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Operator: Good afternoon. This is Chorus Call. Welcome to the financial results presentation of the financial results as of 31st December 2025. [Operator Instructions] And now the Chairman and Chief Executive Officer, Dr. Nicola Cecconato, is going to give his address. Nicola Cecconato: Thank you. Welcome. I'll give you the consolidated results as of 31st December 2025 and the comparison with consolidated results as of 31st December 2024. The slide illustrates on Page 2, the group's corporate structure as of 31st December 2025. During 2025, the group completed a number of significant extraordinary transactions that changed the scope of its consolidated assets and equity investments held. On 9 May, 2025, Ascopiave acquired 9.8% of the share capital of Ascopiave becoming the sole shareholder. In December 2024, Ascopiave exercised put option on 25% of the share capital of Estenergy and the transfer of the shares took place on June 24, 2025. On July 2025, the transaction for the acquisition from the A2A Group of 100% of AP Reti Gas North S.r.l., a newly formed company, and the transfer of certain business units previously owned by Unareti S.p.A. and LD Reti S.r.l. became effective. The company is active in the gas distribution business in the provinces of Bergamo, Brescia, Cremona, Lodi, and Pavia. On October 2025, Ascopiave S.p.A. transferred to Hera S.p.A. 3% stake its held in Hera Comm S.p.A. On 22 November, 2025, the transaction for the acquisition from Sime Partecipazioni S.p.A. of 100% of the share capital of Societa Impianti Metano S.r.l. [indiscernible]. Active in the gas distribution business in 40 towns in Lombardy, Emilia-Romagna, Piedmont became effective. Changes in the consolidation perimeter and transfer of shareholdings. It should be noted that the company, AP RETI GAS has been consolidated on the 1st July 2025 and the consolidated economic results in 2025 refer to the second half of the year. On 24 June, 2025, the 25% stake in Estenergy was sold. In the financial year 2024, the company's results were consolidated using the equity method until 30 September, 2024, the date of the earliest accounting close prior to the exercise of the put option on the shareholding. In the income statement as at 31st December 2025, dividends received from the company were recognized as financial income and the gain from the sale of equity investments was recognized as well. On October 2025, the 3% stake in Hera Comm was sold. Consolidated income statement for the year 2025. In the 2025 financial year, the group realized revenues of EUR 244.3 million, achieving EBITDA of EUR 154.4 million and EBIT of EUR 92 million. The net balance of financial income and expenses was positive at EUR 11.3 million, an improvement of EUR 21.5 million compared to 2024. This change is mainly explained by higher dividends paid by investee companies in particular by the dividend amounting to EUR 22 million distributed by Estenergy S.p.A. prior to the sale of shares. The portion of the result of companies consolidated using the equity method is negative and equal to minus EUR 0.3 million and refers to the results achieved by the subsidiary, Cogeide S.p.A. in the year 2024 net of the write-down made to adjust the investment to its recoverable value. Compared to the previous year, the item shows a negative change of EUR 8.2 million in the 2024 income statement [indiscernible] realized by Estenergy Group with the recognized for the group share until 30 September, 2024. While there was no recognition in the 2025 financial year. Consolidated balance sheet as of 31 December, 2025 as compared to December 2024, the group has invested capital of EUR 1.247 billion invested in capital stock. EUR 184.2 million in tangible fixed assets, EUR 1.017 billion intangible assets, EUR 66.5 million from the value minority interest has [indiscernible] EUR 22.3 million. [indiscernible] EUR 26.5 million from other fixed assets. Then there was negative balance of working capital items and provisions EUR 87.8 million. The intangible fixed assets shown under asset equal EUR 1.317 billion, mainly consists of gas distribution networks and plants owned by the group, EUR 1.175.8 billion, of which EUR 247.8 million is attributable to AP Reti Gas North S.r.l. [indiscernible] Group and goodwill recognized following business combination. Property, plant and equipment consisting of real estate and the value of renewable energy productive plants. It should be noted that during the fourth quarter of the 2024 financial year, Ascopiave S.p.A. exercised the put option in the remaining shares of the associate Estenergy S.p.A. and consequently from the 1 October, 2024, the revenue of equity investments recognized as of 31 September, 2024 was reclassified [indiscernible]. The sales was completed on 24 June, 2025. Shareholders' equity as of 31 December, 2025 amounted to EUR 912.4 million, an increase of EUR 64.6 million compared to 31 December, 2024. The net financial position was EUR 614.2 million, an increase of EUR 226.6 million compared to the end of 2024. The debt-equity ratio is 0.67. Operating data, gas and renewable energies distribution, as of 31 December, 2025, the group's distribution company has managed approximately 1.468 billion users, an increase 68% compared to 31 December, 2024 of which approximately 599,000 related to the company AP Reti Gas North [indiscernible] during 2025. In 2025 financial [indiscernible] AP Reti Gas North into the scope of consolidation as of 1 July, 2025, we distributed 19 million cubic meters in the second half of 2025. The group has 29 hydro power, wind power plants with an installed capacity of 84.1 megawatts. In the 2025 financial year, electricity production amounted to 187.3 gigawatts, a decrease of 30.3 gigawatts, minus 14% compared to the same period of the previous financial year, the latter being characterized by significant rainfall. Evolution of distribution, veritable [indiscernible] revenues and current revenues. Revenues EUR 244.3 million recording an increase of EUR 39.4 million determined by enlargement of the consolidation perimeter by EUR 48.9 million, increased of EUR 10.9 million in gas distribution tariff revenues, the decrease of EUR 5.5 million in revenues from the sale of electricity generated from renewable sources, the decrease of EUR 11.7 million in revenues from energy efficient certificate. The decrease in other revenues of EUR 3.2 million. Gas distribution tariff revenues amounted to EUR 189.8 million and further increase of EUR 50.3 million compared to the previous year. [indiscernible] EUR 39.5 million with expansion of the consolidation perimeter on a like-for-like basis and EUR 10.9 million of which 8.6 million due to the revision of 2020-2024 tariff operating costs envisaged by ARERA Resolution 87/2025. Revenues from the products of energy from renewable sources amounted to EUR 22.6 million, decreased by EUR 5.5 million. Decrease is mainly explained by the lower volume of energy produced. Operating profit, other operating expenses. Operating income amounted to EUR 92 million, showed an increase of EUR 40.3 million due to the enlargement of the scope of consolidation, EUR 13.9 million; increase of EUR 10.9 million in gas distribution tariff revenues, decrease in revenue from the sale of electricity generated from renewable sources, EUR 5.5 million. The decrease in amortization and depreciation, EUR 0.2 million, capital gains of EUR 26.4 million related to the sale of 25% stake in Estenergy, an increase in net operating expenses of EUR 5.5 million. Net operating expenses EUR 84.6 million increased by EUR 20.5 million due to the change in falling revenue and cost items. Enlargement of the scope of consolidation EUR 15 million. Low concession fees two towns, EUR 1.4 million. Higher personnel costs, EUR 1.7 million; higher consulting costs, EUR 3.8 million, of which total EUR 2 million related to the acquisition of AP Reti Gas North. Low compensation to directors and statutory auditors, EUR 0.4 million. Lower gas meter reading costs, EUR 0.5 million. Higher non-recurring cist EUR 2.1 million. Other changes with a negative impact, EUR 0.2 million. Number of Employes and personnel cost. As of 31 December, 2025, the group had 733 employees on the payroll, an increase of 238 compared to 31 December, 2024. This increase is mainly explained by the consolidation of AP Reti Gas North, which have 230 employees as of 31 December, 2025 and AP Reti Gas Next Grids with 17 employees. The overall EUR 23.9 personnel cost increased by EUR 5.8 million driven by enlargement of consolidation perimeter of EUR 4.1 million, EUR 0.4 million increase in capitalized labor cost, EUR 2.1 million increase in current personnel cost mainly due to higher cost of incentive plans and ordinary salary increases during March, the contractual increases provided by national labor contracts and in part individual recognition. Captain Expenditures. Investments in tangible and intangible assets realized during the year amounted to EUR 93.7 million increased by EUR 12.6 million. Investments made by the company in AP Reti Gas North consolidated 1 July, 2025 amount to EUR 4.3 million. Most of the technical investments on the like-for-like basis related to the [indiscernible] and modernization of gas distribution network and plants amounted to EUR 41.9 million, of which EUR 16.3 million in connections, EUR 22.5 million in network expansions [indiscernible] and EUR 2.1 million in reduction plans. Investments in metering equipment amounted to EUR 11.9 million. Investment in the renewable energy sector amounted to EUR 21.1 million, mainly related to costs incurred for the maintenance and expansion of hydroelectric plant EUR 3.5 million, for the construction of photovoltaic plants EUR 7.2 million, and for the construction of other green energy plant EUR 10 million. Other investments amounted to EUR 6.5 million, related investments in land and buildings EUR 2.3 million; hardware and software EUR 2.7 million; company vehicles, EUR 0.9 million; and infrastructure, EUR 0.5 million. Net financial position and cash flow. The net financial position, effective 31 December, 2025 EUR 614.2 million, an increase of EUR 226 million compared to 31 December, 2024. During the year, cash flow generated financial resources of EUR 97.9 million. Net investment in tangible and intangible assets resulted in cash outflows of EUR 93.8 million. Net working capital management generated resources of EUR 9.5 million. The group collected dividends of EUR 27.4 million from subsidiaries, not consolidated on a line-by-line basis. Shareholders' equity resulted in cash outflows of EUR 32.5 million and the distribution of dividends to shareholders. Acquisition of [indiscernible] resulted in cash outflows of EUR 518.2 million of which EUR 456.8 million for the acquisition of the AP Reti Gas North and EUR 46 million for AP Reti Gas Next Grids. The sale of equity investment generated [indiscernible] of which EUR 204.1 million from the sale of equity investments in Estenergy and EUR 54.8 million from the sale Hera Comm. The purchase of equity investments resulted in cash outflows of EUR 472.2 million. The realization of equity investments generated resources of EUR 234.1 million. Financial debt as of 31 December, 2025 amounted to EUR 577.1 million [indiscernible] 49% variable rate and the weighted average cost of debt in the year 3.11%. Before [indiscernible] the Board of Directors of Ascopiave in consideration of the results of the year and the solidity of the group's equity and financial structure will propose at the Shareholders' Meeting, the distribution of a dividend of EUR 0.16 per share, for a total of EUR 34.6 million, an amount calculated on the basis of the shares in circulation and the closing date of the financial year. If approved at the shareholders' Meeting, the dividend will be paid in May 2026 with ex-dividend date on 08 May 2026. I have finished the presentation, now the Q&A session is going to start. Thank you. Operator: [Operator Instructions] First question from Alessandro Di Vito, Mediobanca. Alessandro Di Vito: The first question is relating to the field. Other operators in the field have forecasted an acceleration of optimistic forecast for the year. Do you take part in any tender in the year? The second question is about the increase in revenues due to the positive optimistic forecast. The third and last question if can you give us some guidance on the trends that you expect for 2026. Nicola Cecconato: I'm going to answer some of your questions. [indiscernible] answers to questions will be more specific. On the gas tenders, sure, we also have received, from the contracting stations we have received news that there could be gas tenders during the year. The premises are good. So what you say, what you have read is indeed true as in the past, it has been blocked, but the gas tenders, there will be this year, tenders have already been published. So since we are interested in taking part in some of the tenders, we cannot give you all the information, it is confidential. In the industrial plans, we have already stated that Ascopiave would take part in some of the tenders. We have indicated in [indiscernible] the plan as to what our policy is going to be in 2026. So once the tenders are officially published, then you will know as well the [indiscernible] and what our policies will be, what evaluations will be. For example, in the strategic plan, we have already stated what our policies will be in 2027-2028. So you know more or less are the perimeter of our [indiscernible]. We are ready to take part if they are officially opened. And if there are growth drivers that [indiscernible] the opportunities, relating to the impact on [indiscernible] I'm going to give you a very quick evaluation. [indiscernible] based on the results, the amount we expect to pay between EUR 1.6 million - EUR 1.8 million. Relating to the prospect 2026, we will publish -- we will give some guidance. We will give you some guidance, some tangible guidance, but for that, we need the official publication of tenders. So already in our press release, we have given -- in our strategic planned press release, we have already issued the policies of what our policy will be and the framework within which we will operate. So since we have acquired some new assets, so we also have to take that into consideration. So next year, there could be an increase surely in our turnover, in our revenues. Some of our assets that we have acquired from [indiscernible] will be perfected. We are going to work on it to enhance the performance of these assets. Obviously, we have also to consider what antitrust dictates to us. But what we need to do, our goal is only to increase our performance in the gas sector. That's for sure. This is one of the goals of the year 2026 that we have set for ourselves. Once we have - we will be [indiscernible] so the result of 2026 can surely be an improvement of what we have achieved, what we have accomplished in the year 2025. So EUR 8.6 million is the tariff balance that we have achieved, that we have also managed to get from Estenergy. And -- so the dividends have to be taken into considerations. The dividends have been extremely generous this year as you must have seen from EUR 22 million of dividends as you have seen from our press release. So these components [indiscernible] to be taken into consideration. So anyway, whatever we do, we do it bearing in mind the stability of the regulatory framework. This is the forecast, these are the numbers that we can provide you in order that you can make your own guess on our 2026 performance. Operator: [Operator Instructions] The next question is a follow-up from Alessandro Di Vito, Mediobanca. Alessandro Di Vito: An additional question from me. So what do you expect for the year 2027 if France is excluded from the RAB basis? Nicola Cecconato: We haven't made any simulation on this. There is a trend that tax rates are going to increase. So sincerely, we cannot give you any tangible guidance on this. But there is no constant figure that we can give you. There will surely be consequences from the cost level, dividend. Anyway, the regulatory framework is still standing. So we just hope there will be no adverse effect. So I hope [indiscernible] is going to take into consideration that there is a new situation that has emerged. But as of today, we don't know and we haven't made any simulation. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions. So thank you very much for your participation and see you at the next call. Thanks a lot. This is a Chorus Call. The conference is over. Thank you. You can disconnect your phone.
Operator: Greetings, and welcome to the Full House Resorts Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Adam Campbell. Thank you. You may begin. Adam Campbell: Thank you, and good afternoon, everyone. Welcome to our fourth quarter earnings call. As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're making under the safe harbor provision of federal security laws. I would also like to remind you that the company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption forward-looking statements for the discussion of risks that may affect our results. Also, we may reference -- we may make reference to non-GAAP measures such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as previous press releases that we issued. Lastly, we are also broadcasting this conference at fullhouseresorts.com, where you can find today's earnings release as well as our SEC filings. And with that said, we're ready to go Lewis. Lewis Fanger: Well, good afternoon, everyone. It was a very good fourth quarter, but the comparisons versus last year aren't very straightforward. So we'll take you through those really quick. Revenues rose to $75.4 million, up from $73 million in the fourth quarter of 2024. Keep in mind that the fourth quarter of 2024 included $1.5 million of revenue from Stockman's, which was sold in April of 2025. So revenue growth on an apples-to-apples basis was 5.6%. Adjusted EBITDA in the fourth quarter of 2025 rose to $10.7 million. Adjusted EBITDA for the fourth quarter of 2024 was $10.4 million. That included quite a bit of noise, including the benefit of a $1.2 million recovery settlement and the reversal of about $0.5 million of accruals at corporate. Those 2 figures increased the fourth quarter of 2024's adjusted EBITDA by $1.7 million. Backing those 2 items out of the prior year's fourth quarter, the increase was about 23%. At American Place, our temporary casino continues to show significant growth. Revenues increased by 11% to $32 million in the fourth quarter of 2025. Adjusted property EBITDA rose 29% to $8.7 million. For the full year, revenues and adjusted property EBITDA rose to $124 million and $34.3 million, increases of 13% and 17%, respectively. Interestingly, the pace of growth actually increased as the year progressed. We fully expect adjusted property EBITDA at American Place to continue to climb in 2026 and the year is off to a good start. We have long said that the temporary American Place facility on its own should eventually be able to achieve about $50 million of run rate EBITDA and that it's much larger permanent facility should be able to earn double that amount or about $100 million. We continue to believe that our market remains under-penetrated. Some quick facts. Our permanent casino will not only be nicer, but in terms of square footage, it will be about twice the size of our temporary. We are the closest casino to more than 1 million people. We are located in one of the wealthiest counties in the entire country. Our closest casino competitor is 45 minutes to the south and they make $0.5 billion a year in gaming revenue. Our second-closest casino competitor is about an hour to the north, and they make more than $400 million a year in gaming revenue. And we're sandwiched not just midway between those 2 very successful casinos, but also between 2 of the major north-south traffic arteries in Northern Chicagoland. Those facts, combined with our 3 years of operating experience in the market are what gives us so much conviction in what we think American Place can achieve in the long term. Turning to Chamonix. For the first time in recent memory, we have a fully formed management team. That began with a new General Manager in March of 2025, new Directors of Marketing and Group Sales in July and August of 2025, the promotion of a talented pastry chef to lead the food and beverage department in January of 2026, a new Finance Director last month and a new Assistant General Manager this week. Here's an interesting stat to look at. If you look at just the second half of 2025 under the new management team and compare it to the second half of 2024, revenues increased by $1.2 million or about 5%. Adjusted property EBITDA in those 6 months jumped by $4.2 million. The new team is making great strides and we believe our Colorado operations will be a significant positive contributor to adjusted EBITDA in 2026. Specifically for the fourth quarter of 2025, we had a small, adjusted property EBITDA loss in the seasonally weaker winter season, but that was a significant improvement versus the much larger loss in the fourth quarter of 2024. After several quarters focusing on the cost side, the new team has redoubled its marketing and awareness efforts. If you look at any of our marketing collateral, it has been completely reenergized after transitioning to a new marketing agency during the fourth quarter of 2025. In January and February of 2026, we had a modest amount of construction disruption as we replaced the carpet and installed new ceilings in Bronco Billy's. The incremental spend was extremely modest in the low 6 figures, but the result was outsized. It used to be quite jarring to walk from Chamonix into the Bronco Billy's Casino. Today, while Chamonix is certainly more elevated, the 2 casinos now complement each other quite nicely. We also just opened our Mexican restaurant at Bronco Billy's with an inspired new menu as we prepare to head into the busy summer season. Looking at our database, we've been especially focused on driving loyalty and growth in the top 2 segments of our database. For the first 2 months of 2026, our top segment has seen unique guest counts increase by almost 20% and the total number of visits from that segment is up 36%. For the segment under that, unique guests are up 12%, and total visits are up 24%. Awareness is expanding and loyalty is expanding, which both bode well in our efforts to continue growing revenue and improve profitability. Regarding our group business at Chamonix, that continues to pick up steam. At this point, we have a couple of thousand room nights on the books, with a couple of thousand more that are close to commitment or with decent prospects. As we mentioned last quarter, our ideal group size is between 100 and 150 attendees. Within 500 miles of us, we estimate that there are up to 4,000 conferences that fit that profile. Groups of this size tend to book years ahead of time. When we have a fully ramped group business in a couple of years, we think it will consist of about 55 events per year or about 1 per week. That is the key to improving our midweek occupancy. Among our smaller properties, Silver Slipper and Rising Star declined slightly for the quarter. Similar to Chamonix, we've upgraded most of the management team at Silver Slipper, and they are gearing up for growth in 2026. Grand Lodge, which is a pretty small part of the company at this point, continues to be adversely affected by renovation disruption at the Hyatt Lake Tahoe that houses our casino. The Hyatt Resort will be beautiful when that renovation is complete. But in the meantime, we're trying to manage through the disruption. That includes proactive efforts to find new casino guests in advance of completion of the renovated amenities in 2027. On the balance sheet side, we had about $51 million of liquidity at the end of the quarter, including the undrawn portion of our revolver and we're about to enter that part of the year where we generate meaningful cash flow. We amended our revolving credit facility a few days ago. That was a simple amendment to extend the maturity date of our revolver to August 15, 2027. And we've said this several times, but our Illinois operations alone pay for the interest expense on our current debt. And of course, Illinois continues to ramp, as does Colorado. Lastly, an update on our continuing progress for our permanent American Place Casino. In real time, our architects are putting the finishing touches on our foundation drawings. Those drawings should be done imminently. With those drawings in hand, we'll be able to officially break ground on the casino's foundations. We expect that to occur sometime in the coming weeks. The foundation work does not take a lot of money, but it does take several months to complete. By getting it done now, we can accelerate our time line to construct the permanent facility. Meanwhile, we are making good progress with respect to the financing of the American Place facility. We have received several proposals for the construction of the permanent facility at attractive rates, including proposals that fully fund its construction without the issuance of equity. We're not quite able to provide details just yet, but we hope to do so in the next several weeks. As we have noted previously, we are currently allowed to operate our temporary casino until August of 2027. In conjunction with our anticipated financing, a bill was recently introduced into the Illinois legislature to extend that operations stay by 18 months. Typically, items in the legislature don't get voted on until the end of the session, so we expect it to pass in April or May. Passage of the bill will allow us to transition smoothly from the temporary casino in [ 18 to 20 months ]. Bally's has a similar bill in front of the legislature for the same reason. I covered a lot there, Dan. What did I forget? Daniel Lee: I don't know. I think you got it all. And we'll get to questions. So if we forgot something, it will almost certainly come out in the questions. Lewis Fanger: Very true. Operator: [Operator Instructions] Our first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Ryan Sigdahl: I want to start with Chamonix, though, for the first question. So appreciate the improvement kind of on a full year basis, especially on the cost side. If I look at revenue, 19% growth in the first half of the year. Year-over-year, 7%. In Q3, 2%. In Q4, flipped to a loss. I get the seasonal aspect of that. But I guess, just walk through, I guess, what's going on there specifically just given kind of a decel from a trend standpoint and considering it's still very subscale or early stage in its maturity? Daniel Lee: Ryan, if you recall, last year, when we reported the third quarter, we pretty bluntly said we had run some marketing programs in I think it was principally September of 2024, which were non-economical. In other words, we induced people to come down, gave them free rooms and they didn't gamble, and it actually cost us at the bottom line quite a bit. But it did puff up the top line. Then in the fourth quarter, we had a big grand opening party, and it was a very expensive party to have, we had Jay Leno, et cetera, et cetera. And remember, looking around and realizing that the people who were there were the same people we'd always had when it was a golden opportunity to try to get new customers and people down from Denver and so on. And it was about that time, I realized that we had the wrong management team, and we had to make a bunch of changes. And we have now. But the prior year numbers were kind of artificially inflated by inefficient marketing in those 2 quarters. And -- but now we have a new advertising agency, we have a Chief Marketing Officer here. We have new marketing people at the property. They've been getting organized and all that stuff is coming into play now, and Lewis gave you some of those numbers. And so I think you'll see revenue growth pick up going forward. But the reason it looks like such a small year-over-year growth was the promotional stuff we did last year that kind of boosted revenue but not income. Ryan Sigdahl: Quick follow-up on that, and then I do have another question. Have you seen any re-acceleration thus far in Q1 of '26? Daniel Lee: We have with the caveat that it was pretty torn up back in January. We renovated the west part of Bronco Billy's and putting down the carpet and ceilings. And frankly, I was surprised it didn't have more disruption than it did because we are showing better revenue numbers. I think if we hadn't had that disruption, we'd be doing even better than that. I mean at the end of the day, this is one of those where you open it, it's not performing as well as you thought it would. And you start looking at it and saying, first, did we make a mistake? And I've gone back several times now and gone through the numbers again of how many people live in Colorado Springs, Denver and competition and everything else, and I'm absolutely convinced we did not make a mistake. And in fact, I can underline that by the fact that Monarch's EBDIT (sic) [ EBITDA ] for the year was $199 million. Now they only have 2 casinos. They don't break out the one from the other. But the smaller one, which is in Reno made $40 million to $50 million a year for a long time before they opened in Black Hawk. And so Black Hawk has only been around 3 years, I think, in their portfolio. So they must be making significantly north of $100 million a year in Black Hawk. And it's a good property and frankly, a well-managed company, and they opened far more smoothly than we did. And I look at it and say, well, they're there with 500 rooms, we are equivalent in quality, we have 300 rooms. There are aspects of ours that are nicer than theirs. Now they are an hour from Denver, we're an hour from Colorado Springs, but from Southern Denver, we're about equal distance. But they also have significant competitors there. I mean they not only make a lot of money, but so does Ameristar, the Horseshoe and the Lodge and then there's a bunch of smaller ones. There's a lot less competition in Cripple Creek and the competitors are not anywhere near as good as the quality of ours. So I think we are in the right place. I think we've built the right product. I think fixing up Bronco Billy's makes it quite a bit nice. So we didn't spend a whole lot of money, but it really made a pretty big difference, just changing the carpet and drop -- putting in a drop ceiling. And now we have the right management team all put together, and there's a lot of blocking and tackling that we need to do. I mean there's simple stuff like the housekeeping department there cleans 9 rooms a day. At our other properties, they clean 14 rooms a day. 9 rooms a day is pretty ridiculous. We have a new Assistant GM, who has a strong background in hospitality, and that's one of the first tasks, he'll try to figure out. And we do it through an outside company and we probably need to adjust that. And that factors in all the way down because if you're only cleaning 9 rooms a day, the cost to turn a room is like $50 or $60 when it should be $30 or $35. In other words, the cost of renting a room that would otherwise sit empty, when I say the cost of turning a room. So that factors into who you're willing to comp a room for. And if we can get the cost of turning the room down, then we could be a little more generous with who we comp rooms for. And so there's a lot of blocking and tackling, which we are doing. We had a Mexican restaurant, for example, that had terrible food, to be honest. And it's been closed for about 6 months. We promoted a very talented chef to be the food and beverage manager, and it was kind of funny to persuade him to take the job because he was hesitant. He came back and said, I really want to promote some people and then get rid of some deadwood. And I said, well, that's exactly why I want you to take the job. I too want to promote good people and get rid of deadwood. And so he stepped up and the quality of the food in the reopened Mexican restaurant is 10x what it used to be. And it was just last weekend it opened. And that's important going into the summer. So there's a lot of little blocking and tackling that we are doing at that property. And if you get into the minutia, just about every parameter is trending the right way. No, I wish it were trending faster, but at least it's going the right way. And I'm convinced it will eventually be a very significant profit generator for us. And even this year, it will be significant, but significant like 10% to 15%, and it might be significantly above that next year and then the year after. I mean we built the rate property. We're there for the long haul. And it's a little more -- it's a different marketing task than we have at American Place. At American Place, we are in the middle of 1 million people, they drive by us all the time, but we're in a strong structure. And so it looks like where the Department of Motor Vehicle store salt for the winter. I mean it has absolutely no curb appeal, but a lot of people driving by. And if you go up to Colorado Springs, we have fantastic curb appeal. The building looks fantastic, but nobody is just driving by. So we have to persuade people from Colorado Springs to drive up there. It's just under an hour, but to come up and see it. And once they do come up and see it, we get very good repeat visitation and that's how you build the business, but it doesn't happen overnight. Lewis Fanger: Yes. I mean the most promising thing that we're seeing behind the scenes is that those upper segments, which this property was built for. And when I say upper segments, I don't mean someone that's gambling $10,000 a day. I'm talking about someone that might go in and gamble a couple of hundred dollars a day. That is a very ripe customer that's an abundance that is our biggest group. It's a customer that's finding the building now for the first time. And as I kind of hinted at, or said actually, didn't hint that, in my opening comments, that group is where we're seeing significant growth in loyalty. Daniel Lee: In my experience, I remember Beau Rivage in Mississippi opened slowly. They went through the same sort of things. And then eventually, it found its stride, and it's led Mississippi now for 20 years. Similar in Las Vegas, Luxor opened slowly and then found its stride, and it's been very successful for a long time now and so on. And thinking back, there's things we should have been smarter about. We should have hired a sales [Technical Difficulty] while we were under construction. We didn't. But we're fixing those things now. So... Ryan Sigdahl: Well worth the visit, I can personally attest to that. For my second question, and maybe I'll try and ask this in a shorter way. Indiana bill, it originally included a fair value payment to you guys if you were not the winning bid for relocation. Now it appears like it's just a new license that you can apply for. Just give us an update there on the future of Rising Sun? If you guys are interested kind of under the current structure. Daniel Lee: Listen, this is a long process and a rapidly evolving one. I mean that bill get changed many times in the last week that it was in the legislature. We'll continue to watch it and see. We make money in Rising Sun. We always have, not a lot of money, but we make money. We're the ones who said to the state, we think we -- the state would be much better off if it relocated to an urban center. When they legalized casinos along the Ohio River, you didn't have casinos in Ohio and Kentucky and you do now. And so the original locations where they legalized were the wrong locations, and the independent study that the legislature called for that was done underneath the Gaming Commission said exactly that, that there would be significantly higher revenues to the state with the casino in Indianapolis and in Fort Wayne. Now they chose to widen it out. It's not just Fort Wayne. It's 3 different counties. They're all going to have a referendum in November. I think it's going to be a challenging referendum because the way they did it, there's 3 different counties that are going to have a referendum. And let's say, all 3 pass it then the Gaming Commission is supposed to choose from the 3 and then run a process to figure out a development. So you actually have like it would be problematic for us or anyone else to try to fund the pro side of any county. And yet there's very clearly well-funded opposition. Just look at the website, savefw.com. It's clearly well-funded by somebody. And I'm guessing it's an Indian tribe in Southern Michigan or something along those lines, somebody who might be hurt by this. So you're going to have 3 referendums where the opposition is probably well funded. And the pro side probably isn't. And so will it pass or not? I don't know. I think normally, these things do pass because it produces jobs and tax revenues and so on. But the way the legislature has set this up, and I think it's inadvertent, but I think the way they've set it up, those are going to be very challenging referendums. And we will watch the process and see what happens. And legislature meets again next year. We know where it meets. Meanwhile, we continue to make money in Rising Sun. And we will continue to do that are good for our shareholders as well as good for the state. And that's about it. Operator: Our next question comes from the line of David Bain with Texas Capital Bank. David Bain: Great. First, congratulations on the progress on the American Place financing. I understand you're not giving a ton of detail, but one, I think you reiterated no equity will be sold. And I'm sure you looked at multiple options from whatever asset sales to high yield to REITs as the financing environment involved. If you could help us process that, balancing your thoughts as you went through that process, that could be very helpful for us. And then does that financing come in tandem or include the refinancing or extension of the existing debt? Daniel Lee: David, as I'm sure you'll appreciate, when you're going through one of these processes, you reach out for a lot of people and you find people who are most interested in working with us. And then there's a point where you say, okay, fine, we want you to invest in the due diligence to start working on the legal documents and we will keep it confidential. And I would argue that's about where we are. And until we have a real deal to announce, I really can't go into any of the details, but we are pretty comfortable that we are going to have a deal that will allow us to be open there in 2 years. And we've always said that we're not going to issue equity at anywhere close to these prices, and we're confident that we could get there. But anything further than that, I can't tell you yet. I wish I could, David. Obviously, it's an all-encompassing. I mean it's -- it does involve refinancing the existing bonds. Lewis Fanger: Yes. We're looking at an all-encompassing solution. And I think the only thing to add to what Dan said is, again, not only no equity, but also, we view the financing cost is attractive as well. So we're excited to give you more details. I guess I wish we could. Just can't quite yet. Daniel Lee: Attractive. I think, I would say, acceptable. Attractive would be 5%. We're not 5%, right? But it's also not 15%. And I think it's acceptable. And just on refinancing the existing bonds, they mature in February '28. They become a current liability on February '27. So you pretty much have to refinance them. I think anybody would look at it and say, of course, you have to do that. And so -- but we're -- we've had some really good proposals and we've kind of zeroed in on one formula that we think works and we're trying to nail that down. David Bain: And then I guess my other question, I got to keep you here. I guess I would go with the Chamonix. You gave some encouraging data points on penetration. I think the last call, you mentioned 15% of Colorado Springs visits Colorado -- Cripple Creek once a year, something you intended to tackle. It sounds like the biggest feeder lever. If you could speak to some of the progress specific to the penetration of that market? I know you have a marketing group, but anything, whether it be buses or new forms of advertising and anything that we can look for in terms of impact that's been fruitful so far would be helpful. Daniel Lee: Yes. Well, you mentioned buses. We've looked at buses. We've looked at working with the one company that's in Cripple Creek. We've looked at working with other bus companies. We've even looked at buying our own buses. But at the end of the day, that's not one of the bigger levers. Most people drive themselves, and that's true even in the markets like Atlantic City that traditionally has had a lot of busing, the bus customers still drive themselves. And so -- but there's -- it's a very complicated algorithm because at the same time, we're trying to figure out how to attack these different markets. The whole world of advertising is changing, right? And so like far more people watch TV shows now through YouTube than on the networks. And ultimately, that's good because we can target it. Like we don't have to be buying ads for all of the Denver metropolitan area. We can target those who live on the south side, which is closer to us. We're much less likely to get somebody from Fort Collins because they're quite a bit closer to Black Hawk than to us. But Castle Rock is pretty much equal distance. And so it's about targeting the people in Castle Rock. And then if you can go further and target those people who might have a proclivity to gamble, and so we're getting -- we've hired a bunch of good people who have experience in this and a new advertising agency that is experienced in this to try to make our dollars be most efficient in different markets. Now in Colorado Springs, you can be in more general advertising, right, because anybody in Colorado Springs is a potential customer. And whereas in Denver, if you bought a Denver-wide ad, probably the people who live on the north side of Denver, half the people whose eyeballs you're paying for are less -- not likely to come to us. Whereas in Colorado Springs, everybody is a potential customer. So there's a lot of that parsing and trying to understand it. And even like trying to reduce direct mail we send and trying to do more e-mails, because it's so much more cost effective. Like we don't send any direct mail anymore out of American Place, and we want to get to that point in Chamonix. And so David, honestly, I've got a chief marketing guy who could spend all afternoon answering this question for you. But I guess from our point of view, it's like we've hired people who we think are very confident in this area, and they are working on it full time, and we're seeing some results, and we're confident we're going to get there. Lewis Fanger: Yes. I mean, look, the penetration in the Colorado Springs is creeping up. The percentage coming out of Denver is still an extremely high number. And ultimately, I think those are -- that's a good setup because I think as more and more people that are closer to us experience our brand, we're finding out they're enjoying it. And -- but to have the reach as far as Denver was never in the original model. It was always viewed as overflow. And so to the extent that, that number continues to flourish, it's all to the better as well. So we're set up well. Daniel Lee: And there's some other little blocking and tackling, like Cripple Creek is in the middle of some of the best fly-fishing in the world. I mean there's fantastic fly-fishing around it. And there's fly-fishing guides, fly-fishing camps and everything. So it's like, okay, we need to have a high roller weekend where everybody gets to go fly-fishing, and we have a fly-fishing tournament and people will gamble in the evening. And in the same way the hotels in Las Vegas have golf tournaments. The fly-fishing around Las Vegas isn't so good. So you have golf tournaments, right? And there's no golf, of course, in Cripple Creek, so we can have fly-fishing tournaments, right? And so there's a lot of stuff like that, that we're looking at. And frankly, for a fly-fishing tournament in, say, July, we can get gamblers to fly in from Texas for that. I mean there are nonstop flights from Dallas and Houston into Colorado Springs. It's a pretty easy trip actually. And so for the right high roller, now we have to find the high roller in Dallas who likes to fly-fish. But there are ways to find those people. Operator: Our next question comes from the line of Jordan Bender with Citizens. Jordan Bender: I think you kind of characterized Chamonix as -- the investment thesis there was to focus more on the higher end customer, the luxury customer. Is there a point maybe this year where if you're not starting to see the revenue start to tick up, that you could start to shift some of your focus into that middle or lower end given that the cost structure is fully baked? Lewis Fanger: And apologies. My -- I didn't mean for you to think that we're not focused on the other tiers. We certainly are. I'm looking at my list for January and February, and I'll tell you, we had meaningful growth across every segment. The most growth is in that top tier, but down the line, we're seeing pretty meaningful growth. If you think of the product that we have, it's certainly -- if you bring an upper tier customer into town, they are extremely likely to go to us and only us. If you bring in a lower tier customer, you have the potential and likelihood of sharing that customer around another place or 2. So all things to keep in mind. But ultimately, we've got half of the room product in town. And so long as we see people adding to the bottom line, we will market to them. What naturally happens in these processes is kind of year 1, year 2, you focus on getting customers in general and finding customers that are additive to the bottom line. And fast forward a year after that, then you start cycling and you say, all right, this customer used to get a Friday, free Friday room. Now he does not. Now we've got more customers in the database. We know what people spend. That person doesn't want a Friday room, but they might get a Wednesday room. And so -- and then a year after that, you continue to cycle that database and just optimize it. So we're early in the optimization process, and we're kind of taking people up and down the line. Jordan Bender: And then just switching to Silver Slipper. It's a property that, I guess, we don't really talk about all that much on these calls anymore. But just curious how you view maybe the '26 outlook there? And then just in general, how does that property maybe fit into the overall portfolio as we move forward? Daniel Lee: Year-over-year, the EBDIT (sic) [ EBITDA ] there was about -- it was off a little bit, almost flat. And it was -- in '24, it's a bit above 12%, and then '25, it was a bit below 12%. It should be in the high teens. I mean if you look at the margins, it did $70 million of revenue, and if you take $70 million and apply a normal regional gaming margin, you'd be in the high teens, maybe even in the low 20s. And so we've made quite a few management changes there as well, including a new GM and a new food and beverage manager, a new table games manager, a new HR Director, new Finance Director and whereas it had the same management team since it opened 15 years ago. And so we've made a lot of changes in the past year. And the intent is to get it up to the sort of income it should be having. Now we're not ignoring revenue either, but this is a pretty saturated market. The people in this part of the country gamble more per capita than most areas, and it's not a particularly wealthy region. So I think the upside will be being more efficient on stuff, and we'll get some revenue upside as well. It's a good property. It's kind of a cash cow for us, but it's a cash cow that should make a little more money than it's making. And I think we'll get there in 2026. Lewis Fanger: Not to the high teens in 2026, but I think... Daniel Lee: I'd be disappointed if we don't get to 15%, but -- that's not 19%, but 19% is not out of the question. When you look at what you should be bringing to the bottom line with $70 million of revenue and in a state where the gaming taxes aren't particularly high. And we're on the same page. Operator: Our next question comes from the line of Chad Beynon with Macquarie Asset Management. Chad Beynon: Wanted to ask about your Sports Wagering business supporting over around $7 million of EBITDA this year. I guess talking about a cash cow, that's certainly a good one with pretty high margins there. Can you talk about how that contract looks, if there's any risk to that in '26 or if we should continue to assume the same amount for the year? Daniel Lee: Most of that is with Circa in Illinois, and I think they're pretty happy with what they have. They also operate the sportsbook in the temporary casino and well in the permanent. Illinois has a big population and a limited number of licenses. So that's by far the most valuable license we have. Now we have other licenses that are available. And one of them was markets who paid us upfront for several years. So there's an amortization of deferred revenue which is why you get a little bigger than $5 million. We did do a little change that got approved by the Gaming Commission last week. We've had a sportsbook in the Grand Lodge Casino up at Tahoe for many years. And it was pretty small and the guys were -- it was leased to an outside operator. And the guys who were running it never really did much, right? And it was pretty insignificant for us. And there's a new start-up company that came to us and said, hey, we'd like to take that over and put some money in and try to make it something meaningful. And it's not material to the whole company, but they're paying us significantly more rent than we were getting. And perhaps more importantly, they're paying attention to it better. So it's one of those -- not material to the company as a whole, but I think it's a step in the right direction of changing that to a different operator. We tend not to operate these ourselves because we're not diverse enough to spread the risk. In other words, I think we have a sportsbook at the Silver Slipper, if the Saints get into the Super Bowl, our customers are all going to be betting on the Saints and we won't have bets on the other side. And so it's better to leave it to somebody who's in that business, and we tend to just get license fees for it. Lewis Fanger: If you're thinking about what the number should be on an ongoing basis because there's always -- there has been a lot of noise in that line over the last year or 2. The right number for EBITDA is roughly 6 -- it's like $5.9 million if you're assuming the minimums on the existing contracts. Daniel Lee: No, there's always risk. I mean if Circa decides to cancel and leave the business, there's some limitations in the contract on their ability to do that. But it's not like a treasury bond, I mean it could happen. Lewis Fanger: Yes. I will say, though, Circa is -- more than most companies, Circa has sports in their DNA. They love that sportsbook in Illinois, you'll see that they really -- I mean look, I'm looking at Adam as I say this. I think there's still the patch on the Chicago hockey team, the Blackhawks. And so they continue to fully embrace the sports side. I'd be surprised if there are any changes anytime soon there. Daniel Lee: And frankly, the permanent casino has a sportsbook that's kind of modeled after the one at Durango Station, and that should be good for both us and Circa. Chad Beynon: And then Lewis, yes, looking forward to some of the financing details, hopefully in the next couple -- in the next several weeks. You talked about an 18- to 24-month construction period for the permanent. If that deal is executed and you do decide to kind of push forward on some of the heavier lifting, heavier spending parts of the project, I mean, will there be a meaningful amount of CapEx in '26? Maybe some of that comes in the fourth quarter? Or is it safe to assume that a lot of the permanent spending, kind of the real outflows will come in '27? Just any parameters around that would be helpful. Daniel Lee: Most of it's '27. Lewis Fanger: '27, yes. Daniel Lee: I mean some may even spill into '28. Some of the construction payments are made in arrears, for example. Lewis Fanger: A big portion will be made in arrears, yes. Daniel Lee: But how much is -- falls in this year depends a lot on exactly when we get going. The foundation isn't a big number, but it does take time. So you literally have a guy moving a bulldozer around and then they dig trenches and pour some concrete, which is the foundations for the building that will go up. If you had the pause after doing that, like let's say, the debt markets just weren't cooperating and we had to pause for several months, it's okay. The concrete doesn't go bad. It's still there, right? And you can come back and finish. Now hopefully, we don't have to. Hopefully, we have the financing arranged. And so by the time we're done with the foundations, we can move into the other stuff. But you don't really want to go into the heavier spending until you know you have the money to finish it. And so we're willing to start on the foundation so that we can speed up the opening date and that we can fund with our existing resources, while we try to nail down the financing. Lewis Fanger: I will say that we talk about -- Dan and I talked about this at lunch day. We talk about an 18- to 24-month build. But one thing to keep in mind is the build itself is on the simpler side. In terms of -- there's nothing subterranean, there's no parking garages. It's kind of a basic -- no high-rise exactly. It's a basic 2-story building. And it's the basic rectangular building. On the inside, the fit-out is quite fanciful, but in terms of getting that actual structure up and close and then starting work on the inside, it's relatively -- it's one of the easier pads that we've seen in our lifetimes. And so... Daniel Lee: Actually, only a small part of it is 2-story. Most of it's 1-story. Lewis Fanger: Exactly right. So we talk about 18 to 24 months, but it's -- we'll keep you in the loop, but we feel good -- it is an easier project to build as maybe the right thing to say. Daniel Lee: We'll go as fast as we can, but we don't want to incur a lot of overtime. Operator: Our next question comes from the line of John DeCree with CBRE. John DeCree: Just one from me on Waukegan. I think if I'm not mistaken, just kind of hit the 3-year anniversary couple of weeks ago and 11% growth in the fourth quarter, so still growing double digits. I know you talked a little bit about it in your prepared remarks, but I don't know, Lewis or Dan, if you could give us a little bit more insight as to kind of what's driving the growth there? Is it bigger database? Are you still growing the database? Or is it more spend per the existing database? I'm guessing that double-digit growth, it's probably a little bit of both. But 3 years in still growing double digits is pretty great. So if you could give us a little more color on what's going on there, that would be helpful. Daniel Lee: Well, actually, I want to give credit to the team we have there. I mean where we kind of stubbed our toe in Colorado and had to put together a new team. We had a great team from day 1 in Illinois and that they've just every month, every quarter, figured out a way to increase our penetration, increase our -- not only our number of customers, but the satisfaction levels of the customers. We have the only casino in the whole region that made the list of the Chicago Tribune's best employers. I mean they list, I think, 50 employers and who are the best employers in the region, there's 50 of them. And 2 years in a row now, we've been the only casino on that list. And that trades into very low turnover, which helps. I mean -- and so the team has done a very good job and every month, they're trying to figure out, okay, how do we do better? How do we do better? And had we had an equivalent team in Colorado, we would be much better in Colorado. And people matter. And we've had a great team in Illinois. And now we also have the right demographics. I mean we're the closest casino to 1 million people. We are easy to see. While the outside of the building looks like Department of Motor Vehicles storage place, once you're inside, it feels like a real casino. And even though we did it without spending a lot of money, when you go in, people are like, wow, we didn't expect this. It's wonderful. And so I think we have the right product and the right market. Year, I mean, it was very fast, but equally important, we had the right team, and they've done a great job. Lewis Fanger: And I think to answer to, it's a little bit of both, John. It's -- the database in terms of adding new names to it, it continues to grow at a pace meaningfully similar to what it was 3, 6, 9 months ago. It really hasn't slowed down in terms of the number of people that go into that database. We've crossed 121,000 names or closing in on 125,000 names in the database and not showing signs of slowing down. So -- but it's a little of both. Daniel Lee: And we've done it without hurting the competition. I mean most of it is increased gambling by people in Lake County, which is what we expected. And I guess I should also give a tip of the hat to Alex who forecasted that this is exactly what would happen, and he's been right. Operator: Thank you. We have reached the end of the question-and-answer session. I would like to turn the floor back over to President and Chief Financial Officer, Lewis Fanger, for closing remarks. Lewis Fanger: I'll turn it over to Dan. Any last words? Daniel Lee: No. Listen, it's been kind of a challenging year fixing Colorado while we try to figure out how to finance the permanent American Place. But I think we now have the team in place, and this stuff is trending the right way in Colorado, and I think we're on the cusp of having the financing arranged for American Place. So it doesn't happen overnight. I mean I think the financing would be in place in May or June, which is approximately when we would also have the extension that we mentioned and the legislature. But hopefully, by the time we're having this call for the next quarter, we have a lot more concrete stuff we can talk about. So thank you very much, everybody. Operator: This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.
Operator: Good afternoon, everyone, and welcome to the Atea Pharmaceuticals' Fourth Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions] I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed. Jonae Barnes: Great. Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals' Fourth Quarter and Full Year 2025 Financial Results and Business Update Conference Call. Earlier today, we issued a press release, which outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at ir.ateapharma.com. With me today from Atea are our Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Chief Development Officer, Dr. Janet Hammond; Chief Commercial Officer, John Vavricka; Chief Medical Officer; Dr. Arantxa Horga; and Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran, who will be available for the Q&A portion of today's call. Before we begin the call and as outlined on Slide 2, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Jean-Pierre. Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. I will begin on Slide 3. I am pleased to report that we have made substantial clinical progress in the last year, advancing our global Phase III program evaluating the regimen of bemnifosbuvir and ruzasvir for the treatment of HCV infections. Due to the rigorous execution of our two pivotal Phase III trials, C-FORWARD and C-BEYOND, we expect top line readout this year for both trials. We also presented several dataset reinforcing the potential best-in-class profile of our regimen at the EASL Congress in 2025 and the Liver Meeting 2025, the Annual Meeting of AASLD. Janet will discuss highlights from these presentations. We convened two panel discussions with key opinion leaders that underscore the need for a new optimized HCV regimen to address treatment paradigm shifts, including the test-and-treat model of care and how our regimen is uniquely positioned to address the current needs of patients and prescribers and expand the market in the U.S. In November, we announced the expansion of our antiviral hepatitis pipeline to address a major unmet medical need for immunocompromised patients living with chronic hepatitis E infection, a liver disease for which there is currently no approved therapy available. If left untreated, it can rapidly progress to cirrhosis within 3 to 5 years. In vitro and in vivo results presented last month at CROI 2026 and at the JPMorgan Healthcare Conference in January support our lead product candidate, AT-587 as a potential first-in-class inhibitor against HEV infection. I will review this exciting program later in the presentation. Moving to Slide 4. I'm pleased to report that our global Phase III HCV program is on track. In December, we completed enrollment for our North American trial, C-BEYOND, with over 880 patients, and we expect to complete enrolling C-FORWARD, our trial outside of North America, by midyear. We anticipate top line results for C-BEYOND midyear and for C-FORWARD by year-end. Following our selection of AT-587 as the lead product candidate in our HEV program, we initiated IND and CTA-enabling studies and anticipate initiating a first-in-human study midyear. Importantly, with $301.8 million of cash, cash equivalents and marketable securities as of December 31, 2025, we are in a strong financial position to execute and complete our Phase III HCV program and advance our new HEV development program. We anticipate our cash runway will extend through 2027. With that, I will now turn the call over to Janet to review the profile of our regimen. Janet Hammond: Thanks, Jean-Pierre. Moving to Slide 6. Hepatitis C remains a significant global health care crisis with an increasing incidence of infections despite the availability of direct-acting antivirals for the past decade. Currently, in the United States, out of the reported 160,000 new chronic infections, only 85,000 patients are treated annually. In 2015, there were approximately 2.5 million people infected in the United States. Today, that number has nearly doubled to approximately 4 million. The unrelenting high rate of new chronic hepatitis C infections, which continues to outpace the number of patients being treated, underscores the need for a new differentiated and optimized therapy. In the map shown on the right, you can see that most countries worldwide, including the United States, are not on track to achieve the World Health Organization's goal of the elimination of hepatitis C by 2030. In fact, current estimates suggest we may not even achieve this goal by 2050. Let's not forget that hepatitis C is the primary cause of liver cancer in the United States, the incidence of which is projected to increase by over 50% within the next 5 years from approximately 850,000 cases in 2025 to 1.4 million people. On Slide 7, we are conducting the first global head-to-head active controlled Phase III trials in our program for hepatitis C, comparing our regimen against the current standard of care, sofosbuvir and velpatasvir, which are marketed as Epclusa. Results support our regimen as a potential best-in-class treatment option for patients infected with HCV with a differentiated profile featuring a highly potent combination with a short treatment duration, low risk for drug-drug interactions and convenience with no food effect. We continue to build out our dataset and recent results demonstrated a low risk for drug-drug interactions with proton pump inhibitors, which are taken by an estimated 35% of hepatitis C infected patients. Moving to Slide 8. We presented several datasets supporting the potential best-in-class profile of the regimen of bemnifosbuvir and ruzasvir last year at the EASL Congress and then at the Liver Meeting. Results from the Phase II study in 275 patients demonstrated the 8-week regimen of BEM-ruzasvir achieved 98% SVR12 in the per-protocol treatment-adherent population and a 95% SVR12 in the efficacy-evaluable population. Additional results demonstrated that the regimen has a high barrier to resistance. The regimen has a low risk for drug-drug interactions, including with proton pump inhibitors, H2 blockers and also standard HIV therapy. There is no need for dose adjustment of bemnifosbuvir in patients with hepatic or renal impairment. The regimen can be taken with or without food. In addition, recently generated data show that in addition to inhibiting HCV RNA replication through chain termination, bemnifosbuvir also inhibits assembly and secretion of new hepatitis C virions, further explaining its high antiviral potency. With that, I'll now turn the call over to Arantxa to provide an update on our Phase III program for hepatitis C. Arantxa? Maria Horga: Thank you, Janet. On Slide 10, C-BEYOND enrolled patients in the U.S. and Canada, and C-FORWARD is enrolling patients in 17 countries outside of North America. Combined, we expect to enroll more than 1,760 patients in our Phase III program. Both trials are open-label, randomized 1:1 against the active comparator and stratified by cirrhosis status, genotype and including patients co-infected with HIV. In patients without cirrhosis, treatment duration is 8 weeks with bemnifosbuvir-ruzasvir and 12 weeks with the standard of care. Patients with compensated cirrhosis receive 12 weeks of treatment with either regimen. The primary endpoint for both studies is sustained viral response or cure 24 weeks after treatment initiation. Slide 11 shows the geographic footprint of our global Phase III program with approximately 120 clinical sites in the U.S. and Canada for C-BEYOND, and another 120 clinical sites in 17 countries outside of North America for C-FORWARD. As J.P. mentioned earlier, C-BEYOND patient enrollment was completed in December with more than 180 patients, and we anticipate top line results midyear. C-FORWARD has a broader global geographic and genotypic footprint, and we expect to complete enrollment midyear and to report top line results by year-end. On Slide 12, let's review the Phase III endpoints, patient population and data analysis for our global Phase III program. In C-BEYOND, the primary endpoint will be analyzed in a modified intent-to-treat population as preferred by the U.S. FDA. The analysis will include patients that have been randomized and dosed regardless of drug adherence or lost to follow-up. The statistical analysis will be based on an imputation model with success or failure depending on PCR value, whether negative or not, prior to patient treatment discontinuation. A key secondary endpoint will include the SVR rate of the per-protocol population. In C-FORWARD, the per-protocol population will be analyzed as the primary endpoint as preferred by the EMA. And the SVR rate will only include patients who are at least 80% adherent as measured by pill count and have an SVR assessment at week 24. A key secondary endpoint will include the SVR rate for a modified intent-to-treat population. The same methods for assessing non-inferiority will be conducted in both Phase III studies on both patient populations. The Phase III studies are powered 90% with 5% non-inferiority margin with expected rates approximating 95% in an mITT population. Using these two approaches in a post-hoc analysis of the Phase II results, the SVR rate was 95% in an mITT population and 98% in the per-protocol population. I will now hand the call over to John Vavricka, our Chief Commercial Officer. John? John Vavricka: Thank you, Arantxa. Moving on to Slide 14. As discussed earlier in the call, the rate of newly reported HCV infections in the U.S. is outpacing treatment. Out of approximately 160,000 new HCV infections, only 85,000 patients are treated annually for a total of approximately $1.3 billion in net sales in the U.S. We have consistently heard from health care providers that the test-and-treat model of care, which allows for HCV testing, diagnosis and treatment at the point of care can reduce the barriers to prompt initiation of therapy that exists today. The test-and-treat model of care has gained broad support, including by the CDC and continues to gain momentum through recent bipartisan efforts to advance HCV elimination in the U.S. Key opinion leaders also [ certainly ] can play a critical role in HCV elimination efforts and agree that a treatment optimized to work seamlessly with this model is still needed. Slide 15. While we are advancing our global Phase III trials, we are also preparing for a commercial product launch. Our commercial package will include a blister card for convenience and adherence with a simple 4-week dosing package. The drug product has a low cost of goods relative to net price. And based on our current projections, we anticipate achieving profitability relatively shortly post-launch. From a commercial standpoint, the U.S. HCV prescriber base is highly concentrated with approximately 6,000 prescribers writing 80% of the DAA prescriptions, making it optimal for efficient commercialization using a focused specialty sales force. We anticipate a commercial sales force of around 75 people, which includes the sales team and medical science liaisons. Let's move on to Slide 16. Using our Phase II results, IQVIA conducted an independent quantitative market research study with 153 U.S. high prescribers. These physicians indicated that they would likely prescribe the BEM-RZR regimen to approximately half of their patients, and the results were similar for all patients regardless of their cirrhosis status. Our market research also showed that U.S. payers responded favorably about the potential to include BEM-RZR in the formulary based on the regimen's profile. I'll now hand the call back to Jean-Pierre to review the HEV program. Jean-Pierre Sommadossi: Thank you, John. Let's now move to Slide 18. Hepatitis E virus or HEV is in an acute and a chronic liver disease. In developing countries, genotype 1 and 2 are most prevalent and the virus is transmitted primarily through contaminated water and mostly cause epidemics of acute self-limiting viral hepatitis. In developed countries, genotype 3 is predominantly transmitted primarily through contaminated food such as undercooked meat. This can cause chronic hepatitis in immunocompromised patients and can progress to cirrhosis within 3 to 5 years, which is much far more aggressive than what is seen with hepatitis C or hepatitis B. With no approved therapies for HEV, there is a significant unmet need for a treatment option. Moving to Slide 19. In recent years, with the increasing number of patients who are immunocompromised, which include solid organ transplant recipients, hematopoietic stem cell transplant recipients, patients with hematologic malignancies such as multiple myeloma, there have been a growing incidence of chronic HEV infection in U.S. and Europe. In the absence of any approved therapies for HEV, the standard of care includes reducing immunosuppression and/or ribavirin administration, which both presents challenges. On Slide 20, each year in the U.S. and Europe, about 3% of approximately 450,000 patients who have these underlying medical conditions are at risk to develop chronic HEV. We estimate that the unmet need for this patient population represents a market opportunity between $750 million to $1 billion per year. And obviously, this will follow on orphan designation. On Slide 21, let's now review data supporting the selection of AT-587, our lead product candidate, a potential first-in-class direct-acting antiviral treatment option for chronic HEV. As you see on this slide, in vitro and in vivo activity of bemnifosbuvir was shown against hepatitis C. However, the more potent in vitro activity of AT-587, combined with the positive PK data, which we'll discuss next, led us to select AT-587 as a lead product candidate. The in vitro data on this slide shows the potent nanomolar antiviral activity of AT-587 against HEV genotype 3 and to remain also active against clinical ribavirin resistance-associated substitutions or RAS. As noted earlier, ribavirin is off-label for the treatment -- is used off-label for the treatment of HEV. On Slide 22, we observed that the in vivo single-dose PK studies in rats and monkeys, AT-587 achieved high plasma concentration of the active triphosphate metabolite surrogate, which were comparable to those obtained with bemnifosbuvir. On Slide 23, of particular importance, we also demonstrated that AT-587 efficiently converted to its active triphosphate metabolite in human hepatocytes, which is the site of viral replication in HEV infection. To date, AT-587 has a clean preclinical safety profile, positioning this product candidate as a first-in-class direct-acting antiviral for chronic HEV. I will now turn the call over to Andrea to discuss Atea financials. Andrea Corcoran: Thanks, Jean-Pierre. As Jonae mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2025. The statement of operations and balance sheet are on Slides 25 and 26. We are pleased to report that our cash and investments were $301.8 million at December 31, 2025. The funds expended in 2025 were principally directed to the advancement of our HCV Phase III program, evaluating the combination regimen of bemnifosbuvir and ruzasvir and to discovery efforts leading to the nomination in January 2026 of AT-587 as the lead product candidate for the treatment of HEV. In 2025, we also returned $25 million to our stockholders through a share repurchase program. Each of these investments and use of funds reflects our steadfast commitment to drive value for our stockholders. For R&D expenses quarter-over-quarter and year-over-year, there was an increase in 2025 compared to 2024. The net increase in 2025 was principally driven by an increase in external spend for our HCV Phase III clinical development, offset by a decrease in 2025 in external spend for our COVID-19 clinical development and lower internal expenses, primarily related to a decrease in stock-based compensation expense and lower payroll and payroll-related expenses. For G&A expenses quarter-over-quarter and year-over-year, expenses decreased. The net decrease was primarily related to lower stock-based compensation expense, partially offset by increased professional fees. For 2026, we intend to maintain our rigorous financial discipline while remaining laser-focused on execution and value-creating advancement of our HCV and HEV product candidates. As we complete our Phase III clinical trials, prepare to submit our regulatory filings and engage in prelaunch activities, including the manufacturing of commercial launch supply, the substantial majority of our spending in 2026 will be focused on the advancement of our HCV program. With the resources in hand as of the end of the year, we expect to realize value-creating milestones for both programs and project our cash runway to extend through 2027. I'll now hand the call back to Jean-Pierre for closing remarks. Jean-Pierre Sommadossi: Thank you, Andrea. On Slide 27, in closing, 2026 will be a pivotal year for Atea. We are on track to deliver top line Phase III results from C-BEYOND midyear. These results will be followed by the top line results from C-FORWARD by the end of this year. We believe that the target profile of our regimen featuring high efficacy, short treatment duration, low risk of drug-drug interaction, convenience with no food effect will uniquely position us to address the need of today's patients and seamlessly fit in the test-and-treat model of care, which has the potential to bring us closer to the ultimate goal of HCV eradication. Our HEV program represent a strategic expansion of our antiviral pipeline and address a major unmet need in a highly vulnerable patient population for which there is no approved treatment available. We anticipate initiating a first-in-human study midyear with a proof of concept by the end of the year and possible to advance to a Phase II/III trial in the second half of 2027. With that, I will turn the call back over to the operator. Operator: [Operator Instructions] The first question will come from Maxwell Skor with Morgan Stanley. Selena Zhang: This is Selena on for Max. Having achieved your enrollment target for the cirrhotic population for C-BEYOND, does that increase your confidence in hitting your target in C-FORWARD? Jean-Pierre Sommadossi: Arantxa? Maria Horga: We are going to achieve our target overall for the program, both in C-BEYOND and C-FORWARD. The cirrhotic enrollment has not been an issue. Operator: The next question will come from Jonathan Miller with Evercore ISI. Jonathan Miller: As we look forward to a commercial launch in HCV, I guess I'll focus there. Can you talk a little bit about how the commercial landscape is currently organized in terms of contracting? Are there centralized groups that you're going to have to convince to switch over from legacy systems? How is pricing in the commercial universe currently going to evolve as we've seen the legacy regimens get put under significant pricing pressure. So can you talk a little bit about how the commercial landscape has evolved over the past 6, 9 months and how well you're positioned to deal with those changes? Jean-Pierre Sommadossi: Great question, Jon. John? John Vavricka: Sure. So as you know, that the market for -- the distribution market for specialty -- for DAAs is a specialty market. And there are three segments pretty much, commercial, Medicare and Medicaid. All of those current distribution pathways are known and are fully utilized. And we're currently looking at all of those relative to the three segments as well as relative to the payers. So it's a known quantity where we will have to be. We actually have conducted preliminary research with the payers and obviously seeing the profile, it is of interest to them. And it was stated that they would be eager to include it in formulary. As far as for pricing goes, the pricing, it's relatively stable. Year-over-year, Mavyret pricing went up a little bit, but Epclusa pricing -- net pricing did go down. But overall, for the past at least 2 or 3 years, the pricing has been -- the relative overall net pricing has been relatively stable and their market shares are getting pretty close to a 50-50 with the favoring Epclusa. Does that answer your question? Jonathan Miller: Yes, it does. Operator: The next question will come from Andy Hsieh with William Blair. Tsan-Yu Hsieh: So looking at the primary endpoint of C-BEYOND based on the -- modified to intent-to-treat population, am I thinking about this correctly that based on this analysis plan, you can actually really expand the effect size because you can basically magnify a regimen that actually can have flexibility into missing doses and given the more potency profile compared to the standard of care. So that's part number one. And part number two is in a scenario where you can actually show material clinical benefit over the standard of care, say, maybe with a statistical perspective, John, based on your market analysis, how would that change some of the physician response in terms of their excitement or potential market uptake? Jean-Pierre Sommadossi: Good questions, Andy. Arantxa, do you want to try the first one? Maria Horga: Yes. Andy, so the mITT, as you know, is everybody that gets a dose. So there will be a range there from people that will get 1 dose or maybe 5 days of dosing to people who will be almost done with the full picture, so with all the doses. So I think it will be interesting to see how it pans out, what's the minimum, I guess. But right now, we're really aiming for an 8-week regimen. We can do sub-analysis in the future. Jean-Pierre Sommadossi: John? John Vavricka: Yes. We're actually very excited because when we look at the market research that has been done just with the Phase II data, bearing in mind that these physicians had 10 years' experience with two DAAs, and showing them a profile and which as we talked about, the short duration, low likelihood of drug-drug interactions and the convenience of with or without food, just seeing that profile for the first time, they saw it being used in approximately 50% of their patients regardless of their cirrhosis status. So the profile right now stands very, very well. So your question about if there was some kind of a more favorable response in terms of BEM-RZR, obviously, that would play into their likelihood to prescribe BEM-RZR. But we're also very conscious that we play in the specialty arena. And in that specialty arena, obviously, the distribution of market share tends to balance itself out to make sure that the market is preserved over time. Jean-Pierre Sommadossi: Just to add, Andy, it's clear from the KOL and the prescribers that #1 key important feature is the treatment duration. So treatment duration definitely will be on the shortest with Mavyret. But then after when you evaluate all the, I would say, complex aspects with patients with polymedication, we feel that the prescriber will really highly favor our regimen. And then we'll see -- we'll have to wait, the clinical data in terms of all the type of side effects with fatigue and nausea and headache that have been reported. So let's not forget that this is the first head-to-head. There is a lot of world-type studies. But as a controlled randomized clinical study, this is the first one. And let's see what we are going to learn. Tsan-Yu Hsieh: Great. And maybe a quick housekeeping item. Just from an R&D perspective, it seems like there is a one-time Merck license agreement. Can you talk about that just so we have a better sense of kind of going forward, what the... Jean-Pierre Sommadossi: Okay. Sure. Andrea? Andrea Corcoran: So yes, Andy, we have in-licensed ruzasvir, which is the combination product with bemnifosbuvir in the HCV product candidate. We are paying milestones, and we will pay royalties to Merck on successful commercialization. The next milestone will be due when we submit the NDA and the NDA is approved. And we believe that's in 2027. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jean-Pierre Sommadossi for any closing remarks. Jean-Pierre Sommadossi: Thank you all for joining our fourth quarter 2025 and full year earnings conference call, and thank you for your continued support. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, and thank you for waiting. Welcome to Rumo's Fourth Quarter 2025 Earnings Presentation. [Operator Instructions] This presentation is being recorded and simultaneous translation is available by clicking on the interpretation button. [Operator Instructions]. Before proceeding, we would like to reiterate that forward-looking statements are based on Rumo's Executive Board's beliefs and assumptions and information currently available to the company. These statements involve risks and uncertainties as they relate to future events and depend on circumstances that may or may not materialize. We recommend that you refer to the disclaimer on the second page of the presentation. Now I'll turn the conference over to Mr. Felipe Saraiva, Rumo's Head of Investor Relations. Mr. Saraiva, you may begin the presentation. Felipe Saraiva: Good afternoon, everyone, and thank you for joining Rumo's earnings conference call for the fourth quarter of 2025. Let me start with the highlights on Slide 3 of the presentation. We closed the quarter with transported volume of 22.9 billion RTK, the all-time high performance in the fourth Q. For the full year, volume increased 5% as a result of structural gains in capacity and operational efficiency. The combination of higher volumes and disciplined execution with lower costs and expenses allowed us to maintain resilient margins. I would like to highlight the 11% nominal reduction in unit fixed costs. showing better productivity levels. Adjusted EBITDA reached BRL 1.8 billion in the quarter, an increase of 8% year-over-year. Investments were BRL 1.5 billion in the quarter, in line with our planning for the period. Financial leverage at the end of the quarter was 1.9x the net debt to adjusted EBITDA ratio, stable compared to the previous one. Moving to Page 4, I will present our market share in the quarter. Our market share remained at consistent levels, reaching 48% in Mato Grosso, 36% in Goias and 65% at the Port of Santos. It's important to note that the fourth quarter had an exceptionally high comparison base for market share. In the fourth quarter last year, export volumes were unusually low, which temporarily increased our market share in that period since we booked our capacity at the beginning of the season. Throughout 2025, we observed a normalization of the market dynamics with market share returning to more normalized levels since the second quarter of the year. Now moving to Page 5, I will share more details about this market dynamic in the Santos corridor, which is our main market. Let me start by reminding that the railway capacity is shared between the Goias and Mato Grosso markets, functioning as a system of communicating vessels. Grain exports in these markets increased compared to 2024, although still below the peak observed in 2023. In this scenario, we expanded our market share compared to 2023, supported by the efficient use of our capacity. I would like to highlight the operational flexibility of the railway with the simultaneous transportation of soybean, corn and soybean meal throughout almost the entire second half of the year, maximizing the use of our assets. In the soybean complex, we recorded volume growth and market share gains compared to the 2023 [ co-crop ]. In corn, the record production was more directed to the domestic market with higher carryover inventories at the end of the season. The railway remains the dominant transportation mode at the Port of Santos, reinforcing our key role in the transportation of agricultural commodities from the Midwest of the country. Moving to Page 6 with the operational indicators. We increased volumes in the Northern operation by 14%, which means more trains running throughout our system. Even so, we maintained stability in our main operational indicators, including transit time and dwell time at the Port of Santos. Regarding energy efficiency, we reduced fuel consumption by 2% with good performance in both the Northern and Southern operations. On Slide 7, I present the operational results and volumes. In the Northern operation, I would like to highlight the strong performance in grains with the simultaneous transportation of the 3 commodities and growth in almost all commercial portfolios. In the Southern operation, we also delivered a quarter of growth with highlights in the agricultural commodities portfolio. Moving to Page 8. Let's look at the highlights for revenues and tariffs. In the fourth Q, we continued the commercial adjustment that started in the second quarter of the year. It's important to remember that the 2024 comparison base reflected a scenario with higher expectations for the corn market, which did not materialize over the last 2 seasons. In this context, transportation prices are now reflecting more closely the actual dynamics and seasonality for our markets. I would like to reinforce our commercial strategy of maximizing value through the efficient use of our capacity. On Page 9, I present the quarterly EBITDA. EBITDA increased 8% in the quarter, reaching BRL 1.8 billion. In the Northern operation, the better performance in fixed costs and expenses in addition to tax-related benefits of roughly BRL 80 million helped to support stable results even in an environment of adjusted prices. In the Southern operation, the higher transported volumes offset the lower average prices during the quarter. In addition, we had tax benefits of roughly BRL 44 million, which also contributed to the quarterly performance. Moving to Page 10, we present the financial results and net income. Net financial expenses in the quarter were BRL 721 million, mainly reflecting a higher net debt base and interest rates. Even so, we delivered adjusted net income of BRL 441 million in the quarter and BRL 2.1 billion in 2025, both growing year-over-year. On Slide 11, we move to debt and leverage. The net debt at the end of the quarter was BRL 15.5 billion, reflecting the cash generation during the period. The financial leverage ratio was 1.9x, the same level as the previous quarter. Our liquidity position remains strong with BRL 7.5 billion in cash position at the year-end and a well-distributed debt maturity profile. As presented in the chart on the right, we have no significant maturities in 2026 and 2027. Additionally, we have BRL 2.7 billion in committed credit lines that remain undrawn. On Page 12, we present investments in the quarter. We invested BRL 1.5 billion in the quarter with BRL 490 million in recurring maintenance and BRL 973 million in expansion. At the Ferrovia do Mato Grosso project, we have accumulated roughly BRL 4 billion in investments since the beginning of the construction, with 80% of physical progress at the end of the year. Now let's move to Page 13 with an update on the soybean market. In the state of Mato Grosso, production is estimated at 52 million tons. Harvesting is progressing normally in the region, slightly above the historical average. Exports from the state are expected to be slightly higher than the last year with an estimated 33 million tons exported. Moving now to Page 14 with the corn outlook. Corn production in the state of Mato Grosso is expected to remain at a high level, close to 60 million tons. The expansion of planted area by roughly 400,000 hectares supports strong agricultural production levels in the state. The corn Safrinha seeding pace is also slightly faster than the historical average. Exports from the state are estimated at roughly 24 million tons with strong production levels offsetting the increase in domestic demand. This concludes my presentation, and we are now available for the Q&A session. Thank you. Operator: Joining us today are Mr. Pedro Palma, Mr. Guilherme Machado and Mr. Felipe Saraiva. Before we begin the Q&A session, Mr. Pedro Palma would like to say a few words. Please go ahead, Mr. Palma. Pedro Palma: Thank you. Good afternoon. Thanks for joining us on Rumo's earnings release call. I'd like to start by reiterating that 2025 was a solid execution year in our operation. We have proven our ability to break records and show our resilience and flexibility to navigate through different market scenarios. As Saraiva said, for instance, we had to operate products such as soybean, corn and soybean meal simultaneously during the second semester. We also made significant progress in our efficiency agenda, both energy efficiency, proving the value of rail engineering and the use of technology that have allowed us to use 135 cars in the North operation improving the whole logistics network and reducing fixed costs and unit SG&A, showing our discipline in reducing company costs and also improving structures and processes. These are inherent values to our culture, and they will continue to be strengthened looking forward. According to our plan, we also made all the planned investments for the year. I'd like to highlight the progress in Phase 1 of the Mato Grosso Railway as we announced in the material we shared with you yesterday. So 80% physical execution halfway through the year and on track for what we had mentioned. The main challenge in the year, and this is no secret to you, was the market environment. We had to do some tactical price repositioning, especially in the grains market, and we concluded that repositioning now this quarter in 2025. To remind you of what happened in the tariff scenario and providing a bit more detail on the North system, we increased prices by approximately 70% between '22 and '24. When we started '25, in the first quarter, we realized that we were too expensive compared to other logistics alternatives. So we had to do some pricing repositioning to adjust our pricing level to market levels to make sure that we could continue to be the best, most suitable competitive solution to be the first choice in logistics for the clients and markets where we operate. We're confident that now we are at a more suitable pricing level. We're working on our value creation -- long-term value creation agenda at the company using our available capacity intelligently. And we also believe in the positive structural side of our market. Rumo is a single logistic platform because of the position of our railway and our terminals, and we operate in the best markets such as Mato Grosso and Goias, where there's growing demand and Rumo has the ability to lead in logistics solutions to meet that demand. One point I'd like to mention is safety, which continues to be a nonnegotiable value to us. In 2025, we restructured all of our safety and security process management. We reduced our incident frequency rate by 40%, both with lost time and no lost time and safe operations are productive operations. We still have some work to do. For instance, the rail security, there have been some events. You may have seen it in the media in the second half of the year. We did have a couple of events that led to a rail incident frequency above what we had expected. But rest assured that all of the events have been analyzed in depth and all the lessons learned have been brought in-house and there was nothing structural in common among all those incidents, but each one of them was a lesson learned that will make us more resilient, more safer and more secure. As I said, safety and security is not a priority. It is a value that we will always continue to pursue. And as for the bottom line, I'd like to reiterate how solid our balance sheet is. We have been efficient in raising funds in the financial market. We raised close to BRL 4 billion in new funding lines, reimbursed credit lines or undrawn credit lines, which ensures financial instruments at a very competitive cost and with a long-term maturity profile. So that will allow us to manage any turbulences with peace of mind. So the company is concluding the year with a very solid balance sheet, relevant operating indicators, very liquid cash position and a great position in terms of investments execution profile. Looking forward, before we move on to the Q&A session, you've seen our volume results in January and February. We started off the year with solid volumes in both operations, both North and South, which makes me excited and confident with regards to the plan we'll be executing on in 2026. And absolutely sure that the company is ready to continue with its agenda to execute and profit from the investments that are being made. Now let's move on to the most interesting part of the presentation, the Q&A. Myself, Guilherme and Felipe are here to take your questions. Have a great afternoon. Operator: [Operator Instructions] First question is from Mr. Lucas Marquiori from BTG Pactual. Please go ahead, Mr. Marquiori. Lucas Marquiori: Based on your disclosure and your comment on the pricing repositioning, Pedro, I understand that you've concluded the tariff repositioning process. So what exactly does that mean now going into this new year? What kind of tariff competitive process are you considering for the Q1 or first half of the year? We've seen road transportation now coming to life, especially at the beginning of the year. So I'd like to understand what your commercial dynamics will be in terms of tariff repositioning that you mentioned for Q1 and Q2 so that we can model it. Pedro Palma: Lucas, thanks for the question. This is Pedro. I'll take your question. Well, we concluded repositioning in this last quarter because we had reached the execution and pricing level that would attract the volumes we expect. So what does that mean for 2026? Let me try and explain. In Q1, obviously, you know that there will be a price reduction compared to the first Q '25 because we started repositioning in Q2 '25. So the comparison basis with Q1 last year is not a great comparison basis. And we said that before because we were clearly outside the right pricing level according to market levels. Now to be specific in terms of what we expect to show in Q1 '26, there will be a price reduction compared to the amounts we were operating with in Q1 '25, that will be just over 10%. So obviously, that will depend on the execution. We are contracted, and that's another point. We are contracted for the whole of Q1 and practically Q2. But in our execution, there is a mix of regions, mix of clients, mix of products that may affect the end price level. But the pricing level that you will see when we publish our -- when we post our results for Q1 will be roughly a 10% reduction compared to Q1 '25. Now moving on to Q2 and consistent with what I said that we started repositioning in Q2 then things, prices should become more stable, which goes to my point, that's when we'll conclude the pricing repositioning process. So all the price changes that we did in '25 were enough to balance our competitive positioning, both -- so I'm not expecting any great pricing variation in terms of Q2 last year. And we have also been able to contract prices for Q1 that are very healthy. Obviously, there was some carryover to the beginning of '26 at the end of the year, but it was the risk of contracting the discussion with our clients in a very healthy environment. And it was all very natural. Also looking at Q2, Lucas, obviously, the second half of the year actually. As you know, those dynamics will depend on the corn dynamics. Corn tends to be a more uncertain crop. So obviously, that means a bit more -- a bit less contracting from clients. So for the second half of the year, we still have relevant volumes to be sold, but we are at a comfortable level for the second half of the year. And in terms of pricing, they are balanced with our prices in 2025, once again, reiterating, and that's why I made that statement. I consider the repricing to be concluded not only because we had reached the right price, but because contracts are coming at the pace that we believe is consistent with what we expect in order to execute on our plans. So the first half of the year is solid. We've made good contracts on track with the prices that we had planned and at price levels that we believe to be suitable for the second half. Everything we've already sold has been sold for the right prices, in line with what we executed on in 2025. And the continuation of the sales process will depend on time the sale dynamics, what happens in the market and our crop projections and our competitive positioning in the logistics market. Operator: Next question is from Mr. Andre Ferreira from Bradesco BBI. Andre Ferreira: Pedro, Guilherme. Thank you for providing us with more on that second question. In terms of CapEx. Could you tell us what the CapEx for 2026 might be and how it will be distributed across your main projects? And what are your expectations for the second phase of the Mato Grosso expansion? Guilherme Lelis Machado: Andre, thanks for the question. This is Guilherme. For 2026, we'll continue with our investment portfolio at the level we had planned. Obviously, the company has been watching market movements in terms of cash generation and cash consumption. We did make an adjustment, and it means that the CapEx level we will be executing in 2026 will be less than the 2025 CapEx, but higher than the 2024 CapEx. So it will be between those 2. And obviously, we'll continue executing on the company's main projects. As we had been saying to you, this will be an important year for us. We'll conclude the Mato Grosso Rail Phase 1. We're going to conclude the main milestones on the tracks and the terminal. We'll also continue with our investment programs in maintenance, which is roughly BRL 2 billion. We're also investing in rolling stock to meet the volume increases that will take place in our operation and -- we also have some investments in our operation as a whole, which includes the construction work schedule in the Paulista network, investing in Fips around the Port of Santos. These are all very important continue to increase productivity in our operations. So as I said, our CapEx this year will be less than last year's, but we won't lose traction in our projects. Let me just say that at that CapEx level, I'm sharing with you now, will include the conclusion of the first phase of Mato Grosso. We haven't planned anything for Phase 2 of the Mato Grosso rail yet. That's under discussion. The company is looking into it, but we don't foresee any investments in the second phase yet because we're still assessing the project. but we are keeping to our schedule. We do have flexibility in that contract, and we are complying with all the metrics in the project. Operator: The next question is from Mr. Guilherme Mendes from JPMorgan. Guilherme Mendes: Pedro, Guilherme, Saraiva. The first question about the contract phase in the first half of the year is very clear. Now in order to understand things in the context of the conflicts in the Middle East, we know that, that's an important region for the demand of Brazilian corn and fertilizer imports. Now this conflict started a few days ago. Have you noticed any change in the pace of contracts for the second half of the year? And maybe looking at the future, how much do you think this conflict might impact on the volume to be contracted for the second half of the year? Pedro Palma: Thanks for the question Guilherme. This is Pedro. Let me answer your question. First of all, the Middle East in terms of operational continuity and supplies is not relevant. So it doesn't mean any relevant risk to our rail. So I just wanted to reiterate that we're not concerned about that. As you put very well, Iran's relevance more specifically in the Middle East, the Brazilian agricultural market finds it relevant in terms of corn export as a destination for the second half of the year. It is relevant. Iran is for the Brazilian corn. It does vary from year-to-year. Last year, they bought a lot, 9.5 million tonnes. The year before, it was 5 million tonnes. So corn has a very capitalized, very fragmented market by nature, which is different to soybean. China is the main client of the Brazilian agricultural soybean. Corn is more capitalized. But Iran is a relevant destination for corn exports. But again, it's a relevant player for exports in the second half of the year. So to be very transparent, my crystal ball is as good as yours. So we're going to have to monitor things to understand how long this conflict will last, what kind of an impact it will have. Looking at current data, historical data, I wouldn't say that it won't cause any relevant problems to Brazilian agriculture, but we'll have to monitor the situation. Obviously, ourselves and the whole market will be monitoring it. As you said, Middle East also supplies some fertilizers to Brazil. And those global logistics networks, they end up changing when those impacts happen. The