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Cody Fletcher: Good morning, everyone, and welcome to Bakkt Holdings, Inc.'s first Investor Day, both here in person and virtually at home or in your offices. We appreciate you joining. Before we begin, please review the forward-looking statements and disclaimers in today's materials. Our presentation will include statements regarding future events, business strategy, and market opportunity. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. We encourage you to review the risk factors in our most recent filings with the SEC. I am pleased to introduce Bakkt Holdings, Inc.'s Chief Executive Officer, Akshay Naheta. Akshay Naheta: Welcome, everyone. This is our first Investor Day, and I want to give you a view into what we have worked on over the last year, what we have systemically rebuilt, and where we are taking the company from here. We are entering the next phase of Bakkt Holdings, Inc.'s growth with massive momentum behind us, both from a regulatory perspective as well as the economic and financial tailwinds that lie within the sector of payments and financial services. It is a precise engineered strategy that we have put together that we look forward to disclosing as we go along throughout the year. We have rebuilt our governance, capital structure, and technology. We have a great line of sight. Our pipeline is primed. The regulatory path is clear. We are rewriting the definition of category-defining deals. Today is our opportunity to show you exactly what we have built, the immense velocity at which we are moving, and why Bakkt Holdings, Inc. is positioned to lead in this category. Quick overview of the agenda for today: We will cover five areas: a quick overview of our strategy and the key drivers behind it, the market opportunity and how Bakkt Holdings, Inc. is positioned to capitalize on it, and finally, a product deep dive across our three engines, and a quick review of the year 2025, which was operationally and financially a bit volatile. But we have gone through the restructuring that we had to do. Finally, Q&A followed by my closing remarks. Akshay Naheta: The mission is simple. Build secure infrastructure and products that make money work in real life globally. It is the precise description of the problem we are solving. Money is too slow, too expensive, and too opaque for most people and most transactions worldwide. Bakkt Holdings, Inc. is building the infrastructure layer that changes that for institutions, customers, and companies. Our vision is to build the next-gen financial ecosystem, one that sits at the intersection of programmable money, regulated infrastructure, and AI-driven agentic finance. The analogy I use is that what AWS did for software—it let companies build without owning servers—Bakkt Holdings, Inc. does for finance. We provide the licensed, regulated, scalable rails so that partners do not have to build them. We have done all the work for them. The world is moving towards programmable money. Stablecoins now settle more than $30 trillion annually, and Bitcoin is becoming a treasury asset for a lot of corporates and sovereigns around the world. In the middle of all of this, you have the tokenization opportunity of real-world assets, which is moving from pilot to production in real time. Bakkt Holdings, Inc. is positioned exactly where all this is breaking out, and we are well on our way to take advantage of these opportunities. We have organized Bakkt Holdings, Inc. around three engines. These are engines because each one generates its own revenues while powering the others. Bakkt Markets is our institutional-grade infrastructure for digital assets. It gets institutions to markets faster and more safely. Bakkt Agent is our programmable money and AI-powered agentic finance infrastructure. It is frictionless, intelligent, and fully auditable. Finally, Bakkt Global is our international expansion and strategic value creation engine. We are applying our intellectual capital, technology, and products to the world's highest-growth markets through a disciplined, capital-light investment model. Critically, these three engines are complementary. Markets provides the regulated rails. Agents use those rails to move money globally; that benefits both consumers and businesses. Finally, Global leverages all of our understanding in these different areas to take it into new jurisdictions to generate tremendous value for shareholders, and early results are already showing that for Bakkt Holdings, Inc.'s shareholders. The quick accelerants: We have laid the groundwork over 2025, and we have immense momentum on partnerships that are currently underway. I have showcased a few of these partnerships here, but we are deep in discussions with several partners across the ecosystem, and we have immense momentum on that front. For Agent, we have signed up tier-one telco partnerships across the U.S. and Europe, which will embed connectivity into our fintech product. The distribution partnerships involve category-defining deals, which will improve our immediate reach and will tap into a network of our partners, lowering customer acquisition costs. We look forward to announcing significant partnerships along this line over the very near term. With Better and Zoth, we embed our APIs into their product flows, generating volume from day one. For the Markets segment, with Nexo, Ascendex, and Ubit, we help expand their liquidity and our global client base. These are all commercial agreements with real volume and real economics, and I am extremely confident in each of these partnerships and what they are going to deliver for Bakkt Holdings, Inc.'s shareholders. There are three core KPIs for shareholders to follow going forward. For Bakkt Markets, it is going to be total transacting volume between what we have—the legacy brokerage-in-a-box business that Bakkt Holdings, Inc.'s shareholders are aware of. With DTR coming into the fold, we have significantly added to our stablecoin on-ramp/off-ramp capabilities. I expect the total transaction volume within Bakkt Markets to expand substantially, and Nick will talk about it during his presentation. For Bakkt Agent, the metric is monthly active users. It is a volume business—users transacting is what drives the revenue—and MAUs are the right measure for platform adoption and distribution reach. Finally, for Bakkt Global, we look at strategic asset value—the investment and equity value our global strategy generates. In Japan, we have already made 3x our money. In India, we have made 5x our money. The methodology is internally defined and incorporates mark-to-market valuations, cash proceeds, and any unrealized gains. These are independently governed businesses in different high-growth markets, and they will also generate revenues for Bakkt Holdings, Inc., which will then contribute directly to Bakkt Holdings, Inc.'s financial statements. These three KPIs will be reported as each product and platform becomes operational. The timing is tied to launch milestones and not a fixed calendar date at this time, and full disclosure on definitions, methodology, and reporting timelines is in the appendix. Let me briefly touch upon the Bakkt Holdings, Inc.–DTR transaction. This is foundational to everything you are going to hear today. It is, in our view, a category-defining transaction for digital finance infrastructure. DTR brings us two things: products and people. On the product side, we have a composable API platform. Bakkt Agent provides cross-border payments capability and expands Bakkt Markets into stablecoin payment settlements. These are not roadmap items; they are live and ready to be deployed. DTR also brings a complementary regulatory framework in Europe. They hold the VASP license, which then sits alongside Bakkt Holdings, Inc.'s existing pan-U.S. MTL coverage and the New York BitLicense. Together, we have the regulated footprint to grow the business across both sides of the Atlantic. On the people front, the DTR team is primarily 90% engineering, and it includes our CTO, Remy, who you will hear from later today. That brings in world-class engineering talent and a proven track record of building scalable, global fintech businesses. The acquisition is subject to customary closing conditions and shareholder approval. DTR really unlocks cross-border volume for Bakkt Holdings, Inc. on stablecoin payments. This is where stablecoin technology is transformative. The TAM here is enormous. Cross-border payment flows are $44 trillion today and growing quite rapidly to about $67 trillion by 2033, according to FXC Intelligence. DTR gives Bakkt Holdings, Inc. three specific revenue hooks into that volume: stablecoin on-ramp/off-ramp fees on every fiat-to-crypto conversion, embedded financial services revenue on every flow, and a scalable compliance stack that accelerates partner onboarding, and therefore, volume. Note: the TAM figures represent the full global market, and our serviceable and obtainable market will be disclosed as we formalize specific corridor strategies. Coming to the regulatory front, we have immense tailwinds from clarity within the U.S. regulatory environment. The Stablecoin Act was signed last summer, and the Clarity Act on digital asset markets is currently moving through Congress as we speak. As the rest of the industry plays catch-up with these newly passed laws, Bakkt Holdings, Inc.'s infrastructure is already built for it, with our licenses and regulatory stack. We built this infrastructure before it was required, and that gives us a durable competitive advantage. The four-part cycle on this slide is not aspirational. It describes our current positioning—regulatory alignment along with infrastructure readiness—then helps accelerated adoption, thereby enabling scalable growth. We are in that loop today. I will now turn the call over to Nick Bays to walk you through Bakkt Markets. Nick Bays: Thank you, Akshay. I am Nick Bays at Bakkt Holdings, Inc. I am going to walk you through Bakkt Markets. Our institutional digital asset trading business and how we are expanding it through our partner ecosystem and the DTR transaction. The DTR transaction does not just build out Bakkt Agent; it materially expands Bakkt Markets. Three specific capability additions: over-the-counter trading infrastructure that enables higher-margin execution and larger institutional transactions; stablecoin on- and off-ramps that add payment and settlement fees alongside cross-border transaction volume; and a scalable compliance stack that accelerates client onboarding and drives revenue growth. Pre-DTR, Bakkt Markets was a spot trading and custody business. Post-DTR, it is a full-spectrum institutional digital finance platform: spot, OTC, stablecoin settlement, and cross-border payments. The revenue model expands accordingly—execution spreads on OTC, settlement fees on stablecoin flows, and onboarding-driven volume from the compliance stack. Now let us talk through the institutional digital asset trading layer. The Bakkt Markets platform has three core components that work together as a single institutional execution layer. Best bid/offer engine: We aggregate real-time pricing across multiple venues to provide clients the tightest spreads on every trade. That is institutional-grade price discovery. Order management and risk: Every order is pre-validated for minimum size, holding sufficiency, and marketability before execution. Non-marketable orders are held rather than rejected. Exceptions surface in real time. Flexible funding rails: We offer three fiat funding models. You can use Bakkt Holdings, Inc.'s banking relationships and infrastructure, you can bring your own banking infrastructure, or you can integrate with our partner, Apex Fintech Solutions, to offer a consolidated funding model across TradFi and digital assets. This allows each client to use the funding and brokerage infrastructure that fits their platform. All of this is done on credentialed infrastructure, SOC 1 and SOC 2 certified. Now differentiation in the market. We offer four competitive advantages that are difficult to replicate. Flexibility: We do not force partners into a single structure. They choose the funding rails, the business model, and the integration depth that works for them. Tech stack: Institutional-grade execution engine with real-time risk controls, built on modular APIs. The same architectural principle as the Agent platform—composable, scalable, and auditable. Offerings: From spot trade to fiat on/off ramps to cross-border stablecoin payments via DTR. Breadth of product across one regulatory relationship is unique in the market. Compliance and governance: We offer MTL coverage across all 50 states plus a New York BitLicense. When a partner works with Bakkt Holdings, Inc., they go live without navigating their own licensing. Our regulatory infrastructure becomes theirs. For fintech companies, payment providers, exchanges, and brokers who want U.S. market access, that is an enormous time-to-market advantage. Partnerships and integration: Four strategic partners, each expanding a different dimension of the Bakkt Markets platform. Nexo: We enable U.S.-regulated trading infrastructure and expand our institutional partner network, driving transaction-based revenue growth. Nexo is a tier-one digital asset lender with global institutional relationships. Their network is our network. Ascendex: Expands our global customer base and demonstrates platform demand and scalability. Recurring revenue through activity—Ascendex proves the B2B2C model works at international scale. Ubit: A consumer app that lets users spend digital assets via a Ubit-issued debit card. We power the buy, sell, deposit, and withdraw flows. Our stablecoin and on-board APIs enable bank transfer on- and off-ramps across 30+ EU and Asia countries. Lastly, DTR: Adds cross-border payments and stablecoin settlements, expands the product suite well beyond trading, and supports ongoing platform upgrades. DTR is the infrastructure layer that allows Bakkt Markets to evolve from a trading platform into a complete digital finance infrastructure. Pull the three things together—regulatory infrastructure, onboarding new customers, and growing current offerings. Regulatory infrastructure: Partners do not need to run their own licensing processes. They use ours as a plug-and-play solution. This is how we gain access to the U.S. customer base quickly. Onboarding new customers: Third-party custodians and liquidity providers expand our offering set. Durable banking relationships provide the fiat rails. These are the relationships that let us say “yes” to institutional clients on day one. Growing our current offering: Stablecoin settlement and on-/off-ramps are the new revenue layer enabled by DTR. That turns Bakkt Markets from a trading business into a payments infrastructure business. Cross-selling trading, custody, and payments from a single institutional relationship. The bottom line for Bakkt Markets: This is a high-margin, recurring revenue business that gets better as volume grows. Each partner adds liquidity into the ecosystem. I will now hand it over to Remy and Ankit to review Bakkt Agent. Nick Bays: Together with Ankit, we will talk through Bakkt Agent, our AI programmable finance platform. Remy: Bakkt Agent is really built on four pillars. The technology pillar is a modular tech stack built for scale. Our efficiency layer lowers our cost to serve while volume grows without our headcount growing. Programmability: Bakkt Agent is built for the world of programmable finance—automated, logic-based money movements. Finally, distribution: we plug directly into existing networks of hundreds of millions of users. I will start with tech. This is the tech stack that makes it all work underneath our APIs and direct-to-consumer products. The tech stack is split into four main areas. We have our consumer apps at the top. We have our APIs underneath that we serve to our partners. We have our microservices layer, which is a logic engine, all tied together with a messaging bus allowing them to work asynchronously and independently from each other. Finally, at the bottom, we have a data lake that ties it all together. All the data that is generated internally and externally all falls into one place, laying the groundwork for our AI workforce to work with us. Our second pillar is efficiency. Legacy financial institutions scale headcount as they scale revenue. Our core operating model is built for automation. We have three agents that currently work at Bakkt Holdings, Inc.: Clara, which is our knowledge agent—you can ask anything to Clara about our customers, our business model, and our transactions that go through the platform. She speeds up time to answer by 98%, allowing the team to focus on growth rather than getting context. We have Lucy, who watches every transaction that goes through the platform and helps reduce our detection time by 83%. This helps us maintain our 99.9% platform availability. Finally, we have 74% of merged code contributed by AI, making sure that we speed up our delivery by over 50% without adding headcount to our engineering team. These are not aspirational metrics. These are operational numbers today, and they are a direct reflection of the groundwork that we have laid to make the right architecture decisions from the start. For our consumers, this means faster, simpler, more modular, and reliable money movements. Next, I will talk about programmability—what this means for us and why it matters now. Bakkt Holdings, Inc. is building products for a world where money is programmable. We have three composable APIs that can be used together or separately. The first one is the Zyra API, a chat-native cross-border payment interface that supports voice, text, and image inputs. It is a single API endpoint that our partners can integrate with and gives them access to our full regulated financial infrastructure. We have our Accounts API, allowing us to issue debit, credit, and savings accounts—virtual and named—in U.S. dollars, euros, and British pounds sterling. It has access to instant payment rails in all three native currencies and embeds eSIM issuance. Finally, our Stablecoin API allows payout into 57+ countries across 15 different currencies on 10 public blockchains with same-day settlement 24/7. As I said earlier, these three APIs can be used independently or composed together. Akshay mentioned Zoth—Zoth uses our Stablecoin API and our Accounts API together. Better’s integration is with our Accounts API. Talking about the two of them, Better embeds the Accounts API within their mortgage journey, allowing their mortgage applicants to deposit funds with Better from day one, helping them waive some of the mortgage application fees. Zoth uses our stablecoin financial infrastructure to enable users to more easily pay in and pay out of the Zoth app. I will dive a bit into Zyra. Zyra is the most technically sophisticated part of our stack. At the center, we have a primary agent, a large language model that is based on Google Gemini and then fine-tuned in-house. It helps orchestrate user intent between 15 different sub-agents. Those 15 sub-agents include KYC, settlement, FX, compliance, and treasury. Each specializes in its own domain and operates autonomously within its scope. At the bottom, we have a self-testing layer. This is what makes Zyra an intelligent swarm of agents. It helps analyze the input of user intent and the output that the swarm comes up with, and it learns over time, improving itself. Zyra is not just a chatbot. It is production-grade, self-evaluating, and designed for institutional-quality reliability in global