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Operator: Good morning, and welcome to the Serve Robotics Inc. fourth quarter and full year 2025 financial results conference call. I am France, and I will be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star-1 on your telephone keypad. If you would like to withdraw your question, please press star-1 again. Thank you. I would now like to turn the call over to Steve Webb. Please go ahead. Steve Webb: Thank you, operator, and good afternoon, everyone. I am Steve Webb, Serve Robotics Inc.’s SVP of Marketing and Communications. Welcome to Serve Robotics Inc.’s fourth quarter and full year 2025 earnings call. With me today are Serve Robotics Inc.’s Co-Founder and CEO, Ali Kashani, and our CFO, Brian Read. During today's call, we may present both GAAP and non-GAAP financial measures. If needed, a reconciliation of GAAP to non-GAAP measures can be found in our earnings release filed earlier today. Certain statements in this call are forward-looking statements. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements. We do not undertake any obligation to update any forward-looking statements we make today, except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today as well as the risks and uncertainties described in our most recent Annual Report on Form 10-K and in other filings made with the SEC. We published our quarterly financial press release and our updated corporate presentation to our Investor Relations website earlier this morning, and we ask you to review those documents if you have not already. With that, let me hand it over to Ali. Ali Kashani: Thanks, Steve. Morning, everyone, and thank you all for joining us. A year ago, we told you that we would deploy 2,000 autonomous robots across the country by the end of 2025, that we would expand from a single city to a truly national footprint, and would prove that this technology works, not just in a lab or a closed campus, but on open sidewalks in dense cities, navigating the full complex of urban life. We did all of that and then some. Today, a fleet of 2,000 Serve Robotics Inc. robots have been activated across 20 distinct cities in six major metropolitan areas, from Los Angeles all the way to the Washington, D.C., corridor. We launched Atlanta, Dallas, Chicago, and Miami. We expanded aggressively in every existing market. We also added DoorDash alongside Uber Eats. This gives us access to over 80% of the U.S. food delivery market. We also completed four strategic acquisitions since early 2025, met or exceeded our revenue guidance every single quarter, and through all of it, we maintained a 99.8% delivery completion rate and a proud safety record. So let me say it again: 20 times the fleet, national scale, four acquisitions, and near-perfect reliability. And in Q4, we once again delivered revenue above guidance as we drove 400% year-over-year growth in the quarter. This is not incremental progress. This is a company that is defining a category in real time. But before I get into the quarter, let us look at the broader trends. We are living through one of the most consequential technology transitions of our lifetime. For the past few years, the world has marveled at what AI can do with words and images and code. The next frontier—the one that will reshape our physical world—is physical AI, machines that can see and think and act in real environments alongside people. As we try to anticipate what this future looks like, I find it really helpful to think about the evolution of computing so far. First, it was the personal computer. Then came the Internet. It connected information. It connected people. Next, we put computing and connectivity in every pocket and in every device. We connected the physical things too. As a result of all this, all of commerce and every industry is now digital and connected. Each leap along this path was worth trillions. Fast forward to today, AI has taken over our digital lives over the past few years, arguably becoming the fastest rising rung of this evolution of computing. Physical AI is the natural next phase that is right around the corner. It is the moment when this intelligence leaves the digital realm and enters the streets. And like computing and the Internet before it, the companies that build the platforms for physical AI will define this era. NVIDIA CEO Jensen Huang has called robotics and physical AI the next multitrillion-dollar industry. Every major AI company is racing to build models for the physical world. The investment thesis is pretty clear. The companies that build the platform and own the data will capture the value. And here is what is important. You cannot build physical AI from a research lab. You need robots in the real world gathering real data, encountering real edge cases, and at real scale. That is the flywheel, and it is exactly what Serve Robotics Inc. has built. Every transformative technology goes through the same arc. We are at a very familiar inflection point. Autonomous robots are here to fundamentally shift how we leverage technology in our lives. The question is no longer will this work, as we have seen by our progress last year. Now the question is, how fast can you scale? 2025 was the year we proved the technology. Looking ahead, 2026 is the year we compound the business model. Last quarter, I said that beyond 1,000 robots, the system tips. Scale changes everything. The economics improve. The partners lean in. Learning accelerates. At 2,000 robots, the system does not just tip. It compounds. We are now accelerating the flywheel. We discussed this concept last quarter when we described how more miles lead to more data, better models, and a more capable fleet. This is the flywheel that should be at the core of any physical AI company, and we have really organized our strategy around it. Every investment we make—every acquisition or deployment or partnership—they are all designed to strengthen a specific step of that flywheel and, as a result, make the whole system spin faster. So let me walk you through it: the four steps in the Serve Robotics Inc. flywheel. Step one is amassing data. Physical AI runs on large amounts of data. This is not just some data you scrape off the Internet. This is data collected in real environments. It is collected by robots at scale. Every mile our robots travel enriches our dataset. Every edge case, every construction zone or rush hour or unmarked crosswalk, they all sharpen our models. And this data is proprietary. You cannot just download it on the Internet or simulate it with the same depth and richness. You have to live on the sidewalks. And no one is better positioned for it than Serve Robotics Inc. What is new and exciting is that we are no longer just collecting data from a single environment. Today, our data spans multiple and distinct physical domains. On sidewalks, thousands of robots are mapping the world in 20 unique cities across the country. Every new neighborhood brings new edge cases and new pedestrian and traffic dynamics, new weather patterns. All of that enriches the models network-wide. In hospitals, our recent acquisition Diligent Robotics has a fleet of nearly 100 robots called Moxie, and they are navigating some of the most challenging indoor environments in robotics. These are multilevel facilities with tight corridors, constant foot traffic, high-pressure operations. Moxie robots have completed over 1,000,000 deliveries across more than 25 hospitals, and counting. So, sidewalks and hospitals and beyond—multiple domains, with wide-ranging geographies, all feeding a single robotics and autonomy platform. There is no one who is doing all this and realizing the value of the combination of indoor and outdoor data collection from commercial-scale fleets. The second step of the Serve Robotics Inc. flywheel is the models. Data is a raw material, but step two is where we take everything our robots are seeing and experiencing, and we turn it into better AI models. This is where another recent acquisition comes into focus. VYU Robotics brought us a specialized team that builds end-to-end models for physical AI. We are building systems that empower us to train across all our operating domains, indoors and outdoors, so that what a robot learns in Los Angeles would help a robot in Dallas, or what a Moxie robot learns navigating a hospital corridor could improve a Serve Robotics Inc. robot that is navigating an obstructed city sidewalk. That kind of cross-domain learning is really significant, and it is a compounding advantage that will widen every quarter. Also, our acquisition of Phantom Auto brought us one of the most capable robot connectivity stacks with extremely low latency. This enables us to operate at a large scale and across a significant geographic region because we can reliably assist robots remotely in real time. What is underappreciated here is that every time a remote supervisor assists a robot anywhere in the country, we generate high-quality training data. Our operations, which are empowered by this connectivity stack we acquired, are a conduit to collecting more data and more edge cases, and it is paired with a considerable training dataset, all collected at a faster rate than ever, feeding right back into our models. I should also mention the talented team of engineers that make all of this possible. When you have one of the largest autonomous robot fleets, plus data from multiple physical domains, and the infrastructure to turn all of this into deployed AI, that is where the best people want to work. Retention across our team has been really strong because people love building on real robots in the real world with significant, unique data. The flywheel attracts talent, and talent accelerates the flywheel. The third step of the Serve Robotics Inc. flywheel—after you gather the data and develop the models—is to deploy those models into the real world. Better models only matter if you can actually get them onto live robots. That is pushing all that improved autonomy out to the fleet that is in the real world where the edge cases live. This is where our fleet scale and our partnerships become a strategic asset. Uber Eats and DoorDash combined serve over 80% of the U.S. food delivery market. We are now a multiplatform fleet. We see robots finishing a DoorDash delivery, then picking up an Uber Eats order on the way back. That kind of interoperability drives utilization, and, of course, utilization is the key to both our economics and our data collection. Our merchant network has expanded to over 4,500 available restaurants and retail partners today. Just this morning, we announced a new partnership with White Castle, one of America’s most iconic restaurant brands. And our geographic pipeline also continues to develop. We are in active discussions with city officials across the country, from New York to Boston to San Jose—and even internationally, Vancouver and Toronto and Sydney and Melbourne. As we evaluate all this new wave of market launches, each market will represent a natural extension to our existing footprint, and we are really excited to share more about our plans throughout 2026 as these initiatives progress. And this is the critical point. Every deployment, across every domain, into every new city, generates new, unique data that feeds directly back into step one. And the cycle continues. Finally, the fourth step of the Serve Robotics Inc. flywheel is monetization. This is the step that makes the whole flywheel self-sustaining. When you monetize your fleets, you fund the next turn of the cycle and make the flywheel accelerate much faster. The companies that figure this out early, and can get paid to collect their proprietary data, have a real advantage over those who have to pay for their data. Tesla is the obvious example. They collect massive amounts of road data to train their models by simply selling cars to consumers. One way we are really advancing our monetization is by increasing our revenue sources rapidly. Delivery fees are, of course, our core business. It is continuing to accelerate as we scale geographies. But branding and advertising saw a 50% increase in Q4 year over year. With 2,000 robots moving through high-density neighborhoods, we have effectively built a neighborhood-level media network on wheels. Advertisers’ response has been exceptional, and we are building a robust bookings pipeline. Over time, we believe advertising and branding can represent as much as 50% of our fleet revenues. Think about what that means. It monetizes miles that are already being driven, at nearly zero marginal cost. Also, data and platform revenues are emerging. In 2026, we plan to further invest in our data and platform capabilities to strengthen the foundation of our robotics solution offering. By offering the platform that powers our deployed robots to external partners and other robot operators, we expect this new revenue base to mature and become a meaningful, high-margin contributor. Also, going forward, healthcare revenue from Diligent Robotics will be another meaningful contributor: nearly 100 Moxie robots across over 25 hospital facilities, with each facility generating over $200,000 in annual revenue. This is already a fully functional business unit that is generating both meaningful data and meaningful revenues. Here is what ties everything together. Every dollar of revenue funds more robots, which leads to more data, which helps us create better models, which leads to even more deployments and more revenues. And the cycle repeats. The monetization does not just sustain the flywheel. It accelerates it. I think that our acquisition strategy also deserves a moment of its own. We have completed four acquisitions in the last twelve months. Every acquisition we have made maps directly to a step or two of the Serve Robotics Inc. flywheel. Phantom Auto strengthens our data collection and our deployment scale as well. VYU Robotics strengthens our model creation. Diligent Robotics further strengthens our data gathering by introducing a new operating domain and also boosts our monetization through recurring revenues with compelling economics. And last but not least, Veebo strengthens our delivery robot monetization by boosting our partnerships with restaurants and major QSRs. This is all deliberate. It is a flywheel-driven strategy. Each deal is designed to make the flywheel stronger. Now let me bring this back to our 2025 progress, and specifically, our Q4 results. In Q4, we exceeded our revenue guidance once again. Total revenue for the fourth quarter was $900,000, representing nearly 400% growth year over year, and also meaningful sequential acceleration. Full-year 2025 revenue came in above our $2,500,000 guidance at $2,700,000. We completed the deployment of our 2,000th robot in mid-December, on time and on plan. Q4 alone, we deployed nearly 1,000 robots. That is in a single quarter. That is more than many robotics companies’ entire fleet size. Delivery volume grew 53% quarter over quarter in Q4, and roughly 270% for the full year versus 2024. This is the compounding effect of fleet at scale. Also, it is the geographic expansion and the deepening platform partnerships, all of which are working in concert as we start to see the benefits. And we expect this growth to continue as we deploy new robots and also optimize their operations and utilization. Our merchant base has also expanded to over 4,500 restaurants and retail partners today. This is a more than 10x increase from roughly 400 a year ago. We now reach over 1,700,000 households in our metro areas. This covers a population of over 3,750,000 people. And we did all of this while maintaining our 99.8% delivery reliability and also our strong safety record. This is the part that I am most proud of. Scaling fast is hard, but scaling fast while maintaining quality and safety is what really separates us. Okay. I want to close with where all of this leads to. A year ago, we had roughly 100 robots. Today, we have 2,000. The path is clear from here to 10,000 robots and well beyond. This would be across more cities, more verticals, even internationally. We have the engineering and operations roadmap and also a track record of execution. The hardest part—building the platform and proving the technology, earning the trust of our partners and cities and consumers—these are all tailwinds now. What excites me most is that each additional robot we deploy makes the entire system more valuable. The data gets richer, the models get sharper, the economics improve, the partnerships deepen. This is the nature of a platform business with a flywheel at the core. We are just entering that phase where the compounding effect and the acceleration of the flywheel become visible. With the Diligent Robotics acquisition, we have extended this platform beyond the sidewalk and into hospitals. That is not a one-off. It is a signal of where things are heading. The robotics platform we are building will be general enough to operate wherever very, very intelligent machines are needed to move safely among people, and mature enough to deliver real commercial value right away. We are not building a delivery company. We are building the operating layer for how robots integrate into our lives. That is the long game, and we are playing it from a position of strength. 2025 was the year of proof. 2026 is the year of compounding returns. I have never been more energized about what is ahead. And with that, let me hand it over back to Brian. Brian Read: Thank you, Ali. Good morning, everyone. Entering 2025, we set explicit operating targets around fleet expansion, revenue growth, and geographic scale, and we delivered against each one of them. More importantly, we strengthened the economic foundation of our business while doing so. That operating discipline will continue to define Serve Robotics Inc. into 2026. I will walk through the details. Total revenue for Q4 2025 increased over 400% year over year to $900,000. Full-year 2025 revenue was $2,700,000, exceeding our guidance of $2,500,000 and representing growth of 46% over the prior year. Fleet revenue was $700,000 for the quarter, growing 50% sequentially. Branding saw record bookings during the quarter as our expanded fleet attracted larger advertising commitments. We also recorded our first revenues related to data monetization in the quarter, an early signal of the data and platform opportunity ahead. As Ali and I have mentioned, these opportunities will continue to evolve through 2026. Software revenues were over $200,000 in the quarter. Our transition to recurring software revenue continues to progress, with our recurring software base now representing approximately 70% of software revenues. More broadly than software, we noticed the shift in revenue quality during the year. Our underlying recurring revenues, defined as revenue excluding one-time agreements, grew over 3x during the year. That shift increases revenue visibility while reducing volatility as we scale. Beneath the top line, Q4 margins reflect the largest single-quarter deployment in our history, with nearly 1,000 new robots. When deployments occur at this scale, newly introduced cohorts initially operate below steady-state efficiency. That is expected and by design. What matters is the trajectory as that fleet matures. This past year, we observed average daily operating hours per robot climb 56% to over 12 hours compared to Q4 last year. Cost per delivery trended down quarter over quarter during the year as our operations team gained experience and our systems continued to mature. Collectively, along with other metrics, these trends give us confidence in continued margin improvement moving into 2026. As reflected in our 2025 results, the operational infrastructure required to support our larger fleet was established this past year: expanded market operations, built fleet maintenance capabilities, remote supervision systems, and deployment capacity ahead of 2026 revenue, and, of course, the achievement of our 2,000-robot deployment milestone. As we move through 2026, we expect a growing portion of that infrastructure to be absorbed across a larger and more productive fleet. GAAP operating expenses for Q4 were $34,300,000, reflecting the cost of deploying nearly 1,000 new robots and expanded operational capacity across new cities within Alexandria, Virginia, and Fort Lauderdale, Florida. On a non-GAAP basis, excluding stock-based compensation of $6,300,000, operating expenses were $25,200,000. R&D remains our largest investment area, at $15,900,000 on a GAAP basis or $12,000,000 on a non-GAAP basis. This is directed towards advancing our AI stack, integrating capabilities from the VYU and Phantom Auto acquisitions, and building the data infrastructure for our growing fleet. G&A spending stayed lean and purposeful, decreasing from the prior quarter by $2,000,000 to $11,100,000 on a GAAP basis and $9,100,000 on a non-GAAP basis. We expanded to one new metro area and nine new cities during Q4 and anticipate a flattening of our G&A expense growth even as we continue to scale through 2026. As I mentioned, we will continue to manage operating expenses with discipline, aligning investment with measurable deployment milestones. Interest income generated in the quarter was nearly $2,000,000. Additionally, Q4 reflects a $3,800,000 tax benefit related to deferred tax liabilities associated with the VYU acquisition, resulting in a partial release of our valuation allowance. Turning to the balance sheet, we closed the year with $260,000,000 in cash and marketable securities. Capital expenditures for the quarter were $16,500,000, representing the tail end of our costs for the 2,000-unit build. Our liquidity position provides strategic flexibility in a capital-intensive industry where balance sheet strength is a competitive advantage. We continue to evaluate additional funding opportunities opportunistically. Adjusted EBITDA was negative $28,000,000. As revenue scales and per-unit economics improve, we expect sequential improvement in adjusted EBITDA margins throughout 2026. Turning to our outlook, today, we are raising 2026 revenue guidance to approximately $26,000,000. The improved outlook is primarily driven by the acquisition of Diligent Robotics, which we believe represents a high-return use of capital while broadening our platform, expanding our addressable market, and increasing the proportion of revenue derived from durable recurring contracts. To fund that acquisition, we moderated our planned 2026 capital expenditures. As a result, we redirected a portion of planned near-term fleet investment toward a significant new market opportunity that is expected to contribute roughly $7,000,000 of revenue during 2026, primarily through recurring healthcare contracts. Looking beyond 2026, we continue to expect this newly combined core business to deliver sustained, accelerating growth. We have previously discussed a $60,000,000 to $80,000,000 annualized revenue run rate associated with the full utilization of our fleet. Internally, we view that level less as an endpoint and more as an intermediate milestone as our business continues to scale exponentially. Our growth is expected to be driven in part by disciplined geographic expansion. As Ali touched on earlier, we are in productive discussions to extend our footprint across additional U.S. markets and, over time, pursue selective expansion into major international cities like Toronto, Sydney, Tokyo, Madrid, and London, among many others. We expect 2026 capital expenditures of $25,000,000 associated with the production and deployment of additional robots as we continue expanding the fleet and increasing the volume of real-world operating data that strengthens the flywheel. Recent acquisitions are expected to increase our 2026 operating base by approximately $20,000,000 to $30,000,000. Non-GAAP operating expenses in 2026 are expected to be approximately $160,000,000 to $170,000,000, reflecting continued investment in autonomy development, fleet scale, and platform capabilities across both delivery and healthcare robotics. Let me close with this. The investments we are making in 2026 are specifically designed to strengthen the plan Ali described. We are expanding the fleet, improving the autonomy stack, and increasing monetization opportunities across the platform as the flywheel accelerates. Serve Robotics Inc. has evolved into a diversified robotics platform with multiple revenue streams spanning delivery, advertising, data services, software, and now healthcare automation. In the age of physical AI, we are using our strength in autonomous robotic delivery to build a generational robotics company that will define this era. I will hand it back to Steve for Q&A. Steve Webb: Thank you, Ali and Brian. We will now move into the Q&A session. But first, I would like to say a big thank you to all the investors and analysts who submitted questions via email. Thank you so much for your engagement. The first question we have is related to new robots. Serve Robotics Inc. deployed 2,000 robots last year. What is the goal from a unit deployment perspective in 2026 and beyond that? Ali Kashani: Thank you. I am happy to take this one. So over the next few years, we expect to deploy thousands more robots. But in the short term, as we have shared in the past, before we go on and share a detailed plan, we want to really let the recent growth settle in, and we want to gather all the data and learnings from last year’s 20x fleet growth. We have the capacity to continue growing our revenue right now. On the other hand, manufacturing and supply chain, as we all know, require certain lead time. So we are already working on the supply chain for the next batch of robots, so that we can expand to new major markets as they become available quickly. But the time between now and when the supply chain and manufacturing of the robots would be available is a good time for us to really hone in on our playbooks and get them refined based on the existing growth. And we do not really want to be deploying more robots until we get all the current ones fully activated on a daily basis. Brian Read: Yes, if I can wrap up on that, Ali. In the prepared remarks, we talked about CapEx guidance being approximately $25,000,000 during 2026. A significant majority of that will be for the Serve Robotics Inc. fleet expansion. But we are going to continue to invest not only in Serve Robotics Inc. but for additional Moxie robots and look to accelerate their growth as well. I think, Ali, exactly as you summed up, in this time period—Q1 2026—we are looking to optimize the performance of the full fleet. And most importantly, we retain control over that CapEx timing and also the OpEx deployment costs as that fleet continues to grow. Steve Webb: Great. Thanks, Brian. On to our next question. What percentage of the 2,000 deployed robots should be daily active by the end of first quarter? Ali Kashani: I am happy to take this one as well. So from manufacturing and deploying robots to reaching full utilization of the fleet, as we have discussed in the past, there are several steps that take place. You start with, obviously, creating the depots in each new market, building the operational footprint, which includes hiring and training staff. So this is a lot of the work we have already done. And then the next step after that is getting any requirements by local municipalities, any stage gates, all of that addressed. We need to then activate neighborhoods with our delivery partners, onboard local merchants, and then once all of that is done, we can have robots at full operational hours every day. We would focus on operational efficiency—it is a question of where to put the robots, how to move them around, all of that—so that we capture the maximum demand. So we expect that by the middle of this year, as I said before, before we manufacture any additional robots, we would get all of the existing robots on a fully active daily basis and shift our focus to that operational optimization. We are timing everything again so that we have that full utilization, the full activation of these robots, before manufacturing new ones, given the lead times for manufacturing. Steve Webb: Ali. On to the next question. We received this one about the acquisition of Diligent Robotics. How are the integration efforts going, and what are your plans for growing the healthcare business? Ali Kashani: That is a great question. So we covered some of this earlier, but I can dig in a bit more. We have always intended for our autonomy platform to extend beyond just food delivery and into many other environments, including, in this case, hospital and healthcare. As we looked at Diligent Robotics during our acquisition process, it became pretty clear very quickly that it is the right time and right company for us to expand our scope. So this acquisition actually strengthens our flywheel, as I mentioned earlier, by really enriching our data further. It also creates a more balanced and resilient revenue base for us, and it opens up, obviously, new market opportunities and a new growth engine. We are already starting to integrate our platform capabilities with Moxie robots, but this will take some time. As we do this integration work, we are creating a repeatable playbook for expanding into new verticals and operating in multiple domains. Brian Read: On the second part of that question for the revenue, and just to give a little bit more color, these are existing, established recurring revenue contracts that we were able to acquire through Diligent. And so these are different than our demand cycle for current food delivery. The $7,000,000 number we referenced in the prepared remarks is for revenue here in 2026. And I think it is important, from an integration standpoint, we are going to continue to focus on additional investments into the healthcare business around engineering headcount and infrastructure to support that team through their next phase of growth. Our business development team and sales teams are looking at other opportunities in the pipeline. Several of those are currently being evaluated, and we are going to make the best decisions to drive long-term revenue growth. Ali Kashani: Great. Steve Webb: On to the next question. Is optimization of the fleet a linear process, or are there step functions? And if so, what would cause that? Ali Kashani: Yes. You know, we touched on the steps earlier. Of course, we are pushing a lot of these steps at the same time, but you are never going to get everything done at the same time. I think going from that deployment to full, full utilization steps are pretty important. There are many factors that affect that utilization, and those steps kind of outline, as I said, as I mentioned earlier. Overall, though, we are seeing that our more mature markets are further along on that optimization curve. We mentioned this earlier: 2026 is really about compounding returns for us. 2025 was all about building that infrastructure. So in 2026, we are going to be really laser-focused on optimization and efficiency of the fleet, both on the sidewalk and in the hospitals. Steve Webb: And we have enough time for one more question. Can you speak more about your plans to expand internationally? What is the time frame for those city launches? Ali Kashani: Yes. That is an exciting one to end on. Let me maybe give some context on our thinking here. So we have really built a great foundation for expansion. We are now in 20 cities, six major metros. We have really proven the tech at scale, built the operational playbook, a way to launch new markets efficiently. So this work really supports that international expansion well. We are now in active discussions with city officials and partners in multiple international markets, from Canada to Australia, Japan, Spain, and many other countries. We are considering major cities, dense urban environments, strong delivery markets, and municipal governments that are really leaning into autonomous robots on sidewalks. I want to emphasize that we are going to be disciplined and intentional about these expansions, especially weighing our growth opportunities here in the U.S. versus markets abroad. We have learned from our U.S. expansions to date that the right way to go to a new market is methodical, and we want to really be measured as we identify the right partners and the right expansion cities. We do get a ton of inbound interest to consider, but we want to be very selective. And we see this ultimate growth opportunity internationally as a 2027 opportunity, but 2026 is for us to lay the groundwork for it, just as we laid the groundwork for this year last year by expanding to new cities. In the meantime, our robots obviously will continue and collect more data in more than 20 cities today and expanding by the end of the year, and we will keep making that flywheel move faster and become more durable so that we can enable even further rapid growth and expansion. I will just end by saying this again. I have never been more energized and excited about what is ahead for Serve Robotics Inc., and I cannot wait to see Serve Robotics Inc. robots operating in cities across the globe. Steve Webb: Great. Thanks, Ali, and thanks, Brian. That is all the time we have for today. I would like to thank everyone for joining us again. Thank you for joining us on the call today. Operator: Ladies and gentlemen, thank you all for joining, and that concludes today’s conference call. All participants may now disconnect.
