment charges on goodwill and intangible assets of $110,200,000 during 2025. These charges were primarily due to the decrease in our consolidated market cap and revisions to our forecast, and not a write-down of any specific acquisition. These charges were also the main driver in the change in GAAP net loss from $69,500,000 in 2024 to $178,000,000 in 2025. Adjusted EBITDA for the fourth quarter of 2025 was $13,800,000 compared to $7,900,000 in the prior year. For the full year of 2025, adjusted EBITDA was $41,400,000, representing 59% year-over-year growth. As we look ahead, we remain focused on driving operating leverage, aligning our cost structure with our revenue profile, and prioritizing investments that support future technology margin expansion and technology revenue growth. Our adjusted net income per share in the fourth quarter and full year of 2025 was $0.08 and $0.19, respectively. Weighted average number of shares used in calculating adjusted basic net income per share in the fourth quarter and full year of 2025 was approximately 71,000,000 and 69,900,000 shares, respectively. Turning to the balance sheet, we ended the year with approximately $96,000,000 of cash, cash equivalents, and short-term investments, and $161,000,000 of term loan debt outstanding. For Q1 2026, we currently expect total revenue of $68,000,000 to $70,000,000 and adjusted EBITDA of $7,000,000 to $8,000,000. As we enter 2026, we continue to manage the business with a focus on operational efficiency while balancing targeted investments to support disciplined growth and retention initiatives that we expect will benefit results in the future. We have invested in migration-related personnel and contractors and are adding R&D investments in AI and India. These investments may create near-term financial pressure; we believe they position the business for cost structure improvement in the second half of the year and beyond. Our Q1 2026 revenue is expected to decrease compared to Q4 2025 due to three primary drivers. First, we expect a reduction in TEMS-related revenue due to downselling and our further exit from certain lower-margin TEMS arrangements. This contributed approximately $2,000,000 of the decrease. Second, we continue to see pressure associated with the DOS to Ignite migration. We expect revenue to decline by about $1,500,000 in Q1 2026 compared to Q4 2025 related to data platform pressure. Third, we expect an approximately $1,500,000 decrease in non-recurring revenue in Q1 2026 compared to Q4 2025. This is primarily driven by timing of project completions or certain renewals. A reminder, project-based non-recurring revenue can fluctuate quarter to quarter. We have made substantial progress in migrating our DOS clients to Ignite, but as discussed on previous earnings calls, we still have work ahead. Across 2026 and 2027, we have been notified of roughly $12,500,000 in DOS-related ARR downsell and churn. In addition, we currently estimate $52,000,000 of DOS-related ARR that may be subject to negotiation in 2026 and 2027, of which $35,000,000 is estimated to be data platform infrastructure ARR. Data platform infrastructure—or the data warehouse and related infrastructure—is where we are seeing the highest degree of pressure. While we do expect some level of further churn of this ARR, as Ben mentioned, we are putting plans in place that are designed to retain a large part of this balance. After 2027, we would expect to generally be through the data platform infrastructure migration headwind. We have maintained strong application relationships with our clients even when data platform infrastructure downselling occurs and do not generally lose enterprise relationships entirely. We expect our success in maintaining application relationships to continue in the future. As we approach 2026, although full-year guidance is not being provided, we anticipate that several prevailing trends will persist. These include a sustained emphasis on technology-led bookings through a sharper commercial approach and an ongoing focus on improving technology ARR retention through operational excellence and differentiated applications. With that, I will turn the call back to Ben. Ben Albert: Thanks, Jason. In closing, I want to thank our clients for their continued partnership and our team members for their commitment during a year of meaningful progress and transition. We are focused, disciplined, and aligned around the areas that matter most. We are committed to clear and understandable communication as we move forward. We look forward to updating you on our progress in the quarters ahead. Operator, we are now ready to take questions. Operator: The floor is now open for questions. Thank you. Our first question is coming from Stan Berenshteyn with Wells Fargo. Your line is now open. Stan Berenshteyn: Hi. I guess, if it is one question, I would like to maybe ask about the comments you made around the strategic review in the prepared remarks. Does that include the possibility of selling the company? Thank you. Thanks, Dan, for the question. Appreciate it. Ben Albert: We are really focused on how we best position our company for long-term success. And so as we have done this strategic analysis, we are turning over every rock and looking at the company and looking at how we can best position the company for shareholder value. We see tremendous opportunity ahead in some of the things that we do related to helping better manage costs for our clients as they are really in a challenging market right now, helping drive that consumer experience. And, of course, the foundation for Health Catalyst, Inc. is the clinical quality work that we do. And the ability to do that all together in one is a really huge differentiator for us as an organization. So we are really doing this assessment to best position ourselves for success and align to create shareholder value. Stan Berenshteyn: So is that a yes or is that a no? Thank you. Ben Albert: Appreciate the question. We are just in an assessment mode. I have been one month into the role and really just driving value as we are after. Stan Berenshteyn: Thanks so much. Operator: Thank you. We will go next to Richard Close with Canaccord Genuity. Your line is now open. Richard Close: Yes. Thanks for the question. Jason, maybe if you could go over the transition impact, I guess, with respect to the first quarter and then I think you said $52,000,000 in terms of the data platform for the remainder of the year. It went by pretty quick, so if you could just go over that again and then maybe provide a little bit more detail on exactly what is going on there? Jason Alger: Yes. Yes, I would be happy to. Appreciate the question, Richard. So, yes, definitely wanted to provide a bit more commentary related to the DOS to Ignite migration that is taking place. I did mention the $52,000,000. That would be our DOS-related revenue, which would encompass both integrated applications as well as data platform infrastructure. Really of the two components there, it is the data platform infrastructure where we are seeing the highest degree of pressure related to this migration. This would be the hosting side of the DOS platform, and that is where we have $35,000,000 of data platform infrastructure ARR that we are working with our clients on plans to retain moving forward. And so that is where we do expect to see the pressure across 2026 and 2027. Richard Close: And is it something where they are choosing another platform or competitor? Or what exactly, I guess, are you negotiating with them there on that? Ben Albert: Hi, Richard. It is Ben. Yes, at the data platform infrastructure level, there are cross-industry technology solutions that come in and can enable them depending on their strategy. They still need from us in that when they do that is the expertise and the IP and the applications that we provide on top of that. So it is all part of our strategy to meet them where they are depending on what they are going to do from a data platform infrastructure approach. Richard Close: Thanks. Operator: Thank you. And we will go next to Jeff Garro with Stephens. Your line is now open. Jeff Garro: I want to follow up on the demand environment and ask what you learned in Q4 around bookings and specifically booking size and scope, deal length—or, sorry, the sales cycle length—and app attach rates for deals that landed in Q4? And if you could help translate that into expectations for bookings, or just demand generally, in 2026, that would be helpful as well. Thanks. Ben Albert: Sure. Thanks. In Q4, we did a strategic assessment to look at how our applications and solutions best resonate in the market, and it came back clear that the market is in great need of the ability to better manage their costs, to drive clinical quality, and to engage and attract new consumers to their organizations. That is because they are under more pressure than ever. I mean, profitability pockets are—there are—the payer mix is changing with more Medicare patients coming in, the commercial payments rising at the rate. They really have to be focused on how they are managing their labor costs and their clinical costs. They have to be focused on not eroding clinical quality as they are doing that, and they have to win on the consumer side. So we see activity in those areas, in particular on the cost and labor side, and continually the clinical quality side. So that is where we see the greatest impact and opportunity, and that is representative in the funnel as well. Operator: Thank you. Our next question comes from Elizabeth Anderson with Evercore. Your line is now open. Elizabeth Anderson: Hey, guys. Good afternoon, and thank you so much for the question. I think you talked a little bit about your sharper commercial alignment going forward. Can you talk about when you are going out and you are talking to clients, where do you see it as your sort of right to win with the current portfolio that you have? Thanks. Ben Albert: I will just expand on the prior question because I think that is really where we are strong. The market is in real need of better managing their costs and driving clinical quality. And when you are managing costs, you cannot do that at the expense of your clinical quality in healthcare. And I think the market—this is really early for the market because the cost pressures they are under are growing and are very significant. And so as our right to win, as we have 15 years in this industry, we have done thousands of projects. We have tremendous content and intellectual property to enable our AI, to help guide our clients through change management, to navigate these really rough waters. So the challenge for us is we have not done a good job of telling that story. We are bringing in a Chief Marketing Officer. We have done the strategic assessment. We are turning over every rock. We are talking to our clients. We are talking to partners. We are talking to industry leaders. And the reality is this is a huge need, and it is something that is going to grow, we believe, going forward. And so that is where we are leaning in, and that is where you are going to see our story evolve over time so the market really understands what Health Catalyst, Inc. is all about. Elizabeth Anderson: Got it. Thank you very much. Operator: Thank you. We will go next to David Larsen with BTIG. Your line is now open. Jenny Shen: Hi. This is Jenny Shen on for Dave. Thanks for taking my question. I think you highlighted how despite some of the retention declining to sub-100% levels, you generally maintain and retain most of your clients, especially your enterprise ones. Can you kind of just give us a split? Is it like 50/50 between customers actually rolling off completely or just downselling—just getting a dynamic between the difference between roll-offs and downsells? Thank you. Jason Alger: Yeah. I appreciate that, Jenny. It is definitely a much lower percentage than you mentioned. We do not generally lose enterprise relationships. So where we are seeing the pressure, like I mentioned in the prepared remarks, is on the data platform infrastructure side, and that is where we could see downselling related to that. But, typically, from an application relationship standpoint, including those integrated applications, we generally see that clients are electing to keep those applications for the future. Jenny Shen: Great. Thank you. Ben Albert: Thanks. Operator: Our next question comes from Jessica Tassan with Piper Sandler. Your line is now open. Jessica Tassan: Hi, guys. Thanks for taking the question and nice to meet you, Ben. I was hoping maybe—you know, appreciate the comments on cost and clinical quality as being sources of pipeline strength, but I guess what specifically are the names of the Health Catalyst, Inc. apps that fit into those categories and what do they do? And then can you just talk about how the data platform disintermediation could potentially dilute the value of the applications or at least, you know, commoditize the applications layer and what you are doing to protect against that possibility. Thank you. Ben Albert: Jessica, nice to meet you as well. As we break down our applications across those three categories that we talk about, we have applications that deal with cost intelligence, which would really focus more on some of the clinical services and some of the supply chain work they are doing within the organization to make them most efficient in terms of the procedures that they are doing and being as effective as possible. But when they are making the choices, making sure that clinical quality stays high or even grows. Looking at the labor side, we have something called Power Labor that also fits within the labor within the cost management side of the equation, and the ability to do both at once for an organization is incredibly powerful as well. As you look at the clinical side, there are applications around measures. There are applications that are supporting ambulatory. In today’s world, if you do not have a great ambulatory strategy, it is going to be very challenging to execute and grow with your access. So that blends into the consumer side where we have tremendous consumer intelligence applications as well. So we could spend a lot more time on each of those, and I would be happy to talk about those at length, but there are applications that support each bucket going forward. And I want to just reiterate one thing though: the benefit is, of course, we can go deep on any one of those applications. So this goes back to meet you where you are. If someone has a challenge and they are using a lot of visiting nurse labor that can be incredibly expensive, or not staffing their OR times effectively or efficiently—things like that—we can really help them become more efficient, but again, all with that clinical foundation. As an organization, how are you making these changes? How are you solving these problems while not disrupting your clinical quality? In fact, you are improving your clinical quality, and that is just the core of Health Catalyst, Inc. Operator: Thank you. And we will take our next question from Sarah James with Cantor Fitzgerald. Your line is now open. Sarah James: Thank you. How should we think about the durability of margins if revenue stays under pressure for another few quarters? And can you help us frame the orders of magnitude of the levers that are under your control for 2026? Jason Alger: Yes. Appreciate the question. As we think about gross margins moving forward, there is pressure associated with the DOS to Ignite migration from a technology margin standpoint. That would mostly be the duplicate hosting costs, the duplicate cost structure that we do put in place. We are working to optimize there and remove those costs as quickly as possible, but that does have an impact on Q1 2026. And then from a professional services adjusted gross margin standpoint, we do see pressure associated with the migration personnel that we are adding to assist with the migration. That is to move these migrations as quickly as possible as well. But that is a near-term impact that is impacting Q1 2026 as well. Once we are through the migration, we do expect these to be costs that would be removed from our books moving forward. But we will see the impact in 2026 and a bit of that impact as well as we move into 2027 and continue the migration initiative. Sarah James: Got it. And just to take a step back on that, does that mean that 2026 would be your transition year, returning to growth in 2027? Or is there still a path to positive year-over-year growth for 2026? Jason Alger: Yes, still evaluating. We are not in a position to guide, and we will be providing the 2026 guide on our next earnings call at the latest, but we are not in a position to comment on the 2027 growth expectation at this point. Sarah James: Got it. Thanks. Operator: Thank you. We will go next to Daniel Grosslight with Citigroup. Your line is now open. Daniel Grosslight: Jason, I want to go back to the comments you made around the $12,500,000 of DOS-related ARR churn impacting 2026 and 2027 and then that additional $52,000,000 at risk. Can you kind of just break down for us how much of that combined $65,000,000 that is at risk will impact 2026, and the quarterly cadence of those impacts? And then of the $52,000,000 of ARR subject to negotiation now, what is the realistic success rate you are targeting for these negotiations? Jason Alger: Yes. Appreciate the question, Daniel. As we look at the $12,500,000—starting there—that is DOS-related ARR where we have been notified that the client is looking to downsell or churn related to that. We expect about 75% of that to impact 2026 at different points throughout 2026. More of that will come on probably around midyear and going into the later half of 2026. And around the $52,000,000, that would be DOS-related ARR, which does include the integrated applications and the data as well. And that is where the $35,000,000 would be the piece associated with the data infrastructure. We are working with those clients on negotiation, on migrating those clients to Ignite, and we do expect to continue to see pressure associated with the migration, and that is where we do expect to see some downselling related to the data infrastructure, but would expect to be able to retain those application relationships with the clients. So we are working on a plan with the individual clients, but we will provide more on that, Daniel, as we provide our full-year 2026 guide. Daniel Grosslight: Okay. Thank you. Thanks. Operator: Thank you. And we will go next to Richard Close with Canaccord Genuity. Your line is now open. Richard Close: Yes, thanks for the follow-up. I am just curious on any of the acquisitions that you have done since being a public company. I know VitalWare has been a pretty strong contributor, but can you talk about any of the other acquisitions that you have really seen decent growth in that app layer? And which ones—I guess this has been asked—but which ones really fit into these three priorities now? Ben Albert: Thanks, Richard. This is all part of the assessment in terms of how these applications align to the priorities as we head forward and where we can drive the most shareholder value, the most client value, and the most growth for the organization. Ultimately, we are all about driving measurable improvement, and that measurable improvement comes in those three areas that we talk about. So most of our applications align to those areas, and we see opportunities across, and so we just have to figure out through this assessment which ones are going to create the most value for us going forward. We are super excited to do that, and we will be able to come back with much more clarity no later than our next earnings call when we provide guidance and with a little more thoughts on that assessment. Richard Close: Okay. Thank you. Jason Alger: Thank you. Operator: At this time, there are no further questions in queue. I will now turn the meeting back to Ben Albert for any additional or closing remarks. Ben Albert: Thank you, everyone. We really appreciate you joining today. We look forward to the next call where we will be able to provide guidance and more results from this assessment. Thank you. Operator: This concludes today's Health Catalyst, Inc. fourth quarter and year-end 2025 earnings conference call. Please disconnect your line at this time. Have a wonderful day.
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Fourth Quarter 2025 Earnings Conference Call. My name is Joe, and I will be your conference operator today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Jon Perachio, Vice President of Investor Relations. Please go ahead. Jon Perachio: Thank you, Joe. Joining me on today's call is John Sabino, CEO; and John Collins, CFO and COO. Please note that during today's call, we'll make forward-looking statements, which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today, March 12, 2026, and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release and in the comments made during this conference call as well as in 10-Ks, 10-Qs and other reports we file with the SEC. We assume no obligation to update any forward-looking statements. Also during this call, we'll discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson's website, ir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino. John Sabino: Thank you so much, Jon, and thank you all for joining us today. 