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Operator: Ladies and gentlemen, welcome to the Aareal Bank AG Full Year 2025 Investor and Analyst Conference. I'm [ Moritz, ] the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jurgen Junginger, Head of Debt IR. Please go ahead, sir. Jürgen Junginger: Agenda covers our results for 2025, our outlook for '26 and an update on our strategic plan, Aareal Ambition. I'm joined today by our Management Board, our CEO, Christian Ricken; Nina Babic, our CRO; CFO, Andrew Halford; and Chief Market Officer, Christof Winkelmann. Christian and Andy will take you through our presentation, which will be followed by a question-and-answer session. Now I'm pleased to hand over to Christian. Christian, the floor is yours. Christian Ricken: Yes. Thank you very much, Jurgen. Good morning to everyone, and thank you very much for attending today's call. Before turning to today's presentation, I would like to refer briefly to the recent events in the Middle East. There is no doubt that geopolitical uncertainties have increased, tensions have escalated, there is heightened caution across most business areas. We are aware of that. As a result, investment activity in many sectors may slow or become less predictable for some time. So far, Aareal has not been directly affected by the events of the last week nor more broadly by geopolitical events over the last year. However, we are, of course, monitoring the situation very closely. Now let me turn to our results for 2025 and our outlook for 2026. And I will also provide you an update on our strategic plan, Aareal Ambition. Starting with Slide 3. First, our results for 2025. And as you can imagine, this slide, this chart has become my actual favorite chart because it's a very well reflection of the delivery of the bank. We target an adjusted profit for the year of over EUR 375 million, which we comfortably achieved. On the basis of this good result, the management took action incurring an additional charge of EUR 55 million to support the repositioning of our U.S. business. The adjusted operating profit after the additional EUR 55 million charge was EUR 326 million, which is very similar to the equivalent profit in 2024. Turning to our 2 business segments, both achieved strong results for 2025. Banking & Digital Solutions made a significant contribution to group profits and Q4 average deposits, including retail rose to EUR 17.8 billion. New business in Structured Property Financing reached EUR 12.4 billion for the year, which was a record result. Much of this volume came from Europe, and I will say more about our regional approach later. By the end of 2025, we had reduced nonperforming loans to EUR 1.1 billion. We are planning to bring this balance below EUR 1 billion in the current year, and we are confident we can achieve this in the first half of the year. Our capital ratio continues to be solid with our CET1 fully-phased ratio at 15.5% at the end of 2025. At this conference last year, we introduced our new strategic plan, Aareal Ambition, and I'm pleased to report that we are well on track. As a result, we are well placed to reach our target of around 13% adjusted post-tax return on equity in 2027 still. Our increased focus on Banking & Digital Solutions and our repositioning in the U.S. in Structured Property Financing underpin this progress. I will further -- I will provide further comments on our Aareal Ambition plan later in this presentation. Before moving into the details of our results, I wanted to illustrate the importance of both of our business segments to the overall results. I'm on Slide 4 now. As you can see, Banking & Digital Solutions has contributed significantly to the group's operating profit in each of the last 3 years since the return of, as I would call it, normal interest rates. BDS deposits, including retail rose to an average of EUR 17.8 billion in the fourth quarter of 2025. The business has around 4,300 clients and currently executes payments transactions amounting to EUR 167 billion every year. I would like to thank the staff in this business for their efforts in 2025 and their continued commitment. In Structured Property Financing, the loan volume is over EUR 34 billion, spread across over more than 20 countries and 5 property types. I also would like to thank the staff in this business for their diligence and care as we have grown by taking a conservative approach to risk. I will now hand over to Andy, who will provide further details on our results for 2025. Andy, over to you. Andrew Halford: Thank you very much, Christian, and good morning to everybody. So Slide 6, let me just pick up some of the high-level numbers. So net interest income was down 12% to EUR 934 million, which was mainly the expected impact of lower interest rates. Loan impairment charges are down by 19% to EUR 322 million. As Christian just mentioned, this includes the additional charge of EUR 55 million to support the repositioning of the U.S. business, which includes a faster reduction in U.S. office loans. The efficiency measures that we put in place led to a reduction of 8% in adjusted administrative expenses, which fell to EUR 317 million. The cost-income ratio for 2025 was, therefore, 33%. The other components line includes a EUR 20 million positive one-off, which arose in the second quarter from the successful restructuring of a former legacy nonperforming loan. Overall, adjusted operating profit was EUR 381 million, excluding the additional EUR 55 million charge and EUR 326 million, including the charge. Nonrecurring items amounted to EUR 30 million compared to EUR 34 million the previous year and related to efficiency measures, IT infrastructure investments and other material nonrecurring items. The effective tax rate for the year was higher at 40%, which includes charges arising from the repositioning of the U.S. business. AT1 costs are up by EUR 8 million compared to 2024. This is because our new AT1 issue overlapped with the previous AT1 for about 3 months. Taken together, the adjusted post-tax return on equity was 7.5%, excluding the additional loan impairment and tax charges arising from the actions taken to support the repositioning of the U.S. business. Our solid CET1 ratio fully-phased increased to 15.5% at the end of the year compared to 15.2% at the end of the previous year. Now let's move to Slide 8 and the key profit and loss account items for Banking & Digital Solutions. As Christian has highlighted, BDS continues to make a significant contribution to the bank's overall profitability. In 2025, BDS contributed an adjusted operating profit of EUR 152 million, which is down by 7% compared to the previous year, but this is more than accounted for by the decrease in net interest income, which is down 9% to EUR 246 million. The impact of lower rates is fully in line with our expectations. However, it was offset in part by the strong growth in the housing industry deposits. In BDS, the customer base and share of wallet is constantly growing. Admin expenses are down by 4%, benefiting from tight control of costs and nonrecurring items reflects the investment in digitization that we are making to provide a seamless customer journey. On Slide 9, we look further into Banking & Digital Solutions' net interest income and admin expenses. Net interest income, although down compared with 2024, was above expectations. As I just explained, the impact of lower interest rates was as expected, but was partially offset by the growth in deposits. This growth was continuous during 2025, and therefore, net interest income increased throughout the year. I'll come back to deposits on the next slide. Admin expenses were tightly controlled with strict cost discipline maintained. Turning to Slide 10, which focuses on deposits. Our strong deposit franchise continues to reduce our dependence on the capital markets. As I've mentioned, deposits grew throughout the year. Housing industry and retail deposits in total rose to an average of EUR 17.8 billion in the fourth quarter of 2025. This is an increase of 4% since the fourth quarter of 2024 and an increase of 7% since the first quarter of 2025. Retail deposits have structurally improved and now have an average initial lifetime of around 4 years. The steady increase in housing industry deposits in 2025 reflects our successful sales efforts. These deposit volumes have gradually increased in recent years and reached an average of EUR 14.7 billion in the fourth quarter of 2025. Rental guarantee deposits and maintenance reserves have grown continuously. Sight and term deposits are largely stable. When interest rates returned in 2022, there was a shift from sight to term deposits as depositors sought to capture income. This transaction -- transition has now ceased and today's sight deposits only reflect clients' operating cash and therefore, are expected to be very sticky. Now let's turn to Structured Property Financing and to Slide 11. Net interest income is down 13%, reflecting the impact of lower interest rates and is in line with expectations. Loan impairment charges are significantly down, including the additional charges, admin costs are down benefiting from the efficiency measures that we have introduced. Overall, SPF contributed EUR 174 million to the group's adjusted operating profit. As noted earlier, the other components line includes the positive one-off effects of the restructuring of the former legacy nonperforming loan and the tax charge includes charges arising from the repositioning of the U.S. business. Turning to Slide 12. Let's look further at net interest income from SPF. As I've just said, net interest income was in line with expectations. The result was impacted by lower interest rates. For example, the euro short-term rate decreased from 3.8% at the end of 2024 to 2.3% at the end of 2025, a significant reduction. Net interest income was also affected by proactive strengthening of our subordinated funding and by the weakness of the U.S. dollar. Those factors were partially offset by the growth of our loan book. Turning to Slide 13 and to SPF's admin and loan impairment charges. The efficiency measures adopted across the group are also reflected in the admin expenses of this business segment, which are down 9% to EUR 222 million in 2025. Including the additional EUR 55 million charge, loan impairment charges are significantly down by 19% compared to 2024. Excluding this charge, the decrease would be 33%. Loan impairment charges are heavily biased towards the U.S. and U.S. office loans in particular. Risk costs for the rest of the business are at or below normal levels. At this point in the cycle, we are, therefore, freeing up capacity primarily from U.S. office to redeploy it into the European markets where the returns are presently very strong. I'd now like to hand back to Christian, who will talk about business developments in more detail. Christian Ricken: Thank you, Andy. Now let's turn to Structured Property Financing's new business on Slide 14. We achieved record new business, as I already said, of EUR 12.4 billion in 2025, which was well ahead of our target of EUR 9 billion to EUR 10 billion for the year. Newly acquired business amounted to EUR 8.1 billion, which was up EUR 1.8 billion compared to 2024. The average loan-to-value ratio for newly acquired business was still a conservative 57%, which provides a comfortable risk profile. Gross margins were also good, averaging 234 basis points. Renewals were around similar levels to the previous year. Those figures continue to demonstrate that we are actively identifying attractive market opportunities. Sustainability has been and continues to be an integral part of lending decisions. In 2025, we again supported the green transformation of commercial properties with EUR 5.1 billion of green loans included in our new business numbers. Looking at the geographical distribution of new business, 78% was in Europe, 15% in the U.S., 4% in Canada and 3% was in the Asia Pacific region. As planned, we have increased our focus on Europe and reduced activity in the U.S., concentrating on premium assets and long-standing trusted partners. Our strategy on asset classes has also evolved. Hotel finance continues to be our largest area of new business. However, we are currently taking a more selective approach to new office financing while maintaining our increasing conservative financing of Logistics and Residential, especially Alternative Living properties. Let's now turn to the next slide, which shows our current portfolio. We are at Slide 15. The portfolio totaled EUR 34.3 billion at the end of 2025. This is within the targeted range of EUR 34 billion to EUR 35 billion. As you can see from the 2 pie charts at the bottom of the slide, we are still highly diversified, both by region and property type. We continue to have a clear focus on properties in the major metropolitan areas. We are not financing new construction. Have exposure of only 10% in Germany and no exposure at all to Russia, China or the Middle East. In the U.S., we are focusing on our core strengths. For example, hospitality-related asset classes. We have significantly reduced the U.S. office portfolio, which is down by 1/3 compared to the balance at the end of 2024 and want to reduce this portfolio further. Green loans stood at EUR 11.3 billion at the end of 2025, representing around 1/3 of our total loan book. These loans include the financing of refurbishments as we continue to support commercial properties green transition. Turning to Slide 16 and to nonperforming loans. We are continuing a very active management of nonperforming loans and the balance stood at EUR 1.1 billion at the end of 2025. This is down by 29% compared to the balance at the end of 2023. U.S. office nonperforming loans are down by around 40% over the same period. The Stage 2 coverage ratio stood at 3.1% with the ratio -- sorry, with the Stage 3 ratio at 29% at the end of 2025. The nonperforming loan ratio stood at 3.2%. The U.S. office market remains challenging and U.S. office loans continue to represent over half of total nonperforming loans. More than 25% of the U.S. office loans is nonperforming compared to less than 2% for all other categories. Business outside the U.S. is performing significantly below our long-run average cost of risk. As we have explained, management has taken action to support the repositioning of U.S. loans. We are, therefore, confident that we can reduce total nonperforming loan balance below EUR 1 billion during the first half of 2026 already. Now let me hand over back to Andy for an update on our funding, liquidity and capital positions. Andrew Halford: Thank you, Christian. So on to funding, liquidity and capital. Slide 18 shows our broadly diversified funding mix, solid liquidity ratios and capital markets activity. Following a very active year, liability terms have been successfully extended. Deposits represent around 45% of our total funding volume. The largest part comes from the housing industry with an additional EUR 3 billion from retail deposits. As I mentioned earlier, these retail deposits now have an average initial lifetime of around 4 years. Our liquidity ratios are solid with a net stable funding ratio at 113% at the end of the year and the average liquidity coverage ratio at 209% for the fourth quarter. We're pleased to report that during the year, Fitch revised Aareal Bank's outlook to positive from stable and confirmed its senior preferred rating at BBB+. We demonstrated our full access to the capital markets during 2025. We increased our AT1 capacity by approximately EUR 100 million by replacing the former outstanding EUR 300 million issue with a new issue of USD 425 million, and we issued EUR 100 million of Tier 2 capital. In addition, we completed 3 benchmark Pfandbriefe transactions totaling EUR 2 billion and private placements totaling SEK 1.85 billion. Those were Aareal's first Swedish currency issues since 2006. We also completed our first Significant Risk Transfer or SRT transaction in the fourth quarter. Investors assumed a portion of the credit risk attached to a EUR 2 billion portfolio of European commercial real estate loans in return for a risk premium. This transaction strengthened our capital efficiency. Next, let's look at the Treasury portfolio, which is shown on Slide 19. The Treasury portfolio stood at EUR 9 billion at the end of 2025, up from EUR 8.2 billion the year previous. In terms of asset classes, the portfolio comprises public sector borrowers and covered bonds. It, therefore, has a strong liquidity profile. High credit quality requirements are reflected in the ratings breakdown. 100% of the portfolio has an investment-grade rating with 87% having a rating of AA or higher. Asset-swap purchases ensure that there is low-interest rate risk exposure. The portfolio is almost exclusively in euros and has a well-balanced maturity profile. Turning now to capital on Slide 20. Our ratios continue to be solid. Our CET1 ratio was up from 15.2% a year ago to 15.5% at the end of 2025 on the Basel IV fully-phased basis. Growth in the loan portfolio increased risk-weighted assets but was overcompensated by the reduction in risk-weighted assets that came from our first SRT transaction that I just referred to. This transaction had a total positive CET1 effect of around 0.5 percentage points. Both the Tier 1 ratio of 17.6% and the total capital ratio of 21.1% were further strengthened by the additions to our AT1 and Tier 2 capital during the year. Our leverage ratio at 7.2% at the end of the year is well above regulatory requirements. Now I'll hand back to Christian, who will cover our outlook for 2026 and provide an update on our strategic plan Aareal Ambition. Christian Ricken: Yes. Thank you, Andy. I'm turning now to the outlook on Slide 22. Macroeconomic and geopolitical uncertainty factors are, of course, difficult to predict, and we are monitoring developments closely. However, let me repeat that so far, we have not been affected by current geopolitical events. We are successfully reducing our exposure to U.S. offices. And more broadly, we see a slight improvement in sentiment towards the entire commercial property sector. As a result, Aareal has moved forward into 2026 with confidence. For 2026, we are targeting an adjusted operating profit approaching EUR 400 million. This level of adjusted operating profit would result in an increased adjusted post-tax ROE approaching 8%. In the Banking & Digital Solutions business segment, we expect total deposits to increase further to an annual average of around EUR 17.5 billion. In Structured Property Financing, we aim to keep the credit portfolio at around EUR 34 billion and reduce nonperforming loans below EUR 1 billion in the first half of 2026. Now moving on to Slide 24. I will provide an update on our strategic plan, the Aareal Ambition. We launched Aareal Ambition very successfully in 2025. Let me briefly remind you of the targets we showed you last year. We have 4 strategic targets. They are, first, to strengthen our core businesses; second, to expand our activities; third, to enhance efficiency; and fourth, to maintain a disciplined approach. We are applying these targets across the group. This means that we are continuing to grow our Structured Property Financing activities selectively. In Banking & Digital Solutions, we are targeting growth from existing housing market clients and by further -- by moving further to adjacent markets, for example, the Netherlands. We are also optimizing the scalability of our infrastructure. And on the risk, capital and funding side, we are maintaining discipline over our capital and liquidity ratios. So let's now look at each of these objectives in a little bit more detail. Moving on to Slide 25. The group is now positioned with 2 growth engines within one bank, and this is how we will move forward. In Structured Property Financing, we are sharpening our focus and emphasizing our key areas of competitive strength. This means that we are mainly concentrating on Europe and on hospitality-related asset types. In the U.S., we are actively adjusting the mix and size of our business. In Banking & Digital Solutions, we are accelerating growth. We are targeting an increase in deposit volumes by both nationally and internationally and introducing lending to the housing industry or I would better say, reintroducing lending to the housing industry. In addition, we are building an integrated deposit management platform to serve both our corporate and retail clients. On the risk funding -- sorry, risk, capital and fundings, our objective is strong capital generation and continuation of our solid capital ratios. We also intend to further reduce nonperforming assets. Our infrastructure objectives center on AI and cloud-led technology to create a resilient, efficient and modern platform for the group. In parallel, we will continue to execute our cost efficiency program. Turning to Slide 26 on Structured Property Financing. As I have said, we will grow our areas of competitive strength. And as always, we will continue to adopt a conservative approach to risk while seeking attractive returns. There will be greater emphasis on Europe and greater focus globally on hospitality-related asset types. In the U.S., business will continue to reduce office loans. As a result of these actions, we expect loan volumes to remain stable at around EUR 34 billion. We are also continuously leveraging and broadening our off-balance sheet financing business. We expect to continue to have a portfolio of around EUR 7 billion in these capital-light activities. Moving on to Slide 27 and to Banking & Digital Solutions. We are accelerating deposit growth and expanding our product range. We are currently focused on housing industry customers in Germany. Our first objective is to add new customers, new markets and new channels. We plan to add new groups, for example, small property managers. We plan to add new markets, for example, the Netherlands, France and Spain. And we plan to add a new channel for retail deposits, we plan to have our own platform in addition to the existing option of platforms like Raisin. We also aim to add new ERP partners. Our second objective is to expand beyond the housing industry and into other B2B segments and to do so in Germany and internationally. And thirdly, we are introducing lending services to the housing industry where we have a strong relationship, knowledge and expertise. To support these initiatives, we will continue to invest in digitized end-to-end bank processes and digital product offerings. As a result of these initiatives, we are now targeting combined housing industry and retail deposit volume of more than EUR 18 billion in 2027 compared to an annual average of around EUR 17 billion in 2025. We will also be targeting lending to the housing industry of around EUR 1 billion by 2027. Next, risk, funding and capital on Slide 28. Here, we continue to have 2 major KPIs. We are targeting a Basel IV CET1 fully-phased ratio of at least 13.5%, unchanged on the objective, which we introduced last year. Secondly, we aim to reduce nonperforming loans as a percentage of the loan portfolio to under 3%. To achieve this, we will continue with strong capital generation supported by capital management. We will also continue to optimize funding sources and the risk return from our treasury portfolio. We will, of course, maintain Aareal's conservative approach to risk, proactive credit risk management and our solid balance sheet. Turning now to Slide 29 and to infrastructure. Our objective is an AI and cloud-led transformation along with continued execution of our efficiency program. We aim to create a state-of-the-art platform to support the group's business in the future. As I said, our objective is a modern, resilient and efficient platform. We are also actively driving a technology and efficiency mindset across the bank while streamlining operations and digitizing processes as part of our efficiency program. Our new infrastructure-related KPIs are to achieve gross savings of an additional EUR 40 million in total and a cost-to-income ratio of around 30% by 2027. Moving on to Slide 30. We confirm our 2027 target for the adjusted post-tax return on equity at around 13%. As we have shown on earlier slides, management took action incurring an additional charge of EUR 55 million to support the repositioning of our U.S. business. Excluding the additional charge and the tax impact of repositioning in the U.S., the 2025 adjusted post-tax return on equity was 7.5%. Looking to the future, 2 main factors are expected to drive the increase in return. Firstly, an improved risk profile will reduce our cost of risk on an ongoing basis. And secondly, as I have just described, we are accelerating growth in Banking & Digital Solutions, assuming a normalized CET1 ratio of 13.5%, which takes us to the targeted adjusted post-tax return on equity of around 13%. Turning to Slide 31. Let me highlight our ambitious 2027 targets. As I have just demonstrated, we aim for an adjusted post-tax return on equity of around 13%, a CET1 fully-phased ratio of at least 13.5%, a cost/income ratio of around 30% and an NPL ratio of around 3%, a lot of 3s, but these are our targets. And we continue to be on track to meet those. Now moving to our closing slide, I want to round up with a few key takeaways. Both our business segments achieved a strong operating performance in 2025. We have significantly reduced loan impairment charges and costs. Management was able to take action to support the repositioning of our U.S. business. We have successfully launched our strategic plan Aareal Ambition, and we are well on track. We are sharpening our focus in both businesses. And we are confirming our adjusted post-tax return on equity target of around 13% in 2027. Andy, I and the team will now be pleased to take your questions. Operator: [Operator Instructions] And the first question comes from Corinne Cunningham from Autonomous. Corinne Cunningham: Three from me, please. First one, if you can give us a bit more background on what's happening with margin development. You've told us what's happening for new, and you said renewals. I think you said renewals were flat margins. So maybe just a bit more color on what's happening there and guidance on NII going forward. And on the SRT, can you explain the interaction between what's going on in the background in capital? You had a positive impact from the SRT, but your capital ratio was flat. Obviously, you made a loss, but any other moving parts in there with RWAs, please? And then last point, if you can give us a bit more background specifically on what the EUR 55 million, and you call it repositioning of the U.S. portfolio. But does that basically just mean additional provisioning to make assets easier to sell? If you could explain what that means in more detail, please? Christian Ricken: Okay. Thank you very much. So yes, I would like to allocate the question to my dear colleagues. So Christof will take the first one from the market's perspective; Andy, you would talk to the SRT and Nina, you cover the EUR 55 million. Christof Winkelmann: Yes. So also good morning from my side to everybody. To the question as to how the spread is between new versus existing business or prolongations, they are plus/minus within the average number that we've given you. We don't really publish the individual numbers, but you can take plus/minus 10 basis points from the published figure is where the range is for prolongations and new business for us. Andrew Halford: Let me just pick up on the CET1, the SRT question. So simple math, 15.2% a year ago, the SRT gave us about 0.5 percentage point benefit, 15.7%, and we ended the year at 15.5%. So 0.2% reduction from sort of trading, if you like. That is just primarily the impact of the slightly bigger loan book that we had over the year and hence the slightly higher RWAs. So that's the pretty simple composition of the movements of that number. Corinne Cunningham: Sorry. I was just going to ask Q-on-Q, I was looking more Q-on-Q. And is that literally the same, so higher loan book? Or were there other things specifically in Q4? Andrew Halford: No, it is exactly the same. There is nothing abnormal. Nina Babic: Cunningham, I will take the question on the EUR 55 million, the management action, which we have taken. So what is behind that? So in the end, it's a support for us going forward. So it's nothing on the year 2025. It's as an overlay booked for us, giving us a support on the U.S. repositioning going forward. It's not allocated on any kind of nonperforming loans, but gives us also leeway going forward to stay cautious and to follow up on our very cautious and conservative approach with regard especially to the U.S., as you have seen also on the NPL book, the main part of it is allocated on U.S. office. So that's why we want to stay active here and progress on the targets I've just described. Operator: Ladies and gentlemen, this was already the last question. So I would now like to turn the conference back over to Jurgen Junginger for any closing remarks. Jürgen Junginger: Thank you for joining us this morning. But as always, the IR team is happy to take follow-up calls if you have further questions. So have a good day, and thank you again for listening. Thanks. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Hello, and welcome to the Rentokil Full Year Results 2025. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Andy Ransom, Chief Executive, to begin. Please go ahead when you're ready. Andrew Ransom: Good morning, everyone, and welcome to our full year results presentation for 2025. After my opening remarks, Paul will provide a review of our financial performance. I will then focus on the execution of our plan in North America as well as providing a brief update on our International region, our categories and our adoption of AI. We'll then open the floor for your questions. And as usual, details of how to ask a question can be found on the web portal. 2025 has been a year of encouraging progress with group revenues increasing by 3.8% and with organic revenue growth of 2.6%. Our H2 performance was particularly encouraging with group revenues increasing by 4.5% and with organic revenue growth being 3.5%. My main focus for today, however, will be on North America, looking at our performance in 2025 and how we're building on that platform in 2026. This time last year, we set out our plan for growth in North America, and it has been a year of encouraging progress with our performance, particularly in the second half, improving significantly. Whilst we're not there yet where we want to be, organic growth reached 2.6% in the fourth quarter. This was underpinned by strong execution, rolling out our new marketing plan, investing in our regional brands, opening 150 small local branches through our satellite program and delivering $25 million of in-year cost savings through our efficiency program. Our International business also saw improving organic revenue growth of 3.4% in the second half. This combination of improved growth and cost efficiencies delivered adjusted operating profit growth of 5.4% and positions us well to deliver our plans for 20% net operating margins in North America next year. Now looking to 2026, we have clear plans in place to build on the progress made last year. Our focus continues to be on growth, where we plan to expand our multi-brand strategy, deploying around 30 regional and local brands instead of the 9 we had previously indicated, and we'll continue to increase our local presence, taking our network of small local branches to around 220. As I'll explain in a little more detail later on, the team in North America has also used the pause in integration to develop a simpler plan for the creation of a single unified field operation. On systems, we've developed a new branch data portal, meaning we can maintain our existing systems for longer. And on pay plans, we're taking a more simplified approach to harmonizing pay policy where, in essence, service colleagues joining us next year will join our new plan, whereas existing colleagues will be given the choice of the new plan or to be grandfathered in their existing plan. So this combination of maintaining more brands and their branches, continuing to use our existing branch systems, whilst also simplifying the pay plan process means less change at the front line and more focus on the customer and indeed on growth. Fueling this growth and supporting our 2027 financial targets is our efficiency program, and Paul will now take you through this in more detail along with the rest of the financials. Paul Edgecliffe-Johnson: Thank you, Andy, and good morning, everyone. I will now walk you through our key financial highlights for 2025 and look at our regional performance in more detail before closing on cash flow and capital allocation. As a reminder, unless I state otherwise, all numbers are on a continuing operations basis following the sale of our France Workwear business, and any comparative performance is on a constant currency basis. Revenue was up 3.8% to $6.9 billion with organic revenue growth of 2.6%. Adjusted operating profit increased by 5.4% to just over $1 billion. This resulted in a group adjusted operating profit margin of 15.5%, a 30 basis point increase year-on-year. After an adjusted interest charge of $204 million, up $29 million due to the cost of additional bond debt issued in the year and an adjusted effective tax rate of 25.3%, adjusted basic EPS increased 2.4% to $0.2591. I have spoken previously about our focus on maximizing cash, and I'm particularly pleased with our free cash flow performance with 24.5% growth to $615 million and free cash flow conversion of 98%. This reflects disciplined working capital management and also some one-off benefits, including real estate sales. With the growth in profits and free cash flow and the proceeds from the sale of France Workwear, partly offset by an adverse foreign exchange impact of $181 million on year-end net debt, our leverage ratio improved to 2.6x, down from 2.9x a year ago and close to our target range of 2 to 2.5x. Reflecting this performance, the Board is recommending a full year dividend of $0.1239 per share, an increase of 3%, in line with our progressive dividend policy. Turning to North America. Revenue grew 3.2% to $4.3 billion with organic growth of 2.3%. Pest Control Services was up 1.1%, while Business Services grew 8.9%. I'll come back to talk about these performances in more detail shortly. Adjusted operating profit for the region was $749 million, up 5.1%, bringing our adjusted operating profit margin to 17.4%. This improvement reflects the early benefits of our cost efficiency program, which delivered $25 million of savings in the year. Operationally, we are seeing our strategic initiatives strengthen key KPIs with colleague retention up 2.8 percentage points to 82.2% and customer retention increasing to 80.5%. We also completed 12 bolt-on acquisitions in the region with combined revenues of approximately $27 million in the year prior to purchase. Looking at our performance in North America in more detail. Fourth quarter organic revenue growth in Pest Control Services improved to 2.6% from 1.8% in the third quarter and 0.1% in the first half. This sequential improvement demonstrates the results we're seeing from the strategic initiatives we put in place at the start of this year. Lead flow, a key metric to indicate future growth in our contract portfolio, grew over 7% across the second half of the year, driven by our revised sales and marketing strategy. This has included a shift towards a more targeted digital marketing approach with a bigger focus on driving organic leads and also increased investment in our regional brands to boost lead generation and brand awareness. The ongoing rollout of smaller local branches through the satellite program to bolster customer proximity and local presence is proving successful with branches with one of these localized hubs attached to it, generating more than double the lead flow of those without. We've also improved our execution by moving sales accountability directly back into the branches. In addition to winning new customers, we have retained more through a relentless focus on customer service, and we've been able to sustain strong pricing discipline through the year. Andy will talk more about these initiatives shortly and how we will continue to build into 2026. Turning to Business Services. We were pleased with fourth quarter organic growth of 7.8% against a strong prior year comparative, which included $6 million of emergency vector control revenue, which did not repeat in 2025. Across the year, Business Services organic revenue growth of almost 9% was supported by double-digit growth in both our distribution business and our brand standards business, with the latter benefiting from significant new business wins. Throughout the year, we have been executing against our plans to simplify the North American business, improving the efficiency of our cost base and creating fuel for growth. We are increasing discipline in our day-to-day operations with improvements in organizational design and simplification of processes. The streamlining of operations led to headcount reductions of over 500 roles by the end of 2025. We are also reducing cost in the business through outsourcing and moving non-core functions to lower-cost locations. This has allowed us to scale our back office operations more effectively while reducing our fixed cost base. To date, around 430 roles have successfully been offshored. We're using technology to automate manual processes and improve our overall efficiency while better leveraging the benefits of our purchasing scale through managing our third-party spend and consolidating spend with suppliers. As well as reducing costs, we continue to drive improvements in how we invest our sales and marketing spend to optimize ROI and have reallocated some $20 million of marketing spend away from suboptimal paid lead activity to higher efficiency channels and campaigns. We rapidly mobilized to deliver $25 million of savings in 2025, targeting the cost areas that were easiest to impact quickly. There remains very significant opportunities for us to create efficiency in our cost base. As we drive up efficiency in the business, we are also investing back in a targeted way to drive organic growth. In 2025, this has included incremental marketing investment and strategic initiatives such as the rollout of smaller local branches and enhancing our capabilities in areas from pricing to data insight. This is helping us to identify the levers to elevate performance and amplify the benefits of our strategic initiatives. Improving our data has been and will continue to be fundamental to our ability to optimize our marketing budgets to maximize our reach into available customer demand. We have already delivered a double-digit reduction in our cost per lead, and there is more to do. Balancing driving cost out with funding investments behind sustainable improvements in organic growth has been key to improving both top line growth and profit margin, and we will continue to balance this carefully as we progress towards our North America margin target of over 20% in 2027. Moving to our International business, which encompasses all regions outside North America. Revenue grew 4.8% to $2.6 billion with organic revenue up 3%. Organic revenue growth improved in the second half, up 3.4% compared to 2.6% in the first half. We saw our strongest performance in Europe, driven by healthy demand and solid pricing in Southern Europe, while growth in Asia was supported by the fast-growing economies of India and Indonesia. Adjusted operating profit increased 5.7% to $518 million, with margins increasing 20 basis points to 19.8%. The U.K. and Sub-Sahara Africa delivered double-digit growth, reflecting a strong revenue performance. Asia and MENAT also displayed margin resilience despite a backdrop of high wage inflation. Customer retention remained strong at 85.7%, and excellent colleague retention was seen throughout the year at 90.3%. We also completed 24 acquisitions in the region with combined annualized revenues of approximately $36 million. Turning now to central costs, which in the year were $191 million, up almost 7% and up 9% at actual rates with some 85% of our central costs in sterling. In addition to underlying inflation, this growth represents multiyear ongoing investments in proprietary technology, digital applications and AI capabilities to support colleague efficiency, customer satisfaction and to generate revenue. In 2026, we expect continued above inflation rates of growth in addition to an FX headwind. One-off and adjusting items, excluding termites, were $92 million in 2025, primarily incurred in North America as part of the overall cost efficiency program. Looking forward to 2026, we are expecting a similar level of spend. Moving now to the termite provision, which, across the year, we have increased by $201 million with an additional $122 million in the second half after the $79 million in half 1. The trends that we saw in the first half of the year have continued. These included an increase in the number of complex residential and commercial litigation claims compared to 2024, albeit at a lower level than at the time of acquisition. More detail on this is included in a slide in the appendix, and a continued increase in cost per claim as our proactive strategy to solve customer problems and reduce litigation continues. In addition, during the second half, we have resolved numerous large commercial legacy claims at a cost ahead of the historic average and increased the long-term inflation assumption in our provision model from 2% to 3.2% as a result of persistently high inflation in legal defense, housing and building materials costs. The cash cost of settling claims in 2025 was $95 million, and we expect a similar level of cash payments in 2026. Turning now to cash flow. We generated free cash flow from continuing operations of $615 million, representing an adjusted free cash flow conversion of 98%. This was ahead of our guidance of 80% and a further improvement from the half year. We reduced the working capital outflow by $67 million to an outflow of $59 million through our disciplined focus on debtor management and supplier harmonization, moving to more consistent credit terms across our supplier base. Although some of this improvement was one-off in nature, the underlying discipline remains, and we are focused on continuing to improve in this important area. Our overall free cash flow conversion also benefited from $20 million of real estate sales. Our gross CapEx of $196 million was in line with guidance, and we would expect a similar level of spend in 2026. Cash interest increased by $41 million to $222 million following our refinancing activities earlier in the year. Cash tax was $7 million lower at $100 million, mainly due to legislative changes in the U.S. Looking ahead, we continue to target a free cash flow conversion above 80%. Our strong operational cash generation, combined with strategic divestments, has allowed us to make progress in strengthening the balance sheet. Net debt at the end of the year was $3.65 billion compared to $4 billion at the start of the period. The key cash inflows in the year were $636 million of free cash flow and $391 million in net proceeds from the sale of our France Workwear business, which completed on the 30th of September 2025. Beyond the immediate cash influx, this disposal has simplified our International business, reduced our ongoing capital expenditure requirements and structurally improved our group cash conversion. We reinvested $121 million of cash in bolt-on M&A, which remains core to our growth strategy. This was less than originally planned with some slippage of deals into 2026. Our pipeline for 2026 remains strong, and we're targeting spend of around $200 million. The cash impact from one-off and adjusting items amounted to $100 million for the year. These costs were largely attributable to transformation costs in North America, which, combined with other cash one-off items, will be a further outflow of around $80 million to $85 million in 2026. Our closing net debt was impacted by $181 million adverse FX translation movement. Nonetheless, we are pleased to see progressive strengthening in our balance sheet with our net debt to adjusted EBITDA ratio reducing from 2.9x to 2.6x, bringing us close to our target range of 2 to 2.5x. Turning now to capital allocation, where our framework is built around 5 key priorities designed to balance growth, shareholder returns and financial resilience. Our primary focus is on organic investment as it drives the best ROI, deploying capital to support the long-term growth of our business. We will also continue to pursue targeted inorganic growth through bolt-on M&A. We have a strong track record of successfully integrating acquisitions to drive value creation, and we will remain selective and strategic in identifying opportunities that complement our existing portfolio, strengthen our market position and deliver long-term shareholder value. We remain committed to a progressive dividend policy, ensuring that dividends grow over time. Our approach reflects confidence in the underlying strength of our business and our ability to generate consistent cash flows while maintaining financial flexibility. We recognize the importance of returning excess capital to shareholders at the appropriate time. When we do have surplus capital beyond our reinvestment needs, we will evaluate opportunities to return it, always ensuring that such actions align with our broader financial strategy. Finally, we remain focused on maintaining a strong and resilient balance sheet. Overall, our capital allocation strategy is designed to strike the right balance between investing for the future, delivering long-term value to shareholders and maintaining financial strength. So in summary, we have delivered an in-line performance in 2025. We are encouraged by the clear signs that our revised North America strategy is working and the improvement in growth in the second half from our International businesses. Our focus on cash is improving our operational cash conversion and reducing leverage towards our target range. As we balance investing in sustainable organic growth and driving up the efficiency of the business, we remain firmly on track to achieve our $100 million cost reduction target and our goal of a North America margin above 20% in 2027. Although the first month of 2026 in the U.S. has seen some disruption from extreme weather, as we look forward, we have confidence in delivering in line with market expectations. Thank you. I will now hand you back to Andy. Andrew Ransom: Thank you, Paul. So over the next few minutes, I'm going to start by highlighting the strength of the pest control market, both in the U.S. and globally before diving into North America's performance. I'll then finish with brief updates on our international growth and emerging markets, on our 2 categories and on the good progress we are making with the use of generative AI across the business. As you can see, the global pest control market has demonstrated consistent, resilient growth, expanding from $15.4 billion a decade ago to an estimated $29 billion in 2025. This represents a robust 6.6% compound annual growth rate over the last 10 years. Looking ahead, the market forecast for growth in the pest control industry remains very healthy with a projected 6.2% CAGR through to 2035. This growth is driven by multiple consistent factors, including increasing urbanization and growing middle classes, which drive demand for professional pest services. Heightened demand for higher hygiene standards across all sectors and as you would expect, climate change are also contributing to a rise in pest activity, all combining to create a sustained need for our services. In Hygiene & Wellbeing, which accounted for 17% of group revenues in 2025, we are the leaders in an attractive global market, which is expected to grow at around 4% annually through to 2030. This is being driven by an aging global population and their increasing hygiene needs, social and demographic trends such as urbanization and increasing middle classes, so similar to pest control, a heightened focus on hygiene standards post the pandemic and greater environmental and regulatory compliance requirements. So we're operating in 2 very healthy global markets. Let's now get into the main focus of today's presentation, that's our plan for North America, where we're continuing on our journey to create an undisputed powerhouse in pest control. This is founded on a number of key themes. First, as I've just shown, we operate in an attractive noncyclical growth market with the U.S. accounting for approximately 50% of the world's pest control market and where we are now a leader for commercial, residential and termite services. Second, we are laser-focused on scale and on density. And this is not just about size. It's a fundamental understanding of how density unlocks significant economies of scale and efficiency opportunities. Third, we are building power brands like Terminix and other well-known regional brands such as Western Exterminator and Florida Pest Control, giving us strong brand equity in every city in the United States and, in turn, supporting other parts of the business' need for local digital leads, local sales, local pricing and recruitment. And finally, everything is powered by our proven, repeatable low-cost operating model, centered on being an employer of choice and maintaining an unwavering focus on customer service. Importantly, as you know, we are primarily a contract-based portfolio business with around 75% of Pest Control revenues in the U.S. being under contract. Now looking back, the integration of Terminix required 2 main thrusts: Firstly, to create a unified enterprise in the U.S.; and secondly, to create a single unified field operation. To date, at an enterprise level, we've successfully established a single leadership structure. We've completed the complex legal merger. We've aligned on our core back-office stack of systems, for example, for people management. We've introduced a single approach to procurement, and we've harmonized our management salary and benefit structure. Crucially, we've also made investments that will drive future performance. We've launched our first U.S. Pest Innovation Center, which is focused on residential pest control, termite and mosquitoes. We've placed an intense focus on being an employer of choice, making excellent progress in turning around colleague retention, particularly within Terminix. And we've also invested in new data and pricing capabilities. These are all important steps in unlocking the true long-term potential of the combined business. Now as you know, in 2024, we began pilot migrations to create a single unified field operation. And while these were very successful at delivering the expected cost synergies, and they did not negatively impact on the retention of our field-based colleagues, we did, however, experience a negative impact on our growth. The combination of fewer locations and a complex change agenda saw lower levels of inbound leads and some customers reacting negatively to the change in their technicians, eventually leading to lower customer retention in the migrated branches. Therefore, we made a decision to pause the full-scale migration throughout last year and to focus on returning the business to growth. This time last year, we outlined a new growth plan to address the root causes of the lead flow and customer retention reductions. And as you know, we saw encouraging signs of progress at the half year and again at Q3. And pleasingly, this has continued into the fourth quarter. The detailed plan that we set out in 2025 extended across a number of key areas, but was essentially focused on operational execution. For leads, we revised the marketing plan to add greater emphasis on organic leads on more local web content and on beginning to leverage AI optimization for local search. For 2025, we focused on 9 core regional brands alongside the Terminix brand, and a key part of the plan was to roll out our small branches under the satellite program to give us greater customer proximity. For sales, we moved ownership of field operations back into the branches, making the branch managers fully accountable for their local sales performance. This was coupled with a dedicated door-to-door pilot over the summer in around 25 territories. And as Paul has already highlighted, we also began driving business simplification, including the outsourcing of a number of key functional activities. Whilst this was all underway, our North America team has been working on plans to build on the successes of 2025 and to introduce a much simpler approach to branches, brands, systems and to pay. So let me provide a brief update. Our people, of course, are our greatest asset and our commitment to being an employer of choice is yielding excellent results. We've seen a 19% improvement in Terminix technician retention since the acquisition. And in 2025, North America colleague retention was up a further 2.8% to 82.2%. This is absolutely foundational to our future success. On the customer front, we delivered very encouraging improvements in customer satisfaction ratings, and we've continued our focus on the end-to-end customer experience, delivering a 0.4 percentage increase in customer retention now at 80.5%. And this will continue to be an area of maximum focus going forward. Our marketing focus shifted in 2025 to generate more organic leads through local brands and local content, where we optimize the content of around 1,200 individual web pages. And while only a very small part of the overall impact last year, we've also begun to leverage AI to optimize our local search presence so that when customers need pest control, Terminix is increasingly the AI cited domain to be shown in the search results. Critically, the successful rollout of our local network of new small branches under the successful satellite program brings us much closer to the neighborhoods where our target customers are living. By the end of last year, we had around 150 of these small branches open. In addition, our successful toe in the water with a dedicated door-to-door sales program in 25 territories last year will be expanded to around 40 territories this year. This local approach was reinforced with our focus on 9 regional and local brands alongside Terminix, which together drove a turnaround in residential lead flow, which was up 7.1% in the second half against the same period last year. As you've already heard from Paul, in addition to growth, efficiency was a big theme for 2025 and will continue to be so in 2026. Clearly, improving our marketing, our lead generation and our sales execution only matters if we're efficiently installing and subsequently billing our new customers. We continue to focus on increasing our speed to install rate. And in 2025, we introduced new KPIs to track the percentage of installs within 24 and 48 hours of signing. Overall, performance was good in '25, but this is another area where there is room for further improvement this year. By improving these operational performance areas, we have, in turn, improved our financial performance. Organic growth for Pest Control Services increased through the year, achieving 2.2% in H2 compared to 0.1% in the first half. This culminated in a strong fourth quarter, delivering organic growth of 2.6%. And importantly, the progress on contract revenue was particularly pleasing, up by 2.4% in Q4, alongside a healthy 5.6% increase in jobs. So an encouraging 2025 and one on which to build in 2026. Our brand strategy is a core lever for growth and the original plan focused primarily on both the core Terminix and Rentokil brands. The new plan outlined last year saw us add investment and focus on 9 highly recognized regional and local brands, which included the relaunch of their stand-alone websites and which delivered an encouraging increase in our inbound lead flow. And going forward, we will now invest in around 30 brands and support each of them with our best practice digital and marketing approaches. We'll have the Terminix brand as our national flagship, the 9 brands that we supported last year and a further 20 local and regional brands in key cities where their local brand equity is strong. Next, our focus is on the local branch network. And I've already highlighted the impact of the 2024 pilots and our pivot this time last year to focus on more branches. We've now added 150 small local branches, and the path forward is to continue that rollout, where we will open an additional 70 in 2026, taking our local network of branches to around 800 by the end of this year. This combination of keeping more local brands and their branches and by expanding our network of small branches as part of the satellite program gives us greater customer proximity and a stronger local brand presence. The most significant recent refinement to our plan involves our approach to data and branch systems harmonization. Our updated approach provides us with the immediate benefits of operational harmonization. We're launching Branch 360, which is a unified reporting and insight solution. It's been designed to provide a single pane of glass for our field leadership and our sales and marketing teams. By integrating data across our current branch infrastructure, this system-agnostic platform delivers consistent KPIs and daily accountability without being dependent on a single fully integrated back-end system. This ensures a standardized management experience across the entire organization regardless of the legacy platforms in place at the local level. Going forward, every branch manager will utilize a standardized performance interface that displays critical financial, operational, leads and sales metrics. Rather than requiring managers to manually extract and interpret data, Branch 360 will push actionable insights and reports directly to them on a daily basis. Finally, the team in North America has also developed a new approach for pay plans. The original plan required a branch-by-branch system harmonization to have been implemented before we could change the pay plans. Our new approach is to decouple pay plan implementation from systems harmonization. This year, we will harmonize branch manager pay, and then we'll focus on sales team pay in commercial pest control. This removes complexity and frustration of the different plans, and it's something that we expect to be well received. Finally, for our largest population, the technicians, we're taking a very pragmatic approach. New colleagues will be onboarded directly onto the new plan from 2027. However, we will give our current colleagues the choice to either opt into the new plan or to be grandfathered in their existing plan with no obligation to change. To conclude our dive into North America, we've continued to make good progress on employer of choice and on customer service. We've increased residential lead flow, underpinned by the rollout of 150 small local branches and our additional brands. This execution has led to an improved organic growth performance, which was particularly encouraging in the fourth quarter. Going forward, we're building on this growth platform with a focus on 30 brands and increasing the number of small local branches, which will continue to roll out at pace this year. And we now have a new simpler approach for branch data and systems and for pay plans. There is still a lot of work to be done, but clearly, we are seeing encouraging progress. So before we conclude and take any questions, a brief look at International and our categories as well as at generative AI, which I know will be of interest to you. As you saw earlier, our International businesses continue to operate in strong and resilient growth markets, with revenue in Pest Control up 5.4% in 2025 and increasing by 4% in Hygiene & Wellbeing. International growth markets delivered a solid financial performance with our revenue up 4.4% and profit up by 4.7%. Here, technology and innovation are our core competitive advantages. Our PestConnect deployment continues to progress well with around 100,000 additional devices installed in 2025, bringing our total to over 600,000. And in the Netherlands, for example, over 50% of our commercial pest control portfolio is now connected through technology. Our emerging markets continue to perform well, posting revenue growth of 6.2% and profit growth of 10.8%. And here, we are continuing to execute our cities of the future M&A strategy to capitalize on the development of the mega cities, which has resulted in 24 deals over the last 3 years and has secured leading market positions in key growth markets, including India and Indonesia, and this will be an outstanding platform for future long-term growth. I won't go into this slide in detail, but it's a summary of our overall Pest Control category performance globally and where organic revenue growth increased from 1.8% in the first half to 3.4% in the second. And similarly, in Hygiene & Wellbeing, which increased organic growth from 0.9% in the first half to 3.6% in the second and, as you can see, has delivered consistent revenue growth post pandemic. So this is my 50th and my last presentation to you. And looking ahead, if there's just one area in particular that I will be very excited to see develop, it's how the business adopts generative AI to enhance its productivity and efficiency as well as providing further service differentiation to our increasingly digital savvy customer base. Although clearly, it's still early days, we're making good progress. In 2025, we successfully launched Google Gemini AI to all 60,000 plus of our colleagues, and we had over 1 million users in just the first 6 months alone. On the service side, our innovations like PestConnect Optix, which was launched last year, uses AI to identify individual rodents from images sent from the field. And we've created our own in-house AI portal, lovingly named Rat-GPT, where over 100 dedicated AI agents are already in use or in development. The power of this focus on AI is perhaps best demonstrated by just a couple of brief examples of our Agentic AI solutions currently being piloted. Our prospect prioritization solution is a fully developed system, which uses multiple AI agents to analyze the wide range of leads that we receive. We receive Internet leads. We receive telephone leads, field-based leads, small leads, national account leads, jobs leads, contract leads, leads in high and low-density areas. And what this new agent will do is score each lead based on conversion likelihood, sales value and a range of other metrics, and then will nudge the salesperson to prioritize the best of the leads. Equally impactful is our on-the-go technician assistant. So if you can imagine a technician walking towards a customer site, this GenAI-powered tool will be speaking to the technician, giving them vital information; information about the site's history, the last infestation details, what the open recommendations are, what the bill payment status is and other important practical information. These are just 2 ways in which we are taking the power of AI and deploying it across the company. Clearly, there are many significant opportunities ahead of us, and we're really only just starting. So to wrap up, for the final time, I've included our RIGHT WAY scorecard in the appendix for you to read. But in short, as I prepare to hand over the baton to Mike, I personally feel very encouraged by the group's performance in 2025. Clearly, there is still much more to be done, but I'm very pleased to see our progress in North America, and I'm highly optimistic about the long-term prospects for the company where I will be cheering on from the sidelines in the future. Thank you very much. Paul and I will now be very happy to take your questions, and there will be a brief pause for the operator to line up any questions. Thank you. Operator: [Operator Instructions] And our first question comes from Andy Grobler with BNP Paribas. Andrew Grobler: Just a couple from me, if I may. Firstly, in America and operationally, as the strategy moves to kind of more branches, more systems, more brands and so forth, how would you balance the cost of doing that against and the visibility that you need from a central perspective. Is there a risk that some of these branches become somewhat independent through that process? And then secondly, just in terms of cash costs with termite costs going up in '25 and looking to '26, what are your expectations going in the longer term for those -- both for those termite costs and for the one-off integration costs over the next 2, 3, 4 years? Andrew Ransom: Thanks, Andy. I'll take the first one and hand it to Paul for the second. Look, I don't think so is the answer to your question in terms of risk either on the cost side or indeed on the risk of loss of control of lots and lots of small branches. If I take the second limb of that first. The Branch 360 single pane of glass, in particular, is going to give us the best visibility that we've ever had at branch level. At the moment, if you're a branch manager, across our suite of branches, you've got to have about 42 different tabs if you want to complete the full suite of KPI metrics and measures. And going forward, every single branch is going to have the same desktop open with the same KPIs, metrics, measures, dashboards and push reports going to them centrally. So I actually think we're going to have better control, visibility and consistency across our branches than we've ever had. And many of the smaller branches opened under the satellite program are really an extension of the larger local branch. So they're run by the same branch managers. So I don't think there's any risk there at all of loss of control, quite the opposite, I think. In terms of cost, the smaller branches are relatively cheap, if I can use that word, relatively inexpensive. The costs have been included in our plans, in our budgets, in our forward look on our numbers. So not a significant increase. And the majority of the increased investment on the brand side is actually on organic search. So it's not so much on the paid search, which is quite expensive. It's on organic, supporting their independent websites, web pages, et cetera. So I think the increased cost is modest. It's all factored into our forward-looking numbers. And I think it's going to give us great, great transparency and consistency on the branch level. So Paul? Paul Edgecliffe-Johnson: Look, on the cash side, I think the first thing that we should all remember is this is a very cash-generative business, and we've proven that in 2025. So we brought the leverage down. Cash conversion was at 98%, and we're going to keep pushing really hard on this. The working capital outflows were significantly lower in '25 than they were in 2024. In terms of the sort of one-off areas, the cost of the termite provision, $95 million in 2025 cash cost. We expect it will be about the same in 2026. Our strategy is to try and close off claims as quickly as we can, whether that's litigated claims or non-litigated claims. It's good to push them through, get them to resolution, and that's our plan so that we can put this behind us as quickly as possible. I can't tell you really exactly what the cash is going to be in '27 and 2028, how that will track down. Expectation is that it will track down because we are dealing with large complex claims now. That's what's put up the provision in the second half. And so we will see it ameliorating over time, but I can't tell you exactly the trajectory on that. In terms of the costs related to the transformation plan, the cost-out plan, we will continue to see those costs in 2026. I'm really pleased with how the plan has gone in 2025, how quickly we've managed to get cost out, but there's a lot more to do. The returns on this, obviously, though, are very, very good. So where we see an opportunity to take cost out of the business, yes, it will have a onetime cost for redundancies or restructuring, but we'll continue to pursue those. Thanks, Andy. Andrew Grobler: And just one further thing. Andy, thank you for however many years it's now been, and best of luck with whatever the future brings. Andrew Ransom: Appreciate it, Andy. Operator: The next question comes from Suhasini Varanasi with Goldman Sachs. Suhasini Varanasi: A couple for me, please. I just want to get some more color on the door-to-door pilot that you implemented in 2025. In the places where you implemented it, is it possible to understand the proportion of new sales that came from this new channel versus your traditional or digital channels? That's the first one. And the second one, I think Business Services has been delivering very strong growth despite the headwinds in vector control services in 4Q. Just wanted to understand the drivers behind this and your expectations for 2026. Andrew Ransom: Thanks, Suhasini. The door-to-door program, we're pleased with it. It did not make a major contribution to the revenue performance, relatively modest, but we were pleased with it. It's our first toe in the water for door-to-door. And as I've said before, it's become a big channel. I still think we're learning on the job with this. And I'm on the record of saying in the past, I've always had a slight concern about door-to-door that the customer retention rate on door-to-door isn't as strong as it is where a customer has reached out to find us. And that's proven to be the case. So retention rates have been lower in the door-to-door business, but absolutely in line with what we modeled. So we put a big tick against the program in 2025 as a success, but as a pilot. And we've included, I'd say, a relatively modest ambition in 2026. We're moving up from 25 territories to about 40 territories. If it continues to go well, and I don't see why it wouldn't, in '26. It will obviously be up to Mike and the team, but I wouldn't be surprised to see that getting potentially materially bigger in '27. So not a big contributor. We don't break it out separately. More to come for in '26. Let's see how we get on. If it continues to go well, I think that could be a much more material potential opportunity in the future. Business Services, yes, it's had a really good year actually off a less good year in '24. So you've got a little bit of comp benefit, I would say, '25 on '24. Just a reminder what's in Business Services, half of Business Services or just over half of Business Services is our distribution business, our products distribution business, which is really quite different from everything else. Everything else is a contract portfolio services business. The products business is selling pest products and turf and ornamental products to the industry and to individual consumers. That is a very lumpy business. It can go in waves, and we've had a very strong finish to the year in that business. But it's a good business. It's a good, well-run, solid business. So I don't see -- I'd be surprised if it grows as strongly in '26 as it did in '25, but I would say it's a good performing business, and it's going nicely. The other businesses are contract portfolio businesses. They are Business Service operations. So we have brand standards, which looks after franchise properties and goes and checks if they are living up to the standards that the franchise owner has set. That's a good business, running very nicely. We've won some big new recent accounts. So I would expect that business to perform pretty well in '26. We've got our plants business, Ambius, which is a nice business, doesn't grow at the sort of rates that Pest Control does. So that's a slower growth business, and I'd expect that to be similar in '26. So look, I think it's had a great year, slightly flattered by a poor year in '24, but solid businesses, well run, and I don't see why they shouldn't make a decent contribution in '26, but perhaps not at the stellar growth rates we've seen in '25 would be my best view. Operator: And the next question comes from Annelies Vermeulen with Morgan Stanley. Annelies Vermeulen: I had two questions, please. So firstly, on the rebranding of the retiring brands, I think you said a lot of those are one-branch businesses. So how many branches or brands does that involve? And what was the criteria for the decision on that segment specifically? Were there certain things that you look for in terms of signing those off? And then secondly, on the pay plans for the technicians, have you collected feedback on this from your existing technicians? And what was that based on? And if so, do you expect it to meaningfully continue to contribute to improving retention from here? And are there any additional costs associated with having to run 2 pay plans? Andrew Ransom: Thanks, Annelies. On the rebranding, those who've got a good and long memory will remember that we've got about 80 brands, give or take. So we're going to keep 30. So that means there's 50 -- I unfairly call them 1 horse towns. There are 50 brands. They're almost exclusively single city or single town brands. It doesn't mean to say we don't love them and like them, but it doesn't make economic sense to support those 50 individuals. So they are the 50 smallest. In aggregate, those 50 brands don't even represent 10% of the total revenues. So they will be retired quietly, slowly, gently over the next couple of years. And the criteria really was just based on scale. It's the ones that have got the least footprint, the smallest brands in small towns and smaller cities. And we tested brand equity as well. So we actually tried to work out how strong are these brands in the market. And the ones where we've got strong brand equity, we've retained and the ones where the brand equity is weak, we've taken a decision that it's better to migrate those to a strong brand equity local brand, whether that's Terminix or it might be one of the other 30. On the pay plans, no, look, there's not additional costs. There's the absence of some savings, but it's not material. And again, it's all fully costed in the plan. But as I said in the remarks, it's a very pragmatic decision. As I've explained several times over the last 2 or 3 years, we do have quite a distribution on a bell curve of pay for technicians and some have got legacy pay plans that look quite generous compared to the pay plans we've been operating across the business for some time now. And we've just taken a pragmatic decision that we will grandfather those. So if you want to stay on the pay plan that you're on because you like it, because you think it's generous, because you've worked out how to maximize your income, you can stay on it. So for the pay plan that we're moving to for the new people that joined from '27 onwards, we're essentially taking an existing pay plan that works quite well. We've modified it slightly. So there's absolutely no reason to believe it will be anything other than business as usual and a successful new pay plan. But it does mean we're running more than one pay plan for longer than we originally wanted. So there was some modest cost improvement originally planned to move to a single pay plan. We've foregone that saving. But as I say, relatively modest and included in our forward-looking plans. Annelies Vermeulen: Great. Thank you for the engagement, Andy. Best of luck. Andrew Ransom: Thank you. Cheers. Pleasure. . Operator: And the next question comes from Bill Kirkness with Bernstein Societe Generale Group. William Kirkness: I have two questions, please. Firstly, as organic growth rehabilitates, I assume there's some market share gains happening. And if so, can you just talk about where you see those? Are they quite broad-based? Or are they sort of focused with the smaller peers or larger operators? And then secondly, you mentioned the weather impact in Jan. I just wonder if that's so material as to disrupt this sort of improving momentum we're seeing in North America pest or whether actually you've got enough self-help to drive ongoing improvements regardless of the adverse weather? Andrew Ransom: Thanks, Bill. Look, market share in pest control is a notoriously difficult endeavor, there's about 18,000 to 19,000 pest control companies in the United States, and we're operating across hundreds of cities. So in any particular town, any particular city, customers have got massive choice. Typically, they've got a choice of 10 to 20 local players. And so trying to work out when we improve where the share improvement is coming from and vice versa is really, really difficult. You can only really see in a live dynamic way, whether you're winning or losing share on the big national account piece. And that isn't really what's driving our improvement in organic growth. I'd say it's broad-based, and it's coming essentially from improvement in our operations in residential and termite, and it's across multiple towns and cities. So really difficult to say where we're winning or where we're winning from. But most of it, I would say, is local movement as such. On the weather, look, the way it works in our North American business, the way the entire industry works in North America is you only get paid and you only recognize revenue once you have done the work. So if you get a weather event, as we saw for a few days in January and you can't get your colleagues out on the road to do their routines. If you're not visiting that customer, then you're not billing that customer and that revenue doesn't happen. But that doesn't mean that revenue has gone. What that means is you work like crazy in the month of February to catch up the visits that you missed in the month of January. And clearly, that's what we will have been doing in February to try and catch up that work as much as possible. February weather, we thought was going to be a bit wobbly as well. At one point, there was a couple of snow days. But in actual fact, the weather in Feb turned out fine in the end. So we draw attention to it simply because it happened. It was material. It wasn't just one day. It was a few days down the Eastern Seaboard. But we will be working very hard to catch it up through February and into March. So we're not flagging a major issue, but clearly some softness in the month of January. Operator: The next question comes from Nicole Manion with UBS. Nicole Manion: One on the price and volume split in North America piece. There are a few mentions in the release about the robust pricing environment. I think that's actually sort of fairly consistent with what you said earlier in the year. But is there anything to call out here in terms of the pricing piece still accelerating or just holding at a similar level? And then secondly, sorry if I've missed this, I think you can sort of back it out from the numbers on branches that you have given in the release and the presentation. But could you sort of just confirm the total sort of branch base number as of the end of 2025 in North America? Paul Edgecliffe-Johnson: Thanks, Nicole. So in terms of price and volume, we're still very encouraged by what we're seeing on price. We do manage to get inflation plus, which we've seen through the year. And as you've seen, the organic growth has been ticking up quarter by quarter. So we are continuing at a similar level on price and clearly doing better on volume. We're still losing a bit of volume if you look at that number that we printed in the fourth quarter, but it's improving sequentially. And in terms of the number of branches, well, we said that by the end of this year, we expect to get up to approximately 800, and that's going to include 220 of these sort of small local branches or satellite branches, which we're at 150 on. So the 70 delta is the change from 730-ish at the end of this year to 800-ish at the end of 2026. Nicole Manion: Got it. All the best, Andy. Andrew Ransom: Appreciate it. Cheers, Nicole. Thanks. Operator: And the next question comes from Jane Sparrow with JPMorgan. Jane Sparrow: Two questions, please. Just on the regional brands and the Terminix brand, it sounds like the improvement in lead generation is largely being driven by the reinvigorated regional brands. Can you perhaps comment on the main Terminix brand and how that is performing? And then secondly, of those branches where there's a high proportion of people sticking on the old plan, is there any noticeable divergence on KPIs on your new one pay scorecard versus the other branches where more people are on the new plan, please? Andrew Ransom: Jane. Yes. Look, the Terminix brand is doing well, but you're correct in your deduction that the regional brands must have done really well. They did do really well. Super pleased with the performance of quite a number of the 9 regional brands. And as I said in an earlier answer, a lot of that has come through really focusing on organic search performance, and that's what's given us the encouragement in part to go with the 30 brands. So that's excellent. But the big, big battleship brand, Terminix, is going well and has performed very nicely. We haven't seen as big percentage increases, but it is performing nicely. And there, we do things like market testing for brand recognition, unaided brand recognition. Can you name a pest control company in the United States? Can you name a pest control company that you would consider using if you had a pest control problem. And we've had a recent survey on that, and the data has come out very, very strong. It's a powerhouse brand, and it's got fantastic brand recognition. And so it's performing well, but we do support Terminix significantly with paid search as well as organic search. And over time, what we'll be looking to do, particularly as we get more into the AI generative search, we'll be looking to move further down the organic search for Terminix as well. So it's performing well, but a big part of the rebound in lead performance has come from those regional brands and the reason why we're supporting the 30 going forward. In the second question, that's way too early to say what that looks like in terms of branches with a high proportion of people on old pay plan, which is largely heritage Terminix brands and then performance of branches with people on newer pay plans. So it's too early to call that. What we have been doing, and Paul has made this observation a few times, we've been much more into the data than we've been before. We've got a Head of Data and Data Science. We've got a small data science team, actually not so small these days, analyzing data from branches and really trying to work out, well, where we've got fantastic performing branches versus poor performing branches, what are the factors that are contributing? Is it tenure? Is it pay? Is it geography? Is it commercial versus residential, all of those factors. And we're getting more insight into that, not ready to call it on that, but pay plan might be one element out of about a dozen, but there is no binary read across between old pay plan equals great performance, new pay plan doesn't. That doesn't exist. But the point of the question, what drives different branch level performances and what are those factors, that's really why we're super excited about the 360 single pane of glass. Mike and the team are going to have much better data over the next few years than we've certainly had for the last 2 or 3 years. But no correlation at this point to call out, Jane. Jane Sparrow: Okay. All the best for the future apart from the obvious foot front. Andrew Ransom: Yes. Well, I would say the same to you, Jane. I would say I hope Spurs don't get relegated, but I would be lying if I said that. So good luck, Jane. Operator: [Operator Instructions] And our next question comes from Allen Wells with Jefferies. Allen Wells: Most have been answered, but just two quick ones. Firstly, Paul, just on the $100 million cost saving plan. Obviously, we've had lots of moving parts over the last 12 to 18 months with the change in brand strategy, less closures, more satellites, changing brands, changing remunerations. As we sit here today, could you maybe take a step back and simplify down how we should think about the maiden building blocks of the $100 million and what will be delivered in 2026? That's the first question. And then maybe just secondly, just following up on the remuneration plan and the allowing of grandfathering, et cetera. Obviously, we're a couple of years into this process now. And what drove the need to change that at this stage? What have you seen? What were staff telling you? And why now? That would be my question. Paul Edgecliffe-Johnson: Thanks, Allen. So in terms of the cost plan, I'll happily take a step back and many of you will remember that we had our integration cost savings back in the day. That got a little bit difficult to track through. So when I came in, I said, take the 2024 cost base, there will still be inflation on that cost base, but we will take $100 million of that. And that's what we are tracking well against. So I've said that we've taken $25 million out of the cost base in 2025. We came sort of at that from a cold start. So most of the savings were manifested in the second half. So if you think about that, that means that on a run rate, it's more than double that, that we're achieving, we are investing back into the business. So whether it's the new capabilities we've talked about in pricing, in data, in many other areas of the business or the additional resources we're making available for marketing and for our additional branch network, that's all being funded. So it's a fuel for growth strategy, and we'll continue to do that. So we will tackle back-office costs, we'll tackle inefficiencies, we'll tackle spans and layers, all the normal opportunities that you would see in a very large-scale business to take cost out. There is significant opportunity. What we are doing is going after the right cost at the right time. Some we will leave a little because they might be a bit more disruptive to the business. So the focus at the moment has been on that back office cost, cost of finance of accounts payable, et cetera, et cetera, removing roles, offshoring roles, et cetera. But still lots to do, and we will get that $100 million out by the time we're reporting the 2027 results and to get the margin up to 20% plus. And look, in terms of the pay plans, the whole plan that we're coming up with in terms of how we simplify the go-forward integration is not to cause disruption. It's to settle people down. If there was some anxiety in technicians that perhaps they wouldn't like the new plan as much as their current plan, fine. They can just grandfather on to their current plan. We want people to get focused on doing their jobs well. We are an employer of choice in the industry, and that's the most important thing to make people go out and delight customers every day. And if there's something getting in the way of that, then we've removed that. So yes, that's our thinking. Operator: And the next question comes from James Beard with Deutsche Bank. James Beard: I've got two, please. Firstly, you noted the improvement in residential leads in the second half. I was wondering if you could talk through the time that you expect those to convert over and how that improvement in resi leads is splits between contract and jobbing. And then secondly, going back on to pay plans, again, you said no change to residential sales staff pay plans in '26. When should we expect any sort of change to residential sales staff pay plans, please? Andrew Ransom: Thanks, James. '27 is the answer to the second question. Sorry, I should have said that. In terms of the time it takes from lead into sale into install is a really good question. I mean, that's a proper pest control question, James, that's really down in the weeds, but it's really, really important. Because if it's residential, if you've got a mouse running around your kitchen, when do you want that solved? You want it solved immediately. So the speed from which we can take a residential lead, and the same is true of termite. You've just discovered termites munching away in your basement or your cellar, you want that sorted quickly. And what we've seen is why I mentioned the new KPIs, operational KPIs in terms of how quickly are we getting from the lead to the sale to the install and it only becomes revenue when you do the install. We've got to get faster and we've got to get more consistent at that. So we are now getting a good proportion of the leads converted, sold and installed within 24 to 48 hours. And that's the sort of time window we are giving ourselves because if customers are having to wait 3 days for their mouse running around the kitchen to be dealt with or for the worry of the fact that termites are in their house, for many customers, that's too long. On the commercial side, time is much less critical. Commercial customers, that's fine. You can come next week, you can come next month unless they've got an emergency. So yes, look, it's a really, really key part of the business. And if we look through 2025, what we saw, particularly in the second half was a -- if you go at the top of the funnel and come down, really good improvements in the leads coming into the business. So MQLs, which we track on a daily basis. We look forward to that. At 4:00 every afternoon, we get a daily report on MQLs. Really good progress on SQLs. So what percentage of MQLs turn into sales-qualified leads. So that's gone really, really well. Really good progress on sales. So the marketing leads are good leads. They're turning into sales leads. The sales colleagues are selling and then it gets less good in terms of how many of those sales actually get converted into revenue. So that's the critical thing that the team are now working on is the next challenge as they work from the top of the funnel and they're working through down into the middle and into the bottom of the funnel. So that's why these KPIs of what percentage of sales are getting turned into activity with the customer is super critical. So good, good progress, and I think that's where Mike will have the team focused this year is improving the conversion of actual sales into -- turning into revenue. In terms of the split between contract and jobs, I have explained many, many times, we're a portfolio business, portfolio, meaning a book of contract revenues, roughly 75% of the U.S. For group level, we're more about 80-20. But at North America, U.S. pest, it's 75% contract portfolio, 25% jobs. Really good performance on jobs, over 5% organic growth in jobs in the fourth quarter and improving performance on contract portfolio. But it's that contract portfolio that we've got to get into consistent, healthy positive quarter-on-quarter improvement. We've seen some of that now, but we've got to build on that. It's only when we get that and back to the question we had a while ago about price versus volume. We've got to get that volume growth consistently back into the portfolio. It feels like it's coming. It feels like it's building, but that's where we need to push on in 2026 and into 2027. Only when we get that plus the jobs, will we get the business back into industry levels of growth and beyond. But I'm really confident the team are all over this. But good performance on jobs and an improving performance on contracts as well. James Beard: And all the best in the future, Andy. Andrew Ransom: Appreciate it. Cheers. Thank you. Operator: [Operator Instructions] And our next question comes from James Rose with Barclays. James Rosenthal: I've got a few on commercial, please. In the release, this has been flagged as a particular growth area. I wonder can you expand on your growth plans there? Secondly, is it right that commercial branches will be running on new systems, so slightly different ones to resi and termite branches? And then finally, how progressed are you in bringing some of the innovations and technology you have in the international and European business into the U.S. And what's the opportunity there? Andrew Ransom: Thanks, James. Yes, look, good question. Rentokil is the undisputed global leader in commercial pest control. The Terminix acquisition brought with it a big business in residential and termite. But Rentokil, which operates in, what, 88, 89 countries is globally renowned for its commercial pest control business. So we should be punching above our weight in commercial in the United States. And we're not yet where we need to be in commercial. I think in part because we've had so much focus on getting the resi business right and getting the termite business right. We've recently taken the decision to give independent leadership of the commercial business to one person. We've got an individual who probably knows more about commercial pest control than just about anyone on the planet. He's an export from the United Kingdom. So we've given it dedicated leadership. In terms of the plan for the business, improving customer retention has to be at the first part of that plan. We still don't have retention where it should be. Customer retention in commercial should be very high typically. It needs to be higher. It is going to be -- the commercial business will all be on PestPac, which is the core system that Rentokil has been using for 3 or 4 years now in the United States. So there won't be any great surprises or drama there. So that should be relatively straightforward. And you're absolutely right to raise the question of innovation. I was chatting to Mike the other day, and he's been introduced to some of the really cool innovations that we've got in pest control and commercial pest control, in particular. And we've got some really interesting ones coming in the pipeline over the next year or 2. But we have manifestly been weakest at deployment of commercial pest control innovation, in particular, our connected solutions in the United States. And we're going to fix that. That needs to be a key priority for 2026. We need to see the U.S. really starting to adopt and drive innovation. That's why the individual that's in charge of the business has been chosen in part because he's got great experience with that innovation. So look, I think it's an area we should be punching above our weight given our global position. The systems are relatively straightforward in the innovation agenda. It just needs execution now. We've got the products. We've got the services. We've got the technology. We just have to execute. And it's easy for me to say, particularly as I'm about to walk out the door and say, over to you, Mike. It is easy to say, but that's what we do around the world. So I'm confident we will do that in the United States. Super. Thank you very much, James. I'm looking at Heather across the table here. Are we done with the questions? No more questions. Unbelievable. Thank you all very much. I can't believe that is it. As I said earlier, that was my 50th set of results, and I think quite a good one to sign off on. It has been an immense privilege to be CEO of this company for the last few years. We've gone from a reasonably unstructured conglomerate to a pretty focused world #1 in our chosen industries, which is a pretty cool thing, I feel. And it's been, as I say, a great privilege to be here, but the success we've made in the last decade or so is absolutely down to the people in the organization. I've always said if we get the colleague strategy right in Rentokil Initial, everything else follows. And I think we have got a wonderful culture in this company. So I do want to pay tribute to the 60-odd thousand colleagues and all the ones that went before them in creating the brilliant company that it is. And believe it or not, I do want to thank you a lot. It's been great dealing with you for such a long time, doing my best to answer your questions. Will I miss it? I think I probably will a little bit, but I'll get over it. So thank you all for your interest in the company. It's been great getting to know many of you. And for the next few weeks, I really look forward to handing over to Mike. We're having a great transition. He's having a lot of fun getting to know all the people around the business, and I'm sure he's going to be a great success. And personally, I think the company is set fair for long-term value creation, which is, at the end of the day, what it's all about. So thank you all for your support of the company, your questions and in many cases, your friendship as well. So thank you all very much indeed.