resilience in global commodities is considerable. You can have an impact on the cost of commodities on prices, but markets that need that product will find a way to meet their needs. So to us, we believe the company's figures will materialize. But obviously, it is a relevant conflict, and we'll continue to monitor it. But right now, we don't believe it's going to be a major problem. We're not terribly concerned about what's happening there and its impact on the company. Operator: Next question is from Mr. Gabriel Rezende from Itau BBA. Gabriel Rezende: Pedro, Guilherme, Felipe. I have a follow-up question about geopolitics, but it's more about fuels. It's clear that Petrobras' pricing practices parity are quite detached now if there is a price adjustment on internal fuels, what do you think is going to happen? If fuel prices go up, do you think there will be more pressure on the margin considering the company is contracted for Q1, but will you consider more take or pay for the second half of the year? How do you see that dynamics? Do you think it could be a net positive for the company? And will it help offset the effect you just mentioned on fertilizers and corn exports. Felipe Saraiva: Gabriel, this is Felipe. Thank you for your question. The impact on Rumo will be mainly diesel. That's the first point we should clarify. We need to look price fluctuations in oil tend to affect diesel prices. So how does pricing dynamics work for Rumo? All volume margins that we have with our clients, both to transport general cargo or grain transportation have a protection mechanism. So we can pass on any fluctuations in the price of fuel. So for the whole volume that's been contracted, we are not exposed. We have a natural hedging mechanism that protects the company's margin in terms of passing on the price. Obviously, that will depend on market conditions. If fuels become more expensive, then rail becomes more competitive because the energy efficiency is better than other corridors that depend on road transportation. If it's not clear, let me know, and I'll try and rephrase my explanation, but that's how we see the fuel dynamics. Operator: The next question is from Mr. Rafael Simonetti from UBS BB. Rafael Simonetti: Pedro, Guilherme, Saraiva. It's about working capital. Now looking at 2025, there was a significant variation compared to 2025. Could you please comment on the main factors that explain that? And also what we can expect for 2026. Guilherme Lelis Machado: Rafael, this is Guilherme. Well, from quarter-to-quarter, there's always some phasing -- sometimes they haven't materialized or they are materializing in terms of cash conversion. And there are many topics, but if I focus on, one, the activation of some extemporaneous tax credits that we had over the year. And the monetization dynamics wasn't exactly as it's passed on to the results. So suppliers, clients dynamics are predictable. We know how they work. It's all very healthy. And there are some specific elements that took place that led to that mismatch, but nothing concerning or nothing that changes the dynamics of our working capital dynamics? Operator: The next question is from Mr. Bruno Amorim from Goldman Sachs. Bruno Amorim: I have a follow-up question about the Mato Grosso extension, please. Over the year, how can the extension contribute with volume? Do you think it can make a relevant volume contribution over the year? And for the next years, how are you going to ramp up the use of that capacity? In terms of Mato Grosso. If you're not going to invest in Mato Grosso Phase 2, and you were going to spend about BRL 2 billion a year on the expansion, then there should be a BRL 1 billion reduction in this year's CapEx compared to last year. I know that there are many moving parts, but -- your CapEx is pointing to a CapEx that's closer to BRL 6 billion than BRL 5 billion. And if we take away BRL 1 billion from last year's CapEx, it will be closer to BRL 5 million. So if you can help us reconcile those points. Maybe there's another project that's ramping up this year. Unknown Executive: Bruno, thanks for the question. As for the first part of your question, yes, the beginning of operations of Phase 1 will happen in Q3. Then we'll have the commissioning phase, the beginning of operations. We'll do it gradually, and we'll be very careful about it. We'll begin to move some volume at the BR70 terminal more consistently in Q4. And the main thing is that the company's current capacity would already be enough to move all that volume that will transport in 2026, which will be more than 90 billion RTK in terms of where we want our operation to be. So the terminal will make its contribution. However, it won't bring any substantial additional capacity. So the portfolio we have right now would be enough for the volume. Now as of 2027, yes, there will be more of an inflow to that terminal, and it will grow as the market grows. Let's not forget, there are 10 million tons, and we want to fill up that capacity. And the volume of our operation should be at the same level as the market grows. Now in terms of our investments, yes, we will continue to make major investments in the company to conclude Mato Grosso Phase 1, that will be roughly BRL 1 billion. approximately. And as I said previously, we'll continue with our plan to make recurring investments in maintenance that will be BRL 2 billion. And there is an increase in investments in rolling stock that's considerable. Over the last few years, we have been increasing our asset pool, but in structures that weren't necessarily the direct use of company funds. We did establish partnerships with clients. We will now resume investments in rolling stock using company capital. Now also to pay for the Paulista Network program, we'll also need to increase investments. So it's not a straightforward math. In our investments mix, there are also increases in other investments in the portfolio that have placed us in that position between '24 and '25. Operator: The next question is from Mr. Rogerio Araujo from Bank of America. Rogério Araújo: Now still on your tariff repositioning dynamics. If I could ask a couple of follow-up questions. First, if you hadn't repositioned your prices, would those volumes have left through other corridors, or would it have stayed in Mato Grosso? Second question, could you talk about Rumo's rail gap compared to other transportation mode alternatives, other corridors? And also what kind of freight price floors can we consider. What would be a level that would make the company comfortable to believe that you've reached the right level. Felipe Saraiva: Rogerio, this is Saraiva. Thank you for your question. It's hard for the company to try and work out in hindsight what would have happened, what would have happened if we had positioned it this way or that way. I can tell you what we did do, what we looked into and what variables we took into account. We started 2025 with the company more expensive than other companies in Mato Grosso and around Mato Grosso. We are more expensive than other logistics solutions. So as we said, we repositioned it by roughly 10% as of Q2. Once we repositioned the prices, our market share level normalized, and that's the indicator that the company prices are now level with market levels. If prices were below -- too far below the competition, then that market share might have been much bigger than it was. So the way we look at it and what we estimate for -- from the competition and what we want in terms of market share for the company suggests that we are at an average competitive level in terms of origins in Mato Grosso. Now for 2026, looking at the first half of the year, it suggests that our price is competitive, and they were good for the clients that decided to use rail transportation. If there's any need to change tactics, the company is always open. We are consistently monitoring the market to position rail transportation competitively. That is the priority. We need to make sure that we are occupying our capacity efficiently and always fitting it with the market reality. If there are capture opportunities in the market, we'll capture them like we did last year. If we need to reposition again, we'll keep an eye out for that. That's it, if you'd like anymore explaintions, we'll be here. Rogério Araújo: That's very clear. Operator: The next question is from Mr. Daniel Gasparete from Itau BBA. Daniel Gasparete: I have a follow-up question to Pedro's comments. I just want to double-check the number. Did you say 10%, a little bit less than 10% for Q1. So I just want to double-check that. And then I'd like to talk about the West Network. How are discussions going? And the last one, if I may, is a bit more qualitative. How are you thinking in terms of commercial policies? Saraiva's comments were very clear. And based on what Pedro said, last year, the company had higher prices than other modes of transportation. So how are you thinking about your prices prospectively to protect yourselves from movements like that in the future? Or is it just a price sake, that's the reality of life, and you need to optimize what you can in terms of cost? Unknown Executive: Thank you for your questions, Daniel. Now I'm going to answer your question about the West Network. Now to be transparent, we've been saying this to the market, and we've been discussing it with the government. And the natural way forward would be to return the asset to the granting authority. That is a concession that we have been aware that hasn't been operating at the right level. We reconditioned the last operation we had in the West Network. Right now, that operation has basically been interrupted. There are no volumes being transported. The last contract has terminated with the last remaining client. We're not allocating any funds to that operation. So the next natural step will be to continue to talk to the government to formally return the asset. And we are doing our best to move diligently in that process. There are no news, nothing new to share with you, and this should happen this year. And the contract will end halfway through the year. So we're not allocating any funds to that network. We won't be allocating any funds as of the second half because the operation has been suspended. So we'll now just formally return the asset to the granting authority. Pedro Palma: This is Pedro now, Andre. I'll take your question about the commercial policies. Just to clarify my comment just over 10% price reduction in Q1 2026 compared to Q1 2025. I'm talking about the North operation consolidated yield specifically, which is the most relevant piece of data in our balance sheet. So that's it. The RTK in North operation in Q1 '26 compared to Q1 '25. In terms of our commercial policy, Daniel, to be very candid with you. I used the expression tactical readjustment, tactical positioning because our strategy hasn't changed. We haven't changed our commercial policy. Our policy has always been and continues to be the most competitive logistics solution or competitive in markets where we choose to operate to ensure that we can use our capacity efficiently and intelligently. That allows us to be the player with the lowest cost to serve with the best capacity and the most resilience in the system, connecting Brazil's main export corridor, which is the Port of Santos. So we'll maximize value creation in that structure is key. What we did in 2025 and when we say that in Q1, our price was wrong, that was actually -- just to go back a bit, we came from a crop failure in 2024. So the information about the right price for 2025 that we knew was going to be a year where there would be good product supply for exports, but it was uncertain. Nobody knew. The market didn't know. We didn't know exactly what the pricing level would be for logistics in Mato Grosso and what level it would become stable in 2025. So Q1 was necessary to find out what the new logistics price would be. As we found out what this new pricing level would be, we've made the adjustments -- there were complexities, but we have been doing it throughout the year. In 2025, we had very healthy volumes. We delivered very consolidated volumes because the only adjustments we made were to the prices. Now the level of uncertainty is much less than it was in Q1 '25. Obviously, things can change. I always reiterate, we can never forget that we work with agricultural commodities that are part of our business. That's why we like to keep a high liquidity position and focus on execution, discipline and being very strict when we use company funds. That's why we need to have an agenda to optimize our costs, looking at unit costs to make sure that we have healthy margin levels regardless of what can happen in the commodities environment, which is where we operate. So we can't give you a guarantee of an absolute price level or absolute crop level. What we can guarantee is that our company is increasingly more solid, disciplined and strict when it comes to everyday expenses so that regardless of what happens, we will be the benchmark player, and we will be able to navigate whatever happens. Thank you. Have a great afternoon. Operator: The Q&A session is now concluded. We would like to hand the floor back to Mr. Guilherme Machado for his closing remarks. Guilherme Lelis Machado: I'd like to conclude the call by thank you all for joining us. And to reiterate, we're very confident about 2026, as you saw in our opening remarks. We had a very solid execution in January and February in terms of volume. We'll begin the year practically with the first half of the year fully contracted, focusing on operating those volumes. And we know that the operations back when there's pressure on our system. We do best when we have demand, and that's when we can optimize our system. We also mentioned that at the end of Q1, we'll have more visibility in terms of prices are going, as Pedro reiterated more than once. We should have a little bit less than 10% reduction. And as of the next quarters, pricing levels will be more compatible with the repositioning that we started in 2025. It's reasonable to believe that we'll have more stable prices over the year. We'll monitor market dynamics. There should be a lot of information available at the beginning of the year. And for volumes that haven't been contracted, we will continue to follow our strategy and look out for any opportunities. We aim to increase transported volumes within our system capacity over 90 billion RTK. We'll continue to comply with our investment portfolio and company contracts and concluding Phase 1 of the Mato Grosso Rail, we are absolutely confident that we will be delivering that project in Q3 2026. We have been working on liability management and liquidity in 2025, and that has made us feel sure that we are liquid and our leverage level is consistent with our business profile and our ability to navigate any volatilities this year, maybe due to election or anything else that might happen. That's it. The company is ready to operate efficiently, cost efficiency, whether they be fixed or variable and executing on our investment portfolio. Thank you once again for joining, and I'll see you again during the call for Q1 2026 or some other time. Thank you. Operator: This concludes Rumo's earnings release video conference. Thank you for joining us, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Greetings. Welcome to a.k.a. Brands Holding Corp.'s Fourth Quarter and Fiscal 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Emily Schwartz, Head of Investor Relations. Thank you, and you may begin. Emily Schwartz: Good afternoon. Thank you for joining a.k.a. Brands to discuss our fourth quarter and fiscal 2025 results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today is Ciaran Long, Chief Executive Officer; and Kevin Grant, Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. Management may make forward-looking statements, which refer to expectations, projections and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC. Please note, we assume no obligation to update any such forward-looking statements. This call will also contain non-GAAP financial measures such as adjusted EBITDA, adjusted EBITDA margin and constant currency net sales. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website. With that, I'll turn the call over to Ciaran. Ciaran Long: Good afternoon, everyone. Thanks for joining us today to discuss our fourth quarter and full year 2025 results. I'm pleased to report that we delivered another year of growth, reflecting the continued strength of our brands and the power of our business model. Despite a dynamic environment, we executed on our strategic priorities, strengthened our foundation and entered 2026 positioned for accelerated growth and expanding margins. I want to thank our teams across the business for their focus and disciplined execution throughout the year. Their commitment and hard work were central to the progress we made and the momentum we carry into the year ahead. Let me start with a few highlights from the year. For the full year, we grew net sales 4.4% to $600 million, marking another consecutive year of growth. Our U.S. region, which remains our largest and fastest-growing market, delivered net sales growth of 7% to $394 million. On a 2-year stack, the U.S. is up 25%, further reinforcing our conviction in our U.S. expansion plans, and the U.S. now makes up 66% of the business. Princess Polly continued to deliver strong performance throughout the year, generating double-digit net sales growth and advancing its omnichannel expansion strategy. The brand opened 7 new stores in the U.S. in 2025 and launched its first location in Australia in the fourth quarter, ending the year with 14 stores globally. Wholesale continued to perform well across the portfolio, with our partnership at Nordstrom exceeding expectations with both Princess Polly and Petal & Pup delivering strong results. We also strengthened the leadership team, operations and go-to-market strategy within our streetwear brands. These actions improved merchandising discipline and inventory productivity, positioning Culture Kings and mnml for accelerated growth and stronger margin contribution in 2026. And importantly, we exited the year with inventory down 10% year-over-year, reflecting our continued disciplined approach to inventory management as we improve turns and transition our streetwear business to the test and repeat merchandising approach. In 2025, we also completed an important structural transformation of our supply chain. As discussed in prior quarters, given the rapidly evolving macro environment, we accelerated the diversification of our sourcing strategy to enhance long-term flexibility and resilience. That work is now substantially complete with approximately 50% of our U.S. sourcing from outside of China, in line with our targets, along with our ability to quickly move to different regions as necessary moving forward. Our test and repeat merchandising model and short lead times, while core to our agility and inventory efficiency, meant we couldn't prebuy inventory ahead of our elevated tariffs implemented in 2025. Despite the margin headwinds faced throughout the year as we source product at the higher tariff rates, we delivered 30 basis points of gross margin expansion to 57.3% for the year. We estimate that the tariff headwinds offset by our mitigation efforts negatively impacted fiscal 2025 gross margins by approximately 100 basis points. Looking ahead, we're better positioned to adapt quickly to any future trade policy changes while maintaining our competitive advantages in speed and inventory efficiency. The progress we've made over the past 2 years provides a strong foundation as we look ahead towards 2026 and beyond. In 2024, we stabilized the business and returned to growth. In 2025, we built on that momentum by growing the top line, strengthening our supply chain, expanding our omnichannel presence and continuing to invest in our brands. And as we enter 2026, we have improved operational discipline, stronger inventory health and a clear path to accelerating growth and expanding margins. I'm confident the momentum in our business is picking up with first quarter-to-date net sales growth of mid-single digits, driven by growth in our U.S. online channels. Our 2026 strategy remains focused on 3 core priorities: first, attracting and retaining customers through our direct-to-consumer channels with exclusive trend-driven merchandising and innovative marketing; second, expanding brand awareness and our total addressable market through physical retail and strategic wholesale partnerships; and third, we remain committed to streamlining our operations and strengthening our financial foundation. As part of this, we are actively embedding AI across the organization to enhance the customer experience and drive operational excellence. Our portfolio model and flexible asset-light technology stack enables us to rapidly test and refine solutions at the brand level, scale what works and unlock value across the entire platform. We're already seeing measurable impact in product imagery, marketing productivity and inventory and markdown optimization. These capabilities are already improving conversion, sharpening creative execution and enabling smarter, faster, data-driven decision-making across the business. We expect AI to be a meaningful driver of margin expansion in the coming years, and we're scaling these initiatives with discipline and speed. With that, I'll share highlights from each of our brands and the growth drivers for the coming year. Starting with Princess Polly, our largest brand, which comprises more than half of the portfolio. Princess Polly continues to resonate with next-generation customers through its trend-driven merchandising, authentic customer connections and disciplined social-first marketing approach. And I'm confident that there's tremendous runway ahead for continued global growth. As mentioned, in 2025, Princess Polly delivered double-digit net sales growth, driven by the success in both its direct-to-consumer business and its omnichannel expansion. The team continues to execute its test and repeat model with discipline, delivering consistent weekly newness that supports strong full price sell-through. Importantly, the improvements we made to our supply chain position the brand to operate with stronger in-stock levels and capture demand more efficiently in 2026. From a marketing standpoint, Princess Polly continues to meet its customers where they are, maintaining a presence across more than 20 social and digital platforms, complemented by in-store events and broader brand initiatives. TikTok remains an important demand generation channel. And in 2025, the brand increased its focus on TikTok Live, creator collaborations and search-driven discovery, driving stronger engagement and efficient customer acquisition. Beyond this online performance, Princess Polly continued to expand its retail footprint with results exceeding expectations from both a financial and brand awareness perspective. Princess Polly successfully opened 7 new stores in the U.S. in 2025, ending the year with a total of 13 stores in the U.S. And as mentioned, the brand opened its first store in Australia in Bondi Beach, Sydney in December. The Bondi store has been very well received and reinforces our confidence that Princess Polly's omnichannel strategy resonates well globally. Princess Polly's wholesale business also continued to perform well in the fourth quarter, further expanding brand reach and reinforcing our strategy of meeting customers wherever they choose to shop. Princess Polly will continue to expand and optimize its TikTok Shop and wholesale partnerships, ensuring strong brand presentation across key retail partners. Looking at 2026, Princess Polly has a clear runway for sustained global growth, supported by several strategic initiatives. The brand will continue to fuel e-commerce growth by refining its test and repeat strategy and reinforcing brand and product storytelling. Princess Polly will deliver consistent newness, focusing on proven best-selling party styles while also expanding its casual and basic categories to increase share of wallet. From a marketing perspective, the brand will prioritize influencer-led content and product storytelling across social platforms to drive engagement and full price demand. Princess Polly will continue expanding its U.S. retail footprint with 8 new store leases fully executed and additional locations expected to be announced throughout the year. As shared in our related press release today, store openings in the second half of 2026 include Houston and Frisco in Texas, Orlando, Florida; and Adena, Minnesota, and locations in Jacksonville and Boca Raton in Florida, Nashville, Tennessee; Charlotte, North Carolina planned for early 2027. While the existing fleet continues to meet our profitability and payback expectations, driving solid 4-wall profitability, each new opening provides an opportunity to further refine execution and enhance store productivity. And lastly, Princess Polly is beginning to lay the foundation for international growth to broaden reach and expand its global presence. Later this month, in partnership with a third-party logistics provider, Princess Polly would unlock distribution in the U.K., improving customer lead times and enhancing the overall experience in the region. This establishes the operational foundation for moderate growth in the U.K. in 2026 with further expansion in the coming years. Turning now to our other women's brand, Petal & Pup. The brand continues to resonate with its core customer through a curated assortment of trend-forward feminine occasion-driven styles at accessible price points. In 2025, Petal & Pup delivered solid performance, supported by continued strength in dresses and eventwear, while broadening its assortment to capture more everyday demand and repeat purchases. Brands growing wholesale presence, particularly at Nordstrom, exceeded expectations. Petal & Pup has established a meaningful presence within Nordstrom trend section across all categories, with particular strength in dresses and more casual styles, expanding brand awareness and introducing new customers to the brand. In the fourth quarter, Petal & Pup successfully launched on the rental platform, Nuuly, Nykaa Fashion in India and Australian department store, David Jones, with strong initial results out of the gates and plans to further expand on each of these platforms are already underway. Looking ahead to 2026, the focus remains on deepening product differentiation and strengthening brand equity. Petal & Pup will continue to expand its range with a clear emphasis on outfitting its core customer across every aspect of our life. This includes a stronger push in casual wear and elevated separates, particularly tops and knitwear to complement the brand's established strength in dresses. By building a more balanced and versatile assortment, the brand aims to drive increased repeat rate over time. This strategy will be underpinned by a continued commitment to enhance quality, compelling price points, effortless outfitting and trend-led perspective. Petal & Pup is also elevating its brand storytelling and community engagement, shifting beyond purely product-led campaigns towards more cohesive and authentic brand narratives. The recent refresh of its branding, website and visual identity supports this evolution alongside the launch of an evergreen brand campaign across social channels and key out-of-home placements this month. Omnichannel and international expansion also remains a key growth driver for Petal & Pup. In addition to continued expansion with Nordstrom, newly and existing partners, Petal & Pup will launch with Dillard's, Von Maur and select independent boutiques in 2026, further extending its reach and awareness in the U.S. market. I'm confident that Petal & Pup is well positioned for continued growth in 2026 as it strengthens its assortment and expands its reach. Turning now to our streetwear brands. Culture Kings remains one of the most distinctive experiential retail concepts in the market, blending global streetwear, music, sports and culture into a highly immersive customer experience. In 2025, the focus was on strengthening the fundamentals of the business in both the U.S. and Australia to position the brand for accelerated growth in 2026 and beyond. Culture Kings' exclusively designed in-house brands are a key differentiator and central to its growth strategy. In 2025, the company intensified its focus on this portfolio, including brands such as mnml, Loiter, 73 Studio, Carre, Saint Morta and American Thrift by evolving its merchandising approach, relaunching priority brands and elevating product quality. Investments in Loiter drove double-digit revenue and gross profit dollar growth in 2025, validating the strategy. Building on that momentum, 73 Studio and American Thrift were relaunched in the fourth quarter with a refined design direction and stronger go-to-market execution. Early sell-through and improved new style velocity from the refreshed brands has been encouraging, reinforcing confidence in the owned brand strategy heading into 2026. Owned brand penetration is expected to continue expanding, supported by faster product cycles, tighter assortment and a clear brand point of view. This more focused product strategy is designed to drive stronger full price sell-through and support margin expansion in the year ahead. In addition to the in-house brands, Culture Kings continues to enhance its third-party assortment from leading national headwear and footwear brands such as New Era, ASICS, Adidas and more to complete the streetwear outfit. Beyond its online channel, Culture Kings retail footprint and retailertainment ethos remains central to the model. The stores, including the Las Vegas flagship and 9 locations across Australia and New Zealand, serve as meaningful revenue drivers and powerful marketing engines. Each location delivers a differentiated and immersive experience that builds loyalty, drives customer acquisition and reinforces the brand authority in streetwear. In the fourth quarter, the team relocated the Brisbane store into a newly renovated 5,000 square foot format designed to serve as a more productive and repeatable model. While the store retains high-impact features such as the hot wall and hot basketball court, the format is being tested as a prototype for future U.S. expansion. Early results have been encouraging, and the learnings from Brisbane will directly inform the next phase of U.S. store growth. We're actively pursuing a location for the second U.S. store and we'll provide updates on future calls. Looking ahead to 2026, I'm confident that Culture Kings is set up for success with operational improvements in the rearview, a healthier inventory position, strong and accelerating performance at its in-house brands and more stores on the horizon. I'm encouraged by the progress and excited for the future. Before I turn it over to Kevin, I want to again express my gratitude to our incredible team. The past year acquired agility, resilience and an unwavering focus on execution. Our teams across all functions rose to the challenge, successfully navigating the supply chain transformation while continuing to deliver compelling products and experiences to our customers. I'm confident that we have the right operational foundation, the right team and the right strategic priorities to drive accelerating growth in 2026 and beyond. With that, I'll turn it over to Kevin. Kevin Grant: Thanks, Ciaran. Turning to our financial results for the fourth quarter. Net sales increased 3.1% to $164 million, in line with our guidance. As we noted on our third quarter call, due to the accelerated supply chain transition, we entered October with meaningful out-of-stock positions in key best-selling styles, which limited sales in the early part of the quarter, but inventory levels stabilized as we moved through the quarter, and we ramped up our marketing engine to regain sales momentum. Net sales in Australia were also in line with expectations, increasing 1.6% to $58.1 million. As Ciaran mentioned, we entered 2026 with strong momentum with first quarter to-date net sales growth in the mid-single digits. As a reminder, as we continue expanding across channels, the shape of the P&L will continue to evolve, though we expect overall margin dollars to increase as we pursue the growth opportunity ahead of us. Total orders were $2.2 million, up 6.4% year-over-year. Trailing 12-month active customers, excluding wholesale, were 4.18 million compared to 4.07 million a year ago. And average order value was $76, down 2.6% year-over-year. Turning to our profitability metrics. Gross margin declined 30 basis points to 55.6% compared to 55.9% last year, reflecting the impact of the out-of-stocks and best sellers in October, partially offset by a higher mix of retail stores. Selling expenses were $51 million or 31% of net sales, reflecting the retail footprint expansion and onetime fulfillment charges. Marketing expense was $20.5 million or 12.5% of net sales. General and administrative expenses were $30.3 million or 18.5% of net sales. G&A expenses increased year-over-year primarily due to charges for a nonrecurring legal matter as well as an increase in headcount to support our channel expansion strategy. And we delivered adjusted EBITDA of $2.5 million or 1.5% of net sales. For the full year, net sales increased 4.4% to $600 million, in line with our expectations and compared to $574.7 million a year ago. On a constant currency basis, net sales increased 5%. Adjusted EBITDA for the year was $19.7 million or 3.3% of net sales compared to $23.3 million or 4.1% of net sales a year ago as tariffs and inventory disruptions pressured results. As Ciaran mentioned, the tariff headwinds, partially offset by our mitigation efforts, negatively impacted margin by approximately 100 basis points. Turning to the balance sheet. We ended the year with $20.3 million in cash and cash equivalents compared to $24.2 million at the end of the fourth quarter of 2024. Debt at the end of the quarter was $111.1 million compared to $111.7 million at the end of the fourth quarter of 2024. As a reminder, we successfully refinanced our debt in October and extended the maturity to 2028. As Ciaran mentioned, we're really pleased with the progress we've made improving the quality and quantity of our inventory. We ended the quarter with $86.2 million in inventory, down 10% compared to $95.8 million at the end of the fourth quarter of 2024. Turning now to our outlook. We are entering 2026 with momentum and a stronger operating foundation. Our outlook is based on the tariff rates in place exiting 2025 and does not include the impact of any potential refunds as a result of the Supreme Court's decision to overturn the IEEPA tariffs. For fiscal 2026, we expect net sales to be between $625 million to $635 million, representing growth of 4.2% to 5.8%. We expect adjusted EBITDA of between $27 million and $29 million. For modeling purposes, we anticipate fiscal 2026 stock-based compensation of approximately $6.5 million to $7 million, depreciation and amortization expense of roughly $20 million to $21 million, interest and other expense of approximately $16 million to $18 million an effective tax rate of negative 10%, CapEx between $18 million to $20 million and weighted average diluted share count of approximately 11 million. For the first quarter, as mentioned, quarter-to-date net sales growth is tracking mid-single digits with strength on our online channels in the U.S. As a reminder, in March of last year, Princess Polly and Petal & Pup launched across all Nordstrom stores, creating a more challenging wholesale comparison as we progress through the quarter. For the first quarter, we expect net sales to be between $130 million and $132 million, reflecting a low single-digit growth rate. For modeling purposes, for Q2 through Q4, we expect high single-digit growth on a 2-year stack. Due to the timing of tariff impacts, adjusted EBITDA comparisons will be more challenging in the first quarter before normalizing in the second quarter. We expect adjusted EBITDA between $1.5 million and $2 million in the first quarter. For modeling purposes, for Q2 and Q3, we expect an EBITDA margin expansion of about 100 basis points and a larger expansion in Q4 compared to the same period last year. In closing, entering 2026, the business is operating from a position of greater strength. The progress we made in 2025 across supply chain diversification, inventory discipline and omnichannel expansion has positioned the business to accelerate growth and improve profitability in the year ahead. As a result, we believe 2026 represents an inflection point for the company with clear drivers to support top line growth and margin expansion. With that, we'll open the call for questions. Operator: [Operator Instructions] Our first question comes from Ryan Meyers with Lake Street Capital. Ryan Meyers: First off, just thinking about the EBITDA guide for 2026, obviously, a pretty significant step up here from what you guys reported in 2025. Can you just walk us through kind of the key drivers of that? Is most of that coming from the gross margin side? Are we seeing any operating expense leverage? And then are there any lower nonrecurring costs? Just kind of bridge that gap for us would be helpful. Kevin Grant: Yes. Thanks, Ryan, for the question. Yes, we're coming out of the quarter with good momentum. That strong performance for the year, over 4% growth, 5% on a constant currency basis. We've mentioned we've seen mid-single-digit growth so far in Q1. The guide for the year on the top line is that sort of mid-single digits. And then from a profit perspective, we mentioned EBITDA, we expect over the entire year about 120 basis points of EBITDA expansion. I would say the bulk of that, Ryan, comes from gross margin. We mentioned the headwind of 100 basis points in gross margin in FY '25. So we'll be moving past that in the year. We're finishing inventory in a really strong position, down 10% year-over-year and down 10% sequentially. So we're feeling great about that. We'll have some channel mix impact in the gross margin as well. The balance of the EBITDA improvement will come across the rest of the operating expense lines. As mentioned, we'll continue to see the shape of the P&L move, as the channels change shape of the P&L. But overall, I feel really good about that guidance. And then on the nonrecurring charges, no, not really anything of note for the guide for FY '26. Ryan Meyers: Okay. Got it. And then just switching to the retail business. Can you guys tell us what percentage of the revenue mix now does come from retail? Obviously, pretty significant store openings in 2025, expected again here in 2026. Is that starting to become a more meaningful percentage of the overall revenue mix? And then how should we think about the growth of the stores or the revenue growth at the stores relative to the direct-to-consumer business? Is the growth outpacing that there? Just any more details on that as it's becoming a larger portion of the business? Ciaran Long: Yes, Ryan, this is Ciaran. We are really happy with the store performance. And I think for us, seeing really good productivity on a square foot in the Princess Polly stores also really strong 4-wall profitability and I think really feel good about the opportunity that we have to continue to lean into stores. We've now 13 open in the U.S., which is great progress. As we mentioned, signed 8 more leases. And I would say kind of 4 to 5 of them will open in FY '26. So we're going to continue to lean into the opportunity that we have at the stores. I think tremendous growth. It's also great for us bringing in new customers. We're also seeing a nice halo effect from the online business or to the online business from the stores. So I think just kind of more and more ahead of us. Operator: The next question comes from the line of Dana Telsey with Telsey Group. Dana Telsey: As you think about the Princess Polly business and the opening of the 8 stores, how do you envision the business retail versus wholesale, your direct online? What do you want the complexion to look like? And can you talk about what the gross margin differential is between? Ciaran Long: Yes. Sure, Dana. Look, I think there is tremendous opportunity. And just as a reminder, Princess Polly is about half the revenue for the group at the moment, 13 stores open, also a great presence in Nordstrom across all Nordstrom doors in the U.S., just like the Petal & Pup brand has and seeing really good response rate really across all of the channels for new and existing customers. I think, look, from a long-term perspective, we're going to continue to grow the online business. We think we are -- still have a lot of opportunity there. But obviously, from a wholesale and stores perspective, we are extremely early. I think as it relates to those, I would see the more focus from the Polly team is on opening stores and building out that store footprint. I would say on the Petal team, they're more focused on the wholesale opportunity in front of them. And we mentioned a few of the new partners that they have this year and coming in 2026. From a margin perspective, I would say, look, it's all -- they're all profitable channels. They're all bringing new customers. We do see gross margins a little bit higher in the stores than online as the stores are a little bit less promotional at this stage. Obviously, gross margins lower in the wholesale channel, but very limited selling expenses, marketing in those channels as well. So kind of on a contribution profit basis, pretty similar across the mall and really gives us confidence to kind of our ability to push into the mall and that they'll all be margin accretive. Dana Telsey: Got it. And just lastly, the shaping of the year, how are you thinking of the cadence of top line and adjusted EBITDA given the lapping of tariffs and the supply chain transition that you had? Kevin Grant: Yes, Dana. So from a top line perspective, we've talked about that sort of mid-single-digit growth for the full year and the guide for FY '26. As you alluded to, there's definitely a lot of disruption with the tariffs and supply chain issues in FY '25 that sort of disrupts our normal cadence. So that's why we're guiding from a top line perspective the growth from Q2 through Q4 on a 2-year stack, it's sort of that high single-digit perspective. We mentioned EBITDA over the balance of the year expanding about 120 basis points with that really picking up in Q2. So Q2 and Q3 look very similar and will be about 100 basis points higher than FY '25 with a little bit of a larger impact in Q4. Operator: The next question comes from the line of Eric Beder with SCC Research. Eric Beder: Can you talk a little bit -- I know a little bit about the inventories here. So that's a really nice number, down 10%. I'm assuming given the tariffs and the SKU count, that's down even more. Is that something that -- what we should be thinking about that going forward for this year given the kind of ups and downs in the tariffs last year? Ciaran Long: Yes, Eric, I think really good to see kind of inventory down 10% and doing that in a period where we're growing the overall business up 4.4% for the year and in a period when such progress on diversifying our sourcing last year as well. I would say a big driver of that change in inventory is just the progress we've made at the Culture Kings business and moving them on to test and repeat. It's a slow build to change that and kind of such a transformational difference for the group. But I think the leadership team that's been in there now for 12 months and longer have just made huge progress, and that's a big driver of the inventory change. Look, I think philosophically, we always want to have lower inventory growth and sales growth, and that's how we're looking to go through this year. Eric Beder: Okay. And Australia and New Zealand, 4 quarters of growth here. Is this market back? And how can you leverage that even more now that pretty much the inventories have been cleaned up and some of the other positives have rolled through there? Ciaran Long: Yes. It is great to see 4 quarters in a row of growth in the Australia region. And I think, look, Petal & Pup and Princess Polly have been doing well there because they have been on that test and repeat model. I think now that Culture Kings is and the new leadership and kind of ways of working that the team has there, we're really seeing progress there. We're seeing real improvements in productivity for new products and new SKUs that we're bringing in. So I think back to growth there is great. Also, as we talked about, we opened -- we relocated a store in Brisbane for Culture Kings down at a 5,000 square foot kind of size. It's a new model that we can -- testing there, we can do that quickly and then leverage the rollout in the U.S. I think for us, we are expecting moderate growth in Australia, but I think glad that it's back to growth and will be consistently there. Eric Beder: And just a follow up on that. What is the average size of the Culture Kings stores outside of the Brisbane store in Australia and New Zealand? Ciaran Long: Yes. Traditionally, they were more in that kind of 80,000 square foot size. And as a reminder, the Vegas store in the U.S. bigger again. So for us, really figuring out as we look to scale in the U.S., how do we retain those key aspects of the retail payment that is just core to Culture Kings, sets it apart from anybody else out there and is really the opportunity for us to show off the great 1P brands that we have in that business. So look, we're fortunate that you can test a bit quicker down in Australia from the store side and also being the off-season there does give us a good view into what should be best sellers in the U.S. going forward. Operator: Our last question comes from Ashley Owens with KeyBanc Capital Markets. Ashley Owens: So maybe to start, and correct me if I'm wrong, but I believe I heard that the 1Q quarter-to-date growth has been mid-single digits. Could you just provide more detail as to what's shaping the key assumptions driving deceleration from current trends in the quarter and maybe from a brand perspective, where that moderation is coming from? Or if this is just general conservatism built in? Kevin Grant: Ashley, yes, good observation. Yes, we've seen strong mid-single-digit growth so far in the quarter, and that's largely coming from the U.S. online business, which is great to see. Just as a reminder, we launched in all the Nordstrom doors for both Polly and Petal in March of '25. And that's what's driving kind of that more difficult comp as we move through the quarter and kind of explains where we're guided for Q1. Ashley Owens: Okay. That's super helpful. And then maybe just to follow up, thinking about some of the other drivers of growth in 2026, how we should break this down or balance between order growth and AOV as the primary drivers. I know AOV was declining in through the first half of the year, and then we're also lapping really strong order volume in 2Q and then a little bit in 3Q as well. So just any insight there would be helpful. Kevin Grant: Yes, for sure. From a -- we're pleased really to see in the year that growth in our active customers as well as that strong growth in orders. Q4 order growth was over 6%, and that's really what drove the top line performance. Listen, like with our evolving channel mix, we're going to see some up and down in the AOV, and we've got channels like wholesale will drive the AOV up. We've got other channels like TikTok and new categories that will drive the opposite. We've modeled AOV flat for FY '26 with the top line growth really coming from growth in orders. Operator: Ladies and gentlemen, this now concludes our question-and-answer session and does conclude today's conference as well. Thank you for your participation. Please disconnect your lines, and have a wonderful day.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Rumble Inc.'s Q4 2025 Earnings Call -- Conference Call. [Operator Instructions]. This call is being recorded on March 5, 2026. I would now like to turn the conference over to Shannon Devine, Investor Relations for Rumble. Please go ahead. Shannon Devine: Thank you, operator. I'm here today with Chris Pavlovski, Founder, Chairman and CEO of Rumble; and Brandon Alexandroff, CFO. A press release detailing our fourth quarter and full year 2025 results was released today and available on our Investor Relations website. Before we begin the formal presentation, I would like to remind everyone that statements made on this call may include predictions, estimates or other information that might be considered forward-looking. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the company's cautionary statements in our earnings release and the factors included in our filings with the SEC. Future company updates will be available via press release and the company's identified social media channels. I will now turn the call over to Rumble's Founder, Chairman and CEO, Chris Pavlovski. Christopher Pavlovski: Good afternoon, everyone, and thank you for joining us. 2025 was a year where my team went heads down building and expanding the Rumble product, building out our sales operation and putting together assets that would transform Rumble into an impactful player in cloud. I'm happy to say we've successfully executed on these initiatives. As we enter 2026, we have reached a critical inflection point and Rumble is now primed for a new era of aggressive growth. I'm going to start with 3 Rumble video product initiatives that have been completed and a growth update. First, we addressed user feedback to make the platform more resilient. Our design, interface, stability and features are now far more competitive with YouTube and even exceeding in specific areas. Second, launching Rumble Wallet with Tether to become the first major platform to allow tipping in Bitcoin, USD Tether and Tether Gold was another key initiative that we brought to the public in the first week of 2026. By leveraging Tether's stablecoin technology, we now have a solution for creators to bypass the friction and predatory fees of traditional payment rails. Third, Rumble Shorts. After carefully listening to our community, we introduced Rumble Shorts to deliver better user discovery of content. Rumble Shorts are short vertical videos that play in a continuous swipeable feed, which introduces a fast, engaging way to watch and interact. Users can easily consume shorts from their favorite content creators, discover new ones and send tips through Rumble Wallet, which fuels platform growth and enables monetization. After being in a nonelection year and moving into a midterm election year, early signs are showing that growth is back. In Q4, MAUs are up quarter-over-quarter, driven primarily by international growth. And more recently, less than 10 days ago, Rumble hit a new all-time high of concurrent streamers on the platform. Dan Bongino is back as of February, and Asmongold, a top Twitch streamer, expressed that he is going to be joining Rumble. But it doesn't end there. After only a month since the launch of Rumble Shorts on the web and only a little more than a week or 2 on Android and iOS, the results are staggering. Rumble Shorts has been delivering records. And to quantify that, as of this past weekend, it broke the 1 million unique video views milestone in a single day, up from 669,000 only 1 week prior. It's still very early, but our teams are blown away with the success we've seen so far. We plan to market Rumble Shorts heavily given the stickiness and early response from our core audience. Now on to sales. Regarding our sales organization, as we have mentioned many times, prior to the 2024 election, brand sales faced significant headwinds. Since the '24 election, some of those headwinds have shifted into distinct tailwinds as we captured several brands, including Netflix, Morgan and Morgan, Perplexity, Crypto.com, and most recently, we've added Paramount, Amazon Prime and Fox Nation. To capture this opportunity, we appointed Greg Sherrill as President of Sales, who has had senior leadership positions at Magnite, AT&T and Comcast. Greg has already made strides in repositioning Rumble within the advertising ecosystem, improving our product as we seek to build meaningful integrations across demand-side platforms and supply side platforms and building a professionalized sales operation capable of converting our massive reach into high-value brand partnerships. While we work through the product development cycles, partnership and sales pipelines, we expect to see the returns in the back half of '26 and primarily into 2027. In the meantime, our content teams have been working diligently to capitalize on our recently announced $50 million per year advertising deal with Tether over the next 2 years. The strategy is simple: use the $100 million commitment as the advertising anchor to bring in incremental major influencers and podcasters to the platform. It's an incredible opportunity for the company, and we have been laying the foundation in recent months to capture this revenue opportunity. We expect this to materially ramp in the second and third quarter. The excitement for Rumble as a video platform and the sales infrastructure being put into place is at the highest we've seen it. Growth is back and the platform has never been more ready to capture the moment as we move into the midterm election year. Now let's talk about cloud, which is equally as exciting, but even more transformative. We continue to expect that our acquisition of Northern Data will close in the second quarter of this year, and we are as excited as ever about this transaction. Specifically, earlier today, Northern Data announced they are on pace for roughly 85% GPU utilization by the end of February 2026, which is an incredible accomplishment. This utilization represents the incredibly strong demand in the market. Since finalizing the definitive agreement on November 10, 2025, we have met with several GPU-as-a-Service customers and presented the industrial logic for the acquisition. The reception has been quite positive, not only from a variety of such customers, but also key strategic suppliers in the GPU ecosystem. These market participants see significant value in Rumble's Northern Data acquisition and have expressed keen interest in Rumble delivering Blackwell generation GPUs. Furthermore, many of these customers and suppliers have expressed the desire to begin working together as soon as possible. The pace and size of this growing pipeline, including strong Blackwell demand has been extremely encouraging. The pipeline in Northern Data's improved utilization demonstrates the level of growing GPU-as-a-Service demand, and Rumble couldn't be better positioned to serve it. As I said when we announced we're going public, Rumble's ambition was to compete with YouTube, Google Ads and all the hyperscalers. With the addition of Rumble Shorts, we can now add TikTok to the list. Every day our team continues to build is 1 day closer to realizing that vision. As we move through 2026, I think it's important to contextualize the hand we have. Midterm elections are around the corner, and our video platform is in the best state it's ever been to capture the potential audience growth. Second, our sales team is energized by a favorable ad market. Third, we expect Tether's advertising commitment to materially start to ramp in the second and third quarter. Fourth, we expect our acquisition of Northern Data to close in the second quarter of 2026, which we strongly believe will be transformative and redefine our revenue profile. Fifth, as detailed in Northern Data's announcement earlier today, Northern Data is nearing 85% GPU utilization, evidencing extremely, extremely high GPU demand. Sixth, multiple customers and suppliers have expressed interest in working together on GPU-as-a-Service opportunities as soon as possible. And seventh, Rumble Shorts is on absolute fire. I have to say it's never been more exciting to be at the helm of this company, and I cannot wait to see what this company looks like later in the year. Unknown Executive: I will now take you through our fourth quarter and full year 2025 financials at a very high level before turning the call over to the operator for Q&A. For the full year 2025, we reported revenues of $100.6 million, an increase of 5% compared to $95.5 million in 2024. Our first time achieving this $100 million milestone. For the fourth quarter, we reported revenues of $27.1 million, a sequential increase of 9% from $24.8 million in the third quarter of 2025 and a year-over-year decrease of $3.2 million, of which $2.8 million was attributable to a decrease in audience monetization revenues and $0.4 million to lower other initiatives revenues. The fourth quarter year-over-year decrease in audience monetization revenues was driven by a $5.5 million reduction in advertising, tipping and platform hosting fees, partially offset by a $2.7 million increase in subscription and licensing fees. The decrease in other initiatives revenues was due to a $0.5 million reduction in advertising inventory monetized by our publisher network, partially offset by a $0.1 million increase in cloud services. ARPU increased to $0.46 for the fourth quarter, up 2% sequentially from the third quarter of 2025, a continued positive indicator of our monetization progress. Average global MAUs reached 52 million for the quarter, an 11% sequential increase from Q3, driven primarily by our initial investment in international expansion. Cost of services in the fourth quarter decreased 26% year-over-year to $25.6 million, primarily from an $8.8 million reduction in programming and content expenses. For the full year, cost of services decreased by $31.1 million to $107.4 million, primarily from a $33.9 million reduction in programming and content expenses, offset by an increase in other cost of services of $2.8 million. Adjusted EBITDA loss for the fourth quarter was $16 million compared to a loss of $13.4 million in the fourth quarter of 2024. For the full year of 2025, adjusted EBITDA loss improved to $74.3 million compared to a loss of $92.1 million in '24, an improvement of $17.8 million, primarily driven by the reduction in programming and content expenses and revenue growth. You will see in our financial statements a net loss for the fourth quarter of $32.7 million, which compares to a net loss of $236.8 million in the fourth quarter of 2024. I want to note that the prior year figure included $184.7 million in the change in fair value of derivative liability related to the Tether strategic investment. We ended the quarter with total liquidity of $256.4 million, including $237.9 million in cash and cash equivalents and $18.5 million in Bitcoin holdings. Our Bitcoin holdings are carried at fair value and remeasured each quarter. For the full year, net cash used in operating activities was $70.4 million, an improvement from $87 million in 2024. As Chris described, we entered 2026 with momentum across video, advertising and cloud. The Tether advertising commitment, the build-out of our sales operation under Greg Sherrill and the pending Northern Data acquisition all represent meaningful catalysts for revenue growth. We have the liquidity, the strategy and the team to capitalize on each of them. That concludes my prepared remarks. Before I turn the call over to the operator, I invite you all to join Chris this afternoon at 6:30 p.m. Eastern Time in an exclusive post-earnings interview with Matt Kohrs to be streamed live on the Matt Kohrs Rumble channel. That concludes my prepared remarks. Operator, we're now ready to open the line for questions. Operator: [Operator Instructions]. Our question comes from Thomas Forte, Maxim Group. Thomas Forte: Great. So first off, Chris and Brandon, congrats on the broad-based momentum. I have 3 questions. I'll go one at a time. The first question I had is, how is the addition of Greg Sherrill as your first President of Sales for Rumble Advertising expected to change your go-to-market strategy? Christopher Pavlovski: Tom, this is Chris. Thanks for the question. So traditionally, Rumble prior to the 2024 election was not pursuing brand dollars for various different reasons, mostly because we are boycotted and weren't able to work with a lot of the agencies prior to the 2024 election. That has completely changed post 2024 election. So the environment is much different. And as I stated earlier, a lot of brands have started to work with us that I previously mentioned. And the idea with Greg now is to finally go on the offense to those agencies and start bringing the ad dollars not by taking phone calls, but by going and being proactive and going to the top and the largest agencies in the world and getting those ad dollars into the Rumble advertising center, both for video, for our publishers, for eventually our new Rumble Shorts product, et cetera. So the strategy going forward is it's going to be very much on the offense, and it's going to be going and getting net new ad dollars from big brands. Thomas Forte: Excellent. And then you sort of teased my second question there. So how might a new content type such as Rumble Shorts serve as a catalyst for advertising revenue? Christopher Pavlovski: So in this stage right now, in this quarter and in the next quarter, we're going to keep advertising off Rumble Shorts and really kind of just press as hard as we can on the growth and see how far we can push that. Obviously, we're seeing some pretty amazing internal results that I already went through. But coming later in the year in Q3 and Q4, my teams have already kind of developed what that is going to look like and how we're going to start inserting that. We're looking at taking a very similar approach to Instagram and TikTok in terms of integrating ads that will all come through RAC and maybe we might use some other partners to help us with that. But in the very short term, we're going to just kind of keep the ad load off until we get into the third quarter and kind of evaluate there. The last thing we want to do is kind of hinder this growth that we're seeing. So we're going to push that as high as we can and see where that takes us before integrating the ads. But the ad is definitely a component that is very important. We're going to need to monetize for the creators, and that is going to be something that we must do. I see us doing that by the end of the year. Thomas Forte: Excellent. And then last one for me. So can you briefly explain how your current relationship with content creator and former Deputy Director, FBI, Dan Bongino, is similar to and different from your prior relationship before you left the platform to join the FBI. Christopher Pavlovski: Yes. So I can't get into the specifics of agreements, but I will say that prior to him going to the FBI, he brought his content onto the platform, and that was his choice. Post FBI, we now have his content exclusively, the video podcast exclusively on the platform. That's as much as I could say without getting into the details, but it is -- the video podcast is exclusive to Rumble as it stands right now, and it was not contractually exclusive prior to that. Operator: Our next question comes from Jason Helfstein from Oppenheimer. Jason Helfstein: Definitely always keeping it interesting, not boring. I'll ask 3 and then I'll jump back in the queue and then follow up. So first, I think you made a point that engagement kind of benefited from international. And so if you would strip that out, like the ARPU would have actually increased more on a quarter-to-quarter basis. I don't know if there's more color you can give us there. Christopher Pavlovski: Jason, this is Chris. So yes, we saw some -- we saw international growth. We've obviously been pushing the international in the last quarter by launching a bunch of new languages. Our monetization in the international markets is very negligible, very low in comparison to the U.S. market. So if you were to look at it on a U.S. basis, then yes, I would say that would be correct. But at this point right now, we're kind of still testing the international markets. And whether or not we peel that out and kind of look at ARPU in different countries, it remains to be seen, but we just kind of want to see what really sticks internationally and what works internationally. And then obviously, what markets are going to be easiest for us to monetize internationally and then kind of go from there before we peel out those ARPUs with different countries. Jason Helfstein: Okay. And then on Northern Data, what still needs to happen for the close in the second quarter? Just take us through what's left in the process. Christopher Pavlovski: So at this point right now, we're on track to close in the second quarter. It's -- that's kind of been the schedule since the very start. So everything is running on schedule and on track to close for the second quarter. Obviously, there's -- we still got to go through the tendering process, et cetera. And that's all on schedule to close up by the end of the second quarter. Jason Helfstein: Okay. So like literally like outside of some like, I don't know, procedural or document or something, like is there any way at which any Northern Data shareholders could block the transaction at this point by not tendering? Christopher Pavlovski: No, not that, no. Jason Helfstein: Okay. And then I guess, congrats on the positive gross profit in the quarter. It looks like the minimum guarantees were down like another $1 million-ish sequentially. I mean, Brandon, do you see the pattern that pattern of like lower minimum guarantees continuing into '26? Or do you plan to reinvest the [ Tether Ed ] commitments into like more content and kind of almost like start again with the minimum guarantees? Brandon Alexandroff: Yes. If you kind of take a step back to where we were a year ago, we talked about kind of reducing those minimum guarantees and moving materially towards breakeven. But with the Tether investment and the opportunity we have there with the Tether contracts, I think we said we're going to kind of hit the gas again and start investing again. So I think you'll see some of those investments continue to grow over 2026. And -- but at the same time, we've learned a lot from a lot of those contracts. And we would like to and we plan on moving more towards having profitable agreements. So you'll see continued increase in cost, but we expect the revenue to be increasing at the same time. Operator: Our next question comes from Rohit Kulkarni from ROTH Capital Markets. Rohit Kulkarni: A couple of big picture ones. One on just the drivers behind kind of the advertising sales growth, maybe break down ARPU versus audience growth. What are the next 2 to 3 quarters given the org that you have and the new ad units and new ad surfaces. Maybe just break down how are you thinking about the algorithm behind ad sales growth? Would love to get your thoughts. And then I have a couple of follow-ups. Christopher Pavlovski: Thanks, Rohit, for the question. So when it comes to ad sales, we're anticipating that Greg and his team will start to ramp up later in 2026. Obviously, the ad sales cycle is -- can range from like 6 months to a year with the big brands. You got to get to the upfront, then you got to get your bookings, the RFPs, place the orders in and then get them out the door. So we see that as like a 6-month to a year cycle with the big brands for any kind of meaningful spend. Obviously, with RAC, we have a significant amount of inventory to monetize. So we're very ready on the technology deployment side of the ad sales. And on the sales front, Greg just recently started in the last -- I believe, in January. So he's only been on the ground for a couple of months. So it's been a lot of initial meetings. And then once those initial meetings conclude, he goes into basically getting the bookings and then we go from there. But I see this all kind of materializing in late '26 and then primarily in 2027. But like you mentioned, we do have some other upcoming ad units like with Rumble Shorts later in the year, there is possibility that this can make an impact in the '26 here in Q3 and Q4 as well. Rohit Kulkarni: Okay. And then I guess to the extent -- just on the AI cloud and Northern Data, to the extent you can provide any more color on like how should we think about just the return on investment and kind of how much CapEx do you feel you would need to do over the next kind of 12 months, 24 months? And how do you keep up with a space that is increasingly fragmented and probably getting very competitive? Christopher Pavlovski: Yes. So this is actually a great question. What we've seen in the last couple of months is the demand is unbelievable in this space. The demand for GPUs, even for the H100s and definitely for the Blackwells, the GB300s, it's off the charts from our perspective. And as Northern Data continues to get their utilization up and as you saw, around 85% by the end of this quarter, we're really in a position where we're going to have to invest and really grow this business. And obviously, that is the intent here is to grow it and grow it rapidly. So we're meeting with a lot of customers. The way in which we want to execute on that is we want to secure the contracts in hand from these customers and then go out and purchase the GPUs. So that way, everything is set up in a very good way for the company in a way that will provide us really good returns. So we're out there meeting these customers as we speak every day, and we're really kind of setting up the future here for when this transaction closes. And also, even if it happens prior to the transaction, Rumble Cloud will -- is very open to doing deals prior to the transaction closing as well because we do have the capital on hand and these investments look to have really good returns. So we're very keen on moving as quickly as possible, potentially with some of the clients we've already met with. Rohit Kulkarni: Okay. Great. And one specific one on the AI cloud, if you could. Is there a specific kind of amount of megawatts or number of GPUs that you feel you could scale up to by end of this year or in 12 months after the transaction closes, that's the metric that investors would love to track? Christopher Pavlovski: That's more of a Northern Data question. But what I can say is that there is capacity to scale immediately in some of their data centers with the GB300s, and that is something that we're very much looking into. There's an immediate scaling that we could do with the current data center set that they have. And then obviously, they have other sites like Maysville that require development and have a lot of megawatts potential there. But yes, there is immediate capability to scale with some of their current sites. Operator: We have a follow-up question from Jason Helfstein, Oppenheimer. Jason Helfstein: Like 2 more. So on the $150 million that Tether has committed to spend for data center usage, how are you thinking about prioritizing them? So is it like if you have more demand than you can fulfill with the $150 million, do you -- does Tether get prioritized lower for outside clients or they get prioritized first or TBD? Just any color there. Christopher Pavlovski: Thanks, Jason. So yes, we're going to treat Tether like any other customer, any other paying customer with their demand and the commitment that they have, we're going to have to obviously expand and provide them and invest and provide what we are committed to providing them. And obviously, depending on their needs and the way they scale, we'll accommodate that as well. But our -- my philosophy here is that, obviously, there's a lot of demand in this AI space. There's a lot of people that want to make commitments and pay for H100s or Blackwells and whatnot. We're here to just kind of step on the gas pedal and really grow this business. That's the intent. That's why we're acquiring Northern Data. And we obviously have a lot of potential customers even outside of Tether, and we're looking at all of them, and we want to service as many as we possibly can. And obviously, Tether is one that we definitely want to service as well. Jason Helfstein: And then just on your comments about like the Browns, the Dolphins, the Buccaneers, the NFL you've been signing up, I mean, we can kind of see what the other initiatives line in the model as far as revenue. I mean, it doesn't look like at least so far, any of these teams have been meaningful to revenue. I guess like when they scale up, it's almost like, I guess, like placehold it like is it like, okay, each team -- are these like a few hundred thousand dollars, $0.5 million just kind of when I look at it, right, like other initiatives has revenues gone down by $400,000 from the beginning of the year to the end. Obviously, some clients have moved in, some moved out. But I guess, like how big, for example, could like this NFL business be just as an example? Christopher Pavlovski: Well, I can't speak to specific contracts and deals on our current cloud side. But the way we look at sports as a category is that they're very kind of new in the cloud space. They're really just starting to use video in terms of like keeping all that data and analyzing all that data for plays. And we see this as a pool that will grow quite significantly in the later years to come as they continue to keep more content in the cloud and scale with us and do more things. So that's just like one segment. For us, it's -- we're looking at all different segments, not just NFL teams, but we're looking in various different other areas as well. But yes, in terms of sports, we do see like long-term potential there to grow them. Operator: Ladies and gentlemen, there are no further questions at this time, and this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Welcome to the Lineage Cell Therapeutics Third (sic) [ Fourth ] Quarter 2025 Conference Call. [Operator Instructions] An audio webcast of this call is available on the Investors section of Lineage's website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. And recordings, reproductions or transmission of this call without the expressed written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded. I would now like to introduce your host for today's call, Ioana Hone, Head of Investor Relations at Lineage. Ms. Hone, please go ahead. Ioana Hone: Thank you, Jamie. Good afternoon, and thank you for joining us. A press release reporting our fourth quarter and full year 2025 financial results was issued earlier today, March 5, 2026, and can be found on the Investors section of our website. Please note that today's remarks and responses to your questions reflect management's views as of today only and will contain forward-looking statements within the meaning of federal securities laws. Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties. The company's actual results or performance may differ materially from the expectations indicated by such forward-looking statements. For a discussion of certain factors that could cause the company's results or performance to differ, we refer you to the forward-looking statements section in today's press release and in the company's SEC filings, including its most recent annual report on Form 10-K filed today. We caution you not to place undue reliance on any forward-looking statements, which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer; and Jill Howe, our Chief Financial Officer. I'll now hand the call over to Brian. Brian Culley: Thank you, Ioana, and good afternoon, everyone. We appreciate you taking the time to join us on the call today. We have a great call planned highlighted by recent warrant exercises that further extend our runway and a positive result for our initial go/no-go development milestone in our islet cell research initiative. I want to start by reminding everyone that we have a significant number of employees who live and work in Israel. And while our manufacturing facility is not located near a metropolitan center, some of our staff do commute from larger cities. Their safety is our top priority, and we are, of course, monitoring the situation. To date and as expected, a few employees and employee spouses have been called into military service, which is similar to what we've experienced and successfully navigated in 2023. We cannot know what the future holds, but thanks to the incredible dedication of the team we've hired, our operations are continuing, and we expect things will continue to progress. Thank you also for the many messages of concern and support I've received from our colleagues and shareholders alike. Moving ahead, as many of you know, cell therapy has revolutionized oncology saving lives and creating tremendous shareholder value. But the use of cell therapy in oncology is maturing, while the application of cell therapy the fields outside of cancer remains in the early stages. For this reason, we are focused on delivering the next wave of innovation and value creation in this emerging branch of medicine. We'll begin with the exciting results seen from our lead program in geographic atrophy as a testimonial to what cell therapy is capable of. And as that program matures, we have begun turning our focus to how we can apply our manufacturing success and the lessons we have learned from the OpRegen program to evaluate other medical conditions that also arise from the loss of critical cellular function. Our focus on replacing cells that have become dysfunctional or destroyed may fundamentally reshape many treatment and recovery paradigms. And based on our conviction that the OpRegen program has the potential to drive future value, we believe we are uniquely positioned to capitalize on opportunities to develop other kinds of mature differentiated cells for patients, which, in our view, could lead to clinical outcomes currently beyond the reach of conventional approaches. Our work was productive last year, highlighted by us achieving the first milestone under our Roche and Genentech alliance, entering into a funded research collaboration for preclinical development of ReSonance, which is our first internally developed product candidate, and more recently, the launch of our new islet cell research initiative, something which I will provide an update on later in the call. But first, I want to discuss 2 developments in particular from last year that reinforce our confidence in the company's long-term outlook and which helped shape our plans for 2026. First, after relying on just 7 clinical sites for more than 2 years, Roche and Genentech have somewhat suddenly opened 10 new clinical sites in the GAlette study in the past 9 months, including one announced earlier this week at Duke Eye Center. While we don't have any guidance to share on the timing of any additional trials or data disclosures, we view this surge of site openings as a favorable sign because this activity could support preparations for later-stage trials. And as I've shared on prior calls, there are other actions and readouts that have occurred in the past year that similarly suggest positive forward progress of OpRegen could be underway. The second item we enjoyed last year were the enhancements and milestones we hit with our manufacturing platform, AlloSCOPE. AlloSCOPE purposefully stands for Allogeneic, Scalable, Consistent, Off-the-shelf, Pluripotent Cell Engineering. This acronym highlights the key elements of our core technology. Many of you are familiar with the challenges of autologous cell therapy, such as its high manufacturing cost and donor variability. But with AlloSCOPE, we address those challenges by using the same source cell line for all patients built on a platform we believe is capable of scaling into millions of doses and trillions of cells. This is something that has long been aspired to or sometimes even promised by the field of allogeneic cell therapy. But to our knowledge, very few companies, possibly none, have actually shown that they can perform a large-scale pluripotent cell production process in a GMP setting and use that resulting material in an FDA-cleared clinical trial. But here at Lineage, we successfully established a GMP master cell bank from which we established a GMP working cell bank and generated product that has been used in the clinic. And because the hundreds of vials, which comprise those banks are identical, we are confident that we can successfully repeat the process as many times as needed. We believe this achievement provides credible evidence that the AlloSCOPE cell banking system we built is capable of generating millions of vials of our product candidate. This is no small achievement because it's easy to say you plan to rely on the self-renewing capability of pluripotent cells to generate Phase I trial material. But with complex biologics like cell therapies, the process is the product. So if your early clinical process isn't capable of satisfying commercial scale, then you're developing product candidate that won't be able to supply the market. This is an essential but often overlooked aspect of cell therapy product development and requires certain investments and commitments to occur in the early stages. As a company with many years of experience in this field, we have had the time to make these investments. This also explains why we embrace the mantra of better from the beginning. We strive to only initiate programs that have a clear line of sight to commercial scale and other critical product features. And from these 2 significant developments, specifically, the evidence supporting OpRegen's potential advancement by Genentech, along with the successful demonstration of commercially viable pluripotent cell production, we have developed the conviction to apply our platform to the furtherance of developing other cell-based products with the potential to treat various diseases and conditions. I will say a few things about our recent and planned pipeline development later in the call. But first, I want to briefly review the status of our lead programs, OpRegen for dry AMD with geographic atrophy, OPC1 for spinal cord injury and ReSonance for hearing loss. OpRegen is the most advanced program in our pipeline and serves as a critical case study for our approach to cell transplantation. Dry AMD with GA is an increasingly established indication but suffers from underwhelming treatment options. Initial reports from our Phase I/IIa clinical study included improved anatomy, halting of atrophic progression and improved vision in patients with dry AMD and were unprecedented at the time. And from Roche and Genentech's additional analysis of our Phase I/IIa data, it has been observed in a single dose of OpRegen cells can provide visual improvement lasting for at least 3 years among patients who received the cells at the target location. This is an exceptionally promising finding because dry AMD is a condition that has not been shown to self resolve and only leads to worsening vision. Equally importantly, 3 independent groups pursuing RPE transplants have recently reported short-term outcomes similar to ours, providing further evidence in support of this novel mechanism. Although data remains forthcoming from GAlette, Roche and Genentech's ongoing Phase IIa study, it is encouraging to see that our partners have continued to expand the retinal communities exposure and experience with OpRegen. As a reminder, GAlette is a surgical optimization study designed for approximately 60 patients. This study has been running for 3 years and is an open-label study for which all primary and secondary outcome measures are captured in 90 days. So we infer that Roche has collected and reviewed long-term data from patients treated in that trial, which we expect has informed their recent site expansion decisions. Specifically, after adding only a single site in 2024, Genentech suddenly increased its pace and opened 9 new clinical sites in 2025, bringing this study to a total of 17 unique locations, including the new site just added last week. In addition, Genentech previously acquired novel and proprietary surgical delivery devices from a competitor and sought and received RMAT designation for OpRegen. We believe these are all positive indicators that support our expectation of Roche and Genentech's continued advancement of the OpRegen program. And in December, Lineage received its first $5 million payment from the achievement of a development milestone, highlighting our contribution to this process. When you aggregate these and other publicly available actions, we believe they point to a positive future. And while OpRegen reflects a new technology, we believe we have a set of attributes including scalable manufacturing, proprietary delivery tools, long-term safety and efficacy data and a world-class partnership that adds abundant clinical insights and commercial capabilities. For these reasons and others, I hope you'll appreciate why we are so bullish on the potential for OpRegen to capture the multibillion and still largely unaddressed GA market. And also, while we are taking steps to try to recreate this promise with other cell types. Moving to our next cell type, oligodendrocyte progenitors, we are developing OPC1 an off-the-shelf cell transplant designed to increase mobility for people who suffered from a spinal cord injury. OPC1 has been administered in 2 Phase I/IIa -- excuse me, Phase I/II safety trials in sub-acute patients and the long-term safety and efficacy data we have collected so far is both promising and worthy of further investigation. We currently are enrolling patients in the DOSED study, the third clinical study of OPC1, which is evaluating the safety and novel -- of a novel and proprietary system to deliver ourselves to the area of injury without stopping patient ventilation. In addition to testing the safety and performance of the new device, we also will be collecting functional assessments on all patients, giving us the opportunity to investigate any signals of efficacy that may arise. This is important because last year, we treated our first ever chronic SCI patient. That was an important milestone because chronic injuries represent an additional and larger potential addressable population for this experimental therapy. And unlike subacute patients, many chronic patients have reached a functional plateau, making any physical improvement easier to detect and rely upon. DOSED is an open-label study and that first participant, I mentioned recently had their 6-month safety follow-up visit with no significant safety events reported following treatment. Equally important, the device performed as planned, which provides significant derisking of the device that we plan to employ in a larger trial. Last month, we expanded DOSED to the Greater Los Angeles area by opening our second clinical site at the Rancho Research Institute in conjunction with Rancho Los Amigos National Rehab Center. Jill and I have the pleasure of hosting Dr. Charles Liu, the principal investigator and his team for dinner a few weeks ago, and we are extremely excited to have their group involved with the OPC1 program. Moving next to ReSonance. This is an auditory neuronal cell transplant being developed to treat hearing loss and also marks our first internally developed program. One of our goals during 2025 was to strike deals which partly or completely funded existing product candidates. We accomplished this goal through the partnership we announced with William Demant Invest, which is expected to fund all planned preclinical development for the ANP1 program up to the IND stage. ReSonance was an important test for our business model because it demonstrated that we could conceive of and successfully manufacture a completely new cell-based product candidate on our AlloSCOPE platform in a rapid and efficient way. With a modest investment, we were able to generate new intellectual property and advanced ReSonance into preclinical testing within one year. This early data was sufficient to establish a partnership with a world-leading hearing health care company, which also brought us access to specialized technology, auditory experience and a network of hearing health leaders. We believe this collaboration was an important demonstration of the speed, efficiency and return on investment that the AlloSCOPE platform can provide and evidence of our ability to replicate our OpRegen collaboration success with another cell transplant program. I next will spend just a moment on AlloSCOPE to provide context to my upcoming remarks about our new islet cell initiative. AlloSCOPE describes a platform on which we can bank and scale pluripotent cells to great numbers before differentiating those cells into discrete types of cells of the human body. It delivers what we consider to be the table stakes necessary to create a commercially successful allogeneic cell therapy, and it is being applied by us across multiple programs and cell lines. AlloSCOPE is a proprietary differentiation and production platform on which our cell-based products are derived from a single initial cell line, conferring consistent, cost-effective and scalable production. These features should enable us to support the production of millions of doses of a consistent and cost-effective cell-based product. Using AlloSCOPE, we have successfully completed a cGMP production run from our 2-tiered cell banking system for 2 of our product candidates, one of which has been utilized in the clinic. This achievement is notable because it demonstrates our ability to scale a process with the purity, potency and regulatory quality required to support clinical use, a standard, which we believe sits beyond the reach of many companies and which can become a valuable differentiator for Lineage. With that background provided, I'll remind you that the human body is comprised of about 200 discrete cell types. And because pluripotent cells can become any of those 200 cell types, we have many choices about where to deploy our resources into the development of additional potential product candidates. When thinking about where we might generate the greatest value from our process development and directed differentiation expertise, we recently announced a new research initiative in Type 1 diabetes and specifically, an opportunity we saw to address a major obstacle to a successful Type 1 diabetes cell transplant treatment. We've been getting a lot of questions about our entry into this space. So I'm going to take your time today to walk you through our plans in some detail. The headline is that we met our initial internal go/no-go development milestone, which means we will continue to our next phase of internal development. Now I need to explain why that's important. We already know that islet cell transplants can work. Dozens of patients are functionally cured each year using islet cells from cadavers, meaning they can regulate -- patients can regulate their blood sugar without proactive and daily disease management. However, a major unsolved problem is supply. Cadavers cannot support a commercially viable source of islet cells. Immunosuppression, patient eligibility and hypoimmunity are all additional hurdles that need to be overcome, but we believe the elephant in the room is that we know of no company that can make islets at the scale required for a commercial product. And we believe the greatest value in the islet cell transplant space will accrue to whoever solves that scale problem. The explanation for this gap is that the required dose of islet cells may be as high as 1 billion cells per patient, but mature islets do not expand readily in culture. Meanwhile, our calculations indicate that commercial viability begins in the range of thousands of doses per batch, implying that commercially relevant processes will have to be done on the scale of at least an 80-liter bioreactor. But carrying out a differentiation process in an 80-liter vessel requires feeding that vessel with billions of undifferentiated stem cells, which retain their full flurry potency capability and their genetic stability. And that is the problem. Conventional 3D expansion introduces excessive passaging, risking loss of control and genetic aberrations but generating billions of cells required from conventional 2D approaches, demands in practical surface areas and high aseptic risk. There is unavoidable conflict and trade-off between having reproducible control and scale. Our strategy has 2 aspects. The first is to use the AlloSCOPE platform to combine the control advantages of 2D culture with the volumetric efficiency of 3D systems or what we refer to as 5D engineering. And I'm proud to report today for the first time that we have actually achieved this milestone and reduced it to practice multiple times at 0.5 liter scale, successfully reaching our first go/no-go decision point with this initiative. We're now evaluating whether we can translate this capability to the next step up into a multi leader vessel. Demonstrating reproducible performance at an even larger scale is the next step on the path to feeding 80-liter bioreactors of scale, which should be capable of producing thousands of therapeutic doses of islet cells per run. Importantly, this work is all being done pre-differentiation, which means this stage of development is not dependent on finalizing our immune suppression strategies. The second important aspect of our strategy is that we are looking to tackle the bioreactor feeding problem first. We are inverting the traditional development paradigm by focusing on the scale-up of undifferentiated cells, first, because once you've shown that you can actually produce your material at scale, we believe the risk profile for the rest of the islet cells project changes materially. That's because we already know that islet can be an effective intervention and have been shown by multiple groups to be successful in preclinical and clinical settings. Similarly, editing strategies and differentiation protocols already exist and provide risk-reducing information in those areas. And we may be able to leverage that information if our scale initiative is successful. But no one yet has shown that they can scale islets. We think it's far more prudent to focus first on the unresolved scale problem rather than performing years of expensive studies and deferring the issue of scale for later. Our strategy doesn't fit easily onto a bumper sticker. But if we wanted to print one, it might say better from the beginning. That is how I describe our development philosophy. We enter fields only when we can see the entire path from cell banking through commercial delivery. We look to identify clear go/no-go decision points along the way and we strive to include improvements or solutions to existing methods, processes, delivery or to the cells themselves in order to have the best overall product profile. I'll conclude by saying that our platform generates assets which share certain essential traits in common, so that each dollar we spend on innovation may apply across multiple programs. While each product candidate is, of course, intended for a different condition and each cell line behaves in a unique manner, the early steps of banking, process development, control purity and scale have somewhat common features in the way we apply them, which allows us to expand the scope of our pipeline without losing the focus required to succeed in each indication, and uses our capital in an efficient way. I hope that it helps explain our exciting business update. And with that, I'll turn things over to Jill for a review of our financials. Jill Howe: Thanks, Brian. Before presenting our financial results, I want to address some points that may have caught your attention. The reported net loss for the full year is approximately $45 million higher than in 2024, this increase is mainly due to noncash charges linked to our rising stock price over the year, which resulted in higher warrant liability. Additionally, we incurred a noncash charge relating to an asset we acquired in 2019, which we elected to no longer develop. You may have also noticed that the reported cost for -- OpRegen costs are higher this year. This is due to a standard accounting treatment applied when recording the expense associated with our downstream obligations after we received the first milestone from Roche and Genentech. If you look at the expenses without this cost, the OpRegen developmental expenses were lower year-over-year. As of December 31, 2025, our overall cash position was $55.8 million, which together with the approximate $5.4 million in proceeds from warrants exercised this March is expected to support our planned operations into Q2 of 2028. This is a significantly higher runway than we guided to during our last call, with the biggest contributors being the $21 million in gross proceeds received from an ATM block trade in November, the warrant exercise of $5.4 million this week along with the achievement of the first $5 million milestone under our Roche collaboration. This revised guidance also does not take into account any other potential sources of funding, including additional milestone payments we are eligible for under our Roche collaboration, or any additional partnerships, which we may elect to enter into in the future. Separately, a large additional source of potential capital is the approximately $32 million remaining of underlying warrants priced at $0.91 per share, which is below our current trading price and which gets accelerated if Roche or Genentech publicly disclosed their intent to advance OpRegen into a clinical trial with the comparator arm. Now I will review our fourth quarter and full year results. Total revenues for the fourth quarter were approximately $6.6 million, a net increase of $3.7 million as compared to the same period in 2024. The increase was primarily driven by higher collaboration revenue recognized under our collaboration and license agreement with Roche, following the achievement of the first milestone, along with the new research collaboration agreement with WDI. Total operating expenses for the fourth quarter were $13.2 million, an increase of $5.2 million as compared to the same period in 2024. R&D expenses for the fourth quarter were $8.2 million, an increase of $4.8 million as compared to the same period in 2024. The net increase was primarily driven by $2.1 million for our OpRegen program expenses and $2.7 million for our preclinical and other undisclosed programs. G&A expenses for the fourth quarter were approximately $4.8 million, an increase of $0.4 million as compared to the same period in 2024. The net increase was primarily driven by personnel costs. Loss from operations for the fourth quarter was $6.5 million, an increase of $1.4 million as compared to the same period in 2024. Other income expenses for the fourth quarter reflected other income of $2.2 million compared to other income of approximately $1.9 million for the same period in 2024. The net increase is primarily driven by exchange rate fluctuations related to Lineage's international subsidiaries. No warrant-related financing transaction costs incurred as compared to the prior year's quarter, and this was partially offset by the noncash quarterly fair value remeasurement expenses of the warrant liabilities. The net income loss attributable to Lineage for the 3 months ended December 31 with a net income of $0.9 million or $0.04 per share compared to a net loss of $3.3 million or $0.02 per share for the same period in 2024. Next, I'll spend a few minutes reviewing the full year operating results. Total revenues for the year were $14.6 million, an increase of $5.1 million as compared to the same period in 2024. This increase was primarily driven by higher collaboration revenue recognized under the Roche agreement following the achievement of the first milestone along with new research collaboration agreement with WDI. Total operating expenses for the full year were $51.2 million, an increase of $20.2 million as compared to the same period in 2024. This increase is primarily driven by $14.8 million of expenses recognized during the year for the loss on impairment of the intangible asset related to the VAC platform. R&D expenses for the full year were $17.7 million, an increase of approximately $5.2 million as compared to the same period in 2024. The increase is primarily driven by $1.6 million for our OpRegen program, $0.7 million increase for ANP1 program and $0.2 million for our OPC1 program and $2.8 million for our preclinical programs and other undisclosed programs. G&A expenses for the full year were $18.5 million, an increase of approximately $0.3 million as compared to the same period in 2024. The net increase was primarily driven by $0.2 million in personnel costs and $0.1 million for services provided by third parties. Loss from operations for the full year was $36.6 million, an increase of $15.1 million as compared to the same period in 2024. Other income expenses for the full year reflected other expenses of $32 million compared to other income of $2.9 million for the same period in 2024. The net change of $34.9 million was largely attributable to the noncash fair value measurement expense of the warrant liabilities of $37.9 million, primarily due to an increase in our share price as compared to the prior year period. This increase in expense was partially offset by exchange rate fluctuations related to Lineage's international subsidiaries and lower warrant-related transaction costs incurred as compared to the prior year in connection with the November 2024 financing. The net loss attributable to Lineage for the year ended December 31, 2025, was $63.5 million or $0.28 per share compared to a net loss of $18.6 million or $0.09 per share for 2024. The difference was primarily driven by the noncash fair value remeasurement of the warrant liabilities and the loss on impairment expense related to a 2019 acquisition. Our financial results continue to reflect our ongoing dedication to responsible fiscal management, and we remain focused on balancing our cost of capital with the investments we make to grow and strengthen our pipeline. Let me hand the call back to Brian for concluding remarks. Brian Culley: Thanks, Jill. I'll quickly summarize by repeating 2 key themes. First, we continue to remain confident in the potential for OpRegen to drive positive clinical outcomes in dry AMD and we're encouraged by our partner signs of commitment to the program. We also believe the independent evidence generated by others RPE cell transplant trials supports and elevates our replace and restore philosophy. Second, we're preparing for a successful future by making new investments in our cell transplant platform and using our recent manufacturing innovations as a foundation from which additional pipeline programs can be advanced either by a funded partnerships or independently. We believe our approach offers powerful optionality, which we consider essential for a company at our stage of growth and development. We appreciate your support and belief in our vision. With that operator, we are prepared to take analyst questions. Operator: [Operator Instructions] Your