2026 marks a clear transition for LivePerson from rebuilding to execution. Over the past year, we've strengthened our foundation by improving our balance sheet, optimizing our cost base and sharpening our operations across the company. We are now carrying this discipline into 3 primary areas of focus that we believe can drive LivePerson towards a return to growth. First, we are continuing to prioritize customer growth and retention by leveraging our leading technology and improved balance sheet to solidify customer confidence in LivePerson's a stable long-term strategic partner. Second, we're continuing to innovate our core Conversational Cloud platform while scaling our recently launched Syntrix platform to offer best-in-class AI-led engagement and assurance. And third, we continue to expand our technology partnerships to broaden our platform's reach and unlock new commercial opportunities. We believe that our disciplined execution across these 3 areas of focus can drive LivePerson towards a return to growth in the future. Turning to our results. We outperformed our Q4 guidance on both the top and bottom lines. Revenue was $59.3 million, above the high end of our range, driven by higher variable revenue. Adjusted EBITDA was $10.8 million, also above the high end of our guidance range, driven by our improved cost structure and disciplined operational execution in the quarter. Now let me provide an update on our product strategy. Last week, we reached a significant milestone with the launch of Syntrix. Syntrix is our simulation and evaluation platform that allows brands to launch customer-facing AI agents with confidence and validate human agent readiness at scale. It provides the critical assurance brands need to unlock the value of AI across their customer journey. This emphasis on assurance addresses a clear gap we see in the market. Many brands are not limited by AI capability, but by trust. They struggle to move high potential AI initiatives to production because they lack the confidence in performance, governance and compliance. They also lack a structured way to evaluate AI agent outputs and continually verify adherence to their governance guardrails. As a result, innovation stalls and business impact remains unrealized. Syntrix is our direct response to this challenge. It provides the orchestration and assurance layer enterprises need to confidently deploy AI at scale. Originally introduced in November, Conversation Simulator is now the first capability within the Syntrix platform. It enables enterprises to safely and continuously test, evaluate and validate AI behavior by identifying drift and failures before they reach real customers. With the formal launch of Syntrix earlier last week, we are expanding beyond simulation into a broader assurance vision. Over the coming quarters, we plan to add additional capabilities across simulation, analytics, governance and auditability to support compliance. As the road map unfolds, we expect that Syntrix will become a comprehensive assurance layer that makes AI more predictable at the enterprise scale. Importantly, Syntrix was built to integrate seamlessly into existing enterprise ecosystems. Syntrix is designed to work in concert with our core Conversational Cloud platform, but it is also model and platform agnostic. Our Conversational Cloud remains the system of engagement where customers' interactions occur. Syntrix provides an assurance layer for a safer, more predictable and compliant interactions as AI usage scales. Together, they form a unified platform that allows enterprises to deploy Conversational AI with confidence. Syntrix does not replace Conversational Cloud, it supercharges it. Additionally, Syntrix is designed to deliver the same level of assurance whether customers are using Conversational Cloud or other CX or CCaaS platforms, including those we compete with. This allows enterprises to apply a consistent governance standard across increasingly complex technology and CX stacks. We plan to continue expanding our out-of-the-box integrations throughout the year while also enabling partners and customers to integrate Syntrix with their preferred platforms and AI technologies. Commercially, Syntrix is already gaining traction. We have successfully moved from early access to general availability with paying enterprise customers across banking, telecommunications and technology. This early response, combined with a significant addressable market, positions us to accelerate commercial execution. At this time, we continue to see deeper AI adoption across our core Conversational Cloud platform. In Q4, over 20% of all conversations leveraged our generative AI suite. We're also seeing strong traction with Copilot Translate, the newest addition to our Agent Assist portfolio. It enables brands to eliminate language barriers by embedding real-time AI native translation directly into the agent workflow. We also remain on track to complete our multiyear platform modernization in the first half of this year. This milestone is foundational to our long-term scalability. We are transitioning to a unified architecture designed to support significantly higher generative AI traffic with improved resiliency. Completing this work positions us to reallocate resources towards accelerating product innovation in 2026. Moving to our go-to-market performance. We are seeing continued confidence from our largest enterprise customers. This is reflected in several significant renewals this quarter, including 7 major financial services institutions, 2 major airline carriers, 3 leading telecom and internet service providers and a major health care provider. These renewals underscore the durability of our platform, the strength of our enterprise relationships and our ability to deliver measurable value across highly regulated and customer-centric industries. Our partnership with Google Cloud is also delivering significant early results. In the fourth quarter, we secured a multimillion dollar renewal with an upsell, the major European telecommunications provider through the Google Cloud Marketplace. Based on conversations with several customers, we now expect a material amount of revenue to flow through marketplace by the end of 2026, delivering measurable improvements in churn. This validates our strategy to simplify procurement, leverage existing cloud commitments and expand LivePerson's adoption through partner-led channels. Our momentum with Google continues to deepen across both products and go-to-market. We've standardized on Google Gemini as a default LLM across our platforms and launched LivePerson's RCS channel. Together, these efforts strengthen LivePerson's position within Google's ecosystem and expand the joint opportunities that we can pursue. We're also scaling our Google marketplace motion to enable enterprise customers to seamlessly procure our solutions using their existing cloud commitments. Our teams are now aligned with Google's field organizations to streamline procurement and accelerate sales cycles. While still a phased rollout, we are already seeing tangible traction with multiple marketplace transactions in process and a growing pipeline of joint opportunities. Today, this motion is performing as a high-impact retention lever. By enabling our customers to tap into their existing Google Cloud commitments, we're moving LivePerson directly into the heart of the CTO's strategic spend. This is a fundamentally different relationship that elevates our strategic conversations with current and future customers. As we continue to scale these transactions and strengthen our position within Google's own ecosystem, we are creating a direct incentive for their field organizations to move beyond renewals and begin transacting net new business with us. Complementing this is our strategic collaboration with IT solutions, which has been a significant win for our mid-market segment. By reallocating resources in 2025, we have created immediate value and efficiency in this channel, reflected in improved renewal rates and expansion. As we move into 2026, we intend to deepen this relationship further. We've also launched LivePerson Sync in partnership with Coral Active, a leader in enterprise contact center integrations. This solution enables seamless integrations with systems like Salesforce, Microsoft and ServiceNow, bringing CRM data and workflows directly into the conversation and creating a single unified workspace for agents. By eliminating the swivel chair effect, we've embedded LivePerson deeper into our customer service operations, improving productivity and overall agent experience. As brands streamline their technology stacks and demand tighter integrations between engagement and execution, LivePerson Sync expands our strategic footprint within the enterprise by differentiating our platform, deepening customer relationships and creating new long-term growth opportunities. We're already seeing strong interest with a healthy pipeline of opportunities. While there is still work to be done with retention and growth, we're beginning to see the benefits of more focused and disciplined approach. We are encouraged by the traction with our partnerships and an ecosystem as these alliances are already expanding our market reach and simplifying how customers do business with us. As we move further into 2026, we remain focused on rigorous execution to convert this early traction into long-term stabilization and growth. In conclusion, 2025 was a defining year for LivePerson. I am incredibly proud of the resilience and discipline our team demonstrated throughout this period. We successfully stabilized our foundation, improved our balance sheet and delivered a strong finish to the year. We launched the first phase of Syntrix with Conversation Simulator and opened a critical new growth channel with Google's Marketplace. We also made significant progress in our platform modernization, which is on track for completion in the first half of 2026. This unified architecture is designed to support significantly higher generative AI traffic with improved resiliency. Building on this, we are now focused on scaling Syntrix and accelerating high-velocity partnerships that expand our market reach. While there is still work to be done to further improve our capital structure, we are better positioned today to execute our strategy. For the full year of 2026, we're providing the following guidance. We expect revenue to be in the range of $195 million to $207 million, and we expect adjusted EBITDA to be between a loss of $4 million and positive $7 million. While this guidance implies a year-over-year decline in revenue, we expect to achieve positive net new ARR in the second half of the year. With disciplined focus on executing our strategy, we're positioning LivePerson as the foundational layer for governable AI at scale and building the path for long-term sustainable growth and shareholder value. With that, I'll turn the call over to John Collins. John? John Collins: Thanks, John. The fourth quarter marked a strategic and financial inflection point for LivePerson. We have rationalized the cost structure and improved the balance sheet, transitioning us from a period of rebuilding to one focused on innovation and commercial execution. Our fourth quarter results were driven by increased commercial traction within our enterprise customer base, including usage overages and high-value renewals and expansions. This traction reflects customer plans to move beyond AI experimentation to secure high-volume production applications. It also evidences growing customer confidence that our platform can enable that transition now and support evolving demands in the long run. While the fourth quarter's results and the guidance I'll discuss shortly are anchored by customer demand for our core platform, we believe the launch of Syntrix is an important innovation in the market today and represents a meaningful strategic growth opportunity. Syntrix is increasingly central to customer discussions on AI deployment across many use cases, creating the potential to capture broader AI spend across the enterprise. In terms of deals, we signed 40 in the quarter, including 4 new logos and 36 expansions, which translated to a slight sequential increase in total deal value. We also continue to see strong adoption within the banking, telecommunications and airline sectors. These regulated industries rely on our leading technology for centralized AI-agnostic orchestration layers that ensure AI deployments are secure and effective. Improving customer retention, including renewals with 7 financial services institutions, 2 major airlines and several leading telecom and health care providers underscores the strength of our platform amid a rapidly evolving market. These brands continue to commit to us because of our enterprise-ready platform and our improved financial foundation. Notably, over 40% of these renewals included expanding commitments. Complementing our direct sales motion, we are seeing clear validation of our partnership strategy through Google Cloud. A multimillion dollar renewal and expansion we closed this quarter via the Google Cloud Marketplace is early proof of the potential opportunities. This partnership simplifies the customer procurement process and allows customers to optimize the return on pre-existing Google commitments. While this partnership is still early, customer reception has been strong, and we now expect that a material fraction of total revenue will flow through this channel by the end of 2026. Beyond Google, our partnerships with IT Solutions and Core Active are contributing meaningfully to our commercial motion. These collaborations allow us to embed our technology more deeply into enterprise CRM workflows and deliver a high level of support down market, leading to improved renewal rates, especially within our SMB and MMB customer segments, all while incurring minimal additional overhead. This commercial strategy also helps us avoid the opportunity costs associated with the direct sales team taking time away from enterprise accounts. As for our fourth quarter financial results, total revenue was $59.3 million, above the high end of our guidance range. Note that the upside relative to guidance was driven primarily by higher variable revenue. Adjusted EBITDA was $10.8 million, also above the high end of our guidance range, driven by the benefits of the cost restructuring executed in the third quarter and ongoing disciplined operational execution. Revenue from hosted services was $51 million, down 15% year-over-year. Recurring revenue was $52.9 million or 89% of total revenue. Professional services revenue was $8.3 million, down 36% year-over-year. Average revenue per customer was $680,000, up 9% year-over-year, driven in part by expansions with our largest customers and in part by customer retention. RPO declined to $176 million, consistent with the same factors driving declines in revenue. Net revenue retention was 78% in the fourth quarter, down from 80% in the third quarter. As a reminder, net revenue retention is a function of in-period revenue, meaning this metric will generally continue to decline until revenue begins to grow. Finally, in terms of cash, we ended the fourth quarter with $95 million of cash on the balance sheet. Turning to revenue guidance. We expect positive net ARR in the second half of the year. While we believe this leading indicator supports the path to future growth, the corresponding positive revenue impact in 2026 will be offset by negative net ARR in recent periods. As a result, we expect revenue to decline through the year with the rate of decline flattening in the second half. For the full year 2026, we expect revenue to range from $195 million to $207 million, approximately 92% of which we expect to be recurring. Note that commercial traction with newly launched Syntrix primarily represents upside to the guide. For the first quarter, we expect revenue to range from $53 million to $55 million, a sequential decline of approximately $5 million at the midpoint from the fourth quarter. As for adjusted EBITDA for the full year 2026, we expect a range from a loss of $4 million to a gain of $7 million. It follows that we do not expect adjusted EBITDA less CapEx to be positive in 2026. As for the first quarter, we expect adjusted EBITDA to range from $2 million to $5 million. Our expectation for slightly negative free cash flow reflects our attempt to balance many competing factors in order to increase long-term value creation rather than merely optimize for the near term. Making balanced investments in our go-to-market motion and product innovation will help us achieve positive net ARR in the second half of this year and sustain it going forward. Before taking questions, I'll briefly summarize a few key points. The fourth quarter marked a significant turning point, transitioning us from a period of stabilization to one of targeted execution. Our results confirm that the LivePerson platform is essential to our enterprise customers and their planned AI deployments. We are now effectively leveraging high-efficiency channels such as Google Marketplace to drive both customer retention and future growth. Rigorous cost management has allowed us to operate efficiently while still maintaining investment in 3 strategic priorities: retaining and expanding our customer base, continuously developing new features and capabilities for our customers, including delivering on the Syntrix road map and strengthening our partner network. Looking ahead, we remain committed to the disciplined execution of these pillars. With our cost structure now appropriately aligned to our expected revenue base and the fundamental value of our platform affirmed by our largest customers, we are confident in our trajectory to achieve positive net ARR in the second half. With that, operator, we can move to Q&A. Operator: [Operator Instructions] And the first question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group. Daniel Hibshman: This is Daniel on for Jeff Van Rhee. Just on -- maybe starting off with the bottom line and the current OpEx level. Could you walk us through sort of what -- really nice decrease in the total OpEx for the quarter sequentially here in Q4. Is there anything onetime about the OpEx in Q4? And then maybe just walking us a little bit about how you expect that to -- it looks like scale back up to '26? John Collins: Daniel, I'll start there. So the results in the fourth quarter for the bottom line were primarily driven, as we said in the prepared remarks, by the large restructuring that we executed in the prior quarter. And there may be some onetime items, but it was primarily a structural change to our cost base. As we look forward and as we described in the prepared remarks, we are looking to make investments in innovation on the product side as well as our commercial presence. So those are, we view necessary investments to ensure we're on a path to positive net ARR in the second half. Daniel Hibshman: Yes. And then on positive net new ARR in the second half, maybe you could walk me through -- I think you said you expected revenue to continue posting sequential declines as you're adding net new ARR. Not sure -- maybe I missed something there, not sure how that works out. Are you saying that ARR will grow sequentially in the back half, but nonrecurring elements are going to show sequential declines just that revenue would still dip? Or maybe you could just walk through that again? And then just expanding a little bit on your confidence, whether that's what you're seeing in quotas or what you're seeing in the pipeline in terms of visibility out there to the back half? John Collins: Yes. Let me reconcile the revenue comment with the positive net ARR. So in recent quarters, we've had a large negative net ARR the revenue impact we are feeling throughout 2026. That revenue impact will offset completely the positive revenue from the net ARR we expect to generate in the second half. So that's the reason for the revenue to sequentially decline. It's because historical customer losses are still playing through the P&L throughout 2026. As it relates to our visibility and pipeline, I'll say a few words and pass it over to John Sabino. I mean our guide reflects a healthy pipeline for the first quarter, and that includes some deals for the new product launch Syntrix that we described. But importantly, most of the guide is predicated on demand for the core platform, which continues to be robust as we've described in the prepared remarks. John Sabino: I'll second John Collins' comments. LP Sync and just add a little bit of additional color, LP Sync and Syntrix are new into the market. Syntrix just becoming generally available last week. So we're going to -- it's going to take a little bit of time to build that up, but we are starting to see some of the efforts improving from the marketing and outreach that we've started to do with our commercial teams. So we believe that, that will continue to improve throughout the year. Daniel Hibshman: Yes. And maybe last for me, just on Syntrix. If you could expand a little bit on the marketplace, the competitive landscape, what you were seeing there in terms of the need for Syntrix? Was that customers coming inbound saying, "Hey, I need this sort of thing." Where was sort of the ideation? When did the development of that begin? And then maybe last of all, just how do you expect that to evolve from here in terms of the road map it sounded. Maybe you could expand a little bit. I think you talked about additional functionality you wanted to add to that platform. John Sabino: Yes. Let me start with demand. We initially saw a request for simulation capability to train both Live reps and train AI agents. Simulations was our initial response to that. But what we started to see was that broadly just about every AI initiative, whether it's LivePerson's AI or someone else's, has had a number of challenges throughout an enterprise organization and its deployment and ability to create value for the customer. And this is due to compliance challenges and ability to enforce guardrails and just understand how a model is going to perform in the real world before it gets there. So we stepped back and took a holistic view of what the real challenge was. And essentially, what you're seeing is that it's not whether or not you can deploy AI or have a Conversational Platform that's digital for your customers. It's really your ability to look at the quality of that and assure that it's going to work the way that you expect before it ever gets in front of a customer. So Syntrix as a platform is a response to work with the LivePerson platform and any one of our competitors, whether they be AI providers or CCaaS providers to actually simulate, produce analytics, intelligent insights that can either self-heal or improve performance of a model. These are future things that we're working on to ultimately provide an adherence to a compliance framework. And ultimately, this would lead to overall governance for any AI or orchestrated digital customer journey across a varied tech stack. So that's the evolution of Syntrix. It's really moved from I just want to be able to simulate, train my people and/or a bot into a much broader problem set that we believe that we can solve across a LivePerson ecosystem or a broader digital CX ecosystem where analytics, intelligent identification of issues and/or compliance failures can be reported on and ultimately resolved either before a bot or a customer agent is deployed or catching it if there is something after the fact. Operator: The next question comes from the line of Ryan MacDonald with Needham & Company. Ryan MacDonald: John, maybe just to follow up on Syntrix off of that last response. Can you just talk about the pricing model for Syntrix and whether you're going to be sort of looking at token-based pricing? If so, what kind of visibility does that give you into sort of the revenue stream as sort of Syntrix adoption grows? And then from, I guess, any sort of early signs from some of the first few deals for Syntrix in terms of what sort of uplift this potentially creates within the renewals on the core customer base? John Sabino: So let's start with the pricing model. The pricing model is conversation-based. So you can think of it as a consumption model. It's not necessarily seat-based as you may have seen in some places in the past. And in order to build the model for the customer, we really do look at the number of bots and/or agents they're trying to train and how many campaigns or things that they may be looking to either bring through an AI interaction and/or human interaction. And so we propose a number of different models that represent a statistically significant simulation capability. So it's really based on the consumption and what the customer is trying to achieve. Now with the early customers that we have, we have seen that this is an upsell opportunity as well as a retention capability. So early indications are that customers are using it in line with our model so that the conversation-based pricing accurately reflects what we believe we can do with the customer and is driving improvements that we've published publicly in terms of velocity of training new customers and savings -- excuse me, velocity and training of new agents and savings for customers. So we're confident that this is going to drive bottom line value for customers. Right now, we have dozens of opportunities that we're looking at. And now that we're GA with the product, we're hoping to see some of that as upside in the pipeline going forward. And it represents millions, not hundreds of thousands. Ryan MacDonald: Excellent. I appreciate all the color there. And then on Google Cloud Marketplace, obviously, continuing to see some nice progress there and sort of growth in pipeline. Can you just give us a sense in terms of the, I guess, mix of pipeline sort of heading into '26 here that GCM represents sort of relative to maybe the direct sales channel or other channels? And then what kind of incremental leverage sort of continued sort of growth and success with Google Cloud Marketplace can sort of provide on your direct sales efforts? John Sabino: I'll start and then, John, if you want to add, please feel free. Right now, Google Marketplace really does represent a retention lever for us. It's simplifying procurement, and it's now elevating where the LivePerson spend is typically being allocated within a technology budget inside of some of the large enterprises that we serve. So we see this representing a significant portion of how we do renewals going forward in the future because of the simplification of purchasing and/or an already allocated portion of funding inside of our larger enterprise customers. As far as growth goes, we're starting to see those joint opportunities with Google. We have aligned our commercial teams and theirs, and there's incentives in place for them to work with us now and drive some of the spend for LivePerson through Google Marketplace. So again, we see this as potential upside, right, to be very clear, right now, it's a renewal and expansion play for us, but we believe it to be only natural to create additional new opportunities and potentially new customers through ease of transaction and aligned incentives with Google's field as well as our own. I think it will be... John Collins: The only... John Sabino: Yes, go ahead, John. I'm sorry. I didn't stop there. John Collins: The only addition I would make to that is just to emphasize that it exposes us to a new set of stakeholders. And so where we have previously been predominantly working with the head of care, we now have more access to CIOs, which could change the conversation for us by way of both renewals and potentially growth in the future. Ryan MacDonald: Very helpful. I appreciate it. Maybe one more for you, John Collins. Can you just help us understand from sort of the quarterly flow on adjusted EBITDA? I mean, I know historically, you've sort of ramped as you've gone throughout the year. But can you just help us understand, obviously, you're making some incremental investments this year to try to drive that return to net new ARR growth in the second half. But how we should think about -- it seems like Q1 is sort of the high watermark based on sort of the Q1 and fiscal '26 EBITDA guidance, but how we should expect that to sort of flow throughout the year? John Collins: That is approximately correct. I expect Q1 to be the high point for the year as we emphasize that there is a need for investment on the product side and the commercial side, which we've already begun executing. So that will be additional costs relative to the Q4 run rate that's added this quarter, and we'll see that manifest per the guidance we provided throughout the year. Operator: Thank you. This concludes the question-and-answer session, and this will conclude today's conference call as well. You may disconnect your lines at this time, and we thank you for your participation. John Sabino: Thank you.