Operator: Good afternoon, and welcome to Aware's Fourth Quarter and Full Year 2025 Conference Call. Joining us today are the company's CEO and President, Ajay Amlani; and CFO, David Traverse. [Operator Instructions] Before we begin today's call, I'd like to remind everyone that the presentation today contains forward-looking statements that are based on the current expectations of Aware's management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described. Listeners should please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in forward-looking statements that management will be making today. Aware wishes to caution you that there are factors that could cause actual results to differ materially from those results indicated by such statements. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of these factors. You are cautioned not to place undue reliance upon any forward-looking statements, which speak as only of the date made. Although it may voluntarily do so from time to time, Aware undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Additionally, the call contains certain non-GAAP financial measures that are -- that the term is defined by the SEC and Regulation G. Non-GAAP financial measures should be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, Aware has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release issued today. I would like to remind everyone that this presentation will be recorded and made available for replay via link available in the Investor Relations section of the company's website. Now I'd like to turn the call over to our CEO and President, Ajay Amlani. Ajay? Ajay Amlani: Thank you, Matt, and good afternoon, everyone. Fiscal 2025 was a foundational year for Aware. While revenue timing dynamics, particularly within the federal market, created variability in our financial results, the year was defined by meaningful strategic progress across our technology platform, leadership team, certifications and market positioning. We strengthened the foundation of the business, expanded our competitive reach and positioned Aware as a trusted biometric identity solutions provider. To reiterate, our efforts this year have focused on progressing our 3-pronged transformation. First, advancing our core biometric technology with a focus on liveness and biometric orchestration. Second, strengthening our science forward customer-obsessed approach go-to-market model. And third, deepening strategic partnerships and certifications that build trust and scale. Starting with our first strategic pillar, advancing core biometric technology. Liveness remains one of the most critical vulnerabilities in remote biometric systems today. Biometric injection attacks, deep fakes and presentation attacks continue to evolve rapidly. Throughout fiscal 2025, we invested significantly in our science and research teams to remain a leader in this domain. Our next-generation Intelligent Liveness combines deep biometric expertise with advanced spoof protection to deliver their verifiable proof of personhood. In the NIST IR 8491 evaluation, Aware achieved best-in-class gender and race parity, earning the lowest ratio bias rating in the market, and ensuring fair consistent performance across users at every high-risk touch point, critical for secure digital ecosystems. Aware Intelligent Liveness delivers subsecond capture speeds while materially reducing false negative rates and improving adaptability to emerging spoofing threats without introducing friction. We believe Liveness is not simply a feature. It is foundational infrastructure for secure digital identity. Innovation will continue to be at the heart of our progress in this area. At the same time, we have continued to evolve our biometric orchestration capabilities, which you may recognize as our Awareness Platform. Our orchestration framework is designed to maximize system uptime, enable modular integration of multiple biometric modalities and simplify deployment in complex customer environments. We are focused on building out our open architecture biometric infrastructure to bring civil and criminal identity management together in a single secure and highly scalable environment. By eliminating vendor lock-in and supporting a broad range of biometric systems, it gives organizations the flexibility to modernize on their own terms. We are working diligently to ensure enterprise-grade security, interoperability and scalability of our orchestration platform. Beyond orchestration, customer testing activity across our broader portfolio remains strong in both government and commercial sectors. Much of the demand is centered on defending against facial deepfakes, injection and presentation attacks and threats that are evolving in real time. Organizations are actively evaluating vendors capable of mitigating these risks at scale. Initial customer feedback has been encouraging, particularly around algorithm accuracy, ease of integration and flexibility of deployment. These evaluation cycles are often lengthy especially in government, but the depth and rigor of engagement signal, meaningful intent. We are also seeing continued engagement in fingerprint biometrics, where our long-standing expertise continues to differentiate us. A driving force behind our technology is the Aware team. Over the course of fiscal 2025, we strengthened leadership across engineering, product, sales and marketing. We recently welcomed a new Head of Engineering and a new Head of Product, both of whom brought immediate domain expertise and began implementing operational improvements from day one. These leaders are building upon Aware's strong scientific foundation while driving tighter alignment between product development and customer requirements. Our third pillar centers on building trust and scale through strategic relationships and certifications. Despite procurement delays stemming from the lasting effects of the government shutdown, including delayed appropriations and slower procurement cycles, we saw continued engagement across U.S. and international government and commercial markets. During Q4, we successfully deployed our first mobile biometric solution within a U.S. federal agency. Law enforcement customer growth also continued with the onboarding of additional U.S. agencies. While individually modest, these wins demonstrate growing international trust and institutional trust in our technology. We are expanding direct engagement with U.S. federal agencies at a time when Buy America priorities and supply chain considerations are increasingly relevant. As a U.S.-based biometric provider, we believe we are well positioned to compete both directly for federal buyers and indirectly through system integrator partners. Both channels remain core components of our federal strategy. While procurement timing remains dynamic, biometric modernization continues to be an area of focus within DHS and related agencies. Internationally, we continue to deepen relationships across both advanced and developing markets where digital identity systems are increasingly recognized as foundational national infrastructure. In the fourth quarter, we launched a pilot program with the Caribbean nation to deploy biometric time and attendance systems for government employees, further expanding our global footprint. We also are seeing expanding engagement in aviation and border-related use cases. During Q4, we successfully tested biometric boarding in Orlando International Airport, which now serves as a flagship reference or a direct travel and border strategy in partnership with the Greater Orlando Aviation Authority and U.S. Department of Homeland Security. Our technology supports contactless passenger processing under the Biometric Exit Program. This program demonstrates how biometric orchestration can improve throughput, reduce document handling and enhance traveler experience in one of the busiest airports in the United States. We also continued to expand our partner ecosystem through new strategic relationships, including integrations with digital workflow providers and collaborations with biometric hardware vendors. These initiatives remain in early stages, but we believe they strengthen our long-term go-to-market strategy and broaden our reach over time. We also continue to perform strongly in independent government-led evaluations, including DHS related biometric testing programs. Our face and fingerprint algorithms have improved meaningfully in accuracy, bias mitigation and scalability. During the year, we successfully completed DHS RIVR face matching evaluations and achieved ISO-30107 Level 3 certification for Presentation Attack Detection, placing us among a small group of global providers that meet the highest standards for liveness detection. In the Selfie-to-Document Match track, operating under the first alias MTDS1, Aware was 1 of only 5 vendors to meet all DHS high-performance benchmarks. We were also one of just 3 to achieve zero to failure -- zero failure to extract rates for both selfie and document images, and we delivered the lowest false match rate among that group, including against demographically similar imposters. These results highlight the accuracy, resilience and real-world readiness of our platform at scale. We also achieved ISO 27001 certification, a leading international standard for information security management. As enterprise and government customers increasingly require formal validation of security practices before engaging with vendors, this certification strengthens our ability to compete in larger and more regulated opportunities. We also completed independent biometric bias testing conducted by BixeLab, NVLAP accredited lab under the ISO/IEC 19795-10 standard. The full system evaluation covering both liveness and matching under real-world conditions delivered outstanding results. These results reinforce the accuracy, consistency and fairness of our technology across critical applications, including border control, national ID, financial onboarding, mobile authentication and enterprise access control. Finally, in addition to our biometric and liveness evaluations, where recently achieved FIDO2 Server Certification, validating our ability to support secure passkey-based authentication layered with biometric verification. This certification confirms compliance with FIDO Alliance standards for cryptographic authentication and interoperability, capabilities that are increasingly expected in regulated high assurance environments such as payments and financial services. When combined with our Intelligent Liveness technology, this approach helps verify real user presence, reduce phishing and automated attack risk and deliver fast, seamless identity experiences. These certifications are not simply badges. ISO 30107 Level 3 demonstrates our technology can defend against increasingly sophisticated presentation, deep fake and injection attacks. ISO 27001 validates our corporate security posture and operational rigor. Together, they materially strengthen our credibility with both enterprise and government buyers. More importantly, these validations are how Aware becomes a trusted provider for top Tier 1 enterprises and leading government agencies worldwide. The largest institutions require proven performance, independent verification and enterprise-grade security before they deploy biometric infrastructure at scale. Our certifications and evaluation results meaningfully expanded the universe of opportunities we could pursue and have already enabled us to compete in several large engagements that previously would not have been accessible. With that, I will turn the call over to David to review our financial results in more detail. Over to you, David. David Traverse: Thank you, Ajay. Let's review our financial results for the fourth quarter and full year, which ended on December 31, 2025. Starting with the fourth quarter. Revenue in the fourth quarter was $4.7 million compared to $4.8 million in the prior year period. The slight decrease reflects lower perpetual software license revenue, partially offset by higher maintenance and services and other revenue. Operating expenses for the quarter improved to $6.1 million compared to $6.3 million in the prior year quarter. The lower expenses largely reflects the onetime costs incurred in the prior year period related to the former CEO's transition, which includes severance and acceleration of stock-based compensation expense of $600,000. As we noted in our last earnings call, we continue to expect operating expenses to reflect the strategic investments we are making. Net loss for the quarter was $1.5 million or $0.07 per diluted share compared to a net loss of $1.2 million or $0.06 per diluted share in the prior year quarter. Adjusted EBITDA loss was $800,000 for both Q4 2025 and the prior year quarter. Turning to our results for the full year. For the full year, revenue was $17.3 million compared to $17.4 million in 2024. The slight year-over-year decrease was driven by lower perpetual license revenue, which was partially offset by increases in maintenance and services and other revenue. Net loss of $5.9 million or $0.28 per diluted share compared to a net loss of $4.4 million or $0.21 per diluted share in the same period last year. Adjusted EBITDA loss for the year was $4.6 million compared to adjusted EBITDA loss of $3.9 million in the prior year period. Ended the year with $22.3 million in cash, cash equivalents and marketable securities and no debt. Our balance sheet reflects the increased investments we've made throughout the year to enhance our team, advance our core technology and certifications and support go-to-market initiatives. We will continue to allocate capital to our strategic priorities and build a stronger, more competitive business. While we remain confident in our long-term positioning, we believe we will continue to experience quarterly results that remain uneven given the nature of our procurement cycles and customer conversion timing. This is particularly true in government and large enterprise markets, where funding and execution time lines can shift from quarter-to-quarter. As a result, quarterly results may not fully reflect the underlying progress we're making. For that reason, we believe performance is best evaluated over multiple quarters. With that, I'll hand it back over to Ajay for closing remarks. Ajay? Ajay Amlani: Thanks, David. As David noted, variability remains a feature of our business, particularly as we advance complex government and enterprise opportunities where procurement and funding timing can shift between quarters. During the fourth quarter, multiple large identity solution providers progressed into testing and evaluation phases. These processes can be lengthy and technically rigorous and not at all evaluations -- not all evaluations result in near-term deployments. While timing remains uncertain, continued participation in these evaluations, expands our relationships and informs future opportunities. Retention performance remained strong and well above industry benchmarks and approximately 3/4 of our current pipeline consists of new logos with the balance representing expansion within existing accounts. This year marked the beginning of a comprehensive revitalization of the Aware brand. We've launched a fully redesigned website, our digital storefront with a modern look and feel that reflects the strength and innovation of our technology. At the same time, we sharpened our market positioning to clearly align Aware as a biometric identity solutions company. We also restructured and repositioned our product suite to better align with buyer needs and decision-making priorities, supported by refreshed messaging that clearly communicates our differentiated value across biometric identity, liveness and authentication solutions. While still early, search visibility has improved meaningfully, and we are seeing increased inbound engagement. On the technology front, we continued advancing our intelligent liveness capabilities to defend against increasingly sophisticated presentation, deep fake and injection attacks. We also achieved ISO 30107 Level 3 certification for Presentation Attack Detection, and ISO 27001 certification for information security management, strengthening our credibility with enterprise and government customers that require independently validated performance and enterprise-grade security. Stepping back fiscal 2025 was about building the foundation and getting us out in front of key customers. We strengthened our core technology, expanded certifications, deepened partnerships and continued evolving toward a more integrated biometric solutions platform. Execution and conversion will take time, and we expect variability to remain part of the near-term landscape. However, we believe the structural progress achieved over the past year strengthens our competitive position and supports our long-term opportunity in biometric identity. As we move into 2026, our focus is disciplined execution, converting pilot programs, strengthening the awareness platform, scaling revenue and delivering durable long-term growth. We are building a more predictable and scalable biometric identity business, one that balances innovation with discipline and positions Aware to lead in the next era of digital identity. That concludes our prepared remarks. We'll now open the call for questions. Matt, please provide the instructions. Operator: [Operator Instructions] First question is for Ajay. Federal procurement timing has created some variability in results and 2025 revenue was essentially flat year-over-year. How should investors think about the drivers of potential growth going forward, particularly given the mix of federal, commercial and international opportunities? Ajay Amlani: Thank you very much for the question. In 2025, we did see some programs move slower than expected during the year. As you know, government procurement cycles can vary in timing from quarter-to-quarter. We also had a pretty significant slowdown in government shutdown that also impacted the responsiveness of [ the members of ] the federal government, public servants that we're going through a very difficult point in time in their careers and in their lives trying to suffer through what was one of the longest shutdowns in the history in the U.S. government. Coming out of that, we've seen increased activity in federal government meetings, which have resulted in significant pipeline acceleration and opportunities here in the U.S. federal government work. We continued working though, on the international front and in commercial markets to convert our pipeline, expand our pipeline and expand our brand to make sure that the business continues to stay in a growth path as we expand our product portfolio and our certifications. Operator: Our next question is for David. How should investors think about the mix between perpetual licenses, recurring software, services and maintenance going forward? David Traverse: What we're seeing is the mix will likely continue to evolve depending on the types of programs we're secure. As you know, historically, we've had a combination of perpetual license, maintenance and services and that's particularly in larger government deployments. Exact mix can vary from quarter-to-quarter depending on whether revenue is driven by platform licenses, recurring software sales or cloud-based solution-based programs. So rather than targeting a specific mix, what we're focused on is expanding our presence in these large programs where our software platform can be deployed and maintained over multiple years. Operator: Thanks, David. Our next question. You mentioned several evaluations and testing phases with potential partners. What is the process and time line from evaluation to production deployment? Ajay Amlani: Yes. I mean many of these opportunities start with an evaluation after we've included establishing ourselves as a reputable company to be able to participate. These evaluations can basically move on to pilot programs and then the customers will validate the technology within their environment to decide if they want to be able to move forward. The process typically moves into production deployments, which can expand over time depending upon the scope of the program. Well, our goal is to start small, honestly, with an onboarding a customer, keeping expectations in check and then continuously exceeding those expectations. And then from there, as long as we continue to exceed expectations, they'll grow the amount of work that they do with Aware and don't feel comfortable being able to feed more business and more opportunities our way, particularly in government and large enterprise environments. That's balanced obviously with procurement cycles, budget availability, but the focus is continuing to advance those evaluations and making sure that we can improve conversion and growth as our platform evolves and we end up in a land-and-expand strategy. Operator: Ajay, another one for you. How did the recent certifications and platform enhancements strengthen Aware's competitive position and support future opportunities with customers and partners? Ajay Amlani: So I really do applaud the amount of work that goes into the development of these new certifications around biometrics. We -- people globally are really pushing the envelope in terms of being able to make sure that the technology can keep up with current threats in the market. There are a lot of threats that are based in this market, especially with AI and AI generated identity that can basically trick systems. And so continuing to stay not just one step ahead of it, whereas you could potentially be breached, you need to stay 2 steps ahead of it. And that's where these certifications come into play and become very important. These certifications are typically listed within procurement from major customers, and it's very important to be able to meet these certifications. In a lot of ways, these are just basically ways to be able to make sure that Aware is qualified to be able to bid, but not all parties are usually qualified with these different types of certifications. So it is an ability and a strategic differentiator for us to be able to advocate on behalf of including these certifications in the customers' requests and then also being able to meet these certifications, puts us in a competitive set that's smaller than the more broader set of people that you would normally consider for a solution by proving who's better and who's been able to meet certifications that are available in the industry. Operator: Our next question. Why are deals not announced as they are signed? David Traverse: I can kind of break that down to 2 parts. One is from an SEC requirement standpoint and the other one is more from a customer standpoint. So the first one, the SEC, we make sure all our disclosures and we comply SEC disclosure requirements. Most of the contracts we do sign are within our ordinary core business and don't require a separate disclosure from -- on the SEC side. On the commercial side, many of our government and security-focused customers also have confidentiality provisions. And in addition, our business -- in our business, the signing of a contract is not always the most meaningful milestone as programs often progress through pilots and deployments over time. Operator: Another question received. Are you seeing any new AI native competitors or customers in-sourcing by building their own algorithms using LLMs? What moats or risks does your business have from an AI disruption relative to other SaaS companies? Ajay Amlani: Our company is actually really well positioned to be able to take advantage of the LLMs and the technology that's in place to be able to improve our efficacy, improve our productivity, and also decrease our costs. We look towards the development of these capabilities is a really big strategic differentiator for us. Our existing presence in the market with existing customers and data allows us to be able to work with that data to be able to train our models in a more effective fashion. And we can also utilize it to be able to work on better co-development, upgrading the code and being able to serve our customers in a more effective fashion. As you know, we have a blue-chip list of existing customers, including Department of Homeland Security, Department of Defense, and many others globally, that are really the who's who in terms of government agencies. So being able to expand the services that we actually do with our existing customers to be able to surprise and delight them with new capabilities and functionalities would typically take a lot of effort on our side to be able to invest behind that capability. Whereas with all of the different tools that are now existing in the marketplace, we can be able to do that more effectively because we have a lot of inherent knowledge in the market in terms of what the customers need. We're in constant communication with our customers in terms of what they would like and how they'd like to improve their systems. And we're in the right place to be able to ask the right questions to the tools to be able to develop capabilities, whereas most people don't even know what to ask. Operator: You described 2025 as foundational. What should investors look for in 2026 to measure success? Ajay Amlani: Sure. So 2025 was really about strengthening the foundation and our product platform and our go-to-market execution. We're now in front of most of the major customers for biometrics. They know of us. They have a positive opinion of us. We're being included in a lot of their evaluations. And as we move into 2026, the proof points that investors should look around or look for really around improving execution, stronger conversion of our pipeline into actual program wins, recurring software deployments, larger solution-based programs, particularly in government markets are definitely things that investors can look to. Progression from pilots and evaluations into production deployment is another one. And third, while results can be uneven quarter-to-quarter given the nature of government opportunities, especially, we expect to see greater consistency in bookings and revenue over time as those efforts begin to take hold. Operator: Thank you, Ajay and David. At this time, this concludes our question-and-answer session. If your question wasn't answered, please e-mail Aware's IR team at AWRE@gateway-grp.com. Before we conclude, I'd like to remind everyone that a replay of today's call will be available via link in the Investor Relations section of Aware's website. Thank you for joining us for Aware's Fourth Quarter 2025 Conference Call. You may now disconnect.
Operator: Good morning, and welcome to the Liquidia Corporation Full Year 2025 Financial Results and Corporate Update Conference Call. My name is Josh, and I will be your operator today. [Operator Instructions] Please note that today's call is being recorded. I'll now turn the call over to Jason Adair, Chief Business Officer. Jason Adair: Thank you, and good morning, everyone. It's my pleasure to welcome you to our full year 2025 financial results and corporate update call. Joining me today are Dr. Roger Jeffs, Chief Executive Officer; Michael Kaseta, Chief Operating Officer and Chief Financial Officer; Dr. Rajeev Saggar, Chief Medical Officer; Scott Moomaw, Chief Commercial Officer; and Rusty Shundler, our General Counsel. Before we begin, please note that today's discussion will include forward-looking statements, including statements regarding future results, product performance and ongoing clinical or commercial activities. These statements are subject to risks and uncertainties that may cause actual results to differ materially. For further information, please refer to our filings with the SEC available on our website. Please also note that our earnings release and our commentary includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release. With that, I'll turn the call over to Roger. Roger? Roger Jeffs: Thanks, Jason, and good morning, everyone. As we look back on 2025 and forward into 2026, what stands out is the rapid establishment of our preferred product profile paired with precise execution. Last year demonstrated that Liquidia could launch, scale and reach profitability quickly within only 120 days of launch, in fact. Most importantly, we demonstrated that physicians were willing to rapidly change prescribing behavior when presented with a new differentiated option in YUTREPIA. The benefits of its product profile, deep-lung delivery, low-effort device and wide dose range are taking hold in clinical practice and help place YUTREPIA as one of the top specialty drug launches over the past 5 years across all therapeutic categories. This did not happen by chance, but with purpose as a category defining the SENSE study data clearly set a new data-driven standard for therapeutic success. The momentum of 2025 has clearly carried into 2026. As of February 28, we have received more than 3,600 unique patient referrals and shipped therapy for more than 2,900 patients since launch, maintaining our robust trajectory. While others have observed stagnation from supposed seasonality, that has not been our initial experience as we continue on the same tour trajectory without decline which would suggest that our percent market share is rising and that we are capturing a disproportionate number of new patient starts for inhaled prostacyclins as the best-in-class option. This steady forward momentum is being achieved across PAH and PH-ILD, with new patient prescriptions roughly equal now between the two indications. Patient starts remain at 75% naive to 25% transitions from other prostacyclins. Importantly, breadth and depth are also improving in a measurable way. We have increased total prescribers to around 860 as centers gain confidence and usage expands in the community. A key indicator of that depth is that roughly 25% of physicians have already referred 5 or more patients which is exactly the pattern you want to see when the therapy evolves in becoming the standard of choice rather than an initial trial. If 2025 started the full commercial phase, 2026 begins the full clinical exploration of what may be possible with YUTREPIA and L606. Our development strategy is built on principles we have understood for a long time with prostacyclin. Exposure drives efficacy, tolerability drives durability and convenience drives compliance. Each of these elements is critical to the totality of therapeutic experience and speaks to the high bar that YUTREPIA has quickly established around safety, efficacy and convenience. This year, we will look to further cement this best-in-class product profile via the initiation of multiple new studies, including studies that will transition patients from oral and inhaled prostacyclin therapies and a study of new combinations like adjunctive studies with sotatercept that we hope will further advance the changing standard of care. Further, we will work to initiate new studies to support expansion into additional disease areas such as systemic sclerosis-associated Raynaud's phenomenon and PH-COPD, where high unmet addressable need remains. And of course, we will look to move the therapeutic needle even further via the advancement of our next-generation L606 pivotal study with the study initiated in multiple territories and enrollment expected to begin in the following quarters. Importantly, this disciplined expansion of clinical evidence will be funded by cash flow from operations and will help grow the value of the franchise and the company. With that, I will turn it over to Mike. Michael Kaseta: Thank you, Roger, and good morning, everyone. Our financial results are a direct reflection of two things: sustained patient growth and retention and disciplined execution. Over the last 9 months, as the referral and start curves have moved higher so have revenue, margin contribution and cash generation. For the full year 2025, YUTREPIA generated $148.3 million in net product sales including $90.1 million in the fourth quarter, representing 74% growth in net product sales over the third quarter, 2025. The fourth quarter also marked our second consecutive quarter of increasing profitability with not only non-GAAP adjusted EBITDA of $27.3 million but also $14.6 million of net income. We ended the year with approximately $190.7 million in cash and cash equivalents, having generated $33 million of positive cash flow in the fourth quarter alone. Liquidia is now operating as a cash-generating growth engine. That is not aspirational, it is visible in the quarterly numbers and on the balance sheet. Roger, back to you. Roger Jeffs: Thanks, Mike. We're confident in 2026 and the years ahead as we focus on building a durable franchise with increasing patient preference and a clear path towards at least a $1 billion franchise in 2027 with increasing growth in the years beyond. With that, operator, please open the line for questions. Operator: [Operator Instructions] Our first question comes from Ryan Deschner with Raymond James. Ryan Deschner: Congratulations on the impressive continued launch so far for YUTREPIA. Curious, given the greater than 2,900 patients starts you're reporting today, where do you think this puts you in terms of current market share? And how are you thinking about continued growth in the first half of 2026? And then I have a follow-up. Roger Jeffs: Yes. Thanks, Ryan. I appreciate you joining the call this morning. So it's hard to give an accurate percent market share from a patient number standpoint, given the competitor that doesn't disclose their numbers. So what we have done is talked about -- we've done an analysis based on revenue that maybe, Mike, if you don't mind going through, that speaks to this question. Michael Kaseta: Yes. Thanks, Roger, and thanks, Ryan, for the question. So to give everyone an idea, inhaled treprostinil revenue for Q4 was approximately $550 million. And as Roger said, despite what our competitors have talked about with seasonality in Q4 in their business and their corresponding decrease in revenue from Q3, that's still an increase of 5% revenue from Q3 of 2025. The fact that we had an 80% increase in revenue quarter-over-quarter means that we're accounting for more than 100% of market growth in Q4. And again, as Roger have said, that represents a disproportionate share of new patient starts, along with a fair share of switches from Tyvaso. In terms of what that share is in Q3, we had about -- from a revenue point of view, 10% of market revenue that increased to 17% in Q4. So we're seeing a significant increase quarter-over-quarter. As Roger mentioned, the 2,900 patients starts in just 9 months since launch, that is through February 28. So we're seeing that continued momentum that we've seen in Q4 the first 2/3 of Q1 of 2026 and feel very excited and bullish on our ability to continue a successful launch. Roger Jeffs: And Ryan, just to add, I don't -- it's been very consistent in terms of trajectory, and we don't see any impediment going forward this year with regard to any change in that trajectory. As we mentioned in the prepared remarks, the depth of prescriptions is increasing. We're working on improving the duration and durability so that scripts back upon scripts so that the revenue growth remains. And I believe you had another question, Ryan? Ryan Deschner: Yes, thanks for that. With the new [ outcomes ] data from a competitor that came out recently, what's your take on the potential impact of a new addition to the oral prostacyclin receptor agonist mix on the YUTREPIA launch [indiscernible]? Roger Jeffs: Yes. I mean it's a good question then. First of all, we'll congratulate therapeutics on a successful trial with a IP1 selective agonist, I think for us, it really doesn't have any impact at all. If you look at it, it's more like UPTRAVI than not. I mean, they're both in the nanomolar range. I think potency-wise, they're generally similar. Their target binding profile is highly selective just to the IP1 agonist, and I think the results are similar. You're seeing an effect long term over years in clinical worsening with a very muted effect on symptom oncology which primarily if you look at the 6-minute walk distance, which they didn't disclose, they said it was significant. But my guess is it's muted. And as you know, with UPTRAVI, they had no statistical significance or [ clinical significant ] change in 6-minute walk distance. In these patients -- when you're talking about a first edition of prostacyclin, the patients are symptomatic and looking for improvement. So I don't think like the oral therapies just aren't going to give that bang for the buck. What they are going to bring is the GI. And if you look at the AE profile that was shown, you could see a high degree of GI side defects, diarrhea, emesis and nausea. So I think it's more of the same and all the results that Mike just talked about in terms of our launch trajectory and success, are in the presence of UPTRAVI being in the market. So it's really -- to me, it's really an interchange between how that -- how ralinepag will compete with UPTRAVI in the marketplace once it's launched. So not that concerning. I think also if you look at their box and whisker plot, while they did have success across a lot of different subgroups, one thing that was not differentiated was dose. So it doesn't seem like there's an ability to dose a better outcome there. So what you see is what you get based on probably close to the initial start dose. So again, more of the same, and I don't think it will be impactful in any way in terms of how we view our business. Operator: Our next question comes from Julian Harrison with BTIG. Julian Harrison: Congrats on the progress. Roger, I'm sure you're very familiar with soft mist inhalers, can you help us better understand the differentiation potentially of YUTREPIA, maybe L606 as well relative to a softness inhaler that was recently announced by another company in the space? And then as a follow-up, regarding the PAH versus PH-ILD split of patients on YUTREPIA, should we still be thinking about that on approximately a 3:1 basis? How do you see that maybe evolving over time? Roger Jeffs: Yes. I'll answer the and maybe ask Scott to help me with the second question first. So we've moved to a pretty equal split now between PAH and PH-ILD. There's clearly more white space opportunity in PH-ILD. And I think as we -- one of the things we're doing is we're going to grow our sales force significantly by 1/3. So we're going to have a larger share of voice. And the purpose of that larger share of voice is to get into the community, particularly into the PH-ILD space to continue to penetrate that market, drive awareness and either drive starts to drive referrals. So I think over time, that should become an increasing value proposition. But in PAH, don't forget, we have not only the inhaled market opportunity, but we're also going after the oral and parenteral opportunity. So on aggregate revenue numbers, they may appear similar in terms of the business opportunity. But in pure patient numbers, I think PH-ILD has the opportunity to be more successful. Scott, do you have any other questions or any other responses that you'd like to add? Scott Moomaw: No -- I would completely just agree with everything Roger said. It's been interesting to see PAH get off to a fast start. But as we mentioned, PH-ILD has come on strong and about half where it's going to go from here. I think PH-ILD, we know PH-ILD is definitely the bigger opportunity long term, as Roger called it the white space. but there's still a load of opportunity in PAH. So where it will settle out eventually. I think PH-ILD definitely will be bigger, but there's a lot of growth in both buckets right now to continue in the near term. Roger Jeffs: Yes. Great. Thanks, Scott. So again, Julian, there's multibillion dollar opportunities in each indication. So we're excited about the opportunity that YUTREPIA and subsequently L606 will have in these markets. With regard to the SMI, I know it's a seminal question for everybody in sort of front of mind because there were some pretty hyperbolic comments made about it. What I would say is I think their commentary in general was -- it sounded very much to me that it was validating YUTREPIA because it sounds like they're trying to develop product that has the product profile of YUTREPIA. So -- and what is that? It's an easy-to-use low-resistance device with high portability. There's mitigation of cough. But for us, it's specifically done view of the print formulation of engineered particles in the lower end of the respirable range. And then dosing flexibility due to that tolerance which then parlays as we've clearly shown in the ASCENT study that we can rapidly and aggressively dose patients to 2 or 4x the past standard with absolutely no exacerbation in cough in a population of PH-ILD patients who have a baseline cough and a high predilection for exacerbation of cough when they take inhalation therapy. So YUTREPIA is putting an ideal product profile. What Mike described is we're clearly getting the lot, if not most, of the NRx share, and our TRx share is catching up over time. And the SMI to me is just -- it's a repurposed opportunity. So if you go back to the 793 patent that has a priority date of 2006, and look at example one in particular, it talks about there a single-dose acute administration of treprostinil using an SMI. And in that same patent, there's a single acute dose with the ultrasonic nebulizers that is Tyvaso as we know it today. And what that showed is that in PAH patients with a single dose, low dose, that cough was prevalent, and it describes the MMAD or the median diameter of those particles to be in the 4 to 5-micron range. So nothing different. So you're giving Tyvaso solution. You're not doing anything to improve its tolerability or penetration to the lower airway, you're just using a different way to present an aerosolized mist. So it doesn't really matter if you use a soft mist inhaler, yes, that's probably better from a portability standpoint, but that will be it, it will still present itself clinically in terms of how it behaves as Tyvaso nebulized. So we don't really view it as competitive. I think you'd have to ask the competitors to explain the comments they made around tolerability, they've said they still have to do bioequivalent. So whatever data they have, my guess is it's just single-dose acute studies in normal volunteers which is a very bad proxy for what may happen in patients with a high predilection of cough. And the truth to that statement is, remember, when they launched Tyvaso DPI, they had no data in patients that was done on bioequivalence in PH-ILD. And you've seeing the issues they've had through the National Jewish state, in particular, with the DPI and PH-ILD. And now it seems like they've capitulated and feel that DPIs are now not useful, at least their DPI and they're trying to pivot to another methodology, but I don't see that methodology as providing any forward-looking benefit. So that's kind of my quick view on it. I know, Rajeev, you have some broader statements around perspective because this has been tried before in other markets. And if I could, I'd ask you to speak to those instances, if you will. Rajeev Saggar: Yes, sure. Thanks, Roger. So I think I just want to highlight some key points here. I think the signature of the SMI was primarily derived from the Spiriva Respimat and that was done at a time when the CFC propellants were being removed. And also, there was a patent issue from that company, and they compared it to Spiriva HandiHaler, which is the dry powder formulation. And at that time, the HandiHaler was the highest resistance device ever to be developed in patients with asthma and COPD, which is tens of millions of patients. The only device that has a higher resistance than the HandiHaler to date is actually the Tyvaso DPI device that's used in PAH and PH-ILD. But what's really interesting is with all the studies done comparing the softness inhaler to a dry powder inhaler using the same formulation in this regard with tiotropium, the SMI has never been shown to change the clinical efficacy, the pharmacokinetics and most importantly, who's never been shown to improve or modify safety and/or tolerability inclusive of the concerns for cost. So I just want to highlight as what Roger spoke to that the SMI does not port any substantial benefit besides the portability itself. Operator: Our next question comes from Amy Li with Jefferies. Amy Li: Congrats on the momentum. So when we look at your path to the $1 billion revenue target in 2027 that you laid out, our math suggests that implies sustained patient adds from here. So is that the right way to think about the trajectory? And more importantly, what gives you confidence in maintaining your current pace in the next couple of years? How much visibility do you have into the patient funnel and where the patient is coming from? And then how -- and are you still confident in that number in light of kind of the potential emerging competitive dynamics like SMI? Roger Jeffs: So I'll ask Mike to speak to some of -- how we get there, at least from a revenue calculation standpoint. But as we just said, Amy, we don't see any influence from the SMI. I think it's -- again, it's going to be Tyvaso and perhaps a more portable format from using jet nozzles to create aerosolized particles. But as I said, they're going to be poly dispersed, they're going to cause cough, they're going to have titration issues. So I don't really see that impacting us in any other way. And as you're noting in the competitors' revenues, the nebulized business is decreasing, mostly because we're beginning to take that share away. So I think more of that will continue to happen. Mike, do you want to talk about kind of how we see our sales continuing decline amounting towards greater -- at least $1 billion in revenue in 2027? Michael Kaseta: Yes, Amy, thanks for the question. I mean if you just look at -- start with what I talked about earlier. The market for the quarter was over [ $500 million ], which means it's about -- it's already on -- the inhaled treprostinil market is already a $2 billion market. You then talk about -- our share of that revenue has increased considerably quarter-over-quarter. We believe that will continue as well. Then you look at the opportunity that we talked about in PAH with the $2 billion oral opportunity where we believe that there will be significant opportunity for us to gain significant share from that. So that's another $2 billion opportunity just within PAH that we see. And then as Scott and Roger had said earlier, we're just scratching the surface in PH-ILD. We're enhancing our sales force. We're getting more penetration. We're getting further into the community. So when you look at the overall opportunity, our current $2 billion market opportunity in inhaled treprostinil plus the oral opportunity plus the enhanced white space in PH-ILD, we feel very bullish in our ability to continue on this trajectory and continue on this path to get us to what -- as Roger had said at JPM, YUTREPIA being a $1 billion product in 2027. Roger Jeffs: Yes. I think the other thing, Amy, too -- great response, Mike, is, look, we're doing directed studies that we're going to transition patients from the competitive agents, either oral or inhaled and show the benefits of moving those patients to direct tolerability and efficacy. So all of these things just will continue to build a portfolio and a suite of evidence and data-driven proof that YUTREPIA is the best-in-class and first in choice product. Operator: Our next question comes from Serge Belanger with Needham. Serge Belanger: First question on the legal front. Any new updates or developments that you can share with us? And then secondly, regarding payer access, I think you reported another 85% prescription to patient start conversion. Just curious how that number varies across the Medicare and Commercial segment. And I guess, what additional coverage work is required. I know you had coverage from three major commercial payers, but what additional payers need to come online over the remainder of 2026? Roger Jeffs: Sure. Thanks for the question. So I'll take the legal and then I'll pass it to Mike for payer. So really nothing new from what we said at JPMorgan, Serge, so just a reminder for those who may be newer to the story, that the oral hearing was in June, post-trial briefings were completed in August. So we're now approaching 9 months from trial and 7 months from the post-trial briefing. So we do think we're in the sweet spot for when an opinion should and could be rendered. But obviously, it's been taking longer than we all expected. So we can't really probabilitize on when it actually will come down. What I would say is we remain very confident in the arguments that we made and we strongly believe that we should win. And the case should read out favorably to us. We acknowledge there's a lot of potential options here or outcomes. But regardless of what happens, we're prepared for any and all outcomes. So really nothing new to state today other than we remain confident in our position and look forward to hearing from the judge in due time. So Mike, if you'll talk to payer access, please. Michael Kaseta: Yes. So it's great to hear from you. I think where we are with payer and pull-through is just another example of how we've executed on this launch. Scott and his team have done a masterful job, the fact that we are at -- we've maintained 85% plus of pull-through from really the very early stages of the launch is just simply staggering. And we continue on that pace. We've also said from the beginning of the launch was our goal was to make sure that patients have a choice if they want to use YUTREPIA and what we can say is we've achieved that. And we continue to work through our pull-through, making sure that we provide a suite of services to patients to make sure that if they want YUTREPIA, they can get it. And I think that's evident in that pull-through percentage, and we don't see any change in that coming. And our goal will always be to improve that as we move forward. But I really think we're already in a best-in-class state being at 85-plus percent pull-through percentage. Operator: Our next question comes from Ben Burnett with Wells Fargo. Benjamin Burnett: Congrats on all the progress. I just wanted to see if I could get a little bit of color on some of the launch dynamics into the first quarter. Anything you can say kind of around inventory stocking trends or kind of the refill rate that you're seeing? Roger Jeffs: Yes, Mike, if you wouldn't mind commenting on that? Michael Kaseta: Yes, Ben, thanks for the question. As we said in our press release, and Roger reiterated already, we've already had a strong January and February when it comes to both new patient starts and referrals. We're staying on the exact same trajectory we were on in Q4. We've often gotten questions from analysts and from comments from our competitors about seasonality. We've seen nothing but increases across the board. And as we showed today, we continue to see those increases. So as we've always said, as Roger had said, we are still very confident as we move through the rest of Q1 into Q2 and are on our path to be a $1 billion product in 2027. Now as it relates to inventory and stocking, I think we're now at the point of the launch 9 months in, where we've really normalized and I don't expect there to be any significant swings now. Specialty distributors can make decisions that ended up quarters that we don't have influence over. But at the end of the day, we are tracking well. Our demand is extremely strong. And as a result, we feel very confident in the revenue as we move forward. Benjamin Burnett: Okay. That's extremely helpful. And I guess just also regarding the systemic sclerosis RP program. I thought that was interesting. Could you maybe walk us through kind of the evidence in support of treprostinil and kind of what your path forward is there? Roger Jeffs: Yes, I'd love to. So Rajeev, if you wouldn't mind talking about the Raynaud's program? Rajeev Saggar: Yes, sure. Thanks for the question. So obviously, systemic sclerosis is a rare condition overall. And obviously, by the nature of their -- the actual topic of systemic means they have multiple disorders affecting multiple organ dysfunctions inclusive of the most deadly, which is and PAH and PH-ILD. And despite that, their single most complaint of what drives their quality of life is the problem that occurs with Raynaud's phenomenon, which occurs in at least -- and it's debatable, but somewhere between 90% to 95% of all patients with systemic sclerosis or scleroderma. The reason why we think we have good rationale is that actually many of the drugs that have been approved for pulmonary hypotension have been studied, specifically on the -- and the complication of Raynaud's phenomenon, which is known as digital ulcers inclusive of prostacyclins. In fact, in the European and the U.S. guidelines for the management of Raynaud's phenomenon, iloprost and/or Flolan is used as salvage therapy in the event that patients are recalcitrant to treatments such as calcium channel blockers and/or even PD5 inhibitors, which is used off label. So that just shows that the prostacyclin class in and of itself is able to prevent worsening of ischemic episodes. They're potentially leading to avoiding issues of gangrene and/or amputation of these digits that's affecting these patients. One of the challenges oral treprostinil was studied in condition, again, to try to modify the digital ulcers. The problem with that was the trial was fraught with tolerability issues and patients coming off because of the intolerability of oral treprostinil, Again, highlighting that if we can provide YUTREPIA for these patients, we know that the tolerability profile of inhaled treprostinil has significantly improved. We can also -- we also know from our data that we can dose to a significantly high level, ensuring that we obtain appropriate pharmacokinetic profile to modify the disease and so we look forward to initiating our Phase IIa program in systemic sclerosis RP here in -- near the end of the year. Operator: Our next question comes from Jason Gerberry with Bank of America. Jason Gerberry: Two for me. Just first on PAH, I wanted to just get your view on sort of the role for an inhaled treprostinil in the PAH setting. It's a bit confusing. And so -- on the one hand, your competitor flagged that maybe inhalation approaches are going to see a diminished role in PAH. And then when we talk to KOLs, what they're saying is they're not putting new starts on UPTRAVI but yet when we look at IQVIA data, the UPTRAVI NRx look pretty stable. So there's a lot of conflicting data points in this, and it's a dynamic space. Winrevair is now getting used more in newly diagnosed PAH. So how do you see this dynamic where the role of, say, oral versus an inhaled prostacyclins in PAH? And then my second question for Mike, just when I look at fourth quarter numbers, it looks like really good revenue recognition per patient to take the average -- the 3Q number versus the 4Q number over sales or under sales, I should say. So when we look ahead to 2026, it doesn't seem like that there's going to be a huge gross to net adjustment in the numbers relative to the patients and the revenue capture, but wanted to get your perspective there. Roger Jeffs: Yes. Thanks for the question, Jason. So I'll speak to the PAH issue in terms of oral versus inhaled. And I think the field is moving. The paradigm is shifting to where patients aren't going to be willing to accept off-target effects any longer. And because the burden of those off-target effects can be as bad as the burden of the disease in terms of impact on daily living. So the orals, clearly, if you look at the frequency of AEs related to the GI toxicities, they're significant, and they occur daily, they occur over hours in the day and if you then pair that with minimal symptomatic benefit to the disease, that benefit to risk exchange is not a good negotiation for the patient. So I think going forward, particularly as we continue to evolve data around the ability of YUTREPIA to dose titrate drive effect and really eradicate off target effects to the GI or from parenteral issues related to septicemia and subcutaneous site pain and irritation. There really -- there's -- nobody would be willing to make a trade-off because now you can get the symptomatic benefit without sacrificing your daily living through these off-target effects. So I do think -- and our competitors said it when they spoke about their SMIs, like the people are tired now of off-target effects and their people -- what you want to see is a better benefit to risk profile, which YUTREPIA provides. And then it is a 4 times a day therapy, so that would be the only sort of negative there. We're going to negate that negative with L606. So the imports of that studies will achieve in a different way through liposomal encapsulation, all the benefits of YUTREPIA but then now we'll do it in a twice-a-day format and it will also minimize peak-to-trough excursions so that trough benefit is steady to the peak benefit. So what we're trying to do at this company is really improve patient outcome, have patients feel better, remove these off-target effects and then get them to a point in time where they can take an easy portable therapy without risk. So I think we're well on our way to doing that. I think clearly, YUTREPIA's become the preferred inhaled. And as we continue to sort of cannibalize share from orals, you'll see more and more of that. So again, very excited [indiscernible] across the board. And I think that's it for the PAH to oral. So maybe, Mike, if you can talk about the fourth quarter dynamics? Michael Kaseta: Yes, Jason, thanks for the question. So as we look at our growth to net from 2025 to 2026. As we had said in previous quarters, working on access in the back half of the year, we had some new to market blocks that had existed on the commercial front. Those were slowly removed. The result of that is going to be twofold. One, we will pay more rebates on more of our business as we move forward in 2026. But that will be offset by having more patients having access. So what I would say is, as we have kept saying we are extremely confident in our trajectory as we move into '26 and into '27 but what I would say is maybe there'll be a very small incremental increase in our gross to net, but that is -- it goes to our goal of making sure patients have choice and patients have access. So we will have achieved that goal. And I think we'll sit at a place where we're very comfortable and can still achieve our goals in 2026. And as we've said, being a $1 billion product in 2027. Roger Jeffs: Operator, I think we have time for one more question. Operator: Our next question comes from Gaurav Maini with LifeSci Capital. Gaurav Maini: Congrats on a great print and continued strong launch of YUTREPIA. Just two for me, if that's okay. Can the team give some color on that one in four prostacyclin transition patients and kind of what bucket of prostacyclin therapy, i.e., oral versus inhaled, these patients are coming from? And then secondly, on the new exploratory YUTREPIA trials, can you just describe how these are expected or if they are, I guess, to be label enhancing? Roger Jeffs: Yes. So maybe I'll ask Scott to talk about sort of how the transition market, kind of the demographics of that and then Rajeev, if you will speak to the benefits of the trials that we're doing. So Scott? Scott Moomaw: Sure. So as we've said, you alluded to, we've said that 75% of the patients are new to prostacyclin and then 25% are switch. Obviously, in PH-ILD, there aren't other options. So it's -- those switches are coming from inhaled. In PAH, what we said is that about 30% of the 25% in PAH are coming from the orals. And then the bulk of those are coming -- the rest of those are coming from inhaled. Now we are starting to see more patients transition off of parenterals on to YUTREPIA, I don't think that's going to necessarily become material in terms of the switches, but it is interesting and shows that in the future, we'll probably kind of encroach on the parenteral space. But when I'm out there in the market, I can tell you that the enthusiasm around using YUTREPIA instead of the oral prostacyclins for all the reasons Roger elucidated earlier, is only growing. And so we think that whether they're switching the patient off of an oral prostacyclin or they're using YUTREPIA instead of an oral prostacyclin, again, I think there is a big opportunity there for us. Roger Jeffs: Thank you, Scott. So Rajeev, if you'll speak to the trials, please. Rajeev Saggar: Yes. Thanks for the question. So listen, I firmly believe we're entering into a decade and beyond of inhaled renaissance here in PAH and in PH-ILD. And I think YUTREPIA is leading the charge today, and L606 is going to definitely beat it tomorrow. In that regard, the trials that we are purposely conducting is defining how to switch from the oral prostanoid to YUTREPIA. I think we highlighted a few things on this call. Number one, it is very clear that practitioners across the board are very interested in delivering the most tolerable drug. I think this has been highlighted by the addition of sotatercept to the armamentarium, which has, I think, completely negated and limited the utility of parenteral therapies at this time. We have several large anecdotal cases of YUTREPIA being used acutely in the hospital and to combine that also with sotatercept to maximize the benefit of that combination. In regards to oral prostanoids, we plan to switch studies from selexipag to YUTREPIA. It would detail to the practitioners how to do that effectively and safely. And also, again, the advantage of YUTREPIA is that we can dose 2 to 4x that typically what is used traditionally by Tyvaso. In those studies, we'll also highlight some of the hemodynamic capacity of YUTREPIA, which I think would be very exciting. In regards to label enhancing, I think we reserve the right to always present our data to the agency for consideration for label discussions in that regard. And then finally, I think we've highlighted just -- to highlight again the sotatercept study. The purpose of this study is to transition patients that are on sotatercept in combination with either forms of prostanoid inclusive of parenteral and/or oral and transition those off those therapies safely and effectively to YUTREPIA. So those are the studies that we are keenly and working across to initiate this year. Roger Jeffs: Thank you, Rajeev there. Well said both from you and Scott. So I'll close by just saying as you can hear, Liquidia is all-in for our patients and trying to provide better and better opportunities, both now and in the future. And we look forward to speaking with everyone again in May when we update you on our Q1 outcome. Thank you, everyone. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the ANDRITZ's Full Year 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir. Matthias Pfeifenberger: Good morning, and a warm welcome from ANDRITZ out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO, Dr. Joachim Schonbeck; and our CFO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session. [Operator Instructions]. And now I'd like to pass on to Dr. Joachim Schonbeck for his elaborations. Joachim Schönbeck: Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's result. If you look back to the year 2025, we can say the world has been cautious on investments, but rich in geopolitical surprises. For ANDRITZ, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us. We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower and by -- but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And in metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part. If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year. Revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in ANDRITZ's history, EUR 10.5 billion at year-end, never had that, 7% up from last year. EBITA margin in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that will are prepared for this year. Net income is at 6.6% and EUR 154 million. If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 billion, up 8%. Revenue, EUR 7.9 billion, so very positive book-to-bill ratio. Order backlog, as I said, 10.5% (sic) [ EUR 10.5 billion ] and the comparable EBITA margin for the full year was at 8.9%, exactly where it has been last year, EUR 698 million. The reported EBITA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are -- that we have done in the year '25 and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million. The Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all 3 quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project Cahora Bassa in the fourth quarter of 2024. So that's, I would say, more a onetime effect. If we look to the business areas, you can see a very nice increase in Pulp & Paper and Hydropower; 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals, it's down by 13% for the full year. Environment & Energy, basically 3% down. So I would say, Pulp & Paper, very happy to have -- to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very, very huge success showing that we are really well positioned in the market itself, but also technological-wise. In Hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand and in particular, the demand in electrical energy is really supporting us. In metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for the steel as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture but we did not see investment decisions in the markets where we are in, namely Europe and North America. Regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we ANDRITZ, we seem to be a trusted partner for these endeavors. Looking to the revenue. We see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there. You could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year; on Environment & Energy, dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now, and it will prevail. One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog, as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from Hydropower. And therefore, we can drive the revenues out of that very effectively over time. Looking to the EBITA. Comparable EBITA margin remained stable. The absolute EBITA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution. And there, I can specifically name Metals on the one side and Hydropower on the other side, we really made a strong improvement on that discipline. I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come. In Metals, we will continue the restructuring this year because we see the markets will demand it. And we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that. Turning to ESG. We have finished our ESG program, which was targeted for 2025, I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly. The one we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still, it's a record high level for ANDRITZ. And I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so -- but in total, we are not on 1/3. So we wanted to be at 20%. We ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition, and we still believe there is demand, and we will -- we can cope with that. We want to support people to grow, people in ANDRITZ and outside ANDRITZ, and we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one of one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focused on excellent frequency rate because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below 1 ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15%, and we want to keep the voluntary turnover below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with ANDRITZ. On the governance, we put a focus on supply chain as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audit, supplier prequalification, supplier rating on sustainability by third parties. So that's the area we are focusing on. In the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based targets. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow. 2 acquisitions that completed our portfolio. The one was the Salico Group, in metals, basically being fundamental closing of the gap between the metals processing and the Schuler part of our metals business. We have a portfolio completion done on the paper side. We acquired A.Celli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology that was one of the key technologies we were missing. On decarbonization, we acquired LDX Solutions in the United States. That's an engineering company offering a clean air technology, ideal addition to our product portfolio technology-wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Sanzheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our metals processing group. We know them from -- already from several projects we have done together with them inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single-source solution from us. On the customer service, we have made 2 acquisitions, both acquired from Babcock & Wilcox in the United States. The one is Diamond Power, sootblower company for boiler cleaning. And the other is a material handling company, taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit not only that we know them from the industry, but also culture wise. So we are very confident all 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level, and that is very exciting, especially if we know about the decline we have in the -- on the paper side in the paper business and with the paper machine utilization around the globe, not above 60%. Also the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all-time high in the service revenue. We also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you. Vanessa Hellwing: Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So ANDRITZ has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow in the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially. Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating net working capital and return on -- sorry, and our ROIC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year '24. IFRS 3 amortization increased to EUR 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25. Our recent acquisitions, on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial result, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we had seen the negative impact of EUR 24 million from the deconsolidation of OTORIO already in 2024. I hope you remember that. In the meantime, we have sold OTORIO to Armis and received a consideration in Armis equity. We have now divested our Armis shares, which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25. And just to recall, ANDRITZ has sold its stake in OTORIO to Armis, which is a leading supplier of cyber exposure management and security. For ANDRITZ, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by Joachim, remained solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year and changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for pensions and severance payments. Also to mention provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million, we arrive at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And this spend was well covered and digested by our free cash flow in 2025. Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters coming from a level 3 years ago where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in service business where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25 after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components. Trade working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4. And as mentioned on the last call, on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion, we actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital. So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at ANDRITZ remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. As you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect and this also on liquidity, of course, with roughly EUR 50 million, which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, ROIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands at a substantial margin in our -- at our cost of capital. So the ROIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is, in fact, still an industry-leading level considering it is post tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITA decline. But more importantly, this is because of our recent acquisitions with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, ANDRITZ's balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong. And also important to keep in mind that EBITA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by a plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in '24, our revenue trajectory is still pointing downwards, but we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in Pulp & Paper and Metals, our reported EBITA decreased, but we were able to maintain our comparable EBITA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from March. And also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas. Joachim Schönbeck: Very well, Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So Pulp & Paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China in the paper industry to backward integrate into pulp mills. As mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead with a good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically, these are not only boilers, these are small power plants, a sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants, very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started, and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we gone through the valley, and we can grow that. The good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%. So I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total revenue. In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany. So really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITA margin, the first time in our profitability target for 2027. So we're very proud how that develops in difficult times. Hydropower, I would say we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have set. We see this trend continuing. Environment & Energy. Here, we, I would say, faced a surprisingly subdued market, which, frankly speaking, we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done. On the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed, a lot of exposure to the mining business and also here, uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effect. So -- but I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year increasing over the year -- now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served. So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth on service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and a comparable EBITA margin between 8.7% and 9.1%. The midterm targets basically have been confirmed. And in looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range. We have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know, we have not told you so far. Now we are ready for questions and answers. Thank you very much. Operator: [Operator Instructions] And we have the first question coming from Akash Gupta from JPMorgan. Akash Gupta: I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half? And also, you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance? And then the second part of the first question is that if we then take the midpoint of EUR 8.15 billion, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year? Joachim Schönbeck: Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say, as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. with, I would say, with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but that's, I would say, only that's more marginal. We are working and we are preparing ourselves to continue the growth on the service side as we did even in the last difficult year. So we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we do not have the growth exactly in our hand because we also depend -- we depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking. Akash Gupta: And second one is on automotive in metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end? Joachim Schönbeck: For sure, this will help our customers. And usually, if it helps our customers, it at the end helps us. as I have explained, we see both in automotive and in metals. We see now 3 years in a row, a shrinking market, which means that basically, the industry is overrunning their equipment a bit. It's a traditional business. If you run it 24/7, there is a lot of where you only -- you come to end of lifetime. You can always push it a bit. So from being in these industries long enough, we are quite confident that the market will increase, and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that Act in detail. Akash Gupta: And last one is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower? And would that have any impact on total CapEx for the year? Joachim Schönbeck: The majority of our manufacturing CapEx for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. And -- but it will not exceed our natural cash flow. So we will invest, and I think it's wise to invest because for you, as you know, it's still the cheapest way to spend our money into growth. Akash Gupta: And the overall CapEx level last year, it was around EUR 200 million. Do we expect it to increase or stable in 2026? Joachim Schönbeck: Increase. Operator: The next question comes from Sven Weier from UBS. Sven Weier: The first one is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on Pulp & Paper because you also alluded to China. Joachim Schönbeck: Yes. What's the question? We cannot hear you. Matthias Pfeifenberger: I think we lost Sven Weier. Could you turn to the next question, please? Operator: Yes, of course. The next question comes from Patrick Steiner from ODDO BHF. Patrick Steiner: Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on the previous question basically. Could you provide us a bit of a bridge for -- regarding your revenue guidance to '26 and '27? I mean what are the major drivers behind the less dynamic expected revenue development to '26, including M&A effects and the expected better dynamic from '26 to 2027? Joachim Schönbeck: It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower on the one side. And from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a buildup more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy. And this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and in Environment & Energy to protect the profitability. Patrick Steiner: Okay. That's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for full year basically? And also how this would change with -- if you receive a larger project? Vanessa Hellwing: Well, the acquisitions are already in fully fledged on the net working capital, as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in '25. So it's just that the percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would, of course, have a positive impact on the overall net working capital. Patrick Steiner: Okay. Last one for now. Capital allocation has not been fully funded by operating cash flow in the last 2 years. Should we expect this to change in '26 and '27? Or are you comfortable increasing net debt if favorable opportunities to deploy capital occur? Vanessa Hellwing: Well, so we will continue our capital allocation on quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not value accretive to ANDRITZ overall. But furthermore, as mentioned, CapEx spend will continue even slightly increased. And yes, I mean, the dividends, of course, we will keep also our path here. So we actually see that we continue the picture that you saw the last 2 years or 3 years to really spend our capital -- spend in capital to further manage our net liquidity well, but still keep, of course, a substance for ANDRITZ as this is part of our DNA and necessary for dealing with large projects in an engineering company like we are. Patrick Steiner: So if we think about CapEx maybe slightly increasing, dividends increasing and in terms of M&A and share buybacks, more of an opportunistic stance for 2026, this would make sense, right? Vanessa Hellwing: Yes, exactly. Operator: The next question comes from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic. But would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwind that is comparable to last year? Vanessa Hellwing: That's what we do. Lars Vom Cleff: Okay. Perfect. And then you already mentioned order intake rather driven by midsized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in Pulp & Paper currently, but in Hydro. Is that still the case? Or could we hope for a large greenfield order in Pulp & Paper this year? Joachim Schönbeck: The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues, it also impacts a potential greenfield new pulp mill in South America because that's one of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible]. Lars Vom Cleff: Perfect. And then quickly staying with the order intake, order backlog at records or at least close to record levels, nice book-to-bill in '25. We could also hope for a book-to-bill exceeding 1 again for '26 if momentum continues. or am I wrong here? Joachim Schönbeck: If momentum continues, you are right. Yes. Lars Vom Cleff: Okay. Perfect. And then maybe ending with -- you also said on one of the recent calls that you're seeing increasing pricing pressure from pulp and paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects. Joachim Schönbeck: Yes, you are right on that. Operator: The next question comes from Daniel Lion from Erste Group. Daniel Lion: I would -- could you maybe elaborate a little bit on the adjustments planned now in '26? How far are we actually in the Metals division? And what would you expect to come in the E&E division? Maybe overall, how much should we include in our models for adjustments? Joachim Schönbeck: So we expect in total, I believe we are talking about 700 to 800 people. Daniel Lion: And this is already provisioned to some extent or... Joachim Schönbeck: To some, but not fully. Vanessa Hellwing: So for the NOI in '25, about 50% were accruals for this year. So we will cover a lot with what we have digested already in '25, maybe some more to come. Daniel Lion: And how long would you expect to have this impact the figures? Will this be done in the first half already? Or will we have to expect some impacts in the second half year as well? Joachim Schönbeck: Second half year as well, it's 700, 800 people, you don't do overnight. It's a process you need to negotiate. And depending on which country, majority is Germany, takes long time. And so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track. Daniel Lion: Okay. And then maybe also, again, slightly focusing on '27, what kind of revenue -- what kind of order intake or backlog would you expect roughly that is required in order to reach EUR 9 billion in revenues next year? Joachim Schönbeck: I have not made the calculation, but we do not step back from the targets we have for '27. Daniel Lion: So anything that would need to happen on the way there, something sizable or like, I don't know, big picture greenfield contract in Pulp & Paper or in order to make the guidance happen? Joachim Schönbeck: It would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets. Operator: [Operator Instructions] We now have Sven Weier again from UBS. Sven Weier: I hope you can hear me now. Joachim Schönbeck: Yes. Perfect. Sven Weier: So going back to the Hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is? What kind of growth rates you see? So any color on the turbocharger business you can give? Would be appreciated. That's the first one. Joachim Schönbeck: So turbogenerator business is, I would say, medium-sized 3-digit million business. Growth rates double digit at the moment. We do not -- of course, we do not know how this will continue. That's a business we are selling to energy engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently, that's the volume we can report. And this is why it definitely supports the Hydro business. Sven Weier: And when you say 3 digit, is it like in the low 3 digits or get a better feeling? Joachim Schönbeck: It's in the mid-3 digits. Sven Weier: Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole project. Joachim Schönbeck: No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities, not... Sven Weier: And those are kind of the known names like Siemens Energy and GE or... Joachim Schönbeck: Potentially. Sven Weier: Okay. And then, I mean, the pipeline in Hydro in general, I guess, probably also looks pretty promising based on what you said for 2026. Joachim Schönbeck: Yes. I can only confirm that. Yes. Sven Weier: And then you said you had some spillover into Q2 from Q4, if I understood you correctly on orders. Does it mean that you think Q1 orders should be higher than Q4 overall because of that spillover? Joachim Schönbeck: Could be. We definitely had some decisions that have been pushed over the year-end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not -- with what we see on the project side, we are not pessimistic. Sven Weier: So it won't be lower, let's put it this way in Q4. Joachim Schönbeck: Yes. We can agree on that. Sven Weier: Frank but good. The final question I had was just on the M&A because obviously, you kindly provided the revenue details, the money you paid, so I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average profitability across those targets that you bought? Are we talking like average 10% margin roughly. Joachim Schönbeck: I don't have the figure in my head, but in average, higher than what you see from ANDRITZ in total. Operator: There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger. Matthias Pfeifenberger: Okay. Thanks a lot. Thanks for the presentations of the Executive Board and the extended interest in ANDRITZ and in this call. And we wish you a good day and see you next time. Thanks a lot. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Guy Gittins: Good morning, everyone, and thank you for joining the Foxtons' 2025 Full Year Results Presentation. I'm joined, as always, by Chris Huff, our Group CFO, and we will answer any questions at the end of the call. This morning, I will take you through some of the highlights of 2025, provide an update on the London property market. Chris will then talk you through the financials, and I will finish with an update on our operational progress in the year, followed by some detail on the outlook for 2026. We delivered 5% revenue and EBITDA growth in the year, driven by incremental acquisitions revenue and operational progress in areas such as Lettings, cross-selling and financial services. These higher revenues offset the challenging operating environment, including a volatile sales market and cost headwinds to deliver flat operating profit. These results highlight the resilience of our business as a result of our strategy to position Foxtons firmly as a Lettings-led business. Our portfolio now exceeds 32,000 tenancies, which is up over 50% over the last 5 years, and these tenancies generate highly valuable reoccurring revenues. In 2025, these revenues generated over 2/3 of group revenue. We delivered 8% Lettings market share growth through improved landlord attraction, retention to build on our position as London's largest agent. And impressively, for a London-focused business, we are also the U.K.'s largest Lettings brand. We continue to execute our strategy on acquisitions. In 2024, our acquisitions in Reading and Watford made a significant contribution to revenue growth. Recent acquisitions in Milton Keynes and Birmingham create strong platforms in high-value markets that complement our London base. And operationally, we haven't stood still. The business has embraced a culture of continuous improvement and that mindset is cascading through the organization. We're focused on unlocking the next stage of growth by driving revenue and improving productivity and efficiency right across the business. On Slide 6, you can clearly see our strategy in action. The business has made great progress since I returned in 2022. Over that period, we've reset the strategy with a focus on Lettings-led growth, rebuilt our operational capabilities and delivered significant market share gains. The result is consistent year-on-year revenue growth with an 8% CAGR over the last 5 years. And with a sharp focus on costs, we've maximized operating leverage across the business. As a result, profit growth has outpaced revenue growth, delivering a 23% CAGR over the same period. So while profits were flat in 2025, I remain confident that we can return to our growth trajectory over the coming years. Turning now to Slide 8 and an update on the London Lettings market. On the chart on the left-hand side, you can see the number of renters per property back to 2021, highlighting supply and demand dynamics in the market. The market was resilient in 2025. Tenant demand remains strong and supply levels were healthy. We did see a softening in supply in the run-up to the autumn budget, reflecting speculation around potential tax changes for landlords. But with no major tax reforms announced, supply picked up in December and we delivered a record December for both deal volume and revenue. Rental prices were broadly flat as the market balanced flat supply and demand dynamics with affordability limits for tenants. Even so, the market has delivered a 7% CAGR since 2021. And over the medium term, we expect a return to inflation-linked rental growth. Over the next 2 slides, I will take you through an update on the Renters' Rights Act, one of the biggest changes in the Lettings industry over the last 25 years. On this slide, we've outlined the key provisions in the act. The Renters' Rights Act will come into effect on the 1st of May and brings England broadly in line with the rest of the U.K. There are several key changes. Fixed term tenancies will end, meaning all existing and new rental agreements will move to open-ended periodic agreements. Rent increases will become available to landlords annually, although will require evidence that any increase is in line with the market. This is a shift from the current system where rents are typically fixed for the duration of the contract. And local authorities will have stronger enforcement powers, including the ability to impose higher penalties for non-compliance. So what does this mean for landlords? The vast majority of landlords who provide good quality homes and want to keep good tenants in situ for as long as possible, very little changes to their investment. What does matter is staying on top of the new compliance requirements and working with an agent who can manage those requirements on their behalf. It's incredibly easy to fall foul of the legislation, which is fragmented across local authorities and often overly complex. Even the Chancellor was caught out last year, a reminder of just how difficult it is for ordinary people to navigate the rules. Slide 10. As these new requirements come into force, we expect to see some shifts in the market and opportunities for Foxtons. These fall across 4 main areas. The first is increasing the total addressable market for Foxtons as increasing numbers of DIY landlords opt to use an agent to let and manage their property. Over 50% of landlords fall into this DIY category today, highlighting the size of the opportunity ahead. The second is by increasing Foxton's market share of the Lettings market. We expect landlords will increasingly turn to high-quality agents who can protect their investments and navigate the growing compliance burden. And as the leading agent in our markets, this creates significant opportunity to grow share and also the cross-sell of high-margin property management services. Thirdly, we expect more portfolio stability. With fixed terms removed, we expect longer occupancy lengths as tenancies become more stable. Annual inflation-linked rent increases are also expected to become the norm, creating a more predictable income profile. And fourthly, we expect the estate agency sector to consolidate further. The industry is still highly fragmented with 66% of the market made up of small independent agents. The new regulation will place real pressure on these businesses requiring significant investment in people, training, technology and compliance. Many simply won't be able to make these investments, accelerating consolidation. This dynamic plays directly to our strengths. We are well positioned to lead consolidation in our markets and have a strong track record of delivering attractive returns on capital when we do so. Finally, structurally, we anticipate little change in the size of the sector to remain broadly stable over the medium term based on the experience of similar legislation in Scotland. Turning now to Slide 11 and an update on the London sales market. The sales market was highly volatile in 2025. Across the year, volumes in our London markets were up 2%, in line with our own performance. Q1 volumes were around 30% higher than Q1 2024, driven by a large number of first-time buyers competing ahead of the stamp duty deadline. As expected, Q2 volumes were materially lower, reflecting the pull forward of the transactions into Q1. In the second half, activity was impacted by the delayed autumn budget. The wider economic uncertainty and weak consumer confidence was compounded by the intense speculation around potential tax changes, including the abolition of stamp duty and the implementation of mansion taxes for most properties in London, which really dampened the market. You can clearly see the impact on buyer demand on the bottom chart. New offers agreed, ahead of the budget were subdued, sitting at levels similar to those seen in 2023 shortly after interest rates spiked following the September 2022 mini budget. And with the average transaction taking 4 to 5 months to complete, this slowdown in late 2025 will naturally impact volumes in the first half of this year. In the end, the actual policy changes were fairly limited. Stamp duty remains unchanged and continues to act as a major barrier to improving affordability for buyers. The new mansion tax coming into effect in 2028 only impacts properties over GBP 2 million. While this may create some drag at the very top end of the market, that segment represents only a small share of transactions. This change reinforces our strategic focus on the volume segment of the market, particularly properties priced below GBP 1 million where Foxtons is strongest and where volumes are more resilient. Looking further ahead, it's worth noting that buyer demand in early 2026 is still being held back. For vendors looking to sell in this environment, pricing is absolutely crucial. There are buyers in the market, but they are focused on the right properties at the right price. And when we see homes coming to market competitively priced, buyer interest and offer levels remain strong. I'll now pass over to Chris for a run-through of the financials. Christopher Hough: Thank you, Guy, and good morning, everyone. 