payments. Now, to talk about our direct-to-consumer offering, I will hand it over to Ankit. Ankit Kemka: Hello, everyone. I am Ankit Kemka. I am the Chief Product Officer at Bakkt Holdings, Inc. Let us talk about our direct-to-consumer products. Firstly is the Zyra app, the chat-native remittance app with voice, text, and image input. It covers global money movement from the U.S. to 57 countries. It includes built-in KYC, AML, FX, and local settlements. No separate app or separate onboarding is needed. When you are using the Zyra app, it is all inbuilt. Second is our Everyday Money app. It is a full-service mobile banking app for daily use that is currently being built. It offers debit and savings accounts, debit cards, credit cards, peer-to-peer payments, simplified onboarding, and a retention-focused UX. It is a digital banking product that users come back to every day. Finally, our AI-powered loan underwriting product, which is AI-assisted underwriting and decisioning for consumer credit: faster approvals with consistent policy controls that dramatically lower cost to serve through automation versus traditional credit underwriting. Let me deep dive on the Everyday Money app. The product covers the full life cycle of a user's financial life: earn, spend, save, send, and control your finances. Customers will have access to products such as a checking account, debit cards, a credit card with a rewards program, a savings product, cross-border transfers, and, more importantly, data-driven insights across their financial life. Let me focus on the last pillar, which is distribution. The single biggest cost in consumer fintech is customer acquisition. Traditional partners spend hundreds of dollars to acquire a customer. We have solved that problem structurally by partnering with organizations that have already earned massive consumer trust. Instead of spending millions of dollars in paid marketing—which I have done before—we plug into existing networks where we can leverage owned reach. Organic reach and brand trust drive customer acquisition, and then on top of that, there are network effects that help with virality. We are extremely confident about our pipeline and are in advanced conversations with a few partners, especially for the consumer fintech platform. At Bakkt Holdings, Inc., we believe connectivity and everyday finance are intertwined. Someone with a bank account and an internet connection can go about their daily business fairly easily. Telecom markets are naturally concentrated—typically, two or three partners serve the majority of a country's population. We partner with the leading operator in each geography we want to operate in, and that gives us immediate reach through their existing distribution. With that partnership, we have embedded eSIM technology directly into our consumer fintech product. This creates a deeper relationship with our customers and higher retention due to higher switching costs. More importantly, for the consumer fintech app, owning the primary banking relationship across customers is the holy grail. Partnerships like this are the foundation of driving the primary banking relationship. Our launch focus is in the U.S. and Europe, and we have massive momentum from these telecom partners. In parallel, we are also extending our eSIM capabilities to partners via APIs. With our distribution strategy, Bakkt Holdings, Inc. is accelerating its time to scale and revenue growth. The engine is Bakkt Holdings, Inc.; we provide the regulated rails. Partners do not need to build compliance or licensing infrastructure—we provide all that. The catalyst is our owned reach that drives organic acquisition at scale through our distribution partnerships. This means we can do customer acquisition that is structurally below any other competitor relying on paid channels. More importantly, the integration provides a deeper relationship with our customers, which improves retention and lifetime value. This combination is a flywheel: low CAC, high retention, and an expanding user base. I will hand it over now to Akshay for Bakkt Markets. Thank you. Akshay Naheta: I want to now touch on our third growth engine, which is Bakkt Global. At its core, it is a capital-disciplined model of expanding our intellectual capital and technology into the world's highest-growth opportunities and markets. To be clear, this is not an experiment. This is well-thought-out, methodical capital allocation, and it is already delivering great results for Bakkt Holdings, Inc.'s shareholders. Furthermore, we are extremely confident in the trajectory ahead for this business. Effectively, we are building independently governed businesses in some of the world's highest-growth fintech opportunities. We deploy capital. We take an ownership stake and then help guide the strategic direction, products, and services into independently governed businesses. The independent governance is deliberate. It is a design choice because we do not want these to be characterized as subsidiaries. They have their own boards and management teams, and they devise their own business plans, which are guided by us. It creates accountability and credibility with all stakeholders: the shareholders, the local regulators, and the customers of these businesses. In return, Bakkt Holdings, Inc.'s shareholders derive compounding strategic shareholder value and the requisite growth as those businesses scale. We invest the money, not the infrastructure. Our products, if required, travel with us and can be leveraged by these businesses as and where applicable. It is a scalable and repeatable business model. The flywheel here is driven by the unique business strategy, which then feeds into the unique product strategy, and it is supported by independent governance and management teams. Bakkt Holdings, Inc. sits right at the center of it all, deploying the capital and receiving recurring value back. What makes this really scalable is that the product set is already built. The playbook for standing up these independently governed entities is proven, and we apply it market by market, geography by geography. These are publicly traded companies in some of the world's most attractive, liquid stock markets. We have done it twice so far: Japan, which we consummated over the summer last year, and our announcement in India in late November last year. This is the roadmap that has set both our internal expectations and how we expect these to play out going forward. I am happy to report that both of these opportunities are tracking well ahead of our internal benchmarks when we set out to make these investments. I am also looking forward to the public disclosures from these businesses in the near term, which will then shine further light on how limitless the potential scale of each underlying opportunity is. A quick update on the Japan business: it is called Bitcoin Japan Corporation. It is listed on the Tokyo Stock Exchange under the ticker 8105. We invested about $11.5 million in August, and as of mid-March, we have generated almost $37 million of returns. That is a pretty good outcome, but I think this is going to be dwarfed by what is to come going forward. Philip Lord, who is the CEO of the company, is in the crowd here today, and I am extremely confident in the leadership and the business plan that he and his team are putting together. I serve as the chairman of the board, and I have good insight into what Philip is doing to make sure shareholder money is being deployed in the right manner. Bitcoin Japan's broader strategy, as outlined on their website, is powering the AI and Bitcoin economy in Japan. At their upcoming AGM, I think Philip will be able to shed further light on exactly where he is going with this. Japan, mind you, is the second-largest market capitalization globally after the U.S., and I look forward to disclosing some of the great work that the team has undertaken in the business. Coming to India, we committed $10 million late last year. As of March, it is a 5x+ return on the deployed and yet-to-be-deployed capital. We are pending regulatory approval, which I expect in the very near term, hopefully before the end of the quarter. The strategy that has been discussed thus far in India includes a broker-dealer M&A rollout, which leverages Bakkt Holdings, Inc.'s tokenization capabilities to offer real-world assets in a tokenized format to the existing broker-dealer customers. We are extremely excited about the opportunity in India given the size of the market. It is the second-largest derivatives market in the world and one of the most exciting consumer fintech opportunities anywhere on the planet, given the size and scale of the population. We believe this investment will ultimately represent incredible value for Bakkt Holdings, Inc.'s shareholders, which, in my personal opinion, will be multiples of what you are seeing here in the very near term. Akshay Naheta: With that, what is in store for 2026? On the global side, while we continue to evaluate market opportunities where we can expand, our criteria are very high to go into any new jurisdiction. We want to have a clear high-growth strategic fintech opportunity. We need the right regulatory and legal environment that we can navigate. Finally, we need to bring in the right management team and have the right local capabilities to execute on that business plan. We are going to be very selective in how we grow this, but the current line of sight that we have with the existing investments that we have made is incredible, and we look forward to sharing more updates with you as companies make their plans public. It is good to take a few minutes to go back to what happened over 2025. I took over as CEO about four days from now to the day, a year ago. It really matters to understand where we are going forward. We have laid the groundwork to set Bakkt Holdings, Inc. up as a platform for exponential growth, especially with all of the advanced discussions and partnership opportunities that we have lined up, and I expect to announce these in the very near term. When I joined as CEO following the cooperation agreement with DTR in March, it was clear to me that we had to request patience from our existing shareholders because we needed to transform the business from the ground up, bring in the right people, upgrade the technology, and put in the right governance framework to set Bakkt Holdings, Inc. up for success in the future. On the leadership side, we brought in Ankit Kemka as the Chief Product Officer. He was the Head of Growth at Revolut and primarily focuses on Bakkt Agent. Philip Lord, who joined us as President of Bakkt International, is here in the crowd as well. When he saw the opportunity in Japan and realized how large and scalable it is, he requested that he become sole CEO of the Japan business and is now running that business for us. Thank you, Philip, for all that you did in the few months that you were at Bakkt Holdings, Inc. Finally, we are joined by the existing management team at Bakkt Holdings, Inc. that was there before I joined: Karen Alexander as the CFO, Mark DiNunzio as the General Counsel, and Nick Bays as the COO, who primarily oversees Bakkt Markets. We believe that we have now positioned the company—and the engineering team in particular—with the right domain expertise, execution track record, and alignment with where Bakkt Holdings, Inc. is really going forward. Finally, we revamped the board significantly. We added Lynn Alden, Mike Alfred, and Richard Galvin to the board. All three of them join us as independent directors, and we have Lynn and Mike in the crowd today with us. They all did their independent diligence, challenged our assumptions, and joined because they really believed in the strategy. We have now aligned the governance framework at Bakkt Holdings, Inc. in line with where we are going and the opportunity that lies ahead of us, which is one of the most important things we have done. At the end of the day, it is about people, and both at the board level and the management team level now, I feel like we are on the right path. With all of these governance and leadership changes, we have the right industry expertise and the oversight to ensure that we can deliver for our shareholders going forward. A quick reflection on the past 12 months: We did the leadership reset. We regained the focus as a digital asset infrastructure platform. We divested all non-core assets, completed the sale of Loyalty, and brought in the talent across teams to deploy the technology that we need to succeed going forward. We significantly simplified the capital structure, got rid of the Up-C structure, eliminated significant costs across the organization, recapitalized the balance sheet, and made it all debt-free. Finally, we brought in a whole new institutional shareholder base as a consequence of the turnaround and transformation story that was underway at Bakkt Holdings, Inc. We have done a full platform re-architect, positioning Bakkt Holdings, Inc. for scale through the DTR cooperation agreement, the launch of Global and Agent, and, hopefully, if shareholders approve, the DTR acquisition. I will now turn the call over to Karen Alexander to give us a quick overview of the financials. Karen Alexander: Hello, everybody. Good morning. I am Karen Alexander, the Chief Financial Officer at Bakkt Holdings, Inc. I am going to walk you through our fiscal 2025 financials and what they tell us about the business going forward. Just to set the context, as you have already heard from Akshay, fiscal year 2025 was a year of deliberate transformation. The financial statements that you are going to see reflect that. There was noise from divestitures, restructuring charges, and some of the one-time items that we have cited. I want to make sure we separate clearly from the underlying operating performance of the business going forward. Turning to this next slide, I wanted to focus on four data points in terms of our continuing operations in 2025. The first is total revenue, which was down 32% year-over-year from $3.4 billion to $2.3 billion. Now, thinking about what this number is: substantially all of this is gross transaction services revenue. It is the flow-through number that largely offsets the crypto costs that you see in operating expenses. The gross revenue decline had two drivers: as we disclosed earlier, we amended a commercial agreement with Webull in Q1 that reduced transaction volume, and we saw lower crypto trading volume overall and asset prices through most of 2025. If you compare that to the strong market that we had in Q4 2024 post-election, that is what is going on with this revenue component. The second metric is operating expenses, which again include the cost of crypto that is an offset to crypto revenues. You see that going down from $3.5 billion to $2.5 billion, so that tracks revenue. Drilling into this trend, if you look at OpEx excluding crypto costs, that came in at $156 million. That is up by $96 million, but it is important to note that the increase is almost entirely driven by approximately $65 million of stock-based compensation related to management equity grants during this reorganization. That is a non-cash expense that we expect to recalibrate moving forward. The loss from continuing operations is roughly flat year-over-year: a $98 million loss versus a $94 million loss. But when you strip out the nonrecurring stock-based compensation I previously mentioned, the underlying improvement is real. You are going to see that in the adjusted EBITDA. Adjusted EBITDA improved from a loss of $57 million to a loss of $33 million. That is a $24 million improvement year-over-year, and I think that is the most important trend on this slide. Adjusted EBITDA improvement is driven by approximately an $18 million increase in other income, primarily related to the derivative asset and equity method investment gains associated with Japan. There was also a $12 million reduction in SG&A. This validates that the cost structure is working and that the global strategy is already contributing to the income statement. Karen Alexander: Thinking about that as our continuing results, let us think through some of the legacy impact that we had in our 2025 financial statements that will go to zero or near zero in 2026. First off is the Loyalty divestiture. We recognized a $34.6 million net loss from discontinued operations, which is Loyalty. This is fully behind us. It does not repeat in 2026. We will have a clean continuing operations P&L going forward. The Up-C collapse: as Akshay mentioned, we felt it was important to collapse a structure that was creating ongoing drag. We incurred $26.9 million of TRA settlement costs. Most of that was paid in equity, but it was a combination of cash and equity. That will not recur in 2026. Restructuring expenses included $5.3 million of severance and platform transition costs. This is also nonrecurring. All in, what you see for the one-time legacy impact for 2025 was $66.8 million. Every dollar of this is either nonrecurring or already behind us. The headline is this: we start fiscal year 2026 with a dramatically cleaner P&L. The noise goes away, and what remains is the core operating business. So that was the cost—let us think about what that bought us. As I mentioned, the $66.8 million was deliberate. Every dollar was spent to clear a legacy drag that would have constrained the business going forward, and it does not repeat. On the three eliminated items: that $34.6 million drag in fiscal year 2025 from discontinued operations goes to zero. Loyalty and Custody are fully wound down with no recurring P&L impact. As Akshay mentioned, full-term long-term debt is fully extinguished. We have no debt service obligations or covenants constraining the strategy. Noncontrolling interest has been zeroed out with the Up-C collapse in November. Now we have one class of equity, one cap table, and full shareholder alignment. As a current snapshot into the business, we have about $88 million of cash and restricted cash as of February 2025. We ended 2025 with approximately $27 million of cash, and, as we noted, we raised $48.1 million from the February registered direct offering, plus restricted cash. In closing, we have sufficient liquidity to execute across all three growth engines we talked about today. The transformation cost was real, and it is fully behind us. We will now open for questions. Cody Fletcher: Testing. Testing. Thanks, everybody. Any questions from the audience? Mika is roaming around with a microphone. If you have any, please raise your hand, and then we will send her your way. Please introduce yourself and ask your question. Any questions? Alright. There we go. Dylan Husslin from Roth. I did not see any come through for the inbox. Thank you. Morning. Dylan Husslin: I guess, could you talk about distribution partners—what does the pipeline look like, how do you get embedded in there, and then how many end customers do they have? How do you go about going from where you are now to a much bigger base of people you are feeding your platform into? Akshay Naheta: We talked about the telco partnerships, and, obviously, our focus is the U.S. and Europe. As Ankit mentioned, there are two to three large-scale telco players in each market, and we are partnering with one of the top two or three telco players in each of those markets, which gives us a very good customer acquisition engine going forward. On the additional distribution partnerships, from a Bakkt Agent perspective, we are looking at very large networks where you have hundreds of millions of users either on the platform or already having touchpoints with these