Operator: Good day, everyone, and welcome to Elutia Inc. Fourth Quarter 2025 Financial Results Call. At this time, all participants are in a listen-only mode. After this presentation, there will be a question-and-answer session. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note this conference is being recorded. Now it is my pleasure to turn the call over to Sonali Fonseca. Please proceed. Sonali Fonseca: Thank you, operator, and thank you all for participating in today’s call. Earlier today, Elutia Inc. released financial results for the fourth quarter and full year ended 12/31/2025. A copy of the press release is available on the company’s website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. All statements contained in this call that do not relate to matters of historical fact or relate to expectations, predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, are based upon our current estimates and various assumptions. These statements include material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For lists and descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including Elutia Inc.’s Annual Report on Form 10-K for the year ended 12/31/2024, and in our subsequent periodic reports on Forms 10-Q and 10-K, accessible on the SEC website at www.sec.gov. Such factors may be updated from time to time in Elutia Inc.’s other filings with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, 03/11/2026. Elutia Inc. disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. Also, during this presentation, we refer to gross margin excluding intangible asset amortization, which is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure is available in the company’s financial results release for the fourth quarter and full year ended 12/31/2025, which is accessible on the SEC’s website and posted on the investors page of the Elutia Inc. website at investors.elutia.com. With that, I will turn the call over to Elutia Inc. CEO, Randy Mills. Randy Mills: Thank you, Sonali. Good evening, and welcome to our fourth quarter 2025 earnings call, from our Gaithersburg, Maryland facility, and I am super glad to be here. Wherever you are, however you may be listening, welcome. We are super glad to have you. I am going to try to keep my comments brief tonight, but on that point, you know I may fail. We have so many exciting things going on in Elutia Inc. right now, and I am eager to share them with you. With that, let us just jump in. Here is a forward-looking statement slide that basically says what Sonali just said. And then really quickly on our conference call, so what is on the agenda today? We are going to go over some of the basics. You may have heard this, but we also have a lot of new callers on the call today, so be patient as we go over things like our mission and what we are good at, where we are headed as a company. We made a couple of announcements in that press release that are kind of important, and so we will be updating some of those things there. Matt is going to then talk about finance topics. And then lastly, we will close the call and take your questions. So let us start out with our mission. Humanizing medicine so patients can thrive without compromise. Humanizing medicine. Humanizing medicine. Every 98 seconds, a woman in this country is diagnosed with an invasive form of breast cancer. That means even if I keep my remarks short today, there will be 18 new cases diagnosed during this call. Three of those are going to die during this call. Ten will have breast reconstruction. And three are going to have a serious complication from that surgery. Who are these people? These are our mothers. These are our wives. These are our friends. And our daughters. You know them. That is humanizing medicine. I am looking around this room right now at a group of brilliant overworked, tired professionals. And the look on every one of their faces is the same. Randy, let us go get at this. So why do we think we can fix this appalling problem? Well, let us look at what we are good at. What we are great at, actually. We are great at combining an optimal biological matrix, and we use the biological matrix to hold an implant in place and regenerate into the patient’s own healthy tissue. That is an essential part of the surgery. But what we do that no one else does is we combine that with powerful antibiotics for sustained antibiotic release that prevents infection and these other complications that we are talking about. Infection is the number one complication of surgery, period. And we have the ability to significantly reduce it. And this is not theoretical. Right? We have already done this. LU Pro, we launched in January. We got it through a 194 VACs in nine months. We got it up to an $18 million run rate because physicians loved it. And most importantly, it worked. So that is what we are doing with 41X in breast reconstruction. We cannot do this without an incredible team and I am super pleased to announce that we have done a great job adding some serious horsepower to our team this last quarter. I would like to welcome Guido Nils as our new board member. He is an operating partner at Edsburg Woodlands and the former Chief Operating Officer of Guiding Corporation. He is also, importantly, a longtime friend and mentor of mine. And we are blessed to have him join the team. I would also like to welcome Pete Ligotti as our new Chief Commercial Officer. Pete joins us with a brilliant 30-year career, including 20 years at Integra. Some more time at NuVasive where he ran a successful business. He is going to be coming in here, and he is going to be spearheading our commercial efforts as we move towards the launch and commercialization of 41X. Welcome to both of these gentlemen, to the Elutia Inc. crew. Okay. So where are we headed? I want to be really clear about all this so everybody understands. We are going to solve a really big problem that exists right down in breast reconstruction, and why this is such a transformational opportunity for us really comes at the intersection of three things. One is, it is a really big market. It is a really big market, and that matters. Breast reconstruction is a $1.5 billion market. But it is also a really big market that is facing an enormous problem. As I said, 15% to 20% of breast reconstruction patients will develop a serious postoperative infection. It is just unacceptable. We can do better. We have to do better. And the good news is that our technology platform is almost purpose built for this specific problem. Our first FDA-cleared drug-eluting bioenvelope turns out to be a really, really great way of addressing breast reconstruction infection. And so that is what we are going to do. So digging in here a little bit, breast reconstruction is a really big market. There are 102,000 breasts reconstructed after mastectomy annually. That means there are a lot of biological meshes that are already being used. Biological meshes are already used in 90% of these surgeries. So what does that mean? It means we do not have to train a surgeon on some brand-new technology to solve their problem. We just take a technology that they are used to, that they are familiar with using, and make it much better so it solves their number one problem. Human ADMs, human acellular dermal products lead this market and they are expensive. We are talking about $7,500 to $9,500 per breast. That makes them 65% or more of the total implant spend during a breast reconstruction procedure. So this is a really, really big market. But it is a market that confronts some very unique challenges. When I talk about the postoperative infection rate being 15% to 20%, people look at me and think, oh, that just could not be. It is. It definitively is. I want to explain just a little bit about why we see such high infection. And I am not going to go through all the slides. Some of you may have seen this. I have a longer series on this. But I do want to show you what is really at the root of this. So in a mastectomy, all of the breast tissue has to get removed. If all of the breast tissue is not removed, the woman’s mastectomy is not complete and they have to go through follow-up and surveillance and mammograms and other types of things and still have the risk for redeveloping breast cancer. So all of this tissue has to be removed. Well, one of the things that you should sort of know about breast tissue is that the blood supply for the anterior, or the front, side of the breast all goes through this breast tissue that has to get cut out. And so when a mastectomy is done and that tissue is removed, the blood vessels and therefore the blood supply for the front half of the breast is removed with it, and that closes off that blood supply. And what does that do? Well, that creates a situation where you have an area of the body that your blood flow cannot reach, where your immune system cannot readily reach, and very importantly, where postoperative antibiotics cannot reach. You can give somebody oral antibiotics or you can give somebody IV antibiotics, but if they do not have a vasculature to a particular area, those antibiotics are not going to flow there. And this is what sets up the very unique problem that we see in breast reconstruction. And that is what leads to these exceedingly high infection rates. As I said, one in three women suffer a serious complication, but 15% to 20% experience infection. This is not one paper. This is not some esoteric citing. This is the registry. This is what all of the data says. In fact, put it into real specific numbers. The registry data says it is 12% to 37%. You want to put the real numbers about it. So when we say 15% to 20%, we are not exaggerating. On that number, if anything, we are being conservative. And this is validated every time we go out and talk, particularly with the academic centers where they really track these numbers very, very closely. That leads up to one in five implant loss, so they have to go back and this whole thing comes out. It leads to a massive economic burden for the hospital, a $48,000 economic burden to the hospital. So the hospital certainly should be highly motivated to address this problem. But I just want to keep in mind and go through our mission here in humanized medicine. We are also talking about a woman that started this journey because she was diagnosed with cancer. Not an augmentation. She was diagnosed with cancer. And the number one goal in that woman’s mind is curing herself from that cancer. And that involves chemotherapy. It involves surgery. It involves radiation sometimes. And when an infection pops up, all of that stops. None of that can go on until that infection is resolved. And so this is a significant problem on so many different fronts. And it is one that, if you cannot tell, we are very, very passionate and committed to solving. So the great thing about this anatomical problem that is set up during the mastectomy is it kind of creates a perfect environment for what we do. So what if we flip the script on this and instead of trying to deliver this antibiotic systemically, we delivered it locally. We actually delivered it where the breast implant and the drain are, through the mesh, which is naturally there anyway to hold the implant in place. Well, the exact opposite would happen. Instead of concentrations being very, very low of antibiotic, the concentrations would be very high. And they would stay high for a long period of time. And then the best part, they would not have any systemic effects. So you could have high therapeutic concentrations of antibiotics right there in the breast site without any of these systemic side effects that you sometimes get when you deliver systemic antibiotics. And this was the concept that we started out with a very long time ago. This was the premise behind EluPro, and when we started using EluPro in humans, we saw it was completely valid. And then we got more data on this specifically in breast reconstruction. So there is some really great data out there on what happens if you deliver antibiotics locally into the breast reconstruction spacers. Two different studies particularly that I will reference here. One of them uses a plaster antibiotic plate. Now that does not sound like a great way to treat a woman who is undergoing breast reconstruction, to put a piece of plaster in her breast. But when the risk of postoperative infection is 15% to 20%, desperate times call for some pretty desperate measures. So they gave this a shot. They impregnated this plaster with this antibiotic and they looked at it in just the general breast reconstruction population. What they saw was a 62% reduction in infection risk. We are talking about going from 12.6% to 4.8%. This is not a small study. We are talking about an n of 593 patients in here. So a significant proof of concept that if you deliver these antibiotics locally, you can do a really, really good job of preventing infection. Another version of this was tried, but in a much, much higher-risk setting. Here, what they were looking at is instead of using these big plates, they used these little plaster beads. Again, they are this plaster material. And they put those into the breast cavity. What they were looking at here were women who had very, very poor, in fact pathologically poor, blood flow to the anterior side of the breast, something we call mastectomy skin necrosis. And this is where there is just literally no blood supply to the front part of the breast, and that front sort of breast tissue starts to die. When that happens, your risk of infection skyrockets. And so here, they saw an 82% reduction in infection. We are talking about going from 36% down to 6%. Again, n of 75 here. You might say, well, I guess maybe this problem is solved. Not really. Even the authors, and these are friends and champions of Elutia Inc. who were behind these studies, will tell you this is a suboptimal solution to a very serious problem. No woman likes that plaster put in there. No plastic surgeon wants to make antibiotic beads off-label in the back part of their surgical center. They do not stay in place. They drop down into the inferior side and into the gutters of the breast. They do not provide uniform coverage, and they elute the antibiotic way, way, way too quickly. But it did show that this concept definitively works. And that is why we created NXT 41X. We are combining these powerful antibiotics, rifampin and minocycline. So these are antibiotics that specifically target the pathogens we know we see in breast infection. And it delivers them in a uniform field for an extended period of time. It might be 30 days. Wow. What is this 30 days about? The drains that are placed at the time of surgery stay in 17 days. And so you want a couple of weeks of extra coverage. That is what that is about. And we combine these powerful sustained antibiotics with an optimal biologic matrix. And that matrix I will refer to as 41. It is just the matrix by itself. And we put those two things together and we made something purpose built for the problem that we are trying to solve, which is postoperative infection in breast cancer surgery. So let us talk about the roadmap and how do we get from here to there. Right now, we have SimpliDerm, which I am going to talk about in just a second, but that is our current product that is used in the breast reconstruction space. It gives us a lot of practical, on-the-floor experience in this space. The real excitement starts with 41 and 41X. So 41 is our base matrix. So when I say NXT 41, I am talking about just the biological matrix alone, without antibiotic. It is a phenomenal matrix in its own right. If we were not a drug-eluting biologics company, we would be talking about this incredible NXT 41, but we cannot leave good enough alone, primarily because it does not solve the biggest problem in breast reconstruction. But what we do is we use 41, from a regulatory standpoint, to set the foundation for 41X. We announced today that we have already submitted to FDA NXT 41. Let me just sort of pause and reality check everybody. We know we are going to get questions from FDA. We know we are going to need to respond to them thoughtfully and professionally, and we know that is probably going to take a little while. So let us be patient. Let us give our incredible R&D team the time to do the professional job they need. If something significant happens, I promise we will update you on it. In the meantime, we expect clearance sometime in 2026 for 41. And that will serve as the platform for NXT 41X, which is the base matrix combined with the rifampin and minocycline. And if we put the timelines together, we expect clearance for NXT 41X towards the end of the first half of 2027. So we are looking at a second-half launch of that product. Okay. What is going on inside the company? Well, you can sort of divide it up into three major workstreams. The first one is obviously development. No surprise here. That group is focused pretty heavily on the approval of a highly differentiated product that significantly improves outcomes in plastic and reconstructive surgery. That starts with our 41 base matrix and rolls seamlessly into our 41X drug-eluting matrix. I said we are here in our beautiful Gaithersburg facility. Well, that allows me to introduce manufacturing, because this is our manufacturing facility here, where we have enough capacity to make 41X for the foreseeable future. I think we have something like $120 million in revenue-generating capacity for 41X with just one shift right now. We have this great manufacturing facility. And then, basically, I could sum up manufacturing’s job right now into two things. One, ensuring adequate supply of perfect quality tissue. And two, driving down cost of goods. So that is what they are working on. And then lastly, we now have Pete Ligotti coming in and heading commercial, building these KOL partnerships. I am going to tell you, we do not have a problem getting a meeting and building strong relationships with our KOLs. We have, and are continuing to build, a very robust KOL team of champions. And there is really no secret to it. We are able to do it not because we have great personalities, but because we are addressing their number one problem and the number one problem that their patients are facing right now. In addition to that, Pete is working on developing health economic models, obviously spending a lot of time on reimbursement strategies, and generally preparing for launch readiness of 41X. So now let us turn a little bit to SimpliDerm. We are exploring SimpliDerm strategic options. We announced that in the press release today. You might ask, well, why now? Well, we have gotten to the point where our confidence with the 41X program really dictates that this is now the time for us to focus all of our time, all of our resources, all of our energy on making sure we do a great job with that platform. SimpliDerm is a great product, and whoever gets this asset is going to get a really, really wonderful product. Acellular dermal matrix that is used in soft tissue reconstruction. It has great handling. It is sterile. It is hydrated and ready to use, which is what the plastic surgeons want. 100 million lives covered is a big deal. Some people think they could introduce their own acellular dermal product really quickly and just get it on the market. It turns out reimbursement in the acellular dermal matrix market is a really big deal. So we have 100 million lives covered across two of the largest payers, Anthem and UnitedHealthcare, as well as nine regional plans. Patent protected, obviously. It is completely standalone. So for us, it is a completely segregable business that does not cause any disruption. And whoever gets it, it is EBITDA accretive. So no incremental capital investment is required. It is really a beautiful plug-and-play technology. We will keep you updated on this, and we will see how that process goes. Lastly, I would not be able to say any of the great things that I am saying today, and we would not have been able to make any of the progress that we are making, without our incredible Elutia Inc. crew. We are proud to be recognized for something we already knew. Elutia Inc. is a great place to work, and we were certified by the Great Place to Work certification. The results, I thought when I saw them, I was really proud. It proved we are a mission-driven organization. We are also a merit-driven organization. 54% women, 62% of our leadership roles are occupied by women. 50% have advanced degrees. We are a brilliant group. Not me. But the team. An entire third of our organization has a doctorate. And we are a committed group. Our average tenure, 6.3 years. The advantages, if you are wondering, so what is the advantage of this Great Place to Work certification? Well, the certification is kind of nice. I guess you can hang it on the wall. But what it means is that, compared to our noncertified peer competitors, we tend to outperform on financial metrics by fourfold. We are able to attract job seekers because of the Great Place to Work certification with a 15 times higher attractiveness, and our turnover of certified workforces is about half that of the regular U.S. workplace. So I am going to end my comments there by thanking this tremendous team for frankly making my job such a joy. And with that, I will stop talking, and I will turn it over to Matt Ferguson. Matt Ferguson: Okay. Thank you, Randy. And before I start my remarks, I would just like to say I so appreciate the passion and the leadership that you brought to the organization, and I support all of the comments that you just made about our mission and our market, our opportunity, and probably most importantly, our team. And with that, we put out our earnings press release today with quite a bit of detail in it, and we will put out our 10-K in a couple of days. That will have even more detail in it. So I am just going to hit a few highlights and not take very long here. But moving into a summary of our fourth quarter financial results, from a revenue perspective, we did $3.3 million in revenue, and that compares to $2.8 million in the year-ago quarter. That is up 16%. So we were very pleased with that performance. That was really driven by the return to direct distribution for both our cardiovascular and our SimpliDerm product lines, as we have talked about. The return to direct distribution has also had a very positive effect on our gross margins. So on an adjusted basis, which is probably the better indication of how things are really performing from a business perspective, we had an adjusted gross margin for the fourth quarter of 66.8%. That was up 12 points from the prior-year quarter, when it was 56.5%. So really nice results there. Our net loss from continuing operations, so that is excluding the bioenvelope business that was divested on October 1, was $6.5 million, versus $7.2 million a year ago. And then probably a more relevant metric in terms of our operating performance, our adjusted EBITDA, which is a non-GAAP metric but excludes certain noncash, nonrecurring, noncore operational metrics, was a loss of $4.2 million in the quarter compared to $3.4 million in the year-ago quarter. On our balance sheet, a lot has changed in the last quarter. As you know, our total cash on hand plus the $8 million that we have in escrow is $44.4 million. So it puts us in a really nice position from an overall cash point of view. That is after having paid off all of our debt with SWK that took place at the beginning of the fourth quarter as well. That was about $28 million that went to pay off that debt. And then just from a share count point of view, we have 42.8 million common shares outstanding as of the end of the year. In addition to that, there are 4.5 million pre-funded warrants that are outstanding, so a total of 47.3 million. And all of those common shares outstanding now are Class A common shares. So what that means is that all of our Class B common shares, which were held by one entity, were converted during the quarter and sold into the market. So that, as you know, is essentially an overhang that is gone now, and we are very pleased to get that behind us. One of the effects that we have seen as that has gotten behind us is that we recently came back into compliance with all of Nasdaq continued listing requirements. We put out that release at the beginning of last week, and I would just like to thank all of our investors out there who have put their trust and their capital into Elutia Inc. and helped support that return to compliance there. So moving on, just to take a step back and at a big-picture level, 2025, and really all of 2025, represented a real strategic reset for the company. And the biggest event in that really was the $88 million sale of our bioenvelope business to Boston Scientific, which, again, allowed us to pay off all of our outstanding senior debt to SWK, left us with $44.4 million of cash on the balance sheet and in escrow that will come in later this year, and it really allows us to be completely focused and extremely well resourced for the continued development and the launch of NXT 41, which we truly believe will be transformational in the market starting next year. So I guess with that, the last thing I would like to mention is just that we have tried to be very active in getting this story out, which we truly believe in. We have been active in getting it out to investors, and we are going to continue to do that. We have two conferences coming up in the next couple of months. The first will be just next week, the Sidoti Small Cap Conference, which is an online conference, and then in May, we have the LD Micro Conference, which is a live conference in Los Angeles. So if any of you are attending those events, we would very much love to meet with you there. So with that, in summary, before turning it over to questions, I would just like to reiterate the three key points of our story. We have a validated technology platform, as has been proven by the sale of our EluPro product and our bioenvelope business last quarter to Boston Scientific for $88 million. We have a truly blockbuster pipeline underway, which is really starting with NXT 41 and a $1.5 billion market. And then we are in a great position from a resource point of view. We have a fantastic team. We have a great facility that we are sitting in here today. And we have a strong balance sheet, which will take us through that approval and into commercialization. So with that, I will open it up to questions, and back to you, Operator, to start that off. Thanks. Operator: Thank you so much. We will now open for questions. As a reminder, to ask a question, simply press 11 to get in the queue and wait for your name to be announced. To remove yourself, press 11 again. We have a question from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed. Frank Takkinen: Great. Thanks for taking the questions. Congrats on all the progress. Congrats on 41 submission to the FDA. I was hoping to start with a few questions around that. I know it is a question along the lines of trying to predict the unpredictable, but as you are working internally, what kind of questions are you preparing for from the FDA, and how do you think about the challenges you might have to go through to get it to market, or if it should be a relatively streamlined process? And then secondly, once you do get 41 across the goal line, how quickly can you shift the filing to 41X and resubmit? Randy Mills: Okay. I am just making some notes, Frank. So, Frank, thanks for the questions. I think everyone should view the review process and respect the review process the way we do. The timelines that we have laid out for clearance are fairly conservative. And they are fairly conservative because we want to make sure that we do a really professional job. Now I would say, first and foremost, we submit a high-quality application with everything in it that we think is necessary for a clearance. We do retain a lot of backup data and supporting data on all the necessary points. But as a matter of sort of regulatory strategy and best practices in regulatory science, you do not over answer a question with FDA. You just be prepared to explain the rationale for the things that you did answer. And so that is really the strategy that we have going on. There is no question that biocompatibility for a product like this is a big question in mind, and a big focus right now in the Food and Drug Administration. We know that. We feel pretty good about our product there. We know that when we get into 41X, if we just remember back to the days from EluPro, that things like in vitro elution were a real big point with them. You probably remember the IVE days, Frank. And so we are prepared for any and all of it, but we are prepared for it in a very humble and respectful way. And that is the timelines we have set up that have that in place. And I would just sort of encourage everyone to just keep that in mind. I would not be pulling forward any timelines until we tell you that is probably a good idea. With regards to how fast we roll into 41X, I would say just to keep in mind the whole purpose of 41 is to improve the efficiency of 41X. We have no intention of commercializing 41. It is not a drug-eluting matrix, and so it does not fit with our high-level thesis. So, really, the only reason that we are doing it is for regulatory efficiency. And therefore, the team will learn from the 41 submission. They will call any audibles that they need to as a result of what we learned from the 41 submission. But clearly, their plan is to go pretty efficiently from 41 into 41X. And if at any point we think that that might not, that 41 might no longer serve that purpose, well then we might change the plan. Right? Even pull forward a 41X submission. But right now, we anticipate, in the timelines, an approval pretty efficiently after 41. Frank Takkinen: Got it. Very helpful color. I was hoping to ask a little bit more about commercial. Appreciate some of the comments you made there. But kind of related to SimpliDerm, I think we have talked about just having experience in that space via SimpliDerm could help the commercial readiness of the organization once 41X is approved. How do you think about balancing that readiness that SimpliDerm could have helped with versus the strategic process? And then at the same time, what are you maybe doing from a commercial readiness perspective in light of that transition that is occurring? Randy Mills: Right. So, Frank, let us go through this with the three things that really help us get ready for 41X. One is just the base understanding of this market, how it works, and that includes the reimbursement. Right? So we have done that. We do know and we do understand how this current market works, how reimbursement works here, who the players are, literally the logistics of a breast reconstruction product. So we think we check that. You will remember, by far, the most important thing in the commercialization of EluPro was the value analysis committees, like the VACs. And I will be completely honest here. We learned more about how to do that with EluPro than probably we learned or are learning from SimpliDerm. My 194 VACs in the time that we did that, I mean, that was so key to the explosive growth of that product. And we feel, and we have a team that understands that. We know what to do from a VAC package standpoint. We feel pretty good about that. The third piece, though, was KOLs, and, you know, key opinion leaders and who are the thought leaders in this space. And here is, Frank, where our thought process has really flipped, and it really started flipping when we were able to go last October to the big plastics and breast meeting in New Orleans and just cold call some of these marquee leaders in the field of plastic and reconstructive surgery and say, hey, would you mind having a conversation with us? We are trying to develop a locally delivering biological matrix for breast reconstruction, you know, deliver antibiotic, try to prevent infection. Our dance card filled. And it filled with some of the brightest, strongest thought leaders in this space, and that continues to this day. We have no problem getting meetings with these KOLs and engaging in very meaningful, very enthusiastic conversations with them on how we can best design, build, and deliver a product that is exactly what we need. And so when that last piece sort of started to happen was when we sort of made the decision we are probably pretty good here and can start moving up, particularly with the progress the R&D team is making with the filings. Frank Takkinen: Yep. Yep. That is perfectly clear. I got it. One last I wanted to ask, Randy. Obviously, the data is really impressive with plate as well as the powder with 60% and 80% plus reductions. How do you think, and it is a speculative question, but how do you think NXT 41X could compare from an infection reduction perspective in relation to some of these other techniques that are being used today? Randy Mills: Yeah. We would be thrilled with a 50% reduction. Anyone would be thrilled with something like that. We have some advantages, though, over those techniques that are delivering those results. Those advantages are uniform distribution. So as I said, with the plates and the beads, those things have mass to them and they notoriously sort of fall down into the breast gutters and do not provide uniform coverage. The second thing is the teams that were doing that work know that antibiotic comes out of that real fast, and therefore it does not provide a particularly long-term coverage. We targeted this 30 days, and we targeted the 30 days because the drains come out at day 17, and if the drains are still in, particularly with this, there is a pistoning that can happen with the drains from the outside to the inside, you are constantly introducing and have the potential to introduce bacteria back into that surgical field. So we felt pretty strongly that you needed to have antibiotic coverage that persisted after the drains were pulled. So we feel like we have probably built a better solution than the ones you are seeing with these really fantastic results. I cannot knock what they are seeing. But I think I want to caution everyone here again to a little bit of humility and perspective. There is a percentage of these cases that have such severe necrosis. This is where the vasculature to the breast is so compromised that it does not matter what you would put in there. The tissue just dies. And in that case, we can add antibiotics all day long, but we are not going to prevent what ultimately is going to become something more like a gangrenous infection and the complications from those. And that is really just an unsolvable, at least at this time, consequence of the base mastectomy. So does that help? Frank Takkinen: Yeah. That is perfect. Appreciate the color. Thanks, guys. Operator: Thank you so much. And ladies and gentlemen, this concludes our Q&A session and our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and welcome to the Velocity Financial, Inc. Fourth Quarter 2025 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note today's event is being recorded. I would now like to turn the conference over to Christopher J. Oltmann, Treasurer. Please go ahead. Christopher J. Oltmann: Thanks, Rocco. Hello, everyone, and thank you for joining us today for discussion of Velocity Financial, Inc.'s fourth quarter and full year results. Joining me today are Christopher D. Farrar, Velocity Financial, Inc.'s President and Chief Executive Officer, and Mark R. Szczepaniak, Velocity Financial, Inc.'s Chief Financial Officer. Earlier this afternoon, we released our results, and you can find the press release and accompanying presentation that we will refer to during this call on our Investor Relations website at www.bellfinance.com. I would like to remind everyone that today's call may include forward-looking statements, which are uncertain and outside of the company's control, and actual results may differ materially. For a discussion of some of the risks and other factors that could affect results, please see the risk factors and other cautionary statements made in our communications with shareholders, including the risk factors disclosed in our filings with the Securities and Exchange Commission. Please also note that the content of this conference call contains time-sensitive information that is accurate only as of today, and we do not undertake any duty to update forward-looking statements. We may also refer to certain non-GAAP measures on this call. For reconciliations of these non-GAAP measures, you should refer to the earnings materials on our Investor Relations website. And finally, today's call is being recorded and will be available on the company's website later today. I will now turn the call over to Christopher D. Farrar. Christopher D. Farrar: Thanks, Chris, and I would like to welcome everyone. I appreciate you joining our 2025 year-end earnings call. Pleased to report another incredible year of performance and very proud of what our team accomplished. Through hard work and dedication to our vision, we recognized record levels in originations, portfolio growth, new securitizations, book value, pretax ROE, and earnings. Credit belongs to my amazing team members who are talented and passionate about our mission. I believe they are our greatest asset. From a macro perspective, we see healthy activity in the fixed income markets as our deals are oversubscribed and spreads are tight. Our pipeline is growing, our end real estate markets are healthy, and we are optimistic about our prospects going forward. In terms of our specific results, core net income increased by 52% to $111,000,000, which also drove a new record level of pretax ROE of 26%. Importantly, we achieved this growth while maintaining our margins and credit discipline. With respect to originations, we increased volume by 49% to a record $2,700,000,000, driven by increases in productivity from our account executives. Increased volume also set a record for our capital markets team with nine new securitizations and $2,600,000,000 in new issuance. On a net basis, the portfolio grew by 28% versus the prior year, and our asset management team successfully resolved $331,000,000 in NPLs with net recoveries of $30,000,000. At year-end, we entered into a transformative partnership whereby we sold $129,000,000 of NPLs and retained the servicing rights for the entire pool of loans. This transaction drove significant earnings in Q4 but also freed up approximately $50,000,000 in working capital and will drive future earnings from the servicing fees earned. All in all, a great transaction as this team continues to impress and drive meaningful results to the bottom line. From a liquidity perspective, we have never been stronger, as we issued our first rated unsecured debt offering for $500,000,000 in January, which gives us greater flexibility and makes us less reliant on short-term warehouse lines. This new capital will help us execute our long-term plan of growing book value and maximizing shareholder returns. Looking forward, we have great momentum and are well positioned to continue our growth. That concludes my prepared remarks, and we will turn over to Page three in the earnings presentation. 2025 was really just a fantastic year for us. You can see growth across the board, 26% pretax ROE, grew book value by 21%, and maintained a very healthy NIM at 3.6%. Turning to Page four, digging into the fourth quarter, you can see core net income of $36,300,000, or $0.93 a share, up from $0.60 a share from Q4 2024. I mentioned that the NIM was very healthy and stable at 3.59%. In terms of production, dollars were $634,000,000 for the quarter, up 12.5% from the prior year. I mentioned the activity in both the portfolio and NPLs. As a result of that NPL sale, NPLs were down to 8.5% at the end of the year. Again, hitting on the asset management team, they continue to do a great job of realizing net gains, and we have expanded our disclosures in this year's 10-Ks and in these earnings materials. We are reflecting total revenue that we recognize from the NPLs, and that really just shows we have always made those fees and made that income, but it has been difficult to suss out in the financials. So we broke that out and showed the activity from regular accrued interest as well. As you can see for the quarter, that was a total of $7,600,000. So that team continues to do a great job for us. In terms of financing and capital, I mentioned that we have done a number of securitizations in the year. We did do our second private securitization where we had one investor taking down the entire transaction, and we like that execution and think it is a great diversification as we move forward. I mentioned the strong liquidity position, $92,000,000 in unrestricted cash and plenty of warehouse capacity. As I mentioned in my opening remarks, we are really proud of the NPL transaction we were able to close in the fourth quarter, recognizing $13,400,000 of net income as a result of that sale and releasing about $50,000,000 of working capital to fund future production. With that, I will turn it over to Mark for Page five. Mark R. Szczepaniak: Thanks, Chris. Hi, everyone. Another year is in the books for Velocity Financial, Inc., and as Chris had mentioned, Velocity Financial, Inc. is really ending the year strong. If we go to Page five and look at our loan production, total loan production for the fourth quarter was just under $635,000,000 in UPB. As Chris mentioned, that is a 12.6% year-over-year increase from about $563,000,000 in Q4 2024. The strong production growth in 2025 included the weighted average coupon on new Q4 held-for-investment originations continuing to come in strong at just a little over 10%. Originations in Q4 also continued at tight credit levels, resulting in a weighted average loan-to-value for the quarter just under 63%. 2025 total year loan production is $2,700,000,000 in UPB. That was almost a 47.5% year-over-year increase over the $1,900,000,000 in production for 2024. Over 6,600 loans were originated during 2025. The strong 2025 production was a result of continued organic growth of our borrower base and strong demand for our product. As a result of the continued strong growth in production, if you look at Page six, it shows the year-over-year growth in our overall loan portfolio. The total loan portfolio as of the end of the year for 2025 was $6,500,000,000 in UPB, which is a 28.4% increase over the $5,100,000,000 as of 12/31/2024. The weighted average coupon on our total portfolio at the end of the year was 9.7%, as Chris mentioned, a 21 basis point year-over-year increase. The total portfolio weighted average loan-to-value remained consistently low at 65% as of 12/31/2025, and the average loan balance remained consistent at about $390,000. On Page seven, it shows our recent quarterly portfolio net interest margin. You can see 2024 and 2025 have very, very consistent net interest margins. It is not on the slide, but on an annual basis, our portfolio-related net interest margin was 3.61%, about a 1.4% increase over our 2024 net interest margin of 3.56%. For the year, our portfolio yield increased 39 basis points year over year, while our portfolio cost of funds increased year over year by only 18 basis points. The portfolio yield increase is mainly driven by strong loan production during the year and higher loan coupons, and the increase in the portfolio cost of funds is mainly due to an increase in the securitization market yields. On Page eight, our nonperforming loan rate at the end of 2025 was 8.5% compared to 10.7% at the end of 2024, and the decrease, as Chris mentioned, was a combination of the sale of $129,000,000 in UPB of NPL loans sold during Q4 as well as a combination of continued strong resolutions during the entire year by our special servicing department. The table to the right of the page shows our loans held-for-investment portfolio, including both our amortized cost and fair value loans, and shows the total year-over-year net nonperforming loan valuation allowance we have for our nonperforming loans. As of 12/31/2025, the amortized cost loan portfolio had a $4,500,000 CECL reserve and the fair value portfolio had a $48,300,000 valuation adjustment allowance for a combined valuation allowance on the entire loans held-for-investment portfolio of about 81 basis points. Both of these valuation adjustments are required under U.S. GAAP. The unrealized valuation adjustment on our nonperforming fair value loans represents the value for which the loans, under U.S. GAAP, could be sold out in the secondary market. However, we do not plan on selling NPL loans since our in-house special servicing department has a history of producing net gains and very successful resolutions on these loans. Turning to Page nine, it shows our CECL loan loss reserve, which we said was at $4,500,000 for the end of the year, or 22 basis points of our outstanding amortized cost held-for-investment portfolio, and the CECL loan loss reserve does not include the loans being carried at fair value. For 2025, our net gain/loss from loan charge-offs and REO-related activities at the bottom of that table is a net loss of $3,700,000, mainly as a result of a couple of large legacy loan charge-offs. These were smaller loans; we wanted to clean those up. We do not have those types of loans in our portfolio anymore, so that loss is well above our historical loss experience. We do not foresee these types of losses going forward because of the continued favorable resolutions of our nonperforming loans and that significant loss allowance adjustment that you saw on the previous page for the fair value loans. Page 10 presents the enhanced disclosure that Chris was mentioning on our nonperforming loan resolution activity. So the first set of four columns there is what we have always shown in the past. We go up to the net gain or loss on NPL loan resolution, which brings in the amount of default interest and prepayment fee income over and above contractual principal and interest. But what we had not really shown was what is the contractual interest that we go back and pull in. Under GAAP, you have to reverse that out when a loan goes nonperforming. Once we resolve the loan, we are collecting all of that contractual interest in cash. We wanted to bring that in to show the total amount of revenue that we bring in when we resolve these loans. So in this table, we have added columns for net accrued interest and total recovered on the far right. We felt it was important to add the amount of contractual interest, net of any advance write-offs, that is also collected on resolutions for the efforts of our special servicing team. For 2025 Q4, NPL resolution total dollars recovered, including net contractual interest, was $7,600,000, or 9.8% over the UPB, compared to $7,500,000, or 10.8% over UPB, for 2024. Now if you look at the full year 2025 on this table, the total amount recovered on the resolutions of NPL loans was $30,000,000, or 9% of UPB, compared to $22,300,000 total recovered in 2024, or 8.8% over UPB. Page 11 shows our durable funding and liquidity position at the end of the year. Total liquidity as of December 31 was just under $117,000,000, comprised of about $92,000,000 in cash and cash equivalents and another $25,000,000 in available liquidity in unfinanced collateral. In addition, our available warehouse line capacity at December 31 was just under $600,000,000, with a maximum line capacity of $935,000,000. So there is plenty of capacity and available capacity on the warehouse lines. In Q4, we issued two securitizations, 2025-P2 and 2025-5, with a total of $646,300,000 in securities issued. As Chris mentioned, in January 2026, we completed a public rating process for Velocity Financial, Inc.—it is our first time getting a corporate rating. We were rated by both Fitch and Moody's, and we issued $500,000,000 in unsecured debt. That is a five-year term debt, fixed rate at 9.38% interest, due in 2031. The proceeds of the $500,000,000 debt were used to pay off $215,000,000 of corporate securitized debt that was set to mature in 2027, so we paid that off, and the balance of it was to pay down, as Chris mentioned, our shorter-term warehouse lines. And then in February, we issued the first 2026 debt, 2026-1, with $355,000,000 in securities issued. That concludes my 2025 financial recap. Chris, I would like to now give the presentation back to you for an overview of Velocity Financial, Inc.'s 2026 outlook and key business drivers. Christopher D. Farrar: Thanks, Mark. On Page 12, our markets are very healthy. We like the backdrop there. Credit is stable. We are not reaching to hit our targets or our volumes; we are remaining disciplined there. Capital markets are great. The securitization market in particular is very robust, and we have a deep bench of investors supporting us there. Then I think from an earnings perspective, we think NIMs should remain where they are, and we think we can continue growing the portfolios. We are very positive about the future in 2026. So with that, we will conclude our presentation and open it up for questions. Operator: Thank you. We will now begin the question and answer session. Today's first question comes from Steven Cole Delaney at Citizens Capital Markets. Please go ahead. Steven Cole Delaney: Good afternoon, everyone, and congratulations on an excellent year. We do appreciate Mark's comments on Page nine about the REO, and we may want to follow up with you on that. But, obviously, an outstanding performance. Chris, I am curious, looking ahead, one of the things, if you think about the broader financial markets—and let us talk about the rates market—God, I do not know how many times you turn on CNBC and they were talking the Fed and yada yada. We do not know what the Fed will do. But the futures market, as of a week ago when we updated our internal rate forecast, is showing somewhere between two and three 25 basis point cuts in 2026. Now who knows what we get? And more importantly, the ten-year is really being kind of cranky at 4.20%, and that is, what, 50, 60 basis points off the recent twelve-month lows. I guess what I am trying to say is you have performed the way you did in terms of origination volume, and your clients are obviously finding deals, and they can afford the current rates. Let us just say if we get some short-term rate relief, and if the ten-year were to come down 50 basis points or whatever, how impactful is that to the demand from your borrowing universe for additional loans? I am just curious what the mindset is. And I am curious if you have any material floating-rate loan concentration in your portfolio where, if we did get a break in the five- to ten-year range, is there the possibility of showing somebody some kind of a mini-perm type of a loan structure vis-à-vis just a SOFR-type floater? Thank you for commenting on that, if you would.