2025 saw the group deliver revenue growth despite a challenging operating environment, highlighting the financial resilience we've built into the business over the last 4 years. Financial highlights are set out on Slide 13. Incremental revenues from acquisitions and improved cross-selling of high-value Lettings property management services drove a 5% or GBP 8.6 million increase in revenues to GBP 172.5 million. We delivered GBP 22.2 million of adjusted operating profit, which is flat on the prior year. This represented a robust performance in the context of a challenging operating environment due to a volatile sales market and external cost pressures, in particular, from employer national insurance and living wage increases. Adjusted operating profit margin decreased by 60 basis points to 12.9% as margin growth in Lettings partially mitigated some of these external cost pressures. I'll provide more detail in the segmental reviews. Adjusted EBITDA, which is defined on the same basis used to calculate the group's RCF covenants grew by 5% to GBP 25.3 million. Statutory profit before tax was GBP 16.9 million and net free cash flow grew by 14% to GBP 11.2 million. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, unchanged from the prior year. The group also bought back 5.5 million shares in the year via the buyback programs announced in April and September. Now turning to Slide 14, which provides an overview of the income statement and key changes. Group revenue increased by 5% to GBP 172.5 million, reflecting 5% growth in Lettings revenue, 6% growth in sales revenue and 10% growth in financial services revenue. Group revenue continues to be underpinned by Lettings revenue, which represented 64% in the year. Lettings revenue is non-cyclical and recurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were GBP 3 million higher, reflecting additional acquisition-related headcount, increased revenue-linked staff commissions and GBP 1.1 million of additional employment costs. Contribution margin was flat at 64%, including margin growth in Lettings. Overheads were GBP 4.2 million higher, primarily driven by incremental acquisition operating costs, targeted marketing investments, higher employment costs and GBP 1 million of non-recurring overhead costs. Depreciation, amortization of non-acquired intangibles and share-based payment charges were GBP 1.2 million higher. Together, these movements delivered adjusted operating profit of GBP 22.2 million. Profit before tax was GBP 0.6 million lower than the prior year, reflecting broadly flat adjusted operating profit and GBP 0.5 million higher amortization of acquired intangibles. Cost control continues to be high on our agenda. This included delivering a material cost saving by negotiating an early exit from the Chiswick Park head office lease and rightsizing head office space. This move unlocks GBP 1.5 million of operating cost savings from January 2026 onwards, providing some protection from cost pressures in 2026. Through 2026, we are redoubling our focus on costs to protect profitability in the context of current market conditions. Turning now to Slide 15 and performance in Lettings. Lettings revenue grew by GBP 5 million or 5% to GBP 111 million as a result of GBP 5.2 million of incremental revenues from Lettings acquisitions in Reading and Watford, GBP 0.6 million higher like-for-like revenues, which reflects property management revenue growth with a like-for-like increase in uptake of 7% delivered in the year. This progress will continue to benefit the group in 2026 as revenues annualize and GBP 0.9 million lower interest earned on client monies due to lower Bank of England rates. Revenue per transaction increased by 1%, reflecting the improved cross-sell of property management services, partially offset by the move into higher volume commuter markets and the lower interest on client monies. Contribution grew 6% to GBP 82.9 million off the back of revenue growth, whilst the contribution margin grew by 100 basis points, which is primarily due to margin accretive property management and cross-sell of related ancillary services. Adjusted operating profit grew 9% to GBP 29.8 million and adjusted operating profit margin grew 100 basis points to 26.9%, reflecting the strong contribution margin and the delivery of acquisition-related synergies. Moving to Slide 16, where we have presented detail on the returns from our Lettings-focused acquisition strategy. We have an industry-leading operating platform that delivers high levels of returns from acquisitions by delivering high levels of landlord retention, organic growth from acquired databases and cost synergies. Our operating platform is highly scalable and can power a significantly larger portfolio than we operate today for limited incremental cost. Historic acquisitions in London deliver EBITDA margins above 50% and return on invested capital above our 20% target rates as we maintain a tight focus on ensuring returns through a portfolio's life cycle. Acquisitions are our primary route into new geographies, combining acquired Lettings income to underpin profitability with organic Lettings and sales growth. Under our buy, build and bolt-on strategy, we focus on acquiring platform businesses in high-value markets and enhancing them through high ROI bolt-ons, targeting aggregate returns of at least 20%. In October 2024, we acquired 2 leading businesses in Reading and Watford, completing the group's first acquisitions outside London. Both have performed well, delivering organic revenue growth and first year returns on capital above the target level of at least the group's weighted average cost of capital. The Watford business was integrated onto Foxton's operating platform in 2025 with Reading planned for 2026. Returns are expected to grow as synergies are delivered in Reading and be annualized in Watford. In February 2025, we completed the bolt-on acquisition into the Watford platform. This bolt-on was rapidly integrated and is delivering annualized returns on capital above our 20% target, which highlights the growth we can rapidly deliver in new markets. In January 2026, we acquired leading businesses in Milton Keynes and Birmingham. Over the next 12 to 18 months, we will focus on integration, deploying the Foxtons toolkit to drive organic growth, deliver synergies and support further high ROI bolt-on acquisitions. Moving to Slide 17 and an update on the sales business. Sales revenue grew GBP 2.7 million or 6%, reflecting GBP 3.4 million of incremental revenue from our Reading and Watford acquisitions and GBP 0.8 million lower like-for-like revenues. On a like-for-like basis, revenue was 2% lower, reflecting 3% growth in transaction volumes, broadly in line with the market and 5% reduction in average revenue per transaction, primarily reflecting the higher proportion of lower value first-time buyer properties transacting in Q1 ahead of the March stamp duty deadline. In total, volumes were 19% higher and revenue per transaction was 11% lower. The reduction in revenue per transaction primarily reflects the expansion into commuter markets, which typically display lower revenue per transaction, but higher volumes. The acquisitions in Reading and Watford delivered 9% revenue growth in the first year of Foxtons' ownership, driven by market share growth. Average market share across Foxtons London markets was robust at 4.8%. The adjusted operating loss in sales increased to GBP 5.7 million as the profitable contribution from new commuter town acquisitions only partially mitigated increased operating costs and a strategic decision to maintain bench strength despite weaker H2 market conditions. Improving the profitability of sales remains a key priority for us, and Guy will provide more detail later in the presentation. Moving on to Slide 18 and Financial Services. Revenue in Financial Services was 10% higher at GBP 10.3 million. Specifically, volumes were 13% higher, reflecting the stronger refinance pipeline, higher estate agency cross-sell rates and improved adviser capacity and productivity. 2% reduction in average revenue per transaction, reflecting the change in product mix towards refinance activity. In the year, 42% of revenue was generated from non-cyclical refinance activity and 58% of revenue from purchase activity and other ancillary sources. Adjusted operating profit was broadly flat, primarily reflecting investment in fee earner headcount in H1 as we scale up the business. New fee earners supported revenue growth in the year and typically break even around the 12-month mark. Moving now to Slide 19 and cash flow. There was a 14% increase in net free cash flow to GBP 11.2 million. The operating cash to net free cash flow bridge on the left-hand side shows the key items of note. Operating cash before working capital movements was GBP 36.4 million, 3% higher than the prior year and including GBP 1.9 million of non-underlying cash outflows primarily relating to closed branch costs. There was a GBP 4.4 million working capital outflow, reflecting the ongoing transition to annual billing across the Lettings portfolio to improve competitiveness and landlord retention and position the business ahead of the Renters' Rights Act becoming effective. We expect the portfolio to be fully transitioned to annual billing by 2027 with an estimated GBP 10 million working capital investment across 2026 and 2027. The group paid GBP 4.3 million of corporation tax and made GBP 13 million of lease liability payments in the period. GBP 3.5 million of CapEx spend primarily relating to our new H2 fit-out costs and internally generated software development. Looking at the opening to closing net cash bridge on the right-hand side. Net debt at 31st December was GBP 16.9 million. This reflects GBP 11.2 million of net free cash flow, GBP 5.3 million of acquisition spend and GBP 9.1 million of total shareholder returns. In the year, we increased the RCF to GBP 40 million and extended it by 12 months to June 2028. The interest cover and leverage covenants have remained unchanged. And at the year-end, the leverage covenant ratio was 0.7x, which was below our covenant limit of 1.75x. And the interest cover ratio was 24x, which was above our 4x covenant. Finally, the Board has declared a final dividend of 0.93p per share with a full year dividend totaling 1.17p per share, which is unchanged from the prior year. The proposed dividend will be paid on 15th of May, 2026 to shareholders on the register at 10th of April, 2026, subject to shareholder approval at the AGM. Moving to Slide 20 and an overview of the group's capital allocation framework. The framework aims to support long-term growth and deliver sustainable shareholder returns through organic growth, making accretive Lettings-focused acquisitions, paying a progressive dividend whilst maintaining strong dividend cover and delivering other shareholder returns, namely share buybacks. We continually evaluate the effective uses of capital, including comparing acquisition returns versus those achievable through share buybacks. We consider factors such as expected return on investment, earnings per share accretion, borrowing capacity and leverage. The group seeks to utilize its balance sheet and revolving credit facility to best effect and to maintain a leverage ratio of net debt to adjusted EBITDA of less than 1.25x at the year-end position. I'll now hand back to Guy, who will take us through the operational update. Guy Gittins: Thank you, Chris. Over the next 2 slides, I will lay out operational progress we've made in our business areas and our focus for 2026, followed by the operational upgrades we've delivered across the group. In Lettings, we continued to make progress with our organic growth strategy, delivering against our formula of growing the portfolio and driving the cross-sell of high-margin services. Over the year, we increased our London market share by 8% and maintained high levels of stability across our tenancy portfolio. Revenue and margin growth was supported by a 7% increase in cross-selling property management and the proportion of the portfolio that is actively managed now stands at 43%, up from 32% at the end of 2021. Our focus over 2026 is to continue delivery of our growth formula to continue to grow this highly valuable business. Organic growth is complemented by acquisitive Lettings growth. In the year, we delivered good returns from our Reading and Watford acquisitions with returns above our initial targets. In Watford, we have integrated the business into the operating platform, rebranded to Foxtons and boosted with a bolt-on acquisition that is delivering returns at our 20% target level. We are now the largest Lettings agent in Watford with more than 3x the market share of our nearest competitor. And in January 2026, we expanded into 2 new complementary high-growth markets in Milton Keynes and Birmingham. Milton Keynes is well connected to London, home to a large number of corporate headquarters and has one of the highest levels of GDP per capita in the U.K. Birmingham has undergone a significant regeneration and continues to attract major investments, including a growing number of banking and professional services roles, a trend set to accelerate with the opening of HS2. Both cities have strong pipelines of build-to-rent and new homes developments. And we have already linked these businesses with our corporate customer base. These acquisitions are not part of a plan to become a national agent. This is a targeted strategy focused on markets where Foxtons can create real value. Our priority over the next 12 to 18 months is maximizing returns from these deals through the delivery of organic growth, cost synergies and high return on investment acquisitions. Moving to sales. We operate through a highly volatile market last year, and our market share held broadly flat. In November, we appointed a new Managing Director, James Stevenson, who has a fantastic track record of delivering turnarounds over his 20-year career at Foxtons. And we now have an operational plan to reposition the business to reflect current market environment, and in doing so, improve profitability. It's worth remembering that whilst we are a Lettings-focused business, sales is an integral part of our full service proposition and is highly complementary with Lettings. Our offer is built around supporting customers through their entire property life cycle and sales plays a critical role in helping landlords expand or reposition their portfolios. By delivering this full service approach across sales and Lettings, we significantly strengthened landlord loyalty, enhanced revenue repeatability and increased customer lifetime value. And as Chris highlighted earlier, sales delivered a positive financial contribution before the allocation of shared costs. In Alexander Hall, our Financial Services business, we delivered a 10% revenue growth driven by increasing the operational productivity of our advisers and improving the efficiency of our processes. This included a 13% uplift in mortgage deals per adviser and a 5% improvement on the conversion of leads to mortgage applications. Continuing to build on these upgrades will support further growth. And underpinning all of this is a consistent focus on cost and productivity to maximize the operational leverage across the business. As Chris mentioned, we forensically review our cost base on an ongoing basis, taking costs out wherever we can, including our recent HQ move, which generated GBP 1.5 million of annualized savings. And we're focused on leveraging our technology stack and data capabilities to drive efficiency right across the organization. Turning now to Slide 23. Over this slide, I will present the key group-wide operational upgrades we're delivering to support our growth plan. Customer lifetime value is a key focus for the business. We aim to support customers through their property life cycle, becoming their trusted property partner. And in doing so, we can generate high-quality recurring revenues and earnings. To do this, we need to deliver best-in-class service. We've made significant progress in this area, and I'm pleased to say that we now achieve customer satisfaction scores of over 80%, a double-digit uplift since we launched these programs. In 2025, we continued to enhance the customer experience by further embedding our real-time feedback system across the full customer lifecycle, enabling us to measure service throughout the journey and resolve any issues quickly. Combined with AI-powered sentiment analysis, this allows us to identify the drivers of exceptional service. It embeds insights into training and delivers consistently high standards. Supporting this focus on service are our brand and marketing initiatives. Our focus this year was on strengthening customer attraction and retention in a competitive market. Foxtons has always had a distinctive level of brand awareness. We do things differently. And in 2025, we built on that by launching an exclusive partnership, which makes us the only U.K. estate agent where customers can earn Avios points. It's a differentiated position designed to attract new customers, reward loyalty and drive uptake of our higher-margin services. Turning now to our technology and data capabilities. Our in-house technology and data stack creates the flexibility to develop and deploy AI and data solutions at pace without the constraints of an off-the-shelf system. Our approach is very clear. We only invest in AI where it makes a meaningful difference to our financial results. It's not AI for AI's sake. In 2025, we made strong progress. We expanded our AI-driven sentiment analysis, giving us far deeper insight into customer interactions. We also advanced our data-led lead scoring models, ensuring our people focus their time on the highest value opportunities. And we introduced AI-powered training tools that help new agents reach their full performance faster. Together, these improve efficiency, drive higher productivity and ultimately, enhance profitability. We will continue to identify areas across the platform where embedding AI can deliver an operational and financial impact. These upgrades are a key part of the continuous improvement culture that now runs throughout the entire business. Finally, and most importantly, our people and culture. It is my fundamental belief that a state agency is a people business, having the right talent, developing great leaders and embedding and really demonstrating our core values is critical to our success. This year, we worked with external partners to assess our strengths and opportunities, enhance our employee proposition and introduced our Getting It Done. Together. framework to align recruitment, development and well-being across the organization. The response from our people has been really encouraging. 81% believe Foxtons is well positioned to succeed over the next 3 years, and 85% believe we truly value diversity and build diverse teams. We remain committed to building a collaborative culture that enables our people to deliver exceptional service for our customers. And finally to Slide 25 and the outlook for 2026. In Lettings, we expect the market dynamics we saw throughout '25 to continue with consistent levels of stock and strong tenant demand. The Renters' Rights Act represents a significant growth opportunity for Foxtons as landlords increasingly need professional support to navigate the new regulations. In addition, the 2 acquisitions we completed in January 2026 will generate incremental Lettings revenues. Our plan for 2026 is focused on maximizing the returns from the deals we have completed over the last 18 months, driving organic growth, delivering cost synergies and progressing targeted bolt-on acquisitions to strengthen our market positions. Turning to sales. Buyer activity continues to be held back by weak consumer confidence, macroeconomic concerns and policy decisions. In response, we are repositioning the business for the current market conditions to improve profitability. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and cost continued discipline. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings-accretive acquisitions and continued cost discipline. Importantly, profitability across the group remains underpinned by our substantial base of non-cyclical and reoccurring Lettings revenues, giving us confidence in our ability to deliver against our growth strategy. That concludes the formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks. I'll now pass to the operator for any questions you may have. Operator: [Operator Instructions] Your first telephone question today is from Robert Plant of H2 Radnor. Robert Plant: Three questions, please. Post the acquisition in Birmingham -- the acquisition is in the center of Birmingham. How much of the Birmingham market are you targeting geographically? Secondly, the period of repositioning in sales, how long do you think that will take? And lastly, what are the working capital implications of the Renters' Rights Act? You mentioned investment in working capital. I'm sure there's a difference between when you collect and when you bill for sales. So, can you just talk us through that, please? Guy Gittins: Well, thank you very much for those questions, and welcome, everybody. Thanks for tuning in. Firstly, if I talk about Birmingham, the business that we bought as we do when we're targeting new locations, we always use data to lead the decision and we look for high-volume, high-value rental markets. And obviously, Birmingham is a superb area for this. There's also still, we believe, good growth left in the Birmingham market, both for sales and for Lettings. So, really highlights the reasoning behind looking outside of London as well in conjunction with our continued focus on talking to businesses within London that would be bolt-on. The business that we bought is a Central Birmingham specialist with leading market share within the city center. And we are talking already to other agencies in the nearby vicinity that would allow us to continue our bolt-on strategy to quickly grow revenues and continue to grow that portfolio of Birmingham properties to give us a slightly larger geographic area. So yes, always, we look to buy the hub, which is the business that we bought FleetMilne, and we are wanting to add to that to turbocharge the growth as quickly as possible, and that helps us really drive those profits in the years after. Second question was around repositioning of sales and how quickly does that happen. We're fortunate, as you know, to have huge amounts of data, huge volumes of data and using the data platform that we've built over the last couple of years. Chris and I, and the rest of the senior leadership look at this data on a daily basis to really give us a view of where we think the sales market is heading and allows us to be able to dial up or dial down resource in certain areas. And last year is a great example of that. Prime Central London, the volumes were considerably subdued. However, in our Southwest offices, the market was actually really quite buoyant and that allowed us to be able to apply resource meaningfully to grasp the opportunity in those higher volume areas. And that's really what our plan will be across this year as we sit here looking at the outlook today for what we feel the rest of the sales market will look like in London is different to how it looked 6 months ago and different to how it looked 3 months ago. So, that is an always-on process, but we're perhaps a little bit less excited certainly looking with some of the things that are happening in the Middle East about what may happen around inflation and interest rates. So, we're just making sure that we're always ahead of that. I'll pass on the RRA -- the Renters' Reform Act question over to Chris. Christopher Hough: Yes. The question was around our working capital changes in this area. So, Renters' Rights Act, that will see the removal of fixed terms tenancies. And what we'd expect to see there is an average reduction in the billing period start those tenancies. So, we're making a change here to improve our competitiveness and indeed increase landlord retention. And we've been reducing our billing terms since 2023 as it happens. We estimate that over the course of 2026 and 2027, there's a GBP 10 million investment in working capital required as we fully transition our portfolio. Transitioning portfolio takes time, hence, why there's a 2-year period there. Operator: The next question is from the line of Greg Poulton from Singer Capital Markets. Gregory Poulton: Three questions from me, please. Firstly, obviously, the move to more fully managed tenancies has been an important trend for the Lettings business. Could you just talk about the level of uplift in fees you see from a fully managed versus a letting-only tenancy? And second, can you talk about the expected cadence of acquisitions for the rest of the year? I'm not asking for a forecast on that, but just to sort of guide as to what we could expect to see throughout the remainder of the year? And thirdly, linked to that, how much capital expenditure do you think you will allocate to acquisitions in the remainder of the year? Guy Gittins: All right, Greg. Thanks for those questions. Yes, look, we're really proud of the improvement that we've seen over the last 2 or 3 years with the upsell of our property management service, and that really has come from a fantastic cross-business effort, particularly driven by the Head of Letting working very closely with the Head of Property Management. And that means that we've seen a 7% uplift in that cross-sell of property management services, which ultimately delivers around about a 6% additional fee, which is charging for that premium fully managed service. And of course, as we extrapolate that over a longer period of time, that 7% uplift of the volume of services that we're transferring into that premium service for new deals over time massively helps us grow the overall number of properties that we have under management. And that really is a key KPI that we drive within the business and lots and lots of remuneration is linked to that, lots of the KPIs we talk about across the business is focused on it. So, we're proud of that movement, and it's certainly a very big focus across the business. And I think that as we've mentioned, the change into the Renters' Reform Act does, we believe, increase the likelihood of non-managed landlords wanting to take the fully managed service. As we saw and we mentioned in our presentation, it's really easy to fall foul of some of the rule changes and you need a very, very capable agency who's got large teams of compliance, making sure that your property is fully compliant and looked after at every stage along this journey. And that's why we are seeing more people choose that service through Foxtons. Acquisition cadence, look, we've made 2 great acquisitions at the start of this year. We're watching very carefully what the outlook looks like. And of course, our capital allocation is always very much under review, both with our Board and internally. I'll perhaps let Chris talk to that a little bit later. But acquisitions very much are a function of opportunity. We're talking to agencies both inside London and outside London. And really, we want to make sure that we make the right acquisitions, not just any acquisition. We're pleased with the 2 acquisitions outside of London in Milton Keynes and Birmingham that we've made at the start of this year in January. And really, I suppose my preference now is to try to make sure that those new acquisitions are settled in that we can drive the synergies, that we can make them more profitable and hopefully, find some bolt-on acquisitions to make in the near future. Christopher Hough: Finally, Greg, from a quantum perspective on CapEx and acquisitions, we've done 10 already, and I'd be thinking about that 15 number we put out there previously. So, I expect that additional quantum being the target and the ambition for the remainder of '26. Operator: [Operator Instructions] The next question comes from Adrian Kearsey from Panmure Liberum. Adrian Kearsey: I will say, thank Rob and Greg, for asking the questions I was initially going to ask. But in terms of sales, you've got an average property price last year of GBP 574,000. Can you perhaps sort of give us an indication of the range of the types of properties that you sell to give us a sense of how broad or how narrow your market focus is? Back to also to the second question. Back to Birmingham, currently one site. In order to take advantage of that huge opportunity in Birmingham, when you make further acquisitions, do you think you'll end up having multiple offices in Birmingham? Or will you have a single office in the center? Guy Gittins: I'll take the first question around sales. Our average price around GBP 574,000, look, we want to be in the volume market across the markets that we operate in. And the reason for that is we know that they're more resilient, and we are a volume efficiency machine at Foxtons in sales and particularly in Lettings as well. The spread of properties that we sell, we actually have a minimum fee of GBP 6,000 in London. Now, that means that we don't end up selling many short lease garage spaces, which we were doing a little bit of prior to my arrival. But we do across all price points. I mean, we've just agreed something, a bulk deal in an area in the east of London that's nearly GBP 10 million. And so we're operating in all markets. But absolutely, our sweet spot is that volume piece right in the middle of where the average pricing is across London, and that's really by design. Now, we have been making some efforts to try to increase over time the average. And when I say increase, just a very small increase in that average sales price does make a meaningful difference to us, but we don't want to ever turn our back on that volume market. And the second question was Birmingham one site or multi-sites. Well, I think certainly today, we view the value, the biggest opportunity is to continue to grow from the center to the more affluent areas of the residential areas around Birmingham. And as I've mentioned, we're talking to multiple agencies around those locations at the moment already. And we can also bring, of course, the Foxtons Operating Platform, which really does help grow the businesses. And we've seen fantastic examples of that in both Watford and Reading last year where we've actually delivered some really solid growth once we've layered in the kind of Foxtons' toolkit of marketing, brand productivity and operational excellence. And that doesn't happen overnight. That takes a little bit of time to bed in, and that's what we're very busy doing with both our business in Birmingham and in Milton Keynes at the moment. Operator: There are no more questions from the telephone anymore. We can now read the questions from the webcast. Unknown Executive: First question is from Robin Savage at Zeus. It says, the impact of the Renters' Reform Act this year is interesting. Are there any early market signals that we or any other lettings agencies are seeing that might indicate an uptick in DIY landlords moving towards professional lettings management? Guy Gittins: Great question. Thank you, Robin. Yes, absolutely. Look, we've seen this trend starting to kind of infiltrate the London market over the last 18 months really. We've seen obviously market share increases for Foxtons, and we've seen this increase in our property management cross-sell. And as I've mentioned at the start, that's been a major focus of what I wanted the business to deliver over the last 2 or 3 years, and I'm really proud of the delivery of that. And I don't see it slowing down. We really do offer and believe the offering of the service that we can give to our landlords is best-in-class. And what we are trying to do is deliver the very best service for our landlords, but also making sure that they remain fully compliant and clear of any issues that may be happening and being ahead of those legislation changes as we know they can come in very quickly and catch people out. So, very pleased with what that looks like and definitely are seeing that within London. Unknown Executive: Second question from Robin. Foxtons has built a significant competitive advantage through decades of structured proprietary data and a highly analytical approach. How do you see advances in artificial intelligence and large language models further strengthening that advantage, both in how Foxtons generates market insights and how it manages the business and delivers differentiated services relative to competitors with less developed data capabilities. Guy Gittins: Great question. Thanks, Robin. Well, you've been a beneficiary of coming and seeing the operation in-person here at Foxtons. And I'm sure that you'd agree that there isn't another data system, there isn't another database like Foxtons has across the London market and as far as we're aware, across the whole of the U.K. market. And we've been really utilizing that database, cross-referencing it already with early machine learning over the last 12 months and some AI functionality to help us improve productivity. Great example of that is we have 100 people who sit at Foxtons' head office who are calling into a huge database of nearly 4 million people to drive new listing opportunities. Now the old way of doing that would be just randomly picking a street and calling from A to Z, but our new system uses AI and has machine learning so that it filters up to the top and surfaces the most likely leads that we think we'll convert in the next 3 months. And that's had a meaningful impact on the productivity of that team. We're also using AI to help us improve the speed of new recruits under training to get them to be able to build for the business quicker by helping them through the training flow where we've got AI platforms that have really improved that speed of service during that initial training period. And we're using AI in other areas as well. And as we said in the presentation, we're not -- we are definitely not using AI for AI's sake. It has to have a meaningful impact to the bottom line. And we keep a very, very close eye on lots of technologies that lots of people are working very hard to try to deliver across the industry. And because of our structure of that data and the way that we've built the database, we're able to loop in these functionalities very, very, very quickly. Thanks for that question, Robin. Unknown Executive: One from Andy Murphy at Edison. Given the number of recent deals outside London, are you no longer focusing on London M&A? Guy Gittins: Great question. We absolutely are still very focused on London opportunities. But given where we've seen the growth in the marketplace when we were presented with the deals that we could have done this year and last year, it just totally made sense to look at the Birmingham and the opportunities in Milton Keynes. But it doesn't stop us from looking and continuing to speak to other agents as roll-ins within the London environment. But as I said before, they need to be the right deal for Foxtons, and we need to be paying the right prices for them. And yes, that search is still an always on. So, certainly not turning our back on London-focused acquisitions. Thanks, Andy. Unknown Executive: One from Robert Sanders at Shore Capital. What are the multiples in the market at the moment for Lettings portfolios? And how much consolidation do we see likely in the sector after RRA? Guy Gittins: Yes. I think the RRA opportunity is more likely to create even further consolidation. But actually, I'll let Chris take the questions on the multiples. Christopher Hough: Yes. The multiples really depends where we're buying, what we're buying, the balance of sales versus Lettings. But broadly speaking, a range from 2 to 3x Lettings revenue is a sort of multiple we're seeing, which is actually pretty consistent with what I see in both '24 and '25. So, there's been no significant change there. And for us, now we've got 2 new platforms, which we're building into, i.e., Milton Keynes and Birmingham. That gives the bandwidth and the opportunity to launch into new areas, which is really exciting for us. Unknown Executive: And a question on the sales market from [ Donald ]. How impactful is the lack of overseas buyers in London and the alleged exiting of high-net-worth individuals from the London sales market? Guy Gittins: We touched on earlier, our average sales price across London is GBP 574,000. The super prime market, we know very clearly, particularly last year, felt the pain of the exiting of high-net-worth individuals and certainly, lots of reports, as I'm sure you will have read from the super prime agents really having a torrid year last year. Did that impact our volume market? I mean, ultimately, it does have a very small effect on the movement up and down chain. But the reality is that's why we are in the high-volume market because we know that those transactions overall are less impacted by these big swings of where Netwealth may decide to spend their money this summer versus the next summer. So yes, we haven't been impacted by it. But certainly, super prime agencies, we know really felt the pinch last year. Unknown Executive: And the following question, what are the -- essentially, what's the catalysts that are required to drive volumes in the sales market? Guy Gittins: Well, ultimately, the biggest barrier to returning back to those 145,000 sales transactions that we historically used to see going back before the financial crisis is stamp duty. Last year, we think there were somewhere in the region of 90,000 sales transactions. The year before that, probably 85,000 sales transactions. We always believe that the market would return to its 5 or 6-year average of around about 100,000 sales transactions, but that looks very unlikely this year. And that's the reason that we are ahead of the market really thinking about what we want to do with the sales business this year so that we are rightsizing everything across all of the different regions that we're in. But if you also look at sales being agreed this year already, we know that year-to-date, the number of sales in London is circa down in total around about 6%, whereas pretty much the rest of the U.K. market is up year-on-year on sales agreed. So hopefully, another good reason to point to our acquisitions outside of these locations. Unknown Executive: And that's the end of the questions from the web. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Guy Gittins for any closing remarks. Guy Gittins: Firstly, thank you for joining us this morning. As you know, Chris and I will meet many of you over the coming weeks. We are really focused on continuing to deliver the medium-term targets that we set out in our CMD in last year. We've got a very good business. We've taken a lot of costs out last year, and we're laser-focused on making sure that we can continue to pull all of the different growth levers to achieve those targets in the medium term. I appreciate everybody joining the call this morning, and look forward to seeing you all soon.
Operator: Hello, ladies and gentlemen. Thank you for standing by, and welcome to the Gaotu Techedu Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I would now like to turn the conference over to your first speaker today, Ms. Catherine Chen, Head of Investor Relations. Please go ahead, Catherine. Catherine Chen: Thank you, operator. Good evening, everyone. Thank you for joining Gaotu's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. My name is Catherine, and I'll help host the earnings call today. Gaotu's earnings release for the quarter was distributed earlier and is available on the company's IR website at ir.gaotu.cn as well as through PR Newswire services. Joining the call with me tonight from Gaotu's senior management is Mr. Larry Chen, Gaotu's Founder, Chairman and Chief Executive Officer; and Ms. Shannon Shen, Gaotu's Chief Financial Officer. Larry will first provide the business highlights for the quarter. And then afterwards, Shannon will discuss our financial performance in more detail. Following their prepared remarks, we will open the floor to questions from analysts. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current beliefs and expectations as well as the current market and operating conditions, and they involve known and unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control and may cause the company's actual results, performance or achievements to differ materially from those contained in any forward-looking statements. Further information regarding this and other risks is included in the company's public filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statements, except as required under applicable law. During today's call, management will also discuss certain non-GAAP measures for comparison purpose only. For a definition of non-GAAP financial measures and reconciliation of GAAP to non-GAAP financial results, please refer to our fourth quarter and fiscal year 2025 earnings release published earlier today. As a reminder, this conference is being recorded. In addition, a live and archived webcast of this conference call will be available on Gaotu's IR website. It is now my pleasure to introduce our Founder, Chairman and Chief Executive Officer, Larry. Larry, please? Larry Chen: Good evening, and good morning, everyone. Thank you for joining us on Gaotu's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. I would like to take this opportunity to express my gratitude to each of you for your interest in and support for Gaotu. Before I start, I would like to remind everyone that all financial figures discussed today are in RMB unless stated otherwise. 2025 marked a year of exceptional resilience for Gaotu. We delivered a high-quality operating performance amid a rapidly evolving environment. If I were to summarize the year's achievements in one word, it would be refinement, representing not just a sharpening of our teaching quality, but a systematic elevation of our operational granularity. Throughout the year, we not only exceeded our growth targets, but more importantly, reinforced our organizational foundation, strengthening our core capabilities while continuing to scale rapidly. As we enter 2026, our approach to growth continues to evolve and mature. We are intentionally refining the way we grow, prioritizing profitable growth with the advancement of AI capabilities at the core of our operations, All with AI, always AI. This is how we are driving improvements in business health, operational efficiency and long-term viability. Our fourth quarter performance represents an early validation of this strategic focus at the operational level. In the fourth quarter, we maintained steady top line expansion while realizing meaningful operating leverage. Revenue increased by 21.4% year-over-year to RMB 1.7 billion and the bottom line improved by 38.0%, driven by continued efficiency gains. For the full year of 2025, revenue grew by 35.0% to RMB 6.1 billion, exceeding our initial expectations at the beginning of 2025. Net operating cash inflow reached RMB 416 million, a net increase of RMB 158 million year-over-year, reflecting continued improvement in operational quality and efficiency. After excluding the impact of share repurchases, our cash position increased by RMB 221 million year-over-year, providing strong support for our ongoing investments in products, technology and talent underpinning sustainable long-term growth. We remain firmly committed to enhancing long-term shareholder value. Under our aggregated share repurchase authorization, we have repurchased a total of RMB 670 million of shares, representing 12.8% of our total outstanding shares, including RMB 343 million in buybacks in 2025. As our business fundamentals continue to strengthen, we are well positioned to balance long-term strategic investments with a stable, predictable shareholder return framework. Through consistent and prudent capital allocation, we seek to build durable value, enabling investors who grew alongside Gaotu to benefit from both our capital returns and the intrinsic value we generate. Most encouragingly, our operational gains are increasingly translating into tangible financial performance. We are shaping a more resilient, sustainable and profitable business model, a virtuous growth flywheel anchored in healthy unit economics driven by strong operational excellence and steered by our unwavering commitment to long-term user value. Guided by this framework in 2026, we will focus on advancing strategic priorities across 5 fronts. First, in calibrating growth pace, profitability will remain a core strategic priority. Over the past year, we have comprehensively optimized our cost structure, resource allocation and operating processes to fortify our business models and reinforce its economic foundation. Throughout 2025, our core business delivered a stable profitability, validating the strategic direction we set in the prior period. Meanwhile, our strategic initiatives have progressed well and are steadily emerging as new growth engines. While near-term revenue trends may not fully capture our underlying momentum, we assess performance based on the quality, structure and the sustainability of our growth, which are the pillars of lasting value creation. Second, in product development, we remain relentlessly user-centric, driving continuous innovation in educational products and learning services. The [indiscernible] help learners make real progress rather than merely completing cost delivery. We will continue deepening our understanding of users' real learning needs and pathways, systematically embedding these insights into curriculum design, teaching methods and service experiences. We firmly believe that truly valuable growth stems from superior learning outcomes, higher user satisfaction and stronger brand trust. Third, with respect to technology, we are integrating innovation across our business operations and organization, making it a structural driver for enhancing operational efficiency and user experience. Technology must enable teaching effectiveness, service excellence and operational preceding. In teaching scenarios, we are proactively combining high-quality instructor resources with AI-powered tools to make learning more engaging and effective. On the operations side, we are leveraging technology and data analysis to optimize resource education and enable more informed data-driven decision-making. At the organizational level, we are fostering more seamless collaboration through technology, empowering our team to focus on high-impact initiatives that drive meaningful value creation. Fourth, in terms of talent strategy, we continue to reinforce our competitive moat built around the high-caliber educators. Educators are our most valuable asset and central to sustaining our long-term competitive advantage. We will keep refining our talent selection, development and incentive mechanisms, building a robust pipeline of educators and fostering an environment that supports educators, professional growth and long-term careers. A stable, high-caliber teaching team is a cornerstone for successfully scaling product innovation and technology upgrades. Fifth, to enhance our business portfolio, we are architecting a comprehensive lifelong learning service platform. Personal development is an ongoing journey and learning needs at different stages are inherently connected rather than isolated. Through systematic integration of product formats and delivery models, we ensure learners have access to tailored solutions within Gaotu's ecosystem during every critical development stage. By cultivating deep connections with users, we further strengthen our cross business synergies and extend the user life cycle, significantly enhancing our operating models resilience and long-term return potential. After nearly a decade of development and achievement, Gaotu will celebrate its 12th anniversary in 2026. Standing at this important milestone, we feel immense pride and a strong sense of responsibility. Through an ever-deepening understanding of our users, we have cultivated a core leadership team with a strong sense of ownership and long-term vision, assembled an outstanding well-trained talent pool, distilled a set of cultural principles that shape our direction and most importantly, earned the invaluable trust of tens of millions of students and parents. Since day 1, Gaotu's original aspiration has remained unchanged to build a truly exceptional technology education enterprise. One, where every team member can achieve both material and spiritual productivity, where every student enjoys an exceptional learning experience and accelerated personal growth and where we accompany learners on a lifelong journey of progress while contributing enduring value to the development of education industry and society. Looking ahead, we will remain committed to disciplined prudent management, strictly control risk and continuously strengthen our organizational and cultural foundation through unwavering strategic focus and powerful execution. I firmly believe that as long as we uphold the long-termism, insist on value creation and remain true to the essence of education, Gaotu will advance steadily, generating lasting value for our shareholders, employees, users and society at large. Thank you very much, everyone. This concludes my prepared remarks. I will now pass the call over to our CFO, Shannon, to walk you through this quarter's financial and operational details. Nan Shen: Thank you, Larry, and thank you, everyone, for joining our call today. I will now walk you through our operating and financial performance for the fourth quarter and fiscal year 2025. Please note that all financial data are in RMB terms, unless otherwise stated. In 2025, we systematically optimized our product portfolio and channel mix, filling constant improvements in our revenue quality. We remain firmly committed to advancing our deep integration strategy of AI plus education, substantially enhancing both our educational products and end-to-end operational efficiency through the systematic optimization of our product portfolio and channel structure, leveraging AI as our foundation, learning solutions as our core value and AI-powered digitalization as our operational support. From a structural perspective, after years of focused investments and refinements, we have established a staged growth road map that provides great visibility into future development. Our core businesses delivered solid growth with higher enrollments, optimized unit economics and ongoing profitability improvement, serving as the fundamental pillar supporting the company's profit expansion. At the same time, our strategic initiatives are gaining traction and demonstrating upward momentum, serving as new engines for our scale expansion and profitable growth. In 2026, we will sharpen our focus on user experience and learning outcomes, advancing from scale-oriented growth toward a more efficiency-led model, driven by both revenue scale expansion and operating efficiency gains, we have realized operating leverage for 5 consecutive quarters, continuously elevating our bottom line. In particular, on the user acquisition front, we leveraged AI-driven capabilities and a dynamic resource allocation mechanism to boost user acquisition efficiency. Measured as gross billings divided by selling expenses, user acquisition efficiency improved by 10.8% year-over-year in 2025. Turning to our fourth quarter performance. Revenue grew by 21.4% year-over-year to RMB 1.7 billion. Operating expenses as a percentage of revenue declined by 4.1 percentage points year-over-year, contributing to a 20.9% reduction in our operating loss. As of December 31, 2025, our deferred revenue balance rose by 23.0% year-over-year to RMB 2.6 billion, providing solid visibility for our future revenue growth. Meanwhile, our cash, cash equivalents, restricted cash, short-term and long-term investments totaled RMB 4.0 billion. With this robust cash reserves, we are well funded to deepen our organizational capabilities and improve shareholders' interest throughout 2026. Next, an overview of this quarter's process by business segment. Learning services contributed over 95% of net revenues. Nonacademic tutoring services and traditional learning services as our core segment contributed over 80% of our total revenues. Our new initiatives focused on online and offline nonacademic tutoring services sustained strong growth momentum. In the fourth quarter, gross billings increased by over 30% year-over-year, while revenue grew by 45%. On a full year basis, revenue rose by 9% year-over-year. Within this segment, as our online business benefited from expanding enrollment and enhanced product competitiveness, it demonstrated a constant margin expansion, attaining a middle single-digit margin for the full year. Through ongoing educational content innovation and refined operations, we elevated both product value and the learning experience, driving the retention rate of existing students, which exceed 75% this quarter. Meanwhile, we continued to step up investment in content development centered on cultivating learners' comprehensive capabilities and core competencies. Our latest offerings, including AI-related courses have further enriched and refined our product and content portfolio, enabling us to more effectively address the evolving demand for holistic long-term development. In the fourth quarter, our traditional business maintained stable growth in enrollments while continuing to enhance service quality and efficiency to boost ongoing operational gains. We comprehensively upgraded tutor service standards, deepening our focus on learning process management and learner engagement through clearly defined key procedures and measurable performance indicators, which further reinforced our systematic service delivery capabilities. On the product front, we focused on optimizing our courses to better align with students' learning process and proficiency levels while strengthening our modular needs-based content to enable more targeted and effective instruction. The parallel strengthening of our teaching services and educational products contributed to continued improvement in the overall learning experience at Gaotu. The retention rate for new students also rose meaningfully year-over-year this quarter, reflecting stronger user stickiness. For the full year 2025, revenue from our traditional business grew nearly 15% year-over-year, driven by operational efficiency gains and enhanced organizational capabilities. Profitability for both online large classes and one-on-one tutoring improved year-over-year. Our ongoing refinement of product competitiveness and optimization of operational quality has laid a strong foundation supporting our traditional business sustainable growth. Another key component of our learning services is educational services for college students and adults, where gross billings grew over 15% year-over-year in the fourth quarter, contributing over 15% of total revenues. By prioritizing user needs, optimizing the product mix and sharpening our refined management capabilities, this segment has entered a consecutive growth trajectory and achieved full year profitability across its online offerings in 2025. In our educational services for college students, by leveraging deeper insights into students' life cycle, we have pivoted from selling standard-alone products to developing innovative stage-aligned solutions. These offerings are integrated with adaptive learning pathways that can adjust based on real-time feedback and performance, effectively extending the user learning cycle. Meanwhile, we continued deepening the integration of online courses and AI technologies, fostering personalized learning support and planning capabilities, simultaneously improving both learning experience and outcome. For the full year, our educational services for college students delivered mid-double-digit growth in both [indiscernible] revenue, while reaching profitability at the business line level. Lastly, I will walk you through our financial data. Our cost of revenue this quarter was RMB 540.9 million. Gross profit increased 20.7% year-over-year to over RMB 1.1 billion with a gross margin of 67.9%. Total operating expenses during the quarter increased 15.0% year-over-year to nearly RMB 1.3 billion. Breaking it down, selling expenses increased 20.3% year-over-year this quarter to RMB 885.3 million, accounting for 52.5% of net revenues. Research and development expenses increased 14.0% year-over-year to RMB 165.4 million, accounting for 1.8% of net revenues. General and administrative expenses decreased 2.1% year-over-year to RMB 211.8 million, accounting for 12.6% of net revenues. Loss from operations was RMB 118.0 million and operating loss margin was 7.0%. Non-GAAP loss from operations was RMB 110.7 million, and non-GAAP operating loss margin was 6.6%. Net loss was RMB 84.2 million, and net loss margin was 5.0%. Non-GAAP net loss was RMB 76.8 million and non-GAAP net loss margin was 4.6%. Our net operating cash inflow increased 23.1% year-over-year to RMB 964.8 million. Now turning to our balance sheet. As of December 31, 2025, we held RMB 712 million in cash, cash equivalents and restricted cash, along with RMB 2.7 billion in short-term investments and RMB 551.6 million in long-term investments. This comes to a total of nearly RMB 4.0 billion. As of December 31, 2025, our deferred revenue balance was around RMB 2.6 billion, primarily consisting of tuition received in advance. As of March 4, 2026, we have repurchased an aggregate of around 30.6 million ADS on the open market for nearly RMB 670 million. Before I provide our business outlook for the next quarter, please allow me to remind everyone that this contains forward-looking statements, which include risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on our current estimates, total net revenue for the first quarter of 2026 are expected to be between RMB 1,578 million and RMB 1,598 million, representing an increase of 5.7% to 7.0% on a year-over-year basis. This single-digit increase rate is due to seasonality. We expect the increased rate to return to double digits in the second quarter in 2026. This concludes my prepared remarks. Operator, we are now ready for the Q&A section. Thank you, everyone, for listening. Operator: [Operator Instructions] The first question comes from Crystal Li with CMS. Crystal Li: Congratulations on the strong results. So I just want you to maybe add more color on the development of your off-line business and maybe elaborate more on the -- your future plan on this off-line business. Nan Shen: Thanks, Crystal, for your question. We launched the expansion of our off-line learning centers back in 2023. First, from a strategic perspective, our off-line business represents a clear second growth curve for us and one of the top strategic priority at the group level. The integration of online and off-line is a highly effective approach to enhancing learning efficiency and the overall learning experience and also makes our product metrics more holistic. And it is also a critical step in building our long-term competitive advantages. This initiative is led directly by our founder with prioritization in resource allocation, decision-making efficiency and cross-sector collaboration. By capturing a favorable window of strong user demand in 2023, we have moved quickly to scale our footprint over the past 3 years. We have attracted outstanding industry professionals with deep expertise in local operations, educational product design and teacher sourcing and cultivation, et cetera. Building a professional team is truly important for offline operations and also can execute effectively and also support scalable growth. This has already laid a very solid foundation for our offline businesses. In terms of the current progress and results, our off-line business has achieved clear economies of scale. Since 2023, with continuous investment and operational refinement, our off-line learning center network and revenue scale has grown steadily and rapidly. Based on our current expansion pace and operating plan, we expect the overall scale, I mean, the top line -- the revenue of our off-line business to surpass that of several independently listed peers in the coming year. This is not just a single increase in the number of learning centers. It also represents healthy growth driven by proven unit economics, strong brand reputation and a well-developed supply chain for high-quality teachers. After nearly 3 years of market penetration, our brand has established a solid credibility and influence among students in regional markets. User satisfaction and retention rates continue to improve. And our brand mode is gradually taking shape. Put simply, we have evolved from a pure online service provider to a fully integrated platform, and this is the fundamental and the most definitive outcome of our transformation. That being said, the off-line business has relatively high barriers to entry, including those related to management effectiveness, organizational alignment and also system processes and most importantly, the supply of top-tier teachers. We still have some areas that we need to further optimize and integrate. We are systematically reviewing and refining and continually building up the system to support the growth of this segment. Our upfront investments are focused on strengthening our network footprint, brand reputation and operational capabilities. And we are committed to capturing greater long-term market space and value and progressing steadily towards sustainable profitability. So we foresee at the school level, we can achieve a profitability at this year. And also in the next year, we will foresee our offline business to be profitable, including the headquarter over had. I hope that address your question, Crystal. Operator: As there are no further questions now, I'd like to turn the call back over to the company for closing remarks. Nan Shen: Thank you, operator, and thank you, everyone, for joining the call today. If you have any further questions, please don't hesitate to contact our Investor Relations department or our management via email at ir@gaotu.cn directly. You are also welcome to subscribe to our news alert on the company's IR website. Thank you very much again for your time. Have a great night. Operator: This concludes today's conference call. You may disconnect your line. Thank you.
Operator: Good day, ladies and gentlemen, and welcome to the Red Violet's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Now I would like to introduce your host for today's conference call, Camilo Ramirez, Senior Vice President, Finance and Investor Relations. Please go ahead. Camilo Ramirez: Good afternoon, and welcome. Thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer; and Dan MacLachlan, our Chief Financial Officer. Our call today will begin with comments from Derek and Dan, followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our Investors page on our website, www.redviolet.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. The company undertakes no obligation to update the information provided on this call. For a discussion of the risks and uncertainties associated with Red Violet's business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share and free cash flow. Reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure are provided in the earnings press release issued earlier today. In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amounts may be discussed, and these metrics and their definitions can also be found in the earnings press release issued earlier today. With that, I am pleased to introduce Red Violet's Chairman and Chief Executive Officer, Derek Dubner. Derek Dubner: Good afternoon, and thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. We are pleased to report a record fourth quarter and a strong finish to 2025. The year was defined by disciplined execution, sustained momentum and broad-based demand across our markets. Adoption of our solutions remained robust, driven by the strength of our cloud-native intelligence platform and the expanding integration of our identity graph within customer workflows. Our team executed at a high level, and the strategic investments we have made over the past 2 years are translating into measurable operating performance. We entered 2026 from a position of strength with confidence in our architecture, our trajectory and the opportunity ahead. Let's briefly run through the numbers. Revenue for the quarter was up 20% to a record $23.4 million, producing record adjusted gross profit of $19.5 million, translating to adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 33% to $5.9 million, producing an adjusted EBITDA margin of 25%. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. We generated free cash flow of $3.7 million during the quarter. For the second consecutive year, we bucked the fourth quarter seasonality we had traditionally experienced, delivering sequential revenue growth and establishing a new record quarter. Our IDI billable customer base grew by 169 customers sequentially from the third quarter, ending the fourth quarter at 10,022 customers. FOREWARN added 17,809 users during the fourth quarter, ending the quarter at 390,018 users. Over 620 REALTOR Associations are now contracted to use FOREWARN. For the year, revenue increased 20% to $90.3 million, producing adjusted gross profit of $75.4 million and adjusted EBITDA of $31 million. Adjusted EBITDA margin was 34% for the year. We saw continued growth in the onboarding of top-tier customers, with 127 customers contributing over $100,000 of revenue in 2025 compared to 96 customers in 2024. We generated $18.2 million in free cash flow in 2025 compared to generating $14.4 million in 2024. The momentum we generated in the first 3 quarters extended through the fourth quarter and capped a strong year overall. Demand was well balanced across our verticals, underscoring the versatility of our platform and its growing integration into regulated and mission-critical environments. We continue to see expanding enterprise adoption as customers embed our intelligence more deeply into core operational workflows, further strengthening the durability and visibility of our revenue base. Throughout the year, we continued to execute against a robust product road map, advancing capabilities across our cloud-native AI-enabled platform. We made targeted investments in data science, product development and go-to-market resources to support innovation and long-term growth. At the same time, we executed upon our strategic plan announced last year of increased automation across key areas of the organization, enhancing efficiency and productivity while maintaining operating discipline. We believe there remains meaningful opportunities to further automate and optimize workflows across the business, which we expect will continue to improve performance and scalability over time. On the pervasive topic of AI, there has been significant discussion in the market about artificial intelligence potentially commoditizing software. We believe it's important to distinguish between AI as a capability and the infrastructure required to deliver mission-critical intelligence at scale. Our platform is not a front-end application layered on top of a model. It is a full technology stack, a purpose-built cloud infrastructure, distributed and parallel computing architecture, proprietary data ingestion and normalization systems, rigorous validation frameworks, governance and security controls, API layers and embedded machine learning workflows, all integrated to create and continuously refine a longitudinal identity graph developed and validated over many years. Our management team has been building platforms and companies in this sector for nearly 3 decades. This is our third platform in the identity and analytics space. And throughout that time, we've repeatedly been asked how we compete with larger incumbents or what prevents new entrants from replicating what we build? The answer has never been a single model or a single data set. It has been the integration of architectural design, proprietary engineering, accumulated data intelligence, regulatory alignment and disciplined execution over time. From the earliest days of our first company in the late '90s, we recognized that solving identity at scale required parallel computing and proprietary processing frameworks. We developed our own internal language and systems to ingest, normalize, validate and unify large volumes of structured and unstructured data. IRON is our proprietary entity resolution, data processing and machine learning framework, purpose-built to resolve identities with precision, scalability and computational efficiency that generic frameworks cannot easily replicate. It serves as the core intelligence layer within our architecture, enabling high confidence identity resolution across complex and fragmented data environments. Our AI-assisted development capabilities operate natively within this framework, allowing us to further optimize performance and accelerate innovation. This intellectual property is not publicly available and remains foundational to the construction and continuous refinement of our identity graph. These capabilities were not developed in response to the current AI cycle. They've been embedded in our architecture and our operating philosophy from inception. Artificial intelligence, including generative AI, is a powerful accelerator. It can shorten development cycles, enhance automation and improve analytical precision, but AI alone does not create a durable platform, a unified longitudinal identity graph or the regulatory-grade workflows that our customers depend on, environments where accuracy, consistency and auditability are essential. As AI capabilities continue to evolve, we believe the platforms that will benefit most are those already architected with embedded AI, deep analytical frameworks and secure cloud-native infrastructure. In that respect, AI strengthens and extends the advantages we have built. It does not replace them. Moreover, certain competitors continue to operate on legacy on-premises or hybrid architectures that were not designed for modern cloud-native deployment or deeply embedded machine learning. Because our platform was architected from inception as a cloud-native system with AI integrated directly into core workflows, we believe we are structurally better positioned to incorporate new advancements rapidly and continue widening our competitive moat. Much of the current AI discussion has centered on agent-based automation and what that could mean for traditional per seat software models. It's important to understand that our revenue model is and always has been usage-based, supported by contractual minimums. Approximately 90% of our revenue is volume-driven. The limited portion that is seat-based exists primarily in regulated environments, including law enforcement and collections, where seats are limited to direct human interaction and any automated use is converted to volume-based pricing. Importantly, we view increasing AI adoption by our customers, including agent-based automation and workflow augmentation, as a productivity enhancer. As automation reduces manual effort and accelerates decision-making, we expect transaction volumes and data velocity across our platform to increase. In that context, AI is not a substitute for our solutions. It's a catalyst for greater utilization of them. Expanding the depth and breadth of data within our intelligence engine to serve additional use cases and industries has long been a core element of our strategy. We have consistently enriched our identity graph with new data attributes and analytical capabilities to broaden its applicability across verticals. As AI reduces the cost and time required to build application layers and orchestration tools, we believe competitive advantage increasingly shifts toward platforms that control the intelligence engine. Because we control that engine via our cloud-native platform and longitudinal identity graph, we are now positioned not only to continue expanding horizontally across industries, but also to expand vertically by building and integrating more workflow, case management and application layer capabilities directly on top of our platform, allowing us to internalize key orchestration layers and further embed our intelligence at the center of customer operations. At the same time, we continue to deploy AI-enabled capabilities to aggregate and contextualize fragmented data across our identity graph, uncover deeper relational linkages between entities, identify and surface risk signals with greater precision and deliver more intuitive workflow-driven interfaces. Advancements in AI-assisted development are accelerating our road map, compressing development cycles and broadening the solutions we can deliver. In that respect, AI is not simply enhancing our existing capabilities, it is expanding the strategic scope of our platform and deepening our integration within customer workflows. Now I'll turn it over to Dan to discuss the financials. Daniel MacLachlan: Thank you, Derek, and good afternoon, everyone. The fourth quarter marked a record finish to an exceptional year for Red Violet, defined by strong revenue growth, expanding margins and meaningful cash generation. Importantly, we accomplished this while continuing to invest in the business for the long term, adding more than 30 team members during the year, with a focus on product development and go-to-market expansion. These investments were deliberate and strategic, expanding our AI-driven capabilities and broadening our market reach, all without compromising financial performance. We continue to scale the business both vertically, deepening adoption across existing markets, customers and use cases and horizontally, by introducing new products and expanding into new industries. That strategy is translating into larger and more valuable customer relationships, with 127 customers now contributing over $100,000 in annual revenue in 2025, up 31 customers from the prior year. It is also expanding the reach of our platform as we surpassed 10,000 customers on IDI and more than 620 REALTOR Associations contracted to use FOREWARN. Collectively, these results position us with strong momentum as we enter 2026, supported by a larger and more diversified customer base, expanding platform adoption and continued operating leverage. Turning now to our fourth quarter results. For clarity, all the comparisons I will discuss today will be against the fourth quarter of 2024, unless noted otherwise. Total revenue was a record $23.4 million, up 20% over the prior year. We generated a record $19.5 million in adjusted gross profit, delivering adjusted gross margin of 83%, up 1 percentage point. As is typical in the fourth quarter, personnel costs include year-end incentive compensation tied to annual performance. Even with this seasonal expense, adjusted EBITDA increased 33% to $5.9 million, producing adjusted EBITDA margin of 25%, up 2 percentage points. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Turning to the details of our P&L. Revenue for the fourth quarter was a record $23.4 million. For the second consecutive year, we outperformed the typical fourth quarter seasonality, delivering sequential revenue growth and establishing a new quarterly high. Within IDI, we continue to see strong demand for our solutions and healthy customer expansion, adding 169 billable customers sequentially to end the quarter with 10,022 customers. Our financial and corporate risk vertical continues to deliver consistent strong revenue performance, driven by solid results across our core financial services customers, including banking, insurance and broader corporate risk. The background screening industry also continues to perform exceptionally well, supported by the introduction of additional products, enhanced functionality and new integrations over the past year, driving meaningful growth and momentum in the fourth quarter. Our investigative vertical delivered another strong quarter, supported by continued demand across state and local law enforcement agencies as well as broader investigative customers. We added approximately 200 law enforcement customers in 2025, reflecting the growing reliance on our platform within the public safety community. Performance in the quarter was driven by increased transaction volumes, new agency wins and the further embedding of our solutions into day-to-day investigative workflows. Our emerging markets vertical was an important contributor to revenue growth in the fourth quarter, generating meaningful expansion across a broad and diverse set of customer segments. While we remain in the early stages of penetration within many of these markets, adoption continues to build, providing clear runway for sustained growth. Collections maintained its positive trajectory in the quarter, delivering another period of high teens revenue growth. The continued recovery in this vertical is translating into sustained demand and improved activity levels, reinforcing our competitive position and long-term opportunity in the market. Lastly, IDI's real estate vertical, excluding FOREWARN, declined modestly year-over-year as elevated home prices and interest rates continue to constrain affordability and dampen overall housing activity. Turning to FOREWARN. Revenue growth remained robust in the fourth quarter, driven by the platform's increasing adoption within the daily workflows of real estate professionals. We ended the year with over 620 REALTOR Associations under contract and more than 390,000 users on the platform. Contractual revenue represented 77% of total revenue in the quarter, consistent with the prior year. Gross revenue retention remained strong at 95%, down 1 percentage point. Moving back to the P&L. Our cost of revenue, exclusive of depreciation and amortization increased $0.4 million, or 12% to $3.9 million. Adjusted gross profit increased 21% to a record $19.5 million, resulting in an adjusted gross margin of 83%, up 1 percentage point from the prior year. Our sales and marketing expenses increased $0.4 million or 9% to $5.3 million for the quarter, driven primarily by higher personnel-related expenses. General and administrative expenses increased $1.5 million or 18% to $9.8 million, primarily reflecting higher personnel-related costs. Personnel expenses are typically elevated in the fourth quarter due to year-end incentive compensation and bonus accruals tied to annual performance for the executive leadership team. Depreciation and amortization increased $0.3 million or 12% to $2.8 million for the quarter. Net income increased $1.9 million or 226% to $2.8 million for the quarter. Adjusted net income increased $1.1 million or 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Moving on to the balance sheet. Cash and cash equivalents were $43.6 million at December 31, 2025, compared to $36.5 million at December 31, 2024. Current assets totaled $56.5 million compared to $46.2 million, while current liabilities were $7.9 million, down from $10.3 million. We generated $6.7 million in cash from operating activities in the fourth quarter, unchanged over prior year. Free cash flow for the quarter was $3.7 million compared to $4.4 million in the same period last year. In the fourth quarter and through February 27, 2026, we purchased 57,812 shares of company stock at an average price of $44.01 per share. In total, we have purchased 611,733 shares at an average price of $22.26 per share under our stock repurchase program. As of February 27, 2026, we had $16.4 million remaining under the repurchase program. In closing, 2025 marked another year of disciplined execution and record financial performance for Red Violet. We delivered 20% revenue growth, expanded adjusted gross margin to 84%, adjusted EBITDA margin to 34% and generated $18.2 million in free cash flow. This performance reflects the consistent execution of our team and the increasing efficiency of the business. We believe the scale and financial strength we have built provide a durable base for continued profitable growth. With that, our operator will now open the line for Q&A. Operator: [Operator Instructions] Our first question for today will be coming from the line of Josh Nichols of B. Riley Securities. Josh Nichols: Great to see the company bucking the 4Q seasonality trend yet again. Looking at the enterprise pipeline, I know you secured a couple of wins. You mentioned like a toll authority and payroll processor, I think, the other quarter. Just any update on how that's progressing or generally, what you're seeing in terms of like the enterprise customer pipeline when we look at 2026? Daniel MacLachlan: Yes. Thanks, Josh. This is Dan, and I'll take that question. So yes, I mean, when we look at that enterprise pipeline and specifically kind of that higher-tier customer, we've been excited, and we've given some color on some recent wins. Obviously, we just announced a record number of customers in excess of $100,000 a year, almost a 30% increase -- just over a 30% increase in that customer cohort. And that's really representative of how that pipeline has developed and how that pipeline continues to develop. So we're excited about the investments we've made, the continued execution to move from lower to medium to higher-tier customers, and it's reflected in the cohort as announced today, 127 customers in excess of $100,000 in revenue a year. And so that pipeline continues to develop well, and we're converting into real meaningful customer wins. Josh Nichols: And then just a follow-up. A lot of additions continue to see in like the law enforcement agency vertical, 200 plus this year. When you look at like the 2026 growth trajectory. Like what are the top 1 or 2 opportunities that you think are going to move the needle specifically in those end markets because you serve so many? Derek Dubner: Yes. Thanks, Josh. Derek here. Great to talk to you. The end markets that I think that today, at least, we are most excited about, continue to be public sector and background screening support. And I think as Dan mentioned, we announced we won the largest payroll processor in Q3 last year. That contract kicks in this year. And so we're very excited about that. That proves our differentiation in the marketplace, testing and winning against very strong competition out there. And then in public sector, we continue to make very nice traction, as Dan talked about and you talked about in law enforcement. And we are seeing some great progress at the state level as well with a number of use cases in the way of eligibility requirements and identity verification. And those use cases really are so broad. They capture so many of various state agencies, if you will, use cases. So we continue to see progress there, and we continue to win those. And again, I think we've got a model that's very replicable, and we can replicate it across every state given the uptake there. Operator: Our next question is coming from the line of Eric Martinuzzi of Lake Street Capital Markets. Eric Martinuzzi: I also wanted to focus on the higher-tier customers. That is very substantial growth there in those accounts that are doing over $100,000 annually. I know you've talked when you were asked the question about, hey, where can the business go, that there are, let's call them, whale-sized accounts in the $5 million to $10 million annually. Are there any of those prospects, those types of whale prospects in the pipeline that you guys feel are closer, could happen in 2026? Or is it still too soon to consider them in the funnel? Daniel MacLachlan: Eric, this is Dan. I appreciate the question. And yes, I mean, we have those opportunities now in the pipeline. We also have those opportunities as customers. The third quarter reference we made to one of the largest payroll processors in the country that we won, ultimately, the volume of that customer over time as we continue to expand that relationship can be a multimillion dollar a year customer. The minimum commitment is probably around low to mid-6 figures starting in 2026, which is great. But we think the opportunity to expand that relationship goes into the 7 figures and plus. So yes, we're really excited about the pipeline, but we're also excited about some of these recent large wins that are really representative of those type of customers you're talking about. Eric Martinuzzi: Okay. And I know it was probably -- last summer, you had a pretty substantial data rights agreement that you're able to renew on favorable terms. As far as 2026 goes, do we have anything of that nature, a substantial data rights exposure that we're working on? Or is it all relatively small in comparison? Daniel MacLachlan: Yes. There's really no material licensing renewal agreement that is coming up. I mean we structure these agreements, as you know, long-term, unlimited use, fixed fee structures. We have obviously entered into a renewal for another 6 years at the time, which would bring us past 2030 of our largest data provider, and we announced that, of course, midyear this year, which was great. But no, at this time, in the near term, there really is no material license agreements that are coming up for renewal. Eric Martinuzzi: Okay. And then as far as the 2026 outlook goes, you just finished the year where you grew 20% a quarter where you grew 20%. I know you're not in the guidance business. But right now, I've got kind of a mid-teens growth rate for 2026. Is that a good place to start out? Or are you confident that it's going to be 20% plus? Daniel MacLachlan: Yes, Eric. No, look, I appreciate the question. And as you know, we don't provide formal guidance. Going back to the start of 2024, our goal really, and we publicly disclosed, was to reaccelerate revenue growth and sustain that momentum over the next several years. 2024 was a great year of growth. As you mentioned, 2025 was a strong 20% growth. And we would expect 2026 to continue to deliver healthy top line expansion. So yes, I mean, our goal for the business is to continue to accelerate and drive the business and what you've seen consistently the last couple of years, but we're not going to provide any formal guidance as it sits today. Eric Martinuzzi: All right. And then you generated cash in the quarter. You did put some cash to work on your share repurchase program. A number of different levers you can pull there. You've done things like a onetime dividend in the past. You've used it to invest in data rights, M&A. What's the -- just here in the next 6 months, what's the likely use of cash? Derek Dubner: Thanks, Eric. It's Derek. The likely use of cash is, definitely going to be investing in this business. There are just, as I mentioned in my commentary, so much opportunity and the AI-enabled development that's occurring, which is accelerating deployments and creating such opportunities across everybody's environment, it's especially true for us. So that horizontal expansion I talked about, that was always part of our key strategic plan, has now become also a vertical expansion where we know how our customers interact with us, and we can provide them better tools. And we can do that, we believe, in rather fast fashion in the development world as far as time goes so that we can get even further ingrained in their workflows. So that is our priority #1. Operator: Our next question will come from the line of David Polansky of Immersion Investments. David Polansky: Just to put a finer point on it. I think, Dan, you mentioned payroll processor. There was none of that in Q4. What about the toll authority? Was there any of that revenue in the Q4 number? Daniel MacLachlan: So there was some revenue from the payroll processor in Q4. The contractual minimum commitment of that processor, which is a multiyear agreement, does not start into 2026. So we did see some of that revenue but just early stages, nothing meaningful. And the toll authority at this point has been working on integration and some volume expansion. So very minimal revenue as a result of that win in Q4. David Polansky: Great. And I was hoping it was nice to see the growth in high-spending customers. But -- could you help us understand, is that coming from new customer wins at high initial commitments? Or is that from growth in existing customer spend? Daniel MacLachlan: So it's a combination of both, which is great. And it's not only just growth in that cohort. We're seeing that growth across other cohorts, not just moving from one to the other, but expanding in each, right? So whether it's the $10,000 to $25,000 a year customer, the $25,000 to $100,000 a year customer or the $100,000-plus customer. Each of those cohorts are expanding nicely as we look at them. But it's a combination of both. It's some customers increasing volume, right? So when we win a big customer, they don't necessarily move all their volume at once. But slowly over time, we get the majority of their volume. Or it's a new customer win that happens to be a large, 6-figure plus year customer that we initially win. So it's been a good combination of both existing customer and new higher-tier customers. David Polansky: So when I think about -- I know you don't provide a breakdown of FOREWARN revenue versus IDI revenue. But if I were to say revenue per IDI customer were to grow -- I mean, I have it growing at a high single-digit rate, but then I'm also mixing in some new high initial commitment customers in there. Are you -- is it safe to assume that existing customers are growing spend at sort of a mid-single-digit rate, like 5% to 6%, maybe a little bit more? Daniel MacLachlan: It's safe to assume a little bit more than that, yes. David Polansky: Okay. Great. And then on headcount, I was a little bit surprised to see the sales and marketing headcount come down. I think we had initially discussed you'd be hiring a little bit more aggressively. So I don't know if there was some shuffling there or maybe phasing out less productive salespeople. Can you discuss that a little bit? And then what should we think about hiring and overall headcount for '26? Daniel MacLachlan: Yes. You're absolutely right in pointing out. It's kind of a little bit of end of the year, right? You're going to see a little ebb and flow. We always, as an organization, has focused on doing a really good job of bringing what I would say the C and D players up to A and B levels. And unfortunately, if those C and D players are not able to kind of get to that level, to churn out the bottom, so to speak. So we had a little bit of that at the end of the year. It makes sense, especially as you're kind of ending the year looking at final MBOs and then looking into next year and what your growth model and expectations should be for reps. So we had a little bit of that, but you'll see, I'm assuming here after we report the first quarter, kind of the reversion back in that sales and marketing line for some of those employees that just kind of we netted out at the end of the year. I think as we look at 2026 from an overall growth perspective, I think it would be very consistent with what we saw in 2025. In 2025, we added just over 30 new team members, mostly around product development and then go-to-market. The expectation would be very similar to that in 2026, a focus on product development, AI as well as go-to-market initiatives. So I think it'd be consistent with prior year. David Polansky: All right. Great. And could you just highlight because you mentioned AI. I know it's embedded in the core engine, but just in terms of operational things, whether it's back office, finance, sales function, are you utilizing AI to help the business at all maybe to keep headcount growth less than where it's been? Derek Dubner: Absolutely, David. Yes, this is Derek. And what I would say is that we announced in 2025, our strategic initiative to automate more. And so we've been doing that since. We've been looking across the enterprise to understand where we can automate using AI. There are so many tools that we could be using. And so we've been making good progress. But as I stated in my comments, that we would expect there is a lot more to do there. We're not a mature company. We didn't hire heavily during the pandemic. We're not looking to cut back. We're not citing AI for that. We are growing very quickly, and we're investing in the business, and that investment is for growth. And so as we continue to increase automation by hiring to do that and increase productivity, then we would expect the out years, if you will, or at least later that you're going to see all of that efficiency and productivity. So right now, it's a little bit more investment, but then we will bear the fruit of that investment. Operator: Thank you. And that concludes today's Q&A session. I would like to turn the call back over to Derek Dubner for closing remarks. Please go ahead. Derek Dubner: Thank you. As we look ahead, we're still in the early innings of a much larger opportunity. The digital transformation of identity, risk and decisioning continues to accelerate, and we've built the infrastructure and intelligence engine to serve as a foundational platform in that evolution. Our momentum, expanding enterprise relationships and continued innovation around AI-enabled capabilities position us to extend our reach, both horizontally, across industries and vertically, within customer workflows. We're building for scale, deepening our integration in mission-critical environments and strengthening the long-term economics of the business. We are excited about where we stand today and even more excited about where this platform can go. Operator: Thank you for joining today's program. You may all now disconnect. This does conclude today's conference call.