first question comes from the line of Joe Pantginis with H.C. Wainwright. Joseph Pantginis: Actually, Brian, I have 3 questions, a strategic one, a technical one and probably a question you can't answer. So first, on the strategic question, I mean, you have many ongoing programs now with specific cell types, and you also have this broader AlloSCOPE program with pluripotent cells ready to go. How do you look to potentially translate, say, over the longer term with regard to business development strategy around all your various options? Brian Culley: Thank you, Joe, for the first of those 3 questions. Again, excellent business development team. Clearly, I can point to the Roche and Genentech transaction. I can point to the Demant deal. And of course, these are just things that you've seen. It is normal and common for us to have other interactions, maybe deals that could come together but don't for various reasons. So they're a reliable and productive group. What we can do, what we have the opportunity to do is to take the AlloSCOPE platform and apply it in different ways to generate a basket of assets. And then we can make some decisions that are good for the company in terms of partnering or retaining. We don't have a particular objective to launch any of the products we manufacture, although that's certainly not off the table either. We are really being mindful of our cost of capital, the spending, the risk and our own capability to make decisions about what and whether to partner and what time, assuming that there is an appropriate economic arrangement to be struck at all. So I think the way to maximize the value of the platform that we have developed is in part to generate new assets that can be partnered fairly early and to use some of that capital to offset our needs to rely on traditional capital markets and through that mix of creating assets that are funded by others as well as adding programs and taking them a little bit further. I think we may be solving to optimize for the best return on invested capital that we can with the technology that we have developed here at Lineage. Joseph Pantginis: That's extremely helpful. And then I guess my technical question is without giving away the secret sauce here. For the islet cell component that you're working on here, what would you consider to be the rate-limiting step or steps with regard to moving beyond the 0.5 liter scale? Brian Culley: That's an excellent question and the very nature of the exploratory work is that we do not know. So we cannot predict the linearity of going from half liter to multi liter to ultimately up in the neighborhood of 80-liter or 300 liters. There are incredible new technologies that are available that help companies with this work, but it's very difficult to say. I would say this, though, I do think going from 0 to a 0.5 liter was a much larger achievement than what I expect going from a 0.5 liter to 2, 3, 4 liters will be. And the reason for that is that it hadn't been done before and as I explained earlier on the call, it's very hard to get the control that you want from a 2D process and apply it into the scale of a 3D process. So to be clear about one thing here, AlloSCOPE describes our basic platform, our banking or manufacturing. AlloSCOPE 5.0 is the application where we're essentially tricking cells to think that they're being grown in a 2D environment while actually putting them in a 3D environment. So quite simply 2 plus 3 equals 5, perhaps the additional dimensions are scale and cost in that situation. But I think what's really exciting about the next step is that if you do have control in the lower mid-leader scale, you really could begin to have discussions about pooling that output and feeding maybe an 80-liter reactor or it could give you some insights and confidence about the linearity as you scale. Not every cell line is going to be amenable and can adapt to these larger scales and perhaps some of the technologies don't fit well depending on the cell type that you plan to differentiate. So it's very much unexplored territory, which is why I wanted to spend a lot of time talking about it today. Joseph Pantginis: Very helpful. And then I think we're essentially done because I think the next one is unanswerable, as I said. But with regard to the GAlette study, I'm sure you get questions on this all the time. But is there any visibility or anecdotes you could provide with regard to the types of deliveries that Roche might be testing or methods? Brian Culley: There have been some presentations at conferences where images of different devices have been provided. I don't know in every case whether those presentations have been made available to the public online or are they exclusive to the registrants of these conferences. But what I would say as a general matter is that the 2 big chunky approaches are to deliver [ transvitreally ] through the front of the eye or via a suprachoroidal approach, which is going around the eye and accessing the subretinal space from below. They have trade-offs. I won't go through all of the trade-offs right now, but that is just one basic way of looking at delivery to the subretinal space. Within that, there, of course, are more refined approaches regarding the kinds of needles or the methods that one uses. But if you were to pull up or request from us the 2025 CTS desk -- slide deck, I think some examples of some of the technologies that Genentech acquired are available. But this is an important reminder. This is not -- the study that they're doing is a surgical optimization study. So they're going to be looking at different cohorts of patients and evaluating what works well. So they may try some things that don't go well and abandon those, and that's appropriate. They may find some things that seem to go well and want to push the envelope, and that's also appropriate. In fact, desirable. But this is not a responder analysis. So there -- it's not some number out of 60 is a success threshold. We know that you get the best results if the cells go to the subretinal space. So of course, it is obvious and appropriate to try and simplify that as much as you can before moving into and committing to larger trials. So we're hopeful that everything that has happened is an indication that, that work is going well. I think if that work we're going clearly poorly, they've had abundant time to abandon this initiative, but we also remain confident that our partners know best how to find the right level of risk and reward moving as quickly as they can while not jeopardizing their leadership position in the space. Operator: Our next question comes from the line of Jack Allen with Baird. Jack Allen: Congrats to the team on all the progress made over the course of 2025. Looking forward to a productive 2026. Just 2 quick questions from my end. The first one is on the OPC1 program. I was hoping if you could provide some more color on the timing of the functional measures? And anything you can also add as it relates to the baseline characteristics of that first participant in the study there being a chronic participant. I'm curious as it relates to their baseline functionality. And then secondly, on OpRegen. I know you guys have presented 3-year data in the spring of 2025. I'm curious if 4-year data could be on the docket as it's been great to see the continued durability response as it relates to OpRegen. Brian Culley: Thank you, Jack. I will ask your second question of our partner. I do not know their plans for 4-year data. But obviously we are excited by the fact that the benefits that we're seeing in year one did continue into year 2 and year 3, which mechanistically makes sense for a transplant that is not rejected. We think that's a great sign, especially because the untreated eye in the same patient continues to lose letters of vision. So the delta, the clinical benefit and the confidence in that benefit only seems to get better with each passing year. With respect to OPC1, we do -- I do want to remind everyone that the OPC1 study is a safety and performance study of a device. So it is not an efficacy design. So we have a more limited set of function measurements that we are collecting. But we are collecting things like an E-ISNCSCI exam and quality of life measures, SCIM is one of the tools that we've -- one of the assessment tools that we've employed in this trial. So we collect baseline data or screening data prior to the cells being administered and then we have some early functional assessments probably too early to see anything. So these are functional assessments that occur in the first 90 days. They provide some reinforcement or reliability about your baseline measures and ensure that the patient isn't experiencing any decline. And then we wait until a year in most cases because we aren't looking every 30, 60, 90 days at these patients because, again, that's not what the study was designed to do. But when we collect the 1-year functional assessments, if we do see some changes, those are things that perhaps would be more meaningful if they're occurring at 12 months versus occurring at 3 months or even 6 months. There is, quite interestingly, there has been some information. We view this information as coming from a reliable source, but there was some information about the chronic patient having some improvement in certain measures. This is anecdotal. This is not part of our conveyance of clinical data to the public, but people are free to talk about their own experiences on clinical trials. So you may find some evocative information out there. We don't confirm or refute it. We will only be communicating actual data from our trial when it becomes available. But I would add only to your specific question that the patient fits within our specific criteria as being ASIA Impairment A. And I guess I could add to that, that we had some difficulty finding the next patient in the stagger. And we recently went through an expansion of the protocol to allow a second impairment level of A for the second patient enrolled in this study. So to the extent that we hadn't enrolled a second patient yet, I can tell you that it was because it was really hard to find the stagger that had been agreed to with FDA. So we went through the steps to amend that protocol stagger to broaden it to allow for another A to be treated, and we have someone who has been identified and may get treated here in the coming weeks this month. So I think we're going to be back on track with this trial, but very good and appropriate questions, Jack. Thank you for them. Jack Allen: Awesome. Maybe if I can just follow up one more on AlloSCOPE. But before I do, it's great to hear about the anecdotal progress of the OPC1 program, while it's not necessarily well-vetted clinical data. There's a high unmet need in spinal cord injury. So that's great to hear that there's some enthusiasm there. On AlloSCOPE, I just wanted to ask very briefly how you think about ramping expense of that program as you move up from the half liter bioreactor, I know if you get more expensive as you move into larger reactors, how are you planning to contain cost there? Brian Culley: Yes. It's not too difficult. The cells are eating the media that we feed them, and we have done a lot of batches and the multi-liter batch size, I've spoken frequently about OpRegen already being manufactured at a 3-liter scale. So we have abundant experience at that scale. I think where it starts getting really exciting is when you go up one level beyond, I don't want to get ahead of myself at this point. There still are risks and uncertainties associated with this. But one of the really powerful attributes of our approach of inverting our development plan and focusing on manufacturing is that we are able to put a relatively modest amount of capital to work to get answers as to the scalability of these lines. If we were doing it the other way, if we were doing expensive animal studies or very expensive human studies, and we were deferring the important questions around scale, we would be spending a tremendous amount of money running studies that others have already shown can be successful and not necessarily proving anything about our viable product candidate in terms of its ability to meet the commercial demand. But if instead, you follow the Lineage approach and you say, well, I'm going to answer the question of scale first, then you are looking at the risk profile of your subsequent preclinical and preclinical studies with a little bit of a different view because you already know you can make a lot of your material. So I really like the overall approach. I think it's prudent. I think it's investor friendly. And from our perspective, we have experienced a lot of experience already at a single leader or multi leader scale production. So we have a well-trained team that can fill and finish vials out of that scale in a GMP environment. So we'll have to see. But as Jill said, we're very committed to high returns on our invested research dollars and trying hard to maintain something close to our historic investment of capital on an annual basis. Operator: Next question comes from the line of Mayank Mamtani with B. Riley Securities. Mayank Mamtani: Thanks also to your company employees and their families in Israel. So Brian, just to piggyback on the last -- kind of framing you had on this inverted risk framework you have on the scale-up of the manufacturing first for this islet cell research initiative. Could you maybe just double-click on what have been the learnings to date from the OpRegen work since inception and also as part of specifically the Roche partnership? And maybe also if you could recap what milestones should we be watching for potential candidate being identified here? Or is this being used by a strategic partner since obviously this would draw a lot of interest? And then I have a follow-up. Brian Culley: Thank you, Mayank, for that multipart question. Yes, the inverted risk, I think, as I say, attractive because we're putting what I believe is the least expensive and most challenging step first. And so we're trying to invert the risk profile of islet cell transplant product initiative or campaign. The specific learnings and lessons from the OpRegen program are coupled with independent learnings and lessons we have because, of course, we have other programs that we've had to solve different problems for whether that's our hearing loss program or our spinal cord program. Altogether, a lot of these have taught us some clever and sometimes patentable material and insights. Overall, I would say that AlloSCOPE is comprised of 3 components. There are physical or engineering-type components. So these are the physical properties of how we do the manufacturing. There are biological aspects to it, i.e., exactly what we expose the cells to and when. And then you have an engineering component, which is a little bit more of like the know-how. So it is not that there's a magical molecule that makes AlloSCOPE work or a special coding of plastic or type of plastic that makes everything click. It is the combination through years, in fact, decades of experience coming together, finally being able to show that this capability can legitimately make millions of vials, as I said, trillions of cells and then applying it in a very unique way to solve a specific problem in the setting of islet cells. I don't envision that being a fee-for-service business of our company. I'll never say never because our job here is to create value, it's not necessarily to make medicine. So if we see an opportunity and it makes sense, we may pursue it. But what we would envision with AlloSCOPE in partnerships is always enjoying significant ownership of any program that's going forward. We are bringing tremendous value to partnerships. We're a healthy company that can carry its own weight in development. And so we want to make sure that we're never viewed as a CDMO, not that there's anything wrong with that business, it's just very hard to price that kind of product when the probability of success is unknown as you go into those alliances. And we also have limited GMP space, a very highly trained team. This is not up the shelf skill set that we just grabbed from some recent college grads. So it is something that we have to be very selective where we apply our technology. But you also asked a very important question in there, which is additional programs, and it occurs to me now in this moment that I have previously said that we had some additional cell types that we are going to talk about and it didn't even make it into my prepared remarks, which gives you a sense of how much exciting stuff is happening here. But we do have plans to reveal another new cell type, that could be as early as in the next 3 to 6 weeks. It's coming together. It's maturing. I'm very excited about it. But it is as yet undisclosed. But hopefully that is something that we could have out into -- out for public consumption prior to our next quarterly call. Mayank Mamtani: Yes. No, that new cell type would be great to learn about that. Thank you for that level of detail. And then on the OpRegen program, if that was to theoretically start a Phase III tomorrow, like, what's your capacity for the amount of doses you can provide because these could be like very large trials, at least historically that have been done. And do you have any visibility of regulatory interaction that has occurred beyond the RMAT designation that was secured last year or 2 years ago? Brian Culley: Thank you for that additional question. Unfortunately, again, that's a question that really can only be answered by Roche and Genentech. I am not a party to regulatory strategy discussions or regulatory interactions that they have regarding OpRegen. So I cannot say because I do not know. Mayank Mamtani: Okay. And one last for Jill. In your cash runway, how much of the additional warrants are factored in? If you could just clarify. Jill Howe: Yes. So of the existing runway that we talked through today, it only includes the $5.4 million in warrants that we collected this week on an exercise, sort of, the $32 million remaining is not factored into our future runway at this point. Brian Culley: Mayank, I neglected to answer the remainder of your question. And I'm happy to say that perhaps one of the least of my concerns at this company is being able to manufacture sufficient material. It really speaks to the power of our technology. We literally are manufacturing more OpRegen than we can reasonably fill and finish in a day's work. So I do not think that supply of clinical material will be gating because the 2-part banking system and then the production vessel scale that we're at, really does generate a very large number of cells on each run that we perform. Operator: Next question comes from the line of Albert Lowe with Craig-Hallum. Gum-Ming Lowe: I was wondering how you'll be applying the hypoimmune cell line that you recently received from the partnership with Factor? And I believe this is an iPSC line. Can you please also speak on some advantages of using induced pluripotent stem cell line? Brian Culley: Albert, thank you for that question. The hypoimmune line that we obtained through our Factor alliance is a line that we designed for a neurological indication. That indication is as yet undisclosed. I may or may not -- I think I'll probably just say that I cannot confirm that it is even the same indication that I suggested could be coming out in the next 3 to 6 weeks. But you're correct that it is an iPSC line. I don't know if there are advantages of iPS over ES or vice versa. Our view is that it is appropriate to follow the data and the behavior of these lines. I do think that there is an important discussion that occurs about various attributes that may make one or the other more attractive but there simply have not been enough approved agents to be able to definitively say one is superior. Typically, what one finds is it when you work with one form of a line, that is the line type or source that you defend for us, we are indifferent. We have both types of -- excuse me, we have both types of pluripotent lines. But in this case, the experience that Factor had with gene editing, with iPS, with hypoimmunity and we also engineered in an additional functional, hopefully, relevant edit into that line. That is about us accessing capabilities that we think are valuable, but that we didn't want to build in-house. And because ourselves are always fully characterized before they go into a patient, we can be confident that there are a number of different editing technologies that could be applied because we can always confirm [ materially ] as it was designed to be before we utilize it and before we invest in the scale-up of that material. Gum-Ming Lowe: And looking forward to hearing about this new cell type that's coming soon. Operator: Next question comes from the line of Sean McCutcheon with Raymond James. Yang Chen: This is Yang for Sean. We have one quick question. Could you speak to the process of getting a new OPC1 formulation into the DOSED study? And how much do you think that may shorten the time line versus bridging study? And are you in dialogue with FDA on that front? Brian Culley: Thank you, Yang. Very appropriate question. We elected to separate the new device that we are testing from the new cells that we have manufactured. So we have completed the manufacturing -- the new process by which we manufacture those cells. We have completed the comparability testing including in-life comparability testing and all the other features that go into a meeting package with FDA, but we have not yet presented or delivered that information to FDA to request us to bridge in those studies. We thought it would be prudent to get a little bit of experience with the new device so that then the focus could shift away from the new device and into the new cells. So what we are hopeful for is that the new device will perform as it was designed to be performing in the first 4, 5, 6 patients and then proposed to FDA that we would switch over to the lineage new process in the last handful of patients in the DOSED study. If successful with that endeavor, that would save a lot of time. It would prevent us from having to establish and conduct a separate safety cohort with our new cells. So you can imagine that the bioinformatics data, the animal data, all of the analytical work that we have done to propose that switch has been exhaustive in order to give us the best probability of success in accelerating that process because it is correct that in order to run a larger study, our view is that we need to have this superior device deployed and we need to use our higher quality, higher purity, higher scale and better control OPC1 cells. And so that is our plan. And when that is complete, then I believe we would be in a position to run a larger study, either ourselves or in a partnership but a larger study of spinal cord injury patients. Operator: There are no further questions at this time. I will turn the call back over to Brian Culley, CEO, for closing remarks. Brian Culley: Thanks, everyone. I know it was long and complicated, but it's very important, and I think also very exciting. So stay tuned. Clearly, we have some exciting stuff coming up not too far away. Thank you for your interest and support of the company, and we'll talk again soon. Operator: That concludes today's call. Thank you all for joining, and you may now disconnect.
Operator: Good afternoon, and welcome to Research Frontiers' investor conference call to discuss the fourth quarter and year-end 2025 results of operations and recent developments. The company will be answering many of the questions that were e-mailed to it prior to this conference call, either in their presentation or as part of the Q&A session at the end. In some cases, the company has responded directly to e-mail questions prior to this call or will do so afterwards in order to answer more questions of general interest to shareholders on this call. Some statements today may contain forward-looking information identified by words such as expect, anticipate and forecast. These reflect the current beliefs and actual results may differ materially from those expressed due to various risk factors, including those detailed in our SEC filings. Research Frontiers assumes no obligation to update or revise these statements. [Operator Instructions] The call is being recorded and will be available for replay on Research Frontiers website at smartglass.com for the next 90 days. [Operator Instructions] I would now like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir. Joseph Harary: Thank you, Paul, and thank you, everyone, for joining us for our year-end and fourth quarter 2025 Conference Call. 2025 was a year of not just incremental developments but structural adjustments in the supply chain and meaningful expansion in our automotive pipeline, architectural retrofit execution and new product development and capital positioning. This call is important because when you step back and look at 2024 and 2025 together, the trajectory of this becomes clearer. We have maintained production continuity in automotive through license transitions, expanded OEM engagement with high unit volume vehicle programs, allowing cost reductions by our licensees and expanded engagement through other areas of the vehicle besides just the sunroof. We've seen Ferrari expand production of cards with SPD-SmartGlass and Cadillac enter the market with SPD. We've seen Mercedes showcase SPD broadly in a concept vehicle and launched architectural retrofit initiatives. We've seen advancement in the Black SPD development. We've strengthened our balance sheet. And our licensees, and I think this is important, are making new investments that are specific to SPD business, and they're moving forward and winning new business. We're going to talk about that later. I'll begin with financial results and our recent financing and then address Gauzy directly and then transition to the significant positive developments that have occurred since our last conference call. For the full year 2025 and continuing in 2026, we remain debt-free. We strengthened our working capital. Our royalties improved when adjusted for onetime licensee events early in the year. And let me now just address our February financing directly because we've gotten some questions about it. And keep in mind, I'm trying to save time by answering as many questions as possible. And I have basically taken questions that have been given to us and included many of them in my presentation. So hopefully, that will allow us to efficiently cover a lot of ground because there's a lot of good things to talk about. As we disclosed in our February 18, 2026 Form 8-K, we completed an oversubscribed $1.1 million private placement at $1 per share with 5-year warrants that are at increasing exercise prices. This offering included credit investors, several family members of one of our directors and also importantly, the owner of one of our SPD licensees, and I think even more significant, the one responsible for the SPD architectural retrofit application. And we all believe that the retrofit represents a potentially very significant market. So when the licensee closes to execution of this invests its own capital alongside long-term shareholders, I think that speaks clearly about their confidence in that opportunity. And let me clarify something that I addressed in prior calls. I had stated that we would not need to raise capital if we were paid what we were owed and if we did not experience additional disruptions and there were several in 2025. And I also said we might raise capital for strategic reasons. In 2025, all of these elements were present. We experienced AGP related developments, Gauzy's French subsidiary rehabilitation process and slower collection of certain receivables some of which are now being collected as we speak. At the same time, we saw expanding opportunities in automotive programs, architectural retrofit, black SPD development as well as new product opportunities. Given that combination, we believed that it was prudent to modestly reinforce the balance sheet. We deliberately kept the offering small and focused and was done at a market price. Participants were long-term holders who, other than our licensee had participated in prior friends and family offerings, including our last one in September 2022. The shares were not registered for resale and are subject to at least a 6-month holding period. We entered 2026 with strength in liquidity and no debt and resources to execute on our business. I know a lot of people have been frustrated by the silence that has been coming out of our licensee Gauzy. So let me now address Gauzy directly. In mid-November, Gauzy's French subsidiaries entered into a court supervised rehabilitation proceeding in France. This applies specifically to the French entities. It does not apply to Gauzy's German SPD film production facility. It does not apply to SPD emulsion production in Israel. However, as one would expect through most business organizations, this filing has had some ripple effects. Liquidity has been reallocated by Gauzy to satisfy the French rehabilitation monitors. That allocation appears to have temporarily reduced access to liquidity in other areas of the company, and Gauzy is actively working to address this. Senior management time and attention is understandably at Gauzy been focused on stabilizing and addressing these matters. In addition, Gauzy reduced headcount. And let me just say that sometimes workforce reductions are never easy, but by adjusting expenses and overhead, it can strengthen the long-term sustainability of the company. These actions by Gauzy appear aimed at lowering operating expenses, reducing capital requirements and moving toward a more stable operating profile for Gauzy. And even in the midst of all of this, SPD emulsion production in Israel and SPD film production in Germany continues. In the midst of this, automotive and architectural development programs continue and expand. Gauzy is reconstituting its Board to restore its NASDAQ compliance. They postponed their third quarter 2025 conference call due to the timing of the French filing. But I think it's important to understand that as a foreign issuer, they are required to file financials only semiannually. And as a foreign issuer, their third quarter filing was purely voluntary and their annual filing is not due until the end of April. So they're on a bit of different as you see reporting schedule than we are as a U.S. reporting company. From our standpoint, we remain in regular contact with them almost daily, production inside and outside of France continues. Program execution continues and progress on multiple fronts continues even during these restructuring efforts by Gauzy and we'll talk about some of those things a little later on in the call. So now let me move from the discussion about stabilization to the acceleration of our business. While restructuring efforts were underway, development did not pause. Since our November call, expansion has accelerated. Ferrari continues to produce vehicles utilizing SPD-SmartGlass. And even though license supplier AGP and their European affiliate, Soliver, both filed for bankruptcy protection in 2025. This had a 6-figure impact on recorded royalties for us during 2025. But we successfully transitioned the Ferrari business to another licensee, Isoclima and even though this transition occurred midyear, Isoclima sales levels exceeded their minimum annual royalty thresholds in the third and fourth quarter of 2025. Maintaining continuity through a supply chain shift requires execution even when one has is zig and zag, and we had to do that. So initially, AGP asked that we transition the Ferrari business to their sister company, Soliver in Belgium. And when some of the key suppliers, not SPD, but just in general, for automotive glass pulled their support they moved it back to their production in Peru, and then that didn't survive, so we had to shift it over to Isoclima. But I think that while that was certainly challenging for everybody, we successfully emerged. And I think it illustrates pretty clearly the strength and the robustness of our supply chain. Moving from Ferrari to Cadillac, they also entered the market with SPD-SmartGlass and the Cadillac Celestiq this year. And the Celestiq is General Motors' flagship ultra luxury vehicle. And it has garnered great industry and press accolades with a strong and positive focus on the 4 quadrant SPD smart roof. It represents adoption by a major U.S. OEM or first, and also validates SPD in a next-generation engineered platform for General Motors. We believe this will result in substantial additional business for us. And it's certainly significant that SPD-SmartGlass was chosen and introduced in European ultra performance and American ultra luxury vehicles. Mercedes also recently unveiled a concept vehicle featuring SPD integrated across much of the car, not just the roof. I think it was 75% of the surface area of the glass. As those familiar with the automotive industry understand, concept vehicles often signal direction. They reflect where engineering resources are being allocated and based upon feedback where marketing resources are deployed and what makes it into ultimately new vehicles. Let's reflect, since our November 2025 conference call, I was the keynote speaker at the Automotive Glazing Summit in Detroit. We now have high-volume quotations on 4 models of automotive -- in the automotive sector. Since our last conference call, we have also started work with a new European OEM. And in addition to those models, which can represent hundreds of thousands of units, we also have specialty programs with potential annual volumes in the tens of thousands of units that recently came on board since the last conference call. The automotive pipeline today is broader than at any point in our history. We'll talk a little bit now about some of the new products and technical advances. SPD Black continues to advance and OEMs have made clear their preference for glazing applications that require a neutral or black aesthetic. Black SPD addresses that requirement and broadens the market. We are also advancing new SPD film variants, optical refinements, IR and UV integration, improved manufacturing and yield and broader access to key ancillary technologies to make a super smart window. These are adoption enabling refinements driven by OEM feedback. And of course, we listen carefully to the customer writing the checks. Moving now to the architectural market. Since our last conference call, we and our licensee, AIT, also known as LTI Smart Glass launched the retrofit architectural SPD product at Glass Build America in Orlando. We have identified 4 initial retrofit projects of different sizes. Each highlights a different advantage of the SPD retrofit system, which is why they were selected. In multiple cases, removing exterior glazing would be disruptive or costly. To give an example, in 1 case, the building is a historically designated building. That project initially specified Sage electrochromic glass, but because Sage and their electrochromics required exteriors removal and replacement and something that was actually restricted because of the historical designation, the project pivoted from electrochromic to SPD retrofit. Instead of replacing the facade, SPD upgrades performance from inside the existing frame. Why is this significant? The installed base of buildings globally is vastly larger than annual new construction. And the SPD retrofit system dramatically expands our addressable market and compressors manufacturing and installation time without requiring facade replacement or structural or occupant disruption. It could stay in the building while they do it. Other projects in the retrofit market also span residential and commercial buildings as well as government installations. And since our product launched last quarter, we are focusing on developing some new and innovative ancillary systems and peripherals for the retrofit application. Joseph Harary: With that, I look forward to answering your questions, and we'll first include some of the questions previously sent in by our shareholders in -- so first, without pulling any punches, here are the additional questions we received that were e-mailed to us. And in some cases, I'm combining several related questions into one. And also, we covered some of these topics earlier, but I thought it would be helpful to you to hear some of the questions and for me to go into more detail. Joe, how concerned are you about Gauzy's French rehabilitation proceeding? What happens if things deteriorate further? Well, that's a fair question. And by the way, all indications are that they're not going to deteriorate further. They're actually improving from where I sit. First, it's important to separate the French subsidiary proceedings from the broader organization. The rehabilitation process applies specifically and only to Gauzy's French subsidiaries. It does not apply to the German SPD some production outside of Stuttgart or the SPD emulsion production operations in Israel. SPD film production in Germany continues and SPD emulsion production in Israel continues. Automotive and architectural development programs continue. Market development and new business development for SPD continues. And yes, the French filing required liquidity allocation and management attention. And yes, Gauzy reduced headcount as a part of the restructuring. But restructuring when done properly, can be very -- a very healthy change that strengthens the company. And we, of course, remain in regular contact with Gauzy and from our standpoint, we see operational continuity and SPD production and program execution. I'm going to take another question that's related to that. Do I have a contingency plan of Gauzy does not perform? The answer, Michael, is yes. We do. We have a plan A, B, C and D. My preference is not to have to use any of those. Another question from Mr. Erdman. What can you say about the war? Well, war is bad. And if I had to say what was the most disruptive thing to our business. We have some key technical developments that are on the verge of happening within Gauzy and we have some key meetings with companies outside of Israel that are going to be scheduled for this month or early next month. And really the limiting factor on both was when are they going to open up the Israeli airspace. Right now it's closed. I heard today, I think it was that they're reopening it on Sunday. In some cases, people outside of Israel at Gauzy had to take claims to other countries, then trains and buses, including a 6-hour bus ride to get home. They're very able to operate in these environments where that happens. So kudos to them for the strength and determination to do that. I got another question. Can you provide a postmortem why we didn't get a business on -- and there's a couple of car models mentioned. This is from Jared. I'm going to talk about three of them that are on the list. The only one I'm not talking about is Mercedes, and that's because of some active discussions going on. But one of them was VW. Why don't we get the VW business or the Rivian business, which is somewhat related since they kind of share a lot of the platforms together. VW initially, with the Porsche Taycan went with a PDLC product. And I don't know why they did. So I can't answer the question, why didn't we get the business? I'm sure that they were told some things about the performance and reliability of PDLC as was these other companies. It's probably interesting to note that they took the PDLC out of the out of the Taycan. So sometimes what's promised isn't always delivered. And the question also said, what about in particularly Corvette? I know the reason it has nothing to do with performance. And as many people on the call may know a company that is a well-known supplier of other products to Corvette asked to supply an electrochromic sunroof. It was announced with a lot of fanfare in August of this year by Corvette, there was some good press accolades. And then they realized that they couldn't produce it in scale, and they took it off the configuration list. Another question I got -- and this is from John Nelson. Is there a possibility that SPD can be used on Corvette roofs as a replacement for the sad option that GM offered earlier in 2025? Well, thank you for calling it a sad option. I don't want to disparate anybody, but I'm just reading literally the questions. So thank you, John. Not that I disagree, by the way. Yes. A matter of fact, I think our chances are much higher as a result of what happened there. I think people realize that what we've accomplished in automotive is unprecedented. We're in 4 different OEMs. That means 4 different quality assurance requirements, 4 different supply chain preferences and we were successfully introduced in series production in all of them. So it's something that I highlighted at the Detroit Automotive Glazing Summit that I was the keynote and Chairman of. But I think now it's becoming crystal clear to a lot of the OEMs, how hard that is to do it, what we and our licensees did and what it means to have a reliable supply chain like we have. Let me go back to some other questions. Do we see stabilization efforts underway at Gauzy? Yes, not only that, but continued execution across all their active programs. And they're making progress and they're fixing what are mostly entirely cash flow issues caused by the French bankruptcy. I think once that's done, everything comes together again nicely. And like I said earlier, we're in very close contact almost daily with them. And we've been trying to help them navigate as best we can through some of these issues, and they're very receptive to that. It's another tough question. When do you expect meaningful revenue growth from these automotive programs? And in general, what gives you confidence that 2026 and beyond will be better? Well, thank you for that. Let me start. Not as an excuse but an observation, automotive integration takes time. You're talking about vehicles that have thousands and thousands parts and purchasing decisions and a lot of that has to be coordinated. Fortunately, we have a couple of things going on. Number one, even though these things take time, we started them a while ago. So they're very much well under way. And also another thing that's extremely helpful, and I think every day becomes clear to the OEMs, our SPD technology has been validated across 4 OEMs. And in the auto industry, that's unprecedented, and we have even more OEMs in aircraft. So I think that, that reliability and continuity and maturity of the technology, I think, has been very helpful. But bottom line is the seeds have been planted, getting back to the question, and they've been nourished and now you're seeing them begin to grow. And really, what matters and why I think this year is going to be different and this is going to continue is the breadth of our pipeline and the engagement of engineering that we have. Today, we have Ferrari and McLaren models in production, we have Cadillac newly entered into production with some legs basically within General Motors, some of which I alluded to earlier. Mercedes showcasing SPD broadly in a concept platform, 4 high-volume quotations allowing us to get our costs down meaningfully. Additional new European OEM programs and specialty programs with tens of thousands of unit potential. And also, I think what's helpful is the new SPD related investment by our licensees. So that breadth is broader than at any point in our history. And that's why I think 2026 and beyond will be different. And as programs move from quotation to production, revenue follows, but not before, not in the automotive industry and not with a licensing model. So we focus on execution and integration, getting it into cars reliably. And then for revenue for us and for our licensees, that follows integration. And that's what we've been doing. It's very simple. Next question. Ferrari's low volume, Cadillac is ultra low volume, isn't this still a niche technology? Well, Ferrari and Cadillac and prior to the Mercedes and McLaren all validated performance of SPD technology and the ability of our supply chain to reliably produce for serial production. I might add, produce for serial production across 4 different OEMs with 4 different requirements and 4 different production processes and 4 different procurement processes, we did it. What matters now is expansion. And we have 4 high-volume quotations in the automotive industry. We also have specialty programs in the tens of thousands of unit range. And we also have broader glazing integration discussions beyond just sunroofs. So the pipeline today is about scalability and not just halo vehicles, it's about cost and it's about performance. And we've always had great performance, but the scalability and the costs are things that we're now showing people we can do. Another tough question, also automotive related. If this technology is so compelling, why hasn't a major OEM adopted across all vehicles already? Well, from your mouth to God's ears that it happens, then it might, and I'll give you an example of why that might happen. But automotive adoption is very model specific, at least in the beginning and very platform-specific. OEMs integrate technology based on cost targets, future positioning and design cycles and also what their competition is doing. But we're now seeing broader glazing discussions beyond just sunroof panels, and that represents platform expansion. And a useful historical analogy is antilock brakes. That began as a very expensive item, I mean a fairly significant percentage of the car. But Mercedes took a risk on that one. And even though it was very expensive, and they put in first and high-end vehicles, it eventually became standard across the industry. And as many of you know, we have very good relations with Mercedes, and we speak to them often. And we have pretty much an insider's viewpoint on how they think about things. And I asked the guy that developed the S-Class. And of course, I met him in connection with our work on the SLK and the SL and then the Maybach and the S class. And we had a lot of discussions. And I said to them and I said, Hans, did you have ready regrets about a decision you made? He goes, well, not about SPD, but I did have one regret. We had developed a dynamic shock absorber system that would take the 6 cameras in a car and feed the data into dynamically changing the shock absorbers on the car. And we wanted to call it either Magic Carpet Ride or Magic Glide Control. It made the car really, really smooth to drive. And one day, Dieter Zetsche walked into my office and said, BMW wants to license it from us. And the regret I made as I said, no, because had I said yes, that would have gotten the cost of that down. And if I got the cost of it down by licensing BMW, so that the unit volumes for our supplier were much higher than it would have gone to other carmakers, too. And then it would have been in every one of our cars. So Magic Ride Control would have been in everything at Mercedes, and we'd have a better performing vehicle. So the thinking is and this happens more than I thought it would, that OEMs do share technology. And when they don't, they regret it sometimes. So in our case, adoption, I think, across every model within an OEM will happen when we address 2 things that we spoke about earlier. Cost and color. We have already discussed the significant progress we made in both of these key areas. Next question, which I asked myself today because I'm an investor is, why should investors be patient? Well, first of all, it's a little easier for me to be patient because I have more information as you'd expect, as to what's going on and what's in the pipeline. But I think if you look at this even from an outside viewpoint, investors should be patient because the infrastructure has already been built. We have invested over $125 million in SPD and its markets. That's done. Because these major investments have been made and validated by significant customers, I think that's another reason to be patient. And diversification has increased. Diversification across multiple OEMs, diversification across now you're beginning to see different places in a car where this could be used, and you'll see more of that. I think we should be patient because production continuity has been maintained. I'll mention it very briefly because people sometimes say, well, why do you talk about the competition? I pay attention to the competition. We've had several competitors go bankrupt. The most recent, which you may not be aware of, was eyrise, which is the company that makes architectural liquid crystal. Not PDLC, liquid crystals. So sometimes, when you see something that looks like SPD, it was the eyrise product in an architectural application or they ended up liquidating. And that was within the last month or so. So it's a tough industry. But I think by being smarter, and not that I'm the smarter one, but just setting up a business that was smarter. We've been able to have that production continuity that no one else has had. New OEM programs have opened. Another reason to be patient because those things are seeds that have been planted that will sprout. The architectural retrofit greatly expands the addressable market. These are all structural developments. And durable growth follows those structural expansions, those foundations that we build. So we've also set the table for lower cost and higher revenues, all without requiring large capital expenditures or erosion of profit margins at Research Frontiers. So we've built strong foundations in their we're green from them. And I think that's why investors should be patient. We've discussed a lot of exciting topics so far today, and I'll now ask our operator, Paul, so please open up the conference to any additional questions people participating today might have had that have not already been covered. And just one caveat. We have covered a lot of ground. The call was running a little bit long because there's a lot of exciting things that we wanted to talk about and share with you. So if we've not fully answered any of your questions, but they've been substantially answered, e-mail us rather than ask it on the call because we want to leave time for as many other questions as possible. So Paul, if you can open up the Q&A for live questions, I'd appreciate it. Operator: [Operator Instructions] And our first question comes from Jeff Harvey an investor. Unknown Attendee: So Gauzy announced a $50 million funding proposal. That obviously hasn't gone forward. At least I haven't seen anything to indicate that the funding has been in place. So that's a little disturbing. The other thing is that...... Joseph Harary: Having -- yes, let me address that first because having cut my teeth on corporate transactions as a lawyer and also as the CEO of Research Frontiers. It's not that it hasn't gone forward, but equity credit lines require a registration statement we filed with the SEC and they go effective. Due to kind of the timing of the year, I believe that Gauzy would have to actually have their audited financials in place in order for them to file that registration statement. So I think -- but I think it's also probably important and I don't think I'm revealing anything that I shouldn't about Gauzy's funding plans. But that's more of an intermediate funding plan. They don't need that much money to execute on their business plan and move it forward. And they have access to more immediate, shorter-term capital. That's meant to take care of some of the debt that they have with a particular lender at a higher interest rate. And it's nice to reduce your interest expense. We don't have any debt, so we don't have any interest expense. But they're a different company, so they do. Anyway, I didn't mean to cut you off. I just wanted to address the question while it's fresh. I think you had another question or comment. Unknown Attendee: Yes. Two other things. First of all, the stock has been under $1 for -- I would think getting to a point where they're going to get another letter from the SEC about getting delisted being under $1, but I also.... Joseph Harary: You're talking about Gauzy stock. You're talking about Gauzy stock. Unknown Attendee: Correct. So I think that's -- and the other thing is I would think that they're not going to be able to pay you on time the way you'd like to be paid until they get their financial house in order. So I would think that your expectations of getting royalty revenue from them, again, are going to be subdued near the near term. And I also..... Joseph Harary: Let me address that while it's fresh. Okay. I'm sorry if it's related. I want to make sure I answer all your questions, Jeff. Unknown Attendee: I would think also that potential customers would be reluctant to want to do business with Gauzy given their financial distress. Joseph Harary: Right. They're all excellent observations. Let me maybe put some color on it because like I said, I've been in very close contact with Gauzy throughout this process since pretty much the day after the filing, the bankruptcy filing. So the first question is, are we going to get paid? And the answer is yes. They have stressed to the French -- remember, we get our funding from 2 sources from Gauzy. Vision Systems, which is in France. Now that's directly under the control of the French regulators. And it's more of a monitor to basically just like internally, we have a list of bills that we had to pay, and my office manager presents it to me as CFO and CEO, and I approve it and our audit committee looks at it and it gets approved and then we pay it. What you're doing is you're adding 1 level on top of that, but it's a bureaucratic level, which is a French bureaucratic official that also has to do that. So it could slow down the process. Our invoices have been submitted. I'm told. No guarantee, but I'm told that it typically takes the regulators 1 to 2 weeks to approve something like that. So we're in the queue. As far as post filing things, that's a little smoother because really what they do is they treat prefiling obligations a little bit differently than they do post filings. And November 13 was the prefiling -- was the filing date. So anything that existed, which is about half of our receivables from Gauzy, and from Vision Systems rather, is subject to the French regulator. And the other half is ongoing in the queue for payment. As far as your other question, and it's an excellent observation, are they experiencing any customer concern about their finances? And Jeff, that was the first question I asked them too. Is anybody concerned about your viability or -- said, no, Joe, they're not. We are -- I mean, I'm more focused on SPD film and emulsion obviously. But company-wide, I think when you consider that the flow of revenue and product sales is coming out of France and it's coming out of everywhere else in the world, the customers are continuing to buy. And these are -- some of these are very long-term lucrative contracts that Gauzy has. So because they're long term, the customer has to buy from them and they have to supply and the challenge is, do you have the liquidity to supply what's a very large backlog of orders. And part of this I mean, I'll tell you 2 things. Number 1 is, the backlog -- Gauzy was on track to meet their projections for 2025 until the labor unions initiated this reorganization or rehabilitation proceeding. Then everything stopped because all of a sudden, you have to go through the monitor process to get paid if you're a supplier and it's not just us, it's people that are supplying glass and plastic film and cameras and everything else that they use in their systems. So it's very important to get that restarted quickly, especially since the backlog was tens of millions of dollars of product sales that were profitable. So Gauzy, I think, did what they needed to do, which is they reallocated some capital and some liquidity from other areas of their company to get that flowing quickly because those have longer lead times. And of course, you have the steady-state stuff for research frontiers and other licensees with the SPD emulsion and film. And I'll tell you, yesterday, I was speaking to the CTO of Gauzy and they're producing emulsion. It's ready to go. And they get it over to Germany. Probably after Sunday, it will be a lot easier when they open up the air space. But prior to the word they were getting it too. So it's not -- it's a little bit of a blip. But obviously, you want to see blips as possible. At some point, I imagine, given what Israel has gone through with 2 wars in May when I was there on 7 different fronts. And now this war with Iran, they may very well move a lot more of their emulsion production over to Germany so that -- and their people so that you have less concern about air spaces opening and closing. But I think we're on the tail end of that kind of disruption. So I think we're good. Operator: And our next question comes from Mike Forrester, an investor. Unknown Attendee: My question arises out of the third quarter report of Research Frontiers. And in light of everything you've said about how positive our whole situation is. It leads me to wonder why do we have a capitalization in January at basically $1 a share plus opportunities to buy more stock at $1.10 a share with a selective group of investors, including family members of a director when at the end of the third quarter report, it said we currently expect to have sufficient working capital for more than the next 5 years of operations. End of quote. So how do you justify that? Joseph Harary: Sure. Michael, thank you for bringing that up, and I appreciate the question. So as I mentioned earlier, there was a qualifier on that, which is assuming we get paid what we're owed and assume there's no more supply disruptions because we had one in the second quarter with AGP, as you know. And also for strategic reasons. And what I said earlier in the call, I'm not sure if you were on it, is all three of those factors were present here. Now you asked about directors participating or their family members participating. That was basically the terms were set not with the directors, obviously, they were set with the large investors, the anchor investors that were much larger investors in this offering. And then we were asked, "Hey, why don't you have a director participation in this?" And I said, "Guys, we already circulated our 10-K internally." No company in the world would allow a director to buy stock once that happens. We're closing on this deal. If there's people who know that want to participate on these terms, which have already been set, they're welcome to come into this. And I'll say this to any shareholder out there. Where do these friends and family investors come from? A lot of them had amassed large positions in Research Frontiers and wanted more. And because they have large positions, they would call me throughout the year, throughout the years, I got to know them. Most of the people in this round had invested in the last round, which was in September of 2022. So I knew them there. And they had invested in the prior rounds and the prior rounds and the prior rounds. So these are long-term shareholders. And maybe just to kind of put a color on this, if anybody out there is interested in participating in one of these things, assuming we have to do one again, maybe it's a couple of years before we do it or maybe it's sooner if isn't an acquisition we want to make or a marketing program we want to launch or something like that. Let me know when we're talking, I'm happy to put your name on a list, and we could always figure out if it makes sense for you. But it's not meant to exclude anyone. But these are people that we know and trust. And just to put a little more color on it, in September 2022, the stock that everyone got had a restrictive legend, meaning you cannot sell it in the open market as long as this legend is on the stock certificate. And even though they could have taken that certificate legend off 6 months after the September 2022 offering, nobody in that offering did. So these are long-term holders. And we appreciate that because that's how you get rewarded with a company like this, which has relatively long development cycles with customers in automotive and an aircraft, I think everyone that works in that industry kind of knows about the development cycles. But that's why we did it, and that's why we did it with the people we did. And if anyone is interested, love to hear from you. I can't promise you we're going to do this again. But if we do, and things make sense, we certainly would consider you. Unknown Attendee: Well, it's not just with respect to there being recapitalization, although the third quarter report does mention an expectation that there wouldn't -- this wouldn't happen for 5 years. But....... Joseph Harary: But if you listen to the conference call..... Unknown Attendee: Hang on. Joseph Harary: Okay. I'm sorry. I didn't mean to interrupt you. Unknown Attendee: Well, it's the timing. I mean you're giving us all this glowing information about how Gauzy's situation isn't as bad as the press, so to speak, present it to be. And I'd love to believe that because I have stock in Gauzy as well. But they just filed the bankruptcy or thrown into bankruptcy in mid-November, and here it is January, less than 3 months later that with Research Frontiers' stock plummeting just as Gauzy is plummeting, the offer is at $1 a share. When you talk about '22, I think it was like $2.30 a share and with better warrant rewards for those who reward to the company in terms of the total income. I question the timing, why not wait at least until May. We had at least 12 months before -- according to the latest quarterly report that we have cash and cash equivalents to take us at least 12 months. While this timing is like you're giving a gift to people who may not need that gift. . Joseph Harary: I'm not giving a gift to anyone. This is an investment. But I will say this. Listen to what I said, please. If we were paid what we were owed, and we didn't have any supply disruptions. Two things that didn't happen, by the way. We did that -- we weren't paid what we were owed and we'd have supply disruptions, okay? And if we had a strategic reason, we would do another one. So here we are in March. We have something sitting at a French regulators desk hoping that it gets paid today versus tomorrow. And I don't think anybody on this call would want Research Frontiers to not have the liquidity to execute on our business plan. So I'm thinking about the long-term shareholders and the execution of the business plan and capitalizing on the successes we've had in multiple markets and something no one else has done. And I'm not going to sit there and roll the dice with your money or my money and hope that I get paid on time or hope that there's no more supply disruptions. You wouldn't want a CEO of your company being that reckless. Unknown Attendee: One last question then for you. In light of what you're predicting is when you get the money and so on. Are you going to put out a press release of how things are going so that we might know? Joseph Harary: Yes. We typically don't put out press releases unless there's a specific event like the launch of the Celestiq was a specific event or a major nonfinancial development, but the financial developments are on a cadence of being announced quarterly. And our next quarterly conference call is in the beginning of May. It's not that far off the way that the SEC filing schedule falls, early May is when we typically have our first quarter call. You might see it then. Unknown Attendee: So by then, we should know whether or not Research Frontiers has got its licensing fees from the bankruptcy monitor, right? Joseph Harary: Yes. Yes. I think you'll see a change in our receivables when that happens and in our cash position. And that's not too far off. So financial results, we don't announce in between quarters, but it's close enough where you'll know about it soon enough, I think. Operator: And our next question comes from John Nelson, an Investor. John Nelson: Joe, just a couple of quick questions. You mentioned 4 projects with the retrofit window. Do you have -- can you give us any idea as to how soon any of those could start? . Joseph Harary: I think they -- I mean, they've already started. I mentioned earlier that we're working on some peripherals that go in conjunction with the retrofit window. The retrofit window is a very solid developed product. But now think about any kind of smart window. You're going to want to have ways of controlling it in a smart manner that hopefully will be just as easy to install and integrate as the glasses. So that's one of the things that we're actively working on together. That's LTI and Gauzy and Research Frontiers and the customers to give them a choice. So that's basically what it is. And we've selected different types of projects because I view these not only as revenue sources. I'm not worried about revenue on this. Revenue, when we decide that we're going full force with this, and we have these peripherals all done. AIT has the capacity and the customer base to do this quite quickly without buying a Super Bowl ad or anything like that. But I also want to have white papers so that the architects could get their ideas as to, hey, why would I use this? In some cases, it's obvious. I have building facility management, building envelope issue that I got to deal with. I need glass on the outer skin of the building, but what about things like one of the residents has, I think, 30 or 40 interior windows that to take out the glass and put this in, it's a residential project would be very disruptive to the tenant and very expensive, whereas we could just pop it in and be done with it. And so it's a matter of creating proof points there. John Nelson: Yes. Successful application will create awareness, more awareness...... Joseph Harary: And good news, John, I think -- the good news, John, is that in the architectural market, we have a lot more control over that good news getting out more so than an automotive aircraft where you're somewhat beholden to the OEM. Here, the architects and the homeowners like to brag about what's in their home unless they're rushing oligarchs or something that are trying to lay low. And we've had that happen, too. John Nelson: Okay. And second question is, has Ferrari expressed any interest in expanding the SPD roofs to other models? Joseph Harary: They have. I can't talk about the specifics on that, but they make a lot of money on the [ option ], and they're thrilled with the performance. I mean it has the performance of Ferrari. So what wouldn't they like about it? Operator: Our next question comes from Art Brady, Investor. Art Brady: Basically, I'm interested in learning a lot more about what is happening with the GL project, the Korean company that concentrates on building kiosks? Joseph Harary: I'm not going to talk about a specific project. And I don't think, given that this has been an hour phone call, we should probably spend a lot of time on specifics. But Art, I know you try to reach me earlier in the week, and I typically don't answer shareholder calls right before the SEC filing because I don't want to get any shareholders in trouble, but feel free to call me tomorrow, and we could talk about that. And if you have -- I know you're a resourceful person, you might have some thoughts on that. I'd like to now maybe make some closing remarks. Look at the fact that Ferrari and McLaren have their production continuity going on in Cadillac entering the market and Mercedes integrating SPD broadly in a concept that covered 75% of the car, not just the sunroof and the expanding OEM quotations, high-volume quotations that helped us get the cost down significantly and Black SPD advancing and the architectural retrofit launching and the strengthening of the balance sheet and new investments by our licensees and SPD equipment, and in one case, a direct investment in research frontiers to the friends and family offering. You don't see a static company, you see a foundation that's been built and a technology platform that's being embedded in many of the different places. It's being embedded across geographies worldwide. It's being embedded across vehicle segments. It's being embedded across applications. And the major investments have already been made and the infrastructure has been built. And we've always had the best performance of any SmartGlass technology, and SPD continues to deliver industry-leading performance. And cost and color are being addressed and diversification has increased. The breadth of engagement today is stronger than at any point in our history. And when you connect these developments together, you see a business that is no longer dependent on a single vehicle or a single OEM or a single customer in general or a single market. And we believe all of this positions research printers for durable, diversified growth as these programs mature and enter the marketplace. With that, I want to thank everyone for their participation in the conference call today. If we haven't answered your questions, feel free to e-mail me or call. We try to do the best we can to respond quickly. And I look forward to sharing more upticks with everyone. Operator: This concludes today's conference call. Thank you for attending.
Operator: Good morning, ladies and gentlemen. Welcome to Grupo Financiero Galicia Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at gfgsa.com. [Operator Instructions] Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws and are subject to risks and uncertainty that could cause actual results to differ materially from those expressed. Investors should be aware of events related to the macroeconomic scenario, the financial industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Now I will turn the conference over to Mr. Pablo Firvida, Head of Investor Relations. You may begin your conference. Pablo Firvida: Thank you. Good morning, everyone. I will make a short introduction, and then Gonzalo Fernández Covaro, our CFO, will have some words. Latest figures indicate that Argentina's economy grew by 4.4% on average during 2025 and the primary surplus stood at 1.4% of GDP with an overall fiscal result of 0.2% of GDP. The National Consumer Price Index recorded a 7.9% increase during the fourth quarter of 2025. Inflation for the year stood at 31.5%, significantly decelerating from the 117.8% recorded in 2024 and reaching its lowest level in 8 years. However, monthly inflation accelerated during the second half of the year and displayed a 2.8% increase in December after having reached lows of 1.5% in May and 1.6% in June. In January 2026, monthly inflation rose to 2.9%, while the year-on-year rate accelerated to 32.4%. On the monetary side, the Central Bank expanded the monetary base by ARS 0.7 trillion in the fourth quarter and by ARS 13.2 trillion over the year, bringing the year-on-year increase to 44.5% as of the end of 2025. In December 2025, the exchange rate averaged ARS 1,448 per dollar, reflecting a 29.5% year-on-year depreciation. As of January 1, 2026, both the floor and the ceiling of the exchange rate band began to adjust monthly in line with the latest available monthly inflation data. In December 2025, the average rate on peso-denominated private sector time deposits for up to 59 days stood at 26.6%, 6.4 percentage points below the December 2024 average. Private sector deposits in pesos averaged ARS 104.1 trillion in December, increasing by 10.6% during the quarter and 40.1% in the last 12 months. Time deposits rose 4.3% during the quarter and 44.8% in the year. Peso-denominated transactional deposits increased 18.3% during the fourth quarter and 35.2% in year-over-year terms. Private sector dollar-denominated deposits amounted to $36.4 billion in December 2025, increasing 11.7% during the quarter and 14.6% in the last 12 months. Peso-denominated loans to the private sector averaged ARS 87.6 trillion in December, showing a 10.4% quarterly increase and a 73% year-over-year rise. Private sector dollar-denominated loans amounted to $18.2 billion, recording a 0.5% quarterly decrease and an 83.6% annual increase. Turning now to Grupo Galicia. Net income for 2025 amounted to ARS 196 billion, 91% lower than in the previous year, which represented a 0.4% return on average assets and a 2.5% return on average shareholders' equity. Excluding integration expenses, the result would have been ARS 333 billion and the ROE 4.2%. The result was mainly due to profits from Galicia Asset Management for ARS 127 billion from Naranja X for ARS 59 billion and from Galicia Seguros for ARS 40 billion, partially offset by ARS 70 billion loss from Banco Galicia. Going to the fourth quarter, net loss amounted to ARS 84 billion as the improvement of the financial margin was more than offset by the impact of asset quality deterioration. In the quarter, Banco Galicia recorded ARS 104 billion loss, Naranja X, ARS 49 billion loss, while Galicia Asset Management and Galicia Seguros posted profits for ARS 36 billion and ARS 27 billion, respectively. This loss represented a minus 0.7% annualized return on average assets and a minus 4.3% return on average shareholders' equity. The net result from Banco Galicia for the fiscal year was negatively affected by the non-recurring expenses related to the merger with HSBC, without which it would have reported ARS 60 billion profit. In addition, during the year, the financial margin was negatively affected by changes in reserve requirement regulations and by a significant increase in interest rate, which had an impact on the cost of funding. At the same time, loan loss provisions increased significantly compared to 2024, mainly due to the increase in the retail-loan-portfolio-delinquency rates. The most relevant factors for the deterioration of asset quality were the abrupt increase in interest rate in real terms, the loss of purchasing power of customers and the disappearance of the dilution effect on the installments related to a lower level of inflation. During the quarter, the bank reported ARS 105 billion loss, decreasing 6% as compared to the loss of the third quarter. Operating income increased, reaching ARS 164 billion, up from the ARS 6 billion recorded in the previous quarter due to higher net operating income driven by an improvement of financial margin, offset by higher loan loss provisions, which still showed an upward trend. Average interest-earning assets reached ARS 25 trillion, 3% higher than in the previous quarter, primarily due to the increase of the average volume of dollar-denominated loans, which grew 9%. In the same period, its yield increased 130 basis points, reaching 31.4%, 39.7% in the Peso Portfolio and 8% in the Dollar Portfolio. Interest-bearing liabilities increased 4% from September 2025, amounting to ARS 22 trillion, primarily due to an increase of the dollar-denominated deposits. During this period, its cost decreased 220 basis points to 14.3%. Net interest income increased 23% when compared to the third quarter because of a 7% increase in interest income and of a 9% decrease of interest expenses. Net fee income increased 4% from the previous quarter, mainly stood out the fees related with bundles of products and the ones of deposit accounts. Net income from financial instruments decreased 3%. Gains from FX quotation difference were 29% higher from the previous quarter, including the results from foreign currency trading and other operating income decreased 8% in the quarter. Provision for loan losses increased 42% in the quarter and 220% when compared to the fourth quarter of 2024. Deterioration that was mainly focused in the retail portfolio in which NPLs rose to 14.3%, up from 3.2% recorded at the end of the previous year, particularly affecting personal loans and credit card financing. Personnel expenses reached ARS 178 billion and were 50% lower than in the previous quarter as during that period, losses for ARS 181 billion were recorded due to the restructuring plan following the acquisition of HSBC business in Argentina. Administrative expenses were 12% higher than in the previous quarter due to a 13% increase of taxes and to a 23% increase in expenses for maintenance and repairment of goods and IT. Other operating expenses increased 10%, mainly due to a 68% higher charge for other provisions. The income tax charge was positive as the pretax net income was a loss. The bank's financing to the private sector reached ARS 21 trillion at the end of the quarter, down 2% in the quarter with peso financing decreasing 1% and dollar-denominated financing down 5%. Deposits reached ARS 26 trillion, 4% higher than the quarter before, mainly due to a 6% increase in dollar-denominated deposits. The bank's estimated market share of loans to the private sector was 14.3%, 50 basis points lower than at the end of the previous quarter, and the market share of deposits from the private sector was 16.2%, 20 basis points lower than in the third quarter of 2025. The bank's liquid assets represented 93.2% of transactional deposits and 59.4% of total deposits, similar levels to those of the previous quarter. As regards to asset quality, the ratio of non-performing loans to total financing ended the quarter at 6.9%, recording a 110 basis points deterioration as compared to the 5.8% of the third quarter. As I mentioned before, the deterioration is mainly related to the personal loans and credit card financing portfolios. At the same time, the coverage with allowances reached 97.4%, down from the 101.5% recorded a quarter ago. As of the end of December 2025, the bank's total regulatory capital ratio reached 25.2%, increasing 310 basis points from the end of the third quarter, while the Tier 1 ratio was 25.1%, up 330 basis points during the same period. In summary, during the fourth quarter, financial margin partially recovered and efficiency improved, but still asset quality and the monetary loss due to inflation had a significant impact on profitability. Despite this, Grupo Financiero Galicia was able to keep liquidity and solvency metrics at healthy levels, and we expect an improvement in profitability during 2026. Now Gonzalo Fernández Covaro will make some additional remarks. Thank you. Gonzalo Covaro: Thank you, Pablo. Hi, everyone. Well, looking ahead, I mean, we believe Argentina is entering in a phase of stability, more predictable policy framework and renewal potential for great growth. As normalization continues and structural reforms advance, the banking system is expected to play a central role in supporting investment, productive activity and the long-term economic development. So we see a positive trends for the future for the country. Talking about 2026 specifically, we see inflation a bit higher than our first estimation, now at 23% and GDP growing at 3.7%. We're keeping our projections of 25% loan growth for the year, but we see slower pace at the first half and accelerating in the second half, that could put some pressure to our revenues. As we said in prior calls, we expect NPLs in the bank to have their peak in March '26. So during March to be -- to with the peak, but the cost of risk, we are seeing that we already had the peak in the fourth quarter of 2025, and we started to see credit losses charges to the P&L to decrease in the first quarter of 2026 in the bank. In Naranja X, same trend, but with some slower pace, but also same trend. We expect to have the benefit of the restructuring made last year after the HSBC acquisition and to continue to improve our efficiency ratios and to capture those positive effects during 2026. We are keeping our ROE guidance for 2026 in the low-double-digit range, I would say, between 10% and 11% going from low to high during the year. And regarding dividend payments, we are proposing a payment of ARS 190 billion, which ARS 40 billion are subject to Central Bank approval as usual. So with that, I mean, we are open for questions. Operator: [Operator Instructions] Our first question is from Mr. Brian Flores with Citi. Brian Flores: Gonzalo, Pablo. Gonzalo, just a quick follow-up on the 2026 guidance. So basically, you're maintaining around 25% real year-over-year growth in deposits should be a bit lower. I think the last notion you provided was around 20%. So I just wanted to confirm if these ranges are still value. Gonzalo Covaro: Yes, we said deposit between 15% and 20%, but close to not material changes, I would say. Brian Flores: And then something that caught our attention here is that we saw a strong maybe revision of the growth strategy, right? Because you were growing very fast in the first 3 quarters and you slowed down significantly in the last quarter. Just wanted to check if you have changed your focus on growth, if we should see maybe Galicia losing a bit of market share in 2026 as this asset quality is digested? Or do you think you will defend and keep it steady during 2026? Gonzalo Covaro: No. I mean our goal is to keep market share and also increase it -- try to increase it. But I would say that maybe at a slower pace, as I said before, in the first half and accelerating in the second half. I mean, in the last quarter, yes, I mean, you saw mainly a slower pace in the consumer lending. We still in the same scenario in the first quarter. But until we see that it is the right time to accelerate again, that will be, we assume later in the quarters. But in the whole year, we expect really to defend market share and to grow market share. In terms of commercial, we have lending, we have been seeing some lower demand from customers. But there, as you know, our NPLs in the commercial portfolio in the wholesale portfolio are okay. But we are working with our customers and trying to accelerate commercial lending where we see also a lot of opportunities. But to summarize the answer, the idea is to continue protecting defending market share. And -- but as we said, we see lower growth in the first half, I would say, and higher growth in the second half of the year. Brian Flores: If I may, just a very quick follow-up. So in terms of potential catalysts, do you think the recovery could come more from the macro filtering to the micro, or do you think regulatory -- this is more on the regulatory side than on the economic side? Gonzalo Covaro: I would say that the macro should start accelerating impacting the micro. That's something that we haven't seen maybe last year a lot. But we are expecting that the macro -- I mean, I think it's a combination. We, of course, expect the macro to start accelerating the micro at some point, and we believe that the government should take measures to do that because it's what country needs. From regulatory side, I mean, we don't know what will happen. So we are not betting on changes on the regulatory side. Of course, at some point, they may come, but that's something that we cannot manage. So we are not betting on that one. Operator: Our next question comes from Tito Labarta with Goldman Sachs. Daer Labarta: My question, you mentioned already provisioning levels should begin to come down in 1Q, although this quarter was a bit higher than expected, and we're still seeing that deterioration in asset quality. I guess how quickly can it come down? And what does give you that comfort that you maintain the loan growth guidance, but that credit quality should improve sufficiently to be able to grow at a faster pace in the second half of the year? Is there anything that you need to see? Or do you think it's just getting through the cycle another quarter or 2 and things should get better? Or any other -- any risk to that? Gonzalo Covaro: I mean, of course, that's something that we are assessing and monitoring. Anyway, still 25% is lower than the pace that we have been coming in the last year. So it's a deceleration from what we were coming -- so it's not that we keeping the growth of the prior years. But I mean, it's -- we think that is part of the cycle, as you said. We are starting, of course, to focus in different scores and different segments and that's where we're focusing so far our growth, and that's starting to show. Of course, it's lower than what we were happening in the first half of last year. But we believe that 2 things. First, the cycle is going -- is passing. And also, as I said to Brian before, we believe that the -- at some point, the economy, the current economy -- the growth in the economy should start impacting the micro, and we should start seeing activity to rebound in different sectors. And we should see not in every sector, but we, of course, are monitoring niches of customers and groups of customers where we will focus. So we believe that, that should come. Of course, that if the economy doesn't impact the micro and we don't see growth impacting the activity, well, of course, that would be more difficult. But we expect that, that should happen, and that's where we are seeing the growth -- that's why we are maintaining the growth. Daer Labarta: Okay. No, that's helpful. And just on the cost of risk because it was a little bit elevated, you compared to the last quarter, and you said it should, I guess, beginning to improve already in 1Q. But how -- can you get back to the low-double-digits, high-single-digits maybe by the end of the year? Just sort of what kind of magnitude of improvement should we expect from here on the cost of risk? Gonzalo Covaro: Cost of risk, we are seeing to end the year 8%, I would say, for the 12 months of the year of 2026. The last quarter was -- I am talking about the bank. Last quarter was 12.5%. So we are expecting that -- and the year was like 10%, 10.5% this year -- sorry, 2025 full-year, 12.5% in the last quarter, which is the highest, and we expect to end '26 in 8%, that would be the projection we are managing, and we started to see that in the -- we made some updates of our models, the variables, as you know, you need to do every year. In the fourth quarter, that contributed also in the growth of the charges. So that's done, and we don't expect -- we expect that our next update that we need to be making by the end of this year won't be increasing charges. So that also explains the peak on the last quarter. Operator: Our next question comes from Pedro Offenhenden with Latin Securities. Pedro Offenhenden: I wanted to ask on cost. Should we expect some restructuring or acquisition or integration costs throughout the year or the one-offs are largely behind that? Gonzalo Covaro: One-offs are largely behind, as you said. We continue, of course, looking for the right size of the organization and trying to make our organization more efficient. So we may see some things here and there, but nothing material or that will be treated as one-off as last year. So from now on, everything we do is part of our normal operations. So we won't have any big impact like the ones we had last year. Pedro Offenhenden: And do you have some target on efficiency or administrative expenses growth for the year? Gonzalo Covaro: I mean we expect to see -- I mean, a reduction of around 10% to 11% year-over-year, excluding the one-off of last year. Nevertheless, if you consider the one-off of last year, the reduction will be higher. But excluding the one-off in the expense line of last year, we see a reduction of around 10% to 11% year-over-year, and we see efficiency a bit below 40% for the year. Operator: Our next question comes from Yuri Fernandes with JPMorgan. Yuri Fernandes: No, very briefly on margins. If you can help us understand a little bit the trajectory because I guess the risk-adjusted message is clear, right? This was likely the peak and NPLs still could deteriorate a little bit in the first quarter, but the cost of risk is lower. But I'd like to understand the margins because if your cost of risk improves, maybe we could see better risk-adjusted NIMs this year. So maybe just asking, could we see more stable or not? Like what is the view given the mix shift towards commercial lending? And then my second question is regarding -- I think like there are 2 big debates in Argentina, right? One is the ROE recovery -- and the second one is growth, right? Like when growth will pick up, like could we see more than 20% real growth or not? How confident you are on those 2? Like if you were to pick just one for 2026, are you more comfortable that ROEs, they should recover to more normalized level? Or are you more comfortable with growth? Gonzalo Covaro: Okay. Let's go. I think the first question was NIMs. I mean we see -- as you know, the last 4 quarter, we saw December NIMs recuperating. Remember that October, November were still recovering from the higher -- the spike in interest rates of the elections period. We see the first -- for the year, we see around 16.5% the margins for the bank. Total margin for the bank 16.4%, maybe starting a bit higher around 17%, 18% and ending in 16% during the year. But on average for the year, with the mix we are expecting, we see margins around 16.4% for the year. I mean talking about growth and ROEs, I mean, I would say that we are, I would say, determined to protect our share in the market. So we are focusing a lot in -- I mean, it's difficult to answer which are -- with the ones are more sure in an economy that is still recovering and that we still depend on the economy evolution for the growth, of course, I mean, we need the economy to grows as expected and that the macro impacts the micro as we were saying before, and that families should salaries in real terms starts to recovering, which we expect that to happen, but it's something that we depend -- so it cannot be guaranteed. So I would say that our guidance is -- we maintain the guidance because we believe we can achieve both. But of course, we depend on the -- how the economy evolves and not having any surprise like we have, for example, last year in the third quarter with the interest rate spike or stuff like that. I would say that still, it depend on inflation. Remember that inflation accounting for Argentine banks is a big thing. The lower the inflation comes and interest rates goes down, I would say that in relative terms, the higher the impact is when we compare with other banks in the region, for example, because at some point, we may end with an inflation of 15% or 12% and still booking inflation accounting, where other countries with 8% inflation are not booking it. So -- and if you see, it's a big portion of our P&L. So at some point, when that disappear, I would say that hopefully, in 2028, that will help the Argentine financial system to improve ROE significantly. But on top of that, I would say that we can get to ROE levels above 15% next year. So low-double-digits this year, but including inflation accounting, we can achieve above 15% next year. And after 2028 without inflation accounting, I would say that the consolidation of the higher ROEs will be easier and more stable for the banks in Argentina because you won't have that drag on the inflation accounting that as you know, it's a big burden for us. So in summary, I would say that we are -- we think that we can maintain both. But of course, in both cases, we depend on how the economy continues also in the growth in the top line, but also in the NPLs and the cost of risk that, of course, we are counting this to continue to improve because we see the economy growing and the families to -- with enough disposable income, et cetera, et cetera. Yuri Fernandes: If I may, just on the growth, just to touch on deposits. I think the guidance is 15% to 20%, right? Can you break down dollar and pesos on this? And I don't know like we have another tax kind of flexibilization, right? Like the dollar under the mattress kind of the date. Can this be helpful for deposits to grow this year? So just checking if funding could be another part of the equation for growth. Gonzalo Covaro: Yes. I mean regarding the dollar deposit growth, we may see something with this change in the legislation. We don't expect to be as high as the prior effect that we had with the Tax Amnesty that we have between last year and the year before, but some effect it may have. Remember that today, our dollar deposits are almost half of our deposits. Our goal, of course, is to get more profits out of the dollar. So we are seeing how to get more margins on those. I mean, trying to increase the dollar lending. But as you know, we have some restrictions in terms of who we can lend, but that's something that we are focusing a lot because it's increased. I don't know, Pablo, if you remember the growth divided by dollar deposits and peso deposits? Pablo Firvida: It was -- basically, we concentrated in the peso one around 20%. Dollars is more sensitive to political environment, this type of legislation, as you said. And as we are not really making a good profit on dollar deposits we really don't pay that much attention in a way. We forecast more the peso financing and funding more than the dollar one that perhaps is also -- we cannot manage it as much as the peso funding. The peso was 20%, the dollar, I think it was something like 15%, but they take it as a bulk number. Operator: Our next question comes from Mario Estrella with Itau. Mario Estrella: Well, I guess you already answered with the evolution for the next quarters. I believe well, the next quarter is going to be relatively better than 2025, going from lower ROE to higher as we move towards the end of the year, right? And I understood that the drivers for that, of course, is going to be less pressure on the cost of risk side. But because, I mean, the full quarter results, I mean, in terms of NII, I believe they weren't that bad, I would say. So my question is, I mean, with the inflation trend that we've seen, the first quarter was more inflationary than expected. I mean, what are the downside risk that you see for your guidance if inflation keeps surprising in the upside right? Taking into account that monetary correction loss that the fourth quarter was actually higher than in the third one, right? So that kind of shows you the potential downside risk that we can see from much inflation -- for more inflation, right? Gonzalo Covaro: Yes. I mean the downside, of course, as you just mentioned, is more inflation that, of course, affects our balance sheet. So that could be -- if inflation is higher than expected, that could be a downside. And I would say that we are focusing all our efforts in improving the cost of risk. As you can see easily from our results, margins are okay. I mean costs are okay. I mean, efficiency, but of course, that the thing that is putting some sticks in the wheel for profitability is the cost of risk. So that's main focus we have. So I mean -- and that, of course, is for the good and for the bad. I mean we have a lot of room for improvement there. But also if the improvement is lower than we will see an improvement. I mean that we cannot guarantee anything, but my point is we are seeing the improvement. I would say that the risk could be that the improvement is at a slower pace than expected, and that could impact results, not getting the improvements in as fast as we expect during the year. I would say that could be a downward risk that we're facing. We -- so far, January, we came what we are expecting. But of course, the year is long, and we depend on a lot of things on how economy evolves, et cetera, et cetera, that I mentioned before. So on the other hand, top line is important. I mean even though margins are still healthy, we depend, of course, in growth and growing the top line. And of course, that if we don't see the demand of lending because the economy has any deceleration or whatever, well, that could also -- I would say that both -- those 2 could be downward risks. It's not our base case. We are not -- we are expecting that the economy should help on that. But of course, those 2 are downward risk. In the cost side, I think we are okay. We have done a good job in restructuring. As you know, last year, more than 2,000 people from the HSBC acquisition. Of course, we continue to look for more alternatives to continue to improve efficiency. So we continue in that work to always find and adjust the rightsizing of the organization. But I think those are more predictable or manageable by us. The other 2 top line and NPLs, of cost of risk. In our base case, those should come as expected. But of course, if we have different evolution of the economy and also as we were discussing before, how the macro impacts in the micro, we need to start seeing the economic activity in more sectors moves faster. Well, that could be a downward risk, of course. Mario Estrella: I understood that the ROE evolution for this year will be something around high-single-digits. And then 2027 something around 15%, right? I mean, based on improvement in asset quality, right? Is that right? Gonzalo Covaro: Yes, yes. This year, we're saying low-double-digits or high single is close. So you're right? But the idea is between 10% and 11% this year and next year, around 15% or above and to stabilize those in 2028 without inflation accounting. But what you are in the spot of what you just described, yes. Operator: Our next question comes from Bruno Kenji with UBS. Bruno Kenji: It would be a follow-up regarding the recovery that you expected for results next -- this year. When we look to Naranja X and lower ROE levels that we saw in those fourth quarter results, should the recovery on the metrics such as NPL and cost of risk be on the same pace of the bank or it could have a little delay in terms of the recovery? And if that and also reflects on the ROEs, do you think that there might be a lower acceleration of loans considering the portfolio of Naranja X for the first half and then an opportunity to have a quicker recovery in second quarter if the economies have some space for personal loans and retail when we compare to the bank? Gonzalo Covaro: Yes. I would say that we are seeing improvements in NPLs at Naranja X, albeit at a slower pace than the bank. Nevertheless, that what we are seeing, but still expect also improving during the year. And the scenario -- the growth scenario is similar to the bank. We are seeing also higher growth in the second half. As you know, we still are stabilizing the portfolio in Naranja, which is, of course, 100% consumer, so we don't have a commercial portfolio to go there. But we are growing, of course, selectively growing, but at a slower pace during the first months of the year, and we expect us in the bank to regain as we stabilize the portfolio, regain the growth, the faster growth. We will grow, of course, but the faster growth closer to the midterm of the year or something like that. Operator: Our next question is from Santiago Petri with Franklin Templeton. Santiago Petri: Can you help us understand in which segments are you expecting to grow this year, this 20%, 25%? Is it commercial, consumer? And within commercial, which sectors do you see that you can lend to? Gonzalo Covaro: I mean we are growing -- I mean, I would say that we were growing in the first half. Today, the mix is more 45% consumer, 55% companies in the toll in the bank, our mix. I would say the first half, we are focusing a bit more in commercial. So maybe by the end of the year, we will maybe 60%-40%. So this year, we may see more growth in the commercial and the consumer. But of course, we are growing -- we are going to grow both portfolio, but more towards the commercial portfolio, mainly because in the first half, we are -- as well, we are lending at a higher pace than in the consumer side, as I said before. In the commercial portfolio, of course, we are picking segments, I mean, that are less affected or not affected by the change in the economics or the imports opening and everything we know that it is suffering. We are strong and we are focusing a lot in the agribusiness. As you know, we are one of the main banks in that sector, and we continue to do that and our expectations in this year to continue strongly there. We are also lending in the oil and gas sector, not just the big loans, but because that's local bank doesn't have the balance sheet, but also all the supply chain and all the value chain in oil and gas. In mining, we are also making deals with supply chain in that sector. We see -- we also see the automotive industry doing okay. So we are also focusing on that and part of the value chain. So we have different -- we divided our wholesale operations in verticals. We have oil and gas, we have automotive, we have agribusiness, and we are going through all the value chains. We see commerce, retail commerce that at some point, some sectors not doing that good. So we are not growing in those ones. But we are doing a very good and deep analysis in which sectors we believe that are going to be the winners in these changes that the economy is doing or at least in this transition. And the sectors I mentioned are ones that we see growth and there are others like technologicals and a lot of SMEs that do services, provide services that we see them strong that we are also helping them in the growth path. So we see room for growth in the commercial portfolio. Of course, that, as you know, there are sectors that are not doing good, and we have them very clear, and we are not growing those ones. Santiago Petri: A follow-up, if I may. There are some conversations or I don't know how to name it, about the possibility of banks expanding their U.S. dollar lending to non-U.S. dollar revenue-generating entities. Is this something that you see with, are you comfortable with this change in regulation? Gonzalo Covaro: I mean, two things. Regulation could change then we'll see if we apply or we use it or not. I mean, I would say that for us, that would be on a very cautious way. We don't believe that going massive in lending dollars to non-dollar producer will be something safe. So of course, that will be more focused in the Commercial side, the Wholesale side. And if we have big local companies that are very strong or international, but big companies that even though they are not dollar producer, we see that they could -- they are a devaluation or whatever, well, that would be on a case-by-case basis. But we are not seeing anything massive that we will start lending massively if the regulation change massively to non-dollar producers. So my answer would be, we will evaluate it cautiously and do it on a case-by-case basis, but nothing massive. At least is what we are seeing now with this year, with the -- how the economy is evolving in the future, if Argentine start being more dollarized or how the dollar start being more important in the daily trading, well, we may change our mind. But so far, our first reaction is that if this happen, we will do it on a selective basis and cautiously basis. Operator: The question and answer session is over. We would like to hand the floor back to Pablo Firvida for the company's final remarks. Pablo Firvida: Okay. Thank you, everybody, for attending this call. As always, we are available if you have any further questions. Good morning and good afternoon. Bye-bye. Operator: Grupo Financiero Galicia conference is now closed. We thank you for your participation and wish you a nice day.