Operator: Thank you for standing by, and welcome to Wealthfront Corporation's fourth quarter and fiscal year 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. I would now like to hand the call over to Matthew Moon, Investor Relations. Please go ahead. Matthew Moon: Good afternoon, everyone, and thank you for joining us. Today to discuss Wealthfront Corporation's fourth quarter and full year fiscal 2026 financial results, reflecting the periods ending January 31, 2026. On the line are David Fortunato, our Chief Executive Officer and President, and Alan Imberman, our Chief Financial Officer and Treasurer. After prepared remarks, we will open the line for Q&A. During the course of today's call, we may make forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance that they will prove to be correct. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Wealthfront Corporation files with the Securities and Exchange Commission, including our most recent Form 10-Q. Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP measures. Reconciliations of non-GAAP financial measures to comparable GAAP measures can be found in our press release accompanying this call, which is posted to our Investor Relations website at ir.wealthfront.com. I will now turn the call over to David Fortunato. David Fortunato: Thank you, and good afternoon, everyone. Fiscal 2026 was another successful year in which Wealthfront Corporation continued to deliver on its long-term objective of becoming the leading tech-driven platform for digital natives to turn their savings into wealth. We believe we make the best practices of personal finance accessible at low fees through technology and intuitive and convenient through user-friendly design and automation. At scale, this drives high margins, allowing us to share savings with clients, creating and engendering trust, driving asset retention and low-cost word-of-mouth growth, which once again drives high margins. This flywheel enables us to offer feature enhancements such as our recent ongoing cash APY increases that I will describe in more detail later on, and more broadly, helps our clients save more on every paycheck, earn higher returns on their savings, and borrow at lower rates. We remain grounded in our belief that the best way to build deep, long-term client relationships is to continue to delight clients by offering them more value than anyone else and focusing on their long-term financial outcomes. This informs our product development strategy and keeps us focused on our roadmap regardless of short-term market conditions. At fiscal year-end, total platform assets grew 17% year over year to a record $94.1 billion, with investment advisory assets of $48.7 billion, up 29% year over year, and cash management assets of $45.4 billion, up 7% year over year. Funded clients ended the year at roughly 1,420,000, up 17% year over year, and funded accounts of roughly 1,840,000, up 16% year over year, reflecting 1.3 funded accounts per funded client. Total net deposits in the year ended January 31, 2026 were $6.7 billion, including $400 million in net outflows in the fourth quarter. Fourth quarter figures reflected a cash-to-invest transition environment that resulted in the second-best quarter of total investment advisory cross-product flows, including a second consecutive record quarter of net cross-account transfers from cash to invest. This helped drive annualized organic investment advisory growth to 11% in the quarter, the highest since the market enthusiasm post U.S. election in the quarter ended January 2025, with monthly annualized organic growth accelerating throughout the quarter, ending at 15% in January. Recall, annualized organic growth is calculated as total net deposits in a given period multiplied by an annualization factor based on actual day counts in that period, divided by prior period ending assets. As we will discuss further, cash management net flows began to normalize in mid-January, roughly four weeks after reducing the client rate on December 19 and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and continue up until the April 15 federal tax deadline. On the product development side, we continue to accelerate our product velocity. For example, in the fourth quarter, we bolstered both our cash management and investment advisory offerings, enhanced interoperability between both, and began to offer early access to Wealthfront home lending. For cash management, we introduced automated dividend sweeps from investment advisory accounts to cash management accounts and increased daily withdrawal limits up to $1,000,000 for qualified clients. In December, we began a measured rollout of our proprietary Wealthfront Treasury Money Market Fund, or WLTX X. It offers an attractive after-tax yield alternative for clients and their cash, particularly for clients living in states with high income taxes, given the state tax exemption on U.S. Treasury interest income. As of February, prior to general availability, the money market fund had just over $85 million in AUM. For investment advisory, we expanded availability of fractional shares into automated investing accounts and automated bond portfolios, helping to reduce cash drag and tracking error relative to our target portfolios. We also introduced dividend reinvestment plans as well as a broader list of stocks and ETFs that can be traded in the stock investing account. We continue to see strong uptake, particularly among younger clients, in this investment account. In November, we launched early access to home lending starting in Colorado, and have since expanded to Texas and California, with a full rollout to these states as well as early access in additional states expected to come later this year. We believe we can use technology to deliver a better digital experience and a lower rate, and we are deliberately scaling at a measured pace in order to maximize learnings to optimize our long-term outcomes. We aim to provide our clients home mortgage rates at least 50 basis points better than the national average. While we are in early days, we are proud to have delivered on this objective on average in the states in which we operate today. Beyond new product initiatives, we have increased the base APY on all cash management accounts by five basis points to 3.3% on January 30. Over the course of the past several months, the effective federal funds rate gradually stabilized higher within its target range, allowing us to pass more savings along to our clients. We could have simply taken this benefit for ourselves, but consistent with our business model, we are constantly looking for ways to give back to our clients, deliver better financial outcomes, and build trust. Our focus for Wealthfront Cash is to offer the best cash account experience for young professional savers. In this vein, we launched an incentive in early March in which clients that direct deposit at least $1,000 per month who also have a funded investment account will receive an ongoing 25 basis point boost to their cash APY. We expect this incentive to deepen existing client relationships as well as drive cross-product adoption for those clients using one of the cash management or investment advisory accounts today. We also anticipate new clients to diversify into both of these account types more quickly. Closing with current trends, today we published February metrics. As discussed earlier, when looking at intramonth trends, cash management net outflows peaked in mid-January prior to our five basis point increase to the client base APY. Cash management net outflows significantly improved to only $145 million in February versus $840 million in January. Investment advisory net deposits were $416 million, implying an annualized organic growth rate of 11%. Total net deposits were therefore $271 million in February and, along with market appreciation, led us to another month-end record of total platform assets of $95.2 billion. In turbulent times like these, the time-tested performance of a low-cost diversified index portfolio with the added benefit of automated tax-loss harvesting becomes more apparent. Aggregate investment account returns, most notably our automated investment account, benefited in January and February from the relative outperformance of international equities, contributing to a 2.8% month-over-month growth in January, and 1.7% month-over-month growth in February. Crucially, this performance stands in stark contrast to the returns of speculative asset classes that often falter when market conditions tighten. While others chase fads, our automated investing account is engineered to mitigate volatility and maximize after-tax outcomes. We believe the value of this product is even greater when you consider the strong year-to-date tax losses we have harvested for our clients. February tax-loss harvesting dollars were the highest since the widespread market volatility realized immediately before, during, and after Liberation Day last year. With that, I will now turn the call over to Alan Imberman to go over the financials. Alan Imberman: Thanks, David. Starting with the income statement and a high-level overview for the year. Revenue for fiscal 2026 reached a record $365 million, up 18% year over year. Adjusted EBITDA for fiscal 2026 also hit a new record of $170.7 million, up 20% year over year, reflecting an adjusted EBITDA margin of 47%, up one percentage point year over year. Moving now to the fourth quarter, revenue came in at a quarterly record of $96.1 million, up 16% year over year. Cash management revenue was $69.7 million, up 12% year over year due to both higher average cash management balances measured as the average of beginning and end of quarter figures and a higher annualized fee rate. The average cash management balance in the fourth quarter was $46.2 billion, up 10% year over year, and the annualized cash management fee rate was 60 basis points, up one basis point year over year. When the Fed reduces the Fed funds target rate, we typically wait until the Friday of the following week to reduce the APY we offer our clients. This creates temporary fee compression because the interest rate we receive from banks reprices lower immediately while the interest rate we pay to clients remains constant for a one-week grace period. Additionally, in a declining rate environment, the fee rate is negatively impacted by the inherent mathematical impact of converting annual percentage rates (APR) to annual percentage yields (APY). The inverse of this is true in an increasing rate environment. As David noted, we launched a new incentive in early March in which clients who direct deposit at least $1,000 per month and also have a funded investment account will receive an ongoing cash yield increase of 25 basis points. As a result of both the direct deposit incentive and the five basis points passed along to clients at the end of January, we now expect our first quarter annualized cash management fee rate to be in the range of 57 to 58 basis points. Because April is tax season and our clients are net cash taxpayers, we anticipate significant seasonal cash management net outflows to begin in March and continue up until the April 15 federal tax filing deadline. For context, net cash management outflows in April 2025 were $537 million, and we would expect this figure to be larger this year given the increase in total cash management assets. It may seem counterintuitive, but we are delighted to see tax-related outflows because it reflects the highly attractive financial profile of our clients and also means our clients are comfortable using the cash account to meet near-term liquidity needs, indicating use of the account as a primary operating account that generally gets replenished over time and are typically stickier over the long run. Investment advisory revenue was $25.8 million, up 31% year over year, and surpassed $100 million in annualized revenue for the first time, due primarily to a 30% year over year increase in average investment advisory balances to $47.3 billion. Our annualized investment advisory fee rate was roughly flat at 22 basis points versus the same period last year. Asset growth was driven by both strong markets and net deposits over the trailing twelve months, with organic net deposit growth accelerating throughout the quarter, ending at 15% annualized growth in January. Net cross-account transfer from cash to invest in the quarter set a new record for the second consecutive quarter, reflecting the compelling combination of a broad suite of investment products, overarching platform incentives, and targeted lifecycle marketing campaigns currently in place. Gross profit came in at a quarterly record of $86.6 million, up 17% year over year, reflecting a gross profit margin of 90%. Total GAAP expenses of $310.7 million included $248.3 million in stock-based compensation expense, of which $239 million reflected dual-trigger equity award expense recognized in connection with our IPO. GAAP expenses also included $5.3 million in employer taxes related to these dual-trigger equity awards. Adjusted operating expenses, that is, expenses excluding share-based compensation and employer taxes due to IPO-related equity awards, were $57.1 million, up 15% year over year due primarily to higher product development and general and administrative expense, partially offset by lower marketing expense. Adjusted EBITDA of $44.2 million was up 22% year over year and reflected an adjusted EBITDA margin of 46%, up two percentage points year over year. As we continue to invest in incentives and scale home lending, we expect adjusted EBITDA margins to decline sequentially but remain above 40% for the first fiscal quarter 2027. We continue to demonstrate significant operational and financial discipline, delivering a Rule of 40 metric of 62 for the fourth quarter. This is our fourteenth consecutive quarter, or more than three years, exceeding the Rule of 40 and underscores a business model that has successfully and consistently balanced robust top-line growth with the structural efficiencies of our automated platform. GAAP diluted net income was negative $134.8 million and GAAP diluted earnings per share was negative $1.31, both of which include the one-time impact of dual-trigger equity awards in connection with our IPO of $239 million. We believe that our adjusted EBITDA is a strong proxy for cash flow. For the fourth quarter, net cash provided by operating activities was $33.3 million and free cash flow was $33 million. This results in a free cash flow conversion ratio, that is free cash flow as a percentage of adjusted EBITDA, of 75%. January, however, is a seasonally lower free cash flow period as we pay out the majority of our accrued annual cash bonuses to our employees in that period. For the fiscal year, net cash provided by operating activities was $152.2 million and free cash flow was $151.1 million. This resulted in an annual free cash flow conversion ratio of 88%. Note, both quarterly and annual free cash flow figures are not adjusted for IPO-related expenses; therefore, conversion ratios are lower than they otherwise would have been had the IPO not occurred. Driven primarily by this robust free cash flow generation over the course of the year and over $130 million in net cash proceeds raised in our IPO in December, we continued to strengthen our debt-free balance sheet, ending the period with cash and cash equivalents of $440.8 million. At quarter end, we had roughly 186.5 million diluted shares outstanding. In March, we received board authorization to implement $100 million in share repurchases. We believe repurchasing our stock is attractive at current levels given our robust free cash flow generation, our debt-free capital structure, as well as the multi-decade opportunity to compound wealth with new and existing clients. Over the long term, our excess capital priorities are: invest in organic growth, including infrastructure and automation while also comfortably exceeding minimum capital requirements; evaluate opportunities to repurchase shares; and assess M&A with a preference to build versus buy. Any remaining capital would be added to our surplus reserves in order to bolster resilience and durability. Regarding February metrics, total platform assets ended at another month-end record of $95.2 billion, consisting of $50.0 billion in investment advisory assets, and $45.2 billion in cash management assets. Total net deposits were $271 million, and recall, February only has 28 days in the month. Investment advisory net deposits were $416 million, reflecting organic growth of 11% annualized. We continue to successfully drive cash-to-invest flows, bringing asset-weighted cross-product adoption, that is, assets held by clients with both cash management and investment advisory accounts, to roughly 61.5% at February, up over one percentage point since December. Cash management net flows began to normalize in mid-January, four weeks after reducing the client rate on December 19, and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and to continue up until the April 15 federal tax deadline. In closing, our business is designed to be aligned with the interest of our clients. Simply put, we succeed only when they do. We believe that as long as we continue to deliver products that truly delight our clients, they will engage more broadly with us, entrust us with more of their wealth, and recommend our platform to their friends, family, and coworkers. We are deeply committed to this long-term journey alongside them. With that, we will now open for questions. Operator: Thank you. To ask a question, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. You will be limited to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Ken Worthington of JPMorgan. Your question please, Ken. Ken Worthington: Hi. Good afternoon, and thanks for taking my question. I want to dig further into the rollout of mortgages and see how that is going. So what kind of reception are you getting from your customers in Colorado, where that offering is more seasoned? And can you see, based on the transfer of assets to title companies, how your penetration of eligible customers is looking thus far? David Fortunato: Hey, Ken. How is it going? Yeah. So we are progressing, I think, well. The thing that we are optimizing for—we talked a little bit in the prepared remarks—is less about directly trying to capture all of the volume that we reasonably can in Colorado and really maximizing the learning that we have both with our infrastructure and with the client experience. So as we have launched first in Colorado with the early access period and then in Texas and California, we are really focused on making sure that the experience that we are delivering to clients is good. There are things that we have to improve and we are working on. We have already rolled out a bunch of improvements with more to come. On the rate basis, we feel very good about underpromising and overdelivering on the quality of rate we are giving folks. We are still seeing significant home volume across the country. I think the stat that I saw was more than $400 million of wires to escrow and title companies in our Q4 went off the platform, which obviously is a significant chunk of the outflows that we saw. We have a bunch of things that we need to improve on the digital experience. We are making quick progress, but it is a huge area of focus for us. As we continue to expand the early access period, the real constraint that we have is that the experience that we are offering to clients is one that we feel good about, and we feel the clients will feel good about for the long term. We are not trying to build a transactional mortgage experience. We are trying to build a long-term relationship with clients, of which mortgages is just one step. Ken Worthington: Perfect. And then maybe to follow up, same topic. How do you see the ramp and the rollout to other states and the further penetration in existing states? How does that look as you move through the rest of the year? Is this really kind of an experimental year where you would not expect things to really ramp; it is just sort of getting the infrastructure? Or do you expect things to really ramp as we move throughout the year and as you get more comfortable with the offering? David Fortunato: So we certainly expect to go general availability in Colorado first. That will happen sometime this year. I would expect that we go general availability in Texas and California at some point this year. And I would expect that we launch early access periods in additional states. Exactly what percentage of our client base will be covered by general availability, I am less sure of. Our ability to roll out automation features and balance scaling headcount versus scaling through technology is the kind of core dance that we are doing, where we are trying to really scale with technology and limit headcount growth where needed, except where we are very confident in the volumes that we are seeing, and that is a credible strategy to be able to build sustainable volume over time. Alan Imberman: Thank you. Operator: Our next question comes from the line of Ryan Tomasello of KBW. Your question, please, Ryan. Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Regarding the cash management fee rate guide for 1Q, I believe you said 57 to 58 bps. Is that a reasonable baseline for the remainder of the year, or how should we think about the potential for additional compression there to the extent these incentives you are offering continue to see strong uptake? David Fortunato: Hey, Ryan. Thanks. Yeah. The one thing I would say is the competitive environment has certainly evolved a bit over the last six months. And what we have seen is after the five basis point change and the direct deposit incentive, I think we feel much better about where we are in the competitive environment, and we are seeing that with the transition in cash net flows. As for how we think about the fee rate going forward, I will let Alan take that. Alan Imberman: Yeah, Ryan. So I would say the 57 to 58 is just the first quarter guide. It will really depend on the uptake as to how the rest of the year goes. The thing we like about incentives such as the direct deposit incentive is that we will only have to pay the extra rate when people give us more money or take on this additional incentive by performing the action of direct deposit and funding an investment account. And so as more people adopt it, we do expect to see potentially further degradation in the fee rate, but that would also signal that we have more clients building deeper relationships across the platform with us. And so that is the balance we are looking for there. Ryan Tomasello: Okay. Appreciate that. And then on the account growth, is it possible to isolate the specific trends within the investment advisory side of the business? Obviously, the trends on net deposit organic growth have been quite positive, but I would assume that there are also underlying positive trends on just the actual account growth side within investment advisory. Any color you can provide there? David Fortunato: Yeah. I mean, the investment account growth, as cash-only clients add investment accounts, is a key focus for us in any transition environment. And it has been probably the most significant focus inside of the company over the past three or four months. We focus on the flows because that is what ultimately leads to asset growth and, therefore, revenue growth because of our monetization strategy. But the way that we achieve that flow growth is both growing with clients over the long term and getting more clients to adopt investment products. It is too early to know exactly what the impact will be from the direct deposit incentive that we are trying. I think we are looking forward to being able to talk more about that as we get additional data in, but we have been pleased with the early response. Obviously, direct deposit takes some time to come through. There is a little bit of a lag. So we have not had a direct deposit cycle since that incentive launched. But the past incentives that we have run around investment account adoption, along with the macro environment in January and February being more conducive to investment, have helped our focus on investment cross-product adoption and new client investment growth as well. Operator: Our next question comes from the line of Devin Ryan of Citizens Bank. Please go ahead, Devin. Devin Ryan: Thank you. Hi, David. Hi, Alan. How are you? David Fortunato: Doing well. Thank you. Devin Ryan: Good. Question, another one just kind of cash account. And just some of the outflows kind of late last year, early this year, do you have a sense of whether that money was going toward other online banks paying higher rates, or was it going to brokerages or maybe just, you know, bill pay without kind of gross flows? I would love to get a sense of that. And then do you have a sense of the remaining balances that are maybe more pure rate chasers? And how much of that is remaining? I appreciate that is probably difficult to quantify, but would love to just get some thoughts on that and some of the behavior that you did see kind of late last year into early this year. David Fortunato: Sure. I am happy to give a high-level answer, and then if Alan has anything he wants to add, he can chime in. So what we saw, I think, is broadly consistent with what we had discussed previously, and that is that as rate cuts occur, the larger number of rate cuts that occur in consecutive succession leads to more folks evaluating what they are doing with their cash. So we had three cuts in a row. It takes several weeks for cash net flow activity to normalize post Fed rate cut, which I think we had talked about before. We normally have a really good idea sort of four to six weeks after a rate cut has gone through. One of the interesting things that we saw in January was both: January is a seasonal high period for investing, which I think amplified some of our desire to drive additional cash-to-invest adoption, because January is a great period for folks to reevaluate their finances and think about opening investment accounts. And so we did lean into that in January, and I think some of what you see in the January numbers is that. The other thing I would point out is that the gross versus net distinction in cash flows, especially because of the liquidity features that we offer—free wires, free instant transfers, the ability to send money to escrow and title companies to buy a home—we do a lot of gross flows for cash management. We did a calculation where we look at the recapture rate of those gross flows by client in the quarter, and we are recapturing a majority of the gross withdrawals. That is consistent with what we have seen in prior periods, that we saw from clients in our Q4, and we think it shows the value of the cash management account really sustaining even as clients reach goals. Maybe they are purchasing a house or putting a down payment down. Maybe they are buying a car. They come back to the account, and we do recapture a significant chunk of those assets. I think the sort of high-level question that you asked about what are folks doing with their money is: there are folks that are doing some of all of the things that you described with their money. It is our job to be the best place for our clients to invest for the long term, the best place to save for the long term. We want to deliver the best mortgage experience that they can get anywhere as well. It will take us time to do some of those things, especially the mortgage, but that is really what the focus of the business is—leading with product and delivering the best product and the best value to our clients across their broad financial needs. Devin Ryan: Okay. Great detail. Thank you so much. I guess a follow-up here on the repurchase authorization, $100 million buyback. Can you talk a little bit about expectations, pacing, and intent there? I think it is a strong signal. Obviously, the company has a lot of liquidity here, so in theory, even potentially more behind that. So just love to get a sense of how much is signal versus intent to actually step in and buy shares here down from the IPO price? Alan Imberman: Yeah. Hey, Devin. It is Alan. What I would say is that we think the shares are extremely attractive at the current price. We are in a position, as you mentioned, to have a very strong balance sheet and free cash flow generation such that we can make this investment, and we will compare our ability and our willingness to repurchase against, obviously, other opportunities that we have to invest in. But we do think that we will be purchasers of our shares, especially at the current levels. Operator: Thank you. Our next question comes from the line of Daniel Perlin of RBC Capital Markets. Your question please, Dan. Daniel Perlin: Thanks. Good evening, everyone. I guess I just wanted to kind of circle back a little bit on the home lending side. And I guess the broader context is, I heard everything you said in your prepared remarks, but how do you think that rollout, product reception, and expectations as you think about the ensuing year are going relative to when you kind of addressed investors around the IPO? I mean, it sounds pretty consistent, but it also sounds like there are some nuanced differences maybe. So I just want to make sure I understand that. Thank you. David Fortunato: Sure. So I think we know a lot more about the areas that we need to improve to deliver the best digital experience that we can to clients. And we are putting in focused work on those areas and gradually expanding as we go. We understand a lot more about the operational challenges and where we need to invest to drive operational efficiency so that we can do so as efficiently as possible with as digital a back-end experience as we can. The result of those things is we want to build, like we have with cash and like we have with investments, a sustained low-cost advantage in being able to deliver the products so that we are able to share the savings with clients and get them the best financial outcome. So there is a lot more that we understand with the volume of loans that we have done so far. We will continue to learn and prioritize both the operational efficiency and digital experience wins as we move along, continuing to let people off the early access list and go general availability in Colorado first. I think our understanding and our learnings are generally consistent with what we have communicated in the past. We obviously have a lot more detail now from operating in the space, operating in more states, and doing more loans than we have in the past. Daniel Perlin: Yep. That is great. Just a quick follow-up. So it was really good to see the net deposits turned positive in February. And this pivot, as you guys had telegraphed from cash management to investment advisory, was kind of taking place. I think the question that I have is, you have this weird dynamic right now where the environment may or may not produce lower rates in the near term. It might be sustained for longer. I am just wondering how you guys think about positioning yourselves maybe more in the near term in an environment where that might be the case. It might be an unfair question because it is impossible to answer, but it does feel like there is a lot more volatility around expectations for rates. So just how you are posturing maybe as we go through the next, I guess, couple of quarters. Thank you so much. David Fortunato: Yep. So I think we feel good about our competitive positioning after the five basis point change and the 25 basis point direct deposit incentive. Obviously, we do not know what the market is going to do in the future. We do not know what rates are going to do in the future. We do think that we are well positioned from the investment side because of our focus on global diversification. That has put us in a good position over the last few months, and what we have really seen resonating with clients is in uncertain environments, investing with global diversification is a real selling point. We sort of do not think about positioning ourselves based on what is going to happen over the next few months, but we feel good about our position because of the investments we have made over the last few years in cash, investment, and home lending also, that if rates come down, we feel like we are in a good position to help clients continue to invest or invest more. We feel like we are in a good position to be able to help them buy homes that have become more affordable at lower interest rates while also helping them continue to save for the long term and get access to liquidity as needed using tax-advantaged tools like the Wealthfront money market fund. As we have continued to build out our offering, our goal is really to help clients across the broadest range of financial situations be able to put their savings and investments to work. And that has been the focus, and we feel good about the position because of the diversity. We cannot predict the future, but we can prepare for it, and that is what we have done. Operator: Thank you. Our next question comes from the line of James Jarrow of Goldman Sachs. Your question please, James. James Jarrow: Good afternoon, and thanks for taking the question. Could you just update us on the success of the match programs in the invest business so far? How much has this been driving the flows in that side of the business? And perhaps if you could just also comment on the ROIs there and how you structure that to ensure strong ROIs. David Fortunato: Hey, James. So I would say we are constantly experimenting with incentives. The most successful incentives that we have done for cash-to-invest adoption have actually not been the deposit matches. It has been other types of incentives that we have run to encourage cash-to-invest adoption. We are happy with the initial response to the direct deposit incentive having driven a fair amount of investment account opening. It is still early, and so we will have to see how that evolves over time. We will have to see how that evolves with new clients and if the cross-product adoption rate early in the client tenure improves as we expect it to. I think, generally, our incentives have been successful with the second-best quarter in our history at cross-product flows of cash to invest and a second record quarter of net cross-account transfers from cash to invest. But I do not think that we have overly focused on match as the driver of those. We have looked at a variety of incentives and are pursuing the ones that we feel deliver the best overall outcome to the company and to our clients. James Jarrow: Okay. Thank you so much. That is super helpful. I just wanted to ask a bigger-picture one. So let us say we get to a terminal Fed funds of roughly 3%, which obviously there is uncertainty as to whether we will get there. But how would you think about the right way to model the mix of your client assets across cash versus investment advisory? In other words, what percentage of client assets would you expect to be cash versus investment advisory? Alan Imberman: Hey, James. It is Alan here. Yeah. I think it is a difficult question in the sense that there is more going on than just the level of rates. Clients are accumulating more wealth, and as we have shown in our prospectus, as clients obtain a certain level of cash, they start putting incremental dollars to work and investing, and so you start to see the investment account, which grows faster as well, really continue to grow. And that is what we have seen over the past few quarters. And did not discuss this last time, but investment advisory assets have now overtaken cash assets pretty clearly. And so when we are modeling it, I think it depends on, as well as younger clients coming in who start with cash because they are early in the journey in savings. So I think you have to have more variables than just the level of rates. I think you have to have variables around clients that are coming in and then our existing clients and their behavior. And, again, we have control over that in some of the incentives that we offer. And so that is probably how I would think about it. James Jarrow: Okay. Thanks a lot. Alan Imberman: Thank you. Operator: Our next question comes from the line of Alexander Markgraff of KBW, KBCM. Your question, Alex. Alexander Markgraff: Thanks. Hey, David, Alan, Matt. Thanks for the question. A couple here. I guess just first, David, from a product standpoint, if I look at the releases in 2025, pretty busy. Just sort of curious how you think about calendar 2026 or fiscal 2027 using the sort of digestion year versus carry-forward of velocity framework? And then, Alan, just as a follow-on to that, maybe just some comments on spend priorities in the context of David's comments would be helpful. Thank you. David Fortunato: Hey, Alex. I guess our focus as a product development and technical organization is to be able to build automated products so that we can continue to focus most of our technical talent on delivering new products to clients and improving our existing products. We have a lot left to build. I would say that one of the things that we have seen over the past couple of years is that our roadmap only ever gets longer of things that we want to focus on and we want to get out to our clients. As we continue to build a deeper understanding of our clients' financial situations through both the qualitative and quantitative research that we do into their financial lives, we continue to have new ideas and be excited about those ideas. And so the focus that we have really is on prioritizing and focusing on the things that we think will make the biggest impact to our clients' financial outcomes and have the biggest impact on our business, but we really want to continue to accelerate product velocity, if anything, to continue to get products out to clients and improve the existing product experience so that Wealthfront Corporation is delivering the best value of any provider in the space. Alan Imberman: Yeah. What I would say to add to that in terms of the spend, as I mentioned in the prepared remarks, the investment in home lending as well as our incentives are really where we are putting a lot of resources. We continue to work on incentives and really strengthening the core as well while we invest in home lending. And so that has not changed. We continually look at our business model flywheel and kind of prioritize around that. And so we are continually trying to figure out ways to automate to generate savings, share those savings with clients to help their financial outcomes, build that trust, get them to refer us, and grow with word-of-mouth. And some of that is used through incentives. And so we will continue to use that as our framework for how we invest. Alexander Markgraff: Awesome. I appreciate that. And then, Alan, maybe just a quick follow-up, more sort of model mechanics question on the money market fund. Understanding there are a lot of factors that determine the ramp of that, but just as we see that sort of mix into the model, just a reminder on how that sort of affects the revenue lines would be helpful. Alan Imberman: Yeah. So it will be inside of cash management. We are in a fee waiver period right now. I think starting March 1, the fee is a quarter of a percent on the management fee. And then in terms of, as David mentioned, it offers a really good after-tax yield for folks in states with high income tax. And so we will have to see in terms of the growth once we roll it out to general availability. But that is where it will fit, and that is the monetization on the product. Alexander Markgraff: Awesome. Thank you both. Appreciate it. Operator: Please press *11 on your telephone to ask a question. And as there are no further questions in queue, I would now like to turn the conference back to David Fortunato for closing remarks. Sir? David Fortunato: Thank you. I want to thank everyone for joining the call and for your continued interest in Wealthfront Corporation. We look forward to staying in touch and updating you on our progress in the months ahead. Thanks all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Matthew Moon: Everyone else has left the call.
Operator: Greetings, and welcome to the CuriosityStream Inc. Fourth Quarter and Year End 2025 Results Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, it is now my pleasure to introduce your host, Tia Cudahy, Chief Operating Officer. Thank you. You may begin. Tia Cudahy: Thank you, and welcome to CuriosityStream Inc.'s discussion of its fourth quarter and full year 2025 financial results. Leading the discussion today are Clint Stinchcomb, CuriosityStream Inc.'s Chief Executive Officer, and Phillip Brady Hayden, CuriosityStream Inc.'s Chief Financial Officer. Following management's prepared remarks, we will be happy to take your questions. But first, I will review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under the federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from expectations reflected in any forward-looking statements. Please be aware that any forward-looking statements reflect management's current views only, and the company undertakes no obligation to revise or update these statements, nor to make additional forward-looking statements in the future. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our Investor Relations website, as well as the risks and factors discussed in today's press release. Additional information will also be set forth in our annual report on Form 10-Ks for the fiscal year ended December 31, 2025, when filed. In addition, reference will be made to non-GAAP financial measures. A reconciliation of these non-GAAP measures to comparable GAAP measures can be found on our website at investors.curiositystream.com. Unless otherwise stated, all comparisons will be against our results for the comparable 2024 period. I will now turn the call over to Clint. Clint Stinchcomb: Thank you, Tia, and good evening, everyone. CuriosityStream Inc. was built on one timeless idea. Curiosity changes the world. That every breakthrough begins with a question. A thousand years ago, Leif Erikson sailed west into the unknown and discovered a new world. Nearly a millennium later, Neil Armstrong stepped onto the lunar surface carrying the same enduring message across time. Discovery belongs to the bold, and curiosity is our compass. From ocean waves to moondust, that spirit propels us forward today. In that same spirit of bold exploration, we delivered strong full year 2025 results. Revenue grew 40% to $71,700,000 from $51,100,000 in 2024. Adjusted free cash flow increased 46% to $13,900,000 from 2024. Q4 revenue rose 36% year over year to $19,200,000 from $14,100,000, and adjusted free cash flow climbed 33% to $4,300,000. These gains reflect the strength of our complementary revenue pillars: licensing, driven by high volume and heavily structured video fulfillments for AI model training; subscription sturdiness through operational execution and new partnerships; amplified by cost discipline that expanded gross margins to 60% in Q4 from 52% a year ago, and reduced nondiscretionary G&A expenses by 33% year over year. In 2026, we believe our annual licensing revenue will exceed our overall subscription revenue. We believe we will grow our subscription revenue by low to mid single-digit percentages because of three key drivers: new pricing, which we began rolling out March 1; new wholesale and retail partnerships; inorganic growth from existing partnerships. The recurring, reliable, and predictable revenue from subscription services cements our foundation. Why do we believe we will see licensing revenue eclipse subscription revenue in 2026? Why do we believe licensing will be robust and durable for the foreseeable future? What is the impact to top line, bottom line, and margin expansion? Well, we have covered some of this before. Many investors, analysts, and commercial partners tell us it bears repeating. CuriosityStream Inc.'s licensing business is durable because it is built on assets that are durable, that are scarce, rights-aware, difficult to replicate, and increasingly valuable across multiple end markets. We are not talking about a single opportunistic window. We are talking about a monetization model anchored in premium, unscripted, and scripted media, enriched structured metadata, flexible rights, and growing demand from AI developers and traditional media companies. CuriosityStream Inc. has built a large differentiated content library of rights to nearly 3,000,000 hours of premium factual content plus sports, plus news, plus general entertainment, animation, and film, finished and raw, supported by more than 200 content and data partners and flexible licensing rights. This is not commodity inventory. It is scaled, unscrapable, curated, a corpus that took years of capital, relationships, editorial focus, and dense work to assemble. Enduring revenue streams are almost always rooted in assets that are hard to replace and expensive to rebuild. Demand is broadening, not narrowing. Beyond repeat business from existing customers, we expect our overall roster of partners to more than double in 2026, and potentially increase five to six times in 2027 as the fine-tuning of open-source and certain proprietary models opens opportunities for hundreds of companies. Historically, licensing meant selling finished programs or package rights to broadcasters, streamers, and pay TV partners. That business remains alive and healthy. And in 2025, we announced new license agreements with linear broadcasters, educational platforms, digital-first outlets, global streaming services, and, of course, next-generation AI training developers. This diversification makes licensing more durable and cycle-resilient. Traditional media licensing is healthy and not going away, but AI licensing is accelerating much faster and driving the bulk of our growth here. Over the next five years, AI model development, model refresh cycles, geographic expansion, enterprise fine-tuning, education applications, systems, and multimodal search should all support continued appetite for premium licensed corpus. For AI licensed partners, as their model sophistication grows, so does the need for more video inputs. Developers require large volumes of high integrity, rights-aware training inputs. Premium broadcast video, clean audio, scripts, captions, study guides, metadata, and derivative assets have utility well beyond entertainment viewing. They help train, tune, evaluate, ground, and improve multimodal systems. The more advanced models become, the more they need high-quality, structured, legally licensable data rather than undifferentiated scraped material. So key to note that rights-cleared, structured media will become more valuable over time, not less. There is plenty of media on the open web, but much of it is noisy, duplicative, poorly labeled, low quality, or legally ambiguous. By contrast, CuriosityStream Inc.'s corpus is assembled, curated, and increasingly productized for commercial use cases. The premium quality of our video also helps us stand out, as we have video captured with top-tier equipment like RED cameras, HDR formats, and Blackmagic workflows, delivering cinematic excellence with real-world visual depth. This means sharp, high-resolution footage that captures subtle details from the textures of ancient ruins in history to the fluid motions in wildlife sequences. For AI training, this translates to superior data for tasks like object recognition, scene understanding, and generative video. Said plainly, we generate competitive escape velocity through our expanded data structuring and metadata capabilities that are designed to meet partner volume requirements and bespoke specifications. We are not merely selling files. We are not merely selling clips. We are selling usable datasets. That distinction is critical. In AI, a rights-cleared file has value. A rights-cleared file with strong metadata, taxonomy, provenance, segmentation, and packaging has much more value. That creates pricing power and maintenance. Further, our licensing model benefits from operating leverage and the fact that the standard industry licensing practice in the AI space is one of nonexclusivity. I cannot emphasize enough the value of this dynamic. As our critical-mass corpus is now assembled and the infrastructure is largely in place, each new partnership carries attractive incremental economics, as our hard costs to create or license in content are largely de minimis. We will continue to increase our volume through rev-share constructs that minimize cost and risk. We can now monetize the same video multiple times in multiple forms across multiple geographies and buyer classes. Of course, durability does not mean inevitability. We have to execute. We have to move the ball forward every day. We need to continue acquiring and negotiating sufficient scopes of rights, enriching metadata, segmenting our corpus intelligently, protecting quality, and packaging assets in ways that map directly to buyer workflows. We need to stay disciplined on pricing and avoid treating the library like an undifferentiated commodity supply. We also need to manage legal and policy developments thoughtfully. But all of these are execution challenges. These are not reasons to doubt the model. In fact, a market that increasingly values provenance, trust, and rights discipline should favor CuriosityStream Inc., not hurt it. Our view is informed. Our view is straightforward. CuriosityStream Inc.'s licensing of video, audio, images, scripts, and related data products is durable because it rests on scarce assets, diversified demand, strong reuse economics, and a market shift toward high-quality licensable content. It can continue to grow significantly because we are still early in the monetization curve. It will be lumpy over three- and six-month tranches. But as Warren Buffett often said, we would rather have a lumpy 15% than a smooth 12%. Traditional licensing is meaningful. AI licensing is scaling rapidly. And the strategic value of curated, rights-aware, metadata-rich premium media compounds over time. This is why we believe licensing will remain a critical and durable growth engine for the long-term, foreseeable future. In summary, we believe that we will continue double-digit growth in both revenue and cash flow driven by subscriptions and licensing expansion. We intend to pay 2026 dividends from cash generated by operations as we did in 2024. Our balance sheet remains strong with over $27,000,000 in liquidity and no debt, which we believe gives us financial flexibility. I will now hand the call over to our CFO, Phillip Brady Hayden, who I am sure will emphasize that, among other attributes, at today's share price, we are a growth company that also offers a dividend yield of 10%. Thank you, Clint, and good evening, everyone. Our full financial results are presented in the back of the press release that we just issued a few minutes ago as well as the 10-Ks that we will file in the next few days. But let me quickly go through some of the results that we want to highlight for the fourth quarter as well as full year 2025. In the fourth quarter, we reported revenue of $19,200,000 at the high end of our guidance and a 36% increase compared to $14,100,000 a year ago. For the full year, revenue was $71,700,000, a 40% increase from last year. Likewise, we reported another quarter of positive adjusted EBITDA, which came in at $1,100,000. This was an improvement of $3,100,000 from a year ago, and also our fourth sequential quarter of positive adjusted EBITDA. For the full year, adjusted EBITDA was $8,200,000, a $14,300,000 improvement from 2024. Adjusted free cash flow exceeded our guidance in the fourth quarter at $4,300,000, which is also our eighth consecutive quarter of positive operating cash. For the full year, adjusted free cash flow was $13,900,000, a 46% increase from $9,500,000 in 2024. Licensing revenue was $9,800,000 in the fourth quarter, an increase of $6,100,000 from last year, while subscription revenue came in at $9,100,000. For the full year, subscriptions were $37,000,000, while licensing came in at $33,200,000. This was an increase of over $25,000,000 from 2024 and driven by continued growth in AI training fulfillments. Fourth quarter and full year gross margins were 60% and 57%, respectively, each of these improving from last year. Within cost of revenue, storage and delivery costs increased during the year in light of the high volume of video we put into AI licensing agreements. For the full year, combined costs for advertising and marketing plus G&A were higher by 24% compared to last year, although this increase was the result of noncash charges for stock-based compensation of $14,400,000, or about $0.24 on a per-share basis. G&A also included an adjustment to payroll costs for incentive compensation, as well as a number of one-time expenses associated with our August secondary stock offering. Were it not for the noncash SBC, the incentive comp adjustment, and the common stock sale, G&A would have declined by over $1,000,000 in 2025. For the full year, net loss was $6,400,000 compared to a net loss of $12,900,000 in 2024, representing an improvement of over 50% in net loss. While our revenue was up materially from last year, the 2025 net loss was driven by the one-time charges, incentive comp adjustment, and noncash SBC. Were it not for these specific charges, we would have posted positive earnings for the year. And as we said earlier, adjusted EBITDA was $1,100,000 in the fourth quarter compared to a loss of $1,900,000 a year ago. And for the full year, adjusted EBITDA was $8,200,000 compared to an adjusted EBITDA loss of $6,000,000 in 2024. For the full year, adjusted free cash flow was $13,900,000, a 46% increase from $9,500,000 in 2024. This totals well over $20,000,000 in operating cash that we have generated over the last two years. On October 14, 6,700,000 of our warrants expired unexercised. While these warrants have been trading well out of the money for some time, this expiration of all of the company's outstanding warrants reduces potential dilution and should eliminate any lingering share overhang associated with these instruments. In December, we paid $4,700,000 for our fourth quarter dividend. Including our $0.10 special dividend paid in June, this brings our total dividends paid to $22,000,000 for all of 2025. We ended the year with total cash and securities of $27,300,000 and no outstanding debt, and we believe our balance sheet remains in great shape. Based on yesterday's share price, CuriosityStream Inc. is generating an adjusted free cash flow yield of over 8% and a current dividend yield of over 10%. Given where our shares have recently been trading, we just announced that our Board has increased our share repurchase authorization to $6,000,000, and we plan to selectively resume our repurchase activity in the coming weeks and months. Moving to guidance. For 2026, we expect revenue in the range of $38,000,000 to $42,000,000 and adjusted free cash flow in the range of $6,000,000 to $9,000,000. For the full year, we continue to believe we will achieve double-digit growth in both revenue and cash flow in 2026, and that a full year of positive GAAP earnings is achievable. With that, we can hand it back to the operator and open the call to questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. This is Brent. We are ready to take questions. Go ahead. We are experiencing some technical difficulties. Thank you for continuing to hold. We will be with you as soon as we can. Again, appreciate you continuing to hold. Thank you again for your patience. This is the CuriosityStream Inc. year end 2025 earnings call. We are still having technical difficulties. If you are in the question queue right now, would you please email your questions in reply to the email that you are about to receive, and we will take questions over email shortly. Thank you so much, and thank you for continuing to hold. Thank you for holding. This is the CuriosityStream Inc. 2025 year end earnings report. Our first question today comes from Dan Medina from Needham. Dan Medina: Could you please update us on whether LLM licensors are renewing their deals with you and how the nature of second contracts is different from the earliest LLM contracts you licensed? Clint Stinchcomb: Thank you, Dan, for that question. Really appreciate it. The answer is yes. Virtually everyone has renewed or will renew. And the beauty of the second agreement is it is always easier because you have the paper in place. Same thing with the third agreement. Same thing with the fourth fulfillment. So without a doubt, we are seeing repeat business. At the same time, we are seeing a lot of new potential partners express interest and express either very high volume and specific requirements that we are working aggressively to fulfill right now. Thank you, Dan. Dan Medina: Any change in the pace of adding other companies' libraries to your ability to license hours to the LLMs? Clint Stinchcomb: We are like the Golden Gate Bridge there, Dan. We are constantly in acquisition mode. We have built and amassed, I think, an extraordinary library. We have been told just this week by the most valuable by market cap companies in the world that we have the best video corpus for AI training. So we have video in place. We have paper in place with the world's biggest companies. We have enhanced our human talent. We have done the necessary things to ensure the sturdiness of our subscription services, and feel really, really good about the year, Dan. Dan Medina: Can you give us some cases of how LLMs are using the information you licensed to them in the market to make money, tools, and apps? Clint Stinchcomb: I think it is a great question, and I think that if you look at the evolution of what our technology partners are looking for and are working toward, if you start with 2020 with large language models, there was a lot of text that started there. And that was designed to help teach the models to read, to help create document summarizers, knowledge Q&A, support bots, act as coding copilots. We transitioned up the scale to kind of multimodal AI, which is text, which is images, which is audio, which is video, and that led to video summarization, camera assistance, text-to-image, text-to-video, and agentic AI. Obviously, that is part of the spectrum now, and that is where systems plan, use tools, and act autonomously. And the use cases there are research agents, travel booking assistants, code agents, data ops agents, CRM bots. There is almost an infinite number of use cases. And then I think certainly an exciting stage that we are in the early stages of right now is physical AI where the content is being used to embed AI into robots, into cars, into drones, into devices. And similarly, I think, an infinite number of use cases here with warehouse robots, self-driving cars, home robots, delivery drones, factory arms, all kinds of things. So extraordinarily exciting, difficult to stay up with all of the use cases, but the good news is we have such a variety, such a strong scope of video and data, that we are able to fulfill a large scope and scale of requirements. Jason Kreyer: Clint, you called out 2026 as the greatest year in company history. Can you unpack that from a metrics standpoint, perhaps with some more clarity on your goals for the base streaming business and then the licensing opportunity? Clint Stinchcomb: Thank you for that question, Jason. So we made a lot of progress in 2025. We talked about the increases in cash flow and top line revenue, in the size of our library, and the quality of our library. And so as it relates to our subscription business, and that includes wholesale and retail subscriptions, we are confident that we are going to grow that at low to mid single digits, and we are really confident in that because we have new partnerships coming on every month with channel stores around the world for CuriosityStream Inc. for CuriosityStream Inc. You, and even for CuriosityStream Inc. Catholic Stream. We have new wholesale relationships that are rolling out over the next several months, and even now. And we took a price increase March 1. That is going to take a while to roll through our financials. But with those three things and with the marketing money that we are spending, we are very confident that we will grow our subscription business in the low to mid single digits. And so, based on what Phillip shared, that is off a base of $3,637,000,000 a year. On the subscription side, we are confident that, or I am sorry, on the licensing side, we are confident that we are going to eclipse our subscription revenue because of the work that we have done to date. We are experiencing and anticipating a lot of repeat business from existing partners and customers. And at the same time, I think that our new Chief Commercial Officer, John Belaid, has brought an extraordinary amount of velocity to our efforts right now. And so in working with our key people here, our ops team, we are going way beyond the obvious top six to eight companies that are in the space and anticipate expanding our roster really significantly this year. Now, again, that will be choppy, but the opportunities are big. I am glad that I lived to work through this period of time because we have the goods. We have really unique advantages. We need to execute, but I have never in my career been so close to so many big opportunities at the same time. Thanks, Jason. David Marsh: On the subscription front, how many new platforms are you expecting to launch during FY26? And how many new countries do you think you could launch with existing partners? Clint Stinchcomb: Great question, Dave. Thank you. Well, I think just this year alone, we have already launched with Apple in Canada as one of many examples. And we anticipate that over the course of this year, probably 12 to 20 new platforms. Some of these are not all created equal. Some are larger than others. Some deliver more opportunity than others, but certainly 12 to 20 over the course of this year. And the beauty of all of that is the partners that we are working with are good at growing subscribers. So I feel really confident about our ability to grow that side of the business, and it is sturdy. David Marsh: If I heard you correctly, it sounded like SG&A would have been down $1,000,000 year over year without the nonrecurring charges. So would mid $20 millions be a good expected run rate for fiscal year 2026? Phillip Brady Hayden: Good question, Dave. We do not provide guidance on the expense side, but I think those are fair numbers. Obviously, with stock-based comp, that is a little bit of a wild card because of the way we award our grants and the way the accounting treatment is applied to those. It can be somewhat difficult to predict. But I think if you take out stock-based comp, we are actually looking at G&A other than SBC below $20,000,000. I think your range is certainly fair. David Marsh: Any M&A opportunities you might consider? Clint Stinchcomb: Thanks for that question, Dave. We will always do what is in the best interest of our shareholders. I think that the M&A environment will be exciting this year, will be ripe. If you look at some of the deals that have been done most recently with the big companies, those are a lot more around synergies. But we believe that if we continue to execute, continue to post good increases, continue to show the value of our subscription business and our licensing business, that we will have the opportunity to consider whatever combinations are in the best interest of our shareholders. Patrick Sholl: Could you provide any additional color on the market for content to license for AI training and how your partnership with Versus Video Training Library supports these efforts? Clint Stinchcomb: So Versus is a really good company. They are a technology partner of ours. We have worked with them for a long time. They help us to organize our content, for the most part, help to clip our content, and they help us manage an increasingly large volume of content as we are organizing fulfillments there. Now, we did a lot of licensing agreements before we started working with Versus, but I think they are helping us by handling some of the work on the organization side, helping us to do even more. As far as the content that we offer today, a lot of people rightly think of CuriosityStream Inc. as a company focused in the factual media space. And certainly, we are. And certainly, we have a whole variety of content there. We have a corpus today that is a collection of content from not just ourselves, but from over 200 partners. And so in addition to the full range of factual content—crime, heist, historical crime, espionage, travel, food, culture, home—we also have a good corpus of scripted content, which is really hard to acquire for a variety of reasons—dramas, comedies, westerns, action films, adventure films, mystery, family faith films, etc. And we also have a broad collection of sports—American football, soccer, surfing, tennis, basketball, billiards, boxing, drifting, lots of combat sports. So we have a full corpus there. That is something that gives us a unique advantage and enables us to engage with virtually everybody on the planet who has video licensing needs for training and other purposes. Patrick Sholl: With the price increase implemented March 1, what is the timing of it being fully implemented and expectations on churn? Clint Stinchcomb: It will take a year to fully implement just because we have so many people on annual subscriptions. I think what you will see in the first month is probably 3% to 4% of all of our customers, 5% maybe, who become part of that, and so that will roll out over time. With our pure direct customers, obviously, it will not roll out fully until everyone has renewed their agreement. On the partner side, most of those subscribers are monthly, and it takes some of them a little bit longer to roll out the pricing increase, but we anticipate that over the next handful of months, everybody will. So we will get significant benefit this year, and we will continue to get benefit through February next year. Patrick Sholl: Any additional commentary on the cadence of guidance and expectations on the full year? Clint Stinchcomb: I will speak to that for a minute, and then I will hand over to Phillip for his point of view as well. We got into the half year because many of the partnerships that we are working on are large and have the potential to be very large, and they are a little bit lumpy. The benefit to working with the biggest companies in the world is you know you are going to get paid. You are not chasing people to get paid. However, sometimes the payment schedules can be a little different than certain other companies. So the cash revenue can be a little bit lumpy in light of these big licensing opportunities. And so we are extremely confident in the year that we are going to have this year. Without giving specific year-end guidance, like we said, our intent is to pay our dividend from cash from operations. And our belief is that our licensing revenue will exceed our subscription revenue. So we feel good about where we are going to end up. We have said double-digit increases in both cash flow and top line revenue, and that is what we are working toward every day and are confident that we will achieve. Phillip Brady Hayden: The only thing I will add is the revenue cycle for these deals, and we have talked about this before, but it is generally between four and six months. We are delivering content. We are then recognizing the revenue. We go through an acceptance process. We are not issuing our POs until we are actually getting paid under most of the contracts that we are doing. So the entire cycle can last as long as six months, and it has just become very difficult for us to predict with much precision exactly when the numbers are going to hit. I will say, as we get closer to midyear, I think there is a good chance we will narrow our guidance and revise it into Q2. We know it is a little bit broad, having the $38,000,000 to $42,000,000 and $6,000,000 to $9,000,000 on the cash flow side. But our plan would be to narrow that to the extent that we can here during the second quarter. Clint Stinchcomb: And I know that it is March 11, and people are probably wondering what we are going to do in the first quarter. And what I will say is the good news about much of what we are doing today is it is not seasonal. Our intent is to do the best deals that we can, and obviously for the company, but for our partners, because we believe that those will lead to additional opportunities. We said double-digit increases in cash flow and top line revenue for the year. That may seem a little conservative to people or a little lukewarm in light of the fact that we did 40% to 46%, but our intention as we give guidance is to beat that guidance. And that is the approach that we are taking, and we believe that over the year, that will yield the best results for us. Thank you for that question, Patrick. Tia Cudahy: Clint, Phillip, thank you. This is the end of the CuriosityStream Inc. Q4 and year end 2025 earnings call. Thank you again to all of the participants on the line staying with us through the technical difficulties. Have a nice evening.