Operator: Good afternoon, everyone. Welcome to the AEO, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Judy Meehan, Head of Investor Relations and Corporate Communications. Please go ahead. Judy Meehan: Good afternoon, everyone. Today, we issued our fourth quarter and fiscal year 2025 press release. Note that included in the release and during this call, certain financial metrics are presented on both a GAAP and non-GAAP adjusted basis. Reconciliations of adjusted results to the GAAP results are available in the tables attached to the earnings release, which is posted on our corporate website at www.aeo-inc.com in the Investor Relations section. Here, you can also find our fourth quarter investor presentation. During today's call, we will make certain forward-looking statements. These statements are based upon information that represents the company's current expectations or beliefs. The results actually realized may differ materially based on risk factors included in our SEC filings. The company undertakes 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. Today, we have a change to our conference call format. Due to the passing of Jay's mother, he is unable to join the question-and-answer section of the call. We extend our deepest condolences to Jay and the Schottenstein family. Today's call will include Jay's overview and highlights, which were prerecorded. Joining me for the call are Jen Foyle, President, Executive Creative Director for American Eagle and Aerie and Mike Mathias, Chief Financial Officer. And now we will begin the call. Jay Schottenstein: Thanks to the hard work of the team, we made meaningful progress this year and delivered a strong fourth quarter. Following a tough start to the year, I'm extremely proud of how the team course corrected with a deliberate action plan that ignited growth, improved profitability and cash flow, fueling a strong finish to 2025. Initiatives across merchandising, operations and marketing, continue to strengthen our company and position our brands for long-term success. We remain committed to driving enduring profitable growth and strong cash flow for our shareholders. Let me walk you through the highlights of the quarter, and Mike will go through the numbers in detail. We delivered double-digit sales growth in the fourth quarter ahead of plan. This represented an acceleration from the third quarter to produce our best quarter of the year. We also achieved record-breaking results through the Thanksgiving and holiday season, building on the approved trends that began last summer. Margin performance was solid and drove enhanced operating efficiencies. We were thrilled to see the remarkable momentum at Aerie and OFFLINE, which delivered 23% comp growth. Robust demand was broad-based across categories and channels. By leveraging our stronger market position and heightened demand, we exited the quarter with record brand awareness. And customer acquisition was up in the double digits. With successful expansion underway across a number of categories, we see significant runway to continue to build Aerie and OFFLINE and capture new audiences in the years ahead. I'm also pleased by the consistent and steady progress we've seen at American Eagle. Comps grew 2%, accelerating from the third quarter with growth across genders. Product initiatives are delivering more newness and fresh trends right collections. Following impactful partnerships with Sydney Sweeny and Travis Kelce, Martha Stewart's holiday campaign, reinforce AE's cross-generational appeal as the ultimate gift-giving destination. Customer counts and retention rates are proof points of success. This year, we look forward to creating more culture defining moments with newly announced partnerships with Lamine Yamal, Ella Langley and Bailey Zimmerman and more to come. In terms of the numbers, total revenue hit an all-time high for the fourth quarter, increasing 10% to $1.8 billion. Overall comp sales grew 8%. Adjusted operating income of $180 million was up 27% from the $142 million last year. Notably, we achieved these results despite significant tariff pressure. Successful tariff mitigation efforts centered on cost savings, greater efficiencies and strategic management across our sourcing operations. Full year 2025 annual revenue reached a record $5.5 billion, up 3% to last year, and adjusted operating income was $328 million. We ended 2025 in a strong financial position with nearly $240 million in cash and no debt. Our capital allocation strategy remains focused on investing in the business while returning cash to shareholders. We completed $256 million in share buybacks while paying $85 million in dividends last year. Now looking ahead, we remain confident in our strategy and our ability to build on our second half. As part of the continued effort to drive efficiencies and prioritize initiatives with the highest impact and strongest returns, we made the decision to exit Quiet Logistics during the quarter. This move keeps our focus and investment dollars on our core brands. As we exit the third-party business, we are left with a significantly enhanced logistics function, including much improved warehousing systems and technology, regionalized distribution capabilities, excellent speed to customer at a network that will support growth for several years. We entered 2026 from a position of strength and positive sales trends continuing. We have significant opportunities ahead and our teams are energized and committed to executing on our plans. I am fully confident in our path forward and our strategy to drive long-term profitable growth and free cash generation, which in turn will create value for shareholders. Jennifer Foyle: Good afternoon, everyone. I want to begin by underscoring how pleased I am with the fourth quarter performance. Our commitment to product leadership continues to be a key engine that's driving our business, and that's true across all brands. As I'll share, we saw a widespread improvement in the majority of our categories. There has been a clear acceleration in demand in certain segments as our customers respond to newness, color and trend-right fashion. Compelling new collections in fleece, tees and knits, coupled with the growing accessories business within AE and Aerie are together supporting our layering and outfitting strategy. As you've heard, following the first quarter 2025, we initiated a number of process changes and the reorganization of the teams and talent. We began to see the results of this work mid-year. I'm proud of the quick execution, and we are excited to carry this momentum forward. I'm confident that we remain very well positioned for profitable growth in 2026 and beyond. Now let's review our wins and opportunities by brand. Turning to Aerie first, where we have experienced strong acceleration in demand, strength has been broad-based across all categories, including intimate, soft dressing and OFFLINE activewear. Fresh flows of new and exciting collections, coupled with category expansions in areas like sleepwear kept the customer engaged throughout the season. We grabbed our community’s attention with must-have products and position them in the most relevant ways. Aerie apparel was strong across both tops and bottoms as a result of great fabrication, on-trend fun prints and winning color stories. I am particularly encouraged by the continued momentum in intimates recording some of our best ever results in the quarter with matchback sets fueling demand. OFFLINE had another incredible quarter with steady sales in active bottoms and double-digit growth in sports bras, tops and fashion bottoms. OFFLINE signature cloud fleece remains a customer favorite, and we continue to have significant opportunities to leverage the success of this key franchise. Our focus on new fashion silhouettes and fresh color drops are also contributing to strong growth across categories. As we look to accelerate the OFFLINE business in 2026, we will be focused on expanding our footprint engaging more customers and delivering great product. OFFLINE's brand awareness is rising and the brand has a long runway ahead. Our share is still small, but growing, and I'm confident that we have only just begun to scratch the surface of this brand's massive and long-term potential. The powerful reacceleration of the Aerie brand coupled with the explosive trajectory of OFFLINE is cementing our position as a leader in the space. And with our brand positioning as relevant and strong as ever, we look to continue to expand our reach to more customers. New Aerie customers grew 14% and brand awareness climbed 12% year-over-year. We know these customers are sticky, and we are focused on maintaining this healthy and engaged customer base. As we kick off 2026, expect to see significant increase in buzz for Aerie as we launch a highly visible brand campaign, rooted in purpose and mission. And as you've heard, we're just getting started here, and I'm excited for what's ahead. Now moving on to American Eagle, which achieved a solid 2% increase in the quarter. Positive results were driven by men's, women's tops and our signature AE jeans across genders. The men's business continued to improve in the fourth quarter, delivering the third consecutive quarter of growth. Positive results were seen across nearly every category, with sweaters, shirts and tees and sweatshirts emerging as favorites and graphics leading the way as the hero. Our strategy to recapture the men's business is on track as we gain market share and expand our customer base. AE women's comp was flat in the quarter, strength in jeans and tops, including knits, sweaters and fleece was offset by a slower demand in dresses and non-denim bottoms. Driving ongoing progress is a top priority, and we are working to ensure that we have the best styles and quality together with more frequent flows to support growth. Work is underway, and we are focused on investing in depth of key items and size integrity to drive sales. We expect to see continued improvements as we move through 2026. As Jay reviewed, AE brand marketing has been a clear strategic focus and is expanding brand awareness and driving purchase intent. In addition to talent-focused campaigns, we recently relaunched AE's creator community to bring together a network of passionate trendsetters and brand advocates to drive revenue and digital content. And just last week, we announced our partnership with Stagecoach, joining country music's biggest stage and connecting with a new generation of artists and fans as we continue to show up at the intersection of culture and fashion. The intention behind these initiatives is to maintain and drive our industry-leading position. Before turning the call over to Mike, I want to recognize the team for a strong finish to 2025. Their ability to drive improvement across multiple processes and to deliver results was impressive. We are incredibly optimistic about the profitable growth potential of our portfolio. We are moving forward decisively and we know that our brands are uniquely positioned to win, scale and deliver sustained long-term growth. And with that, I'll turn the call over to Mike. Mike Mathias: Thanks, Jen, and good afternoon, everyone. 2025 results reflect the actions we took to strengthen the fundamentals of the business, make operational improvements, introduce new compelling product collections and launch strategic marketing initiatives. These steps strengthened our foundation for long-term success and drove a sharp improvement in trends throughout the year across brands and channels, even as we navigated a dynamic retail industry in an unprecedented tariff backdrop. Our strong performance in the fourth quarter is a testament to this work with results coming in ahead of expectations across margins and profitability. In the quarter, consolidated revenue of $1.8 billion increased 10% to last year, fueled by comparable sales growth of 8% with Aerie up 23% and American Eagle up 2%. We saw across-the-board improvement in trends with an acceleration from the prior quarter. KPIs were favorable with growth in transactions across brands driven by higher traffic. The average unit retail price was flat to last year. Gross profit dollars of $651 million increased 9%. Gross margin declined 30 basis points to 37% from 37.3% last year, which included net tariff pressure of approximately $50 million. On the positive side, the leverage from strong revenue growth, lower costs, favorable currency and overall operational efficiencies partially offset tariffs and higher markdowns. Buying, occupancy and warehousing leveraged 50 basis points due to higher sales and a continued focus on operational improvements. SG&A increased 4% to $418 million and as a rate leveraged 120 basis points to last year, driven by strong revenue growth. Planned investments in advertising were offset by our continued focus on disciplined cost management and lower incentives. Adjusted operating income of $180 million was above our recent guidance of $167 million to $170 million, driven largely by very robust sales and margins at Aerie and OFFLINE. The adjusted operating margin of 10.2% increased from 8.9% last year. During the quarter, we recognized restructuring charges totaling approximately $85 million, of which $13 million was cash, primarily related to severance. These charges relate to discontinuation of quiet platforms, third-party logistics, store impairments and a corporate restructuring. Net annual savings from these actions is estimated at about $20 million annually, with a portion of that expected to be realized in 2026. We ended the year with a strong balance sheet with cash of $239 million after returning $341 million to shareholders. At year-end, total liquidity was approximately $930 million. Consolidated inventory cost was up 10% with units up 3%. Cost inventory reflects the impact of tariffs. Fourth quarter CapEx totaled $59 million, bringing year-to-date spend to just over $260 million. As we look ahead to next year, we expect similar levels of CapEx in the range of $250 million to $260 million, reflecting investments in technology upgrades, general corporate maintenance as well as 35 new Aerie, OFFLINE store openings and about 60 store remodels. In 2026, we expect to close another 25 to 30 lower productivity AE stores. Turning to our 2026 outlook. The first quarter is off to a good start. Comp sales are positive across brands with notable strong performance continuing at Aerie and OFFLINE. For the first quarter, we expect comparable sales growth in the high single digits, with American Eagle comps in the positive low single digits and Aerie OFFLINE comps in the double digits. Our operating income expectation is in the range of $20 million to $25 million, which includes tariff headwinds of approximately $30 million and incremental advertising investment, which will drive total SG&A expense up approximately 10% versus last year. For the full year, we expect operating profit in the range of $390 million to $410 million based on consolidated comparable sales growth in the mid-single digits. Guidance reflects the incremental tariffs that were put in place in 2025, which primarily impacts the first half of the year. Our outlook does not incorporate developments related to the recent Supreme Court decisions and subsequent actions. Modeling purposes, please note that we expect approximately 80% of our annual operating profit to be generated in the second half of the year. This weighting reflects pressures from tariffs and incremental advertising spend, which will impact the first and second quarters. In the second half of the year, we will cycle tariffs and investments in advertising, which began midyear 2025. To wrap it up, we ended the year on a strong note and remain confident in our forward trajectory. In 2026, we look forward to building on the significant progress we made last year to generate continued growth and enhanced value for our shareholders. With that, we'll open up for questions. Operator: [Operator Instructions] Our first question today comes from Paul Lejuez with Citi. Paul Lejuez: Two quick ones. Gross margin, can you talk about what you expect once you move past the first quarter where obviously you've got the comparisons. Maybe you could talk 2Q through 4Q. And then you mentioned increased markdowns again this quarter. I'm curious if you could talk more about which brand you saw the higher markdowns, maybe which category is needed to be promoted to drive sales, and how you think about the promotional outlook for the rest of the year? Mike Mathias: Paul, on gross margin, yes, I think we know that last year was a little different with where we broke down inventory in the first quarter and pulled markdowns forward. So I think as we talked a little bit different points that if you really look at kind of 2024 gross margin cadence and then the impact of tariffs around that $30 million each quarter, we're looking at gross margin sort of in that mid- to high 30% range in the first quarter, a little lower than that in the second quarter. And actually, 24 less tariffs would get you pretty close to what we're expecting for the first half of the year. Second half then, we're looking to expand our gross margin performance, anniversarying tariffs as is, I mean we're guiding tariffs to essentially the same thing we've been talking about really the IEEPA impact of that $130 million plus per year. We'll know a lot more come May of really what that's going to look like by quarter. But if you start with that as what should be a worst case then we'd look to expand upon the gross margin results we just saw in the third and fourth quarter of this year at, call it, like a mid-single-digit comp results. We've got some early indications on costing for the third quarter time frame at this point. The team is doing a great job there. And controlling costs, all the other costs within gross margin, we've been very successful with that to date and expect to continue that. So we'd look to expand upon gross margin improvement -- on gross margin in the back half. At markdown front, I think you talked about in the January time frame after at ICR and after our holiday sales release around being well controlled across categories for the most part. We talked about bottoms in the jeans business and the jeans category being promoted a little deeper to compete. And that was having kind of a mix impact in the AE brand, where markdowns were up a bit in total. Aerie, on the other hand, the AUR was up in the quarter. With the growth trajectory of the business, they've been able to really control or even reduce promotions a bit, AUR was up mid-single digits in the fourth quarter and markdowns are actually down favorable for Aerie. So the mix of the business is very favorable for us with really a couple of bottoms categories, especially jeans being promoted a little deeper. Paul Lejuez: Should we expect that to continue, the markdowns to be higher at AE and lower at Aerie? Jennifer Foyle: We -- it's Jen, by the way, Paul. We do expect some pressure in denim. And we feel good about our positioning, though, as we bring in other bottoms. That's what we're really excited about. So there's new bottoms that we've been testing, not only just in long legs, but skirts and shorts, early reads have been positive. As you know, we have a huge spring break customer, and we're just on the cusp of this right now. In fact, we're in Miami right now, and we can see them coming into shops. So we're excited about the way we're positioning. And the beauty about these brands, Paul, is that we have a portfolio of brands, right? We can pulse and throttle categories that we need to, but also get into new categories that are trending. So we feel really good about where we're headed as we get into peak spring break in all brands and some of the new categories that you'll see us introducing more and also just to lean on to Aerie, Mike said it, we've been pulling back on promotions. They've been doing a nice job balancing out competing and pulling back promotions. And it's only just begun here in Aerie. We have a spring break again. I mentioned it already for all brands. It's coming our way and swim, early reads on swim have been strong, but that's a category that we're looking to build margin and not just unit-based promotions. Operator: The next question comes from Jay Sole with UBS. Jay Sole: A few questions for me. Just number one, Mike, how are you thinking about store openings this year? And sort of you gave us comp sales guidance for the first quarter of the year, but how you think about total sales? And then the Middle East business, can you just give us an update on how you're thinking about that business given what's going on? And then can you also explain lastly, the impact of the quiet, the changes to the quiet logistics, what impact is that having on EBIT dollars? Those are my 3 questions, to start. Mike Mathias: Sure, Jay. Store openings, we're looking at 35 to 40 openings for Aerie and OFFLINE this year. Just to reiterate, we're probably expecting somewhere in the 25 to 35 in terms of net closings for AE as we continue just to refine and optimize the AE store fleet so you can model that or assume those plans for the year. Total sales then, we do have total sales to comp actually would be pretty similar. So we gave high single-digit comp guidance for the first quarter. Total revenue will be similar to that. Just based on the fact we do have a bit of a comp spread in our brand sales, but then with the disposition or the closing of Quiet, you'll see a reduction in total revenue because of that third-party revenue. So the net-net is that comp result in total revenue should be similar. And yes, I mean, just to expand upon that guidance a bit. We -- high single-digit comp for the first quarter. We're looking at sort of mid- to high in the second quarter and then mid for the back half, so you get to kind of a mid- to high comp expectation for the full year then. And then again, with total revenue and comp being similar for the year. Middle East, our team is doing a nice job just connecting with our business partners there, really Alshaya in the Middle East and then our JV partner with Fox in Israel, definitely some disruption to the business -- their businesses at the moment. Alshaya stores are actually mostly open at this point after some initial disruption, but the stores in Israel are still closed. Reminder that the license business on one hand and a JV on the other. So the EBIT impact to us would be -- quantified what we think assuming that this -- the war wraps up in the first quarter for now that the impact of the first quarter will be very minimal to us from an income or EBIT perspective just based on the structure or the relationships there being kind of licensed and JV. And then for Quiet, again, you'll see some quarterly revenue reduction from what was about a -- probably about a $60 million total number in our 2025 results. So that will wind down here at the beginning of the year and go to zero as we get to end of the year here. And then we talked about the restructuring in total, which Quiet as a part of being around a $20 million benefit annually. Again, we're in a bit of a wind down mode but with the other kind of corporate restructuring and store impairments, we're expecting probably at least 50% of that, maybe a little more to benefit this year, but we'll provide some updated guidance with especially how the cadence of the Quiet business shutting down here in the next several months. Operator: The next comes from Matthew Boss with JPMorgan. Matthew Boss: Congrats on another nice quarter. So Jen, with Aerie comps up high teens in the back half of the year, could you break down the inflection in the business if -- maybe if we looked at it by customer file or key category performance? And then so far in the first quarter, have you seen any slowing relative to the low 20s comps that you saw in the fourth quarter? Jennifer Foyle: Very similar, Matt. We're seeing nice momentum headed into Q1. Look, back in Q1 last year, we knew it was the time for all brands, not just Aerie for us to pivot, focus on our product, deliver and gain momentum going into the back half, which is typically our Super Bowl. We have all brands. It's our big quarter, Q3. And I think the team is really -- that's what we did, right? We focused on our product. So if you look at Aerie, certainly, what was really exciting in Aerie, not only new categories, i.e., sleep, which delivered a lot of growth for the brand. OFFLINE is moving faster. Honestly, it's one of our fastest-growing brands in the total portfolio that I've seen in history. So OFFLINE is very exciting. And then, of course, AE. But going back to Aerie, the most important thing is that all categories really worked. And I think that's important as we look forward, Matt, because when you think about just the newer trends and trends are moving faster, I think Aerie then can throttle on either, let's just say that more hard lines become trending, whether it's suiting or more straight line is what I can say. If Aerie is a softer business, we have all the layering pieces. We can support those businesses. And I think that's why we're expanding our offerings in Aerie so that we can lean into other categories when trends change. And I think it's really working. And there's new things to come, too. We have new businesses that we're developing, new ideas. The team is running very flexible. I mean, we're really trying to work on flexibility, newness, and I think that's what's winning, just delivering these new product offerings when it's not expected, seems to be really working for the Aerie brand. So more to come here, but we've seen nice momentum into Q1, and we're going to focus and continue to deliver. Matthew Boss: That's great color. And then, Mike, on the expense side, with reinvestments, I think you cited marketing this year. How best to think about the leverage point in the business for SG&A? Or any changes relative to historical flow-through to consider? Mike Mathias: Yes. We have another 2 quarters here of this intentional and strategic increase in elevation of our advertising spend. So you're going to see in the first quarter -- or first 2 quarters here, like over 50% increase in advertising dollars, which is, again, is intentional. So I think that's driving SG&A in the first half, up in the low double-digit range with all other expense categories being managed as we have successfully for a few years now, kind of low to mid-single digit and leveraging nicely on the sales expectations. So it's really advertising, driving the dollar increase and advertising is going to drive some deleverage in the first and second quarter. When we get to the back, at this point looking to -- at least our initial plans is for advertising dollars to be relatively flat, maybe a slight increase. So we plan to leverage advertising in the back half of the year, once we're anniversarying the elevated spend that started last year in the third quarter. And then the rest of the -- again, the rest of the SG&A lines being well controlled, may have a little bit of incentive comp increase compared to this year in both the third and fourth quarter, a little more in the fourth quarter. But we're looking to leverage SG&A though, across the back half even with that. So we'll get back into a cycle Matt, then starting in the back half of the year and forward 12 months into '27 that we want to leverage this expense based on a mid- to high single -- sorry, a low to mid-single-digit comp. The plans at the moment and the guidance we're providing, we're looking to expand upon some healthy operating rates in the back half once we anniversary tariffs and this elevated advertising spend, and we want to carry that into '27 on a 12-month basis going forward to get this operating rate back -- going back to the high single digits. Jennifer Foyle: Mike, I think that's a great point, too. When you think about marketing and our strategy, really, it was about relevancy for American Eagle for the American Eagle brand. And I'm sure you've seen many of the tactics that have gone viral out there for American Eagle. And then Aerie, it's really been awareness. And boy, has that strategy worked. We've grown our brand awareness over end points, it's huge. It's a huge number. I'm really proud of the team there. And now the teams are up because keep in mind, we share a platform. Now what we want to do is get that customer shopping back. Coming back to us. We want peak performance from these customers. We want them to come back through our doors or onto the site, and those are the tactics that we're working on. Mike Mathias: It's great, Jen. We are 5% this year and our teams work very closely on a week-to-week basis on -- there's a campaign pieces of it, and then there's the week-to-week spend on kind of digital media performance marketing that we're managing very closely. And our teams are doing it very well together and come to Jen and I on those fronts on kind of managing that week-to-week. The intent, as we talked about then is kind of maintain that 5% spend into the sale increase, maintaining that. We think this elevated level, all the metrics Jen just said, moving in the right direction. We like what we're seeing, it's why we're continuing it. We think it's the right new baseline to run the company. We'll make some changes based on what we see, rebalancing some of the spend between kind advertising strategies, maybe across tactics around talent versus media performance spend, just trying to find efficiencies in other line items like content creation, or relooking at some plans into '27 around rebalancing some of those things, and we're continuing to manage it that way. But this kind of 5% new baseline is working for us. Operator: The next question comes from Jonna Kim with TD Cowen. Jungwon Kim: As you think about American Eagle's brand positioning, what are key opportunities that you see for improvement over time? And then could you just speak to the intimates business performance during the quarter and just quarter-to-date, what you're seeing there? And how do you think that business will evolve over time as well? Jennifer Foyle: Yes. For American Eagle, Mike mentioned it, number one, Street -- our fleet rationalization. We're still working through some lower-tier stores that we need to optimize and actually give back to our best stores. So just so you know, our new remodels in the American Eagle brand are really resonating with the customer. We're seeing nice upticks versus the average base. And so we're working on the remodels where we can justify, and where it make sense depending on the mall. So excited about that. Our new SoHo store has been outperforming, and it's a great visualization to where we're headed for our entire portfolio of brands, but a great representation of the American Eagle brand. So number one, fleet optimization; number two, product, product, product, we focus on product. We're focusing on new innovation, delivering new products, delivering excitement on top of our incredible marketing campaigns that, again are developed -- we have relevancy now, like we needed to get back on the map. That's what American Eagle is up to. We're a more mature brand, and we needed to turn heads. And certainly, the team really has stood out there, and I think some of these new campaigns and getting up to snuff on our marketing spend and competing because we were a little -- we underperformed there versus our competition. And I think yes, we're ready to compete a little bit more. We're building our new franchise businesses. We're excited about men's. Men's has turned around, and now it's just women's and really looking at women's dollar per square foot by store and making sure that we're really optimizing the women's business in our best stores and online. Let's not forget about the direct business. Our direct business has been outperforming last year on the back half and going into Q1, we're seeing really nice momentum on the direct business. It's in way of getting new acquired customers. And again, this is where we're working on how do we get them to repeat shop either on site or going into stores. And that is a new -- I would say it's a new initiative for us. We're talking a little bit more about omni customer. I'm not a huge fan of the word omni, but there certainly is opportunity in this new world to understand where the customer is going to be leveraging some of our new capabilities and understand where they are and being there for the customer with what he or she wants. So most -- those are really our tactics. And again, like I said, product, we have new product categories. We have new talent that we're launching in American Eagle. We're excited about that. You've heard some of the -- you've seen it already, Ella Langley, by the way, we just launched her. She's the #1 song in the U.S. right now, her song, Choosin' Texas. So we're just excited about continuing to gain that relevancy in American Eagle. And keep in mind, it's our Americas 250th anniversary this year and next year's AE's 50th anniversary. So lots of excitement around American Eagle. On the intimates side, I think intimates is just getting going. We're leveraging undies to bundle and to get new customers into our brand. We're considering it the lipstick of our brand. But also, we're launching new bra silhouette, bralettes are back and these layering pieces. So we have lots of categories now on the intimate side, again, that we can lean into and pulse depending on the trends and where the trends are going. But we're feeling good about intimates. Again, they saw a great success in Q4, and we're continuing that momentum into Q1. Operator: The next question comes from Dana Telsey with Telsey Advisory Group. Dana Telsey: As you think about the advertising, which has been so successful. Obviously, Stagecoach now being the next thing. How do you think of it for the balance of the year? And how do you see lapping whether it's Sydney Sweeney or the others? And then on the refreshes in stores, how many store refreshes are you doing? And what kind of productivity gains have you seen from these refreshes? Jennifer Foyle: Sure. So I didn't mention this before, but also not only are we leveraging talent, more so on the AE side of the business. But in both brands, AE and Aerie, we're really leaning into our community and our customer base, and we're really -- I mean both brands right now are starting new tactics to gain new customers as far as -- well, there's some I can't tell you. There's some I can't share with you, but this creator community that I think we are just encroaching on for both brands, it's real. And that is the difference, okay? So there's a lot of our competitions out there. They're getting -- they're finding tactics, but I think our tactics for our brands are about real and authentic and getting our community that believes in our brands to celebrate our brands, and that's -- and so these influencers that we're leveraging across all brands, I think we're going to really lean into both -- we're excited about it, and we're already starting to see some momentum gaining with this influencer program that we're starting. And again, it's more innate. We own it, and we're excited about it. So the tactics are slightly different than some of what we see our competition doing. Mike Mathias: On the store remodels, refreshes, Dana, we've got -- as I said in prepared remarks, we'll do at least around 60, maybe a few more than that this year. We're, I think, in our third to fourth year of that program, where we still have about a 350 to 400 store in total. We're working towards probably about another year away from that. I think we'll get over the 300 mark, close to that with these next 60. Again, the average age of the fleet before we started this was about 12 years. We were behind a little bit due to COVID and in our intentions of refreshing the fleet. The stores we know we want to sign leases for the longer term. And I think once we'll get into a rhythm of keeping the average age more in that 6- to 7-year sweet spot, which we think is the right thing to do. So -- and then on a performance basis, we are seeing a comp result or an increase in these stores that's above the chain average. So we like what we're seeing in terms of payback on that cash. It's a bit of a kind of maintenance/some payback by doing this. We have refined the cost of these down from where we started in the first year. So we're kind of the elements of the store that we need to touch and the biggest bang for our buck is the average has come down on the spend since we started. So we're kind of maybe more than halfway through the program. We like what we're seeing in terms of performance and with the intent on an ongoing basis to kind of maintain the age of the fleet more in that 6-, 7-year range. Operator: The next question comes from Janine Stichter with BTIG. Janine Hoffman Stichter: Just on the tariffs, can you remind us what you've done on pricing in response? Have you raised tickets at all and any thoughts on pricing for the rest of the year? Mike Mathias: Yes. I think we've talked about really business as usual. We've approach kind of tickets and pricing, just like we always have, where we -- what's the right price value equation for the customer, where are we not seeing price resistance across items, some strategic intent of increasing tickets a bit, so we can kind of provide that right value equation from a promotion perspective to the customer. . So no specific intent around tariff pass-through. It's really what we've been -- what we've always done from a pricing perspective and maintaining. Again, AUR for the fourth quarter was relatively flat, like down a little bit in AE and up in Aerie. From a margin perspective, it's not a bad place to be with some mix benefits in there, aside from the tariff impact. So we'll continue down that path with whether the opportunistic and kind of opportunities to raise tickets a bit. But just based on customer reaction, and what's right for the price value equation. Janine Hoffman Stichter: Great. And then maybe just back on Quiet Logistics with the $20 million in annualized savings. Are you thinking about reinvesting any of that? Are there areas you potentially spend more, or is that flowing all the way through the bottom line? Mike Mathias: No. I think we're looking at reinvesting other than probably advertising. I mean, a lot of what we've been doing with the management of our expense base for several years was to find some funding to do what we're doing on the advertising line. And actually, if you -- we've been measuring that ourselves and just looking at our own sort of internal scorecard over the last several years. We've done a nice job at kind of reducing the rate of sale on the majority of the expense base, the bigger line items that we've -- the project we had a few years ago where we kind of addressed 85% of our overall OpEx base. We've been continued success there to kind of knock that down as a rate of sale, and we have sort of funding that back to advertising right now in total. Again, we anniversary that and start to leverage again starting in the back half of the year. So no reinvestment of those dollars specifically. It's sort of an ongoing program to improve our operating rate, short term here, we're investing some dollars back in advertising, for sure, at least 12 months, but nothing else specific from that savings that we're intending to do. Operator: The next question comes from Jon Keypour with Goldman Sachs. Jonathan Keypour: I just had a question about the low single-digit AE comp in 1Q. Just noticing that the -- if you go from 4Q '24 to 1Q '25, the sequential comparable gets 3 points easier, but the low single digit sort of implies that on a 2-year stack basis, there's a slowdown. So just any commentary around that? And then I have a follow-up. Mike Mathias: Yes. And Jon, I think if you look at the improvement to that point, I mean I think we've seen a 5-point improvement from kind of the second quarter of last year through the fourth -- to this fourth quarter result of plus 2%. And the guidance we're providing now is based on what we've seen to date, we know there's been some weather disruptions, some serious storms and things like that in this February this year that we didn't really see that dramatically last year, especially the Northeast getting pounded a bit. And we have obviously our store base is a nice concentration in that area, but we're pleased to see the kind of trend continue from fourth quarter. That being said, Jen said the spring break time is ahead of us, short season is coming. The mark whole time frame is more like 75% of our total first quarter. So we've got a long way to go. But the continuation of the trend we saw and the teams are working hard to capture these next 2 months, and we'll see how the quarter pans out, but it's the right place to be at the moment. Jonathan Keypour: Got it. Okay. And then just in terms of the Aerie comp, which was very impressive, just any way that we can get a sense of buckets that contributed to that 23%. Like I guess, there was a different question to try to get at this, but you mentioned like 14% new customer addition. Just any ways we can piece together the building blocks to get to the 23%? Jennifer Foyle: Yes. That was actually branded witness. I just wanted to let you know. We were roughly at 55% as we increase that, but we do have a new customer base to solidly growing our customer base. In Aerie, I have to say this. Literally, all categories worked, whether it was set dressing, fleece, knit, tees, sweater, sleep really was unbelievable and intimate and layering. We have this new layering business that we're pretty excited about, so, so far so good. And that continues into Q1. And again, we still have some categories that we actually lean on more as we head into the spring break time period. So strategically, we didn't pull swim in as hard as we used to in the past because we believe that there's a different strategy for swim where we can lean on. It's a great margin category. And I think that's what we're looking to do. And we're going to bring in newness monthly, more so than we did in the past, past just like that girl. So I think there's still more to come here because we still have some new category introductions or seasonal introductions that I think are still in play. Early reads on these seasonal categories, including in AE, are strong. Last year, if you remember, we had weather and shorts are really tough across the board. So that's a huge category for us. In Aerie, OFFLINE and in American Eagle. So there's still a lot of volume in front of us, and we're going to set ourselves up for success here. Operator: The next question comes from Corey Tarlowe with Jefferies. Corey Tarlowe: Yes. Mike, on tariff, could you remind us again what the impact is that you're expecting? And then I asked that in the vein that you guided with IEEPA in, how much upside is there to the current guide if that is struck down? Mike Mathias: Yes. So just the quarterly impact of how we laid things out with IEEPA tariffs that were in place. So about a $30 million impact each of the first and second quarter. So kind of $60 million total for the spring season. We incurred $20 million of impact in Q3 of '25, but probably more like a $30 million, $35 million on a full quarter basis because of the timing of the effective tariff rates last year. And then we incurred $50 million of impact this past fourth quarter. So that gets you to your $130 million plus number for -- on an annual basis. Obviously, we left that guidance or left the approach to guidance in place because to your second question, I don't think any of us know what's about to happen. We've got this 10% Section 122 in place, all indication is that's going to go to 15% based on kind of recent communication. We know there's things happening on the 301 front that this administration intends to do. So the impact to the total year, we believe the guidance we just gave should be the worst case, knock on wood. I hope I didn't distinct ourselves in the entire industry with that comment. But there would be upside, we've done some back of the envelope math of what it could look like based on the cadence of when we think the Section 122 tariffs expiring after 150 days and if 301 take effect, but it's all guesstimates at this point. So I think we'll know a lot more by the first quarter call at the end of May. I expect to provide a bit of upside to this guidance at that point, but better off to quantify that over the next couple of months once we actually know more than kind of put numbers out there that we're not 100% sure of at the moment. Corey Tarlowe: Got it. That's super helpful. And then just as a quick follow-up, it looks like there's no buyback embedded in the outlook. So I was just curious how you're thinking about that specifically. Mike Mathias: Yes. We repurchased about 1 million shares there before the end of the year. Share count in our projection right now would be about 177 million versus -- for the year versus 176 million last year. We are going to look at -- again, we always talk about capital allocation being investing back in the business first. We're committed to our $0.50 per share dividend. And then looking at buybacks to offset dilution minimally. So the January buyback was part of that, if you look at the full year last year, we returned, again, $341 million to shareholders, $85 million in dividends and over $250 million in share repurchases. So we'll continue to look at it, Corey. Minimally offset kind of dilution from internal grants in general. So we kind of prioritize that. Look at anything above and beyond that as we kind of get into the year and see how cash flow is trending? Operator: The next question comes from Marni Shapiro with The Retail Tracker. Marni Shapiro: Congratulations, and please extend my condolences to Jay. Jen, the stores look fantastic. So I have a couple of quick questions for you. Following on the denim conversation, I'm curious if part of the denim is a shift in what's working in denim from higher rises to lower from very baggy to boot and the customer is a little slower to move. Or is it something else that you're thinking? And then on your collaborations, which have been incredibly successful, and I love the 2 new ones, are you thinking about expanding this into Aerie at all to do something there, along the similar vein, now that Aerie is kind of like, Aerie is back, so are you kind of thinking along the lines there in Aerie? Jennifer Foyle: I like that thinking, Marni. First and foremost, Aerie has great things in store. But again, Aerie has many different tactics, and I just mentioned, we do a little bit more grassroots, the community, and it's just -- they vote for us, and it's a winning recipe. But I will say, Marni, we do have some fun things in store. And as you know, back in October, we leaned into not using AI on our models. And it's a nice uptick to where we were when we launched Aerie Real, I think it's just -- it's a great -- it actually addresses the new generation. I'm quite excited about it, and we've only just begun here. So really, that's what we're up to in Aerie. And again, Marni, with all these new customers, we've got to get them to come back more often. You can't imagine the dollars on the table, if we could just get them to come back one more time annually. So those will be some of our focuses. And can we go back to your first question? I'm sorry, I got so excited about Aerie for a minute. Marni Shapiro: It was just, I'm curious there are changes happening in denim rises to lower, the baggy is going -- giving way to a cleaner, a little more narrow boot cut. So is that kind of -- I thought there's a confusion with the customers right now because you're not the only ones talking about this, all my peeps are talking about this. Jennifer Foyle: I think you're right. I think definitely, the rises are getting lower. You're seeing more midriffs being shown. But I also think it is about these other bottoms, including skirts, shorts and other clothes, khaki, chino, utility, those ideas, I think, are here. And I think it is about pivoting into those. But you're right, definitely the lower rise is something that we are addressing. And we do have, and that is working for us. So now it's about just moving the business. This business has changed drastically, Marni. There's so many new fits to your point. We are seeing with Ella, we're seeing the boot work for us. For sure. That makes a lot of sense. So right now, we're in the process of our test and scale for back-to-school. So I'll learn more in a couple of weeks as far as -- and we have all these fits out there that we test and learn from, and where we want to place our bets. So there's more to come here, and the team is ready to execute. Marni Shapiro: Well, the stores look fantastic. Your denim shorts look absolutely fantastic. Congratulations. Best of luck. Jennifer Foyle: Thanks, Marni. Operator, we have time for one more question. Operator: That question will be coming from Janet Kloppenburg with JJK Research Associates, Inc. Janet Kloppenburg: I was a little surprised to hear that denim bottoms were not performing. I don't know, maybe I'm misinterpreting it, Jen. Are they performing to your expectations and because you've made investments in other denim areas or maybe denim isn't where you think the brand should be right now. So... Jennifer Foyle: No, no, no. Yes, denim is at the center of everything we do in American Eagle. Like we have maintained our market share, like our positioning, everything we do. That is our core recipe for that business. And those men's and women's did comp on the quarter. It was just, in some cases, what price are they willing to pay for some fashion. So that's some of the pressure that we saw. But we learn that lesson, and we're trying to take that forward, particularly the most important quarter, obviously, is Q3 for this business. So applying those learnings, but denim, it's at the core of everything we do. It's just -- it was more about us leaning into some fits that didn't work at successfully as we were hoping to and learning from that and reapplying those lessons. Janet Kloppenburg: Okay, great. And then just for Mike, I think you said AUR was flat. Can you just talk a little bit more about the traffic and unit terms in the quarter? And what -- how we should think about that going forward? Mike Mathias: Yes, Janet. So AUR overall at a company level was flat. AE was down slightly, kind of low single and Aerie was up in the mid-single digits. So it kind of ties to the margin color we were providing earlier as well. And what Jen just mentioned about, we've been talking about jeans specifically as being positive, but then a little pressure, a little kind of more promotional to drive those results. We're expecting something similar as we continue, like right now in the beginning of the first -- early in the year here. Again, the Aerie team on the current trajectory is being able to kind of manage intelligently and pull back and be more targeted and then AE is really still probably in the same game we just talked about. So we're expecting something similar in the short term, and we'll see how the rest of the season progresses. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Jennifer Foyle: Thank you.
Operator: Good afternoon, and welcome to the Webull Corporation Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Carlos Questell, Head of Investor Relations. Please go ahead. Carlos Questell: Good morning, good afternoon, and good evening, everyone. Welcome to Webull's Fourth Quarter and Full Year 2025 Conference Call. Earlier today, we issued a press release detailing our fourth quarter and full year results. A copy of the release can be found on our IR website at webullcorp.com under the Investor Relations tab. Please note that this call is being recorded and will be available for replay via our IR website. During the call, we'll be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to the cautionary statement and risk factors contained in our filings with the Securities and Exchange Commission and press release, both of which can be accessed via our website. Today's presentation will include a discussion on adjusted operating expenses, adjusted operating profit and adjusted net income, all non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to their most directly comparative GAAP measures are included in the press release that we issued today. It is important to note that although we believe that these non-GAAP measures provide useful information about operating results, they should not be considered in isolation or construed as an alternative to their directly comparative GAAP measures. Furthermore, other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. With me today is our Group President and U.S. CEO, Anthony Denier; and our Group CFO, H.C. Wang. We will begin with prepared remarks and then take questions at the end. With that, I would now like to turn it over to Anthony. Anthony Michael Denier: Thank you, Carlos, and hello, everyone. Thanks for joining us today. Webull's fourth quarter and full year results show strong progress and returns for our first full year as a public company. Our full year results reflect our success as we continue to enhance our offerings for our growing base of active traders and investors, expand our client base globally and extend our capabilities into new markets, including institutional investors. Following our public listing in April of last year, we have been executing on an ambitious plan to address the growing requirements of our user base of sophisticated, active investors looking for autonomy from traditional brokerages. We're proud to report that we offer that platform today, and it provides our users with a one-stop shop for securities trading as well as offering in crypto, futures, prediction markets and more. And what's more interesting is, it's all enhanced by AI. AI is dramatically changing the investing industry, and we at Webull are on the forefront of many of those changes. We're proud to be shaping the future of active self-directed trading through the integration of AI via Vega, our AI assistant for trading and platform guidance, delivering real-time insights and AI-generated trading ideas. Launched at the end of last year, Vega is already integral to our continued growth, providing our users with market data, information and associated analysis as well as real-time portfolio monitoring, with user-controlled management of positions and risk preferences. Since launching just a few months ago, Vega currently assists 1.2 million global users each week with 10% of weekly active users deploying the tool to answer over 10 million questions since creation. AI deployment across our platform also extends within our organization with AI implementation across customer service, R&D and internal operations. We're looking to integrate AI into every aspect of our internal business to optimize and scale a global business that provides a differentiated, sophisticated regulatory compliant trading platform to users across markets. I'm proud of the Webull team for a strong first year as a public company. I'm also proud of our leadership and the development of our AI capabilities over the past year. As we establish Webull as a leading investment platform for active traders, I want to be sure you understand how important the scale we have achieved is to our strategies going forward. We are poised to bring our solutions to brokerage firms, high-net-individuals, family offices and wealth advisers. I look forward to chatting with all of you about B2B opportunities in 2026. With that, let me now walk you through the key highlights from 2025 in more detail. Here on Slides 2, 3 and 4, I'll walk you through our 2025 highlights. We are proud of our performance in 2025, delivering record revenue and a solid operating profit margin improvement from the prior year. We recorded revenue of $571 million, representing 46% growth from 2024, driven by record trading volumes across all asset categories. First, customer assets reached $24.6 billion, inclusive of approximately $1 billion in assets from the acquisition of Webull Pay, representing an 81% increase from 2024. Second, equity trading volume increased by 59% year-over-year, to $732 billion, while options volume rose by 19%, to 550 million contracts. And our newer products, including futures, prediction markets and crypto, all delivered strong growth during 2025. We recorded an elevated but disciplined increase in adjusted operating expenses of $460.7 million, representing an annual increase of 24% as we continue to invest in strategic product offerings and market expansion to support long-term growth. Operating profitability was strong with a 14.6 percentage point increase in adjusted operating profit margin, on an annual basis, to 19.3%, representing an adjusted operating profit of $110.3 million for the year. As our industry undergoes structural changes, we will continue to invest proactively to capture outsized share over time. Turning now to Slide 5 and our 2025 road map. I'm really pleased with this progress. Webull Premium, our subscription-based service for active traders and long-term investors, has reached 102,000 subscribers by year-end, surpassing the 100,000 target we set for ourselves. Our premium subscribers contribute 30% of our AUM, 60% of overall margin debit balances and our most active customers. Looking ahead, we aim to double our premium subscriber base in the coming year while continuing to enhance the product with additional features, making it the best value product for active traders. One of our proudest moments of 2025 was the introduction of Vega, our AI tool that combines news, earnings and technical data to deliver a focused, intuitive experience that helps both new and seasoned investors navigate modern trading and make smarter decisions. Since its release, approximately 1 in 8 users have used the assistant before trading, and Vega continues to play a role in not only bringing people to our platform, but keeping them there as reflected in the 1.2 million users a week who utilize this exciting technology. We also launched BlackRock model portfolios, which provide a robo-advisor offering and allow users to access a range of diversified portfolios across various asset classes, including alternative and digital assets. In line with expanded digital asset offerings, 2025 marked the reintroduction of crypto trading for our U.S. customers with the acquisition of Webull Pay and the launch of crypto trading in Australia and Brazil. We are also actively exploring digital asset licenses in a number of other markets and expect to bring them online in the coming year. The introduction of prediction markets to our asset classes has also been an exciting innovation this year. This offering provides an engaging and accessible trading experience that lowers barriers to entry for users. This quarter, more than 162 million prediction contracts were traded, with 81 million in December alone. We're excited to continue the momentum around prediction markets with the introduction of sports prediction markets across all the major sports leagues. And while Webull has always been a global player, 2025 has been a year of further global expansion. We now have more than 760,000 funded accounts outside the U.S. APAC customer assets have surpassed $3 billion, and our partnership with Meritz Financial Group has increased access to the U.S. market for Korean investors. Canada is also on track to soon reach $1.5 billion in customer assets, fast on the heels of surpassing $1 billion only 4 months ago. Additionally, we launched our platform in the Netherlands and are now licensed in 4 additional EU markets: Germany, Italy, Spain and Portugal. We prioritize delivering U.S. products to international markets from the start, and it is just good business to have diversified revenue streams globally. Looking ahead to 2026. On Slide 6, you'll see that we have identified 3 main priorities for the year. First, we will sustain and grow our elite offerings for active traders, leveraging AI tools that enhance the trading experience and allow us to maintain price leadership across the market. Second, we will continue growing our global business by cementing our position in existing markets and continuing to add to our localized product offerings. Finally, as I noted earlier, we will be building on last year's partnership with Meritz to expand our B2B platform. On Slide 7, I'll discuss our growth in both users and funded accounts for Q4. During the fourth quarter, we added roughly 1 million registered users, bringing the platform to a total of 26.8 million registered users. We saw steady sequential growth throughout the year, posting a more than 3 million user increase year-over-year and representing a 15% increase. Our investments in marketing are yielding results and are indicative of a strong fit between our offerings and market demand. As previously mentioned, Webull's roots as a global market data platform mean there is a significant number of registered users in geographies where our trading platform is not yet available. We continue to offer best-in-class market data and information to all users regardless of their brokerage status, a feature of our platform that has only been bolstered by the introduction of Vega to all Webull accounts. On the right side of the slide, you can see funded account metrics. Funded accounts defined as accounts where customers have made an initial deposit that has remained above 0 for 45 consecutive calendar days as of the record date, showed steady growth. We added approximately 100,000 new funded accounts this quarter, bringing the total number of funded accounts to 5.03 million, an 8% year-over-year increase. As we continue to innovate and enhance our offerings, we're also happy to report that our quarterly retention rate remained high at approximately 97%. Turning to Slide 8. Legal customer assets reached an all-time high of $24.6 billion in the fourth quarter, representing an 81% increase on a year-over-year basis and a $3.4 billion sequential increase. You all know that trading volumes were high in the fourth quarter. Our growth in customer assets reflects this. Customers deposited over $3.9 billion during the quarter, an incredible 225% increase year-over-year and a sequential increase of $1.8 billion, bringing cumulative net deposits for the full year to $8.6 billion. Lastly, on Slide 9, you'll see trading volumes for the quarter. While we saw strong growth in our newer products, particularly prediction markets and crypto, equity and options remain our core offerings, and trading volumes continue to grow. Equity notional volume reached $239 billion, up 87% year-over-year and 17% sequentially, while options contract volume totaled 154 million this quarter, up 38% year-over-year and up 5% sequentially. These results underscore the strength and resilience of our active trader base, which remains highly engaged through periods of market volatility. Our customers continue to trade consistently across core asset classes, reflecting a disciplined long-term approach rather than short-term momentum-driven behavior. With that, I'll pass the call over to H.C. for a closer look at our financial results for the quarter. H. Wang: Thank you, Anthony, and thanks to everyone for joining us today. In the fourth quarter, Webull generated total revenue of $165.2 million, representing 50% year-over-year growth. This strong performance reflects continued strength across both trading and interest-related income streams. On the expense side, adjusted operating expenses were $143.6 million, up 62% year-over-year, primarily driven by increased marketing and branding investments. Let me take a moment to frame this clearly. The increase in marketing spend is intentional and strategic. We are capitalizing on a strong equity market backdrop, multiple industry catalysts and the branding tailwind from our recent listing to accelerate customer acquisition, AUM growth and international expansion. Over time, we remain confident in our ability to scale revenues ahead of the expenses, supported by the operating leverage in our model. I will now walk through profitability and then the key components of revenues and expenses in more detail. Turning to Slide 11. We continue to demonstrate consistent profitability. Webull has now delivered 5 consecutive quarters of operating profitability with each quarter generating over $20 million in adjusted operating profit. In Q4, adjusted operating profit was $21.6 million, representing a 13% adjusted operating profit margin. Adjusted net income was $14.6 million, or 8.8% of revenue. For the full year, we generated $84 million in adjusted net income in our first year as a public company. As we look ahead, our approach remains consistent. We will continue to balance disciplined execution, profitability with targeted investments to capture long-term growth. Turning to Slide 12. Our trading-related revenues continue to grow, supported by momentum from the third quarter and strong trading activity across asset classes. Trading-related revenues increased 56% year-over-year to $112.5 million and DARTs increased to 1.2 million (sic) [ 1,202 ] in the fourth quarter. We're seeing broad-based engagement across equities, options, futures, crypto and prediction markets. Importantly, our users continue to trade consistently across market conditions. This reflects the base of active traders who remain engaged through volatility rather than being driven by short-term momentum-based behavior. We believe this positions us well for sustained growth on trading revenues over time. Turning to Slide 13. Interest-related income continues to scale along with client assets. In the fourth quarter, interest-related income grew 31% year-over-year to $43.5 million, primarily driven by higher interest earned on client cash, margin lending and corporate cash. Specifically, customer margin balances increased 43% year-over-year to $689 million at the end of Q4, reflecting higher utilization from our premium customers. Sequentially, interest-related income was roughly flat as declines in fully paid stock lending revenues offset increases in other categories. This reflects the normalization of borrowing rates for certain hard-to-borrow securities, which had elevated stock lending revenues in the prior quarter. As I've mentioned on this call before, our business model is relatively resilient to interest rate changes. Over the long term, as we continue to grow client assets globally, we expect this revenue stream to continue to expand. Finally, let's turn to Slide 14 for a closer look at operating expenses. Adjusted operating expenses increased 62% year-over-year, with the majority of the increase driven by marketing and branding investments. These investments are focused on accelerating customer acquisition and AUM growth, and we are already seeing strong early returns as reflected in our record $3.9 billion of net deposits in the quarter. It's also important to note that excluding marketing, our cost base remains well controlled. We achieved our highest operating profit margin ex-marketing in the fourth quarter at 45%, demonstrating the strong operating leverage of our platform. We expect that our margins should continue to improve as we further scale and diversify our revenue base, which will give us the flexibility we need to invest opportunistically in customers and AUM growth, particularly during periods of market expansion. Now thank you, everyone. With that, I'll turn the call back to Anthony before we open the line for questions. Anthony Michael Denier: Thanks, H.C. Q4 was another record-breaking quarter for Webull on multiple fronts as we focus on growing revenue, growing AUM, all while maintaining fiscal responsibility. This is now our fourth reporting quarter as a publicly listed company, and Webull has delivered growth and profitability every quarter. As we mark a monumental milestone for the platform, I want to recognize our global team for an outstanding year. It's clear that the team's dedication has been central to the progress we've made as a company and will continue as we look forward to the next year of supporting our user base of active securities traders, expanding our platform for investors across existing and new markets and continually looking to expand our client base, including with B2B offerings. We look forward to engaging with you at several upcoming industry and investor conferences. On that note, we welcome any questions you may have, either here on the call or one-on-one. Operator: [Operator Instructions] Our first question is from Chris Brendler with Rosenblatt. Christopher Brendler: Congratulations on the strong results. I'm going to ask the most obvious question first, which is, just maybe dive into the marketing spend in the fourth quarter a little bit in terms of the sequential increase. How much of that went to new customer acquisition? How much of that went to incentives on folks bringing over balances? And if you could comment at all about the run rate from here? As we think about 2026, you expect this elevated level to continue? That would be great. Anthony Michael Denier: Chris, Anthony here. Thanks for the question. So the Q4 marketing expense was certainly higher, and that is -- that's actually illustrated in the success in the AUM growth we've had. The majority of the marketing spend we do -- you don't see Webull on Super Bowl Sunday. You don't see us on billboards around town. We focus a lot of our marketing spend on where it's most impactful for the customers that we are focused on acquiring, and those are high-net-worth active trading customers, right? And that's reflected in the net deposits we received in Q4, right? So record net deposits, $8.6 billion over the course of the whole year. $3.9 billion over the course of just Q4 alone. And that successful marketing campaign is the main driver for the higher marketing costs we see in Q4. Now going forward, we're going to be very conscious on maintaining a strong operating margin. So I do not expect that the marketing costs will be as high going forward. But again, we're opportunistic. Where we have an opportunity to grow and to invest in growth, we will take that opportunity. So Q1 is looking much lighter than Q4 was, but that was a lot because of the success of Q4. H. Wang: Chris, just something to add on top of Anthony. So if you look at our marketing expense, as a percentage of revenue, it was about 35% in 2024. And that as a percentage of revenue has actually come down to about 23% -- 24% in 2025. So as we continue into the new year, we will continue to obviously invest in customer acquisition and AUM growth, but we will also be keeping an eye on this ratio, percentage of revenue and spend on marketing. An important point, I think Anthony had alluded to is that we are -- the majority of our marketing spend is actually performance-based. So these are for successful deposits, for successful account openings, these are that we can track. These are not fixed branding investments that are committed early in the year. So we have a lot of flexibility to dynamically calibrate and adjust the marketing spend as we see where the market is going. Christopher Brendler: Makes total sense. I appreciate that color. Since we're already in March and markets have changed a little bit since last year, certainly seeing a lot of trading volume but also some volatility. Can you comment at all about 2026 year-to-date in terms of the trends in DARTs and equity versus option? That would be great. Anthony Michael Denier: Yes. No, no problem. I think the market is setting itself up for an interesting rest of the year. But looking back, we're almost at the end of the first quarter already. And I can say confidently now that, I mean, January is probably the second best month we've ever had as a company since inception. So Q1 is certainly looking strong. When there is volatility, especially with our customer base, there's a lot of activity and a lot of trading. When the markets start getting harder to read, whether there's geopolitical headlines that we're reading multiple times a day now, that could change the direction of the market at any time. We see a lot more concentration in our options business, and the margin in our options business is quite higher than our equities business. So that's actually a net positive for us. And I think in a volatile tape, which seems like it is going to be in the foreseeable future, I think we're extremely well positioned with just our core customer base, right? You see a lot of our competitors looking to target active traders. We have only targeted active traders since day 1. That is our core. That is our flywheel, right? And it will constantly help us when there is volatility in the market. And the activity between a casual retail trader and an active retail trader is very different. So the second part, I think, where we have an advantage is our global distribution, right? We're now operating in 14 different countries around the world, and it's great to have diversity of revenue streams with different product types, with a volatile market and a questionable outcome of which direction the market is going to go. And then lastly is our B2B business, which has done nothing but expand since we made our first announcement only 3 months ago. We'll continue to build on those partnerships. It is a long-term and slow growing business when you're dealing with B2B relationships, but they are consistent through different changing markets over time. Christopher Brendler: That's great color. One last one, if you don't mind, is the prediction markets here. Super exciting to see the success after such a late in the year launch, certainly it ramped very quickly. How should we think about prediction markets and contributing to earnings and profitability in 2026? Anthony Michael Denier: So prediction markets are exciting for our business. I think it opens up our TAM to a completely new demographic of customer. It is a great reengagement tool for customers that have gone dormant or have slowed their activity on the platform. It's a great calling card to come back and rediscover investing and trading. I do not believe that prediction markets are going to be any part of our core business going forward. I think our core business is in the active securities trader. And I think the prediction markets are a great tool that we can use to engage -- and keep clients engage with -- and keep clients engaged with their portfolio, allowing them to speculate, to hedge and allowing them to have access to new tools and a new on-ramp to gather a new customer base. Operator: The next question is from Mike Grondahl with Northland Securities. Mike Grondahl: I wanted to follow up on the $3.9 billion in net new deposits. You guys really called out the marketing spend, and we know what you've done there for people moving balances. But I didn't hear you mention crypto, that new offering or Meritz, that rollout. Do you want to attribute any of that big growth to crypto or Meritz? Or I guess, drill down a little bit deeper there, Anthony. Anthony Michael Denier: Yes. So firstly, any of the B2B relationships that we've onboarded, they're not attributable to net deposits. Those net deposits are purely coming from retail. Crypto, however, is included because our crypto business is only attributed to retail right now. To give you a little bit of color on how Meritz is going, we've been obviously quiet in terms of the revenue attributed to this new partnership because we still are growing it, and it's still very early. But we have, to date, traded north of $1 billion notional in equity for Korean customers through our relationship with Meritz. That number is growing on a week-to-week basis, and we expect them to be a very important partner for our B2B business in the longer term. On the crypto side, and we've talked about this before, the availability and the opportunity for us for crypto is a wide-open field. And I'm extremely excited about the ability to be best-in-class for active crypto trading, but it's still too early. The amount of trading that we're doing on crypto versus our securities business is still de minimis. We are still waiting to roll out a couple of key products towards the end of this quarter. And I think there'll be much more material conversations to have for Q2 in terms of crypto revenue contribution. Mike Grondahl: Got it. And just going back to Meritz, how ramped up is that relationship? Is it still early innings, middle innings? And then what does the pipeline look like for other international partnerships or opportunity? Anthony Michael Denier: So for the Meritz relationship, again, a very key one for one of the largest active trading regions in Korea, very, very early innings. I mean we're still not even out of the second inning yet. First inning was getting them onboarded. Second inning is where we are as we're still testing. And some of that test phase, we are working out the different trade flows that they want to send to us, and that number has been growing on a steady basis. I expect that -- I expect to be 10x at the end of this year where we are today, to give some context. And pipeline for B2B, that's where the B2B gets really exciting. As you guys know, onboarding institutional investors is not as quick as onboarding a retail customer. So these relationships do take time to build. But the pipeline is primed and ready. We have multiple businesses that are looking to connect with us on multiple reasons. We're beating our competition in price. We're beating our competition in technology. We're beating our competition on having boots on the ground where these B2B relationships are, and we're beating them on product diversification. There's very few competitors that we have in this space that can match us on all those fronts. So I expect the B2B business to be equal, if not greater, over the next several years than our current retail business. Operator: The next question is from Karim Assef with Bank of America. Karim Assef: Can you guys hear me okay? Anthony Michael Denier: Yes, sir. Karim Assef: Okay. Perfect. Congrats on a strong quarter. My first question is on capital priorities and M&A. So could you give us an update about your capital priorities for this year? And what are some of the key focus areas for M&A in terms of size and target markets? H. Wang: I'll take this one. I think our answer hasn't really changed. We'll continue to be very focused investing in growth, that means customer acquisition, AUM acquisition and continue to invest in technology, especially AI, to make us the best-in-class platform for active traders and also in geographical expansion where we're currently operating. So I would say it's primarily in organic growth as we see a lot of opportunities in our current space where we're gaining share across a number of markets. In terms of the M&A opportunities, I think it's something I think we'll be opportunistic. We don't have a strategy necessarily saying that we have to grow through acquisitions. But if something interesting that does come along, we'll obviously evaluate it from a risk-reward perspective. Karim Assef: Got it. And then for my follow-up, I wanted to know if there are any plans to publish monthly metrics such as DARTs, account growth, net deposits, similar to what some of your peers provide? And if so, could you share the timing or the context around when you might start? H. Wang: Well, thanks for the suggestion. I think -- we are listening, and we are evaluating and also balancing with, I guess, where we are in terms of the maturity of the business. So if you noted, we've actually disclosed more granular data in terms of DARTs and also the interest earning asset balances in this quarterly presentation. So we want to be transparent and give more information to our investors and research analysts. So when we're ready, we'll be releasing data probably on a more regular cadence. So thank you. Operator: The next question is from Ed Engel with Compass Point. Edward Engel: I wanted to kind of drill down on some of the success you're seeing on the performance marketing side. Is there any specific segment or segments that are kind of driving a lot of the growth there, whether it's U.S., international or kind of these new products, like crypto and prediction markets? Anthony Michael Denier: So what I've been most impressed with, especially over the course of '25, was the growth of the international contribution, meaning our non-U.S. broker-dealers that are contributing into our U.S. product flow, mainly in the form of equities and options business. We have more than doubled the amount of incoming flow over the course of '25. So a doubling effect, which I am very confident that, that trend will continue into '26 as we continue to export kind of the U.S. retail experience to retail investors outside the U.S., to all of our broker-dealer affiliates in the Webull Corporation umbrella. Looking at things like a retail customer sitting in another country, is still reading the same investment blogs, is still looking at the same Reddit channels, talking about using options to trade volatility or ahead of an earnings cycle, right? But that customer usually does not have access to that U.S. product where they live. And if they do have access to it, usually, they have to be some ultra-high-net-worth customer or they're going to pay some ridiculously high fees or have a very bad user experience. We are bringing that U.S. experience outside of the U.S. and been extremely successful in doing so. We're continuing to push that agenda. We are the first true zero-commission platform in Hong Kong. And when we went to zero commission in Hong Kong, I believe it was November of 2025. Our Hong Kong customer order flow nearly doubled immediately. We will continue to push pricing, price compression and better user experience everywhere globally. So that international cohort is really important for us. And then when we look at product types, you mentioned crypto, of course, crypto is extremely important for our demographic of customer. Like I mentioned earlier, we will be focusing on targeting active crypto traders with price compression here in the U.S. We have licenses and are offering crypto currently in Brazil and Australia. And I believe that we will have -- I want to be careful. I don't want to make too many promises. But we will have probably 2 more licenses to trade crypto before the next earnings call and continue to expand on that for expanding our user base for the products that we offer. And then lastly, I think prediction markets as a new product is something that's extremely interesting for our B2B business. In order to offer predictive markets, you have to have multiple licenses. And you have to have the ability to offer technology on a quick delivery schedule that you can then offer these products to other platforms that do not have the proper licenses and do not have the proper technology to offer it. So there's a huge queue of clients that we're building that will also expand our prediction market business that expands outside of retail alone. Edward Engel: Great. Appreciate all that color. And then just kind of get into the trading revenue segment within the platform and trading fees line item, a pretty big sequential increase in that. We can kind of back into prediction market revenue just given the volume you gave us, and it's some of that, but not really all of it. So just curious, of that kind of platform and trading fee line item, like what really drove that sequential increase? H. Wang: Well, there's -- it's actually a number of things. So outside of our core products, equities and options, all the other asset classes are -- the trading-related revenues go into the platform and trading fees. So that includes futures, crypto and prediction markets as well as the commissions that we do collect on some of our foreign affiliates. Yes, so Q4, there's a big jump, I think, for several reasons. One is that our -- like our futures business actually continues to grow. And also, we had consolidated Webull Pay, the crypto business, at the end of Q3. So Q4 was really the first time that we had ever presented crypto revenue in any of our results as well as prediction markets. So as you can see, we -- like, Q4 was a big quarter for prediction markets. And so for us, that also is a significant contributor to the results in Q4. Edward Engel: Great. And then just one last housekeeping one. I saw on the balance sheet that you -- it looks like the promissory note balance declined. Was that you paying this down [indiscernible]? H. Wang: Yes, we paid -- yes, that's correct. We had $100 million of promissory note on our balance sheet at the beginning of Q4. And then we paid off $35 million of the principal of the promissory note in Q4. Edward Engel: Okay. And I guess the interest payment steps up, correct, in about a month. Is it fair to assume that you would try to take it down relatively quick? Or are you okay with it out there? H. Wang: I think we're -- again, we're evaluating. We have time to pay down the promissory notes. So there's flexibility on when to pay it off. So I think it depends on the -- our cash flow and our balance sheet and also our strategic priorities in the coming quarters. So there is -- the goal is to eventually pay it off. So -- because we are -- we would like to maintain a healthy balance sheet and not to take on too much debt. And so the goal is definitely to pay it down over time. And then so hopefully, save on the interest costs. Brian Vieten: Great. Once again, congrats on the big growth. Operator: The next question is from Brian Vieten with Siebert. Brian Vieten: Just a question on, I guess, the customer funnel kind of driving new adds and keeping people engaged. Can you just talk about prediction markets versus crypto? Like what's been, I guess, a more compelling funnel for you and how you see that looking in '26? And then separately, just on price, it seems like for a number of products, the pricing is very competitive. But I do wonder if maybe you could come out at sort of a healthier price level and then the customer could kind of opt out versus you kind of immediately cut the price and then it's harder to maybe raise it down the road. Have you guys run through any of these analyses where maybe you do just have the normal fee structure and you could always sort of cut it down over time and kind of delight the customer from that standpoint. Is that an exercise you guys have worked through with prediction markets, crypto, kind of your newer markets? Anthony Michael Denier: Brian, so I think one of the big differences, though, when we talk about price compression for crypto, I think the biggest differentiator between our business and any of our competitor business in terms of trading of crypto and the spreads that are built in the pricing is that we're not reliant on any crypto revenue currently, right? So any revenue that we add, whether it's from a pricing spread that's 1/4 of the margin of our next competitor, that's still accretive revenue for us. And if any of our competitors were to match our pricing, they'd have to be cutting their crypto revenue significantly. So we think that, that puts us in a very good position. It almost reminds me of when we launched the platform in 2018, where there was us and 2 or 3 other digital platforms that were only offering zero commission, right, for equities. And the largest players, they were very, very slow to adapt and change because it was so cannibalistic to a very important revenue stream that they depended on. I see this as the same exact opportunity for us. And to get more detailed about your question when, I don't think we would have an across-the-board pricing compression for all clients because the majority of crypto investors are long-term investors, right? They're buying it to add to their portfolio. So the entry cost is not that important to them. We're targeting the active crypto traders, right? People that are day trading crypto multiple times a day, every day. That is the majority of our customer base, with active traders, and we want to cater a product specifically for them. So we do have a couple of different models in mind, and I will give you more details as we get closer to a launch date. Brian Vieten: Okay. Great. Okay. Perfect. And I guess just from a fee capture standpoint, it sounds like, near term, it's more about getting volume out there and driving more engagement and getting new customer adds? Is it -- are we right to think there's probably not a big revenue number coming from crypto prediction markets in '26? I might have missed that if you covered it earlier, but could you just walk through the fee structure a little bit for this year? Anthony Michael Denier: So for our prediction markets, we charge $0.01 commission per contract. We also do receive exchange rebates on top of that as part of the revenue stream for prediction markets. We did run an offering around the Super Bowl, where we announced no commission for prediction markets, for anything related to the Super Bowl, game winner, point spread, MVP, things like that. And that actually drove a significant amount of traffic without us actually having to advertise or pay for expensive advertising during the Super Bowl cycle. A very successful program for us. I think there's very little compression that's available for prediction markets. I think the prediction market game is strictly about volume and size at this point. And that could be run in a couple of ways. It could be a targeted audience, which, again, I'm not convinced that that's our audience. I think our audience are the active securities traders, not the pure spec traders, but that can change. Still kind of waiting to see some data and waiting to see which direction a lot of the kind of regulatory and political cultural oversight -- in which direction that wind is going before I want to commit to doubling down on a specific product. And obviously, crypto on-ramp is a natural progression for our demographic, and we'll continue to pursue the right product suite as we roll out -- like I mentioned, as we roll out the offering and get aggressive into Q2. Brian Vieten: Okay. Great. And then just lastly, I think for some of your competitors, one of them has 10, 11 businesses, I think that are $100 million or more in revenues. Prediction Markets was the fastest growing -- I'm sorry, the fastest to $100 million of all 11 businesses. And it's funny, we looked at a couple of years back, a lot of them didn't -- they launched 5 years ago. But even if you haircut the prediction market number by 80%, it's still the fastest to $100 million. And so I guess from my standpoint, it's I'm still a little bit, I guess, just confused why we wouldn't just have the full capture in such a sort of fast-growing market that's kind of wide open. But I'll hear your side as well. Anthony Michael Denier: No. So Brian, I mean, we do have the full suite of prediction markets that all of our competitors have. It's not that we don't offer them. We absolutely do offer them. However, we don't put our prediction markets front and center in our customer experience, right? And I think that's a great metric you mentioned, but another great metric is you look at our traditional securities products, we're probably $115 million in terms of AUM of the competitor you mentioned, yet we do 1/3 the amount of equity business they do on any given day. We do probably 20% to 25% of the options business that they do in any given day. So we understand who our core customer is, and we build our platform and we develop it around our core customer. Operator: This concludes our question-and-answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.