Operator: Good morning, and welcome to PROREIT's Fourth Quarter and Annual Results Conference Call for Fiscal 2025. [Operator Instructions] For your convenience, the results release along with fourth quarter and fiscal 2025 financial statements and management's discussion and analysis are available at proreit.com in the Investors section and on SEDAR+. Before we start, I have been asked by PROREIT to read the following message regarding forward-looking statements and non-IFRS measures. PROREIT's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements or other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors may cause actual results, level of activity, performance, achievements, future events or development to differ materially from those expressed or implied by the forward-looking statements. As a result, PROREIT cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PROREIT's MD&A dated March 4, 2026, available at www.sedarplus.ca. Forward-looking statements represent management's expectations as at March 4, 2026, and except as may be required by law, PROREIT has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The discussion today will include non-IFRS financial measures. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the fourth quarter and fiscal 2025 earnings release and non-IFRS measures section of the MD&A for fiscal 2025 for additional information. I will now turn the call over to Mr. Gordon Lawlor, President and Chief Executive Officer of PROREIT. Please go ahead. Gordon Lawlor: Thank you, Sylvie. Good morning, everyone, and welcome. Joining me today is Alison Schafer, our CFO and Corporate Secretary. Zach Aaron, Vice President of Investments and Asset Management, is not joining us today as he has a new bouncing baby girl as of last week. Congrats Zach and Julia on his proud new parents. I'll begin with an overview of our fiscal 2025 and fourth quarter performance before turning the call over to Alison for a more detailed review of our financial results. We're very proud of our performance in 2025, which marked a major milestone for PROREIT as we completed our transition to a pure-play industrial REIT focused on small and midday properties. I want to commend our entire team. Achieving this strategic objective established 3 years ago reflects the disciplined execution and commitment of our employees. Over the course of the year, we repositioned our portfolio, strengthened our balance sheet and enhanced the overall quality of our platform to support sustainable long-term growth. At year-end, our portfolio comprised 105 investment properties, totaling 6.4 million square feet of gross leasable area. Weighted average lease term to maturity was 4.3 years compared to 3.8 years at the same time last year. In line with our capital recycling strategy, we sold a total of 17 noncore properties during the year for gross proceeds of $71.2 million. We also acquired a portfolio of 7 high-quality industrial properties in Winnipeg, Manitoba from Parkit Enterprise, Inc. for $101.9 million. By the same token, we struck a strategic partnership with Parkit to pursue future growth opportunities. As part of the transaction, we also successfully raised $42.1 million of equity, further enhancing our financial flexibility and positioning the REIT for future growth. As of year-end, industrial assets represented 90.5% of our base rent compared to 80.8% a year ago. The enhanced earnings profile of our industrial-focused portfolio is reflected in our financial performance. NOI rose by 9.6% in the fourth quarter and 8.4% for the year despite owning 10 fewer properties. Turning to the portfolio transactions during the year. We completed the sale of a noncore office property located in St. John, New Brunswick, totaling approximately 51,000 square feet for gross proceeds of $7.2 million. We continue to manage that property on behalf of the purchaser. And the sale of our noncore retail property in Rocky Mountain House, Alberta, totaling approximately 5,000 square feet for gross proceeds of $400,000. Net proceeds for these sales were used to repay related mortgages, credit facilities and for general corporate purposes. Leveraging our partnership with Parkit, we purchased an industrial property in Winnipeg from them for $5.4 million as we continue to increase our presence in this market. Purchase price was financed through $3.2 million of the non-revolving credit facility and approximately $2.1 million of PROREIT equity priced at $6.20 per unit to Parkit. Subsequent to year-end, we engaged in 2 additional transactions. First, we sold our 50% interest in a noncore industrial property in Dartmouth, Nova Scotia, totaling approximately 65,000 square feet with our share of gross proceeds of $5.7 million. Second, we're in the process of acquiring a 100% interest in a single-tenant 2024 built 10-year leased industrial building in Milton, New Brunswick, totaling approximately 60,000 square feet of GLA for $12.3 million. Our focused presence in robust secondary markets continues to deliver compelling results. According to CBRE, our core markets of Halifax, Winnipeg and Ottawa all outperformed the national average in terms of market rent growth in 2025. Turning to leasing activity. Our leasing momentum was sustained throughout the year, driven by contractual rent escalations as well as stronger renewal rates and higher rents on new leases. As of today, we've secured 80.1% of GLA maturing in 2025 at a positive average spread of 34.2%. Excluding the St. Hison property, which I'll address shortly, we've renewed 95% of our 2025 GLA. We've also secured renewals on 68.2% of GLA maturing in 2026 at a 33.8% positive average spread, reflecting one of the strongest leasing cycles at this stage in our history and providing meaningful embedded growth heading into 2026. This includes, among other transactions, 5 leases renewed starting in 2026 with rent increases ranging from 40% to 45%. Overall portfolio occupancy was 95.4% at year-end compared to 97.8% a year earlier. As noted on previous calls, our occupancy rate was impacted by a single vacancy in a 176,000 square foot property located at 6375 Picard Street in Saint-Hyacinthe Quebec. On February 27, we entered into a nonbinding offer to lease for approximately 74,000 square feet at this property to a new tenant for a term exceeding 10 years at a market rent. Subject to the completion of the binding lease, rent commencement is expected mid-2026. Including this property, our portfolio occupancy would have been approximately 98.1% at year-end. With that, I'll now turn the call over to Alison. Alison, over to you. Alison Schafer: Thank you, Gordie, and good morning, everyone. We are pleased with our fourth quarter and full year results. In the quarter, property revenue totaled $26.2 million. That's up 5.4% year-over-year despite owning 10 fewer properties. The increase is mainly driven by contractual increases in rent and higher rental rates on lease renewals and new leases. For the full year, property revenues amounted to $104.1 million, up 4.9% year-over-year. Net operating income, or NOI, was $16.1 million, an increase of 9.6% compared to last year due to the same factors. For the full year, NOI amounted to $63.4 million, which was up 8.4% year-over-year. Fourth quarter same-property NOI, representing 98 of our 105 properties reached $14.1 million. That was up 8.1% year-over-year, driven by robust 9.1% growth in our industrial segment. The increase reflects contractual rent escalations, stronger renewal rates and higher rents on new leases. This was achieved despite a decline in overall average occupancy related to the single tenant vacancy Gordie mentioned earlier. For the full year, same-property NOI reached $53.0 million, up 8% year-over-year. Our funds from operations, or FFO, amounted to $7.8 million for the quarter, which was up 14.3%. This was driven by increases in contractual base rent, higher rates on renewals and higher rental rates on new leases. This was offset by an increase in interest and financing costs. Basic AFFO payout ratio was 99.1% in Q4 compared to 96.1% for the same quarter last year. This is primarily driven by the timing of the sale of 17 properties we completed in 2025, an increase in interest and financing costs and the issuance of equity in connection with the Parkit transaction in Winnipeg. We expect improvement on our payout ratio, creating some financial flexibility and some room for future acquisitions. The weighted average capitalization rate of our portfolio was stable year-over-year at approximately 6.7% at December 31, 2025. Moving on to our balance sheet. Adjusted debt to annualized adjusted EBITDA ratio came in at 9.0x at December 31, 2025. That was down from 9.2x at the previous year-end, while our adjusted debt to gross book value decreased to 48.8% from 50.3% at the same time last year. Our midterm goal is to reduce our adjusted debt to adjusted EBITDA ratio and adjusted debt to gross book value further as we continue to grow the business. At year-end, our total debt, including current and noncurrent portions, totaled $525 million compared to the $531.1 million at September 30, 2025, and $499 million at December 30, 2024. Looking at our upcoming maturities. In 2026, we have $157.1 million maturing. We are actively engaged with lenders on these maturities and expect to secure refinancing on competitive terms with robust refinancing proceeds. In 2027, we have another $48.7 million maturing, mainly tied to high-performing industrial assets in Burnside Industrial Park. And for 2028, we have $59.8 million of maturities. The weighted average interest rate on these mortgages is 3.7% for 2026. 4.8% for 2027 and 3.5% for 2028. Finally, our distribution of $0.0375 per unit was maintained for the fourth quarter of 2025. That wraps up our financial review. Gordie, back to you for closing remarks. Gordon Lawlor: Thank you, Allison. We're entering 2026 with a clear strategy and a focused industrial platform, supported by disciplined financial management. Our priority remains the pursuit of high-quality opportunities aligned with our prudent value-driven approach to growth. Fundamentals across our small and midday portfolios remain healthy, and we're seeing signs of improving market conditions as we move through 2026. With this strong foundation, we are well positioned to strengthen our leadership position in the Canadian light industrial sector and create sustained long-term value for our unitholders. Thank you. Sylvie, back to you for the question-and-answer period. Operator: [Operator Instructions] And your first question will be from Sam Damiani at TD Cowen. Sam Damiani: [Operator Instructions] Just on your comments, Gordie, and I guess, Allison, too, just with the NOI growth being very strong and you're seeing improving market conditions as you enter the new year, your leverage did tick down below 49% with the asset sales that you've completed. I mean, are you seeing a better path, an easier path, I guess, to bring that leverage toward those midterm targets now than, let's say, was the case a year ago? Like are we -- should we be building in some expectations for that leverage to stay further below 50% going forward? Gordon Lawlor: Thanks, Sam. I think where we are right now, I mean, I like us being around the 50%. I know we have that 45% target -- to [indiscernible] fully get there, we need to tie it into a larger deal with some equity. So really, what we're focused now is just staying around the $50 million. When we talk about where we are, I mean, we have room for about $40 million in acquisitions right now, and we'd like to see if we could execute on that. We announced a $12 million -- great $12 million asset here. So probably room for another $25 million or $30 million. So you'd probably see that before we focused on the debt reduction. We've been so focused on the debt reduction since 2022, and we just want to have this opportunity. We see a lot of assets right now in the market. So there's some opportunities here to add about another $40 million to the math. And then we're still mindful of the 50%, we wouldn't go above that other than if it was on a short-term basis or anything. But the 48.8% is where we ended up the year, but we'd probably pick that up a little bit if there were some good acquisitions. Sam Damiani: That's helpful. Just looking at the lease expiry schedule, you've got 17% expiring in 2027. I assume the government is a decent chunk of that. I mean, do you have any early prospects on extending those? Are there any larger expected departures within that cluster of leases? Gordon Lawlor: I mean we're reaching out to everybody in 2027. It's a little early on that basis. We have no real inclinations of any big spaces coming back at this point in time for 2027. And we have A big chunk of that is under market rent as well. So we don't really have a negative view of anything on as far as 2027 goes at this point in time. But obviously, we're just getting going on it. Sam Damiani: Okay. All right. That's helpful. Last one for me, just on Picard Street and St. Haison. You've got, I guess, that lease that's almost across the finish line. I'm just wondering what's left to finalize there with that? And also any update on prospects for the remaining 100,000 square feet of that property? Gordon Lawlor: Yes. So I mean I just signed the LOI like Friday night. So that's fresh, but we've been dealing with this tenant for 3 or 4 months. So we're well through that. We're crossing lease drafts and things like that. And if all things move well, they'll be into the building in April for some setup of some work to be done. So it's nonbinding, but everybody in good faith is working towards this one. It seems like a very good group we have here. So -- and backs off for a couple of weeks. So it's landing on my plate. So pushing it through to get it across the line, obviously. And as far as other prospects, nailing that piece down, if you were to look at the building, that's the half of the building facing the 20, the TransCanada Highway there. That leaves another 100,000 in the back of the building. There's good shipping in the back right of that building and then a little bit of shipping in the back bottom of the building. So it can be split in 2 more pieces. We're in initial discussions with another 60,000 square foot tenant right now, maybe short-term or midterm type storage. opportunity on one piece of the space without having to do anything to the building. But literally, we just started that this week because we've kind of secured the other piece. Sam Damiani: Okay. And you're getting rents that's sort of in line with the kinds of numbers you were talking about last quarter? Yes, higher than 9%, lower than 11%. Operator: Next question will be from Mark Rothschild at Canaccord. Mark Rothschild: Just following up on the discussion of same-property NOI growth and leases. You started answering or talking about 2027. To what extent do you believe that this wide leasing spreads that you're achieving will continue past 2026? Gordon Lawlor: So we have 5-year cash flow, Mark. I think we told you that before. So we still see the 7% to 9% cash flow growth across '26, '27 and '28 at this point in time when we -- when you get out to '29 and '30 and you're 4 and 5 years out, you're in other leasing assumptions and terms. But we see good strength for '26, '27 and '28 for sure. Mark Rothschild: When you just say cash flow growth, do you mean same-property NOI growth? Or do you mean actual cash flow FFO? Gordon Lawlor: Cash flow FFO. Mark Rothschild: Okay. Great. And maybe just one more for me, quite a bit of debt maturing this year. Can you just give a little more clarity on what rates you're seeing now and what we should expect based on the current market? Gordon Lawlor: Yes. I mean it's a great time to have debt coming due it seems other than all the terrible things going on in the world, like 3 lenders are a big piece of that. We're trying to secure some of that now. We've got good competition among the lenders. So I think we'd be -- and we just signed a $29 million 7-year brand-new piece with a new lender at $158 million over 7 years. So I mean that's a pretty solid rate for us. I think $155 million over is the best rate we've ever had on a margin basis. So I think we'd be -- depending on when we pick the terms, we're trying to break this $150 million up in the next number of years. So we may take some 3-year piece of this some 5, obviously, and then there was an attractive 7% here. So we're trying to split this one up a little bit more. We bought $300 million of assets in '21, which got us to the point where it was mostly all 5-year money that was available then. So we're trying to split that up. So the long story short, I'd say we'd be at about 4.5% on all of it. We'll probably get some 4.3s and then 4.6s is for the longer-term stuff. Operator: Next question will be from Brad Sturges at Raymond James. Bradley Sturges: Just maybe switching gears a bit. The asset sale that you completed to start the year in Halifax, just curious to get a bit more color in terms of the decision around or what drove that decision to sell that asset? Is it kind of a one-off? Or do you see potentially more rebalancing within the industrial portfolio? Gordon Lawlor: Yes, that's give or take, a one-off. I mean that's a joint venture asset with our partner who has a view on the portfolio, obviously. This asset was a little lower ceiling height than the rest of it, kind of orphaned in a different spot in the park. And so which we agreed with at the time just because I've known the asset for several years. We've got it secured now with some longer-term leases, so kind of full value. So I thought it was a good time to see if we could sell it. And we sold it just a slight premium above our IFRS value. I think it was $175 a foot or something like that. So we don't have significant discussions with towing of assets out of the JV. I mean we sold a small $3 million, $4 million retail asset, that type of thing. So it's just calling on the edges more than a sale program on the JV entirely, Brad. Bradley Sturges: Great. And can you comment on what the exit cap rate might have been? Gordon Lawlor: Don't exactly know. I would say it would have been slightly below 7. I don't have Zach here today with the math on it. But it was -- I'd say it would have been just below a 7 from 3 quarters perhaps. Bradley Sturges: And then obviously, you bought something in Moncton. Maybe just expand on the opportunity you see there with that acquisition. And then maybe what else could be in the pipeline from an acquisition opportunity? Gordon Lawlor: Yes, that's an asset, brand-new build asset that we've been monitoring. I think we gave our first offer on that back in April of '24, and we couldn't agree on a price. So it came up again, there was a rent step that happened, which made it easier to make the math work. So that was just a one-off asset that we've been watching and saw it being built and leased, and we like it a lot, and that's a long-term hold for us. As far as other assets, the -- publicly, the RFA Artis has 1.2 million square feet portfolio came out here a month ago. There's Winnipeg assets in there, which is obviously be of interest to us. I bid on an asset in single-tenant asset in Quebec City last week, just a quiet offer. So there's -- like there's a couple of million -- hundred million of real estate kind of sitting around my desk that we're getting quiet looks at or things like that, that some of it will stick. So it's a very interesting time actually. It seems like things are loosening up, and we're going to see some real estate come on here in the next 6 months, which is positive. Operator: Next question will be from Tal Woolley at CIBC Capital Markets. Tal Woolley: Apologies if you answered this before, but just any significant dispositions planned for 2026? Gordon Lawlor: No, not for 2026. We're I just looked it out and can't keep track of what's coming in and out the door anymore. Alison Schafer: No, we don't have any. Gordon Lawlor: No, no, we don't have any plans. I mean what we have left on the retail basis is grocery anchored on our line of credit, honestly. So it's like, honestly, just a pain to sell it. You'd have to replace it with other things. We might have one more office building towards the end of the year, small office. You can figure that one out. And then we're still holding the 60,000 square foot Ottawa office building. That's got debt on it at 2.9% until 2029. Good solid asset. I think it's still 80% occupied. I think we leased a floor but there were some other tos and fros. So it's still performing very well. And we have no need to fire sale that. That's a good asset. So yes, nothing big planned at this time. Like I said, we're going to try to put a few more assets on the books here with a little bit of room we have and then let the cash flow growth to keep these buildings leased obviously. Tal Woolley: Got it. And then maybe you can talk just a little bit about -- there's been a lot of chatter around defense spending, and that matters a lot in markets in the East. I'm just wondering, are you seeing sort of anything really translate on the ground yet in terms of demand? Or how should we think about that tailwind maybe coming to the market over the next few years? Gordon Lawlor: Yes, I sat in on the Burnside leasing call Tuesday. Every 2 weeks, we have a detailed call where you go through every 2,000 feet. It is a bit painful, but and Zach's absence. I think there's some RFPs out there for some larger space and that I go around the country talking about the defense spending, too. I think where it will help Halifax is the construction around all of that. That's what Burnside is construction related. They're going to let more people back in this country again, and they'll land in Halifax as well. So I think it's really the defense spending because of what will go on around it versus a specific defense contractor taking space from our small base standpoint at least, right? So I think [Killam] would probably have that same view on that. I didn't listen to their call. But I think that's the piece of it. And then just the defense spending in general, I mean, we have 128,000 square foot leased in Canada, Ontario, that's Thales, a French contractor. That's related to the Halifax project, but they're in Ontario. So it's not specific to Halifax. It's just in general, it could help defense contractors across Canada taking more space, I think it will be helpful. Tal Woolley: Okay. And then just lastly on -- are you looking at any sort of developing more new nodes? I think it's something like Quebec City, where I think you've got one property right now. Any interest in building out other sort of nodes within the portfolio over the next couple of years? Gordon Lawlor: Yes. I mean Quebec City has been on my list for like 15 years. It's just been hard to buy there. And for those of you who have followed, you know that through the Cominar deal, Blackstone Pure has like 3 million square feet there. So we have an interest in getting into that market eventually as we think some of that real estate will come to fruition. So that's definitely an area that we're interested in. I've been on a single tenant building here just last week. The ask was ridiculous. So I don't suspect we'll get anywhere. But yes, we're cognizant of that market. We've been trying to understand the market rent in the last 3 to 6 months because the rents were pushed there for a while. And we think we've got that figured out now. So we're happy to look there a little more. Tal Woolley: Okay. And anywhere else across the portfolio, Western Canada? Gordon Lawlor: Yes. I mean I was out West. I was in Calgary for a few days last week, like the Calgary small Bay market, spent the whole day driving that. There's some big bombers there in Balzac area north, all very fancy, all very shiny, but kind of not our real estate. But the Calgary small Bay market seems to be doing quite well. I've got a trip plan to Edmonton in the next couple of weeks as well to just test that back out. So the concept, as I said, at the Board yesterday, if we're trying to get to $2 billion in assets, we have to look at some of these other secondary markets. If you call Calgary and Edmonton, secondary in Quebec City, you do, I guess. So yes, we're just looking at those opportunities to see if any of it fits in our wheelhouse. So it's an interesting time. Operator: [Operator Instructions] Next is Demon Liu at Desjardins. Unknown Analyst: So on 2026 lease maturities, so very encouraged to see the strong leasing spreads so far for almost 70% of those maturities. So do you expect to achieve similar spread for the rest of the 2026 maturities? And do you see any material nonrenewal risks? Gordon Lawlor: I think we're going to -- I mean, if I look back to '24, '25, '26 yesterday, we've had plus 30% across all of those years. we don't see any indication of that changing significantly. The 70% that's done, a big piece of that is -- I think it comes in, in September. It's about 325,000 square feet from single-tenant temperature controlled building. So that would be more September that we'd see that cash flow. I think we may get 80,000 square foot back in a building in Woodstock, Ontario, probably in Q2. That's just recent. That's great space. We've already got some interest in it already, some tours like just in the last number of weeks. So that would be the only thing that's hitting us right now, probably mid-Q2. Unknown Analyst: Okay. So lastly, just on the acquisition, like what's your acquisition pipeline look like this year and in 2027? And like which markets and type of assets that you are targeting, if any? Gordon Lawlor: Yes. I mean, so we're a small mid-Bay folks. So that's what we're targeting. I mentioned briefly, there's some Winnipeg assets in the market right now. We're going to look at that. Quebec City is an area that's of interest. It's 2.5 hours down the road from our head office here in Montreal. Halifax, we look more -- we have 35-plus percent of the market there with our partners. So no need to do too much unless there was something interesting there. We have room for about $40 million in acquisitions right now. And then we announced a brand-new asset, $12 million in Moncton at a 7 cap. So that's really attractive brand-new building for us. So it's just a mix of small and mid-bay assets around our regions. Ottawa is of interest. It's just hard to get assets there. So we're -- there's a lot of real estate that's going to come out, I think, here in '26. So we're going to be poised and looking at it all. Operator: Ladies and gentlemen, this concludes our question-and-answer period for today as well as the conference call. We would like to thank you for attending and ask that you please disconnect your lines. Enjoy the rest of your day.
Operator: Good afternoon, everyone, and thank you for joining OptimizeRx' Fourth Quarter and Fiscal 2025 Earnings Conference Call. With us today is Chief Executive Officer, Steve Silvestro. He is joined by Chief Financial and Strategic Officer, Ed Stelmakh; Chief Legal and Administrative Officer, Marion Odence-Ford; and Chief Business Officer, Andrew D'Silva. At the conclusion of today's call, I will provide some important cautions regarding the forward-looking statements made by management during today's call. The company will also be discussing certain non-GAAP financial measures, which it believes are useful in evaluating the company's operating results. A reconciliation of such non-GAAP financial measures is included in the earnings release the company issued this afternoon as well as in the Investor Relations section of the company's website. I would like to remind everyone that today's call is being recorded and will be made available for replay as an audio recording of this conference call on the Investor Relations section of the company's website. Now I would like to turn the call over to OptimizeRx CEO, Steve Silvestro. Mr. Silvestro, you may begin. Stephen Silvestro: Thank you, operator, and good afternoon to everyone joining us for today's fourth quarter and fiscal year 2025 earnings call. We delivered a strong fourth quarter, exceeding both consensus estimates and our internal expectations. Revenue for the fourth quarter was $32.2 million, and adjusted EBITDA was $12 million. For the full year, revenue totaled $109.4 million with adjusted EBITDA of $24.3 million. Our full year 2025 results clearly demonstrate the strength of our operating model and the significant opportunity within our market. We delivered solid top line performance across both our largest and most established clients and a growing cohort of newer customers, particularly in the mid-tier and long-tail life science companies. We view this segment as highly attractive, providing a meaningful runway to expand our customer base and deepen our relationships over time. At the same time, improvements in our product mix and channel partner strategy contributed to higher gross margins in 2025. When combined with cost optimization initiatives following the Medicx acquisition and the benefits of our largely fixed cost, highly scalable operating model, we more than doubled both adjusted EBITDA and free cash flow year-over-year. While we're pleased with our fourth quarter results, we are seeing softness in our year-to-date contracted revenue numbers as compared to last year. This is mostly driven by a previously communicated market shift away from managed services, which contributed a material portion of our contracted revenue in the first half of 2025. In addition, we believe some of our clients are adopting a more conservative spending tone in the early stages of 2026 as they adjust their portfolios to most favored nation pricing. We feel confident that the latter is a temporary phenomenon that will start to normalize in the course of the coming few months. Given this backdrop, we are updating our 2026 guidance and are taking a more conservative view on revenue while continuing to stay focused on profitability. For 2026, we expect revenue in the range of $109 million to $114 million and adjusted EBITDA between $21 million and $25 million. I also want to be clear, management and our Board believe there is still significant opportunity for value creation, particularly when examining the demand and operating leverage we saw in 2025. Indeed, fiscal 2025 demonstrated the strength of our profitable growth model. We achieved Rule of 40 performance, delivered adjusted EBITDA margins above 20% for the year and generated nearly $19 million in free cash flow from operations. Reflecting our confidence in the long-term value of the business, our Board has authorized a $10 million share repurchase program. We intend to finance the repurchase using our available cash and cash equivalents in open market or privately negotiated transactions. I'd also like to address some of the speculation and questions we received regarding artificial intelligence. Our business has experienced minimal disruption from AI, and we do not expect to be disrupted in the future. We are not a commoditized software solution or a strategic partner to life science companies supported by a proprietary and highly valuable communications network that connects pharmaceutical manufacturers with health care professionals and patients at critical moments of care. In fact, AI may serve as a tailwind. We are hearing from customers that historically up to 50% of marketing budgets were allocated to content creation. As AI drives efficiencies within our client base, that allocation of spend is likely to be redeployed to both expand reach and improve execution of marketing efforts, areas where OptimizeRx is particularly well positioned. We believe we are strongly positioned for long-term outperformance on both the top and bottom line. We address key pain points for our customers, including enhancing brand visibility, reducing script abandonment, improving interoperability between disparate point-of-care platforms and supporting the transition to more complex and specialty medications. A strong example of our impact comes from one of our largest customers, a top 10 pharmaceutical manufacturer that engaged OptimizeRx to support specific oncology initiatives through our point-of-care and point-of-prescribe-based marketing solutions. While early programs were focused on targeted use cases, the results demonstrated measurable impact in reaching prescribers within a clinical workflow and influencing engagement at key decision points. As performance validated the DAAP model, the manufacturer expanded their investment with OptimizeRx in 2025 to support multiple oncology brands across various indications. This expansion across brands and tumor types drove meaningful year-over-year revenue growth, evolving from initial pilot programs into a scaled multi-brand oncology engagement strategy. When we talk about enterprise engagements, this is the momentum we're looking for. We're also seeing strong momentum in the med tech sector. One flagship client first partnered with us post-COVID to expand prescriber reach to our legacy point-of-care marketing solutions. Consistent script lift in 2024 prompted the client to adopt DAAP, our AI-enabled Dynamic Audience Activation Platform, which facilitated precise timely outreach to prescribers, including many previously untapped new prescribers, exactly when it mattered most in the patient journey. This continues to be a major differentiator for the company and for our clients. By activating and leveraging these high-value HCP audiences identified through DAAP, the client rapidly scaled deployment to additional brands and channels. This multi-brand, multichannel scaling is delivering substantial impact in a highly competitive and rapidly growing landscape. The success of this program resulted in the customer drastically increasing its investment in OptimizeRx solutions from pilot dollars in 2022 to several million dollars in 2025. This pattern, starting with targeted POC engagement, progressing to DAAP adoption and then accelerating across the portfolio highlights the repeatable path to accelerated growth and stronger ROI that we see across dozens of similar pharma and med tech companies. OptimizeRx is uniquely positioned to drive sustainable long-term growth and shareholder value. The keyword here is sustainable. With one of the nation's largest point-of-care networks and the only true point of prescribe network, we enable pharmaceutical manufacturers to engage health care providers directly at the moments that matter most when actual decisions are being considered and made. Building on this foundation, we've developed a purpose-built omnichannel platform that integrates advanced patient finding capabilities such as DAAP and micro neighborhood targeting. These tools are redefining how pharmaceutical companies, physicians and patients connect, improving patient outcomes and transforming engagement across the health care ecosystem. Our reach across both point-of-care and direct-to-consumer channels provides a durable competitive advantage. We believe OptimizeRx is the only company with the scale, technology and data integration required to seamlessly engage providers and patients across all channels. This positions us as a comprehensive commercialization partner, supporting customers throughout the full product life cycle, deepening relationships and expanding long-term value capture. As we have discussed on prior calls, a key focus moving forward is to further demonstrate our reach, scalability and value as a trusted strategic partner. Our ability to consistently expand relationships with our largest customers underscores the value we deliver and the impact we have on script lift in the commercialization process. I'm confident that continued focus on execution, notwithstanding some of the near-term headwinds seen in our space, combined with our differentiated platform and strong customer outcomes will translate into meaningful long-term shareholder value. We believe our momentum positions us to capture additional market share and expand our role within the pharma industry's multibillion-dollar digital ecosystem. Our customers remain deeply integrated across our HCP and DTC offerings, and our objective is to support them seamlessly across the full patient care journey. And with that, I'd like to turn the call over to our CFSO, Ed Stelmakh, who will walk us through the financials. Ed? Edward Stelmakh: Thanks, Steve, and good afternoon, everyone. A press release was issued with the financial results for our fourth quarter and fiscal year ended December 31, 2025. A copy is available for viewing and may be downloaded from the Investor Relations section of our website, and additional information can be obtained through our forthcoming Form 10-K. Fourth quarter revenue came in at $32.2 million, and this was largely in line with our previously communicated expectations as we continue to convert more of our DAAP agreements into subscription revenue that spread more evenly over the course of the year. In addition, buys came in at a more moderate level than in 2024. Gross margin increased from 68.1% in the quarter ended December 31, 2024, 74.8% in the quarter ended December 31, 2025. Year-over-year gross margin expansion is tied to a favorable solution and channel partner mix. While the fourth quarter was a record gross margin quarter, we don't anticipate gross margins to be at this level in 2026 and continue to believe we'll be in the mid-60% range as the fourth quarter saw an unusually high amount of specialty messaging in higher-margin channels, which was a favorable but uncommon mix for us. Our operating expenses for the quarter ended December 31, 2025, decreased by $2.9 million year-over-year, largely due to lower cash OpEx as we saw benefits from the post-acquisition cost reduction measures we implemented in 2024. Meanwhile, our net income came in at $5 million or $0.26 on a fully diluted basis for the fourth quarter of 2025 compared to a net loss of $0.1 million during the fourth quarter of 2024. On a non-GAAP basis, our net income for the fourth quarter of 2025 was $9.9 million or $0.51 per diluted share outstanding as compared to a non-GAAP net income of $5.5 million or $0.30 per diluted share outstanding in the same year ago period. Our adjusted EBITDA came in at $12 million for the fourth quarter of 2025 compared to $8.8 million during the fourth quarter of 2024. We ended the year with cash and short-term investments totaling $23.4 million as of December 31, 2025, as compared to $13.4 million on December 31, 2024. We were able to increase our cash balance throughout the year despite paying off $8 million in principal during 2025, including $6 million ahead of our prepayment schedule. Our operating cash flow was $18.7 million for 2025 versus $4.9 million in 2024. As a result, our current debt balance stands at $26.3 million. We continue to believe we're well funded to execute against our strategic and operational goals, and we'll look to utilize free cash flow to pay down debt at an accelerated rate and opportunistically look to repurchase shares. Now I'd like to turn to our KPIs for the 12 months ended December 31, 2025. Average revenue per top 20 pharmaceutical manufacturer was $2.8 million, which declined slightly from $3 million in 2024 and was directly tied to lower buy-ups and data-related revenue that I highlighted earlier. Meanwhile, net revenue retention rate remained strong at 116% and revenue per FTE came in at $839,000, topping the $701,000 we posted during the 12 months ended December 31, 2024. Finally, I'd like to provide additional color around our guidance, which now calls for 2026 revenue to come in between $109 million and $114 million and adjusted EBITDA between $21 million and $25 million. As you may recall, our first half 2025 revenue was positively impacted by managed service revenues, which contributed to approximately $9 million in the first half of 2025. Since we don't expect a similar revenue mix in 2026, our revenue phasing is likely to fall in line with historical 40% to 60% contribution between first and second half of the year. And with that, I'll turn the call back over to Steve. Steve? Stephen Silvestro: Thanks, Ed. Operator, now let's move to Q&A. Operator: We'll now begin the question-and-answer session. [Operator Instructions] The first question comes from Ryan Daniels with William Blair. Ryan Daniels: Curious in your commentary on some of the end market weakness, a few points there. One, are you really just seeing the conservatism with the 17 companies that are in MFN negotiations? Or is it broader across the entire client base? That's number one. Stephen Silvestro: Great. Thanks, Ryan. Good to hear from you. We're seeing a broader pause across all of the clients as they're trying to just digest what it's going to mean for them. So the contracting duration has started to shorten a little bit from maybe 6 to 12 months down to quarter pulses or even half year pulses as they're sort of contemplating how they're going to deploy spend. I think that will normalize over time or we think it's going to normalize over time as they get through it. And outside of those that are -- I think it's really just over conservatism for the first quarter. That's sort of our stance. And that's what we're hearing as people are just being cautious. Ryan Daniels: Okay. And are you seeing any nuances between D2C and HCP marketing? Are you seeing pressure on both of those from your partners? Stephen Silvestro: Yes, it's about the same across the board. They're not being viewed differently at this point by any of the manufacturers. Everybody has got the same view of both DTC and HCP spend as a whole. Ryan Daniels: Okay. Okay. That's helpful. And then maybe one for Ed. You mentioned during the quarter, gross margins were obviously great and drove a lot of upside to the bottom line. I think you said there were some specialty messaging and higher-margin channels. Can you go into a little bit more detail on what that was or what drove that? And then why you don't think that could be sustainable? Is it just something that you don't want to model, but maybe in a given quarter, you might be able to do that again and drive margins through those specialty messages? Edward Stelmakh: Ryan, yes, thanks for the question. Yes. So, I guess, two parts here. First of all, what happened in Q4 2025. So there, we did have a very positive -- very favorable mix of channel partners that we utilize to drive our messages. And as you know, we can pick and choose which channel partners we can drive messages to, but we're clearly going to be running those messages through channel partners where we can reach the best audience under DAAP. So that's what happened there in terms of our ability to drive higher margins for that quarter. As far as 2026 is concerned, we are guiding to mid-60% gross margin range, mainly due to the fact that we don't feel comfortable taking the high end of the equation and running it through the year. We can do it periodically, but I don't see us doing this on a regular basis throughout the year. Ryan Daniels: Okay. I appreciate that. And then maybe last question, I'll go back to Steve. You mentioned you're not seeing any disruption from AI, but would love to hear your purview on how it's actually helping your operations. I know you have used AI in some of your kind of real-time analytics and product deployment in the past. So just curious what AI has meant to you maybe over the last quarter or two and what you're investing in as we look forward over the next few years to enhance your offering or your ROI for clients. Stephen Silvestro: Yes. No problem, Ryan. Happy to talk to it. And it's actually an extension of what Ed just mentioned, which is everyone is pretty hyped up on the Agentic AI deployment across the board. As you know, we've been doing this now for years. So it's not anything new for OptimizeRx. But what it does is creates efficiency and speed within organizations. You still need human input to get things to actually move. But what it will enable us to do is get clients to stop spending money on things like content creation or other stuff where they were just very people heavy and start to deploy AI in a way that enables them to spend more money on commercial execution, and that's where we're particularly strong. And so we're excited about the AI piece. We don't see it as disruptive to us at all. We see us as an enabler of people adopting more AI. And then just to piggyback on Ed's comment around sort of channel partner selection and deployment of messages that impacts the profile, I think that is a great example of what AI could do for OptimizeRx as more people adopt the Agentic and other components of AI that are getting out there. It allows us to be more efficient with channel partner distribution message distribution and physician identification. And so we are welcoming it. I think it's not broad enough yet, Ryan, where we're willing to reset the profile of the business from a margin perspective, but we were able to flash that publicly and show what the potential is within this business as we continue to grow it. So, for me, I'm very excited about it. I'm trying not to overhype it, but it's a positive, net positive for us. I appreciate you calling it out. Operator: The next question is from Eric Martinuzzi with Lake Street. Eric Martinuzzi: Yes. Historically, you've been able to give some color on the percent of revenue that's under contract. I would guess, given the duration color that you gave, Steve, that maybe that number is not in what I would say a 30% number is what you've talked about in the past. Can you give us any color on percent under contract? Stephen Silvestro: Yes, we can give a little bit of color. I mean right now, we're roughly -- if we take out the managed service component, Eric, that we talked about, which is predominantly first half contracted, we're running roughly 15% to 20% off of where we normally would be. And that's mostly due to the timing of the contract, the duration of the contracts. When you take out the managed service component, it's mostly contract duration, meaning shorter-term contracts than we would have seen same time last year or years previous. And we think that's -- we're not panicking about that. We think that's going to adjust over time. And we think as we get to the midyear, we'll start to see that the contracted revenue numbers will take care of themselves and normalize themselves. But Ed, you can feel free to chime in if you want. I know you and Andy are also tracking it very closely. Edward Stelmakh: Yes. I think you got it right, Steve, 15% to 20% behind last year's numbers. We typically don't disclose the exact percentage of revenue that's already under contract, but we will give you a gauge for whether or not we're running ahead or behind. But just to give you a little more color, as Steve said, there was an impact of managed services playing a pretty big material role last year in the first half around the same time. So that's missing from the equation this year to a large extent. And also shorter duration contracts are also hitting us a little bit out of the gates. But we are kind of reading the market, and we are very positive and very optimistic about pharma once they get through the first quarter or two of this year, normalizing their spending within the year and coming back strong in the back half of the year. Eric Martinuzzi: And following up on the managed services comment. I think you said there was -- was it $9 million in the first half? Or was it $9 million for 2025? Edward Stelmakh: So it was $9 million of revenue in the first half of 2025. Eric Martinuzzi: And is there -- have you -- does the guide for 2026, does that include any amount for managed services? Edward Stelmakh: It includes very little. As we said last year, managed services is a very episodic solution for us. It comes and goes. So we're not counting on much of it coming in this year. Operator: The next question is from Constantine Davides with Citizens. Constantine Davides: Great. Steve, you highlighted in your prepared remarks performance from mid-tier and smaller manufacturers. Just wondering what exactly you're doing to attack that portion of the market and what's been driving that success? Stephen Silvestro: Constantine, good to hear from you. Really, what it is, is we have an ability to supplement a lot of what those mid-tier and long-tail clients don't have infrastructurally within their own businesses. So if you think about what OptimizeRx is evolving into as a commercialization partner for a lot of these assets, taking new -- a lot of these companies, taking new assets to market, launching them, trying to drive sales, we can fill a lot of the empty space where they may not have big budgets for big marketing teams, Cadillac budgets for agencies, hundreds of sales reps out on the street. And we're able to fill that gap very seamlessly in a cost-efficient, effective way. And the growth in the mid-tier and the long tail has, I would say, has exceeded our expectations that the uptick there is faster than we were even initially anticipating, which is a really, really good sign. And coming back to one of the questions that Ryan had around the people that are negotiating on the MFN front, all of those are the top 10 manufacturers, right? It's the Lillys of the world and the Pfizers and everybody else that people are familiar with household names. But the volume of specialty pharmaceuticals is actually still coming out of the mid-tier and the long tail, the biotech sector. And so it's a particularly interesting opportunity for our business. So we're honing in on it. I appreciate, it's a great question. Constantine Davides: Great. And then just in terms of capital deployment, I saw you guys announced a share repurchase plan. And just trying to think about or understand how you're thinking about paying down debt versus deploying it towards buybacks, just what we should be expecting there? Stephen Silvestro: Sure. Ed, I'll let you handle that one. Edward Stelmakh: Thanks, Steve. Constant, Yes, so we're going to look at every opportunity as it comes to us. As you know, historically, we've paid down debt with all of our excess cash flow. And the plan is to continue to do that as much as possible this year as well. But also we'll gauge it against the opportunity to come in and buy back our stock at the right price point. So, I guess, the easy answer to your question is it depends. But in most cases, I think you can expect us to spend that money on paying down the debt. Constantine Davides: Got it. And then maybe one last one for you, Ed. What have you contemplated in guidance in terms of approximate NRR for the year? Edward Stelmakh: So, NRR in our case, as I said consistently, we're shooting for anything above 100% as a good marker. So we haven't really unpacked our guidance based on specific NRR numbers. But I think if you look at where we're guiding now, there's probably some room for slight excess above 100%. Operator: [Operator Instructions] The next question is from Jeff Garro with Stephens. Jeffrey Garro: I wanted to ask a few more follow-ups on the end market dynamics. I'll throw a couple out to start, really focused around customer behavior. And curious if any comments you can give on what January and February bookings looked like versus December when those large pharma companies were still in the middle of negotiating those most favored nation pricing agreements. And then as we think about lower spend, early here in 2026. Is that likely to result in increased catch-up spend in the back half of the year? Or is there a possibility that, that piece of the budget is just unlikely to be recaptured this year? Any particular feedback or anecdotes you're hearing from your customers to support what the likely back half behavior is? Stephen Silvestro: Yes. Jeff, good to hear from you. So just the dynamics right now that we're seeing out in the marketplace, which is pretty consistent with everybody in our peer group that I think you guys are all either following or aware of, is exactly what we said, right? Everyone is a little bit distracted with the MFN negotiations, even if they're not directly in those negotiations, they're sort of in a wait-and-see what's going on with it. We do think that, that's disruptive in the first half of the year. That's why we've adjusted the guide to accommodate for that. We do think the business will be back to its 40-60 traditional performance in terms of revenue flow. And so that would tell you that the back half will probably be a little bit stronger than the first half. In terms of how January, February, et cetera, are looking, we've already shared a contracted revenue number and told you that we did $9 million in the first half. So you'd have to pull that out because we know it's not repeatable. And then we told you sort of where we were year-to-date. So that should give you the info that you're looking for. We feel pretty confident in the way that we're going to get to the first half, and we feel more confident in the back half. And the conversations we're currently having with clients, the client satisfaction that we're hearing back from our Chief Commercial Officer, has us feeling bullish on the back half of the year. But again, we've dropped the guide a little bit on the top line just to adjust for some of the things that we've already mentioned. And we've reiterated and raised the guide on EBITDA. So that should be, I think, a pretty good signal on how we feel about the year. Happy to answer more questions around the dynamics, but I think that probably addresses that. Jeffrey Garro: All super helpful. And maybe to just kind of probe a little bit more on visibility and the business shifts to drive more consistent results. Maybe you could update us on converting some of your DAAP arrangements to subscription. I think at one point in 2025, it was greater than 5% of annual revenue, I would assume for 2025. And a later update, you talked about a line of sight into moving that to 10%. So any color you could give on where that subscription mix ended exiting 2025 and how you see that progressing in 2026 would be helpful. Stephen Silvestro: Andy, why don't I have you talk to just the conversion factor, if you'd like. And I don't know if we're going to disclose a number yet, Jeff, but Andy can talk to you about the trend we're seeing, and we feel really good about it is what I would say. Andy, why don't you take that? Andrew D'Silva: Yes. So we got pretty close to 10% as it relates to exiting the year on that run rate, obviously, not for the full year. We were between 5% and 10% for the full year. As you think about it in 2026 and going forward, if we continue to increase DAAP as a percent of our overall business, I believe you'd start to see a continued increase in the subscription side of the business, and DAAP is a key focus area for our growth. Operator: The next question is from David Grossman with Stifel. David Grossman: So just to kind of level set on maybe the macro assumptions underlying the revised guide for '26. Are you thinking that we've kind of stabilized at a level and it should be flat to up from these levels? Are you contemplating incremental degradation? Maybe you could just give us some incremental insight into how you're thinking about that and how that was embedded in the guide -- the revised guidance. Stephen Silvestro: Sure. Ed, do you want to take that one? Edward Stelmakh: Yes, I can take that. Yes. So I would say, yes, definitely a slower start to the year than we had hoped for. Our current thinking is that as the year goes forward, these things will start to improve. hoping Q2, Q3 is when we really see that come to fruition. And those are the signals we're getting back from the market that they're taking a bit of a pause, trying to digest what MFN means to their individual portfolios. So they're signing up for shorter duration contracts out of the gates, but eventually, they'll open up their wallets and continue to market like the kind of industry they've been for many, many years. David Grossman: Is your sense that we'll have more of a fourth -- back-end loaded year than we typically have in the fourth quarter? Or do you expect it will be similar? Edward Stelmakh: It's tough to predict, but I look at it in a similar way we had a few years ago, a slowdown in FDA approvals. And pharma watches certain factors like that very closely. So any time there's any kind of disruption or change in course, they'll usually hit the pause button or pump the brakes a bit, but then come back strong in the back half of the year. David Grossman: Got it. And on the net revenue retention, how much is the decline in the fourth quarter related to managed services? Or was managed services in the fourth quarter similar to what you saw in the fourth quarter last year? Just trying to get a sense because it looks like NRR dipped a little bit in the fourth quarter. And just wondering if that's really tied to the managed service dynamic or if there are other things that play there like the reduced spending. Edward Stelmakh: Yes. I mean it's partially that. Partially also the quarter is the buy-ups and the conversion to a subscription model that happened in 2025. It just smooth out the way revenues are recognized. So those two factors contributed to the drop. David Grossman: Got it. And I guess, Steve, just on kind of your AI commentary. What -- when you're talking to these large pharmaceutical companies, what are they sharing with you in terms of their own internal efforts and where they want you to fill in, in terms of how they're kind of deploying AI on the marketing side of the house? Stephen Silvestro: Yes, sure. Happy to comment on it. And then I know we're looking -- we're looking to see you here next week, so we can chat some more on it. But the large part of what they're trying to do right now is look at it for basically internally the way that they're structuring clinical trials, making that more efficient, large language models, looking to train on those large language models, looking to use data that they've got from places like IQVIA, Surescripts or any of the other providers that they've amassed over the years and start to deploy some of that in a more, I think, a direct way and create some efficiencies around that. So those are the big things that they're looking to do. And I already shared the content creation comment, David, which is a huge one. The amount of content, as everybody knows on the call, that pharma creates is enormous. And if they can leverage some of these tools that are coming out to basically eliminate the manual labor associated with building all of that content and the approval process that is constrained that content from getting deployed in a timely manner, that is going to be an unbelievable unlock for the industry. The biggest frustration for pharmaceutical marketers is going through the medical legal and regulatory process. And one of the areas that they're really looking at is trying to use AI to eliminate the need to go through that entire process the way that it's currently constituted. So you can think about like medical simulations, you could think about legal. Obviously, legal is a huge place that could be disrupted with this, right? And then on the regulatory front, same thing. Those are all places where large language models and AI can absolutely disrupt or replace what's going on in those spaces. And so if pharma is successful in the deployment of what really is being called by McKinsey and others, Agentic AI, they'll be able to speed their time to get things to market. So drugs getting through approval and getting launched and getting deployed and all that will be rapidly to be significantly faster than it currently is. And that will give them way more marketing opportunity and more marketing budget to focus on execution, which is what they really want to spend money on. And that's where we sit. We sit on the execution side. Operator: The next question is a follow-up from Constantine Davides with Citizens. Constantine Davides: Let me ask one more. Steve, at the end of '26, you guys announced a few new partnerships and transitioned -- it looks like transitioned a couple to exclusivity arrangements. So just wondering if you can talk about your ongoing efforts there. I think perception that, that world was pretty well canvassed, but just how much more room to run is there in both the EHR world, but also the stand-alone e-prescribing arena? Stephen Silvestro: Yes. Thanks for the question, Constantine. It's a great one. So it's important for the group to know for everybody to know EHR and e-prescribe are two different animals. And every EHR has an e-prescribe module that's bolted into it. In some cases, the EHR owns the e-prescribe and it's native. In other cases, they've integrated and e-prescribe into it. So those are two different points of connectivity that we have. what we're really focused on is expanding not just our EHR footprint, but what we call our point-of-prescribe footprint as well. And the reason for that is we want to make sure that we are actively engaging in the digital conversation with the prescriber when they are contemplating the diagnosis and prescription therapy selection and subsequently transmitting that prescription to whatever pharmacy it's going to go to after the real-time benefit check and so on and so forth. So it's less about platforms that we don't have. It's more about further integrations into those platforms and making sure that we're consistently embedded in every part of the workflow that we can be. We did sign just on your question around the exclusivity, we were able to peel back a few channel partners from competitors who had signed agreements with these specific channel partners and either failed to pay the channel partner, failed to perform didn't deliver on what they said they were going to deliver. And so those channel partners proactively approached OptimizeRx through our channel lead who's done a phenomenal job of relationships and wanted to become part of the network. And to me, that is a huge positive signal that we are doing good by our partners and striving to be the best partner that we can for them, and that's why we have more people coming. So I'm excited to share more about that. I'm not going to share names on this call, Constantine, but at some point, you're going to see press releases with the names and joint statements from me and those additional channel partners coming in the not-too-distant future. Constantine Davides: Thanks for the additional color. Stephen Silvestro: Yes, you got it. Does that answer the question? I just want to make sure I got it. Constantine Davides: Absolutely. Yes. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Steve Silvestro for any closing remarks. Stephen Silvestro: Thank you, operator. Thank you all for joining us today. I'd like to end by congratulating and thanking the entire OptimizeRx team for a tremendous 2025. We deeply appreciate their dedication and hard work as we navigate an increasingly complex and rapidly evolving digital pharma marketing landscape. Our industry is undergoing significant transformation, and our products and services are uniquely positioned to redefine how pharmaceutical brands, patients and prescribers connect. Our mission-driven culture continues to fuel innovation and execution, enabling us to attract and retain strong partnerships while reinforcing our role as a trusted and long-term technology partner. While we remain in the early stages of what is still a relatively nascent industry, we are confident that our proven business model, solutions and technology platform are directly addressing the evolving needs of our customers. Our synchronized HCP and DTC marketing capabilities powered by real-time brand eligibility signals, combined with expanded functionality such as micro neighborhood targeting allow us to deliver hyperlocal privacy-safe audiences across both patients and prescribers. These differentiated capabilities continue to expand our competitive moat and strengthen our market leadership. For the remainder of the year, our priorities are clear. We are intensely focused on increasing customer utilization of DAAP and building greater revenue predictability by transitioning more customers to a subscription-based model. Establishing a consistent recurring revenue component is a critical step as we advance toward becoming a sustained Rule of 40 company. We believe these initiatives will be transformative and central to driving long-term shareholder value for OptimizeRx. Thank you again for your time today. I look forward to speaking with you on our next earnings call and connecting with many of you at the upcoming industry conferences. Operator, please proceed with OptimizeRx' safe harbor statement. Operator: Thank you, sir. Before we conclude today's call, I would like to provide the company's safe harbor statement that includes important cautions regarding forward-looking statements made during today's call. Statements made by management during today's call may contain forward-looking statements within the definition of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934 as amended. These forward-looking statements should not be used to make investment decisions. The words anticipate, estimate, expect, possible and seeking and similar expressions identify forward-looking statements. They may speak only to the date that such statements were made. Forward-looking statements in this call include statements regarding our plans to drive sustainable long-term growth, plans for shareholder value creation, converting more customers to our reoccurring model. Becoming a sustained Rule of 40 company, strength of our operating model, experiencing minimal disruption from AI, unlocking new opportunities for profitable revenue growth, plans to make our revenue streams more predictable, plans to drive substantial operating leverage, estimated 2026 revenue and adjusted EBITDA ranges, long-term outperformance on both the top and bottom lines, continued strong momentum in the medtech sector, ability to improve patient outcome and to transform engagement across the health care ecosystem, ability to consistently expand relationships with our largest customers, estimation of total addressable market size, ability to capture additional market share and expand our role within the pharma digital ecosystem, market penetration, revenue growth, gross margin, operating expenses, profitability, cash flow, technology, investments, growth opportunities, acquisitions and upcoming announcements. Forward-looking statements also include the management's expectations for the rest of the year. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject to include, but are not limited to, the effects of government regulation, competition, dependence on a concentrated group of customers, cybersecurity incidents that could disrupt operations, the ability to keep pace with growing and evolving technology, the ability to maintain contracts with electronic prescription platforms and electronic health records networks and other material risks. Risks and uncertainties to which forward-looking statements are subject could affect business and financial results are included in the company's annual report on Form 10-K for the year ended December 31, 2023, and in other filings the company has made and may make with the SEC in the future. These filings when made, are available on the company's website and on the SEC website at sec.gov. Before we end today's conference, I would like to remind everyone that an audio recording of this conference call will be available for replay starting later this evening running through for a year on the Investors section of the company's website. Thank you for joining us today. This concludes today's conference call. You may now disconnect your lines.