networks. The way our technology works is plug-and-play. We have done all the work. We built the infrastructure. For you to be able to launch something yourself is literally: you skin the app and launch it. Or, if you have an existing platform, you embed our chatbot within it, and you can run on our regulated rails with all of the infrastructure and piping at the back to launch a fully fledged fintech platform. We are in very advanced discussions on some category-defining deals, and, in the very near term, I look forward to updating you once we are ready to do so in accordance with SEC regulations. I hope that answers your question. Cody Fletcher: Thank you, Dylan. Any other questions from the audience? No? And Marni from Macquarie as well. Marni Lysart: Good morning. This is Marni Lysart from Macquarie. I guess it would be good, when we think about the pipeline, to get a bit more color on how you navigate the regulatory landscape. You have called out trying not to have the operating structure encompassing subsidiaries. How do you approach that as you evolve? Akshay Naheta: The regulatory landscape is a two-part vector. One is Bakkt Global: these are independent companies in their own jurisdictions, and they follow the regulations and laws in those local jurisdictions. Bakkt Holdings, Inc. does not have anything to do with what is happening in India or Japan, in the sense that those companies focus on the local regulatory environment. That is straightforward and clear. In terms of Bakkt Agent and Markets, we have the pan-U.S. licensing coverage. Similar to our brokerage-in-a-box business, which we have been doing for over five years—even before my time—we have leveraged that business model, which has been approved by regulators, and transferred it over to the Agent side, which is almost the same thing: you on-ramp and off-ramp. The only capabilities that you are adding on top are cross-border payments. Ankit talked about our capabilities to do near-instantaneous settlements in over 57 countries, which I expect will get to over 90 countries by the end of the year. There, we work with local regulated financial institutions—banks and payment service providers—who have their own local requirements. They conduct KYC/AML from their perspective. We ensure that we cover those on our side, and, so far, we have successfully done it for almost 57 countries. I do not see any problems with us getting to 90 by the end of the year. Does that answer your question? Marni Lysart: Yes, that is clear. Thanks for answering my question. Cody Fletcher: We have one more here. Thank you. Jared Watson: Good morning. Jared Watson from Retail. Thanks for taking my question. Akshay, you have talked previously about wanting Bakkt Holdings, Inc. to compete in the public markets. Has that and the capital you raised and the balance sheet been a competitive advantage in partnership discussions, especially when some of your competitors are private? Thank you very much. Akshay Naheta: It has made a big difference because, when I joined Bakkt Holdings, Inc., the big issue was that people were concerned about having their deposits or customer deposits sitting at Bakkt Holdings, Inc. Even though it is all segregated and is held within our trust, and we cannot commingle funds or use them, recapitalizing the balance sheet has helped materially with these customers and partners. From an ongoing business perspective, no one wants to do all of the integrations with a company and then face uncertainty around the financial stability of the business going forward. That has been a big driver of instilling confidence and helping us drive an active pipeline on the B2B side. As we go into stablecoin on-ramp/off-ramp payments, you will see it unfold pretty exponentially as we go through this year because the volumes on pure stablecoin on-ramp/off-ramp cross-border payments are in the billions. Even though you do not take any financial risk or hold customer funds because it is instantaneous, people want to make sure that you have a strong balance sheet to have the confidence of working with you as a counterparty. So, yes, it has helped tremendously. Thanks. Cody Fletcher: I have one more from Darren at home. Thank you, Darren. For Akshay: given you founded DTR, can you speak to why it was necessary to fold it into Bakkt Holdings, Inc.? Also, double-click on the benefits that DTR brings to Bakkt Agent, near term and long term. Akshay Naheta: I will have Ankit and Nick answer in a little more detail so you hear it from the people who are executing and touching the technology day to day. Just to rewind, it was always the intention for DTR to be folded into Bakkt Holdings, Inc., subject to shareholder approvals. The transaction was put together in March. I joined as CEO, and I was not sure, given all of the clouds around Bakkt Holdings, Inc. with the Loyalty business—I did not have any experience running a Loyalty business or a call center business. Until that business was hived off, I did not know if this would be the right focus, because my focus is fintech and the changing financial landscape going forward. It made sense for both companies to get into a cooperation agreement-type partnership. Now that the Loyalty business is behind us, and given all of the opportunities with the distribution pipeline that we have in very late and advanced stages, the independent committee and the board thought that it would make economic sense for these companies to come together to provide those services in a seamless manner to end customers. Nick, do you want to add color on the Markets side, and then Ankit on Agent? Nick Bays: My pleasure. Now that we are done with the prepared remarks, I can tell you how exciting it really is to have DTR in the fold. Working in the space of our Markets business, we were primarily focused on spot trading. That business is durable, resilient, and still valuable. But what we have seen in the space, and in talking to prospects over the last couple of years, are questions around stablecoins, payments, and cross-border. They saw our regulatory footprint and said we could power them. We were trying to figure out how our existing technology could power them, and there were a lot of rough edges. It was difficult to convince prospects to partner with us on that capability. Through the DTR commercial arrangement over the last nine months, we have already done integrations to help power these things. We are ready to go and are already ready in the U.S. to offer that capability. Now, when those prospects come to us, we do not have to turn them away, which is really exciting. We can also collapse a lot of overlapping technology, with synergies that let us consolidate onto a more modern technology stack. That has been really transformative, and we are looking forward to taking that out to market in the next couple of months. Ankit, do you want to talk about Agent? Ankit Kemka: The Bakkt Agent product is built on the tech stack from DTR. It is built from the ground up. Two examples: The Zyra app, which is a global money movement solution, is using everything that DTR has built and then adding agents on top. It is fully integrated. Second, the Everyday Money app: if you remember the modular tech stack that Remy showed, that is exactly how we have built the Everyday Money app. We have taken different product features—each built independently and modular—and they all connect for the fintech consumer platform we are building. It has been instrumental, and the way we have built this is very scalable. It can work across geographies and across platforms. It is pretty cool stuff. Cody Fletcher: We probably have time for one more here from Paul Golding, also at Macquarie. He is asking: how are you viewing the competitive landscape around stablecoin enablement and your relative positioning? Akshay Naheta: There are two segments: Bakkt Markets and Bakkt Agent. On the Bakkt Markets side, my view is that the architecture of payment systems is going to change dramatically over the next few years. You are already seeing some very large M&A transactions happen. We are aware of what our competitors are doing in the space, but the scale of the opportunity in payments is so large that doing tens of billions of dollars of volume is a drop in the ocean given the $44 trillion of cross-border payments today. Once we have all of the capability that Nick talked about within the Bakkt Markets platform, you will start seeing us sign larger clients. We are already seeing very good results with Nexo. I think Zoth will also go live over the next month or so, and the volume will scale rapidly now that we have fully integrated the DTR tech stack on the Bakkt Markets side. On the Agent side, competition boils down to distribution. Providing products in a cost-efficient manner—we have done that through our tech stack, with very little human intervention throughout the stack, from onboarding to accounting to compliance to money movements to treasury management, and so on. You go to any neobank or fintech out there—Chime, Revolut, and others—and with Ankit being at Revolut for so many years, we have a lot of insights into that space. It is about distribution partnerships. We have taken a thoughtful approach where we do not have to spend hundreds of millions of dollars like these companies did and be loss-making for years. We will be able to scale rapidly to a large number of monthly active users without spending that kind of money. That is why, when we launch with the right distribution partners in the very near term, MAUs will be one of the metrics to follow closely. Cody Fletcher: Thank you. I wanted to hand the mic over to a member of the board, Mike Alfred. Would you like to say anything? Okay. That is all the questions, then. I will pass it back to Akshay for closing remarks. Thank you. Akshay Naheta: In closing, 2025 has been a year where we have laid the groundwork. There was a lot of heavy lifting. It was not easy along the way, especially with divesting the Loyalty business. We have stripped away the noise, rebuilt the foundation, and I believe that Bakkt Holdings, Inc. is now well positioned to compound long-term shareholder value. Ninety percent of the structural work is behind us at this stage. We are also at a very interesting time in the world. Periods in which the architecture of money changes are very rare, and I believe we are in one of those periods today. I thought we were in that period three years ago when I left SoftBank to start DTR. There were structural forces shaping my thoughts around where financial infrastructure was moving. One was geopolitics: we had many years of peace, and with the Ukraine–Russia war starting in early 2022, that landscape changed dramatically. Over the last few weeks, it has changed again. The second is global debt levels: even back in 2022, fiscal debt levels were at all-time highs. You have not seen that level of global debt in peacetime. Given the global debt levels across major economies and the geopolitical backdrop, this will reshape the architecture of money. These new digital systems—primarily stablecoins—are going to redefine how value is stored, transferred, and programmed. The growth we are seeing in artificial intelligence will be a dramatic driver in how the software stack is structured in all financial institutions going forward. We have positioned Bakkt Holdings, Inc. at the center of it all, and we do not have any legacy technology debt to tackle this because we built everything from the ground up. Bakkt Holdings, Inc. sits at the intersection of these incredible changes, and I believe that we will be able to take significant advantage of the opportunities ahead. Looking ahead into 2026, we have built significant momentum. We have announced, or are very close to announcing, some very large partnerships. The discussions are progressing. We are in advanced conversations, and we expect aggressive growth at Bakkt Agent through the adoption of monthly active users on the platform. We have a clear line of sight. What lies ahead is a period of disciplined execution. We have the right team in place to do that, and this will translate into long-term value for shareholders, I believe. I thank our existing shareholders before I joined the company for their patience, and I believe that, if they stay on with us, they will be rewarded along with us for the journey ahead. Thank you so much for your time today. We appreciate you joining us in person today. Thank you.
Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, I would like to welcome everyone to Adecoagro S.A.'s 2025 Results Conference Call. Today with us, we have Mr. Mariano Bosch, Chief Executive Officer; Mr. Emilio Gnecco, Chief Financial Officer; Mr. Renato Junqueira Pereira, Sugar, Ethanol, and Energy Vice President; and Ms. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer section. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro S.A.'s management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Adecoagro S.A. and could cause results to differ materially from those expressed in such forward-looking statements. I will now turn the conference over to Mr. Mariano Bosch, Chief Executive Officer. Mr. Bosch, you may begin your conference. Mariano Bosch: Good morning, and thank you for joining Adecoagro S.A.'s 2025 Results Conference. Today, we are presenting a larger, further diversified, and more resilient Adecoagro S.A., but with the same DNA: being the lowest-cost producer. Upon acquiring Profertil, we became the largest producer of urea in South America. This new operation marked a transformational moment for us as it broadened our production capabilities, more than doubled our cash generation, and reduced earnings volatility by incorporating a stable, consistent, and already cash-generating business. We are adding a unique asset in Argentina to our well-diversified agro-industrial portfolio, with the capacity to expand its earnings and cash potential by leveraging Argentina's largest natural gas reserves. As we rely on natural gas to produce urea, greater extraction will translate into further supply at more competitive prices. We also have a huge market opportunity of reaching a wider demand in South America that today must rely on imports from faraway origins such as the Middle East. Due to the ongoing international conflict, urea prices have peaked and we are very well positioned to capture this upside, as most of our production is still open to market prices and our gas supply remains secure and at a fixed price. The acquisition of Profertil would not have been possible without the continued support of our shareholders. We raised $300 million in new equity anchored by Tetra, our controlling shareholder, further reinforcing their commitment to the company's long-term strategy. Given this incorporation, we decided to simplify the way we view our businesses and move to three segments: the Sugar, Ethanol, and Energy business; the Fertilizers business; and the Food and Agriculture business, all of which Emilio will detail shortly. Now, looking back to 2025, it was a challenging year for the agribusiness sector as commodity prices reached the low end of the cycle. Today's prices remain under pressure, but with a focus on efficiency and being the local producer, we will be able to continue navigating the cycle. Higher crushing in Brazil will drive further cost dilution, which will partially mitigate the lower sugar prices. In Argentina and Uruguay, better productivity will turn into margin expansion and greater results. On top of this, we expect a normalized and full year of operations from the Fertilizers business, driving further cash generation. To conclude, I would like to acknowledge all the people in Adecoagro S.A. for their hard work in this tough context. I am convinced that if we remain focused on being the lowest-cost producer in each of our sustainable production models, we can further expand our earnings potential. I will now turn the call over to Emilio to walk you through the numbers for the year. Emilio Gnecco: Thank you, Mariano. Good morning, everyone. Before entering into the results of the year, I would like to make a preliminary observation with the intention to provide more clarity in the understanding of the numbers we are presenting today. Following the acquisition of Profertil on 12/18/2025, our consolidated interim financial statements incorporate Profertil's income statement only for a 13-day period under a new business unit named Fertilizers. Additionally, in an effort to update and simplify the way we view our business units, from January 2026 the company will change the business segment reporting structure as follows: Segment number one, Sugar, Ethanol, and Energy business as previously known; segment number two, the Fertilizers business, which includes the manufacturing and commercialization of fertilizers; and segment number three, Food and Agriculture business, which reflects an integrated business focused on agriculture and food production that in the past was presented through three separate verticals: Crops, Rice, and Dairy. Please turn to page four where you can see how the acquisition of Profertil supports our scale. On a pro forma annualized basis, consolidating the 2024 and 2025 results of our Fertilizers business, Adecoagro S.A. increased its size from a base of $1.5 billion in recurring revenues and a mid-cycle adjusted EBITDA of more than $400 million and cash generation of $150 million to above the $2.0 billion sales threshold with the potential to generate $700 million in EBITDA and to double its cash generation. In addition, the acquisition further diversifies our portfolio, as illustrated in the pie chart at the top right, thereby strengthening the company's ability to perform across cycles. Please turn to page five of the presentation. As we have been anticipating over the previous quarters, 2025 was a challenging year marked by lower commodity prices, mixed productivity, and higher costs in U.S. dollars, which resulted in a year-over-year decrease of 2% in sales and 38% in adjusted EBITDA. On top of that, Fertilizers' financial results were affected by two events which resulted in approximately 90 days of downtime: first, Profertil carried out the largest scheduled turnaround of its plant, resulting in a full shutdown of 54 days starting on October 16 and ending on December 8, shortly before our acquisition of the company; and second, a 31-day downtime due to the flooding of a third-party gas distributor that interrupted delivery of gas to the plant. As a result, again on a pro forma basis, assuming full-year results of our Fertilizers business for both 2025 and 2024, revenues were down 6% compared to the prior year, whereas adjusted EBITDA declined by 35% year over year. We expect a full recovery in the Fertilizers business’ adjusted EBITDA as operations return to normalized levels. At Adecoagro S.A., we have always leveraged low-cost production and product and geographic diversification to mitigate commodity price volatility and adverse weather events—two inherent risks within the agribusiness segment. With the incorporation of the Fertilizers segment, we have moved to three equal-size revenue streams and a more diversified and less volatile cash generation across our geographies and products, as shown in the pie charts at the bottom of the slide. Regarding the acquisition of Profertil, we would like to make now a brief summary. Please move to page six of the presentation. We closed the transaction during mid-December for a total consideration of $1.1 billion for the 90% equity interest. From this amount, $676 million had already been paid by December 