Jennie Daly: So good morning to you all. We're going to start nice and sharp today because I know it's a really, really busy results day. But before I do, and it has become usual practice, we have members of our group management team with us here today and also our first newly appointed Customer Experience Director, Maria Sebastian. So Maria, give everybody a wave so they know who you are. And we will -- hopefully, you'll have the opportunity to catch up with Maria later this morning. And while not -- there is Maria. Actually, you missed your moment, Maria. So here is Maria, our Customer Experience Director. And while not here today, I'm also pleased to say that we have appointed a new Divisional Chair for the London and Southeast, Tom Pocock, formerly of Barclays. And Tom will be joining us soon, and you'll no doubt meet through the course of the year. Right. Let's get started. So I'll start with some highlights on 2025 and the delivery of the medium-term targets we set out last October. And Chris will cover 2025 performance in more detail and turn to guidance. And then I'll update you on how the spring selling season is playing out and how we are driving the business forward with those medium-term targets firmly in our sights. There we go. So this morning, you'll hear our strategy for driving returns in what has been a challenging year for the industry. Against that backdrop, we delivered 2025 volumes in line with guidance, growing completions by 6% with new outlet openings up 29% in the year, ending 2025 with 219 outlets ahead of expectations. The planning activity we created and stopped over the last 3 years has gained momentum through the year and is now delivering both in applications -- results, sorry, in both applications submitted, but more pleasingly, in the rate of permissions granted. And this is ultimately the basis for future outlet openings. And you'll hear that we remain very confident in delivering average outlet growth year-on-year. Another key focus is utilizing our strong existing landbank and increasing capital efficiency. Chris will speak more about this. It's not something that happens overnight, but we are well on that journey. Our strategy and the actions that we've been taking will drive improved returns, both in terms of margin and return on assets in the medium-term. We have a continued focus on cost discipline, grinding out cost whilst protecting value and balancing the medium-term strategy commitments. And while the housing market remains tough, we remain confident in this plan that is in our control and deliverable. And you'll hear more about this during the presentation. However, our outlook does not incorporate potential impacts from recent events in the Middle East that may arise for the U.K. economy and our business given the early stages of development. And finally, you will have seen that we've added flexibility to our capital allocation. Chris will talk you through the detail, but suffice to say that we remain confident that the unchanged quantum of net asset value-based returns remains appropriate, but do see benefits for shareholders and having more flexibility by adding the potential for a buyback element to our ordinary distributions. So this slide will be a bit more familiar to you and gets a bit more into the guts of our 2025 performance. I won't run through them all, but I'll just pull out a couple of the highlights. We delivered a robust sales rate, which I think attests to the quality of our product and locations and the efforts of our teams. Turning now to landbank. You can see that our landbank has come down slightly as planned as we seek to reduce landbank years. This is a key objective for us given the strong landbank that we hold, though we will do so principally by growing volumes. We've continued to prioritize customer scores and build quality as part of our commitment to operational excellence. We have a high customer score comfortably above the 5-star threshold under the new survey criteria, and our build quality continues to lead the sector. I'm delighted that for the second consecutive year and the third in 5 years, our Taylor Wimpey site manager was awarded the Supreme Award in the NHBC Housebuilders Award. This year, congratulations go to Lee Dewing of our North Yorkshire business. So you'll have already seen most of the key numbers on the slide through the trading statement, but I'll just highlight the outlet chart, which I think illustrates the progress that we are making in outlet openings. We opened 71 outlets last year, 29% up from 2024 with good progress year-on-year. There's some good momentum here, and we remain very much on track. We expect to open more outlets in 2026 than we did in 2025 and remain confident in growing average outlet numbers year-on-year. I think it is worth reminding you what we said about our approach to outlets. We have a strong single brand, and we mostly run our sites as single outlets. So this increase in outlets represents real growth in new markets. So I'll now hand over to Chris to take you through our performance and guidance in detail. Chris Carney: Thanks, Jennie, and good morning, everyone. As usual, I'll take you through the financial performance for 2025, a year in which the group delivered a robust set of results despite a challenging market backdrop. Our disciplined operational focus, the consistent execution of our strategy and the continued progress in planning and outlet openings underpins the financial resilience you'll see across the next few slides. So let me begin with the headline financials. Group revenue increased 13% to GBP 3.84 billion, supported by growth in the U.K. completions, resilient private pricing and a stronger contribution from land sales. Overall, a very good performance in a year where second half sentiment softened. Gross profit was slightly higher at GBP 658 million with gross margin stepping down to 17.1%. This movement is consistent with the factors that we've been flagging throughout the year, modest build cost inflation, slightly lower opening order book pricing and the impact of landbank evolution. Adjusted operating profit was GBP 421 million, up 1% year-on-year, delivering an adjusted operating margin of 10.9%, and I'll come back to margin performance in more detail shortly. PBT and adjusted EPS were both lower year-on-year, reflecting higher net finance costs. And finally, return on net operating assets edged up to 11% with improved asset turn more than offsetting the margin headwinds. Turning to the U.K. We completed 10,614 homes, excluding joint ventures, up 6.4% year-on-year and in the middle of the guidance range we set a year ago. Private completions increased by 7.7%, while affordable completions increased by almost 2%. Affordable represented 21% of total completions, and we expect a similar mix of around 20% to 21% in 2026. The blended U.K. average selling price was GBP 335,000 with the private average selling price at GBP 374,000, both about 5% higher. This reflects a greater proportion of completions in London and the South. Underlying pricing was positive in the North and became progressively softer as you move down the country, but overall remained reasonably resilient. As we entered 2026, underlying pricing in the order book was roughly 0.5% lower year-on-year, primarily due to those late year book deals in London that we highlighted in the January trading update. After taking that into account, we expect mix benefits to support an increase in the 2026 blended average selling price of around 2% over the GBP 335,000 reported for 2025. Adjusted U.K. operating profit remained steady at GBP 369 million, while margin softened to 10.1%. On the next slide, I'll walk you through the main drivers of the 1.4 percentage point operating margin reduction. So in 2025, we saw modest market-driven pressures from both pricing and build cost, which together reduced adjusted operating margin by 110 basis points. On pricing, the pressure came from the opening 2025 order book and the London bulk deals, which contributed to completions in 2025 and formed part of the order book for 2026. Build cost inflation was about 0.5% in half one and 1% for the year overall, driven mainly by materials rather than labor. The underlying market rate was slightly higher, but our supply chain self-help initiatives and increasing usage of our new house type range helped offset part of the pressure, and that work will continue into 2026. Landbank evolution was also a factor as we continue to trade out of older higher-margin sites acquired after the Brexit referendum. We still expect this to normalize and then become a positive contributor. And as we discussed in October, that improvement will start in 2027 and become more meaningful in 2028 and 2029. As we said in January, land sales were particularly strong in 2025, enhancing our group margin by roughly 60 basis points, a similar benefit to 2024. However, as we said, we don't expect land sales to be margin enhancing in 2026, so that benefit will unwind. We also had a 0.5 percentage point impact from the GBP 20 million one-off charge relating to historic workmanship issues at the legacy London apartment scheme. So these 2 impacts dropping out will be broadly neutral going into 2026. The headwinds from pricing and build cost inflation were partly offset by improved recovery of operating expenses as both volume and revenue grew. So turning to cladding and fire safety. This slide will look familiar to everyone from the half year, and I'm pleased to say that the overall provision has remained broadly unchanged. That sits alongside strong operational progress. We've continued to move at pace, progressing assessments, initiating further works, and we've now fully remediated 62 buildings. Since June, the number of buildings awaiting formal assessment has reduced by around half. There is still significant work ahead, but the stability of the provision over the past 6 months reinforces the robustness of the assumptions we updated in June. To date, we have set aside GBP 544 million for cladding and fire safety remediation and spent GBP 131 million. That leaves a remaining provision of GBP 413 million. Our cost estimates on assessed buildings, including the cavity barrier risks highlighted at the half year have continued to prove robust. The small uplift you see reflects routine mechanics, the unwind of discounting and minor updates to assumptions such as inflation and legal costs. Cash spent in 2025 was GBP 49 million, around half our previous guidance, mainly due to the delayed invoicing from the Building Safety Fund. With those payments now expected this year, we anticipate around GBP 150 million of cash outflow in 2026 and about GBP 100 million in 2027, with remediation still expected to conclude in 2030. Our balance sheet remains a core strength of the business. Net operating assets were broadly flat at GBP 3.8 billion. Land -- net of land creditors reduced modestly, reflecting the contraction in the short-term landbank to 77,000 plots, consistent with progress towards the targets we set out in October. Work in progress increased year-on-year, supporting higher outlet numbers and continued infrastructure investment to support new outlet openings. Tangible net asset value per share declined to GBP 1.176, driven by the increase in the building safety provisions in the first half. Turning to cash flow then. This bridge shows the movement from opening to closing net cash. The working capital outflow reflects higher debtors due to the London bulk deal signed towards the end of the year and lower creditors mainly from reduced affordable advance receipts and customer deposits. The land decrease includes a higher level of deferred receipts on land sales and the increase in WIP supports our outlook growth strategy as planning momentum improves. After tax, interest, dividends and other items, we ended the year with a strong net cash position of GBP 343 million, in line with guidance provided at the half year. Now I've included this slide to reiterate a couple of points from our investor and analyst event in October as this is a critical focus for the business. Our medium-term plan remains 14,000 U.K. completions, 4.5 to 5 years of short-term landbank, 16% to 18% adjusted operating margin and return on net operating assets above 20%. Capital discipline across land and WIP is central to delivering those improved returns. In 2025, we made good progress, returning capital into smaller sites, reducing the scale of the landbank, increasing outlet numbers and improving the distribution of our investments across the country. The short-term owned and controlled landbank is now 77,000 plots, down from 79,000. The average approved site size reduced again in 2025 to 211 plots compared to an average of 260 in the previous 5 years. And we closed the year with 219 outlets, up 3%. As we discussed in October, WIP invested in both London and infrastructure will take time to normalize, but we're seeing early progress. WIP per outlet has improved since the half year and is now back in line with end of 2024 levels. London apartment WIP reduced from GBP 270 million in June to GBP 200 million and the GBP 100 million of land sales completed in 2025 will release around GBP 30 million of infrastructure capital for reinvestment to fuel future growth. So there was good progress in 2025, increasing confidence in our ability to deliver the returns set out in our medium-term plan. Next, turning to our capital allocation priorities. Today, we're announcing an evolution of our shareholder distribution policy. But before outlining the change, I think it's important to note the context. Taylor Wimpey is inherently highly cash generative through the cycle, and that cash continues to fund the consistent investment we make in land and work in progress to support future growth. That remains unchanged. As a result, the first 2 priorities of our framework stay exactly as they are, maintaining a strong balance sheet and investing in land and WIP to underpin sustainable long-term growth. We've been equally consistent in returning significant cash to shareholders. Since introducing our ordinary dividend policy in 2018, more than GBP 2.8 billion has been returned. Our existing distribution policy, returning 7.5% of net assets or at least GBP 250 million each year through the cycle also remains in place. What we're introducing today is an element of flexibility in how that amount is delivered. We will continue to return 7.5% of net assets split equally between the final and interim. However, from here, a minimum of 5% of net assets will be paid as a regular ordinary dividend with the remaining portion returned either via dividend or share buyback to be determined by the Board as most appropriate at the time. This added flexibility strengthens the policy and supports the long-term interests of all shareholders. Accordingly, today, we are announcing a final 2025 dividend of GBP 0.0295 per share, equivalent to GBP 105 million and a GBP 52 million share buyback, which will commence shortly. Taken together, this brings total shareholder distributions for 2025 to GBP 322 million, including the 2025 interim dividend. Finally, our fourth priority remains unchanged. We will return excess cash to shareholders when appropriate. So with the combination of good cash generation, a strong landbank and an invested WIP position, giving us everything we need to support disciplined profitable growth, it's clear that our long-standing commitment to funding the business first remains fully intact, and this evolution in policy is built on that foundation. So finally, turning to guidance. As you would expect, we remain mindful of the broader geopolitical backdrop, including recent developments in the Middle East. Our outlook today reflects the conditions we see in our markets at present and does not incorporate any potential impact from those emerging events given the uncertainty and the early stage of development. With our strategic approach to land and strong conversion into outlets, we continue to expect average outlets to be higher in 2026 than in 2025. Trading in the year-to-date has been encouraging, although we did enter the year with a slightly lower order book. Against that backdrop, we are setting U.K. volume guidance, excluding joint ventures at 10,600 to 11,000 completions for 2026. At our January trading update, we covered the 2 main moving parts impacting adjusted operating margin in 2026, and I'll recap those now together with one further relevant factor for 2026. Pricing in the opening order book was around 0.5% lower year-on-year, driven by bulk deals. We continue to see low single-digit build cost inflation and legal completions in Spain are expected to normalize this year to around GBP 350 million to GBP 400 million after 2 years of higher than usual output. Taken together, these factors are a headwind to profit margin in 2026 relative to 2025, and we, therefore, expect adjusted operating profit of around GBP 400 million, and we expect pre-exceptional net finance charges to be around GBP 30 million. As we said in January, U.K. volumes in 2026 are likely to be more second half weighted than usual with around 40% completing in half 1, reflecting the softer market conditions in Q4 last year. Given the half 1, half 2 phasing effect, we anticipate a larger half 1 cash outflow than last year, resulting in around GBP 0 to GBP 50 million of net cash at the half year with the half 2 weighting of completion supporting a recovery in the balance by the year-end. So in summary, I'm pleased with the group's performance in 2025, a strong and resilient result despite a changeable market backdrop. Looking ahead, our focus is on leveraging our excellent land position to drive outlet growth, which in turn supports volume growth, margin progression and enhanced return to shareholders over time. I'll hand you back to Jennie. Jennie Daly: So taking a step back then and looking at the market as a whole, we are pleased to see some signs of improvement and opportunity. Mortgage availability remains good with mortgage rates lower year-on-year and real wage growth supporting affordability, though still more challenged than in the years before the downturn. Unemployment remains at low levels. And although customer sentiment is lower generally, it has been on an improving trend. In addition to the budget uncertainty through much of the second half, last year was also impacted by a notable increase in the amount of secondhand stock on the market. And although we hope for improvement this year, we're also ensuring that our customers are aware of the benefits of buying new. Encouragingly, first-time buyer numbers are showing some signs of improvement, but remain well below the levels we saw before the downturn. Deposit building remains a real challenge for this group, particularly in the affordability constrained south. On the Section 106 affordable housing side of the market, securing partners remains a challenge. But despite that, we are in a good position for 2026 affordable deliveries. Overall, medium- to long-term drivers continue to look positive. And as a result, our medium- to long-term view of the market opportunity is unchanged. There is a long-term structural undersupply of homes in the U.K. However, we also now have a political commitment to address undersupply with meaningful interventions to support supply side bottlenecks such as planning and more on that later. So turning now to Taylor Wimpey and our focus on controlling what we can and driving value from it. A good example here is the performance that we're driving from our marketing platforms. Last year, we updated you on how we changed our marketing approach to target fewer but higher quality leads, and it's pleasing to see clear benefits of this. We've also improved the online experience for customers through optimizing media and website effectiveness. We are seeing good quality lead generation, a year-on-year increase in overall appointments, which is still the best indicator of future intention to purchase and better conversion rates. And finally, we are seeing good quality visitors with a strong intention to move, but decisions are taking time with customers visiting sites multiple times before commitment. Spring selling season is progressing well with our performance similar to this time last year, which you will remember as a strong comparator. The year-to-date net private sales rate compares well to this point last year. The last 4 weeks have been a bit stronger at 0.87, including bulks or 0.83, excluding bulks, and that compares to the same period in 2025, which was 0.82 with no bulks. Whilst this is encouraging, I think we should remain mindful of the weak trading in quarter 4 and that it is still early in the year. As we told you in January, our order book at the start of the year is a bit lower than the comparative period given the tougher trading environment that we saw in the second half of 2025. We had a strong Boxing Day sales campaign supported by proactive management actions, and we can see that the appointments taken in this period are now converting into sales in recent weeks. As a result, the order book has made some progress, and it currently stands at 7,678 homes compared to around 8,000 at the same time last year. As I said, customer sentiment is moving in the right direction. However, we are still seeing first-time buyers, especially those in the South, grappling with affordability constraints. As a result, incentives remain an important factor in gaining commitment and are running around 6%. Now over the next few slides, I'll show you the progress that we're making in driving a more efficient land position and liberating our strategic land pipeline through our assertive planning strategy. We're still at the relatively early stages of the new planning cycle. But as expected, we've seen some early improvements in decision-making because of the changes introduced by the NPPF at the very end of 2024. These pie charts represent a snapshot of expected outcomes for our assertive strategic applications as at February 2025 and February 2026. I think if you want a stat that really shows a shift in sentiment, this is a good one. At this moment in time, we forecast 49% of planning officers will make a positive recommendation on our assertive applications. That's more than double the 22% we saw at the same point last year. I would stress that this is a point-in-time snapshot of what is a dynamic process. So as applications progress through the various stages of planning consideration, such as consultation stage, we would expect the not known categories to crystallize in some numbers towards the positive. With a clearer and more consistent planning policy backdrop weighted to housing delivery, our proactive strategy is delivering. This clarity means that we are being more determinative in our approach to engagement at a local level. It also means that we are more confident in a positive appeal outcome than in past years, and we are choosing this route more quickly when local engagement routes are exhausted. And not on the slide, but in terms of overall applications, sentiment has visibly improved with positive planning progress or planning achieved on 71% of applications in 2025 compared to 58% the prior year. So against this positive and improving backdrop, how are we faring? So you will recall that I've been telling you for some time that we've had a very deliberate and targeted strategy since 2023 to get ahead, load the planning basis and now we are seeing results. We achieved detailed planning for over 10,000 plots in 2025, 28% increase year-on-year. On the chart that you can see on the left, while some of those applications have been in the system since 2023, many more were submitted more recently and have benefited from early progress following the NPPF. We also converted over 5,000 plots from the strategic pipeline in the year, not unexpectedly weighted to the second half and final quarter. Additionally, plots for first principal planning determination are continuing to increase, now standing around 32,000 plots, and we are progressing them through planning at a pleasing rate. At the investor and analyst update, we set out a number of set of applications that we intended to submit from our strategic land pipeline. Just to stress, these applications are over and above our business as usual planning activity. In October, we expected to submit 52 applications in 2025 compared to 20 in 2024 or around 11,500 plots. I'm pleased to say that our teams have worked hard and hit the application target, surpassing the plot count level. In October, we also talked about 17 set of applications being targeted for committee decisions. And this was a stretching target. And whilst applications came in slightly below, in plot terms, the numbers came in broadly in line. And we have since had a number of those delayed applications go to planning committees in 2026. So all in all, I think it's a good showing relative to our experience in most recent years. All this is key to driving outlets, and we are maintaining the momentum, which we will see in the next slides. We start from a position of strength, a strong short-term landbank sitting at 77,000 plots, which continues to give us the confidence that we can deliver growth without net investment in land. Our intention in the land market in 2025 was to continue to be selective and below replacement. In the year, we approved around 8,000 plots. And as you heard from Chris already, the average site size of those approvals was around 211 plots, in line with our strategy to target smaller sites. And the geographic distribution approvals nudged in favor of our Northern businesses. The land market remains uneven, but there are signs of gradual stabilizing as the flows of opportunity improve. Competition remains high for well-located deliverable sites, whilst more complex or lower-value locations see less competition. Investment is, I think, expected to remain selective in the near-term as landowner pricing realism continues to act as a constraint in some areas. We remain confident of delivery over the next few years. We already own and have planning for all of our 2026 completions and already own or control everything we need for 2027, almost all of which has planning. With the momentum we've outlined, we are on track to open more outlets in 2026 than we did in 2025 and expect average outlets to increase year-on-year. So now I'm going to run through a couple of example sites approved during 2025. Both examples are own sites that we've unlocked and I think reflect the tangible benefit of our assertive planning actions. They demonstrate the improving planning environment and illustrate how our mature strategic land pipeline is supporting early delivery during this period of planning opportunity. So you may recall that in October, Shaun White highlighted this particular site located in the Green Belt on the edge of Solihull. We have held this land for over 30 years. And I think a few sites demonstrate the maturity and value within our strategic pipeline or indeed the frustrations of the planning system quite as well as this one. The journey hasn't been straightforward though it was considered as a draft allocation in the early 2010s, the site didn't make it into the 2013 adopted Solihull local plan given limited Green Belt review. Though the site was not formally adopted, it was never dropped, but was identified as a draft allocation since the local plan review commenced in 2015. After various stages of consultation, the local plan journey concluded negatively in October 2024 when an inspector's report into the plan concluded that it would be found unsigned if pursued. So after nearly 10 years of effort, the council withdrew their plan. But the breakthrough came when 2 things aligned, our continuing local engagement and the emergence of the draft NPPF 2024. This caused an immediate shift in sentiment within the council, a council which now find itself under real pressure to deliver a 5-year housing land supply. In fact, as Shaun noted in October, whilst we had already worked to prepare an application, we were now actively encouraged by the planning authority, and we submitted an application in December 2024. This came against a positive backdrop, an updated NPPF guidance on Green Belt release and strengthened recognition of local housing need. What followed was a marked change in pace, engagement with officers and elected members was constructive throughout, and we secured a resolution to grant within 12 months. That is rapid progress in today's planning environment and a testament to the quality of the work from our team and the appetite of forward-thinking councils to approve high quality schemes on a proactive basis to support their housing need. We now move to the next phase. Reserve matters applications are underway and will be submitted later this year with an outlet anticipated late 2027. This site, I think, is a story of the commitment and our commitment to strategic land over the long-term, to partnership and being agile enough to act decisively when the environment shifts in our favor. And it represents exactly the kind of capital-efficient progress we need, land we have held for decades, unlock through determination, good timing and the strength of our relationships. And now a smaller site example, this one at Abbots Langley, another owned site, which was acquired in 1996 on Green Belt land now considered grey belt. We submitted a detailed application in July 2025, proposing 50% affordable housing. What made this possible was the constructive early engagement with the local planning authority. They encouraged a detailed submission in this instance because the housing need was clear and the authority could not demonstrate a 5 year housing land supply. And as a result, the presumption in favor applied, giving the application a strong footing from the outset. That clarity and national policy meant that our teams could move confidently and present a high quality scheme with the right evidence behind it. The shift in sentiment, combined with the planning reforms created an environment where good applications are now progressed quickly and Abbots Langley is a perfect example. We'll shortly begin work on site with an outlet scheduled to open in the second half of this year. So to summarize, the assertive planning strategy that we've pursued since 2023 is delivering results. The planning reforms have created a more decisive and supportive environment and where engagement is tougher, if updated, then the NPPF gives our teams the certainty they need to pursue an appeal route if required. The examples this morning give me confidence that the planning landscape is continuing to improve and that it will be supportive of our medium-term targets. So we outlined these targets to you in October last year, and this is our business focus. We remain both committed and confident in achieving these over the medium-term. During 2026, we will continue to focus on strategy execution and with improvements in results coming through over the medium-term. And as a reminder, this plan is predicated on current market conditions, so sales rates around the levels we've seen over the last 2 years. So you've heard today that our strategy is in progress and is driving returns on what has been a challenging environment over the last few years. We are a business with a strong balance sheet, excellent landbank and experienced teams, and we've ensured that we are ready and poised for growth. We are well positioned. Our planning strategy shows signs of early wins with continuing momentum in an improving planning backdrop. Day-to-day, we're focused on driving outlets, recycling capital and driving returns without net land investment. Thank you, and happy now to move to questions. Allison Sun: Jennie, Allison from Bank of America. Just 2 questions from my side. So first, can you give us a bit color in terms of the sales rate in January, February, like how it is progressing? And what's the driver behind that? And the second is, can you tell us how the incentive has changed maybe year-to-date versus last year? Jennie Daly: Okay. So I think in terms of what's driving the sales rate, probably different than we saw at the end of 2024 and start of 2025. we had a fairly subdued market in the final stages of 2025. I talked about sort of our leaning into the Boxing Day campaign. We had generated a lot of interest, but we were coming off a fairly soft start. So the teams need the opportunity to build the leads into sort of further engagement into site visits and then reservations. So it's perhaps not surprising that January was just a little softer given that sort of a slow start coming in from the tail end of 2025. And as I mentioned, we have seen sort of increased momentum in the last 4 weeks. So February, the last 4 week rate was 0.87 and excluding bulk was 0.83 against a comparator of 0.82. So month-on-month improvement there. And in terms of incentives, we're running at around 6% now. We are seeing that customers have an expectation of a deal. And there is, as I mentioned, quite a lot of inventory on the secondhand market. So there's customer choice. So using that incentive to support customer commitment. Zaim Beekawa: Zaim Beekawa, JPMorgan. The first is on the -- obviously, in light of no demand stimulus, some of your peers have done some shared equity schemes. Has a view changed there in terms of offering something similar? And then second, on the landbank evolution, Chris, I think you gave sort of the details on the margin bridge, but maybe some details as to how much that could impact completions in '26 also? Jennie Daly: Okay. I'll give Chris the landbank evolution question. We continue to look at various models in the market around sort of shared equity and others. We see them as quite expensive, both for the customer and for our balance sheet. And from what we can see in the market, they're not really driving sort of customer engagement. We have a very strong platform to engage with customers and to drive inquiries, which is working well for us at the moment. I would stress that we do continue to look at various models coming to the market, but we need to ensure that it is actually a benefit to the customer and that it also comes at a reasonable price to the developer. Chris? Chris Carney: Yes. And on the landbank evolution, I said back in October that our expectation was that the impact would be minimal in 2026. It would start to kick in, in 2027 with the lion's share in '28 and '29. Ami Galla: Ami Galla from Citi. A few questions from me. The first one was on the market. To an extent on the PRS side or on bulk deals, I remember that the broader backdrop was a lot more difficult in the second half of last year. How has that shifted into early this year? And are you seeing more sort of opportunities there to make bulk deals at a better pricing? If you could give us some color in terms of the sort of discount that you have to give on bulk deals, that will be helpful. The second question was just on the Section 106 process. The government has talked about a clearance mechanism. Can you give us some sense of how do you think that will pan out? And do you think that would help you as we think about the sort of second half and the order book beyond that? And the last one was just on the timber frame facility. Can you give us an update of how that is progressing? And how should we think about the utilization there? Jennie Daly: Okay. Just on the Section 106, Ami, to government clearance. Yes. Okay. We haven't seen any sort of material change in sort of PRS sort of activity or pricing since we entered the year. And we're seeing some fairly deep discounts being sort of presented sort of out in the market. So no shift that we are seeing. On the Section 106, although government have sort of made some guidance available, the frustration, if I can call it that, is that it is just guidance. It's not a directive, and it lacks a degree of punch that we need with local authorities who are unwilling to engage. We're actually making really good progress with local authorities who are willing to engage, and that's very pleasing. But we do continue to meet some fairly incalcitrant authorities unwilling to discuss potential cascade mechanisms, for example, for Section 106. So we would be still asking government for something that's genuinely a solution to drive that part of the market. But to just reconfirm, we are in a good place for 2026. And in terms of timber frame, it's progressing well. It's maturing. We're learning as we go, and I'm quite pleased with progress at this point, Ami. But it really will come into its own when volumes start to step up. It's intended to be there to support us through skill shortage and sort of more rapid growth period. Aynsley Lammin: Aynsley Lammin from Investec. I think I've got 3 as well actually, please. Just you flagged up again the kind of affordability constraint around first-time buyers, and there's been some noise again around the potential kind of fiscal stimulus support on the demand side for government. Just interested, I think you're always quite well plugged in. So interested in your view of where we might be there, where government's thinking is on a kind of Help to Buy type scheme. And second question, just interested a bit more color, I guess, on build material cost inflation, labor inflation, what the trends are doing there? And then thirdly, just on the kind of change of more flexible share capital returns, did you consider at all reducing the quantum? You still obviously seem very wedded to that 7.5%. And what's the criteria you'd use between kind of choosing dividends versus share capital return -- share buyback? Jennie Daly: Okay. I mean in terms of affordability, although we're seeing some improvements, we talked about the sort of variable difference between North and South. The wage growth and some improvements into -- sort of from the FCA and PRA changes last year have helped around thresholds, stress testing, income multiples. But in higher value areas where deposit building is still a very significant challenge and maybe add on to that stamp duty as well in some areas where entry homes are above the stamp duty threshold. So we see that the first-time buyer is still sort of heavily impacted. And I think that, that's playing out right across the market. The scale of the inventory sitting in the second half market. I think that the lack of activity from first-time buyers is part of the cause of that also. So we do think that there is a case, particularly now that we're seeing such progress in supply side, but continuing weakness in demand for some form of demand side stimulus. There have been discussions with government, but it would be too much to say that those are progressive at this point. And then in terms of sort of capital returns before I pass over to Chris for the build cost and maybe more detail around dividend, I think it's important to note that the overall distribution remains at 7.5% of net asset value. But that flexibility or sort of evolution, we think, is in the best interest of our shareholders at this point in time. Chris, do you want to pick up on build costs? Chris Carney: Yes, of course. So you saw on the slide today, 1% build cost inflation for completions in 2025. The exit rate that I mentioned, I think, in January was 1.5%. In January, we saw several manufacturers request pretty sizable increases, the order of 5% to 10%, well above inflation. We pushed back and many of those were sort of either withdrawn, deferred or partially offset through rebates, although we haven't been able to eliminate all of those increases. And the pressure is coming from sort of raw materials, energy, packaging and a little bit of labor inflation as well. So based on where we stand today, obviously, you can see we're guiding to another year of low single-digit build cost inflation, likely higher than the 1% that you saw on the slide. But we'll continue to aim to beat the market through improvement in our procurement practices and other self-help measures, including the benefits from the pull-through of the new house type range, but we would still expect build cost inflation to be above 1% in 2026. And just to follow-up on what Jennie said on the question on capital returns. We're in a very strong position, Aynsley, to grow output and volumes without needing additional investment across land and WIP as we set out in October. And yes, as you'd expect, the Board does regularly review the overall quantum of distributions in the context of our capital allocation priorities. And you remember what they are. The first one is maintain a strong balance sheet and the second is to invest in land and WIP to support future growth. And yes, if either of those constraints came about in either one of those priorities, then that would prompt to change, but we don't have that at the moment. William Jones: Will Jones from Rothschild & Co Redburn. Try 3 as well, please. First, just maybe extending on build costs. Could you just remind us at this stage of the year, what visibility you have in terms of cover for the year ahead? And maybe just expand if you can a little bit on those efficiencies and particularly interested in the house type range and where we are on rollout. Second was London. Could you give us a sense of either plots remaining completions, just some sense of the proportions there? And maybe if you could help on what the margin drag has been from London in '25 and potentially '26, just high level to think about as and when that reverses back out? And the last, maybe just around land and intake margins, and I appreciate you don't give kind of hard numbers anymore, but any color on as you've got migrated somewhat to the smaller sites into the north, how that's affecting the economics? Jennie Daly: Okay. Chris Carney: Yes. So in terms of build cost inflation and cover, yes, I mean, we are well progressed in those -- in that position. So over 90% of our materials are negotiated centrally. We don't -- we've moved away in recent years from having like a point in the year where they all get negotiated, but we have pretty good visibility for this year. So very comfortable with what I've outlined. I think it's worth just bearing in mind that we've been dealing with build cost inflation and little or no house price inflation for 3 years now, and that's been tough. And it has driven a real sort of step change in how we procure. We've expanded the number of categories and the spend that we manage centrally to maximize our purchasing power. We're retendering those categories more often. We've introduced rapid repricing, which lets us benchmark more quickly and secure better terms as soon as we see sort of signs of pressure from suppliers. And we've recently added e-auctions as one of the things that we're doing and the early results are very encouraging. And yes, where we have suppliers who are a bit in transient, pushing for unjustified increases, then if we have to, we'll switch supply. So we've made pretty meaningful changes in how we address the market conditions, and we're seeing benefits in that. In terms of the new house type range, it accounted for just over 1/4 of our completions in 2025, and that will rise to just under half in 2026. So obviously, those rollouts just take time to flush them through the landbank. And obviously, planning has been difficult. So now it's a little bit better than obviously, the pace improves. In terms of, pardon me, London completions and margin drag and all that sort of stuff, actually, it's -- I don't think you should necessarily think about it like that. It is all tied up in the landbank evolution that we've talked about. But actually, some of the London sites that they were procured a long time ago, and they've been delivered very well. So it's not quite right to just assume that they have a massive drag. Some of them are actually pretty good in terms of the margin performance. And the last one was... Jennie Daly: Yes, the landbank or the land intake, I'll take that I'll give you a rest there, Chris. I mean, look, we don't give sort of guidance or -- but I'm really comfortable the acquisitions that we made last year, good markets, good sort of intake margins, entirely supportive of our medium-term targets. Glynis Johnson: Glynis Johnson, Jefferies. Chris Carney: Yes, Glynis. Glynis Johnson: Nice to steal the microphone for someone else. Four questions, but hopefully, super quick. You talked about North-South in terms of approvals, a bit of a skew. Can you talk about the outlet openings? Do the outlet openings also have a North-South SKU? And does that make a difference? Second of all, in terms of incentives, one of your peers yesterday talked about stepping up incentives and stepping up quite substantially and was of the view that others would have to follow. Have you seen incentives move up as we've gone through February? Are you seeing any areas where incentives have stepped up markedly or competition as a whole step up? Thirdly, London, when do you need to take the decision about whether or not to do further bulk sales in London? What is the -- what are you looking for in London to say, okay, we can just sell out on a normal basis or need to do bulk deals, which you've already said PRS is at quite substantial discounts. Actually, I'll leave it there at 3. Jennie Daly: Yes. In terms of sort of outlet openings, we're a business that looks to support all our businesses. And I think that we've got a reasonably good spread sort of across our divisions of outlet openings. On incentives, I mean, I mentioned that incentives are running at 6%. I think that we're working hard on pricing, Glynis. It remains disciplined, and we're certainly aligned to the wider market rather than trading aggressively sort of for volumes. So we're working, as we always do, to balance price and sales rates without sort of sacrificing sort of value or sort of long-term value. We can see some movements. It's part of the every day. There's a lot going on in the markets. And so our businesses are mindful of sort of changes in behavior by others. But we'll continue to drive that really disciplined sort of balance and ensure that we're doing the right thing in terms of long-term value. And then in London, the decisions around sort of bulk deals, they're carefully balanced. They're relative to how we're seeing the sales market evolve. We're also mindful of the capital that's potentially locked up and where we think that, that capital is better recycled through a potential bulk deal. As you saw last year, we will make those decisions. But we remain very active in the private sales market also. So there's no plan as such, we will continue to watch the market, and we'll make judgments as we progress. But overall, our approach to bulks hasn't changed. Our preference is to do those on a planned basis. Alastair Stewart: Alastair Stewart from Progressive. A couple of broad-ish questions. First, on the market. You mentioned it's taking time to secure sales. Have you got any broad comparatives either in the overall length of time from first clicking on to the website and then finishing? Or is it a case of coming back and forward more often than in the past? And related to that, you said there's quite a lot of inventory in the secondhand market. Is a lot of that buy-to-let landlords trying to get out? So that's kind of the first question. Second question is on the Iran situation. Obviously, a week is not a long time. But are you getting any feedback from your sales outlets that the rank and file buyers are getting a bit jittery. And possibly on the other side, is this great exodus to Dubai tax [indiscernible]. Some of them actually thinking of getting back in a hurry and that in turn may actually support your London market. And finally, again, costs, any brick manufacturers or anybody else giving you gentle calls saying we've been noticing the price of gas recently, guild your lines for further increases. Jennie Daly: Okay. Quite a few things there. Alastair Stewart: Two questions. Jennie Daly: Yes, yes. I think there's 4, but we'll go. In terms of taking time, I mean, I think the overall time taken about 80 days from inquiry to reservation. Alastair Stewart: Sorry, what was that? Jennie Daly: 80, 8-0. And actually, that hasn't moved massively. The interesting point in the comments that I made was the multiple visits. So we're seeing customers coming back sort of more frequently than previously. And our teams are working hard with our customer group. In terms of the secondhand market, it's a good question. And we did do some work as we saw the secondhand inventory climbing sort of last year. It's not as simple as that. Yes, there's a couple of markets where you would say maybe buy-to-let landlords. But it's pretty pervasive, Alastair, right across the country. And I would take it back to you, you need first-time buyers to drive the whole ecosystem, and that's where I would put the issue. We're not hearing anything from customers as yet. And we haven't had any calls from any of the suppliers. And if they're listening, I don't want any are on gas. And a lot of them are hedged in the near-term in any event. And as Chris says, then we will make sure that we're sort of pushing back very hard on that. And whether there's opportunity sort of in this crisis, I'm going to say there's a human cost to what's going on in the Middle East, then I'm sure that our London teams will be sort of ready and able to talk to them. Rebecca Parker: Rebecca Parker from Goldman Sachs. Just wondering in terms of your outlets that you plan to open in 2026, how many of those have detailed planning consent? And then secondly, how are you seeing land market opportunities? At the moment I know that you were saying that some landowners, the pricing realism is acting as a bit of a constraint. And then thirdly, how should we be thinking about WIP as we go into 2026, just given that you do have that target to increase outlets? Jennie Daly: Okay. Sorry, could you repeat the second question? Rebecca Parker: How are you seeing land market opportunities just given that you commented that there was a bit of pricing realism acting as a constraint? Jennie Daly: Okay. I mean I think as I said in my narrative, we're in an excellent position for 2026 in terms of planning and in fact, in an exceptionally good position for 2027 as well. We are seeing, as I said, some stabilization in the land market. We are seeing more opportunities coming through in many of the geographies. Competition is stronger for sites that are sort of further along the planning process and in good quality locations, weaker where it's more complex, where planning is less evolved. But we talked about in an environment with build cost inflation and particularly with some of the regulatory costs that we're going to see sort of realizing over the coming year, ensuring that landowners are realistic is an important part in the market. And some of the other commentators, Savills and the RICS are seeing very similar sort of positions. And then WIP, Chris, can you take the WIP question? Chris Carney: Yes. So WIP at the end of 2025 was GBP 2.07 billion. And I think as we progress to the first half, it'd probably be somewhere between GBP 2.1 billion, GBP 2.2 billion at that point. Jennie Daly: Chris? Christopher Millington: Chris Millington at Deutsche. First one, I just wanted to ask about the medium-term targets. Obviously, the market has been a bit stop starting over the last couple of years. And recalling back to the CMD, it looked like the profile was to get you to those 14,000 completions by about 2029 based on the CAGR growth rate. Where do you think that is at the moment? Obviously, this year, we're looking at kind of 2% growth at the midrange. That's number one, just the timing about mid-terms. Second one is you've had a few questions around London, et cetera, et cetera. But could you just talk in a general sense kind of how North Midlands versus South has progressed over the last couple of years? And does it move up? And is there much of a margin difference between the 2, given the relative demand profiles rather than just picking out discrete parts of the market? And the final one is H1, H2 margins this year with volumes back-end loaded with the order book coming in a bit lower. Can you give us some feel kind of how that H1 margin can look? Obviously, we can do the sums over the full year and back out H2? Jennie Daly: Okay. If you will take the last one, Chris. I mean in terms of the medium-term, I think we were really clear when we spoke in October about 2026, not likely to sort of demonstrate sort of full growth, and we talked about the achievement of our medium-term targets not being linear. And we also said somewhere between 3 and 5 years. So I think that we remain confident. I've talked a few times in the narrative about remaining confident in the medium-term targets over that time frame. In terms of London differential, I think it's probably the same answer that Chris gave really. There are differentials. There's always been sort of differentials between our Northern operating businesses and in London. And it would be wrong to characterize all schemes in and around London as per schemes. There's definitely some challenge around sales in those sites, but some of them are performing fairly well on a relative basis. And then half 1, half 2 margins, Chris? Chris Carney: Yes. Yes, of course. So our half 1 operating margin in 2026 is going to be lower than half 1 operating margin was in 2025, which I think was 9.7% and that reflects 3 sort of key factors. We came into this year with underlying pricing in the order book around 0.5% lower year-on-year. Second, we've seen low single-digit build cost inflation in that 12-month period, we talked about that this morning. And third, obviously, we've signaled very clearly in the statement that the volumes are going to be weighted 40% in the first half, 60% in the second half. And that was due obviously to the softer market conditions that we experienced in Q4. And I think that means we expect to deliver around 30% of the group's 2026 adjusted operating profit in the first half. Christopher Millington: And can I come back really quickly? Not on the margin on the geographic split, proportional on completions. However you do split your geography, how much would you regard as North and Midlands versus below that or South of that? Chris Carney: Sorry, Chris. Christopher Millington: I'm talking about the proportion of... Jennie Daly: Yes. So [ between the ] segment, Chris as you know, I mean, it would be reasonable to expect everything sort of from Nottingham, Birmingham North is North and everything South is South. But we've talked about it's also gradations of. So it gets softer the further South you come. It's not simply just characterizing all of the South as impacted. There are some markets that are more challenged in the South. There are some markets in the North, which are more challenged. So I'm not happy to sort of strike a line and say that's North and this is South because it's a movable depending on markets. Christopher Millington: It's just -- it keeps getting referred to as being soft. And it's just to put context around that comment. Jennie Daly: Yes. Well, you just think of it on the basis of the further South you come, there's a gradual softening or look at it in terms of sort of pricing. Pricing is, as you come South as it increases, then it becomes more challenging. There are some markets in Kent where affordability is easier. They're doing really well. So I think it's just a way of sort of helping you understand the broad variables. Okay. One more. Kate Middleton: Kate Middleton, Panmure Liberum. Just a quick question on pricing. So I know you're speaking about stronger growth in sales prices in the Northern regions. But just wondering if you can attribute a particular ASP to the North versus London and the South. And then just a couple on sites. So guiding to net outlet growth. And obviously, you've said 211 plots per site is the average for the year. Wondering if that's just what you're continuing to target moving forward or whether that's due to reduce? And also with the outlet growth, are we looking at sites closing as well as opening at a greater rate? Or is the rate of site closure kind of staying relatively consistent moving forward? Jennie Daly: Okay. So we don't segment on an ASP basis, albeit we do give Spain on a separate basis. In terms of sort of average site size, so the 211 that we referred to was on land intake rather than outlet opening. We talked about targeting smaller sites. I think we were really clear in October, that's not small. It's sites that we can still achieve a volume housebuilder sort of benefit in. So 211 is pretty good. I'm comfortable with that. If it was a little bit lower, that would be good, a little bit higher, fine. And then in terms of outlet growth, well, the rate of closure is a function of the market. And so we'll see how the market sort of evolves over time in the coming months. All right. Well, thank you very much for your time today. I do know it's a busy -- it's been a busy results day. And Chris and I look forward to seeing you later in the year.
Thérèse Byars: Good afternoon, everyone. This is Thérèse Byars speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us today. The statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call are not to be -- are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed the past performance of the investments. For additional information, you may visit the FRMO Corp. website at frmocorp.com. Today's discussion will be led by Murray Stahl, Chief Executive Officer; and Steven Bregman, President and Chief Financial Officer. They will review key points related to the fiscal 2026 second quarter earnings. And now I'll turn the discussion over to Mr. Stahl. Murray Stahl: Okay. Thank you, Thérèse, and thank you, everybody, for joining us today. First, let me apologize for our delayed filing and therefore, delayed meeting. You may be aware we had to we had a little dispute about what our tax liability might be, if we were to sell certain securities that required a recalculation. And we're in a not-too-distant future because we're now past the February quarter end, we're going to have another meeting in about 6 weeks to discuss the February results. And you know what, we're going to have a different tax number as well for the simple reason that the market value of the assets have changed. But we'll talk about that then. So my apologies, but such is life. In any event, I'll do some key points right now, just tell you some things that are happening or happened very recently, and then we can go to questions. So one thing that I think is important, you might recall, we have an interest in a company called HashMaster. And we owned the building where we owned the building in which HashMaster was located. We sold that recently. And part of the proceeds were used to prepay the mortgage or I should say, the buyer was a company called Synteq, repaid our mortgage to 0. So now we are once again debt-free. And the rest of the proceeds we took in Synteq stock. So we're now a proud owner of a small interest in this company, Synteq, which is involved in all things supporting, a, the cryptocurrency industry; and b, the emerging data center industry. So we are a proud owner of that. Now, we should point out that, that doesn't mean we're getting out of mining, quite the contrary. We have, in the last year or so, preferred to do our mining through a publicly traded company called Winland. So you might have observed, we made a number of investments in Winland. And the moment we own approximately 45% of Winland, if and when we cross the 50% barrier, we'll be consolidating Winland. So our financial statements will have a different look and character. However, you can tell a few things right now. We have not bought mining rigs in a little while. So if you look at the line on the balance sheet, digital mining assets and depreciation, you'll see a de minimis about $31,000. I think you'll find this rather interesting. If you go to digital assets, digital assets, we didn't buy any digital assets during the quarter as such. We, however, in the half month period of time, if you were to look on our balance sheet, you compare the digital assets cost basis on May -- in May versus the cost basis in December, in round numbers, the cost basis is higher by $36,000. That $36,000 are the digital assets that we mined during this 6-month reporting period. We mine those digital assets with $31,000 worth of equipment. There is significance of that. Now, before I go into the significance, I just want to point out, we say the cost of the digital asset of $36,000. The cost of digital assets are the market value that existed on the day we mine them. That doesn't mean it actually cost us $36,000 to mine the assets or create the assets, if you like. That's just what the value would be if we were to sell those assets. So $36,000 of assets on $31,000 of value should tell you something. It tells you that one of the important variables in mining are the longevity of your assets. So it's not something that people talk about a lot. Longevity assets is not the exact same thing as the life in the depreciation sense. We depreciate the assets generally over 3 years. That doesn't mean they last 3 years. Lately, the last 1.5 years or 2, we've combined our mining interests in terms of newly purchased equipment to a so-called Scrypt mining. Scrypt mining is spelled with a Y. So it's S-C-R-Y-P-T. And the idea is that we make a higher return Scrypt mining and using some of the revenues to buy Bitcoin than you would, if we actually mine the Bitcoin itself. And the more important point is that Scrypt mining, since most of the revenues come from Dogecoin has unique features. Scrypt mining has no halving. It does have a halving in relation to the Litecoin assets that are mined. Scrypt mining, for those who aren't familiar with the term, Scrypt mining is basically merged mining. You can mine 2 coins with one electric current. That's what makes it interesting. So we mine Litecoin and Dogecoin. We keep Litecoin, we sell Dogecoin. We use some of Dogecoin to pay our electricity charges, and we use some of Dogecoin to actually buy some Bitcoin. That's how we increase our Bitcoin. Because Dogecoin represents the bulk of the assets, there is no halving in Dogecoin. And halving, H-A-L-V-I-N-G is central to understanding a Bitcoin. Every 4 years, the block reward is reduced in half or by 50%. That's why they call it the halving. So one of the most important things, arguably the most important thing you can do in cryptocurrency mining is to prepare for the halving. So it's my personal observation that, a, very few people prepare for the halving; and b, very few people even talk about the halving; and c, many people are unaware that there is such a thing as a halving. And when we get close enough to the halving and various participants become aware there is such a thing as a halving and preparations have to be made for the halving, well, it has a tendency for reasons maybe I'll get some questions, have an opportunity to expand on this at length, has a tendency to be very disruptive to the Bitcoin markets. In principle, everything in cryptocurrency, everything in Bitcoin should be completely and totally transparent to everybody. Why? Because everything one needs to know is contained in the original working paper of the protocol. There should be no surprises. However, very, very few people are aware of the protocol and are aware of the halving. And therefore, there are surprises. And surprises typically tend to happen about more or less about 2 years before the next halving. The next halving is going to occur in approximately April 18, 2028. This is March 2026. So let's say, crudely speaking, we're about 2 years away from the halving. So disruption is right on schedule. Ultimately, the market will sort out and Bitcoin will continue as it always has. So it won't be a big issue. But until such time, it's an issue. Essentially, what people have to do is there has to be a changeover in equipment. So the equipment you have today, unless you're doing scrip mining equipment where there's no halving, you're going to have to get new equipment. So you're going to have to get new equipment, how are you going to pay for the equipment? So the practice of many people is to sell some of, and in some cases, a lot of the Bitcoin they accumulated during the prior period. And everybody has to prepare for the halving more or less simultaneously, that cryptocurrency comes on the market. And it's a seasonal phenomenon, so to speak. Eventually, I think people will master the reality and prepare gradually or prepare to do something else where there is not a halving. So eventually, it will work its way out. In the meantime, it's just something we have to live with it. Some other points of interest. Liquidity. You will observe the liquidity, not just the cash on the balance sheet, but the fact that we have no debt. I believe this is the most liquid we've ever been on the balance sheet. And we have a lot of borrowing power that we really have never used. We could use it if we have to. But it's worthwhile reflecting on how much liquidity we really have if we choose to use it. So it's the best position we have ever had in our history. Another one point that I'd like to make that's not germane to the subject of crypto is exchanges. It's another big focus of ours. You might have noticed that in the summer, MIAX came public. So MIAX is a private investment. MIAX for those that are new to FRMO, its origin is we were at one time, the largest holder of 2 exchanges, one being the Minneapolis Green Exchange, the other being the Bermuda Stock Exchange, and we merged those in exchange for an interest in MIAX. MIAX is not our only exchange investment. We have some other small exchange investment, but largely, we're in MIAX. So the IPO was, I think, extremely successful, and that required a markup in value. And I commend MIAX for your attention. I think it's well worthwhile following. They're doing a lot of interesting things, but rather than go into what they're doing, I'll let the company speak for itself and just relate to you, I couldn't be more pleased with what's going on at MIAX. And I'm really proud of everybody and the team and all they've been able to accomplish in what is really a short period of time. So that's what I had in terms of general remarks. And now I think it would be great if we could take some questions. So Thérèse, you'd be so kind as to read them, I'd be delighted to respond. Thérèse Byars: Happy to do so. The first is, first of all, congratulations on your call regarding ZCash, which has performed exceptionally well in 2025. As you previously explained, a key driver of its success has been its monetary policy, which is similar to Bitcoins. Could you share your thoughts on Litecoin, particularly in light of the recent launch of the first Litecoin ETF? What potential trigger points do you see for Litecoin that could lead to a similar performance pattern as ZCash? While Litecoin has the privacy upgrade MWEB, it seems that ZCash may have an edge in certain aspects. Additionally, Ethereum appears to be attempting to capitalize on the same anonymity trend. Could you elaborate on FRMO's broader Altcoin strategy and what shareholders might expect in this regard? Murray Stahl: Okay. First of all, the idea of operating completely anonymously, that idea is diametrically opposed the idea of having broad-based global usage of a given cryptocurrency. So if a given cryptocurrency is given cryptocurrency community, I should say, is interested in maximizing anonymity, it's just not going to be one of the leading coins. And the reason for that is it's just too dangerous to allow a complete anonymity for a lot of reasons. One obvious reason is just taxation. The governments have to be able to collect taxation. So you couldn't have a situation in which people can escape taxation by anonymity. So you could have a small community that's able to do it. But government is going to make rules about whether or not you can use a given currency, that's the thrust of the currency. So it's interesting, but it's only interesting for small community users that governments in the world, they say governments in the plural. I don't mean any particular government. It's -- you're not going to create the next Bitcoin if you're going to create a wholly anonymous currency. So that's one thing. With Litecoin, you will observe if you go to a website called BitInfoCharts, which I'm actually going to do it just so I can speak intelligently. So give me just 1 second, and I'm going to get there, and I'm going to show you something. So the thing about Litecoin that's intriguing is the amount of measured in dollars, of course, so it's comparable. The amount of dollars or amount of coins measured in dollars that traded in the last 24 hours. So this is off this website, BitInfoCharts, which is reading it off the blockchain. So it's accurate. In Bitcoin, I'm going to round. In the last 24 hours, the Bitcoin volume, so to speak, is $18.7 billion. It's billion with a B. Litecoin volume in the same period of time, last 24 hours is round numbers, $10 billion. I should point out to you the market capitalization of Litecoin is only $4.2 billion. There's a lot of trading volume in Litecoin. So you can do a lot with Litecoin. Litecoin has more or less the same monetary policy as Bitcoin. Litecoin is not really anonymous. It may have a small subset of it that's going to become anonymous or that is -- currently has the faculty of being anonymous. But you can do a lot with it. Among the things you might be able to do with it, you might be able to use it if it has these liquidity characteristics for instantaneous settlement of certain types of securities. So you might be aware that the world is moving to instantaneous settlement. So one of the reasons the world is moving to instantaneous settlement is because markets globally, as they connected as they get connected, are moving to 24/7 trading. Now if we're going to have 24/7 trading, one of the problems in 24/7 trading is the banks. The banks aren't open 24/7. So what happened if it were, as an example, Sunday, and you saw in a market that has to be -- it happens to be open on Sunday, you saw enormous opportunity to buy something and you have no access to your cash. So the market has created a solution for that or at least an interim solution called stablecoins. Stablecoins trade 24/7. The stablecoin market is now approaching in terms of the assets of stablecoins, $0.5 trillion. Stablecoin market is largely dollar-based. So if this continues, and I personally think it will, its way of bypassing banks as payment modalities. As a matter of fact, if it were Sunday and you want to buy something, speaking purely theoretically, you could give someone X dollars’ worth of your money market fund if your money market fund were shares and were transferable. Just your money market fund is not transferable. What is transfer is you can draw money from your money market fund and transfer the money, but you only withdraw the money during banking hours. So stablecoin, if you want to analogize it to something, make it easy to understand, it's like being able to trade on a 24/7 basis or being able to use on a 24/7 basis, your money market fund. Okay. So if you can do that and you're able to pay for things every 24 hours, then 7 days a week, 24 hours a day, then you might want to settle them. And the new trend to settle them either instantaneously or virtually instantaneously. We don't have that yet in the United States, but we're moving to that. So we're going to have an instantaneous settlement system and you want to track things, a pretty good redundant device is to use a mined cryptocurrency. It might be Litecoin. So in theory, you could divide Litecoin into enough pieces that each individual share could be tracked by a fraction of a Litecoin. It's possible. So if it's going to have $10 billion of volume a day, if you divide it up into small enough pieces, you could use Litecoin for instantaneous settlement. You could, in theory, use Dogecoin for instantaneous settlement, but Litecoin has much more volume than Dogecoin. Dogecoin, just as a matter of interest, is only $161 million of volume versus $10 billion. So the only cryptocurrency that I'm aware that has that type of volume during the day is Litecoin. Incidentally, the Litecoin volume is in round numbers, almost 3x the Ethereum volume. So I can see a possible use case. Whether that's going to happen or not, time will tell, but that's my simplistic view of Litecoin. Thérèse Byars: The next question, if you're ready for it, is also related to tokenization. Would you please comment on how the tokenization and movement on chain of financial assets will affect the securities exchanges held by FRMO and various HK Funds. What are your thoughts about the school of thought circulating recently -- this is kind of related recently that Bitcoin is no longer a fixed asset due to the ability of the markets to create synthetic supply. Those are 2 separate questions, which can we read the second one later. Murray Stahl: Okay. So well, I'll do them both. Let's do the first part first. So I'm going to interpret the first part this way. So is tokenization a threat to exchanges? Not at all. Tokenization is one of the greatest things that could ever happen to exchanges. So the reason you need an exchange is because no one, including the securities participants want to have what's called naked access. So how do you guarantee that your counterparty is legitimate? That's why you need intermediaries. Much, much more important than that. In electronic trading, there are all sorts of things people can do to disturb the market. Here's an obvious thing, what's called spoofing. Spoofing involves you put bids and offers out there, you being some person out there in cyberspace. They're putting bids and offers for a given security and you'll say, okay, so trader A and trader B can come together and agree on a price. What do you need a security exchange for? Well, how do you -- if you happen to be either trader A or trader B, not your counterparty is even giving you proper information. So your counterparty will say, I'm willing to -- I'm offering so many shares of something or other at a given price. Of course, it's all electronic and you or maybe your computer becomes aware of it and says, yes, I would like to buy some or all those securities at that price, except it's not a real offer or it might not be a real bid. And now the other side has gotten information about what your buy point is. And there's no intermediary. That's the way securities markets would evolve. So just as a matter of historical interest, the London Stock Exchange was originally a coffee house in London. People met there. So they didn't call the London Stock Exchange. And people would say all kinds of things in negotiating securities transactions, much of which was false. So even with the technology of the 18th century, everyone realized need an intermediary to enforce some rules. Similarly, New York Stock Exchange, originally, it was the buttonwood agreement where people who met under a tree. With the view to exchanging securities, why did they all need to get together and have a certain rules-based system. Of course, they had no computers and not the technology we have today, but they needed a rules-based system. They need it and it had to be enforced. So if someone did something, that person could be banned from trading, and the person will be identified as such. And it happened in many, many instances. So of course, you can move to the world of tokenization, and that will lead to either or virtually instantaneous or maybe instantaneous settlement. But you're not going to eliminate the need for exchanges. And then some entity has to collect the data, meaning the aggregate data. There are people very interested in how many shares traded, what shares traded, et cetera, et cetera, et cetera. Somebody has to pull that. And there has to be an interconnect point where everyone's trades are going to be monitored, not for tax purposes or anything, just to keep everybody honest. That's why trading floor has evolved. Everybody is going to be on the same floor. So you could have said 150 years ago when they had the first trading floors, why do we need a trading floor? Why does trader A and trader -- why do trader A and trader B need to transact on this floor? Why can't they be half a mile away and transact? Because they're half a mile away, they're not subject to scrutiny. And we don't know if one of the counterparties is being honest. And it takes a few people that are not honest and you destroy the confidence. Everyone has securities markets, and you can really hurt possibly even destroying the economy. And there are all sorts of other things. I won't go into it, but you get the idea of how important it is. So why don't you repeat the second part, so I make sure I get this question right, Thérèse, what's the second part of the question? I just want to get it right. I think I know what it is. Thérèse Byars: The second part is, what are your thoughts about the school of thought circulating recently that Bitcoin is no longer a fixed unit asset due to the ability of the markets to create synthetic supply? Murray Stahl: Okay. I think it's ridiculous. And the reason it's ridiculous is there is no such thing as synthetic supply other than the word synthetic supply. So you could talk about synthetic supply, it could be a derivative or an option. All those things are, is a bet on what the future price of Bitcoin is going to be? It's not Bitcoin. So I could buy or sell a future on Bitcoin, and I could do it in any amount. So if the market capitalization of Bitcoin were as it is now, somewhere between $1.3 trillion and $1.4 trillion, could you create in principle, $2 trillion or $3 trillion or $4 trillion worth of futures? Yes, you can. But all it is, is people who are making a bet with you on the future price of Bitcoin. It's not Bitcoin. Supply of Bitcoin is fixed. It doesn't matter how many options you have, how many futures you have, how many other types of exotic derivative of contracts you have. There is right now almost 20 million Bitcoin is only going to be $21 million, and that's it. So there is no such thing as synthetic supply. It doesn't exist other than in the vocabulary of people wish to make an assertion that is not correct. Thérèse Byars: The next question has to do with on the Q2 2025 conference call, Abaxx Technologies, A-B-A-X-X was mentioned in the Q&A and Murray was not familiar with it. He said he wasn't familiar with it, but would look into it for future discussions. So I'm curious if you looked into it and what his thoughts are. Murray Stahl: Okay. So what -- just so you know what it is. Abaxx is speaking loosely, the commodities exchange or a commodity exchange based in Singapore and spent a lot of their time developing the trading systems. And not that many months ago, I remember how many months ago, but not that many months ago, it commenced trading, obviously, from a very low level. As far as I can tell, recently, from a very low level, their volume is up a lot. They're trading gold, they're trading natural gas. There are some other commodities. The volume is up a lot. So it could possibly emerge as a rival to the multi-commodity exchange of India. It's possible. Just too early to tell. It trades and as far as I can determine, it seems to have a market capitalization already of $1.4 billion. I have to verify that, but I think I tried the day to verify it, and it looked like it was $1.4 billion. I want to check the number of shares outstanding and make sure I didn't make a mistake, but that's what it looks like in any event. That's a lot of market value for the level of trading they have. But on the other hand, I don't want to say it's outlandish because their growth rate, albeit from a very low base, is not far from 100%. So there's a lot of -- in the Far East, a lot of underlying demand for commodity futures, particularly in natural gas and particularly in gold. So it's an interesting company to follow, but I haven't bought any. Thérèse Byars: Next is, why do the condensed consolidated statements of income have the 3 months ending November 30, 2024, and the 6 months ending November 30, 2024, have different amounts for the diluted shares. It just seemed to me that if it's the same date, the number of shares should be the same. Murray Stahl: Well, it seems that we -- you said and I don't want to cut the question off, I can answer it, but... Thérèse Byars: No, that's it. That's it. Murray Stahl: That's it? Okay. Well, it seems that way to me too, but there's -- like there isn't everything in accounting, a little bit of a wrinkle. I'll explain the wrinkle. So our directors are paid a certain number of options instead of cash. And -- we have -- or they were paid that. So those options are still outstanding. If the stock price rises and those options are in the money, well, they make it to fully diluted shares outstanding because they can in theory be exercised. If the stock price goes down, well, then they're out of money and no reasonable human is exercised them and the shares outstanding go down. It's not a big amount, and it's not going to change the valuation of the company, but that's why we have that fluctuation. A good argument for paying directors in cash, not options. Thérèse Byars: Next, please provide an update on direct and indirect holdings of MIAX, including warrants. Murray Stahl: I think we have the quarterly statement holdings. Does it include MIAX in there? Do you know, Thérèse? Thérèse Byars: I'm not 100% sure. Murray Stahl: In that table. Thérèse Byars: In the table, that's on the website. Murray Stahl: Yes. Is it not there? Is it not there? I believe it says I'm reading from the table. I didn't want to just quote a number. So in reading from the table, this is as of November 30, calculated by people other than myself. I'll read from the table, I'll just give these numbers. Restricted shares, 935,202. And these are publicly available shares, 11,441 for a grand total of round numbers, 946,000 and some hundreds of shares. That's reading from the table. Thérèse Byars: I'll have to review how that's calculated if they include warrants were not... Murray Stahl: I don't remember if they include warrants or not. But the warrants are in the money, sort of warrants in the money, you know what we're going to do. Thérèse Byars: Okay. And our last question is, what are Mr. Stahl and Mr. Bregman's biggest regrets after 25 years of managing FRMO? Murray Stahl: You want to talk about your biggest regret, Steve? I guess he isn’t happy. Steven Bregman: [indiscernible]. Murray Stahl: Okay. I know you had regrets. I don't know you had regret. Steven Bregman: For some reason, shares came to mind. I don't know how relevant it is to the intent of the question. But what came to mind was anybody has seen a movie that's beloved by some called Peggy Sue Got Married, which probably came out a few years before [indiscernible]. If you don't know the story, the basic concept of it is that, there is a growing woman, she's a mother and somehow she wakes up and she's a teenager again. She's got her own memory [indiscernible] top of her head. But somehow she went back to her high school years, and she's lost and the only person she can really trust when she sees there, she wakes up and [indiscernible] her grandfather. And at a certain point, she's asking him, you kind of feel them out. They're about to go outside, it's fall, it's cold. He's adjusting his [indiscernible]. And I think she asked him something like, grandpa, do you had a chance to go back and do it differently, what would be the change? He said, well, I would have taken better care of my children. And my teeth are more or less okay. But there might have been other things I wish they would have better. But with respect to managing [indiscernible] I think personally that we've done a marvel job over a very changeable environment, a number of environments. Of course, that's the way the market is always are. And in one sense, I think it's been kind of an experiment and a method of investing consistent with our investment philosophy, which Murray has queued to with great consistency and [indiscernible], anyway, that's mine. Murray Stahl: Well, here's mine. If you see in the beginning all the way at the top of the entire earnings release, the so-called quarterly report, and you'll see that I personally own a little bit over 8 million shares. My great regret is, I should have bought more during the windows. Of course, I can only buy during an open window. I should have bought more, and I didn't. And I regret that because the way FRMO and Winland and Consensus Mining and Horizon Kinetics, the way they're positioned. And I'm not saying this because you know I don't say things to be boastful or be promoting the companies. We've never been as well positioned as we are now. I'm more confident in it than I've ever been. I've always been confident. We're just extremely well positioned for the future. And I think a lot of great things are about to happen. A lot of great things are actually happening as we speak. Some of them are obvious. And when you look back, some people say, well, did you think it would take a long time to happen? It actually didn't. And if you look back, it actually in the scheme of things, when you look at the magnitude of some of the achievements, it didn't even take that long. It obviously couldn't happen a day or a week. So my big regret should have bought more stock, and I didn't. But I did buy some, and now I have over 8 million shares. I wish I would have bought more. But I just -- and I'm not saying it just to promote the stock or anything. I really -- that is my regret. I should have bought more, should have been more aggressive at and I just wasn't for whatever the reason was. That's my regret. Thérèse Byars: Well, that was our last question, so I will let you wrap it up. Murray Stahl: I'll wrap it up by saying thanks so much for joining us, and thanks for your support. And normally, I say we're going to reprise this in 90 days. But now I can't say that because we're going to reprise this in, I think, about 6 weeks, maybe a little bit less than 6 weeks. So you have about that period of time to present more questions, and I will be delighted to answer. And if in the interim, things occur to you that you didn't pose right now, don't hesitate to give us a call, and we'll get you an answer. So thanks again for joining us, and I'll just say good afternoon and signing off. Thanks so much. Thérèse Byars: The conference has now ended. You may disconnect.