Operator: Good morning. My name is Natalia, and I will be your operator today. Welcome to Ecopetrol's earnings conference call, in which we will discuss the main financial and operating results in 2025. [Operator Instructions] Before we begin, it is important to mention that the comments in this call by Ecopetrol's senior management include projections of the company's future performance. These projections do not constitute any commitment as to future results nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol; Juan Carlos Hurtado, Executive Vice President of Hydrocarbons; Camilo Barco, CFO; and Bayron Triana, Executive Vice President of Transition Energies. Thank you for your attention. Mr. Roa, you may begin your conference. Ricardo Barragan: Good morning. Thank you for joining us today for Ecopetrol Group's Fourth Quarter and Full Year 2025 Results Call. Last year, we achieved our goals, maintained financial discipline, stable operations, maximizing value management, drivers that reflect the strength of our strategy and the group's ability to operate in challenging environment. We consolidated a 44% 3-year success rate in exploration the industry average and exceeded our 2025 target by 60% drilling 16 wells. [ This team ] achieved the second highest net profit in history. In production and refining, we met our targets within the announced range and achieved a reserves replacement ratio of 121%, the highest in the last 4 years. In 2025, we marketed in advance 100% of the Sirius gas and moved forward with new supply alternatives. On the other hand, we declared the well Lorito to be commercially viable. Also, we surpassed our renewable energy capacity goal, reaching 951 megawatt, initially set by 2030 and strategic milestone for diversifying the company's energy metrics. But in ISA, we executed investments 31% higher in 2024 with projects of a total amount of $664 million. I would like to highlight how our efficiency program delivered history result in 2025 accumulation more than COP 16 trillion over the past 3 years, strengthening our financial position and supporting business sustainability. 2025 was a year of reliable execution. We maintained the group's long-term sustainability and met the goals announced to the market. Let us move to the next slide. Average production reached 745,000 barrels per day. Transportation exceeded 1.1 million barrels per day and refining throughput reached 417,000 barrels per day. Both operational performance and the efficiency program mitigated the impact of one adverse environment, considering a reduction of nearly 15% in crude prices. Despite this, we maintained an EBITDA margin in line with expectation, demonstrating discipline and resilience. On the commercial front, we achieved the best crude differential of the past 4 years. We closed 2025 at $4.6 per barrel, an improvement of $2 compared to 2024, driven by market diversification, basket optimization and effective coordination among our trading companies. Finally, to our shareholders. In 2025, we transferred COP 35 trillion to the nation in dividends, taxes, and royalties. This result ratifies Ecopetrol's role as a fundamental pillar for national economic development. The Board of Directors will propose to the general assembly on March 27 a dividend of COP 110 per share equivalent to 50% of net income under the dividend distribution policy of Ecopetrol. This proposal reaffirms our commitment to responsible, sustainable and value-oriented dividend distribution. Let's move to the next slide. At the end of 2025, Ecopetrol reached 1.944 billion barrels of oil equivalent improving 1P reserves, supporting the long-term sustainability of our operations. This result was mainly driven by organic growth, which added [ 314 ] million barrels through enhanced recovery, the largest reserves incorporation in the history as well as operational optimization that contributed with 19 million barrels helping to offset external variables such as Brent prices, exchange rates and inflation. In addition, according to Law 2056 of 2020 and Resolution 164 of 2015, reserves associated with crude royalty securitization were incorporated. This practice is recognized by the SEC and has been applied to gas royalties since 2014 for Ecopetrol Group. The total crude incorporation amounted to 314 million, 1.6x the year's production, allowing the company to reach historic highs in one peak crude reserves volumes, reaffirming the resilience of the field, both national and internationally. In gas, natural decline led to a reduction of 4.7 million barrels of oil equivalent partially offset by results at Pauto and Pauto fields, where pressure reduction techniques and hydraulic improvements were implemented to extend wells' life. We expect this trend to be reversed in the medium term as we progressively enable volumes discovered in Sirius and KG. Internationally, we continue to advance in the Orca Brazil Gas to the Market project after the commerciality declaration in 2025. Once the development plan gets the approval by the National Agency of Petroleum, Natural Gas, and Biofuels of Brazil, resources will gradually be progressed as reserves. Let us move to the next slide. In 2025, we also advanced firmly in ESG indicators by strengthening our environmental, social and governance commitments. On the environmental side, we reduced 561,000 tons of CO2 equivalent 165% of the annual target. We also received the Gold Standard recognition for methane management from the United Nation, validating our technical and transparent approach based on environmental protection. Ecopetrol consolidated its leadership in Colombian's aviation energy transition by supplying co-processed jet [indiscernible] with renewable feedstocks for the operation of more than 700 LatAm flights. Regarding water management, we reused 181 million cubic meters, equivalent to 82% of water used in operations, a 10% increase compared to 2024, positioning us as a global benchmark in the sector. In energy transition at the Cartagena Refinery, we began installing the largest PEM electrolyzer in Latin America, capable of producing 800 tons of green hydrogen per year and avoid up to 7,700 tons of CO2 equivalent annually. In 2025, we consolidate our leadership in Works for Taxes in Colombia. Since 2018, we have accumulated 154 projects, worth COP 1.4 trillion equivalent to 35% of the national total. Only in 2025, we completed 21 projects worth COP 109 billion, benefiting more than 49,000 inhabitants in 31 municipalities across 12 departments. On corporate governance, we highlight the approval of the statutory reform that incorporates an employee representative on the Board of Directors, strengthening diversity participation and best governance practices. With this, I hand over to Juan Carlos, who will present the details of the Hydrocarbon business performance. Juan Carlos Parra: Thank you, Ricardo. On the exploration front, we continue to strengthen our portfolio. By the end of the 2025, we drilled 16 wells, exceeding our target of 10. Of these 16, 7 were successful, 5 are under evaluation and 4 failed, achieving an average success rate of 44% over the last 3 years, placing us at competitive levels within the industry. In 2025, we promote the maturation of discoveries towards the development phase with a potential of over 455 million barrels of crude equivalent to 24% of the current reserve of the Ecopetrol Group, highlighting one first commercial declaration of 4 exploration areas of Orca Brazil, Lorito, Toritos and Saltador. Second, the extension of the commercial area of the Terecay field, reaffirming the potential of Los Llanos Centrales. These volumes will gradually be incorporated into 1P reserve as their development progress. Environmental license is currently underway for the Lorito project and the development plan for the Orca asset is awaiting approval from the Brazilian National Ports Administration. In the Sirius project, the delineation stage of the discovery was completed, confirming the potential of the 6 trillion cubic feet. Furthermore, the ANH approved the extension of the 10 exploration and production contracts and agreements with additional terms between 1 and 4 years and authorized the transfer of 50% of the participation and operation, the Parex Resources Colombia in the Farallones E&P agreement. By 2026, in association with Parex, we expect the drilling of 2 exploratory wells in the Pedemonte as well in Farallones extension agreement. Next slide, please. On the production front, we reached a total accumulated production of 745,000 barrels of oil per day, in line with the established target at levels comparable to those of 2024. This result was largely driven by national crude production, which reached 517,000 barrels, the highest level in the last 5 years. Thanks to, first, the enhanced recovery strategies to increase production in major fields and mitigate natural decline. Second, growth in production from the Caño Sur fields, and third, the acquisition of a 45% stake in the CPO09 block. We highlight that this production level was achieved with a 10% optimization at the initial planned investment, and we achieved efficiencies of more than $139 million in drilling and completion activities. The 2026 organic investment plans has a simply breakeven of $40 per barrel, positioning this a competitive portfolio given current market conditions. Of this portfolio, 88% of the investment will be concentrated in growth projects. Among the milestones to be achieved in [ 2026 ] increased the number of development wells to be drilled in the country compared to 2025 and extending the development plan in Midland with Oxy until July 2027. Jointly defined with the price framework, the interest of both and aligned with the reduction in activity. Next slide, please. By the end of 2025, the Transportation segment posted one of its best historical performance in EBITDA and net income, affirming its flexibility and operational efficiency amid a challenging environment. Regarding transport volumes, the segment through the strategic investments and operational adjustments managed to expand evacuation options to capture volumes outside the network and respond actively to the needs of both the business growth and the market. In the context, the following milestone stand up, which enable us to transport volumes above 1,100,000 barrels through the network. First, expansion of evacuation capacity in oil pipelines by more than 122,000 barrels. Multiproject pipelines by more than 10,000 barrels and additional storage capacity by 323,000 barrels, thanks to the commissioning of the new tanks in Pozos Colorados. Second, commissioning of the crude oil import scheme from Coveñas to our Barrancabermeja refinery to mitigate and respond of the third-party impact on the infrastructure monitoring schemes, operational control and the interinstitutional coordination were strengthened in the Caño Limón - Coveñas system. The time line activation of alternative evacuation routes together with flexible operating schemes and the use of the technology allowed us to preserve system continuity, avoid deferred production and maintain refinery supply. From a financial standpoint, prioritization of cost optimization neutralizing external effects such as the exchange rate and maximizing the use of infrastructure among other measures enabled the segment to achieve an EBITDA of COP 11 trillion and net income close to COP 5 trillion, one of the highest results in the history of the segment. Continuing with the refining segment results, solid operational execution and commercial decisions allow us to capture better international price differentials, strengthening profitability reservations of the business for 2025. We highlight the historical record of [ 113,000 ] barrels per day of integrated throughput in the fourth quarter of 2025, reflecting operational stability and high unitability after major maintenance for first half of the year. The results contributed to the annual total of 470,000 barrels. The gross refining margin increased by 32% in 2025 compared to 2024, increasing from $9.9 to $13.1 per barrel, thanks to production focus on higher value and higher quality fuels, crude basket optimization, prioritizing the processing of crudes with greater economic contribution and acting opportunity to capture international price differentials. EBITDA reached COP 2.7 trillion, 20% higher compared to 2024, driven by prioritizing operational and energy efficiency, which keep refining costs under control and strengthen competitiveness and resilience in the face of energy and price conditions. In practice, each barrel contribute more supported by the system capacity to take advantage of international price differentials, control and unit costs and energy use efficiencies. Regarding electrical reliability in Cartagena, efforts continued throughout 2025 to manage and decrease risk with a projection of reaching a tolerate risk level in 2026. In 2025, progress reached 81%. 3 out of the 13 out of the 16 milestones complete and connection to the national interconnecting system was secured. 70 megawatts of backup, reducing exposure to grid events and supporting establish operation. Next slide, please. During 2025, the efficiency program was consolidated as a key driver for value generation in the hydrocarbons line. We implemented decisive actions to maintain competitive unit costs, which have allowed us to offset exchange rate and inflationary impacts. At the end of 2025, the total unit cost of the Hydrocarbons line was $46 per barrel, a significant decrease of $1.7 or 3.4% compared to 2024, mainly driven by the synergies implemented in crude oil purchasing and strict cost-executing discipline. The lifting cost stood at $12.2 per barrel, $0.3 less than in 2024, marking 2025 as an important turning point in the indicator trend. Efficiencies played a fundamental role by contributing $0.96 per barrel in optimization. The refining cash cost and transport barrel costs remained stable during 2025, closing at $5.75 per barrel and $3.41 per barrel, respectively. This reflects the effective mitigation of inflation and exchange rate pressures as a result of the established operational discipline and efficiency materials throughout the year. Despite the impact of the exchange rate on costs expressed in dollar, the trend in local currency confirmed operation control, financial discipline and our commitment to ensuring and downward trajectory in our key cost indicators. Now I will give the floor to Bayron, who will discuss the main milestone of the energy transition line. Bayron Triana Arias: Thank you, Juan Carlos. 2025 was a year of disciplined execution in the energy transition business line. We made progress in strengthening energy security, scaling our renewable portfolio and capturing efficiencies with operational and financial impact. In relation to natural gas, the Ecopetrol Group remains committed to generating value and contributing to the growth of the country's supply with Ecopetrol being the only producer to market long-term volumes during 2025 for the period 2026 to '29. As a result, in December, we closed the sale of gas from the Sirius field together with Petrobras, selling the entire volume up to 249 GBTUD, a key step forward for its entry in 2030. Similarly, for 2026, the Ecopetrol Group has signed gas sales contracts for an average of 326 GBTUD to mainly serve the residential and commercial segments, reaching an estimated coverage of 76% of its demand, 6 percentage points more than in 2025. In terms of gas supply optionality, complementary to offshore development in 2025, we will market 60 GBTUD of reclassified gas through Buenaventura with deliveries scheduled for 2026. Additionally, in February, we began marketing 2 products with an offer between 126 and 370 GBTUD, which will be delivered through Sociedad Portuaria Puerto Bahía, starting in December 2026. Let's move to the next slide, please. In terms of electricity, by the end of 2025, we reached nearly 951 megawatts of capacity incorporated into the renewable energy portfolio, exceeding the target of 900 megawatts. This growth contributes to reducing the unit cost of our electricity supply. Within this portfolio, operating capacity grew by 94% from 186 megawatts at the end of 2024 to 381 megawatts at the end of 2025. This growth is explained in part by the acquisition of Statkraft's asset portfolio, which included the Portón del Sol solar farm, the first asset operating in Colombia under the remote self-generation scheme as well as the entry into operation of the La Cira and La Iguana projects. The combined operation of the group's solar farms and the Cantayús small hydroelectric plant avoided the emission of approximately 47,000 tons of CO2 equivalent and generated savings of around COP 55 billion in 2025. In addition, in December 2025, the 205-megawatt Windpeshi wind farm reached its FID. This project will be the first wind project built and operated 100% by Ecopetrol as well as one of the largest in the country. I would like to highlight that during 2025, these efforts enabled us to reduce the electricity supply tariff for Ecopetrol Group by approximately 4%, contributing among other things, to mitigating pressures on lifting costs. Ecopetrol Group's electricity demand is equivalent to 10.25% of the energy in the national interconnected system. This demand was covered 92% through self generation, both conventional and renewable and through contracts in the wholesale energy market, MEM as it is known in Colombia. When contracting in the MEM, the group seeks to mitigate variations in the cost of electricity supply through planning supported by risk policies. To this end, it plans energy contracting with horizons of between 1 and 3 years, considering the expansion of the system, the evolution of demand and climate effects. Next slide, please. Now I would like to highlight our efforts in energy efficiency, which is a structural level of competitiveness for Ecopetrol Group. 2025 closed with 4.79 petajoules of energy optimization, 1.6x the annual target, generating significant emissions reductions and savings. This result led us to achieve 99% of the goal of 25 petajoules of cumulative energy optimization between 2018 and 2030 ahead of schedule. The improvements were achieved through 80 initiatives comprising operational control of production processes, investments in technological upgrades of high consumption equipment and energy management systems in the Transportation segment. Finally, in terms of our contribution to energy justice in the regions, in 2025, the gas social project achieved its historical peak, completing more than 114,000 cumulative connections in 21 departments across the country. And in energy communities, we reached 3.8 megawatts accumulating in operation and construction, helping more than 58,000 people with centralized renewable solutions that strengthen energy autonomy and expand access to affordable energy. I now give the floor to Camilo Barco to detail the financial performance for the period. Alfonso Camilo Munoz: Thank you, Bayron. 2025 results confirm that Ecopetrol Group delivered performance in line with the annual investment plan reported to the market. The company operated with financial strength supported by an improved OpEx reduction target and CapEx flexibility, which boosted efficiencies across all segments and business lines, even in an environment marked by lower crude prices compared to 2024, higher tax burden and inflationary pressure. In 2025, we achieved an EBITDA of COP 46.7 trillion with a stable EBITDA margin aligned with the annual target of 39%, driven by the gradual recovery of the refining segment, the stability of the Transportation segment and the significant contribution of the profitability and efficiency program. The exploration and production segment contributed approximately 51% of the EBITDA, while the Transportation and Transmission and Road segments jointly contributed 43% and refining accounted for the remaining 6%. It is worth highlighting the continued recovery of the downstream segment, which delivered a 20% increase in EBITDA compared to 2024, supported by favorable market conditions for product differentiation. Likewise, portfolio diversification through the contribution of the transportation business and ISA has been key to the group's performance in periods of high volatility. During 2025, the profitability and efficiency programs delivered a record target of approximately COP 6.6 trillion, exceeding the adjusted annual target of COP 5 trillion by 1.3x and reaching nearly COP 23 trillion over the past 5 years. These results reflect our commitment to financial discipline, value creation and sustained contribution to the group's performance. In 2025, this efficiency plan enabled optimizations with an effect on EBITDA of approximately COP 3.6 trillion. In CapEx, we achieved COP 2 trillion in efficiencies through the successful execution of the investment plan, driven by upstream optimizations, particularly in surface facilities, drilling and completion activities. In OpEx, we achieved COP 1.8 trillion in efficiencies, thanks to improvements in energy, maintenance and digitalization. These efforts contained cost in an inflationary environment and improved key indicators such as lifting costs, which decreased by $0.9 per barrel, maintained the Barrancabermeja refinery conversion index near 91% and reduced energy consumption by 4.8 petajoules equivalent to COP 130 billion. These results not only support the 2025 performance, but also consolidate a more competitive basis to face the challenges of 2026. Additionally, our financial flexibility, operational strength and cash management contributed to a total shareholder return of 24% for local investors when combining dividends and share price variation and 39% for our shareholders in the United States. Likewise, our focus on capturing efficiencies enabled us to reach a net income breakeven close to $50 per barrel, reaffirming the competitiveness and resilience of our diversified portfolio. Regarding investments, we closed the year with $6.3 billion in organic investment execution within the range outlined in the investment plan. We highlight the following investments: Hydrocarbons, $3.9 billion, 63% of the total with focus on Meta, Piedemonte, Permian and Brazil. Energy transition and gas, $750 million, 12% of the total for advancing infrastructure to ensure medium-term supply for the country and complementing our energy matrix through renewable energy. And transmission and road, around 25% of the total investments were allocated primarily to the power transmission project. Brazil accounted for the largest share of investment followed by Colombia, Chile and Peru. In total, ISA advanced on 26 transmission projects, 183 reinforcements and upgrades in Brazil and 3 road concession projects which together will add approximately 4,988 kilometers of transmission lines and 296 kilometers of roads once they enter into operation. Let's move on the next slide. Net income for the year totaled COP 9 trillion, a level close to the target established in the financial plan despite a lower average of Brent price of USD 5 per barrel versus the initial estimate of USD 73 per barrel. The outcome is mainly explained by the following factors. First, nonrecurring effects recorded in 2024, such as the valuation of CPO-09 and the reversal of impairment, which generated a positive impact of COP 1.6 trillion. Those were not perceived during 2025. It is important to highlight that these nonrecurring factors did not represent cash outflow nor affected our cash flow results. Second, market factors, including the 15% annual decline in Brent prices, which went from $80 in 2024 down to $68 per barrel in 2025. Inflationary effects on cost and expenses and the revaluation of the Colombian peso against the U.S. dollar had a combined impact of 7.2 trillion. Third, external events such as blockades at production field, a tax on infrastructure and new taxes derived from the state of internal commotion decree and the nondeductible VAT on fuel imports reduced our net income by COP 1 trillion. These effects were partially offset by the improved performance of crude and product differential, which contributed COP 2.6 trillion as well as OpEx optimizations and our commercial strategy, which contributed an additional COP 1.3 trillion. External factors altogether amounted COP 5.6 trillion and explained nearly 95% of the decline in net income between 2024 and 2025. Operational and commercial activity compensated for approximately 22% of the variation. Let's move on to the next slide, please. In terms of liquidity, we closed December with a consolidated cash position of COP 12.7 trillion, maintaining a solid stance supported by operating cash generation and working capital optimization. Free cash flow for the year reached COP 11 trillion, driven by operating cash generation, boosted by the early collection of COP 7.7 trillion from FEPC and cost and expense reduction measures and also the disciplined execution of CapEx in line with the estimates established in the plan. In working capital management, we strengthened liquidity by reducing the FEPC balance to its lowest levels within the last 5 years and by offsetting COP 6.9 trillion in tax credit. To manage foreign exchange risk, we executed hedges using financial instruments that protected between 6% and 16% of monthly dollar-denominated revenue. Likewise, to mitigate Brent price volatility, we carried out hedging operations during the second half of 2025 to cover between 8% and 20% of export volume. For 2026, working capital management will focus on the collection or offsetting of the 2025 tax credit balance, which closed at COP 11.4 trillion as well as on the collection of the FEPC receivables around COP 3 trillion. We have also initiated execution of the hedging plan to mitigate market risk associated with price and exchange rate volatility in 2026. Regarding the ongoing process with DIAN concerning import VAT on fuels for the period 2022 to 2024, the administrative stage has concluded for 3 cases, one in Ecopetrol and the other 2 in Reficar, amounting to approximately COP 9.6 trillion, including estimated penalties and interest. The company maintains its position not to record the provision based on the opinion of external legal advisers and in accordance with the accounting standard. Now let's move on the next slide. 2025 was a key year in consolidating our financing strategy and ended with an adequate debt structure, a controlled maturity profile and a gross debt-to-EBITDA ratio of 2.3x, below the maximum level of 2.5x established in the company's strategic framework. Excluding ISA, this ratio stood at 1.6x, reflecting a healthy leverage level comparable to the oil and gas industry peer. During the year, the following achievements stand out: the renegotiation of bank debt, resulting in rate reduction of up to 80 basis points for U.S. dollar-denominated loans and 85 basis points for Colombian peso denominated loan, the securing of a new committed line of up to COP 700 billion available under any market scenario and the structuring of financing mechanism to support inorganic growth opportunities with the energy transition strategy. To highlight the fact that the group's liquidity remained fully secured throughout the year without the need to increase long-term debt to finance Ecopetrol's organic investment plan even in an environment of lower-than-expected revenues relative to the investment plan. During the year, the group's incremental debt reached approximately $1.8 billion equivalent. Around 70% corresponded to ISA, mainly due to the conversion of its pesos-denominated obligations into U.S. dollar, while the remaining 30% corresponded to Ecopetrol specifically allocated to inorganic business opportunity. In 2026, we plan to continue strengthening the company's capital structure and do not expect definitive incremental debt to finance Ecopetrol organic capital. Our focus is on optimizing the financial cost and debt structure while reinforcing liquidity and flexibility in working capital management. Should we identify inorganic growth opportunities, this may require additional debt always under the principle of maintaining a control leverage level. We will continue monitoring market conditions and will be prepared to respond and adapt to different scenario. Finally, let's move on the next slide to detail this year's investment plan. The investment plan projected for 2026 ranges between $5.4 billion and $6.7 billion. These align with our historical execution levels and allocated to strengthening the traditional business while advancing strategic priorities in the energy transition. The plan is based on an average Brent price expected of $60 per barrel and an exchange rate of COP 4,050 per dollar within a price range that allows us to adapt to different scenarios, maintaining strict capital discipline and ensuring competitive return with a target EBITDA margin of 40%. With approximately 70% of total investments, the Hydrocarbons business will continue to be the core driver, considering a production target between 730,000 and 740,000 barrels of oil equivalent per day, refinery throughputs between 410,000 and 420,000 barrels per day and more than 1,100,000 barrels transported per day. This performance is supported by enhanced oil recovery technologies that optimize resource, increase crude production in Colombia and offset the natural decline of gas. Likewise, we expect to drill between 380 to 430 development wells and up to 10 exploratory wells prioritizing the most profitable opportunities within our portfolio. In transportation and refining, investments will strengthen the integrity and reliability of the group's critical infrastructure. The remaining 30% of investments will deepen diversification into low emission business, including transmission and road, the integration of renewable energy and sustainability projects that enhance portfolio resilience. As part of the 2026 plan, we expect to capture approximately COP 5.7 trillion in efficiencies and deliver COP 28 trillion in transfers to the nation. Additionally, we aim at maintaining a net income breakeven close to $47 per barrel. In renewable energy, we expect to incorporate an additional 750 megawatts of projects in operation, construction and execution. Our goals reflect financial discipline, a focus on profitability and a measurable impact in our energy transition strategy. During 2026, we will continue executing with discipline, prioritizing investments that strengthen our portfolio and ensuring that each decision contributes to a more competitive, resilient and results-driven group. Now I will turn it over to the President, who will present the conclusion. Ricardo Barragan: Thank you, Camilo. In 2026, we will maintain a clear strategic focus, a strict capital discipline, strengthening traditional business, and ensuring the group's long-term sustainability. Natural gas is a strategic lever. We are advancing offshore projects and maintaining continuous exploration activity as a pillar to progress resources into reserves. At the same time, we will proactively manage supply sources to ensure reliability and flexibility. We continue progressing in the energy transition with the start of civil works at the Windpeshi project, community responsible compensation, and the launch of green hydrogen production at the Cartagena Refinery in coming months. We manage working capital, securing liquidity, and reducing cash flow pressures in a volatile environment. We delivered the plan presented for 2025 and expect to comply with the one defined for 2026. With this, we open the question-and-answer session. Thank you very much. Operator: [Interpreted] [Operator Instructions] Daniel Guardiola is online with a question. Daniel Guardiola: [Interpreted] I have a couple of questions. One is about [ Permian ], and I'd like to know if you could give us more light of why there was a sequential fall of the production. And if this result is because of less intensity in the drilling or what happened? And considering what you have been doing in [indiscernible]. Camilo, could you tell us what's the total production at Permian and Delaware? And overall, how many wells do you think that you will be drilling this year to reach those 11,000 barrels per day? And the second question has to do with dividends. Looking at the figures of 2025 of the company, you could see that the cash flow of the company was hurt. And Camilo, could you give us more light of the dividend, which was approved by the Board of Directors? Is it subject or not to the collection of the fiscal -- and the fiscal and the ISAPEC? Juan Carlos Parra: [Interpreted] This is Juan Carlos Parra, Vice President of Hydrocarbons. Regarding your first question, you have to keep in mind that in 2024, we had about 94,000 barrels per day and for 2025, 122,000. So this year, today, we can say that we are above 91,000 barrels in the first year -- first months of the year. And this is basically agreed in the development plans of the agreement that we have in term -- and it depends on the activity as everybody knows and of the prices because it's the type of field that we work on really depends on the prices right then. So it's related to that. For this year, we estimate that we will have 38 to 40 wells. But while the price of the barrel moves, we can start looking at our investment plan. Daniel Guardiola: [Interpreted] I'm sorry. Can I ask you something else about this? Those 78,000 barrels include Delaware or what? Because it said only Midland. Juan Carlos Parra: [Interpreted] It includes everything. All of the basin or the fields that we have. The topic of the reduction of activity is reflected throughout the premium about -- from '24 to '25, we see a 12% reduction in the number of drills in 2024, 309 throughout the basin to 273, and we moved from 4 to 2. Alfonso Camilo Munoz: [Interpreted] This is Camilo Barco. On your question about dividend, there are several aspects. First and very important for everybody that's joining us today. The distribution of dividends is given by the authority of the shareholders' meeting. So it's important to keep in mind that this is the recommendation preapproved by the Board of Directors to be given to the shareholders' meeting. It's a recommendation of 5.1% of the activity available for shareholders, which is COP 110 per share. And if it's related to the [indiscernible] it's important also to mention that the cash flow of Ecopetrol has an important impact on certain accounts that are crossed with those of the nation in favor and against, not only [indiscernible], but also the balance of taxes in favor are things that have an impact on the cash flow. And we hope that as we've seen in prior years to have a discussion in which we agree with the Ministry of Treasury. We can reach agreements on the timetable of payments of [ ETEC ], which determine the timetable of payments of dividends indeed. Operator: Next question from Katherine Ortiz from Corredores Davivienda. Katherine Ortiz Sogamoso: [Interpreted] I have 2 questions. No, 3. One, along with what Daniel asked, I'd like to understand, could you give us a guide of the tax on equity that Ecopetrol will be paying, understanding that the proposition of dividends is only one payment in April. And could you give us a guide to see -- I believe it's close to COP 1 billion. And I'd like to also understand how you will manage the liquidity and the resources to make these payments understanding, of course, the level of cash flow you have today. And also to understand on a short-term basis with the leverage indicators. That's my first question. Second question relates to the reserves. This report surprises us because of the change in the agreements with the National Agency of Hydrocarbons. So I'd like to understand why did you make a change in the contracts, especially in that aspect? And how can this really benefit Ecopetrol because it's an accounting change really that makes the added value to look higher. But from another viewpoint, do you really see a benefit? And if there is one, what percentage of the contracts are currently tied to royalties in sample and in money? And my third and last question relates to the breakeven profit. The gap between the breakeven and the EBITDA is wider. And if we look at the end of 2025, there is a difference that's quite big, about $18 per barrel. So I'd like to understand if that difference in the total what proportion is explained by the higher taxes that we've observed that Ecopetrol is paying and if it obeys to other reasons? Those are my 3 questions. Alfonso Camilo Munoz: Camilo Barco. On your question related to the equity tax, the calculation that you mentioned is correct. What we estimated to pay by Ecopetrol is between COP 1 billion and COP 1.3 million calculated as the rate of COP 1.6 million over the liquid equity. This payment will be made in April. How does it relate to the liquidity? It's important to say that we have tax balances in favor that ended at a high level in 2025, close to COP 11.5 billion, which give us good space to compensate part of that tax. Otherwise, the cash flow and the liquidity of the group is in healthy conditions and robust as we saw COP 12.7 billion consolidated total cash, and that gives us the capability to maneuver and make all the payments of dividends and the debt on a timely basis. Also, we have to keep in mind here. When it comes to the tax equity and other taxes, there are discussions constantly made with the Ministry of Treasury that allow us to have agreements on the availability of the group's cash flow and the requirements of treasury and also allow us to align the time lines of payments of these. So we're talking about an item to compensate the accounts payable and receivable to the Ministry of Treasury. Ricardo Barragan: We can continue with the question on reserves. My name is Ricardo Roa and I'm the CEO. I'm going to answer your question on the explanation you need on the changes of agreements with ANH. But I'd like to clarify, there were no changes in the contracts between Ecopetrol and the National Agency of Hydrocarbons. Secondly, this is legal situation that we've been experiencing for some years. But what did happen is that a decision was made as a result of the change of title on the royalties that instead of being made in things, it was -- they were made in money, paid in money. And we incorporated these reserves to the resources of the company on the balance. We're talking about 9 fields that are subject to this application, the scheme. This is validated not only by SEC, but other methodologies that audited these reserves. We are talking about 100 fields in which we are working on, but we are looking at 9. And we're going to continue consolidating in our balance the disposition of reserves that we have. These are valid in the methodology and create more stability to the expectations of production that the company has in time. We also have to add in terms of the report or the role played by the incorporation of reserves, we could say that this is the highest in the history of the company and the participation with the appropriation of reserves in the fields in Colombia was big. We're talking about 20%. Logically, when we look at this incorporation, we could say in short that we have consumed in production 248,000 barrels. We've incorporated 200,000 barrels, and this is the result that shows the 121% reposition of reserves. Katherine Ortiz Sogamoso: Ricardo, I'm sorry, thank you for the answer, but also that potential of 100 would then allow to add how many reserves as well. If that's made -- please correct how I'm saying this because we're talking about contractual agreements according to what you wrote in the report. Juan Carlos Parra: This is Juan Carlos Hurtado, Executive VP of Hydrocarbons. To add more fields is an analysis underway? Yes. But really, the benefit -- one of the biggest benefits is to ensure the commercial basket because it's our oil, and we can ensure in 2 ways: one, because we're in charge of the refineries and in the basket. So it really depends on the analysis we make year after year. And as the President said, it also depends on the analysis we make every year depending on the conditions. Alfonso Camilo Munoz: Okay, Katherine. Let's talk about the breakeven of profit. It's important to mention that indeed, in 2025, we ended with a breakeven close to $50 per barrel. For 2026, aligned with the goals that we have set out, we estimate that the breakeven will be closer to $46 per barrel. And within that -- those $46, there's a tax component of $9 to $10 per barrel. Operator: [Operator Instructions] Thiago Casqueiro from Morgan Stanley. Thiago Casqueiro: I have 2 questions and one follow-up here. The first question is related to lifting costs. We have seen a strong Colombian peso recently. So if the FX remains around current levels, what would be a reasonable assumption for lifting costs in 2026? I'm trying to get a sense here if there is room to further reduce it in dollar basis? And the second question is related to the commercialization front. The company reached the best crude differential in 4 years. So how do you see this going forward, especially considering the current developments in the Middle East? And then the follow-up is related to Permian. If you could remind us when exactly does the Delaware contract expire in 2027? Is it also in -- during the midyear or it's earlier or later than that? Alfonso Camilo Munoz: [Interpreted] This is Camilo Barco. I'd like to refer to the effect of the exchange rate on the lifting cost. Indeed, as you mentioned, the exchange has a significant impact on the lifting cost because this metric is expressed in dollars per barrel. So it is evident that in revaluation periods, the exchange rate has a pressure when there is a higher lifting cost. When this trend changes, which we are starting to see, just keeping this trend of devaluation we're seeing, surely, we will see a significant impact that will allow us to foresee and meet our goal to have a lifting cost below $12 per barrel. Julián Fernando Lemos: This is Julián Fernando, Corporate Vice President of New Businesses. Regarding your question on the agreement with Oxy in Delaware, it's in effect until December 31, 2026. Thank you for your question. Unknown Executive: Thank you for your question. We have had a successful commercial strategy that has allowed us to report better differentials between the last quarter of 2024 and last quarter of 2025. When it comes to what's happening in the Middle East, part of the answer depends on how long the conflict will last. There are several countries involved, not only Iran, now we have Saudi Arabia and countries close by. There are 15 million barrels that are -- that do not -- cannot pass through the Hormuz Strait. We see that this will strengthen the company, meaning it will position us to have a lower differential than the demand will be higher for Colombian oil, not only for oil, but refined products as well. Two days ago, what happened, one of the refineries in Arabia, Aramco, which processes 550 barrels per day was attacked. And this, of course, has to do with gasoline and diesel in the Middle East. So when it comes to oil, we see an enhancement, although now it all depends on the durability of this crisis. Arabia reported its inventory for today of 75 million barrels. It will last a week. China already said it closes its exports. So although right now, we do not see it, we do believe that this will help the company. Operator: Ricardo Sandoval from Bancolombia. Ricardo Andres Sandoval Carrera: [Interpreted] I have 2 questions. One, on the reserves. We have high ambition to see reserves entering or incorporated in Brazil. However, I'd like to have more details, if possible, if these reserves were incorporated or not? If -- or what could be the potential of the reserves that we can see incorporate? And what do we need to materialize this? Could you give us more light on this? Second question is on DIAN, the tax authority in Colombia. And the report, the big risk because DIAN has the power to continue with the fine. So in terms of risks, have you been talking with rating firms? What do they say to you about this? And could you give us any comments, the covenants or what borrowers say about these future fights with DIAN. Could you give us more color on this? Ricardo Barragan: This is Ricardo Roa, the CEO. Thank you for your questions. Let me share with you that, indeed, that was one of the expectations to incorporate the reserves that we had with the Gato do Mato asset in Brazil. But because of the proceeding of the national agency of oil, which is equivalent to that of hydrocarbons in Colombia, we could not incorporate about 70 million barrels in our balance of reserves of the year before. But it is the initial foundation for this year. I would say in a couple of weeks, we can incorporate those reserves in the significant reserves in our balance. Alfonso Camilo Munoz: Ricardo, this is Camilo Barco. On your question on the DIAN, there are major developments made that we'd like to share with you. With regards to the controversy or the difference of the interpretation with this authority, several advances have been made. And today, we can say that we have completed the administrative phase, and we are within the jurisdictional path. We have filed different cases on the official payments, and this makes us compete, especially with the administrative contentious courts where the process will take place in the terms that are foreseen in the law. We insist since this is a controversy that's more tax related, the statute clearly states that once these actions are presented, with the cautionary measures, especially those related to the provisional suspension, the coactive charge would have to be part of the discussion within the judicial process. And this is one of the elements that's being discussed. But we trust that the jurisdictional instances will know how to protect the interest of the company in this sense. When it comes to the terms, we are within the terms of this process. And in similar cases or similar events, we're talking about terms of 3 to 6 years long. These are long processes. When it comes to discussions held with the rating firms, of course, as we've done it with the market. This is something that we've discussed with them. We've disclosed this with details to them. And we haven't seen major concern from these rating firms on this controversy. And specifically, it's worth mentioning on your question of covenants, we have no covenants included in our mechanisms of financing. We don't see a risk -- an imminent risk. But let me go back. In 2026, we do not see any risk in terms of liquidity or any effect. There is no likelihood that this controversy will be resolved on a short-term basis. So there is no incidence on Ecopetrol. And there is no impact on the provision, either on the accounting. Our external counsel say that there is very low risk to lose this controversy or again, there is no -- there is likelihood to have success. It's very, very high, the likelihood. And this will have very little, if any, impact on our balance sheet. Operator: We have from Hugo Beltrán from Acciones y Valores. Hugo Beltrán: [Interpreted] I'd like to ask about the gap between the real production of oil and the goal that was established for the year. And you mentioned several factors like the climate and blockades. Could you please elaborate more on those settings? And if you overcame some of these reasons for lower production and which were the fields were affected? And the maintenance aspect last year, you said that this reduced the supply of natural gas in some refineries of Ecopetrol. If there is a similar scenario in 2026, do you have a contingency plan different that could help you with the natural gas problem? Or are we still exposed to a similar scenario? Juan Carlos Parra: Good morning. This is Juan Carlos Hurtado, Executive VP of Hydrocarbons. When it comes to the gap that you were asking about, I can say that when it comes to the settings this year, especially in the last 1.5 months, we had events that did hit our production levels. And because of the rainy season, we still have factors related to weather, not only the stability because of thunderstorms, but we also had the slide of an electric tower, and that stopped us from operating a station from working with the field, and this also affected and restricted partially the production of those fields. This has been restored now, of course, but that did have an impact. So when it comes to Rubiales, Caño Sur, Castilla, Chichimene and [ Casix ], those are the fields. Bayron Triana Arias: Good Morning. Bayron Triana, VP of Energies for Transition. When it comes to the [ SPAC ] question, and we always carry out the overhaul, the maintenance. And what differs from last year is that the import project from Buenaventura is already in operation. So it gives more capability and resilience to the transport of natural gas system in Colombia. So now we see the coordination of all the agents, so that in October, we can surpass this event. Operator: We have Andrés Duarte from Corficolombiana Andres Duarte: I have 2 questions. And maybe later, I have time for a third one. My questions are, the first one is related to Venezuela. I'd like to know what opportunities do you see? And in what cases or what type of opportunities do you see with the investments planned that you already have approved already? Or in the future, would you go from self-generation to sell electricity to Venezuela? Second question is a follow-up to what you already explained on the reserves and the ANH. You paid for some fields, the royalty in money, right? And that, to me, will imply that the production related to those reserves, which are about 5% of the total today, that production will necessarily -- no, the profit per barrel will decrease for those barrels because it's like if you paid the lifting cost twice. On the one hand side, you're paying royalty and on the other side, you're paying the lifting cost of those barrels. So please clarify if I'm correct. Ricardo Barragan: Andrés, this is Ricardo Roa, the CEO. Allow me to talk about the opportunities we've identified and the chances to make transactions of energy with Venezuela. First, Venezuela needs electricity to reactivate its economy and the exploitation of the hydrocarbons in higher volumes to those that we've seen recently. And we need gas for the past 10 years, we've needed. So we can exchange resources of products or light crude oil, which we see a lot in Venezuela. And after identifying these opportunities, we have talked with OPAC last week to give -- to make an assessment and to make transactions of this nature with Venezuela. When it comes to the amount of energy that we could sell to Venezuela, or yes, electricity or to improve the concept of self-generation to sell energy to Venezuela. Remember, the transactions are not -- of this type are not physical, they're financial. We have to go through the wholesale market, and these contracts are financial. And today, Ecopetrol cannot do this because when it purchased ISA, it was forced to do it. But ISA can do it. It has no restrictions to commercialize energy with Venezuela. The core of the business of ISA is to develop these interconnections for years, and it's done so with Venezuela before. So there's an opportunity there. So today, the regulation allows us to have projects and to record that energy for our consumption. That's a premise that we can do today. So the energy that Venezuela needs and Colombia having good sources based on hydroelectricity, I would say that we can enable those connections without any problem to Venezuela provided the restrictions are raised. And from there, we can carry out the transactions, energy transactions with that country. Meaning... Andres Duarte: So you mean Ecopetrol generates it according to your new strategic plan? Yes. But it would be for the system and the system with any surplus, part of that surplus would be sold to Venezuela, right? Ricardo Barragan: Yes. Any generator in the country can place the energy in the system. And with the transactions held according to the boundaries and the agreements with boundaries made, Yes. We've -- this is the way that we've been doing transactions for many years. We have generations in the system. We have what's called the boundary or frontier systems. And according to what's agreed with those frontier systems, any generator, any self-generator can place a surplus in that system and the energy is taken from other buyers. Alfonso Camilo Munoz: Andrés. Good morning. I would like to answer your question related to the treatment, the accounting treatment and financial treatment given to the royalties. The most important part here is to repeat that the monetization of the royalties is that today, the volumes are no longer of the ANH but become volumes of barrels owned by Ecopetrol. This isn't a big cost for Ecopetrol, but there is a reconversion or reclassification of the cost. Before, what we did was to provide the barrel to the ANH and the ANH would give it back to us to commercialize it. So then we would register a sales cost, a higher sales cost over those volumes of royalties. However, today, since it's owned by Ecopetrol, the sales cost to purchase those barrels is transferred to the operating cost, as you stated. And as so, this increases the total cost of the lifting cost, yes. But we have to keep in mind, when you produce more barrels, which are incorporated in the production of Ecopetrol, the unit cost per barrel drops. So what we can say is that the effect is neutral -- and it's more a reclassification of the sales cost and the operating cost with the effect, yes, that when you divide the total cost -- lifting cost by number -- a higher number of barrels, you can record a lower lifting cost per barrel. Andres Duarte: Yes, Camilo. So when you look at these fields, when it comes to royalties, those barrels and those fields are not being commercialized by ANH, but with the mechanism that you've explained through Ecopetrol, right? Alfonso Camilo Munoz: Until before this monetization of royalties, that's how we did it, yes. ANH would give it to us to be commercialized by Ecopetrol with the risk that any other commercializer could do it. But today, since it's owned by Ecopetrol, we eliminated that risk. We ensured the crude slate and 100%, we are commercializing those barrels. Operator: Next question from Juan Felipe from Credicorp. Juan Felipe: I'd like to make 2 questions. One, what's happening in Iran today and the impact it has on the higher crude oil prices and on the margins, do you see any changes on your strategy for this effect because it will hurt surely the profitability levels? And second question, during this quarter, we see in the midstream volumes transported compared to the last quarter of last year, but we see a decrease in revenue. Since these are tariffs regulated, could you give us more details of this negative variation? Unknown Executive: Thank you for your question. When it comes to the Iranian conflict, there are impacts on the 15 million barrels, of course, that cannot pass the Hormuz Strait. And that, of course, will increase the price of oil. When it comes to refined products, as of today, the report says is that in the Middle East and Iran and Arabia, you can see a shortage of diesel because when it comes to load, so for these enhanced in the past 48 hours. Also in naphtha, we see a cut in exports. Remember, there are countries like Qatar, Dubai, Iran, Saudi Arabia, Iraq and others that exported last year, 1.2 million barrels in naphtha. And that naphtha went to countries in the East. And most likely, that naphtha now will have to go from the U.S. and rebalance all the market. The gasoline market right now does not export a lot of gasoline and jet. We see also a cut in exports. So to conclude, we can foresee that if this war is extended, there was a spike in prices. But we have to keep in mind the following. The freight are at astronomical prices, 150%, 160% higher. So we can have a better price that will be mitigated by transport cost of those oils or products, and we have to see the impact on this. But if the situation will continue like this, surely, it can be a good time for the downstream in many parts of the world. Unknown Executive: This is the [ President of Senate. ] Regarding your question, as you can see in the report, the increase or higher volume transported was of oil. And you have to remember that the transport rates are in dollars. Therefore, because of the exchange rate, there was a reduction in revenue. The total reduction is COP 512 billion, of which a good percentage is because of the lower exchange rate. In addition, there is COP 131 million owed because when you compare the semester of '24 to '25, there was a chip boy for the transport, which in '25 is not there. Still, I'd like to highlight that of the COP 512 million through efficiencies, we reduced the impact to COP 179 million. So in the report, you can see there is an improvement of the EBITDA margin to 61%. Operator: [Operator Instructions] Joao Barichello from UBS. Joao Barichello: I have 2 from my side. So my first question is a follow-up on the 2026 investment plan. So the company raised all its guidance and operational financial figures based on a $60 per barrel Brent, but oil prices have been supporting higher levels since the beginning of the year, and it's right now above the $80 per barrel level following all the recent geopolitical events. So could the company consider an update on the plan if oil prices remain at these levels for longer? Could the company also higher production levels or accelerate investments? And also, I have another question on M&A activity. So in the last few months, there was some news link in Ecopetrol for potential acquisition of upstream companies in Brazil. So could you elaborate further on how the company has been seeing M&As opportunity in the industry? Is this being under discussed as a way of strengthening Ecopetrol reserves replenishment? That's it from my side. Ricardo Barragan: This is Ricardo Roa, the CEO. The plan is elaborated now for 3 years. We have a long-term planning plan for the next 3 years, first. Secondly, when it comes to the maintenance that we are observing today, now we see prices above $80. We will make the corresponding assessments like we did last year in April in another process when we saw that the barrel price dropped significantly, and we changed our investments for the rest of the year. And we got more into our savings and efficiency program. If in the next weeks or months, we will see changes, of course, we will be making a revision of better bets to increase production and to look at the relocation of our CapEx with our different assets. to be more profitable with the conditions we're seeing today. Joao, if you allow me to complement with several figures, we'd like to -- we announced to the market an investments plan between COP 22 billion and COP 27 billion. And this plan that was announced, we incorporate what we call an option. And we believe that while we see the Brent increasing its value and to have more flow. And in turn, we see more -- the possibility to make more investments under the stringent capital management systems that we have. We will be more on the higher range of the investments plan close to COP 27 trillion. And of course, thinking about the investments with the capability to increase production on a short-term basis. Julián Fernando Lemos: This is Julián Lemos. I'll talk about your question of Brazil. Ecopetrol constantly evaluates growth opportunities, inorganic growth opportunities in these operations are almost always covered by confidentiality agreements. And once we make a lot of the technical economic analysis and we have the approvals, we will be reporting these to the market. Operator: Next question from Alejandra Andrade from JPMorgan. Alejandra Andrade Carrillo: There are 2. First, in a higher Brent price scenario, are you going to review your investments plan or the opportunities that you see now are the highest? Second, what type of opportunities, inorganic opportunities do you see when it comes to A&P? Ricardo Barragan: Thank you, Alejandra. This is Ricardo Roa. With regards to your first question, when there are conditions of an uptrend on the price of oil, we will be, of course, reviewing these. And according to the figures obtained, we'll be reviewing the allocation of the CapEx and investments that we have for this year of COP 22 billion to COP 27 billion. Remember, in past years, we have been investing $20 billion with our strategic business, the traditional one. So we'll be doing the same thing we did last year like we did in April of last year when the Brent dropped so much. So once we see a sequence of the conditions that we see today, we, of course, will be reviewing the plan for the rest of the year, and we'll be looking at the possibility of increasing the production of our assets. Let's hear what Julián can answer on the type of opportunities, inorganic opportunities we see. Julián Fernando Lemos: Thank you, Mr. President. This is Julian Lemos, Julián. As I said before, the group recurrently analyzes opportunities that contribute to the growth -- inorganic growth of reserves and production. When we have announcements to make, we will let the market know. Operator: Let's continue with Guilherme Costa from Goldman Sachs. Guilherme Costa Martins: I have 2 quick ones, actually more as a follow-up of recent questions. The first one on the higher freight prices. Could you please remind us of the share of your production that is actually exported overseas and hence would be exposed to the volatility in freight prices? And my second question, we saw some increase in discount for heavy oil in the global markets given the higher availability of Venezuelan crude oil in the market. Could you please remind us as well what percentage of your output is similar to Venezuelan crude and is also exported overseas. Also, have you seen any impact in pricing so far?RECELL. Ricardo Barragan: Thank you so much for your 2 questions. With regards to the follow-up of the wells, yes, of course, these are high. We export 35% of the Colombian production, 11 million barrels a month to the U.S. 45% is exported to Asia and the residual part to Europe. The exposure right now has been mitigated with actions like contracting a time charter, which are vessels contracted at a fixed rate. We recently -- we have one vessel between Coveñas and the U.S. and that allows us to have a better price and helps us right now. in times of volatility. We're looking at similar options also for Asia. That exposure also is seen by us, especially looking at offers with clients and if we and if we can provide everything in Coveñas. And this is how we've been working to not be exposed to the volatility that we are seeing globally. With regards to your second question, when it comes to the discount of the heavy crude, it's true that we expect a weakening of prices because no restrictions of Venezuela, yes. But this is more a perception of oversupply. We moved crude in a nonformal market to a formal market. So there is no incremental production now. We can refer to increases before 2019 when we took to the U.S., 40% of the Colombian production, we exported to there. And also remember that the bad crude oil from Venezuela has an effect on the Middle East. Before we said therefore that we are also working on a s-commercial strategy. And let me tell you what we're doing to mitigate all this. We have clients and markets, and we have fixed-term contracts. So the increases of discounts are being managed through these agreements. We also have commercial offices in Asia and the U.S., which allow us to mitigate that exposure to that potential discount we may have. And our crude oil compared to those of Venezuela, those oils with lower content of metals and acidity levels are better. And I'd like to end, yes, there is a discount of heavy crude has been seen. But we believe that with our commercial strategy, we can mitigate this soon. Operator: Next question from Badr of Barclays. Badr El Moutawakil El Alami: I had a quick question on the FEPC and the downstream pricing policy. As we're seeing, obviously, with the unfortunate in the Middle East, we're seeing crack margins going up, especially for diesel. And I was wondering, can you remind us what is Ecopetrol downstream pricing policy? How fast do you adjust downstream prices? And how are you thinking about the potential pressure from the FEPC that could start materializing in the second quarter this year? Ricardo Barragan: We have seen factorizing the conversation we've had today that there is a potential in prices, and we made a sensitivity analysis at $80, what would be the impact on the FEPC. If we continue in the same conditions, we had a discount of gasoline prices of almost COP 1,000, and we could close the FEPC that covers the part of gasoline and diesel more or less at COP 5 million. If we were at $80 and we had an increase of prices, we think that, that number could be [ COP 7.98 million. ] So short answer, we would have an increase in FEPC with high prices. But it's still early, but you're right, there could be an impact on the FEPC depending on how high are those prices and the international price. Alfonso Camilo Munoz: I would like to add, this is Camilo Barco. I'm the CFO. I'd like to -- I'd like to say conceptually on the performance of prices and FPEC is very important. Of all the downstream policies and prices, these are determined by the ministry. So this has -- really depends on what this ministry determines. We're talking about sales prices and prices for the producers. And what we do envision is that with this new level of prices, while the current conditions take place, we could have a reverse in the FPEC according to what we see in our financial plan, I would say, for the national government of about COP 2 billion more than what Julio already mentioned as well. Operator: We don't have any live. Now we're going to read the questions. Juan Pablo Ramirez from Davivienda asks, what could be the impact by closing the Hormuz Strait on the gas price imported by Colombia, understanding that it's imported from the U.S. and Trinidad and Tobago, what is the development of the regasification system in Coveñas? When will it begin operations? Bayron Triana Arias: This is Bayron Triana, with regard to the questions on the impacts of importing gas in Colombia, I'd like to highlight that import is made by a company that's not Ecopetrol. The duration -- we have to see the impacts that will take place in this company. But we can say that in the spot, when it comes to purchases of Ecopetrol for the infrastructure of the Pacific and the Caribbean, the contracts are all long term to mitigate the effects of what's taking place now. When it comes to the development of the Coveñas plant, this plant has all the permits now, the environmental permits. We are working now with the carrier. The initial phase of 110 million cubic feet was canceled, and we have a phase of 400 million cubic feet, and we expect that by the end of 2028, it will be in operation. Operator: Declan Hanlon from Banco Santander asks, "Could you update -- give us an update on the strategy and plan related to the joint venture in [ Permian ] in terms of rights and obligations and in the strategy of the company to political pressure to sell this asset? Julián Fernando Lemos: I am Julián Lemos, the Corporate VP of Strategy and New Businesses. Today, we have an agreement in force with Occidental. As I mentioned in another question, one of the contracts is in force until December 31, 2027, the one of Delaware, the one of Midland is a joint venture agreement in force while the partners decide. And as Juan Carlos said before, the level of activity and therefore, of investments made the analysis of what's happening macroeconomically in the market. And to -- that way, we can agree with our partner how we can develop that basin. Operator: Nelson Bocanegra from Reuters asks, "Does Ecopetrol keep in mind compete to keep the resources upstream that Parex has -- since Parex has already given its offer? Julián Fernando Lemos: Julián Lemos, Corporate VP of Strategy and New Businesses. Since these processes usually are covered by confidentiality agreements, we cannot state anything on this. But again, as I've said before, Ecopetrol constantly evaluates inorganic growth opportunities to incorporate reserves, and these will be announced to the market. Thank you. Operator: Nicolas Bourgeois from [indiscernible] Capital asks, the bonds in dollars of Ecopetrol are quoted at levels that seem disconnected from the fundamentals. Do you -- would you consider to have a tender offer for any of these bonds? Unknown Executive: With regard to the operations to handle debt or to financing in Ecopetrol, we'd like to take this opportunity to indicate several aspects. First, Ecopetrol, we monitor constantly the market, the banking financial markets and that of capitals. And we evaluate carefully the different windows and performances. Right now, we have several purposes in terms of handling debt. And the goal is to decrease the cost of that financing. And secondly, to reduce or mitigate the refinancing risks. So consequently, we evaluate all the possibilities. And it's important to clarify that right now, we do not have any refinancing risks associated. Our next maturities, major maturities are closer to the end of the year of 2029. And our average mean life is over 8 years. So with this said, we will be carefully evaluating all the possibilities and the performance of the market. Initially, we do not see any windows. But as they open, we are going to be prepared to look at them closer. Operator: Alfredo Jaramillo from REDD asks, what are the -- what's the likelihood that Ecopetrol will be purchasing the assets of Canacol this year? Julián Fernando Lemos: Alfredo, thank you for your question. This is Julián Lemos. This is a competitive process. As I said before, covered by a confidentiality agreement. So we cannot tell you the likelihood. But we can say that when Ecopetrol analyzes and will conclude that these operations are proper and gets the approvals, this will be shared with the market. Operator: Felipe Gomez from Ashmore asks, how much do you expect CapEx from Sirius? When will this be disbursed? And when will it be financed? What happens when -- if you do not reach the production levels in 2030? Unknown Executive: Allow me from the financial area to answer the questions regarding the CapEx and the financing schemes that we have. And let's give the microphone to Bayron to talk about the expectations and the commercialization we have for that. Bayron Triana Arias: The consortium will invest about $1.2 billion in the exploration phase and $2.9 million more for production development. This major CapEx investment will have different financing schemes. Of course, these are being evaluated according to the best practices to finance these types of projects. Especially we are emphasizing the possibility to develop structures of balance to -- for this particular project Unknown Executive: With regard to the question of what happens with the commercial part of gas by 2030, this has been financed with flexibility for the seller provided the project is in operation. So when the project is in operation, the contracts are firm and become mandatory for us beforehand, there is no obligation to deliver the gas. Still, Ecopetrol has projects until Sirius is in operation to import gas back that level of gas needed. Operator: There are no more questions. Now let's listen to Ricardo Roa, the CEO, for final remarks. Ricardo Barragan: Thank you all for attending this earnings call. We appreciate your questions, which have allowed us to clarify the aspects that you were wondering about regarding the results of the last quarter of 2025. We'd like to say finally that there is absolutely no aspect or parameter that has not been protected duly by the hundreds and thousands of employees of Ecopetrol. They have devoted their intellect and their smartness. So for all of our shareholders and creditors, we have sound robust results that allow us to continue showing you that we have a great company in Colombia that does create value for shareholders and for the country. Thank you all. Operator: Thank you all. This concludes our earnings call for the fourth quarter of 2025. Thank you for attending. You can disconnect now.
Milena Mondini: Good morning, everyone, and welcome, and thank you for joining us as we review Admiral 2025 year-end results. Today, we'll be announcing another remarkable year of financial results and strategic progress. So I will start with the key highlights before handing over to Geraint on the financials and to Alistair on U.K. Insurance and Costi on Europe. I will then come back to reflect on what we have achieved over the last 5 years and finally explain how the evolution of our strategy position us to create even more value in the years ahead. So let's start with the main achievement for 2025. We delivered a record profit of GBP 958 million. This was up 16% year-on-year, reflecting disciplined execution and growth across the group. 2025 also marked exciting progress across data, technology and AI and the evolution of our motor proposition, including the acquisition of Flock subject to regulatory approval. Today, we'll also outline the evolution of our group strategy. This strategy builds on a very strong platform, but more diversified customer base and the competitive advantage we already have to deliver higher long-term value for all our stakeholders. We will also cover our new capital distribution framework, including share buybacks. Geraint will take you through that later. So more in detail. As already mentioned, 2025 was a year of record. Our customer base increased 7%, while we continue delivering strong customer outcomes with the group Net Promoter Score over 50. Group profit reached a new high, driven by record U.K. Motor profit, passing now the bar of GBP 1 billion, following another record year in 2024. This was achieved in a challenging market environment, thanks to positive evolution of recent years and continued underwriting discipline across the cycle. Importantly, this was not just a U.K. Motor story. All parts of the group contributed. In the U.K., Other Personal Lines, Admiral Money combined delivered a profit of GBP 88 million. Europe also performed strongly with a fast return to profitability in Italy and great results in France, which Costi will cover shortly. 2025 was also a year of strong shareholder returns, supported by a 7% increase in dividend per share, a very strong capital position with a solvency ratio of 193% and another stellar return on equity of 53%. Beyond the financial results, 2025 marked an acceleration in our strategic progress. We are pleased with our rapid advancement on artificial intelligence, particularly with the value delivered by machine learning models and the new gen AI center of excellence to scale priority use case, train our people and provide them with the right tools. We are managing more than 150 gen AI initiatives across the group, including support to over 4,000 colleagues, some agentic models with promising initial results and more potential to come. Selling more product to our existing customers remains a key growth driver with our multi-risk customers now exceeding GBP 1.6 million. Across Europe, we continue to evolve our broker propositions with stronger segmentation and more customized offering, driving better margin, as Costi will explain later. We also continue to innovate in Motor. An example is our partnership with Octopus that positions us well in the fast-growing salary-sacrifice scheme for electric vehicles with a tailored risk-based proposition aligned with our ambition to support customers in making greener choices. And in Admiral Money, completing our first forward flow deal was an important milestone as it opened up a more capital-efficient growth path and support higher returns and lower volatility. On M&A, the integration of More Than is now fully completed and contributed positively. Elephant disposal is also completed. And finally, early this year, we announced our intention to acquire Flock, a company we had invested in since 2024. Flock offers a telemetry-based fleet proposition with an effective feedback loop to improve safety and performance. It's an excellent strategic fit with our U.K. Motor expertise with promising underwriting and claim synergies and it's closely aligned with our joint ambition to improve safety on the roads. And by combining Admiral data ambition to Admiral's strength with Flock technology, we see an opportunity to develop a differentiated fleet business in an underserved market. So in summary, 2025 was a record year for Admiral with strong profits, customer growth and progress in technology and strategy. Now before handing over to Geraint, I want to take a moment because this will be the last time that you joined me on stage to present results. And I think it's fair to say that the strength and discipline of the performance for about 2 years are a good reflection of his leadership, his judgment and his consistency over the last 12 years as CFO, a period during which Admiral tripled its turnover and grew profit from GBP 350 million to almost GBP 1 billion. And please join me to congratulate Rachel who is here with us today and will succeed to Geraint, bringing deep knowledge of Admiral, a strong track record within the group and a great skill set for the role. So thank you, Geraint, and congratulations, Rachel. Geraint Jones: Thank you. Good morning, everyone. 12 years of not being conduct. One last time, let me talk you through the main drivers of an excellent 2025 result. Lots of positives, lots of good milestones. I'll cover the U.K. Motor loss ratios, the dividend, strong capital position. And as Milena mentioned, I'll talk you through the change in the approach to capital return that we've announced today. To start with though, let's look at the component parts of the group profits and the main ratios. The group combined ratio was very positive again at 80%. That was 3 points higher than 2024, though the impact of Ogden accounted for around 2 points of that difference. So in reality, only a very small change. And that, in turn, has made up of a slightly improved expense ratio and a slightly higher loss ratio. The latter as expected, due to the higher loss ratio 2025, underwriting year in the U.K. Motor having an impact. On to the results then. In U.K. Insurance, overall profit was GBP 1.1 billion. That's GBP 110 million higher than 2024, including Ogden, or GBP 180 million higher if Ogden is excluded, very big increase. The U.K. Motor results, I'll cover shortly, but the result there was a record profit, just over GBP 1 billion. And we're very pleased with a really strong year for the U.K. Other Personal Lines, Home insurance, Travel and Pet insurance, all profitable, strong growth. And the combined profit there was GBP 62 million, was nearly triple of 2024's result. In Europe, we're reporting a much better results, improving by nearly GBP 30 million versus 2024. We see growth in higher profits in France, small loss in Spain, impacted by new reinsurance arrangements and a recovery to profit in Italy. Good to see that happen so swiftly. And worth reminding that we continue to hold prudent booked reserves in Europe in the upper end of our range and the best estimates are also conservative. Admiral Money had a great year. Profit was double 2024's, benefiting firstly from good growth in the balance sheet. But also, as we talked about at the 2025 half year from profit generated from selling some back book loans in the first half and selling newly originated loans, which don't hit Admiral's balance sheet. That will be a continuing, we think, attractive feature of the Admiral Money business model. We continue to see good margins on the unsecured loans business, which makes up the big majority of the balances, but the results from car finance, which was relaunched in late 2024, are also encouraging. Credit loss experience remains very solid, and we hold an appropriately prudent provision for losses. There are some other comments on the page, which cover the movement in the share scheme costs and the other line, and you've got the usual extra information in the back of the pack. All in all, group profit was up 16% or 28% if you exclude the impact of Ogden on both years. Let's take a look at the very impressive U.K. Motor results. So this is a summarized income statement plus some of the key ratios and some commentary. Both years include the impact of the Ogden discount rate change. And so some of those year-on-year comparisons, you see look a little less stronger than they really are. We show the pounds and the percentage impact of Ogden in the table and starting with the top line. Customer numbers increased by 2% year-on-year, 50,000 added in the first half and around 80,000 in the second half, so 1% increases half-on-half. As Alistair will talk a bit more about later, we reduced our prices in H1 last year, and hence, average premiums have fallen. And so despite our bigger portfolio, turnover was down by 7% as the team took a disciplined approach in the competitive U.K. market and reflecting the claims trends that we were seeing. As a result of the reduced premiums and continued claims inflation, the current year loss ratio for '25 is 3 points higher than '24. And of course, we also don't see quite the same positive impact of Ogden in '25 than we did last year. And those 2 items are the main drivers of the higher combined ratio you see at the bottom, which is as we expected. The underwriting results improved by around GBP 40 million with higher earned premiums and a much lower reinsurance charge offsetting the higher net claims cost. You'll remember that we had much more limited quota share recovery assets coming into 2025, and we see a similar picture as we exit 2025 too. Net investment income was higher, up to a record level due mainly to higher invested assets at a similar rate of return. Profit commission was notably higher as we started now to recognize income on the high profitability 2024 underwriting year, though we still haven't yet recognized income on '21 to '23 or on 2025. We do expect to see revenue coming through on '21 and '25 very soon. I already mentioned the main drivers of the higher combined ratio we see at the bottom. But within that mix, reserve releases were 10% year-on-year, basically the same like-for-like. Next up, we'll take a quick look at the main U.K. Motor loss ratios, which, as always, are a key driver of this result. The chart shows the U.K. Motor discounted book loss ratios and there are generally positive and consistent messages to report here. We can see -- we see continued strong improvements in '23 and especially on '24 over the last year. 2024 is clearly a very good margin year on a very large premium base. In 2025, we see burn cost inflation around mid-single digits level and that's a small improvement in H2 versus where we saw things at the half year point. The first discounted booked loss ratio for '25 is at 78%. That's 7 points up versus '24 at its equivalent point. And that's again basically in line with our expectation. On an undiscounted basis, 2025 is 85% compared to 77% for '24. Now we expect '25 will be a good profitable year. You can see it looks healthy on the chart at the 12-month point, and it should develop positively from here, though obviously won't end as profitably as 2024. We maintained very high reserve strength. It's very close to the maximum percentile, and we expect that will reduce a bit further in 2026 towards the middle of our range. Overall, on claims, positive experience in line with our expectations, usual trends and there's more information in the back of the document. Moving now to look at the capital position. So this is the bridge of the solvency ratio from half year to full year '25. There's a couple of observations. Firstly, the capital generation in the second half is largely offset by the final dividend. And secondly, due mainly to pretty flat revenue in '25 versus '24, we see a much smaller change in the capital requirement in '25 than we did in '24 and particularly in the second half. And then the change in the capital requirements and the other items in the middle almost cancel each other out, leaving the group with a healthy -- very healthy, almost flat ratio of 193%. Short update on the internal model. Lots of hard work by our team, as usual, over the past few months since we last updated you. We now expect to make our application for approval shortly. Post approval, we'll target solvency coverage in the 150% to 170% range, probably at the upper end, in part to give us flexibility for smaller M&A opportunities. We'll give more information on the post-model approval capital position at the appropriate time. Speaking of M&A briefly, Milena mentioned earlier, the Flock acquisition. As we said in the press release, if that gets regulatory approval and completes in the second quarter, we estimate the impact on solvency will be a bit less than 10 percentage points and is, therefore, largely absorbed by the strong position. Next up is the dividend. So these are the details of the dividends, split between interim and final. And for 2024, we call out the impact of the Ogden change, which was obviously significant on the dividend for last year. The proposed final dividend is 90p per share. That brings the total for the year to 205p, over GBP 620 million, and that's 7% higher than 2024. The difference in the payout ratios year-on-year is due to us starting to use capital to purchase shares for the share schemes, which we said back in August would start in the second half of '25. You'll remember that historically, we issued new shares each year for those share schemes rather than purchased in the market, but we haven't done that since 2023. In the fourth quarter last year, the trust bought about 1 million shares for just over GBP 30 million. And the capital that we use for dividend and the share scheme purchases equated to basically the same percentage of earnings across both years, close to the 90% level. And in 2026, we expect the trust will buy around 3 million shares. Next up, we'll cover the change in the capital return approach. On the left, we show a summary of our capital allocation framework. Milena will talk a bit more about Point 1 later, which covers how we allocate capital to our businesses. And we're generally comfortable that around 10% of earnings is a fair guide of what we need to retain to fund and invest in growth. And that's meant an average dividend payout over the last 5 or 6 years of 90%. Step 2, we know the importance of strong cash returns to our shareholders. So the ordinary dividend remains at 65% of earnings. Step 3, as just mentioned, we purchased shares for the share plans. And final -- and Step 4, not finally, using some surplus capital is an option for funding M&A. And then that leaves the surplus capital and that's what's changing today. Historically, as you know, we've returned this to shareholders in the form of special dividends. But from the interim 2026 dividend, we'll change that Step 5 to be either buyback and cancel shares or pay a special dividend depending on what the Board believes is the best option. For 2026, subject to regulatory approval, we expect to buy shares at the interim and final dividend dates. The 90% guidance we've given out over the past few years to cover the ordinary plus the special or buyback plus the share schemes purchase should generally hold moving forward. And then one final slide for me to sum up. Looking back on 2025, clearly, it was a really strong year, record profits, record returns to shareholders, lots of positive results and developments across the group. For U.K., the Personal Lines and Admiral Money, great results, strong and swift turnaround in Europe, progress on the internal model, very pleasing stuff. And looking ahead, a few comments on what we might expect in 2026. On growth, in summary, we plan to grow everywhere. That's obviously subject to how the markets develop, in particular, when prices in U.K. Motor start to increase. For turnover, I'd expect a bit more growth in '26 than we saw in '25. And in general, of course, we expect faster growth from the newer businesses, U.K., the Personal Lines, Admiral Money and Europe. And then a few comments in respect to the group profit. Firstly, obviously, we will see more of an impact of the less profitable '25 underwriting year feeding into the 2026 results, but we will still benefit from good releases and profit commission coming through on 2024 and '23 and some of the earlier years too. Secondly, we project continued improvements in the results in aggregate for the newer businesses that we talked about. And finally, we expect group profit in '26 to be quite flat versus '25 after a really very strong last couple of years where profits have more than doubled. And all those comments, of course, subject to the usual caveats on markets, geopolitics, war and weather. That's it from me. I will hand you to Alistair now to talk to us about U.K. Insurance. Alistair Hargreaves: Thank you, Geraint. Good morning. I'm very pleased to take you through an excellent set of U.K. Insurance results. 