Operator: Good day, and welcome to the Kingsway Fourth Quarter 2025 and Full Year Earnings Call. [Operator Instructions] Please note, this conference is being recorded. With me on the call are JT Fitzgerald, Chief Executive Officer; and Kent Hansen, Chief Financial Officer. Before we begin, I'd like to remind everyone that today's conference may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by those forward-looking statements. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see the risk factors detailed in the company's annual report on Form 10-K, subsequent Forms 10-Q and Forms 8-K filed with the Securities and Exchange Commission. Please note that today's call may include the use of non-GAAP metrics that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP metrics to the most comparable GAAP measures is available in the most recent press release as well as in the company's periodic filings with the SEC. Now I'd like to hand the call over to JT Fitzgerald, CEO of Kingsway. JT, please proceed. John Fitzgerald: Thank you, Matt. Good afternoon, everyone, and welcome to the Kingsway earnings call for the fourth quarter and full year 2025. To our knowledge, Kingsway is the only publicly traded U.S. company employing the search fund model to acquire and build great businesses. We own and operate a diversified collection of high-quality services companies that are asset-light, profitable, growing and that generate recurring revenue. Our goal is to compound long-term shareholder value on a per share basis, and we believe our businesses can scale due to our decentralized management model and our talented team of operator CEOs. We also continue to benefit from significant tax assets that enhance our returns. In short, Kingsway is uniquely positioned to capitalize on the search fund model at scale within a tax-efficient public company framework. I'm pleased to report a strong fourth quarter and a year of meaningful financial and strategic progress in 2025. During the year, we completed 6 acquisitions within the KSX segment, launched our Skilled Trades platform, significantly grew revenues and earnings power and made meaningful investments in our operating businesses that position Kingsway to accelerate growth in 2026 and beyond. Importantly, and for the first time, our KSX segment represented a majority of both revenue and adjusted EBITDA in both the third and fourth quarters. For the full year 2025, consolidated revenue grew to $135 million, reflecting both organic growth across our businesses and contributions from recent acquisitions. Consolidated adjusted EBITDA for the year was $7.8 million and portfolio LTM EBITDA was $22 million to $23 million as of December 31. Kent will provide further detail in his remarks on the portfolio LTM EBITDA metric, which we believe more accurately reflects the trailing 12-month earnings capacity of the company. As you may have noticed in our earnings release this afternoon, Kingsway is budgeting for double-digit organic growth across both KSX and Extended Warranty. I'm also pleased to reiterate our target of 3 to 5 acquisitions in 2026. Our vision at Kingsway is to combine both organic and inorganic growth to drive value creation. And before we get into the details of our 2025 performance, I wanted to share why I am comfortable with these targets and optimistic about where the company is headed. First, it's worth noting that our annual budgeting process is comprehensive, evaluating each business one by one and then setting realistic performance targets for the coming year. The goal is not to underestimate or overestimate. It is to forecast as accurately as we can with a high confidence interval, but the performance of each business is likely to be in the year ahead. The outcome of our process this year is a budget for strong organic growth across both our segments. It's worth a few words on why we are confident in this forecast. In KSX, it starts with the characteristics of the businesses we own. Our strategy is to purchase companies with recurring revenues, fragmented customer bases and strong secular growth tailwinds. We then match these businesses with talented operator leaders who are motivated and incentivized to drive performance. A few examples highlight the growth prospects for our portfolio. Roundhouse, our most profitable KSX operating business, services electric motors for natural gas compression and transmission infrastructure in the Permian Basin, the most productive hydrocarbon-producing area in the world at a moment when domestic energy infrastructure is expanding at significant scale. The demand for reliable motor maintenance and repair in that environment is essential, growing and structurally undersupplied. Roundhouse was a high-growth business before we acquired it in the middle of last year and is already tracking ahead of our acquisition underwriting. For Image Solutions and Kingsway Skilled Trades, 2025 was an investment year that positioned both companies for growth in 2026. Image Solutions invested heavily in expanding its business development team in the first half of the year, which temporarily depressed profitability as the sales team ramped up. That rebuilding is complete. The team is in place, the pipeline is developing and the early results are encouraging. We are excited for where this business is headed under the leadership of operator CEO, Davide Zanchi. Kingsway Skilled Trades has followed a similar path. Buds Plumbing, its first acquisition, went through an initial investment period and is now going from strength to strength, ahead of our expectations. AAA and Southside, which were acquired in the back half of 2025, have received significant investment in recent months and are poised to follow in the footsteps of Buds as we progress into 2026. We see potential for both robust top line and bottom line growth in these businesses in the year ahead. When I look across the KSX portfolio, I see companies with not only attractive business characteristics and talented leadership in place, but also with strong secular growth trends supporting them. That context is important as we think about our 2026 growth targets. In Extended Warranty, our businesses achieved double-digit cash sales growth in the back half of 2025 at a time when claims costs were also moderating. We are anticipating a much improved 2026 for our Extended Warranty businesses. Turning to inorganic growth. We are pleased to have completed 6 strategic acquisitions in 2025. Our acquisition pipeline remains robust, and I'm pleased to reiterate our target for 3 to 5 acquisitions during the coming year. We got off to a fast start in January, completing our first transaction of 2026 via our subsidiary, Ravix's acquisition of Ledgers Inc. Ledgers is a leading provider of outsourced bookkeeping and accounting services serving nonprofits and small and midsized businesses, primarily in the Midwest. This addition diversifies Ravix's revenue foundation and expands its geographic reach while bringing a strong base of recurring revenue and an experienced team that fits well with Ravix's service-first culture. We see meaningful opportunities to enhance value through cross-selling and continued organic growth, and we are excited about the role ledgers will play as we continue scaling Ravix into a leading provider of finance and accounting solutions. Underpinning our confidence in our transaction pipeline is our dual-track approach to finding great companies to acquire. First, our operators and residents are dedicated to sourcing, evaluating and executing our M&A activity. Our active searchers, each focused on identifying new platform and stand-alone acquisitions that meet our asset-light recurring revenue and structural growth criteria. Second, our owned businesses can pursue tuck-in acquisition activity within our existing platforms. The HR team and ledgers at Ravix, Viewpoint at SPI and Buds, Southside and AAA at Skilled Trades are all examples of our operator CEOs identifying and executing acquisitions within the businesses they run. That activity is not dependent on the OIR pipeline. It runs in parallel. It compounds the value of the platforms we've already built. And in many cases, it produces faster integrations and better returns because the acquiring operator already understands the market. When you look at our 2025 acquisition activity in that context, 6 transactions across both tracks. It reflects a model that is generating deal flow from multiple sources simultaneously, exactly how we designed it. To summarize, 2025 was a year of disciplined execution. We expanded the portfolio through the 6 acquisitions, launched a new platform in Skilled Trades and strengthened our existing businesses with targeted tuck-ins at Ravix, SPI and Skilled Trades. The compounding effect of those investments is reflected in portfolio LTM adjusted EBITDA of $22 million to $23 million. As we look forward to 2026, we expect both double-digit organic growth and a steady cadence of inorganic growth to underpin our value creation aspirations. We entered the year with momentum, a diversified set of growth levers and an active M&A pipeline across both our searchers and our platform operators. With that, I'll turn the call over to Kent for a few more -- for a more detailed review of the financials. Kent Hansen: Great. Thank you, JT, and good afternoon, everyone. Total revenue for the quarter was up 30.1% to $38.6 million and up 23.4% to $135 million for the year. Consolidated net loss for the quarter was $1.6 million and $10.3 million for the full year. Consolidated adjusted EBITDA for the quarter was $2.7 million and $7.8 million for the year. Within our KSX segment, revenue increased by 63.6% to $20.3 million for the quarter and was up 58.5% to $64.2 million for the year. KSX adjusted EBITDA rose by 28.6% to $2.5 million for the quarter and was up 40.8% to $9.5 million for the year. It is worth noting here that while KSX adjusted EBITDA declined slightly from Q3 to Q4, this is the result of seasonality in our Plumbing businesses and Roundhouse, which typically have their lowest seasonality profitability during the winter and their seasonality best quarters in Q2 and Q3. Turning to Extended Warranty. Revenue increased 6.1% to $18.3 million for the quarter and was up 2.8% to $70.8 million for the year. Cash sales were up 11% for the quarter and 9% for the year. IWS, which sells warranty products exclusively through credit unions, continued to perform well with cash sales up 10% year-over-year. Total Extended Warranty claims moderated in 2025 and were up 4.4% for the year compared to an increase of 6.3% in the prior year, primarily due to inflation on parts and labor as the number of claims was slightly lower in 2025 than 2024. Overall, Extended Warranty is performing well. Cash sales are robust, and the segment is positioned for improved performance in the periods ahead. Turning now to the balance sheet and the capital structure. As of December 31, 2025, the company had $8.3 million in cash and cash equivalents, up from $5.5 million at year-end 2024. Total debt was $70.7 million at the end of 2025 compared to $57.5 million as of December 31, 2024. Our year-end '25 debt is comprised of $55 million in bank loans, $2 million in notes payable and $13.7 million in subordinated debt. Net debt or debt minus cash at year-end was $62.4 million, up slightly from $61.4 million at the end of 2024. The increase in net debt is primarily related to additional borrowings related to the recent acquisitions of Roundhouse and Southside Plumbing, partially offset by continued debt amortization payments. I'd like to conclude by sharing additional detail on the portfolio LTM adjusted EBITDA metric that JT referenced earlier. Following a review, we concluded it made sense to update our portfolio earnings metric for 2 reasons. First, we received feedback that the name run rate adjusted EBITDA was confusing for investors. The metric actually describes trailing 12-month performance, not a forward run rate. Second, for the Extended Warranty segment specifically, we have always evaluated performance internally using modified cash adjusted EBITDA, and it didn't make sense to report one metric externally while managing to a different one internally. Importantly, our lenders also use the modified cash adjusted EBITDA metric when assessing the operating performance of our Extended Warranty businesses. Aligning our internal and external reporting metrics eliminates any disconnect and provides investors a clearer view of how we actually run and evaluate the business. Portfolio LTM adjusted EBITDA represents the pro forma trailing 12-month performance of our operating businesses and is calculated using adjusted EBITDA for KSX and modified cash adjusted EBITDA for Extended Warranty. Modified cash reflects timing differences between GAAP revenue recognition and GAAP commission expense to the timing of cash receipts and cash commission expense associated with warranty contracts as well as an adjustment to investment income for the difference between actual book yield and current market yield. No other adjustments are made. For clarity, modified cash adjusted EBITDA defers only the portion of contract premium needed to pay claims over the life of the underlying contract and does not defer any commission expense. We believe this change better aligns our external disclosure with how management and our lenders evaluate the performance of the Extended Warranty business, provides a clearer view of the operating performance of Kingsway's portfolio of businesses and is consistent with the metric used in our credit agreements for financial covenant purposes. I'll now turn the call over to JT for a few final thoughts before we open the line for questions. JT? John Fitzgerald: Thanks, Kent. To close, I want to thank Kingsway's employees, partners and shareholders for their continued dedication and support. 2025 was a year of tremendous progress, 6 acquisitions completed, a new platform launched and a portfolio that enters 2026, generating $22 million to $23 million in platform LTM EBITDA. We have budgeted for double-digit organic revenue and EBITDA growth this year across both our segments, and I believe the work we did in 2025, expanding platforms, diversifying revenue streams, investing in our businesses and strengthening our operator bench has set us up to deliver on those expectations. I'm confident in the plan, and I'm excited about what this team is capable of and where Kingsway is headed. I'll now turn the call over to Matt to open the line for questions. Operator: [Operator Instructions] Your first question is coming from Nick Weiman (sic) [ Mitch Weiman ]. Mitchell Weiman: Congrats on a good quarter. John Fitzgerald: You said Nick, but I know it's Mitch. Mitchell Weiman: Correct. One question I had was what is -- you didn't talk about digital diagnostics in the prepared remarks. What's going on there? We kind of -- I just remember in prior conversations kind of 6 months ago or so, you really thought they'd start to grow in the second half of the year. John Fitzgerald: Yes. DDI, I think, grew high single digits on the year. And plugging along here. I think that we've got a great operator. He's building the team there on the ground, got a new leadership team alongside him and is now really -- it's a very -- because of the criticality of the service they're providing, Mitch, the focus for the first 18 months or so is really on creating a foundation upon which they felt comfortable growing. We're dealing with patients' lives here and patient safety is first and foremost. So hardening the infrastructure, all of the technology systems and the telemetry that connects the hospitals to the company, creating redundancy with the second location and building all of the internal protocols to make sure that you have perfect patient safety 24/7, 365 was really the focus. We have a great operator there. And Peter, Navy Nuclear Officer, worked in the nuclear industry for a long time, and so understands how to create safety programs. And so that was a lot of the time and energy spent is investing in the foundation. In -- I would say, kind of the back half of the year and now into 2025, the focus is now shifting to organic growth and new customer acquisition. And so we're hopeful that we see -- we had nice growth and a nice growth tailwind there. And now with the foundation in place, we hope that Peter and the sales efforts are going to be bringing new customers and therefore, new revenue on board. Kent Hansen: Operator, before we take the next question, I'd just like to clarify. In my remarks, I said net debt at the end of '24 was $61.4 million. That was not correct. Yes. So a little bit of... John Fitzgerald: That was end of Q3. Kent Hansen: That was end of Q3. At the end of 2024, net debt was $52 million. So I just wanted to make that correction. Thank you. Operator: [Operator Instructions] There are no further questions in the queue. I'll now hand the floor over to James Carbonara for e-mailed questions. James Carbonara: Our first e-mailed question is, can you speak to the acquisition pipeline? John Fitzgerald: Yes. Like I mentioned in the prepared remarks, sort of dual track acquisition pipeline. We've got several now platforms within KSX, if you look at VMS, Ravix, Skilled Trades, and I would anticipate probably Image Solutions in the years ahead, all looking at tuck-in acquisitions and very strong pipelines in many of those businesses. And then obviously, our OIR pipeline, as I've said in the past, remains robust. Recognize that acquisitions there have to meet our very disciplined underwriting criteria, and there is an element of serendipity, but there is very strong deal flow, and we're looking at a lot of things. James Carbonara: Excellent. And the next question is, could you update us on OIRs Peter Hearne and Paul Vidal, please? They both have great CVs. Why do you think they have not made an acquisition just yet? John Fitzgerald: Yes, that's a fair question. Obviously, Peter and Paul are both highly, highly capable. We wouldn't have brought them in the program if they weren't. I guess the honest answer is there's a huge amount of, as I mentioned, serendipity to finding the right business at the right price with the right operator fit and can sometimes take longer than any of us would like. Between the 2 of them, they've evaluated dozens of opportunities, and we've passed on deals where either the valuation, business quality or cultural fit didn't meet our threshold. We'd rather have them walk away than close on a marginal deal. That said, I won't pretend that in Peter's case, 3 years without a close is where we expect it to be, and that's certainly something that we're actively managing. James Carbonara: Excellent. The next one is, can you share some of the adjustments or the bridge from the consolidated adjusted EBITDA of $7.8 million to portfolio LTM EBITDA of $22 million to $23 million, if that's the right way to look at it? Kent Hansen: Yes, James, it's Kent. I'll take that one. There's basically 3 main things that are the walk between those 2 numbers. The first is pro forma. So our consolidated EBITDA number that's published in the earnings release does not include any pro forma. It's just the actual results for the companies that we own during the period. The second adjustment would be any difference between -- for the warranty companies between the modified cash EBITDA number and what is reported under U.S. GAAP revenue and commission expense. As we said in the prepared remarks that modified cash doesn't defer 100% of the revenue over the life of the contract, only the portion that relates to claims. The rest is sort of recognized day 1 and then all commission expense -- no commission expense is deferred. It's all recognized day 1. And then there's a smallish adjustment for the difference between book yield and investment yield on our investment portfolio. And the third difference would be any corporate expenses. So adjusted -- the adjusted consolidated EBITDA number includes everything, all companies. And if you look at the numbers in the earnings release for KSX adjusted EBITDA and Extended Warranty adjusted EBITDA, those do not include the sort of the holding company and the KSX, the OIR expenses. So those are the -- so just to recap, the 3 main buckets are pro forma, modified cash and corporate expenses. James Carbonara: The next question is, you noted that Image Solutions and the newer Skilled Trades acquisitions went through an investment period in 2025 that temporarily depressed profitability. Have those investments fully normalized? And what kind of margin expansion should we expect from these businesses in 2026? John Fitzgerald: Yes. As I mentioned, in both cases, Image Solutions went through hurricane disruption, a full rebuilding of the sales team and that's all kind of in place, and we feel really good about the momentum there. I don't know that I want to give like margin targets, but we feel really good about the trajectory. Similarly, at Skilled Trades, both as I mentioned, AAA and Southside acquired late in the year, and we made some deliberate investments in systems, infrastructure, integration, some transition services with the owners, et cetera. And we don't anticipate that will repeat at the same level going forward. Buds is a good template for what these businesses look like at maturity, and we feel like it's a good template and these businesses are well on their way to hitting their stride. James Carbonara: Excellent. Next question, we had a couple of them come in on the double-digit growth, try to merge them here. Can you provide a little bit of color on how you achieved the double-digit growth in revenue and EBITDA on the KSX Holdings, given the number of recent acquisitions and the typical J-curve, pleasantly surprised by the guidance. What are some of the drivers of the growth? Is it a particular company? John Fitzgerald: No, I would say that we're looking at pretty universal growth across all of the businesses, maybe at slightly different rates. Some businesses have revenue growth as the big driver. In a couple of cases, there's some efficiency gains that will drive bottom line growth. And then obviously, pricing is an important lever as well. And so it's a combination of pricing and units at the top line and in some cases, some efficiency gains at the bottom line. James Carbonara: Great. And the last one I'm seeing, you touched on this a little bit earlier in terms of the 3 to 5 acquisitions targeted for 2026. How many do you expect to be tuck-ins for the existing platforms versus entirely new platforms sourced by your operators and residents? John Fitzgerald: Yes, these are sort of targets, not commitments. But I would guess with 3 OIRs, we ought to conservatively target at least 1 to 2 new platform investments. And by deduction, that would mean 2 to 3 new tuck-in acquisitions at our existing platforms. James Carbonara: Thank you, JT. Seeing no further e-mailed questions in. I'll throw it back to the operator, who will no doubt throw it back to you. Operator: Thank you. And that concludes our Q&A session. I'll now hand the conference back to JT Fitzgerald, Chief Executive Officer, for closing remarks. Please go ahead. John Fitzgerald: Wonderful. Thank you. Well, I appreciate everyone taking the time here this afternoon to listen to our remarks and ask some wonderful questions. Thank you for your support and looking forward to a great 2026. Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to BuzzFeed, Inc. Fourth Quarter 2025 Earnings Conference Call. I'd now like to hand the conference over to your first speaker today, Juliana Clifton, Vice President of Communications. Please go ahead. Juliana Clifton: Hi, everyone. Welcome to BuzzFeed, Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. I'm Juliana Clifton, VP of Communications for BuzzFeed. Joining me today are CEO, Jonah Peretti; and our Chief Financial Officer, Matt Omer. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's press release, our 2025 annual report on Form 10-K to be filed with the SEC and our 2025 quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we present both GAAP and non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. The use of non-GAAP financial measures allows us to measure the operational strength and performance of our business to establish budgets and to develop operational goals for managing our business. We believe adjusted EBITDA and adjusted EBITDA margin are relevant and useful information for investors because they allow investors to view performance in a manner similar to the method used by our management. A reconciliation of these GAAP to non-GAAP measures is included in today's earnings press release. Please refer to our Investor Relations website to find today's press release. Now I'll hand the call over to Jonah. Jonah Peretti: Thank you. Good afternoon, everyone, and thanks for joining us. Before Matt walks through the numbers, I want to step back and talk about how we're thinking about the business and what we're trying to accomplish this year. At a high level, we believe BuzzFeed Inc. is undervalued. The current market value of the company does not reflect the strength of our individual brands, the quality of our assets or the innovative work we've been doing to create new products with big upside in the future. In other words, we believe the sum of the parts is worth more than the whole. . We generated close to $200 million in proceeds from selling Complex and First We Feast. But while owning these assets, our market cap was as low as $30 million with these assets representing a minority of our revenue. We believe this pattern continues today where the assets we own would be valued much higher individually than the market capitalization of BuzzFeed Inc., and this is only partly attributable to corporate debt. In fact, we believe that our current assets are worth a multiple of our market cap, especially when you consider the promise we see in unlaunched products and forthcoming features. This value isn't being recognized for a combination of reasons, including the pessimistic view of digital media in general, legacy centralized costs and downstream debt from our SPAC transaction, pre-COVID real estate commitment and the timing of cost reductions and new initiatives. We are in a much better position today on many of these issues, but we believe we can overcome these legacy costs and complications to help the market see the underlying value of the core assets and new products. When we look inside the company, we see several distinct sources of value. One, First, we have a powerful durable brands with loyal audiences, properties like HuffPost, Tasty, BuzzFeed and BuzzFeed Studios, each serve different communities have different monetization profiles and, in many cases, are attractive in their own rights of partners, advertisers and potential strategic counterparts. These are not generic media properties. They are category-defining brands with strong recognition and engagement. Secondly, we have assets and IP, particularly in bus seat studios that are scaling rapidly. Studio revenue nearly tripled this year as we delivered 3 feature films and entered the micro drama category. This IP can travel across formats and platforms, which gives us optionality around partnerships, licensing and other ways to monetize what we've created over many years. Thirdly, we have a growing body of innovative work that we'll launch this year as new products and enhanced features in our core businesses. Over the past year, we've been investing in new products and AI-driven experiences that deepen engagement, make our content more personalized and interactive and make our advertising and commerce offerings more effective. This year about surfacing that value and improving it, not just talking about it. On the innovation side, we're rolling out new apps and product experiences that integrate AI more directly into the core BuzzFeed experience. You'll see more of this throughout the year including at South by Southwest tomorrow, where we'll share details on the apps that we've built and where we're headed. Over the coming quarters, we plan to demonstrate the value of our assets in concrete ways. We are actively exploring a range of strategic options and we are focused on closing the gap between how the market values BuzzFeed Inc, today and what we believe our individual assets are worth. To summarize, our brands and assets are more valuable than our current market capitalization implies. Our innovative work, especially in AI and new product experiences represents meaningful upside that is not yet priced in. Our mandate this year is to prove the value of our parts, narrow the disconnect between intrinsic value and trading value and take the steps necessary to create value for our shareholders. With that, I'll hand it over to Matt to walk you through our financials. Matt Omer: Thank you, Jonah. I want to start by providing some context on the full year before getting into Q specifics. Total revenue for the full year 2025 was $185.3 million, down 2% year-over-year from $189.9 million in 2024. Breaking down our full year numbers. Advertising revenue declined 3% to $91.7 million. Programmatic advertising grew 7% to $69.6 million. This is our seventh consecutive quarter of programmatic growth and it now represents 76% of total advertising revenue. Direct sold advertising declined 25% to $22.1 million. Content revenue increased 9% to $37 million. Studio revenue nearly tripled to $16.1 million as we delivered 3 feature films during the year, coupled with positive contributions from our micro-drama vertical. Direct sold content declined 26% to $21 million. Commerce and other revenue declined 8% to $56.5 million. Affiliate commerce declined 7% to $55.5 million primarily reflecting changes in supplemental bonus structures from our partners. The underlying business remains strong, and we have not seen a decline in our conversion rates, click-through rates and total GMV driven for partners. The decline was primarily driven by a reduction in supplemental incentives from the prior year. Net loss from continuing operations was $57.3 million compared to $34 million in 2024, reflecting a noncash goodwill impairment charge of $30.2 million, driven by a sustained decline in our share price. For the full year, adjusted EBITDA improved 61% and to $8.8 million compared to $5.5 million in 2024. Time spent totaled 276.5 million hours down 7% year-over-year and expected given that 2024 includes elevated engagement during the presidential election cycle. We ended the year with cash and cash equivalents and restricted cash of approximately $27.7 million, a decrease of $10.9 million compared to 2024. But as a reminder, in 2025 equated approximately $9 million in expenses related to refinancing our former convertible notes, severance and purchasing shares back from a prior investor. Before I get into Q4 epics, I want to provide some context on our balance sheet position. As of December 31, 2025, we had total debt of $60.2 million. That's broken up with $45 million in our term loan and $15.2 million in film financing arrangements. Our term loan is secured by our existing accounts receivable and our film financing indebtedness is generally repaid directly with production tax credits proceeds or minimum guarantee payments for feature films. The cash and cash equivalents and restricted cash on the balance sheet is $27.7 million, which includes approximately $19.3 million pledged as collateral for our letters of credit on our office leases. We expect that approximately $15 million of those levers of credit will be released by our landlord after our sublease concludes in May of 2026, and we expect to use those funds to pay down debt. Now let's turn to Q4 2025 specifically. Q4 revenue was $56.5 million, up 1% year-over-year. Advertising revenue increased slightly to $25.6 million. Programmatic advertising grew 2% to $18.4 million and direct sold advertising declined 3% to $7.2 million, reflecting continued market softness. Content revenue increased 56% to $14.7 million, driven by Studio. studio revenue grew $7.3 million as we recognized 2 feature films in Q4 plus contributions from micro-dramas. Direct sold content declined 5% to $7.4 million. Commerce and other revenue declined 24% to $16.3 million, and affiliate commerce declined 23% to $16.1 million, primarily driven by the continued decline in supplemental bonuses from affiliate partners as they refine their commission structures. Net loss from continuing operations was $26.8 million compared to a net loss of continuing operations of $4.1 million in Q4 2024, again, reflecting a $30.2 million noncash goodwill and impairment charge. Adjusted EBITDA for Q4 2025 was $12 million compared to $10.9 million in Q4 2024. And time spent was 17.3 million hours, down 11% year-over-year, again, reflecting the comparison to an elevated engagement of the presidential election cycle in Q4 2024. As Jonah mentioned, we are evaluating strategic opportunities to unlock value and remedy the liquidity challenges that we are going to be facing. Some of those options could have a material impact on the shape of the company and our business in 2026. Given this, we are withholding the 2026 guidance at this time, we expect to provide an update on both our strategic direction and financial outlook in the coming quarters. Thank you for joining us today. I'll hand the call back to our host. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good day, everyone, and welcome to American Outdoor Brands, Inc. Third Quarter Fiscal 2026 Financial Results Conference Call. This call is being recorded. At this time, I would like to turn the call over to Elizabeth A. Sharp, Vice President of Investor Relations, for some information about today's call. Our comments today may contain predictions, estimates, and other forward-looking statements. Elizabeth A. Sharp: Our use of words like anticipate, project, estimate, expect, intend, should, could, indicate, suggest, believe, and other similar expressions is intended to identify those forward-looking statements. Forward-looking statements also include statements regarding our product development, focus, objectives, strategies and vision, our strategic evolution, our market share and market demand for our products, market and inventory conditions related to our products and in our industry in general, and growth opportunities and trends. Our forward-looking statements represent our current judgment about the future, and they are subject to various risks and uncertainties. Risk factors and other considerations that could cause our actual results to be materially different are described in our securities filings. You can find those documents, as well as a replay of this call, on our website at https://aob.com. Today's call contains time-sensitive information that is accurate only as of this time, and we assume no obligation to update any forward-looking statements. Our actual results could differ materially from our statements today. A few important items to note about our comments on today's call. First, we reference certain non-GAAP financial measures. Our non-GAAP results exclude amortization of acquired assets, stock compensation, emerging growth transition costs, nonrecurring inventory reserve adjustments, impairment of assets held for sale, technology implementation costs, other costs, and income tax adjustments. The reconciliation of GAAP financial measures to non-GAAP financial measures, whether they are discussed on today's call, can be found in our filings, as well as today's earnings press release, which are posted on our website. Also, when we reference EPS, we are always referencing fully diluted EPS. Joining us on today's call is Brian Daniel Murphy, President and CEO, and H. Andrew Fulmer, CFO. With that, I will turn the call over to Brian. Brian Daniel Murphy: Thanks, Liz, and thanks, everyone, for joining us today. I believe our third quarter performance demonstrates the disciplined execution of our strategy. In a period marked by shifting tariff policies, uneven retailer ordering patterns, and consumer uncertainty, our team remained focused on the fundamentals: delivering strong retail sell-through, advancing our innovation pipeline, and actively managing our portfolio to ensure our resources are concentrated behind the brands and product categories where we can create the most value. Despite the ongoing uncertainty that continues to characterize fiscal 2026, we believe our underlying operating model remains fully intact. Importantly, our results give us the confidence to reiterate our net sales and adjusted EBITDA guidance for fiscal 2026. With that, let us dig into the details. Net sales for the quarter were $56,600,000, down 3.3% on a year-over-year basis but ahead of our expectations. To refresh everyone, there are a couple of elements creating tough sales comps in our current environment. One is an ongoing inventory reset taking place at our largest e-commerce retailer, and the other is the extended softness in the aiming solutions category. We believe these are near-term challenges and that our underlying business is performing very well. In fact, for the third quarter, when we adjust out for these elements, our net sales would have grown in the high single digits and our POS results would have grown in the mid-teens. Even without that adjustment, our POS results were still strong, with growth of 5% for the quarter. This marks the third consecutive quarter of favorable POS results, which were led by strength in the outdoor lifestyle category. Ultimately, what matters most is what happens when consumers encounter our products at retail. The continued strength we are seeing in POS reinforces that our innovation is resonating. The outdoor lifestyle category generated over 62% of net sales in the quarter, delivered year-over-year growth of 5.4%, driven by strength in our BOG and MEAT! Your Maker brands. The shooting sports category declined 15% in the quarter, largely due to softness in aiming solutions products. Notably, our Caldwell brand delivered solid growth, reflecting strong retailer and consumer response to the innovative Claycopter platform. That momentum was reinforced at SHOT Show in January, where engagement around our new Claycopter and Claymore connected products was exceptionally strong. Increasingly, retail partners are seeking differentiated innovation to drive traffic and strengthen consumer engagement, allowing us to take share following our entry into the shotgun sports category. Turning to innovation, investments we have made in our new product pipeline continue to bear fruit, with new products representing over 26% of our net sales in the quarter. Looking ahead, as we enter peak fishing season, we are preparing an initial rollout in April of ScoreTracker Live, a platform that integrates Major League Fishing ScoreTracker technology into our Bubba app to deliver real-time tournament hosting and live scoring to anglers and organizers everywhere. ScoreTracker Live brings the intensity and excitement once reserved for professional MLF bass tournaments to events of any size, from neighborhood competitions and school teams to local clubs and regional circuits. It also supports the growing adoption of catch-and-release tournament formats that promote sustainable fisheries, aligning competitive excitement with responsible stewardship. These new products from Caldwell and Bubba demonstrate that we are executing on a strategy that pairs two things in a novel way in our markets, that is, by combining innovative hardware with integrated digital capabilities, especially in categories where connectivity enhances the consumer experience. By building connected product ecosystems around select growth brands, we are deepening engagement, creating differentiated value for our retail partners, and supporting recurring revenue opportunities that increase customer lifetime value. The momentum we are seeing with brands like Caldwell and Bubba reflects the impact of directing our capital and innovation priorities toward areas where our capabilities can create meaningful differentiation and long-term value. They are just two examples within what we consider to be our highest growth brands, which include BOG, Bubba, Caldwell, Grilla, and MEAT! Your Maker. We invest in them accordingly. That same discipline also guides how we evaluate the rest of our portfolio. We continually assess where our proven innovation engine can have the greatest impact and, just as importantly, where it cannot. During the quarter, we took two actions that reflect that disciplined approach to capital allocation and portfolio management. First, we made the decision to divest our camping and survival brand. UST was originally acquired by our former parent company in 2016 and was included in our brand portfolio when we spun off in 2020. Since then, the camping accessories category has become increasingly price-driven and more brand-agnostic, with retailers deemphasizing traditional camping products and dedicating that shelf space to other product categories. While we evaluated opportunities to introduce differentiated innovation in the camping category, we ultimately concluded that the UST brand is unlikely to benefit from our innovation capabilities, and additional investment would be unlikely to generate returns consistent with our expectations. Therefore, we will continue fulfilling customer orders from existing inventory while we evaluate opportunities to transition the brand and its remaining inventory to an appropriate buyer. Second, and as I mentioned earlier, weak trends in aiming solutions stand out in contrast to the balance of our shooting sports category. While we believe this market will rebound at some point, we also believe there is a greater near-term opportunity to redeploy capital into higher growth categories. As we prepare to accelerate the sell-through of a portion of this inventory, we took a reserve in the quarter that Andy will detail later. Together, these actions demonstrate our focus on investing in the brands and product categories where innovation and differentiation can drive stronger long-term growth, while reinforcing our commitment to disciplined working capital management. Lastly, I want to touch briefly on tariffs. They continue to represent a dynamic and evolving element of the operating environment for many companies, including ours. As we have discussed in prior quarters, and as we all continue to experience, the policy landscape around tariffs can change quickly, requiring us to remain agile and thoughtful in how we proceed. Our teams have done a great job staying close to these developments, evaluating the potential impacts, and positioning the business so that we can respond appropriately as conditions evolve. It is clear that the current environment requires us to remain disciplined and agile. Accordingly, we remain focused on the priorities that continue to strengthen our business: investing in innovation, refining our brand portfolio, and allocating capital with discipline. With a strong set of brands and a well-performing operating model, we believe we are well positioned to navigate the current environment, continuing to build enduring long-term value for our shareholders. I will now turn the call over to H. Andrew Fulmer to walk through the financial results. H. Andrew Fulmer: Thanks, Brian. As Brian mentioned, we are pleased with our third quarter results, particularly given the ongoing macroeconomic and tariff-related dynamics impacting our business. Net sales for Q3 were $56,600,000 compared to $58,500,000 in Q3 last year, a decrease of 3.3%. In our outdoor lifestyle category, which consists of products relating to hunting, fishing, meat processing, outdoor cooking, and rugged outdoor activities, net sales for Q3 increased 5.4% over last year to $35,300,000, mainly driven by increases in our BOG and MEAT! Your Maker brands. In our shooting sports category, which includes solutions for target shooting, aiming, safe storage, cleaning and maintenance, and personal protection, net sales declined 15% compared to last year, driven mainly by a decrease in aiming solutions. Turning to our distribution channels, our traditional channel net sales decreased by 2.1% in Q3, while our e-commerce net sales decreased 4.6% compared to last year. Consistent with previous quarters this year, our largest e-commerce retailer continued to reset its inventory, which we believe is in response to tariff pressures. Domestic net sales decreased 3.4%, while international net sales remained relatively flat to Q3 of last year. Gross margin was 41% for Q3, down 370 basis points from Q3 last year, driven by the impact of new tariffs, including IEEPA tariffs, and an inventory reserve of $1,200,000 related to aiming solutions that Brian discussed. While the reserve impacted gross margin a bit in the quarter, it demonstrates our commitment to rationalize slower-moving inventory so we can reallocate capital toward higher-return opportunities, such as share repurchases and M&A opportunities. We expect to monetize a meaningful portion of this inventory over time, helping to drive improved working capital and enhancing financial flexibility. Without the reserve, gross margin would have been 43.1%, slightly ahead of our original expectations. It is important to note that on February 20, the U.S. Supreme Court issued a ruling striking down tariffs previously imposed under IEEPA. The third quarter was the first period in which we began to see the impact of IEEPA tariffs flow through cost of goods sold, with approximately $1,700,000 recognized in the quarter. As a reminder, tariffs are capitalized into inventory and then recognized in the cost of goods sold as that inventory turns. As Brian explained, during the third quarter, we made the decision to divest our UST brand. Following this decision, we reclassified the related assets to assets held for sale and then performed an evaluation based on expected future cash flows. As a result, we recorded a non-cash impairment charge of $3,400,000, which is reflected in operating expense in Q3. The UST contribution to the business has been minimal, and we do not anticipate any impact to our fiscal 2026 outlook. GAAP operating expenses for the quarter were $27,100,000 compared to $25,800,000 last year. The increase was driven by the non-cash impairment related to UST, partially offset by lower variable costs from reduced net sales as well as lower intangible amortization. On a non-GAAP basis, operating expenses in Q3 were $21,000,000 compared to $22,700,000 in Q3 of last year. Non-GAAP operating expenses exclude the non-cash impairment, intangible amortization, stock