Jennie Daly: So good morning to you all. We're going to start nice and sharp today because I know it's a really, really busy results day. But before I do, and it has become usual practice, we have members of our group management team with us here today and also our first newly appointed Customer Experience Director, Maria Sebastian. So Maria, give everybody a wave so they know who you are. And we will -- hopefully, you'll have the opportunity to catch up with Maria later this morning. And while not -- there is Maria. Actually, you missed your moment, Maria. So here is Maria, our Customer Experience Director. And while not here today, I'm also pleased to say that we have appointed a new Divisional Chair for the London and Southeast, Tom Pocock, formerly of Barclays. And Tom will be joining us soon, and you'll no doubt meet through the course of the year. Right. Let's get started. So I'll start with some highlights on 2025 and the delivery of the medium-term targets we set out last October. And Chris will cover 2025 performance in more detail and turn to guidance. And then I'll update you on how the spring selling season is playing out and how we are driving the business forward with those medium-term targets firmly in our sights. There we go. So this morning, you'll hear our strategy for driving returns in what has been a challenging year for the industry. Against that backdrop, we delivered 2025 volumes in line with guidance, growing completions by 6% with new outlet openings up 29% in the year, ending 2025 with 219 outlets ahead of expectations. The planning activity we created and stopped over the last 3 years has gained momentum through the year and is now delivering both in applications -- results, sorry, in both applications submitted, but more pleasingly, in the rate of permissions granted. And this is ultimately the basis for future outlet openings. And you'll hear that we remain very confident in delivering average outlet growth year-on-year. Another key focus is utilizing our strong existing landbank and increasing capital efficiency. Chris will speak more about this. It's not something that happens overnight, but we are well on that journey. Our strategy and the actions that we've been taking will drive improved returns, both in terms of margin and return on assets in the medium-term. We have a continued focus on cost discipline, grinding out cost whilst protecting value and balancing the medium-term strategy commitments. And while the housing market remains tough, we remain confident in this plan that is in our control and deliverable. And you'll hear more about this during the presentation. However, our outlook does not incorporate potential impacts from recent events in the Middle East that may arise for the U.K. economy and our business given the early stages of development. And finally, you will have seen that we've added flexibility to our capital allocation. Chris will talk you through the detail, but suffice to say that we remain confident that the unchanged quantum of net asset value-based returns remains appropriate, but do see benefits for shareholders and having more flexibility by adding the potential for a buyback element to our ordinary distributions. So this slide will be a bit more familiar to you and gets a bit more into the guts of our 2025 performance. I won't run through them all, but I'll just pull out a couple of the highlights. We delivered a robust sales rate, which I think attests to the quality of our product and locations and the efforts of our teams. Turning now to landbank. You can see that our landbank has come down slightly as planned as we seek to reduce landbank years. This is a key objective for us given the strong landbank that we hold, though we will do so principally by growing volumes. We've continued to prioritize customer scores and build quality as part of our commitment to operational excellence. We have a high customer score comfortably above the 5-star threshold under the new survey criteria, and our build quality continues to lead the sector. I'm delighted that for the second consecutive year and the third in 5 years, our Taylor Wimpey site manager was awarded the Supreme Award in the NHBC Housebuilders Award. This year, congratulations go to Lee Dewing of our North Yorkshire business. So you'll have already seen most of the key numbers on the slide through the trading statement, but I'll just highlight the outlet chart, which I think illustrates the progress that we are making in outlet openings. We opened 71 outlets last year, 29% up from 2024 with good progress year-on-year. There's some good momentum here, and we remain very much on track. We expect to open more outlets in 2026 than we did in 2025 and remain confident in growing average outlet numbers year-on-year. I think it is worth reminding you what we said about our approach to outlets. We have a strong single brand, and we mostly run our sites as single outlets. So this increase in outlets represents real growth in new markets. So I'll now hand over to Chris to take you through our performance and guidance in detail. Chris Carney: Thanks, Jennie, and good morning, everyone. As usual, I'll take you through the financial performance for 2025, a year in which the group delivered a robust set of results despite a challenging market backdrop. Our disciplined operational focus, the consistent execution of our strategy and the continued progress in planning and outlet openings underpins the financial resilience you'll see across the next few slides. So let me begin with the headline financials. Group revenue increased 13% to GBP 3.84 billion, supported by growth in the U.K. completions, resilient private pricing and a stronger contribution from land sales. Overall, a very good performance in a year where second half sentiment softened. Gross profit was slightly higher at GBP 658 million with gross margin stepping down to 17.1%. This movement is consistent with the factors that we've been flagging throughout the year, modest build cost inflation, slightly lower opening order book pricing and the impact of landbank evolution. Adjusted operating profit was GBP 421 million, up 1% year-on-year, delivering an adjusted operating margin of 10.9%, and I'll come back to margin performance in more detail shortly. PBT and adjusted EPS were both lower year-on-year, reflecting higher net finance costs. And finally, return on net operating assets edged up to 11% with improved asset turn more than offsetting the margin headwinds. Turning to the U.K. We completed 10,614 homes, excluding joint ventures, up 6.4% year-on-year and in the middle of the guidance range we set a year ago. Private completions increased by 7.7%, while affordable completions increased by almost 2%. Affordable represented 21% of total completions, and we expect a similar mix of around 20% to 21% in 2026. The blended U.K. average selling price was GBP 335,000 with the private average selling price at GBP 374,000, both about 5% higher. This reflects a greater proportion of completions in London and the South. Underlying pricing was positive in the North and became progressively softer as you move down the country, but overall remained reasonably resilient. As we entered 2026, underlying pricing in the order book was roughly 0.5% lower year-on-year, primarily due to those late year book deals in London that we highlighted in the January trading update. After taking that into account, we expect mix benefits to support an increase in the 2026 blended average selling price of around 2% over the GBP 335,000 reported for 2025. Adjusted U.K. operating profit remained steady at GBP 369 million, while margin softened to 10.1%. On the next slide, I'll walk you through the main drivers of the 1.4 percentage point operating margin reduction. So in 2025, we saw modest market-driven pressures from both pricing and build cost, which together reduced adjusted operating margin by 110 basis points. On pricing, the pressure came from the opening 2025 order book and the London bulk deals, which contributed to completions in 2025 and formed part of the order book for 2026. Build cost inflation was about 0.5% in half one and 1% for the year overall, driven mainly by materials rather than labor. The underlying market rate was slightly higher, but our supply chain self-help initiatives and increasing usage of our new house type range helped offset part of the pressure, and that work will continue into 2026. Landbank evolution was also a factor as we continue to trade out of older higher-margin sites acquired after the Brexit referendum. We still expect this to normalize and then become a positive contributor. And as we discussed in October, that improvement will start in 2027 and become more meaningful in 2028 and 2029. As we said in January, land sales were particularly strong in 2025, enhancing our group margin by roughly 60 basis points, a similar benefit to 2024. However, as we said, we don't expect land sales to be margin enhancing in 2026, so that benefit will unwind. We also had a 0.5 percentage point impact from the GBP 20 million one-off charge relating to historic workmanship issues at the legacy London apartment scheme. So these 2 impacts dropping out will be broadly neutral going into 2026. The headwinds from pricing and build cost inflation were partly offset by improved recovery of operating expenses as both volume and revenue grew. So turning to cladding and fire safety. This slide will look familiar to everyone from the half year, and I'm pleased to say that the overall provision has remained broadly unchanged. That sits alongside strong operational progress. We've continued to move at pace, progressing assessments, initiating further works, and we've now fully remediated 62 buildings. Since June, the number of buildings awaiting formal assessment has reduced by around half. There is still significant work ahead, but the stability of the provision over the past 6 months reinforces the robustness of the assumptions we updated in June. To date, we have set aside GBP 544 million for cladding and fire safety remediation and spent GBP 131 million. That leaves a remaining provision of GBP 413 million. Our cost estimates on assessed buildings, including the cavity barrier risks highlighted at the half year have continued to prove robust. The small uplift you see reflects routine mechanics, the unwind of discounting and minor updates to assumptions such as inflation and legal costs. Cash spent in 2025 was GBP 49 million, around half our previous guidance, mainly due to the delayed invoicing from the Building Safety Fund. With those payments now expected this year, we anticipate around GBP 150 million of cash outflow in 2026 and about GBP 100 million in 2027, with remediation still expected to conclude in 2030. Our balance sheet remains a core strength of the business. Net operating assets were broadly flat at GBP 3.8 billion. Land -- net of land creditors reduced modestly, reflecting the contraction in the short-term landbank to 77,000 plots, consistent with progress towards the targets we set out in October. Work in progress increased year-on-year, supporting higher outlet numbers and continued infrastructure investment to support new outlet openings. Tangible net asset value per share declined to GBP 1.176, driven by the increase in the building safety provisions in the first half. Turning to cash flow then. This bridge shows the movement from opening to closing net cash. The working capital outflow reflects higher debtors due to the London bulk deal signed towards the end of the year and lower creditors mainly from reduced affordable advance receipts and customer deposits. The land decrease includes a higher level of deferred receipts on land sales and the increase in WIP supports our outlook growth strategy as planning momentum improves. After tax, interest, dividends and other items, we ended the year with a strong net cash position of GBP 343 million, in line with guidance provided at the half year. Now I've included this slide to reiterate a couple of points from our investor and analyst event in October as this is a critical focus for the business. Our medium-term plan remains 14,000 U.K. completions, 4.5 to 5 years of short-term landbank, 16% to 18% adjusted operating margin and return on net operating assets above 20%. Capital discipline across land and WIP is central to delivering those improved returns. In 2025, we made good progress, returning capital into smaller sites, reducing the scale of the landbank, increasing outlet numbers and improving the distribution of our investments across the country. The short-term owned and controlled landbank is now 77,000 plots, down from 79,000. The average approved site size reduced again in 2025 to 211 plots compared to an average of 260 in the previous 5 years. And we closed the year with 219 outlets, up 3%. As we discussed in October, WIP invested in both London and infrastructure will take time to normalize, but we're seeing early progress. WIP per outlet has improved since the half year and is now back in line with end of 2024 levels. London apartment WIP reduced from GBP 270 million in June to GBP 200 million and the GBP 100 million of land sales completed in 2025 will release around GBP 30 million of infrastructure capital for reinvestment to fuel future growth. So there was good progress in 2025, increasing confidence in our ability to deliver the returns set out in our medium-term plan. Next, turning to our capital allocation priorities. Today, we're announcing an evolution of our shareholder distribution policy. But before outlining the change, I think it's important to note the context. Taylor Wimpey is inherently highly cash generative through the cycle, and that cash continues to fund the consistent investment we make in land and work in progress to support future growth. That remains unchanged. As a result, the first 2 priorities of our framework stay exactly as they are, maintaining a strong balance sheet and investing in land and WIP to underpin sustainable long-term growth. We've been equally consistent in returning significant cash to shareholders. Since introducing our ordinary dividend policy in 2018, more than GBP 2.8 billion has been returned. Our existing distribution policy, returning 7.5% of net assets or at least GBP 250 million each year through the cycle also remains in place. What we're introducing today is an element of flexibility in how that amount is delivered. We will continue to return 7.5% of net assets split equally between the final and interim. However, from here, a minimum of 5% of net assets will be paid as a regular ordinary dividend with the remaining portion returned either via dividend or share buyback to be determined by the Board as most appropriate at the time. This added flexibility strengthens the policy and supports the long-term interests of all shareholders. Accordingly, today, we are announcing a final 2025 dividend of GBP 0.0295 per share, equivalent to GBP 105 million and a GBP 52 million share buyback, which will commence shortly. Taken together, this brings total shareholder distributions for 2025 to GBP 322 million, including the 2025 interim dividend. Finally, our fourth priority remains unchanged. We will return excess cash to shareholders when appropriate. So with the combination of good cash generation, a strong landbank and an invested WIP position, giving us everything we need to support disciplined profitable growth, it's clear that our long-standing commitment to funding the business first remains fully intact, and this evolution in policy is built on that foundation. So finally, turning to guidance. As you would expect, we remain mindful of the broader geopolitical backdrop, including recent developments in the Middle East. Our outlook today reflects the conditions we see in our markets at present and does not incorporate any potential impact from those emerging events given the uncertainty and the early stage of development. With our strategic approach to land and strong conversion into outlets, we continue to expect average outlets to be higher in 2026 than in 2025. Trading in the year-to-date has been encouraging, although we did enter the year with a slightly lower order book. Against that backdrop, we are setting U.K. volume guidance, excluding joint ventures at 10,600 to 11,000 completions for 2026. At our January trading update, we covered the 2 main moving parts impacting adjusted operating margin in 2026, and I'll recap those now together with one further relevant factor for 2026. Pricing in the opening order book was around 0.5% lower year-on-year, driven by bulk deals. We continue to see low single-digit build cost inflation and legal completions in Spain are expected to normalize this year to around GBP 350 million to GBP 400 million after 2 years of higher than usual output. Taken together, these factors are a headwind to profit margin in 2026 relative to 2025, and we, therefore, expect adjusted operating profit of around GBP 400 million, and we expect pre-exceptional net finance charges to be around GBP 30 million. As we said in January, U.K. volumes in 2026 are likely to be more second half weighted than usual with around 40% completing in half 1, reflecting the softer market conditions in Q4 last year. Given the half 1, half 2 phasing effect, we anticipate a larger half 1 cash outflow than last year, resulting in around GBP 0 to GBP 50 million of net cash at the half year with the half 2 weighting of completion supporting a recovery in the balance by the year-end. So in summary, I'm pleased with the group's performance in 2025, a strong and resilient result despite a changeable market backdrop. Looking ahead, our focus is on leveraging our excellent land position to drive outlet growth, which in turn supports volume growth, margin progression and enhanced return to shareholders over time. I'll hand you back to Jennie. Jennie Daly: So taking a step back then and looking at the market as a whole, we are pleased to see some signs of improvement and opportunity. Mortgage availability remains good with mortgage rates lower year-on-year and real wage growth supporting affordability, though still more challenged than in the years before the downturn. Unemployment remains at low levels. And although customer sentiment is lower generally, it has been on an improving trend. In addition to the budget uncertainty through much of the second half, last year was also impacted by a notable increase in the amount of secondhand stock on the market. And although we hope for improvement this year, we're also ensuring that our customers are aware of the benefits of buying new. Encouragingly, first-time buyer numbers are showing some signs of improvement, but remain well below the levels we saw before the downturn. Deposit building remains a real challenge for this group, particularly in the affordability constrained south. On the Section 106 affordable housing side of the market, securing partners remains a challenge. But despite that, we are in a good position for 2026 affordable deliveries. Overall, medium- to long-term drivers continue to look positive. And as a result, our medium- to long-term view of the market opportunity is unchanged. There is a long-term structural undersupply of homes in the U.K. However, we also now have a political commitment to address undersupply with meaningful interventions to support supply side bottlenecks such as planning and more on that later. So turning now to Taylor Wimpey and our focus on controlling what we can and driving value from it. A good example here is the performance that we're driving from our marketing platforms. Last year, we updated you on how we changed our marketing approach to target fewer but higher quality leads, and it's pleasing to see clear benefits of this. We've also improved the online experience for customers through optimizing media and website effectiveness. We are seeing good quality lead generation, a year-on-year increase in overall appointments, which is still the best indicator of future intention to purchase and better conversion rates. And finally, we are seeing good quality visitors with a strong intention to move, but decisions are taking time with customers visiting sites multiple times before commitment. Spring selling season is progressing well with our performance similar to this time last year, which you will remember as a strong comparator. The year-to-date net private sales rate compares well to this point last year. The last 4 weeks have been a bit stronger at 0.87, including bulks or 0.83, excluding bulks, and that compares to the same period in 2025, which was 0.82 with no bulks. Whilst this is encouraging, I think we should remain mindful of the weak trading in quarter 4 and that it is still early in the year. As we told you in January, our order book at the start of the year is a bit lower than the comparative period given the tougher trading environment that we saw in the second half of 2025. We had a strong Boxing Day sales campaign supported by proactive management actions, and we can see that the appointments taken in this period are now converting into sales in recent weeks. As a result, the order book has made some progress, and it currently stands at 7,678 homes compared to around 8,000 at the same time last year. As I said, customer sentiment is moving in the right direction. However, we are still seeing first-time buyers, especially those in the South, grappling with affordability constraints. As a result, incentives remain an important factor in gaining commitment and are running around 6%. Now over the next few slides, I'll show you the progress that we're making in driving a more efficient land position and liberating our strategic land pipeline through our assertive planning strategy. We're still at the relatively early stages of the new planning cycle. But as expected, we've seen some early improvements in decision-making because of the changes introduced by the NPPF at the very end of 2024. These pie charts represent a snapshot of expected outcomes for our assertive strategic applications as at February 2025 and February 2026. I think if you want a stat that really shows a shift in sentiment, this is a good one. At this moment in time, we forecast 49% of planning officers will make a positive recommendation on our assertive applications. That's more than double the 22% we saw at the same point last year. I would stress that this is a point-in-time snapshot of what is a dynamic process. So as applications progress through the various stages of planning consideration, such as consultation stage, we would expect the not known categories to crystallize in some numbers towards the positive. With a clearer and more consistent planning policy backdrop weighted to housing delivery, our proactive strategy is delivering. This clarity means that we are being more determinative in our approach to engagement at a local level. It also means that we are more confident in a positive appeal outcome than in past years, and we are choosing this route more quickly when local engagement routes are exhausted. And not on the slide, but in terms of overall applications, sentiment has visibly improved with positive planning progress or planning achieved on 71% of applications in 2025 compared to 58% the prior year. So against this positive and improving backdrop, how are we faring? So you will recall that I've been telling you for some time that we've had a very deliberate and targeted strategy since 2023 to get ahead, load the planning basis and now we are seeing results. We achieved detailed planning for over 10,000 plots in 2025, 28% increase year-on-year. On the chart that you can see on the left, while some of those applications have been in the system since 2023, many more were submitted more recently and have benefited from early progress following the NPPF. We also converted over 5,000 plots from the strategic pipeline in the year, not unexpectedly weighted to the second half and final quarter. Additionally, plots for first principal planning determination are continuing to increase, now standing around 32,000 plots, and we are progressing them through planning at a pleasing rate. At the investor and analyst update, we set out a number of set of applications that we intended to submit from our strategic land pipeline. Just to stress, these applications are over and above our business as usual planning activity. In October, we expected to submit 52 applications in 2025 compared to 20 in 2024 or around 11,500 plots. I'm pleased to say that our teams have worked hard and hit the application target, surpassing the plot count level. In October, we also talked about 17 set of applications being targeted for committee decisions. And this was a stretching target. And whilst applications came in slightly below, in plot terms, the numbers came in broadly in line. And we have since had a number of those delayed applications go to planning committees in 2026. So all in all, I think it's a good showing relative to our experience in most recent years. All this is key to driving outlets, and we are maintaining the momentum, which we will see in the next slides. We start from a position of strength, a strong short-term landbank sitting at 77,000 plots, which continues to give us the confidence that we can deliver growth without net investment in land. Our intention in the land market in 2025 was to continue to be selective and below replacement. In the year, we approved around 8,000 plots. And as you heard from Chris already, the average site size of those approvals was around 211 plots, in line with our strategy to target smaller sites. And the geographic distribution approvals nudged in favor of our Northern businesses. The land market remains uneven, but there are signs of gradual stabilizing as the flows of opportunity improve. Competition remains high for well-located deliverable sites, whilst more complex or lower-value locations see less competition. Investment is, I think, expected to remain selective in the near-term as landowner pricing realism continues to act as a constraint in some areas. We remain confident of delivery over the next few years. We already own and have planning for all of our 2026 completions and already own or control everything we need for 2027, almost all of which has planning. With the momentum we've outlined, we are on track to open more outlets in 2026 than we did in 2025 and expect average outlets to increase year-on-year. So now I'm going to run through a couple of example sites approved during 2025. Both examples are own sites that we've unlocked and I think reflect the tangible benefit of our assertive planning actions. They demonstrate the improving planning environment and illustrate how our mature strategic land pipeline is supporting early delivery during this period of planning opportunity. So you may recall that in October, Shaun White highlighted this particular site located in the Green Belt on the edge of Solihull. We have held this land for over 30 years. And I think a few sites demonstrate the maturity and value within our strategic pipeline or indeed the frustrations of the planning system quite as well as this one. The journey hasn't been straightforward though it was considered as a draft allocation in the early 2010s, the site didn't make it into the 2013 adopted Solihull local plan given limited Green Belt review. Though the site was not formally adopted, it was never dropped, but was identified as a draft allocation since the local plan review commenced in 2015. After various stages of consultation, the local plan journey concluded negatively in October 2024 when an inspector's report into the plan concluded that it would be found unsigned if pursued. So after nearly 10 years of effort, the council withdrew their plan. But the breakthrough came when 2 things aligned, our continuing local engagement and the emergence of the draft NPPF 2024. This caused an immediate shift in sentiment within the council, a council which now find itself under real pressure to deliver a 5-year housing land supply. In fact, as Shaun noted in October, whilst we had already worked to prepare an application, we were now actively encouraged by the planning authority, and we submitted an application in December 2024. This came against a positive backdrop, an updated NPPF guidance on Green Belt release and strengthened recognition of local housing need. What followed was a marked change in pace, engagement with officers and elected members was constructive throughout, and we secured a resolution to grant within 12 months. That is rapid progress in today's planning environment and a testament to the quality of the work from our team and the appetite of forward-thinking councils to approve high quality schemes on a proactive basis to support their housing need. We now move to the next phase. Reserve matters applications are underway and will be submitted later this year with an outlet anticipated late 2027. This site, I think, is a story of the commitment and our commitment to strategic land over the long-term, to partnership and being agile enough to act decisively when the environment shifts in our favor. And it represents exactly the kind of capital-efficient progress we need, land we have held for decades, unlock through determination, good timing and the strength of our relationships. And now a smaller site example, this one at Abbots Langley, another owned site, which was acquired in 1996 on Green Belt land now considered grey belt. We submitted a detailed application in July 2025, proposing 50% affordable housing. What made this possible was the constructive early engagement with the local planning authority. They encouraged a detailed submission in this instance because the housing need was clear and the authority could not demonstrate a 5 year housing land supply. And as a result, the presumption in favor applied, giving the application a strong footing from the outset. That clarity and national policy meant that our teams could move confidently and present a high quality scheme with the right evidence behind it. The shift in sentiment, combined with the planning reforms created an environment where good applications are now progressed quickly and Abbots Langley is a perfect example. We'll shortly begin work on site with an outlet scheduled to open in the second half of this year. So to summarize, the assertive planning strategy that we've pursued since 2023 is delivering results. The planning reforms have created a more decisive and supportive environment and where engagement is tougher, if updated, then the NPPF gives our teams the certainty they need to pursue an appeal route if required. The examples this morning give me confidence that the planning landscape is continuing to improve and that it will be supportive of our medium-term targets. So we outlined these targets to you in October last year, and this is our business focus. We remain both committed and confident in achieving these over the medium-term. During 2026, we will continue to focus on strategy execution and with improvements in results coming through over the medium-term. And as a reminder, this plan is predicated on current market conditions, so sales rates around the levels we've seen over the last 2 years. So you've heard today that our strategy is in progress and is driving returns on what has been a challenging environment over the last few years. We are a business with a strong balance sheet, excellent landbank and experienced teams, and we've ensured that we are ready and poised for growth. We are well positioned. Our planning strategy shows signs of early wins with continuing momentum in an improving planning backdrop. Day-to-day, we're focused on driving outlets, recycling capital and driving returns without net land investment. Thank you, and happy now to move to questions. Allison Sun: Jennie, Allison from Bank of America. Just 2 questions from my side. So first, can you give us a bit color in terms of the sales rate in January, February, like how it is progressing? And what's the driver behind that? And the second is, can you tell us how the incentive has changed maybe year-to-date versus last year? Jennie Daly: Okay. So I think in terms of what's driving the sales rate, probably different than we saw at the end of 2024 and start of 2025. we had a fairly subdued market in the final stages of 2025. I talked about sort of our leaning into the Boxing Day campaign. We had generated a lot of interest, but we were coming off a fairly soft start. So the teams need the opportunity to build the leads into sort of further engagement into site visits and then reservations. So it's perhaps not surprising that January was just a little softer given that sort of a slow start coming in from the tail end of 2025. And as I mentioned, we have seen sort of increased momentum in the last 4 weeks. So February, the last 4 week rate was 0.87 and excluding bulk was 0.83 against a comparator of 0.82. So month-on-month improvement there. And in terms of incentives, we're running at around 6% now. We are seeing that customers have an expectation of a deal. And there is, as I mentioned, quite a lot of inventory on the secondhand market. So there's customer choice. So using that incentive to support customer commitment. Zaim Beekawa: Zaim Beekawa, JPMorgan. The first is on the -- obviously, in light of no demand stimulus, some of your peers have done some shared equity schemes. Has a view changed there in terms of offering something similar? And then second, on the landbank evolution, Chris, I think you gave sort of the details on the margin bridge, but maybe some details as to how much that could impact completions in '26 also? Jennie Daly: Okay. I'll give Chris the landbank evolution question. We continue to look at various models in the market around sort of shared equity and others. We see them as quite expensive, both for the customer and for our balance sheet. And from what we can see in the market, they're not really driving sort of customer engagement. We have a very strong platform to engage with customers and to drive inquiries, which is working well for us at the moment. I would stress that we do continue to look at various models coming to the market, but we need to ensure that it is actually a benefit to the customer and that it also comes at a reasonable price to the developer. Chris? Chris Carney: Yes. And on the landbank evolution, I said back in October that our expectation was that the impact would be minimal in 2026. It would start to kick in, in 2027 with the lion's share in '28 and '29. Ami Galla: Ami Galla from Citi. A few questions from me. The first one was on the market. To an extent on the PRS side or on bulk deals, I remember that the broader backdrop was a lot more difficult in the second half of last year. How has that shifted into early this year? And are you seeing more sort of opportunities there to make bulk deals at a better pricing? If you could give us some color in terms of the sort of discount that you have to give on bulk deals, that will be helpful. The second question was just on the Section 106 process. The government has talked about a clearance mechanism. Can you give us some sense of how do you think that will pan out? And do you think that would help you as we think about the sort of second half and the order book beyond that? And the last one was just on the timber frame facility. Can you give us an update of how that is progressing? And how should we think about the utilization there? Jennie Daly: Okay. Just on the Section 106, Ami, to government clearance. Yes. Okay. We haven't seen any sort of material change in sort of PRS sort of activity or pricing since we entered the year. And we're seeing some fairly deep discounts being sort of presented sort of out in the market. So no shift that we are seeing. On the Section 106, although government have sort of made some guidance available, the frustration, if I can call it that, is that it is just guidance. It's not a directive, and it lacks a degree of punch that we need with local authorities who are unwilling to engage. We're actually making really good progress with local authorities who are willing to engage, and that's very pleasing. But we do continue to meet some fairly incalcitrant authorities unwilling to discuss potential cascade mechanisms, for example, for Section 106. So we would be still asking government for something that's genuinely a solution to drive that part of the market. But to just reconfirm, we are in a good place for 2026. And in terms of timber frame, it's progressing well. It's maturing. We're learning as we go, and I'm quite pleased with progress at this point, Ami. But it really will come into its own when volumes start to step up. It's intended to be there to support us through skill shortage and sort of more rapid growth period. Aynsley Lammin: Aynsley Lammin from Investec. I think I've got 3 as well actually, please. Just you flagged up again the kind of affordability constraint around first-time buyers, and there's been some noise again around the potential kind of fiscal stimulus support on the demand side for government. Just interested, I think you're always quite well plugged in. So interested in your view of where we might be there, where government's thinking is on a kind of Help to Buy type scheme. And second question, just interested a bit more color, I guess, on build material cost inflation, labor inflation, what the trends are doing there? And then thirdly, just on the kind of change of more flexible share capital returns, did you consider at all reducing the quantum? You still obviously seem very wedded to that 7.5%. And what's the criteria you'd use between kind of choosing dividends versus share capital return -- share buyback? Jennie Daly: Okay. I mean in terms of affordability, although we're seeing some improvements, we talked about the sort of variable difference between North and South. The wage growth and some improvements into -- sort of from the FCA and PRA changes last year have helped around thresholds, stress testing, income multiples. But in higher value areas where deposit building is still a very significant challenge and maybe add on to that stamp duty as well in some areas where entry homes are above the stamp duty threshold. So we see that the first-time buyer is still sort of heavily impacted. And I think that, that's playing out right across the market. The scale of the inventory sitting in the second half market. I think that the lack of activity from first-time buyers is part of the cause of that also. So we do think that there is a case, particularly now that we're seeing such progress in supply side, but continuing weakness in demand for some form of demand side stimulus. There have been discussions with government, but it would be too much to say that those are progressive at this point. And then in terms of sort of capital returns before I pass over to Chris for the build cost and maybe more detail around dividend, I think it's important to note that the overall distribution remains at 7.5% of net asset value. But that flexibility or sort of evolution, we think, is in the best interest of our shareholders at this point in time. Chris, do you want to pick up on build costs? Chris Carney: Yes, of course. So you saw on the slide today, 1% build cost inflation for completions in 2025. The exit rate that I mentioned, I think, in January was 1.5%. In January, we saw several manufacturers request pretty sizable increases, the order of 5% to 10%, well above inflation. We pushed back and many of those were sort of either withdrawn, deferred or partially offset through rebates, although we haven't been able to eliminate all of those increases. And the pressure is coming from sort of raw materials, energy, packaging and a little bit of labor inflation as well. So based on where we stand today, obviously, you can see we're guiding to another year of low single-digit build cost inflation, likely higher than the 1% that you saw on the slide. But we'll continue to aim to beat the market through improvement in our procurement practices and other self-help measures, including the benefits from the pull-through of the new house type range, but we would still expect build cost inflation to be above 1% in 2026. And just to follow-up on what Jennie said on the question on capital returns. We're in a very strong position, Aynsley, to grow output and volumes without needing additional investment across land and WIP as we set out in October. And yes, as you'd expect, the Board does regularly review the overall quantum of distributions in the context of our capital allocation priorities. And you remember what they are. The first one is maintain a strong balance sheet and the second is to invest in land and WIP to support future growth. And yes, if either of those constraints came about in either one of those priorities, then that would prompt to change, but we don't have that at the moment. William Jones: Will Jones from Rothschild & Co Redburn. Try 3 as well, please. First, just maybe extending on build costs. Could you just remind us at this stage of the year, what visibility you have in terms of cover for the year ahead? And maybe just expand if you can a little bit on those efficiencies and particularly interested in the house type range and where we are on rollout. Second was London. Could you give us a sense of either plots remaining completions, just some sense of the proportions there? And maybe if you could help on what the margin drag has been from London in '25 and potentially '26, just high level to think about as and when that reverses back out? And the last, maybe just around land and intake margins, and I appreciate you don't give kind of hard numbers anymore, but any color on as you've got migrated somewhat to the smaller sites into the north, how that's affecting the economics? Jennie Daly: Okay. Chris Carney: Yes. So in terms of build cost inflation and cover, yes, I mean, we are well progressed in those -- in that position. So over 90% of our materials are negotiated centrally. We don't -- we've moved away in recent years from having like a point in the year where they all get negotiated, but we have pretty good visibility for this year. So very comfortable with what I've outlined. I think it's worth just bearing in mind that we've been dealing with build cost inflation and little or no house price inflation for 3 years now, and that's been tough. And it has driven a real sort of step change in how we procure. We've expanded the number of categories and the spend that we manage centrally to maximize our purchasing power. We're retendering those categories more often. We've introduced rapid repricing, which lets us benchmark more quickly and secure better terms as soon as we see sort of signs of pressure from suppliers. And we've recently added e-auctions as one of the things that we're doing and the early results are very encouraging. And yes, where we have suppliers who are a bit in transient, pushing for unjustified increases, then if we have to, we'll switch supply. So we've made pretty meaningful changes in how we address the market conditions, and we're seeing benefits in that. In terms of the new house type range, it accounted for just over 1/4 of our completions in 2025, and that will rise to just under half in 2026. So obviously, those rollouts just take time to flush them through the landbank. And obviously, planning has been difficult. So now it's a little bit better than obviously, the pace improves. In terms of, pardon me, London completions and margin drag and all that sort of stuff, actually, it's -- I don't think you should necessarily think about it like that. It is all tied up in the landbank evolution that we've talked about. But actually, some of the London sites that they were procured a long time ago, and they've been delivered very well. So it's not quite right to just assume that they have a massive drag. Some of them are actually pretty good in terms of the margin performance. And the last one was... Jennie Daly: Yes, the landbank or the land intake, I'll take that I'll give you a rest there, Chris. I mean, look, we don't give sort of guidance or -- but I'm really comfortable the acquisitions that we made last year, good markets, good sort of intake margins, entirely supportive of our medium-term targets. Glynis Johnson: Glynis Johnson, Jefferies. Chris Carney: Yes, Glynis. Glynis Johnson: Nice to steal the microphone for someone else. Four questions, but hopefully, super quick. You talked about North-South in terms of approvals, a bit of a skew. Can you talk about the outlet openings? Do the outlet openings also have a North-South SKU? And does that make a difference? Second of all, in terms of incentives, one of your peers yesterday talked about stepping up incentives and stepping up quite substantially and was of the view that others would have to follow. Have you seen incentives move up as we've gone through February? Are you seeing any areas where incentives have stepped up markedly or competition as a whole step up? Thirdly, London, when do you need to take the decision about whether or not to do further bulk sales in London? What is the -- what are you looking for in London to say, okay, we can just sell out on a normal basis or need to do bulk deals, which you've already said PRS is at quite substantial discounts. Actually, I'll leave it there at 3. Jennie Daly: Yes. In terms of sort of outlet openings, we're a business that looks to support all our businesses. And I think that we've got a reasonably good spread sort of across our divisions of outlet openings. On incentives, I mean, I mentioned that incentives are running at 6%. I think that we're working hard on pricing, Glynis. It remains disciplined, and we're certainly aligned to the wider market rather than trading aggressively sort of for volumes. So we're working, as we always do, to balance price and sales rates without sort of sacrificing sort of value or sort of long-term value. We can see some movements. It's part of the every day. There's a lot going on in the markets. And so our businesses are mindful of sort of changes in behavior by others. But we'll continue to drive that really disciplined sort of balance and ensure that we're doing the right thing in terms of long-term value. And then in London, the decisions around sort of bulk deals, they're carefully balanced. They're relative to how we're seeing the sales market evolve. We're also mindful of the capital that's potentially locked up and where we think that, that capital is better recycled through a potential bulk deal. As you saw last year, we will make those decisions. But we remain very active in the private sales market also. So there's no plan as such, we will continue to watch the market, and we'll make judgments as we progress. But overall, our approach to bulks hasn't changed. Our preference is to do those on a planned basis. Alastair Stewart: Alastair Stewart from Progressive. A couple of broad-ish questions. First, on the market. You mentioned it's taking time to secure sales. Have you got any broad comparatives either in the overall length of time from first clicking on to the website and then finishing? Or is it a case of coming back and forward more often than in the past? And related to that, you said there's quite a lot of inventory in the secondhand market. Is a lot of that buy-to-let landlords trying to get out? So that's kind of the first question. Second question is on the Iran situation. Obviously, a week is not a long time. But are you getting any feedback from your sales outlets that the rank and file buyers are getting a bit jittery. And possibly on the other side, is this great exodus to Dubai tax [indiscernible]. Some of them actually thinking of getting back in a hurry and that in turn may actually support your London market. And finally, again, costs, any brick manufacturers or anybody else giving you gentle calls saying we've been noticing the price of gas recently, guild your lines for further increases. Jennie Daly: Okay. Quite a few things there. Alastair Stewart: Two questions. Jennie Daly: Yes, yes. I think there's 4, but we'll go. In terms of taking time, I mean, I think the overall time taken about 80 days from inquiry to reservation. Alastair Stewart: Sorry, what was that? Jennie Daly: 80, 8-0. And actually, that hasn't moved massively. The interesting point in the comments that I made was the multiple visits. So we're seeing customers coming back sort of more frequently than previously. And our teams are working hard with our customer group. In terms of the secondhand market, it's a good question. And we did do some work as we saw the secondhand inventory climbing sort of last year. It's not as simple as that. Yes, there's a couple of markets where you would say maybe buy-to-let landlords. But it's pretty pervasive, Alastair, right across the country. And I would take it back to you, you need first-time buyers to drive the whole ecosystem, and that's where I would put the issue. We're not hearing anything from customers as yet. And we haven't had any calls from any of the suppliers. And if they're listening, I don't want any are on gas. And a lot of them are hedged in the near-term in any event. And as Chris says, then we will make sure that we're sort of pushing back very hard on that. And whether there's opportunity sort of in this crisis, I'm going to say there's a human cost to what's going on in the Middle East, then I'm sure that our London teams will be sort of ready and able to talk to them. Rebecca Parker: Rebecca Parker from Goldman Sachs. Just wondering in terms of your outlets that you plan to open in 2026, how many of those have detailed planning consent? And then secondly, how are you seeing land market opportunities? At the moment I know that you were saying that some landowners, the pricing realism is acting as a bit of a constraint. And then thirdly, how should we be thinking about WIP as we go into 2026, just given that you do have that target to increase outlets? Jennie Daly: Okay. Sorry, could you repeat the second question? Rebecca Parker: How are you seeing land market opportunities just given that you commented that there was a bit of pricing realism acting as a constraint? Jennie Daly: Okay. I mean I think as I said in my narrative, we're in an excellent position for 2026 in terms of planning and in fact, in an exceptionally good position for 2027 as well. We are seeing, as I said, some stabilization in the land market. We are seeing more opportunities coming through in many of the geographies. Competition is stronger for sites that are sort of further along the planning process and in good quality locations, weaker where it's more complex, where planning is less evolved. But we talked about in an environment with build cost inflation and particularly with some of the regulatory costs that we're going to see sort of realizing over the coming year, ensuring that landowners are realistic is an important part in the market. And some of the other commentators, Savills and the RICS are seeing very similar sort of positions. And then WIP, Chris, can you take the WIP question? Chris Carney: Yes. So WIP at the end of 2025 was GBP 2.07 billion. And I think as we progress to the first half, it'd probably be somewhere between GBP 2.1 billion, GBP 2.2 billion at that point. Jennie Daly: Chris? Christopher Millington: Chris Millington at Deutsche. First one, I just wanted to ask about the medium-term targets. Obviously, the market has been a bit stop starting over the last couple of years. And recalling back to the CMD, it looked like the profile was to get you to those 14,000 completions by about 2029 based on the CAGR growth rate. Where do you think that is at the moment? Obviously, this year, we're looking at kind of 2% growth at the midrange. That's number one, just the timing about mid-terms. Second one is you've had a few questions around London, et cetera, et cetera. But could you just talk in a general sense kind of how North Midlands versus South has progressed over the last couple of years? And does it move up? And is there much of a margin difference between the 2, given the relative demand profiles rather than just picking out discrete parts of the market? And the final one is H1, H2 margins this year with volumes back-end loaded with the order book coming in a bit lower. Can you give us some feel kind of how that H1 margin can look? Obviously, we can do the sums over the full year and back out H2? Jennie Daly: Okay. If you will take the last one, Chris. I mean in terms of the medium-term, I think we were really clear when we spoke in October about 2026, not likely to sort of demonstrate sort of full growth, and we talked about the achievement of our medium-term targets not being linear. And we also said somewhere between 3 and 5 years. So I think that we remain confident. I've talked a few times in the narrative about remaining confident in the medium-term targets over that time frame. In terms of London differential, I think it's probably the same answer that Chris gave really. There are differentials. There's always been sort of differentials between our Northern operating businesses and in London. And it would be wrong to characterize all schemes in and around London as per schemes. There's definitely some challenge around sales in those sites, but some of them are performing fairly well on a relative basis. And then half 1, half 2 margins, Chris? Chris Carney: Yes. Yes, of course. So our half 1 operating margin in 2026 is going to be lower than half 1 operating margin was in 2025, which I think was 9.7% and that reflects 3 sort of key factors. We came into this year with underlying pricing in the order book around 0.5% lower year-on-year. Second, we've seen low single-digit build cost inflation in that 12-month period, we talked about that this morning. And third, obviously, we've signaled very clearly in the statement that the volumes are going to be weighted 40% in the first half, 60% in the second half. And that was due obviously to the softer market conditions that we experienced in Q4. And I think that means we expect to deliver around 30% of the group's 2026 adjusted operating profit in the first half. Christopher Millington: And can I come back really quickly? Not on the margin on the geographic split, proportional on completions. However you do split your geography, how much would you regard as North and Midlands versus below that or South of that? Chris Carney: Sorry, Chris. Christopher Millington: I'm talking about the proportion of... Jennie Daly: Yes. So [ between the ] segment, Chris as you know, I mean, it would be reasonable to expect everything sort of from Nottingham, Birmingham North is North and everything South is South. But we've talked about it's also gradations of. So it gets softer the further South you come. It's not simply just characterizing all of the South as impacted. There are some markets that are more challenged in the South. There are some markets in the North, which are more challenged. So I'm not happy to sort of strike a line and say that's North and this is South because it's a movable depending on markets. Christopher Millington: It's just -- it keeps getting referred to as being soft. And it's just to put context around that comment. Jennie Daly: Yes. Well, you just think of it on the basis of the further South you come, there's a gradual softening or look at it in terms of sort of pricing. Pricing is, as you come South as it increases, then it becomes more challenging. There are some markets in Kent where affordability is easier. They're doing really well. So I think it's just a way of sort of helping you understand the broad variables. Okay. One more. Kate Middleton: Kate Middleton, Panmure Liberum. Just a quick question on pricing. So I know you're speaking about stronger growth in sales prices in the Northern regions. But just wondering if you can attribute a particular ASP to the North versus London and the South. And then just a couple on sites. So guiding to net outlet growth. And obviously, you've said 211 plots per site is the average for the year. Wondering if that's just what you're continuing to target moving forward or whether that's due to reduce? And also with the outlet growth, are we looking at sites closing as well as opening at a greater rate? Or is the rate of site closure kind of staying relatively consistent moving forward? Jennie Daly: Okay. So we don't segment on an ASP basis, albeit we do give Spain on a separate basis. In terms of sort of average site size, so the 211 that we referred to was on land intake rather than outlet opening. We talked about targeting smaller sites. I think we were really clear in October, that's not small. It's sites that we can still achieve a volume housebuilder sort of benefit in. So 211 is pretty good. I'm comfortable with that. If it was a little bit lower, that would be good, a little bit higher, fine. And then in terms of outlet growth, well, the rate of closure is a function of the market. And so we'll see how the market sort of evolves over time in the coming months. All right. Well, thank you very much for your time today. I do know it's a busy -- it's been a busy results day. And Chris and I look forward to seeing you later in the year.
Operator: Good day, and welcome to the Bioventus Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Dave Crawford. Please go ahead. David Crawford: Thanks, Chuck, and good morning, everyone. Thanks for joining us. It's my pleasure to welcome you to the Bioventus 2025 Fourth Quarter Earnings Conference Call. With me this morning are Rob Claypoole, President and CEO; and Mark Singleton, Senior Vice President and CFO. Rob will begin his remarks with an update on our business, review our performance against our 2025 priorities and lay out our 2026 objectives. Then Mark will review the fourth quarter results and discuss our 2026 financial guidance. We will finish the call with Q&A. A presentation for today's call is available on the Investors section of our website, bioventus.com. Before we begin, I would like to remind everyone that our remarks today contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the SEC, including Item 1A Risk Factors of the company's Form 10-K for the year ended December 31, 2025, as such factors may be updated from time to time in the company's other filings made with the SEC. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable securities laws. This call will also include reference to certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP or adjusted financial measures. Important disclosures about and definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investors section of our website at bioventus.com. Now I will turn the call over to Rob. Robert Claypoole: Thank you, Dave. Good morning, everyone, and thanks for joining our call today. Bioventus delivered another solid quarter and concluded a successful year across our strategic priorities while helping patients recover so they can live life to the fullest. Over the past 3 years, we have established a strong track record of meeting or exceeding our financial guidance while enhancing our portfolio and significantly strengthening our commercial, operational and financial fundamentals across our company. In short, we've transformed Bioventus. It's a different company today with a very strong foundation, and we are now entering an exciting new phase and are well positioned to build a $1 billion leading med tech company. In this next phase, we are increasing our focus on accelerating our revenue growth while further strengthening our earnings power and expanding our capital allocation optionality through strong and consistent growth in free cash flow. We believe this combination will drive significant future value creation for shareholders. For my remarks this morning, I would like to discuss 3 areas. First, I will briefly highlight our fourth quarter performance. Second, I will summarize our 2025 full year performance with respect to our 3 priorities that we outlined at the start of last year. And finally, I will lay out our objectives for 2026. Let's start with a review of the fourth quarter, which represented a significant year-over-year acceleration and reflects our progress with sharpening commercial execution, scaling operations and strengthening our financial foundation. The results further demonstrate that Bioventus possesses a powerful combination of value drivers of revenue growth, increased profitability and enhanced cash flow. We delivered 10% organic revenue growth with robust performance across our core businesses, and we achieved the second half revenue acceleration that we guided to throughout the past year. We drove an increase in adjusted EBITDA of $8 million and expanded our adjusted EBITDA margin by almost 500 basis points compared to the prior year. And we set a record for quarterly cash from operations at approximately $38 million, helped in part by our improved inventory management. In addition to our strong financial performance, we received positive market feedback and valuable insights from the pilot launches for 2 of our exciting growth drivers, peripheral nerve stimulation, or PNS, and platelet-rich plasma, or PRP, which I will discuss in more detail in a moment. Now let me shift to a review of our full year performance against the 3 priorities I introduced at the start of 2025, driving above-market revenue growth, continuing to expand our profitability and accelerating free cash flow generation. Across all 3 of our businesses, we delivered above-market organic revenue growth for 2025. In our Pain Treatments business, we drove solid growth from our market-leading HA business and added the 2 new high potential growth drivers I already referred to, PNS and PRP. We also received a strong contribution to our 2025 growth from Surgical Solutions and equally important, solidified our plan to accelerate growth in this business in 2026 and beyond. And in Restorative Therapies, we delivered our highest organic growth in the last 7 years, thanks to the excellent execution of our great team and the powerful impact Exogen has on patients' lives. Turning to our second focus area, expanding profitability. We drove nearly 150 basis points of adjusted EBITDA margin expansion compared to 2024, surpassing our goal to expand our adjusted EBITDA margin by 100 basis points. This illustrates our capability to build our profitability by leveraging the combination of strong organic revenue growth, our peer-leading gross margin and consistent operational efficiencies. Expanding our adjusted EBITDA margin to a level at or above many of our peers gives us the ability to invest in our significant growth opportunities in 2026, which we believe will accelerate future revenue growth. And with respect to our third focus area, we ended the year by generating nearly $75 million of cash from operations, accomplishing our goal to nearly double cash flow from operations compared to the prior year. In addition, we refinanced our term loan, which enhanced our liquidity and drove interest expense savings in the second half of the year that we expect to continue throughout 2026. Overall, 2025 was a pivotal year for our company and reflected our substantial advancements with our portfolio, execution and financial performance. Next, I would like to highlight the 3 objectives we are prioritizing in 2026. First, with a strong financial foundation established, we are very focused on accelerating our growth drivers through targeted and disciplined investment. Second, as we significantly increase investments to accelerate future growth, we aim to drive profitability at a pace exceeding revenue growth. And third, we look to continue to strengthen our already robust cash flow, which in turn will enhance our capital allocation optionality. Let me expand on each objective, starting with revenue growth. We remain focused on driving above-market growth across our core business, led by our durable and very profitable HA franchise, which generates profit to invest in and accelerate our future growth drivers of PNS, PRP, ultrasonics and our international business. In 2026, we plan to allocate approximately $13 million of incremental investment towards these exciting growth drivers. Investment across these businesses includes expansion of commercial resources, evidence generation to highlight the clinical and economic benefits of our technology, stronger marketing to raise awareness of our clinically differentiated portfolio and continued R&D innovation. Let me provide additional context on these 3 investments -- on these investments across our 3 businesses. First, within our Pain Treatments business, we will be investing in both PNS and PRP. Our PNS platform will receive the largest share of the incremental investment, given the rapidly expanding market, our highly differentiated technology and the enormous potential of this business. This resource allocation strategy is supported by our successful pilot launch and positive feedback from physicians and patients as they see the benefits of our innovative technology. During the pilot launch, we gained positive traction with both our trial and permanent solutions and collected valuable insights. The learnings from the pilot launch enable us to invest aggressively in 2026 in a very targeted and measured way to maximize the growth of this business in 2026 and over the coming years. Mark and I have spent time in the field and witnessed firsthand the positive impact that our PNS technology has on patients' lives. Our interactions with a wide variety of customers and patients have made us even more confident that our PNS business will become a major growth driver for Bioventus given the power, size and ease of use of our differentiated technology. We're also excited about PRP following its successful pilot launch. As a reminder, we are leveraging our existing HA commercial team for PRP, so there is less incremental investment required for this growth driver. Again, the market feedback from our pilot launch has been positive about our differentiated technology and the benefits for both physicians and patients. We believe the combination of PNS and PRP will provide a minimum of 200 basis points of growth this year with further acceleration in 2027. Shifting to our Surgical Solutions business, where ultrasonics will receive a disproportionate amount of our incremental investments considering the size of the market, the unique benefits of our technology and our increasing ability to make our solution the standard of care. In 2026, we plan to invest aggressively in marketing to raise awareness and medical education to train surgeons earlier in their careers and in sales expansion in targeted areas. We will also continue to support the growth of our excellent bone graft substitutes technology by raising awareness of our distinct clinical and economic value proposition. And with respect to our Restorative Therapies business, we will continue to support the business with targeted investments in 2026 and maintain our renewed focus and disciplined execution following a very successful 2025. Finally, within our International segment, we plan to make significant investments across Pain Treatment, Surgical Solutions and Restorative Therapies given the untapped growth potential in front of us. I recently attended our international sales meeting and came away even more confident that our international business is well positioned to become a key growth driver for Bioventus. We now have a targeted growth plan, new structure and capabilities and a highly energetic team that is very focused on driving excellent execution in 2026. Before I turn the call over to Mark, let me briefly touch on our other 2 key objectives for 2026, earnings and cash flow. Mark will share more details on both during his section, so I'll just provide the headlines. We remain committed to increasing our earnings and strengthening cash flow even as we accelerate investment in our growth drivers. We expect earnings growth to outpace revenue growth, driven by our peer-leading gross margin, disciplined resource allocation and our interest expense savings. Given our substantial progress over the past few years in raising our EBITDA margin, we believe the best way to maximize shareholder value is to prioritize greater investment in our future growth while maintaining an EBITDA margin of approximately 20% for 2026. We believe our strong business model gives us the flexibility to invest more aggressively in 2026 to accelerate our future growth and the ability to expand our margins as soon as 2027. And we believe this combination of accelerating growth and margin expansion will create significant shareholder value. And with respect to our third objective, as our increased earnings outpaces revenue growth, we expect it to contribute to an increase in cash flow, which will create increased capital allocation optionality. In the near term, we will continue to prioritize strengthening our balance sheet by using our strong free cash flow to further reduce debt. In conclusion, thanks to the strong execution of our team, we have transformed Bioventus and created a strong foundation. It's unusual for a company our size to consistently grow above the market while simultaneously increasing its investment in growth and expanding profitability and cash flow. We believe this combination is one of the many aspects that sets Bioventus apart. We are now entering a new stage, confident in our portfolio, growth strategy and investment power to become a $1 billion leading med tech company. Our team is focused, excited and ready for the year ahead. Now I'll turn the call over to Mark. Mark Singleton: Thank you, Rob, and good morning, everyone. Let me begin by saying that I am proud of our team's hard work and dedication to transform Bioventus and significantly improve our financial results over the past few years. After a strong finish to the year, our improved execution has now positioned us to increase investment in our future growth while continuing to strengthen our balance sheet. I'm confident that with continued strong focus and disciplined execution, we will advance our business and create significant shareholder value. Turning to our headline results for the fourth quarter. Revenue of $158 million increased 3% compared to the prior year. Organic growth was 10% after adjusting for the impact of our advanced rehabilitation divestiture at the end of 2024, which was a result of strong performance across Pain Treatments and Restorative Therapies. Revenue growth also benefited from an additional selling day compared to the prior year. Adjusted EBITDA of $37 million was $8 million higher than the prior year and represented an increase of 30%. Again, foreign exchange rates had an unfavorable impact for the quarter, and we incurred an unplanned loss of almost $1 million. For the year, we've absorbed more than $3 million in unplanned impacts from FX rate movements. Adjusted EBITDA margin of 23% expanded 490 basis points compared to the fourth quarter of last year. This was the result of higher revenue, improved gross margin and disciplined spending. And adjusted earnings were $0.24 per diluted share for the quarter. Now let me provide some additional commentary on our quarterly revenue. In Pain Treatments, we continue to see the second half acceleration that we previously communicated as revenue advanced 15% in Q4. Growth in HA benefited from strong volume growth in DUROLANE and recent account wins from earlier in the year. Next, Surgical Solutions revenue grew by 3%. Results in Ultrasonics were impacted due to a tough comparison to the prior year for capital sales, which was an all-time high. To give you a sense of the tough comparison, generator revenue in the fourth quarter this year still represented our third highest total ever. For the year, we exceeded our plan for capital sales, which provides the foundation to accelerate disposable growth in 2026. Growth was also impacted in our International segment due to the timing of distributor orders. Shifting to Restorative Therapies. Revenue declined 26% compared to the prior year due to the divestiture of our Advanced Rehabilitation business. Excluding the impact of the divestiture, organic growth was 10% as the Exogen team delivered another strong quarter to close a remarkable year. Finally, revenue from our International segment was unchanged compared to the prior year, while organic growth climbed 10%. For the year, our International segment grew 11% organically as our new team delivered on its target of double-digit organic growth in 2025. We believe this positive momentum can continue given the talent additions made throughout the year, market expansion opportunities and improved commercial execution. Moving down the income statement. Adjusted gross margin of 76% was 180 basis points higher than the prior year period due to improved product mix and favorable comparison to the prior year, which more than offset the impact of tariffs and foreign exchange rates. Adjusted total operating expenses and R&D expenses declined by $2 million as increased investment was more than offset by direct expense savings related to the divestiture of our Advanced Rehabilitation business. Now for additional detail on our bottom line financial metrics. Adjusted operating income of $33 million increased $7 million compared to the prior year. Adjusted net income of $20 million increased $1 million compared to the prior year. This growth is the result of our increased gross margin, decreased operating expenses and lower interest expense, which was offset by higher tax expense. Now shifting to the balance sheet and cash flow statement. Consistent with our planning assumptions, we generated significant cash flow for a third straight quarter. Cash flow from operations totaled $38 million, nearly doubled compared to the fourth quarter last year. The stronger cash flow was driven by higher profitability, lower interest expense and a reduction in inventories. As Rob mentioned, we achieved a full year objective of nearly doubling cash flow from operations, delivering a 92% increase for the year. We ended the quarter with $51 million in cash on hand, $294 million in outstanding debt. During the quarter, debt decreased $29 million as we repaid the borrowings on our revolving credit facility. As a result of the lower debt outstanding, our net leverage ratio declined to below 2.5x at the end of the quarter. We are confident our projected strong cash flow and increase in adjusted EBITDA will drive our net leverage well below 2x by the end of 2026. We believe this reduction in our net leverage will drive additional interest expense savings and enable greater optionality for future capital deployment. Finally, let me lay out our 2026 financial guidance and provide some additional color on our guidance for the year. Based on current business trends, we expect net sales to range from $600 million to $610 million. In terms of quarterly phasing, we expect our first quarter revenue growth to be below our implied guidance range, at which point we believe it will accelerate in Q2 and the second half of 2026 as our PRP and PNS investments result in a more meaningful contribution to growth. First quarter growth is expected to be impacted by 1 fewer selling day than the prior year and a rebalancing of HA distributor inventory levels given the very strong fourth quarter results. For the year, we expect adjusted earnings per share of $0.73 to $0.77, which represents growth that outpaces our revenue growth. This demonstrates strong earnings expansion while making significant incremental investments in our growth drivers. Finally, further demonstrating the strength of our business and our momentum, we project cash from operations to range between $82 million and $87 million, an increase of approximately 10% to 17%, driven by higher operating earnings and lower interest expense. In line with the cadence established in prior years, we expect revenue and adjusted EBITDA to be the lowest in the first quarter of 2026 and to be the highest in the fourth quarter. Our guidance does not assume additional impact from the U.S. dollar fluctuation for the year. In closing, Bioventus has solidified its foundation, and we are now at an inflection point to invest in our 4 growth drivers to accelerate future revenue growth, deliver increased profitability and strengthened earnings power and generate significant free cash flow. We believe this is a powerful combination as we strive to create increased value for our shareholders. Operator, please open the line for questions. Operator: [Operator Instructions] And our first question for today will come from Chase Knickerbocker with Craig-Hallum Capital Group. Chase Knickerbocker: Congrats on the impressive execution to finish 2025 here. I wanted to start in pain. You've kind of far exceeded kind of what we had modeled there in Q4. I wanted to get a little bit more color. I just throw out a couple kind of quick questions on pain. So just any growth contribution year-over-year from price? And then some thoughts on kind of GELSYN and SUPARTZ's contribution to growth. Was it positive? Was it negative? And clearly, it looks like double-digit during growth, but can you just give us a sense of kind of underlying volume, too? Robert Claypoole: Chase, this is Rob. Thanks for the question. Yes, maybe I'll start by saying we have a great Pain Treatments business. And of course, it starts with HA, saw that again in the fourth quarter. Knee osteoarthritis isn't going away. It has favorable underlying demographics. And as you know, HA is a very trusted therapy in this space, and we believe we set ourselves apart competitively with our clinical differentiation and broad private payer access and significant commercial strengths. And we saw that again in the fourth quarter. I think it's another example of how this business over the long term generates durable, very profitable growth for us. So yes, in the fourth quarter, strong performance by the team. It was a great job. It's in line with what we signaled to you that we'd see a back half of the year acceleration. And of course, that's driven always by account wins and market expansion in general. It was also aided to a small extent by selling days and distributor dynamics. So even more positive than what we saw -- than what we expected. As it relates to price volume, our business continues to be driven by volume. We're focused on both, very intentional about both. But as it relates to the performance that we saw, highly driven by volume and saw a good performance across the portfolio there. I may -- I'll just mention one more in the last part of what you said, which was on DUROLANE. Yes, with the strength of DUROLANE for us and the continued shift in the market from multi to single injection, as you would expect, DUROLANE is what led the performance for us. Chase Knickerbocker: Got it. And maybe just on the '26 guide, can you give us a sense for kind of assumptions by segment as far as how you kind of come out on the top line versus contribution for growth by segment? Mark Singleton: Yes. Thanks, Chase. This is Mark. When you kind of walk through the portfolio, again, really strong fourth quarter, proud of the results that we delivered in fourth quarter and the turnaround that we've done over the last few years. When we look at our growth for 2026 -- in 2025, Exogen had a really strong year. So from that perspective, we look for the Restorative Therapies segment to be low to mid-single-digit growth in 2026. From a pain perspective, we really look at that as our continued execution across the different pieces of our portfolio within that. And we'd expect mid- to high single-digit growth in the pain portfolio. And then from a surgical perspective with our strong ultrasonic technology that we believe is ability to really change the standard of care in that business over time that we would expect to have double-digit growth in that portfolio in 2026. Chase Knickerbocker: And then just one last one for me, guys, if I can sneak one in. Just as it relates to kind of pain for 2026, obviously, exiting the year on that strong quarter and guide kind of implies a step down, inorganic growth for the HA business that gets you kind of closer to market growth rates. Can you just kind of walk us through kind of why that deceleration in organic growth in the first half of the year from kind of the strong Q4 performance? And just maybe walk us through what in the market is kind of causing that expectation from you guys? Robert Claypoole: Yes, sure. I'll take that, Chase. So in 2026, we expect to grow our HA business above the market again, and we anticipate that growth to be less than 2025, partly influenced by the selling days in Q1 and normalizing inventories, but mainly because of our very intentional approach to continuously play the long game and to go after business that is accretive to our profitable growth. That's the main driver. And we've done that and shown that for years with our durable profitable growth in this business. And it's important for us because we're leveraging that profitable growth to fund our exciting future growth drivers, 2 of which, as you know, fall into our Pain Treatments business with PRP and PNS. So that's really the key, some contribution from selling days and normalizing inventories, but really our intentional approach to go after profitable growth. So we feel good about HA and our Pain Treatments business overall for 2026. Operator: Your next question will come from Mike Petusky with Barrington Research. Michael Petusky: Yes, nice finish to the year. So I guess, Mark, on the -- you guys sort of alluded multiple times to the -- in terms of pain and maybe some favorable order timing, it seemed like distributor dynamics, et cetera. Is there any way to quantify how much sort of, I guess, tailwind you got just from sort of favorable order timing in the quarter? Mark Singleton: Yes. Thanks, Mike. Appreciate your question. From an order timing perspective, really selling days was really favorable to us in Q4. So that helped us a little bit overall from the -- as Rob said, a little bit higher growth than what we had expected. Some of the distributor dynamics in Q4 probably helped us $2-ish million, maybe a little bit higher overall, and that's a little bit alluded to when we look into Q1, that will be our lowest growth from an overall year perspective. So as we see some of that move down after Q4. And so those are really the 2 main drivers of that. Michael Petusky: Okay. And then just sort of one more, I guess, maybe a couple of questions within one more category. In terms of PNS, you guys referred to learnings during the pilot phase. And I'm just curious, what were your learnings in terms of -- is it the trial lead? Is it as important as I think you guys had believed it was? Is TalisMann getting favorable reception? Like what have you guys learned? And then second part to that, I guess, is -- I may have missed this, but are you guys reaffirming the 200 basis point bump from PNS and PRP for '26? Robert Claypoole: Thanks, Mike. Yes. First on the PNS pilot, there are a number of things that we were seeking to learn during that pilot, and it was very successful from that standpoint. First is just in terms of our differentiated technology. It's you always gain additional insights once you go into pilot launch. And what we received back was very positive feedback on the power of our technology, the size of it and the ease of use. And all of those relate back to that our peripheral nerve stimulation technology, in particular, our permanent solution is the only one on the market that was designed from the start for peripheral nerves. And so we saw -- but we saw a positive feedback from that during the pilot launch. We expected it, but good to have that confirmed. And then also from a learning standpoint, we plan to scale this business aggressively. And so what we learned during the pilot launch was how to do that most effectively from the optimal resource allocation across that business in terms of where we invest and also the pace at which we should go with throughout 2026 and beyond in order to maximize our success. And then just a lot of learnings around the best way to execute in the market to help patients with our fantastic technology while creating this major new growth driver for Bioventus. So we're really looking forward to that -- all of that playing out as we are shifting here into the full launch and accelerating this year and expected for the years to come as well. Regarding the second part of your question, in terms of the 200 basis points, yes, we reaffirmed that in our remarks earlier that we expect to see a minimum of 200 basis points from the contribution of PNS and PRP combined. Operator: The next question will come from Caitlin Roberts with Canaccord Genuity. Caitlin Cronin: Congrats on the quarter. Maybe just starting with Ultrasonics. How near term are your expectations to build out the neurosurgery and the general surgery parts of the business? And does this require more rep adds from that perspective? Robert Claypoole: Caitlin, yes, our biggest focus for our Ultrasonics business is in the spine space, and that's for a few different reasons. But the most -- the biggest reason is just the significant size and opportunity of that space. It's much larger than neuro in general. And -- but we're also -- we have the technology and the interest with neuro in general because it's already -- the Ultrasonics is already an established standard of care in those spaces, and it lends itself naturally to us accelerating the growth in this business. But the biggest focus and the majority of our investment is going to be aimed at expanding within the spine space. And then was that -- did I cover both parts of your question? Or was there a second part to it there? Caitlin Cronin: Yes. It was just if you required any more rep adds for adding those other indications, but it sounds like the focus is more on spine. So... Robert Claypoole: Yes. But I'll touch on that as well. I mean it is the same sales organization that calls on both the spine space and neuro for us within Ultrasonics. And as we've alluded to a number of times, our 4 growth drivers, including Ultrasonics, are getting a disproportionate amount of our investment in 2026. And with Ultrasonics, we expect that to be in a number of places, including expanding our sales presence. So that will impact, of course, both spine and beyond spine and also increasing our marketing power. We have such great technology, but we need to raise awareness of our differentiated clinical and economic benefits with Ultrasonics. And we're really looking forward to putting more marketing power beyond this business and then doing some other things in terms of surgeon training and evidence and continued innovation. We have a fantastic R&D team behind our Ultrasonic business, and we're rejuvenating some of the investments from an innovation standpoint because we believe we can continue to drive exciting technology that will really help our surgeons and patients in this space. So we will see some of the investment go to Ultrasonics this year. Caitlin Cronin: That's great. And just a quick one on PNS. Any color on the progress to building out the PNS team and cadence to hiring this year? Robert Claypoole: Yes. We're moving fast. We're scaling the business. And again, as I mentioned earlier with Mike, really driving that optimal resource allocation across PNS, and it's with the sales organization, of course, but it's also with the back support that we have, evidence that we're investing in. And as you may have seen recently, we've brought on a new dedicated General Manager for this business, just given the enormous potential that it has. So Megan Rosengarten has joined Bioventus and under her leadership, we're really looking forward to driving it aggressively throughout the year. So we'll see throughout the year an investment in this business across multiple aspects that are required to scale it effectively, not just to drive the growth in 2026, but as we mentioned, we expect that growth to further accelerate in 2027 and beyond. Operator: This will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Rob Claypoole, our CEO, for any closing remarks. Please go ahead. Robert Claypoole: All right. Thanks, everyone, for your interest in Bioventus. Once again, we delivered a solid performance throughout our business in the fourth quarter, and we are confident in our ability to build on our momentum to deliver above-market revenue growth, improve earnings and accelerate our cash flow to create significant shareholder value. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and welcome to the Spire Healthcare Full Year Results for 2025. [Operator Instructions] I will now hand over to your host for today, Justin Ash of Spire Healthcare. Justin, over to you. Justin Ash: Thank you, and welcome, everybody, in the room and welcome, everybody, online. Very good to be here today. If you are joining for the first time, I'm Justin Ash, and I'm the Group Chief Executive of Spire Healthcare, and this is Harbant Samra, our CFO. So we're going to talk you through the results, and then we're going to leave lots of time for questions. So let me start with a review of our strategic progress in 2025, the market context, how we're thinking about 2026 and how we're prioritizing in response. So the results we're sharing with you today demonstrate a resilient performance in the face of significant cost challenges and changes in the NHS commissioning environment towards the end of last year. In response, we focused on consistent delivery of our strategic priorities. Our private focused multi-payor strategy, our transformation program that's delivering efficiencies through standardizing, centralizing and embedding digital and automation, our plan to grow in primary care, an area of accelerating demand and our continuous focus on care quality and innovation to drive an even better patient experience. Together, these priorities allowed us to respond with flexibility in 2025 while strengthening our foundations for the long term. So looking first at the market, we saw 4 key trends last year. The private market, as previously reported, saw low single-digit percentage volume decline for much of '25. However, I'm encouraged that we saw improving momentum in demand, especially self-pay during the second half of H2 as well as continued growth in primary care. However, we experienced significant labor inflation during 2025, driven by the increase in Employer National Insurance contributions. And of course, in the later parts of H2, there was a sector-wide slowdown in NHS volumes as we began to see the start of activity management plans as integrated care boards faced budget-free restrictions. We responded to these trends with focus in line with our strategic plans. Looking first at private patient growth. We ended the year with a return to positive volume growth in self-pay. As I said, I'm encouraged to see that is continuing now. There is no doubt some market effect here as the impact of NHS budget constraints both influence local waiting times and patient sentiment more generally. However, we've also spent 18 months building our efficiency and effectiveness in private patient acquisition and response, including actions to strengthen our brand, our speed of access and our mix. Next, transformation. 2025 was the biggest year of change yet for our business. We drove efficiency, and we delivered our plan of GBP 30 million savings, offsetting rising employment costs. The largest program was transitioning administration for incoming inquiries, bookings, preoperative assessments and self-pay sales into 3 patient support centers. This is already providing a platform to improve patient experience and deliver growth with further benefits to come. We've also been investing in our sites over a number of years, creating an estate which is attractive to patients and those who work there, and this enabled us to lower our CapEx spend in 2025 without compromising on quality. We made progress in primary care. Our clinic strategy is to open sites in new geographies to attract private patients we could not otherwise access, and in 2025, we opened 5, including in Kingston, Wimbledon and Kings Lynn. The larger hospital outpatient clinics generated downstream referrals to our hospitals worth GBP 3 million of EBITDA. We also made 2 small acquisitions of a physiotherapy business and an occupational health business, both of which are performing in line with plan. Lastly, we continued to deliver on our quality strategy, including a focus on reducing average length of stay across several procedures, saving just over GBP 1 million whilst improving patient access and recovery. We are now at 29 surgical robots across the estate, and we added 7 in 2025. These have increased our capacity to provide high-value private care, and they deliver improved outcomes and also contribute to faster recovery times. And our actions underpinned by focus on efficiency and CapEx discipline have resulted in strong adjusted free cash flow growth. I just want to take a moment to unpack some of the actions we've taken to leverage the self-pay opportunity, in particular, over the last 18 months. So I mentioned improving brand scores and marketing effectiveness on the previous slide. Our private focus targeted local marketing strategy is successfully driving demand and conversion in a competitive and predominantly online marketing environment. So if you look at the chart on the right, our latest data shows our brand scores now lead the market. More people are moving from simple brand awareness at the top to the next level direct service consideration. Our unprompted and prompted awareness are now at their highest levels ever of 35% and 80%, respectively. And consideration, which is key, has driven by 6% to 61%, which in turn drove record levels of inquiries to Spire during the year. We've continued to apply AI to optimize our pricing locally to ensure we are as competitive as possible versus our competitors whilst also protecting margin. And since moving self-pay sales and bookings to patient support centers, they are consistently delivering call answer rates of around 95% compared to 60% before we move to patient support centers and therefore, converting more inquiries to bookings and bookings on the same day. And finally, to meet rising demand for diagnostic MRIs, we applied again AI to increase image quality, throughput and capacity in scanners at 21 hospitals, halving the scan times to contribute over GBP 2.5 million EBITDA in 2025 through growth in activity. So all these activities are setting us up well with strong foundations from which to capitalize on the improving self-pay environment. As we look ahead to the rest of this financial year, I just want to take a moment to frame what is happening with NHS commissioning and the related effect in the private market. The NHS is going through a fairly fundamental restructure as it seeks to ensure financial discipline. You're all aware of the system-wide and well-documented NHS commissioning slowdown of both independent sector and NHS elective work, which is impacting hospitals in our first quarter of 2026. Patient demand remains high, but the budget is not there to fund the demand. And as a result, multiple integrated care boards have imposed activity management plans. I should mention that our primary care business is relatively insulated from this given the long-term nature of the contracting there. The net effect is we expect NHS revenue to be down about 25% in Q1. At the same time, as I've mentioned, self-pay is responding, partly a consumer reaction to the NHS slowdown as well as our own actions. And in Q1, we expect around 4% growth in private revenue with self-pay up around 6%. Looking ahead, the NHS financial year resets in April, and activity will undoubtedly bounce back from the lower levels of Q1. We are yet to have firm visibility on what activity plans for the period covering our Q2 to Q4 will look like or how they will be managed. So clearly, that is a material uncertainty for the year. And this should become clearer as commissioning discussions progress in the coming months. But with this in mind, we've developed some scenarios on which to base our 2026 plans for Q2 to Q4. Broadly speaking, these assume significant improvement in NHS activity relative to Q1 as budgets are reset. We've taken a balanced view of continuing NHS budgetary pressures alongside the need to reduce waiting lists. And we also expect faster private patient growth in response. So we also think this is a transitionary period for the NHS as it resets, whilst local relationships between Spire and commissioners remains strong. Therefore, as we look to the rest of 2026, our strategic priorities set us up well to control the controllables, respond flexibly to the market environment, and we will make delivering sustainable cash flow a priority. We will continue to intensify our focus on private payor growth, capturing the momentum we're seeing in self-pay through targeted local investment in marketing and price optimization. The next phase of our development in our patient support centers will further support self-pay inquiries through to conversion, which together with a new website and CRM system will deliver an even better experience for patients and consultants. And we'll continue to streamline hospital operations to make quick access and treatment for private patients a priority. In transformation, we'll continue to deliver more efficiency improvements. Our track record in delivering such programs has led us to accelerate our 2026 savings program, which will at least mitigate the Q1 NHS commissioning impact. In primary care, we've built a strong foundation across multiple services, spanning private GP, occupational health, mental health and physiotherapy. This year, we aim to accelerate integrating these services with our hospitals and leverage our existing base to drive organic growth. We anticipate limited M&A. We're also working on unlocking the opportunity for growth with employers, where the growing impetus behind employee health and productivity gives us a platform to provide a wider range of treatment solutions in addition to traditional occupational health. And we'll continue to open a small number of CapEx-light clinics in new geographies. Finally, of course, we will maintain our focus on care quality that underpins our growth. We aim to maintain or improve our already high ratings from regulators and patient and consultant satisfaction scores. So the Board announced in September 2025 that the company is actively evaluating actions to drive long-term sustainable shareholder value. That review is ongoing. So as part of this review, we're considering a range of potential options, which may include, but is not limited to, a potential sale of the company, value generation from the hospital property estate and adjustments to our operational and strategic plans. There can be no certainty that any offer will be made for the company nor as to the terms of any offer if made. Many of you will already understand that being in this process and therefore, subject to takeover panel rules means there are limitations to the statements we can make today about the strategic review, our forecasts and the assumptions that underpin them. The Board will make a further announcement on this matter in due course as appropriate. In the meantime, as you can see, we continue to focus on executing our existing strategy to grow our healthcare business. The management team and I are relentlessly focused on delivering our 2026 priorities. Finally, I'd like to take a moment to talk about the high standard of care that we provide. This is the foundation for our resilient performance, and I'm pleased to say that in 2025, 98% of our sites were rated good or outstanding or the equivalent by regulators. 97% of hospital patients rated as good or very good with a rise in very good ratings. 84% of consultants rated our care very good or excellent on par with last year and with a small increase in excellent ratings. So this is only possible through the hard work and commitment of our more than 17,000 employees and over 8,000 consultant partners. They have adapted to change as we have significantly transitioned the way we run our business to be more agile and responsive. It required their patience, their input, their professionalism. And I'd like to take this opportunity to thank them profoundly for their collaboration, partnership and professionalism. I've been really delighted to see this professionalism and dedication in action as I and fellow directors have visited sites throughout the year, meeting our DAISY and IRIS award winners for outstanding care and marquee moments such as the opening of our new clinics and the delivery of new surgical robots. Thank you very much, and I'll now hand over to Harbant. Harbant Samra: Thank you, Justin. Good morning, everybody. So I'll start by giving a high-level summary of the financial year. Total revenue for the group has grown 4.5% with hospitals up 4.3%. Underlying this, we saw a strengthening and improving private market, but the NHS business experienced slowing volumes in the second half due to their budgetary pressures. We also saw strong growth in revenue for our Primary Care business. Adjusted EBITDA was up 3.2% to GBP 268.6 million. This was supported by the successful delivery of our transformation savings target as well as price and mix management. These savings helped to mitigate increased cost pressures, a larger element of which related to the rises in National Insurance and National Minimum Wage from Q2 onwards. After deducting depreciation and finance charges, both of which were in line with guidance, the group reported an adjusted profit before tax of GBP 46.5 million, 7.4% down on the prior year. We have delivered our CapEx plan, investing in growth projects and transformation and have done so whilst reducing the overall spend by 30% year-on-year to GBP 78.5 million. As a result, I'm pleased to report that our adjusted free cash flow was up 64.9% to GBP 64.3 million. Finally, ROCE was 8% compared to 8.2% for 2024. On a comparable basis, excluding National Insurance and National Minimum Wage uplift during the year, ROCE increased by 30 basis points to 8.5%. Now turning to our Hospital Business. Total revenue grew 4.3% to GBP 1.5 billion and is reflective of our strategy where we have targeted growth across both private and the NHS. Overall, total volume across all payors was up 1.4%. Adjusted EBITDA for our Hospital Business rose by 3.9% to GBP 258.8 million, representing a margin of 17.9%, broadly flat to last year's 18%. EBITDA would have grown by more than 7%, excluding National Insurance and National Minimum Wage rises. And the GBP 30 million of new cost savings alongside tight management of price and acuity helped to mitigate the cost headwinds. Moving on to performance by payor. I will start with self-pay. Overall, revenue saw a minor decline, but notably year-on-year volume growth returned to positive by the end of 2025. This is reflective of our strategy to target this segment. We have invested in the start of the sales funnel with targeted marketing, and we have made big and important changes to our booking processes, centralizing teams into patient support centers. Bearing in mind the scale of these changes, it was not surprising that we saw some operational disruption early on during the summer. But the centers have now bedded down and are making a positive contribution to our self-pay and wider business. We've also continued to optimize price based on local market dynamics at an individual procedure level, resulting in ARPC growth -- growing by 3.9% during the year. Turning to PMI. The market has remained stable. As we flagged at the half year, insurers continue to manage claims access and issue tenders. Despite this context, we have grown PMI revenue by 3.1%. This is largely driven by our price and mix management towards higher acuity procedures, contributing to above-inflation ARPC growth of 5.3%. Overall, the signs for our private business for both self-pay and PMI are encouraging. Turning now to the NHS. In the second half of 2025, we saw the initial signs of sector-wide action from the NHS, where it slowed commissioning due to budgetary pressures. This was followed by further tightening in late 2025, where certain integrated care boards requested a stop in activity. The result of this was revenue growth for H1 reaching 16.2% before slowing to 6.8% in H2, taking us to revenue growth for the full year of 11.4%. We also continue to target high acuity procedures and thereby achieved a 3.2% uplift in average revenue per case, slightly ahead of the NHS tariff uplift of 3.1%. Orthopedics continue to account for over 60% of all NHS admissions. Moving on to our Primary Care business. Revenue increased 7.4% to GBP 133.7 million, driven by organic and new contract growth across talking therapies and occupational health. After including our recent acquisitions of Acorn and Physiolistic, revenue growth was 10.5%, and their revenue and profit contribution were in line with plan. Adjusted EBITDA for our Primary Care business as a whole was GBP 9.8 million, which whilst at a headline level is a reduction, the core business has grown by more than 5% year-on-year. Two of the 3 larger new clinics are already profitable. More importantly, these clinics have also generated GBP 3 million in EBITDA through referrals to our hospitals, which is encouraging given the relatively short period of time that they have been open. Looking at overall group EBITDA delivery, we can demonstrate the important role that the transformation savings played in our full year outturn with the business delivering on those things in our control. In addition to one-off cost headwinds, which includes National Insurance and Minimum Wage increases, there was also underlying cost inflation, half of which related to salary uplifts. Our transformation savings have mitigated around 2/3 of this cost inflation, which together with price and mix management has underpinned EBITDA growth. Turning to profitability. We incurred GBP 27.9 million of adjusting items with statutory profit after tax declining to GBP 17.2 million, stated after the impact of National Insurance and National Minimum Wage rises, partially mitigated by a reduction in taxation. This benefit arose from a review we initiated over qualifying capital investments for tax deductions and covers a number of years. 2025 was a significant year for our transformation program. As a result, the adjusting items included around GBP 13 million in one-off costs associated with delivery, covering, for example, redundancy costs and setting up the PSCs. Adjusting items also included certain fees linked to the ongoing strategic review of around GBP 7 million. Moving on to cash flow. We have grown adjusted free cash flow by around 65%. This outcome evidences our disciplined approach towards CapEx investment. We continue to focus on growth and returns with CapEx increasingly directed towards expanding the private patient business. Alongside this, our transformation program delivered GBP 30 million in savings, helping to support the overall strong cash flow outcome. Now a deeper dive into CapEx. Total CapEx was GBP 78.5 million, which is 30% lower than last year. We have made significant but targeted investment in our estate over the last few years. As a consequence of this, we have dealt with a backlog and importantly, have become a much more modern and attractive offering for private patients, which is clear from their feedback. This strategy has meant that in 2025, CapEx as a percentage of revenue decreased to 5% compared to 6% to 7% in prior years. Of our total CapEx outlay, GBP 50 million was directed towards our hospitals for maintenance and growth. We also invested GBP 20 million supporting our transformation program and GBP 8 million in primary care, which included new clinic openings. For 2026, we expect the underlying split across these categories will follow a similar pattern to that for 2025. Moving on to the balance sheet and returns. We have maintained our leverage at 2x, and this is stated after acquiring the Acorn and Physiolistic businesses during the year. We have also extended the maturity of our bank facilities by 18 months to August 2028. The underlying terms are unchanged. The strength of our balance sheet is further underpinned by the quality of our freehold base, where we have a valuable portfolio of 19 hospital properties. We know that this -- we note that the market appetite for healthcare assets remains strong. Having this asset base gives us a wide range of options in terms of strategy and generating future shareholder returns. Our ROCE was 8%. However, I will highlight that after adjusting for the impact of National Insurance and National Minimum Wage rises, our ROCE would have been 8.5%. Moving on to the outlook. As Justin has mentioned, private patient momentum has continued to improve in the first months of 2026. For the full year, we're expecting percentage growth of mid- to high single digit year-on-year. NHS volumes remain a material uncertainty across the sector and activity from April or the start of the commissioning year has yet to be agreed. As a result, there are a range of scenarios we are planning for, which means we are targeting an adjusted EBITDA outcome for 2026, which is broadly in line with 2025. Our base planning assumption is for Q2 to Q4 NHS revenue to be down between 5% and 10% year-on-year, a significant improvement versus the Q1 outturn, which will be down around 25% year-on-year. We think this planning assumption is plausible in the context of a new budget and commissioning year. And as a reminder, the provisional NHS tariff for 2026 is close to an annual uplift of 0%. On savings, we have an existing GBP 30 million target. Over half of this is already underpinned by rollover from programs deployed last year alongside head office restructuring that took place in January. We are planning to deliver ahead of this target to at least offset the impact of the Q1 NHS shortfall. Primary Care is expected to deliver strong organic growth. Finally, across all scenarios, we will continue to be disciplined around the deployment of CapEx, leading to lower CapEx as a percentage of revenue and maintain our focus on generating free cash flow. Thank you. With that, I'll now hand back to Justin. Justin Ash: Thank you, Harbant. Okay. So I'm just going to give a short summary, and then we will go to Q&A. So today's results demonstrate a resilient performance against the backdrop of increased employment costs, combined with the changes in the NHS commissioning environment. We've used the levers at our disposal to respond effectively. We focused on growing private and particularly self-pay. We delivered our biggest ever year of transformation, including our planned GBP 30 million in savings. And we improved cash generation while maintaining care quality, optimizing our pricing and exercising discipline across our activity mix and investments. In doing this, we have created a strong platform for improving patient experience and growth. So looking to the rest of 2026, we'll remain focused on using the levers of our strategy to deliver sustainable cash flow. We will respond to NHS uncertainty by growing private patient revenue, building on encouraging early momentum in self-pay, and this will be enabled by targeted investment and further improvements in our patient support centers. Actions are already underway to accelerate transformation cost savings this year, which will at least offset the Q1 NHS commissioning impact and more. Our transformation program will continue to create greater consistency and ensure that we maintain and improve our high-quality ratings. In Primary Care, we intend to focus on organic growth and integration in the year ahead. We'll leverage our multiservice platform, step up our engagement with the employer market and build on the momentum from our clinics to continue to drive new referral pathways into our hospitals. In all that we do, we will remain disciplined in deploying CapEx towards higher returning investment and benefit from our already well-invested estate. So we have a solid foundation to deliver sustainable returns as we continue our evolution to meet the U.K.'s growing healthcare needs. We remain excited by the private market opportunities ahead and confident in the medium-term outlook for Spire Healthcare. Thank you very much for listening. I'm now going to go and join Harbant and take Q&A, and we'll start with questions in the room. Thank you. Justin Ash: Question here. Can you please state your name and your organization? Sebastien Jantet: It's Seb Jante from Panmure Liberum. So 3 questions, if I may. I'll just start off with one on PMI. Obviously, kind of all of the operators are under pressure from NHS kind of volumes. And I'm guessing that, that kind of is flowing into the PMI kind of discussions on pricing. And I'm just wondering how those are kind of panning out? Are you finding it harder to get decent price increases through? And also in terms of the PMI, are they starting to ask you for broader offerings that go around physiotherapy and some of the more primary care stuff as part of that? Or are they still seeking that from other vendors? Justin Ash: Okay. So I'll take that. Thank you, Seb. So PMI, so I think we're pleased with our relations with PMIs. I think things have moved forward from the last time we talked. I think we think we'll see some of the impact in the NHS as well beginning to filter through in PMI as well. And yes, we have very broad -- Peter may add, but we have very broad strategic discussions. It depends a bit by insurer, but the broader offering is clearly where insurance is going. I mean patients generally by way of backdrop, one of the reasons for our primary care strategy is younger patients, in particular, are accessing both self-pay and PMI and they're accessing it typically through Primary Care. You can see insurers are interested in that, and we have very strong engagements with them on that. So I think overall, a pretty constructive environment. Peter, would you be happy with that? Peter Corfield: Yes. Justin Ash: Yes, it's a pretty constructive environment at the moment. Sebastien Jantet: Second question is on I guess, more the shape of the NHS volumes as the year kind of progresses. So we're kind of sitting here in March. You're still not really clear on NHS volumes and what they might be. Is there a risk that the NHS volumes don't end up being equally spread through the year, which would obviously cause you guys a headache in terms of costs and kind of -- and capacity? Justin Ash: Yes is the answer. I mean, first of all, we can't see the future here. And by the way, at this time of the year, we never quite know what it will be. It's just there's a bit more uncertainty than there was. So what are the scenarios around NHS? So I think we've picked a plausible scenario because they've got 2 pressures. If you read the press, let's do NHS generally, you can read a lot about the imposition of enforcement around deficits. So the NHS has clearly decided that it wants financial discipline. And that's the backdrop to this. I mean, just to be clear, we've not had a single message about relationship with the independent sector. This has been about financial discipline and therefore, looking for places to impose restrictions where they can to hit the fact they're under budgetary pressure. And we work with commissioners on that, and that's clearly important for the NHS. On the other hand, there's clearly pressure on commissioning boards where their waiting list get too high. So what we've seen in the first quarter is whilst we are down 25%, we're also seeing and a little bit more of what our spot contracts where a commissioning board of particularly a trust calls up and says, we've got to wait in this problem. Can you help us with this cohort of patients, okay? So I suspect the year is going to look a bit like that, which is overall, we think the effect will be what we've described, which is down mid-5% to 10%, but it will probably be made up of indicative activity plans, which are topped up with spot work, okay? Whether that will be lumpy during the year? I don't know. I really don't know. But remember, it resets 6th of April. So what will definitely happen is the volumes will go up. We know this partly because we've rebooked patients, right? So we've rebooked patients we had to cancel. So it will pick up. Will it bob around? Probably. But I think it's worth saying we do talk to local commissioners all the time. Whilst this may look like a big fracture at the very top level, locally, we're talking to commissioning boards and trust daily. Our hospital directors and our NHS commissioning team have super strong relationships with them. So as far as we'll have visibility, this team will be on it. Is there anything you'd add to that, Peter? Peter Corfield: No. Justin Ash: Is that a good description? Yes. So that's pretty much what it looks like. So maybe, but I think overall, our assumption is the numbers we've given you today. Sebastien Jantet: And then last question is just on self-pay. So obviously, it's always been a competitive area, but it's kind of even more competitive now that everyone is trying to make up the backlog, the kind of hole in the revenue line from the NHS. What makes you think that you're going to be able to outperform and accelerate in that market versus your peers when presumably they're all investing in this space as well and all pushing hard there, too? Justin Ash: So I think -- so if you look at our market shares locally, which we spend a lot of time looking at, we held share over the last couple of years, okay? And the truth is in the last couple of years, we weren't hugely differentiated in the way we brought ourselves to market, okay? I think we're differentiated on quality. But in terms of our business processes, they were quite local. They were a bit clunky. We had good teams, but we had 38 separate hospitals, okay? So what have we done? We've done quite profound research into what really matters to self-pay patients in particular, okay, which is being able to get through on the phone and being able to get booked in on the day they call and ideally get booked in within 2 days for their first consultation. If in particular, their MSK patients, they want to be able to get their MRI within 2 days or on the day that they're there. And that all leads to a high likelihood that they will then have their admission with us, okay? So what do we do? So that's one of the main reasons we put patient support centers in place because we've gone from -- we were holding share when we were answering 60% of calls. We're now answering 95% of calls, number one. Number two, one of the things which has happened because of patient support centers is that for the vast majority of consultants, we now are able to book directly into their diaries. And therefore, we can get people booked in quickly. And we can start tracking a KPI of how quickly people got their outpatient deployment as apart from it being an aspiration. And AI, which I mentioned a couple of times, is an interest and AI is actually delivering results in the business. Putting that in MRIs means that we literally have every day empty slots in our MRIs. We're able to deal with our underlying volume. But because we've got nearly 50% more capacity, it means that literally you can walk down the corridor and get your MRI if you need scanning. The hospitals have worked really hard on managing outpatient and theater availability. So I think the answer is we have lined ourselves up to be super effective in the things that matter to our patients as well as then delivering them a really outstanding service. And also, I would be able to say, I think we've probably got the best invested estate because we've been investing consistently. So when they come here, it looks really good and that matters to patients. So I think we've got all those things in place. And Harbant about to add something. Harbant Samra: I was going to say, I was going to go on the estates point as well, but I'll add a little bit more color. The look and feel of our estates, I mean, it's visible to anybody, right? It is a more competitive market. I agree with what you said. But in terms of the look and feel of our estates and our facilities, we are very proud of what we've achieved. We've also made a lot of tactical investments to support our consultants. So don't forget how important they are in that conversation as well in terms of where the patient is going to go as well. So a lot of the robotics, for example, that was done with that in mind. So we're moving confidently on that basis. Justin Ash: And then the final part is the marketing. We have really invested under Peter's leadership in super sophisticated digital online marketing. We have a partnership with Google. We know we're getting better hits. We know we're getting better flow through. And we're going to bring them -- our website is okay, but it's not brilliant. We're going to bring in a new website this year, which will make that patient journey much easier. And as it gets up and running, one of the ways you win, as you know, online is we're making your content super attractive so that people search on your site, okay? And that's before the CRM system, which will integrate across all patient types and between primary care and secondary care in time. So I think the answer is because we're super, super focused on this, and we've been working on it for the last couple of years. Kane Slutzkin: It's Kane Slutzkin from Deutsche. Just on the NHS sort of improvement through Q2 to Q4, what are you guys assuming for traffic there? Because I know usually, we sort of see a little uplift late on 0 is obviously pretty low. So just wondering what you... Harbant Samra: 0 is pretty low. You don't need me to tell you that. But... Kane Slutzkin: What do you -- is that in the 5% to 10%. Is that... Harbant Samra: Sorry. That is in the 5% to 10%. So the way to look at it is that they issued their consultation in December. It's not really a consultation. The only reason it will change if there is an exceptional pay award. They've already done their pay award recently. I think they -- was it 3.3%. 3.3%. So I mean that's essentially already factored into the tariff. There is an opportunity for us to continue to do what we've done in the past, which is to tap into higher acuity. And that's what we'll certainly seek to do in this environment if tariff is so, I guess, underwhelming. But the opportunity to outperform 0%, I mean it's not a great deal, but we will obviously do our best. Justin Ash: And by the way, Harbant showed it. We have really focused on hips and knees, and we have focused on higher acuity. And that continues, by the way. So that might give us a little bit of upside from mix on there. Although once you're at 60%, there's obviously a limit to how far you can go, but that focus continues. Kane Slutzkin: All right. Just on energy prices, I know we chat about it earlier, you're saying you're sort of hedged into Q1 now or Q1 '27... Harbant Samra: Next year and even beyond that. Kane Slutzkin: Yes. You were hedged partially for '26. I'm just wondering when did you initiate this? Harbant Samra: So it's a rolling arrangement we have. Most of that was fixed back in about October and November. We take a pretty conservative approach towards doing it. So all of our energy needs are now under fixed price arrangements through to the end of Q1 2027 and then it tapers down to 50% by the midyear. But clearly, we're watching developments closely, and we'll take more action to continue to work out whether we want to increase that sooner rather than later. We'll see. But we're in a good place. Kane Slutzkin: Great. And just finally, on the property, you guys usually do your sort of annual reevaluation. I assume it's still 1.4. Is there any sort of comfort -- I don't know, maybe you can't actually comment on this part of the review, but not... Harbant Samra: I'm looking at IDC. Justin Ash: The lawyers have all poked up in the call. Kane Slutzkin: Can ask just last one on the Primary Care. You mentioned you expect very little M&A this year. It's obviously quite a fragmented market. Is that just because you've got enough sort of going on? Justin Ash: So we may do a little bit. But having put in a number of businesses, the next stage is to integrate it because if you're doing M&A, it's really important you've got a platform, which is aligned to do it. So in order to then accelerate M&A in due time, we want to get the businesses which we've got, which are performing well fully integrated. This is partly to do with also bringing in systems, so CRM. So we have visibility. So one of the things that we don't have today is easy visibility from going into a clinic and then booking through to a hospital. We want to make that super easy because in order to have really successful M&A, you've got to be able to have all your systems set up smoothly to plug in. Secondly, we think there's quite a lot of organic opportunity that we're going to focus on it. So it's not a change of strategy. It's just we've got plenty to deliver within primary care. It's doing very nicely. We're just going to double down a bit on our organic opportunities for the next few months. Natalia Webster: Natalia Webster from RBC. Just a follow-up on the private side on PMI and self-pay. You've talked about sort of the various factors that give you confidence on improvement there, but just curious on what you're expecting in terms of the mix of improvement in volumes versus improvement in pricing and mix as well? And then secondly, on cost efficiencies, you say you're tracking ahead of plan of the GBP 30 million in 2026. While some of that will come from annualization of savings in 2025, are you able to talk a bit more on your plans for 2026 and where you're seeing those additional cost savings? Justin Ash: Sure. Thank you. Well, I would say on private, we won't go into the complete plan of volume versus mix, but we are starting to see volume improvement. So it's not just mix and price. We're definitely seeing volume improvement, particularly in self-pay, which is very encouraging. So I think that's the answer on that one. Harbant, cost efficiencies? Harbant Samra: Cost efficiencies. So how we're thinking about '26, I mean, the way I'd do that, Natalia, is break it down into probably 4 buckets. A big chunk of what we're going to deliver in 2026 is actually already linked to the action we took in 2025. So there's an annualization effect from all the actions we took last year. And if you recall some of the things we did in the middle of last year, the restructuring, et cetera, you'll see the full year impact of that. And then just more generally, we've also taken action in the center early this year in January, where we restructured some of our teams. So over half of the savings that we're currently targeting for this year is really underpinned by the actions we've taken. The other 2 buckets, the way I'd look at those is that we've clearly got our transformation activity, which is underway. So digitalization, for example, and that forms part of the number, which is more than GBP 30 million. Again, I can't give you a specific number, but it's more than GBP 30 million. And then lastly, we brought forward some of the operational efficiencies that are on our list for maybe back end of this year and into next year to help to underpin the overall savings target, which means that we can say with confidence we've got enough there to offset at least or even more than the NHS shortfall during Q1. Justin Ash: Thank you. Any other questions in the room? Let me just check first if there are online questions. Operator: Yes, we have a question from David Adlington. David Adlington: Can you hear me? Justin Ash: We can. David Adlington: Firstly, maybe just the government focus on reducing waiting lists. Obviously, I would have thought the private sector would be a key part in addressing those waiting lists. In the short term, at least it seems to have swung around to a bit of hiatus on the NHS commissioning side. I suppose a big picture question is what's more important to the government at the moment, budgetary pressures or waiting list? And do you expect that to change between now and the next election? And then a second one, just want to get your thoughts on the bone cement shortage in the U.K. and whether you thought you might have any impact from that? Justin Ash: Okay. So on the first one, I think you may have to ask the government if there's any. But look, seriously, it's obvious that financial discipline in the NHS is top of the agenda at least this year. That's clearly the case. That's what's happened. It's also clearly the case that waiting lists are of great importance. And waiting list comprises 2 things, right? There's 7.4 million people. Of that, just under 6 million are waiting for a consultation diagnosis and just over 1 million are in treatment, okay? Those over 1 million people in treatment will be very top of mind for the NHS. I know they are. And that's why we've given a balanced guidance because that pressure won't go away. There is financial pressure. I suppose our guidance says we think the financial pressure slightly outweighs the waiting list pressure. I think our view is that in the medium term, that waiting list pressure will be compelling for any government. And that's why we say we think this is a transitionary period. So I guess we've given our view, but I don't have an official view from anybody else. You'd have to talk to government or NHS. In terms of bone cement, we have multiple suppliers. We found alternative supply just to top up from that supplier, and we just carried on unaffected. Operator: Thank you very much. We have no further raised hands online. So I will hand back to Justin. Justin Ash: So I think we've got another question in the room, Seb. Sebastien Jantet: I'm going to try this one and see if you answer it. So just looking at how the first half might look versus the second half in terms of kind of profit splits. Normally, I'd be quite comfortable having a crack at it, but there's obviously quite a lot of moving parts going around this year in the first half and the second half. So I'm wondering if you're able to give us any sense of what that might look like in terms of shape of the first half versus second half. Harbant Samra: Yes, happy to. At a headline level, I would expect to be slightly more weighted towards the second half. One of the reasons for that is whilst we're confident about delivering all the savings, clearly, some of those will appear in the second half. But again, there are a couple of other pretty significant moving parts for NHS, the question you asked earlier in terms of the lumpiness of the commissioning will also determine how that weighting plays out. But that's what I would expect. Justin Ash: Anybody else for questions? Okay. Well, thank you so much for attending both in person and online. Thank you for your questions, and we'll close the session. Thank you very much. Have a good day.
Peter Nyquist: Hi, and good morning, everyone. My name is Peter Nyquist, I'm heading up Investor Relations here at Elekta. With me here in Stockholm, I have our CEO, Jakob Just-Bomholt. I have our CFO, Tobias Hagglov, who's doing his last quarter as well as our incoming CFO, Klara Eiritz, who will not present today, but she will be available here in the studio. Tobias and Jakob will present the result, as always, for the fiscal third quarter -- fiscal year 2025-2026, third quarter. We will start the presentation with Jakob giving away the takeaways from the third quarter as well as an update where we are in the strategic execution and the change of operating model and the cost savings related to that as well. Tobias then will talk about the financials and the Elekta's outlook. After presentation, as always, we will have time for questions and answers. But before we start, I would like to remind you that some of the information discussed on this call contains forward-looking statements. This can include projections regarding revenue, operating result, cash flow as well as product and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. With that said, I would like to give the word to you, Jakob. Please, Jakob. Jakob Just-Bomholt: Thank you, Peter. Thanks, and welcome to all of you. So before I get into the quarter, let me just share some overall reflections. It's a solid quarter, but Elekta, we still are not trading at what I believe is the long-term potential of the company. So that calls for a clear strategy. It calls for decisiveness. It calls for execution, bias to action, bold decisions. And I would say we are on that journey. I would say, specifically related to the change in our operating model, I really appreciate the support from leaders within Elekta, Elekta colleagues. We're changing a lot. We are changing the structure. We are changing layers. We are letting go of people who are highly valued and deeply competent. But we had to change coming back to my point that we are not trading at full potential. But the support in getting there has been spectacular. And as I'll outline, essentially by the end of this week, we are running consultations in U.K. We will be concluded with the change we outlined end of November. That's very good. And then big thanks to you, Tobias. You have ensured that we have had a very orderly transition in leadership within the finance function. To you, Klara, and welcome to you at this call, and we look forward to you presenting the numbers at our Q4 and annual accounts. But let me then turn into what this call is really about our Q3. As I said, it's a solid quarter. We have to recognize significant impact from FX, and we will also see impact coming into Q4. And then clearly, also in line with the guidance we gave at Q2, a significant impact in reported EBIT from a restructuring charge of a bit more than SEK 400 million. We stand by the guidance that it will be less than SEK 500 million. On orders, I would say good, a book-to-bill of 1.17, it was 1.15 last year. Keep in mind that typically, Q3 is a good order intake quarter because we roll on a lot of the service contracts, particularly in Europe, that given quarter. And then we saw -- and I'll come back to China, we did see order growth. We did see revenue growth. So that's pleasing, but it was also expected. On U.S., I'll come back to. But there year-to-date, we have seen good orders coming in. It was also much needed, and then we continued the momentum on Europe. So all in all, when I look at the book-to-bill rolling 12 months of 1.09, I think it's healthy. We would like to see it higher, but it's healthy. In terms of organic growth, we are at 2%, continue to see good momentum in Europe. And as I said, China returning to growth. And we stand by the view that we expect both on orders and revenue double-digit growth, probably around 10% in China for second half of the year. And then what our Chinese General Manager, Anming outlined in the strategy update, we do see the market bouncing back almost to pre-anticorruption levels in terms of units. Gross margin at 38.3% supported by product launches. And also pricing, we actually do see a bit of tailwind on that mix and pricing, but a headwind on the cost, and that's a big focus area. I'll come back to that later on. But of course, it's going to be a significant focus area for us going forward. EBIT margin at 11.9%, a bit higher than last year. But just keep in mind, on a comparable basis, we get headwind from less capitalization, more amortization, relatively speaking. So adjusting for it, the EBIT cash margin that we look a lot at, at Elekta is significantly higher, and you will outline that, Tobias, on rolling 12-month basis is really good news. I can say my sincere hope is that coming into next year, the EBIT cash and the reported EBIT will be roughly the same number, meaning that our amortization and capitalization will be a match. Let's see if we get there. In terms of cash flow, less good than last quarter -- same quarter last year, but we should keep in mind that overall, year-to-date, we see good cash flow improvement, and we have paid out roughly SEK 100 million in the quarter linked to restructuring charge. So if we move on to the next page on commercial development, Americas, a decrease of 6%, fundamentally, of course, not attractive. That's why we have a must-win battle to address it. We did outline last time that we were positive on getting Evo approval. I think it's important as part of our commitment that we have a good say-do ratio, and we were, of course, pleased to see that on 16th of January, we could announce Evo approval. Year-to-date, as I said, we have double-digit order growth, substantial double-digit order growth in the U.S. alone. That's also needed because our decrease in revenue reflects a depleted order backlog. So we have a lot of work ahead of us. But of course, every quarter that goes well and is growing is a good quarter. And year-to-date, we have been doing well. We have sold 2 customers on the promise of Evo upgrade. That's now happening. And we are building our funnel going forward. But you shouldn't expect that it's just going to be a huge splash going forward because a lot of the orders have been already taking year-to-date. But of course, the customer interest is good going forward, and we will look at commercializing Elekta Evo the way we have done in Europe. We continue to see growth in South America linked to very strong order intake prior years. On APAC, as I said, and as expected, China is returning to growth. We do see a little bit slowdown in other large countries, notably Japan, also Indonesia, where there's a big tender. So the market is really awaiting what will happen there. And then on EMEA, we see a good increase, continued strong momentum in Europe. And of course, we need to sustain that going forward. And then I'll just flag here, Middle East could potentially impact timing of installation. It's way too early to indicate how many we have a sense for what are the installations at risk, and it's not going to be material, and it will just be a time delay if that happens from Q4 to Q1. So all in all, I would say a solid quarter commercially. But of course, we would like to see that number go up. And that's what our strategy is all about, yes. So if we take the next slide and look at our must-win battles, this is what we outlined end of January. We feel very good about them. They have been working through. Some we are far on, some we are less far on. And I'll give you more details on simplifying power speed. But we did this. I'll just remind you, not to save cost. Of course, we take that in, but we did it to increase velocity of our decision-making within operations, within commercial and most notably also within our innovation department. We are delayering. We are empowering. We are driving culture. It's part of performance management. I think it's going to deliver a lot of good results. And I actually start to feel that the puzzle is getting assembled. We are moving on from having it as an initiative that we needed to execute on to kind of things are settling down. And as I started out by saying, thanks to great work by the leaders and colleagues at Elekta. It's a lot of change. We have asked people to come back to the office because we feel being an innovation-driven company, we can really benefit from problem solving together rather than at a distance. Two focused innovation. There are a lot I could say, but there's also a lot that could be used against us commercially. But I would highlight that we continue to invest in innovation. We believe there is significant need for our solutions going forward. Our current product portfolio will become even better going forward linked to what we have in our pipeline, but we will do it more focused. We will have a stronger commercial lens on it, and we will unfold more of that thought process when we meet at the Capital Market Day in June. Then our third initiative, expand in China, win in the U.S. China is important for Elekta. We are market leaders. We did unfold what does that mean, but it really goes into localizing Elekta in China. We are both from a product point of view, we have a very, very strong organization. We are localizing our supply chain, and then we also continue -- we have both local products, and we are saying should we have even a broader made in China for China product portfolio. So we actually feel good about our China position, not least also because what we said is that the market is going to recover. And then with Elekta Evo, it's now about competing in the U.S. This is Elekta's biggest opportunity because this is the market where our relative share is the lowest compared to other places. And I believe we have every right to compete in the market. That's what I hear from our customers, there is systemic demand for having strong competition, and we are ready. And then lastly, the fourth on continuous COGS reduction. I would really say in today's quite volatile world, it has 2 dimensions. And one is to continually address our bill of material, our ability to install and service our installed base. So that's on cost. A lot of focus will be on continuous engineering to update our tech stack and work with our vendors to continuously increase quality, lower cost. But we also focus a lot on pricing to ensure that we can mitigate certain cost increases in today's volatile world. So we are establishing a pricing desk here in Stockholm. I feel good about that, and we certainly have potential to become more dynamic in how we approach that top line part of our business. So that's where we are. If we then go into our operating model, I have to say, actually, I think we have done well. And by the end of this week, we will almost have executed all the changes that we outlined to you end of November. So that's in 3 months. And we are now at 83%, but the remaining 17% is due to a consultation in U.K., which is happening this week. Of course, it's been tough for us within Elekta, but it will serve the company very, very well to clarify roles, responsibilities who are accountable for what, reduce layers, decentralize, push decision-makings to those who has the best knowledge and then move with a bias to action. So we stand by what we state that we will have a run rate savings without jeopardizing commercial or innovation of more than SEK 500 million, full impact Q1 next year, i.e., from 1st of May. The mix is 30% COGS, 70% OpEx. We're still simulating, but that's our best evaluation. Restructuring charge to be taken this year between SEK 450 million and SEK 500 million. We have taken SEK 417 million here in Q3. And then as I said, we are moving well. And then in parallel, we are now linked to budget and also, Klara, with your support, we are now assessing all the discretionary spend because I do think there is a potential for Elekta to just be very, very, very prudent in terms of where we allocate resource and cost and that should also support us into next year. So that's where we are. And then with that, over to you, Tobias. Tobias Hagglov: Thank you, Jakob, and good morning, everyone. So let's look into the third quarter then a little bit more in detail. And I think you, Jakob alluded to several of the points here on the slide. Net sales in the quarter increased by 2%, and we had a growth here in Solutions by 1% and Service by 3%. We can see a continued strong momentum in Europe, supported by our product launches, Elekta Evo, Elekta ONE. And also when looking into our Chinese operations, as you know, this has been impacted by the anticorruption campaign here over the last years. It's actually returning here to growth in the quarter after 2 years, which is a very positive signal. Then moving down in the P&L, looking into the gross margin, we have an improvement here of 120 basis points. In the quarter, we have a negative impact from tariffs of 100 basis points and then furthermore from FX of 130 basis points. But including this, we are improving our gross margin. It is supported by the product launches. It's also, as you heard Jakob mentioned, supported by general price improvements that we see across our products. If we then look at the operating margin, we have an improvement here of 20 basis points, amounting to 11.9 percentage points in the quarter. This is driven by the improved gross margin. We also can see that we have lower R&D investments and also lower admin costs here year-over-year in the quarter. And what also Jakob mentioned here is that we do have lower capitalization of R&D and higher amortizations. And if you actually would look at the cash EBIT margin, adjusted cash EBIT margin is actually up 170 basis points in the quarter year-over-year. And then also here, we do have restructuring charges here of SEK 417 million reported as items affecting comparability, which is also then reflected in the earnings per share. What we have seen in the quarter is a quite a rapid move of the currencies. And here, we have outlined the effect here both from operations and then also sorted out the currency impact. So what we see in our P&L is that our net sales are impacted by more than SEK 500 million negative in the quarter from the FX moves. And in terms of growth, this corresponds to minus 12%. This is predominantly driven by a stronger Swedish krona versus our main revenue currencies, the U.S. dollar and the euro. When you then look further down in the P&L, we have a negative impact on our gross margin of 130 basis points, which I just mentioned, and furthermore here on the operating margin of 180 basis points. And in addition to the translational currency impact, which I just mentioned, this is also driven then by the dollar depreciation versus our main cost currencies in euro and pound. If we then look at the cash flow, and Jakob also mentioned this, we do have a lower cash flow year-over-year in the third quarter. Still though that year-to-date, our cash flow is more than SEK 400 million better than last year. We have also had a more smooth development of our working capital in the inventory development, especially. In this slide here, we have sorted out the effect of restructuring provisions and then here stated more solely the working capital development in the quarter, which was stable. Then investments are lower than last year, both here in the quarter as well as year-to-date. And taxes, interest, net and other are on the same level as Q3 last year. The cash flow generation this year has led to that we have a net debt decrease of more than SEK 200 million compared to Q3 last year. Then looking at the trends here, I was talking about the currency impact and in nominal terms, we have seen a bit of a slight decline of the revenues, although currency adjusted growth here in the quarters. But when you look at it, and I was talking about the improved gross margin, there is a steady trend here, strongly supported by the product launches and price improvements and also which, of course, then with the must-win battles that Jakob was on will be further supported by the gross -- to the gross margin development. So a steady improvement here over the quarters on the gross margin. We have also an improvement here on a 12-month rolling basis on the operating margin improvement. And if you then would look again at the cash operating margin, it's a strong improvement here, which has been ongoing here quarter-by-quarter sequentially. Then looking at the cash flow. We have a lower cash flow in Q3. But if you look at the -- as well as the year-to-date, you look at the 12-month rolling, it's a significant stronger cash flow over the last 12 months than what we had here a year ago. And if we then look at the outlook, we reiterate our '25, '26 outlook. We expect net sales in constant currency to grow year-over-year. And we also expect a negative impact here on earnings and from tariffs in Q4 as well. And the midterm targets, no change there, and they are confirmed. So by that, I would like to, before the Q&A session, say a big thank you to all here over the years here. Working with you has been a pleasure. And I then hand over the word to you, Jakob. Jakob Just-Bomholt: So the closing remarks should reflect what you just heard. So solid quarter, solid performance. We have launched Evo now in the U.S. also. We are building up the funnel, good order growth year-to-date. Obviously, we have strong currency headwind and also increased tariff headwind despite gross margin is at 38.3%. And as you outlined, Tobias, with an improving trend, and we need to sustain that. And then we focus a lot on what we can control as part of our must-win battles, super important, and we are well on the way of resetting how we operate and how we think and how we execute within Elekta. And by the way, it will also lead to cost reduction of more than SEK 500 million. And then we focus obviously on cash flow generation also. That's also why we can report here year-to-date an increase of almost SEK 0.5 billion. Peter Nyquist: Great. Thanks. And before we start with the Q&A, I just want to remind you that we have the Capital Markets Day here in Stockholm set for June 17. So it will be here in Stockholm. More information will be distributed later on. And with that, I think we have -- yes, and this is the calendar for the following report. So the next one comes in May 28, our Q4 earnings report. So with that, I would like to open up for questions, operator. Peter Nyquist: And I think the first question comes from UBS and Kavya Deshpande, please. Kavya Deshpande: Can you hear me? Peter Nyquist: Yes, we can hear you, perfect. Kavya Deshpande: Two, please, both on China. The first was, would you be able to share how much China order growth actually was in the quarter and remind us how this compared to Q2 and Q1, please? Just because you've been quite specific about the target to grow orders around 10% in H2. So it would be a bit helpful to get some more specificity on the year-to-date trend. And then just more generally, would you be able to remind us, please, why you think the radiotherapy category in China differs to other capital equipment markets where we've obviously seen this acceleration in share shift towards Chinese players over the past year and a bit. Specifically to United Imaging, you look like they're getting good traction with their new O-ring linac and adaptive radiotherapy product as well, please? Jakob Just-Bomholt: Yes. Thanks, Kavya. Good questions, of course. So we'll stick to second half, we say double-digit growth on orders, but we have positive both on revenue and orders here in Q3. So that's good. And it is linked to market recovery. Of course, we have also asked ourselves why are we an outlier on China versus other MedTech companies. But I think the short answer is the market is heavily underpenetrated. You have 1.8 linac accelerator per capita, and there is a growing cancer burden in the country. So there has now been pent-up demand, and we used to have 300 linacs, it dropped to 170 and now it could very well be 260, 270 linacs going forward. So we are not entirely back. Then in terms of competitive situation, we also outlined, there are a lot of local ring-based competitors, but there's really one who has traction, that's United Imaging. Despite, I would say, and also because of we have localized our products and our market presence, we remain the market leader. We have lost a bit of share, but we remain in the high 30s in terms of market share, and that's also our aspiration going forward. Peter Nyquist: And we'll move to the next question, Kepler Cheuvreux, and that's Oliver Reinberg. Oliver Reinberg: Quick questions from my side, if I may. Firstly, can you just provide us a bit of color on the order intake composition? I would assume that a large part is driven by Evo. Can you just confirm that ideally quantified? And if that's the case, what kind of product categories you have seen any kind of declines? That's question number one. Secondly, just looking forward into Q4, we had a very strong comparison in terms of gross margin. I just wondered if you can share any kind of thoughts on that, what to expect going forward now? And lastly, just on strategy, Jakob, I just wondered, can you just discuss how you think about the critical size of Elekta overall and obviously, you have to pay for your marketing installation service infrastructure. How easy is that? And related to that, how do you think about the role of partnerships in the past, there was always a discussion of the importance of independence. It would be helpful to get your thoughts on that. Jakob Just-Bomholt: All right. I'll take the very easy one first. Gross margin Q4, we don't give that guidance, I'm sorry. We will stay with our guidance. We believe in organic growth positive for this year. So I hope you understand that. In terms of order intake, what I will share is that, of course, we just got the approval in U.S. mid-January and our quarter ended January. But we have seen a very substantial order growth in the U.S. It's still too low, but very substantial relative to prior years linked to the expectation of Evo getting approved. And as we got more certain, then we saw that pick up. We are now converting that order backlog from Versa HD into Evo. So that's working. We are, by the way, also upgrading to Iris. And then we can just see the funnel opportunity. I would dare to say, quite rapidly expanding in terms of prospective customers having interest. And of course, we hope to see the same commercial traction in U.S. And why shouldn't we, as we have seen in Europe, and there are roughly 2/3 of what we sell of new solutions are Evo related. So that gives you a good indication. And it's also a nice system, I have to say it's versatile, it's adaptive, it's competitive. So we'll continue to build from that. Then the last one in terms of Elekta's critical side, I would almost say I would love to answer it. It will probably also take 10 minutes, and it's certainly a worthwhile topic for our Capital Market Day. But if you will get my helicopter perspective, then relative to our main competitor, of course, we are smaller. But I would just dare to say that we are the focused radiation therapy market, and that comes with a lot of benefits. Then we have assessed our product portfolio. The product portfolio logic is absolutely sound from Brachy to Neuro to linear accelerator, CT, MR to supporting software suite. So the logic stands, and we believe we can build that ecosystem that is relevant. And then there will be a choice. You can have Elekta. We are a little bit more open, not fully open, but a little bit more open than others or you can go for a more closed system. And that's good. We want to give customers choice, and then we want to compete for our fair market share. Peter Nyquist: We'll move to Handelsbanken and Ludwig Germunder. Ludwig Germunder: I have a few. I want to start with the cost savings program, please. And you've been talking about it, of course. But would you say that the underlying impact from savings during this quarter has been in line with your own expectations? Or would you say that the -- for the quarter has been above your own expectations in terms of how fast you've been able to get the impact from it? That's my first one. Jakob Just-Bomholt: As expected, very little impact this quarter. It will have a significant impact in Q4. But the model we did was really focused on Q1 and there we are, I would say, on par with maybe a little bit above our expectations. Ludwig Germunder: Okay. And just to make sure regarding this restructuring charge of SEK 417 million in the P&L, is it fair to assume that most of this was a cash expense in the quarter as well? Tobias Hagglov: No. Most of it is actually a provision, but you also have a certain degree of payments in the quarter cash cost. Jakob Just-Bomholt: Yes. So what we guide is roughly SEK 100 million was paid out in the quarter. That means remaining SEK 300 million remains to be paid out and that's in line with the expectation. And then we will have some further provisions to be made. So the guidance we have given is SEK 450 million to SEK 500 million, of which we have paid out, if you will, SEK 100 million. Ludwig Germunder: Great. Very helpful. And then just one final on the Middle East situation you mentioned. I know you said it's too early to quantify, but would you be willing to give us any context here, like how much of sales or orders are related to the region where you see a risk of any delayed installations? Just to get some sense on how to think about it. Jakob Just-Bomholt: Sure, sure. So -- but take it with a grain of salt because, as you all know, the situation is fluid. But in terms of potentially impacted installations and thereby sale would be 2% of Q4 sales. So I would say it's a very manageable amount, and then we follow in real time those installations. That number may change given where we are and what we see, but I would still dare to say it's manageable. Then our perspective may look different in a week's time. Peter Nyquist: So we'll move to Mattias Vadsten at SEB. Mattias Vadsten: Can you hear me? Peter Nyquist: Yes, we can hear you perfect. Mattias Vadsten: First question, maybe another one that takes 10 minutes to answer, but you talked about commercially driven innovation in the presentation. So if you could give just some examples on what this statement really means, focus on software vis-a-vis hardware, new platforms versus refining current platforms, et cetera, et cetera? That's the first one. Jakob Just-Bomholt: Yes. It's also a fundamental question, and we outlined a little bit in the strategy outlook. We'll outline more, of course, and find the boundary between what we want to say and what we can say and so forth. But yes, commercially driven means a little bit less big platform, more modular-driven innovation. It's deliberately vague. Sorry about that, Mattias. But I would say we reduce the risk profile in our innovation. We increase the traction. And I would say when I -- and we spent a lot of time over the last 4 months in assessing our innovation pipeline. I'm also hands-on involved in it. I have to say. We put a customer lens on and a commercial lens on. And you should expect that over the next 24 months, we will significantly enhance the portfolio of our CM linac portfolio, and that goes both for hardware and software. So I feel very good. That's also why we are willing to fund continued investment. As I said, we are not asking our investors to underwrite, an increase in gross R&D, it will come down a little bit, but we should be able to see more output. And then let's not forget, it's not only resources put in, it's also how efficient you are. So we are also structurally addressing the efficiency within our R&D engine, if you will. Mattias Vadsten: And then you talked a little bit about Evo and the comparison to Europe and so on. But from what you've heard and seen now in terms of customer behavior, customer feedback, what conclusions can be drawn if you compare sort of what you've seen in Europe since sort of late 2024? And also, if you could give an update on sort of upgrade versus new linac? Jakob Just-Bomholt: Yes. If I take the latter first, then given that we have sold quite a few units this year with the promise of upgrading technical obsolescence against the fee, then you can say we have essentially already sold Evos in the U.S. and we'll continue to sell Evo. Then we are now upgrading. We will build reference sites. We will prove -- provide clinical evidence. And it matters a lot that we shouldn't ask U.S.-based customers. I met some of them here 3 weeks ago in Holland, but then they had to fly to Europe. That's not very efficient. So we are now building our reference sites with Evo so we can demonstrate the value. And then we look at our funnel and so far, so good. But I'm not going to commit to a number. I think it's too early days, but why -- I would just say why wouldn't we see the same demand in U.S. as we have seen in Europe. And there, we have just seen a good traction. But I would rather demonstrate it through actions and promise here for the future. But so far, so good, I would say. Mattias Vadsten: Perfect. And then I will squeeze in one final quick one. So you said book-to-bill was 1.3 first half in the Q2 report for China. Could you give that year-to-date figure now, book-to-bill for China? Jakob Just-Bomholt: Yes, it's above 1.1 for China. And so we will end up with a book-to-bill. I'll just do the math here, but it will be above 1.1. And that's an important milestone because we have seen a depletion in our China backlog. So we actually had a good revenue year after the anticorruption, but we were depleting the backlog and now we are building the backlog again. And that's why we essentially feel pretty okay about our China position, recognizing everything that is said in terms of competing. And we're also using it, I would say, we very often, as Europeans, we are a bit defensive. I look at it differently, how can we tap into China speed? How can we build competitiveness in China? And if we can compete in China, when we can, we can also take that know-how elsewhere in the world. Peter Nyquist: We'll move to Veronika Dubajova from Citi. Veronika Dubajova: I'm going to keep it to 2, please. My first one is just to understand the sort of process of converting some of the older orders in U.S. to Evo. Can you sort of maybe talk through from a customer perspective, how that works? And also just from an accounting perspective, when you do trigger that conversion, does that show up in the gross order number? Or is it just because it's a conversion of an older order, there is no incremental impact on that? If you could just touch upon how that works. That's the first one. And then obviously, you guys are pushing ahead with the restructuring with the strategic changes. And so it would be great to sort of just get a little bit of a pulse on the organization and what's the feedback? Where does morale sit? Anything that sort of is worrying you in terms of how the organization is dealing with the changes that you put into place? Jakob Just-Bomholt: Yes, I can do that. So if we talk about upgrades to Evo, that will now happen and there will be incremental charges. I don't want to share the specifics, but it's substantial, and then it will be triggered from a revenue recognition point of view when we install the units. That's typically when we recognize the revenue. So that's how it's going to go. In terms of restructuring, as I started out by saying, I have to say, I've just been super impressed all around with the behaviors from, I would say, owners to leadership to employees. We knew we needed to change. And then at the same time, we empathize because the change is tough. And it is not only in terms of fewer people, it's also the way of working. And I have to say, I've just seen so many people who work, including a few here in this room until very last day, and it's massively impressive. I think the morale is good, where we -- you can say, biggest impact on morale is actually we have implemented a 4-day in the office policy. But we do that because Elekta, our purpose is so important. We need to innovate for customers and patients around the world. There's more than 2 million patients being treated on our ecosystem, you can say. And we feel that we need to increase momentum and velocity. And part of that is inspiring each other. But all in all, I have to say I'm very pleased with where we are. We haven't lost focus on commercial, on customer and cost and so forth. But I have to say there's a lot more to do. So the must-win battles we have outlined is really meant for the next 24 months. And as I said, as part of that must-win battle 1, we are now addressing our discretionary spend, and we are just going through line by line. And that's important because we only want to spend money where it adds value either for our customers, patients and investors. Veronika Dubajova: And just to clarify, so when you upgrade, I don't know, Versa from to Evo. What's the impact on the order backlog? Do you recognize the whole order, the price uplift? How does that work? Jakob Just-Bomholt: Yes. Then we -- once we upgrade, we recognize it in the order backlog. And when we install it, we recognize it in revenue. And obviously, it's quite good margin perspective. Yes. Veronika Dubajova: Yes. But from an order perspective? Jakob Just-Bomholt: Yes. So when we then commit to the order, then there is an order backlog increase. But the way you should think about it, you will not see it in the -- yes, you will see it, but it's not going to be that significant in the total order backlog number. Tobias Hagglov: And it's the upgrade value. It's not like we double counted here, Veronika, if that's your question. Veronika Dubajova: Okay. Perfect. That's just what I was trying to get at. Peter Nyquist: The next question will come from Kristofer Liljeberg at Carnegie. Kristofer Liljeberg-Svensson: Three questions. The first one is you said that you're looking at other costs here besides the restructuring program. So should we interpret that as you expect or that you see potential for more savings than the SEK 500 million in the next fiscal year? Jakob Just-Bomholt: Kristofer, you should interpret what we have said is we are committed to run rate of more than SEK 500 million. And now we'll just -- we are running through the machine and then let's see where we get to. Kristofer Liljeberg-Svensson: Okay. And I don't -- I understand you don't want to be specific, but just to clarify, do you expect China and U.S. sales growth to be positive now in the fourth quarter, given what's happening with better order momentum? Jakob Just-Bomholt: I think the only thing I'll say on China is we have guided towards second half growth, right, double-digit growth, probably around 10%. On U.S., I will put that under the overall group umbrella and say we guide at a positive organic growth for the year. I know we are vague, I hope we can be more precise, but I'll stick to the guidance here now. Kristofer Liljeberg-Svensson: Okay. But when you say 10% in China, is that for orders or sales? Jakob Just-Bomholt: Both. Kristofer Liljeberg-Svensson: Both. Okay. That makes sense. And then my final question, I noticed you said here that you would like cash EBIT to be in line with reported EBIT, i.e., a much less positive effect from capitalized R&D. In such a scenario, would you say that this midterm EBIT margin target of 14% is still valid, i.e. that cash EBIT improvement would be even bigger. Jakob Just-Bomholt: Let's get back to at our Capital Markets Day. But if I just address in isolation, and I think many of you on this call will agree, if we look a couple of years ago, difference between reported and cash-based EBIT was 4%. Last year, it was 3%. This year, it's 1.3%. And it's complex. And I personally like to keep things simple. So within Elekta, we look at gross R&D spend. And why not then take the next step in the simplification and match capitalization with amortization. How that will be executed, we are evaluating. But I do think I said that we are committed to improving the quality of earnings, and I think this is an important part of it. Peter Nyquist: So next question, we'll go to Sten Gustafsson at ABG. Sten Gustafsson: Two questions. And the first one is a follow-up. Did I hear you correctly when you said that you expect to see a substantial part of the cost saving program to materialize in Q4? I think previously, you talked about it to come in Q1 next fiscal year. But do you expect to see it already now in Q4? Jakob Just-Bomholt: Not full amount, but substantial. So you heard correctly, Sten. Sten Gustafsson: Very positive to hear. My second question is related to China. Obviously, you book orders there now for Evo, but have you also started to book sales? Or when will you start installations of Evo in China? Jakob Just-Bomholt: So it goes into what I outlined here that we expect in second half, both from orders and revenue growth of around 10%. Specifically on Evo in China, yes, we got approval. We also see it's a relatively smaller part of the overall portfolio from a commercial point of view. We sell Harmony Pro also with adaptive treatment possibility. Sten Gustafsson: Okay. I mean, but you are allowed to make installations of Evo in China now? Jakob Just-Bomholt: Yes. That's right. Correct. Peter Nyquist: And I would like to welcome in David Adlington at JPMorgan into the call to ask question. David Adlington: Just on the U.S., please. So firstly, I assume you saw some pent-up demand on orders with the approval of the Evo. I just wondered if you could sort of quantify how much of that was pent-up demand and how you're expecting orders to develop in the U.S. in the coming quarter? And then secondly, I just wonder if you've seen any customer reaction to the Varian announcement that they're launching a new platform in the late summer. Jakob Just-Bomholt: Yes. So if I take Varian first, David, I don't comment on competitors' product. We are very well aware, both from an IP point of view and in the market performance. I think it's actually fundamentally good because it's more adaptive, and we are just very early on in the S-curve of making adaptive radiation therapy treatment the main product. So I think for more options to a customer will expand that piece of the market. And then we look at our own innovation road map and feel actually good about our relative strength today, tomorrow and in 2 years. Specifically on U.S., I mean, obviously, it's helpful to have your best product available for commercialization. As I said, part of that pent-up demand was taking in the quarters up to. So we also had a good Q3 and some of the orders we had prior to FDA approval because we included a provision in the contract that they would be upgraded once we got the approval. And now we have the work ahead of us in building the funnel, building the reference sites and really get into the track of what we have seen in Europe. I would say -- so I don't want to give specific guidance. I don't think that's appropriate for Q4. I would say that overall, we are not getting our fair market share in U.S. That's why we have it as a must-win battle. We now have the product portfolio, I would say, to compete. We have set the organization. We know what we need to do. Now we just need to do it and demonstrate it in actions actually. David Adlington: Maybe just a quick follow-up... Peter Nyquist: Go ahead. David Adlington: A quick follow-up? Peter Nyquist: Yes, absolutely. David Adlington: Just wondering, with the announcement that they are launching in September, has that seen any customers who were potentially looking at Evo just sort of pause and wait to see what's coming in September? Jakob Just-Bomholt: It's not the feedback I'm getting. I mean, I look at our funnel and how it develops and that part looks okay. Peter Nyquist: Next question will go to Richard Felton at Goldman Sachs. Richard Felton: Two for me, please. First one is on one of the must-win battles winning in the U.S. So obviously, having Evo in the market is an important part of that. But can you talk about what you're potentially doing differently from a commercial execution perspective in that market going forward? And then the second question, just coming back to China, you alluded to a little bit of market share losses, but there's still a market share in the high 30s in that market. Could you just clarify, are those comments based on the installed base overall or share of new placements? Jakob Just-Bomholt: China share of new placements. Basically, we look at how many linacs been purchased, and it's very transparent in the China market and then what has been our share. On U.S., yes, I can share a bit. I mean, it, of course, always starts with suitable product, but then commercial execution matters a lot. And that's going back into our decentralized model. So we are pushing P&L responsibility to our 5 regions. We report here 3, but we have 5 reporting directly to me. We have delayered the organization. We are centralizing part of the pricing, strategic pricing framework, but otherwise, we are out there. Then we have spent a lot of time mapping our existing installed base, what our retention strategy. We look at aging profile, we look at flips, we look at greenfields. We are mapping out the market. And then we really -- and I have to say, I'm pushing a lot on let's build the funnel because funnel should be a predictor for order intake, which is -- should be a predictor for revenue generation. I'm not saying we are there yet, but we are doing quite some swings, I would say, in structured commercial execution, but that goes for all regions. And then maybe I'll just say -- and then at the same time and very, very importantly, we recognize we are on a burning platform, and we are deeply frustrated about where we are in U.S., not least because I think it's good for our customers and our patients or their patients to have a strong competitive alternative. We think we have that now. They are part of our portfolio. We want to do even better, and that's what we are addressing in focused innovation, and we need to address it fast. Peter Nyquist: Great. Thanks, Richard, for those questions. We move to SB1 Markets with Johan Unn rus has the next question. We lost you there, Johan or maybe you. Can you hear us? Johan Unn rus: Can you? Peter Nyquist: Yes. Now we can hear you. Good. Johan Unn rus: Can you hear me? Yes. I think we will double [ command ] to that. Yes. A follow-up on the funnel in the U.S. Evo is, of course, extremely important in the U.S. and clearly a very important bit of that win -- must-win battle. What about the funnel so far? Can you see any new Elekta? Any orders coming from centers and accounts which are new to Elekta? Or is this Elekta users already? Jakob Just-Bomholt: Yes. So if we look at it, funnel is important. Let's not forget funnel on service and our TPS OIS software is extremely important. We have Brachy and Neuro also important. But if we get to linac, I mean, quite pleasing, we have done some flips taken from competitors. I think that's very important. When they flip us, we flip them. And then it's less a greenfield market actually because it's so mature. If we look at the funnel, I would say I think we are on track in building it. I still -- before I commit to saying that we are at the same track as Europe, I want to see that converted in execution. But as I said, we just got the approval. So I think it's also okay. But so far, so good. So far, so good. Johan Unn rus: Yes. And a follow-up to that, obviously very important to have centers and reference sites. You referred to that earlier. What -- how long will it take to get that in place, 3 to 6 months? Jakob Just-Bomholt: It will happen very quickly. It will happen very quickly. Some of them here in Q4 also. Johan Unn rus: Good. And what about the sense of time from order to installation in the funnel? Are most of them fairly sort of imminent orders, so to speak? Jakob Just-Bomholt: I don't want to give the specific here in terms of maturity from funnel to orders. And then the way you should think about it is from order to revenue, it's typically 12 months, but with significant variations from order to order. But it's, of course, important if you look at U.S., we have a very favorable working capital. I mean people pay upfront and so forth. So I think it's not only from a revenue and EBIT, it's also from a cash perspective, favorable that we get our fair market share. Johan Unn rus: Is it fair to say that, that dynamic is in line with what to be expected in the linac hardware market in general? Or could it be [ offset ]? Jakob Just-Bomholt: I think if it relates to Evo, we are on expectations, but I still would say we need a bit more time. We got approval mid-January. We have received quite a few orders. You saw order intake Q3 linked to Evo. So that's good. I look at year-to-date, and I can see a substantial, substantial increase in U.S.-based, not Americas-based, but U.S.-based orders. I like that. Let's see how we sustain it over the next couple of quarters and our ability to then convert funnel into actual wins. That's what I'm looking at. Peter Nyquist: We will now move to the last question for this session, and that will be Ludvig Lundgren at Nordea. Ludvig Lundgren: So a bit of a follow-up to the Evo and the U.S. So I think in Europe, you actually initially saw sales being driven by Iris upgrades for like previous Versa installations. And as these have shorter lead times than new installations, so I just wonder if you will expect to see a similar pattern in the U.S. And then also, if you can remind us of the margins of these type of installations. Jakob Just-Bomholt: Yes. So the margins, I think, let me put it this way, 80% plus. So they're obviously attractive. And we are looking at upgrade. It will be less than in Europe from that point of view. But we will do Iris upgrades here in Q4. And -- but we also did that last year. So when you look at the comp, we look at Q4 that is a tough comparable quarter last year, but we still stand by, of course, the guidance we have given in terms of organic growth for the year. Ludvig Lundgren: Okay. Understood. And then my final one, just on -- if you have any updates on the Section 232 investigation. And also, if you can comment on this recent U.S. tariff changes and how you expect that to affect? Jakob Just-Bomholt: Yes. We are evaluating it. We actually report here this quarter a bit higher tariff impact, but it's also linked to selling more in U.S. So in a way, it's a positive problem, but we are still evaluating and understanding. So I think we need a bit more time with everything that's going on. Peter Nyquist: Maybe before we close the call, any final remarks from your side, Jakob? Jakob Just-Bomholt: Solid quarter. We are busy. We execute a lot. We have to continue the momentum, bias to action, clear strategy, then we look forward to Capital Market Day where -- so with your support, Klara, I hope and endorsed by the Board, we can outline a financial plan that management stands behind. Peter Nyquist: Thanks. Jakob Just-Bomholt: Thank you very much. Peter Nyquist: Thank you.