2025 has been a record year across all our lines of business, underpinned by disciplined execution, customer centricity and strong operational delivery. Starting with the headlines. Customer numbers reached 9.6 million, up 9% year-on-year, with strong contributions from Motor, Household, Travel and Pet. We delivered GBP 5 billion of turnover and GBP 1.1 billion of profit, passing the GBP 1 billion profit milestone for the first time. We continue to deliver competitive prices, great service and good customer outcomes, which is recognized in customer feedback. We remain #1 in Trustpilot and achieve an NPS over 55. Importantly, 1.6 million customers now hold 2 or more products with us, a 14% increase year-on-year. Customers buying more products gives us better data to improve risk selection for all products. is a driver of our retention advantage in Motor and growth in new lines of business. Overall, an efficient source of growth that contributes to improved expense ratios. Recent announcements are leading to a more predictable regulatory landscape. Outcomes from the Motor insurance task force and premium finance review were in line with expectations, and the Home and Travel claims handling review is now complete, and we have no significant concerns. Let's turn to the Motor market. Starting with claims trends, frequency was largely flat following the marked decline we saw in 2024, and severity has returned to more normal mid-single-digit levels. Our expectation is that these trends continue, but the current macro environment introduces some uncertainty. The graph on the left shows a dark line for claims burn costs. Claims burn costs increased steeply through 2022 and then continue to increase but more modestly. The light line for market average premiums shows a lagging response to claims costs, increasing rapidly in 2023, outpacing claims costs and then declining. Both lines are indexed to 2021, and you see they cross in 2025 as increases in claims costs now exceed increases in premiums over the period. Let's focus on recent market prices. On the right, you see prices continue to decline through the second half of 2025, though at a slower rate than in the first half. We estimate average premiums declined by around 10% in 2025, broadly in line with movements reflected in ABI data. Since the start of '26, market prices are relatively flat with some differences in strategy between market participants. Market prices need to increase imminently. EY forecasts a Motor market combined ratio of 111% for 2026. This is on an earned basis, and EY assumed price increases through 2026. So delays in market price increases will put more pressure on this 2026 market combined ratio. Turning to Admiral U.K. Motor. In 2025, we focused on disciplined cycle management and maintaining our strong advantage in pricing, claims and customer retention. In 2025, we reduced rates by around half as much as the market. All the decreases were in H1. In H2, our prices were broadly flat. The left-hand graph shows that this led to a decline in new business market share in the second half of '25. Lower new business was more than offset by strong retention, resulting in modest policy growth, though lower average premiums resulted in a drop in turnover. In '26, we started increasing premiums with low single-digit increases at the start of the year to reflect the claims outlook and maintain good written margins. Taking a longer view, our disciplined approach results in varying growth through the cycle, but maximizes value and growth over the medium term. The graph on the right shows our year-on-year vehicle growth rate in blue, in yellow is our written loss ratio. Our loss ratio is consistently better than the market, but still fluctuates within a range due to the cycle. We respond quickly to claims trends, even if it results in slower growth in the short term. It then enables us to grow quickly when loss ratios are low, for example, by 15% in 2024. Since the start of 2020, our vehicles covered has grown at a CAGR of 5% and with an average combined ratio advantage of around 20% versus the market. We continue to invest in strengthening our pricing, claims and claims capabilities, including embracing predictive AI and gen AI, which Milena will talk more about. Electric vehicles is a great example of our pricing and claims focus. We lead in this growing segment. We're very competitive whilst delivering comparable loss ratios to high levels of reparability. Our overall approach is to be disciplined and grow when the time is right, whilst focusing on driving advantage in pricing, claims and customer retention. We're confident this will result in growth and maximizing value over the medium term. Let's move to our other U.K. Insurance lines where we've had an outstanding year. We welcomed 650,000 new customers, year-on-year growth of 21% and tripled profits across Household, Travel and Pet. In Household, market premiums softened further and subsidence claims were elevated in the second half of the year. Our own pricing remained more disciplined than the market and weather-adjusted loss ratios improved by about 2 percentage points. This, combined with top line growth meant that although prior year reserve releases normalize from the 2024 exceptional levels, we still delivered a record Household profit. The More Than integration is complete with around 380,000 Home and Pet customers transferred successfully. This has accelerated growth and enhanced capability, particularly in Pet. Travel grew customers by 29% and continued its positive profit trajectory. Pet grew even faster and reached breakeven just 3 years after launch. All 3 lines are now profitable with clear momentum and strong positions across their markets. So -- I'm going on too fast. So in summary, in 2025, we've delivered record profits. But in addition, Motor remains disciplined and well positioned ahead of the market. Pricing increases expected in 2026. Household, Travel and Pet are performing extremely well with growing scale and margin and customer satisfaction and retention are excellent with more customers choosing to buy more products from us. We enter 2026 with confidence that we'll continue to deliver sustainable profitable growth over the medium term. Milena will talk more about this shortly. Now I'll hand over to Costi for Europe. Costantino Moretti: Thank you, Al, and good morning, everyone. For our European operations, 2025 has been a year of consolidation. We have directed our efforts towards strengthening the operational core across our 3 markets, focusing on the fundamentals of discipline and optimization. It has been a positive period where we have made good progress on our strategy, providing a positive contribution to the group's ongoing diversification efforts. Moving to the financial results. The headline for the year is a return to combined profitability across the region. The business delivered GBP 39 million Motor profit on a wall account basis, of which GBP 11 million is the Admiral's share. Going back to the business performance, we closed 2025 with a good combined ratio of 94%. While this represents a significant year-on-year improvement of over 10 points, it is important to look at the individual market dynamics. In Italy, with ConTe, we have reached a small profit which is a GBP 30 million recovery from the previous year. This significant recovery was driven by strong actions taken on the expenses and a deliberate and disciplined pruning of the portfolio. We made the conscious decision to prioritize technical margins over volumes, leading to an expected vehicle in force reduction. With the business now on a more stable footing, we are in a position to look towards growth, always keeping the focus on its underwriting quality. Moving to Spain, where Admiral Seguros' reported results includes about GBP 8 million of one-off accounting impact related to a change in the reinsurance structure. Going forward, we have established new multiyear and large reinsurance arrangements at the European level with our historical partners. Effective from 2026, these agreements aim to improve capital efficiency and provide greater stability to our results. Excluding this specific item, the Spanish business is nearly breakeven. This is supported by the direct business, which provides a positive contribution to the results. While our diversification initiatives with ING Bank and brokers are showing very encouraging improvements while scaling up. Closing with France, where L'olivier has had a very strong year. We achieved double-digit growth in both turnover and profit with results reaching GBP 16 million profit and we surpassed 0.5 million customers. This performance demonstrates that L'olivier is successfully applying the Admiral model, maintaining a strong combined ratio advantage versus the market while driving growth through digital channels. Let's move to review our strategic progress, starting from the shift in distribution. We have focused heavily on our new brokers proposition in Italy and Spain. As the business mix indicates, we have moved away from an initial test and learn proposition towards this new one, which focuses on building long-term relationships with the intermediaries and also targets better risk segments and higher-margin business in line with our expectations. The early metrics from this shift are positive and provide a solid foundation. We are seeing solid improvement compared to our order book across all the key metrics like higher income per policy, lower frequency and lower cost per claim. And these improved fundamentals have contributed to a 9-point reduction in the overall loss ratio. While there is still more work to do, we expect these benefits to continue as more growth will come and the new proposition mature. In France, we are continuing to diversify through our household insurance product. We now cover over 100,000 risks, a 25% increase versus last year, which provides a meaningful second pillar to our French operation. Regarding efficiency, we have managed to steadily reduce the European motor expense ratio by 7 points since 2022. This has been a necessary step to remain competitive. And even in Italy, despite the reduction in turnover, we improved the expense ratio by 1 point through automation and more streamlined digital customer experience. These operational improvements are also supported by our new common data platform, which is now operational across the 3 countries. This asset allows us to deploy data futures and machine learning models across border with greater technical agility and quality, which is essential for maintaining our edge in a rapidly evolving market. To wrap up, we're very pleased by the progress made this year. Our European operations have reached combined profitability, giving us confidence in their future contribution to group's broader diversification strategy. Our objective moving forward is to leverage this stability to increase our scale and enhance our earnings. We have the right expertise, a solid data and technological framework and a disciplined path ahead. Thank you. I'll now hand over to Milena to talk more about the group strategy. Milena Mondini: Thank you, Costi. So as you just heard, 2025 was an excellent year across the group. Now I would like to take a moment and step back with you and see what we have accomplished over the last 5 years. In 2020, we announced our 5-year group strategy based on 3 pillars: business diversification, Admiral 2.0 and Motor evolution. And today, we're extremely proud of what we achieved in this time frame. First, remarkable growth with turnover up nearly 90% and group risk and profit almost 60%. We returned overall GBP 3.2 billion to our shareholders. Second, we diversified the group with more than 50% of customers now coming from other lines of business or geographies and contributing close to GBP 100 million of profit. In addition, we developed new business such as Pet insurance in the U.K., Commercial insurance in the U.K. also, Household insurance in France and we extend our addressable target market with U.K. Commercial Insurance as just mentioned in B2B2C, in B2B and B2B2C in Europe by opening up the broker distribution channel. Third, we refocus our portfolio. We exit all of our price comparison sites and the U.S. insurance business to concentrate on the growth great opportunities we have in U.K. and in Continental Europe. The acquisition of More Than and of Flock are instrumental to strengthen our product diversification in the U.K. Fourth, we overachieved our Admiral 2.0 ambition. With cloud migration, new data platform, tech stack renewal, hybrid working, scaled agile delivery, predictive AI excellence at scale and the announcement of our multiproduct offer. Fifth, we made further progress in our Motor proposition, including market leadership in EV, as Alistair mentioned, growing telematic product, fast-growing subscription model and short-term insurance with our brand for the youngest Veygo. Last but most important, throughout this period, we maintained our historical and quite unique strength. More than 20-point combined ratio advantage versus market in our core business, a unique 30-point delta return on equity versus market, a group NPS above 50 and the legendary Great Place to Work status. So back to nowadays where this leave us. Our current market presents very significant growth opportunities. They are large, attractive, growing with a combined size of around GBP 130 billion. And today, our market share across many of these markets remains relatively modest, and this leaves us substantial headroom to grow. We're continuing evolving our offering to unlock further opportunity in lending with the first forward flow deal and a new car finance product in Europe, extending our distribution and product lines. Commercial Insurance and SME are also good opportunity to provide strong proposition to a large underserved market, experiencing similar trends to Personal Lines 20 years ago with more digitalization, pricing sophistication and automation, where we can deploy our competitive advantage. Organic growth in all these segments will be driven by market-leading expertise in price comparison site and digital distribution, channels that are growing faster than the rest of the market. Cross-selling and higher retention and increasing economies of scale; and fourth, automation and synergies across the group. Our plan is based on organic growth, but we will consider opportunities for selective accretive acquisitions to accelerate diversification. Importantly, the diversification also reduced over time our exposure to any single market cycle, making Admiral more resilient in time. So having delivered on our strategy, we now look forward starting with the market context that is fast evolving, but also presenting very interesting opportunities and tailwinds. The U.K. market cycle in Motor is expected to turn and the regulatory environment is expected to be more predictable as Alistair commented before. Market consolidation could create more rational dynamics overall. More importantly, the rapid evolution of AI and gen AI represents a major opportunity for us. Predictive AI is becoming the key driver of underwriting differentiation. And we already have 12 points of loss ratio advantage versus market and this is a big driver of it. Gen AI and automation offer efficiency potential of up to 30% in the long term for customer service area and may also disrupt distribution and proposition in the long run. What is interesting to us is also the potential to accelerate the transition to direct distribution in markets where direct has more room to grow. Another major trend is the advancement of car technology, another key pillar of our strategy since 2020 Motor evolution. In the short to medium term, the most impactful change will be the shift to electric vehicles, expected to reach around 80% of new car sales by 2030, where we already have underwriting and market share leadership, as Alistair commented before. This is followed by an increased penetration of advanced safety systems. These technologies have a positive impact on collision frequency, but this has been so far more than offset by an increase in severity. As for EV, our scale and sophisticated prices approach results in a competitive advantage. In the long run, we expect autonomous vehicles, now in their infancy, to grow in share and reach a point where frequency decrease will not be anymore offset by severity. For this to happen, we need to see technology, customer appetite, regulation, infrastructure, all to further develop across countries. It will take anyhow long time to scale with higher level autonomy expected to represent around 4% of the car park by 2035, and the overall market premiums expected to be continuing to grow for at least 20 years, supported by number of cars on the road and the mix. We remain very close to this evolution, having, for example, underwritten Wayve, an autonomous vehicles player in the U.K. since 2018. As AI and mobility trends evolve, our view is that the key winning factor will remain sophisticated data-driven decision-making, scale and a lot of good quality data at scale, an entrepreneurial mindset consistently looking for opportunity to innovate and cost efficiency. And those are all areas where Admiral has a structural advantage, including 8-point expense ratio delta versus market. So overall, we are strongly positioned to leverage those key trends. Now let me introduce our evolved strategy framework. First of all, this is not a discontinuity in our strategy. It's an inflection point where we start compounding what we have already built, a more diversified business, stronger platforms and proven competitive advantage. The focus is now making those trends to reinforce each other and more deliberately over time. I think about this strategy with a set of reinforcing layers, each layer supports the next and within each layer, the benefit compound as the business grows. The other layer of our strategy is where we compound performance. Our first pillar is scaled selectively and profitably. And this is about translating diversification into sustainable growth and accelerate margin in our newer lines of business as they mature. The middle layer is where we compound capabilities. Our second pillar is future-proof our competitive advantage and it is about leveraging on the strong capability we have built in data and technology and the multiproduct benefits to improve customer lifetime value and our structural edge. At the core, at the center, we are compounding our foundations. Our third pillar is amplify the Admiral DNA, and this is to ensure that our culture, our talent, the innovation and the impact continue to evolve, providing stability and long-term direction and resilience as we grow. So the pillars are interconnected. Stronger foundation are a driver of stronger capability and in turn, these are enabler of stronger performance. Let me now walk you through each of these pillars in more detail and explain what we intend to prioritize and what we aim to deliver for each. So first pillar, scaling selectively and profitably. We have a clear ambition to continue to scale all our business while increasing margins in our newer lines. In U.K. Motor, we'll continue to grow as we have done in every cycle since Admiral was founded with discipline and at the right time, as Alistair illustrated earlier. We'll continue to invest to maintain our market-leading margins. In other lines of business, U.K. Personal Lines, Admiral Money and Europe, we will continue to grow and at a faster pace of Motor on average, generating greater economy of scale and higher margins. A key focus will be transferring our underwriting and claims trends from U.K. Motor into other products and geography as well as creating more cost synergies across the group and leverage the benefit of multi-risk ownership. Overall, we expect to deliver strong revenue growth everywhere, including reaching top 3 position in Other Insurance Personal Lines in the U.K. and substantially higher margin for those business combined, more than doubling profit by 2028 and more profitable growth thereafter. Finally, we will continue to develop our new and still small U.K. Commercial Insurance business, building a stronger SME proposition and growing commercial motor starting with the integration of Flock. Now let's move to the capabilities that are the key enabler of the growth ambition that we just discussed. It's a virtuous circle that starts from our structural strength in data, customer focus and speed with the objective to increase customer lifetime value. And with higher customer lifetime value, we create optionality, the flexibility to reinvest in these capabilities or to invest and grow or to retain margins. On the left side of the slide, we see how this focus translate into better underwriting results and efficiency. We'll continue to extend our advanced predictive AI capability, increasing both the quality and the velocity of pricing across all the lines of business and geography beyond motor. We'll also increasingly leverage on connected vehicle data and predictive AI beyond underwriting into customer-based management. This model -- this predictive AI model already delivered over GBP 100 million of incremental loss ratio value, and we expect this to continue over time. At the same time, we see good potential from generative AI to improve customer engagement, to increase productivity in technology and service area, and in particular, to improve speed of settlement that is great for customer and in addition, correlates with lower cost of claims. It's a win-win. Combined with further automation and continued cost discipline, we expect more than GBP 100 million of annual efficiency benefit by 2028. That as I said before, we may decide to reinvest in existing capability. On the right side of the slide, we look at our customers. We are strengthening a mobile-first digital end-to-end experience, multiproduct ownership and retention, which is already above market and will further benefit from multiproduct customers retaining around 5 points better than the rest. Lower expense ratio, higher retention and multiproduct ownership are key driver of higher customer lifetime value. As mentioned, this creates optionality, but also a more resilience to long-term market trends, margin pressures and volatility. So moving to the third pillar, amplifying Admiral DNA. This is what makes Admiral Admiral and different. It's our culture, it's our approach and it's something we are deeply proud of. As the environment evolves, we are focused on ensuring that our DNA evolves too, starting with our people through reskilling, developing internal talent and strengthening diversity and mobility across the group. We had this year so many examples of senior leader moving across different area and geography, including the new CEO of Veygo and new Head of Claims, new Group Data Officer, new Head of Data and Tech in Europe. And this internal mobility allow us to get different perspective and cross-fertilization from one side, but also continuity and cultural fit from the other. Another strong feature of Admiral culture is relentless curiosity and innovation, and we'll continue to evolve our products and innovate for our customers. We focus on offering competitive price, inclusive product, affordable product, including for nonstandard risks. Safety and sustainability are central in our product proposition, whether through fleet safety proposition like Flock or through EV electric vehicle leadership or initiatives around flood prevention. We also want to increase our positive impact on communities, investing around 1% of profit into community initiatives with focus on employability and climate resilience. We are proud of the 45,000 volunteering hours delivered by our colleague in 2025 and remain committed to our net zero ambition by 2040. So that was the third pillar of our strategy. Our strategy is also supported by a simple and disciplined capital management framework that is designed to increase value over time. So how we allocate capital to our operation? In U.K. Insurance, we focus on optimizing returns over the medium term. As we've always done, targeting consistently high return on equity with no structural capital constraints. In other lines, we invest to support growth and margin expansions where financial orders are met or expected to be met in the near term. In newer hires, like commercial, for example, we allocate capital to R&D and early-stage investment while requiring a clear right to win and scalability in the medium to long term. A key structural advantage is our capital-efficient reinsurance model and this is a competitive advantage that is quite difficult to replicate as it stands as it is built over more than 20 years of strong track record. Geraint already talked you through the other steps of our framework, including the introduction of buyback as additional way to return surplus to our shareholders. Selective M&A remains an opportunistic tool to accelerate growth, especially on Other Personal Lines in the U.K. and in Europe, only where our financial hurdles are met. So in this slide, next slide, we bring all of it together. Our strategy and capital management framework designed to deliver strong value for our customers and shareholders. We already delivered strong earnings growth, exceptional return and resilience through the cycle with a 7.6% EPS CAGR over the last 5 years. Looking forward, our ambition is to sustain and build on that performance by scaling what already works, disciplined growing U.K. Motor, faster growth and margin expansions in other lines and continued optionality from capability improvements. Our model is quite unique in the sector, delivering at the same time, strong returns, growth and exceptional capital efficiency. Importantly, this is about quality of growth as much as quantity, retaining our competitive advantage, our capital discipline and our culture that underpins them. In short, we believe we can continue to deliver higher returns sustainably while staying true to what makes Admiral different. So conclusion, to sum up, 2025 was a record year for Admiral, record profits, record dividends and strong customer growth delivered through discipline in U.K. Motor and increasingly diversified contribution across the group. Second, we have fully delivered our 2020-2025 strategy. Admiral today is resilient and more diversified with proven competitive advantage that are difficult to replicate. Third, looking ahead to 2026, while U.K. Motor market remains competitive, we expect price to increase. Admiral is well positioned to perform strongly and remain disciplined and resilient through the cycle. Fourth, we have evolved our strategy to compound those trends, not change direction, but raising ambition while staying disciplined. We have strengthened our capital management framework, adding buybacks alongside dividends while maintaining a very strong balance sheet and flexibility to invest. We remain confident on our trajectory, on our ability to leverage market trends and continue to deliver even greater value to our customers and to our shareholders for the long term. Thank you very much for listening. And now we're ready to take questions. Milena Mondini: [Operator Instructions] I think, first one, I saw it. Darius Satkauskas: Darius Satkauskas with KBW. The first question is sort of a statement and a question. I appreciate the update to the capital return policy introduction of opportunistic buyback. I think one of the challenges with having an opportunistic buyback rather than the program is that when you do it, it's great. When you don't, it sort of signals in the market that management is saying the shares may be expensive. How are you going to deal with that challenge? And are there any hurdle rates you'd like to point for us to sort of gauge how you think about when we should expect buyback and when not? And the second question is, your Flock acquisition, where do you think you are in positioning for the potential liability shift to Commercial from Personal among your competitors? And who do you think is going to determine the win in the future? Is there a risk that a company like Allianz with a huge balance sheet simply takes the entire market in Commercial Insurance? Or do you think Admiral can appropriately compete 10 years down the line, 20 years down the line? Milena Mondini: Geraint, do you want to take the first one, I'll take the second? Geraint Jones: Yes. So buybacks, it will be based on what the Board assesses is the right thing to do to try and deliver the max return for shareholders over the medium to long term. I don't, certainly for the foreseeable future, expect it to be dip in, dip out. We'd expect to be doing it for 2026, and we'll give -- we -- the company will give an update on that at least annually, I suspect, as we move forward. But yes, I hear your point on opportunistic versus steady. Milena Mondini: So your second question is about Flock and Commercial Insurance. So there are a few reasons why we're interested in this market. It's attractive as stand-alone market, but it's also a market where we see we can deploy a lot of our strength. And the fleet market is very competitive. So you do need to be a very good underwriter. Our claims and pricing strength can be transferred across nicely. But we also think it's a market that is -- it will be disrupted. And that's why we didn't want to really enter in the traditional way, but just focus on a proposition that we think is fit for the future, is the type of business that's going to grow in the future. So it's telemetry based. There's a lot of data from -- a lot of driving data, a sector in which we already have developed strong components to very large and growing telematic portfolio in Personal Lines. It's an interesting proposition because there is a strong feedback loop to driver to increase safety, to increase performance. And I would say it's also a building block for car of the future. The more the car become -- embed safety features and become autonomous, the more this type of skill set, data-driven pricing and underwriting and the feedback loop is important. So for us, it's a very interesting way to create and to develop a business that is interesting per se, but is also a way into the future. And I think it's a competitive market. We need to do it in the right way and with a proposition that is future fit. That's our ambition there. And we think the mix of Flock skill, technology and proposition, an Admiral amount of data, strength in pricing, data-driven pricing sophisticated telematic and also very strong claims management really can create something unique. Sorry, I'm going to go in order one. Ivan Bokhmat: It's Ivan Bokhmat from Barclays. My first question would be on the strategy into 2030. I just want to clarify, perhaps, did I interpret it correctly. So the slide that shows your 8% CAGR in the past 5 years, you're saying that you're trying to achieve that same growth into 2030. So as a statement, maybe you could just confirm that. And secondly, on the trajectory of those earnings, as far as I understand, for 2026, you're talking about flattish numbers and then it would imply more of a hockey stick trajectory in later years. So perhaps you could just talk a little bit about how this trajectory might look like, where the acceleration will come and maybe specifically on the U.K. Motor, that cyclical target where you would grow 5% through the cycle over time, when will that time frame apply in this particular case? And maybe one final small question. The partial internal model, the -- if you apply imminently, do you think you will get the regulatory approval by year-end? And what does it mean for some extra capital decisions? Milena Mondini: Yes. So I think what we're seeing here is 3 things. As you know, we normally don't give very precise guidance on long-term or medium-term earnings. But what we're saying is that there are 2 very clear revenue for growth and profitable growth in the future. Our core market, that is U.K. Motor, is a market where we have a market-leading business, we expect to continue to grow across the cycle. We'll continue to do at the right time and with the right choice and the discipline around pricing. But we'll continue, as we've done in every single cycle since Admiral was founded. We'll continue to grow our U.K. business from a larger base and retaining very, very strong margin. We also have another leg that is our other lines of business, Personal Lines and U.K. Insurance, Europe and Money, and we're planning to grow across all of them indistinctively and also increase margin for those business combined. So if you take those 2 things together, we expect to increase shareholders' returns over time without having necessarily put a specific date because there will still be some cyclicality. But the other preservation is with increased contribution from other lines, although there will still be market model cyclically to impact our results. We think we are gradually, over time, reducing the dependence on a single cycle. So that's the key message. Geraint Jones: Internal model? On the internal model, we do expect to submit our application for approval very soon. The time line for review of that is not fixed. And as you can imagine, it's not a short read. So I think we'd update on the outcome of that at the appropriate time rather than comment on how long we expect it to take. If and when it's approved, you can be sure we'll be trying to use it around the business to optimize and things like that. And again, we'll talk about that at the right time. Milena Mondini: Sorry, you mentioned something also about the shape. And as I was saying, there is still crack in the market. So as Geraint suggested, we do see a different path across the next few years. So we'll grow through the cycle. But next year may have a different impact on our growth ambition than the year after that. So that's -- but that's very normal. That's what we have done in the past, as you've seen in the slide that Alistair projected. We tend to grow when it's the right time when underwriting margin are healthier and will continue to do so. Sorry... Benjamin Cohen: Ben Cohen at RBC. I just wanted to ask a few things on the U.K. Motor business. Firstly, would your central assumption be that you would be able to match claims inflation through the course of '26? And could you make a comment as to what you've seen in the market reaction as you've tried to put through or you have put through some price increases at the beginning of the year? And the third element, could you just remind us what happened to claims inflation in Motor kind of post the Ukraine, Russia invasion, just to maybe give some sort of comparison with maybe where we are now in terms of the situation in the Middle East? Milena Mondini: Al, take it the first and I'll, sorry... Alistair Hargreaves: Yes, sure. So in terms of managing through the cycle in 2026, we're expecting claims inflation, as I mentioned, to be towards more normal levels, so mid-single digits. We'll be looking at that. We'll be looking at elasticity within the market. We'll be thinking about average premiums and continuing to price with discipline. As you saw in 2025, we did that and we've -- as Geraint said, we're very happy with the profitability on that yet. It's not as strong as '24, but it's still strong. So that will be the same approach that we'll take to 2026. As Milena said, reiterated, we think that's the right approach to optimizing both value and growth over the medium term. So far, in terms of market at the start of this year, we're seeing different strategies from different players. But broadly speaking, I'd say that market premiums have been relatively flat. But as I say, we've started to increase our prices at the start of the year. In terms of claims inflation post the Russia invasion, there was a lot of disruption to the supply chain and that was one of the impacts that caused higher parts, vehicle inflation as well as supply chain constraints. We don't think it's a direct parallel to what we're seeing at the moment. In terms of the disruption that we're seeing at the moment is more about oil and fuel prices not directly related. But I think as you're inferring, it increases supply chain or the geopolitical instability increases the risk of that. So that's something we'll be watching very carefully through our supply chain. William Hardcastle: Will Hardcastle, UBS. First of all, I'm going to embarrass you, Geraint. Thanks very much for your help over the years. There's been some journey in the current role. I've always really enjoyed our interactions, some of them quite lively. But you've always been really helpful. So good luck for future endeavors, including the Admiral roles. Next, on to the questions, I'll ask you the tough ones now. You booked 2025 under -- undiscounted booked loss ratio at the 78% or 85% undiscounted. That's an average number. So I'm assuming the exit was slightly worse, given the shape of the pricing last year. I guess prepricing in excess of inflation, pre-percentile shifts, how roughly, where is the starting point essentially for that '26? How much worse than the 85% should we be thinking? And then moving on to something a bit bigger picture, doubling of the non-U.K. Motor business. It's quite non-Admiral to give a target like this. I'm sort of intrigued as to the logic, the thinking behind being -- it must imply a lot of confidence behind it. Does it imply any slowdown at all of top line and sort of extraction of the benefits you put through? Or is this just a better hope and a direction of Travel from here? Alistair Hargreaves: I'll take the first one. So the first one was about the exit loss ratio. So as you pointed out, the undiscounted booked loss ratio is at 85%. It's not -- it's higher, obviously, than '24 that was an exceptional year, but it's not unusual if you look back at previous years, hence, the comments about good profitability. As I said, we managed rates through the year, paying very close eye on claims trends. And in the second half, we were flat. And I think that means that the exit loss ratio was slightly higher than the overall, but not significantly so. And as I also mentioned, as we started in '26, we made some adjustments to price to make sure that our starting point in '26 was in the right place. Milena Mondini: The second point is about confidence about the other line of business. It's a mix of 2 things. First of all, is the momentum. If you look at where we are, momentum and maturity, if you want, of some of our other lines of business, we have fantastic 2025, doubling profit in Admiral Money, strong recovery in Europe and return to profitability with confidence in the prospect and the future. And other lines of insurance in the U.K. also deliver a stellar year. I think we are reaching a maturity in those areas that allow us to continue to grow and increase margin over time. And it's also, I would say, a reflection of our strategy because the strategy is also very much about compounding. And so what I mean is that we have a few things -- we're focusing a lot on is our proposition to multi customers, very important because customers with more risk have better retention, have better loss ratio and better NPS, tend to be happier and stick longer with better results and also better experience for them. So I think there is momentum in terms of the multi -- our journey to multi-products are probably later than some other player in the market because historically, we were very much a U.K. Motor story. But as this business grow, there's a lot of potential there. That's a very interesting opportunity, but also transferring some of the strength in Predictive AI, for example, across all the business is also another big driver of value. And so if you merge those 2 things, plus economy of scale, plus potential benefit, we do see a momentum that will allow us to both continue growing and deliver more profit. And so I think it's really very much a reflection of our strategy and a bit of the switch of focus from growing individual business that are stand-alone interesting to really compound the benefit. So it's just meant to be that over time. We'll continue to be disciplined. So we follow cyclicality. There's cyclicality in the U.K. Household market that will take into account, but we do think we can achieve both growth and higher margins. Thomas Bateman: Thomas Bateman from Mediobanca. Just a quick question on the reserving. I was surprised to see the PYD quite low, but then the risk adjustment percentile come down. Could you just explain now how that's working? And the second question is actually a follow-up to Will's on -- I guess, on Europe. I take your comment of Spain is breakeven now, but I guess you have been working on that for a while and there is more confidence there. And you alluded to AI platforms, et cetera. Have you been able to launch on any of those AI platforms, either in the U.K. or in Europe yet? Milena Mondini: So do you want to take the risk adjustment? Costi maybe briefly comment on the confidence in Europe and Spain, and I will pick up maybe on the AI. Geraint Jones: Actually, Tom, if you split out the Ogden impact on last year and compare year-on-year, you get the same percentage. So a fairly strong level of releases coming through year-on-year. The percentile was really ever so slightly down. I wouldn't say that we'd notably dropped the risk adjustment strength. So it's a very strong set of reserves and continued pretty consistent releases coming through basically in line, I think, with what we've guided in that kind of 10-ish range over the past couple of years. Costantino Moretti: So on Europe and then on the AI point, so basically, yes, as Milena mentioned, there is a good level of confidence. It's a large opportunity where we are making very good progress on several fronts. And what is giving to us the confidence is that we are keep trading at very good margins on the direct business and we are seeing very good progress coming from the distribution-diversification initiatives, which will help us to target much larger opportunities. And so once also those initiatives will turn into profitable ones in the medium term, we expect our overall margins to expand. In addition to that, we expect a more efficient reinsurance agreements to provide benefit in the medium to longer term. Clearly, there is also an element about the competitiveness on the expense side on the efficiency. And we're also there making good progress, and we are testing also some more advanced gen AI tools and models. On this front, it's more early days, but early signs are very promising. Milena Mondini: I think more in general on AI, there is a lot of opportunities. And a lot of that is focused on improving efficiency internally. It's about improving automation, increasing speed of servicing the customer and so forth. I guess your question was more referred to the distribution element. So how customers interact and choose insurance. And if you think about Admiral from very early stage, we've always been a bit of a forefront of disruption and distribution, and we were among the first direct player in the market in the U.K. We were the first to have an Internet-only brand, Elephant, let's call it in U.K. We're the first one to embed price comparison site with confused.com and so forth. So it's obviously something that, as you may imagine, we're very close -- we're working very close to price comparison site as they may embed more gen AI technology in their way of interacting to customer and distribution and adapting our website. We also have interesting pilot in part of the business, like gen AI embed chatbot in Veygo and other initiative across the group. So something we're very, very close. Now if you ask me, do you think this is going to be a very big disruption in U.K. Motor in the short term? I personally don't think is the case. I think there will be a different way of interacting with the customer. But the value proposition to a customer, how much you can save by shopping on price comparison site on Motor insurance is huge. It's hundreds of pounds sometimes. So I don't think it's going to be the first market where we see a lot of change. I think it's early to say. Everything is very nascent at this stage, but I think there are markets where this could be an acceleration to direct and that could be the one where customers are more used to speak with an intermediary, for example. So it can be commercial lines, it can be Europe where direct is not picked. But at this stage, it's very early to say. As for us, we try to be close to everything and work and progress on all the fronts at the same time. I think we had 1, 2 and 3, yes. Carl Lofthagen: Carl Lofthagen from Berenberg. Just the first one on the U.K. Home book. I think we've seen kind of continued expense ratio improvement as you've gained scale and you're now running the business at a combined ratio in sort of the mid-80s. Is that sort of the level that you're sort of happy with? Or are you willing to trade some margin to take market share as you've kind of said you want to be a top 3 player? And then the second question is just a clarification on the share count development. I think if I just look at the basic share count, which decreased by GBP 5 million from GBP 306 million to GBP 301 million in H2, but diluted went up GBP 1 million. Presumably, the shares you're buying back for the share scheme shouldn't impact the share count. Just I guess for modeling purposes, I mean, how should we kind of think about that, excluding sort of any sort of additional buybacks, et cetera? Milena Mondini: Sorry, Al, you take the first. Geraint will take the second. Alistair Hargreaves: So on the Household expense ratio, we've had an advantage in terms of expense ratio for Household for some time. But as you highlight, it's an area of focus. As the book grows and we get more renewals to customers, that helps in terms of expense ratio, but we're also focused on driving improvements. For example, Milena talked about how we can use gen AI for both customer experience and efficiency. So those are areas of focus. In terms of the combined ratio range, we think about Household similar to Motor, where it's about optimizing for value over the medium term. But as you're alluding to, we're a bit more biased towards growth on Household than margin. But we -- I think the 80% is good. I think we talked a bit about a range when we did the deep dive, so we're not sort of sticking to a specific target. But we'll do that in optimizing for value and growth over the medium term. Geraint Jones: On share count, Carl, if you look at the -- in the back of our accounts on Note 12, you got the update the number of shares that were in issue every year. It's been GBP 306 million odd for a couple of years since we stopped diluting for the share plans. The GBP 301 million is actually the number that's used in the EPS, and that excludes some of those shares that are held in the trust. The share purchases per share plans won't adjust the number of shares that were an issue, obviously. They will go to employees. The share buyback and cancel, obviously, that will reduce the number of shares in issue. So the purchase for the share plans doesn't change the number of shares. Buybacks obviously will. Derald Goh: It's Derald Goh from Jefferies. Two big picture questions, if I may, please. So the 4% sort of EV -- sorry, AV penetration rate by 2035, that's an interesting number. I'm just keen to hear what are the main variables that might sway that number. Essentially how prudent is that 4%? And maybe if you could also say what were your projections 10 years ago? How does that compare to what you had 10 years ago, let's say? And then secondly, going back to distribution, you mentioned there's potential to disrupt there. Maybe could you speak to your past experiences? I know you've been trying to push PCWs outside the U.K. Some places are more successful than others. What might be different this time that would allow you to be more successful with whether it's AI or changes in customer behaviors and what not? Milena Mondini: Sure. I think I'll take the first and second, but Costi, if you want to add anything on distribution outside U.K., it would be great. So EV, this is referred to this is referred to relatively common forecasts that have been out like the World Economic Forum and a lot of other organization. And I think the number is quite aligned. You may look at car sales in terms of car park is 4% because there is quite a lag time from new sales to fit into car park. The average -- the median age of a car in U.K. is 16 and probably the average is 11 years. So it takes time as the new model gets released. I think you're absolutely right. So it's still very much of an estimate, and there are a lot of influencing factors. You need to get, first of all, regulation in place, infrastructure in place, technology and investment in place and customer appetite in place. So there are a lot of things that can contribute and can go both direction. If we don't see the simultaneous development of all these 4 areas, it's difficult to imagine a world in which people will really freely just use autonomous vehicles car on the roads. So I cannot tell if it's prudent or not. But I would say this is really the majority of the -- I think everybody agrees that it takes some time, both because there are some hurdles and because there is time for the car park to evolve. And I think also take the chance to remind that this is about L3+. L3 basically means when the driver can take the highs off of the wheel, but still need to get in, in 10 seconds. So it's not really full benefit of EV in terms of, for example, liability shift and so forth. Anyway, it's very nascent now. So you asked me how this was versus 10 years ago? I think this is a story that we see in all the technology disruption. If I go back 10 years, this was supposed to be earlier. And so what happened is that this projection tend to shift. If you ask me how it was compared to a few years back, like maybe 3, 4? What I would say is not very different, but we see a slightly later adoption, but probably faster. It very often happen with every technology now that it takes longer, longer, longer, but then it can be more. So it's difficult to say, honestly. It's very, very early stage, and the U.K. is a bit behind the U.S. in terms of regulation and so forth. Second question was on distribution. I don't know, Costi, do you want to kick it off on? Costantino Moretti: Yes. On distribution, the -- well, the European markets, as you know, are very different. When we started our businesses a few years ago, I think direct was about 5%. Now on average, it's getting closer to 20% -- between 15% and 20%, so direct is still growing. And therefore, if a more AI-driven disruption would happen, we could say that being a leading player in those markets that will put us in a nice place. At the same time, price comparisons, you're right. We try to educate the market and to push more digital growth to accelerate. It didn't happen at the speed we expected. And at the moment, as I said, direct is still growing, price comparisons are doing nicely, but not at a supe- fast speed. At the same time, traditional are still a very important channel, which predominantly is the main channel, which is linked why we decided a while ago to start to diversify the distribution and on how to win and how we can be confident basically because the right to wins are exactly the same of direct. So risk selection, customer experience and lean operations. And the moment you demonstrate that you can replicate those, then you can win in that market and our results that are coming through are making us confident more and more that we can achieve this. Andreas de Groot van Embden: Andreas van Embden, Peel Hunt. Two questions, please. First one is on ancillary sales. I saw that the average sort of revenue per vehicle in the U.K. has come down from GBP 76 to GBP 71. Just wondered what your outlook is for this in '26 and '27, particularly not only on the installment income because I assume you've lowered your APRs, which has brought down the average premium per policy there or per vehicle there. But also on the other ancillary sales, whether you're seeing any pressure on those fees and commissions? And on -- the second question is on price velocity. I think you mentioned that. I just wondered what would you exactly meant by that in the U.K. and whether extending it means changing pricing more. I don't know whether you do intraday pricing or not in the U.K. But whether -- with that velocity, by how much could you extend it? And how important is that to maintain your competitive position, particularly through PCWs in the U.K. as the market becomes more competitive? Alistair Hargreaves: So it's Al. I'll take the first one. As you mentioned, the main driver of the change in the revenue is premium finance. It's worth noting that there's 2 impacts there. So we did reduce our APR through 2025, in line with the cost of funds. But also, we saw our average premiums coming down through the year. So that also impacts on the other revenue per vehicle. So in terms of our APRs, they're very competitive at the moment, not necessarily anticipating any changes, but we'll continue to assess for fair value on that product. In terms of average premiums, as we've said, we're expecting the market to turn and that will lead to -- and we're increasing our premium, so that will flow through as well. I don't think there's anything else of significant note to call out on other revenue. Milena Mondini: So on the price velocity, I think if we step back just a few years back, a lot of the pricing was done through SaaS or XL, and we could put price change in production overnight, we can have a meeting. If you all ask me, I'll let Geraint decide and make change almost overnight. That is still the case. And I think it's an advantage. And I think it's really rooted in the culture and the closeness of the management team to price into claims trend and that relevance that we give to loss ratio all around Admiral. But our pricing is more and more based on machine learning and predictive AI models. And this, of course, is not something that you change overnight because it's more complex, require more technology, the process to upgrade and renew the model just takes longer. And we've done a fantastic -- like a lot of work in the last year or 2 to really bring this time from ideation to change in production much shorter and shorter. I think there is still a bit we can go for. And so we're very close and we have a strong capability, more than 120 models in place, GBP 100 million of loss ratio incremental value. So we start from a good point. But I think there is more we can go to increase this even more. But the biggest opportunity in my mind is to extend this also more and to extend these trends more into other lines of business. So that's where I see the excitement. And to do that, we appointed this year a new group CDO. She did a great job in Europe to set up a new data platform. She just -- she's coming over and she came over actually a couple of months ago, and she's going to help to increase even more this ability. So I think we're really in a very strong position, but want to go. We're very keen to be as fast as we can. Operator: [Operator Instructions] We will now go to the question. And the question comes from the line of Vash Gosalia from Goldman Sachs. Vash Gosalia: Hopefully you can hear me. First of all, apologies for not being there in person. I have 2 questions, please. The first one is just on something you mentioned on your 2026 profitability. So if I heard you correctly, you said you plan to move to the middle of your confidence interval through 2026. And you've obviously also said you expect flattish profitability. So can I read that as your earnings in 2026 actually being supported by PYD just to offset some of the weakness in U.K. Motor? And any sort of color as to how or why that might be different would be really helpful. And the second question, a slightly longer term or big picture question. So you've obviously sort of alluded to you having a lot of sort of advantage on the cost ratio front. And you can obviously leverage AI and gen AI to improve that. But I'm just trying to think if the technology essentially democratizes the use of AI, wouldn't that allow your competitors to actually gain advantage quicker and narrow the gap to you? So any sort of color or comment on that would be helpful as well. Milena Mondini: Will you take the first? Geraint Jones: Yes. So we would expect to start to release our -- reduce our risk adjustment percentile from its current near max level towards the middle of the range during 2026. I would reject your assertion of weak U.K. Motor. I think U.K. Motor profitability for '25 is strong, but slightly less strong than the extremely strong 2024. So we think there's good profitability to come on 2025. And obviously, that starts to feed into the accounts in 2026. PYD and reserve releases are a constant feature of our income statement and profitability. But you are right to expect as we reduce the risk adjustment to some extent, obviously, that contributes to profitability in 2026 versus 2025. And if you do the mix, flat profitability, but higher profits from other lines of business means slightly lower profits from U.K. Motor, but from a very high start point. So I think -- Vash, I think that was the nature of the question, right? Vash Gosalia: Yes. I mean -- and apologies if I said like weak profitability. I meant more direction-wise. But yes, you've answered my question. Geraint Jones: No offense taken. Milena Mondini: On the second point, it's a very good question. It's a very good question. I think every technological evolution, data evolution and if you think about digitalization, automation, migration to cloud, more and more like technology, it becomes more and more a commodity itself, but the way technology is implemented is very differentiating and it becomes more so as we move along. And so a big decision on AI is how you do it. A big driver are how much this is adopted. So you can deploy gen AI tool to have all the organization, but how much is adopted, how is adopted is a massive driver of how much efficiency benefit you can drive. I think we start in a great situation because we tend to have a very strong culture, very transparent and people with good expertise that are really, really keen to do what is right for the business. Governance is another differentiating factor, how you govern what you put in place and how you make sure that it's solid, is stable, how make sure that the model learn over time. I think an appetite for innovation, bottom up as well as top-down is also very important. So I think a lot of the element that plays here are a culture and also the ability to do it faster, better and cheaper than others. And it's still early to say, but I think we are well positioned to achieve that. We have a last question. Shanti Kang: It's Shanti from Bank of America. You just touched a bit earlier when we talked about the internal model and how that could give you a bit of flexion for M&A. Historically, I guess, you guys have partnered with names via Pioneer or you've had a relationship with the existing names before you would kind of move forward with an M&A transaction. What kind of skill sets or regions, if you were looking at that, would you be thinking of? Milena Mondini: It's the last question. Do you want to take it? Geraint Jones: It sounds like I've explained this badly. I wasn't really referring to the internal model coming in, giving us more firepower for M&A necessarily. I understand the point of the question, but I think funding small M&A to retain profitability is one of the options I would talk about. I know you should cover where M&A might play a part of it. Milena Mondini: Yes. So as I said, our plan -- our history of successful organic growth, and we're excited about the plan we have on growing organically. We will look into opportunity mainly to accelerate diversification, I would say. So as we've done with Flock as we've done with More Than, we'll look at accelerated diversification in other lines of business in insurance in the U.K. or in Europe where we need more scale. But we stay open, look and see, but also very, very focused on our organic growth plan and consider different option on how to eventually tackle the challenge. Thank you very much. Thank you for your question, and thank you for your time. And we'll be around a few minutes if that can help. Thanks a lot.
Operator: Good afternoon, and welcome to Inuvo's Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 5, 2026. I would now like to turn the conference over to Katie Cooper, Director of Marketing. Please go ahead. Katie Cooper: Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo Fourth Quarter and Full Year 2025 Shareholder Update Call. Today, Inuvo's Chief Executive Officer, Rob Buchner; and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10-K with the Securities and Exchange Commission this evening. Before we begin, I'm going to review the company's safe harbor statement. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to Inuvo, Inc. are as such a forward-looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussions will include references to non-GAAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. With that, I will now turn the call over to CEO, Rob Buchner. Rob Buchner: Good afternoon. Thank you, Katie, and everyone for joining the call today. Before I begin, I'd like to take a moment to thank the entire Inuvo team as well as our broad group of clients and partners for your support as I've moved into my new position. Thank you for all you do, every day for this company. I'd also like to thank Rich Howe and the Inuvo Board for your confidence in me and for providing an excellent vantage point over these past months as I transition to the new role. As I mentioned on our call in January, I'm taking the helm as CEO at a decisive turning point for our company and for our industry at large. Specifically, as new technologies emerge, consumer behaviors and intent have become more widely distributed across digital media and a agentic systems, making consumer purchase intent more difficult to ascertain. At the same time, the industry has experienced an increase in sophisticated technologies, often nefarious that have allowed lower traffic to masquerade as legitimate, high-intent consumer demand, necessitating quality controls beyond those historically available. This is a systemic industry-wide issue. As such, the industry has been subject to increased regulation, both due to consumer privacy concerns and because of Platform partner's compliance measures to restore integrity of search ecosystems. All of these factors lead to a widening gap between perceived intent and true quality in the advertiser's digital media experience as well as a more difficult operating environment for those reliant on legacy technologies. Put simply, our industry is ripe for disruption. When I was contemplating the CEO role at Inuvo, I had a front row seat for nearly a year to IntentKey's leading-edge tech that I believe is both undervalued and a true antidote to the shortcomings of legacy systems. While today, the field is littered with legacy ad techs that overpromise and failed to deliver on their AI-powered premises, IntentKey was purpose built to the Agentic era. Advancements in adaptive buying systems are very real and establish a widening arena for our Generative AI to be deployed within other Agentic workflows as an intelligence layer. IntentKey provides custom, adaptive audience models in real time, utilizing a large language model that doesn't depend on cookies or other legacy technologies that are being scrutinized by increased regulation and privacy concerns. But the real value proposition is in its speed. IntentKey's actionable intelligence leverages predictive AI, enabling users to enter bid streams faster, up to 24 hours ahead of market moves. When supply and demand dynamics favor higher returns on advertising dollars. As budgets are tightening and return on advertising spend is decreasing at an alarming rate, we have a technology that can identify new prospects and accelerate conversion with dynamic audience modeling. What's more, I believe there is a tremendous opportunity for us as a data provider, leveraging our IntentKey product, there is a path to pursuing data deals that allow advertisers and marketers to directly use IntentKey to custom design their audience models and execute media buys with minimal friction. This shift will require deeper SSP and DSP integrations, but will return a more scalable, reoccurring revenue model going forward. I see an opportunity here to leverage this technology towards higher-margin growth, resulting in a more resilient business for Inuvo. And we have a team that's ready to execute. This shift will take time, but I believe we are well positioned to exploit this market window with a proprietary disruptive technology that is well ahead of the competition. 2026 Is about exploiting near-term opportunities, while laying the groundwork for this evolution. My plan is centered upon 4 strategic pillars: first, a refined go-to-market focus. As the ad agency complex continues to contract, it's imperative that we transition towards high-margin upstream strategic engagements. To do this, we will execute on 3 primary fronts: one, pursue large, high-value deals with CXOs inside of brand organizations, leaders who control budgets and are ensnared by diminishing returns in performance marketing. By pursuing relationships further up in brand authority, I believe we can harness an opportunity to provide brand stewards with greater transparency and actionable information that can help these brands grow, while also increasing our profit margins. Two, big partnerships where we can integrate IntentKey, both as a service and as a data provider because IntentKey can integrate into these legacy and emerging buying systems more effectively than other technologies, I believe we have an opportunity to create exponential growth through integration in ways traditional competitors cannot. What's more, we believe we have a commanding advantage in this area with our large language model, positioning us to become a leader in helping brands navigate this rapidly evolving programmatic landscape. And three, align our deal teams and sales organizations to support high potential verticals. This is a continuation of the work I started as Chief Operating Officer and is an important step toward the kind of growth I envision for the organization. My second pillar is raising IntentKey's industry profile. The evolution of our industry has laid bear 2 strategic imperatives for brands. The first imperative is speed, advertising alignment and ROI in an environment where structural foundations of legacy systems are faltering. The second of these imperatives is the need for privacy-first consumer protection. In this environment, IntentKey's value proposition is clear and significant, and yet I believe undervalued due to a lack of brand awareness. IntentKey is not just another AI-powered ad Platform. It's a Platform that provides intelligence and a meaningful strategic advantage to its users. We have a significant opportunity to drive growth by translating IntentKey's value proposition into sustainable, high retention revenue growth through vertical marketing of the IntentKey Platform, clearly articulated branding of IntentKey's value proposition and 24-hour advanced prediction capabilities and promotion of the brand by showcasing an elevated user experience through IntentPath. The third pillar is continuous product innovation. Inuvo's core competitive advantage is Intent Discovery, delivered through a suite of advanced visualization and compliance tools. We believe that continued advancement of those tools through the adoption of new features, integrations with new DSPs and enhanced privacy features can both deepen budget commitments from our traditional media customers and expand our potential addressable market into other privacy-sensitive verticals. And lastly, our fourth pillar is high-margin growth. Through successful execution on the first 3 pillars and an increased focus on driving Platform-led higher-margin revenue into the business, we can strengthen the company through improved profitability, liquidity and financial resilience. As I sit here today, I believe we're already making some early progress on these 4 pillars. With respect to our go-to-market strategy, we will continue to be drawn to enterprise-grade sales directors. Individuals who can engage with CXOs on a strategic plan versus a transactional basis. These sales directors will court evolve marketers who recognize IntentKey as a foundational intelligence layer for the age of Intent. With this talent in place and aligned with our target verticals, we are positioning ourselves to secure the large service contracts and integrations that can drive stickier, compounding revenue over the long term. As I mentioned on our January call, we entered 2026 with the strongest sales pipeline for IntentKey we've had to date. This builds upon the 83 new clients acquired in 2025. Overall, early year performance reflects improved retention quality, higher average budget commitments and stronger revenue visibility compared to the prior year. In addition, we continue to have active discussions with several high potential IntentKey customers. I hope to share a few of those brand names next quarter. The nature of IntentKey integration and testing necessitates a longer lead-up to deal closings. Still, we expect IntentKey's adoption trajectory to grow beyond historical levels. With respect to raising our industry profile, in the weeks ahead, we'll be launching a product-specific website for IntentKey to further support our sales teams and to encourage self-service trials. This site will host product videos and will showcase new product capabilities. Our corporate site inuvo.com was refreshed this week. And as a leading ad Platform in the search marketplace, we launched clicktransparency.org, which elevates an urgent existing industry initiative to restore click integrity by setting new standards that will drive out low-quality traffic to the ecosystem at large. This initiative is meant to drive greater transparency, effectiveness and safety for consumers, publishers and advertisers they serve. Its charter is aligned with our Platform partners, and we are already getting the attention of other ad tech, competitors and some of the largest ad tech platforms in the world. And with respect to product innovation, we've recently completed integrations with SSP and DSP providers that will expand our addressable market by enabling us to bring IntentKey to companies in new privacy sensitive industry verticals, including pharmaceuticals, health care and government. We are acting with urgency and investing in lead generation and outbound marketing campaigns, laying the groundwork for addressable market growth in the near term, and a transformation to a data provider in the long term. While it's still early, I'm happy to report, we are already in active discussions with companies who require the functionalities provided by these new integrations, whose needs we couldn't address under prior data sources. In addition, we recently began a pilot of a new social media offering that brings IntentKey Audience Intelligence to social media campaigns, effectively opening up a new channel to our sales function. And we are currently exploring ways to expand our offerings into the AI chat environment to harness opportunities arising out of the rapid adoption of AI-assisted surge. And lastly, we're in the process of migrating our data centers to the AWS Cloud, which will provide cost savings, greater scalability and resiliency as we accelerate growth. With respect to high-margin growth, successful execution in pursuing growth in our higher-margin, self-serve and IntentKey products, should translate into stronger financial results and a more financially resilient company in the future. Now I want to be frank, the last couple of months has been challenging to the Platforms side of our business, even though IntentKey is showing robust signs of growth early in the new year. After bottoming out in mid-January, I'm pleased to say that our Platform products have seen signs of recovery. However, we believe the recovery process will be gradual. In light of this, we're taking prudent steps to contain costs where we can until the business returns to normative sales velocity. We're onboarding new partners week-over-week. In the meantime, our AI-powered quality assurance feature, Ranger is live and is continuing to ensure quality, alignment and compliance, closing the gap that necessitated the fourth quarter reset of the system. We remain confident that as we work our way through the self-imposed pullback on this side of the business, we are unlocking our ability to grow sustainably in the future from a more solid foundation. Our industry is at an inflection point. However, it's clear to me that the market is coming around to us and importantly, to IntentKey. Now is the time to move with urgency, driving towards a more durable, compounding future that has much to offer in this changing marketplace. We are working to harness the opportunities before us and believe we have the right strategy to return to strength in the months ahead. With that said, I'll hand it over to Wally who will take you through the financials. Wally Ruiz: Thank you, Rob. Good afternoon, everyone, and thank you for joining us today. I'll start off my comments today with a review of the fourth quarter and full year, then I'll touch on liquidity and our near-term outlook, after which, I'll hand the call back over to Rob for closing comments. First, looking at the fourth quarter, the intentional moves we made with our Platform products resulted in a significant pullback in revenue during the fourth quarter. Fourth quarter 2025 revenue totaled $14.3 million, a decrease of $11.9 million or 46% compared to the fourth quarter of 2024. Partially offsetting this decline was a new campaign introduced in the prior year by another large Platform client that had increased its revenue by 30%. Cost of revenue was 8% higher in the fourth quarter compared to the same quarter a year ago, resulting in gross profit of $9.5 million, a decrease of $12.3 million or 56% from the fourth quarter of 2024. The higher cost of revenue this year was due to the new campaign I just mentioned. Unlike other Platform campaigns where their cost is reported as a marketing cost, this campaign is accounted for as a cost of revenue. Fourth quarter operating expenses were $10.7 million, down more than 50% compared to the fourth quarter of 2024. The driver of lower operating expense was a 60% year-over-year decrease in fourth quarter marketing expenses driven by lower revenue from our largest Platform client. However, all components of operating expense in the fourth quarter were lower than the prior year. This decline in operating expenses helped offset the year-over-year gross margin decline yielding a fourth quarter operating loss of $1.2 million compared to operating income of $220,000 in the same quarter last year. Net loss for the quarter was $594,000 or $0.04 per share. Adjusted EBITDA for the quarter was $360,000. For the full year 2025, revenue increased to $86.2 million compared to $83.8 million in 2024, driven by strong performance in the first half of the year, primarily from our 2 largest Platform clients. Cost of revenue increased to $22 million in 2025, an 83% increase compared to 2024's cost of revenue of $12 million. This increase is a result of the change in the Platform sales mix and in particular, growth with the Platform client with its new campaign, as I previously mentioned. As a reminder, cost of revenue consists primarily of payments to website publishers and app developers who host our ads as well as to media cost of agencies and brands clients. The increased cost of revenue caused gross profit to decrease $7.5 million or 11% in the full year of 2025 compared with 2024. Gross margin for 2025 was 74.5% compared to 85.6% in 2024. Full year 2025 operating expenses were $70.9 million, down $6.4 million or 8% from 2024, driven by a $7.8 million decrease in marketing expenses. General and administrative expenses increased by $1.4 million, primarily due to the reduction in the allowance for expected credit losses recorded last year. Operating loss for the full year 2025 was $6.7 million compared to $5.5 million in 2024. During 2025, we recognized $1.9 million of other income driven by employee credit -- employee retention credits of $1.1 million and $700,000 from a refund relating to a prior period, all of which were received during the year. As a result, we recognized a 2025 net loss of $5.1 million, an improvement of $667,000 compared to the net loss of $5.8 million in 2024. Net loss per share was $0.35 and $0.41 in 2025 and 2024, respectively. 2025 adjusted EBITDA was a negative $1.3 million compared to a negative $816,000 in 2024. Turning to liquidity. We ended the year with $2.8 million in cash and cash equivalents and $6.7 million availability under our borrowing facility as of December 31, 2025. In January, we entered into a $3.3 million subordinated convertible note and we received $6.2 million in connection with a class action settlement claim. These liquidity events have helped us navigate the cash consequences of the pullback in Platforms revenue. We believe we have adequate liquidity to execute on our strategic growth plans. Before I hand the call back to Rob, I want to give a few quick thoughts about 2026. Regarding the Platforms business, as Rob mentioned, we are beginning to see recovery in our revenue after what we believe was a bottom in mid-January. As a result, Q1 Platforms revenue is expected to remain light with recovery coming gradually over the course of the year. I also want to remind everyone that the first and second quarters of 2025 were record revenue quarters for us, making it extremely tough comps year-over-year. With respect to agencies and brands, we're forecasting strong double-digit growth for each quarter of 2026, driven by a very healthy sales pipeline. With that, I will hand the call back over to Rob. Rob? Rob Buchner: Thanks, Wally. It's an exciting time to be part of Inuvo. We say that the precipice of an industry sea change, armed with proprietary technology that we believe can be a wellspring of new growth in the programmatic Agentic era. AI agents will soon handle complex workflows, audience discovery, custom modeling and activation that previously required hours of manual work across multiple platforms. But this shift requires an industry-wide approach with data and technology providers, agencies, DSPs and SSPs collaborating to realize the promise of Agentic advertising. Some of this development is happening today, much of it is still hype. My aim is not to add to the hyperbole, but to pierce it with a bone honest value proposition that resonates with major marketers who are frustrated, confused and mistrusting. I intend to bring the IntentKey story to advertisers through more plain spoken marketing programs that compel trial of our products. The very name IntentKey was [ pressioned ]. It provides a foundational intelligence layer for the so-called age of intent. The marketplace is finally catching up to the reality that success during these seismic shifts require the very things IntentKey provides, speed and real-time, actionable, privacy-first intelligence. With a focus on a clear go-to-market strategy, leveraging our core strengths in audience modeling, building a strong brand presence and driving towards higher-margin opportunities, we believe we can build a stronger, more resilient, compounding business that will translate to greater value for our customers and shareholders. I look forward to updating you on our progress next quarter. With that, I'll now open the call to Q&A. Operator: [Operator Instructions] Your first question comes from the line of Brian Kinstlinger from Alliance Global Partners. Brian Kinstlinger: Congrats, Rob, on the new role. Can you speak to capital -- the capital deployment strategy between your 2 existing businesses plus the new data offering, maybe in the context of the Platforms business requires this substantial marketing dollars which creates a very small return on investment? And then maybe discuss, if any, what investments are needed to make to start that new data opportunity? Rob Buchner: Brian, thanks. And I think I've met many of the people on this call, and Brian, I look forward to working with you in the years ahead. As it relates to capital deployment on the Platforms business, the marketing expense kind of rises and falls with the sales velocity and demand on that platform. So it's a variable that is kind of fixed to that side of the business. Capital as it relates to marketing on IntentKey is really about demand creation and incenting trial of our product, and we're going to be putting a lot of energy in that direction through outbound campaigns and some lead management. Some of those are already in place. Brian Kinstlinger: Yes. Which leads me to my second question. It sounds like you agree Inuvo to me was a first mover in AI for ad tech, but it hasn't capitalized. What are the plans to improve that awareness of IntentKey, maybe give some specifics. I know you mentioned social media, but how else do you gain awareness. You've got these 83 new customers that you added last year. How do you get them to increase wallet share as well. . Rob Buchner: Yes. In terms of raising the profile for IntentKey, that's going to come gradually in time as we free up more cash to invest in marketing. But having -- through thought leadership having more presence at industry conferences. I'm attending Marketecture next week already in New York. That's a very high-profile event, while this industry has gone through change. So I think it's being present where the minds of this industry are. And then it's also beginning to take our use cases to market, especially in some of these high-priority verticals where we have good credentials in getting some of those logos to be referenceable for new. And again, I want to concentrate our marketing against the highest potential high-yield segments, if you will, or verticals, like life sciences, pharmaceutical, health care, automotive, government, where privacy and our differentiation shines the best. So it's getting out there, and it's doing it quarter-over-quarter and building a brand, and the brand is IntentKey. Brian Kinstlinger: Great. My last question maybe for Wally, but maybe Rob chime in if you think. It sounds like revenue will be down substantially next year as you gradually recover from a low point in the March quarter. How should we think about the expenses, given an increased focus on marketing, what we see SG&A increase from the sales side, will that show up in marketing costs like how should we think about the expense side growing from these need to increase that brand awareness for yourself? Rob Buchner: Wally, do you want to take that one? Wally Ruiz: Yes. Thanks. The revenue throughout the year is going to increase. Yes, as we mentioned, Q1 will be light. But the IntentKey is on target, starting in Q1, and we'll continue to grow into each of the succeeding quarters. And the Platform revenue is -- will also -- is at a low point as Rob pointed out in January and is ramping up now. So yes, there is an opportunity for us to catch up in revenue. But to your point, it being lower than last year, we have already started paring back some expenses. And we're being very careful with the expenses that we have for the remainder of the year. I think that one of the things that you had mentioned about the cash deployment on the Platforms earlier is that, yes, the Platforms business does take a lot of cash, but it also gives us an opportunity to use our credit because we're able to receive payments of our revenue prior to having to pay our vendors. One of the advantages of the Platforms business is that it does provide a number of days of working capital to us. So in some ways, I'm not going to say it's entirely self-funding, but it does fund itself to some extent by providing working capital. But yes, I think that the SG&A, I think the G&A, the general and administrative will be -- will remain being flat to down in 2026. Compensation expense will be -- I suspect in our forecast is that it will be lower in 2026 than in 2025. And the marketing cost, as Rob pointed out, is pegged primarily, not entirely, but primarily to revenue growth in the Platforms business. Does that give you some guidance, Brian? Operator: Your next question comes from the line of Jack Vander Aarde from Maxim Group. Jack Vander Aarde: Okay. Welcome on board, Rob. Congrats on the role. Maybe just a quick question for Rob. You mentioned the IntentKey Self-Serve product being a key focus, it sounds like, and it's a very high margin, but maybe lower ASP product line, but I know it's been rapidly growing. Just wondering where does this fit in though in terms of your growth roadmap in terms of, is this going to be the focus and a material part of revenue within the IntentKey segment or overall revenues going forward? How does this play into your overall vision? Rob Buchner: Yes. I would say it's a longer-term ambition because those deals take longer to cultivate. When we get them, and we have several enterprise [ clients ] now, they tend to be stickier. They're almost pure margin. But it's a longer-term evolution of the business on the IntentKey side. But with this Agentic era occurring and us being able to integrate IntentKey into these workflows, both as an intelligence tool, a strategy tool, if you will, and then an audience activation at the executional level. When we can play at a data level, I think it's kind of a game changer, but it's a longer-term ambition rather than a near-term impact. Jack Vander Aarde: Okay. Got you there. And then maybe just for Wally and Rob, I know in the past, there was kind of a soft sort of breakeven target for EBITDA in terms of revenue. Given some of the strategic moving parts here, has -- is there any changes to that nuance as an aggregate, maybe there's changes to the gross margin trade-off versus the OpEx. But are we still looking at kind of $100 million, roughly, revenue as a breakeven? Or -- how do we think about that now as this business roadmap plays out? Wally Ruiz: Yes. I think that's right, Jack. The sales mix in 2026 and beyond is going to change considerably from 2025 and prior. So the -- so having said that, I think that we will be at breakeven. We've always said that $25 million quarter we could be breakeven. And I think we're back to that again. Jack Vander Aarde: Okay. And then just in terms of the operating expenses kind of just going forward is they really did drop off here. Was it really a one-for-one, just with Google or your largest Platform customer? Or is there something else to this we're looking at 2026. Is this a fair -- just under $11 million of total OpEx, it can bounce depending on mix. But it's well below the historical period. So just looking forward into the first quarter, can you give us a sense there? Wally Ruiz: Yes. So yes, marketing costs dropped off because of revenue dropping off from the largest Platform client, and that's -- and that client is starting to ramp up in Q1. So you should expect marketing costs to continue to be low because of that in Q1. As far as compensation goes, I think it's going to be in line with the past quarters, although we have made some adjustments, and there are some severances in Q1 that would affect compensation. G&A, general and administrative is going -- as it's always been, it's been relatively flat, and there's no reason to think that it would grow. Jack Vander Aarde: Okay. Great. And then maybe just one more for Rob, and then I'll hop back in the queue. Just given the long-standing importance of the relationship with Google to the business' history and looking forward and then the recent cash award that you guys received in January, and some of your other larger Platform customers have been long standing. Can you maybe just touch on how do you view these relationships? Is there -- I think the contracts keep getting extended a couple of months at a time. Can you just maybe provide a view on your perspective on that relationship and looking forward? Rob Buchner: Well, listen, it's a key part of the business. And it's important that we stay on the right side of quality and keep the integrity of our network up to those standards. And try to lead the industry and our partner network along those lines. So we continue week over week to do everything that we can to be as compliant and to be a leader in the industry. And that's why we started that industry initiative, clicktransparency.org, I mean, these are all kind of moves that we make to stay on the right side of those contracts. Jack Vander Aarde: Congrats again on the role and look forward to tracking the story. Operator: [Operator Instructions] Your next question comes from the line of Bruce Hood from Excel Group. Bruce Hood: So I just had a quick question following up on previous quarters. There has been mention of a government contract potentially being signed. Is that still in the works? Or is that kind of being pushed off? Rob Buchner: Bruce, no, it's very much alive, and we're weeks away now. I'm very close to that. This is a multiyear, multimillion dollar engagement. These contracts take a long time to work their way through procurement. We've cleared every hurdle and have every indication that we are weeks away from realizing execution of the contract. Operator: [Operator Instructions] There are no further questions at this time. I will now turn the call over back to Rob Buchner, CEO. Please go ahead, sir. Rob Buchner: Hey guys, I just wanted to say thank you for joining us for this call. I'm getting to know some of you since I was at the LD Micro Conference as COO back in October. I'm only 5 weeks in the chair, there's a lot of moving parts, but I'm incredibly optimistic about the moves that we're making. And if we continue to execute along the lines which we articulated over the course of the last hour, I think it's going to be a really great future. So thanks again, everyone. I look forward to working with all of you going forward. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good afternoon, and welcome to Marvell Technology Inc. Fourth Quarter and Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I will now turn the conference over to Mr. Ashish Saran, Senior Vice President of Investor Relations. Thank you. You may begin. Ashish Saran: Good afternoon, everyone. Welcome to Marvell's Fourth Quarter and Fiscal Year 2026 Earnings Call. Joining me today are Matt Murphy, Marvell's Chairman and CEO; Willem Meintjes, CFO; Chris Koopmans, President and COO; and Sandeep Bharathi, President, Data Center Group. Let me remind everyone that certain comments made today include forward-looking statements, which are subject to significant risks and uncertainties that could cause our actual results to differ materially from management's current expectations. Please review the cautionary statements and risk factors contained in our earnings press release, which we filed with the SEC today, and posted on our website, as well as our most recent 8-K, 10-K, 10-Q and other documents filed by us from time to time with the SEC. We do not intend to update our forward-looking statements. During our call today, we will refer to certain non-GAAP financial measures. A reconciliation between our GAAP and non-GAAP financial measures is available on our earnings press release. Let me now turn the call over to Matt for his comments on the quarter. Matt? Matthew Murphy: Thanks, Ashish, and good afternoon, everyone. Let me begin by extending a warm welcome to the Celestial AI and XConn team. We recently closed both acquisitions and the teams are working closely together with joint product road map discussions in full swing with customers. These highly strategic additions further strengthen our technology platform and significantly enhance Marvell's position in the rapidly emerging AI scale-up networking market. I'll provide additional detail on these acquisitions later in today's call. Now turning to our results and business outlook. For the fourth quarter of fiscal 2026, Marvell delivered record revenue of $2.219 billion, reflecting 7% sequential growth. Revenue exceeded the midpoint of guidance, driven by strong demand in our data center end market. As a result, non-GAAP earnings per share of $0.80 exceeded the midpoint of guidance by $0.01. Turning to our full year results. Fiscal 2026 was an exceptional year for Marvell. Revenue grew 42% year-over-year to approximately $8.2 billion as reported, and approximately 45% year-over-year, excluding the divested automotive Ethernet business. Our data center revenue surpassed $6 billion, growing 46% year-over-year. This performance was driven by robust demand for our interconnect, switching and storage products, along with a strong ramp in our custom business, which doubled in fiscal 2026. As we begin fiscal 2027, we are seeing very strong demand across our entire data center portfolio with bookings accelerating at a record pace. This robust demand is reflected in our guidance for the first quarter of fiscal 2027, the total company revenue forecasted now to grow 8% sequentially at the midpoint to $2.4 billion. Looking ahead, we expect to grow revenue every quarter this fiscal year at a similarly strong sequential rate, which would result in Q4 revenue exceeding $3 billion exiting this year. This forecast also implies that our year-over-year revenue growth rate will accelerate each quarter throughout fiscal 2027. As a result, we now expect overall Marvell revenue in fiscal 2027 to grow more than 30% year-over-year, approaching $11 billion. Notably, this outlook is meaningfully higher than what we communicated in our prior updates. Some of you may recall, in September 2025, during an investor call hosted by JPMorgan, we provided a fiscal 2027 revenue outlook of approximately $9.5 billion, which at that time was received positively as it was significantly higher than the market expectations. In our December 2025 earnings call, as CapEx growth forecasts continue to increase, we updated our fiscal 2027 revenue forecast to approximately $10 billion. Today's outlook approaching $11 billion raises our forecast by almost another $1 billion. Importantly, this outlook is driven by Marvell's organic businesses as the recently closed acquisitions are not expected to contribute meaningfully until fiscal 2028. The increase in our overall revenue outlook is all being driven by our data center business. Since December 2025, cloud CapEx expectations have continued to increase, and we have seen our bookings continue to accelerate. As a result, we now see our fiscal 2027 data center revenue growing by 40% year-over-year. We expect all our key product lines in data center to be stronger than our prior outlook. Notably, we expect our interconnect business to more than 50% year-over-year, well above our prior expectation of 30% growth. For our communications and other end market, we expect 10% revenue growth in fiscal 2027. Looking ahead to fiscal 2028, while we assume the rate of CapEx growth moderates from the current fiscal year, we expect continued robust data center revenue growth for Marvell. We expect our interconnect business to significantly outpace cloud CapEx growth, our custom business to at least double year-over-year, and our Ethernet switching business to continue to ramp meaningfully. In addition, we expect Celestial AI and XConn to contribute approximately $250 million in aggregate revenue in fiscal 2028. As a result, we expect data center revenue and fiscal 2028 to grow close to 50% year-over-year. Achievement of our forecast would result in three straight years of data center revenue growth compounding at well over 40%. For our communications end market, we continue to expect low single-digit percentage revenue growth in fiscal 2028, consistent with our prior view. So in aggregate, we expect Marvell's overall revenue in fiscal 2028 to grow close to 40% year-over-year, reaching approximately $15 billion, roughly $2 billion higher than the outlook we provided in our December earnings call, and driving our non-GAAP EPS to well over $5. This outlook is based on demand we are seeing now and designs that are already in execution. As we progress through the fiscal year, we plan on remaining closely aligned with our customers as we expect them to continue to invest in AI infrastructure. With that, I'll provide more context on our numerous growth drivers across our end markets, beginning with data center. In our data center end market, we delivered record fourth quarter revenue of $1.65 billion, representing 9% sequential growth and 21% year-over-year growth. Revenue exceeded our guidance, driven by increased demand across our interconnect portfolio. We achieved sequential growth across all key product lines, including optical interconnects, custom silicon, switching and storage. Looking into the first quarter, we expect our data center revenue to grow approximately 10% sequentially, including a seasonal sequential -- including a seasonal sequential decline in on-premise data center revenue. Let me now highlight the broader trends across both our established data center businesses and our newer growth initiatives, including recent acquisitions. I'll organize the discussion into three categories. Interconnect, switching and custom. I'll begin with Interconnect, where we offer the industry's broadest and comprehensive high-speed connectivity portfolio, addressing scale out, scale across, and scale up networking. In our scale-out PAM franchise, demand remains robust for our 800-gig products. We are also seeing very strong bookings from multiple Tier 1 customers for our 1.6T solutions which entered production in the second half of fiscal 2026. Reflecting this demand in our first-to-market technology leadership, we expect our 1.6T revenue ramp -- to ramp very rapidly in fiscal 2027 with substantial additional growth projected in fiscal 2028. As a result, we expect to continue to maintain leadership in the PAM market at 1.6T just like we have at every PAM generation. Marvell is the first company to productize 200-gigabit per lane technology, enabling the 1.6T transition now underway. While this generation is expected to continue to grow through the end of the decade, Marvell has already demonstrated 400-gig per lane technology. We expect that this will position us to enable the industry's subsequent transition to 3.2T, once 1.6T reaches full maturity. To support campus-wide data centers requiring longer reach than traditional PAM solutions, Marvell has introduced Coherent light, optimized for 2 to 20-kilometer applications within a highly power-efficient outlook. We have already begun shipping first-generation 1.6T Coherent light products and are now introducing a second generation with integrated MACsec security. Turning to scale across interconnects, a technology we pioneered with our 100-gig DCI modules, we continue to lead the market with Coherent 400-gig and newer 800-gig solutions. We are winning new customers and expect to supply DCI modules to all five major U.S. hyperscalers this year. We see significant long-term growth in this market, as the global data center footprint expands and bandwidth requirements between data centers continues to increase. Industry forecasts project that DCI pluggable TAM to grow by more than 5x by calendar 2030, with speeds doubling each generation and feature complexity increasing, including the integration of MACsec. To that end, earlier today, we announced our latest innovations and scale across interconnects, including the industry's first Secure 1.6T ZR and ZR+ DCI modules powered by our new 2-nanometer Coherent DSP. We also introduced a new 2-nanometer 800-gig DSP, which enables second-generation lower-power 800-gig DCI modules. DCI modules powered by these 2-nanometer MACsec-enabled DSPs are expected to begin sampling later this year. This positions Marvell to maintain technology leadership, supported by our proven expertise in large-scale manufacturing of these highly specialized and complex modules. Now let's move to scale-up interconnects, which is an entirely new and rapidly emerging market. We are very excited about what we believe to be a massive opportunity unlocked by Celestial AI's photonic fabric, or PF technology, as well as growing customer traction for our AEC and retimer solutions. As discussed last quarter, Celestial AI's PF technology is expected to enable large-scale commercial deployment of CPO for scale-up connectivity starting next year. Our chiplets will be co-packaged into both custom XPUs and the scale-up which is connecting them together on both sides of the length. With the acquisition now complete, Marvell's engineering and operations teams are fully engaged in bringing Celestial's first generation chiplet into high-volume manufacturing. We remain on track for our forecast for our CPO revenue from Celestial to reach a $500 million annualized run rate in the fourth quarter of fiscal 2028, doubling to a $1 billion annualized run rate by the fourth quarter of fiscal 2029. We have seen strong interest from a broad range of customers in Celestial's photonic fabric technology following the deal announcement. We look forward to updating on our progress in the scale-up interconnect market, which we believe could exceed $10 billion by 2030. In the AEC market, we have secured design wins with 3 Tier 1 U.S. hyperscalers and several additional customers, including model builders and hardware OEMs. We are also seeing strong traction for our retimers. As a result, we expect combined AEC and retimer revenue to more than double year-over-year in fiscal 2027. We continue to innovate through our Golden Cable initiative, a strategic program that delivers a complete solution, including industry-leading software and validated reference designs, enabling ecosystem partners to rapidly design and deploy AEC products at scale. Hyperscale customers benefit from access to multiple high-volume cable OEMs offering fully compatible AECs, both on the same high-performance Marvell DSP and reference design. Turning to data center switching, we delivered strong growth in fiscal 2026 with revenue exceeding $300 million, driven entirely by scale-out applications. Given sustained demand for our current 12.8T products and a strong ramp of next-generation 51.2T products, we now expect data center switch revenue in fiscal 2027 to surpass $600 million, up from the $500 million we had indicated last quarter. We are seeing strong engagement from both existing and new customers for our 51.2T platform, and our upcoming 100T platform, which we begin to -- should we expect to begin sampling in the first half of this fiscal year. Our 100T switch delivers industry-leading power efficiency and lower latency, attributes that are especially critical for AI applications. In scale-up switching, the combination of Marvell and XConn creates a significantly larger team to address rapidly emerging UAL and Ethernet-based opportunities. UA Link builds on decades of PCI ecosystem development and incorporates high-speed interface innovations from Ethernet to meet the bandwidth, latency and reach requirements of next-generation accelerated infrastructure. XConn expands Marvell's switch team with deep PCIe switching expertise, enabling a comprehensive -- enabling comprehensive support to customers building next-generation AI platforms. We are fast tracking our scale-up switch road map by leveraging our extensive experience in developing large reticle size scale-out switch chips, and best-in-class in-house high-performance series. We remain on track to sample our UALink 115T solutions in the second half of this fiscal year with volume production expected in fiscal 2028. In parallel, we continue to advance the Ethernet-based road map with key customers. We're able to further enhance our scale-up road map by enabling integration of our CPO technology from Celestial directly with our switches, delivering a purpose-built, fully optimized end-to-end optical scale-up platform. XConn also adds advanced PCIe and CXL switch solutions, another completely incremental TAM for Marvell. The PCIe Gen 6 and CXL 3.1 solution is based on a monolithic switch architecture supporting up to 256 lanes, delivering the industry's highest ratings and lowest latency. PCIe switching remains foundational in standard compute architectures connecting CPUs to peripherals and increasingly an AI infrastructure to connect CPUs to XPUs. In parallel with next-generation protocols like UALink, PCIe is also adopted for XPU to XPU connectivity, particularly in AI inference systems and small- to medium-sized clusters. CXL is rapidly becoming essential for memory disaggregation in modern data centers. We have been investing in CXL for several years and XConn switching portfolio, combined with Marvell CXL memory expanders create the industry's most comprehensive CXL platform. XConn was already engaged with more than 20 customers prior to the acquisition. As part of Marvell, XConn now benefits from our global sales and marketing reach and strong presence in the data center. As a result, we expect to drive strong growth in both the PCIe and CXL switch markets over the next several years. Turning now to our custom business. This remains one of the most compelling growth drivers for Marvell. In just a few years, we have scaled from zero revenue to $1.5 billion in fiscal 2026. As you may recall, the first meaningful ramp again in the second half of fiscal 2025. Fiscal 2026 marked the first full year of production for those programs. And as a result, we doubled our customer revenue year-over-year. We expect custom revenue to grow more than 