31, with the remaining balance to be paid during 2026. As of today, the outstanding balance is approximately $50 million that will be settled before the end of this month. The transaction was financed through a combination of cash balances in the amount of $400 million, approximately two new long-term debt facilities of $200 million each with a seven-year tenure, two-year grace period at attractive rates, and an equity issuance of $300 million, marking Adecoagro S.A.'s return to the public markets since its IPO in 2011. At the same time, we continue to invest in organic growth projects throughout our operations as outlined in the box on the right-hand side of the slide. Please direct your attention to page seven where we present our debt profile. Our net debt and net leverage ratio increased compared to prior periods, explained mainly by the financing of the acquisition of Profertil and the lower results of the year. On a pro forma basis, net debt reached $1.5 billion, whereas our net leverage increased to 3.3x compared to 1.2x in 2024. Despite this, it is worth noting the company's full capacity to repay short-term debt with its cash balance. Most of our indebtedness is in the long term, and its currency breakdown matches that of our revenues, mitigating currency risk. Going forward, we intend to reduce our leverage ratio through higher expected adjusted EBITDA generation, mainly from our Fertilizers business, together with a revision of our capital allocation strategy. In this sense, we have reviewed our shareholder distribution program in light of our capital allocation priorities and the lower results generated. Accordingly, our Board of Directors approved the distribution of $35 million in cash dividends for 2026, subject to approval at our Annual General Shareholders' Meeting. Moving to the financial and operational performance of our business units, let us start with the Sugar, Ethanol, and Energy business on slide nine. The weather during 2025 was characterized by above-average rainfall, which reduced the amount of effective milling days and therefore limited our ability to reach a crushing volume in line with 2024. Nevertheless, the cane left unharvested at year end benefited from these favorable rains, showing excellent yields and is currently being harvested under our continuous harvest model while maximizing ethanol production. Cane productivity recovered significantly during 2025, as seen on the graph at the top left of the slide, positively impacting the mark-to-market of our biological assets on greater expected yields for the upcoming quarters. In terms of mix, we achieved a 72% ethanol mix during the quarter and a 58% mix for the full year, as ethanol prices substantially improved during 2025, becoming the product with a better margin. Although we maximized ethanol and largely increased the amount of volume sold at greater prices, annual sales remained below the prior year on lower global sugar prices and volumes sold. Despite the declining milling, our cash cost—which reflects how much it costs us to produce one pound of sugar and ethanol in sugar equivalent—remained unchanged at 12.8¢ per pound. This is explained by a more efficient upgrade of our machinery, which in turn reduced our annual maintenance CapEx, together with an increase in tax recovery given higher ethanol sales. Overall, adjusted EBITDA for the year ended at $292 million, below 2024’s performance. Looking at 2026, we foresee a low double-digit growth in our crushing volumes due to better productivity and a full year of ethanol maximization given the current price scenario. On the following page, 11, we present for the first time the Fertilizers business. As previously mentioned, the acquisition was concluded in mid-December, and therefore, our financial statements only include Profertil’s income statement for a 13-day period. For comparison purposes, we present Profertil’s full-year results and its main drivers. In 2025, as we described earlier today, the fertilizer plant experienced two major stoppages resulting in 90 days of downtime, which adversely affected results. Net sales and adjusted EBITDA declined year over year as fewer operating days throughout the year reduced production volumes, despite higher prices for both urea and ammonia. For 2026, we expect a full recovery in adjusted EBITDA generation driven by normalized operations compared to the prior year and a positive market price outlook. In the case of our farming business—now Food and Agriculture—2025 results were pressured by a combination of lower commodity prices, mainly in rice and peanut, uneven yields, and higher costs in U.S. dollar terms. The top line of this business remained in line versus the previous year due to higher volumes sold, which in turn partially offset declining prices, as seen on slide 13. Nevertheless, adjusted EBITDA was negatively impacted by the increase in costs and an uneven performance at the farm level. Looking ahead, we have implemented cost initiatives to improve margins, including a 22% reduction in total planted area through the renegotiation of our lease agreements. We have also increased the share of rice varieties due to more resilient prices, while also leveraging our production flexibility to produce dairy products for the domestic and export market based on marginal contribution. Before concluding this presentation, I would like to share a few brief closing remarks. Over the years, Adecoagro S.A. has demonstrated a strong track record of delivering consistent results and generating cash flow notwithstanding commodity price cycles and adverse weather events. With the incorporation of the Fertilizers business, we have effectively doubled the size of the company, further enhanced the security and visibility of our cash generation, and positioned Adecoagro S.A. in a new league in terms of scale and relevance. We acquired a state-of-the-art asset and a cash-generating business with immediate earnings contribution and limited execution risk. As a result, we are today a significantly stronger and more resilient company with enhanced diversification and a more robust earnings profile. We are very enthusiastic about the company we are building and the long-term value that this transformation is expected to deliver for all of our stakeholders. Thank you very much for your time. We will now open for questions. Operator: Thank you. The floor is now open for questions. If you have a question, please write it down in the Q&A section or click on “raise hand” for audio questions. Please remember that your company's name should be visible for your question to be taken. We do ask that when you pose your question, you pick up your headset to provide optimum sound quality. Please hold while we poll for questions. Our first question comes from Guillermo Gutia with BTG Pactual. Your microphone is open. Guillermo Gutia: Hi, Mariano. Good morning. So, two questions from our side here, please. The first one is on Fertilizers. You are now starting to operate Profertil at a time when urea prices are actually soaring. So we just want to hear a bit on the fertilizer market today. How are you seeing it? If you expect these higher prices to impact industry volumes in a meaningful way, or we may actually see this price increase maybe flow more directly to Profertil’s margins. So that is the first. And the second one is on the Sugar and Ethanol business. You are now estimating a double-digit growth in sugarcane crushing for this crop year, something that should be largely helped by agricultural yields. So we just want to know how you are seeing the unitary cost going forward, especially since you are going to have a higher dilution from the stronger volumes, but fertilizer prices are also increasing. So those are the two, please. Mariano Bosch: Thank you, Guillermo, for your question. Number one, I am going to take the question on the Fertilizers business, and then Renato will take the specifics of Sugar and Ethanol. On the Fertilizers business, of course, today the level of prices has increased because of the conflict, and that increase is between 30% to 40%. But before that, fertilizer prices were also good prices for us and for our business model. And today, how these higher prices on urea transform into higher margins for us—that difference goes directly to the final number, to the EBITDA number, or to our cash generation, because all our costs are fixed. Our gas contract, which is 60% of the cost of producing urea, is already fixed, and we have fueling contracts until 2027. So that is pretty easy to calculate and to understand what is the impact of that increase in prices. Having said this, we produce per year, or we should be producing on average, 1.3 million tons per year. From this 1.3 million tons, we have already produced and sold during January and February around 200,000, so 1.1 million are still open to this increase in prices. And we sell almost every month the amount that we are producing. There are some months that we sell more because of the cyclical acquisition from the farmers, so during July, August, and September we sell more than during February and March. So if the prices continue at this level, that 1.1 million tons that are still available for sale will impact directly our final results. So that is basically how we see this, and we see fertilizers for this year at relatively high prices. We have this view that even with the conflict finalizing, fertilizer prices will be impacted for the whole year with the most probability. And then going to your second question on the Sugar and Ethanol business, I will ask Renato to answer that question. Renato? Renato Junqueira Pereira: Hi, Guillermo. We think that our cost can be reduced in approximately 10% to 15%. I think one of the points you just mentioned is the dilution factor. As was mentioned, we had a lot of rains in the last quarter of last year, which improved a lot the outlook for the sugarcane for this year. That is why we are having a very intense first quarter in terms of crushing, producing only ethanol at high prices. So that is the dilution factor. Then, if you go to other points that impact our cost, we think that labor should increase close to inflation. Fertilizer: we have already fixed and bought 70% of our annual need, so we do not see impact until at least mid-year. And diesel, of course, depends on the increase of price of Petrobras, but we have the benefits of the increase of price of gasoline. Also, leasing cost should be lower because of the consequent prices. And more important, we have been working a lot in adjusting our efficiencies, especially in the agriculture part. We have been very disciplined in measuring the efficiency of each machine in the field, so we have reduced the number of equipment to harvest the sugarcane, to plant the sugarcane, so we are doing the same thing with less equipment, which represents less cost. So we are very optimistic we are going to have a good year in terms of cost. Guillermo Gutia: Very clear. Thank you very much, guys. Operator: Our next question comes from Gabriel Baja with SIT. Your microphone is open. Gabriel Baja: Hi, Adecoagro S.A. team. Thanks for taking my questions. I have two. Mostly, it is a kind of a follow-up from the last question. The first one is about the Fertilizers business. When you think about this new scenario for urea and ammonia price, given the fact that you have a really interesting position in the gas price, and I think China, how should we think about the commercialization strategy for the year, given this much better scenario, but the level of certainty that you have at this point makes this kind of decision more, let us say, challenging in this context. So I would like to understand this strategy for the year. The second point is about another commercialization strategy, but in ethanol. The same case here. You see a really tough situation right now for gas and the price for diesel in the country. You are seeing, even though Petrobras has not changed the gasoline price, gasoline prices increasing in the last two weeks, which means that it seems to be more supportive for ethanol price during this next crop season for the year. So to take advantage of this stronger scenario for ethanol price, how should we think about the mix and the commercialization strategy for ethanol going forward from your point of view? So those are the two questions. Thank you. Mariano Bosch: Hi, Gabriel. Thank you for asking your question. Renato, do you want to answer the second question on the gasoline prices, etc.? Renato Junqueira Pereira: Okay. So we are more optimistic about the ethanol situation now, that the gasoline price will have to increase. Actually, it is already increasing. In the short term, the prices are very good because the level of inventories is very low. Actually, it is 25% lower than a year ago. That is why, under our continuous harvest model, we are crushing a lot in the first quarter and only producing ethanol. So we are selling ethanol right now close to 20¢ per pound equivalent in Mato Grosso do Sul. When the season really starts, which is mid-April, we believe that the supply of ethanol will increase, something between 3 and 4 billion liters. But part of this is going to be consumed by the lower stocks that I just mentioned. The other part is going to be consumed by the fact that E30 is going to be effective since day one, different from last year. And the other part of the volume is going to be absorbed by a higher market share of hydrous ethanol. If you consider a parity at the pump at 60%, it is still an ethanol equivalent to 16.5¢ per pound in Mato Grosso do Sul, which is still better than sugar now. So that is why we think that we will be maximizing ethanol the whole year, and, of course, with a better price because of the situation of gasoline that you asked. Emilio Gnecco: Thank you, Renato. Mariano Bosch: Gabriel, and on the Fertilizers business and our strategy on commercialization, in this case you have to take into account that we always follow international prices. South America, this region, imports millions of tons of urea per year, and the region only produces 1.5–1.7 million tons per year. So the net imports are huge. So always the price is determined by international prices. Having said this, most of our strategy is selling domestically within Argentina, because Argentina, in particular, also imports half of the needs that it has per year. So our strategy is to maximize the sales within Argentina but always pricing at import parity. So that is the concept on how we price and all our strategy. And then, as we are producing every month more or less the same amount, and the needs of urea are different—there is a peak in May and another peak in August, September, October of the need that urea has at the fields or in the farms—part of the commercialization strategy includes delivering into the storage capacity in the interior of the different places in order to have this urea ready to be used, strategically. So that is basically how we sell the urea that we are producing all year round. Gabriel Baja: Thank you, team. Very clear. Operator: Once again, please type in the Q&A or click on “raise hand” for audio questions. Our next question comes from Isabella Simonato with Bank of America. Your microphone is open. Isabella Simonato: Thank you. Good morning. Thank you. My question is a little bit on the use of capital. As you said, you are much more leveraged than a year ago, and we have a very different cash flow stream profile, and I understand that this higher urea price should accelerate that. So I was wondering how first we should think about CapEx for 2026 and also cash being returned to shareholders. Thank you. Mariano Bosch: Thank you, Isabella. As you know, we have been always very disciplined on this allocation strategy. So with the acquisition of the Fertilizers business, we have higher leverage to what we have always expressed that is our ideal leverage in terms of times EBITDA. So around 2x is where we would like to be and where we are working to be. But having said this, when there is something very specific, very attractive, as it was the acquisition of the Fertilizers business, and we get into and we can move into this level as we are today, we are very confident that we are going to be able to go to the leverage where we feel comfortable pretty quick, and that is what we are working on. But as Emilio explained, we are continuing with our dividend policy, so we are continuing to distribute in cash dividends $35 million that will be distributed equally in May and November, as we have been doing in the past three or four years. And also, we are analyzing interesting growth projects. Each one of these three lines of business has very attractive and specific growth opportunities, most of them organic growth opportunities and some of them inorganic. But we are always analyzing that. But we will continue to be very disciplined with this general concept of the capital allocation, where some is for returning to shareholders, some to continue to grow, and also to go to the levels of debt of 2x, or around 2x, that is where we feel more comfortable. Isabella Simonato: Thank you very much. Operator: Our next question comes from Matheus Enfeldt with UBS. Your microphone is open. Matheus Enfeldt: Hi, everyone. Thank you for the time and for taking my question. My first question is sort of a follow-up from the previous question, which is: I understand that the near focus is on the deleveraging story, which might be relatively quick given what we are seeing in urea and ethanol prices. So thinking once you do deleverage in two, three years, what is the next growth avenue that you really view from here? Is it expanding more sugarcane crush? Is that a possibility? Or potentially expanding more the capacity in Profertil? And also if there could be M&A in the pipeline once leverage really drops? So that is my first question. And then the second question is: I understand that there is a change in the Food and Agriculture segment on how you perceive the business. It is going to be, I do not know, 30% of your revenues, but a relatively small contribution to the overall business, but with a lot of complexity. I think ten different commodities that you need to follow. So I am just wondering how you think that these assets fit into Adecoagro S.A.'s midterm portfolio—if there are ways to potentially monetize better the asset, or if you have the appropriate scale in the farming business to really run, or if you could think of JVs or some partnerships. Just on how you think that this fits into your portfolio midterm. Those are my questions. Thank you. Mariano Bosch: Thank you, Matheus, for your question. I am going to start with the second one and go into the first one. We feel very comfortable with the three business lines that we have today. We think that the Food and Agriculture business is something that has, as you mentioned, sales in that level, and we see a lot of opportunities to continue improving there. And when we think on the margins in terms of EBITDA, that is directly to the cash generation. So we feel very comfortable and enthusiastic on how that business is being transformed into a more cash-generating business. So we do not see anything strategic there on a partnership or anything specific there. We continue to see a lot of advantages in the domestic consumption business, etc., that are improving and working very well. There are some new products that are adding value, and that is very compelling in terms of what is going on there. But having said this, and going to the first part of your question on what is