Chris Merkel: Hi, everyone. Welcome to Exodus Movement, Inc.'s fourth quarter 2025 earnings call. I am your host, Chris Merkel, and with us today are Exodus Movement, Inc.'s Co-Founder and CEO, JP Richardson, and CFO, James Gernetzke. During today's call, we may make forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may vary materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in forward-looking statements in our earnings press release and our most recent Form 10-K filed with the Securities and Exchange Commission, available on the investor relations portion of our website. We do not undertake any obligation to update forward-looking statements. As always, feel free to visit our social media accounts on X or Reddit to submit questions for our investor relations team after our call. I will now turn the call over to JP to discuss Exodus Movement, Inc.'s fourth quarter and full year 2025. JP Richardson: Thank you everyone for joining. We want to try something a little different today. I have been told multiple times that my opening on earnings calls just does not sound like me, and I think that is a fair criticism, so we are going to keep this more conversational, a lot like how I speak publicly on interviews or even internally in company all-hands calls. So often, I love to tell stories, and today is going to be no different. A couple weeks ago, I took my kids skiing for the first time. My little boy, he is seven years old. And so we are on the bunny slope, where they teach the young kids, and he could barely stand up. He kept falling over and over again. And I am sure many of you with kids can relate to this. But he kept getting up over and over again. Ultimately, he asked about going up on a lift on the mountain to actually go down. His mom looked at him and she goes, son, you are not ready yet, and your dad does not think that you are ready yet. He said to her, he is like, I am going to show him. Meaning me, of course. So me admiring his determination I said, okay. Well, let us go. Go to the top of the mountain. Let us check it out. So we all went up, and he is going up and he went down, and, yeah, he fell a couple times, but he made it down without any issue. It was actually really impressive. Thinking about this moment with my kids and heading into this call today, it is kind of a lot like what 2025 felt like for this company. The market kind of knocked us around. Stock price and Bitcoin price just tested everyone's patience, and every single time the team just kept building. Even when we get knocked down, we just kept building. Focused. We are building the infrastructure that makes us less dependent on market conditions, these very market conditions in the first place. We will walk you through what we built and where we are headed. Let us do a brief look back into 2025. 2025 was the most consequential year in the history of Exodus Movement, Inc. This is because of what we built while the market has been pulling back. As you remember, early 2025, it seems like an eternity now, we rang the bell on the New York Stock Exchange. Ultimately, being on the New York Stock Exchange opened the door for more investors that could not touch us in the OTC markets. We announced Exodus Pay, one of the most important products in the company's history. In November, we closed the Grateful acquisition, and this gave us a live payment sandbox in Latin America, where every lesson in Grateful is making its way back into Exodus Pay. In the same month, we signed the W3C acquisition—I am going to come back to that in a moment. We expanded ExoSwap to more signed partnerships—I am going to talk about that even later. We expanded our tokenized equity to Solana through Superstate's Opening Bell platform. For full-year revenue, we grew 5% to $121.6 million. That growth came from improved monetization and B2B expansion, even as retail activity softened all the way toward the end of the year. Now for ten years, Exodus Movement, Inc. was built on speculation. When crypto is up, we thrive. When crypto pulls back, we feel it, much like what we are seeing in the markets today. As a public company, the stock reflects this reality directly. This model has served us well for a decade, but it is not enough anymore. Everything we did in 2025 was in service of one goal, and that is creating more revenue streams—revenue streams that do not depend on where crypto trades tomorrow. We are becoming a payments company—one that serves people whether Bitcoin is at $30,000 or $130,000. One that earns revenue from the daily financial lives of real people, not just trading activity. The product at the center of the shift is Exodus Pay. Most people use at least three financial apps—I am guessing many of you on this call are going to be very familiar with this. No doubt you have a banking app. You have a payments app like Venmo or Cash App. And you probably have a brokerage app like Robinhood or Fidelity. Exodus Pay makes it one. We are building the product that lets people send, spend, invest, and earn from a single interface. No seed phrases, no blockchain jargon, no L1, L2—which, later on, nobody cares about that stuff. No complexity. Self-custody should feel as easy as tap to pay. And at its core, Exodus Pay is built on stablecoins. Stablecoins are the dollars that move at Internet speed. You may have heard of them. We are making stablecoins usable for everyday payments—groceries, rideshare, restaurants, anywhere Visa or Mastercard is accepted. Again, from speculation-driven swap fees to revenue built on daily utility. What is going to power Exodus Pay is the product of W3C. So let us talk about the W3C acquisition. It remains the centerpiece of our vertical integration strategy. Let me remind everyone why this deal matters in the first place. The first reason this deal matters: we get to own the full payment stack from self-custodial wallet to the spend card at the terminal. No other wallet owns end-to-end payment rails. The second reason is revenue diversification. Our revenue today is heavily tied to swap volume. The third reason is the B2B2C infrastructure for partners. W3C already powers MetaMask, Ledger, OKX, and Kraken in their cards. Owning this infrastructure means Exodus Movement, Inc. can provide card programs and payment rails to other wallets and apps. This means more revenue from partners without acquiring those end users directly. We remain confident in the ability to close in 2026 and are working diligently toward closing. Switching to what seems these days like everybody's favorite topic, AI, because it is reshaping both how we build and what we build. Let us first talk about how we build. I actually write code every single day using Claude Code. Tasks that used to take me months now take me just hours. It is that wild how good these tools are these days. What is true for me here is true for our entire engineering organization. We are pushing hard toward a model where AI ultimately writes all of our code. We are not there yet, but the productivity gains we are seeing so far have already been quite significant. Now with what we build—how we think about the future here—is that we think AI agents represent an entirely new class of customer for Exodus Movement, Inc. These agents are going to need wallet infrastructure. They are going to need to send money, check balances, and make purchases. It is easy, when you think of payments apps like Exodus Pay, to think of the total addressable market as just 8 billion people of the entire world, right? But with AI agents, it will potentially be in the trillions because each one of these agents is going to need a wallet. Exodus Movement, Inc. aims to be the default wallet layer for this world. Let us hit on ExoSwap. ExoSwap continues to be a meaningful volume driver. In Q4, we signed—or in total, have—18 signed partnerships, 11 that are producing, $416 million in Q4 volume, 26% of our quarterly total. This strength shows that our infrastructure is trusted by other major platforms like Ledger and MetaMask. MetaMask just went live in December with Solana. Following the close of W3C, we are going to be able to offer card issuance as well to a lot of these partnerships that are using ExoSwap, especially a lot of the new ones. I want to leave you with this. Our revenue today does not yet reflect the magnitude of what we have built. We have invested significant resources—capital, talent, time—into infrastructure, acquisitions, and product development that have not yet hit the top line. I understand this. I understand the patience it requires from you, our shareholders. I want you to understand what is on the other side. We are shifting from a company built on speculation to a company built on payments—on daily utility, on infrastructure that earns revenue every time someone taps a card, invests into their future, saves for a rainy day, or buys their groceries. That is the company we are building. 2025 laid the foundation, and 2026 is where it starts to come to life. With that, I am going to hand it over to James to walk through our financial results. James, thank you. Let us start with Q4 and full-year revenue and swap volumes. James Gernetzke: Full-year revenue was $121.6 million. That is up 5% from 2024. Q4 revenue was $29.5 million, which represents a 3% decrease from Q3 and a 34% decline from the record Q4 we had a year ago. To put that year-over-year comparison in context, Q4 2024 was our highest revenue quarter in company history, in a quarter where we saw major industry catalysts like the U.S. election and Bitcoin topping $100,000 for the very first time. As a recent industry backdrop, digital asset prices were also in decline for most of Q4 2025 after briefly enjoying early October highs. Full-year swap volume was $6.89 billion, which is a 21% increase from 2024. This is a meaningful increase that demonstrates the underlying growth in the platform, even as digital asset prices declined. Q4 swap volume of $1.59 billion was down 9% sequentially and down 32% year over year, tracking the broader market pullback. ExoSwap, our B2B swaps platform, continued to be a significant volume driver for Exodus Movement, Inc. at $416 million of volume in Q4, or 26% of our total quarterly volume. Our growing B2B swap volume demonstrates that Exodus Movement, Inc. is increasingly a critical piece of infrastructure for the broader ecosystem. With regard to staking and other non-exchange revenue, full-year revenue from staking reached over $4 million for the year, nearly doubling 2024's total. Our improvements to Solana staking in particular drove this acceleration. This is recurring revenue that can be compounded for as long as the assets remain under stake. Fiat onboarding also saw a 28% increase in revenue versus 2024. Quarterly funded users—users who have actually put their money into Exodus Movement, Inc.—finished the year at 1.7 million. That is down 6% from last quarter and 11% from a year ago, reflecting the broader retail environment. Monthly active users at the end of Q4 were 1.5 million, down 35% from the previous year and unchanged sequentially. While monthly active users declined year over year in line with broader retail activity, our funded user base remained resilient, demonstrating the stickiness of our wallet. To pursue ownership of a full payment stack, during 2025, we funded $80 million of debt related to the W3C acquisition. While we initially used the Galaxy credit facility, we made the decision to pay off that debt prior to the end of the year. This resulted in the first reduction of our Bitcoin treasury in quite some time, and during 2026, we have continued to sell digital assets as we prepare for the next disbursement related to the W3C acquisition. As we have stated in the past, we believe that our treasury, including our Bitcoin treasury, is available to fund M&A and other growth initiatives, ultimately growing our Bitcoin treasury. On a related note, we continue to evaluate ways to demonstrate the power of tokenized equity. However, we are pausing our Bitcoin dividend plans as we are prioritizing M&A and other growth initiatives at this time. We remain committed to exploring opportunities afforded to us and our shareholders through tokenized equities as their use continues to grow. Finally, expanding on JP's earlier note regarding ExoSwap, MetaMask is a notable name that we signed towards the end of last year. Their wallet launched support in the final days of 2025 for Bitcoin. Initial results are slowly ramping up as MetaMask users gain familiarity with the new multichain functionality. Chris, with that, let us get back over to you for questions. Chris Merkel: Thank you, James. We will now open for questions. It is time for our analyst questions, and I see we have Andrew James Harte from BTIG. Go ahead, Andrew. Andrew James Harte: Hi. Can you hear me okay? Chris Merkel: Yes. Andrew James Harte: Great. Thanks for taking the question. JP, I thought your comments about agentic payments were really interesting. I think the idea was that agents are going to need the wallet infrastructure to operate out of. I guess, can you just expand on the steps needed to go from where we are today, both in terms of capabilities or potential partnerships or integrations, to make that a reality? That would be very helpful. Thank you. JP Richardson: Yeah. Great question. Ultimately, when you want to enable agents to be able to transact with wallets and send stablecoins, what you want to be able to do is have a world where the company or individuals that are using or leveraging these agents can maintain control over their wallets. I mean, I suppose what you could do, you could just set up an OpenClaude on your Mac mini, right, and have it go hog wild with Exodus Movement, Inc., then that would work today or should work today, right? But, again, what you want is to be able to say, okay, I have this mass amount of agents. Maybe I am a company in the travel industry, right? I am going to have an AI agent doing travel on behalf of consumers. Well, I need to be able to basically either give the consumer the ability to give access to, say, Exodus Movement, Inc. in that AI agent or, as a business, be able to give an AI agent access to a number of wallets that I have full control over and can control the keys as well. Effectively, what that means is that from the consumer perspective—again, I am just going to step into the shoes of an Exodus Pay customer—that means having Exodus Pay or Exodus connect directly to, like, a ChatGPT or a Claude. Actually, that is something that behind the scenes we have had working for a while, but we just want to make sure the user experience works really well. When it comes to the business side—again, that travel agent example—what that ultimately means is that we would have to produce back-end software for these agents to be able to, again, view all these separate wallets. There are a number of angles that we are looking at here. The one that we are most interested in in the short term is empowering consumers that have, again, just Exodus Movement, Inc. on their phone and are able to connect to, again, like, ChatGPT or even, in some cases, maybe even an OpenClaude as these agents become more commercialized and say, go ahead. Spend up to $500. I want you to go look for a flight, the best flight to, I do not know, Florida, right? Whatever it is. That is going to be critical, and to make all that work well and to make sure that the limits and restrictions are in, because, again, you do not—like, the worst-case scenario is if you say, okay, AI agent, you have full access to my wallet, be good with it, and then you find out it went and speculated and bought a bunch of Dogecoin from your entire wallet. You would be pretty upset about that. So there are a lot of security controls that have to come in place as well. Chris Merkel: Alright. Ed Engel from Compass Point is next up. Go ahead, Ed. Ed Engel: Hi. Thanks for taking my question. I just wanted to ask some questions about the cost structure here. Do you mind going through the costs or some of the one-time expenses we might have had in the fourth quarter related to M&A or anything else to call out? And then would it be fair to assume that might continue into the first quarter or maybe into the second quarter until the transaction closes? James Gernetzke: Yes. Obviously, we had the legal costs. There is the interest associated with the Galaxy loan. The interest, obviously, since we paid it off, is not going to continue. There are some legal costs as we go through the regulatory process. There are certainly going to be some legal costs, but my assumption would be that it would be slightly less as we go through that process. But there still will be some for sure. Ed Engel: Let us see. And sorry. And then you said some other one-time costs— James Gernetzke: Yes. And then we have our standard, similar one-time costs that we have seen for non-M&A items from previous quarters. So yes, to answer the question, the M&A continues. We are still out there looking for other businesses and other opportunities. Obviously, we do not have anything to report at this time, and we are very focused on getting W3C closed and integrated. But that does not mean that we are not still working on a pipeline. I would say that in general, I would expect over the next quarter or so that the costs should be slightly lower than previous quarters, but not zero. Chris Merkel: Alright. We have Gareth Gaceta up next. Hi, Gareth. Gareth Gaceta: Hi, guys. Can you hear me alright? Chris Merkel: Yes. Gareth Gaceta: Awesome. I was wondering if you could provide some detail on the drivers to the improved monetization in the ExoSwap in the quarter. Do you guys think that there might be future opportunities for similar expansion, or was it maybe more of a one-time event? James Gernetzke: Yeah. Let me start. I would say that in terms of ExoSwap, we have grown the book of business in terms of the number of partners that we are working with. As we grow that book, you will see different areas, different cost structures, etc., that come with it. Over time, as that product matures, we will start to get to a steady state. We do expect changes in the short term as the book continues to grow. We are pleased with the amount of new deals that have been signed and the work that is going on in that area. Now there are some—because this is a B2B2C, we are relying on the partners, and there is one partner that looks like it is probably going to stop operations over time. You will have those pluses and minuses, but I would say that we are definitely pleased with the direction and the amount of new contracts that have been signed and new partners that have come on. JP Richardson: Alright. Thank you, James. Chris Merkel: We have Michael John Grondahl from Northland. Go ahead, Mike. Michael John Grondahl: Thank you. So sort of two questions, guys. One, I think you mentioned 18 signed ExoSwap partners and 11 operating. When do you think the next, I do not know, the next wave, the next seven, are going to ramp up, and any significant partners in that next wave? And then secondly, I would like to understand better kind of the go-to-market with Exodus Pay. Is that only going to be within sort of ExoSwap and the trading customers, or help us understand how we are going to see that Exodus Pay offering in the real world. James Gernetzke: Let me start with the 11 and the 18. I think that we are seeing steady growth, and it is steady growth right now. In terms of significant names, we are pleased with the mix and the size of different clients that we are getting. Unfortunately, it is a B2B product. We need the client's consent to share the names, and I do not have any larger names that have shared consent to offer you, unfortunately, right now. But I could definitely say—again, just to reiterate—we are pleased at the growth that we have seen in that, and we are looking forward to that continuing for the rest of the year. So JP, on Exodus Pay— JP Richardson: Yeah. Let me hit a little bit more about the partners with ExoSwap here. Even though we cannot announce the names yet, the reality is that yes, we have signed other big partners, and we will be able to announce that in the future, which is going to be great. In addition to that, I think James had mentioned something that is really important: with the ExoSwap partnerships, we have to rely upon the partner's timeline. Often what you see is that the partner in some scenarios might just enable, say, one asset, so you can swap from one pair to the other, and it does not have support for other assets and other blockchains. As we march forward and they get one going—like, oh, wow, this thing is working really well—now let us enable it for these other blockchains and make it work really well there and keep that train going. We are going to see more and more of that, and we already have seen that, with timeframes that we will be able to announce in the future. I anticipate that will be the pattern moving forward: we will sign the partners, then there is the time to integrate, they go live on one blockchain, and then they expand out on additional blockchains. As we mentioned, we have some very big names in the industry that we have been working with for quite some time, and that becomes quite a strong testimonial as we start working with other partnerships. I think that is really important to call out. Now related to the question of—so you referred to it as ExoPay. I am assuming you were talking about Exodus Pay. So ExoPay—now, this is getting confusing—ExoPay is our fiat on-ramp, off-ramp. We have recently renamed that to ExoRamp to separate the confusion. To be very clear here: think of ExoSwap as allowing people to swap from crypto to crypto. ExoRamp allows people to onboard into crypto via a bank account or a debit card, or off-ramp in time. So it is basically fiat on-ramp/off-ramp. Exodus Pay, again, is our initiative to, as earlier in this conversation I had mentioned, bring the world of all these disparate financial apps into one single app, right? The biggest is banking, a payments app like Venmo or Cash App, and then a brokerage app—Robinhood or Fidelity, E*TRADE, whatever you use—all into one application with no crypto complexity whatsoever. Now, when you ask about go-to-market, we had a very early test group that we experimented with, and we had conversations with people at events at ETHDenver. Initial feedback was really good. We are marching forward. In fact, you are going to see something this week that is going to come out about another event that Exodus Pay is going to be a part of. Again, it is about mainstream payments, allowing people to easily use assets like stablecoins anywhere in the world that Visa or Mastercard is accepted, right? That is really important. The big aspect of go-to-market and how we think about Exodus Pay is that we want to align to big cultural moments. I am going to say that again. We want to align with big cultural moments. I wish some of you were not thinking, like, oh, does that mean he is going to go out and pull the trigger on a Super Bowl ad or something like that? We do not have any plans for that, but you never know. No, but we have no plans for that whatsoever. But who knows? When it comes to big cultural moments, there are things that you will see this year that will answer that question. It is about being a part of mainstream conversations, mainstream payment experiences. There is a lot more that we will be able to unpack in future conversations. It is going to be great. Chris Merkel: Alright. Kevin Dede from HC Wainwright. Hi, Kevin. How are you? JP Richardson: Kevin, we cannot hear you if you are speaking. Chris Merkel: Okay. Nope. Still cannot hear. Still cannot hear. Still cannot hear, Kevin. Kevin Darryl Dede: Can you hear me at all now? Chris Merkel: Okay. JP Richardson: Hi, Kevin. Sorry about that. It is tough being a tech analyst and keeping your tech working. Kevin Darryl Dede: So, JP, sort of a two-parter. I am going to think I am going to ask Mike's question in a different way. The progress you are making with ExoSwap clearly indicates that you are embedding yourselves with complementary businesses, right? It is proving the B2B model that you have developed at Exodus Movement, Inc. But with Exodus Pay, it seems to me that—I mean, I hear what you say about leveraging big cultural moments. I get that. But you are taking on a sizable amount of risk in spending versus trying to build a consumer-facing app. I am wondering how you are going to approach that risk, how you plan to allocate capital to it, and how you expect it to roll out. And then I would also like to hear about the roadblocks you have to seeing W3C complete, and the timeframe to that. You did not offer much detail there. JP Richardson: Kevin, can you just unpack the risk bit a bit more? I just want to make sure I really capture your question clearly. Kevin Darryl Dede: Well, in my mind, there is a little bit of controversy over Exodus Movement, Inc.'s development in the B2B world versus a consumer-facing app. And Exodus Pay, I think, is the culmination of your consumer-facing initiatives, and that is clear through today's call. What is not clear is the resources you will dedicate to building a consumer-facing business—arguably the most difficult thing to do in business. So I am just wondering how you are assessing the risk and allocating capital, and developing that capability. JP Richardson: Got it. Okay. You are probably going to hate this answer, but I am going to say it anyway. Exodus Pay is the evolution of what Exodus Movement, Inc. is today. We were born—and the way that we thought about Exodus Movement, Inc. from the early days—was all about empowering consumers to control their wealth. That was the piece of it. From 2015, there was actually—I had a conversation with our cofounder, Daniel, just recently, and he was like, JP, do you remember in the early days when we put our phone number inside the software? I am like, yeah, I do. Is that not crazy? People would call. I am eating dinner with my family, and my kid has got spaghetti pouring out of his mouth, and then the phone is ringing nonstop. I am trying—I am like, oh my gosh. I am eating? I share these stories because Exodus Movement, Inc. was always a company focused on consumer needs. Always. At that moment in time, the technology was not quite where we needed it to be. Regulations were not quite where we needed them to be. Mastercard and Visa were not quite where we needed them to be. The technology has now caught up where you do not have to think about the complexities of secret phrases and which layer you are on. You do not have to care about any of those things. The regulations have now started to catch up, especially with the Genius Act, in embracing stablecoins, right? That is really key and critical. Visa and Mastercard see what is happening, and that is why with W3C—which will be a good segue to talk about W3C in just a moment, per your other question—they see what is happening. That is why there is starting to be the rise of these crypto cards that allow you to connect the card directly to your wallet, your self-custodial wallet, so you have full control and you can go and you can tap to pay anywhere. Again, Exodus Movement, Inc. was always a company built on the consumer experience. I think it is really important to highlight and call out. Now related to W3C, as mentioned in the opening statements, we are very committed to getting this done. Anybody that has been through acquisitions knows there are all sorts of complexities that come with it. With this acquisition, there are a number of subsidiaries that blend into what we are buying as a company, and each one of these subsidiaries has different levels of complexity that we have to ultimately address. James, I am sure you can—you have been a big part of this as well along with me—you can probably add some additional color to this. James Gernetzke: Yeah. I think on the W3C front, we are in front of the regulators right now, and we are progressing toward it on the timeline that we brought up when we signed the deal. In terms of capital allocation, to put a finer point on JP's comments, because Exodus Pay is the evolution of Exodus Movement, Inc., that capital allocation, you should expect it to follow a similar path and the things that we said about our consumer business going forward in different fronts. Obviously, we have allocated a lot of capital to W3C and the B2B side. We still maintain that Amazon AWS playbook, even with the W3C acquisition. JP Richardson: It might be important to mention too that per capital allocation, one aspect that is going to be important here is that because Exodus Movement, Inc., even though we were focused as a consumer app early on, it was more about those in crypto. You are going to allocate capital and think, oh, we are going to target crypto people. Uh-oh, there is a bear market. Better pull back and not think about how to reach the mainstream. That was historically the thought process. But now shifting closer to the mainstream, bear or bull market, it does not matter, right? Because Joe Plumber does not think about the price of Bitcoin. Joe Plumber does not actually even care about the price of Bitcoin. Actually, Joe Plumber may not be our ideal target use case; it is going to be maybe a younger demographic. Let us say some 19-year-old watching college basketball on a Saturday or whatever it is, right? They may not really care about the price of Bitcoin, but they definitely care about how they spend money and how they think about the future. We still have to be thoughtful but yet bold when it comes to capital allocation when reaching that demographic. Chris Merkel: Thank you. There are no more questions. Thanks, JP, James, and all of our analysts for submitting your questions. Please visit our social channels on X and Reddit to submit your questions for management. Our investor relations team is standing by. Thanks for joining us today, and we will see you next quarter.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Fossil Group, Inc. Fourth Quarter and Full Year 2025 Earnings Call. At this time, all parties are in listen-only mode. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. I will now turn the call over to Christine Greany of the Blueshirt Group to begin. Christine Greany: Hello, everyone, and thank you for joining us. With me on the call today are Franco Fogliato, Chief Executive Officer, and Randy Greben, Chief Financial Officer. Before we begin, I would like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those discussed during this call. Fossil Group, Inc.’s policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company’s Form 8-K, 10-Q, and 10-K reports filed with the SEC. In addition, Fossil Group, Inc. assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During today’s call, we will refer to constant currency results as well as certain non-GAAP financial measures. Please note that you can find a reconciliation of actual results to constant currency results and other information regarding non-GAAP measures discussed on this call in Fossil Group, Inc.’s earnings release, which was filed today on Form 8-K and is available in the Investors section on fossilgroup.com. I will now turn the call over to Franco to begin. Franco Fogliato: Hello, everyone, and thank you for joining us. 2025 was a transformative year for the company, defined by operational excellence and financial performance that exceeded our expectations. We took bold steps to advance our turnaround plan, delivering strong execution against the three pillars we laid out just one year ago. Those include refocusing on our core, rightsizing our cost structure, and strengthening our balance sheet. We built a brand-led, consumer-focused operating model, assembled an exceptional management team, and established a culture of accountability. We recently appointed a new Chief People Officer, who will be a valuable part of our efforts to continue strengthening our organizational capabilities, culture, and customer-first mindset. I am incredibly proud of our teams and want to thank everyone across the organization for their energy, passion, and hard work, and for upholding our commitment to keep the consumer at the center of everything we do. Our turnaround efforts gained traction quickly, enabling us to end the year ahead of our initial plan. We delivered full-year performance above the updated guidance we provided halfway through the year. Net sales totaled $1.0 billion, gross margin expanded 380 basis points to 55.9%, and we reduced SG&A by over $100,000,000. This drove a positive adjusted operating income of $11,000,000, a year-over-year improvement of $48,000,000. Now I will turn to the operating highlights and key accomplishments of 2025. First and foremost, we created a positive brand platform for the future. We accomplished this by improving the customer journey and delivering a robust pipeline of product innovation, all supported by powerful heritage brand storytelling. At the same time, we successfully established a full-price selling model by radically transforming our promotional cadence across channels. This enabled us to return the business to healthy gross margin in the mid-50s and improve the profitability in both our wholesale and direct-to-consumer channels. Importantly, this has strengthened our wholesale partner relationships, creating a powerful flywheel effect that is delivering benefits across all channels. Next, we reenergized our core licensed brands Michael Kors, Emporio Armani, Armani Exchange, and Diesel. Most notably, strategic investment in point of sale and a renewed focus on specialty watch retail enabled us to improve our in-store presentation and performance in the wholesale channel. We also drove momentum in our traditional watch business by prioritizing our most scalable markets in the wholesale channel, including the U.S. and India. This resulted in wholesale traditional watch growth in our core brands of 2% globally for the full year in 2025. At the same time, we took clear action to rightsize our cost structure and instituted a culture of strict cost control. Lastly, and as importantly, we transformed our balance sheet. We now have the runway and flexibility to support the next phase of our turnaround, build a sustainable, profitable business model, and deliver long-term value creation. We have entered 2026 well positioned to leverage our foundational assets, including our 40-plus-year heritage, iconic brand, innovative design, global reach, and talented teams. Also notable, the industry is experiencing strong momentum across markets and demographics. At the same time, our comeback is capturing increasing attention from consumers, partners, and the press. Just last month, I was at the Inhorgenta watch and jewelry show in Munich, where many of our brands were center stage. In 2026, we will be making more bold moves on our journey to reinvent Fossil Group, Inc. and lead the industry. It is an exciting time for the company, as we continue to foster a collaborative, creative, and energetic culture, accountability, and a stronger commitment to win. We are turning the page to a new chapter and evolving our three strategic pillars as follows: returning to profitable growth, optimizing our operating model, and building shareholder value. Over the next three years, this evolution of our turnaround is expected to generate a return to top-line growth, high single-digit adjusted operating margin, and positive free cash flow. More on our financial outlook shortly. But first, let us talk about the initiatives we will be executing against to further advance our turnaround. Within our first pillar, returning to profitable growth, our teams will be focusing on defined initiatives across the positive brand platform to fuel innovation, deepen consumer engagement, grow the traditional watch business, and reinvigorate our jewelry and leather categories. In 2026, we will be fueling innovation through design, technology, and storytelling. This includes reigniting key icons, continuing to delight our customers with culturally relevant collaborations, reviving one of Fossil’s most sought-after Y2K innovations, and introducing a selective group of premium products. Let me take you through the roadmap. Starting with our watch icons, which make up a significant portion of our business, we will be innovating and expanding upon key collections including our Everett, Arlo, Machine, and Raquel platforms and our watch rings. Additionally, we will be doubling down on our Minis collection across all of our top women’s platforms. Following the success of 2025 collaborations such as Fantastic Four, Galactus, Minecraft, Xiaobai, and Superman, we will continue activating culturally relevant partnerships with both new and returning properties in 2026. These collaborations deliver highly engaged audiences, customer acquisition at scale, and meaningful earned media. Importantly, as we anniversary successful 2025 partnerships, we are focusing on converting collaboration shoppers into long-term Fossil customers, improving retention and lifetime value. One of our most significant introductions this year is the return of Fossil BigTick, a bold animated movement that combines analog craft with digital innovation. Originally introduced in the late 1990s, BigTick is one of Fossil’s most recognizable and emotionally resonant designs. The designs are geared towards the millennial watch consumer nostalgic for Y2K, Gen Z consumers seeking an analog-forward accessory, and the male watch enthusiast looking for a big, bold watch to match his style. Earlier this month, we launched a nostalgic, limited-edition Y2K capsule, quickly followed by a reinvention of BigTick Machine. Initial response from consumers and acclaim from the press have been tremendous thus far. Our BigTick marketing campaign reflects the evolution of our creative strategy, featuring a dynamic animated concept built around the idea that everything BigTick touches becomes larger than life. Its bold storytelling reinforces product distinctiveness while driving momentum in real events. We have a lot more exciting BigTick innovation coming and anticipate the momentum will continue to build as we roll out additional collections throughout the year. Another significant innovation coming later this year is the introduction of Signature, Fossil’s first premium platform in more than a decade. Rooted in craftsmanship and timeless design, the collection represents an important evolution for the brand and is designed to resonate with watch enthusiasts and collectors alike. Signature will also introduce a new level of technical sophistication and assembly that reflects Fossil’s continued commitment to quality and innovation. We look forward to sharing more details in the coming quarters. While we are first and foremost a watchmaker, our jewelry and leather offerings expand our expression as an accessories brand. Our strategy for this category focuses on staying true to our brand DNA of quality, value, and timelessness. We are positioning the business with modern designs, including jewelry introductions inspired by our most important watch collections, and increased personalization through engravable offerings. We will be supporting all of this product innovation with a focused, high-impact marketing roadmap. In 2025, we concentrated our investments in priority markets, and the results validated that disciplined, brand-led investment drives stronger engagement and return. This year, we will continue scaling this approach, deploying our resources to opportunities where we can build further brand equity and accelerate growth. Our 2026 storytelling is designed to celebrate Fossil heritage, reinforce our quality and design credentials, and elevate cultural relevance. A great example of this is our exciting partnership with brand ambassador Nick Jonas. Nick has proven to be an authentic and highly engaged partner, currently anchoring campaigns across Nick Jonas Collection, Machine, and BigTick. Moving now to our omnichannel initiatives, which are designed to modernize our brand expression in wholesale, improve our e-commerce business, and optimize our Fossil store portfolio. In the wholesale channel, we are focusing on our top customers in must-win markets, including the U.S., France, Germany, and India. For example, in the U.S., the strength of the Fossil brand, our robust product pipeline, and engaging campaigns are driving growth with key partners. Additionally, we are expanding distribution to specialty and energy retailers that can help build brand awareness and create excitement among the younger demographic. In the e-commerce channel, we have reshaped our business through two major actions over the past eighteen months. First, we dramatically reduced our discount posture by more than 50%, establishing a full-price selling model. Next, we implemented a comprehensive redesign of the Fossil site, featuring richer storytelling and a more seamless customer journey. The result is a smaller but more profitable sales channel with higher AUR across the entire marketplace. As we pursue long-term growth, we will continue to deliver consistent price and promotion while investing in personalization, inspiration, and more cohesive brand representation to drive customer engagement and strengthen brand perception. In the retail channel, we are optimizing our store portfolio and deploying our Store of the Future strategy in the U.S. and EMEA. We are very pleased with the initial results from our Store of the Future concept, which blends lifestyle selling, data-led decision-making, and a purpose-driven strategy. Importantly, it is shifting our selling culture to proactive clienteling and outreach, personalized service, and community focus. This has resulted in improvement across key performance indicators, including AUR and conversion. Turning to our core licensed brands, we are focusing on initiatives to return the brands to sustained sales growth. We believe there is a significant opportunity to unlock potential in Michael Kors jewelry and men’s watches. Our strategy for Kors jewelry is centered on modern, wearable design while leaning into one of our strongest assets, the MK logo. We have recalibrated our pricing architecture to improve accessibility and enhance our competitive position. In men’s watches, we are returning to proven Michael Kors design codes and investing behind hero platforms that have historically driven scale. We will do this by focusing on bold, confident styling, recognizable attributes, and strong perceived value within key price tiers. For the Emporio Armani brand, we are pursuing opportunities in select markets outside of China, where there is strong local demand for premium products and additional runway in the wholesale channel to broaden assortment and leverage long-standing partnerships. We are also continuing to drive the Armani Exchange brand, which is experiencing strong momentum across major markets, including the U.S. and India. Key initiatives include elevating our retail presence, expanding distribution, building on the success of our icons, and delivering localized product offerings. Turning now to the final area of focus under our growth pillar, we see a significant opportunity in India, which has been the fastest-growing large economy in the world for the past four years. It is an important strategic market where our brands have category leadership, strong momentum, and secular tailwinds. I was in India last month with other members of our executive team as part of our focus on unlocking the full potential of this geography, where we are experiencing growth across all channels and brands. In 2026, we will be building further brand heat across our portfolio by broadening our assortment, entering premium price points, and introducing limited editions, all supported by dynamic storytelling. We will also be increasing our footprint to expand distribution, opening additional wholesale doors with both new and existing partners, and opening new Fossil retail stores. We have a highly seasoned team in India who is committed to driving continued growth and rapidly scaling the business. Moving now to our second turnaround pillar, optimizing our operating model. We made significant progress toward rightsizing our expense structure in 2025. With this improved baseline and an emphasis on stricter cost control, we are well positioned to continue to drive optimization across the organization. We will be focused on initiatives to strengthen our omnichannel strategy and go-to-market execution while prioritizing operational investment and infrastructure improvements. Key areas of focus include sharpening our go-to-market execution to elevate point-of-sale engagement, reducing complexity and improving business agility, enhancing our digital and technology infrastructure, delivering best-in-class supply chain performance, and prioritizing high-impact projects and key performance indicators. I will now turn to our third and final pillar, building shareholder value. The rapid progress we made in year one of the turnaround, our accelerating profit profile, and our strengthening balance sheet give us the conditions to create lasting value for all of our stakeholders. We expect to continue improving profitability, affording us the optionality to strategically invest for growth and value creation. Building on the strong execution and financial performance we delivered in 2025, we are pleased to be raising the financial targets we introduced one year ago. As a reminder, we previously communicated a 2027 sales target of at least $800,000,000. We now expect to surpass that benchmark one year earlier than planned. In 2026, we expect sales in the range of $945,000,000 to $965,000,000, highlighted by a return to top-line growth in the fourth quarter. Additionally, we expect positive adjusted operating margin of 3% to 5% and breakeven free cash flow. Our commitment to operational excellence and returning the business to profitable growth is grounded in a focus on disciplined accountability and performance. I am grateful to our teams, partners, and shareholders for their continuing support of Fossil Group, Inc. and look forward to reporting to you on our progress throughout the year. Before I turn the call to Randy, I would like to acknowledge the current geopolitical climate. As a global company, we are disheartened by the events occurring in the Middle East, and we are closely monitoring the safety and well-being of our employees and partners in the region. Now I will turn the call to Randy to discuss the financials. Randy Greben: Thank you, Franco. 2025 was a year of tremendous progress on multiple fronts. I am pleased that we gained strong traction on our turnaround initiatives, delivered financial results ahead of our expectations, and transformed our balance sheet. Our 2025 performance reflects the strength of our brands, strategies, and teams, and demonstrates that we have the right building blocks in place to drive long-term growth and profitability. Now I will turn to the specifics of our fourth quarter and full-year performance. Net sales for Q4 totaled $274,000,000, reflecting a decline of 20%, including four points of impact from store closures. For the full year 2025, net sales were $1,000,000,000, including 330 basis points of impact from store closures and 80 basis points of impact from the exit of connected watches. Fourth quarter gross margin came in at 57.4%. That is up 350 basis points from last year and reflects the ongoing strength of product margins as well as our focus on full-price selling, which allowed us to drive structurally higher margins over the past 12 to 18 months. Indeed, full-year gross margin for 2025 was 55.9%, representing 380 basis points of expansion versus 2024, even with the continued and compounded headwind of minimum royalty guarantee shortfalls, which, as previously shared, are expected to be materially abated in full-year 2026. In 2025, we executed against several initiatives that drove a meaningful improvement in gross margin. Specifically, we substantially lowered our discount rate, strengthened our supply chain, negotiated better terms with key suppliers, retooled our open-to-buy processes, and implemented targeted price increases. I am pleased to note that all of these actions not only improved our underlying gross margin profile but also enabled us to largely mitigate tariff headwinds throughout the year. The fact that we were able to absorb the impact of tariffs in 2025 while delivering a return to healthy gross margins demonstrates the agility of our supply chain and is a testament to our teams around the globe. Looking at 2026, we expect to continue to offset the current rate structure through our mitigation strategies and have not embedded material rate changes or any tariff refunds into our forward-looking guidance. Moving now to operating expenses. Strict cost control enabled us to lower SG&A expenses by 16% versus prior year. The improvement is attributable to 49 fewer stores in operation versus a year ago, as well as lower compensation and administrative expenses. During Q4, we closed six additional stores, ending the year with 199 locations globally. All 49 closures in 2025 occurred at natural lease expiration with minimal closing costs. Given the improving performance of our fleet, we expect to reduce our number of store closures down to approximately 15 locations this year. As we continue to focus on improving our cost structure, our teams are acting with financial discipline and rigor. I am pleased to note that on a full-year basis, we slightly over-delivered on our full-year SG&A savings target of $100,000,000. Zooming out, the successful delivery of 2025’s SG&A savings target was a key follow-on to work that began in 2023. In total, the company’s SG&A levels have been rightsized by more than $250,000,000 over the last 36 months. And while the lion’s share of this work is behind us, we are never done. As Franco mentioned, in 2026, we expect to further optimize our operating model by capturing efficiencies throughout the organization. We will be directing resources toward go-to-market execution, operational investments, and infrastructure improvements. Looking now at our bottom-line performance in Q4, strong gross margins north of 57% and exceptional expense management translated to a profitable quarter, with adjusted operating income totaling $11,000,000. We also achieved positive adjusted operating income for the full year, also at $11,000,000. This is notable after two consecutive years of losses on the bottom line and is another very tangible demonstration of our turnaround taking root. Turning to the balance sheet. We ended the year with $96,000,000 in cash and cash equivalents, $67,000,000 of availability under our asset-based revolver, and no utilization of our ATM program. Year-end inventory was $152,000,000, down 15% from last year, consistent with sales and in line with our expectations. It is worth noting that we have brought inventory levels down by more than $200,000,000 over the last three years. The reduction in inventory, particularly in the last year, has not only seen us become more appropriately balanced in terms of weeks of supply and churn, but, as importantly, it occurred as we rebalanced our overall inventory position to include far more full-margin products. Strengthening the balance sheet was a key pillar under the first phase of our turnaround, and we delivered on that in spades. We are pleased to have entered 2026 in a healthy position with the right combination of liquidity and debt maturity horizon. Now let us take a look at our outlook for 2026 and beyond. We are incredibly proud of the work our teams are doing and believe we are poised for another year of strong execution as we embark on the next evolution of our turnaround plan that Franco just laid out. Provided there is no significant disruption in the macroeconomic environment, we expect our turnaround pillars to deliver the following outcomes for full-year 2026: worldwide net sales of $945,000,000 to $965,000,000, including approximately $21,000,000 of impact related to retail store closures. That is down 4% to 6% and represents a significant improvement in the rate of decline versus last year. For added context, the impact of store closures and the extra week in 2025 is worth about 360 basis points. And it is worth reiterating the point that Franco made a few minutes ago. Based on the guidance we are providing today, we now see 2026 as the sales low point under our turnaround, one year earlier than previously planned, and materially higher than the approximately $800,000,000 in revenue we indicated for 2027 one year ago. As we look at the cadence of the year, we anticipate that 2026 will be second-half weighted, with year-over-year declines slowing through the year and an expected return to top-line growth in the fourth quarter. This is in line with seasonal trends but, more importantly, reflects the compounding benefits of our turnaround initiatives. This includes the lapping of last year’s store closures and selected further closures this year, the sunsetting of some noncore small licensed brands, and our watchstations.com website, and the comping of last year’s inventory reset as we shifted our focus to full-price selling. Importantly, we anticipate that gross margins will remain healthy in the mid to upper 50s. Further, we expect that the intra-quarter volatility we have experienced, particularly in Q3 of previous years, should be largely abated with the benefit of our minimum guaranteed royalty relief. Additionally, expense control is expected to drive another year of meaningful SG&A reduction and enable us to achieve SG&A leverage. While we will be investing in marketing to support the robust pipeline of innovation that Franco spoke about, total marketing dollars are expected to be down slightly versus 2025. We are positioned to achieve improved profitability in 2026 and expect adjusted operating margins to be in the range of 3% to 5% on a full-year basis. Additionally, our focus on improving cash conversion is expected to result in breakeven free cash flow as we drive the business to be cash-generating in 2027 and beyond. With innovative product offerings, favorable watch industry dynamics, and talented teams, we are looking forward to building upon the foundation and track record we established in year one of our turnaround. To that end, we are rolling forward our previously communicated three-year outlook by one year. In 2028, we expect our turnaround plan to be driving mid-single-digit sales growth, high single-digit adjusted operating margins, and positive free cash flow. Looking further ahead, we believe our brand-led, consumer-focused, and increasingly optimized operating model will deliver benefits well into the future. Now I will ask the operator to open the call to Q&A. We will now open for questions. Operator: We will now begin the question and answer session. Our first question comes from the line of Tom Forte with Maxim Group. Tom, please go ahead. Tom Forte: Great, thanks. Franco and Randy, congrats on the strong quarter and year. I have three questions. I will go one at a time. I apologize to the extent that you may have commented on these during the prepared remarks. Question number one, what were the drivers of gross margin in the quarter, and what gives you confidence the improvements are sustainable? Franco Fogliato: Hi, Tom. Thank you. We are excited. Look, we made significant progress. I think you remember, we always said that the fourth quarter last year was the beginning of the new strategy toward the end of the fourth quarter. We wanted to build a smaller company, more profitable. We wanted to change the model from very promotional into a full-price selling model. And we are continuing with this strategy. We are very excited. I am thankful for the work the teams have done globally to drive this strategy, and the strategy is paying very much shareholder value. Not only have we seen a better gross margin with our DTC, but we have seen incredible AUR increases across the marketplace as we become less promotional through the marketplace. We are excited. We are a product and marketing company. We built greater relationships with our partners. And I have just got back from the trade show, as I mentioned in my earlier remarks. There is great momentum. We have seen customers that we have not done business with for years. They are coming back to us now because we are leading by example. So very, very encouraged. Randy Greben: Thank you, Franco. And, Tom, wonderful to hear from you. The only thing that I would add is, while Franco likes to say 2025 is in the past and we are now living in 2026, if you look at 2025, our gross margin performance was actually quite sustainable and consistent, other than the dip that we took in the third quarter, which, as we have spoken about, was related to royalty shortfalls. As we have successfully renegotiated our minimum guarantees for 2026, that third-quarter divot should not be in place, and you should see that continued sustained performance. So, really, the past is a very positive indication. We have already locked in the improvement that we were seeking for 2026. Tom Forte: Alright, wonderful, and I appreciate both of you answering all my questions. Alright, so question number two. It looks like you are guiding to an inflection point in sales and a return to growth in 2026. What gives you confidence you will be able to achieve that goal? Franco Fogliato: Yeah, look. The last eighteen months have been a transformation of the company. We are in the middle of the journey. We see the light at the end of the tunnel, a smaller company returning to growth. And we are excited about the opportunities. I keep saying I am excited about what we have done, but that is history. I am excited about what we are delivering to the market now in terms of innovation. But I guarantee you, we are more excited about what is coming next. You know, the pipeline takes eighteen months to get there. We are so excited about the opportunities. We think as we are driving a smaller DTC, we have seen a very good return from our wholesale channel, beyond our expectations in 2025. Consumers are very resilient. They love our portfolio of brands. Customers have a long-term relationship with the company. We are driving the company to get back into growth because the company has incredible assets and incredible brands. Tom Forte: Alright, excellent. Alright, so third and final question for me. It seems like you have already made a number of adjustments to manage expenses. In the next evolution of your turnaround plan, you talk about further improving the cost structure. What more can you do that you have not already done? Franco Fogliato: Yeah, it is a great question. Let me take the lead, and then I will have Randy jump in, and he is driving that. Look, as an organization, we are driving continuous improvement that we are really anchoring into the discipline of managing the company. We will constantly evaluate what we do and constantly find a better way to do that. It is all about the innovation, the way we bring the product to market, the focus on driving the business. We are so pleased because, honestly, since we refinanced the business in November, this is a different company. Everything we do is about how we grow and become more efficient. We are very, very pleased. I think there are plenty of opportunities still there. We are looking at store performance, market performance, channel performance. This is really part of what we want to drive—accountability and focus on driving shareholder value. Randy Greben: So a few things that I would like to add, if I could. If you think about the work that we have done to manage expenses, it has been very broad, and we are quite proud of the breadth and depth of where we have made adjustments to our business. One of the things that is important as we look into the future is the continued optimization of the business. And if you think about ways that that may play out, we have lots of opportunity as it relates to the simplification of our technology stack, places in which we can leverage automation or AI. And then, as you move forward into the more medium-term horizon of our turnaround, that is when we start to play a little bit of offense as well, and we get the benefit of sales leverage as we return to growth. Tom Forte: Thank you for taking my questions. Franco Fogliato: Thank you very much. Operator: Your next question comes from the line of Owen Rickert with Northland Capital Markets. Owen, please go ahead. Owen Rickert: Hey, guys. Congrats on a great quarter, and the outlook is pretty solid here. I have about four questions for you. I guess, firstly, you know, deepening consumer engagement is cited as a key growth driver going forward. Can you just maybe elaborate on what that means tactically? Is that more marketing spend in the first half of the year? And, I guess, how are you measuring an engagement improvement? Franco Fogliato: Yeah, great. Hi, Owen. Thanks again. Look, we are excited that we are a product and marketing company. Part of the strategy in the turnaround plan was to refocus the company on the fundamentals. When I joined the company and we assembled a world-class management team, we clearly said product takes time. And we saw some of that coming through fall 2025. Really, spring 2026 is very exciting. You have seen we launched BigTick with Fossil. It is an incredible success, and we are just at the beginning. So we think innovation in product and the way we bring storytelling to the market will be the key differentiator. Think about the animation we just launched with BigTick. This is, to us, just the beginning. When I think about our core licensed brands, which is really the second pillar of returning to growth—think about Michael Kors, Armani, Diesel—those are world-class brands that consumers are shopping every day. We see good momentum. We are investing in jewelry. We are investing in traditional watches. We see great momentum there. And the third pillar we are really, probably to some extent, proud of is really our Indian market that has been overperforming the company. India is the fourth-largest economy in the world and has been one of the fastest growing in the last few years. It is an industry that is growing. We are very well positioned there. We have seen strong growth, and we think that market will continue to grow for us. So very excited. It is early days. Look, we are here for the long run. We think that as we get the company back to the fundamentals, the opportunity is there, and we are really focused on driving these performances going forward. Randy Greben: The only thing that I would add is, Owen, you suggested in your question that we would be spending more on marketing. Our anticipation is actually that we will be spending slightly less on marketing in 2026. We will certainly be spending the marketing dollars that we do spend better. We will be more optimized in terms of the way we deploy our funds—smarter media mix modeling, smarter use of ambassadors. We have got a robust pipeline of initiatives that we expect to really drive efficiency as we work through this year and into the next. Owen Rickert: Got it. Thanks, guys. Next for me, you mentioned those three pillars of the next evolution—profitable growth, optimizing the operating model, and building that shareholder value. I guess, how do you think about sequencing those? Is profitable growth the prerequisite for everything else, or are the three pillars running in parallel? Franco Fogliato: Look. Let me take this, and then I will leave Randy to dig in and give you more visibility. Look, we always said that returning the company to growth is a priority. We think the reason why we have done everything we have done so far is because we believe the company has an opportunity to return to growth. We also see the industry coming back, which is very encouraging. And it is very pleasing to see younger generations coming back into traditional watches. All of this is very exciting. The first eighteen months for me with the company have been simply fantastic. They have been exciting. And I look every day at all the opportunities, and I think, we are doing the right work to focus on what matters, which is really profitable sales. And once we are really driving this and we see our DTC stabilizing because we are less promotional and we continue to invest in our wholesale channel, there is no reason why the company should not grow given the strong assets we have here. Randy Greben: Owen, I do not necessarily view them as sequential. There really should be a flywheel effect. If you think about the third pillar, building shareholder value, that should be borne through an improvement in profitability, our ability to grow and then strategically invest for growth, and, of course, to generate cash, all borne through efficiencies in the operating model and growing the top line. So much less about sequencing, more about getting all three to fuel each other. Owen Rickert: Got it. Got it. Super helpful, guys. And then we are seeing some pretty nice tailwinds with consumer adoption. I guess, as you think about the consumer you are trying to target, has your view of that target consumer for, I guess, the Fossil brand and licensed brands evolved through this transformation process or this turnaround process at all? Franco Fogliato: Owen, thanks for the question. This is probably the most impressive thing I have seen in my career: the resilience of our consumer. Literally, we moved from a model that was highly dependent on promotional sales into a model highly dependent on full-price sales. And we have seen no slowdown. We have seen consumers coming back, buying our product. We saw that we lost some consumers in our Fossil brand, and, to be honest, I am not even sure we wanted them because they were looking for deals. And we got back some of the consumers we lost because we were very promotional. And there is only one way of defining that: the resilience of our brand. So we are very pleased with this. So thanks for asking the question because every time we discuss internally, that is probably the biggest and best surprise we had. I would have thought we would have been impacted more, but it did not happen. The consumer came back, and they were, “We love what you guys are doing for Fossil.” And the BigTick response is just a phenomenon, as we are capturing not only the cohort of consumers that saw BigTick in the 1990s, but we are catching this new generation that wants a real brand. So very exciting. Thanks for asking. Owen Rickert: Great. Great. And then last for me, guys. When you talk to your wholesale partners today versus, let us say, a year ago, how has that conversation been evolving? Are they leaning in more, asking for more products, more marketing support? What is the qualitative feel of those relationships right now? Franco Fogliato: It is a great question. Look, we are on the phone with them, obviously, weekly. Some of them are decades-long relationships. They are impressed. They are impressed with the speed of change we have driven with the company. They love the consistency. And I recall—I think I said this in the previous call—the first time I met with them, in October or November 2024, they said, “We love your story, but we have heard the story before.” When I met them again in Q1 2025, they said, “Well, you have been consistent. Keep going this way.” And now they recognize we are walking the talk. And they love it. And, to be honest, the results are paying. They are seeing more sales support for our brands. They are seeing more margin because they are less promotional. And suddenly, from being probably not very inspiring, we went to leading by example. And we have great relationships. I was in Munich, in Germany, for the trade show—jewelry and watch trade show—and, literally, a year ago, they were happy we were back, but this year was really surprising. They are coming, and we literally had customers that had not done business with us for years. They are back and want to deal with Fossil Group, Inc. You know, this company has got a great reputation, and it was one of the reasons I thought this company had an opportunity to have a much stronger future. And I think the first indications from our partners are very encouraging. Owen Rickert: Great. Thanks for taking my questions, guys. Franco Fogliato: Thank you, Owen. Thank you so much. Operator: That concludes our question and answer session. I will now turn the call back over to Franco for any closing remarks. Franco? Franco Fogliato: Thank you, everyone, for listening to today’s call. We are excited about where we are headed and look forward to talking with you after the Q1 results. Operator: That concludes today’s conference call. You may now disconnect.