20% year-over-year in fiscal 2027, higher than our prior view. We continue to see growth from our Lead XPU program this year, including a transition to its next generation. As I noted last quarter, we have purchased orders covering the entirety of this fiscal year's forecast for this next-generation program and are now ramping production. In addition, we are expecting the growth to continue in fiscal 2028 from this program. We are also deeply engaged on the follow-on generation of this XPU. In addition, several XPU attach programs are ramping in fiscal 2027, including our initial CXL and NIC products. CXL demand is accelerating, partly driven by tight memory supply. Our custom CXL expanders enable customers to reuse prior generation DRAM with new XPUs, GPUs and CPUs, while also supporting near-memory compute operations. A recent white paper from a leading hyperscaler on next-generation LLM inference architectures highlighted, near-memory processing is a key opportunity to improve model performance. They cited Marvell's structure a processor as an example of a CXL-enabled solution that improves programmability and simplify system integration. This all provides a great setup for fiscal 2028, where we continue to expect custom revenue to at least double year-over-year from three primary drivers. First, continued growth from our existing custom programs. Second, multiple XPU attach programs reaching high volume, particularly in custom NIC and CXL applications. As I mentioned last quarter, we have line of sight to revenue exceeding $2 billion by fiscal 2029 from just these two use cases, and we expect to make significant progress towards that outlook through fiscal 2028. Third, our new Tier 1 XPU program ramping into high-volume production. This program has continued to progress well -- very well through development, and we have firm volume requirements for all of next year and are planning for high-volume manufacturing. Beyond programs already won, we are encouraged by strong new design engagements with both existing and new customers. Custom compute is proliferating across the hyperscale ecosystem with inference optimized hardware becoming increasingly important. We are seeing an unprecedented level of activity across multiple new engagements as hyperscalers increased their cadence of custom chip development. We are engaged in deep technical discussions on innovative new architectures, and are seeing a massive opportunity on 2-nanometer and below process technologies. Okay. Turning to our communications and other end markets. We delivered fourth quarter revenue of $567 million, up 2% sequentially and 26% year-over-year. For the first quarter, we expect low single-digit sequential growth on a percentage basis and approximately 30% year-over-year. In summary, we concluded fiscal 2026 on a strong note with revenue growing 42% year-over-year and non-GAAP EPS increasing 81%, roughly twice the rate of revenue growth, demonstrating the strong operating leverage in our business model. Fiscal 2026, we were very active on the M&A front, divesting our automotive Ethernet business for a double-digit revenue multiple, and rapidly redeploying the proceeds into two highly strategic acquisitions. These positioned Marvell at the forefront of the large and incremental AI scale-up networking market. At the same time, we continue to execute our capital return program returning $2.245 billion to stockholders through share repurchases and dividends. So far in fiscal 2027, we are seeing strong bookings across our entire data center portfolio with customers signaling robust demand not only for this year but for the next several years. We believe we are still in the early stages of a strong multiyear growth cycle for Marvell. Our first quarter fiscal 2027 guidance represents 27% year-over-year growth at the midpoint, reaccelerating from 22% in the prior quarter. We expect year-over-year growth to accelerate each quarter throughout fiscal 2027, with revenue exiting the fiscal year at over $3 billion in the fourth quarter. We have raised our fiscal 2027 forecast meaningfully. And in fact, the revenue growth rate we are projecting today for fiscal 2027 is roughly double the outlook we provided just a few months ago in September. This is an exciting moment for Marvell. I want to take a moment to thank our global team for staying focused despite the external noise, and delivering consistent execution, which has enabled record results and positioned us to capitalize on what we expect will be a massive AI opportunity ahead. I look forward to updating you on our progress in the coming quarters. With that, I'll turn the call over to Willem for more detail on our recent results and outlook. Willem Meintjes: Thank you, Matt, and good afternoon, everyone. Let me start by summarizing our full fiscal year 2026 results, which were very robust across the board. In fiscal 2026, Marvell delivered $8.195 billion in revenue, growing 42% year-over-year. This growth was primarily driven by AI demand in our data center end market, as well as the continuing recovery in our communications and other end markets. For the full year, on a GAAP basis, our gross margin was 51%. Operating margin was 16.1%, and earnings per diluted share was $3.07. On a non-GAAP basis, our gross margin was 59.5%. Operating margin was 35.3%, expanding by 640 basis points year-over-year, and earnings per diluted share was $2.84, growing 81% year-over-year. We also significantly increased capital returns to our stockholders, returning $2.245 billion through share purchases and dividends in fiscal 2026, an increase of approximately $1.3 billion from the prior year. Moving on to our financial results for the fourth quarter of fiscal 2026. Revenue in the fourth quarter was $2.219 billion, growing 22% year-over-year and 7% sequentially. Our data center end market was 74% of total revenue, with our communications and other end markets contributing the remaining 26%. GAAP gross margin was 51.7%. Non-GAAP gross margin was 59%. Moving on to operating expenses. GAAP operating expenses were $744 million, including stock-based compensation, amortization of acquired intangible assets, restructuring costs, and acquisition-related costs. Non-GAAP operating expenses came in at $517 million, in line with guidance. Our GAAP operating margin was 18.2%, while our non-GAAP operating margin was 35.7%. For the fourth quarter, GAAP earnings per diluted share was $0.46. Non-GAAP earnings per diluted share was $0.80, above the midpoint of guidance, reflecting year-over-year growth of 33%. Now turning to our cash flow and balance sheet. In the fourth quarter cash flow from operations was $374 million. Our inventory at the end of the fourth quarter was $1.39 billion, growing $374 million from the prior quarter. Our working capital has increased to support the significant revenue growth we are driving. During the quarter, we repurchased $200 million of our stocks through our ongoing capital return program, and returned $51 million to shareholders through cash dividends in the quarter. We expect to continue to return capital through repurchases and dividends. As of the end of the fourth quarter, our total debt was $4.47 billion, with a gross debt-to-EBITDA ratio of 1.38x, and a net debt-to-EBITDA ratio of 0.57x. Our debt ratios have continued to improve as we have driven an increase in our EBITDA. Turning to our guidance for the first quarter of fiscal 2027. We're forecasting revenue to be in the range of $2.4 billion, plus or minus 5%. We expect our GAAP gross margin to be between 51.4% and 52.4%. We expect our non-GAAP gross margin to be between 58.25% and 59.25%. Looking forward, we anticipate that the overall level of revenue and product mix will remain key determinants of our gross margin in every -- in any given quarter. We project our GAAP operating expenses to be approximately $872 million. We anticipate our non-GAAP operating expenses to be approximately $575 million in the first quarter. This is stepping up from the prior quarter due to the typical seasonality in payroll taxes, and employee salary merit increases, as well as the addition of Celestial AI and XConn. The two acquisitions in aggregate are expected to add approximately $75 million to our fiscal 2027 annual non-GAAP operating expenses. We expect our GAAP other income and expense, including interest on our debt, to be an expense of approximately $51 million. We expect our non-GAAP other income and expense, including interest on our debt to be an expense of approximately $48 million. We expect a non-GAAP tax rate of 11%. We expect our basic weighted average shares outstanding to be 876 million, and our diluted weighted average shares outstanding to be $883 million. We anticipate GAAP earnings per diluted share in the range of $0.26 to $0.36. We expect non-GAAP earnings per diluted share in the range of $0.74 to $0.84. As we look ahead to the rest of fiscal 2027, we will continue to invest in growing our business while driving operating leverage. On a sequential basis, we expect non-GAAP OpEx to remain flat in the second quarter and then grow in the low to mid-single digits on a percentage basis in each of the third and fourth quarters, well below the rate of revenue growth Matt provided in his remarks. We are seeing strong growth from our existing franchises and scale out and scale across AI as well as custom, and we are investing to drive new revenue streams from the rapidly emerging AI scale up market. We have entered a robust multiyear growth period and are looking forward to delivering strong earnings growth to our stockholders. With that, we are ready to start our Q&A session. Operator, please open the line and announce Q&A instructions. Thank you. Operator: [Operator Instructions] Your first question comes from Ross Seymore with Deutsche Bank. Ross Seymore: Matt, thanks for all the updates on the out year and well, fiscal year, both this and next. Beyond the magnitude of the revenue growth, can you just talk about the profile of it? Is the customer base broadening? People are always worried especially in your custom business about the concentration of it. So I just wanted to get a little bit more color on the shape of the demand from a customer perspective? Matthew Murphy: Yes. Thanks, Ross. Well, first of all, we're deeply engaged across the entire ecosystem, extremely strong position with the top four U.S. hyperscalers and then the next level. And each of them, we have a different concentration and revenue mix. But just to be super clear, if you look at this year and you look at us driving the company to $11 billion, and then you unpack things like custom, it's not that big a percentage of the total. So that's not what's driving our concentration. I mean by design because of the top four U.S. hyperscalers is spending the bulk of the CapEx, that's where the dollars are going to go. But we're quite diversified across each of them. And some of them we sell a different mix, obviously, of product to. But in the case of all four, within our portfolio, which I just went through the laundry list of all the different types of products that we provide, we're highly diversified within each of these customers. So -- so yes, custom is something that gets a lot of attention. But if you just look at the numbers I gave you and the context as I said, it's a piece of the equation, but not all of it. And then over time, even on the custom business, as you look out through fiscal '28 and fiscal '29, Remember, we've got 20-plus design wins, or products now, sockets that are either in production or going into production, it's going to layer in across all those companies as well. So the diversification is only going to get better over time. But we're very unique in sort of the breadth I think of the products that we offer and the product lines we have to really serve end-to-end the needs of all of our key hyperscalers. And the last two M&As we just did really round that out nicely in terms of adding PCIe, getting -- beefing up the UAL, and then also adding key silicon photonics capabilities. Operator: Your next question comes from Harlan Sur with JPMorgan. Harlan Sur: Congratulations on the strong results and execution. Matt, on your custom XPU and XPU attached subsegment, OpenAI recently inked a partnership with your lead XPU, customer to consume, I think, something like 2 gigawatts worth of your lead customers, next-gen and next-gen XPU. So it feels like the overall demand for AI compute continues to accelerate. Right on top of that, like you said, you're ramping 15 to 20 XPU attached custom programs this year and next year. Within our better outlook for custom this year, and with you already starting to ramp your lead customers next-gen XPU program, do you still anticipate a stronger second half step-up of this XPU program? Or is it more of a linear ramp through the year now? And I think you previously thought that you would exit this year with custom driving about a $2 billion sort of annualized growth rate. What does that exit run rate look like today? Matthew Murphy: Yes. Thanks, Harlan. I think the first part of your question is absolutely seeing strong validation in the market for the AI compute spend, and the fact that a significant portion of that continues to go to companies that are building their own XPUs. So that's a positive trend. We certainly see it. And you're right. Even where we don't necessarily have the XPU, we have XPU attached. So all the XPU attached is going with XPUs in customers where we're not participating. So we're -- we participate across every one of those large companies and more on XPU attached. So that's a very positive trend for us that's driving our positive outlook for sure through this year, which we said custom was going to grow faster than we thought, but more meaningfully into fiscal '28 and '29. And then from a linearity perspective, under the hood, we kind of give you a view of what the sequentials would look like throughout the year. But yes, custom, we have said was going to be a stronger second half due to a program transition. That's still the case. And that -- the type of exit rate you're talking about is certainly still intact and probably has an upward bias to it. If you look at the exit rate we're talking about for the whole company now, we're looking at north of $3 billion. So within that custom continues to have some real upside to it. But that's going to improve meaningfully and the revenue growth is going to continue into fiscal '28 which is basically those programs from the second half now having a full year. So that's going to provide some nice growth. Content increase, then layering in the XPU attach, and then layering in our new program with a new Tier 1 hyperscaler, which is in its early stages, but just even the rough plug we have for them, is significantly lower than actually the wafers that we're planning on starting the material and the production plan we have with our manufacturing supply chain. So I think it's a very reasonable setup for next year with a lot of upward bias depending on if these trends continue. Operator: Your next question comes from Aaron Rakers with Wells Fargo. Aaron Rakers: I guess my first question is on the optics, the electro-optics business. I know Matt, you've talked about in the past that your ability to kind of outgrow the pace of what we're seeing in CapEx spend. So I guess my question is, we've seen some massive upward provisions in CapEx. I think most people look at that and say, "Hey, we're looking at like 60% plus growth this year." Do you think you can grow at that level? And how do you think about the durability of that growth as we move into fiscal '27 -- or fiscal '28? Matthew Murphy: Yes. Aaron, your observation is absolutely correct. And that's why even as we look at the upward momentum we see in the business for this year, a big part of that change is in that electro-optics portfolio. We had been calling it kind of closer to CapEx as we were modeling what we thought we could do this year back in the September call and then even in the -- in my December call. But now it's clearly growing more like -- more like accelerator growth and more like this sort of accelerated CapEx growth. So yes, it's growing like 50% plus this year now. And that momentum is going to continue, okay, into fiscal '28. A couple of things are happening there. The first is that as new XPU, GPU, et cetera, generations are released. There is -- we are seeing some increased concentration on the attach rate of optics. So that's a positive. You get more 1.6T, which has just -- because of its performance, commands higher ASP. So that's going to roll in. And then we have -- yes, we just have some pretty new exciting programs happening in that area. So that business has been growing at like 50% a year-ish. You can give it plus or minus, I get the exact data. But it's been at that rate for some time since we acquired Inphi and the data center stuff really took off. We see that continuing not only through fiscal '28, but that momentum should continue beyond that. Maybe it's not the exact same magnitude, but it's significant. We have a real head of steam on the electro optics business at Marvell. Operator: Your next question comes from Blayne Curtis with Jefferies. Blayne Curtis: Matt, I don't want to ask on the custom business. So I think you feel very confident about the trajectory. I'm just kind of curious, one, can you just help us with '26? Because I mean, you have the big broad swath, but I mean, is that custom business growing 30% this year? I just want to figure out the base that you're going to double. And can you talk about that second major XPU customer? I mean, kind of give this type of guidance, like what kind of confidence do you have in the timing of that program? Matthew Murphy: Sure. Yes. And I think you're talking about -- just to be clear, calendar '26, fiscal '27 set on custom, kind of what numbers are we talking? Is that the first question? The second one is the... Blayne Curtis: Yes, sorry, your fiscal year. But yes, fiscal '27 is at around 30%. And then your confidence level on that second major XPU customer and timing as we try to layer that in to get to that double? Matthew Murphy: Yes, great. And by the way, I don't feel bad. I've been in this job for 10 years, and I still have to translate every day between my fiscal year on my calendar year. So don't feel bad. For fiscal '27 we had been indicating after the double from last year, it would grow 20% this year. So we're just saying that's north of that. So I'm -- I can't give you the exact number now, but it's biased upwards, but it's just -- so just take what I read before that 20%, you can make an estimate but higher, but not significant enough where I would like give you a new number, but just say it's biased higher. So in the ballpark, but higher. So then next year, obviously, gets a little bigger than we thought. And then the reason we're confident is we have line of sight in terms of -- well, first of all, we have history, right? We've built these large scale custom programs before. We've done these ramps before. We have a good sense of when the product is going to go through its key milestones through NPI. We have had very detailed discussions and alignment around the manufacturing plan, and we've aligned up a corridor for fiscal '28 for production on this that would be a lot higher than what I'm indicating to you. I think we're budgeting at the moment for -- is there a delay? Does it take longer, et cetera. And plus, I think at the moment, it seems like a lot of folks aren't really believing it's maybe going to do anything. But I think our plug is very, very reasonable for next year Blayne in terms of what's there. And I think it would bias quite a bit higher if we could just achieve what we're planning on reserving in terms of capacity. So more to come there. But I think we try to call the ball as best we can. And in general, we've done a pretty good job over the years of trying to size and judge things in advance. And then usually, we're pretty good and then they're biased upwards. So we'll see where it lands. But I think it's not a big stretch for this custom business to double next year. Operator: Your next question comes from Ben Reitzes with Melius Research. Benjamin Reitzes: Matt, nice to see the beat and raise. I wanted to ask the question about what got better in a different way? I mean, if you could just unpack since December, the $2 billion, especially the -- how fiscal '28 got $2 billion better since December? What -- if we can unpack that and what exactly got better? And then potentially, I'm going to be a little greedy, what can carry into the next year as well, calendar '28 of those signs that you saw since then? Matthew Murphy: Yes. Thanks, Ben, and great to hear from you a long time. So I think -- one is you just kind of look at it as progression. I mean, it's the first point I'd make is we tried to give a view for investors to be helpful because there's a lot of concern and angst back at the end of last year. So in September, we talked about 9.4-ish for this year. And then that's now -- in December, we said that looks more like 10, and now I'm saying it's more like 11. So some of that is just the progression in terms of time and getting better visibility and more concrete. And then that just ripples into the -- I'll use calendar for a second, calendar '27. But on top of that, I mean, one, we've now got very firm requirements and understand the profile, in particular the interconnect business. And that is, I think we had called it very conservatively, to be frank. And I think even a few analysts last quarter kind of [ dinged ] us saying, well, you're plugging your interconnect business at CapEx, but it really looks more like it should be tied to GPU, XPU. And that's really the case. So I think we're seeing that now in terms of the forecast. So that's come up quite a bit, which then again, the upward revisions we're seeing for this year then ripple into next year. And then I'd say this is all underwritten Ben, by extremely strong bookings and backlog layering in and then the detailed conversations with our customers around supply planning. It's just given us a much more concrete view. And by the way, the other reason I think it's important and why we felt it was important to continue to update on this metric is that we set targets back in April of '24 for calendar '28. We did that around some assumptions around data center market share of 20%. And those numbers looked enormous at the time we talked about it. I think you guys were there. We were doing low billions a quarter in revenue at that time. $1 billion -- I think we had guided $1.1 billion or $1.2 billion when we put out this number that was like $15 billion in data center revenue in four years. And I think everyone thought we were nuts. At our June AI investor event, we said the TAM went up, so that data center revenue bogey kind of moved up to like if you just did the math, moved up to more like $18 billion and change. But now you kind of look at it and you see where we're landing in calendar '26. And now we're sitting here in '27. I mean, it's -- we're very much on track actually to those targets that we had set Ben. And so in a way, yes, it's some upward revisions and that's part of it is just because we have more data, but it actually is also validating, I think, the plan we set actually four years ago about what we thought we could go off and do, which were very lofty ambitions, and we're not there yet, and we have to go execute like crazy me and the whole team. But we're very encouraged by what we're seeing, and the proof is in the pudding that we're getting in terms of the backlog forecast and alignment with our entire supply chain to be ready to go make that happen both this year, next year and in calendar '28. Operator: Your next question comes from Tom O'Malley with Barclays. Thomas O'Malley: I think in the preamble, Matt, you talked about AEC and retimers more than doubling in the fiscal year. Could you maybe give us some perspective on the base there? And then you've been really helpful in the next few years kind of giving the contributing factors of what is a pretty impressive growth profile. Maybe talk a little bit about how much that can contribute in this broader overview? Matthew Murphy: Yes. Tom. Yes, this is still an emerging area for us. So we're -- it's doubling -- over doubling this year, but it's probably in the $200 million range is what I would say. I mean, we actually -- I think based on some of the things we're looking at, maybe that goes higher, but that just gives you a sense of the magnitude. But it's going to keep going from there. I mean this is -- we've seen this in a lot of our emerging product areas when we get into them. Once they start doubling, they kind of keep doubling, and you know this market quite well. There's quite a bit of room, I think, for a bunch of people to participate. So yes, we're very encouraged by what we see based on the traction we have on our products, especially on product leadership. We leverage a lot of our DSP and PAM technology in this area. We inflected when both on the retimer side and AECs move from NRZ to PAM, and that was -- that was our kind of conscious decision to do that. So we're earlier in the cycle because we're coming in, in later generations than some of the existing sockets, but we intend to really invest here in a significant way and participate. Over the long term, we see that as complemented. There's a place in the market for this, and we're going to participate. But obviously, we made the bet when you go back to even the Inphi acquisition five years ago on optics and pluggable optics, in particular, and then now with Celestial also, on CPO on the scale upside. So there's a period of time we're going to participate. I think it's going to be great, and the business is going to do well and it leverages what we have. And I think it's going to be just part of our goal to be the end-to-end provider for our customers of all of these types of solutions. From electrical to optical to silicon photonics various reaches various distances, various form factors. And that's what our customers are looking for, okay? They want to have an interconnect partner that could be the one-stop shop and do it all and have high amounts of leverage on the IP, so they can trust it, because we do it ourselves and also on the firmware and the software, and the system implementations, they also want to make sure that they have reusability. So it's been a virtuous cycle here, just the scale-up part relative to the scale out is smaller but growing rapidly. Operator: Your next question comes from Vivek Arya with Bank of America Securities. Vivek Arya: Matt, I just wanted to first clarify what your XPU attach was last year and what contribution you expect in '27 and '28? And then, kind of, my more strategic question is, when we look at the pattern of your first large XPU program, right, you had a very strong start, followed by competition from another supplier. How would you handicap kind of your exclusivity at the large new XPU customer you plan to start at next year? Matthew Murphy: Yes. Thanks, Vivek. So maybe I'll answer the second one first. So yes, we're -- I think you're asking specifically about our newer program that would ramp next year, and we feel very good about our position. These are very deep engagements we have with our customers. We're two hands on the steering wheel on this. This is multi-generational in nature. Given the rate of innovation and the pace that the technology is moving at, it's really in everybody's best interest to plan, not just one generation out but even farther. And so we've really been able to do that, I think, across the Board with our customers. And so we feel really good about our position there. And the sustainability of that. It still needs to ramp obviously. But certainly, the CapEx envelope is out there to really consume a lot of product, and we're very encouraged by what we see from a road map perspective. And we're investing heavily as a company to be there across the board on all of the key attributes that these big XPU customers care about. So I think more to come on that, as well as future opportunities on XPU for the company. But we feel very good about our position in the next few years in terms of line of sight to hitting the revenue targets that we talked about over the last couple of years and then growing beyond that. And then, yes, I'm sorry, then the -- on the XPU attach, we [ can't ] give the exact numbers, but just maybe big round numbers. And maybe we'll first start with the line of sight just on the NIC and CXL I gave you, which was kind of $2 billion out in '28, and then you layer more on that. So -- and by the way, just -- we had sized for everybody on the call, the XPU attached TAM in the future at about $15 billion in calendar '28. We didn't break it out exactly, but we had a total market share goal of about 20% in that time frame. So I'll just call that $3 billion, we're driving in that area. So let's take a step back now. XPU attached probably in the couple of hundred million ballpark say like this last year, doubling this year, maybe over doubling again the year after. So I think by next year, this thing is probably a $1 billion type business. We'll see how it all shakes out. It's all going to happen under the hood of our custom business with that. But just to give you a sense, it's on a massive trajectory upward, and it's in that category of kind of double plus each year. Operator: Your next question comes from Tore Svanberg with Stifel. Tore Svanberg: Congrats on the record quarter. Matt, I was hoping you could give us a bit of an update on the mix of the opto electronic business. So you talked about 1.6 already shipping. But my understanding is that 800-gig is definitely going to be the bigger volumes this year. So any sense for what the mix is going to look like for fiscal '27 between 1.6, and I guess, 8 and even some 400? Matthew Murphy: Yes. Well, I think you got it right. First of all -- and we've been saying this for a while that 800 was going to be sort of stronger for longer, and I think that was our mantra even last year. And that's still the case for sure. But as I mentioned in the prepared remarks, we had significant shipments actually of 1.6T at the end of last year, and it's going to ramp again pretty hard this year. But 800 will still be the majority. I think it's going to take probably through -- I mean, even next year, 800 is still going to be strong. So I can't give you the exact breakout at the moment, Tore, but part of the -- I think, the uplift as well in terms of just our outlook for interconnect for the year was also based on, kind of, all of our customers revising up in terms of what they were going to need, but maybe a little bit more pronounced in 1.6T and it's really ramping strong with those initial customers we had and more will layer on throughout the year and next year. So yes, maybe more on that later, Tore, but probably not in a position to give you the exact number. And also, I'd say the reason why too, is it's been moving around a lot. I mean, this has been very dynamic in terms of the bookings environment and the demand environment. So I think the mix will have a better view of what that looks like as we progress throughout the year. Operator: Your next question comes from Joe Moore with Morgan Stanley. Joseph Moore: With all the growth that you're looking at here, I wonder if you see anything on the supply chain, that could be challenging for you. My sense is you've come a long way in terms of supply chain management since a couple of years ago, but just any updates there would be great? Matthew Murphy: Yes. Joe, great to hear from you. I'm going to have Chris answer that, our COO. He's been knee deep and had that job for about 5 years, and he's knee-deep in the supply. So Chris, go ahead. Christopher Koopmans: Yes. Thanks, Joe. Look, we've been in a tight supply environment for anything that touches AI, advanced node wafer fabrication, advanced packaging, large body substrate since the launch of ChatGPT. And against that backdrop, to your point, we were still able to grow the company north of 40% in total revenue last year. So we clearly have very, very good relationships with our suppliers. But I would argue that really what helps us we've been forecasting this growth for quite some time. And by giving them multiple years of visibility of what we're going to need and ramping into these numbers is really helping us. And so I'm very confident we've secured the supply that we need for all the growth that Matt outlined this year, next year and beyond. Operator: Your next question comes from Jim Schneider with Goldman Sachs. James Schneider: It's great to hear the increased visibility you have business in the next year, but If I think about the guidance for $15 billion of revenue next year, and $5 of earnings, roughly speaking, that's about 15% to where I see the peak consensus being for next year's revenue, but only about half of that on the earnings side. So can you maybe unpack a bit of what are the moving pieces below the top line? Whether that's gross margin mix, or increased investments to sort of get to that? Or is the $5 number just relatively conservative? Matthew Murphy: Jim, yes, yes, that's like just a floor like it's 5-plus. I mean you can run your own pro forma income statement. But just to give you a sense of how to think about it. So on the top line, we gave you a framework. And then you can also take, basically where we're going to exit this year and you could use whatever number you want to model finally in your model, but we're saying put in 3, or a bit more. And then if you actually just kind of roll through some of the guidance we've given you already for this year on OpEx and the moving pieces on gross margin, we actually start to get to our target operating model, margin model exiting the year. And that probably continues through the next year is a safe assumption. So the number if you put in 15, and you put in that, it probably -- it floats above $5. So that was not a prescriptive number, or a firm number. It was just a 5-plus. People are going to have their own estimates, and you guys will sort of come up with your own view. But yes, no, I'm not making any comment about any kind of margin changes, or dilution, or losing leverage at all. We're going to get leverage -- we're in the mid-30s op margins right now, if you kind of look at where we were last quarter and what we're guiding and that should float up throughout the year. And then not calling it exactly for next year, but it probably would be consistent with our -- certainly our exit rate of this year. And so that's a simple way to think about it. So it's -- that would pop out a number above $5. Operator: And your next question is from Christopher Rolland with Susquehanna International Group. Christopher Rolland: Matt, thanks for answering the question. So mine is around kind of big picture, like the CPO scale-up world. Perhaps if you could describe what it looks like, what it looks like for Marvell? But also in your prepared remarks, you talked about integrating Celestial, it sounds like into the Innovium platform. I was wondering, are there potentially like UALink switch trays that you might be able to integrate this into as well? And just the timing around such products would be cool. Matthew Murphy: Yes. Great. Thanks. So yes, on the initial plan on Celestial -- and where we -- and just by the way, on the big picture side, our view pretty consistently for some time now has been that the deployment of CPO and scale out would be relatively limited relative to the -- especially relative to the amount of pluggable transceivers that we're going to get deployed. And you can go back many, many OFCs ago, and that's been our view. And that's been the case to today, for sure. And then I think on the go forward, relatively wise, it's still the case, although you may see some of the industry. That's not our current plan today, although we could absolutely do that and do that integration with the Celestial technology, and our Innovium CareLink products. And we've done POCs and we've done some work there, but we'll be ready to react to the market there, Chris, when it's needed. On the scale up, and you mentioned UAL, that's a perfect use case where that is where we see that CPO technology inflecting in a pretty big way and Celestial brought us a pretty significant design win and engagement in that area. And that's what we're trying to drive for next year. So when we ramp it next year, at the end of next year, the -- that would be serving the scale-up application and it would be both an integration of the photonic fabric chiplet into the XPU, as well as on the switch side. That's the first one. There will be a whole bunch of shipments on scale up switching that will be copper-based, and that's going to exist for some time, too. But we're seeing very, very strong interest across the board for kind of beyond the next few years of where the CPO for scale-up really starts to inflect. And this has been -- and that's sort of been our recognition over the last year or two, is that's where that's going to happen and that's why we did the M&A and we brought the team on. So to sum it all up, we'll be shipping next year CPO for scale up at one large customer, and then we're working on more for beyond that. And then the rest of those deployments would be still copper-based. I think we'll do one more question and then I'll -- I think we'll wrap it. Operator: Our last question then will come from Mark Lipacis with Evercore ISI. Mark Lipacis: Congrats on the great quarter. Matt, I'm wondering, when you look at these AI systems that your customers are building, it sounds like the way you're talking about it that there's a bigger bottleneck on the connectivity side and the processor side. And so -- but that would be like the part one of the question. And if you agree with that, what's the argument for, why not shift your process or resources to focus more on connectivity? It seems like your lead is a lot more obvious on the connectivity side, it's a higher margin business. That's where the bottleneck is. And seems like there's a higher chance to add more value, to get paid for that value. And by contrast, the processor side sounds like it's quite noisy on the competitive front. And I think you guys probably get dinged on multiple because of that noise. And so what's the kind of -- what's the rationale for not doing something like that? Matthew Murphy: Yes. Thanks, Mark. It's a valid question. So first of all, on the interconnect side -- well, on your first part of your question, I'm not sure what's more of the bottleneck or not? I know for sure, the interconnect is a bottleneck, but you could also argue industry-wide, there's a lot more to do on the processing side. But just to be clear, we are absolutely investing to win on interconnect. Like we're not sort of trading anything off there. I mean we're going all in to make sure that we're the leader here. And that's why you can even see when we did our M&A moves last year, we put all that towards that market. I would say, though, at the same time, we're in the custom business. The -- and you got to break it into two pieces. On the XPU attach side, obviously, that is more margin-rich. And leverages a lot of the Marvell IP, and technology we have, and those typically are our chips that we do. And we've made quite a nice business out of that. And then on the XPU side, we want to be a big time supplier to our customers. We do get strategic advantage, okay, in being in that market though, Mark, which was actually even a reason thinking all the way back to Avera when we acquired it out of IBM -- or sorry, out of GLOBALFOUNDRIES back in 2019. And one of the reasons that I wanted to do that acquisition and get Marvell into custom -- I mean I never envisioned it would be this significant business for us. Okay. Let's be clear, back in 2019, we weren't thinking that we were going to buy an asset for $650 million, and it was going to open up a $50 billion TAM, but it did. And one of the strategic rationales that I had for that deal was that it would put Marvell in a product area where we had to be at the bleeding edge. We had to be at the bleeding edge on nodes, packaging, IP development, and it was a tip of the spear type of product line that I felt would be really good for us to really have a driving force to keep Marvell best-in-class on technology. Because at that time, we were making the move from fast follower to trying to be a technology leader. So now we're in that business. I agree with you. It's got a lot of noise around it, and it's got a lot of controversies over the last year and all the different things that have gone on, and maybe it's affected a multiple. But the fact of the matter is, we're in that business. Our customers are counting on us. We've grown that business from zero to $1.5 billion. It's going to grow again this year. It's going to double the year after. And it's going to be a significant revenue growth driver for Marvell. So I'm not compromising anything on the rest of the portfolio to be in that business. And remember as well, that business also gets significant funding and contribution from our customers who pay us NRE and put their commitment in to make sure that those programs are successful. So we do get underwritten in terms of the support to go do them. And so I'm going to keep -- at this point, I'm in the AI market. I have the full portfolio. I'm going to follow what my customers want me to do. And I'm going to ignore the noise. I mean, if you actually look at last year and all the different things that came out, and all the different noise that was out there, it was all wrong. I mean you actually analysts retracting notes. You had articles that weren't even accurate at all. I mean you had -- honestly, it was all noise. Look at our results that we're guiding, look at our outlook for this year. Look at our outlook for next year. Do you see me blinking? You don't. So yes, we're in the business. We're going to be in the business. Our customers want me to be in this business, and we're going to drive a major significant revenue company at Marvell. I'm very fired up on this topic. Thank you, Mark. All right. Ashish wrap it? Ashish Saran: Go for it. Matthew Murphy: Yes, I got a couple of closing statements. That wasn't it, by the way, everybody. All right. So first, thank you, everybody, for joining the call. I appreciate the interest in the company. It's always fun. Look, our business is on a very strong trajectory, okay? I mentioned on our prepared results. We had record design wins over the past year. Team did a great job. We're seeing record demand. We're on track to grow our data center revenue at or above 40% for the third straight year. And by the way, if I go back 4 years, 5 years, 10 years, this business has been growing at like 35%, 40%, 45% for a very, very long time, and it's going to continue to do that. In fact, for next year, we're looking at that growth accelerating closer to 50% next year, and we're driving the company to try to get this company to $15 billion of revenue next year. It's -- I've been doing this job for 10 years. The team has been incredibly dedicated and we have this massive opportunity in front of us. So as I said to Ben, who asked one of the great questions, we set some very ambitious targets for the company for calendar '28, fiscal '29. Almost 2 years ago, it looked crazy. We're on track. We're on track to achieve the goals that we set. This is the start of it. We're going to continue to update you guys on the progress of the company. And I want to end by just thanking all the Marvell employees for your focus, your commitment, and your commitment to our customers to drive the execution they're looking for, and our goal is to make Marvell one of the big winners in this once-in-a-lifetime episodic AI infrastructure build-out. So thanks, everybody, for your interest in the company. I'll see a bunch of you guys on the East Coast in New York next week. Operator: Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.
Mike Chang: [Presentation] Good afternoon and welcome to Samsara's Fourth Quarter Fiscal 2026 Earnings Call. I'm Mike Chang, Samsara's Senior Vice President of Finance. Joining me today are Samsara's Chief Executive Officer and Co-Founder, Sanjit Biswas; and our Chief Financial Officer, Dominic Phillips. In addition to our prepared remarks on this call, additional information can be found in our shareholder letter, press release, investor presentation and SEC filings on our Investor Relations website at investors.samsara.com. The matters we'll discuss today include forward-looking statements. Actual results may differ materially from those contained in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings. Any forward-looking statements that we make on this call are based on assumptions as of today, March 5, 2026, and we undertake no obligation to update these statements as a result of new information or future events unless required by law. During today's call, we will discuss our fourth quarter fiscal 2026 financial results. We'd like to point out that the company reports non-GAAP results, in addition to, and not as a substitute for or superior to financial measures calculated in accordance with GAAP. We also report both actual and constant currency growth rates for certain metrics. On the call, we only provide constant currency commentary when there is difference. Reconciliations of GAAP to non-GAAP financial measures and additional information on constant currency are provided in our press release and investor presentation. We'll make opening remarks, dive into highlights for the quarter and open the call up for Q&A. With that, I'll hand the call over to Sanjit. Sanjit Biswas: Thanks, Mike, and thank you, everyone, for joining us today. FY '26 was an outstanding year of durable and efficient growth. We ended the year with $1.9 billion in ARR, growing 30% year-over-year. Our $432 million of net new ARR drove this performance, growing 21% year-over-year and demonstrating our ability to accelerate growth even as we operate at much larger scale. Our momentum is strongest with our largest customers. We ended the year with $1.2 billion of ARR from our $100,000-plus ARR customers, an increase of 37% year-over-year and our second consecutive quarter of sequential acceleration. As we look back on FY '26, it's clear we are uniquely positioned to help digitize the world of physical operations. We help these industries transform through a combination of hardware devices, cloud connectivity, deep AI and data integrations. At the heart of our competitive advantage is our proprietary data asset, information that simply isn't found on the Internet. This includes everything from dash cam imagery captured across hundreds of millions of miles of roads daily to specific maintenance inspection workflows and service routes. We now have more than 25 trillion data points flowing through our platform every year. This data provides us with the unique moat that fuels a powerful data network effect, as we add more customers and assets, our AI models become more insightful for everyone on the platform. This creates a compounding advantage that is difficult for others to replicate. Since our founding in 2015, we've worked towards a vision of fully digitized operations. We see this transformation occurring in 3 distinct phases. Phase 1, connecting the world's physical operations, then Phase 2, analyzing the data to surface actionable operational insights and Phase 3 automating entire workflows with proprietary AI agents. Let's start with Phase 1. Our customers are service businesses that rely on physical assets and labor and require a wide range of equipment for their operations. This includes light-duty vehicles, school buses, yellow iron construction equipment, trailers, tools and even dumpsters. On average, our largest customers spend around 80% of the revenue on these types of assets and workers. By connecting their operations to the cloud using IoT hardware, we're building a massive and proprietary data asset that represents the physical world. This includes real-time data such as video, GPS locations, sensor readings and diagnostics codes which our customers use to gain operational benefits, including protecting frontline workers from false claims and liability with HD video evidence, delivering best-in-class customer service with live locations to provide accurate ETAs and ensuring compliance with asset and worker monitoring. While customers can immediately achieve clear and fast ROI from connecting their operations to the cloud, this digitization is still in its early stages. This is due to the significant change management required to digitize revenue-generating assets. We believe the multi-decade effort to connect the world's physical operations creates a durable long-term growth opportunity for our business. Once we've collected all the data, our customers enter Phase 2. We trained purpose-built AI to surface deeper cross-functional insights that were previously unattainable. For the first time, our customers can see the direct correlation between worker behavior and long-term vehicle health, how specific service routes impact both fuel efficiency and customer satisfaction and how real-time coaching helps prevent accidents and keep their workers safe. By applying AI to this operational data, our customers are using actionable insights to transform their operations. This includes identifying safety risks through 40-plus AI detections, like drowsiness, risky weather and passenger left behind, and correlating that risk with the workers' broader safety record, simplifying compliance tracking by automating the verification of worker and asset qualifications and minimizing fuel spend through coaching driving behavior and intelligently suggesting the most cost-effective gas stations along their routes. Our AI analysis can now go even deeper by expanding the scope beyond a single customer driving actionable insights from analyzing our network of tens of thousands of customers collectively. For example, we can predict asset breakdowns by analyzing sensor data and comparing it against data from tens of thousands of assets of the identical make, model, and year to understand the average time to failure. Analyze weather risk by comparing national weather service data with actual camera footage from Samsara's network of millions of devices, and optimize operational performance by comparing an organization's safety records -- safety scores, utilization rates and fuel efficiency against anonymized data from industry peers to identify specific areas for improvement. These actionable insights do more than just power dashboards. They build a high-velocity, high-quality data foundation required for automation. You cannot effectively automate what you've not first unified and understood. Next, our customers enter Phase 3. Advances in AI reasoning capabilities allow us to build AI agents to take action and automate entire workflows. We are shifting the paradigm from providing insights in Phase 2 which require a human to interpret and act to delivering automated outcomes in Phase 3. These agents will supercharge our customers' operations, giving them virtual teammates to completely transform their approach to safety, efficiency and sustainability. As part of this, we're excited to announce our very first AI agent, the AI Safety Coach. It comprehends risk by self-reviewing data sources such as safety event videos, workers' safety records and weather conditions. This depth of understanding allows the agent to deliver automated safety outcomes, providing real-time voice coaching in the cab, and personalized end-of-week coaching videos for workers. It even dynamically adjust safety alerts based on risky conditions such as increasing following distances when it begins to snow. Beyond safety, our road map includes a suite of specialized AI agents designed to act as force multipliers for back office teams. We're developing additional AI agents to assist with compliance, maintenance and dispatching. By automating these high-frequency complex tasks, we're enabling our customers to scale their operations without the traditional linear increase in administrative costs. To realize the full potential of these 3 phases, technology must be adopted by the people who power the business every day. Today, the majority of physical operations are moving into Phase 1 or Phase 2 of their digital transformation, which requires installation of our hardware and change management with their frontline workers. From there, the transition to Phase 3 can happen much faster as the core parts of their operation are digitized and prepared for AI automation. The progress we've made in digitizing the world's physical operations is directly translating to our results. We partner with many of the leading physical operations organizations, including 7 of the top 10 food service companies, 7 of the top 10 waste management companies, and 5 of the top 10 wholesale and retail companies. In Q4, we added 204 new $100,000-plus ARR customers and ended FY '26 with 3,194, $100,000-plus ARR customers. Our large customer momentum is laying the foundation for durable growth as these organizations adopt more products across our platform to achieve additional ROI. Large customer wins for the quarter include Southern California Edison, Groundworks and Harris County in Texas. I'd like to share 2 examples of how we're expanding with our customers. The first is with 1 of North America's leading freight transportation companies, operating a rail network of more than 30,000 route miles. Since becoming a customer in 2021, they've used our video-based safety and telematics products on their freight hostlers to build a world-class safety program. This resulted in a 90% drop in safety events and a 97% drop in distracted driving. In Q4, we expanded our partnership to include AI Multicam as they are growing their safety program. They were a top 10 win for the quarter. We estimate they will save over $12 million per year through fewer and less severe accidents, lower maintenance spend and reduced fuel consumption. Another example is with Estes, which was also a top 10 win for the quarter. Estes is the largest privately held freight transportation company in North America. They operate over 43,000 trailers and 10,500 tractors to move 70 million pounds of freight daily. After initially partnering with Samsara for video-based safety and Telematics, they expanded in Q4 to add equipment monitoring, Asset Tags and connected asset maintenance, further unifying their operations on our platform. Estes is deploying asset gateways across their trailer fleet to gain real-time visibility and safety insights. They're using Asset Tags to track thousands of smaller mission-critical assets, including dollies, forklifts and ramps that are essential to their daily dock operations. They're also using connected asset maintenance to detect issues early and reduce unplanned downtime and streamlined shop operations with integrated warranty and inventory management. We are proud of the impact we're making together with our customers. We introduced the Asset Tag 18 months ago, and our customers are rapidly adopting them to get better visibility across their operations from heavy-duty assets to smaller tools and equipment. This is only made possible by our industry-leading industrial-grade Samsara network, which continues to get bigger and better. In just the last 2 years, we doubled our network density and can now detect Asset Tags in near real time providing visibility at scale that can't be replicated. We are further strengthening our network through an integration with Hubble's terrestrial network of more than 90 million consumer smartphones. This builds on Samsara's strong presence on roads, job sites, and in residential areas by extending visibility inside buildings. To continue the momentum of our Asset Tags, we are introducing the all-new Asset Tag XS, a form factor 5x smaller than our original Asset Tag. It is purpose built for more compact, high-value handheld tools and specialized equipment, such as gas meters and IV pumps. Equipment managers can now mix and match Asset Tags based on the size and shape of their assets. Finally, we also introduced the latest generation of our Asset Tag. It has 6 years of maintenance-free battery life, a 50% increase over the previous generation and improved precision finding and range. We're excited to see the growing impact that Asset Tags are having on our customers' operations. As we close out a fantastic FY '26, I want to thank our customers for their continued partnership and our team for their relentless focus on innovation. We're in the early innings of a multi-decade opportunity to transform the physical world and I have never been more excited about the road ahead. We also wanted to share that our Chief Product Officer, Kiran Saker has retired. Our CTO and Co-Founder, John Bicket; and SVP of Product Management, Johan Land, will take over leadership of our engineering and product organizations, respectively. We thank Kiran for his outsized impact and customer focus which were instrumental in growing Samsara from an early-stage idea into a multibillion-dollar business. Lastly, we're excited to announce that we will be hosting our customer conference Beyond 2026 from June 23 to 26 in Las Vegas. We'll also be hosting an Investor Day as part of the event. Beyond is our opportunity to bring together leaders from across industries to discuss the state of physical operations and new ways to deliver value through digitization. We hope you'll join us and are looking forward to seeing many of you there. I'll now hand it over to Dominic to go over the financial highlights for the quarter. Dominic Phillips: Thank you, Sanjit. Q4 was another quarter of accelerating growth and improved operating leverage. The quarter was highlighted by strong performance across several key metrics, including 31% year-over-year net new ARR growth in constant currency, the third consecutive quarter of sequential acceleration and the highest net new ARR growth in the past 8 quarters. leading to 30% total ARR growth also accelerating sequentially at a larger scale. 37% year-over-year ARR growth for $100,000-plus customers, the second consecutive quarter of sequential acceleration at a larger scale, and 56% year-over-year ARR growth for $1 million-plus customers, the third consecutive quarter of sequential acceleration at a larger scale. A quarterly record 13 $1 million plus net new ACV transactions, 23% of net new ACV from emerging products launched over the past 2 years and achieving our second consecutive quarter of GAAP profitability. More broadly, our durable and increasingly efficient growth demonstrates the large yet still early opportunity for digital transformation across physical operations. Looking ahead, we believe we're well positioned to deliver durable growth and create long-term shareholder value for several key reasons. The first is that we have a unique defensible data advantage. By instrumenting physical assets with IoT hardware, we generate a large and growing proprietary data asset that cannot be easily replicated. Second, we're leveraging this proprietary data to power a closed loop of intelligence and action. We use AI to surface operational insights and deploy AI agents to take action on those insights and automate workflows across the platform. This drives stronger customer engagement and expands the long-term value of our platform. Third, we have exposure to secular growth in physical infrastructure. Our business model scales with physical assets rather than headcount or knowledge workers and aligns us with end markets benefiting from major initiatives such as the global AI infrastructure build-out. The stock price performance of our top 100 public customers is up more than 30% over the past year. Fourth, our products offer a differentiated value prop in mission-critical workflows, delivering fast tangible ROI such as accident reduction, fuel and maintenance savings, and improved asset utilization, making us essential to our customers' operations. And lastly, we're targeting the large less discretionary operations budget, which represents approximately 80% of our customers' revenue on average. And because we help them optimize this significant cost base, we have a large opportunity to drive customer impact and long-term growth. Okay. Now turning to our results. Q4 and FY '26 ending ARR was $1.9 billion, an increase of 30% year-over-year, accelerating sequentially at a larger scale. Within that, we added $145 million of net new ARR in Q4, an increase of 33% year-over-year or 31% in constant currency, resulting in the third consecutive quarter of accelerating sequential growth and the highest net new ARR growth rate in the past 8 quarters. Our overall net new ARR in FY '26 was $432 million, an increase of 21% year-over-year, which also accelerated year-over-year at a larger scale. And FY '26 revenue was $1.6 billion, an increase of 30% year-over-year or 29% in constant currency. Several factors drove our strong top line performance in Q4. First, large customer momentum is leading to higher growth at scale. In terms of large deals, we signed a quarterly record 13 $1 million plus net new transactions in Q4. This reflects the success of our R&D and go-to-market investments to support these larger customer opportunities. In terms of large customers, we ended Q4 with 3,194, $100,000 ARR customers including a quarterly increase of 204, our second highest quarter ever. ARR from $100,000-plus customers was $1.2 billion, increasing 37% year-over-year resulting in the second consecutive quarter of sequential acceleration at a larger scale. $100,000-plus customers represent 61% of total ARR, up from 58% 1 year ago and 56% 2 years ago. Additionally, ARR from $1 million-plus customers increased 56% year-over-year, representing the third consecutive quarter of sequential acceleration at a larger scale. Consistently over time, our ARR mix from large customers has increased, while ARR mix from smaller customers has decreased. To better reflect this trend and align with our capital allocation strategy, we're refreshing our definition of core customers to include customers with more than $25,000 in ARR versus $10,000 previously. At the end of Q4, $25,000-plus customers contributed 85% of total ARR, up from 83% 1 year ago and 81% 2 years ago. We expect this trend to continue and believe this update also helps investors better understand our focus on larger customers versus other competitors in the space. Second, our customers are increasingly using Samsara as their mission-critical system of action by subscribing to multiple applications on a single unified platform. 96% of our $100,000-plus ARR customers subscribed to 2 or more products and 69% subscribe to 3 or more. In Q4, 9 of the top 10 net new ACV deals included, 2 or more products. 8 of the top 10 included 3 or more products, and 6 of the top 10 included 4 more products. In Q4, we had a large win with 1 of the Midwest's largest farmer-owned co-ops, following rapid M&A-driven growth that left data fragmented across systems, they consolidated on Samsara. This customer leverages route planning to digitally access daily orders, commercial navigation for safe, compliant vehicle aware turn-by-turn directions, and connected workflows to streamline proof of delivery and signatures. Additionally, Telematics and video-based safety provide real-time visibility to enable proactive protection of drivers and reduce risk. In a pilot, they achieved a 65% reduction in safety events, an 85% reduction in speeding events, and a 45% reduction in idling time. Strong multiproduct adoption like this helped us achieve our target dollar-based net retention rate of approximately 115% for core customers, both for our prior definition of $10,000-plus ARR customers and our updated definition of $25,000-plus ARR customers. And third, we demonstrated strong execution across several frontiers. In terms of emerging products, 23% of net new ACV in Q4 came from new products launched over the past 2 years, including AI Multicam, asset maintenance, Asset Tags, commercial navigation, qualifications, routing, training and workflows. Emerging products now contribute more than $100 million in ARR, 8 of the top 10 net new ACV transactions in Q4 included in emerging product, 58 transactions in Q4 included more than $100,000 in emerging product net new ACV and Asset Tags ending ARR more than tripled year-over-year. In Q4, we signed our largest ever Asset Tags deal with Total Safety, a leading provider of industrial safety services with over 250,000 assets in the U.S. Total Safety is deploying Asset Tags to track critical high-value safety equipment such as breathing air tanks, eyewash stations, and small tools to ensure asset visibility critical to their operations. By digitizing their inventory, they are increasing equipment recovery and helping their customers eliminate the high cost of lost assets. In terms of end markets, we saw strong momentum across construction, wholesale and retail trade and public sector. Construction contributed the highest net new ACV mix of all industries for the tenth consecutive quarter and had its highest net new ACV growth in the last 7 quarters. Wholesale and retail trade was our second largest vertical in Q4 and contributed its highest net new ACV mix in the last 3 years and public sector FY '26 net new ACV growth accelerated for the third consecutive year, including Q4 wins with the state of New York and Harris County, the third largest county in the U.S. And in terms of international, 15% of net new ACV came from non-U.S. geographies. Europe ARR growth accelerated for the fourth straight quarter, led by our largest ever European net new ACV deal with Dawsongroup, the U.K.'s largest independent asset rental leasing and contract hire company. And Canada had a highest year-over-year net new ACV growth in the last 10 quarters. In addition to driving strong top line growth, we continue to deliver operating leverage across our business as we scale. In FY '26, non-GAAP gross margin was 78%, up 1 percentage point year-over-year. Non-GAAP operating margin was 17%, up 8 percentage points from 1 year ago, and free cash flow margin was 13% in FY '26, up 4 percentage points year-over-year. Okay. Now turning to Q1 and FY '27 guidance based on FX rates as of January 31. Our guidance philosophy remains the same and is derisked for potential downside scenarios. For Q1, we expect revenue to be between $454 million and $456 million, representing 24% year-over-year growth or 22% to 23% growth in constant currency. Non-GAAP operating margin to be 15%. And Non-GAAP EPS to be between $0.12 and $0.13. For full year FY '27, we expect revenue to be between $1.965 billion and $1.975 billion, representing 21% to 22% year-over-year growth or 21% growth in constant currency. Non-GAAP operating margin to be 19%, non-GAAP EPS to be between $0.65 and $0.69. And we also expect to be GAAP profitable for full year FY '27. Finally, please see the additional modeling notes in our shareholder letter. To wrap up in Q4 and in FY '26, we delivered accelerating growth at scale while expanding operating leverage across the board. Looking ahead, we believe we're well positioned to sustain durable and efficient growth because we use hardware to generate a unique defensible data asset that we harness with AI to surface operational insights and automatically take action to drive more customer value. We are aligned with the secular growth in physical operations and markets that are benefiting from major initiatives such as the global AI infrastructure build-out and we deliver large tangible customer ROI with fast payback periods. We look forward to building on this momentum as we help our customers operate more safely, efficiently and sustainably at a greater scale. And with that, I'll hand it over to Mike to moderate Q&A. Mike Chang: Thanks, Dominic. We will now open the line up for questions. [Operator Instructions] The first question today comes from Matt Hedberg with RBC followed by Keith Weiss with Morgan Stanley. Matthew Hedberg: Can you hear me? Dominic Phillips: Yes. Matthew Hedberg: Great. And great job this quarter. A lot of positives to pick through here. The emerging product success was certainly a standout reaching 2 really significant milestones. I guess, as you look to the future, and by the way, I think you guys outlined a really, really compelling reason why data is at the core of Samsara and why that is extremely defensive and in fact, offensive in an AI environment. Can you talk about, though, where you're seeing some of the best adoption rates for some of these emerging products? Is it across all your customers? Is it some of your larger customers, particular verticals? Any sense for just kind of how those emerging products are distributed? Sanjit Biswas: Matt, this is Sanjit. I'll take that one. So I would say we are seeing very strong momentum, especially with large customers because they have the most complex physical operations thousands of, and tens of thousands of frontline workers and similar -- probably a larger number of assets. So when we introduce new technologies like commercial navigation, maintenance, training, they're very well received because they know immediately how to put that technology to work. So I would say if I had to choose a pattern, it would be among these larger customers where they're set up to absorb these new products. Mike Chang: The next question comes from Keith Weiss with Morgan Stanley, followed by Alex Zukin with Wolfe. Keith Weiss: Congratulations on a really outstanding quarter and end to the year. Two -- Really 2 questions I want to ask 1 more tactical, 1 more strategic. On the more tactical side of the equation, the acceleration that we've seen over the past couple of quarters in net new ARR. Is it too simple to say that this is sort of Asset Tags and that new solution ramping up within the product portfolio? Or is there like a broader set of drivers that are behind that acceleration? And then on the more strategic side, coming out of the Morgan Stanley TMT Conference. We've been talking a lot about proprietary data. And 1 of the debates that emerged is the, how the value of data sustains over time? And I'd love to hear your guys' view on it in terms of the relative value of the data when it's brand new and it's just coming off of the devices versus how much value it retains as it becomes older and older and becomes part of that like bigger data set that you have over time? Dominic Phillips: It's Dominic. I'll go for the first 1 and then Sanjit can take the second one. I think the acceleration, the net new ARR acceleration over the last 3 quarters has been much broader than something just simply as Asset Tags. I think broadly as a bucket, the emerging products have definitely been a big contributor. So going from 8% of the net new ACV mix in Q2 to 20% in Q3 and then 23% in Q4. Asset Tags has been important within that. But once again, we didn't see 1 product within the emerging products driving more than 50% of that contribution. I think it's been a lot of large customer momentum and success. Again, a quarterly record 13 $1 million plus net new ACV transactions, our second highest quarter ever of $100,000-plus adds. We're seeing good momentum internationally. And then in specific verticals, again, things like construction and wholesale and retail and public sector this quarter were all strong. So emerging products definitely playing a role, but it's been -- the strength and the growth has been much more broader than that. Sanjit Biswas: And Keith, on the proprietary data angle, we think there's a lot of value in the sort of accumulation and really the data asset that builds up over time. And I'll give you 1 or 2 just kind of concrete examples. Maintenance is actually 1 that our customers have really started taking to. We have a tremendous amount of information about what happens with the specific make, model, year of a truck. So for example, if you have a 2020 Freightliner Cascadia, how does it wear over time? What have others seen? Where does it start to break down? Where does the maintenance cost go up? That is from the accumulation of a lot of data over time. The same philosophy applies to things like risk data. You want to understand how millions of drivers over different weather conditions over time, different tenures of their company, different risk patterns behave. So it's not just in-the-moment data, that's, of course, valuable, but it's really being able to look at it over time and across customers, that's where it accumulates to be something really interesting. Mike Chang: The next question comes from Alex Zukin with Wolfe Research, followed by Michael Turrin with Wells Fargo. Aleksandr Zukin: I echo my congratulations on really, really strong quarter. Maybe first one for you, Sanjit, just the AI offering that you launched the agentic offering. Maybe just help us understand a little bit of how you plan to monetize that within your customer base and kind of how -- I think listed a few that are on the maybe horizon. Maybe talk to us a little bit about your vision for introducing that type of functionality and maybe how the pricing evolves around that. And then Dom, it's your largest net new ARR beat as a public company. Despite the conservatism you always embedded in the guidance, I think we're starting with a 2 percentage point expansion on a larger scale, implying the largest starting incremental margin guidance for a fiscal year guide. So maybe walk through kind of just the momentum that you're seeing in existing and new customers that gives you that confidence to embed that sales efficiency to start the guidance. Sanjit Biswas: Sure. I'll start with the agentic question. So AI agents are sort of new concept to the world and very new in the world of our customers. We are getting these products out there to understand better how they're going to use the agents, how often they use it, the patterns and so on. And that will give us the data we need to figure out the right pricing model. both is a fair share of value but also matches how the customers use the product. So we'll have more to come there. We'll really get these out there starting in the summer with Beyond. And we are excited, not just about the Safety Agent, but also the maintenance compliance and the other sort of virtual team members we can add to our customers' teams. Dominic Phillips: Yes. And I would say, that we've -- again, Q4 was fantastic, but we've really had 3 consecutive quarters now of accelerating net new ARR growth. And so a lot of great momentum, obviously, to end FY '26 and then taking us into FY '27. I think not only have we demonstrated a lot of accelerating growth, but we've also done so by getting more efficient, again across the board. And so we're finding ways to operate more efficiently. We're using a lot of AI tools internally to drive a lot more productivity. Even looking at something as simple as like ARR per employee, that has increased every year over the last several years, I think it's like up like more than 30% over the last 3 years. And so we're able to drive a lot more top line scale while doing so much more efficiently. And that gives us confidence that we can continue to do that into FY '27. Mike Chang: The next question comes from Michael Turrin with Wells Fargo, followed by Matt Martino with Goldman Sachs. Michael Turrin: Echo my congrats as well. The 4Q results are really impressive even for Samsara in Q4. So the first question is just, you had a lot of rich detail in there, but just help us understand where the sources of upside came from? And if anything at all, surprised you relative to what you're expecting? And as sort of the second part to that, just how that shades what you're framing to us for fiscal '27 as well, Dom?. Dominic Phillips: Yes. Again, as I -- we just kind of talked with Alex a third consecutive quarter of net new ARR acceleration, strongest net new ARR growth in 8 quarters. And then -- and so much net new ARR acceleration that the overall $1.9 billion of ending ARR accelerated back up to 30%. Again, large customers, a lot of large deals, the record 13 $1 million-plus transactions and then the $200,000 and $400,000-plus adds was very strong. I think tied into the emerging products, we're just seeing much larger multiproduct transactions. So 9 of the top 10 deals, 2-plus products; 8 of the top 10, 3 plus; and then 6 of the top 10, 4 plus. So a lot of multiproduct strengths driving the growth. And then we're getting contribution from these emerging frontiers, whether it's the emerging products at 23%, international or again some of these verticals. And so 3 consecutive quarters, I'd say, of acceleration and a lot of growth strength, and that gives us a lot of good momentum going into '27. Michael Turrin: Congrats again. Mike Chang: Next question comes from Matt Martino with Goldman Sachs, followed by Matt Bullock with BofA. Matthew Martino: Sanjit, for you, Asset Tags clearly feels like something much bigger. So as you introduce the XS form factor, bring in Hubble to extend the network, how should we think about the strategic end state there? Is this mainly about driving deeper adoption within the base? Or does this really start to open up an entirely broader asset visibility platform for you guys? Sanjit Biswas: Yes, Matt, I would say it's definitely both. The world of physical operations has a ton of assets. There's, of course, vehicles and trailers and construction equipment, but I mentioned a lot of the smaller handheld assets, there's tools, there's dollies and so on. So really, our first priority here is, like I said, with Phase 1, we're just simply trying to digitize and get this information into the cloud so we can start operating on it. As we do that, I think it does open up a lot of interesting use cases. Many of our customers are interested in things like asset dormancy, which piece of equipment haven't moved, maybe they don't need to own them and they could rent them instead there are definitely sophisticated ways to kind of load balance where those assets are placed. And then I do think there's this agentic opportunity. All of that will appeal to our existing customers. And I do think this will open up some new possibilities of maybe some customers that don't have a tremendous number of vehicles, but have a lot of other kinds of field assets. We highlighted total safety, for example, they have about 250,000 assets. That will be a good example of one. Mike Chang: Great. The next question comes from Matt Bullock with BofA, followed by Derrick Wood with TD Cowen. Matthew Bullock: Sanjit, I wanted to ask about the public sector. Annual net new ACV growth accelerated for the third consecutive year here. It's now a $100 million plus ARR business that's pretty clearly benefiting from network effects. My question was about legislation or the policy environment. We noticed that Samsara presented to Congress twice during February. What was that about specifically? And are there any kind of legislative tailwinds that we should have on our radar as we enter fiscal '27? Sanjit Biswas: Yes, absolutely. So we are very excited about momentum in the public sector. Just as a reminder, the public sector, they have a lot of physical operations that are required to maintain and really run all of our communities. There -- a lot of the reason that we're providing so much information to Congress is simply to educate. We want them to understand the benefit of these technologies, not just in the public sector, but even in the private sector. Our products have a huge impact on safety, on efficiency, and it's part of this bigger digitization trend. So there, I would say the work has really been around kind of education, first and foremost. And then in the public sector itself, I think we are seeing some great network effects, as you highlighted, cities and states that are not competitive with 1 another. So when you unlock value for one, they tend to talk about it and tell others about it. Matthew Bullock: That's fantastic. And if I could squeeze 1 more in for Dom, if I could. Obviously, the large deal momentum was excellent in 4Q. But I wanted to ask about helping frame the contribution from large deals that were ramping from 2Q and 3Q? Just helping us understand kind of what the contribution was from prior deal momentum in 4Q given the pretty huge net new ARR number. Dominic Phillips: Yes. Most of the Q4 performance and results were driven by new deals booked and signed in the quarter. The -- I assume the 1 that you're referring to in Q2 is the First Student transaction. That was a large deal that we signed in Q2 and is a phased rollout. And so we got some of that contribution in Q4 will continue to be rolled out over time. But most of the bookings and ARR, the net new ARR in Q4 were the result of new deals, whether they are expansions to existing customers or signing new customers, but that were booked in the quarter. Mike Chang: The next question comes from Derrick Wood with TD Cowen followed by Jim Fish with Piper Sandler. James Wood: Great. I'll echo my congrats as well. I guess, Sanjit, just going back on vertical discussion, construction, 10th sequential -- or 10th quarter in a row of strength, outsized. How much of that is being driven by physical AI data center infrastructure build-out? And what are some of the other drivers? And then just -- I mean, given the projected tens of gigawatts of data center capacity expected to be stood up over the next couple of years, are you -- can you just talk about the strength of your pipeline, not only in construction but those other verticals, energy, utilities, field services that are tied to data center builds. Sanjit Biswas: Sure. So Derrick, Construction was absolutely another strong vertical for us this quarter. I would say that a significant number of our customers are involved in this AI data center build-out, but they're also helping build and maintain roadways and buildings and kind of all the infrastructure that powers the planet. So while it has been a kind of tailwind in general in the construction industry, there are a number of different sort of areas of interest there. But on the utility side, we see electrical utilities, other trades. We work with a lot of electrical contracting companies, for example, they are all involved in this AI data center build-out. So it's really been an interesting kind of macro tailwind or effect in that industry. But at the adjacent industries, as you highlighted, utilities and field services, too. James Wood: Great. And if I could squeeze 1 for Dom, speaking of macro. I -- We have been getting questions on whether the rise in memory prices would have any impact on your margins or cash flow or supply chain dynamics or anything to flag to think about potential impact on the model? Dominic Phillips: Yes. We're definitely seeing some increase in memory for us. It's more on the storage side, more on the NAND side than on the memory side. I think we've operated through different supply chain disruptions. We have a very kind of nimble supply chain team that's really well prepared to kind of handle and navigate the current dynamics. We kind of went through something similar in 2022. And I think most importantly, we were able to meet all customer demand while driving free cash flow leverage, and we feel like we're in a similar position now we factored this into the -- in the modeling notes and the gross margin and the 100 basis points of free cash flow leverage that we started with in the notes. I think, also something that we think about it from a competitive standpoint, we think that we're best positioned and best capitalized to navigate through this. This could be an opportunity for us to increase more market share and then ultimately, we obviously think that the prices are going to stabilize over time, and we don't see any long-term structural changes to our financial profile. Mike Chang: The next question comes from Jim Fish with Piper Sandler, followed by Alex Sklar with Raymond James. Sanjit Biswas: Thanks for the question here. Look, I think a lot of people here are impressed by the emerging product side of things. Dom, another quarter north of 20% here. It seems like this is starting to become the new norm. I guess, how are you guys thinking about it for the annual guide here? And was it fairly balanced again or a few of the products underneath starting to lead a little bit more. And Sanjit, just for you, was tags XS, a customer-driven ask? Or why this version? How should we think about capability difference or pricing difference? Dominic Phillips: Yes. From the emerging products side, very similar to the previous quarters. It was very widespread. There wasn't 1 of the kind of emerging products that drove more than 50% of the bookings. And so we saw pretty broad-based strength, and we have good momentum across all of those products going into '27. Sanjit Biswas: Yes. And in terms of Asset Tag XS, it very much was customer-driven. Customers tried the original Asset Tags. They really like the functionality. Many of these customers, they have smaller, often handheld tools where they needed something that basically had less volume. So that's where that ask came from, and that's why we built XS. The pricing is similar to the original Asset Tag family. It's really the form factor that's different. Mike Chang: The next question comes from Alex Sklar with Raymond James, followed by Peter Burkly with Evercore. Johnathan McCary: This is Johnathan McCary on for Alex. So Sanjit, I'll start with you. You guys called out success in Europe again this quarter. So I wanted to think ask how you're thinking about resourcing to that region as we head into fiscal '27. And then conceptually, how much of a priority is geo expansion over the next few years? And then tangentially for Dom, I wanted to ask on the hiring embedded in the outlook for the year. continued success in Europe, but you're also seeing product velocity that seems like it continues to pick up. So curious where you're adding more manpower across the business? And then which areas are driving the leverage embedded in the guide. Sanjit Biswas: Yes. I'll take the first part of that. So we're, again, very pleased with the progress in Europe. Dawsongroup [indiscernible] Fraikin. These have all been huge lands for us are very well-known companies in the geo. So I think it's just going to be continued investment and effort. We're planning to just be consistent there. And we're making the product investments that are required as well in terms of the features and functionality that are required. But if we take a step back, we play in some of the most important geographic markets today between North America and Western Europe. So I think it's really about to follow through and really helping digitize these large-scale operations. We still have a long way to go, which we're excited about. Dominic Phillips: Yes. And then on the hiring front, I touched on this a little bit earlier. But again, we expect FY '27 is going to be another year of productivity improvements. I use the stat that over the past 3 years, the ARR per employee is up more than 30%. We expect it will increase again in FY '27. Most of the hiring in FY '27 will be in our go-to-market and sales-related roles. Most of the other functions are going to be roughly the same size, maybe some smaller, which we expect will drive leverage across all of the OpEx line items. Mike Chang: The next question comes from Peter Burkly with Evercore followed by Jackson with William Blair. Peter Burkly: This is Pete Burkly on for Kirk Materne. I'll echo my congrats on a really strong quarter here. So just want to sort of focus in on, again, on the large customer segment and really strong growth and acceleration, the $100,000 ARR segment and the $1 million-plus segment as well. So I'm curious if you could just sort of unpack some of that strength, whether it's primarily multiproduct attach, some of the emerging products like Asset Tags and AI Multicam or if you're just seeing a broader fleet and asset expansion sort of underneath the hood in some of those larger customers. And then just curious how much runway sort of remains to continue to expand ARPU within that really large ARR customer base. Dominic Phillips: Yes, I'd say on the large customers, it was weighted a little bit more towards existing customers doing expansions, multiproduct adoption across the board definitely drove strength. And again, almost all of those licensing the core kind of vehicle-based products, Telematics and video-based safety. But as I said, things like 8 out of the top 10 had 3-plus products and 6 of the top 10 at 4 or more. So licensing something outside 1 of these emerging products, which is also quite strong for us. And similarly, even on the new logo side, the new customer lands, the large ones, all had or multiproduct transactions out of the gate. Mike Chang: The next question comes from Jackson with William Blair, followed by Jason Celino with KeyBanc. Jackson Bogli: This is Jackson on for doing Dylan Becker. We've talked about the substantial data set. We have more than 25 trillion data points on the platform. Large customers are doing more. There's more products in earlier stages of development and adoption altogether, I was curious if you could speak to how all of these things really allow you to accelerate the time to value with customers and really support the already considerable value proposition that you guys offer customers? Sanjit Biswas: Yes. I think, first of all, we're excited to be able to expand the platform. This really expands areas of value more than anything else. So for example, with maintenance, that was something weren't doing as much in before, but it's a tremendous area of expense for our customers who have a lot of assets. Time to value continues to be strong. Our customers realize this ROI within a year. So that's never really been an issue of like how do we speed that up. I'm excited about helping just kind of drive that already 8x ROI that we see with customers even broader as we expand into kind of more adjacent areas like maintenance, training, qualifications, workflows and so on. Jackson Bogli: Got it. That's super helpful. And then 1 more quickly, if I could. There's a lot of geopolitical turmoil going on in multiple regions. How should we think about the impact to the business' international expansion plans? Like would you even say the heightened uncertainty may provide a tailwind or headwind to potential adoption? I'm just curious any color you guys would have on the current macro landscape. Sanjit Biswas: I think it's -- for us, again, as I said on an earlier question, we're pretty focused on North America and Western Europe. There's 35 million commercial vehicles here in North America. There's 45 million in Western Europe. So we feel that the markets we're selling in are ready for this kind of digital transformation, they're adopting these technologies. So we're going to stay focused in the geographies we're in. Mike Chang: Great. Next question comes from Jason Celino with KeyBanc, followed by Nick Altmann with BTIG. Jason Celino: Maybe my first one, I think it was mentioned that you have 40 different AI detections, I don't know if this is a new way to frame it, but how many of these are powered by like AI-type models? Or can they be powered by kind of the same models. And then when we think about the categories of some of these detections, are they more than just safety-based detections? Sanjit Biswas: Sure. So these are all different forms of AI detection. Some of them involve technologies like large language models, others are kind of more time series-based models. So we are continuously expanding the library of types of detections. And safety is, of course, an important area for these detections, but are thinking about AI models much more generally. So we look at things like weather conditions and road conditions. We're looking at other kind of health vehicle and asset health related AI models. So we're continually expanding, but they build on a number of different technologies. Jason Celino: Okay. Great. And then maybe just a quick 1 for Dom. SBC philosophy. I know you're guiding to GAAP full year profitability, which is refreshing. But maybe refresh us on how you're thinking about SBC as a whole and its trajectory. Dominic Phillips: Yes. We view equity-based compensation as a real cost of the business. We forecast that we're driving leverage. I think we were in the kind of the high 20s 4 years ago, when we went public. We got it down into that low 20s last year in FY '26, the 10-K will come out -- or it's in the press release, but it was 20%, we'll be below that again in FY '27 and expect it to go down even further from there. So this is a big area of focus for us. And pleased that we were able to get to GAAP profitability now for 2 consecutive quarters. I think it will probably go a little bit negative in Q1, where we tend to spend a little bit more money, not on the SBC side, but on the OpEx side, but then we've got a path to getting it to positive for the full year. Mike Chang: The next question comes from Nick with BTIG, followed by Mark with Loop Capital. Nicholas Altmann: You mentioned you doubled the network density, and that is enabling you guys to detect the Asset Tags in near real time. So can you just talk about how much of an unlock those new real-time detection capabilities could be for both customers who are looking to adopt Asset Tags or even existing Asset Tags customers who are potentially looking to expand their footprint. Sanjit Biswas: Yes, absolutely. So the network density is an interesting 1 because it lets us basically increase the frequency and fidelity of the data we're getting back. This is especially helpful in a scenario like theft and loss. A lot of these assets get lost or stolen, and they walk away from job sites and so on. So customers are looking to go recover those. They need to know where they are if they're moving and so on, so it definitely helps there. And then we also embed this technology in other areas like our worker safety wearable. And so even if someone is not near a vehicle, we're able to help keep them safe outside of the cab. So for field services workers, for example, this is a helpful technology. So I think it just increases the number of applications we can address from kind of basic asset tracking, doing much more fine-grain analytics on these assets because we get much more frequent data updates. Mike Chang: The next question comes from Mark with Loop followed by Andrew with BNP. Mark Schappel: Congrats on the strong quarter here. Sanjit, typically at the start of the year is when software companies will adjust their sales orgs and the go-to-market strategies. I was wondering if you're planning any meaningful changes on the sales front in the coming year? Sanjit Biswas: No. I would say, Mark, we're always looking at efficiencies, trying to make sure we're approaching the market in the best way possible. We're very happy with our structure, nothing significant to report there. I don't know, Dominic, if you want to add anything? Dominic Phillips: I think more like evolutionary changes. And so -- having kind of more global account specialists for these like larger multinationals, we're experimenting and we'll make more investments in things like product sales specialists to cover all of these emerging products, but nothing hugely structurally different going into FY '27. Mike Chang: Our next question comes from Andrew with BNP followed by Junaid with Truist. Andrew? Okay. Let's pass there. Okay. Our last question today comes from Junaid with Truist. Junaid Siddiqui: Great. Given the scale of your network now and with offerings like AI Multicam, 360, real-time weather intelligence. How do you see these capabilities, positioning the platform as fleets begin adopting higher levels of autonomy. And how should we think about the monetization potential of that proprietary data in an autonomous future context? Sanjit Biswas: Yes. From our perspective, autonomy is an exciting technology. It's been on the horizon for some time, and it's starting to come to fruition on the consumer side at least. We kind of view operations as a whole. So autonomy is an and for us. We're going to start seeing autonomous vehicles and devices appear in our customers' operations at some point. We do think that will help expand the number of types of asset -- number and types of assets and the applications we address. So you're going to see more workflows, more automation happening where people and these autonomous vehicles are working together. We don't have plans to take this video data and sell it to the autonomous providers or anything like that. But for us, we're really just tracking it as more of a technology. Mike Chang: All right. So this concludes the question-and-answer portion. Thank you all for attending our Q4 fiscal year 2026 earnings call. Before I let you go have a few short announcements. We'll be attending the Loop Capital Markets Conference on March 10 and the Wells Fargo Symposium on April 8. We'll also be hosting the William Blair Bus Tour on March 16 and the Goldman Sachs Bus Tour on April 13 in San Francisco. We hope to see you at 1 of these events. Finally, we are hosting our Investor Day, as Sanjit mentioned, this June in Las Vegas. Please send an e-mail to ir@samsara.com, if you're interested in attending in person. For those who prefer to attend virtually our IR website will have a link to a live broadcast. That's it for today's meeting. If you have any follow-up questions, you can e-mail at ir@samsara.com. Bye everyone.