within the most attractive growth avenues that we are seeing today, the Sugar and Ethanol has always been very consistent, and we have this organic growth that we have been talking about and that we have been always analyzing, and we expect that to continue to be there as the returns or the marginal returns are continuing to be attractive. But when we explained to the market and when we were so enthusiastic on our Fertilizers business, it is because we are seeing strategically in South America a huge opportunity in terms of urea production. Argentina has one of the largest gas basins in the world and will become a very important exporter of gas. So one of the big opportunities that we see is to become a larger producer of urea. So, of course, we are analyzing that opportunity of building a new plant, duplicating the plant—what are the growth avenues that we are looking at there on the Fertilizers business. These are investments that are huge in terms of the amount of capital required, and are also very relevant in terms of the engineering of that plant. The time that it takes to build it—it is a three-year project to build a plant like we have today at the minimum, and when you include everything, it is always more of four, or sometimes it is a five-year project to build a plant like what we have today. So that is a huge project, very relevant. We have nothing to announce today rather than that we are very enthusiastic on analyzing deeper the project, the location, the amount of gas, and what is the exact amount of gas, etc. So we can also think about this regime that Argentina has, this special program with some benefits for large investments like this one. So these are the type of potential projects that could appear in the next year or so. Matheus Enfeldt: That is super clear. Thank you. Operator: Our next question comes from Lucas Ferreira with JPMorgan. Your microphone is open. Lucas Ferreira: Hi, guys. Two questions. On the Fertilizers business, how to think about the production cost per ton of urea and ammonia this year? Since last year, given the stoppage, I think not only you lost the volumes, but maybe fixed-cost dilution was impacted. So assuming the plant running full-year, and the gas prices you have fixed, what is the cost per ton, more or less, that you imagine for this business? And then, in the long term, how to think about this business? Right now you have fixed costs—obviously, this is a great thing because prices are going up, but it could have gone the other way. So my question is how to think about this business. Is this a business where we will see very high operating leverage, so you work with fixed prices? Is that going to be the business model going forward, or when the contract expires, would you be more spot? Just to understand how to model this long term. And if I may, on the farming business, maybe if you can quickly comment on the outlook for next season. I know it is maybe too early to say, but any improvements you are seeing for the business? And I think you are close to the administration—Argentina administration. Any views on any clue you have on if Argentina, with all the reforms passing, will be able to lower further the export taxes? How to think about that? Thank you. Mariano Bosch: Thank you, Lucas, for your question. On the second question, in terms of the farming business, in Argentina with this new administration, everything is improving. We are very optimistic on that, and that is why we feel comfortable that with this Food and Agriculture business in general, being able to compete domestically and in the export market will also be very positive. The taxes are being reduced. So that is a very relevant improvement that is going on within Argentina and that will certainly help this business to continue to improve. And that is why I mentioned before that we are still optimistic on this farming and agriculture business for Argentina and Uruguay in the coming future. Going to the first question and regarding the fertilizer and the urea and how we think about the prices, again, this is a very long-term view. This is within our DNA, as we were saying at the beginning. We believe we are the lowest-cost producers in the region of urea when we think on replacing all these imports of 10 million tons of urea that are happening every year in South America. We feel very comfortable that we are within the lower-cost producers, and we have analyzed all over the world the different plants that are producing urea, the different prices of gas, etc., and we are very confident on being the lowest-cost producer. What is this cash cost of producing urea today with this level of 1.3 million tons to be produced in the plant—that is what we think that we can produce stabilized—is within $180 to $190 per ton of urea. And, as you have seen, the prices are much higher, and we do not think that level of price is possible in order to compete with urea in this region. So we are very confident to be the local producer in terms of producing urea; that is why we got involved. We were not seeing that the prices were going to be at this level as we are today. We were always thinking on this long-term view that we have when we get involved into a business. Lucas Ferreira: Perfect. And just to follow up, the $180–$190 includes SG&A as well, so is it kind of EBITDA cost? Mariano Bosch: No, no. I am talking about cost of product. I am talking about the cash cost. Lucas Ferreira: Okay. Thank you very much. Operator: Our next question comes from Julia Rizzo with Morgan Stanley. Your microphone is open. Julia Rizzo: Hi. Good morning. Thank you for picking up my question. I would like to hear your thoughts on what you know about the global fertilizer, especially urea production—the dynamics within supply cuts around the key regions close to the Middle East. If you know about anything about supply cuts or supply reduction, and how that can affect or last in the market. And derivative to that is: as the planting season is starting in the Northern Hemisphere, especially Europe and India, and I think, less likely, the U.S., do we know if they have enough urea supplies for this season? Can you give us a sense of the supply-demand disruption that we could be seeing now in urea, given the war and Strait of Hormuz situation? Mariano Bosch: Hi, Julia. Thank you for your question. Of course, we are following this very closely. There is a lack of urea that is very relevant. Thirty percent of what comes into South America comes from the Middle East and through the Hormuz Strait. So there will be a lack of supply, and that can impact even further what has already been impacted. And also, there is a time needed in order for that to reach—60 days at least since you ask for the urea until it comes to be used. So, yes, it is going to be difficult to supply the whole needs for South America and for the Americas in general. The Americas are importers of urea globally. Julia Rizzo: So you are saying that it could be a supply shock? Given current inventory levels on the ground, I do not know how much the industry holds inventory for the next season. Mariano Bosch: Inventories are very low. The inventories are very low. Julia Rizzo: In South America, but in the Northern Hemisphere, are inventories enough? The Northern Hemisphere, let us say? Mariano Bosch: The Northern Hemisphere is also under pressure in terms of being importers of urea. I do not remember exactly how much they import, but they import like 5 million tons. Renato Junqueira Pereira: Yes. Julia Rizzo: And usually, they do not have enough inventories, like a three-month, four-month inventory. I do not know what is the level—inventories in the chain—what usually works. Mariano Bosch: In China, it is relatively low. Julia Rizzo: Okay. Interesting. So, yes, that could mean that prices will stay higher for longer until supply gets back on track, right? Mariano Bosch: Of course, we do not know, but that is a clear possibility. Julia Rizzo: Okay. I have another question on sugar. If you could help me: I would like to hear your thoughts. Recently, we saw a decline in—or a revision lower from—the Asian harvest. We have Brazil, of course, naturally going max ethanol. We have oil prices reaching over $100—actually, futures even higher. Why do you think it is driven—it is kind of putting up this pressure on sugar prices compared to other commodities, and even a strength in the fundamentals? And what do you see that turning? Mariano Bosch: That is a good question, Julia. We also do not clearly understand. Renato just explained, the sugar production in Brazil, which is one of the main producers worldwide, is going to be maximizing ethanol. So we expect that to be also transferring to sugar prices in the medium term, but we are not seeing that yet. Renato, can you add something else? Renato Junqueira Pereira: Well, I think it is exactly that. Once the market realizes that Brazil is maximizing ethanol, it is going to have less margin to switch the mix towards sugar, and then the market is going to be more balanced. Then we think there is a potential to increase the price of sugar in the second semester. And if you think in the midterm, we think that the supply is going to decrease because today the sugar price is below most countries' production costs, including most players in Brazil. So we think that it is going to have an impact on supply, so price should react next year, and then probably the low price is not going to last that long. Julia Rizzo: Okay. Thank you. Operator: This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks. Mariano Bosch: Thank you all for participating today, and we hope to see you in our next conferences. Operator: Thank you. This concludes today's presentation. You may disconnect at this time and have a nice day.
Operator: Good morning, and thank you for standing by. Currently, all of the participants are in listen-only mode. After management's discussion, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Michael Polyviou. Please go ahead. Michael Polyviou: Thank you, Hilla, and welcome to IceCure Medical Ltd's conference call to review the financial results as of and for the twelve months ended December 31, 2025, and provide an update on recent operational highlights. You may refer to the earnings press release that we issued earlier this morning. Participating on today's call is IceCure Medical Ltd's CEO, Eyal Shamir. Company VP of Sales North America, Chad Good, is not able to join due to a connectivity issue, so I will read his prepared statement. Jay LeVeigh, the company's COO, will be available during the Q&A portion of the call. Before we begin, I will now take a moment to read a statement about forward-looking statements. The call and the question-and-answer session that follows contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions or variations of such words are intended to identify such statements. For example, we are using forward-looking statements in this presentation when we discuss the FDA's marketing authorization to ProSense driving meaningful growth for us; the post-marketing study for ProSense; growth in interest; installation of ProSense systems; a growing pipeline of customers, including medical clinics and hospitals; potential increases to CPT code reimbursement; and rising levels of interest in ProSense from breast radiologists and surgeons. The forward-looking statements contained or implied during this call are subject to risks and uncertainties, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's Annual Report on Form 20-F for the year ended December 31, 2025, which will be filed with the SEC on March 17, 2026, and is available on the SEC's website at www.sec.gov. The company disclaims any intention or obligation, except as required by law, to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, March 17, 2026. I will now turn the call over to IceCure Medical Ltd's CEO, Eyal Shamir. Eyal, please go ahead. Eyal Shamir: Thanks, Michael. Michael Polyviou: As we previously disclosed in early January, we had a record fourth quarter of sales of approximately $1.3 million, leading to a record revenue from sales of $3.4 million for the full year ended December 31, 2025. Eyal Shamir: Our growth was driven by record-year sales reflecting the positive effect of the U.S. FDA clearance in low-risk early-stage breast cancer and continued growth and adoption of ProSense in key markets. In the interest of time, until Chad and I have several exciting topics to discuss, I ask that you refer to the press release issued this morning for the full financial results. This morning, we will focus on IceCure Medical Ltd's strong global commercial momentum driven by regulatory approval, a major medical society guidance recommending cryoablation for low-risk disease, high-quality study data demonstrating growth in efficacy and safety, and a marked increase in awareness and importance among both doctors and patients in the U.S. and abroad. Following the U.S. FDA marketing authorization of ProSense in October 2025 for the treatment of low-risk breast cancer in women age 70 and over as well as patients who are not suitable for surgery, we believe the most notable recent catalyst for adoption of ProSense is the American Society of Breast Surgeons’ (ASBRS) 2026 statement. As we announced last week, the ASBRS now recommends cryoablation as an option for selected patients with biologically low-risk early-stage breast cancer. We are very pleased to see cryoablation receive deep recognition from a leading professional society representing our targeted end user and believe it could represent a significant catalyst while further validating its important role in modern breast cancer care as an option that prioritizes outcomes, cosmetic results, and patient choice. These recommendations support patients and doctors in their decision-making to opt for cryoablation. It also supports further expansion for reimbursement. As a reminder, ProSense is the first and the only FDA-cleared medical device for the treatment of breast cancer. We do not anticipate other companies to enter breast cancer cryoablation devices into the market in the U.S. anytime soon, as the FDA market authorization established that any other company wishing to file 510(k) marketing authorization for a different cryoablation system to treat breast cancer will be required to submit full findings of follow-up data from its clinical study. As you have seen in our recent announcements in the U.S., our growing pipeline of customers, including medical clinics and hospitals, is converting to signed contracts, deliveries, and installation of ProSense. In addition to those like Fuel Imaging and Thomas Hospital, which we announced, there are prominent hospitals in cities where there are present installations and procedures that I cannot name. One of them is a large university hospital in the Southeast. Another is considered among the world's most highly regarded medical institutions, and it now has a ProSense system at two of its largest facilities. We believe there is an opportunity to install additional systems through this prestigious hospital network. I also want to point out that the last few customer announcements have been purely commercial-focused. They are not part of the post-marketing study process. We do expect momentum to grow, driven by both patient and doctor demand, as each new installation adds a flywheel effect. For example, the recent ProSense installation at Thomas Hospital in Alabama, which we announced in February, led to a very engaging media segment on the local news. The segment was broadcast on February 26 on WKRG, a CBS affiliate in Fairhope, Alabama. We invite you to view this two-minute news story; the link is provided in our earnings release, which was issued earlier today. One of the doctors at the hospital described cryoablation with ProSense as a life-giving, life-extending technology that successfully treated a 90-year-old breast cancer patient in 30 minutes. To really make his point, the doctor goes on and adds that you cannot even get a pizza in that amount of time. We believe organically driven news similar to this in local markets will drive patient demand. As for medical conferences, we have two important ones in the U.S. in April: the Society of Breast Imaging and the American Society of Breast Surgeons Annual Meeting, where we will engage directly with our target audience. While we have consistently attended and exhibited at these two major U.S. conferences in the past to educate the medical community, we expect that with the FDA clearance and the ASBRS guideline recommendation, it will create a sense of urgency, and doctors will be able to immediately act upon the incoming interest in ProSense. As a reminder, this will be the first time ever we will be able to promote ProSense for breast cancer. As expected, the level of interest from breast radiologists and surgeons is rising, with about half of our customer pipeline stemming from each of those specialties. I will now turn the call to Michael, who will provide more detail on the U.S. commercial activity. However, first, I want to comment further on global sales momentum and performance. Our assumption that the FDA clearance would widen demand in other markets where ProSense already has approval for breast cancer is being proven. Regulatory validation in the U.S. increases confidence and adoption internationally, especially in Europe, reflecting strong demand and extended market presence. In markets where IceCure Medical Ltd already had activities, we have seen expanded usage to include new clinical applications, particularly breast cancer and other interventional oncology indications. Yesterday, we submitted the Class III amended application to Health Canada seeking to expand our current regulatory approval to include use of the ProSense cryoablation system for the treatment of early-stage, low-risk invasive breast cancer in patients aged 60 years and older. The application is supported by the data from our ICE3 clinical study and the U.S. FDA marketing clearance of ProSense in the treatment of low-risk breast cancer. Under the proposed indication in Canada, up to approximately 7,130 women diagnosed with low-risk breast cancer would be eligible for cryoablation. We expect a decision from Health Canada on our application during 2026, subject to the agency's standard review procedure and potential follow-up questions. Globally, evidence-based data and peer-reviewed presentations and abstracts are enhancing ProSense’s reputation, and the independent studies that are currently underway will further increase global exposure. For example, the SIXT study led by Dr. Vanessa Saavedra and renowned breast surgeons in Brazil and the PRECISE study in Italy led by Professor Franco Orsi, an interventional radiologist and key opinion leader, are expected to contribute meaningful clinical evidence. Additionally, the clinical programs are being heavily promoted on social media to recruit patients and increase local exposure and awareness among patient communities and advocacy groups. In 2025, we had a record number of peer-reviewed publications and conference presentations, and we have had several more in early 2026. In 2025, 60 principal investigators presented data at 10 conferences across the world from the U.S., Europe, and Asia. We are encouraged to see a growing number of international conferences that are now adding new ProSense clinical data in various countries to educate doctors about our minimally invasive option. These presentations combined with independent study publications significantly increase global exposure and drive growing demand for