compensation, and certain nonrecurring expenses as they occur. GAAP EPS for Q3 was a loss of $0.32 compared to GAAP EPS of $0.01 last year. On a non-GAAP basis, EPS was $0.12 for the third quarter, compared to $0.21 last year. Our Q3 figures are based on our fully diluted share count of approximately 12,500,000 shares, a number that should remain consistent through year-end outside of any additional share buybacks that may occur. Adjusted EBITDA for the quarter was $3,300,000 compared to $4,700,000 in the third quarter of last year, driven by the $1,200,000 inventory reserve and the $1,700,000 of IEEPA tariffs I referenced in my gross margin discussion. Turning now to the balance sheet and cash flow, we continue to maintain a strong balance sheet, ending the quarter with $10,400,000 in cash and no debt after repurchasing $1,400,000 of our common stock. As we have discussed before, our business is seasonal, with the highest quarterly net sales typically occurring in Q2 and Q3. This pattern generally results in operating cash outflows in the first half of the fiscal year, followed by inflows in the second half as receivables are collected and inventory levels decline. This seasonal pattern played out as expected in Q3. Operating cash inflow was $9,900,000 in Q3, reflecting decreases in accounts receivable and inventory. During the quarter, inventory levels declined by $13,800,000, which includes UST-related assets held for sale. We ended the quarter with total inventory of $110,200,000, down from $124,000,000 at the end of Q2. We expect our inventory at the end of the year to be approximately $110,000,000, which is lower than we originally planned. We will continue to explore opportunities to further lower that balance by monetizing slower-moving inventory. Our balance sheet remains strong and debt-free. We ended the quarter with no balance on our $75,000,000 line of credit, resulting in total available capital of over $100,000,000. We are also pleased to share that we recently amended our debt agreement with TD Bank to extend the maturity date to March 2031. We believe this renewal provides us with favorable pricing and terms, reflecting the strength of our financial position. Turning to capital expenditures, we spent $1,200,000 in Q3, primarily related to product tooling and patent costs. For full fiscal 2026, we are lowering our expected CapEx range by $500,000 and now expect to spend between $3,500,000 and $4,000,000, consistent with our asset-light operating model. During Q3, we continued returning capital to shareholders through our share buyback program, repurchasing approximately 181,000 shares at an average price of $7.87 per share. Now turning to our outlook, we are in the final stretch of our fiscal year, and we are encouraged by our performance to date. As such, we are maintaining our previously communicated full-year guidance for net sales, gross margin, and adjusted EBITDA. Let us begin with net sales. We continue to expect fiscal 2026 net sales in the range of approximately $191,000,000 to $193,000,000. Recall that at the end of fiscal 2025, retailers accelerated approximately $10,000,000 of orders originally planned for fiscal 2026 to get ahead of impending tariffs, creating a more challenging comparison for the current year. Including that impact, fiscal 2026 net sales would decline approximately 13% to 14% year over year. However, adjusting for that acceleration, the underlying decline in net sales for fiscal 2026 would be approximately 5%, which we would view as solid performance given the current environment. Turning to gross margin, we continue to expect full-year gross margins in the range of 42% to 43%. This implies lower gross margins in Q4, primarily due to increased amortization of tariff variances, including IEEPA tariffs, associated with inventory purchases made earlier in the year. Turning to operating expenses, we have remained disciplined in managing our costs and avoiding structural expense growth, an approach that helps us maintain a lower level of expense over the long term, allowing us to be agile and asset-light when responding to changes in our environment. We have reduced spending in areas such as travel, remote office footprints, and nonessential contracts. As a result, we expect total operating expenses to decline for full fiscal 2026. With regard to tariffs, our outlook reflects our current expectations based on what we know today and mitigation initiatives that we have taken, which include pricing actions, as well as benefiting from the flexibility of our asset-light business model. Our outlook does not reflect any potential tariff refunds, which remain subject to further guidance from U.S. Customs and Border Protection. Lastly, based on all the factors I have discussed, we continue to expect adjusted EBITDA for fiscal 2026 to be in the range of 4% to 4.5% of net sales. We remain committed to our long-term operating model, which targets EBITDA contribution of 25% to 30% on net sales above $200,000,000. We have demonstrated this level of performance in the past, and as our brands continue to introduce innovative and compelling products, we remain confident in our ability to drive sustained profitability over time. With that, operator, please open the call for questions from our analysts. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. The first question will come from Matthew Butler Koranda with Roth Capital. Please go ahead. Matthew Butler Koranda: Hey, guys. Good afternoon. Maybe we will start out with the POS commentary, up 5% year over year, I think you mentioned in the press release. I guess we still have to lap the kind of wonky fourth quarter from last year where retailers preordered a fair bit. Can you just remind us what was pulled forward in the fourth quarter last year so we have a reasonable comparison to make for the implied fourth quarter sales run rate? H. Andrew Fulmer: Yeah, Matt. This is Andy. Retailers pulled in roughly $10,000,000, and that was pretty much the last two weeks of Q4, so from May back into the last couple weeks of April. Matthew Butler Koranda: Okay. Got it. It seems like fourth quarter, once we get through this period, perhaps there is a little bit more appetite from your retail customers to sort of load in a bit more. I mean, maybe just talk about their inventory levels and where they sit currently given POS has remained positive. It seems like they have been sort of flushing inventory for the better part of the last couple of quarters. Brian Daniel Murphy: Yeah. Hey, Matt. It is Brian. I think what you are seeing here, we alluded to it at the beginning part of the script, where there are two things occurring right now: we have aiming solutions softness and then we have this large e-commerce customer that is, I would say, not destocking. I would consider it more underordering relative to demand. We do expect that both of those areas will normalize at some point. That said, excluding those two isolated items, the far majority of our business is performing quite well. We had mentioned high single digits in the quarter versus last year and being up mid-teens for POS. That convergence between POS and replenishment certainly is more correlated for the majority of our business. Really, where we are seeing that disconnect is with those two items I just mentioned. Going forward, I would expect at some point there will be a normalization. We are seeing signs of that, but we are not quite ready to declare finality by any means. Certainly, things are moving, I think, in the right direction. It is just going to be a matter of when those normalize. Matthew Butler Koranda: Okay. Got it. Then Andy mentioned we are performing better on inventory reductions and expect to be at $110,000,000 by the end of the year. Is that coming from sort of promotional activity and monetizing slow-moving inventory through promotions, or just finding new avenues of demand? Maybe just help us understand why the inventory reduction is happening a little faster than expected. H. Andrew Fulmer: Yeah. It assumes just a regular amount of promotions, nothing crazy. In fact, I think there is opportunity to end a little bit better than the $110,000,000 if we can move some of the slower-moving inventory that I talked about. Brian Daniel Murphy: Yeah. Just to add on what Andy said, it is really about efficiency. We talked about capital allocation, and we are constantly looking for areas where we can take advantage of, do we have a higher growth opportunity on one side of the business versus another? The aiming solutions product is great, and something could change tomorrow, and we would see demand spike for that type of product, but we just look at ourselves and say the opportunity cost is too high. Let us move through this. I think that is part of it, the reduction, but it is also just increased efficiency from that higher growth inventory that is going to be churning through, which would lead to a lower inventory number. Matthew Butler Koranda: Okay, guys. Appreciate it. I will leave it there. Operator: The next question will come from Doug Lane with Water Tower Research. Please go ahead. Doug Lane: Yes. Excuse me. Good evening, everybody. Just staying on inventories, if you get down to your level that you are expecting to end the year at, you are still up a little bit versus the prior year in a year where sales went down. So what was the reason for the increase in inventories to begin with? Do you think you will have to be a little bit more promotional going into 2027? H. Andrew Fulmer: Yeah, Doug. This is Andy. The main driver there is the increase in tariffs. So the year-over-year, it is effectively all IEEPA and the Section 232 tariffs that we have now. Brian Daniel Murphy: Yeah. But the core inventories are reducing really quite well. The tariffs are obfuscating the overall business, but it is still real inventory. It is a real inventory number. Doug Lane: No. That makes sense. I get that. And then, sorry, I have a second part. I wanted to talk about tariffs. You talked about the third quarter being the first real impact as that capitalized tariffs start coming through the cost of goods sold. So fourth quarter gross margin is down. I know you are not giving 2027 guidance yet, but should we just directionally see continued gross margin pressure in 2027 as these capitalized tariffs continue to go through the P&L? H. Andrew Fulmer: Yeah. I think that is a safe assumption. We cannot comment on what the margin percentage would be, but when you think back to when the IEEPA tariffs started back in March and April, they were accelerated all the way up to 125% in April, kind of down to roughly 30% for a while, and then November down to 20%. As we talked about, those are capitalized into inventory and then amortized in the future. You will see some spikes with those fluctuations rolling into fiscal 2027. Brian Daniel Murphy: I want to jump in too, just to give some historical context. When we were hit with the first round of 301 tariffs the first time the administration implemented the 301 tariffs back in 2018 or so, you saw a very similar pattern where it hits immediately, you amortize that over time, but the pricing actions that you take, coupled with the fact that we are such prolific generators of new products—our new product velocity is off the charts—that is our main way for us to, over time, really reclaim that margin. I think you are seeing something very similar right now. If you look back, it took us probably, I do not know, Andy, eighteen months, something like that, to be able to fully recover that margin pressure. Right now, it is a snapshot. It is a moment in time, but this is actually following a pretty similar path. Doug Lane: Okay. And did the IEEPA tariffs—how much of your tariff pressure is from IEEPA, and will that help that it is at least going away? Then have you begun any efforts to try to recover the tariffs you already paid? H. Andrew Fulmer: Yeah. The IEEPA tariffs are kind of that difference in pressure that you talked about before. TBD on what happens going forward, though. The Section 232 tariffs, as of today, are 10% until, I think, July or so, but who knows what that will be replaced with. We are obviously keeping a keen eye on it every day as the news comes out. As far as the refunds go, we are doing everything we can to preserve our rights, and we will see how that process shakes out. Doug Lane: Okay. Fair enough. And just lastly, the third quarter sales came in better than you expected and better than the Street expected, and the full-year sales number is unchanged. So did the third quarter borrow from the fourth quarter, or are you just being conservative given the environment? Brian Daniel Murphy: Yeah. I can jump in. No. There was no shifting of orders. Everything came through. That is what we try to do each quarter, not try to pull or push in any way. We really want to have a normal, recurring, more comparable business. From where I sit in this chair today, I did not see anything that caught my eye that is worth calling out. Doug Lane: Okay. Fair enough. Thank you. Brian Daniel Murphy: Yep. Thank you. Operator: The next question will come from Mark Smith with Lake Street Capital. Please go ahead. Mark Smith: Hi, guys. First, just a clarification question. Just looking at the impairment, I just want to confirm all of the impairment was on UST, or was there anything else that was impaired? H. Andrew Fulmer: No. 100% of the impairment was UST. Mark Smith: Perfect. And then second, you talked a lot about point of sale, talked about where the consumer is today. Curious if you can give us more thoughts on what you are hearing, what you are seeing out there from consumer spending. As we think about shooting sports, NICS improved a little bit following the end of the quarter. Have you seen any uptick since then? Any thoughts that you have on your consumer would be great. Brian Daniel Murphy: Sure. Hey, Mark. I will touch on shooting sports first because I think there is an interesting contrast that is happening there. You have aiming solutions, which, based on some of the data that I have seen from third parties, has been one of the worst-performing product categories in the space, whereas the areas that we play in outside of that are doing pretty well. In others, especially like shotgun sports with Caldwell, we are seeing some really nice share gains there. A good portion of that new product revenue is coming from products like the new Claycopter platform. Overall, I think we are seeing good trends there; just the aiming solutions is the one to keep an eye on, but it should normalize. Anything else related to the customer? I would say there is still that bifurcation that we had talked about before. I think it will be interesting to see going forward what happens with oil prices; do they sustain? Any uncertainty with the consumer is going to lead them to start changing their behavior, most likely. If unemployment begins to go up, if the consumer is under pressure, we will see what happens with rates. All that just adds to uncertainty. In real time, it looks like store foot traffic growth does seem to be improving versus our last call when looking at different retailers, so that is a positive. Going forward, the consumer is still kind of touch and go. I think the more affluent consumers are continuing to spend, and then I think the lower-income, middle-income folks—the avid sportsmen and women—are certainly still spending. The more casual one is not; I think they are really pulling back. I think American Outdoor Brands, Inc. is really well situated, just given where our brands play, and the innovation piece is so important to these retailers to pull in consumers. Mark Smith: Perfect. I think last question for me, just the topic this year of inventories and the guidance for year-end. It seems like a lot of the new product that you showed off at SHOT Show and have launched—is a lot of that going to be built up in that inventory number at the end of the fiscal year, or will you be shipping and have some of that cleared out before the end of the year? Then second, just a moving piece within that, will the UST—I imagine that that is a small piece of inventory—do you expect that to be all gone or at least not in the book at year-end inventory? H. Andrew Fulmer: Yeah. As far as the new products, it is a great question because the timing of two of the key products that you saw at SHOT Show is right near year-end. We are planning to ship those to our customers late April, early May. Yes, we will have some of that new product coming in because, obviously, we want to make sure our fill rates are good there. On the UST question, it is pretty minimal at this point after the impairment that was recorded. TBD on what that looks like going forward. Mark Smith: Perfect. H. Andrew Fulmer: Thank you, guys. Mark Smith: Yep. Thank you. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Brian Daniel Murphy for any closing remarks. Brian Daniel Murphy: Thank you, operator. Before we close, I want to let everyone know that we will be participating in the ROTH Conference in California on March 23 and the Lake Street Virtual Conference on March 31, so we hope to see some of you there. I want to thank our employees, whose tireless commitment to innovation allows us to remain focused on executing our long-term vision. Thank you to everyone who joined us today. We look forward to speaking with you again next quarter. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, and welcome to the Silvaco's Fourth Quarter Fiscal Year 2025 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Chris Zegarelli, Chief Financial Officer for Silvaco. Please proceed. Chris Zegarelli: Thank you. Joining me on the call today is Wally Rhines, Silvaco's CEO and Director. As a reminder, a press release highlighting the company's results, along with supplemental financial results are available on our IR site at investors.silvaco.com. An archived replay of the call will be available on this website for a limited time after the call. Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. It is important to also note that the company undertakes no obligation to update such statements, except as required by law. The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today's press release and on this conference call. The Risk Factors section in Silvaco's annual report on Form 10-K for the year-ended 12/31/2024, and the most recent Form 10-Q filing with the Securities and Exchange Commission provide descriptions of these risks. With that, I'd like to turn the call over to our CEO, Wally Rhines. Wally? Walden Rhines: Thanks, Chris. Good afternoon, and thank you all for joining the call. I'm pleased with our performance in the fourth quarter of 2025. We're executing our turnaround plan faster than anticipated, which can be seen clearly in the numbers. For Q4, we delivered bookings at the high end of the guided range, revenue and gross margin above the high end and non-GAAP operating expenses at the low end, all resulting in a much lower operating loss than expected in the quarter. Our Q1 guide is strong as well. I'm proud of the team for delivering such strong results and positioning us for a faster-than-expected recovery in the business. Chris will walk you through the details later in the call. But now I'll turn to discussing our progress toward the return of the business to a strong predictable growth. I'd like to start with big news on the AI front. We reached an important milestone in Q4 ahead of our prior expectations. During the quarter, a second customer adopted our AI-driven solution for manufacturing process development known as FTCO. This win with a customer in Asia and is outside of our Memory segment. We believe that this win confirms the clear customer value of our AI solution beyond memory and points to significant opportunities ahead. This AI bundle delivered above-average bookings and revenue, reflecting the high value placed on our unique set of AI capabilities. It's very encouraging to see adoption of our AI solutions faster than expected. In our total TCAD business in Q4, we saw a 70% sequential increase in bookings to $9.2 million and a 34% sequential increase in revenue to $8.7 million, driven by adoption of FTCO by a new customer. We continue to enhance this AI-driven process development platform with new and upgraded features that put more AI features in front of more design and manufacturing engineers to slash their development times, save money and enable first-time right silicon. We believe that the transition to more AI-enabled sales will be a long-term tailwind to the business. After a soft 2025, we also expect the pace of TCAD contract renewals to accelerate in 2026. These trends support our expectation that the TCAD business will grow sequentially in Q1 and will grow for the full year 2026 as well. In Q4, we also saw a meaningful inflection in the semiconductor IP business. We delivered record IP revenue and bookings of over $5 million in the quarter, driven by our first full quarter of Mixel revenue post-acquisition. Mixel's industry-leading MIPI PHY IP continues to have a strong following globally, led by its reputation for unparalleled quality. We're building on that reputation by leveraging the entirety of the Silvaco sales force to drive more growth in Mixel products. We're also broadening our offerings from custom solutions to production-ready or PRO Pro products. Our Pro portfolio is silicon proven in 9 different foundries and 12 different manufacturing nodes. Mixel IP has proven to enable up to 35% reduction in die area and up to 50% reduction in leakage power. The MIPI PHY market is over $300 million per year, and we still have a relatively modest share. We're positioned for steady growth in this area as we ramp MIPI Pro products, which serve the largest part of the market. Outside of Mixel, Andy Wright, Head of Silvaco's IP business, has done a great job of increasing our internal capacity for foundational IP elements such as memory compilers and standard cells. As we look to the latter part of 2026 and into 2027, we see considerable opportunity to grow these areas given our increase in efficiency. Our IP business continues to be positioned as our fastest grower in 2026 and is already almost 30% of our business as we exit 2025. We expect to continue to deliver steady growth in IP sales across interface and foundational IP elements as well as our acceleration in MIPI. This is a story to watch in 2026. Now turning to EDA. We saw a significant decline in our Q4 bookings and revenue after all-time records in Q3. Bookings for Q4 came in at just under $4 million with revenue of $4.4 million. Here, we continue to focus on shifting priority to a handful of core products that we believe can deliver significant growth. One of these focus areas is Jivaro, which continues to see relatively strong customer interest and has a strong pipeline for new business potential. Jivaro has been adopted by leading companies as it accelerates post-layout SPICE simulations by up to 10x with sign-off accuracy. Jivaro and the other core EDA products are well positioned for growth as we focus development, sales and field application resources on core growth drivers. We expect stability in EDA in the short term and then a return to growth as these new priorities deliver results later in the year. Underlying this improved business performance are the series of restructuring steps that we put in place almost from day 1. We drove targeted reductions in support groups as well as in product areas to enable the teams to focus on core growth drivers. We also challenged product and support teams to limit direct customer support work done by business unit R&D staff so that they could focus more on product development. This change alone has had the benefit of simultaneously improving our gross margins while increasing R&D capacity. We also put in place leading AI tools to accelerate our software development. We're continuing to drive other process improvements to continue improving our ability to plan, drive and execute the business. These changes have been widely embraced across the company, and I look forward to seeing how they continue to accelerate our execution and to delight our customers. And while I'm proud of the team for the significant progress we made in the quarter, I want to reiterate that we still have a lot of work in front of us. In the coming quarters, we expect to build on momentum from the fourth quarter. For example, we'll continue to deliver significant growth in our IP business. We can already see evidence of this improvement in a strengthening pipeline, which we expect to convert into strong revenue in 2026. We also see good growth in TCAD as renewals grow and interest continues to increase around our AI solutions. For EDA, we'll see benefit from our restructuring activities later in the year as we focus on key growth segments. And overall, we expect our AI-driven machine learning capability to change the way semiconductor manufacturing process development is done and to add broad capabilities for fab engineers to improve yields, throughput and failure analysis. As I said last quarter, Chris and I are firmly committed to an aggressive acceleration of Silvaco's business. We're off to a good start, but the best is yet to come. I'd now like to turn the call over to Chris, who will discuss our financial results and our outlook in more detail. Chris? Chris Zegarelli: Thanks, Wally. Good afternoon, everyone. In Q4, we delivered $18.3 million in bookings near the high end of our guided range. Strength in the quarter came from IP products and our TCAD solutions. IP delivered more bookings in Q4 than it did in the entire year of 2024. IP bookings grew almost 5x sequentially as Mixel started to meaningfully contribute to the business. TCAD bookings were also particularly strong, up 70% to $9.2 million with the close of another AI-driven process development win with a large OEM in Asia. Strong bookings helped propel revenue to $18.3 million in the quarter, above the high end of the guided range. TCAD and IP revenue grew strongly in the quarter, up 34% and almost 3x, respectively. IP strength was driven by Mixel, while TCAD strength was driven by our latest FTCO win. EDA, on the other hand, saw a significant sequential decline after setting records in Q3. 