Operator: Good afternoon, and thank you for standing by. Welcome to Grove Collaborative Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Hosting today's call are Grove's CEO, Jeff Yurcisin and CFO, Tom Siragusa. Some of the statements made today about future prospects, financial results, business strategies, industry trends and Grove's ability to successfully respond to business risks may be considered forward-looking, including statements relating to reactivation of lapsed customers, future increases in advertising spend, stabilization of our e-commerce platform, sequential revenue growth throughout the year, while maintaining profitability discipline, increased capacity to execute additional growth initiatives, savings from reduction in force and improved subscription experience, future increases in product development, guidance for 2026, including guidance related to revenue and adjusted EBITDA; net revenue reaching a low point in the first quarter of 2026, seasonality and advertising investment in the first quarter of 2026, sequential improvement in revenue and acceleration of advertising investment, such statements are based on current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including those risks discussed in Grove's filings with the Securities and Exchange Commission. All of these statements are based on Grove's views today, and Grove assumes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. During today's call, Grove will also discuss certain non-GAAP financial measures, which adjust GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP items to the most directly comparable GAAP financial measures and Grove's earnings release, which is also available on Grove's Investor Relations website. I would now like to turn the call over to Jeff Yurcisin to begin. Jeff Yurcisin: Thank you, operator, and thank you for everyone joining us. I want to start with the financial headlines. We delivered on our revised full year 2025 revenue and adjusted EBITDA guidance, and we returned to positive adjusted EBITDA in the fourth quarter. This was our first positive adjusted EBITDA quarter in the last 6 quarters, and the result reflects a deliberate choice to prioritize liquidity and adjusted EBITDA profitability while we work through customer experience disruptions tied to our e-commerce platform migration. Stepping back Grove's focus remains the same. Driving long-term shareholder value by building a stronger, more resilient business, one that can deliver sustainable growth and consistent profitability over time. Our mission is also unchanged to be the leading destination for clean, sustainable nontoxic products for every room in the home. To earn that position in a market dominated by scale, digital platforms, we have to win where it matters by delivering a customer experience that's meaningfully differentiated with unit economics that support profitable growth and that starts with execution in the near term. Today's consumer is navigating a fragmented, often confusing marketplace crowded with options, inconsistent standards and marketing claims that are hard to verify. And I have higher conviction than ever that Grove is positioned to capitalize on this consumer problem by building a platform of curated and highly vetted products leading with transparency and making it easier for customers to align everyday purchases with their values without sacrificing efficacy. For the conscientious 57 million consumers who care about ingredients, performance and sustainability, shopping can feel like a trade-off between convenience and trust. We believe Grove is uniquely positioned to simplify that decision. We curate and vet products to a higher standard. We lead with transparency, and we make it easier for customers to align everyday purchases with their values without sacrificing efficacy. That positioning matters because it's not just a brand promise. It's a business model that we believe can drive durable unit economics over time. When customers trust the curation and feel confident in the experience, we earn repeat behavior. And when we earn repeat behavior, we can invest more efficiently and scale more profitably. However, '25 was a challenging year and a meaningful part of that came from our e-commerce platform migration early in the year. While the migration was strategically important, the transition created real friction in the customer experience, most notably across the mobile app, subscriptions and our VIP program. When those areas did not perform consistently, we saw more churn in '25 than we originally expected. That was particularly disappointing because we entered '25 with real momentum. We had delivered our first quarter of sequential revenue growth in Q4 2024 and our first full year of positive adjusted EBITDA. The migration issues interrupted that progress. We ended 2025 with 599,000 active customers, down 13% from 689,000 at the end of 2024. That ending customer base is the starting point for our 2026 revenue expectations. Importantly, we don't view the customers who churned as gone forever. As we continue to stabilize our e-commerce platform and restore reliability and the customer experience, we believe we have an opportunity to reactivate a meaningful portion of them over time. But first, we need to build the best possible shopping experience for clean, sustainable products that arrive regularly in one's home. And that's what 2026 is for us, a year of rebuilding that momentum. We are encouraged by the direction because we now have clarity on the root e-commerce platform issues, and we're making tangible progress to fixing them. As those fixes take hold, we expect to stabilize active customers, reactivate lapsed ones and measurably increasing advertising spend to acquire new customers. We expect to deliver sequential revenue growth through the year while maintaining profitability discipline. And as the core experience stabilizes, we will also have more capacity to execute additional growth initiatives, which I'm looking forward to highlighting in future quarters. As we execute that plan, we're staying anchored to the same 4 key pillars we've discussed throughout the year, balance sheet strength, sustainable profitability, revenue growth in environmental and human health. These pillars continue to represent the framework that keeps us focused as we're still rebuilding parts of the customer experience. Starting with balance sheet strength and profitability. In the fourth quarter, we delivered $1.6 million of positive adjusted EBITDA. It reinforces our commitment to navigate this transformation responsibly, protecting liquidity, managing profitability and scaling advertising spend only when the customer experience is stable and paybacks justify it. We also delivered breakeven operating cash flow in the quarter. This is the fifth quarter in the last 8, where we've achieved at least breakeven or positive operating cash flow. That consistency matters. It underscores our focus on disciplined execution and building a more durable operating model. Contributing to these results, we continue to align expenses to the current scale of the business. We executed a reduction in force in November that we expect to generate approximately $5 million of annualized savings. This action was necessary to match our cost structure to the business today, improve operating leverage and create capacity to invest as performance improves. On the revenue and customer side, we advanced several important initiatives to strengthen the experience and rebuild engagement. First, we launched our loyalty program, Grove Green Rewards in the fourth quarter. The program is designed to deepen engagement, reward repeat behavior and reinforce the value customers get from shopping growth. It includes a sign-up bonus, differentiated earn rates for VIP customers and enhance earning on subscriptions. It also gives us multiple levers to run points-based promotions and exclusive VIP deals. And importantly, it allows us to incorporate rewards into new customer offers and reintroduce referral capabilities. Second, in February, we launched our redesigned mobile app, which is a key step towards stabilizing the mobile experience. We moved away from our prior third-party approach and rebuilt our own customer app. Mobile is too important to the customer experience to tolerate instability. This release restores much of the functionality and experience customers have prior to the migration. There's still work ahead to improve performance over the coming quarters. But this release represents a meaningful step forward in delivering a better customer experience. Third, we're focused on strengthening our subscription experience, which is a core driver of retention and lifetime value and an experience that was negatively impacted in the platform migration. In 2025, subscription units drove 60% of our revenue and orders with subscriptions were 79% of total orders. By the time we report second quarter earnings we expect to meaningfully improve the subscription experience to customers who want a box of home essentials delivered on a regular basis to their home. Taken together, Grove, Green Rewards, the redesigned mobile app and our planned subscription improvements are foundational to our strategy this year. They are designed to restore elements of the experience customers know and love, deepen engagement through loyalty, improve discovery and convenience and help us deliver a more personalized and reliable experience that reinforces Grove as the destination for clean and sustainable Assets. Our fourth pillar is environmental and human health. In the first quarter of 2026, we expanded Grove's ingredient standards to cover more than 10,000 banned or restricted ingredients, including more than 3,000 outright banned across every category we carry. To our knowledge, this is the most stringent standards and curated assortment that exists in this space. These standards are also informed by leading EU safety frameworks and often go beyond baseline U.S. requirements through tighter limits and stricter exclusions. For customers, the benefit is straightforward, more confidence in what comes into their home. Strategically, it further differentiates Grove versus competitors that have shorter, less comprehensive less, reinforcing our role as the trusted curator not just the marketplace. Alongside our focus on core execution, as we've stated previously, we continue to evaluate strategic options to maximize shareholder value. These may include additional acquisitions or partnerships, divestitures and other strategic options consistent with our mission and long-term vision. Any action we take will be guided by the same principles that shape how we operate the business every day, customer focus, capital efficiency and sustainable shareholder value creation. In closing, I'm energized about 2026 because the work in front of us is clear and gives us a credible path to stabilizing the business and then reaccelerating responsibly without sacrificing profitability discipline. Grove remains uniquely positioned to lead in human health and wellness by combining trusted standards with the convenience and economics of a modern digital platform. Tom will now walk you through the financials and our 2026 outlook. Tom Siragusa: Thank you, Jeff, and welcome, everyone. I'll walk through our fourth quarter and full year financial results and then review our outlook for 2026. Starting at the top line, revenue for the fourth quarter was $42.4 million, down 14.3% year-over-year. The decline was primarily driven by fewer orders reflecting reduced advertising investment and the lagging effects of disruptions from our e-commerce platform migration earlier in the year. That decline was partially offset by $2.9 million of QVC revenue driven by 8Greens Today’s Special Value program. QVC was an existing 8Greens sales channel that Grove acquired as part of the 8Greens acquisition in the first quarter. For the full year, revenue was $173.7 million, within our revised guidance range. While revenue declined 14.6% year-over-year, we made deliberate trade-offs to protect liquidity and profitability while prioritizing fixes to the customer experience, and we ended the year with positive adjusted EBITDA in the fourth quarter. Turning to our operating metrics. DTC total orders were $539,000, a decline of 25% year-over-year, while active customers ended the quarter at $599,000, down 13% versus the prior year. These declines were driven primarily by headwinds related to the e-commerce migration and lower advertising spend relative to prior years, which reduced new customer acquisition and in turn repeat orders given the recurring nature of our business. DTC net revenue per order was $69.50, an increase of 4.1% year-over-year. The increase was primarily driven by more targeted promotional strategies and a larger mix of higher-priced items and customer orders as we continue to expand our selection. Our gross margin was 53.0%, an increase of 60 basis points compared to 52.4% in the fourth quarter of 2024. The increase was primarily driven by lower promotional activity, partially offset by a nonrecurring benefit in the prior year period related to the sell-through of previously reserved inventory. Turning to advertising. We invested $1 million in the quarter, a 65.2% decrease year-over-year. This reduction reflects a strategic decision to preserve liquidity and drive profitability while we focus on optimizing the core experience through ongoing improvements across our web and app platforms. Product development expense was $1.9 million, down 59.2% year-over-year. This decline reflects our decision to streamline our technology organization as well as lower amortization costs following the e-commerce platform migration. In the near term, we've also been more selective in own brand innovation, prioritizing resources towards stabilizing and improving our core technology and customer experience. As the platform work progresses, we expect to rebalance our investment in product development to support both innovation and growth initiatives aligned with our financial discipline. SG&A expense was $21.2 million, a 20.8% decrease versus the prior year. The reduction was driven by lower fulfillment costs from fewer orders, ongoing cost optimization initiatives, including the reduction in force executed in the fourth quarter as well as reduced depreciation and amortization and lower stock-based compensation. Net loss was $1.6 million or a 3.7% net loss margin compared to a net loss of $12.6 million or a 25.5% net loss margin in the prior year. The year-over-year improvement reflects lower operating expenses and lower interest expense as well as the absence of the noncash loss on debt extinguishment related to the payoff of our term loan in the fourth quarter of 2024. Adjusted EBITDA was $1.6 million or a 3.7% margin compared to negative $1.6 million or a negative 3.3% margin in the prior year. The year-over-year increase reflects structural cost reductions, including our reduction in force from November and disciplined advertising investment. As Jeff mentioned, this is a return to positive adjusted EBITDA for the first time in 6 quarters, reaffirming our commitment to navigating our transformation with discipline. For the full year, net loss was $11.7 million, and adjusted EBITDA was negative $2.2 million, which is in line with our revised full year adjusted EBITDA guidance and reflects the trade-offs we made throughout the year as we navigated the migration and reset our cost structure. Turning to the balance sheet and liquidity. We ended the quarter with $11.8 million in cash, cash equivalents and restricted cash down from $12.3 million at the end of the third quarter, primarily reflecting cash used in investing and financing activities. Operating cash flow was breakeven for the quarter as noncash items more than offset the net loss while working capital was a modest use of cash. This is compared to a $0.3 million operating cash inflow in the prior year. Now turning to our outlook. For the full year 2026, we expect net revenue to be approximately $140 million to $150 million and adjusted EBITDA to be approximately breakeven. Looking across the year, we expect Q1 to represent the trough in revenue for the year, reflecting seasonality and continued disciplined advertising investment. From that point, we expect sequential improvement as customer experience enhancements support customer retention and enable a measured reacceleration of customer acquisition investment throughout the year. In closing, our priorities for 2026 are clear, maintain financial discipline as we continue to optimize the customer experience. These actions are laying the foundation for a healthier, more efficient business that can return to profitable growth going forward. With that, I'll turn the call back over to Jeff for closing remarks. Jeff Yurcisin: Thank you, Tom. As we close out the year, I want to bring us back to what's most important. Grove is rebuilding for the long term, but we also have to deliver in the short term. Over the past year, we've done the really hard work. migrating to a modern platform, reshaping our cost base and refocusing the organization on fixing the core customer experience. We now believe we're past the most disruptive phase of this migration. Our priorities for the next phase are clear. First, keep improving the experience, especially on mobile and subscriptions, so customers can reliably shop, subscribe and reorder with confidence. Second, operate with tight financial discipline protecting liquidity and ensuring that investments meet our standards for payback and lifetime value. And third, as these improvements take hold, we turn to measured growth built on stronger unit economics and a more efficient cost structure. The last year hasn't been good enough, but we know the path forward, and we're executing with urgency and discipline. That's how we'll rebuild long-term shareholder value and reinforce Grove as the destination for clean and sustainable essentials. With that, we're happy to answer any questions you have. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Susan Anderson with Canaccord Genuity. Susan Anderson: Maybe just to start off, if you could kind of talk about -- so first quarter is going to be the trough in sales and then pick up after that. Maybe talk about the drivers that's going to drive the pickup sequentially in sales as we go throughout the year. And then also, maybe if you could just talk about your customer acquisition investment for this year? Are you expecting to invest more in customer acquisition versus what you did last year? Jeff Yurcisin: Susan, let me take that, and then I'll let Tom kind of share in terms of total acquisition spend. So the core reason we're expecting the sequential growth goes back to building a better customer experience. Over the last 12 months since that -- since we jumped on the platform migration, it's been a rough customer experience. The mobile app alone was a really big change that we just launched in Q1, and we're seeing early positive signals. The loyalty program in Q4, each one of these will improve the core customer experience. We mentioned the subscription experience that we hope to be able to announce before our next call, and you put all of this together. And it's pretty energizing about what we can get accomplished. And so that is the primary driver. And then with that in parallel, we do expect to be increasing marketing spend because we are seeing the better repeat rates and a better LTV to CAC and ultimately, better paybacks. Tom, I'll let you kind of handle the specifics around marketing spend. Tom Siragusa: Thanks, Jeff. Yes, so Susan, we -- if you look at our P&L in the fourth quarter, we took our advertising spend down from about $3 million in the third quarter, down to about $1 million in the fourth quarter. We expect to be in about the same range in the first quarter. And we're not going to give specifics as to what we think that ramp is going to look like over the course of the year. But given some of the technology improvements and the impact that those will have on the CX, those should be the enabler for us to go and grow advertising spend because there will be a better user experience, and that should be one of the key enablers for growth over the course of the year. That, along with stabilizing existing customer base. So that's how I would think about the cadence. Susan Anderson: Okay. Great. And then maybe if you could just talk about the categories that you offer currently on your site. And I guess, is there any white space left. You've obviously been able to expand quite a bit into health and wellness and then beauty and pet as well. So maybe just talk about kind of where you're at with those newer categories and then also any white space opportunity ahead. Jeff Yurcisin: Appreciate that. We think most of the opportunity is within our core categories, and we see real growth paths within the type of assortment that we are currently selling. Are there opportunities adjacent, of course, they are. So some of those will be when we think about wellness, thinking in a more broad perspective than justify them as minerals and supplements, but everything going into air filters and even potentially mattresses where the opportunity is to deliver and curate the best products for a healthy home. And that goes beyond just our kind of standard categories. I would also say, this year, we will be enabling some drop ship capabilities, which will allow us to get into some higher AOV categories with the right type of economics. But again, all through the lens of these 3,000 banned ingredients and substances, the highest most -- the highest standards from an ingredients perspective. And also the most kind of curated assortment out there. And so from a category perspective, we are seeing success in all of these new categories whenever we launch more products, customers love it. And we're seeing growth, but the real opportunity is serving the core customer with an adjacency towards drop ship, which will expand our overall categories into beyond just VMS, but into broader human health. Susan Anderson: Okay. Great. And then maybe lastly, if you could just talk about the margins for this year and if there's any varying cadence by quarter, whether it's gross margin or operating expense to get to your breakeven for the year? Jeff Yurcisin: Tom, I'll let you take this. Tom Siragusa: Yes. So I think in terms of margins, without giving specific guidance, I think from a gross margin perspective, we don't expect there to be a lot to move the needle one way or the other there. We did launched our loyalty program, which will allow us to be more tactical with our promotions from a point-based perspective. So we'll be leaning into that and using that to be as effective as we possibly can from a promotional perspective to engage customers. And then from an advertising perspective, we're going to spend similar to the fourth quarter and the first quarter, and then we'll scale it from there. I think given the discretionary nature of advertising spend, we'll lean in there as we see the results from some of the technology improvements and from a new customer acquisition perspective. And then from an operating expense perspective, we executed the RIF in the fourth quarter that reset our cost base lower. And so I think that's probably a good baseline to think about what our operating expense structure will look like going forward. Operator: There are no further questions at this time. I'd like to hand the floor back over to Jeff Yurcisin for any closing comments. Jeff Yurcisin: Thank you very much. I just want to thank everyone who joined the call, and hope you have a great night. Thank you. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Roy Nir: Good afternoon, everyone, and welcome to Entravision's Fourth Quarter and Full Year 2025 Earnings Call. I'm Roy Nir, Vice President of Financial Reporting and Investor Relations. Joining me today to discuss our results are Michael Christenson, our Chief Executive Officer; and Mark Boelke, our Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to inform you that this call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entravision's SEC filings for a list of risks and uncertainties that could impact actual results. The press release is available on the company's Investor Relations page and was filed with the SEC on Form 8-K. Additional information may also be found on our annual report on Form 10-K, which was also filed today. Our call today is using Zoom. If you'd like to ask a question, please use the Q&A function on the screen, during the call, indicate you name and company, and submit your question in writing. We will try to answer any questions that relate to the topics contained in today's call during the Q&A session. I will now turn the call over to Michael Christenson. Michael Christenson: Thanks, Roy, and thank you to those of you joining this call today. We appreciate your interest and your support. As you saw in our press release, on a consolidated basis, Entravision increased revenue 26% to $134 million in 4Q '25 compared to 4Q '24. We had an operating loss of $21 million in 4Q '25 compared to an operating loss of $49 million in 4Q '24. The 4Q '25 operating loss included a $26 million noncash impairment charge. So we would have had an operating profit if we exclude that adjustment. But as we've said on prior calls, we're committed to growing our business and earning a profit. So we acknowledge that we have work to do to improve our operating performance and profitability, especially in our Media business. We report our results for 2 segments: Media and Advertising Technology & Services, what we call ATS. For our Media segment, our revenue declined 32% in 4Q '25 compared to 4Q '24. This decline was primarily due to lower political revenue. Excluding political revenue, our 4Q '25 results included a 4% increase in local advertising revenue and a 5% decrease in national advertising revenue. Our local operations had 3% lower monthly active advertisers, but this was offset by an 8% increase in revenue per monthly active advertiser. In terms of operating expenses and profitability, as we have discussed in the past, we made a number of important investments in our media business in 2025. We added capacity to our local sales teams, more sellers, and we added digital sales specialists and digital sales operations capabilities, more digital. When we analyzed our local markets and our local advertiser base, we saw an opportunity to increase revenue by adding sales capacity. In addition, virtually all our local advertising customers are advertising in digital channels, search, social, streaming video and streaming audio. And we believe we can serve their needs in digital channels as well as our traditional broadcast, video and audio channels. The increase in operating expenses in our Media segment for these investments is about $8 million on an annualized basis. However, we funded these investments in part by improving efficiency and reducing costs in nonrevenue-generating operations. So as you'll see, total operating expenses in our Media segment were actually 6% lower in 4Q '25 compared to 4Q '24. Since revenue was lower because we did not have political revenue, we did have an operating loss of $428,000 in 4Q '25 compared to an operating profit of $18.5 million in 4Q '24. For our Media segment, we have 2 additional initiatives underway to generate incremental revenue. First, in October of last year, we began broadcasting a new network that we call Altavision. Altavision is broadcast on our multicast capacity across all of our markets. We provide the broadcasting infrastructure and sales, and we also provide local news programming. The balance of the programming is provided by Grupo Multimedios of Monterrey, Mexico. And together, we share the revenue. The stations have been on the air since October, and we've been test marketing with local advertisers since the beginning of this year. In addition, on January 1, 2026, we launched new programming on our full power Orlando television station, WOTF-TV, in a partnership with Hemisphere Media. Hemisphere Media owns WAPA TV, the #1 television station in Puerto Rico. And together, we launched WAPA Orlando Channel 26 to serve the growing Puerto Rican, Caribbean, Central and South American Spanish-speaking communities in Central Florida. There are more than 500,000 Puerto Ricans in the Orlando market, and we are very excited about this new -- the new revenue potential for this business. Now for our Advertising Technology & Services segment. ATS revenue more than doubled in 4Q '25 compared to 4Q '24, and we had more customers and higher spend per customer. We've continued to invest in our ATS segment in 4Q '25 to grow revenue and operating profits. We invested in our engineering team to continue to improve our technology and to build more powerful AI capabilities into our platform. And we invested to increase the capacity of our sales organization and customer operations. In addition, our infrastructure costs, primarily cloud computing costs increased in 4Q '25 compared to 4Q '24 as our infrastructure costs will grow as our revenue grows. They're currently growing at about the same pace as revenue. But as the business gets larger, we expect to see some incremental operating leverage so that these costs will grow at a slower pace than revenue. But the combination of our investments, investments in increased operating expenses, that's the direct operating expenses plus selling, general and administrative expenses were $6.5 million higher in 4Q '25 compared to 4Q '24. That's $26 million higher on an annualized basis. The operating profit for ATS was $12 million in 4Q '25 compared to an operating profit of $2 million in 4Q '24. In our ATS segment, this week, we announced an acquisition. We acquired the technology, platform and product IP of Playback Rewards. Playback Rewards is a reward and loyalty platform. For the past year, we have been developing our own reward platform, but this acquisition presented an opportunity to accelerate our entry into this market with a more robust platform. So to summarize, in Media, we're investing to increase our local sales capacity and to expand our digital sales and digital sales operations capabilities. Again, more sellers and more digital. And in ATS, we're investing to add more engineers to advance our technology and to increase our sales capacity, more technology, better technology and more sellers. We believe these investments will help us build a stronger company. So now I'll ask Mark to share with you more details of our financial results for 4Q '25 and the full year 2025. Mark? Mark Boelke: Thank you, Mike. I'll start by reviewing the performance of each of our 2 reporting segments, again, Media and Advertising Technology & Services. In our Media segment, fourth quarter revenue was $45.8 million, which was down 32% compared to fourth quarter 2024. Full year 2025 revenue was $176.7 million, down 20% compared to full year 2024. As we've noted on previous calls, our Media business began slowly in 2025, in part due to advertiser uncertainty in the environment of a new administration and federal immigration enforcement actions. In addition, there was significant political advertising in 2024 that was not present in 2025. However, we've seen sequential quarterly improvements in revenue as we move through 2025, particularly in local ad sales, and we're seeing momentum and progress in the execution of our revenue strategies. One of our goals is to optimize our organizational structure and the expense of support services in order to align them with revenue and to be profitable in each segment as well as on a consolidated basis. Let's look at total operating expense for the Media business, again, meaning the sum of direct operating expense and selling, general and administrative expense, or SG&A, as those 2 line items are reported in our segment results. Media segment total operating expense in the fourth quarter decreased $2.5 million compared to fourth quarter '24, a decrease of 6%. Operating expense was flat for full year 2025 compared to full year 2024. Starting in Q3 '25, we have taken steps under an ongoing organizational design plan intended to support revenue growth and reduce expenses in our Media segment. Key components of this plan included a reduction in Q3 and Q4 of approximately 5% of the Media segment's total workforce, primarily in back-office roles, and we abandoned several leased facilities with impacted employees transitioning to remote work. We expect these changes to reduce media operating expense by approximately $5 million on an annual basis, and we recorded charges during third and fourth quarter totaling $2.8 million for the expenses associated with these moves. And these charges were reported as restructuring costs on our income statement. The Media segment had an operating loss of $0.4 million in Q4 '25 compared to operating profit of $18.5 million in Q4 '24. The decrease was mainly due to political advertising revenue in Q4 '24 that was not present in Q4 '25. We continue to evaluate the organizational structure of our Media business in order to provide compelling content, drive sales, streamline our organization and optimize expense. And the Media segment operating loss improved significantly from third quarter to fourth quarter '25. Now let's turn to our Ad Tech & Services segment, or ATS. Fourth quarter revenue for the ATS business was $88.6 million. This was an increase of 123% compared to fourth quarter '24 and a sequential increase of 16% from third quarter to fourth quarter '25. Full year 2025 revenue was $270.9 million, an increase of 90% year-over-year compared to full year 2024. As the year progressed through the fourth quarter, we had a higher number of monthly active accounts and higher revenue per monthly active account. As discussed on previous calls, we have had success executing our strategies in the ATS business during 2025, including expanding the sales team and geographic sales coverage and strengthening our AI capabilities and platform technology. ATS total operating expenses increased by 48% in the fourth quarter '25 compared to Q4 '24, an increase of $6.5 million. Operating expenses increased by 54% in full year '25 compared to full year '24. The ATS expense increase was primarily related to the increase in revenue. For example, as Mike mentioned, the expense of cloud computing services has increased as a result of processing more transactions and using stronger AI capabilities built into our ad tech platform. There was an increase in sales commissions and performance compensation as a result of the revenue increase and achievement of other performance metrics. And the ATS business has also hired additional sales, engineering and ad operations staff in recent quarters in order to drive ATS growth and expand into new geographic areas. ATS operating profit was $12.3 million in Q4 '25. This was an increase of 464% versus Q4 '24 and a sequential increase of 26% from the prior quarter, Q3 '25. Operating profit for full year 2025 was $33.8 million, an increase of 317% versus full year 2024. Our goal for the ATS business is to continue to grow revenue and generate positive operating leverage and the ATS revenue increase exceeded the expense increase in terms of percentage and absolute dollars. Combining our 2 operating segments, on a consolidated basis, revenue for fourth quarter '25 was $134.4 million, up 26% compared to fourth quarter '24. Full year 2025 revenue was $447.6 million, up 23% compared to full year '24. The 2 segments together generated a consolidated segment operating profit of $11.9 million in Q4 '25 and $27.6 million for full year '25, a decrease of 43% and 41% compared to the respective prior periods. The decrease was a result of decreasing -- I'm sorry, was a result of decreased operating profit in the Media segment, primarily due to political revenue in 2024 that was not present in 2025, partially offset by increased operating profit in the ATS segment. We had a consolidated operating loss of $20.7 million in Q4 '25 compared to a loss of $48.6 million in Q4 '24. Our consolidated operating loss included a noncash impairment charge of $26 million related to certain FCC licenses. Without this noncash impairment charge, we would have had an operating profit of over $5 million in Q4 '25. Full year 2025 operating loss was $83.4 million versus $52 million for full year 2024, with the increase primarily due to a loss on lease abandonment related to our corporate headquarters and restructuring charges related primarily to our Media segment. Again, our goal is to be profitable for each segment and generate a consolidated operating profit. We have additional work to do, particularly in the Media business, and we remain focused on growing revenue and reducing operating expense throughout 2026 and beyond. Looking at corporate expenses, we have taken significant steps to reduce these expenses over the past few years. Corporate expenses in fourth quarter '25 were $6.5 million, a 13% decrease compared to fourth quarter '24 or about $1 million. The decrease was primarily due to expense reductions in rent and professional services. For full year 2025, we reduced corporate expenses by $10.5 million compared to full year '24, a 28% decrease year-over-year. Going back 1 year further for additional context, corporate expense in 2025 was almost half of the amount of corporate expense in 2023. Entravision's balance sheet remains strong with over $63 million in cash and marketable securities at year-end. We're proud of our strong balance sheet, which we believe sets us apart from others in the industry. In 2025, we made total debt payments of $20 million, reducing our credit facility indebtedness to about $168 million as of year-end. We entered into an amendment to our credit facility in Q3 as previously reported. The amendment was a proactive and strategic move to accelerate debt reduction and provide more financial stability and flexibility under our credit agreement. In addition, we paid $4.6 million in dividends to stockholders in the fourth quarter or $0.05 per share and a total of $18 million for full year 2025 or $0.20 per share. For the first quarter of 2026, our Board of Directors has approved a $0.05 dividend per share payable on March 31 to stockholders of record as of March 17 for a total payment of approximately $4.6 million. Our strategy regarding allocation of cash is, first, reduce debt and maintain low leverage; and second, return capital to our shareholders, primarily through dividends. We look at capital allocation on a 2-year basis to take into account cyclical political advertising that occurs every other year. During the past 2 years, 2024 and 2025, we had about $85 million of net cash provided by operating activities. During this 2-year period, we used about $76 million of that $85 million to pay down debt and pay a shareholder dividend. That's $40 million used to reduce debt and $36 million used to pay dividends to shareholders. 2025 was not a political year, so we did not have meaningful political revenue last year, but we have now entered another political advertising election year here in 2026. We'd like to thank you for joining our call today. We welcome our investors to connect with us through the Investor Relations page on our corporate website, entravision.com, where you will have access to a transcript of this call, the press release containing our fourth quarter and full year financial results and a copy of our annual report filed with the SEC on Form 10-K. At this time, Mike and I would like to open the call for questions from the investment community. Roy, I'll turn it back over to you. Roy Nir: Thank you, Mark. [Operator Instructions] The first question is regarding the outlook for political revenue in 2026. Mike, do you want to address that? Michael Christenson: Yes. So as of today, we are 243 days away from election day 2026. And as you can see in the news, primaries are underway across the country. I think we're very well positioned for a strong political spending environment in 2026. As we've said on prior calls, we believe the Latino vote will be critical to the outcome of the congressional elections in all -- in our 6 Southwestern states. The Cook Political Report lists the 35 closest races of the 435 congressional races, and we are fortunate to have 11 of those 35 in our markets. We also have the important Texas U.S. Senate race, which is, again, getting a lot of press. And then finally, we have governors' races in California, Colorado, Nevada, New Mexico and Texas. So we're very well positioned. And what I would say is, which we've also said on past calls, we believe the Latino vote will be critical to the outcome of these elections. Studies have shown that Latinos are the most persuadable segment of the electorate, and we have a powerful channel for reaching that audience. And what we will say to make it very clear, what we say to everyone, we can get to listen to our pitch, you must win the Latino vote to win your election. And if you want to win the Latino vote, you should double or triple your allocation to Spanish language media. So again, we're very optimistic about how we're positioned for 2026. Roy Nir: Thank you, Mike. We received another question related to the status of renewing the affiliation agreement with TU. Can you provide an update on that? Michael Christenson: Sure. Not much to update since our last call, what we said last time, and it's still the case today. The affiliation agreement with TelevisaUnivision runs through December 31, '26. We've been partners for 3 decades, and our plan is to renew this agreement. So we expect to renew this agreement. But that's all I can say at this point. Roy Nir: Thank you, Mike. Please hold as we review additional questions. Thank you, everyone, for joining us today. Mike, I'll turn it back to you for closing remarks. Michael Christenson: At this point, we'll say thanks, Roy, and thank you again to all of you who are joining our call today. We look forward to speaking with you again when we report our 2026 first quarter results. Thank you very much.
Operator: Welcome to Evogene's Fourth Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, March 5, 2026. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene's management will constitute forward-looking statements that relate to future events. This presentation contains forward-looking statements relating to future events and Evogene Ltd., the company may from time to time, make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting us that are considered forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995, the PSLRA and other securities laws as amended. Statements that are not statements of historical fact may be deemed to forward-looking statements. Such forward-looking statements may be identified by the use of such words as believe, expect, anticipate, should, plan, estimate, intend and potential or words of similar meaning. We are using forward-looking statements in this presentation when we discuss our value drivers, commercialization efforts and timing, product development and launches, estimate market sizes and milestones, pipeline as well as our capabilities and technology. Such statements are based on current expectations, estimates, projections and assumptions, describe opinions about future events, involve certain risks and uncertainties, which are difficult to predict and are not guarantees of future performance. Readers are cautioned that certain important factors may affect the company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this presentation. Therefore, actual future results, performance or achievements and trends in the future may differ materially from what is expressed or implied by such forward-looking statements due to a variety of factors, many of which are beyond our control, including, without limitation, the aftermath of the recent war between Israel and each of the terrorist groups, Hamas and Hezbollah, Iran and other regional terrorist groups supported by Iran and any destabilizations in Israel, neighboring territories or the Middle East region and those described in greater detail in Evogene's annual report on Form 20-F and in other information Evogene files and furnished with the Israel Securities Authority and the U.S. Securities and Exchange Commission, including those factors under the heading Risk Factors. Except as required by applicable security laws, we disclaim any obligation or commitment to update any information contained in this presentation or to publicly release the results of any revisions to any statements that may be made to reflect future events or developments or changes in expectations, estimates, projections and assumptions. The information contained herein does not constitute a prospectus or other offering document nor does it constitute or form part of any invitation or offer to sell or any solicitation of any invitation or offer to purchase or subscribe for any securities of Evogene or the company nor shall the information or any part of it or the fact of its distribution from the basis of or be relied on in connection with any action, contract, commitment or relating thereto or the securities of Evogene or the company. The trademarks include herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of our product or services. With us on the line will be Ofer Haviv, President and CEO of Evogene and Yaron Eldad, CFO of Evogene. Now I will turn the call over to Ofer Haviv. Mr. Haviv, please go ahead. Ofer Haviv: Thank you for joining Evogene's Fourth Quarter and Annual 2025 Analyst Call. In today's call, I would like to focus on the significant progress Evogene has made over the past year and to outline the strategic transformation we initiated to position the company for long-term value creation. Following my remarks, our CFO, Yaron Eldad, will present the financial results, and we will then open the call for questions. During 2025, following a comprehensive review of our technology, markets and capital allocation, we made deliberate choice to sharpen our focus and execution. This transformation was guided by a strong objective to direct Evogene resources where we believe we can create the greatest sustainable value. Today, our mission is clear and focused. to design novel, highly potent small molecules optimized across multiple parameters for drug development and ag chemicals by utilizing ChemPass AI, our computational generative AI engine. For this purpose, we implemented 2 core strategic decisions. First, we focused our technology development on a single computational engine, ChemPass AI. Second, we streamlined our business activities to concentrate exclusively on 2 high-impact markets where ChemPass AI offers strong differentiation, human health centered on small molecule drugs and agriculture focused on novel ag chemicals. These decisions led to determined actions across the company. We dedicated our computational capabilities to ChemPass AI, discontinued noncore activities, divested misaligned assets, resized the organization and established a business development team aligned with our refined strategy. I would like to elaborate on ChemPass AI and emphasize its competitive advantage for small molecules generation. ChemPass AI is designed to generate novel, highly active molecules while meeting the complex parameters required to meaningfully increase the probability of downstream development success. ChemPass AI competitive advantage lies in the powerful combination of the following 2 capabilities. The first, generating novel molecules based on vast chemical territories and the second, ensuring they meet demanding multiple parameters requirement from day 1. Our platform goes far beyond the chemical space the industry traditionally explores. Based on 38 billion molecules universe, ChemPass AI foundation model navigates vast diverse chemical domains that others simply cannot access. This enables us to design truly original molecular structures with strong biological potential and highly defensible intellectual property, opening the door to breakthrough products and new IP landscape. At the same time, precision is built into every molecules we create. Our AI engine simultaneously optimize a wide range of critical chemical, biological and physical parameters, tailoring each compound to the exact constraints and success criteria of the specific target product. The result is not just innovations, but synthesizable active molecules engineered from the outset to meet real development requirements, dramatically increasing the probability of real-world commercial success. This differentiation is supported by proprietary technological advancements developed by our internal team, guided by world-class scientific advisers and reinforced through multiple collaborations with leading technology companies, including Google Cloud with whom we are currently engaged in our second collaboration. Our first announced collaboration with Google Cloud was successfully completed in mid-2025 with a first-in-class foundation model for the generation of novel molecular product candidates optimized for multiple parameters by processing a database of 38 billion structures. We tripled our benchmarks for accuracy, delivering 90% design precision. Building on this, we were pleased to announce our second collaboration with Google Cloud initiated this February. We are now integrating advanced AI agents into ChemPass AI using Google Cloud Vertex AI to decrease manual errors and automate complex scientific workflows, aiming to improve our novel small molecule candidate probability of development success. This move towards autonomous discovery is key to advancing and scaling our capabilities for the support of future partnerships across the pharma and agriculture industries. To summarize the uniqueness of Evogene's offering, our product candidate combines 3 powerful capabilities: novel molecules generated based on vast and diverse chemical space, simultaneous optimizations for multiparameters requirements from the outset, highly potent molecules optimized through targeted experimental validation. We don't just design novel chemistry. We generate novel chemistry that performs. ChemPass AI is built on fully integrated partnership-driven workflow, forming our business model expressed in collaboration and in-house development towards proprietary product candidate. Our partners are engaged at every stage from joint strategic review through rigorous experimental validation and collaborative evaluation. Each project is custom designed to align precisely with each specific scientific and strategic objectives. I view this collaborative structure as a key strategic advantage for us, both in enhancing the likelihood of advancing proprietary candidate molecules with the highest potential to become successful products and in positioning Evogene as a true development partner, enabling participation in the product's future revenue stream. That brings me to this slide, demonstrating the implementation of our business model, summarizing Evogene's current achievements of which I'm very proud. In human health, we are advancing multiple partnered drug discovery programs with biotechnology companies and academic institutions. In this partnership, ChemPass AI is driving discovery and optimization of candidates that are progressing into testing with our partners. To date, we have publicly disclosed 4 such collaborations, and we expect such activity to scale with additional collaborations. These achievements were made within a very short time frame of several months, and we aim to present similar advancement during the remainder of 2026 and beyond. You are invited to visit Evogene's website and review our company's presentation for additional details on each of these collaborations. In agriculture, our subsidiary, AgPlenus, continues to apply ChemPass AI to development of novel herbicides and fungicides. The maturity and robustness of the platform are reflected through our strategic collaboration with Bayer and Corteva alongside a differentiated internal pipeline. We expect continued growth through the expansion of those collaborations and the formation of new partnerships. In our future quarterly analyst call, I expect to go deeper into these business engagements and update on new ones. To complete my part in today's call, I would like to send a clear message. The generation of proprietary small molecule product candidates is our mission. With ChemPass AI, our well-differentiated generative AI engine, disciplined capital allocation focused on high potential markets and a strong strategic partnerships, we believe Evogene is now positioned on a defined more focused path towards sustainable value creation. Our business aim for short and midterm is to become the partner of choice for small molecule discovery and optimization with pharma and big biotech companies for drug development and with multinational agriculture companies for ag chemical development. For the long term, Evogene aims to develop its own product pipeline, benefiting from the competitive edge of our proprietary technology. This is Evogene, combining cutting-edge AI with deep scientific expertise to generate real-world innovation. Thank you for your time and attention. With this, I conclude my part and will now hand the call to our CFO, Yaron Eldad, to present the financial results. Yaron Eldad: As part of the company's updated strategic plan, management implemented an organizational realignment and cost reduction initiatives. The effects of these measures are reflected in the significant decrease in operating expenses net, which declined to approximately $13.8 million for the year ended 2025 compared to approximately $22 million in 2024. The impact is also evident in the fourth quarter results with total operating expenses net of approximately $3.2 million compared to approximately $4.3 million in the corresponding period of 2024. The company expects this reduced expense level to be sustained in future periods. In 2025, Lavie Bio Ltd, a subsidiary of Evogene Ltd focused on agriculture biologicals, completed the sale of the majority of its operations to ICL. As a result of this transaction, Lavie Bio no longer maintains employees and its operation expense level has decreased significantly. Lavie Bio anticipates distributing the majority of its remaining cash to its shareholders, including Evogene during 2026. During 2025, as part of the company's updated strategic plan, we scaled down Biomica's operations and research and development activities and reduced its personnel to a minimal level. In early 2026, Biomica entered into a license agreement with Lishan Pharmaceuticals for its lead oncology candidate, BMC128. Following this transaction, Biomica does not expect to conduct further material operational activities and anticipates distributing the majority of its remaining cash to its shareholders, including Evogene. With respect to AgPlenus, we integrated AgPlenus, our ag chemical subsidiary into the core operations of Evogene with the objective of maximizing the value of our ChemPass AI platform for the development of novel ag chemical products. In alignment with the company's updated organizational structure, AgPlenus was resized and streamlined to reflect the revised operating model. During 2025, due to a significant decline in demand for castor seeds, Casterra AG ceased its operations in Kenya, reduced its headcount and overall expense level and is currently focusing its activities on the Brazilian market. As a result of these developments, Casterra recorded an impairment of approximately $2.2 million related to its seed inventory. This impairment is presented within cost of sales in the consolidated financial statements in a separate line item. In February 2026, Evogene entered into a warrant inducement agreement with an existing investor, providing the immediate exercise in full of its August 2024 Series A and Series B warrants, resulting in gross proceeds to the company of approximately $3.4 million before deducting placement agent fees and other offering expenses. In consideration for such exercise, the investor will receive in a private placement, new unregistered Series A1 and Series B1 warrants to purchase up to an aggregate of 5,076,924 ordinary shares. The new warrants are exercisable immediately at an exercise price of $1.25 per ordinary share. Cash position. As of December 31, 2025, Evogene held consolidated cash, cash equivalents and short-term bank deposits of approximately $13 million. The consolidated cash usage during the fourth quarter of 2025 was approximately $3 million. Excluding Lavie Bio and Biomica, Evogene and its other subsidiaries used approximately $2.4 million in cash during the fourth quarter of 2025. Revenues for 2025 totaled approximately $3.9 million compared to approximately $5.6 million in the same period the previous year, reflecting a decrease of approximately $1.7 million. The decrease was primarily driven by lower revenue recognized from AgPlenus' activity, which included onetime payment during the first quarter of 2024 and revenues recognized from the collaboration agreement with Corteva that was completed during 2024. Revenues for the fourth quarter of 2025 were approximately $0.3 million, a decrease compared to approximately $1.5 million in the same period last year. The decrease was mainly due to reduced seed sales generated by Casterra during the fourth quarter of 2025. Cost of revenues for the year ending 2025 was approximately $4.1 million compared to approximately $2.4 million in the previous year. The increase was primarily attributable to an inventory impairment of approximately $2.2 million recorded by Casterra during the fourth quarter of 2025, mainly due to its decision to cease its operations in Kenya as noted above. Cost of revenues for the fourth quarter of 2025 was $2.3 million compared to $0.7 million in the fourth quarter of the previous year. The increase in quarterly cost of revenues was mainly driven by the same inventory impairment of Casterra as noted above. R&D expenses net of nonrefundable grants for the year 2025 were approximately $8 million, a decrease of approximately $4.5 million compared to $12.5 million in the year 2024. The decrease was primarily due to reduced R&D expenses in Biomica, Casterra and AgPlenus. In the fourth quarter of 2025, R&D expenses were approximately $1.8 million, down from approximately $2.7 million in the same period of 2024. This decrease is mainly attributed to decreased expenses in Biomica. Sales and marketing expenses for the year 2025 were approximately $1.5 million, a decrease of approximately $0.5 million compared to approximately $2 million in the same period last year. The decrease was mainly due to reductions in Evogene and Biomica's personnel costs. Sales and marketing expenses for the fourth quarter of 2025 and 2024 were approximately $0.3 million and $0.4 million, respectively. General and administrative expenses for the year 2025 decreased to approximately $4.3 million from approximately $7 million in the same period last year. This decrease is mainly attributable to expenses recorded during the year 2024 related to a provision for doubtful debt for one of Casterra's seed suppliers as well as transaction costs associated with Evogene's fundraising in August 2024. Additional decrease is attributable to a reduction in Biomica's activity and personnel costs during 2025. General and administrative expenses for the fourth quarter of 2025 decreased to approximately $0.9 million compared to approximately $1.3 million in the same period of the previous year. primarily due to decreased expenses in Evogene and Biomica, as mentioned above. Operating loss for 2025 was approximately $14 million, a significant decrease from approximately $18.8 million in the same period of the previous year, mainly due to decreased operating expenses, partially offset by the decreased revenues, as mentioned above, and the higher cost of revenues, mainly due to an inventory impairment of approximately $2.2 million recorded by Casterra in the fourth quarter of 2025. The operating loss for the fourth quarter of 2025 was approximately $5.2 million, an increase from approximately $3.5 million in the same period of the previous year primarily due to the decreased revenues and increased cost of revenues mentioned above, partially offset by decreased operating expenses. Financing income net for the year 2025 was approximately $0.6 million compared to approximately $4 million in the previous year. The decrease in financing income net was mainly associated with accounting treatment of prefunded warrants and warrants issued in August 2024 fundraising. As a result, during the 12 months of 2025, the company recorded financial income net related to prefunded warrants and warrants of approximately $458,000 as compared to a financial income of approximately $3.4 million in the same period of 2024. Financing expenses net for the fourth quarter of 2025 were approximately $0.2 million compared to financing income net of approximately $4.5 million in the same period of the previous year. The decrease in financing income is mainly associated with accounting treatment of prefunded warrants and warrants issued in the August 2024 fundraising as mentioned above. Income from discontinued operations net for the 12 months of 2025 was approximately $5.7 million compared to a loss of approximately $3.2 million in the same period of 2024. For the fourth quarter of 2025, loss from discontinued operations net was approximately $16,000 compared to a loss of approximately $1 million in the fourth quarter of the previous year. These amounts primarily reflect the financial results of Lavie Bio's operations as well as expenses related to the development and maintenance of MicroBoost AI for Ag, which are presented as a single line item in the consolidated statements of profit and loss. Following the sale of the majority of Lavie Bio's assets as well as Evogene's MicroBoost AI for Ag to ICL, the company recognized a gain on sale of approximately $6.4 million which is also included in the income from discontinued operations net for the year of 2025. All prior period amounts have been reclassified to confirm to this presentation. Net loss for the 12 months of 2025 was approximately $7.8 million compared to approximately $18.1 million in the same period last year. The $10.3 million decrease in net loss was primarily due to decreased operating expenses and an income derived from discontinued operations due to the asset sale to ICL net, partially offset by reduced revenues, higher cost of revenues and a decreased financing income net. The net loss for the fourth quarter of 2025 was approximately $5.4 million compared to net loss of approximately $5,000 in the same period last year. This increase in net loss was primarily due to decreased financial income, decreased revenues and increased cost of revenues, partially offset by decreased operating expenses as mentioned above. Operator? Operator: [Operator Instructions] There is a siren in Israel. We will be back in a few minutes. Thank you for standing by. The first question, can you speak to the terms of the BMC128 license agreement with Lishan Pharmaceuticals? Ofer Haviv: This is Ofer. Sorry for asking you to wait. It's not a regular time here in Israel, we are -- everybody that participated in the call is in the same place at Evogene Office. With respect to this question, what I can disclose is that the agreement with Lishan includes a milestone payment, which is expected based on advancing the BMC128 in the pipeline or if there will be any commercial transaction that will generate value for Lishan so we will participate in this amount. And of course, revenue sharing from revenue the end product will generate. So this is what we can disclose. And in pharma, the numbers will be quite significant. So when this [indiscernible], it could be significant for Evogene. It could be quite significant for Biomica and Evogene as a major shareholders in Biomica is expected to benefit from it. We can move to the next question. Operator: Can you speak to the magnitude of cash potentially coming in from Lavie Bio and Biomica. To summarize, can you highlight investor catalysts over the coming 12 months? Ofer Haviv: So with respect to the cash expected from Biomica and Lavie Bio. So we disclosed the financial terms of the acquisition of the majority of Lavie Bio -- and MicroBoost and to ICL and what we have expected is that the cash that Evogene will have after this dividend distribution will satisfy our need for at least mid next year, maybe even more. But the current operation, the expectation is that even without additional financial transaction, we have sufficient cash for a little bit more than 1.5 years. And with respect to the catalyst that might took place -- so I think that I tried to describe it in my part. So you can envision 3 type of catalysts. The first one, additional technology collaboration with companies such as Google. What I can share is that we are talking with some other company in the same size like Google, where we are looking for a different opportunity to work together and leverage their assets and knowledge to the where we acted. And each time that such a thing happen, it really pushed the limitation that we are addressing with our technology to further and further. So this is quite important. And of course, it the attention of potential partners because it increased the evidence that what we are offering is something very unique if all of this mega, mega company is working with us. So this is one type of catalyst. The second type of catalyst is additional collaboration agreement with pharma companies or with biotech companies where we are going to use ChemPass AI to identify small molecules which bind to the protein of interest addressing multi actor criteria, novel chemical structure and with high potency. The first set of collaboration that we engaged with small biotech companies and institution. Now we are targeting for more and bigger type of tech companies. And we are also expecting that at least some of those transactions will inject cash to the company to Evogene even in the early stage to cover our expenses. So this is the first type of catalyst that you can think of. And the second type of catalyst you can think of. And the third is, again, collaboration agreement, but this time with other chemical companies -- we are talking with some companies in this field. The industry in the last few years didn't have a positive performance the market. And this has had a negative effect on their willingness and appetite to enter into a collaboration. But things start to change now and understanding that there is a clear need for innovation increase. And also I think that the performance that AgPlenus achieved in the last year, hopefully will help us to engage in some collaboration agreements with potential partners in this industry. So to summarize, 3 type of catalyst technology collaboration with companies like Google and others, then collaboration with midsized biotech and pharma companies and collaboration with other chemical companies. This is the main catalyst I'm expecting to share coming from the core business of Evogene as we see today -- we also have some other activities such as Casterra and some other legacy activity. But I prefer not to refer to them today because it's very important for me to make sure that it's very clear that what is the strategic avenue Evogene decided to go through and we truly believe this represent the highest potential for our shareholders for the next few years. Operator: There are no further questions at this time. Mr. Haviv, would you like to make a concluding statement? Ofer Haviv: Yes. I would like to thank everybody to participate in today's conference call. We are here in Evogene committed to achieve our targets I can assure you that all of Evogene employees are working from home or even coming to our offices. And I'm looking forward to continue to update you and share with you additional great announcement like in the last quarter. Thank you. Operator: Thank you. This concludes Evogene's Fourth Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
Operator: Welcome to the Dürr conference call for the preliminary figures of 2025. I will now hand over to Mathias Christen. Mathias Christen: Thank you, Anna. Welcome to today's call, ladies and gentlemen. The corresponding presentation is available on our website, and I assume you have it in front of you. As you know, we published select key figures in an ad hoc release already on February 17. Nonetheless, there are still enough figures and news to share with you today. The figures usually relate to continued operations with some exceptions that will be marked. Our CEO, Jochen Weyrauch will start on Page 2 before Dietmar Heinrich, our CFO, will take you through the financials. Jochen, the floor is yours, please. Jochen Weyrauch: Thank you, Mathias, and good afternoon to all participants on the call. As the most important figures, as Mathias said, were already released, I would like to start with a wider perspective and share with you what I personally consider the most important achievements of 2025. Basically, we delivered on what we promised. We simplified our group structure and turned Dürr in a more focused technology company with only 3 instead of 5 divisions. This involves sharpening our focus on the core business, which is automating production processes and making them more sustainable and efficient or Sustainable Automation as we call it. In this context, we successfully sold the noncore environmental technology business with a high post-tax book gain of EUR 227 million. On top, we started resizing our administrative structure to adapt to a smaller scope of business and tackle cost savings of EUR 50 million. This was after the capacity measures at HOMAG, a further major step to systematically reduce our fixed costs. The effectiveness of our cost-cutting measures is being testified by the improved operating performance in 2025 that was achieved despite the adverse macro environment. Next is Slide 3. The improved operating performance is reflected by 100 basis points improvement of the EBIT margin before extraordinaries. At 5.6%, the margin even slightly exceeded the target corridor of 4.5% to 5.5%. The group's net profit of EUR 206 million benefited from the good operating performance and the high book profit from the environmental technology sale. At EUR 227 million, the book profit was higher than assumed, mainly due to valuation and currency effects. We met our revised order intake guidance, thanks to a strong finish [ to the ] year. In Q4, customers have more flexibly adapted to the uncertain environment and started to place large strategical orders again. However, I would like to underline that we might see quarterly fluctuations in new orders again as the macro volatility remains high. Sales stood at EUR 4.2 billion and we were not satisfied. But given the fact that we were facing customer-induced project delays, I would still call them solid. Free cash flow for the continued operations reached EUR 162 million and was appreciably higher than projected, mainly because of very high premature payments in Q4 that were expected in 2026. For 2026, we see potential for further earnings improvement. I'd like to talk about the drivers in a few minutes. Slide 4 shows the already released figures relating to the developments I just described. I would like to highlight that we managed to increase operating EBIT by 19% despite the slight drop in sales. This was mainly supported by 50% earnings increase at HOMAG and further improvements in Automotive from an already high base level. Moreover, we benefited from lower cost -- lower expenses for our OneDürrGroup synergy program that will be closed in 2026. On Slide 5, you see strong fourth quarters are not -- as you can see -- as we already mentioned a number of times, strong fourth quarters are not unusual at Dürr. Nonetheless, Q4 2025 was a really good one. As I already mentioned, the good levels of order intake and free cash flow, I would like to underscore the high 7.4% EBIT margin before extraordinaries, mainly resulting from an 11% margin in Automotive and an above 6% margin at HOMAG. Automotive's high margin reflects the division's best-in-class project execution and the effects of the value before volume strategy while HOMAG benefited from its self-help measures. Slide 6 shows that we met or exceeded all of our targets that has in part been revised in July. Please note that the low reported EBIT margin of 0.7% was influenced by high extraordinary expenses of EUR 204 million, while the book gain of EUR 264 million before taxes was not considered in EBIT as it is not attributable to the continued business. On the opposite, net income of the group includes the post-tax book profit and thus doubled to EUR 206 million. Slide 7 reveals the strong impact of the tariff conflicts on order intake in Q2 and Q3. In both quarters, new orders were almost EUR 300 million lower than they should have been in order to meet our initial guidance from March. Q4 included 2 major automotive orders from U.S. and Eastern Europe and the largest order ever for HOMAG in timber house construction equipment. This order from North America has a volume of not much less than EUR 100 million and underlines the outstanding market position of HOMAG when it comes to really large projects. Slide 8, please. The global distribution of order intake was well balanced. We saw the expected declines in those regions that we were very strong in 2025. That means Europe and particularly Germany. While the China share continued to decline, we benefited from higher dynamics in other Asian countries, especially India and Saudi Arabia. Slide 9 underscores that the sale of the environmental technology business was a really successful transaction. This is mainly expressed by the high book profit. Before 2018, [ these ] environmental technology activities were a low-performing business. Then we acquired our main competitor, MEGTEC/Universal, shaped an integrated global player with best-in-class technology and consequently created additional value. This value is reflected in the high book gain we generated from the sale. When looking at the lower table, please keep in mind that the 12% margin in 2025 is not an adequate measure for assessing the selling transaction as it includes EUR 9 million of positive nonoperating allocation effects. Let's have a look on the divisions, starting on Page 11 with Automotive. Looking at the 29% drop in order intake, please consider that the 2024 base was very high due to several exceptionally large orders. On the opposite, Q2 and Q3 2025 were exceptionally weak as automotive OEMs postponed CapEx decisions due to tariff-induced uncertainty. Q4 was appreciably better again with customers resuming strategically important projects. At constant sales, the operating margin exceeded last year's high level and reached a strong 11% in Q4. There were 2 decisive factors for this. Our excellence in order execution under the umbrella of the combined Automotive division and our value before volume strategy with its focus on margins, strong projects in the sales process. Page 12. At the Industrial Automation, order intake [indiscernible] were mainly burdened by the market weakness in the lithium-ion battery business. We restructured this business and transferred it to the Automotive division at the beginning of 2026 to make use of Automotive's execution strength. The negative EBIT includes impairments of EUR 135 million. Of this, EUR 120 million are attributable to the impairment of BBS Automation in July. Further impairments of EUR 15 million were recognized in the battery business in Q4, reflecting the weaker market outlook. A quick view on the other 2 businesses of Industrial Automation. Schenck's balancing technology business showed a very good earnings performance, while at BBS Automation, there's still room for improvement. We installed a new management at BBS at the beginning of 2026, headed by the former Chief Operating Officer of HOMAG. His task is to improve operating excellence at BBS and further develop the strategy. He has a great track record at HOMAG, and I'm very sure he will do a very good job at Industrial Automation and BBS as well. Speaking about HOMAG, the main message on Page 13 is that the division made excellent margin progress despite slightly lower sales and was able to much better cope with the difficult furniture market environment than in 2024. The margin increase of just under 200 basis points is the result of self-help measures and successfully reduced fixed costs. Order intake slightly grew on the back of the accelerating demand in the timber house sector. 3 years after the beginning of the market weakness in the furniture sector, it's still difficult to tell when there will be a real recovery. But what we know is that HOMAG is well prepared for it. Next is Page 14. Service sales were almost on last year's level, even though the uncertain environment prompted customers to temporarily be more cautious in their service spending. With this, I hand over to Dietmar, who will take you through the financials. Dietmar Heinrich: Thank you, Jochen. Ladies and gentlemen, a warm welcome also from my side. Page 16 basically presents figures Jochen already touched upon. Therefore, I would like to limit myself on shedding some light on net income. You can see 2 net income figures here. The first one is minus EUR 50 million for the continuing operations, resulting from the high extraordinary expenses of EUR 204 million, of which EUR 135 million were impairment driven. We will get back to this point more in details later on as well. On the second topic on the bottom, you can see the net income of EUR 206 million of the group as a whole. This additionally includes the post-tax book gain of EUR 227 million from the environmental technology sale. Slide 17 contains information on the quarterly and regional sales split which will certainly be helpful for your follow-up analysis. For now, I would like to directly jump to Slide 18 with the EBIT before extraordinary effects. As mentioned, operating earnings increased by a high 19%, spurred by a strong second half when HOMAG fully benefited from its self-help measures and Automotive contributed very high earnings. High margin towards the end of the year are a characteristic at Dürr. But the 7.4% in Q4 2025 are really remarkable and came close to our midterm target level of 8%. The main earnings driver in the full year was a gross profit increase of EUR 23 million based on lower material costs, good order execution and well-managed personnel costs. And this despite a sales drop compared to previous year. On top, we benefited from lower costs for the OneDürrGroup synergy program as well as from lower negative allocation effects of EUR 9 million. On Slide 19, we show the composition of the extraordinary expenses of EUR 204 million in continued operations. 2/3 were attributable to the impairments and will not lead to any cash out. The second largest item was cost of EUR 38 million for restructuring measures, mainly for the admin adjustments announced in mid-2025 that are well on track. PPA decreased from EUR 42 million to EUR 28 million. On the group level, the extraordinary expenses were opposed by the high book gain of EUR 264 million from the environmental technology transaction. Now let's turn to Page 20. Back in December, we announced that free cash flow would be in the range of EUR 100 million to EUR 200 million and exceed the original target of up to EUR 50 million. In fact, it reached EUR 162 million in the continued business. This resulted from very high customer prepayments before Christmas. We were often asked about the reasons for this. The answer has a lot to do with customers' balance sheet and cash flow considerations. If they expect lower cash flows in the year to come, they will bring forward payments to the old year to reduce future cash outs. Beyond high prepayments, free cash flow mainly benefited from lower cash outs for investments. Page 21 shows that we kept net working capital under respective 2024 levels during the complete year with very low days working capital of 27 at the year-end. While the business volume was almost constant with a sales decline of just under 3%, we strongly reduced inventories, receivables and contract assets. This shows that we are able to keep a decent level of cash in the company, which is even more important when macro uncertainty is high. I'm pleased to say that we saw strong progress in net working capital management at BBS Automation under the Dürr umbrella and that the Automotive division managed to further reduce net working capital to less than 0. Page 22 is next. In the group as a whole, free cash flow expanded to EUR 193 million. Based on this and the EUR 295 million proceeds from the environmental technology sale, we were able to reduce net financial debt by EUR 330 million to only EUR 66 million. This equals to a low leverage of 0.2 and brought back debt to the very comfortable levels before the acquisition of BBS Automation in 2023. My last slide, #23, is on ESG. I would like to point out 2 important facts in our climate reporting. The first one is a reduction of Scope 3 emissions by 27% in 2025. Scope 3 mainly includes emissions in the use phase of our products. 27% is an enormous decline. This figure illustrates the very high relevance of our painting equipment for reducing our customers' CO2 footprint. The reason for the strong reduction is that a large share of the painting equipment we commissioned in 2025 features low-emission technology. The prime example is the world's first paint shop to operate entirely without fossil fuels that we handed over to a customer in Europe. The second fact I would like to draw your attention on is related to the EU taxonomy. We were able for the first time to recognize sales from the spare parts and service business in our taxonomy eligible and taxonomy aligned revenues. This means that almost 1/4 of group revenues are taxonomy aligned compared to 13% in 2024. With this, I would like to hand back to Jochen, who will make you familiar with the outlook for 2026. Jochen Weyrauch: Thank you, Dietmar. Slide 25 expresses that we expect the high level of macro uncertainty to persist in 2026. And looking at the war in the Middle East, this assumption seems absolutely justified. Automotive, we see a solid pipeline with quite a number of CapEx projects in the field of painting and assembly technology. However, the lesson learned from 2025 is that predicting the timing of contract awards is difficult nowadays. There's enough new business out there, but we cannot rule out that projects expected for 2026 might be postponed. Industrial Automation continues to see good prospects in the medtech and consumer sector, while new business with auto OEMs and suppliers is expected to remain volatile given the slower pace of EV transformation. At Woodworking or HOMAG, it's difficult to predict when the furniture business will finally recover. From today's point of view, we would rather expect another challenging year. However, HOMAG is strong enough to cope with this, especially given the upward trend in the timber house business that will support utilization and sales realization. Page 26, please. The war in the Middle East additionally threatens economic stability. This increases uncertainty and makes the outlook for 2026 even more difficult. Provided that the war will not further escalate, but rather be finished in the foreseeable future and under the assumption that no other international conflicts put additional pressure on supply chains and economic stability, we can give the following guidance for 2026. Sounds like a little longer disclaimer this year, however. We see potential to increase both order intake and sales. In the best case, order intake could rise up by up to 8% to EUR 4.2 billion, while sales could expand to up to EUR 4.3 billion. Looking at the ongoing uncertainties and the fragile geopolitical situation, however, we also included the possibility of declining new orders and sales in the guidance. With respect to earnings, our target is to further improve the operating performance and to increase the EBIT margin before extraordinaries to up to 6.5%. This also requires that the world will return to a more stable state soon. Supporting factors from earnings increase in 2026 include further earnings potential at HOMAG, operating improvements at BBS Automation, positive effects from the capacity cuts in the administrative sector and the battery business as well as strongly reduced expenses for the OneDürrGroup synergy program. On the opposite, we expect a onetime burden of around EUR 10 million at HOMAG for the transition to a new ERP system and for ramping up a new factory in Poland that will yield efficiency improvements from 2027 on. For free cash flow, we are giving a guidance of EUR 150 million minus to EUR 0 million. This considers the advanced customer payments at the end of 2025, higher net working capital needs for 2026, the tax payments for the environmental technology sale and the cash out for the administrative adjustments. Moreover, there might be a payment resulting from a tax audit that we will have examined by court, however. Upside potential for free cash flow may arise from customer prepayments in the course of the year that are not yet fully foreseeable. Page 27, please. To keep it short, I would like to refrain from going into detail on the divisional outlook. When looking at this, please note that the shift of the battery business from Industrial Automation to Automotive at the beginning of 2026 and the transfer of the BENZ Tooling business to Woodworking. The joint sales volume of both businesses is around EUR 100 million. This brings us to the summary on Slide 28. 2025 was marked by the transformation of Dürr into a leaner group with only 3 divisions and full focus on automation and sustainable production. Alongside with this, we improved our earnings resilience. Our 2 largest divisions, Automotive and Woodworking, were able to increase earnings in an adverse environment based on operating excellence and self-help measures. Industrial Automation will go the same way and improve its performance under the new management. Order intake was impacted by market uncertainties in 2025, but there is potential for improvements in 2026, provided that the extremely high level of uncertainty that we are facing right now will not last too long. Sales should, if at all, only grow slightly in 2026, but are expected to accelerate more strongly again in 2027. Provided that the geopolitical situation will calm down soon, there are good prospects for further margin improvements in 2026 and beyond based on operating excellence and further cost reductions, for example, in administration. Free cash flow will probably be lower in 2026. However, given our business model, it makes more sense to look at the 3-year cash flow average as this smooths out the high fluctuations in customer payments. Our balance sheet is very solid, securing the funds to grow and further develop our business. In 2026, we will put full focus on further strengthening our efficiency and operating excellence, especially at BBS Automation. Large acquisitions should not be expected this year, but are an option to speed up top line growth beyond 2026. Ladies and gentlemen, thank you very much for listening. Dietmar and I will now be happy to answer your questions. Operator: [Operator Instructions] We have a couple of questions already incoming. We will start with the first question from Nikita Papaccio, Deutsche Bank. Nikita Lal: I would actually have 3. The first one is on your service part of the business. The share of revenues is fluctuating close to 30%. Are there any initiatives or planning to increase the share? The second one is on your margin guidance for your automation business. I understand that you installed a new management team, but could you explain in more detail the building blocks of the margin improvement in 2026, please? And my final question is on dividends. Maybe I oversee it, but any comments here would be really helpful. Jochen Weyrauch: Thank you for your question, Nikita. First on service. We have always ongoing initiatives for the service business. And it's a bit different by division. We have already a very good share of service revenues in Automotive, which we are further expanding with new offerings, for example, our spare parts in many cases now comprise RFID chips to make it easier for our customers to track the lifetime of our products on the one hand. But on the other hand, of course, make our business more captive as companies, let me simplify, like pirates are more difficult to work on similar spare parts. We use a lot digital products in the service system now partially based already on artificial intelligence. This maybe on Automotive. On the HOMAG side, we are developing because we have a very high installed base, a very complex installed base. We are developing very special standardized service and upgrade programs that will help to support the service there as well, just given a few examples. And as you can see on our Industrial Automation business, especially at the BBS side, is not so much used to a strong service business yet. There, we're really kicking off programs to benefit from the [ potential ] that's out there. So lots of programs. And this makes us really very confident that this business will grow. And actually, we've set this as a strategic target even down to our remuneration for the year. On the margin guidance for Industrial Automation, the blocks and improvements, Dietmar, do you want to cover a few topics where we see the improvements? Dietmar Heinrich: It's on one side, continuing the optimization measures that are already established. We will on the -- one impact have the -- negative impact from the lithium-ion business that Jochen mentioned before that was under stress, and we had to do the impairment actually is removed to auto. This helps them to lift already to a certain extent then the margin. The second topic is that we are working on operational excellence in project management that we are improving the footprint continuously. We are combining 2 locations here in Germany that are very close together. That's already agreed upon with the works council there so that we can realize synergies. So that's why we are finally confident that we can reach the margin improvement, but it's not yet where we want to go. So there are still further steps to come finally beyond 2026. Jochen Weyrauch: On the dividends, I think we have -- there is nothing to be communicated yet. So it's difficult to comment on it at this point. Dietmar Heinrich: But Nikita, maybe to add, Jochen, we have the guardrails of 30% to 40% of the net income, but you are for sure aware that in case of extraordinary charges, we did some adjustments. This year, we have, 2025, an extraordinary benefit. So we might consider this. But in general, we are a good friend of a continuous dividend policy. And of course, nevertheless, having our shareholders having a share of the -- or the income [ that is the ] benefit that we produce. So it's a very generic statement, I have to say. We will discuss with the Supervisory Board. And when we get out with the final report at the end of March, you will get information in that regard. Operator: All right. The next question is from Philippe Lorrain from Bernstein. Philippe Lorrain: So I also have like a few questions. So maybe if I can just follow up a little bit on the impairment that you were mentioning for Industrial Automation, if you can quantify that? And also with regard to the guidance that you provide per division, you give indications on the sales for 2025 in the lithium-ion battery system business and also for BENZ. But looking at 2026, what would have been like the kind of figures that you were anticipating for this in terms of order intake and also like the margin impact, maybe the dilutive margin impact on Automotive and the relative margin impact on Industrial Automation would help a little bit. So that would be the first question. Dietmar Heinrich: So Philippe, in regard to the impairment, just to make sure it's LIB that you mentioned. Philippe Lorrain: Yes... Dietmar Heinrich: Because I was still busy taking note, sorry for that. Yes, it's the market situation in the battery market in European market is very, very difficult. That's the area that we focus on because we have been of the opinion that we can gain business in the European market with the drive also for independency in regard to battery supplies in the European Union. We can see that from a customer perspective, this did not materialize finally. We could see the difficulties of Northvolt. We could see Porsche's announcement regarding their joint venture, Cellforce. And we do see that last year, the market in regard to new business was very, very low. At the very end of -- then we reviewed the business opportunities, we reviewed the business plan, and we came to the conclusion that for the foreseeable future, it's not going to build up then finally in the area that we really targeted. And we did then finally impairment of EUR 15 million. So the impairment as a whole is EUR 135 million. As I mentioned before, thereof the EUR 120 million for BBS that we already [ or PAS ] at that time that we already did at the end of the first half of the year and the EUR 15 million now in the fourth quarter for LIB. Philippe Lorrain: Okay. So the margin -- yes, sir. Jochen Weyrauch: Maybe to add to that - go ahead, Philippe. Go. Philippe Lorrain: No, I was just meaning -- so the margin step-ups come basically from the fact that we just reduced the amount of depreciation going forward? Jochen Weyrauch: Yes, it's also operational improvement. So we expect a significant -- after restructuring we've made in the lithium-ion business, we really expect even close to double-digit million improvement in the lithium-ion business as such operationally independent from any depreciations on the business. You were asking also on the dilution for the business, it's... Dietmar Heinrich: Based on last year, it would be around 70 basis points for Automotive in the margin. Philippe Lorrain: Okay. So basically, so if I take like the 7% to 8% target -- margin target range, sorry, for 2026, I would need to hike that by basically like around 70 bps. So more or less what you expect... Dietmar Heinrich: Philippe, when you look to 2020 figures, then you would go down from the 8.6% towards 7.9% in order to have it comparable. And in regard to 2026 guidance, as Jochen outlined, we want to bring back the figure to the breakeven or the business to breakeven for 2026. So the dilutive effect is significantly smaller. Jochen Weyrauch: More comes from volume. And you were asking about volumes, both businesses are in the magnitude of EUR 50 million or a bit more at the moment. Philippe Lorrain: So that was the order intake volume for the LIB. Jochen Weyrauch: Also order intake on lithium-ion was lower last year. We had a good 2024 with a large order that we're currently still executing and BENZ would be around the EUR 50 million roughly, yes. Philippe Lorrain: Okay. Perfect. Then I have like one question maybe on the large order that you had for timber house for HOMAG in Q4, if you can quantify a little bit that kind of impact? Jochen Weyrauch: Yes. That order was close to EUR 100 million in order intake is coming from North America. It will be executed this year and to some extent, also next year. And all in all, in that area, what we call [indiscernible], which is the wooden houses business, we had an order intake of about EUR 200 million last year, record order intake. Philippe Lorrain: Okay, including that order? Jochen Weyrauch: Including that order, yes. Philippe Lorrain: Okay. Perfect. I've got 2 more technical questions, so to say, for you. So the first one is on the announcement that you already preemptively make that you are to revise the 2030 sales guidance. So obviously, there's a need to adjust anyway for the sale of the environmental business of CTS. But are there any other reasons also that push you to do that, say, for instance, like the slightly lighter anticipation in terms of order intake for 2026 versus what could have -- one could have expected, so let's say, me, for example, in terms of growth and also generally like the cautious stance that you have with regard to the geopolitical situation? Jochen Weyrauch: All of what you're saying is valid in a certain sense. However, EUR 100 million up or down, maybe I'm a bit too generous now, in 2026 don't have much impact on 2030, at least I hope. So CTS is a valid discussion. We will be, of course, reviewing growth potentials, which currently we are really revisiting in order to, not too far in the future, redefine what would bring us to the EUR 6 billion or whether the EUR 6 billion are still the EUR 6 billion. Dietmar Heinrich: And Philippe, it's always including both organic growth and inorganic growth, which means acquisition, Jochen pointed out with -- on the presentation, you can see 2026 is on efficiency. But of course, for the future, especially when opportunities coming up to strengthen the business, we will seriously diligently look into them. Jochen Weyrauch: Within the core business. Dietmar Heinrich: Within the core business and with net debt being reduced to a level close to 0, we are also now having a good headroom again to act when opportunities are coming up in the future. Philippe Lorrain: Okay. So maybe you will actually stop targeting such a fixed figure, including, let's say, like M&A and so on and rather guide organically that could actually like be wiser, I guess, going forward? Dietmar Heinrich: We will take it into consideration. Philippe Lorrain: Yes. That's good. And finally, I've got a question for you, Dietmar, because you were mentioning the fact that contract assets were actually reduced. So to which extent do you manage to proactively reduce or keep that under control versus what is it that you actually cannot control? Because I understand there's always a relation between that item and also the sales recognition and the earnings recognition and actually, the market typically likes if contract assets are not too much inflated. So it's good news here, but we get that to be seen. But I was wondering whether there's actually like -- really like something that you can control versus something that you have to actually deal with. Dietmar Heinrich: Yes, you're right, Philippe, and looking into the number, we had a decline of EUR 84 million from end of 2024 to end of '25. So that's a significant decline. But basically, I would say the majority of this, we can manage. I think one of the reasons for this at the very end is in conjunction with the sales recognization, especially the excellent EBIT margin on the automotive side in the fourth quarter business. So a couple of projects have been completed. We had to -- or we could then finally realize the outstanding sales. We could realize then also the profit with releasing contingencies that we had in there, and that was also making a contribution to the drop in the total contract assets as well. Philippe Lorrain: Okay. Perfect. And if you don't mind just like a very -- like a little housekeeping stuff. So you mentioned EUR 10 million of cost for HOMAG for ERP transition. Is it going to be recognized below the line, so i.e., in earnings adjustments or within the guided margin? Dietmar Heinrich: We had internally some discussion, but let's say it this way, the Head of our Audit Committee is not too much a friend of it. Jochen Weyrauch: So it really goes bottom line. Philippe Lorrain: Okay. So in the adjusted EBIT still? Jochen Weyrauch: This is earnings before extraordinary effects. Dietmar Heinrich: And that's also -- Jochen mentioned that we had a decline or we expect a decline or had already a decline last year in the OneDürrGroup synergy program. In that regard, we stopped the one ERP approach, and we finally moved now to a brownfield approach regarding SAP R/3 to S/4 transformation that is division based. And we have on one side, the savings, and we have smaller amounts due to the brownfield approach than in the division, but it's reflected directly in the divisions, and it's shown there. Operator: The next question is from Adrian Pehl, ODDO BHF SE. Adrian Pehl: Actually, 2 questions left from my side. First of all, on the cash flow guidance that you gave, just to get a sense of what defines really the very low end and the upper end of that? Because if you take the 2 years together, i.e., 2025 and your, let's say, very low end of 2026, there's literally any -- hardly any cash flow left on an EBITDA of EUR 600 million. So that seems a very cautious to me, but maybe also the moving parts and building blocks would be interested on that number. And then secondly, on the regional developments, I mean, obviously, throughout the year, we have seen, in particular, China quite soft. And I was wondering also on the order side of things, actually now down to book-to-bill of 0.4 in Q4. First of all, how do you think of that business progressing? And secondly, is that due to a structure of Chinese rather buying Chinese products? So is that a structural thing? Or how should we see it? And then I might have a follow-up on the regional setup. Dietmar Heinrich: Shall I start with the free cash flow guidance? Adrian, in that regard, we mentioned that we received quite big early prepayments or payments in December from our customer side that had a strong influence. Remember that the guidance originally was 0 to EUR 50 million. Now -- then we increased, we got out now with EUR 162 million. Based on the past, maybe we sometimes could overexceed a little bit. So you can roughly say that we received around EUR 100 million more than we expected finally. And this, of course, is missing as a cash inflow in 2026. So that's why we are certain. On the other side, we will not, for ongoing projects, receive significant milestone payments because these earlier payments also to some extent are made. And then we have nonoperating cash outs like we mentioned for the tax on the environmental technology sale. We booked the net gain finally, but the tax payments will be made in 2026. And we have the expected payout from the tax audit in Germany that we are targeting or not targeting, we will have it examined by the court. We don't want to mention the number due to the tax authority not letting to know our real position on this, but we build up respective provisions. So no impact on the profit side impacted. And that's actually -- and of course, when orders are coming in towards the end of the year, we could have again the advantage that we get the initial down payments and then have a better cash flow development despite the fact that not much of the contracts as is being built up during that time. So this defines the upper and the lower end from a verbal explanation. Jochen Weyrauch: On the regional distribution, especially China of the orders, first, as a disclaimer, as you know, in many cases, we have orders that are triple-digit millions. So this can fluctuate over time. However, especially on China, where we've seen some declines, it is -- China is a very competitive market. And from what we see, it's not about in terms of winning the orders, at least in most cases, independent from whether you are local or not local. In fact, we are local for more than 30 years already in China. It is competition. And of course, the market after boom times around adding capacities with now dozens of producers that -- it's natural that the investments have been somewhat down. However, I can note that this year, we've already seen some upwind and book 1/2 orders in automotive, not the big orders, but activities there. So let's see what's happening. And China, of course, is the most competitive market on the planet. This is why we are also continuing to play there, especially to learn from them. And not to forget, we're using our own Chinese facilities to follow Chinese OEMs into the world. So if you look at China from a holistic point of view, it's a bit more than just the order intake mix. Adrian Pehl: Right. And more generally on that, I mean, how are you managing your capacities, in particular on the automotive side of things? So I mean, obviously, your overall profitability was solid in particular in the second half of the year. It looks like you are probably also assuming or selecting orders depending on the margin profile. Is that continuously the case? And how should we think of the margin profile in your order backlog going forward? Jochen Weyrauch: Yes. We have a healthy -- continue to have a healthy margin in the order backlog. And in many cases, with the excellence that we have in order execution, we turn or we even increase the margin that we have in the backlog when executing projects. Then in terms of capacity management, we are very much used still today to manage projects very globally. So when we -- just to give you an example, execute an order in Saudi Arabia, you would have colleagues from China involved, from Korea, from Italy, from Poland, from Germany and probably a few more countries. This is how we are used to execute orders, not saying independently from where they are, but to a large extent. And this is why we can manage capacities quite well. And second, also very important is that a lot of the P&L, especially in automotive, is purchased goods. So we are not so dependent in terms of load in factories because our value adding, our own value adding in terms of products is limited to the amount where we can differentiate with own IP. Operator: So dear ladies and gentlemen, there are no more questions in the queue at the moment. [Operator Instructions] And there is a follow-up from Philippe Lorrain, Bernstein again. Philippe Lorrain: So the first one would be on the extra cost that you had on the continuing business prior to the actual sale of CTS Environmental. So could you quantify that again for the full year of 2025, so we know what negative impact actually leaves the P&L? Dietmar Heinrich: This was around EUR 30 million, Philippe, as a whole, a smaller amount, low to 1-digit million euro, I would say, EUR 3 million to EUR 4 million was already in 2024. The remainder was in 2025. So that's the amount that we spent, and this was related to the carve-out preparation, which was quite complex and was then transaction-related expenses. Philippe Lorrain: Okay. But you had also this -- this also includes the impact of shifting the costs that were actually not recognized anymore in CTS Environmental, but rather in the existing continuing business also [indiscernible] all together? Dietmar Heinrich: That's correct. It recorded in the discontinued operations. Philippe Lorrain: Okay. Perfect. And second question that came to my mind as well, as you were mentioning Saudi Arabia. But with the current situation in the Middle East, so do you have any, let's say, like significant projects where you have works on the ground and so on? And what's the situation like there in this kind of scenario that we are going through in the Middle East? Jochen Weyrauch: Yes. We are -- Philippe, we're having 2 projects that are currently significant, the 2 projects in Saudi Arabia, but they are not at the Persian Gulf side in the East, but they are in the West, near Jeddah, King Abdullah Economic Zone. So far, first of all, our people are safe because we have the people there. We have all the plans to deal with the situation and escalate if necessary. And second, in terms of the supply chain, we're carefully watching. And where necessary, we reroute goods at this point. So, so far, we're not with a view on this region, expect any interruptions. What, of course, we have to carefully watch is our supply chain in general. And there, it's difficult to say at this point. It is what we said before, if this conflict is managed within the foreseeable future, we don't see a real impact. If it takes longer, we will have to see. Operator: Thank you very much. With that, since there are no more questions in the queue, I'm closing the Q&A session again and handing the floor back over to the host. Mathias Christen: Thank you, Anna. Thank you, ladies and gentlemen, for your questions and the discussion. If there are follow-ups, please don't hesitate to contact me. The full annual report will be published on March 26 and the Q1 figures on May 12. We are planning a Capital Markets Day in the course of the year as we are currently examining our midterm sales targets and working on a strategy update. For today, that's it. Take care. Goodbye.