Operator: Greetings, and welcome to the Digimarc Corporation Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Charles Beck, Chief Financial Officer. Please go ahead. Charles Beck: Welcome, everyone, to our Q4 earnings call. I am Charles Beck, Digimarc Corporation's CFO, and I am joined today by Riley McCormack, Digimarc Corporation's CEO. On the call today Riley will provide a business update and I will discuss Q4 2025 financial results. We will be followed by a question-and-answer forum. We have posted our prepared remarks in the Investor Relations section of our website and will archive this webcast there. For those of you dialing in, this is a reminder that we are simulcasting the presentation we will walk through today. If you would like to follow along with the slides, I would encourage you to join our webcast as referenced in our earnings press release shared earlier today. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that have risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. Riley will now provide a business update. Riley McCormack: Thank you, Charles, and hello, everyone. On this call, we will walk through Digimarc Corporation's Q4 performance, highlight our strategic progress across product innovation and commercial execution, share updates on our financial metrics such as ARR and free cash flow, and provide clarity on where we are focused in 2026. Since our last call, we have made significant progress in advancing adoption of our secure gift card solution. Achieved a critical milestone by signing our first commercial order, and are laying the rails for future orders by advancing initial rollout plans with eight North American retailers, including four of the largest. You signed IP licensing agreements with two of the world's largest and most respected technology companies, providing validation of the relevance and value of our inventions by two companies widely regarded as leaders in the new era of AI. We secured an upsell with an existing customer to expand their use of our anti-counterfeiting solution to allow for the authentication of tax stamps, a new application for our solution. We added two new logos in the digital space, one a global consumer goods company and the other an AI-powered content generation company, demonstrating a business model or vertical does not impact the need for digital trust and integrity solutions. And we signed a deal with another major CPG to enable their participation in end-to-end market demonstrations of Digimarc Corporation Recycle in Germany, the second European country running a scale validation of our solution's real-world ability to create higher quality and quantity of plastic recyclate. We achieved both positive non-GAAP net income touching on our financial highlights in Q4 and positive free cash flow in the quarter, two milestones Digimarc Corporation has not achieved in over twelve years. We ended the year with just under $13 million of cash and investments and no debt. And we expect to generate significant ARR growth in 2026. As a reminder, our three focus areas are retail loss prevention, product authentication, and digital trust and integrity, and we serve these markets with the seven solutions you see listed on this slide. In addition, and as demonstrated by the business highlights just discussed, we continue to selectively engage outside of our three focus areas when the opportunities represent low-distraction revenue and/or advance our positioning in longer-term strategic areas. Before we dive further into the details of our progress in the quarter, I want to remind investors of the focused strategy we communicated last year, as it provides important context for an issue that is front of mind for all investors but particularly those in the software space. Last year, we shared that in the wake of the relentless acceleration of AI models and agents, a vacuum of trust and authenticity is being created. Trust is fast becoming the only currency that matters, and we believe that the future will belong to companies that make that currency scalable. This is why we are building the trust layer for the modern world. A foundation that is needed more now than ever and is emerging as a significant opportunity we were created to lead. Today, as investors weigh the ever-increasing risk that AI's rapid advance poses to workflow and task automation software functionality, Digimarc Corporation's strategic focus positions us as one of the select software companies poised to benefit from this irreversible trend. As opposed to threatening our business, AI's advances instead are driving an increased need for solutions that make trust verifiable and authenticity scalable, the two things that all of our solutions are purposely built to do. Moreover, our competitive moats are not relying on the size of our code base and/or our number of prebuilt integrations. Instead, they are built upon our vast intellectual property, our multiple network effects, our ability to bridge the physical and digital domains, all of which remain unaffected by the advent of AI. As a result, we are well positioned amongst our software peers because we welcome an even greater AI disruption. Instead of compromising our opportunity set and/or eroding our competitive moats, this disruption is acting as a tailwind to our business by expanding the trust vacuum our solutions are built to fill. Our greatest near-term opportunities are in retail loss prevention and more specifically our secure gift card solution. On this front, we have made substantial progress towards gaining widespread adoption, aided by the industry's hyper-focus on finding an answer to the fraud that is creating an existential threat to their business. Results to date demonstrate the power of our solution: strong fraud reduction, improved checkout experience, and high scalability across printers, brands, and retailers, all without any adverse impact on sales. Due to the positive impact that we expect our secure gift card solution to have on our 2026 and beyond results, we wanted to provide investors with additional information and transparency to ensure they have a full understanding of the opportunity ahead. We have posted a gift card investor supplemental on our Investor Relations section, a hyperlink to which can be found on this slide. The U.S. serviceable addressable market for our solution is an estimated 3 billion to 5 billion cards annually. The global SAM is 7.5 billion to 17 billion cards annually. Commercial activity against that SAM is accelerating, supported by ecosystem partnerships, growing regulatory pressure for secure packaging, and large retailers preparing for initial rollouts in 2026. With key workstreams to enable large gift card printers now largely complete, our focus for 2026 is commencing large-scale rollouts of Digimarc Corporation-enabled firmware across retailers' front-of-store scanners, and catalyzing significant adoption of our solution by the gift card brands that are sold through those stores. As a reminder, our current go-to-market model is to monetize the gift card side of the network and provide our scanner detection software for free. One of the longest lead-time dependencies and the greatest source of historic timing risk has been the scanner vendors shipping generally available versions of their firmware running our latest software. This is a prerequisite for retailers to begin their in-store firmware refresh process, which itself is a requirement for the industry to capture the value from printers, brands, and program managers licensing our solution. Over the last few months, the three major scanner vendors have all publicly committed to timelines to complete this critical gatekeeping activity. More recently, based on evergreen commitments these vendors continue to make to their largest retail customers, we believe it is a matter of weeks until the most relevant scanner models from these industry-leading vendors have GA firmware that incorporates our latest software. With the expectation that this historically significant risk factor is weeks away from being predominantly behind us, we are advancing the rollout plans of Digimarc Corporation-enabled firmware with our initial cohort of retail partners and are excited with the information we can publicly share. We currently expect all Chinook's locations to be carrying Digimarc Corporation-secured gift cards this spring, and approximately 600 stores of a major U.S. retailer to be doing the same this summer, with plans to greatly expand that number for holiday 2026. In addition, we are in various stages of planning initial rollouts with an additional six retailers, including three of the largest in North America. When including the major U.S. retailer that I referenced a moment ago, our initial cohort of retailers includes a humbling list of widely respected industry leaders, including four of the largest retailers in North America. Turning now to gift card enablement, earlier in this quarter we closed our first secure gift card commercial order representing over $500,000 in ARR. This order is comprised of gift cards from six closed-loop and open-loop brands, and represents the first batch of gift cards that will appear at Schnoke stores in early spring and the approximately 600 stores of the major U.S. retailer in the summer. As we describe in greater detail in our gift card investor supplemental, we expect our pricing to increase over three stages based on our solution's adoption, maturity, and scale. Using our current Digimarc Corporation-subsidized pricing, this first order represents less than 0.1%, or 10 basis points, of our U.S. SAM described earlier. We are in conversations with additional open-loop and closed-loop brands comprising both third-party and first-party issuers supporting the retailer rollout planning already discussed. In all instances, our conversations with the brands are being aided by the retailers and the gift card networks, both of whom hold enormous power in this ecosystem. Recall that one of the most powerful aspects of this opportunity is that fraud is a zero-sum game. The belief that laggards will face an increasing percentage of an ever-increasing amount of fraud remains at the very front of ecosystem participants' minds. In our last few quarterly earnings presentations, we have shown a slide that described the gift card ecosystem at a very high level. This updated slide replaces that slide and is included in the gift card investor supplemental that I referenced earlier. It provides more detail of the ecosystem we are enabling as we lay the rails for what we expect to accomplish in 2026 and beyond. Turning now to product authentication. ARR from our anti-counterfeiting solution continues to grow, driven by customer upsells and new customer wins. Brands face rampant counterfeiting and IP theft, with bad actors advancing their technology and processes to replicate packaging and security features with alarming accuracy, something made ever easier with the advancement of AI. Decentralized supply chains and omnichannel sales make counterfeit detection more difficult, forcing brands to be reactive against emerging threats. Many security measures require trained inspectors and specialized tools, limiting accessibility, increasing costs, and reducing scalability. Digimarc Corporation's secure and scalable covert and connected solution provides superior results when compared to competing analog solutions, such as tags, codes, inks, or labels. We closed multiple upsell deals with existing customers for our anti-counterfeiting solution, reflecting both increased contract value and the expansion of our solution to new geographies and new brands. As we have repeatedly stated, when we solve our customers' most challenging problems, we expect to be an upsell and cross-sell company. We closed an upsell with an existing customer to expand their use of our anti-counterfeiting solution to allow for the authentication of tax stamps, representing a new application of our solution. We also secured an upsell with one of the world's leading pharmaceutical companies as they expand our solution across more of their products around the world. A prospect who originally contacted us for the use of our anti-counterfeiting solution is now progressing in our digital pipeline, something that happened almost immediately after we told them about our offering in this space. This shows the synergistic nature of our authentication focus and related solution suite, as well as the greenfield nature of our work in the digital trust and integrity space. Piracy of their digital assets was a problem this organization had previously thought unsolvable, until they engaged with us. Looking ahead, we are soon to enter print trials for the application of our solution to cigarette tipping paper, bringing our solution down to the stick level, where a large percentage of the counterfeiting occurs. There are an estimated 5,000,000,000,000 cigarettes sold each year, representing a sizable unit total addressable market, assuming our solution meets the market's needs. Turning now to digital trust and integrity. We exceeded our conservative 2025 ARR assumptions in this space and look to accelerate our traction throughout 2026. Problems of trust and integrity in the digital domain existed prior to the advent of AI, but AI has created new ones while making prior ones worse and/or harder to solve. The work of C2PA has created wide awareness that our technology addresses many of these problems, and our history, our credibility, our expertise, our experience, and our first to market with and co-leadership of the digital watermarking component of the C2PA standard are all coalescing to ensure that we are well positioned to serve this ever-growing wave. I want to use this call to provide more background information on one of our four in this area: leak detection, and specifically the version of our solution that provides leak detection for web content. We featured this solution in a recent press release case study with a Fortune 100 global technology company. Our leak detection for web content solution addresses a significant gap in the data loss prevention space: low-tech, image-based leaks of internal company information. Risk assessments sometimes refer to this as a mobile picture path, and it has long remained an identified risk without a risk reduction method. These leaks happen when an employee, contractor, or people working at trusted third parties like suppliers or outsourcing firms use their phones to take pictures of screens showing sensitive and confidential information. These images can be shared externally on social media, news sites, online forums, and more, causing harm to the owners of that sensitive and confidential information. Companies like Coca-Cola, HP, TD Bank, and even CrowdStrike have made the news in recent months due to image-based leaks exposing everything from dashboards, IT security details, customer data, product designs and images, and factory layouts. These stories reveal how low-tech leaks can bypass the best DLP stacks, resulting in financial losses, lost competitive advantage, and legal and reputational harm. While photo-based leaks are nearly impossible to prevent, especially when people work remotely, Digimarc Corporation enables companies to identify leakers quickly so they can take action, prevent future leaks, and gain insights to build a more trustworthy workforce and extended ecosystem. Our leak detection for web content solution adds a covert security layer to on-screen content, without impacting the user experience or interfering with day-to-day work activity. When sensitive information is captured via screenshot or photo, Digimarc Corporation's covert resilient security layer is captured along with it. Then, when an image is discovered online, our customers simply upload it to the Illuminate platform to help identify the source of the leak—fast, effective, and scalable across global workforces and ecosystems. Our other version of leak detection provides leak detection for media assets, and in Q4, we signed a deal with the global consumer goods company to help them address unauthorized sharing of sensitive digital content by trusted channels under embargo. Our customer has already received tangible benefits from our solution's real-world efficacy, and we expect to grow our deal with them over time. We also signed an internal compliance deal with an AI-powered content generation company interested in supporting attribution, auditability, and responsible commercialization of their user-generated content as rights holders' scrutiny of GenAI intensifies. While we are focused on our authentication use cases, we continue to support identification use cases that could drive future growth. We are advancing our position in these longer-term strategic areas and are confident in our ability to win when the time is right to pursue them. An example of this is recycling, where we are progressing well in both the Belgium and Germany end-to-end market demonstrations of our solution's ability to impact real-world change. Digimarc Corporation-enabled product volume is expected to reach critical mass in sorting centers by midyear in Belgium, and by Q3 in Germany. We believe these live cradle-to-rebirth activities will result in the production of a new fraction of PCR feedstock that is not possible using current sorting technologies. This would provide tangible proof of our solution's ability to, among other things, create new end markets for recycled plastic, something that is critical for the industry's ability to comply with the sunrise of the EU's Packaging and Packaging Waste Regulation. We also closed an upsell deal with one of our engaged customers in Q4, and have multiple opportunities in our pipeline across both our Automate and Engage solutions. I will now turn the call over to Charles to discuss our financial results. Charles Beck: Thank you, Riley. Ending ARR for Q4 was $13.7 million compared to $20 million for Q4 last year. The decrease reflects the loss of two large customer contracts outside of our focus areas, the $3,500,000 DRS contract in Q2 and the $3.1 million retailer contract that I stated on the last call would lapse in Q4. Excluding these two items, ARR grew $400,000 year over year. That growth, however, was largely muted by higher other customer churn and choosing to be strategically price aggressive on solutions outside of our focus areas. As I have stated previously, we expected higher churn as we sharpened our go-to-market focus. For 2026, we expect to deliver significant ARR growth, with contributions from all focus areas but the largest single driver being our secured gift card solution. On that front, our goal is to progress our targeted retailers and brands toward meaningful adoption for holiday 2026, which we would expect orders in summer and early fall. We also expect there to be continued ramp for the spring 2027 refresh cycle and beyond, which we would expect orders in late fall and early winter. Time is of the essence as we work to maximize holiday orders, and we are singularly focused on hitting the necessary deadlines to do exactly that. As we begin to penetrate the large opportunity ahead of us in the gift card space, we will be transparent with the percentage of our ARR generated from gift card orders. At least initially, we do not believe these deals will have our typical annual contract terms, but will instead have a shorter duration. As I alluded to earlier, the gift card market is characterized by the presence of two recurring orders that occur at least two times a year, if not more frequently, which provides us some ability to project the next twelve months of revenue based on incoming orders. This accounting for a shorter duration will likely understate our true run-rate demand, especially as we are increasing our penetration of retail stores, brands, and the percentage of SKUs issued by those brands. Total revenue for Q4 was $8.9 million, an increase of $200,000, or 3%, from $8.7 million in Q4 last year. Subscription revenue, which accounted for 60% of total revenue for the quarter, increased 6% from $5.0 million to $5.3 million. The increase reflects $1.4 million of license fees paid during the quarter from the two IP licensing deals that Riley referenced earlier. The increase from these deals, as well as growth in other areas, was partially offset by the impact of the two previously mentioned customer contracts that ended during 2025. While we do not talk about IP licensing often, it is a normal and recurring part of our business, although that revenue can be lumpy. For background, we have generated well over $100 million of IP license revenue over our company's history. The reason we are highlighting the deals signed in Q4 is that, in addition to their size, they were with two technology market leaders and highlight the value of our IP. As a reminder, we do not include IP licensing deals in ARR. Service revenue decreased 2% from a rounded down $3.6 million to a rounded up $3.6 million, reflecting slightly lower commercial service revenue. Subscription gross profit margin was 90% for the quarter, five points higher than Q4 last year, largely reflecting lower subscription platform costs. Our platform costs are now $200,000 lower per quarter than they were at the beginning of 2025. We expect further reductions in these costs in 2026 as we continue to focus on ways to optimize our platform. Service gross profit margin was 57% for the quarter, down two points from 59% in Q4 last year. The decrease was due to a more favorable mix of revenue and cost last year. Operating expenses were $10,000,000 for the quarter, down $4,400,000, or 31%, from $14,400,000 in Q4 last year. Important to note, we incurred $500,000 of costs during the quarter directly related to the two IP license deals previously mentioned. Otherwise, operating expense would have been down $4.9 million year over year. The large reduction in expenses reflects lower headcount costs due to the reorganization in 2025, as well as lower non-headcount cash costs from our ongoing corporate streamlining efforts. While we will continue to be diligent pursuing ways to operate more efficiently and effectively to ensure that we are maximizing the return of every dollar we spend, as mentioned on the last call, we are increasing our overall investment in the business to support growth ahead. Non-GAAP operating expenses, which exclude non-cash and non-recurring items, were $6,500,000 for the quarter, down $5,400,000, or 45%, from $11,900,000 in Q4 last year. Excluding the aforementioned $500,000 of IP license costs, non-GAAP operating expenses would have been $5.8 million lower, exceeding the target we set out on our Q4 earnings call a year ago. Again, the decrease is mostly due to the impact of the reorganization and our ongoing non-headcount streamlining efforts. Net loss per diluted share for the quarter was $0.19 versus $0.40 in Q4 last year. Non-GAAP net income per diluted share for the quarter was $0.05 versus a non-GAAP net loss of $0.22 in Q4 last year. Regarding cash flow, we ended the quarter with $12,900,000 in cash and short-term investments with no debt. We generated positive free cash flow of $700,000 in the quarter, compared to negative free cash flow of $4,400,000 in Q4 last year, an improvement of $5,100,000. That improvement was despite a negative change in working capital of $1,000,000 year over year, largely due to the timing of customer receipts, otherwise the improvement would have been even greater. For Q1, we expect a free cash flow loss of $1 million to $2 million. Included in this number are some additional headcount investments I mentioned earlier that we are making to accelerate our growth, as well as approximately $500,000 of year-end related public company compliance costs that we incur in Q1 every year. Also included in this number is approximately $1,000,000 in expenses we expect to pay in Q1 largely related to one-time tax and legal costs associated with implementing a new corporate structure. We expect a large cash-on-cash return from this investment, as the new corporate structure will allow us to realize substantial ongoing cash savings, primarily through implementing an alternative long-term employee equity incentive program favored by conscious entities such as REITs. In addition to these substantial ongoing cash savings, we believe this new program will maximize shareholder value in three other ways when compared to the current program: by reducing future dilution; helping us attract and retain the key talent needed to drive and support our expected growth; and directly tying the realization of all equity-based compensation issued under this new program, including time-based awards, to shareholder value creation. One last point to note regarding this new structure: it will require the issuance of a new CUSIP number, something a few investors have historically expressed a desire for us to do. The details of our new corporate structure, including a robust Q&A section, will be described in greater detail in our S-4 filing due out tomorrow, which incorporates our annual proxy statement. For further discussion of our financial results and risks and prospects for our business, please see our Form 10-K that will be filed with the SEC. I will now turn the call back over to Riley for final remarks. Riley McCormack: Thank you, Charles. In the wake of the relentless acceleration of AI models and agents, a vacuum of trust and authenticity is being created. Trust is fast becoming the only currency that matters; the future will belong to companies that make that currency scalable. We believe Digimarc Corporation is ideally positioned to lead that charge. We are focused on delivering a future where humans and intelligent systems alike can verify what is real, protect what matters, and move forward with confidence. We are focused on filling the ever-expanding vacuum by positioning ourselves to deliver trust in every interaction spanning both the physical and digital worlds. We are building the trust layer for the modern world, a foundation that is needed more now than ever and is emerging as a significant opportunity we were created to lead. We are capitalizing on the convergence of key trends driving increased demand for our solutions, positioning ourselves as one of the select software companies to benefit from, not be a casualty of, the relentless advance of AI. We are advancing our secure gift card solution by aligning key industry partners as we progress toward widespread adoption of our solution. We signed our first commercial order and are advancing initial rollout plans with eight retailers, including four of the largest in North America. ARR from our anti-counterfeiting solution continues to grow, driven by customer upsells and new customer wins. We also continue to grow the universe of form factors to which our authentication solution is applicable, securing an upsell for tax stamps and entering print trials for tipping paper, which continues to grow our TAM. We believe our decision to prioritize the long-term opportunity in digital trust and integrity is paying off. We exceeded our conservative 2025 ARR assumptions in the space and look to accelerate our traction through 2026 as early results show the near-universal need for solutions in this greenfield area. We continue to be well positioned to address very large problems outside of our current focus areas when the markets are ripe. We signed IP licensing agreements with two of the world's largest and most respected technology companies, providing validation of the relevance and value of our inventions by two companies widely regarded as leaders in the new era of AI. We signed a deal with a major CPG to enable the participation in end-to-end market demonstrations of Digimarc Corporation Recycle in Germany, the second European country running a scaled validation of our solution's real-world impact. We achieved both positive non-GAAP net income and positive free cash flow in Q4 2025, two milestones Digimarc Corporation has not achieved in over twelve years. We expect to generate significant ARR growth in 2026. We will now open for questions. Paul will now open the call for questions. Operator: Hello, Paul? Paul, can you hear us? Charles Beck: Apologies. There may be some technical difficulties here. We apologize, but it appears that there may be an issue on the tech side with our conference call service here. Riley McCormack: So we are unable to reach anybody at the call center service. We think their service is down. We apologize for this technical difficulty. Obviously, any investors who want to reach out to Charles and me, please do so. Have a great rest of your day. Thanks.
Operator: Okay. Hello, everyone, and welcome to Viant Technology Inc.’s fourth quarter 2025 earnings conference call. My name is David, and I will be your operator today. Before I hand the call over to the Viant Technology Inc. leadership team, I would like to go over a few housekeeping notes for the program. As a reminder, this call is being recorded. After the speakers’ remarks, there will be a question-and-answer session. If you plan to ask a question, please ensure you have set your Zoom name to display your full name and firm. If you would like to ask a question during the call, please use the raise hand function located at the bottom of your screen. Thank you for your attendance today. I am now happy to turn the call over to Nicholas Todd Zangler, SVP of Investor Relations for Viant Technology Inc. Nicholas Todd Zangler: Thank you. Good afternoon, and welcome to Viant Technology Inc.’s fourth quarter 2025 earnings conference call. On the call today are Tim Vanderhook, Co-Founder and Chief Executive Officer; Chris Vanderhook, Co-Founder and Chief Operating Officer; and Lawrence J. Madden, Chief Financial Officer. I would like to remind you that we will make forward-looking statements on our call today, including, but not limited to, statements regarding our guidance for Q1 2026 and other future financial results, our strategy, our platform development initiatives, including Viant AI, our pipeline and potential partnership opportunities, growth of our total addressable market, our share repurchase program, and industry trends that are based on assumptions and subject to future events, risks, and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of today and we undertake no obligation to update or revise these statements except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements, and our entire Safe Harbor statement, please refer to the news release issued today as well as the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2025, under the heading “Risk Factors,” and in our other filings with the SEC. During today’s call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, are included in the news release issued today and in our earnings presentation, which have been posted on the Investor Relations page of the company’s website and in our filings with the SEC. I will now turn the call over to Tim Vanderhook, Chief Executive Officer of Viant Technology Inc. Tim? Tim Vanderhook: Thanks, Nick. And thank you all for joining us today. We delivered strong fourth quarter performance achieving new company records across all key metrics. Revenue increased 22% year-over-year, and contribution ex-TAC increased 19% year-over-year, both above the high point of our quarterly guidance range. When excluding political advertising, revenue and contribution ex-TAC increased 28% and 24% in the quarter, respectively, and more accurately reflects the true strength of our business. Growth was broad-based across verticals, driven by accelerating CTV demand, strong digital out-of-home and mobile demand, increased utilization and further adoption of Viant Technology Inc.’s addressability solutions, and expanded use of the Viant AI product suite. Adjusted EBITDA increased 45% year-over-year to $24,700,000 for the quarter and exceeded the high end of our guidance range. Our fourth quarter performance completes a solid year for Viant Technology Inc. In 2025, revenue increased 19% to $344,000,000. Contribution ex-TAC increased 18% to $209,000,000, and adjusted EBITDA increased 29% to $57,000,000. While these are standout results as reported, our underlying performance was far stronger than these results indicate. Our contribution ex-TAC rose nearly 20% in 2025 while absorbing the effects of tariff-related pressure, cycling a difficult political comparison, and navigating the migration of a material client off platform due to a corporate merger. We were also able to increase adjusted EBITDA nearly 30% while absorbing incremental operating expenses associated with our strategic acquisitions of IRIS.TV and Locker. As we shift our focus to 2026, we foresee a year of accelerating performance attributable to a number of catalysts worth noting. First, we see a healthy ad environment, evidenced by strengthening customer demand trends observed through this point in the quarter. Our new flagship customer Molson Coors is live and actively deploying ad spend in the first quarter, with plans to ramp throughout the year and in the years to come. Joining Molson Coors are several major U.S. advertisers who have recently launched ad campaigns with Viant Technology Inc., including WHOOP, the human performance company behind world-class wearable technology. Other notable wins include a leading CTV streaming service, a national charitable foundation, and a national convenience store chain. We expect these advertisers to significantly ramp ad spend in the coming quarters, and we look forward to securing additional major U.S. advertiser wins throughout the year. We also expect major tentpole viewership events to drive incremental ad spend to the CTV channel this year. In February, the most-watched Winter Olympics since 2014 averaged 23,500,000 U.S. viewers, and the 2026 World Cup is projected to exceed a prior record of 26,000,000 U.S. viewers later this year. Both marquee events are hosted by providers within our Direct Access Premium Publisher program—Peacock for the Winter Olympics and Fox, Peacock, and various virtual MVPDs for the World Cup. Furthermore, we anticipate strong contribution from political advertisers in the second half of the year, fueled by midterm elections and the ongoing shift of political budgets from linear TV to CTV. Within our addressability suite, we expect to benefit from ramping adoption and increased utilization of IRIS ID, our industry-leading content identifier. And finally, I could not be more excited about the recent launch of Outcomes, our new branded AI decisioning solution powered by our AI Lattice Brain and intelligence layer, which is aimed at winning performance budgets across advertisers of all sizes. Chris and I are going to spend the bulk of our time today highlighting the capabilities, features, and use cases associated with the launch of Outcomes. But I do want to provide an update on recent performance and progress across all three of our key strategic priorities: CTV, addressability, and Viant AI. The migration of advertising dollars from linear television to CTV continues to accelerate, and our platform is strategically positioned to serve advertisers capitalizing on this shift. Reflecting this market dynamic, our customers increasingly directed their purchasing decisions towards CTV, with total CTV spend on our platform reaching a new all-time high in the quarter and representing 46% of total advertiser spend. For the second consecutive year, CTV contribution ex-TAC increased by more than 40%, over two-and-a-half times the broader industry growth rate. This outsized adoption reflects Viant Technology Inc.’s strategic investments in CTV infrastructure, publisher relationships, and addressability solutions, which collectively position Viant Technology Inc. as the platform of choice for CTV campaign deployment across the open internet. Contributing to our outsized CTV growth is the continued expansion of our Direct Access Premium Publisher program. Direct Access offers advertisers an efficient, targetable, and measurable path to purchase CTV ad inventory. By facilitating transactions directly with publishers, we can bypass bidstream resellers, allowing advertisers’ spend to be allocated to working media, not middlemen, driving better returns for our clients. For the full year 2025, nearly 50% of CTV ad spend on our platform was transacted through our Direct Access Premium Publisher program, which includes CTV streaming services from leading providers like Disney, Paramount, Peacock, and many more. Our addressability suite is the bedrock of our buying platform. It includes the industry’s leading audience identifier, Household ID, and the industry’s leading content identifier, IRIS ID. Viant Technology Inc.’s Household ID, our patented deterministic audience targeting and measurement solution, continues to see strong utilization amongst advertisers and was a meaningful contributor to top-line growth in the quarter. Household ID delivers superior addressability for advertisers looking to leverage their first-party data to reach specific audiences and measure campaign performance. Our Household ID is truly ubiquitous, embedded in over 80% of all programmatic bid requests and over 90% of all CTV requests. And with 95% of all household addresses mapped to our ID graph, we can match advertisers to addressable audiences at a massive scale, with Household ID offering approximately four times the coverage of competing audience identifiers. IRIS ID, our proprietary content targeting and measurement solution, continues to proliferate amongst publishers, enabling advertisers to deploy contextual campaigns at greater scale. In just over a year since its acquisition, the presence of IRIS ID within the CTV bidstream has grown fivefold, reaching nearly 50% of incoming CTV bid requests during the first quarter. IRIS ID empowers advertisers to target CTV inventory at the show level, going beyond the app, making it possible for advertisers to bid on unique contextual signals like emotional sentiment, tone, and brand suitability. This is made possible through direct integrations with the publishers’ own content management systems, providing Viant Technology Inc. with a meaningfully higher resolution of contextual intelligence. Looking across our client base, financial institutions use IRIS ID for brand-safe ad placement, targeting categories like fine art and family, and content that conveys inspiration and reflection. Outdoor fashion retailers deploy IRIS ID for brand relevance, targeting categories such as nature and travel, and content that exudes reliability and ruggedness. Given the enhancement in performance, we have seen several advertisers and agencies mandate the use of IRIS ID across their entire CTV budgets, which is quite the endorsement and one that is likely to incentivize further adoption across CTV publishers. In the quarter, revenue attached to IRIS ID utilization increased 90% sequentially. Moving on to Viant AI. In early January, we announced the launch of the fourth phase of Viant AI, our AI decisioning functionality. AI decisioning introduces a new standard of autonomous optimization. It moves beyond initial ad campaign setup, providing for real-time campaign refinement and the technological agility to continuously react to fluid market conditions, with the goal of delivering optimal campaign outcomes. The launch of AI decisioning was accompanied by the introduction of a new branded solution appropriately named Outcomes, which we have built to service performance advertisers. At the surface level—the user interface level—Outcomes asks for just four basic inputs: the name of the advertiser or the advertiser’s product or service, the budget, the flight dates, and the goal, be it incremental revenue, return on ad spend, or per action. Once submitted, the advertiser’s work is done, and Viant AI does the rest. Beneath the surface is a decisioning architecture purpose-built for autonomous campaign operation, which we call the AI Lattice Brain. Based on the advertiser inputs, the Lattice Brain constructs the most optimal media plan by leveraging differentiated and proprietary signals unique to Viant Technology Inc. from within our intelligence layer. Signals that support a multitude of functions: for identity resolution, Lattice Brain utilizes signals like Household ID and our custom identity graph to build and execute sophisticated audience targeting strategies, frequency capping, and sequential messaging capabilities. For supply quality evaluation, Lattice Brain leverages our unique integrations with Direct Access Premium Publishers and our custom supply scoring models. These models rank supply paths based on impression quality, brand safety, fraudulence, bot activity, and more, providing critical intelligence that informs channel and publisher mix modeling and price discovery. For performance enhancement, Lattice Brain taps our high-fidelity signals like IRIS ID, along with attention and creative placement scoring models to maximize campaigns for viewability, engagement, and overall impact, aligning media delivery directly to advertiser-defined outcomes. Our AI Lattice Brain operates against a signal set that no competing DSP or standalone AI tool can replicate, because it is dependent on proprietary identifiers, unique supply integrations, and optimized intelligence that accumulates only through our integrated stack. Importantly, Lattice Brain launches with this intelligence already in place, activating against the mature, high-fidelity signal foundation from day one. As campaigns execute, our platform continuously incorporates incremental performance data—data further sharpening precision and efficiency. We believe this flywheel to decide, execute, measure, and refine, operating against the highest-fidelity proprietary signals, is capable of delivering newfound levels of ad efficiency and performance that compounds over time. Historically, advertisers and agencies have been burdened with the responsibility of manually constructing and executing ad campaigns. They have had little choice but to navigate a highly complex and fluid bidstream, which operates at the staggering speed of up to 15,000,000 bid requests per second. Independently, this is a difficult task, even with the use of our proprietary data signals at their disposal. But with the launch of Outcomes, the onus shifts to AI, and performance optimization becomes autonomous. Outcomes assumes the role of media planner, trader, and data scientist, autonomously optimizing every decision in service of the advertiser’s defined performance objective. As the culmination of all four phases of Viant AI, Outcomes is a complete autonomous performance solution. Governed by our Lattice Brain decisioning architecture, it leverages proprietary data signals within our intelligence layer to deliver measurable performance outcomes in a way that has not been done before. We have built the open internet’s first fully autonomous AI-powered ad product, designed to compete for performance budgets against the walled gardens. In a moment, Chris will discuss our go-to-market strategy and run through a few early case studies that demonstrate the effectiveness of our new Outcomes solution. Before concluding, I want to briefly address the broader industry discussion around AI and its impact on software platforms, including companies like Viant Technology Inc. We believe AI strengthens businesses built on proprietary data and domain-specific infrastructure. In our case, AI amplifies the structural advantages already embedded in our platform. There is an insurmountable gap between the theoretical ability to assemble a DSP interface using AI tools versus operating a scaled, enterprise-grade, programmatic platform supported by irreplicable infrastructure. While an LLM may generate generic bidding logic against commodity signals, our AI operates against deterministic household-level identity, proprietary content-level signals, exclusive direct access supply paths, and years of accumulated optimization intelligence. LLMs cannot replicate a Household ID covering over 115,000,000 U.S. households, selectively embed IRIS ID across more than 1,400 publisher content management systems, or recreate direct publisher integrations representing over 75% of addressable CTV through prompt engineering alone. While AI may transform user interfaces across categories such as CRMs and analytics dashboards, at Viant Technology Inc., AI is not an overlay. It is fused with proprietary data and programmatic infrastructure. That fusion defines our platform architecture and reinforces our competitive positioning. In summary, we delivered on our commitment to reaccelerate top and bottom-line growth in the fourth quarter, anchored by our three strategic priorities: CTV, addressability, and Viant AI. Our business is strategically aligned to capitalize on the industry’s largest and most transformative growth opportunities, where we continue to lead and innovate. We believe this positioning uniquely equips Viant Technology Inc. to capture the next wave of brand and performance budget growth in 2026 and beyond. With that, I will pass it over to Chris. Chris Vanderhook: Thanks, Tim. I will provide an update on our customer go-to-market strategy, particularly as it pertains to the launch of Outcomes. But first, let us take a step back and survey the broader advertising landscape. This year in the U.S., total advertising dollars are expected to reach nearly $450,000,000,000. Of this, 30% will be allocated to brand budgets, while 70% will be allocated to performance budgets. Today, performance budgets have largely been dominated by search and social walled gardens, including Google, Meta, and Amazon. With the launch of Outcomes, we intend to compete directly for performance budgets, aiming to divert spend to the open internet by leveraging a complete end-to-end view of attribution across the entire customer journey, connecting initial CTV exposure to final conversion. Our go-to-market approach starts with our existing customers, where we see an opportunity to drive significant organic growth as we increasingly service their performance budgets, in addition to their existing brand budgets. Virtually all of our customers allocate spend to search and social walled gardens as part of a well-rounded holistic marketing strategy. We intend to leverage our existing relationships to showcase the effectiveness of Outcomes and win new performance budgets from our existing customers. This initiative is well underway, and I would like to highlight a few examples of our Outcomes product at work. Over 20 existing customers have extensively tested Outcomes, with a number of them implementing Outcomes on an ongoing basis, one of which is MacKenzie-Childs, a luxury home décor brand and prominent seller of tableware, kitchenware, and decorative home furnishings. In our initial tests, we ran two separate ad campaigns for MacKenzie-Childs, each identical in scope, with both campaigns seeking to maximize sales conversions over the same time period with the same budget. The only difference was that one campaign was planned, executed, and optimized by a