Antti Vuolanto: Good morning, and welcome to Herantis Pharma's Full Year 2025 Results Webcast and Business Update. My name is Antti Vuolanto, I'm the CEO. And together with me, I have here CFO, Tone Kvale. During the webcast, we will review the key highlights of the past year and provide you an update of the business and R&D. After the presentation, we have a Q&A session, and you are welcome to submit questions throughout the webcast. With that, let's get started. And first, the necessary forward-looking statements and then a short reminder of what Herantis Pharma is and then we go into the last year's highlights. So Herantis Pharma, we are a clinical-stage public company listed here in Nasdaq First North Growth Market, Finland. And with our lead asset, HER-096, we aim to stop the progression of Parkinson's disease by protecting dopamine neurons from further degeneration and also support their functional restoration. We have just also announced that we have completed a Phase I program. We have solid safety data. We have shown efficient brain penetration. We have strong biomarker data, showing biological response in Parkinson's patients. And basically, we are ready to start a Phase II efficacy signal finding trial. So just a reminder what HER-096 is. It is a first-in-class peptide targeting key drivers of Parkinson's disease, specifically modulation of the unfolded protein response pathway, so proteostasis. And we have also shown a robust impact on mitochondrial function as well. HER-096 design is based on a protein, a neurotrophic factor called CDNF or cerebral dopamine neurotrophic factor. And we have shown in preclinical settings that, yes, we capture the full activity of the CDNF protein in terms of protection of the neurons and supporting the neurons for functional recovery. So if we think about the clinical and therapeutic profile of HER-096, we do have a disease modifying and symptomatic potential based on preclinical studies and earlier studies with the CDNF protein, so we can slow or even halt the neuron degeneration in midbrain, which is relevant for Parkinson's disease. As already mentioned, we have a biological validation with the biomarker data from Parkinson's patients. We have robustly confirmed the brain penetration after the subcutaneous administration. So we believe that we have all the ingredients that HER-096 can really be a game changing therapy that could really stop the progression of the Parkinson's disease, which currently is not possible. So there is an unmet clinical need in the disease. The current treatments can treat the symptoms, but not the disease itself. And many patients don't get a symptomatic benefit or they might have significant side effects. And also the effectiveness of the current treatments declined over time when the disease progresses on the background, always regardless of the current treatments. And of course, as a consequence of that, there is a huge market potential for HER-096. Parkinson's News Today is an organization who has evaluated that the estimated economic impact of Parkinson's disease globally is around USD 277 billion annually. So it's a huge impact on societies. It's forecasted that therapeutic market in PD will grow to USD 13 billion by 2033 (sic) [ 2034 ], and this is from global data. And we -- there are also estimates that from the currently approximately 10 million patients until 2050, there will be 25 million patients. So we are in the middle of a very large unmet clinical need, and we want to be among the first ones to really address this. So this was the short introduction to Herantis, and let's go into the highlights of 2025. So I'll start this with the business highlights. So a year ago, in February '25, we announced that we successfully completed a directed share issue. We raised EUR 5.2 million, and that was obviously used for finalizing the Phase Ib and being able to deliver the great data. We announced the top line data from the Phase Ib trial with Parkinson's disease patients in October. The trial met its all primary and secondary endpoints. So we demonstrated very nice safety profile and also the robust brain penetration in the Parkinson's patient's brain. In November, we announced that we have completed a 6 months preclinical toxicology study with HER-096, and this is, of course, a major milestone towards to be ready for Phase II trial as this kind of a long-term preclinical tox study is a prerequisite for starting a long Phase II efficacy trial. And right after the reporting period, we also have provided, actually, a lot of good news. So in early days in January, we reported the biomarker data showing that we have a very clear evidence of biological response to HER-096 exposure in Parkinson's disease patients. In early February, we announced a directed share issue. We raised EUR 4.2 million. And further in February, we announced that we have been selected for EUR 8 million Horizon Europe grant that will be used for supporting the conduct of the Phase II clinical trial. But let's go into the financial figures, and Tone will go through those. Tone Kvale: Yes. Thank you. So full year 2025 compared to last year, the total operating expenses, they went to the same level, but the difference you can see on the loss side is that, in 2024, we had the EIC Accelerator grant program, which ended now in 2025. So we got more grant in 2024 compared to 2025. We are spending the money on -- most of the money goes directly to the science. We spent it on finalizing the Phase Ib trial. We're also preparing for the Phase II and the development of biomarkers is also a big part of the costs. And then last year, we raised money in February 2025, and we had finance expenses relating to that. And we are continuing the focus on investor relations and partnering activities. So when it comes to the cash, we ended the year with EUR 2.6 million in the bank compared to EUR 2.1 million in 2024. Right after we closed the books, we had a successful fundraising and raised gross EUR 4.2 million. With the cash we have as of today, it takes us into Q1 2027. So to be able to start the Phase II clinical trial, we need to raise more money. So for the financial position, just going through the kind of -- some of the balance items for 2025. If you look into the balance sheet, you see that the long-term debt increased from EUR 2.1 million in 2024 to EUR 3.4 million in 2025 million, and that is due to the research funding, which we are receiving from Michael J. Fox and Parkinson's U.K. This is very good money that we have spent now on the Phase Ib. We had a temporary negative equity by the end of the year of EUR 1.7 million, but that went positive when we raised the money in February. And as Antti mentioned, for the financial events, we had the successful fundraising, and also we was selected for the EUR 8 million grant from Horizon, which is going to be spent on running the Phase II trial. So that's really good that we have the cash coming in. Antti Vuolanto: Very good. Thank you. And let's move on with the short business update. So as mentioned, we have a completed Phase I program, just a small short recap of what the Phase I program told us and what will be the next steps. So the Phase Ia clinical trial that we completed a couple of years ago was a single ascending dose study in healthy individuals. And we also had elderly individuals there to take cerebrospinal fluid samples to show the brain penetration profile of HER-096. And the main findings were very good safety and tolerability profile of the single dose. We demonstrated efficient brain penetration in elderly healthy individuals, and the brain penetration was, in a way, very much aligned with the preclinical findings we had reported earlier. And we also have very favorable pharmacokinetic profile considering the administration. And now we completed a Phase Ib clinical trial where we first had a couple of additional elderly individuals for single administration to complete the -- some of the pharmacokinetic work, and then we had Parkinson's patients in 2 cohorts or 2 dose levels, 200- and 300-milligram doses and placebo patients as well. And these patients received active -- they received HER-096 or placebo treatment for 4 weeks, 2 administrations per week. And the main findings, we continue to see good safety and tolerability profile in Parkinson's patients. We established the pharmacokinetics in the cerebrospinal fluid in these patients. And of course, then we have this biological response in biomarker analysis, which I will also provide some more insights here and recap of the webinar that we held early January. About the safety profile, here is a very high-level summary of the systemic safety findings from patients or healthy individuals receiving HER-096 dosing. So basically, on the systemic level, we didn't see any treatment emerged adverse events, no serious adverse events, no dose-limiting toxicities, and we didn't reach, obviously, the maximum tolerated dose. And this was very much aligned with the preclinical studies. The main incidence that we saw was related to the injection site. They were mild and transient and self-resolving. So exactly aligned with preclinical findings. And this is, of course, very good. And then the second part of the results is obviously the HER-096 presence in the cerebrospinal fluid. And this data summarizes what we learned from the Parkinson's patients in the Phase Ib with 200-milligram dose, we ended up close to 100 nanograms per ml, with 300-milligram dose, close to 150-nanograms per ml. And again, this is very much aligned with the preclinical data, and these levels are comparable to those levels that we have seen in preclinical settings to provide the maximum efficacy in those models. So we believe that 300-milligram dose will be a very good dose for going forward with Phase II, and this is also supported by the biomarker data. And just a short recap of what did we see in the biomarker data. And just a reminder that we analyzed different sample types with different technologies, but the main comparison was the change that we observed when we compared the before dosing sample of the last dose compared to the before dosing sample of the first dose. So a cumulative effect of 4 weeks exposure to HER-096. So we had samples from CSF, so demonstrating what happens in the CNS, central nervous system, and there, we showed an effect on proteostasis and oxidative stress and inflammation. So basically, really closely related to unfolded protein response pathway and then mitochondrial function as well. Then we had samples that is called Neuronal-enriched extracellular vesicles. So particles that comes from the central nervous system, the sample is taken from the blood. So we can't, for sure, say that all the signals come from the CNS, but maybe majority of that. And again, we see changes in mitochondrial functions and also inflammation, very much aligned with the mechanism of action. And then from plasma and blood, we also saw changes in proteostasis and in mitochondrial functions. So this multiple layers of data showing very concordant results across different sample types, different location or where we derive the samples shows that there is a very clear biological response, and this is a true response in Parkinson's patients, and the response is aligned with the mechanism of action. So if I summarize on one slide what we see. So at the baseline, Parkinson's patients, they have chronically activated unfolded protein response pathway. So there is a dysfunction of proteostasis, there is also lower activity of mitochondrial function. So mitochondria are the energy factors of the cell, and there is elevated oxidative stress. So overall, the stress level is high and the viability functionality is low. After HER-096 dosing, we see elevation of proteostasis activity. We see elevation of mitochondrial function activity. We see a decrease in oxidative stress. So we have decreased the stress and increased the viability functionality. And then, of course, the very good question is, as this is the data from the first month, what happens after a longer treatment period. And we, of course, believe and hope that it will result in symptomatic improvement and disease modification. And this is, of course, the purpose of running the Phase II trial to demonstrate this in Parkinson's patients, which would then allow going forward with the commercialization path. So if I summarize where we are with HER-096, we believe that we have reduced development risk based on the very successful Phase Ib trial. We have established very nice safety profile, confirmed brain penetration. We have biomarker-confirmed biological activity. So we believe that we have much reduced translational risk. We are ready for Phase II. So we are planning a signal-seeking proof-of-concept efficacy trial in approximately 100 early-stage Parkinson's patients. It will be a multicenter European study if we run that ourselves. And we are currently nearing the confirmation of the study design. It's not completely ready yet, but we, of course, will inform the market when we are ready to do so. HER-096 is very much differentiated asset. So it's a first-in-class molecule. We are addressing unfolded protein response pathway as the only company in clinical development. With that, we target the core drivers of Parkinson's pathology. And we really have designed from the beginning the asset to really modify or stop the progression of the disease. And of course, what we are currently doing, we are looking at the different routes and options, how we can execute the Phase II, and we are in discussions with strategic partners. We are in discussions with investors. We also confirmed the EUR 8 million EU Horizon grant that will support the conduct of the study. And we are also looking at different non-dilutive opportunities there might also be. But of course, we will inform the market as soon as we have anything material on this resourcing of the Phase II efficacy trial. I want to highlight the strong external validation and financial support that we have for HER-096. Parkinson's U.K., the Michael J. Fox Foundation, they have -- or they did finance the majority of the Phase Ib clinical trial with almost EUR 4 million research financing, and we obviously continue to discuss with them how they could support the conduct of the Phase II. We have also had very strong support from the European Union. We completed one -- a biomarker development program of EUR 2.5 million grant that was completed a year ago -- approximately a year ago. We have secured EUR 15 million investment commitment from EIC fund from which we have now utilized EUR 4.2 million. So over EUR 10 million still exist in that commitment. And we just announced EUR 8 million support for the Phase II trial. So we have been quite successful in achieving this validation. And I have to highlight that all of these financiers and the financing, it's like really competitive vehicles and opportunities. So we have been really happy that we -- our science and the commercial potential has been evaluated to be really strong among these organizations. So as a summary, we believe that HER-096 is a potentially game-changing therapy that could become the first disease-modifying treatment for Parkinson's disease. We have huge market opportunity. We are backed by a long research, robust external validation. And one thing that I didn't address yet is that the broad functionality of HER-096 in the basic biology of aging cells, improving the tolerance against different stress factors, may open wide therapeutic opportunities in other neurodegenerative disorders or even beyond CNS indications. By these words, I think we will end the business update, and we are ready to start the Q&A session. Tone Kvale: Yes. And we have received questions and you can just continue sending in questions via the webcast. The first one is, can you provide an update of your Phase II plans? And when do you expect to initiate it? Antti Vuolanto: Yes. So as I mentioned, we are currently in a way, finalizing the study design. So we are also, in addition to that, considering regulatory preparation, should we have regulatory discussions on the protocol. What we can say is that we are planning a double-blind, placebo-controlled, randomized efficacy and safety trial in early-stage Parkinson's patients. And we are engaged with several European really top-notch investigators, also within that EU consortium that won the grant. And also, of course, the recent fundraise, EUR 4 million helps us to prepare for the Phase II and also gives us the freedom to really find out the right financial ways of resourcing the Phase II. And as mentioned, the trial will be most likely conducted within Europe if we run that ourselves. However, we are making sure that we are also open regulatory wise to be able to open trial sites elsewhere, for example, in the U.S., if there is a need, for example, if there is a partner or there is an investor who would have an incentive to open up a site also elsewhere than in Europe. Tone Kvale: Good. Next one is regarding the Horizon grant and congratulations with that. How will this impact the company on a strategic point of view and also from a financial point of view? Antti Vuolanto: Yes, of course, EUR 8 million for conduct of Phase II. It decreases the capital need for running the Phase II with full amount. It is, of course, also very beneficial for our shareholders as that's non-dilutive. So I think that's great. But in addition to that, of course, Horizon EU grants, they are really competitive grants vehicles and being selected for the grant shows that, first of all, we have great science, but we also have great commercial opportunities there. And that, in a way, brings a quality stamp as we were winning this grant. Tone Kvale: Good. Next one is based on your current cash position and the benefit from the grant, what additional capital do you need and will be required to be able to start the Phase II trial? And maybe I can just take that one. As you know, we raised EUR 4.2 million in February, and that will help us now kind of continuing the preparation for the Phase II. We got the Horizon grant of EUR 8 million, and that is earmarked the Phase II. So of course, that is helping us a lot for that one. But in addition, we think we need -- of course, we haven't -- the final design of the trial is not ready yet, but we think in the range between EUR 20 million and EUR 25 million is needed as an additional capital on top of this to fully fund the trial and also the ongoing operation during the trial period. Next one. Is the Phase Ib biomarker data good enough to secure a partnering agreement? Antti Vuolanto: Well, that's a very good question. Of course, the full Phase I like data package that we have, the safety data, the pharmacokinetic data and also the biomarker data, it's a great package. And when we have discussed this package within the partnering discussions or with other stakeholders like the patient organizations or informed investors, everybody congratulate that you could not get much more within a Phase I clinical program. However, it might not be appropriate to start speculating about exactly whether this could trigger a partnering agreement or not because there are many different kinds of pharmaceutical companies. They have different objectives and there might be different like deal structures that we investigate. So of course, we will inform the market as soon as there is something material. But before we have anything material, we can't speculate too much. Tone Kvale: Yes. Next question. Congratulations with the 2025 progress. The Phase Ib biomarker analysis showed modulation of various PD-related pathways. How will these biomarker findings inform endpoint selection and patient certification for the Phase II? Antti Vuolanto: Yes, of course, we are really happy that we have seen changes in the core pathways, including the proteostasis and mitochondrial function. Maybe for patient selection, the challenge is that how we can exploit that data when we are screening the patients. And we believe that we need to select early-stage patients. And in Phase II, we need to carefully design what is the primary endpoint and then select patients in such a way that they show characteristics that are measured by the primary endpoint. So that's the focus there. Tone Kvale: Good. I think there was no more questions. So maybe some closing remarks. I think just from my side, we see that we have a really strong external validation of our science during 2025. So I think the future looks good. What do you think? Antti Vuolanto: Yes, I fully agree. So I think 2025 was a very successful year. We were able to complete a fairly large clinical trial within the time and the budget, which is not for certain in clinical development. The data is great. We have a very good momentum. We have got really good feedback. And now we just need to go forward and beyond and ensure that we can run the Phase II clinical trial. And of course, within Phase II trial, providing the first efficacy signal. That's the trial where potentially the value creation is quickest among the, let's say, clinical studies. So we look really forward -- positively forward for this year and what this year will bring. And we hope to be able to update the market about the future development related to finalizing the Phase II clinical plan and then also how we resource the trial within due course. So thank you for joining us today. Thank you for submitting the questions. And I hope you will follow us intimately going forward. Thank you.
Operator: Ladies and gentlemen, welcome to the ANDRITZ's Full Year 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir. Matthias Pfeifenberger: Good morning, and a warm welcome from ANDRITZ out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO, Dr. Joachim Schonbeck; and our CFO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session. [Operator Instructions]. And now I'd like to pass on to Dr. Joachim Schonbeck for his elaborations. Joachim Schönbeck: Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's result. If you look back to the year 2025, we can say the world has been cautious on investments, but rich in geopolitical surprises. For ANDRITZ, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us. We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower and by -- but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And in metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part. If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year. Revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in ANDRITZ's history, EUR 10.5 billion at year-end, never had that, 7% up from last year. EBITA margin in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that will are prepared for this year. Net income is at 6.6% and EUR 154 million. If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 billion, up 8%. Revenue, EUR 7.9 billion, so very positive book-to-bill ratio. Order backlog, as I said, 10.5% (sic) [ EUR 10.5 billion ] and the comparable EBITA margin for the full year was at 8.9%, exactly where it has been last year, EUR 698 million. The reported EBITA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are -- that we have done in the year '25 and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million. The Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all 3 quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project Cahora Bassa in the fourth quarter of 2024. So that's, I would say, more a onetime effect. If we look to the business areas, you can see a very nice increase in Pulp & Paper and Hydropower; 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals, it's down by 13% for the full year. Environment & Energy, basically 3% down. So I would say, Pulp & Paper, very happy to have -- to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very, very huge success showing that we are really well positioned in the market itself, but also technological-wise. In Hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand and in particular, the demand in electrical energy is really supporting us. In metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for the steel as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture but we did not see investment decisions in the markets where we are in, namely Europe and North America. Regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we ANDRITZ, we seem to be a trusted partner for these endeavors. Looking to the revenue. We see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there. You could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year; on Environment & Energy, dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now, and it will prevail. One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog, as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from Hydropower. And therefore, we can drive the revenues out of that very effectively over time. Looking to the EBITA. Comparable EBITA margin remained stable. The absolute EBITA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution. And there, I can specifically name Metals on the one side and Hydropower on the other side, we really made a strong improvement on that discipline. I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come. In Metals, we will continue the restructuring this year because we see the markets will demand it. And we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that. Turning to ESG. We have finished our ESG program, which was targeted for 2025, I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly. The one we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still, it's a record high level for ANDRITZ. And I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so -- but in total, we are not on 1/3. So we wanted to be at 20%. We ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition, and we still believe there is demand, and we will -- we can cope with that. We want to support people to grow, people in ANDRITZ and outside ANDRITZ, and we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one of one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focused on excellent frequency rate because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below 1 ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15%, and we want to keep the voluntary turnover below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with ANDRITZ. On the governance, we put a focus on supply chain as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audit, supplier prequalification, supplier rating on sustainability by third parties. So that's the area we are focusing on. In the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based targets. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow. 2 acquisitions that completed our portfolio. The one was the Salico Group, in metals, basically being fundamental closing of the gap between the metals processing and the Schuler part of our metals business. We have a portfolio completion done on the paper side. We acquired A.Celli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology that was one of the key technologies we were missing. On decarbonization, we acquired LDX Solutions in the United States. That's an engineering company offering a clean air technology, ideal addition to our product portfolio technology-wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Sanzheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our metals processing group. We know them from -- already from several projects we have done together with them inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single-source solution from us. On the customer service, we have made 2 acquisitions, both acquired from Babcock & Wilcox in the United States. The one is Diamond Power, sootblower company for boiler cleaning. And the other is a material handling company, taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit not only that we know them from the industry, but also culture wise. So we are very confident all 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level, and that is very exciting, especially if we know about the decline we have in the -- on the paper side in the paper business and with the paper machine utilization around the globe, not above 60%. Also the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all-time high in the service revenue. We also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you. Vanessa Hellwing: Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So ANDRITZ has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow in the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially. Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating net working capital and return on -- sorry, and our ROIC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year '24. IFRS 3 amortization increased to EUR 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25. Our recent acquisitions, on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial result, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we had seen the negative impact of EUR 24 million from the deconsolidation of OTORIO already in 2024. I hope you remember that. In the meantime, we have sold OTORIO to Armis and received a consideration in Armis equity. We have now divested our Armis shares, which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25. And just to recall, ANDRITZ has sold its stake in OTORIO to Armis, which is a leading supplier of cyber exposure management and security. For ANDRITZ, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by Joachim, remained solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year and changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for pensions and severance payments. Also to mention provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million, we arrive at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And this spend was well covered and digested by our free cash flow in 2025. Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters coming from a level 3 years ago where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in service business where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25 after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components. Trade working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4. And as mentioned on the last call, on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion, we actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital. So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at ANDRITZ remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. As you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect and this also on liquidity, of course, with roughly EUR 50 million, which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, ROIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands at a substantial margin in our -- at our cost of capital. So the ROIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is, in fact, still an industry-leading level considering it is post tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITA decline. But more importantly, this is because of our recent acquisitions with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, ANDRITZ's balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong. And also important to keep in mind that EBITA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by a plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in '24, our revenue trajectory is still pointing downwards, but we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in Pulp & Paper and Metals, our reported EBITA decreased, but we were able to maintain our comparable EBITA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from March. And also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas. Joachim Schönbeck: Very well, Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So Pulp & Paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China in the paper industry to backward integrate into pulp mills. As mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead with a good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically, these are not only boilers, these are small power plants, a sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants, very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started, and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we gone through the valley, and we can grow that. The good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%. So I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total revenue. In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany. So really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITA margin, the first time in our profitability target for 2027. So we're very proud how that develops in difficult times. Hydropower, I would say we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have set. We see this trend continuing. Environment & Energy. Here, we, I would say, faced a surprisingly subdued market, which, frankly speaking, we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done. On the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed, a lot of exposure to the mining business and also here, uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effect. So -- but I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year increasing over the year -- now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served. So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth on service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and a comparable EBITA margin between 8.7% and 9.1%. The midterm targets basically have been confirmed. And in looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range. We have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know, we have not told you so far. Now we are ready for questions and answers. Thank you very much. Operator: [Operator Instructions] And we have the first question coming from Akash Gupta from JPMorgan. Akash Gupta: I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half? And also, you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance? And then the second part of the first question is that if we then take the midpoint of EUR 8.15 billion, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year? Joachim Schönbeck: Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say, as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. with, I would say, with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but that's, I would say, only that's more marginal. We are working and we are preparing ourselves to continue the growth on the service side as we did even in the last difficult year. So we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we do not have the growth exactly in our hand because we also depend -- we depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking. Akash Gupta: And second one is on automotive in metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end? Joachim Schönbeck: For sure, this will help our customers. And usually, if it helps our customers, it at the end helps us. as I have explained, we see both in automotive and in metals. We see now 3 years in a row, a shrinking market, which means that basically, the industry is overrunning their equipment a bit. It's a traditional business. If you run it 24/7, there is a lot of where you only -- you come to end of lifetime. You can always push it a bit. So from being in these industries long enough, we are quite confident that the market will increase, and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that Act in detail. Akash Gupta: And last one is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower? And would that have any impact on total CapEx for the year? Joachim Schönbeck: The majority of our manufacturing CapEx for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. And -- but it will not exceed our natural cash flow. So we will invest, and I think it's wise to invest because for you, as you know, it's still the cheapest way to spend our money into growth. Akash Gupta: And the overall CapEx level last year, it was around EUR 200 million. Do we expect it to increase or stable in 2026? Joachim Schönbeck: Increase. Operator: The next question comes from Sven Weier from UBS. Sven Weier: The first one is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on Pulp & Paper because you also alluded to China. Joachim Schönbeck: Yes. What's the question? We cannot hear you. Matthias Pfeifenberger: I think we lost Sven Weier. Could you turn to the next question, please? Operator: Yes, of course. The next question comes from Patrick Steiner from ODDO BHF. Patrick Steiner: Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on the previous question basically. Could you provide us a bit of a bridge for -- regarding your revenue guidance to '26 and '27? I mean what are the major drivers behind the less dynamic expected revenue development to '26, including M&A effects and the expected better dynamic from '26 to 2027? Joachim Schönbeck: It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower on the one side. And from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a buildup more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy. And this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and in Environment & Energy to protect the profitability. Patrick Steiner: Okay. That's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for full year basically? And also how this would change with -- if you receive a larger project? Vanessa Hellwing: Well, the acquisitions are already in fully fledged on the net working capital, as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in '25. So it's just that the percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would, of course, have a positive impact on the overall net working capital. Patrick Steiner: Okay. Last one for now. Capital allocation has not been fully funded by operating cash flow in the last 2 years. Should we expect this to change in '26 and '27? Or are you comfortable increasing net debt if favorable opportunities to deploy capital occur? Vanessa Hellwing: Well, so we will continue our capital allocation on quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not value accretive to ANDRITZ overall. But furthermore, as mentioned, CapEx spend will continue even slightly increased. And yes, I mean, the dividends, of course, we will keep also our path here. So we actually see that we continue the picture that you saw the last 2 years or 3 years to really spend our capital -- spend in capital to further manage our net liquidity well, but still keep, of course, a substance for ANDRITZ as this is part of our DNA and necessary for dealing with large projects in an engineering company like we are. Patrick Steiner: So if we think about CapEx maybe slightly increasing, dividends increasing and in terms of M&A and share buybacks, more of an opportunistic stance for 2026, this would make sense, right? Vanessa Hellwing: Yes, exactly. Operator: The next question comes from Lars Vom-Cleff from Deutsche Bank. Lars Vom Cleff: Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic. But would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwind that is comparable to last year? Vanessa Hellwing: That's what we do. Lars Vom Cleff: Okay. Perfect. And then you already mentioned order intake rather driven by midsized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in Pulp & Paper currently, but in Hydro. Is that still the case? Or could we hope for a large greenfield order in Pulp & Paper this year? Joachim Schönbeck: The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues, it also impacts a potential greenfield new pulp mill in South America because that's one of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible]. Lars Vom Cleff: Perfect. And then quickly staying with the order intake, order backlog at records or at least close to record levels, nice book-to-bill in '25. We could also hope for a book-to-bill exceeding 1 again for '26 if momentum continues. or am I wrong here? Joachim Schönbeck: If momentum continues, you are right. Yes. Lars Vom Cleff: Okay. Perfect. And then maybe ending with -- you also said on one of the recent calls that you're seeing increasing pricing pressure from pulp and paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects. Joachim Schönbeck: Yes, you are right on that. Operator: The next question comes from Daniel Lion from Erste Group. Daniel Lion: I would -- could you maybe elaborate a little bit on the adjustments planned now in '26? How far are we actually in the Metals division? And what would you expect to come in the E&E division? Maybe overall, how much should we include in our models for adjustments? Joachim Schönbeck: So we expect in total, I believe we are talking about 700 to 800 people. Daniel Lion: And this is already provisioned to some extent or... Joachim Schönbeck: To some, but not fully. Vanessa Hellwing: So for the NOI in '25, about 50% were accruals for this year. So we will cover a lot with what we have digested already in '25, maybe some more to come. Daniel Lion: And how long would you expect to have this impact the figures? Will this be done in the first half already? Or will we have to expect some impacts in the second half year as well? Joachim Schönbeck: Second half year as well, it's 700, 800 people, you don't do overnight. It's a process you need to negotiate. And depending on which country, majority is Germany, takes long time. And so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track. Daniel Lion: Okay. And then maybe also, again, slightly focusing on '27, what kind of revenue -- what kind of order intake or backlog would you expect roughly that is required in order to reach EUR 9 billion in revenues next year? Joachim Schönbeck: I have not made the calculation, but we do not step back from the targets we have for '27. Daniel Lion: So anything that would need to happen on the way there, something sizable or like, I don't know, big picture greenfield contract in Pulp & Paper or in order to make the guidance happen? Joachim Schönbeck: It would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets. Operator: [Operator Instructions] We now have Sven Weier again from UBS. Sven Weier: I hope you can hear me now. Joachim Schönbeck: Yes. Perfect. Sven Weier: So going back to the Hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is? What kind of growth rates you see? So any color on the turbocharger business you can give? Would be appreciated. That's the first one. Joachim Schönbeck: So turbogenerator business is, I would say, medium-sized 3-digit million business. Growth rates double digit at the moment. We do not -- of course, we do not know how this will continue. That's a business we are selling to energy engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently, that's the volume we can report. And this is why it definitely supports the Hydro business. Sven Weier: And when you say 3 digit, is it like in the low 3 digits or get a better feeling? Joachim Schönbeck: It's in the mid-3 digits. Sven Weier: Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole project. Joachim Schönbeck: No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities, not... Sven Weier: And those are kind of the known names like Siemens Energy and GE or... Joachim Schönbeck: Potentially. Sven Weier: Okay. And then, I mean, the pipeline in Hydro in general, I guess, probably also looks pretty promising based on what you said for 2026. Joachim Schönbeck: Yes. I can only confirm that. Yes. Sven Weier: And then you said you had some spillover into Q2 from Q4, if I understood you correctly on orders. Does it mean that you think Q1 orders should be higher than Q4 overall because of that spillover? Joachim Schönbeck: Could be. We definitely had some decisions that have been pushed over the year-end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not -- with what we see on the project side, we are not pessimistic. Sven Weier: So it won't be lower, let's put it this way in Q4. Joachim Schönbeck: Yes. We can agree on that. Sven Weier: Frank but good. The final question I had was just on the M&A because obviously, you kindly provided the revenue details, the money you paid, so I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average profitability across those targets that you bought? Are we talking like average 10% margin roughly. Joachim Schönbeck: I don't have the figure in my head, but in average, higher than what you see from ANDRITZ in total. Operator: There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger. Matthias Pfeifenberger: Okay. Thanks a lot. Thanks for the presentations of the Executive Board and the extended interest in ANDRITZ and in this call. And we wish you a good day and see you next time. Thanks a lot. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Operator: Good afternoon, and welcome to OmniAb, Inc.'s First -- Fourth Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the call over to Kurt Gustafson, OmniAb Inc.'s Chief Financial Officer. You may begin. Thank you. Kurt Gustafson: Thank you, operator, and good afternoon to everyone. Thanks for joining our fourth quarter and full year 2025 financial results conference call. There are slides to accompany today's prepared remarks, and they're available in the Investors section of our website at omniab.com. Before we begin, I'd like to remind listeners that comments made during this call by OmniAb's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast today, March 4, 2026. Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me this afternoon is Matt Foehr, OmniAb's President and CEO. Matt is going to cover some business highlights, and I'll cover some financial information, and then we'll be opening the call up for questions. And with that, let me turn the call over to Matt. Matthew Foehr: Thanks, Kurt. Good afternoon, everyone, and thanks for joining our call. I'll start now on Slide #4. Our business built some nice momentum in 2025 that we sustained throughout the year. specifically related to broadening both our roster of partners and the number of active programs enabled by our technologies. By year-end, we're happy to report that we had 107 partners who are running 407 active programs. And as our partner pipeline advances, there are certain later-stage programs that are now coming into focus with the potential to drive meaningful milestone revenue and create value over time, headed towards the generation of significant future recurring royalty revenue streams. On the innovation front, we introduced OmniUltra at the Antibody Engineering Conference down in San Diego in mid-December. OmniUltra is the industry's first and only transgenic chicken platform to express ultra-long CDRH3 on a human antibody framework. We see OmniUltra as an important new growth driver that can help us gain additional partners, generate new program starts, create incremental near-term revenue opportunities and extend our reach into peptide focused discovery applications. Additionally, we're building a strong foundation for our xPloration platform, which brings our high-throughput single B-cell screening capabilities directly into our partners' labs. We think xPloration is very well positioned for significant growth with an expanding pipeline of high-quality prospects and increasing engagement as more partners are actively evaluating the platform for use in their labs. And we expect xPloration to be additive to the business and to contribute to our growth. And I note with the growth in our base of partners and our partner program portfolio, it's becoming easier to highlight that our differentiated platforms and business are highly scalable, allowing us to add new programs while maintaining operating efficiency, positioning OmniAb on a sustainable path to future growth. And as Kurt will describe in his section in a bit, we're on a trajectory to positive cash flow. Moving to our key business metrics, starting on Slide #5. As I mentioned, at year-end, we had 107 active partners, reflecting a continued growth and diversification of our business from that perspective. During Q4, we executed new license agreements with the Dana Farber Cancer Institute, Mabtrx Biosciences, which is a newly formed JV between, Arrowmark Partners and Viking Global Investors and with 2 global big pharma companies. The partner mix across discovery stage, commercials and academics continues to evolve and has remained relatively constant percentage-wise. A majority of our partners are headquartered here in the U.S. and the remainder are primarily in Europe and in Asia. We continue to broaden and diversify our partner base, which I think demonstrates consistent strong execution by our business development and scientific teams. 2025 was an especially strong year for us in terms of partner additions. I also note that we're proud of the strength of our partners as well, which I think says a lot about the quality of our technologies. 8 of the 10 largest pharma companies in the world are active partners of OmniAb. Now on to Slide #6, you'll see our active programs metrics. We exited 2025 with 407 active programs, representing a net increase of 44 programs during the year. We saw 84 program additions in 2025 with a significant share of additions originating from our newer technology offerings. Our number of program additions in 2025 was substantially higher than recent years and more than 20% higher than 2024. Now a attrition is obviously a natural and expected part of drug discovery and development. And I note that we had 40 program terminations during the year, consistent with the normal ebb and flow we expect as partners adjust portfolios and budgets and adjust technical priorities. And lastly, and I think it's important to note here that over 98% of our active programs have contracted future economics to OmniAb. We have over $3 billion in total contracted milestone payments for active antibody programs and an average royalty rate of 3.4% and across our portfolio. Slide 7 provides another look at our active programs and shows the strong advancement activity we saw across our partner pipeline throughout 2025. The figure here on this slide includes our entire partner program pipeline. And as you can see on the left side of this pyramid graphic, during the year, we added the 84 new programs I just referenced, demonstrating the continued strength of our technology platforms. And again, this was a very strong year from that perspective and substantially higher than recent years. In terms of active program progression, we have 25 advancement or progression events in 2025. 16 programs advanced from discovery into preclinical development, which reflects our partner's progress and the identification of promising therapeutic candidates to take forward towards human trials. We also saw some healthy advancement further in the development process. 4 programs moved from preclinical into Phase I clinical trials and a couple of programs advanced into each of the clinical phases thereafter. And notably, 1 program reached the registration stage during 2025. This slide shows each advancement event, and I note that a couple of programs advance through more than one level or stage during the year. On attrition, which is depicted on the right side of this pyramid graphic, we had the 40 program terminations across various stages and 4 program regression events during the year. Now program regression is far less common but does happen from time to time in a portfolio of active programs that has grown to the level that ours has in recent years. We see the level of attrition shown here is consistent with the normal dynamics of drug development. What's particularly encouraging and exciting are the 25 total program advancement events we saw as programs move from one development stage to the next. This progression demonstrates that OmniAb-enabled therapeutics are continuing to perform well for our partners in development and in the clinic and are moving closer to potential commercialization, which supports our milestone and royalty revenue opportunity over time and increases the value of the individual programs to our stakeholders. Slide 8 shows the growth in the post-discovery stage programs over recent years. This, again, I think, demonstrates the value that our technologies bring to our partners. And I know both the overall growth and the progression into the preclinical stage over recent years. Slide 9 shows the number of active clinical programs and approved products which totaled 32 at the end of Q4. These numbers are net of attrition and reflect new clinical entrants as well as attrition and a regression event during the year. The fourth quarter saw a very important milestone with the first OmnidAb-derived program advancing into human clinical testing. This program entered human clinical trials less than 2 years from when we introduced the OmnidAb single domain discovery platform. So having it generate a program that reached the clinic that quickly underscores both the technology's traction with our partners and its potential to drive future value for our stakeholders. We anticipate the potential for multiple new entries into clinical development for novel OmniAb-derived programs this year, including additional OmnidAb programs. We look forward to the continued progression of these active clinical programs, which have over $350 million in remaining contracted milestone payments to us. Turning now to Slide 10. Here, we're highlighting and only listing our active clinical and commercial stage partner pipeline programs that are active and that carry remaining downstream economics to OmniAb. The placement of each program in this graphic is based on its most advanced stage in any geography or indication. We found this figure can be a helpful visual for investors who follow some of our more visible partner programs. Turning now to Slide 11. I want to highlight a few recent updates for our partner programs that are leveraging our technologies. Immunovant continues to make what we see as strong progress and report clinical momentum in anti-FcRn space across a range of important indications with major unmet medical needs. Their next-generation candidate IMVT-1402 has a potentially registrational trial in difficult to treat rheumatoid arthritis that's fully enrolled with top line data expected in the second half of this year. Top line data from our proof-of-concept trial in lupus are also expected in the second half of this year. IMVT-1402 development is progressing across a range of indications with potentially registrational trials in Graves' disease, myasthenia gravis, CIDP and Sjögren’s disease, all remaining on track and with top line data for Graves' disease and myasthenia gravis expected in 2027. Immunovant also anticipate sharing top line data from its 2 Phase III studies evaluating batoclimab as a potential treatment for active moderate to severe thyroid eye disease in the first half of this year. In addition, Hanall reported ongoing preparation for an NDA submission in Japan for batoclimab as a treatment for myasthenia gravis. Moving across to the center of the slide here. At the time of the JPMorgan conference in January, Teva announced a funding agreement with Royalty Pharma of up to $500 million to accelerate the clinical development of their anti-IL-15 antibody, TEV-'408, specifically for vitiligo. Top line results from the Phase 1b trial in that indication are expected in the first half of this year and top line results of a Phase 2a trial evaluating 408 for celiac disease are expected in the second half of this year. With recent developments and disclosures, this is an asset in a program that is rightfully gaining more attention. Lastly, Merck KGaA indicated that based on Phase I data, it plans to advance M9140 directly to Phase III trials in metastatic colorectal cancer. This compound is a novel [ anti-CEACAM-5 antibody drug conjugate with a topoisomerase 1 inhibitor payload. It's been disclosed that the Phase III study is anticipated to start in the first half of this year which represents a pretty significant acceleration of the program's development. On Slide #12, we show some of the upcoming events that I just mentioned. 2026 is positioned to be a fantastic year for potential value-creating events. This calendar of near-term events is the strongest in recent memory. And in addition to the data and regulatory events highlighted here, we also expect new Phase I, Phase II and Phase III trial initiations this year. We'll talk more about this as we go through the year, but early views are that 2027 is also shaping up to be a year that will have some important events, including for some of the programs that I mentioned on the prior slide. Turning to Slide 13. I'd like to take a moment to highlight our 2 most recent technology launches, which we believe position us for substantial growth while reflecting our commitment to innovation, which we think differentiates OmniAb in the eyes of our partners. OmniUltra is the first and only transgenic chicken produced antibodies with ultra-long CDRH3 which is a structural feature of antibodies typically found in cows. These ultra-long CDRH3 are designed to reach binding pockets not accessible with other antibodies or modalities, potentially unveiling new therapeutic opportunities. What's particularly exciting about OmniUltra is the potential ability of these ultra-long CDRH3 to create novel picobodies. At roughly 1/3 the size of a nanobody, picobodies are the smallest functional antibody fragment and have a range of potential uses, including as building blocks for multispecifics, as binders for CAR-T and as a radiopharmaceutical therapies as well as in vivo generated peptides. OmniUltra, not only expands our antibody discovery capabilities, but it also creates a meaningful entry point into the peptide therapeutics space. As I think almost everyone knows by now, peptide therapeutics have experienced substantial growth and industry attention and investment, driven in large part by the success of the GLP-1s over the last couple of years. Moving to the right panel on this slide. Last May, we launched our xPloration partner access program. xPloration is our proprietary innovative high-throughput single B-cell screening platform that leverages machine learning and artificial intelligence. The xPloration platform includes a competitively priced instrument and proprietary single-use consumables as well as annual software subscriptions and maintenance contracts. As such, it has the potential for multiple revenue streams. Deployed instruments are performing extremely well for partners, and we're seeing strong continued demand for both on-site and virtual demos. Together, OmniUltra and xPloration represent important new engines that broaden our technology offering, expand our addressable markets and strengthen our competitive position in the discovery platform space. And with that, let me now turn the call over to Kurt for a discussion of our financial results. Kurt? Kurt Gustafson: Thank you, Matt. On Slide 15, I'll start with a review of revenue. Total revenue for the fourth quarter of 2025 was $8.4 million compared with $10.8 million in the same period in 2024. The decrease was primarily driven by a decline in license revenue, which was partially offset by an increase in milestone revenue. Royalty revenue increased, but this was due to an adjustment in the prior year period to reconcile royalties to actual product sales. And we also saw a small contribution from xPloration in the fourth quarter. Slide 16 shows our cost and operating expenses for the fourth quarter of 2025. As Matt mentioned, even with our growing program portfolio, we have a scale platform that has allowed us to be very disciplined with our cost structure. As you can see from the chart, our operating expenses in the fourth quarter decreased to $24.1 million from $26.7 million. Most of this decrease was due to lower personnel costs, but we also saw lower outside service costs, primarily related to reduced spend for our legacy small molecule ion channel programs. Q4 2025 also included a noncash impairment charge of $3.9 million, primarily related to certain small molecule ion channel property and equipment. Q4 2024 had a similar-sized write-off associated with intangibles. Turning to Slide 17. I'll focus on the bottom part of the P&L here and make just a few comments. If you focus on the tax line, as we previously guided for taxes, we recorded a full valuation allowance against the income tax benefit associated with our net loss, which is why our effective tax rate is close to 0%. Our net loss for the fourth quarter was $14.2 million or $0.11 per share compared with a net loss of $13.1 million or $0.12 per share in the prior year period. On Slide 18, for the full year 2025, revenue was $18.7 million versus $26.4 million in 2024. The difference related to both the decline in License revenue and Milestone revenue. Service revenue decreased as a result of the completion of certain small molecule ion channel programs. and these declines were partially offset by approximately $800,000 of xPloration revenue as a result of the launch of our xPloration partner access program. On Slide 19, we have our operating expense for the full year. Operating expense in 2025 decreased to $87.6 million from $100.9 million last year. R&D expense for the year was $47.8 million, down from $55.1 million in 2024 due to lower personnel costs and stock-based comp and external expenses. As I mentioned in Q4 of 2025, there was also a noncash impairment charge of $3.9 million related to legacy small molecule ion channel assets. G&A was $29.2 million in 2025 compared with $30.7 million in 2024, primarily due to lower legal fees and stock-based compensation. Moving to Slide 20, which shows our P&L for the full year 2025 versus 2024. I'll once again, focused on the bottom line here. The net loss was $64.8 million or $0.57 per share compared with a net loss of $62 million or $0.61 per share in 2024. Excluding the noncash impairment charge we took in the fourth quarter, earnings per share in 2025 would have been $0.54. Slide 21 shows the company's P&L for the year, broken out by quarter. As we've mentioned previously, and you can see in this table, our revenue is lumpy as much of the revenue comes in from the achievement of Milestones and one other thing I wanted to point out here is that you'll see a general trend of declining R&D and G&A expense, obviously, excluding the impairment charge we took in the fourth quarter. In 2025, we implemented workforce reductions of 22 employees, which resulted in savings in 2025 and going forward. On Slide 22, we've got the balance sheet as of December 31, 2025, and 2024. We ended the year with $54 million in cash, cash equivalents and short-term investments. You also see here the normal reductions to goodwill and intangible assets. These intangible assets relate to prior corporate and technology acquisitions, which are amortized over time. Property, plant and equipment is also lower due to normal depreciation as well as the noncash impairment charge we took in the fourth quarter. On Slide 23, we've got our financial guidance for 2026. The revenue guidance is based on information that our partners have disclosed to us as well as information they have disclosed publicly about their programs. And based on this information, we expect revenue in 2026 to be in the range of $25 million to $30 million. We expect operating expense to be in the range of $80 million to $85 million as we continue to realize efficiencies in the business. Cash operating expense is expected to be in the range of $50 million to $55 million. We define cash operating expense as GAAP operating expense less stock-based compensation, depreciation and the amortization of intangibles. We expect the combination of these noncash items to be about $30 million in 2026. In addition, the company expects to end the year with a cash balance in the range of $30 million to $35 million. And just as in 2025, the 2026 full year effective tax rate is expected to be approximately 0% due to the valuation allowance. Turning to Slide 24. In addition to providing 2026 guidance, we wanted to provide some thoughts on our longer-term financial outlook. The financial side of our business model is one that is highly scalable. As we look out into the future, our revenue is expected to transition from more milestone driven to more royalty driven. That being said, we've got over $3 billion of contracted milestones in our existing antibody programs and $350 million of that is for programs that are already in the clinic. The average royalty across our antibody portfolio is approximately 3.4%. These types of revenue streams don't have corresponding cost of goods or selling costs. We've also been realizing efficiencies in our operating costs in recent years. We have a focused business development team dedicated to bringing in new partners, while most of our R&D costs relate to maintaining our animal colonies with a small amount directed towards new technology development. This creates a highly leverageable business. As you can see from these charts, we have and will continue to control operating costs to capture that leverage that is built into our business model. Our maturing portfolio programs are expected to drive revenue higher. Combined with tight control of our operating expenses, we are driving our cash use lower, and this puts us on a trajectory to being cash flow positive. And with that, I'd like to open up the call for questions. Operator? Operator: [Operator Instructions]. Your first question comes from the line of Puneet Souda from Leerink. Puneet Souda: First one on the partner programs. Given the sort of the backdrop of the markets, fundraising activity that happened in the second half last year and it still is ongoing, one on the clinical assets. Just wondering if you're seeing any effect from that? And how should we think about the new program's growth this year despite the strong 2025 that you had. So maybe I know it's always hard to sort of outline that, but just wondering, how are you thinking about the new program growth this year and any feedback from the business element side? Matthew Foehr: Yes. Yes. Thanks, Puneet. This is Matt. So yes, 2025, we observed really nice momentum in program additions and also a really strong year in terms of partner adds as well. We noticed a shift beginning last year as I think the industry started to get some more winded in sales. We saw partners, both existing and new partners initiating new programs. Many of those are attracted to us because of our newer technologies. Some of the technologies we had launched that being OmnidAb, the year the prior or the prospect of OmniUltra coming, which we launched in mid-December. So we feel like we're very well positioned for this year with coming on the tail-end of new technology launches and are obviously really pleased to see partners actively progressing, looking at accelerating development and that sort of thing. So we feel very good about that element as we look forward. Puneet Souda: Got it. And then on xPloration, Nice to see some revenue there. I don't know if you can quantify it, but maybe, for the full -- I would love to know if you have a number in mind for the full year? What sort of growth you can see on that platform? It's a nice addition of revenue on top of the core animal models and programs that program growth that you're seeing. And then also wondering if you can provide anything on the pull-through side of the xPloration. Matthew Foehr: Yes, Puneet, I'll give a little color there. Obviously, we launched xPloration midyear last year with our partner access program, highlighted at the PEGS conference and sold an instrument right after that, obviously, deployed instruments now are performing extremely well for partners, xPloration obviously has the potential to contribute revenue in a variety of ways, not only from instrument sales, but also from the single-use consumables, which are at a nice -- very nice high margin as well as subscriptions and maintenance contracts. The flow of interest is very strong. It's with our, what I'll call our highest tier of partners, these are ones who are obviously doing a lot of discovery work and I think are attracted to xPloration because of its -- it's a throughput and ease of use, the ability to do multiple runs in a day and the ability to generate huge amounts of data, which I think is very well timed for some of the interests of the industry. So yes, we do expect it will be contributing this year. We're excited about that. We've not broken down the various parts of revenue guidance, but we do see significant growth for xPloration and contribution this year. Operator: Your next question comes from the line of Mike King from Rodman & Renshaw. Michael King: First is nice to see you guys are cattle light and keeping the expenses under control. But as a valuation metric, it would seem to me to be more important for you guys to be adding programs and advancing things in the pipeline. So I'm just wondering how sacrosanct the cash flow neutrality or positivity is relative to additional investments that you might want to make to generate additional partnerships? Matthew Foehr: Yes. Yes, Mike, good question. I mean we are obviously building this business to be differentiated from the perspective of technologies that we know the industry needs, right? But to do that in a really efficient way that benefits our shareholders and our stakeholders. We sit in a really, I'll say, envious and unique position in the industry, right, with 107 partners. Over 407 programs that partners are progressing through various stages of development gives us a really valuable perspective on the industry, right? We can see -- we understand the targets that are of most interest to the biggest and most valuable pharma companies in the world, right? And that informs kind of how we invest in our technologies, it informs kind of the work that we do and how we work with the partners. And I think you're seeing the benefit of that in many of our metrics, right? So for us to add incremental partnerships, we can do that quite efficiently in the model that we have. We talk a lot about the innovations that we choose to invest in, and we do it really with that knowledge of not only where the industry is right now from the perspective of discovery and innovation. But knowing where it's heading as well, right? And that's what informed our investments over past years and things like our Omni dab single domain technology. And then more recently, with the December launch of OmniUltra, which is -- it sounds [indiscernible] but it's a chicken that makes cow-like antibodies with fully human sequences. That was something that was -- we knew there'd be demand there based on our dialogue with partners. So for us, I think we can do that very efficiently. We think that benefits all of our stakeholders, and that's where we're going to continue to focus. Michael King: Okay. And then just real quick follow-up. Jumping to share count in the third and fourth quarter. What can we attribute that to? Kurt Gustafson: Yes. Thanks, Mike. We did raise some capital, and so that raising capital increased the share count during that period of time. Operator: Your next question is from the line of Matt Hewitt from Craig-Hallum Capital Group. Matthew Hewitt: Maybe to dig in a little bit more on the xPloration opportunity. It sounds like you're seeing strong demand. What was the number of systems that were placed or deployed exiting this past year? And given the pipeline, where could that go in '26? Matthew Foehr: Yes, yes. Thanks, Matt. Yes. So a quick answer to the first part of the question is 2, instruments deployed as of the end of 2025. And as we look to this year, as I said, we expect growth out of xPloration, we're excited about the flow of interest from our highest tier partners. These are obviously larger capital purchases for many companies. So there can be longer sales cycles, which we fully expected when we launched the technology. So they go through budget and capital approvals, et cetera. But the reception is quite positive. It's keeping our team very busy, which is great and the interest in demos and the performance in those demos has really been fantastic. So hopefully, that gives you the color you need. Matthew Hewitt: Yes. No, that's great. And then you talked about -- Kurt, I think you were talking about this a little bit during your prepared remarks as far as your trajectory towards a cash flow breakeven, given the pipeline and Matt, you spoke to this as well, given the pipeline of opportunity, things progressing through the channel, or through the clinic, I should say, this year and into next year, when do you think that you could hit breakeven? Is that something that you see potentially exiting '27, maybe a little bit longer? Just trying to get a sense for time frame is when you could get to that level? Matthew Foehr: Yes. Thanks, Matt. Great question. Our future revenue is largely based on clinical and regulatory advancements by our partners for our partner programs. And while we're not giving a precise date for when we achieve breakeven, the growing and maturing portfolio of our partner programs gives us confidence that we are on the right path and that our trajectory can take us there. So we see it coming, but we can't give you an exact date right now, but we do see it coming. Operator: Your next question comes from the line of Joe Pantginis from H.C. Wainwright. Joseph Pantginis: So on the flip side for xPloration, obviously, we see the opportunities there. So just curious, how would you describe -- I mean, it sounded like you placed 2 machines in '25. But looking forward, your manufacturing needs and investment on your end and impact on op expenses as the program gets larger. Kurt Gustafson: Yes, Joe, good question. This is an instrument that we use here for our own research. So we have a team of folks that understand the instrument is using it all of the time. And so there's not a large incremental investment in terms of staff that we need to make to go do this. This is a program that we've made available to our partners. For the most part, instruments would be built kind of to suit, if you will, or build for these folks when they order one. And so there's not even a large sort of investment in inventory, if you will, to go do that. So we're keeping this really lean right now as we want to make sure that this is something that is accretive to the business as we possibly can make it going forward. Operator: Your next question comes from the line of Brendan Smith from TD Cowen. Chad Wiatrowski: This is Chad on for Brendan. I'd like to kick it off with Ultra. How has the initial response from partners been? And have you seen the beginning of that ramp in demand that you kind of called out last quarter? Matthew Foehr: Chad, thanks. The Ultra launch is going fantastically well. I've been really pleased with the reception. Obviously, it's still very early days. We just launched it in mid-December. But we did really a massive amount of validation work around Ultra before we launched it. The presentations that were given at the AET Conference in December highlighted a broad array of therapeutic targets that we had assessed at the time of launch. We also had 3 partner programs already progressing at that time. That number has increased and we expect it will continue to increase. So we're seeing really strong engagement. The technology is performing extremely well. And so we feel real good about how it will impact the business going forward. Chad Wiatrowski: That's awesome. Are you seeing any like specific traction amongst other modalities that you would call out of interest? Matthew Foehr: Yes. I mean I think there's been a general trend in the industry, and I'll say, smaller is better, looking for smaller binding units, if you will, that can be strung together in multispecifics. There's obviously been a big growing opportunity in the radio pharma space. That's something that the industry has observed. And then, of course, we've opened up totally new opportunities and a completely new call file in the peptide space, right? So peptides are an area of growing and increasing interest. There's significant growth in that space and really opened up our call file, if you will, to well over 130 companies that are new potential targets for us. So for all those reasons, I think we're excited about it. Again, early days, but we're building some nice momentum and we're excited about it. Chad Wiatrowski: Totally. I'm going to be that guy. I'm -- one more question in. But for your fiscal year '26 rev guide, it's kind of hinting out a return to 2024 levels. Would it be safe to say you're seeing early signs of recovery in the market? And what kind of visibility do you have into your partner spend expectations that couldn't form that outlook? Kurt Gustafson: Yes. I think most of -- a big chunk of our revenue is milestone-based. And so as we talked about it on a quarterly basis, the revenue number is lumpy. It actually is for years as well. So it sort of is just really a function of what kind of clinical or regulatory events are going to be happening. And as we sort of project forward into 2026 based on what partners have said, we project out what those milestones might be. And so I'm not sure it's really sort of kind of whether the industry or the overall market is what's driving that as much as us taking a look at the very specific events that are happening with the programs that we've got. Any events that are sort of coming up for 2026. That's really more the driver of it. Operator: Your next question comes from the line of Srikripa Devarakonda from Tourist. Unknown Analyst: This is Anna on for Kripa. One question on xPloration. Could you kind of qualitatively describe how the interest in xPloration is shaping up in terms of interest from any new partners or kind of strengthening that existing partner relationship? Matthew Foehr: Yes. Great question. The answer is both. I mentioned that of our existing partners, the ones that obviously have the quick engagers in evaluating xPloration with strong interest have been that highest tier of partners, right? These are the ones that are doing a lot of antibody discovery work, have a thirst for more data, are attracted to the high throughput and ease of use of the instrument, it is also attracting others as well who are not current partners of our repertoire generation discovery technology. So that's one of the things I referenced when I generally say I think there are benefits and advantages that xPloration creates for the business is not only deepening those relationships with existing partners and building structures that allow us to create value earlier in a product's life cycle or a program's life cycle or the relationship, but also attracting others as well who we can also bring in as a more broader partner in the process. So I think that is another benefit of xPloration. Unknown Analyst: Great. And on OmniUltra, are there any milestones we should expect from OmniUltra in 2026? Matthew Foehr: Yes. I obviously will expect to continue to be adding partners and programs with OmniUltra. That's going to be our initial focus as we launch the technology. As those programs obviously go through development and graduate to later stages of development, we expect that will happen in due time, but the initial is going to be driving new partnerships and new programs and leveraging the technology in that way. Operator: Your last question comes from the line of Stephen D. Willey from Stifel. Stephen Willey: Just actually had a question about a footnote on Slide 24, where I think for programs with tier of royalties, you're making some kind of sales assumption and using a blended royalty calculation. Have you said or can you speak to what proportion of the programs that are active have either a tiered or fixed royalty structure? Kurt Gustafson: That's a good question, Steve. I don't think we've given that number out before. It's more than a handful, but I'm not -- I wouldn't say it's a majority. I don't know, Matt... Matthew Foehr: Yes, more than handful that have tiered -- majority of our deals are flat royalties. There are some instances in which they are tiered, but the majority are a straight royalty. Stephen Willey: Got it. And then just also curious where you think that average, I guess, it's 3.4% royalty rate could trend to over time and whether you're trying to command a higher royalty rate on some of the newer technology offerings like OmnidAb and OmniUltra? Matthew Foehr: Yes. I think for Discovery Technologies, Steve, there's always a dynamic there of how far you can push, right, on royalties. Obviously, the level of innovation allows us to drive better economics more generally, but those economics can be an interplay between upfront payments, service payments, milestones that are paid along the way in royalty. So it really depends in many instances on the negotiating dynamic, the soft points or the points of interest of the partner. But I will say that more innovative technologies do drive more value for our shareholders. And that's one of the reasons why we've launched new technologies like OmniUltra, like OmnidAb, but that kind of gives you a little color on the dynamic. Operator: There are no further questions at this time. I would now like to turn the call back to Matt Foehr for closing comments. Sir, please go ahead. Matthew Foehr: Great. Thanks. I'd like to thank everyone for joining today's call and for your questions and engagement. We look forward discussing our first quarter financial results in a few months. In the meantime, we'll be participating at the Leerink Global Healthcare Conference which is next week in Miami. So we hope to see some of you there. We also expect to be on the road likely in the spring with NDRs and the like. So thanks again, and have a great day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.
Operator: We have reconnected with our speakers. Please proceed, Mary. Mary Chen: Thank you, Betsy, and welcome to our 2025 fourth quarter and full year earnings conference call. Joining me on the call today are Donald Dunde Yu, Tuniu Corporation's Founder, Chairman and Chief Executive Officer, and Anqiang Chen, Tuniu Corporation's Financial Controller. For today's agenda, management will discuss business updates, operational highlights, and financial performance for the fourth quarter and fiscal year 2025. Before we continue, please refer to our Safe Harbor statements in the earnings press release, which apply to this call, as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains our reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Dunde Yu. Donald Dunde Yu: Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and full year 2025 earnings conference call. In the fourth quarter, our business continued to maintain solid growth momentum. Net revenues increased by 20% year over year, exceeding our previous guidance, while revenues from our core packaged tour products grew at an even faster pace, rising 35% year over year. At the same time, we achieved profitability for both the quarter and the year. This also marks the third consecutive year following the pandemic in which we have delivered a full year non-GAAP profitability. We have announced a long-term shareholder return plan totaling up to $50 million to be carried out during the three-year period from March 2026 via cash dividends and share repurchases. This plan reflects both our commitment to provide shareholders with sustainable returns and our confidence in the long-term outlook of the travel industry. The travel market continued to grow in a healthy manner in the past year. The extension of national holidays and other favorable policies further stimulated domestic travel demand, while the increasing number of visa-free destinations makes it easier for Chinese travelers to explore more destinations overseas. In 2025, we adopted a more proactive product strategy. By differentiating our products and product lines, we targeted distinct customer segments and offered a richer, more tailored portfolio based on customer needs. Meanwhile, we leveraged our supply chain growth to enhance price competitiveness and attract more customers. During the year, we continued to pursue an open and collaborative approach, attracting high-quality partners to expand new channels and enhance service quality for our customers. Contributions from channels such as live streaming, offline stores, and corporate clients continued to increase as a share of Tuniu Corporation's transaction volume. In addition, we actively embraced new technologies, leveraging innovation tools to further enhance our product and service and improve operational efficiency. Now I will walk you through our key achievements in more detail. First, our strong supply chain remains the foundation for delivering high-quality and price-competitive products. In 2025, we further enhanced our direct and centralized procurement strategy in order to lower purchasing costs. Moreover, based on customer needs and pain points, we consolidated flight resources and introduced several connecting flights for select long-haul travel products to niche destinations. This approach further expanded our departure city coverage, making it more convenient for travelers from lower-tier cities to travel abroad. It also enabled us to take advantage of airline discounts available in those hubs, allowing us to offer even more competitive pricing to our customers, and further boosted demand for related destinations. Many hub cities such as Chengdu are popular tourist destinations themselves, allowing travelers to combine stopovers with leisure visits. As a result, these products gained strong traction upon launch. For example, our Caucasus series using connecting flights recorded over 500% year-over-year growth in transaction volume in 2025. We will continue to expand these offerings by adding more departure points and destinations. In terms of products, we continue to adopt a differentiated strategy to better serve distinct customer segments. As the core customers of our New Tour products, experienced travelers and repeat customers tend to prioritize travel experience and typically have greater flexibility in both time and budget. In 2025, New Tour introduced a wider range of niche destination products, including the organizer tours to the Caucasus region in April and to South America in October. At the same time, we further enhanced the travel experience of New Tour products by implementing a zero-shopping policy throughout the trip and by including curated experiences such as Michelin-star dining and helicopter tours. In 2024, we launched our New Select series, offering a wider range of cost-effective products and further expanding Tuniu Corporation's price tiers. In 2025, we expanded our New Select offerings to cover a broader array of international destinations. With more competitive pricing, the New Select products have attracted a wider customer base, enabling travelers to either reduce their travel budgets or explore additional destinations within the same budget, an option that strongly appeals to travel fans, particularly younger ones. The New Select Singapore–Malaysia tour series launched in June recorded over 10,000 paid bookings during the summer holiday period. We also observed a continued rise in demand for self-guided tours, particularly in the domestic travel market. Last year, we expanded the supply of our Hotel Plus X products, with hotels at the core and supported by dynamic packaging technology. We broadened the coverage to all provinces in China's mainland and further penetrated lower-tier markets. During the 2025 Labor Day and National Day holidays, transaction volume for our self-drive tour products recorded triple-digit year-over-year growth. Going forward, we will continue this strategy by expanding the supply and destination coverage of our self-guided tour products. In addition, in 2025, we continued to explore and expand diversified channels. Live streaming is playing an increasingly important role for our sales. In 2025, both payment and verification volume through our live streaming channel continued to record double-digit year-over-year growth, while achieving profitability through a single channel. The live streaming channel contributed over 15% to our total transaction volume in 2025, compared to approximately 10% in 2024. On the product side, first, we expanded the range of live streaming offerings. Beyond the traditional hotel plus scenic spot packages, we added personalized service products such as travel photography as well as more high-ticket items like long-haul outbound travel products, enriching customers' choices. Second, we fully leveraged our supply chain advantages to ensure competitive pricing. For example, our New Select products are highly popular with live stream audiences due to their good value for money. In terms of format, we increased the number of our outdoor live streaming shows, including inviting live streamers to broadcast live from destination sites. In March, Tuniu Corporation partnered with multiple live streamers to conduct a 21-day on-site live streaming campaign across 10 islands in the Maldives, generating cumulative sales of over RMB100 million. On the service side, with more than a decade of experience in the travel industry, we provide professional tour guidance and comprehensive travel-related services. In addition, we have a dedicated verification team and specialized system support in place to deliver a smoother redemption experience for customers. Offline stores remain an essential part of our overall sales and service network. As of 2025, we operated more than 400 stores nationwide. We expanded our store presence in key cities, including major popular tourist destinations and transportation hubs such as Chengdu and Xi'an, building scale in local markets to enhance operational efficiency and reduce costs. In 2025, transaction volume from offline stores increased by nearly 20% year over year. We also continued to develop channels such as traffic platforms and corporate clients, tailoring our product offerings to the specific needs of each channel. On traffic platforms, sales of standalone products such as air tickets and hotel bookings grew rapidly. For corporate clients, in addition to providing business travel booking services, we leveraged our extensive experience in the leisure segment to offer customized group travel solutions as well as personal and family vacation products for employees. In 2025, transaction value from corporate clients increased by more than 20% year over year. In terms of technology, we are exploring the application of AI agents across various business scenarios. Last April, Tuniu Corporation officially launched our self-developed travel AI agent, AI Assistant Xiao Niu. The assistant integrates vertical travel application scenarios with large language models to provide customers with one-stop services, including smart search, automated price comparisons, personalized recommendations, and dynamic packaging. At the same time, we continued to integrate technological tools into our daily operations. These initiatives have improved efficiency and helped control operating costs. We are encouraged by the growing adoption of our AI tools among both customers and employees. In addition, we have adopted an open collaboration approach by gradually providing external AI agents such as OpenClaw with the same comprehensive travel booking capabilities available in our app via MCP interface, enabling them to search and place bookings directly. We will continue to embrace new technology to support high-quality growth. Over the past year, we have made steady progress while managing a range of challenges. Overall, the company continues to move forward on the sustainable development path. In the year ahead, we will remain focused on customer needs, continue refining our products and services, and expand our reach through diversified channels to support stable and sustainable growth. I will now turn the call over to Anqiang Chen, our Financial Controller, for the financial highlights. Anqiang Chen: Thank you, Donald. Hello, everyone. Now I will walk you through our fourth quarter and fiscal year 2025 financial results in greater detail. Please note that all amounts are in RMB unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. For the fourth quarter of 2025, net revenues were RMB123.5 million, representing a year-over-year increase of 20% from the corresponding period in 2024. Revenues from packaged tours were up 35% year over year to RMB102.1 million and accounted for 83% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 21% year over year to RMB21.5 million and accounted for 17% of our total net revenues. The decrease was primarily due to the decrease of merchandise sales. Gross profit for the fourth quarter of 2025 was RMB70 million, almost in line with gross profit in the fourth quarter of 2024. Operating expenses for the fourth quarter of 2025 were million, down 16% year over year. Research and product development expenses for the fourth quarter of 2025 were RMB12.3 million, down 8% year over year. The decrease was primarily due to the decrease in research and product development personnel-related expenses. Sales and marketing expenses for the fourth quarter of 2025 were RMB44.1 million, up 3% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses for the fourth quarter of 2025 were RMB12.8 million, down 52% year over year. The decrease was primarily due to the impairment of property and equipment, net, recorded in the fourth quarter of 2024. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB1.5 million in the fourth quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB3.5 million in the fourth quarter of 2025. As of December 31, 2025, the company had cash and cash equivalents, restricted cash, certain investments, and long-term deposits of RMB1.1 billion. Cash flow generated from operations for the fourth quarter of 2025 was RMB68.8 million. Capital expenditures for the fourth quarter of 2025 were RMB0.5 million. Now, moving to full year 2025 results. In 2025, net revenues were RMB578 million, representing a 13% year-over-year increase. Revenues from packaged tours were up 21% year over year to RMB493.5 million and accounted for 85% of our total net revenues in 2025. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 20% year over year to RMB84.5 million and accounted for 15% of our total net revenues in 2025. The decrease was primarily due to the decrease in the commission fees received from other travel-related products. Gross profit was RMB335 million in 2025, down 6% year over year. Operating expenses were RMB323.7 million in 2025, up 10% year over year. Research and product development expenses were million in 2025, up 12% year over year. The increase was primarily due to the increase in research and product development personnel-related expenses. Sales and marketing expenses were RMB193.9 million in 2025, up 8% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses were RMB71.8 million in 2025, down 18% year over year. The decrease was primarily due to the decrease in general and administrative personnel-related expenses and impairment of property and equipment, net. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB31.1 million in 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses, amortization of acquired intangible assets, and impairment of property and equipment, net, was RMB42.6 million in 2025. Capital expenditures were RMB4.4 million in 2025. For 2026, the company expects to generate RMB100 million to RMB131.6 million of net revenues, which represents a 7% to 12% increase year over year. Please note that this forecast reflects our current and preliminary views on the industry and our operations, which are subject to change. Thank you for listening. We are now ready for your questions. Operator: We will now open for questions. There are no questions at this time. I will now turn the call over to Tuniu Corporation's Director of Investor Relations, Mary Chen. Mary Chen: Once again, thank you for joining us today. Please do not hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.