adoption of IceCure Medical Ltd’s system for breast tumors and breast cancer care, as well as other indications for which ProSense is approved. I will now hand the call over to Michael for more insight on the U.S. market. Michael, Michael Polyviou: Thank you, Eyal. We have known for some time the level of interest in the U.S. for ProSense breast cancer treatment, driven by IceCure Medical Ltd's active participation at medical industry conferences and the 19 ICE3 clinical sites. Also, the strong interim and the final ICE3 data have enabled interest to continue building along with each successful milestone: submission for FDA clearance, outcome of the FDA's advisory panel, then of course, the FDA clearance itself. Today, I believe three factors have converged to accelerate adoption in the U.S. First, ProSense is FDA-cleared. Second, there is established reimbursement. Third, the ASBRS's new guidelines recommend cryoablation for low-risk breast cancer. We are experiencing a clear uptick in interest and engagement from potential facilities. Eyal has already shared some of the newest customers. Based on our increased activity in the fourth quarter of last year and in 2026, we believe we will close an increasing number of system sales and installations during the second quarter, with continued growth in the subsequent quarters of 2026. We are increasing our U.S. commercial organization to address demand. Our core sales team is working hard on the ground at sites in priority territories that we are targeting. By the end of the year, we intend to triple our commercial team in alignment with growing momentum and demand with the aim of getting broader penetration across the U.S. Our customers are already performing ultrasound-guided procedures and needle biopsies on a weekly basis, procedures that have many of the same skill sets needed for cryoablation. Furthermore, ProSense is easy to implement and does not need to access the hospital's IT systems. From a hospital perspective, no additional infrastructure investment is needed. We believe the ultimate champions within the hospital and clinics are the surgeons and radiologists that are delivering care. Our goal is to approach the departments that are directly delivering care. Depending upon the size of the customer, ranging from small privately owned clinics to the largest, most prestigious hospital networks in the U.S., the sales cycle process from lead to contract and installation can take on average from a few months to nine months. While interest has been very strong among potential customers who want to use ProSense commercially, we are also seeing a lot of interest from clinics and hospitals that want to join our recently FDA-cleared post-marketing study and use ProSense commercially too. Many of the sites in our customer pipeline have been waiting for the post-marketing study to commence before they acquire a system. We expect that our post-marketing study will significantly accelerate the national rollout and availability of ProSense. The FDA's requirement is to have 30 sites for the PMS. The majority of these 30 sites have been identified, and we expect to begin the onboarding process in the next three to six months, with all 30 to be opened by the end of next year. All of the PMS sites will commit to performing commercial procedures outside of the study patients. Patient enrollment is slated to commence in late summer with 20% enrollment by this time next year. As a reminder, the post-marketing study procedures are eligible for reimbursement. The CPT code which covers facility costs is about $4,000. However, following the FDA clearance for ProSense, the company has applied for transitional pass-through payment, which may result by early 2027 in an additional up to $900 per procedure. We have also been working with medical societies and associations and expect to submit the CPT1 code reimbursement to cover the physician's costs in the second quarter of this year. We expect a response by early 2027 with a CPT1 going effective in early 2028. We are highly encouraged by what we are experiencing in the U.S. market and believe we can see similar trends in Canada if ProSense is approved there for breast cancer. Eyal has already shared with you the strong momentum in global markets in part due to the FDA's clearance. We are working hard on getting ProSense into more clinics and hospitals so that more women can have a minimally invasive option for their breast cancer. I will now turn the call over to Hilla for Q&A. Thank you. Operator: Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. Please press 2. If you are using speaker equipment, kindly lift the handset before pressing the number. Your questions will be polled in the order they are received. The first question is from Kemp Dolliver of Brooklyn Capital Markets. Please go ahead. Kemp Dolliver: Great. Thank you. Could you walk through a little more detail with regard to your plans to get reimbursement coverage beyond Medicare? I think you probably have to approach the Medicare Advantage plans, possibly VA, and maybe some other smaller segments to get coverage across the approved population. Eyal Shamir: Yes. Hi, Kemp. This is Eyal. Thank you for your question. I will refer it to Jay LeVeigh, our COO, who is also covering regulatory and reimbursement. So, Jay, please. Jay LeVeigh: Hi. Thank you, Eyal. So, regarding reimbursement, we are currently operating under the CPT code with a well-attractive payment of $4,000, and as we see post-FDA approval, we see that reimbursement is becoming more consistent. We do have in place a payer outreach program in which we approach private payers. We are focusing on the Medicare Advantage program because of the population that is in our labeling that we got from the FDA, and in addition to that, we are continuing to work on increasing payments and, of course, transitioning to CPT1. Kemp Dolliver: Great. Thank you. One other question. As you proceed with getting CPT1 code in place, do you see that as spurring significant additional demand, or is it really just a matter of getting better reimbursement based on what you have seen so far in the market? Eyal Shamir: Yes, Kemp, thank you. As we all know, CPT1 is part of establishing a standard of care in the U.S. Of course, we are planning to grow in 2026 and in 2027, but we believe that our next coming inflection point will be early 2028 after we get the CPT1. So, of course, it will improve total reimbursement, but we believe that it will be an important point at which IceCure Medical Ltd will be able to grow much faster and higher. Operator: The next question is from Anthony Vendetti of Maxim Group. Please go ahead. Anthony Vendetti: Yes, thank you. Just a couple of questions. So on the 30 hybrid commercial clinical sites, I know you mentioned that more than half have been identified. Can you get a little more specific? Have you identified at least 20 or 25? And then just talk a little bit about the ramp, because I know you have been preparing for that. How quickly you think you can ramp that up? And then I just had a question on Japan and then Canada. Eyal Shamir: Jay, please, under your responsibility as COO, you could answer firstly on the number of sites that will be part of our PMS, and also on production and manufacturing ramp up. Jay LeVeigh: Yes. Thank you, Eyal. So, with regard to the post-market study, we are required to have 30 sites. We see very high interest from those sites. We already identified, although still in the early stages, the sites that are needed for the study. And now the team, post-FDA approval, is working with the CRO to make sure that the sites meet all the requirements, and we can convert them to both PMS sites and also being commercial at the same time. With regard to the— Anthony Vendetti: I was going to say, so all 30 sites have been identified, and each one of these clinical sites—one of their requirements for most, if not all, of those sites is to also be a commercial site, which sounds like most of them would want to be as well. They have been identified, and it is just a matter of your team going through their requirements to officially become a clinical site. There is some paperwork associated with that, and you have a CRO assisting in that, correct? Jay LeVeigh: Yes. I will just emphasize that we identified the sites. We have high interest from sites across the U.S. We have not signed all agreements related to the post-market study. This is still something that is in process. But based on the interest and the work that is being done, we have a lot of confidence that we will move forward fast with those sites. Anthony Vendetti: Okay. And then you also announced that you filed in Canada for regulatory approval, hoping to get that before the end of this year. Can you talk about the opportunity there? Because I think the age there might be lower than here, right, because it is 70 and above here. In Canada, is it 60 and above? And then what is the opportunity there? And then lastly, just an update on Japan. I think you are working with Terumo, I believe the largest medical device company there, to file in Japan. So maybe just address those two. That would be great. Thanks. Jay LeVeigh: Eyal, do you want me to address those? Eyal Shamir: Yes, please. Jay LeVeigh: So, with regards to the indication that was submitted in Canada, we submitted for the ICE3 indication, which is 60 and above. This represents a little bit more than 10,000 new cases every year in Canada. In Japan, as well, as you mentioned, we are working with Terumo and, post-FDA, Terumo has already started the process with the PMDA. They already had a first general consultation with PMDA. They got positive outcomes with some comments to address. They are planning to have another discussion with the PMDA and immediately after to do the formal submission in Japan. Anthony Vendetti: Okay, great. Thanks for all that color. I will hop back in the queue. Operator: Thank you. We have reached the end of the call. I will now turn the call over to Eyal Shamir for concluding remarks. Eyal Shamir: Thank you all for joining us today on the call. IceCure Medical Ltd is now at a clear turning point. With the FDA clearance and medical society recommendation in the U.S., our commercial pipeline is growing, and we expect to convert these potential customers into ProSense installations so that women can have the minimally invasive option they deserve. Have a good day, everyone. Anthony Vendetti: Operator? Operator: This concludes the IceCure Medical Ltd fourth quarter and full year 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Telesat Corporation Fourth Quarter 2025 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the conference over to James Ratcliffe, Vice President of Investor Relations. You may begin. James Ratcliffe: Thank you, Desiree, and good morning, everyone. This morning, we filed our annual report for the period ending December 31, 2025, on Form 20-F with the SEC and on SEDAR+. Our remarks today may contain forward-looking statements. There are risks that Telesat Corporation’s actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, please see Telesat Corporation’s annual report and updates filed with the SEC. Telesat Corporation assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, Telesat Corporation’s President and Chief Executive Officer. Dan Goldberg: Okay. Thanks, James, and thank you all for joining us this morning. I'll say a few words about the business and our focus for this year, then I'll hand over to Donald to speak to the numbers in more detail, and we'll then open the call up to questions. I'm pleased with the results we achieved last year and the steps we've taken to position Telesat Corporation for significant growth and to capture the compelling opportunities we're seeing in the market today. Our GEO business faces structural challenges. We've discussed that before. But we came in ahead of our adjusted EBITDA guidance for last year, and within the constraints of what's essentially a fixed-cost business, we've optimized our cost structure where we can to maximize the cash flow of that business. Turning to LEO, I'm very pleased with the significant progress we've been making on Lightspeed, including the very tangible progress on the development of the network, the satellites, the multiple software platforms that power the constellation and support our customers, and the development of the advanced user terminals and landing stations that comprise the terrestrial portion of the Lightspeed network. It's very positive and very exciting. As we've said previously, our first satellites are scheduled to launch at the end of this year. Then we have a very heavy launch cadence planned throughout next year, 2027. Although our expectation has been for Lightspeed to enter full global commercial service around the end of next year, it now looks like we'll enter service about three months later than that, so around Q1 2028. The cause of the slight slip is the readiness of the chips, the ASICs, which power the onboard processor and phased-array antennas of the Lightspeed satellites. These chips are being developed by SatixFy, which some of you may know was acquired by MDA last year. The delivery of these chips is one of the key schedule risks our program faced, and for that reason, we were pleased that MDA acquired SatixFy, given that MDA has much greater financial and technical resources and is also our prime contractor for the Lightspeed satellites. We're tracking the development of these chips pretty forensically and, based on that and the assurances we're getting from MDA, we feel good that the chips will be available in time to support the program schedule. Turning to the commercial landscape for Lightspeed, it's absolutely the case that global market dynamics are evolving in ways that I believe are very accretive to the Lightspeed business case. The fact of the matter is there's a transition taking place across the verticals we serve toward LEO. The impressive progress Starlink has achieved is a clear testament to that, and so too are the very significant opportunities we're seeing for Telesat Lightspeed. Last year, as you know, we signed a substantial agreement with Viasat to use Lightspeed for a range of services, prominently among them broadband to commercial airlines. Airlines and business jet users around the world are showing a strong appetite for high-throughput, low-latency satellite connectivity, and Lightspeed has been optimized to serve their fast-growing requirements. But without a doubt, some of the most compelling near-term opportunities we're pursuing are in the government defense market. I've said on previous calls that we've become increasingly bullish on the government and defense opportunity for Telesat Lightspeed, and the trends there only continue to get better. The geopolitical environment is driving once-in-a-generation increases in defense investments by allied countries globally, with defense organizations increasingly focused on the need for mission-critical, resilient, reliable, high-throughput, and low-latency satellite communication services from dependable providers. Indeed, the Government of Canada, in its recently released defense industrial strategy, identified satellite communications as a critical sovereign capability, pledging in the first instance to procure these important services from Canadian companies like Telesat Corporation in order to meet its and Canada’s allies' sovereignty and security requirements, with the Arctic a particularly important area of focus. And Canada certainly isn't alone in identifying the need for advanced LEO services for defense and sovereignty purposes. The U.S., the EU, Germany, Italy, South Korea are just a few of the governments that have plans to procure such capabilities. Given the fact that Lightspeed was designed from the very outset to meet the demanding requirements of defense users, Telesat Corporation is well positioned to meet those needs. To give you a few examples of those opportunities, Telesat Government Solutions, our U.S. subsidiary, has received an IDIQ contract under the U.S. SHIELD program, making us an approved supplier for the over $150 billion “Golden Dome” project, in which robust and resilient connectivity plays a key role. In Korea, we recently signed an MOU with Hanwha Systems, a leading provider of defense equipment and services to the Korean and other governments, to work together on leveraging the Telesat Lightspeed solution and Hanwha's defense offerings, as well as to develop user terminals compatible with Telesat Lightspeed. And of course, as we announced in December, Telesat Corporation and MDA have been selected by the Government of Canada to develop and deploy the Enhanced Satellite Communications Project Polar, known as ESCaPE, a next-generation satellite communications platform to provide connectivity for the Canadian Armed Forces in the Far North. This is a significant opportunity for us, and we're working with our partners to get under contract for that as soon as possible. In light of the order of magnitude of the opportunity to serve allied defense users, and as you may have seen in our separate release this morning, we're further optimizing Telesat Lightspeed for defense requirements by adding military Ka spectrum, or Mil Ka as it's called, to our initial 156 Lightspeed satellites, and we fully expect additional satellites we'll add to the constellation in the future will also have Mil Ka capability. Specifically, we're dedicating 500 megahertz of our Lightspeed capacity to Mil Ka, which is 25% of the total spectrum that Lightspeed will operate on. Because Mil Ka spectrum is adjacent to the commercial Ka-band spectrum used by Lightspeed, the change in frequency plan is a straightforward one, resulting in no adverse schedule impact and only a modest cost impact. And when I say modest cost impact, the cost is around $25 million, which is less than half a percent of the total program cost for the first 156 satellites. The 500 megahertz of Mil Ka will replace the same amount of commercial Ka-band spectrum on the network's user link — that's the link between the satellites and the user terminals that our customers will have. The gateway link — the link between the satellites and our gateways located at various locations throughout the world — is unaffected by the spectrum change. Allied defense users want Mil Ka capability, and with this change to Lightspeed, we'll be able to offer a very substantial increase to the total current global supply of Mil Ka with performance capabilities that are vastly superior to the Mil Ka platforms that allied governments have historically relied upon. Specifically, because we're offering it from LEO on a highly flexible, highly advanced constellation, it will be more resilient, more secure, higher throughput, and lower latency, and it'll cover the entire planet including the poles, which means, of course, the Arctic. As you can probably tell, we're very excited about this change to Lightspeed and about the opportunities we're seeing out there. We're very bullish on Lightspeed's prospects, and I'd say now more than ever. Donald will take you through our financial expectations for 2026, but I wanted to say a few words about our key priorities for the year. In LEO, naturally, we're laser-focused on successfully and timely deploying Telesat Lightspeed while expanding our revenue backlog in advance of global commercial availability. Given the various opportunities we're pursuing, we're very optimistic we'll be successful in meaningfully growing our Lightspeed backlog this year. In our GEO business, our focus remains on maximizing the revenue we can generate from our existing satellite fleet while at the same time being highly disciplined on costs in order to mitigate as much as possible the EBITDA and cash flow impact of the ongoing revenue decline in that business. And of course, we remain very focused on refinancing the Telesat Canada debt — the debt that's tied to our legacy GEO business. We continue to work closely with our advisers, who are engaged with the advisers representing some of the larger lenders, with the aim of reaching a successful result prior to the initial debt maturities in December. So I'll end my remarks there and hand over to Donald to go over the numbers. And while this is the first time you'll be hearing from Donald, he's already been on board since last October and has come up to speed, as we knew he would, very quickly. So, Donald, that official welcome over to you. Donald: Thank you, Dan, and good morning, everyone. I'm very pleased to be joining you this morning and to do my first call as Telesat Corporation CFO. My prepared remarks today will focus on highlights from this morning's press release and filings, including our guidance for 2026. Telesat Corporation ended the year 2025 with reported revenue of $418 million, adjusted EBITDA of $213 million, and with $510 million of cash on the balance sheet. In the fourth quarter of 2025, Telesat Corporation reported revenue of $94 million and adjusted EBITDA was $40 million. Revenue in 2025 was in line with our expectations and our guidance. Adjusted EBITDA of $213 million, including $33 million in expenses relating to our equity distribution in Q3 and our debt refinancing process, was well above our guidance of $170 million to $190 million due to higher-than-anticipated capitalized labor to our Lightspeed project, lower-than-expected increase in our headcount, and, except for the equity distribution and debt refinancing expense, lower-than-expected OpEx in our legacy GEO business segment. Interest expense for 2025 totaled $200 million, down from $240 million in 2024 and $270 million in 2023, reflecting our buyback of $857 million of Telesat Canada debt. Non-cash interest expense of $29 million incurred on Telesat Lightspeed financing was capitalized in 2025. Net loss for the year was $530 million compared to $302 million in 2024. The negative variance of $220 million was principally due to reduced revenue and EBITDA, impairment of goodwill relating to our GEO business, and we also recorded an increase in the derivative liability relating to the Telesat Lightspeed financing warrants caused by the meaningful increase in the valuation of the project as we are making strong progress on the development of the constellation. This was partially offset by a foreign exchange gain associated with the impact of a stronger Canadian dollar on our U.S.