human expert, which served as our control group, while the other campaign was planned, executed, and optimized by our new fully autonomous Outcomes solution. We even handicapped Outcomes by restricting the use of retargeting strategies, which would have further enhanced performance, and yet still, the campaign utilizing Outcomes delivered a 58% lower cost per conversion compared to the control group. Let me clearly articulate this result. For this test, the human expert campaign was able to generate a $135 sale for every $33 spent on advertising, while Outcomes was able to generate a $160 sale for every $14 spent on advertising, a 58% reduction in cost per outcome. So for the same budget, Outcomes generated over 180% total sales versus the control campaign. There are two primary reasons behind Outcomes’ superior performance. First, at any given moment amongst trillions of potential campaign configurations, by definition, there must exist one ideal campaign that best allocates spend across the right channels, publishers, audiences, and content, and does so at the right price to yield the most optimal outcome. In the pursuit of this optimal outcome, we believe our AI Lattice Brain is simply far better at digesting and interpreting all of our proprietary data signals—inputs utilized to create the most ideal campaign. And second, in a fluid marketplace, the ideal campaign configuration is always changing. Lattice Brain is uniquely capable of iterating and redesigning campaigns in real time in response to fluid market conditions at a speed that is simply impossible for humans to replicate, and therefore, it is far better equipped to continuously reconfigure for the most ideal campaign configuration, which results in driving superior business outcomes for the customer. In another client test, UMass Global, a private university with over 19,000 students, pitted Outcomes against human experts with a goal of driving high-intent student inquiries. Even with a short training period, Outcomes achieved an 82% lower cost per outcome compared to the control group. Kampgrounds of America, one of the nation’s largest campgrounds franchise businesses, tested Outcomes during a recent holiday season with a goal of driving confirmed purchase events. Outcomes delivered a 76% reduction in cost per purchase event compared to the control group. Tire Discounters, one of the largest tires and automotive service retailers in the U.S., recently tested Outcomes seeking high-intent lead events. Outcomes delivered a 43% reduction in cost per lead compared to the control group. Uqora, a biotech healthcare company, saw a 95% reduction in cost per outcome, while the Alzheimer’s Association saw a 68% reduction in cost per outcome. And the list goes on. Based on these results, we believe Outcomes is clearly capable of driving a meaningful inflection in return on ad spend for advertisers. As utilization scales amongst our existing customer base, we see an immediate opportunity to accelerate organic growth. We believe that over time, clients will move toward autonomous platforms that deliver increased performance and greater reliability in achieving outcomes. Beyond our existing customers, Outcomes enables Viant Technology Inc. to aggressively pursue performance budgets across the more than 10,000,000 advertisers currently spending with search and social walled gardens. And because virtually all of these prospective advertisers are yet to utilize the highly effective CTV channel, we simply need to prove that their first dollar allocated to CTV via Outcomes will outperform their next dollar allocated to search and social walled gardens, where we believe they are already overinvested and seeing diminishing returns. We are also seeing strong enterprise adoption with major U.S. brands, including Molson Coors, as they partner with Viant Technology Inc. across a broad range of industry verticals. We recently announced a partnership with WHOOP, the performance company behind world-class wearable technology, where Viant Technology Inc. was designated as their DSP of record. WHOOP chose Viant Technology Inc. because they recognize CTV as the most digital channel for growth and value our capacity to deliver measurable incremental results via proprietary, high-fidelity data signals. With aggressive growth ambitions, WHOOP plans to deploy a sizable ad budget over the next two years through Viant Technology Inc.’s buying platform. We believe major U.S. advertisers are increasingly partnering with Viant Technology Inc. because of our unique value proposition—rooted in independence, CTV leadership, proprietary data and addressability solutions, and AI capabilities. To capitalize on recent momentum, we have expanded our enterprise sales team, appointing tenured executive sales leaders across key industry verticals, including healthcare, CPG, QSR, retail, and travel and tourism. These seasoned leaders bring deep, long-standing relationships with major U.S. advertisers and are tasked with securing new flagship accounts. And to best serve the diverse needs of major U.S. advertisers who manage both large brand budgets and large performance budgets, our buying platform remains flexible in use. Advertisers may choose to run campaigns manually as they have traditionally done, or they can choose to leverage various individual components of our AI suite, including AI bidding, AI planning, and AI measurement and analysis, or they could choose to go all in on autonomous advertising, delegating the entire construction and execution process to our Outcomes solution, powered by our Lattice Brain AI decisioning architecture and intelligence layer. In closing, I want to reiterate that our long-standing vision has always been to deliver autonomous advertising to the open internet. After years of dedicated investment, focus, and persistence, we are thrilled to be in market with a fully autonomous buying platform, uniquely equipped with proprietary, high-fidelity data signals. With this new asset, we see an unprecedented opportunity to expand our total addressable market and accelerate growth throughout 2026 and beyond, winning incremental spend from our existing customers, performance advertisers, and major U.S. brands. And with that, I will turn it over to Lawrence to provide more detail on our financial performance. Lawrence? Lawrence J. Madden: Thanks, Chris. Before I begin, I would like to remind everyone that we have posted a presentation on our Investor Relations website that includes supplemental financial information to accompany today’s call. We concluded 2025 with a strong fourth quarter, executing against the key strategic priorities Tim outlined—CTV, addressability, and AI—and translating that momentum into record financial performance. Before diving into our detailed fourth quarter results, I will provide a high-level summary of our full-year performance. For the full year of 2025, we achieved record results across all key metrics. Revenue totaled $344,200,000, increasing 19% year-over-year. Contribution ex-TAC totaled $208,700,000, increasing 18% year-over-year. Adjusted EBITDA totaled $57,400,000, increasing 29% year-over-year, and adjusted EBITDA margin expanded by approximately 250 basis points year-over-year to reach 28%. Finally, non-GAAP net income totaled $41,100,000 in 2025, increasing 19% year-over-year. I will now move on to our results for the fourth quarter. Revenue for Q4 was $110,100,000, up 22% year-over-year and 5% above the high end of our guidance range. On a sequential basis, revenue increased 29% from Q3. Contribution ex-TAC for Q4 totaled $64,600,000, up 19% year-over-year and 1% above the high end of our guidance range. On a sequential basis, contribution ex-TAC increased 22% from Q3. Both revenue and contribution ex-TAC represent record results for a quarterly period. It is important to note, as Tim mentioned, our underlying business is performing stronger than our reported results indicate, primarily attributable to the difficult comparison brought about by last year’s high political ad spend contribution. When excluding political ad spend contribution from the prior-year election cycle, which weighed on revenue growth by approximately 600 basis points and contribution ex-TAC growth by approximately 500 basis points in the quarter, revenue increased 28% year-over-year and contribution ex-TAC increased 24% year-over-year on a pro forma basis. New customer momentum also remains strong, as evidenced by the recent announcement of a new multi-form, multiyear partnership with WHOOP, alongside a number of recently established wins with other major U.S. advertisers, including Molson Coors. We believe these trends reinforce our strong competitive positioning and support our ability to continue outperforming the broader programmatic market over the long term. We delivered strong performance across most customer verticals in Q4, with financial services, public services, and CPG leading the way. Advertisers continue to select Viant Technology Inc. for access to emerging digital channels, with CTV adoption reflecting the broader industry shift toward premium addressable video. In Q4, customer-directed CTV purchasing accounted for a record high of 46% of total platform spend, with nearly half running through our Direct Access Premium Publishers. CTV spend reached an all-time high in the quarter, as advertisers increasingly prioritize CTV to drive performance outcomes. Advertisers industry-wide continue to shift their media mix towards emerging digital channels such as CTV, streaming audio, and digital out-of-home. Reflecting this secular trend, customer-directed purchasing on our platform across these channels collectively represented approximately 54% of total platform spend for the year, up from 51% in 2024 and 43% in 2023. Viant Technology Inc. remains well positioned as a leading partner for advertisers moving beyond traditional display to capitalize on next-generation media formats. Reflecting advertiser preference for high-impact, measurable formats, customer-directed video spend, inclusive of CTV, reached a record high and represented 63% of total spend in the quarter, underscoring Viant Technology Inc.’s strong positioning to serve this demand. Non-GAAP operating expenses totaled $39,800,000 in the fourth quarter, representing a 7% year-over-year increase and an 8% sequential increase. Notably, operating expenses include strategic investments related to the acquisitions of IRIS.TV, which closed in November 2024, and Locker, which closed in February 2025, both of which expand our long-term product capabilities and are intended to support long-term growth. Excluding these acquisitions, organic non-GAAP operating expenses increased a modest 5% year-over-year and increased 8% sequentially, reflecting continued operating leverage and disciplined expense management. Importantly, we remain focused on scaling efficiently. Even as we continue to invest in innovation across Viant AI and our broader technology stack, we are delivering measurable gains in productivity, increasing trailing-twelve-month contribution ex-TAC per employee by over 8% year-over-year, marking 10 straight quarterly increases—a clear signal of improving operational efficiency. Adjusted EBITDA for Q4 was $24,700,000, exceeding the high point of our guidance by 5% and growing 45% year-over-year and 54% sequentially. Adjusted EBITDA as a percentage of contribution ex-TAC was 38% for the quarter, above our guidance range and representing nearly 700 basis points of improvement over the prior-year period. Non-GAAP net income, which excludes stock-based comp and other adjustments, totaled $19,000,000 for the quarter, up 37% from $13,800,000 in the prior year. Non-GAAP basic earnings per Class A share outstanding was $0.23 in the fourth quarter compared to $0.17 in the prior year. In terms of share count, we ended the quarter with 63,300,000 total shares outstanding, consisting of 17,600,000 Class A shares and 45,700,000 Class B shares. We ended the quarter with a strong balance sheet, including $191,200,000 in cash and cash equivalents, $219,200,000 in positive working capital, no debt, and full access to our $75,000,000 credit facility. During the quarter, we generated $33,100,000 of cash flow from operations and $28,200,000 of free cash flow, up 101% and 132%, respectively, year-over-year. We also remain disciplined in our capital allocations. Since launching our share repurchase program in May 2024, we have returned $59,600,000 to shareholders. As of March 9, approximately $40,400,000 remains available under our current authorization. We intend to continue executing this program with a focus on maximizing value for long-term shareholders, particularly during periods when our stock is undervalued. We believe our strong financial foundation, combined with consistent execution and a balanced capital allocation strategy, positions us well to capture growth opportunities and drive shareholder value in the quarters ahead. Turning now to our Q1 outlook. For 2026, we expect revenue of $83,000,000 to $86,000,000, up 20% over the prior-year period at the midpoint; contribution ex-TAC of $49,000,000 to $51,000,000, reflecting 17% year-over-year growth at the midpoint; non-GAAP operating expenses of $40,500,000 to $41,500,000, up 10% year-over-year at the midpoint; and adjusted EBITDA of $8,500,000 to $9,500,000, representing a 67% year-over-year increase at the midpoint. Finally, we expect an adjusted EBITDA margin as a percentage of contribution ex-TAC of 18% at the midpoint, representing over 500 basis points of improvement over the prior-year period. The midpoint of our guide assumes record Q1 performance across revenue, contribution ex-TAC, and adjusted EBITDA. I would also like to make a couple of general observations about our outlook for 2026. In 2026, we expect contribution ex-TAC growth to continue outpacing the broader U.S. programmatic market, which is projected to grow approximately 13%, driving further market share gains. We expect year-over-year growth rates in revenue and contribution ex-TAC to accelerate sequentially as we move through 2026, primarily driven by new client onboarding, ramping organic growth, and political contribution in the back half of the year. We also expect revenue and contribution ex-TAC to continue growing faster than non-GAAP operating expenses, leading to continued adjusted EBITDA margin expansion in 2026. In closing, we delivered another record quarter, executing against our strategic priorities and advancing innovation across our platform. We believe we are well positioned for sustainable long-term growth given our strategic alignment with secular growth trends, including CTV, addressability, and Viant AI. I will now turn the call back over to the operator for questions. Operator? Operator: Thank you, Lawrence. We will now proceed to the Q&A session. If you would like to ask a question, please use the raise hand feature in your controls located at the bottom of your Zoom window. Our first question comes from Jason Michael Kreyer with Craig-Hallum. Jason? Jason Michael Kreyer: Alright. Thanks, guys. I appreciate that. Maybe I will start off just where you ended that, Larry. You talked several times about the opportunity for accelerating growth through 2026. Maybe frame expectations for the year relative to the guide for Q1. Kind of what drives that upward swing as 2026 progresses. I want to step back and maybe talk about the late-stage deal pipeline that you guys had talked about a couple of quarters ago. Just want to get an update on how you feel that has progressed the last few months. How you feel about win rates in deals that have closed, and then just maybe what has been your ability to add or to replenish that pipeline of additional late-stage opportunities? Lawrence J. Madden: Yeah, certainly. Thanks, Jason. Well, if you break down—we have talked a lot about the tailwinds we are having right now—and if you break them down relative to our Q1 guide, which can kind of speak to what we see in the future quarters, first of all, in Q1, we had limited contribution from Molson Coors and WHOOP. Both of those advertisers onboarded during the quarter and only have spent modestly. We expect that for both of them to significantly ramp beginning in Q2. Similarly, with Outcomes, really a lot of early stages of testing, very little contribution in Q1, and as we move through the quarters, we expect that to obviously contribute nicely. We have talked about other customer wins that we have not announced—we talked about them a bit generically—many of those are also ramping up in the second and third quarters, so we expect to get a lift from that. And relative to Q1, you know Q1 is historically our lowest quarter, and I think this year, based on our mix of clients, maybe we are over-indexed a little bit towards customers that have the most negative seasonality in Q1, which impacted Q1 guide a little bit, certainly relative to Q4. But we see a nice ramp up as we move through based on the new clients we are winning, Outcomes coming through and starting to build up, that it will build nicely. We are very confident that it will build nicely as the quarters progress in terms of growth. Tim Vanderhook: I would just—I will start with that. One of the big areas of investment around operating expenses is building out the enterprise sales team, and so I think we have done a great job of putting leaders in place that are from high-quality places. We have pulled leaders in vertical categories from Yahoo and many other very high-quality companies. So that investment is going to continue to replenish that sales pipeline. It is not just the win rate, I would say. We are beating much larger competitors at late stage in the game. We are always up against a very large competitor, and typically you are seeing the advertisers select Viant Technology Inc. for the innovation that we are pumping out. So that pipeline continues to grow. We talked to most investors—we mentioned last year around $250,000,000 of pipeline. We have closed very big wins in that. Some of those have been delayed to this year. A lot of times when we do not win a customer, they have chosen not to make a change until a future period because it is a fairly big lift to change platform providers, and so I think some of those will get kicked into the back half of this year as that determination of when to switch. You want to add anything? I would just say, though, in these pitches, it is becoming very apparent of our advantage around our proprietary data—both around Household ID, the continued scaling of IRIS ID, our supply quality models that do not get enough attention but clients find incredibly valuable, our Direct Access program of being able to be directly connected to the largest content owners in the world. All of that is really opening a lot of eyes with a lot of these large brands. And really these large brands, I think they all have a commonality: they have to drive higher growth. And they have—many of them are looking at their playbook that they have run for the last four or five years, giving the largest platforms in the world most of their money. While those companies have outsized growth, the largest platforms in the world, their business suffers. And I think we are a great counterpunch to that, and a lot of marketers are really taking a look at the proprietary data that we have and saying that is a way for them to deliver more growth in the future years. Jason Michael Kreyer: Perfect. Thanks, guys. Appreciate it. Tim Vanderhook: Thanks, Jason. Operator: Our next question comes from Laura Anne Martin with Needham. Laura? Laura Anne Martin: Somebody just has to tell you that because—and I am going to ask about your growth in the quarter. So when we look at DV360, their third-party was down 2%, The Trade Desk up 13% in net revenue, you guys up 19% in net revenue. Really big size difference—like, you guys are tiny compared to those two. My question is, are you taking share from these—you just said you were taking share from these bigger companies. How much of this is sustainable over time? Because I sort of feel like Wall Street thinks globally scaled large footprints have competitive advantage over smaller companies. Right now, you are disproving that, but convince me that small can win at these much higher revenue growth numbers than Google and Trade Desk, who are your sort of globally scaled competitors in your direct business, because these numbers are amazing. And then I wanted to drill down on IRIS ID. I remember at CES a year ago, we were talking—you had just bought IRIS. Maybe it was two years ago, I am sort of forgetting. You said it was up five times year-over-year, and you are now at percent of the incoming CTV bidstream had IRIS IDs. What is the gating factor there? Would you expect that to get to 75%, 100%? What is stopping more usage, or do you expect that kind of up 5x to continue over in 2026 and 2027? Tim Vanderhook: Why do you not take IRIS? Chris Vanderhook: Yeah. So with IRIS, we have seen incredible adoption of the IRIS ID. What that means is that we need content owners to carry it, and we have made announcements with some of the largest content owners, the largest television networks. We have had the IRIS technology in and of itself to be able to run computer vision, to contextualize video, pull out emotional sentiments, check for brand suitability. This is checking a lot of boxes for marketers. Most marketers, I will say, are completely unaware of the fact that when they buy CTV, they are only able to buy at the app level through other platforms. So you can only buy the app. A lot of these large apps have 20,000 to 30,000 titles of content, so a brand may not be the right fit for half of those content titles. And most brands are unaware of that, and when you give them that problem statement, IRIS completely answers that. That is number one. Number two, marketers have been testing it. As we said, revenue grew 90% from Q3 to Q4. So huge growth. Why? Because they see the performance improvement. When they see the performance improvement, they bid higher for those IRIS IDs that are relevant for that brand. It is driving, on average, we have said, a 466% increase in conversion rate. Forget upper-funnel metrics—brand awareness and consideration—just straight up conversion rate and sales. So marketers bid up for it, content owners get more money for it, that increases the amount of content owners that will then carry the IRIS ID. So we are at approximately 50% now. We believe we are going to continue to scale that. We think it is reasonable that we would get to 70% penetration this year, and so the future looks really bright for IRIS, and it is also really bright for our customers because they are taking advantage of that and they are driving greater returns. Again, being a buy-side player, we only care about what drives our customers’ business. If we drive their business and their growth, they are going to spend more money on our platform. Tim Vanderhook: So, your first question—can the smaller company beat the larger companies? I think we are proving it now, and we really believe it is sustainable over the long run due to proprietary data. When you can only target at the app level and not deliver the performance, that is really a big gating item. The second concept here is that the large platforms have been self-reporting their own success back to these brands. Meanwhile, the total sales of the brand are actually down. So these things are not correlating, and they have had now half a decade or a decade of working with these larger companies where this is just a continual output year after year. So they have really lost faith in the reported metrics that the platforms are using. I think they are looking for an independent buy-side platform to help them understand what is driving success for their business. So what drives our success? It is proprietary data and Viant AI, which is the automation and the autonomy where they can get way more productive with their media dollars at work. And I would add to that Direct Access. By pulling out all the middlemen, the same dollar has more working media. They are getting more ad impressions per dollar than they were prior to Direct Access being there. It is really the combination of all of this that is driving better efficiency when you work with Viant Technology Inc. relative to—you mentioned Google, The Trade Desk, and Amazon. Amazon has a different type of perspective where they are really good at subsidizing businesses in the near term—you are seeing that with their 1% fees that they have been out in the marketplace—or bundling of the products of AWS plus subsidization. But in the end, Google and Amazon—the two very large platforms that we compete with—those platforms sell media. We help the buyers of that media allocate their budgets appropriately across. We are only on their side of the table. We are not on the other side of the table. And I think that is another thing that the Fortune 500 or large advertiser set has come to grips with—is like, actually, I cannot believe these numbers because I have a decade’s worth of data that says it does not correlate to overall business results. And I need a partner just on my side with proprietary data and the automation of the workflows to actually improve efficiency of their business. So I firmly believe that it is sustainable. When it comes to WHOOP, we beat The Trade Desk. When it comes to others, we beat Google. You are seeing with down on third-party. So we have proven it many times. And although Amazon has had a banner 2025 year in the space, that I do not believe is sustainable over the long run as marketers are smarter and smarter to not trust a platform whose selling them media—or ads is a better way to say it. You cannot trust the metrics that you are looking at. Laura Anne Martin: Thank you very much. Great numbers. Tim Vanderhook: Thank you. Thank you. Operator: Our next question comes from Tom White with D.A. Davidson. Tom? Tom White: Great. Thanks for taking my questions. Nice end to the year, guys. Maybe just with regards to your commentary about the expansion of your addressable market, you know, if I think back, it seems like a lot of the recent product innovation that you have launched were initially conceived around going towards the smaller end of the market, right—those search and social advertisers. But over the last several quarters and thus far this year, it seems like you are getting traction with the bigger boys with some of this innovation or at least getting their attention. When you look out to 2026, 2027, 2028, what is the bigger opportunity, do you think, for you? And then just if you could quickly comment on IRIS ID as a competitive moat. Obviously, you guys have a head start there, and the numbers look great, but what is stopping any of the other big platforms from going out and trying to convince content owners to start embedding this ID or coming up with something similar? Thanks. Chris Vanderhook: Yes. I will answer the first one on the expanding TAM. You have to have what we see as a commonality—you think in big brands, they have brand-based budgets where they are looking to raise awareness and consideration for their products and services that might pay in a future period, but they also have performance-based budgets where they have to get sales now. And really what you have to do is create ad products that address both of those, and that is really what we have aimed to do. And if I look at these DTC brands, many of them start only in performance. But they quickly realize that they tap out in Meta or Google’s Performance Max or Demand Gen or Search—they tap out there because they cannot drive growth after a certain period. So then they realize, oh, we have to invest in our brand to raise our baseline sales. And so what we are seeing is that when we go down market to these direct-to-consumer e-commerce companies, we are seeing that what they need is they need to tap into CTV. That is really going to drive growth for them. But they need tools; they need a level of workflow that they are used to in some of these platforms like Meta’s Advantage Plus or Google’s PMAX. So we deliver that with Outcomes. But they are tapping into a really high-growth channel that not only drives brand awareness but also is capable, as I said, with solutions like IRIS ID, they can drive the lower-funnel performance for sales now as well. So, what is bigger? Look, the down-market DTC and e-commerce companies are small businesses. Meta and Google—they have an audience of 10,000,000 businesses that buy advertising from them. If you look at the open internet, I do not know, 10,000 to 20,000 companies buy advertising in the open internet. And how many companies buy television? Maybe 1,000 to 2,000, something like that. So we are looking at addressing—we want to, again, all marketers of all sizes have similar challenges. You have to create products for both. But we see them both equally as appealing. Tim Vanderhook: On the IRIS ID question on why someone could not just copy it, it really is the network effect of IRIS ID, and it is why we hit it so hard last year in scaling that ID. Network effects of tying the ecosystem around this identifier, and that is why getting to critical mass was so important for us in 2025 in scaling that. How do we do it? We have done over 1,400 integrations with content management platforms—all various content management platforms. Even a big content owner, they will have many content platforms underneath it. So we have done all these integrations—again, over 1,400. That takes time, resource, and effort to actually get done. Or you could just adopt the IRIS ID. And every big platform would have to go do the similar types of integrations to replicate what the IRIS ID brings. The second area of network effect is just the OpenRTB protocol that we operate in. There is only one spot for a content object in the OpenRTB protocol, and IRIS ID is implemented nearly 50% of the time in that spot. So the content owner is really not incentivized to bring a second one in because you cannot even get it through the RTB protocol with IRIS ID installed. So there are a number of factors there. I would just ladder it up in total to network effects of this content identifier that we captured in 2025. Tom White: Thank you. Very interesting, helpful color. I appreciate it. Tim Vanderhook: Thanks, Tom. Maria Ripps: Great. Thanks so much, and congrats on the quarter. First, I wanted to ask about Outcomes. You mentioned that you ran pilots in Q4 with a number of clients implementing Outcomes. Anything you can share maybe on the initial conversion rate and where you see that over time? And then how should we think about incremental uplift to monetization as you roll out this functionality across your broad advertiser base? And then would love to hear your thoughts on The Trade Desk–OpenAI partnership and what that means for the programmatic space more broadly and then for your platform more specifically. And what are your thoughts on being involved in some of those emerging AI services? Tim Vanderhook: I do not have the exact numbers on conversion rate, but there are just a number of factors. Obviously, the cost efficiency relative to the sales that Chris touched on in our prepared remarks—really, really good compared to what anybody has seen from an autonomous platform. So I think overall conversion rate is hard to give you an exact answer to that other than we are beating what the current status quo is, which is manual optimization or some level of automated optimization that is out there today. Chris Vanderhook: And I would just say, you know, the real through line here about the performance improvements is the fact that we have proprietary data signals that are extremely valuable. But when you couple that with an autonomous workflow, the speed of that is what is driving the improved campaign results or the performance improvements. And it is doing it at a level of reliability for marketers that is way greater than that of human-based, stressed-out workflows. When I think of the jobs of traders—the gun that they are under, so to speak—they have to come up with the optimization strategies and the tactics that they are going to pull, and they do that on a day-to-day basis. And it is an absolute grind, and that leads to an instability in the reliability of the metrics. And really the autonomous workflows that we have put out here are really driving tremendous value, and it is what we think marketers over time are going to continue to adopt. Tim Vanderhook: Yeah. Obviously, the number of users using bots is really exciting when you look at it as a brand new channel. It is kind of like social when it started to originally emerge and users flocked to it. So there is a ton of real estate available there for advertising. I think OpenAI’s strategy in partnering with third-party DSPs is kind of like Facebook’s early strategy. They were a part of RTB; everyone was involved, and then they pulled it all back and went with their current go-to-market. So we are always a little slower in going to work with organizations like this because we are mindful that they may change strategy overnight, like you saw with agentic checkout with commerce transactions—that has already been abandoned. So I would caution investors about putting any level of excitement until you really see what is the ad format, how does it actually work, and what level of data would be shared. I think the announcement around The Trade Desk—it does not really fit with the RTB protocol as we do. You would have to have sensitive user-level data be sent across. Usually, big platforms do not pass that level of granular information due to consumer privacy reasons. So the truth is we do not know what OpenAI is thinking here at Viant Technology Inc. We are watching, but there is a huge amount of users, a huge amount of real estate and time spent, and certainly a whole bunch of interesting insights that OpenAI knows no one else knows—kind of like search data is unique. But when I chat with an application, I am very rarely ready to buy right now. I am usually middle of the funnel doing some research and information. So although very interesting and exciting—so exciting around future opportunity—I do not think that is a 2026 revenue generator in a large scaled way. Of course, these guys are innovating at incredible rates, and so I may eat my words in the back half of the year, but we are watching, we are paying attention to it, and it appears to be chatbots appear to be a brand-new channel that is opening up tons of available inventory for advertisers. So as we learn more and go throughout the year, we will certainly participate where it makes sense. Relative to The Trade Desk, I think Criteo—who has actually been announced; I do want to say The Trade Desk was a rumor, and interesting timing there. But Criteo has been announced—that makes more sense around product listing or shopping-based ads that they could provide given Criteo’s customer base. So Criteo feels more like a natural fit. I would say The Trade Desk and Viant Technology Inc. seems a little bit different. Maria Ripps: That is very helpful. Thank you. Chris Vanderhook: Thanks, Maria. Operator: Our next question comes from Matthew Dorrian Condon with Citizens. Matt? Matthew Dorrian Condon: Thank you so much for taking my questions. My first one, just to follow up on some earlier comments about Amazon. They have announced new partnerships with Netflix and their integration with Roku. It seems that they are obviously pushing more and more into the ability to service third-party inventory. Can you just talk about how you would expect—I mean, obviously, today, a lot of spend is going through Prime Video and into Amazon’s own platforms—but they are clearly more aggressively going after that third-party inventory. Just how do you see that shaping up in 2026 and 2027? Why are they not as big a threat as maybe the media seems to portray them? And then just a follow up on—I believe when you landed Molson, they talked about findability being the key metric that was the reason why they went with you guys. For WHOOP, was there a similar metric that they found? What was the product that really got them over the goal line to go with Viant Technology Inc.? Thanks, guys. Tim Vanderhook: Well, I do not want to say they are not a threat. They are a threat. They are subsidizing their products. They are doing the bundling strategy that Google executed. So it definitely is a threat, and at Viant Technology Inc., we are paying a lot of attention to Amazon. So I do not want to discount Amazon as a competitor in the space like some others have. I think we do focus on Amazon. But what Amazon knows—they know a lot about customers of Amazon. They know very little in all the other retailers like Walmart, CVS, all these other products. And so if you are a QSR, is Amazon DSP a good fit for you? Likely not based on the proprietary data that they have. If you are a product that is sold through Amazon, Amazon DSP makes a lot of sense to actually partner with to track the sales and reach consumers on Netflix or some of the other platforms. I caution the other big content owners out there because if Amazon runs the same playbook as Google, what they do is they say Prime Video outperforms every other app on the buy. And it is all about—by doing that integration—we bought the ad, but hey, the Roku app was not as good as Prime Video. I can basically write what the report is going to say, as long as they follow that same strategy—and they have been. So I think they have a major trust issue when it comes to what they are reporting in the platform if the transaction does not happen on Amazon.com. That being said, a lot of products and services are sold on Amazon, and I think it makes sense for those customers to use the Amazon DSP in that way. But if your product is also sold in 50 other retailers, the Amazon DSP really is not a good fit for you. Chris Vanderhook: Yeah. So they had a huge focus on CTV. This is a growth brand. They are very focused—they are a fast-growing company. They are very focused on continuing to grow their brand. And in CTV, what do you want? You want addressability—both in terms of “I want to reach the right households, the right people,” and then “I also want to know what type of content they are consuming so I can make my ad relevant to that content.” That drives performance. So, yeah, heavily looked at our addressability solutions. A lot of clients kick the tires hard on that right now, and they see our scale relative to other players is—ours is dramatically larger. And one of the big reasons is we have been at this—this is not a two- or three-year effort. We have been at this for over ten years. We are a leader in this space. So I expect many more brands to continue to focus around addressability. A lot of people think addressability is just for targeting. The largest advantage of addressability is measurement—for you to truly see, “I showed a CTV ad, did I get a sale?” But it is not just that. It is what else did they do in the journey? “Oh, we showed a CTV ad. They then went to Google, searched, later were exposed to a social ad, and then purchased.” That level of visibility that you can give to a marketer and help them properly allocate their money accordingly is incredible. Without an addressability solution for measurement that we offer, they will continually just put money to whoever showed the last ad—which marketers are increasingly not falling for anymore. Tim Vanderhook: I just want to add to that too, not about WHOOP, but about Molson around the addressability solutions of IRIS. If you are a regulated industry like alcohol, you cannot show ads in children’s content, and so IRIS becomes a critical content identifier as well for you to actually deploy money with confidence that you are not going to get a fine for showing ads in children’s content. And it is the combination of these two proprietary data signals that we have that is really pulling the large enterprise customers our way. Operator: Okay. Our final question will come from Barton Evans Crockett with Rosenblatt. Barton? Barton Evans Crockett: Okay. Thanks for squeezing me in. So I was wanting to ask two questions, really. First is, just looking at the growth rates that you are talking about, contribution ex-TAC ex-political up 24% in the fourth quarter, but slowing to the high teens in the first quarter. Do you see the ex-TAC revenue number at some point returning to what you were doing in the fourth quarter? And I know there were some seasonal factors in the first quarter, but that is kind of a notable slowdown. So I was wondering if you could address that first. And then the things I was just wondering about in terms of the LLM debate—you mentioned that it might be easy for an LLM to code an interface, but the value is really elsewhere, kind of the data and presumably the execution. Would it make sense for someone like a Viant Technology Inc. to perhaps use an LLM, though, as an interface, as a way to perhaps penetrate clients that are now wedded to The Trade Desk interface at the agency level—essentially to be an MCP where the execution is through you, but maybe the front end is Claude? Is that conceivable? Could that be an opportunity over time? Or is that something that is just not on the table because of the risk of them getting too much leverage or scraping your data? Tim Vanderhook: Yeah. First is it is just the mix shift of our advertisers in the way that they spend their money. It is better to look at it on an annualized basis. So if you look at our contribution ex-TAC on an annualized basis of 2025, we are going to, hopefully, outperform that in 2026 given the customer wins. And as we mentioned, WHOOP, Molson Coors—some of the large advertisers were, I do not want to say de minimis in Q1, but slowly coming on, learning, understanding how things go. So those ad spends will kick in in the later quarters. And so I think the biggest thing to take away from our call is we are going to grow these numbers sequentially throughout the year. And as you look at the second half, political really kicks in—about half the money is spent in Q3 and about half the money is spent in Q4, roughly, is the way that it goes all the way up until that election cycle. So I would really caution everyone to look rather than quarter-to-quarter—when you look at advertising-based businesses, there is some seasonality. There is a mix shift of the various advertisers on our platform that is really driving the Q1 number that you are seeing. But I can tell you the pipeline is strong, the growth of our business is very strong, and we think we will deliver just like we did last year. No. Look, the Viant AI interface is an LLM interface today. The users of that interface are not with the traditional self-service user interface. So I think we have already delivered on that. It is getting users comfortable with that. I hate to say old habits die hard, but people like to click buttons. It is just a lot of work, and they want to know, is there a hallucination in the data? So a lot of this is test and learn and users getting comfortable with this new interface. That is a big one. As far as an MCP, it is certainly going to be a big factor in the future. We are thinking it each and every day. But again, the market is moving so fast quarter to quarter. You kind of have to project out, and so I think if the interface is your moat, you are in serious trouble in 2026 this year and in the outer years. So I think we have a lead there. We delivered it, I think, eighteen months ago or so. We delivered that interface to customers for them to initially test and learn on, and people love it because there is no training, there is no certification. You do not need to go to Trade Desk Academy for two weeks, and still make mistakes after that. So I think overall, interfaces are dead. Dashboards are dead. You really want an LLM to deliver the info. And I would just say, Chris Vanderhook: what we are doing today—if you look at digital advertising and programmatic—these are human workflows. There are entire organizations that are built around these human workflows. When Tim is saying old habits die hard, although there is an incredible amount of innovation, and I believe that we are leading in that. We are the ones who are bringing from human-based workflows to autonomous workflows—autonomous being the key word. Where is all of tech going? It is going autonomous. So we are leading there. However, if I rolled out and said all brands today, “If you want to interact with me, you must build your own agent that then plugs into my MCP,” we are so far away from that today. I know that there are early—I would say—kind of the green shoots that are out there that we are looking at, and I think those are going to be in the DTC e-commerce space that we are first going to see that. We are very focused on that market. So as we think about our own go-to-market as going after these DTC and e-commerce brands, we think that is a really good solution there. But over time, it does make a lot of sense that an agent will come to the infrastructure that provides all of this and will want to go to infrastructure with incredible proprietary data, which we also have. So, we do look to enable that in the future. And let me just add, we believe Tim Vanderhook: that the LLM is the commodity. It is the proprietary data on top of that LLM which is unique, or the application layer tied to the RTB infrastructure that we actually have. And I think, getting to Chris’s point here around humans—right now you have humans in a five-step process. The human is in the middle of it all. We have taken the human out of the middle and put it at the very front of the line. You set the guardrails, you set the goals, and then you let autonomy actually happen. And so that is really the big difference that I see. The LLM—most of their moat is with consumers. ChatGPT has 650,000,000 consumers spending tons of time per day on that. That is not commoditized—that is very valuable as a media seller. But for us, from an enterprise perspective, the LLMs are commoditized. I could swap out Gemini with OpenAI. I could swap out OpenAI with DeepSeek. It does not really provide noticeable levels of difference in the output sets there or noticeable levels of difference in quality. So to me, from an enterprise perspective, the LLM is the commodity. Proprietary data is the moat. And I think the commodity piece—the reason why many of them give you back the same answer—is that they are all trained off of the same data. They are all trained off of scraping the web, all of them. Certainly, you could argue some of them have proprietary data assets—certainly. That is very—I think that is becoming understood that that is the piece that is commoditized. But that said, to your core question, will we enable third-party agents to be able to interface through an MCP into our infrastructure? Yes. Barton Evans Crockett: Okay. That is interesting. Thank you. Tim Vanderhook: Thanks, Barton. Operator: —concludes the Q&A portion of the call. Thank you. Chris Vanderhook: Thank you, everybody. Operator: Have a good evening.