65% of revenue in the quarter came from license revenue and the remaining 35% from maintenance and service. From a geographic perspective, we saw the most growth in Q4 from the APAC region, which spiked to 57% of total revenue in the quarter. APAC strength was driven by FTCO. Looking down the P&L, GAAP gross margin in Q4 was 83.3% and non-GAAP gross margin was 85.6%. Gross margin increased roughly 5 full points sequentially and came in well ahead of guidance. As part of our restructuring activities, Wally and I set clear expectations for the field application teams to prioritize customer support, while R&D teams focused primarily on product development. We also drove some reductions in these areas as well. Taken together, these changes resulted in much faster-than-expected improvement in our gross margin. We believe this trend is sustainable. GAAP operating expenses were down almost 8% sequentially to $22 million. Non-GAAP operating expenses were down 5% sequentially to $16.7 million, below the midpoint of the guided range. This result is more meaningful than it may appear. We think about total spending as the combination of cost of sales and operating expenses. In our business, the majority of cost of sales is the cost of our colleagues supporting customers. From this perspective, our total non-GAAP spending, which combines both cost of sales and operating expenses, trended from $21.3 million in Q3 to $19.3 million in Q4, a sequential decrease of just over 9%. Our guidance indicates that this trend continues in Q1 with a similar level of sequential reduction in total spending. We expect further reductions in Q2. These reductions are ahead of our expectations and reinforce our commitment to driving the business to profitability. We indicated on our last call that we were committed to reducing annualized non-GAAP operating expenses by at least $15 million annually. We now believe that we will deliver $20 million in gross annualized non-GAAP spending reductions. Our guiding principle remains the same. We intend to turn the business profitable at flat revenue. Achieving this goal will create a strong foundation for future profitable growth. GAAP operating loss improved quarter-over-quarter to a $6.8 million loss. Non-GAAP operating loss was just over $1 million, well ahead of Q3 and ahead of expectations. GAAP net loss in the quarter was $7.2 million and GAAP EPS was a $0.24 loss. Non-GAAP net loss in the quarter was $0.8 million and non-GAAP EPS was a $0.03 loss. Next, turning to the balance sheet and cash flow. Cash and marketable securities at quarter end was $18.3 million, including $8.3 million of restricted cash due to the Nangate settlement. Given that we have executed cost reductions ahead of prior expectations and given strength in bookings and revenue, our underlying burn rate net of onetime items has declined significantly in Q1. We expect that the $10 million of unrestricted cash on the balance sheet as of year-end will support operations as we drive to positive operating cash flow later in the year. We expect to approach operating cash flow breakeven in Q2 and to see positive operating cash flow in Q3. Now turning to guidance. For Q1 2026, we expect bookings of between $15 million and $19 million, revenue of between $15 million and $19 million, non-GAAP gross margin of around 85% and non-GAAP operating expenses of $14.5 million to $16.5 million. In closing, we believe that with improved financial discipline and a focus on key growth opportunities, we will set the stage for profitable growth going forward. We would also note that the non-GAAP operating profitability is within the high end of the guided range for Q1, which is ahead of our prior expectations. And with that, operator, we will now take questions. Operator: [Operator Instructions] Our first question will be coming from the line of Craig Ellis of B. Riley Securities. Craig Ellis: Congratulations on the strong execution team. Wally, I wanted to start one -- that's a fairly high-level question for you. When you came in, you outlined a number of growth priorities, and it seems like we're off on the right foot as we close out 4Q and 1Q. Can you just go into more detail on where you're happy with the business' execution and on the 2 or 3 things you really want to see the business execute on as we go through the first half of this year? Walden Rhines: Sure, Craig. I'd be glad to. And it's true. I've now been here for over 5 months. And I now have a much better perspective on where the opportunities lie, where the weaknesses are and where we need to move ahead. I think the first thing of note, of course, was that we needed more financial flexibility. And so the cost reduction program has been executed well. It's always difficult, but I think morale has improved greatly. And now after the majority of it is over, people are back to work and thinking about new opportunities. The survey of all of the product lines was -- became more detailed as I -- this last quarter, met with customers, traveled the world, Asia, Europe. I spent time with our Mixel employees in Egypt. I spent time in India with new customers. I've come to the conclusion that we have an incredible long-term opportunity driven by artificial intelligence and the whole change that's underway in how process development is done and how wafer fabs engineers and product engineers optimize their processes, optimize their manufacturing, sign defects, look for yield problems. And that, I think, builds well on the core manufacturing capability of Silvaco and provides the long-term growth engine. The thing that I was particularly pleased by, though, was in the short term, such strength in IP, driven, as Chris indicated, by the strength of the Mixel business, but also the rest of the IP product line as Andy Wright has brought in new disciplines, made it more efficient, greatly increased our capacity and the great marriage that came by joining a well-seasoned significant sales force with a negligible sales force at Mixel has produced a very promising outlook for very rapid growth for the IP business in the year ahead. EDA, while it is down, has selected good opportunities. Jivaro is a category killer and is, in fact, a sign-off tool, at least one major company and then at a slew of other very leading semiconductor companies. And it's one of a handful of EDA products that can provide not only the strength of contract renewals going forward, but some potential for growth. But it's going to be a stabilization issue in the short term and then growth in the longer term. So summarizing, great long-term opportunity in the evolution of TCAD to the next generation of AI-driven process development, great-looking short-term IP business driven by Mixel, but complemented by the efficiencies in the existing business and a good stable base of key targeted products in EDA, which although they won't grow in the short term, they provide the strong renewal base of revenue, and it makes me very glad that I joined Silvaco. Craig Ellis: That's really helpful, Wally. Chris, I'll direct a follow-up to you. And it's in part a clarification and then in part a question. The clarification for the nice Asia foundry FTCO deal. Did that fully rev rec in the first quarter? Or is that a multi-quarter rev rec? And can you provide any color there? And then the second part of the question, love the incremental expense the team is able to achieve going from $15 million to $20 million. Can you give us some color on where you're realizing that incremental $5 million in savings? Chris Zegarelli: Yes, Craig, happy to do it. So from a rev rec perspective, on the FTCO win, it was not all recognized in Q4. So a significant amount of it was recognized. The rest of it will run over the term of the contract. And as you saw, good momentum in FTCO leads to good numbers in TCAD, good strong growth sequentially. And as Wally was indicating, we're seeing incremental interest there, a good pipeline on FTCO, a lot to be excited about as we look at new FTCO opportunities through this year and beyond. In terms of cost savings, I think we laid it out last call that, obviously, we were incrementally more focused on support organizations, for example, for reductions, but we also did look across the organization to streamline, reset some org structures, for example, and extract some value. I think for me, Craig, and I pointed it out in the prepared remarks, but I want to emphasize it here, some of our spending does go through cost of sales. So one of the reasons why you saw gross margin perform so well in the quarter and why we think it's sustainable at these levels is that we were able to have the product teams really focus on product development and have most of the customer support work being done by the field application engineers. And that just leads to a much more cost-effective view on cost of sales. And it also increases capacity on the R&D side where the team can focus more on engineering those new exciting AI-driven products that Wally was alluding to. So I think it was broad-based, a little bit more on the support side. We have been streamlining. We do think some more cost does come out into Q2. So I can already confidently say there will be a sequential decline again in Q2, and that's where profitability will be within our grasp after delivering some pretty good numbers here in Q4, and I think a pretty good guide for Q1. Craig Ellis: Good numbers indeed. Operator: And our next question will be coming from the line of Kevin Garrigan of Jefferies. Kevin Garrigan: Wally and Chris, let me echo my congrats on the results and all the progress. Wally, previously, you mentioned the adoption process of FTCO was always kind of a gating factor. Your second FTCO customer was faster than you expected. So are you able to kind of speed up the adoption process? Or what was the driver of the faster-than-expected adoption? And can that translate to other engagements? Walden Rhines: I think the -- our efficiency at closing and ramping FTCO customers is going to continuously increase. The initial engagements were very upfront service-oriented, a lot of bringing the customer online. This particular one was based both on the vision they could see ahead as well as some initial purchases to get things going. And I think in the future, the message is becoming better honed. Our field sales organization is able to communicate the value and the pipeline is increasing for the number of customers. So I think I would expect that the time it takes to go from initial engagement to real revenue is going to decrease as we move forward and as people see what the benefits are for applying AI to the next generation of processes. Kevin Garrigan: Okay. Perfect. And then, Chris, can you just kind of give us any color on how we should think about bookings by segment in Q1? Should we expect it to be more kind of TCAD-driven and SIP versus EDA? Chris Zegarelli: That's a good guess, and I would agree with that we're seeing continued strength in TCAD sequentially in Q1. So that's a very strong story. IP after delivering really good numbers in Q4, it's in the same range, maybe down a slight tick. And EDA feels flattish sequentially. So yes, a good TCAD uplift in Q1. Kevin Garrigan: Congrats again on all the results. Operator: And our next question will be coming from the line of Robert Mertens of TD Cowen. Robert Mertens: This is Robert on for Krish. Maybe just to go back to the FTCO product, just how you're thinking about the new customers ramp through the year and your older customer, if you expect any acceleration of orders in calendar year '26 or more of the upside could be a '27 story? Walden Rhines: Yes. Well, if you want me to take that, I guess you're talking to Chris first. But the way the pipeline is shaping up, we expect it to be a 2026 story. It's -- we have enough additional customers in the queue -- and I'd point out that there are 2 elements to this TCAD growth sector. One is the people who are traditional TCAD users. And we have a strong renewal contract -- strong queue of contract renewals that provide growth in the base business. The FTCO is really a different thing. It's how you ship and develop processes in a totally different way. It doesn't really head on compete with our traditional TCAD business. It's really a different business. And as more and more people are realizing that, then it's not something where we have much direct competition with customers. It's just a case of selling the value of moving to a new paradigm for process development. And we're just being helped along a great deal by all the NVIDIA publicity and the people talking about tools, Anthropic, OpenAI and so on where everyone is looking and saying, how is my world going to change. And the people who've done TCAD or use TCAD to develop and optimize their processes in the past are asking that question. And so we just need to be there with an answer that they can act upon quickly, and it seems to be going very well. Operator: And our next question will be coming from the line of Christian Schwab of Craig-Hallum Capital Group. Christian Schwab: Solid results. I just have one quick question. Can you give us an idea of what you're anticipating either percentage-wise or dollar-wise in growth from the Mixel acquisition in '25 versus '26? Chris Zegarelli: I can take that. Yes, absolutely. Feel free to add more color, if you'd like. I mean, as you saw sequentially from Q3 to Q4 from a booking standpoint, IP grew $4 million sequentially. A good piece of that was from Mixel. And if you just annualize that quarterly performance, you can get a sense of what that business is doing, call it, approaching double digits. And then as Wally said, there's the PRO or Pro products and there's increased efficiency within the team and leveraging of the sales force. So we think growth comes from there, but that gives you a sense of the baseline of where they're coming from and how we do see that growing sequentially into this year and more momentum probably in the second half is what I'd say as we lay the groundwork for really supporting those Pro products that we just recently announced. Christian Schwab: Go ahead, Wally. Walden Rhines: And thanks for that growth. Between that and strong TCAD year, we really expect to deliver double-digit revenue growth in the current calendar year. Christian Schwab: Great. That was going to be my next question. No other questions. Operator: [Operator Instructions] Our next question will be coming from the line of Denis Pyatchanin of Needham & Company. Denis Pyatchanin: So my first question is basically about your 3 segments. So performance-wise, what do you think we can expect from all of these in 2026? Do you think you could provide some sort of color that's either quantitative or qualitative in nature in terms of which ones would do better than the other? Walden Rhines: Okay. As we indicated in the summary, the really large percentage growth will come in IP. But the core business of TCAD continues, will be strong. It's a profitable growing business. And so it's -- while not the fastest grower in the coming year, it will grow just as Chris indicated. The third is we will grow less had a record growth this past year, and that's EDA. So we expect it to simply be stable, a good part of the business, having strong renewals, but the growth of individual products will be slower. So fastest growth, IP, second fastest, TCAD and the new FTCO, which is almost a totally different business from TCAD and then IP third. I'm sorry, EDA. Yes. Denis Pyatchanin: No, that's great. And then so for my second question, you mentioned that you're going to be doing like an incremental $5 million in annualized OpEx reduction. Can you tell us what is this additional source of savings that you found? Walden Rhines: Chris? Chris Zegarelli: Yes. No, I can speak to that. I mean we were always executing this broad streamlining and cost reduction effort within the company. Last call, we said at least $15 million. But as we've been working through the synergies, we found some good opportunities in SG&A, for example, to really streamline and kind of focus the team and activities. And we've also found some opportunities in selected businesses as well. I think for me, this is all part of the broader strategy of getting the business profitable at flat revenue. You can see with the reductions in OpEx in Q4, which was faster than expected, a continuation into Q1, and it will continue into Q2. This is just showing that move towards profitability. And then as we hit the growth drivers that Wally was alluding to, there's a lot of profitable growth that comes from that kind of upside once we kind of get that firm foundation in place. So expect some incremental reductions to go from here. As Wally indicated, most of it has already been executed. There is a little bit more to go, and that's kind of what you see in the coming quarters in terms of sequential reduction. Operator: And I am showing no further questions. I would now like to turn the call back to Wally for closing remarks. Walden Rhines: Well, we thank you all for joining us today. It's been a great quarter for us, and our outlook is strong and getting very exciting here. So we look forward to talking to you again in the near future. And thank you again for joining us today. Operator: And this concludes today's program. Thank you for participating. You may now disconnect.
Operator: Hello, and welcome to the SentinelOne, Inc. Q4 FY 2026 Earnings Conference Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Saad Nazir, Head of Investor Relations. Saad Nazir: Good afternoon, everyone, and welcome to SentinelOne, Inc.'s earnings call for the fiscal year ended 01/31/2026. With us today are Tomer Weingarten, CEO, and Barry Paget, Interim CFO. Our press release and an earnings presentation were issued earlier today and are posted on the Investor Relations section of our website. This call and accompanying slides are being broadcast live via webcast, and a replay will be available on our website after the call. Before we begin, I would like to remind you that during today's call, we will be making forward-looking statements about financial performance and future events, including our guidance for the fiscal first quarter and full fiscal year 2027, as well as long-term financial targets. We caution you that such statements reflect our best judgment based on what is currently known to us, and that our actual results or events could differ materially. Please refer to the documents we file from time to time with the SEC, in particular, our quarterly reports on Form 10-Q and our annual report on Form 10-K. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. Any forward-looking statements made during this call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons why actual results may differ materially from those anticipated, even if new information becomes available in the future. During this call, we will discuss non-GAAP financial measures, and all comparisons made are year over year unless otherwise noted. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and non-GAAP results, other than with respect to our non-GAAP financial outlook, is provided in today's press release and in our earnings presentation. These non-GAAP measures are not intended to be a substitute for our GAAP results. Our financial outlook excludes stock-based compensation expense, employer payroll tax on employee stock transactions, amortization expense of acquired intangible assets, acquisition-related compensation costs, restructuring charges, gains on strategic investments, impacts of the previously announced Italian tax settlement, and income tax provision which cannot be determined at this time and are therefore not reconciled in today's press release. And with that, let me turn the call over to Tomer Weingarten, CEO of SentinelOne, Inc. Tomer Weingarten: Good afternoon, everyone, and thank you for joining our fourth quarter earnings call. Fiscal 2026 was a landmark year for SentinelOne, Inc. We achieved a $1 billion revenue scale, growing 22% year over year, and delivered full-year operating profitability, a significant milestone towards profitable growth. In Q4, our total ARR grew 22%, driven by strong new logo acquisition and expansion with existing customers. We delivered $64 million in net new ARR in Q4, a company record. This marks our third consecutive quarter exceeding ARR expectations, showing execution consistency and positive growth. We drove about half of our new business to new logos, showing a balanced split between new logo acquisition and expansion within our existing customer base. We are gaining traction in the most critical domains of cybersecurity—both AI for security and security for AI. We are helping organizations advance their digital transformations securely and intelligently. SentinelOne, Inc. offers the only cybersecurity platform that delivers disunifications—truly. AI represents a significant TAM expansion and a long-term tailwind for our business. From early on, AI-native security has been foundational to our platform architecture. This early advantage positions us to emerge as the category winner in the AI era across more than a $100 billion market opportunity. We have established SentinelOne, Inc. as a clear technology leader in cybersecurity. Our relentless focus on delivering AI-powered innovations that truly unify security, data, and automation has positioned us at the forefront of the industry. As we enter the new fiscal year, we are accelerating our path towards achieving the Rule of 40 driven by durable growth and higher profitability. Now, let us dive deeper into the details of our quarterly performance. We are winning new logos and expanding our footprint across diverse platform categories. Enterprises are choosing the Singularity Platform for unified AI-native security that provides a single pane of glass and seamless workflow. We firmly believe that cybersecurity should not be complicated. Beyond the Singularity Platform's best-in-class efficacy, its intuitive design and operational simplicity are driving stronger customer adoption. Today, our unified platform spans seven core solution categories, delivering more than 40 different modules designed to solve the most complex use cases, all while providing end-to-end autonomous cybersecurity. In fiscal 2026, our non-endpoint solutions surpassed half of our total annual bookings, a clear testament to the diversity and customer outcomes of the Singularity Platform. Customers are increasingly consolidating on our platform. In fiscal 2026, the percentage of our enterprise customers using three or more solutions increased to 65% versus 39% a year ago. Enterprises using four or more solutions more than doubled to 42% versus 19% a year ago. And enterprises using five or more solutions increased to 22%, versus 9% a year ago. And for many of the enterprise logos we are adding, this is just the beginning of a long-term expansion journey. In Q4, our cross-platform adoption drove a record ARR per customer, signifying solid momentum contributions from our AI, Data, Cloud, Wayfinder, and Endpoint solutions. Customers of all sizes, especially large enterprises, are increasingly recognizing Singularity's architectural advantage. Our Q4 performance clearly demonstrates this momentum. We drove sequentially higher win rates across every market segment, anchored by accelerating gains in the enterprise. Let us look at an enterprise win that exemplifies this. Internet security giant Cloudflare, a company securing about 40% of all human-originated internet traffic, moved to SentinelOne, Inc. in less than 24 hours, completely uninterrupted. After a rigorous POC, they selected SentinelOne, Inc. to replace our closest competitor as their security platform of choice, citing our superior technology and ease of use as the deciding factors. This seven-figure deal included endpoint security, Purple, and our Wayfinder Elite services. This is a clear testament to our technological edge and the platform value we deliver. Next, looking at our key growth drivers, Purple is becoming the bedrock of modern security operations, empowering teams to respond faster, accelerate detection, and automate investigations. The trajectory of Purple adoption continues to outpace our internal expectations, hitting a record attach rate of over 50% on licenses sold in Q4. According to IDC's independent study, Purple users experienced 55% faster threat remediation, a 60% lower likelihood of major incidents, and an impressive 338% return on investment over just three years. We are seeing strong Purple uptake across both new logos and existing customers. Many of our Purple AI customers are expanding their usage, signifying future growth potential and the value it delivers. For AI security, we are benefiting from the accelerating enterprise demand for secure adoption of AI models, agentic workflows, and employee AI usage. In Q4, ARR from Prompt Security more than doubled sequentially. In addition to existing customer upsells, we have started winning standalone AI security deals with Fortune 500 companies. Moreover, we are beginning to win AI security deals from customers of our direct competitors, creating a new strategic entry point to expand our market share and footprint. There are no serious scalable alternatives to Prompt Security in the market, and customers need to adopt AI now. For example, in the past quarter, a Fortune 100 financial services company deployed nearly 100,000 licenses for AI security and governance. Prompt is helping solve complex AI governance and compliance challenges for customers across our industry. In another example, a multinational retail giant deployed Prompt Security to eliminate a visibility black hole surrounding unmonitored employee AI usage. They chose SentinelOne, Inc. for quick deployment, visibility, and real-time AI security, all while satisfying strict European GDPR requirements. We also launched Closed Security, the industry's first open-source security suite to secure emerging autonomous agents like OpenClaw and others. For Data solutions, we surpassed $130 million in ARR with growth accelerating sequentially. We are seeing rising demand for our AI SIEM as it delivers deeper visibility, real-time detection, and autonomous response, all with far more efficient unit economics than legacy alternatives. In Q4, we also launched our new AI-native Data Security Posture Management solution, or DSPM, to help customers secure their data and AI workloads. Furthermore, with Observo.ai, we now own the data pipeline that powers modern security operations. The market is clearly recognizing this value. We were just named SIEM Innovation of the Year in the Cybersecurity Breakthrough Awards. We have now fully integrated Observo.ai's data pipeline solution into the Singularity Platform. This creates a truly comprehensive data architecture, natively unifying petabyte-scale ingestion, data pipeline, orchestration, and hyperautomation into a single seamless experience. For Data solutions, we signed a multi-year infrastructure partnership with a global hyperscaler. As part of our expanding alliance, SentinelOne, Inc.'s threat intelligence data now pairs with this company's native threat intelligence services. This shared telemetry model powers our own joint offerings and establishes a highly strategic growth vector for our Data business. In addition to taking share from legacy incumbents, our platform is now beginning to serve as the foundational data layer for the world's largest technology innovators. For Cloud security, we are seeing strong expansion, especially with our best-of-breed runtime workload capabilities covering both on-prem and cloud environments. In Q4, our Cloud security solution surpassed $160 million in ARR. As cloud environments expand and AI workloads multiply, the need for robust security is increasing. We are meeting this demand by delivering comprehensive cloud-native detection and response that scales with our customers' infrastructure, simplifying their operations and elevating defenses with our unified platform. For Endpoint, we achieved double-digit ARR growth in Q4. We continue to outgrow the broader market by delivering the most autonomous endpoint security solution available, combining industry-leading efficacy, performance, and user experience. Nearly half of the existing Endpoint sector is still using legacy antivirus solutions. We see this as a clear opportunity for continued market share gains. Our leadership in AI-native security is attracting the most advanced technology innovators in the world. In Q4, one of the top frontier labs selected the Singularity Platform to secure mission-critical infrastructure in the development of its flagship models. This win underscores that the architects of the AI frontier recognize SentinelOne, Inc. as the definitive security layer for the future of intelligence. In the era of AI, securing highly restricted on-prem environments, where true sovereignty is of paramount importance, is becoming one of the most strategic growth opportunities. While our competitors have no ability to secure these environments, we saw triple-digit booking growth in the quarter, signifying an emerging growth vector for us. We have the distinct advantage of delivering fully autonomous, high-velocity AI protection both in the cloud and on-prem. This differentiation was clear in our recent win with one of the largest postal operators globally. The customer signed a five-year commitment to secure their vast network with SentinelOne, Inc. Our ability to deliver specialized on-prem security at scale, while meeting the most rigorous government standards, was the deciding factor. In addition, we are seeing strong enterprise interest in Wayfinder Threat Services, which crossed $100 million in ARR in Q4. As enterprises race to adopt generative AI, they often lack the blueprint to do so safely. Wayfinder fills that gap by serving as both an implementation arm and a managed supervision layer for AI cybersecurity. Our Wayfinder AI-augmented services deliver immediate time to value by deploying in under 15 minutes and resolving 99% of threats without any customer action required. Trust is a big factor. We believe that expert human oversight is the way forward to build customer trust when adopting new autonomous technologies. Wayfinder embodies this vision by pairing our AI-native platform with elite AI security experts. As expected, SentinelOne, Inc. Flex is proving to be a highly effective model for broader platform adoption. By simplifying the purchasing process, Flex is driving larger deal sizes, multi-solution deployments, and extended commitments. Flex simplifies the path for large-scale platform adoption and secures long-term, high-value partnerships. For a platform consolidation win, we secured an eight-figure TCV deal with an iconic global logistics company that standardized on the Singularity Platform for unified AI security. To protect their highly distributed and critical infrastructure, this enterprise consolidated multiple competing vendors on the Singularity Platform. SentinelOne, Inc. was the clear choice to modernize their operations and securely implement AI. Alongside industry-leading efficacy, the Singularity Platform's intuitive design, unified interface, and ease of use are key differentiators that are driving strong platform adoption. We are delivering the only single-plane platform on the market capable of being deployed anywhere, which stands in stark contrast to our next-gen peers. Large enterprises, especially leading innovators, are recognizing this—in many cases, securing millions of assets in a single deployment. Our continued upmarket trajectory is driving larger deal sizes and steady retention rates. Landing these premier enterprise logos at scale provides us with a significant, highly durable runway to drive strong growth for years to come. Today, we proudly secure nearly one-fifth of the Fortune 500 and hundreds of Global 2000 enterprises. Our expanding customer base now includes some of the most sophisticated and iconic companies on the planet, alongside highly regulated, mission-critical infrastructure—from the pioneers building today's frontier AI models to the global category leaders in semiconductors, automotive, aviation, finance, and smartphone giants the world relies on. In the partner ecosystem, we continue to expand and deepen our engagements. Our partners are a force multiplier, helping expand our reach and scale. We are seeing strong traction driven by increasing platform adoption across AI, Data, Cloud, and broader platform solutions. We are increasingly winning at the top end of the market, highlighted by an eight-figure strategic partner win in Q4. This deal provides access to our entire Singularity Platform through a flexible deployment schedule. In addition, we are strategically scaling our mid-market adoption by driving operational leverage for our partners. Our success across the managed security ecosystem is a clear testament to this strategy. In fiscal 2026, we achieved over 60% ACV growth with our top 20 MSSP partners and over 75% ACV growth with our top 10 MSSP partners. These partners are rapidly expanding beyond the endpoint. They are adopting our AI, Data, Cloud, and broader platform solutions. Our MSP partners are standardizing on SentinelOne, Inc. Our unique platform architecture delivers the multi-tenancy and remote management capabilities that drive real operational leverage and technology differentiation. This technology advantage translates directly into a dominant competitive position for SentinelOne, Inc. in the managed security ecosystem. We are also deepening collaboration with hyperscalers by integrating our technology and platform across their cloud marketplaces and AI services. Together, these alliances are enhancing our market presence and positioning SentinelOne, Inc. as a trusted partner for enterprises worldwide. In the public sector, we achieved FedRAMP authorization at the High impact level, and this opens more public sector opportunities for us in both Federal and SLED environments. Let us shift gears to the broader industry dynamics and why SentinelOne, Inc. is a distinguished beneficiary for the AI era. There has been a lot of debate about the impact of AI on traditional SaaS business models. While some of these concerns are justified, especially if you are selling an antiquated platform built upon a legacy code base, modern security operations remain mission critical. Cybersecurity is an imperative for safe adoption and usage of AI, is a significant tailwind for SentinelOne, Inc., and we are already seeing AI security as the fastest growth category for us today. We are the builders enabling secure AI adoption for builders. Our enterprise success clearly validates this. Our platform and AI models are forged from real-time proprietary threat intelligence data at petabyte scale that is gathered across tens of thousands of organizations and tens of millions of assets globally. That scale, intellectual property, and depth of data—combined with human insights—are a unique competitive moat. The reality is that cybersecurity is paramount in the age of AI. The market needs reflect this reality. Gartner recently highlighted that AI security is the fastest-growing segment in cybersecurity, expanding over 70%. Security and trust remain the single biggest barrier to enterprise AI adoption in the United States and globally. At SentinelOne, Inc., we are helping organizations move from basic AI systems to true autonomous agentic action with trust and safety embedded as our guiding principles. We are putting defenders firmly in control of the AI boom, delivering the platform, tools, strategies, and services they need to build, secure, and benefit from AI. We are delivering an end-to-end AI-native platform that seamlessly delivers security for data, infrastructure, and runtime as a single unified system. We actively partner with, invest in, and protect the pioneers building today's frontier AI models. Grounded in this ecosystem, we are pushing into the frontier of autonomous agentic security, where AI does not only assist humans, but also independently detects and stops complex threats in real time. Reflecting upon the past year, we delivered strong growth and margin improvement while driving innovations that are shaping the future of cybersecurity. At increasing scale and durable top-line growth, we are continuously refining our operating model to be well positioned for the opportunities ahead. We remain laser-focused on our most efficient go-to-market channels while unlocking structural productivity gains by integrating AI throughout our business. We have always operated with a builder mindset. Looking ahead, we are establishing a stronger SentinelOne, Inc. that is well positioned to lead in an AI-first security landscape while creating long-term value for our customers, partners, and shareholders. Before I turn the call over to Barry, I am pleased to welcome Sonalee Parekh to our leadership team. Sonalee is joining SentinelOne, Inc. as our new Chief Financial Officer. She brings more than 25 years of experience across public software and technology companies. Sonalee has a proven track record of scaling high-growth software platforms, driving financial discipline, and overseeing multi-product strategies. That is an ideal fit to lead the next phase of SentinelOne, Inc.'s financial strategy—delivering growth and profitability. I look forward to our partnership. I would also like to thank Barry for his leadership and steady hand as Interim CFO. He has been a trusted partner, ensuring a seamless transition and leading our finance function. In closing, I want to take a moment to acknowledge the contributions of all Sentinels—their relentless focus, dedication, and execution drive our success. And thanks to all our customers, partners, and shareholders for their continued support. Our mission to be a force for good remains as important as ever, in ensuring AI is also a force for good. Thank you again for joining us today. With that, I will hand it over to our Interim CFO, Barry Paget. Barry Paget: Thank you, Tomer, and thanks, everyone, for joining us today. Let us review the details for Q4, the full fiscal year 2026, and our guidance for Q1 and fiscal year 2027. As a reminder, all comparisons are year over year, and financial measures discussed here are non-GAAP unless otherwise noted. Fiscal year 2026 was a transformational year for SentinelOne, Inc., highlighted by two major financial milestones. Firstly, we scaled the business past $1 billion in revenue, growing 22% year over year. Secondly, we achieved full-year operating profitability, driving a 600-plus basis point year-over-year improvement to expand our operating margin to 3.5%. Let us review the financial performance of our fourth quarter. In Q4, our revenue grew 20% year over year to $271 million. International markets grew 30% and represented 40% of total revenue, reflecting strong international demand and a growing global footprint. In Q4, our total ARR grew 22%, and we added a record $64 million in net new ARR, which exceeded our expectations. These results were driven by a balanced split between new logo acquisition and platform adoption by existing customers. As we continue our strategic shift upmarket, our ARR per customer reached a new company record. We are seeing strong momentum at the top end of the market, as our cohort of customers with ARR of $1 million or more grew 20% year over year to 153 customers in Q4. Additionally, customers with ARR of $100,000 or more grew 18% to 1,667. Furthermore, retention rates across our large customers remain strong, underscoring the mission-critical nature of the Singularity Platform. For customers with $100,000 or more in ARR, our gross retention rate was 96% in Q4, and our dollar-based net retention rate for these customers was 109%, driven by these large organizations continuing to adopt the broader platform and consuming multiple products from us. Overall, we are maintaining a balanced split between new logo acquisition and existing customer expansion. Given our scale and relative market share, this focus allows us to increase our market share with significant future expansion potential. Turning to margins, we maintained a solid gross margin profile in Q4 at 78%, highlighting healthy platform unit economics and scale efficiencies. In Q4, our operating margin was 6%, representing an improvement of 450 basis points year over year. We also achieved a net income margin of 9% in the quarter. On a trailing 12-month basis, we delivered a free cash flow margin of 5% and successfully delivered our second full year of positive free cash flow. This is an important milestone that underscores our path towards sustained profitable growth. We ended the year with a robust balance sheet, including $770 million in cash, cash equivalents, and investments, and, most importantly, no debt. Given our strong balance sheet and confidence in our long-term trajectory, we opportunistically repurchased 6.5 million shares this quarter, bringing the total shares repurchased to 12.2 million in fiscal year 2026. We will continue to employ a balanced capital allocation strategy, prioritizing organic investments while returning capital to shareholders. Turning to our guidance for Q1 and fiscal year 2027, as we enter our next chapter of scale and profitability, we are enhancing our guidance framework. In addition to our revenue and operating income outlook, we are providing guidance for earnings per share and some helpful modeling assumptions. We believe this enhanced framework offers a more comprehensive view of the company's earnings growth and cash generation. For the full fiscal year 2027, we expect revenue to be between $1.195 billion and $1.205 billion, representing 20% year-over-year growth at the midpoint. For Q1, we expect revenue to be between $276 million and $278 million, representing 21% year-over-year growth at the midpoint. Our fiscal year 2027 revenue outlook also implies a year-over-year improvement in net new ARR. Overall, our outlook is supported by a solid pipeline, strategic partnership opportunities, and rising contributions from our emerging solutions, including AI, Data, Cloud, Wayfinder, and others. At the same time, we continue to monitor the evolving macroeconomic environment and geopolitical uncertainties, which can still influence deal timing and sales cycles across the industry. Turning to our profitability metrics, for fiscal 2027, we expect operating income to be between $110 million and $120 million, representing an operating margin of 10% at the midpoint. For Q1, we expect operating income to be between $4 million and $6 million, representing an operating margin of 2% at the midpoint. Our strong operating income outlook is driven by increasing operational efficiencies with scale and with cost discipline. We are accelerating toward the Rule of 40, mainly led by sustained top-line growth and improving profitability. For fiscal year 2027, we expect fully diluted earnings per share to be between $0.32 and $0.38 per share, representing $0.35 at the midpoint. And for Q1, we expect earnings per share to be between $0.01 and $0.02. We expect a non-GAAP tax rate of approximately 17% for fiscal year 2027. We expect our weighted average diluted share count to be approximately 345 million for Q1 and 352 million for the full year. Adjusting for the scheduled tax settlement payments of $40 million in fiscal year 2027 disclosed in our January 8-Ks, we expect our adjusted full-year free cash flow margin to closely track our operating margin outlook for fiscal 2027. For Q1, we expect adjusted free cash flow margins to be in the low teens, reflecting our standard historical seasonality and strong underlying cash generation. Taking a step back, our technology leadership and competitive position remain strong. We are scaling the business while consistently driving strong operating leverage. Our investment approach strikes a disciplined balance between capturing long-term growth opportunities and maintaining a responsible, profitable financial profile. This strategy is foundational to scaling SentinelOne, Inc. into a multibillion-dollar, highly profitable business. Before closing, I would like to welcome Sonalee as our new CFO. Her expertise scaling global businesses is a great fit for us. Over the coming weeks, I will be working closely with Sonalee and our seasoned finance team to ensure a seamless handoff. In summary, we are very well positioned at the intersection of AI, Data, and cybersecurity, leading the industry into the next era of autonomous security. Security is no longer just a safeguard; it is the strategic enabler of AI innovation. With a strong financial foundation, a highly differentiated platform, and a vast market opportunity, we remain firmly committed to maximizing our business potential. Thank you all for joining us today. We will now take your questions. Operator, please open up the line. Operator: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form. Our first question comes from Brian Essex at JPMorgan. Please go ahead with your question. Brian Essex: Hi, good afternoon, and thank you for taking the question. Maybe for Tomer, I would love to understand some of the dynamics around the growth that you have had this quarter, particularly in light of the lower sales and marketing growth. What percentage of the deals were partner-led or partner-influenced, and what are the plans for hiring and product and expectations for productivity as you move through fiscal 2027? Tomer Weingarten: Thanks for the question, Brian. We delivered record fourth-quarter net new ARR, 6% year-over-year growth, and probably the strongest sequential growth we have had in the last 24 months. It really demonstrates more than anything execution consistency and solid demand pretty much across the board. I would say that there was not any big change between our business with partners and our business with end customers. We are doing larger deals, and I think that is probably reflected. Flex is taking, I think, a more pronounced part of our overall bookings. So, all in all, I would say the dynamic is one that we have seen throughout the quarters and throughout the year. As we look into next year, when we review how we want to focus, I think we are pretty clear that we are on a quest to optimize. I do not think you are going to see us grow headcount in a significant way, and it will imply that sales productivity, which is reflected in the margin guide, is going to get better. We are clear on our continued upmarket