-dollar-denominated debt at the end of the year. EBITDA from our legacy GEO business segment totaled $284 million, or $317 million excluding $33 million of expense related to the equity distribution and debt refinancing-related costs, representing a margin of 77%, down from 80% in 2024. LEO loss before interest, tax, depreciation, and amortization for the year was $67 million, driven by operating expenses of $72 million, which were slightly below our guidance updated in October 2025 of $75 million to $85 million, reflecting higher capitalized labor and a slower pace of hiring in 2025. Capital expenditures in 2025 on an accrued basis were $708 million, of which nearly all were related to Telesat Lightspeed. This was below our expectations and our guidance of $900 million to $1.1 billion for the year. This was mostly attributable to milestone payments we expected to make to MDA last year that will be made in 2026. In September, we distributed 62% of the equity of Telesat Lightspeed to a wholly owned subsidiary of Telesat Corporation to provide us with more flexibility to raise capital in the future. Through our adviser, we are engaged with the advisers of the ad hoc group of lenders with the objective of successfully refinancing Telesat Canada debt before it matures in 2026 and 2027. You will note in MD&A disclosure in our financial statements and MD&A regarding liquidity given the need to refinance $1.7 billion of debt in Telesat Canada coming due in December 2026. Telesat Canada financial statements were prepared on a going-concern basis as usual. I would now like to turn to our financial guidance for 2026, which was disclosed in our press release earlier this morning. We've modified our disclosure in an effort to provide guidance that tracks the metrics we focus on as we run the business. We are, therefore, providing guidance for revenue and adjusted EBITDA of our legacy GEO business segment. For the LEO business segment, we're providing guidance for the total amount we will invest in Lightspeed in 2026, including operating costs incurred and capitalized labor and interest. We believe this approach will provide investors with the information they need to track our investment and progress in the Lightspeed project. On the GEO side, we expect 2026 revenue of between $300 million and $320 million, representing a year-on-year decline of $90 million to $110 million compared to 2025, roughly evenly split between our broadcast and enterprise segments. In broadcast, we expect revenue from DISH to decline due to the reduced usage of Nimiq 5 and the end of the Anik F3 contract in April 2025. Revenue from Bell is also to decline due to the expiration of its contract on the Nimiq 4 satellite in October 2025. On the enterprise side, the largest impact comes from declining revenue under our restructured contract with Explorer, the vast majority of which being non-cash, as well as our Telstar 14R satellite reaching end of life. With lower expected revenue, we expect GEO segment adjusted EBITDA to be $210 million to $220 million in 2026, excluding any expense related to our debt refinancing process. As a reminder, these costs, plus the costs related to the transfer of 62% of Telesat LEO, amounted to $33 million in 2025. In the LEO segment, we expect to spend between $1.0 billion and $1.2 billion on Telesat Lightspeed in 2026, including operating costs, capitalized labor and interest, and capital expenditures incurred with third-party vendors and suppliers. I'll note that our guidance assumes an average exchange rate of 1.38 Canadian dollars per U.S. dollar. Turning to our cash and liquidity position, we had approximately $206 million of cash on hand at the end of 2025 in our GEO business segment, and the business continues to generate healthy cash. We believe the combination of this cash on hand and the cash flow generated by our legacy GEO assets in 2026 to be sufficient to meet all the company’s obligations prior to Telesat Canada debt maturing in December. In the LEO segment, we ended the year with $337 million in cash on hand. This, combined with $1.82 billion available under our Telesat Lightspeed financing and $325 million available from our vendor financing, is expected to be sufficient to fully fund the Telesat Lightspeed project until it achieves global commercial service. Before I conclude my prepared remarks, I would like to confirm that we are in compliance with all covenants in our credit agreement and indenture. I also want to remind everyone that Section 5 of our 20-F includes the unaudited condensed consolidated financial information. I'll now turn the call back to the operator for the Q&A. Thank you. Desiree: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star then 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit yourself to one question and one follow-up question only. Thank you. Our first question comes from the line of David McFadgen with ATB Capital Markets. Your line is open. David McFadgen: Alright. Hi, guys. So a couple of questions. Maybe I'll start off with the decision to put some of the Lightspeed capacity on the military Ka band. I thought that when you would do that, you would also announce a deal with the Canadian Armed Forces. It's kind of a surprise that you didn't announce that at the same time. Do you still expect a deal with the Canadian Armed Forces? Where would licensing of that military Ka spectrum sit? Dan Goldberg: Good morning, David. It's Dan. So it was back in December that we announced — well, by we I mean we were joined by the Government of Canada and MDA — and it was announced that MDA and Telesat Corporation had been selected to form a strategic partnership with the Government of Canada to deliver ESCaPE. And what is known about ESCaPE is, well, a few things. One, it's a multi-frequency-band constellation for support in the Arctic of Canada's defense and sovereignty requirements. It's Mil Ka, it is X-band, and UHF — so all spectrum that defense users frequently use. And so, while it was announced back in December, we're still not under contract, which is not a surprise. It takes some time to do that. And so we — and by we, I mean Telesat Corporation and MDA — are currently engaged with the Government of Canada, working on that. We're focused on getting that done sooner than later. And so because we're still negotiating everything and it's not done yet, we can't say exactly what it is the constellation will look like. It is the case that by putting Mil Ka on Lightspeed, Lightspeed is better situated to meet some of those requirements. But we're not in a position to say anything more about that right now. We are focused on getting that contract done certainly before the end of this year. David McFadgen: Okay. So I would imagine that you could also sell that military Ka-band capacity to other defense departments around the world, right? Like, the Canadian Armed Forces isn't going to take the entire 500 megahertz, or is it? Dan Goldberg: Yeah. Listen. As I said in my remarks, the quantum of Mil Ka capacity that we're bringing to market by proliferating it across all of our satellites is a massive increase. It's a little hard to track this stuff because it's Mil Ka, so you don't know everything. But for instance, the U.S. and its allies use the WGS network. The UK has Skynet. There are other pockets of Mil Ka elsewhere. Historically, it's all been in GEO. But as you can imagine, the amount of capacity across those systems relative to what we're bringing on Lightspeed — whether it's an order-of-magnitude increase — is dramatically higher. And it's not just the sheer quantum of capacity we're bringing. The capacity that we're bringing, the performance characteristics are so much more compelling. It's high throughput, low latency, distributed, which makes it more resilient. It covers the poles, which — there's a heavy focus on the Arctic right now for all sorts of reasons. And so, yes, we will be able to make that capability available not just to the Government of Canada, but to all of the allied nations — NATO and other allied governments. And not to go on for too long here, but there is a significant focus with military planners on having access to these kinds of capabilities given the nature of modern warfare, given the nature of the fact that so many more of the platforms that they use are high-bandwidth consumption platforms, many of which operate autonomously and need these high-throughput, low-latency, very resilient, very secure links. So we think about this as a very significant opportunity for Telesat Corporation, and we caught this at a great time. We caught it early enough in the build-out of Lightspeed so that it's not schedule impactful. As I mentioned in my remarks, the cost is pretty trivial. Because we were already using the commercial Ka and because the military Ka band is immediately adjacent, the changes that needed to be made to accommodate the Mil Ka on Lightspeed were very straightforward. And look, this isn't something that we figured out last week. This is something that we had been thinking about for some time now. So we were able to do some advanced planning work with MDA to make sure that this would be as easy — from a schedule perspective and from a cost perspective — as possible. So we're really pleased about this. David McFadgen: Okay. And maybe I can just follow up on a comment you made. You're talking about ESCaPE, right? ESCaPE — the military wants to be able to have a constellation running at X and UHF. You just want to sign Ka. So do you envision another potential constellation here that you would be able to offer up that would run on X and UHF? Is that a possibility? Dan Goldberg: It's still a little premature to say. I really want us to get through the good work that's taking place right now with the Government of Canada. Again, we want to move quickly on that. The good news is the Government of Canada, as you probably heard, is very much wanting to streamline and accelerate their procurement processes, so we've got a pretty motivated counterparty to move these discussions along. So all I would say is to stay tuned on that. David McFadgen: And maybe if I can just ask one more — I won't take up too much time — but just for 2026 guidance, it would be really helpful if you can give us an idea on the EBITDA loss as you would expect out of LEO. Because, obviously, I think you can figure it out. Dan Goldberg: If you look at the guidance, I think what you have there is the total expenditures associated with Lightspeed, both CapEx and OpEx. But we can break it down. I think it's $1.0 billion to $1.2 billion in total, Donald, and can you give a range for what we think the OpEx piece of that— Donald: Included in the $1.0 billion to $1.2 billion, there's somewhere between $90 million to $110 million of OpEx in Lightspeed that we will incur this year, depending on how much labor we're capitalizing. One of the reasons we decided to not show the EBITDA specifically for Lightspeed is that how much labor we are capitalizing versus expensing is always difficult to predict when we're looking forward. But each quarter, we'll report on what it is so that everyone can tell what it is. David McFadgen: Okay. Alright. That's really helpful. Thank you. Dan Goldberg: Okay. Thank you. Desiree: Our next question comes from the line of Caleb Henry with Quilty Space. Your line is open. Caleb Henry: Hi. Thanks, guys. Just a question on the launch schedule with the three-month delay. Do you have a sense of how many satellites will be launched by the end of 2027 now? Dan Goldberg: Yeah. I think we can probably give a sense of that. So, two things. We are still holding our launch schedule for our initial launch, so that is still being focused towards the end of this year. That hasn't changed. Then our expectation is our significant launch cadence will — because we're going to launch those first satellites, and as we said before, we're going to test them extensively before we start launching the rest of the satellites. By the time we launch the first two satellites, do the orbit raising, and then do the amount of testing that we and a bunch of our customers want to do, it'll be sort of mid next year where we kick off with the heavy launch schedule. So by the end of the year, we will have enough satellites in orbit so that we can launch full global commercial coverage, but we've slipped the date back a quarter — you still have to do the orbit raising and whatnot. For us to do full global coverage, that's about 96 satellites. So we should have 96 satellites at least in orbit by the end of next year, and then we're just going to keep going. And so that's the plan. Caleb Henry: Okay. And then on the Mil Ka — you talked about the spacecraft side. Can you share any updates on whether that requires any new gateway infrastructure? And then on the user terminal side, will those Mil Ka user terminals be available at the same time as the commercial ones, or where is that in the development cycle? Dan Goldberg: Yeah. Good question. The gateway — because I mentioned in the opening remarks that the spectrum that we use for the gateway frequencies isn't changing — the gateways are totally unimpacted. And then on the user terminal side, yes, there will be Mil Ka–compatible user terminals for a variety of different platforms — ships, planes, drones, manpacks — that will be available. One of the great things about operating in commercial Ka is that the Mil Ka is adjacent, and so the user terminal partners that we've already been working with — their flat-panel antennas, the modems, and whatnot — can accommodate the addition of the Mil Ka. We'll be engaging with all of our customers, defense and commercial alike, with a good family of advanced flat-panel antennas. And by the way, we talk a lot about flat-panel antennas. The parabolic antennas are still out there, and they are quite efficient, so those will be available too because they are good for certain applications. But yes, those will all be available when we go into service. Caleb Henry: Alright. Thank you. Desiree: Our next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. Laura: Hey. This is Laura on for Edison, and thanks for taking my question. I want to follow up on that Canadian Arctic military communication constellation topic. Could you provide more sense on the backlog potential from both the Canadian military and the others? And any additional spend you anticipate not just from the spectrum perspective, but for overall efforts required compared to the baseline Lightspeed? Dan Goldberg: So on ESCaPE, first off, there's a lot of information about ESCaPE that's publicly available. It's been a program of record for the Department of National Defence here for many, many years. But I won't speculate just now on potential backlog impact, nor on impacts to our broader plan — whether that's spending or revenue profile and whatnot. We need to get through this contract negotiation with the Government of Canada. But I will say on backlog creation — less about ESCaPE, but just a broader observation — as I mentioned in our opening remarks, the pipeline of activities for Lightspeed is robust. And a lot of that right now in this environment relates to defense applications — defense and sovereignty applications. And because of that, we are very bullish about our ability to significantly grow our backlog for Lightspeed this year. Our expectation is this time next year, our backlog tied to LEO is fairly dramatically higher than it is today, with the caveat that we've got to sign these deals and with the caveat also that because many of those opportunities are government-related, government opportunities often have a life of their own in terms of closing them. But notwithstanding that, that's our expectation — that we will be closing significant opportunities for Lightspeed this year and that will have a very significant favorable impact on backlog for Lightspeed. Laura: Okay. Gotcha. Appreciate it. Thank you. Desiree: And again, if you would like to ask a question, press star then the number one on your telephone keypad. We do have our next question from the line of Walter Piecyk with LightShed Ventures. Your line is open. Walter Piecyk: Hey, Dan. On the spectrum change, this is probably a tactical, wonky question. I'm not fully understanding because if I went back to, I think it was in 2024 — as you may recall, I was asking about adding additional spectrums, and you referred to that as payloads. And I think at the time, you were like, for the first 198 satellites, the ship has sailed, and it didn't seem like — and I think I've asked this question a couple times on earnings calls — that you couldn't add spectrum because there was obviously some available that was out there to the constellation to broaden out the services. So I'm guessing there's something different because