Operator: Greetings, and welcome to UiPath's Fourth Quarter and Full Year 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Allise Furlani Head of Investor Relations. Thank you. You may begin. Allise Furlani: Good afternoon, and thank you for joining us today to review UIPath's fourth quarter and full year fiscal 2026 financial results which we announced in our earnings press release issued after the market closed today. On the call with me are Daniel Dines, Founder and Chief Executive Officer; and Ashim Gupta, Chief Operating and Financial Officer, to deliver our prepared comments and answer questions. Our earnings press release and financial supplemental materials are posted on the UiPath Investor Relations website. These materials include GAAP to non-GAAP reconciliations. We will be discussing non-GAAP metrics on today's call. This afternoon's call includes forward-looking statements regarding our financial guidance for the first quarter and full year fiscal 2027 and our ability to drive and accelerate future growth and operational efficiency and grow our platform, product offerings and market opportunity. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, and therefore, investors should not place undue reliance on these statements. For a discussion of the material risks and uncertainties that could affect actual results, please refer to our annual report on Form 10-K for the year ended January 31, 2025 and our subsequent reports filed with the SEC, including our annual report on Form 10-K for the year ended January 31, 2026, to be filed with the SEC. Forward-looking statements made on this call reflect our views as of today. We undertake no obligation to update them. I would like to highlight that this webcast is being accompanied by slides. We will post the slides and a copy of our prepared remarks to our Investor Relations website immediately following the conclusion of this call. In addition, please note that all comparisons are year-over-year unless otherwise indicated. Now I would like to hand the call over to Daniel. Daniel Dines: Thank you, Allise. Good afternoon, everyone, and thanks for joining us. I want to start by thanking the people who made this year possible. Our employees, we executed with discipline and purpose. Our customers who trust us with their most critical workflows and our partners who have made a genuine bet on our platform. This is a team effort, and I feel that every day. We delivered another strong quarter, beating the high end of our guidance across all metrics and closing out a year of disciplined execution. Fourth quarter ARR reached $1.853 billion, up 11% year-over-year, driven by $70 million of net new ARR and the revenue of $481 million, up 14% year-over-year. Alongside that growth, we've achieved full year GAAP profitability for the first time in our company's history. We grew fourth quarter non-GAAP operating income to $150 million, a 31% margin, a reflection of the operational progress we made throughout the year driving meaningful efficiency while continuing to invest in growth. And in Q4, we posted our strongest sequential net additions of customers with $1 million or more in ARR in 2 years with deals over $1 million, up over 50% year-over-year, a reflection of both improved sales execution and deepening enterprise platform adoption. I have never been more energized. What we are seeing now goes beyond a single quarter, we are at an inflection point in how software is built. Advances in AI are dramatically reducing the time and cost required to create software. And that has led to understandable questions in the market about how value will be created going forward. Historically, moments like this don't eliminate software, they shift where value is captured. Enterprises don't simply pay for code they pay for trust, for operability and for government, the ability to run complex systems reliably, securely and with full accountability. As the cost of building software falls, the value of platform that can safely govern, orchestrate and scale that software rises. And there is a second dynamic that I find even more exciting. When building becomes cheaper, more gets built, more processes get automated, more edge cases get addressed and more systems become autonomous. That expansion does not shrink the need for enterprise orchestration, it increases it. And this is precisely the environment UiPath is designed to operate in. , We entered this new agentic era with 4 advantages. First, a unified platform combining deterministic automation, agentic automation and enterprise-grade orchestration with governance, security and scalability built in. This is the full stack, it is what wins new logos and drives expansion across our base; second, a powerful installed-based flywheel, thousands of enterprises run mission-critical workflows on UiPath today. And within those workflows, there are opportunities for agents to be deployed and the overall process to be orchestrated. Third, 2 decades of enterprise trust and governance, deployment experience that AI plus automation is expected to deliver accountability, auditability, observability and reliability at scale; and fourth, deep vertical expertise with enterprise-wide reach, regulatory depth in the industries where the stakes are highest paired with the horizontal ability to orchestrate across the entire enterprise. Let me spend a few minutes on each. Driver one. Our agentic -- our unified Agentic automation platform. As AI makes intelligence more accessible, what matters is execution. Enterprises are getting answers to complex questions faster than ever before, and yet they still struggle to reliably execute complex cross-system processes with accountability and compliance built in. The goal now is to pair the insight they are getting with the actions and execution that our platform enables, financial reporting, claims processing, regulatory compliance. This cannot be improvised. They must be institutionalized. Enterprise automation requires 2 modes, deterministic for precision audibility and agentic for reasoning and adaptability. Most vendors offer 1 or the other, UiPath id purpose-built to integrate both under a single control play, allowing enterprises to move from experimentation to scale production grade deployment. Most people think orchestration means agent to agent coordination. Real enterprise orchestration brings together agentic automation, deterministic automation and humans because that is how work actually gets done. We offer that and the full execution layer underneath it, governing how our transaction moves from start to finish and ensuring that it completes reliably every single time. This is what Maestro is built to do at enterprise scale. What makes Maestro uniquely powerful is its architecture. It is built on Temporal, the most modern workflow technology featuring durable execution and trusted by the most demanding technology companies in the world. Workflows are defined in a way, AI agents can generate and modify it directly while remaining fully transparent to business stakeholders and auditors in a world where AI agents are increasingly the ones creating and maintaining workflows that distinction matters enormously. The customer results make this concrete, a U.S.-based semiconductor company fail to deploy an agentic workflow with another vendor after more than a year of trying with UiPath, they were successful in under 2 weeks leading to a 7-figure expansion across Agent Builder, Maestro and Test Cloud. Today, they run over 3,000 automations and have sales more than 2 million hours and, One New Zealand who went from proof of concept to production grade pilot in 5 weeks reduce 4- to 5-day order-to-cash process to 10 minutes, and they are now scaling this across their B2B sales operations. With UiPath, they expect roughly $20 million in cost savings this year as they plan to further leverage the platform to support their broader transformation programs. Driver two: the flywheel inside our installed base. The most important story this quarter is the economic shift underway inside our installed base. Customers are not experimenting with AI, they are expanding their operating model on our platform. AI product ARR, which includes agentic, IDP and Maestro, reached nearly $200 million this quarter, with strong growth fueled by agentic. But the number I keep coming back to is this, the number of customers above $100,000 in ARR who have bought AI products grew 25% year-over-year and they spend nearly 3x as much as those who have not. Additionally, 16 of our top 20 deals this quarter included AI products. All of this is clear evidence that agentic automation is becoming central to our largest customers' roadmaps. Importantly, this AI growth is layering on top of a core unattended automation business that continues to grow. We are not seeing AI agents replacing deterministic unattended automation in production we are seeing customers extending their processes with AI. A major U.S. airline illustrates this well. Building on their deterministic foundation, they are now deploying Agent Builder, Communications Mining, and Maestro to automate Procure-to-Pay and Supplier workflows, a blueprint for how customers move from task automation to end-to-end process orchestration, and how that journey drives platform-wide expansion. This is the flywheel. Every workflow automated creates new surface area for agents. Every agent deployed drives more automation, deeper integration, and broader platform adoption. Testing is another area where we see a significant and underappreciated expansion opportunity. As agentic workflows and applications sprawl, traditional QA simply cannot keep up. Forrester named UiPath a Leader in The Forrester Wave for Autonomous Testing Platforms in Q4 2025 with Test Cloud receiving the highest possible scores in 7 criteria including vision, roadmap, and automation creation, orchestration, and execution. A global technology company is a strong example, standardizing their entire automation program on UiPath, expanding into Test Cloud, and planning to implement UiPath Agents and Maestro to automate supply chain workflows. Turning to driver 3, Governance. Building an agent is becoming easier. Making it enterprise-grade is not. Enterprise-grade agents require deterministic execution with traceability, exception handling, and audit trails that satisfy external regulators. We see this play out in how customers choose us. An American credit union selected UiPath as we were one of the only solutions to meet their strict banking security and governance requirements. And a European automobile manufacturer chose UiPath as the foundation of their agentic AI strategy, selecting Maestro because we could deliver Enterprise-grade governance, error handling, and human-in-the-loop safeguards at the level their compliance standards demand. In both cases, governance was not a consideration, it was the deciding factor. And that brings us to driver 4, vertical depth. It's not just about governance, it's about knowing the domain deeply enough to manage and operate it at scale for real Impact. That is why vertical depth matters more in the agentic era, not less. As building becomes easier, differentiation shifts to domain-specific workflow intelligence, especially in industries where the cost of getting it wrong is existential. At Vive in February, we launched agentic AI solutions purpose-built for healthcare, targeting revenue cycle management, medical records summarization, claim denial resolution, and prior authorization. In line with that strategy, we acquired WorkFusion in February. Bringing purpose-built agents for financial crime compliance, with deep anti-money laundering and know-your-customer expertise directly into our platform, extending our reach into the highest stakes compliance workflows inside global banks. Healthcare and financial services are 2 examples of a broader strategy. We pair vertical depth with the horizontal reach to orchestrate across every function of a global enterprise, a combination that neither horizontal or vertical platforms alone can match. And great platforms don't scale alone. Our partners are building practices, joint solutions, and go-to-market motions around our platform. Our expanded partnership with Deloitte is a strong example. Together, we launched Agentic ERP, embedding AI agents into mission-critical finance and operations workflows. A Fortune 20 oil and gas company that is migrating to SAP S/4HANA is already scaling through the partnership, expanding Test Cloud coverage from 10% to roughly 50% of their SAP environment while building new agentic use cases across the migration. Accenture tells a similar story. Together we deployed a global agentic sales order entry solution for a strategic life sciences customer, reducing processing time by 1/3 unlocking automation for orders previously too complex to handle, and orchestrating autonomous agents transforming the orders while navigating 150,000 exceptions. Before I close, I want to give you a preview of what's coming next on our product roadmap. Over the last few months, the world has changed. The boundaries of what is possible have shifted faster than most people expected. We have spent years building a unified platform for exactly this moment. And what it can now unlock with the next generation of coding agents, it's something I'm genuinely excited about. Our platform is evolving into 1 where coding agents can participate across the entire automation life cycle. Agents will work with subject matter experts to discover processes and identify exceptions. They will work with business analysts to generate process definitions. Since developers in building automation, deploy those automations into production and help manage them at runtime. The first capability of that vision ships in the next couple of months and it targets a problem I hear in nearly every customer conversation. Their automation backlog is growing faster than their ability to build. The ROI exists. The executive sponsorship exists. The constraints have been the time, cost and specialized skills required to build and maintain production-grade automations. AI coding agents will generate and maintain production-grade unattended UiPath automations in hours instead of weeks. AI accelerates how automations are built. It does not change the platform they need to run on. For example, every one of those automations still needs our platform, Maestro for orchestration, process intelligence and observability, governance for control and auditability, granular access control and credential vaults for security. As we look ahead, we expect to cross $2 billion in ARR this fiscal year, a milestone that reflects the durability of what we have built and the expanding role we play in how enterprises operate. Finally, we invite you to join our annual Agentic AI Summit on March 25, which will be live streamed on our website. Please reach out to our Investor Relations team for details. With that, I'll turn the call over to Ashim. Ashim Gupta: Thank you, Daniel, and good afternoon, everyone. Before turning to the financials, I'd like to provide a quick operational update. Over the past year, we strengthened our operating model, tightening coordination across teams and driving greater consistency and efficiency in how we go to market and serve customers. The result is more predictable execution, tighter alignment across sales, customer success and product and greater operating rigor across the business. We've built a more disciplined and scalable global sales cadence. The entire company has been enabled and is focused on pushing our AI capabilities into every deal, customer conversation and across our internal operations. As we move to fiscal 2027, our priorities are focused on translating these structural advantages into durable growth. First, accelerating growth across our customer base, expanding penetration inside our installed base, scaling AI adoption on top of deterministic automation and deepening our vertical solution strategy in regulated and mission-critical industries where our platform is most differentiated. Second, driving faster time to value. Selling software is only part of the journey. Our forward-deployed engineers, services organization, post-sales team and partner ecosystem continue to improve their coordination to ensure customers realize value quickly and at scale. Third, scaling operating leverage, including internal adoption of our own agentic capabilities and continued focus on cost discipline. Across engineering, support and internal operations, we are deploying UiPath agents to streamline workflows, reduce manual work and accelerate execution, and we are already seeing productivity gains from these deployments. We expect this to become an additional source of operating leverage as adoption deepens. These initiatives reinforce the scalability of our model and give us confidence in the next phase of margin expansion. We reached an important milestone on profitability this year. When we first introduced our long-term model, we targeted non-GAAP operating margins of approximately 20%. In fiscal 2026, we surpassed that, delivering a 23% non-GAAP operating margin while continuing to invest for growth. Given the strength and scalability of our model, we are updating our long-term non-GAAP operating margin target to 30%. We are equally focused on GAAP profitability. Over the past several years, we have driven meaningful improvement in GAAP expenses as a percentage of revenue, including stock-based compensation, which declined to 18% of revenue from 25% last year, and we expect that trend to continue. We expect to be meaningfully GAAP profitable in fiscal 2027 and are committed to expanding GAAP profitability over time. Turning to the quarter. Unless otherwise indicated, I will be discussing results on a non-GAAP basis, and all growth rates are year-over-year. I also want to note that since we price and sell in local currency, fluctuations in FX rates impact results. Fourth quarter revenue grew to $481 million, an increase of 14%. Normalizing for the year-over-year FX tailwind of approximately $16 million, revenue grew 10%. Total revenue for fiscal year 2026 was $1.611 billion, an increase of 13% year-over-year. Normalizing for the year-over-year FX tailwind of approximately $30 million, revenue grew 11%. ARR totaled $1.853 billion, an increase of 11%. Net new ARR was $70 million. This included a $14 million year-over-year FX tailwind. As organizations adopt an AI-first operating model, they are accelerating cloud migration to deploy, orchestrate and scale automation seamlessly. We ended the year with over $1.2 billion in cloud ARR, which includes both hybrid and SaaS, up over 20% year-over-year. I want to highlight one data point that speaks directly to where the platform is headed. Among customers with more than $1 million in ARR, 90% are using our AI products. When we look at customers with more than $100,000 in ARR, approximately 60% are using our AI products. That level of attachment is a retention and expansion flywheel, and it gives us high confidence in the durability of the customers we are focused on the most. Across our broader base, 42% of customers with over $30,000 in ARR use our AI products, which provides a significant runway for expansion. We ended the quarter with approximately 10,750 customers. We continue to be successful in signing new enterprise logos that align with our strategy of targeting long-term customers with a propensity to invest, including new logos like Enterprise Products Partners, Helix Electric, [ Veonet ] Vision and a U.S. construction company consolidating on UiPath. They chose us to replace multiple point solutions with a single platform and plan to expand beyond deterministic automation, deploying agentic capabilities across loan originations and mortgage operations. As with prior quarters, the vast majority of customer attrition continues to be at the lower end. To provide a bit more color, when we take a closer look into our total logo count, for full year 2026, customers that spent over $30,000 in ARR increased 7% year-over-year. Customers with $100,000 or more in ARR increased to 2,565, while customers in $1 million or more in ARR increased to 357. Dollar-based gross retention was best-in-class at 97%, and our dollar-based net retention rate remained at 107%. Adjusting for FX, dollar-based net retention was 106%. Remaining performance obligations increased to $1.475 billion, up 19%. Normalizing for the FX tailwind, which was approximately $64 million, RPO grew 14%. Current RPO increased to $913 million, up 13%. Turning to expenses. We delivered fourth quarter overall gross margin of 86% and software gross margin was 92%. Fourth quarter operating expenses were $263 million. We ended the year with 3,981 total employees. I want to reiterate a significant milestone. For the first time in company history, UiPath delivered a full year of GAAP profitability. For the full year, GAAP operating income was $57 million, and we delivered our second consecutive quarter of GAAP operating income at $80 million in the fourth quarter. Fourth quarter non-GAAP operating income was $150 million, representing a 31% margin. Full year non-GAAP operating income was $370 million, a 23% margin and over 600 basis points of margin expansion year-over-year. Fourth quarter GAAP net income was $104 million. Full year GAAP net income was $282 million. Fourth quarter adjusted free cash flow was $182 million, bringing full year adjusted free cash flow to $372 million. We ended the quarter with $1.7 billion in cash, cash equivalents and marketable securities and no debt. During the fourth quarter, we repurchased 780,000 shares at an average price of $12.83. For the full fiscal year, we returned approximately $337 million to stockholders, repurchasing 30.9 million shares at an average price of $10.92. Since January 31, under our 10b5-1 plan, we have repurchased an additional 14 million shares at an average price of $12.11 through March 10, 2026, completing our $1 billion stock repurchase program. Following the completion of the program, our Board has authorized an additional $500 million in repurchase capacity. This reflects our confidence in the durability of our cash flows and our commitment to disciplined capital allocation. Now turning to guidance. Our guidance philosophy remains unchanged. We base our guidance on what we see in the pipeline and apply prudent assumptions, particularly as the federal and macroeconomic environment remains variable. Our guidance reflects continued momentum across the business and includes WorkFusion's contribution aligned to our ARR definition. WorkFusion strengthens our position in financial services automation through its advanced agentic technology, an area where the demand for compliant auditable agentic workflows is accelerating. Also included our current foreign exchange rates, including a modest headwind from the yen and a modest tailwind from the euro, which in aggregate have an immaterial impact. Turning to the specifics of our guide. For the first fiscal quarter 2027, we expect revenue in the range of $395 million to $400 million, ARR in the range of $1.894 billion to $1.899 billion, non-GAAP operating income of approximately $80 million. And we expect first quarter basic share count to be approximately 525 million shares. For the full fiscal year 2027, we expect revenue in the range of $1.754 billion to $1.759 billion, ARR in the range of $2.051 billion to $2.056 billion, non-GAAP operating income of approximately $415 million. Before I close, I want to leave you with a few final modeling points, including the following: first half revenue to be approximately $795 million, second half revenue to reflect similar seasonal patterns as fiscal 2026, with approximately 30% of total revenue in the fourth quarter. First half net new ARR to be approximately $73 million and second half net new ARR to reflect similar seasonality as fiscal year 2026 with the fourth quarter being our strongest quarter. We are encouraged by the momentum we're seeing as customers accelerate their shift of workloads to the cloud. While this is an overall positive, we anticipate that growth in our SaaS offerings will create approximately a 1% headwind to total revenue growth for the full year. Fiscal year non-GAAP gross margin to be approximately 84% as we scale our cloud offerings; non-GAAP operating income to reflect similar seasonality to our top line metrics. Fiscal year 2027 non-GAAP adjusted free cash flow of approximately $425 million, also to follow normal seasonal patterns. Lastly, we are committed to managing stock-based compensation and for full fiscal year 2027, we expect dilution to be between 2% to 3% year-over-year, excluding any buyback. Thank you for joining us today, and we look forward to speaking with many of you during the quarter. With that, I will now turn the call over to the operator. Operator, please poll for questions. Operator: Hello, and thank you for your patience. I will now hand the call over to Daniel Dines. Daniel Dines: Hello, everyone. Thank you for coming back after our outage with the service provider for our Investor Relations conference calls. We are ready to take questions. I hope that you guys get the chance to listen to the end of our reading. And also, we have published online the entire transcript of the -- of our earnings calls. So thank you again and apologize for the delay. We are ready to take questions. Operator: [Operator Instructions] And our first question comes from the line of Bryan Bergin with TD Cowen. Bryan Bergin: First one I have is just as it relates to net new ARR. And as you build the 2027 outlook, just how are you thinking about net new ARR expansion potential here on an FX-neutral basis? Sorry if I missed what you said on FX contribution assumptions as it relates to 1Q and the full year. But just trying to unpack that looking ahead. And then my follow-up is going to be on margins. So on op income margin, I appreciate the update on the 30% target. Just want to dig in on how you're thinking about the potential kind of the moving parts of that as it relates to gross margin and OpEx components moving forward? Ashim Gupta: Yes. So Brian, great to hear from you. When you think about the IRR contribution, I think our guidance kind of says that, there's really no significant or material FX contribution from that versus our prior guidance. So as you look at it, really, FX is a minimal impact from where our previous estimates were. The second piece of it is, from a margin standpoint, you look at the moving pieces and definitely across the board, there is opportunity to agentify and to use the technology advances across every function. That includes engineering, G&A as well as sales and marketing, which gives us really the ability to continue to reinvest in growth as needed. But we're going to look at it in a balanced way in terms of what makes sense for the company. And you can see our commitment to operating margin expansion over the last 2 years. And then just back to the IRR, I want to just give a little bit of color. When you look at our base, we have a sizable Japan business. So we have headwind from the yen, and tailwind to the euro, and they basically net out to be an immaterial impact for the full year. So we're really pleased with the progress. As Daniel commented and I did in the script, we really feel positive about the expansion that we're seeing within our customers and our ability to stabilize our net new ARR, and that's kind of reflected in both our performance as well as our guidance. Operator: And our next question comes from the line of Sanjit Singh with Morgan Stanley. Sanjit Singh: Daniel, thank you for the disclosure on the ARR traction -- I'm sorry, the AI traction with respect to ARR, of the $200 million, that was great to see. In terms of the composition of that, could you give us any details on sort of the split between IDP and what you're seeing on the agent side. And to the extent you can sort of disclose that, I'd just love to hear about the underlying momentum with the agentic side of the house, including Maestro as you go into next year? Daniel Dines: Sanjit, we have really a great momentum on diffusion of the AI within our platform. We have not provided clear ratios between different components of what we put into the AI. And I will let Ashim to comment further. Ashim Gupta: Yes, so like when you look at the way we price, we actually allow pretty good fungibility between our AI and Agentic products actually, both in some of our old pricing as well as our new pricing. So we don't really materially split it out. Of course, IDP hasn't been in the market for a longer period of time, for like the last 2.5 to 3 years. So IDP definitely has a good portion of the IRR. But agentic is a significant portion, and we see that in the platform. If you can see that in the deals and the commentary that we're giving and selling as a part -- that we talk about in our script. So from that standpoint, we can't really split it apart but we also see them as complementary because remember, IDP also includes IXP, which is not like simple document processing. It really uses advanced technology to be able to parse different documents using different models and that is part and parcel of the way we price. Sanjit Singh: Yes, that's great. That's great context. And then just a follow-up on the guide, Ashim, on 2 aspects. One, in terms of WorkFusion, how should I think about that contribution when I sort of calculate what the guidance implies from a net new ARR basis? I think there are some reports out there that they are around $25 million ARR toward the end of last year. So I just want to sort of stand to check that. And then from this time last year, there was some concerns around build as you guys are pretty cautious on the federal business. Just your sort of underlying assumptions about Fed going into next year, maybe the first half of this year given some of the headwinds you saw this time last year? Ashim Gupta: Yes. So the first thing is the $25 million is not accurate. That's the first thing I can say categorically. The second piece is, they also had a different method of ARR -- of accounting. So when we brought it back, even the numbers that have been out there also do not account for it. We -- It is actually below our materiality threshold, Sanjit. So that gives you an indication. We really look at this like a tuck-in acquisition in terms of where it is. And from that standpoint, you can also just see kind of the strength overall within our guidance, and we've been transparent that, that includes the WorkFusion contribution, but it is immaterial, and we don't break it out. Sanjit Singh: And then just on the Fed piece? Ashim Gupta: Yes, sorry. On the federal government, we're actually seeing a really good traction there. I would say just like the environment, I would say the federal government is a dynamic economy. But I would say our team has done an incredible job connected at really high levels within the organization. And I'll let Daniel comment on some of his discussions and his views of it. But within certain agencies, we feel very well strong position. And then there are some agencies, of course, that are going through their changes. But overall, we're actually very bullish about the way our teams are executing and the opportunity that exists there. Daniel Dines: Yes. And we are seeing an increased appetite for more long-term projects, strategic projects, especially in the department of war. Operator: And our next question comes from the line of Michael Turrin with Wells Fargo Securities. Michael Turrin: Just to start, maybe a higher level one. You had some commentary, but just in terms of budgets and what you're seeing around categories like automation and AI, it would be great to get just a top-down view there and also how you're positioned to capture that in the market where there's just an increasing number of vendors also positioning agentic solutions, which may be newer to market, but might also insert some noise into those conversations. Daniel Dines: Look, I think we are really well positioned to help customers with the diffusions of AI within their enterprise workflows. We are -- we have -- we built Maestro, which is essentially a process orchestration technologies that -- and at its core, is a new powerful workflow engines. That's -- that gives us a very interesting advantage in the market right now. So we all know about the impact of the coding agents. I would say that this will translate for us. And I'm extremely bullish about it into a much faster adoption curve for our customers. We aim to use coding agents to enable our platform for coding agents that will accelerate dramatically the time to value for our customers. And that, of course, includes creation of AI agents, deployment of agents in the context of enterprise workflows. I would like also to stress how important is the combination between deterministic automation and agentic automation into the context of the same platform that can orchestrate both what I would say, humans, agentic, and deterministic automation. Michael Turrin: Ashim, just you gave some texture. I know the commentary and the guidance on the call was pretty similar to entering fiscal '27 as '26, but it sounded like in some of the prior answer that maybe public sector is trending a bit better. So just any more context you'd give us around how you're characterizing the current environment, the visibility you have into the model for the forward year at this point and just how you're thinking about the contribution from the AI product portfolio as that scales in fiscal '27? Ashim Gupta: Yes. I mean we really continue to characterize it as variable. And I'll double-click just again for anybody who's new in terms of what we mean by that. I think we do see pockets of strength and we see pockets of pressure or fluctuations that happen from a macroeconomic standpoint. And at the same time, those tend to move around quite a bit. Like right now, our bullishness in terms of public sector feels really good. Last time on this year, if you remember, we kind of awful -- felt a lot of uncertainty in that area. We're seeing strength in areas like financial services and health care, international markets like Australia. And then there's -- obviously, the Middle East conflict is there, so there's uncertainty there. So we really characterize it as variable. As I commented in the script, we continue to kind of maintain a very consistent guidance philosophy. We look at our pipeline. We have really deep inspection. We get a lot of signal from the field. Daniel has spent a lot of time with customers over the last 3 months, 4 months. We have -- we've been very in touch with kind of the field in terms of hearing. And then the other piece is, we obviously have a very strong now statistical and forecasting models between our finance and our ops team, and we triangulate the 3 of them. So we talked about kind of putting the appropriate prudence in the -- in for guidance, accounting for the variability in macroeconomic environment, and we've done so. And at the same time, when you look at our guidance, I do think it also reflects kind of stabilization of net new ARR and what the potential is yielding in terms of the traction our teams are making in the agentic market and how we're positioned. So that's how I would characterize our guidance. Operator: And our next question comes from the line of Kirk Materne with Evercore ISI. Chirag Ved: This is Chirag on for Kirk. You highlighted multiple industry partnerships, right, Veeva -- like with Veeva and certain vertical solutions like health care and financial crime, would you highlight health care and finance as the 2 verticals that are showing the strongest willingness to spend right now on agentic AI initiatives? Or are there others that you would flag? And when you think about agentic automation at scale, what does success look like in terms of repeatable playbook and sales cycle impact here? Daniel Dines: I think you got it very right. It's the health care. And I think we nominate it within the health care in particularly, I would say, parts of revenue cycle management, denials, prior authorization. It's a very important type of processes for us. Financial industry has been since the beginning of the company, our stronghold, and we strengthened it with the acquisition of WorkFusion with our big foray into financial crimes. And I would add also the public sector as an important vertical for us that we are eyeing. Operator: And our next question comes from the line of Terry Tillman with Truth Securities. Terrell Tillman: I have two. So first on Maestro, it is my impression, it's vendor agnostic from an agentic standpoint. Are you all seeing situations where it's involved in managing agents from system of record companies or AI-native businesses? Or is it mostly like a control plane for your own agents? And then I have a follow-up. Daniel Dines: Yes. I think Maestro, it's kind of agnostic in terms of what kind of agents it can manage. Of course, for our own agents, that are built with Agent Builder, we have very tight integrations. But we have also brought agents built with open source frameworks like the LangGraph type of agencies, first-class citizens in our platforms. And in terms of using -- utilizing agents built on system of record applications. Of course, we are -- we facilitate using them in our platform. I would not say we manage them. It's more or less like you can call an API that is provided by that platform. But I want to be specific, the all agents that are built with open source framework can be deployed and executed in the context of the security and governance that our platform provides. Terrell Tillman: Yes. That's a good clarification on the API side. Thank you, Daniel. And I guess, Ashim, the SaaS shift, that was an important call-out, 1% impact to growth as we look into FY '27. I'm also curious though, is there also starting to be this impact of timing dynamic or around consumption or scaling volumes related to the actual agentic solutions that we need to kind of appreciate that's not going to show up in revenue yet. Ashim Gupta: No. I mean, remember, we do -- we still price on kind of a bundle, meaning on a subscription, consumable-type hybrid model, meaning we sell kind of use it or lose it units that are there. So we're not on a consumption basis of accounting, so to speak. We're still on an ARR basis of accounting. So I would say there's -- it's not about any trailing or any delayed impact that you would see there. At the same time, I think our agentic solutions are scaling and our customers are adopting more and more as we talked about in the script and sales are moving very well for us. And that obviously is what's contributing a little bit to our SaaS side of it. Operator: And our next question comes from the line of Radi Sultan with UBS. Radi Sultan: Daniel, in your prepared remarks, you mentioned this growing backlog of automations you're seeing at customers. I just wanted to double click on that, like how big is that tailwind of AI unlocking more automatable workflows. And you mentioned the AI product ARRl, but just how material is that sort of pull through to the core automation business as well? I just love to get your thoughts there. Daniel Dines: Yes, that's an acute observation. Because of the huge interest in AI, it's actually driving renewed interest in automation. I think in most cases that we are seeing, people expect that the use of AI will result in some sort of automation. And it's becoming more clear that AI and Agentic AI and deterministic automation are very complementary. So basically, any AI initiatives surfaces more opportunities for deterministic automation, especially in our case for unattended deterministic automations. Radi Sultan: Got it. And then just a follow-up for Ashim. Just as you think about the ARR and revenue guide for the year and we think about sort of what the biggest drivers are, you guys really extended the product portfolio over the past 12 to 18 months. And just as we think about AI product, test cloud vertical solutions, sort of core RPA. Like how should we think about sort of what the biggest drivers are of that sort of growth next year as you kind of think about the guide? Ashim Gupta: Yes. I think if you just look at some of the metrics that we disclosed, right, 90% of our $1 million-plus customers haven't incorporated AI products, right? I think that is a great -- to me, kind of a great tell of the success of the AI products and the ability for us to expand. And we've also talked about the number of customers that still have room to adopt those AI products that are there. So from our standpoint, AI and agentic is going to lead the way. But at the same time, as Daniel talks about, they're not a separate stream. They actually are very synergistic. As people pull forward AI and agentic products from us, it actually also pulls through the rest of the platform, whether that is IDP, IXP, unattended robots, et cetera. And we see that. We are very purposeful in discussing that we are seeing growth rate within kind of the core RPA business and we look at that as very synergistic as we go forward. The other thing to highlight is we're super excited about our test automation business. And that is still in its infancy, but we really see that having good traction in the market, and that can also be -- that is also a growth driver for us as we enter this year. Operator: Our next question comes from the line of Scott Berg with Needham & Company. Scott Berg: I've got 2. Daniel, we've been doing some work with partners here. It's become very evident and clear that your partner strategy seems to be resonating really well right now across several different -- or your vertical strategy, excuse me, is working well across several verticals. But my question is, as you look into '27, are you able to lean into that strategy even more so given the success you're having there lately? Or do you feel like you're already at kind of a maximum effort. Daniel Dines: On the contrary, I think we are at the beginning of our vertical strategy. We are doubling down our focus on investments into this year. So if I can summarize our product strategy, I think there are 3 major pillars that we are seeing right now. So we focus on adopting coding agents all across our platform. So every single artifact is building on our platform will be built primarily by coding agents. Second its process orchestration that really drives everything Agentic AI and deterministic workflows. And third, it's vertical solutions. And we have seen clearly more of a move into customers that have a higher demand of kind of an outcome-based vision by use case-based type of solutions that they want to adopt. Scott Berg: Got it. Very helpful there. And then Ashim, I was hoping you can drill down in the quarter a little bit I know there's a $14 million tailwind around FX for ARR. But what was your assumption of that number going in the quarter? I get a lot of questions, to try to kind of back into the math in terms of how much incremental impact it might have been versus your expectations 90 days ago? Ashim Gupta: Yes, it was honestly right. It was just right in line with that. As I talked about, like I think the yen you could see has an inverse correlation to the euro and the net for both of those tended to be 0. We see that both as we look into the current year as we've seen FX rates move as well as the current assumption that we see there. So from both our guidance standpoint and our results, we really see an immaterial impact to that. The driver for our beat in the quarter was really just sales execution. And we're -- we feel very strong about the customer response as we've seen about the traction that we're getting within our AI products. FX did not have a material impact versus our guidance. Operator: And our next question comes from Kingsley Crane with Canaccord Genuity. William Kingsley Crane: I think the idea of AI on top of deterministic automations, is really resonating. Just on this idea of Agentic really being about pulling through to the whole platform. Just trying to get a sense of how that ends up playing out from a deal timing perspective? Like -- is the customer typically renewing at a much higher rate? Is it happening where they'll adopt AI and then through the life cycle of their contract, they'll realize that they need more automation? Just trying to get more color on that. Ashim Gupta: I think it's all of the above. Honestly, like we've seen the customers renew just at renewal, expand into AI products. We have very good examples of that, both within -- across every vertical and every geography. There's also areas that they're still working through their POCs, but it's bolstered their renewal and their confidence given our road map. And the POCs are moving well, so they would expand just a little bit as they continue to kind of dip their toe in the water. So from our standpoint, it's not one single motion. It really depends on the customer or the circumstance. But what is encouraging to us is the success that our proof of concepts the feedback that we're getting from customers that as Daniel talked about governance matters and the full extent of our platform is a difference maker for us. William Kingsley Crane: Great. And then just a quick follow-up. That #1 OSWorld ranking for Screen Agent definitely impressive, and that's still holding up. Just curious like how specifically Screen Agent is driving more automation growth within customers. And just a reminder on the unit economics that's affected by running Opus versus running high-q, things like that. Daniel Dines: Yes. I think we are still in the early innings of deployment of the screenplay agent. We are seeing really good use cases from our customers. They -- the powerful use of this screenplay agent is that it is used in the context of autonomous workflows. So basically, the best we combine like using deterministic UI automation technologies. And in the places where it's extremely difficult to define in rules how to use the screen when the screens are -- have a high degree of variability. Our customers are using the screenplay agent. So that basically extended our platform in a few use cases that we couldn't basically touch before. But again, I think it's still early to comment on how does it help with the platform adoption. Operator: And our next question comes from the line of Arsenije Matovic with Wolfe Research. Arsenije Matovic: I just kind of wanted to go back and expand kind of on the ARR guidance methodology in terms of that conservatism. Like what does that mean? And I understand we're not going to be talking about inorganic from WorkFusion, $20 million, whatever it is. Even if you strip out that number growing at the 65% rate the CEO talked about. Is there a way that it still looks a little bit less conservative in that guide? And if there is a little bit less conservative [indiscernible] dynamic where it's just, hey, larger renewal cohorts and also more confidence in that execution tailwind that you started to see exiting the year? Ashim Gupta: Yes. So one is I just want to correct, Like, I don't think we should -- the metrics that we talked about, as I said, we bring it on at a different ARR methodology. So I really want to caution everybody to use kind of those -- those assumptions. It's immaterial for a reason as we've done that test. The second piece is, while the business was growing at 65%, remember, we also have overlapping customers, et cetera. We really view this as a technology tuck-in that can drive utilization and stickiness across our Agentic and AI platform. And of course, we do see potential there for the upsell, but we also have to go through an integration period with the company. And that is all baked into our guidance from that standpoint. We look at it as our core business continues to be very strong, and we are stabilizing net new ARR. And with AI and Agentic, we do feel bullishness about the overall business. But given the macroeconomic environment continuing to be variable, we do layer the appropriate prudence that is there. Arsenije Matovic: Got it. And then just in response to an earlier question, I didn't really kind of get the in line with the constant currency guide. Can we just clarify what was the constant currency ARR growth rate implied in the guide for revenue and for ARR growth because the communications throughout the year on tailwinds and incremental headwinds has kind of laid up a weird kind of analysis to figure out what the actual core constant currency growth was? Ashim Gupta: Yes. From our standpoint, we gave the $14 million, which we assumed -- which we -- for the guidance that was there, but the growth rate remains 11% for us. It is largely a material year-over-year. Operator: And our next question comes from the line of Siti Panigrahi with Mizuho Securities. Phil Winslow: This is Phil on for Siti. So you guys raised the long-term non-GAAP operating margin target to 30%, which is a meaningful step up. Can you walk us through what gives you confidence in that number? And what is the time frame of achieving that target? Ashim Gupta: Yes. So right now, we're in and around 23% north of that. We've shown really good progress and scalability over the last couple of years, in particular. The first thing is we just continue to operate with really good discipline. And so we constantly are moving investments to higher return areas. And so when you're able to do that, it obviously creates a scalability of expansion. The second is we believe in the productivity that is being unlocked right now with agentic and that agentification within our own business is something that is very exciting for us and our teams to unlock further steps of productivity. And that includes all areas within the company. We can be more productive, expand and support our broader road map, really with similar technology spend just because of the advances that are there or R&D spend. The same goes with our G&A function as well as our sales and marketing function. So we're really seeing that scalability just even with the technology advances as well. In terms of time frame, it's a long-term margin target. We -- as it implies, that's kind of within a 3-year time frame from our standpoint in and around it. And at the same time, like we don't take -- we're not waiting for 3 years. We're going to continue to execute and drive productivity as we see fit. Operator: And our next question comes from the line of Koji Ikeda with Bank of America. Koji Ikeda: I'm going to ask one on dollar-based net revenue retention. So it's down 1 point to 106% when adjusting for FX. And so looking into fiscal '27, what are the main drivers we should be thinking about, whether that's product, geography, vertical or maybe something else in there that can drive expansion in that metric? And how should we be thinking about the dollar-based net revenue retention assumptions that are embedded in the guide? Is that flat, up or down from the 106%? Ashim Gupta: Yes. I think when you look at overall net new ARR stabilizing, like we don't really see a difference in the mix shift between net new logos as well as expansion. We see them both as areas that will continue. We've kind of operated in this 80-20, 70-30 split. So that gives you, I think, enough data to be able to see that net new ARR stabilizes over this period of time from where we are. In terms of what gives us confidence or kind of how we see that expansion, again, as we spoke about earlier, it is really around our AI and Agentic products. And then with that, really pulling through the overall platform, including deterministic automation, continuing to expand across our customer base. Operator: Our next question comes from the line of James Kisner with Water Tower Research. James Kisner: I guess first, just -- from the foundational model perspective, I mean has the Anthropic supply chain risk designation, have you seen any kind of ripples from that at all? Is there any kind of exposure at all any change in behaviors out there? And then just on the WorkFusion acquisition, does that portend potentially future acquisitions and other verticals for agentic capabilities? Daniel Dines: Yes. In relation to Anthropic, our strategy was from the beginning to be model agnostic. And we -- 1 of the features that many of our customers have requested this to give them the capabilities of choosing what model and even bring their own model to be used by our platform. So we do offer Anthropic models but they are optional and not mandatory. And from this perspective, there is zero impact on our working relationship with public agencies in the U.S. About WorkFusion, Yes, it's -- we are always looking into the market, especially for tuck-in acquisition that gives us the talent, technology, and expertise in a particular vertical. Operator: And with that, ladies and gentlemen, that does conclude the question-and-answer session. I would now like to turn the floor back to management for any closing remarks. Daniel Dines: Well, thank you so much for listening to this call. And once again, I would like to apologize for the outage that we experienced, and I'm looking forward to meeting many of you in the coming days. Thank you. Operator: Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may now disconnect at this time, and have a wonderful rest of your day.
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