trajectory. We are clear on the need and the desire to do more with our partner base. We are clear about the potential in our partner base. You can see some of the figures with our growth with our MSP partners—top 10 partners growing 75% year over year. Obviously, there is a lot of potential both in our partner base and with our move upmarket. So, all in all, we plan to do much of the same this year in an improved manner with an optimized sales force. Operator: Our next question comes from John Stephen DiFucci at Guggenheim. Please go ahead with your question. John Stephen DiFucci: Thank you. Since Brian asked about top line, I am going to ask about the bottom line. It is just a little confusing. Like, this quarter, and in the first quarter, profit margins are a little lower than I think people were looking for—at least we were. But for the year, they look great. So if you could just explain that a little bit, maybe Barry, again, just so we understand what is happening in the model. Barry Paget: Yeah, John. On the free cash flow side, we feel pretty comfortable on the cash collection. We have seen meaningful improvement over the past few years. That being said, it can be a little lumpy just in terms of larger deals and when they fall into a particular quarter. And as those larger deals roll out maybe over months and quarters as opposed to days, like smaller deals. Operator: Our next question comes from Meta Marshall at Morgan Stanley. Go ahead with your question. Meta Marshall: Great, thanks. I just wanted to ask—clearly, a lot of success selling with the 65% of customers having three or more solutions. How do you, in combination with maybe NRR ticking down a hair, think about the ability to continue to add new or get further adoption of new products into the base? Thanks. Tomer Weingarten: Absolutely. We definitely think that this is a source for additional growth for us. We are very stable on the NRR front. I think the biggest thing I would call out there is that, for us, it means that we are doing more new logo business, which is exactly what we want to see, and we have executed that strategy for the last few years. It is not going to change this year. So we are really driving those in tandem. And what you can see is that not only are we creating more and more adoption within our customer base, even with that, our customer base is still relatively underpenetrated. We have tremendous capabilities. Our platform is incredibly broad. That just means that for a lot of these new logos that we are just starting the journey with, the expansion opportunity is really in the future. Which is great, which really means that we can land and onboard new customers, and then, with time, we will see more and more from the customer base. That is exactly the dynamic we want to see. That is exactly what is reflected in these results. Operator: Our next question comes from Nasr Islam at Deutsche Bank, on for Brad Zelnick. Please go ahead with your question. Nasr Islam: Hi, this is Nasr Islam on for Brad Zelnick. Thank you for taking the question. We have heard from you, Tomer, and your peers in recent quarters about the importance of Endpoint security, especially in the GenAI era. Can you provide an update on how Endpoint progressed in the quarter and any changes in the competitive landscape that you are seeing, if any? Tomer Weingarten: Of course. Endpoint still remains a strong growth driver for us. We grew double digit, and that is non-trivial in the market today. We are still gaining share in Endpoint, and there is still a lot to go after in terms of incumbent providers. It is clear that the best control point right now for GenAI is actually attached to those same endpoints. So when you look at us selling AI security, I think the success we are seeing there is tied to our ability to deploy that within minutes, sometimes on those exact same endpoints—whether our agent is already there or not. Our ability to continue and expand our Endpoint footprint is what makes our AI security product incredibly successful. So, all in all, not only are you gaining the best and the most complete telemetry from the endpoint today, it is also becoming one of the only true control points to regulate what employees, what the workforce, is doing with generative AI—block it, sanitize it, make sure there is no data leakage, put the right guardrails—and that is exactly what we are doing with our AI security platform and with Prompt Security specifically. Operator: Next question comes from Shrenik Kothari at Baird. Please go ahead with your question. Shrenik Kothari: Yeah, thanks for taking my question. So, Tomer, you brought in Sonalee. As she steps in, what are the top, say, three priorities you have explicitly asked her to focus on first? And then, just related to, kind of financially, how should investors think about the next phase of the model under her? Thanks a lot. Tomer Weingarten: Of course. Thank you for the question. We are incredibly excited to welcome her. Her focus is going to be durable growth and acceleration in our go-to-market. I think what we are seeing right now is growing demand for our platform with multiple avenues for growth. We have talked about AI security growing triple digit. We have talked about on-prem, which is a new revenue vector for us, now growing triple digit as well, and infrastructure deals that are also growing triple digit. So, obviously, her job is going to be to balance that with continuing to improve and hone in on our entire go-to-market and sales and marketing spend and expense. There is no surprise here that as we look into next year and the coming year, the landscape is changing in terms of what customers are looking for. And it is very clear that we have some of the most unique solutions right now for some of the most urgent problems in the market. So, as we look at this year, it is a lot about realigning a lot of our resources to go after these opportunities. As we improve our business, you can see some of that already reflected in our operating margin. This is the trajectory we are on. We are accelerating our path to even better profitability. We are optimizing on cash flow. I think these are the things that we will collectively be focused on. Operator: Our next question comes from Patrick Edwin Colville at Scotiabank. Please go ahead with your question. Patrick Edwin Colville: Thank you so much. And, Tomer, let me ask this one to you. Nice reacceleration in new ARR this quarter. You gave us the sort of breadcrumb that you expect a year-on-year improvement in new ARR in fiscal 2027. So, two parts, if I may. One is, can you unpack that last bit a little bit more to provide any more color? And then, what would be the driver of that? Is it kind of core Endpoint—to your point earlier that there is this renaissance in spend on Endpoint—or is it that plus these emerging products and the multiple tailwinds coming together in fiscal 2027? Tomer Weingarten: Yes. Let me try and unpack that. Obviously, that is exactly what we want to see. We want to improve net new ARR. You have seen a little bit of that in Q4, but that is what we are looking at for this coming year. On top of that, we are also starting to see a seasonality change. We are moving from this 40/60 first-half/second-half dynamic we have had in the past couple of years more to roughly 50/50. So that means that the first half of the year is very solid, and that has positive impact on growth for the year for both revenue and ARR. These are some of the dynamics that we are seeing there. Some of it is coming from Endpoint. I would not call it the full renaissance, to be honest, but there is definitely more traction in Endpoint. I think if you are seeing some of our businesses crossing the $100 million ARR mark and still accelerating in a pretty significant way, those are our sources of added revenue growth and added ARR growth. So, all in all, we believe that an improved net new ARR is a good starting point for us in our revenue guide. Operator: Our next question comes from Richard Poland at Wells Fargo. Please go ahead with your question. Richard Poland: Hey, thanks for taking my question. I guess, just on the gross margin side, I noticed that gross margin ticked down a little bit in the quarter, but I think it was maybe a touch better than expectations. As we look forward to next year, could we see that start to stabilize or tick up, or is there anything underlying there that we should think about? Tomer Weingarten: Yes, of course. I would say our gross margins are incredibly stable. They are also best in industry, so they are incredibly high. We put it exactly at the high end of our range of our long-term targets. So, all in all, we feel like they are stable. They are going to continue to be stable. We do not forecast any change in that. Operator: Our next question comes from Michael Joseph Cikos at Needham. Please go ahead with your question. Michael Joseph Cikos: Thanks for taking the question here. Tomer, if I could come back to the prepared comments and the opening script. Great to hear about the seven-figure deal over at Cloudflare displacing your next closest competitor. Can you discuss that a little bit more as far as how Cloudflare came to you, how the deal came together—again, just given their positioning in the software ecosystem, they are thought of as being pretty market leading? I would love to get some more color there. Thank you. Tomer Weingarten: Of course. It is a combination of the set of capabilities that we have today that—through the prepared remarks—we tried outlining how unique the capabilities that we have today are, especially at scale. So when customers are looking to add and prepare themselves for adopting more generative AI and more AI agents, the most advanced ones really need these capabilities now. They cannot buy off a demo. They cannot buy off something with a roadmap. They need something tangible that works today and works at scale and is proven. And that is exactly what Prompt Security and Purple AI bring to bear. These are already fully deployed, fully scalable products that are covering right now millions of devices and assets globally. So that drives a lot of demand from customers of all competitors. And in the case of Cloudflare, I think efficacy was a big deal, the ease of deployment, coverage for systems of all operating systems—these were some of the key things that they wanted to find. I think they also wanted a like-minded partner that can move fast with them in AI. And, as you pointed out, despite them being a leading partner for some of our competitors, they have chosen the best technology that they could. And doing this at a scale where you need to be completely flawless in your transition to create no interruption, I think that was also a very impressive feat by both teams, and I think that punctuates the win. Operator: Our next question comes from Shaul Eyal at TD Cowen. Please go ahead with your question. Shaul Eyal: Thank you. Good afternoon, everybody. Tomer or Barry, can you talk to us about the sources of operating leverage and margin for fiscal 2027, as we think about double digit for the year? Tomer Weingarten: Sure. Barry Paget: Happy to share here. A couple of things that we are super focused on. Firstly, really sharpening the focus on the highest-yielding go-to-market opportunities. You heard Tomer talk about some of the product lines and some of the businesses that are rapidly growing for us—some of them in the triple digits—making sure that we are investing behind those and giving them the oxygen they need. And then, secondly, not necessarily germane just to us, but integrating AI throughout our business and our business operations. We are seeing meaningful productivity gains across the board—everything from engineering and development to how we serve customers to how we just run the internal organism itself. Tomer Weingarten: I would just add to that. You have seen us through the past couple of years also taking pretty hard decisions on what not to invest in and what to potentially deprecate and prune away. I think these are the decisions we are going to continue to make. You have seen us do that with a couple of product lines last year. We do not expect the exact same thing this year, but we are definitely honing in on more areas where we see higher yield. So I think it is not farfetched to see us narrowing our focus, at least in go to market, on not only the most yielding but the most important parts of our platform—what is the most important right now for customers. So, all in all, we have not grown our headcount. We have not inflated our ranks in the past couple of years. That is definitely not going to happen this year. We are finding more and more ways to become more productive with AI. It is already happening. A meaningful amount of the code we generate today is generated with AI. That has tremendous impact on us. We are a big R&D shop. We are a big innovation hub. That means that we can build more with less, we can take products to market faster, we can iterate and get better outcomes to customers. All of those are going to help us also drive benefits to the bottom line as well. Operator: Our next question comes from Roger Foley Boyd at UBS. Please go ahead with your question. Roger Foley Boyd: Great, thanks for the question. Tomer, it looked like it was a pretty strong quarter overall for new customer acquisition. You noted, I think, half of new business came from new customers. And against that, you had a 50% attach rate of Purple. Any directional color on what that attach rate looks like with new customers, and to what extent are you finding that Purple is driving these new customer wins and really influencing your win rates in areas like Endpoint? Thanks. Tomer Weingarten: Of course. First of all, it is pretty balanced. We are seeing the uptake both from existing customers and new customers. I think we mentioned a couple of earnings calls ago that we created a new bundle, and we took our Complete bundle and made it a Complete AI bundle, basically adding in some of the Purple AI capability. That is creating a nice differentiator for us in the mass market. So that is driving some of that attach. But, at the end of the day, it is really clear—when you can create 60% faster outcomes, when you can have 300% plus return on investment, it becomes almost a no-brainer. If you are using one of these things, you are actually saving money, and the economics are favorable for customers. That is the main driver behind the Purple uptake. We are also— as I have said in the past—continuously adding more capabilities to the Purple suite. We are adding more and more agentic capabilities that are completely integrated into the platform. We do not require customers to buy another product or to deploy something else or to build their own agent, or we just give them a studio. We are giving them complete integrated AI capabilities they can turn on with one click of a button. That seamlessness—that user experience—is resonating in the market. Operator: Our next question comes from Joseph Anthony Gallo at Jefferies. Please go ahead with your question. Joseph Anthony Gallo: Hey, thanks for the question. It was great to see the $130 million in Data ARR. Can you talk through the sustainability of growth in that business? And then, Tomer, regarding SIEM, how do you think that market evolves in an LLM-based world? Does it become more or less important? Is there any risk of disruption? Thank you. Tomer Weingarten: Thank you for the question. Our Data business is going to go only one way, which is up. That is terabytes and terabytes and petabytes of data that we are seeing down our pipeline. There is a very familiar dynamic in the data space where the initial land is just a piece of customers' overall data needs, and as they onboard our data lake, it is the starting point for them into how much more they can put into it over the years. We are starting to see those expansion opportunities pop up. We are absolutely seeing more and more demand for our data lake capability. Specifically for SIEM—and I think there is a small nuance here—SIEM, you can think about it as its front end for security operations that you put on top of the data lake. I would say that certain customers still want that front end. They want those capabilities. At the same time, what we are seeing more and more is that when we apply some of our Purple suite agentic operations directly on the data—directly on the ingested data—now with Observo integrated into it, the ability to ingest data in real time and apply LLMs that are on the backbone of Purple AI to then orchestrate autonomous operation, to us that is the future of where cybersecurity is going to go. And I am saying the future, but it is also happening right now for certain customers. So I think it is really a question of what models you are going to support for customers. Some customers are going to want more controls, more dashboards, more of that legacy experience—I would call that the SIEM experience. Other customers are much more focused on automation, on embedding LLMs and agentic workflows into their data ingestion as close as possible to the point of ingestion, and that, to us, is almost a new model for cybersecurity that maybe, in the course of the next few years, is going to make SIEM something that is less mandatory than it is today. But right now, what we see in the market is both approaches, and we are doing what customers are asking us to do. Operator: Our next question comes from Eric Heath at KeyBanc. Please go ahead with your question. Eric Heath: Hey, thanks for taking the question here, and nice finish to the year. Maybe Barry or Tomer, could you speak to the linearity in the quarter that you saw, given that the DSOs were a little bit higher than they have been—revenue being in line with your guidance? Thanks. Tomer Weingarten: Yep. I think the revenue beat for us, the entire year, was very minimal beats, I would say. Q4 was a little bit more back-end loaded. I think you see that as well reflected. As Barry mentioned, some of the collections came a bit later than we wanted, but nothing too dramatic. I think that is the full extent of the dynamic that we have seen. Otherwise, the other thing—obviously, when you are not getting these collections in time—it is going to show up a bit later. So you should expect something a bit more healthy maybe in Q2. And I think, again, I called out the changing seasonality for us, so that is another dynamic that is going to be at play. It is probably going to look a bit different for us this year in a very positive way, I should say. So these are the fullest dynamics that we are seeing. Operator: Our next question comes from Adam Tindle at Raymond James. Please go ahead with your question. Adam Tindle: Okay, thank you. I just wanted to continue on that last comment there, Tomer, on net new ARR and seasonality. I think you said earlier 50/50 for first half/second half. And if I am doing the math right for the full year, you are probably going to be somewhere in the neighborhood of $200 million of net new ARR—correct me if I am wrong there. But I think that would imply $100 million or so in the first half, which would be very strong, I think up over 20%. I know it is important with Sonalee coming on, and, under prior CFOs, we had early stumbles in terms of relative to expectations and numbers and just wanting to avoid that. You talked on the call about gaining credibility, which you are certainly doing as you are executing. So I wanted to give this a forum to flush out those net new ARR comments so we do not get too far ahead of ourselves for the first half as Sonalee comes on. Thanks. Tomer Weingarten: Of course. Good questions overall. I would say, first, I think you are not wrong on the net new ARR number—probably a slight improvement over that. And I think the seasonality is just what we have line of sight to right now and just a very solid start for the year. Once we are able to transact earlier in the year, you can do the math of what that means for the rest of the year, and that is what we are seeing. That is what is happening. So we are just calling it out. And, as I mentioned, it is just a good starting point for us. We are starting to maintain that consistency, and I think that should persist. We do not see a reason why it would not. Operator: Our next question comes from Jonathan Frank Ho at William Blair. Please go ahead with your question. Jonathan Frank Ho: Hi. I wanted to dig a little bit into Wayfinder, and could you give us a sense of what some of these enhancements like human-plus-AI capabilities and Intel—how does that allow you to reimagine modern MDR solutions? Thank you. Tomer Weingarten: Thank you. Great question. I think that is exactly it. It is really clear that the role of MDR is shifting. If MDR, in past years, was really manual human work to sift through alerts, with the increased automation and autonomous action of our platform, our MDR analysts and overall service are graduating to be more of a supervision layer, and that is helping us not only scale, but also achieve much better outcomes for customers. And I think, more than anything, it is really clear that we all need to still establish a level of trust when we talk about autonomous agents. Obviously, the margin of error is quite big with some of what these autonomous agents are doing. So, for us, a good way to control that and a good way to make sure that agents always stay within their guardrails—that all autonomous action and critical action are always happening with human supervision—is attaching services like Wayfinder to monitor these agentic actions that are happening, and we are doing so in a highly scalable way. Once again, that is something that resonates with customers. Right now, with us, they can onboard agentic workflows and have humans regulate that, and that is a big thing. We are not just offering them a piece of technology. We are offering them complete managed supervision of their security stack. Operator: Our next question comes from Ittai Kidron at Oppenheimer & Co. Please go ahead with your question. Ittai Kidron: Hey, guys. For me, maybe one for you, Tomer, and one for you, Barry. Tomer, on your side, you clearly have a very broad portfolio at this point, and it is nice to see the traction there. Can you talk about how the comp plan for quotas for salespeople is changing because of that, and what are you incentivizing, and how do you get salespeople focused on the right thing? And then for you, Barry, with your initial guide for fiscal 2027 and going back to the previous questions, in what way are you more conservative, or in what way is your guidance philosophy right now for 2027 different from the exercise you went through in 2026? Tomer Weingarten: Thank you for the questions. Comp plans have not changed in a dramatic way. I just want to remind everybody that we always had this component that we called emerging products, and we are just changing what we put in that basket of emerging products, and we like the behavior that we are seeing. We also see some natural affinity to what customers are asking for, and we are making sure that we are aligning that basket of emerging products to reflect what is happening right now in the market and what we believe are the best products that are the best fit to what customers are trying to solve right now. You are not going to be surprised that you find things there like AI security. You are not going to be surprised that Data is still there. So, obviously, that is a great tool for us—has been and will continue to be—to drive people in the right direction and where the market is currently showing the most demand. Barry Paget: And just to your question on guidance overall, I think this is the right starting point for the year. We are really comfortable with the guide. If you look at the things that are supporting it, it is a few things: solid pipeline, strategic partnership opportunities, and we have been talking a lot about the rising contribution of our emerging solutions—AI, Data, Cloud, Wayfinder, others. So we feel like we are at the right spot. Operator: We have no further questions at this time. We will turn the call back over to Tomer Weingarten for closing remarks. Tomer Weingarten: Thank you all for joining us today, and talk to you next quarter.