there's a swap out, or whatever it is. Can you explain why that's the case, or maybe if there's some update that, this late in the game, you can actually change the spectrum that's in the constellation? Dan Goldberg: Yeah. My recollection is when you and others have asked that question in the past, it's mostly been in the context of, like, a D2D — so, can you add spectrum for direct-to-device applications, whether that's L-band or S-band or C-band or whatnot. There, because that spectrum is so far away from the 28 gigahertz band that the commercial Ka band is in, you would need a different payload to transmit on those frequencies, and that would be a very significant change to the satellite. If we wanted to support our existing mission — broadband connectivity in Ka band — and add a direct-to-device payload, for instance, we would need a bigger satellite. It would be a very different thing. What's different here is the military Ka band — as I said, it's also in the 28 gigahertz band. It is contiguous with the commercial Ka band. So we've really just shifted the frequency plan up by 500 megahertz for the user link, and that's a pretty easy modification. So that's the difference. Dan Goldberg: You're talking to somebody who was a history major. If I had asked our CTO to explain it, you might not have followed us. No, I'm kidding. If we had the CTO get on, those guys drone on forever. Let's just hear on Amazon. It feels like there's a slower rollout. They're getting hazed a little bit by the FCC chairman about their rollout. For you guys, obviously with the progress, you're heading towards this first launch at the end of this year. My question is, because of what's going on at Amazon and your progress, have you found it easier to get the attention of some of these enterprise/government customers? Are you seeing more fluidity there in getting towards contracts than maybe six months ago — both from your progress and also perhaps from Amazon's lack thereof? Dan Goldberg: I won't comment on Amazon. We're certainly getting more engagement with the customer base, and I'd say particularly the defense, the government customer base. Part of that is we're just getting, as you point out, closer to being in service. A big part of it is demand for this kind of capability has grown dramatically over the last, call it, 12-plus months because of the changes in the geopolitical environment. Some of that's been a function of everybody seeing how the Ukraine hostilities have unfolded and how consequential access to Starlink is in a modern conflict. And when I say Starlink, I really mean an advanced LEO constellation that can support all sorts of things in a battlefield domain — whether that's flying drones, communications with forward operating units, fighter jets — all of that. Part of it is we're getting closer. Part of it is there's a much greater focus on the need to have these kinds of capabilities from a range of suppliers. I think all these governments want to be able to work with a range of different constellation providers, in part just to have more resilience, more diversity, less vendor lock — that kind of rationale. With respect to Amazon, as far as I can tell, they're coming. It's taken them, I think, longer than they had anticipated. They point to the lack of launch opportunities, and we understand that. But I think the forward progress and the traction that we're getting in the market has a lot less to do with their schedule and a whole lot more to do with the capabilities that we're bringing and this moment in time in terms of the geopolitical environment and what customers want. And then I've spoken a lot about defense, but these other verticals that we're focused on also are embracing LEO — whether that's aero, maritime, fixed enterprise, backhaul for MNOs. You're seeing significant traction with LEO. As we get closer to being in service, all of these things have been very favorable tailwinds. Walter Piecyk: That's very comprehensive. Thank you. And I'm hoping you're planning on some type of launch party because Florida's a lovely place to be in December, especially for us in the Northeast. Dan Goldberg: Florida is lovely, but our launches will be coming out of Vandenberg. Walter Piecyk: That's okay — California, that's fine. Even better. Dan Goldberg: We will be having a lot of launches in the next 18 months, so we'll have a lot of opportunity to celebrate that. Walter Piecyk: Awesome. Thank you. Dan Goldberg: Thanks. Desiree: That concludes the question-and-answer session. I would like to turn the call back over to our CEO, Dan Goldberg, for closing remarks. Dan Goldberg: Okay. Well, operator, thank you very much, and thank you all for joining us this morning. We look forward to speaking with you shortly when we release our first quarter results. Donald: Thank you very much. Desiree: Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.
Operator: Greetings, and welcome to the ClearPoint Neuro, Inc. Fourth Quarter and Full Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects, and strategies, both preliminary and projected; the total addressable markets or the market opportunity for the company's products and services; the company's expectations regarding the integration, performance, and anticipated benefits of the recent acquisition of Eris Holdings Inc., including operational efficiencies, and the impact on the company's financial condition and results of operations; the company's expectation for future development, regulatory approval timing, commercialization, and the market for cell and gene therapies, and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies; and management's expectations, beliefs, estimates, or projections regarding future revenue and results of operations. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements or for new information or future events. For more information about the company's risks and uncertainties, please refer to the company's filings with the SEC, including the company's recent filings on Form 8-K, Form 10-K, and Form 10-Q. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I will now turn the call over to Joseph Burnett, Chief Executive Officer. Please go ahead, sir. Joseph Burnett: Thank you. As always, thank you to all of the investors, analysts, and biopharma partners listening to today's call. We remain both committed to and focused on developing a complete neuro ecosystem capable of delivering various minimally invasive treatments, including cell and gene therapies to the brain. We believe that this approach will finally unlock hope for the patients and their families who are battling these frightening neurologic disorders and who today have very few options to choose from. This is one of the largest unmet needs in all of medicine, and we at ClearPoint Neuro, Inc. believe we can play a crucial role in this exciting future. Our company ended 2025 on a high note with the strongest financial quarter of the year, a newly acquired and commercialized neurocritical care product line, and genuine excitement for what is to come in 2026. Over the past five years, we have invested more than $100,000,000 and built a strong foundation to support our team and our goals moving forward. This foundation is made up of four growing product categories, a vetted pipeline of new development programs, an expanded manufacturing footprint, a thoroughly audited quality system, a collection of global regulatory approvals, an expansive IP portfolio, an installed base of more than 150 global centers, and the cash position and investor base to execute on our strategy. Most importantly, through our unique biologics and drug delivery ecosystem, we have attracted more than 60 active biopharma partners. We are participating in more than 25 active clinical trials. We are exploring therapies for more than 15 different indications, and currently more than 10 of our biopharma partner programs have now been accepted to some form of FDA expedited review. Our foundation is set, and our company has never been in a stronger position than we are right now. As we look ahead, we have now entered the next two phases of our growth strategy. The first phase, which we call Fast Forward, is to penetrate an existing $1,000,000,000 market opportunity made up of four distinct product segments: number one, pre-commercial drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical management. We expect all four of these product lines to grow double digits in 2026 through the expansion of our commercial organization, approval of products in new geographies, additional site activations, generation and publication of new clinical evidence, and the execution and launch of new products in our development pipeline. The second phase which we are entering in parallel is called Essential Everywhere. This phase is different, as it requires us not to grow share in an existing market, but to build a completely new market that does not yet exist for commercial cell and gene therapy delivery. This is a market in which we believe that the unique ClearPoint Neuro, Inc. ecosystem will play an essential role. This ecosystem will include brain segmentation tools, predictive drug delivery modeling, pre-planning and navigation software, frame and robotics delivery options, drug loading and mechanized infusion technologies, an array of cell and gene therapy routes of administration, and post-procedure quality confirmation software to meticulously track proper delivery. All of these workflow steps will be supported by our talented team of clinical specialists and scientists who will be there in the room assisting our partners when these new-to-world therapies are finally commercialized. While the only gene therapy approved today for direct delivery to the brain is for a very rare disease, it is important to remember that this drug is in fact co-labeled with ClearPoint Neuro, Inc. technology, a trend we expect to continue in the future. As we look ahead to the full year 2026, we now expect revenues to be in the range of $52,000,000 to $56,000,000, which now takes into account a couple of factors, including the latest FDA communications regarding the potential approval and treatment of rare diseases, as well as the integration efforts and priorities surrounding our recent acquisition of Eris just a few months ago. I invite anyone listening to visit clearpointneuro.com. You can download a new version of our investor deck that should better communicate the vision and scale of our strategy. I will now turn the call over to our CFO, Danilo D’Alessandro, to walk through the prior year financial data, after which I will provide a bit more commentary on the road ahead. Danilo? Danilo D’Alessandro: Thank you, Joe, and thank you all for joining us today. Let me start by looking at the full year 2025 results. ClearPoint Neuro, Inc. total revenues were $37,000,000 for the year ended 12/31/2025, compared to $31,400,000 in the year 2024. Our total 2025 revenue of $37,000,000 includes $1,200,000 of revenue from the acquisition of Eris Holdings Inc., which we completed on 11/20/2025. Revenue is made up of three components: biologics and drug delivery; neurosurgery navigation and therapy; and capital equipment and software. We include the EarFlo product line in our navigation and therapy segment. Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials. Biologics and drug delivery revenue increased 10% to $19,000,000 in 2025, up from $17,300,000 in 2024. This increase was primarily due to an increase in our product sales as our pharmaceutical partners advanced their development programs. Neurosurgery navigation revenue consists of commercial sales of disposable products and services related to the cases utilizing the ClearPoint Neuro, Inc. system to deliver medical therapy to the intended target. This revenue segment grew to $14,800,000 for the year 2025, including $1,200,000 in EarFlo revenue. The growth in this segment was mainly due to our increased installation base and the full market release of our PRISM Laser System and iCT solution. Capital equipment and software revenue consists of sales of ClearPoint Neuro, Inc. reusable hardware and software and related services, and was $3,100,000 for the year 2025. Gross margin for the full year 2025 was 61%, in line with the year 2024. Research and development costs were $13,900,000 for the year 2025, compared to $12,400,000 in 2024, an increase of $1,500,000, or 12%. The increase was due to higher product and software development costs of $1,200,000, an increase in personnel costs, including share-based compensation expense of $200,000, and additional costs due to the consolidation of Eris. Sales and marketing expenses were $16,500,000 for the year 2025, compared to $14,500,000 for the same period in 2024, an increase of $2,000,000, or 14%. This increase was due to higher personnel costs, including share-based compensation expense, of $1,400,000 resulting from increases in headcount in our clinical team, as well as increased cost of $900,000 due to the integration of Eris, partially offset by decreased marketing cost of $200,000 and decreased travel cost of $200,000. General and administrative expenses were $16,500,000 for the year 2025, compared to $12,000,000 for the same period in 2024, an increase of $4,500,000, or 38%. This increase was due primarily to severance expense of $1,400,000 in connection with the Eris acquisition, increased professional service fees of $1,000,000, higher personnel costs including share-based compensation of $900,000, higher information technology and software costs of $500,000, increased bad debt expense of $200,000, and additional cost of $200,000 related to the Eris acquisition. Net interest expense for the year 2025 was $1,200,000. Interest expense for the year 2025 was $2,400,000, compared with $450,000 for the year 2024. The increase was due to the issuance of notes payable in May and November 2025. I will now turn to the fourth quarter 2025 results. Total revenue was $10,400,000 for the three months ended 12/31/2025, in comparison to $7,800,000 for the three months ended 12/31/2024. Biologics and drug delivery revenue increased 23% to $5,200,000 in 2025. This increase is attributable to $1,100,000 of higher product revenue resulting from greater demand for disposables as multiple partners progressed in their trials, partially offset by lower service revenue of $100,000. Neurosurgery navigation and therapy revenue was $4,700,000 for 2025, from $2,900,000 for the same period in 2024. The increase is driven by an increased customer base and additional revenues due to the EarFlo product line acquisition completed in November 2025. Capital equipment, product, and related service revenue was $500,000 for 2025, a slight decrease compared to $600,000 in the same period in 2024. Gross margin was 62% for 2025, compared to a gross margin of 61% for the same period in 2024. Operating expenses for 2025 were $13,400,000, compared to $10,400,000 for 2024. The increase was mainly driven by the acquisition and consolidation of Eris’ financials and increased professional services fees. At 12/31/2025, the company had cash and cash equivalents totaling $45,900,000, as compared to $20,100,000 at 12/31/2024, with the increase resulting from the net proceeds of the notes payable and stock offering of $51,400,000 and cash acquired as part of the Eris acquisition of $1,100,000, partially offset by the use of $23,900,000 in cash for operating activities and $1,900,000 in cash paid for taxes related to the net share settlement of equity awards. Net cash flows used in operating activities for the year ended 12/31/2025 was $23,900,000, an increase of $15,000,000 from the year ended 12/31/2024. This increase was primarily due to a higher net loss of $6,600,000 and the paydown of accounts payable and accrued expenses of $10,600,000; $8,000,000 is related to liabilities assumed from the Eris acquisition as part of the purchase price and Eris acquisition-related transaction expenses. In addition, we had $1,100,000 of operational post-acquisition Eris expenses in Q4. We do not expect to incur cash outflows for the payment of assumed liabilities of a similar magnitude in future periods, as the paydown of the liabilities assumed in connection with the Eris acquisition represents a non-recurring event. I would now like to turn the call back to Joe. Joseph Burnett: Thank you, Danilo. As you can tell from our fourth quarter results, we ended 2025 on a strong note, with terrific momentum going into 2026. Now I will just spend a few minutes digging a bit deeper into our four-pillar growth strategy. As a reminder, our four pillars consist of the following segments: number one, pre-commercial biologics and drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical management. These are the four markets that we participate actively in today, and pretty much 100% of our current revenue is coming from these four markets. In 2026, we expect all four of these segments to each grow in the double digits. In the future, expect to add our fifth pillar of growth, which would be commercial cell and gene therapy delivery as our biopharma partners continue to progress through the various global regulatory processes. To be clear, our existing revenue forecast for 2026 of between $52,000,000 and $56,000,000 does not include any meaningful expected revenue from commercial drug delivery, so any change to the FDA treatment of rare diseases or approvals of these drugs outside of the United States would be upside to this forecast. First, let us start with pillar number one, pre-commercial biologics and drug delivery. The team has made substantial progress building out the ClearPoint Neuro, Inc. Advanced Laboratories facility in Torrey Pines, California, affectionately known as the CAL. In 2025, we performed our very first preclinical study for a sponsor and continue to execute additional studies already here in 2026. While construction will not be complete until our scheduled grand opening in the second half of the year, we do have the capability now to do smaller studies, and we expect to add full GLP capability soon as well. We continue to support our talented biopharma partners as their cell and gene therapy treatments progress through the development, clinical, and regulatory process. We now have more than 60 active biopharma partners, we support more than 25 active clinical trials, and we have more than 10 partner programs that have been accepted to some form of FDA expedited review. For some perspective, if we look at only the programs under expedited review, which span across eight different indications, there would be more than two million patients in the United States alone that have indications that are being considered for expedited designation pathways. Treating just 1% of those patients, or about 20,000 patients a year, could deliver approximately $300,000,000 in annual revenue to ClearPoint Neuro, Inc. Keep in mind that modest assumption of procedure volume is not even high enough to treat the newly diagnosed patients each year, let alone provide care to the millions of patients already living with the disease. I can tell you from direct conversations with our partners that their ambition and expectations far exceed that number. I can also share with you that in 2025, we had the highest volume of clinical trial cases supported by our biologics and drug delivery team in our history. In the meantime, while we are waiting for these first-in-world treatments to successfully win approval, our existing and collaborative biopharma relationships combined with our unique neuro capabilities should position us to achieve 20% of the estimated $300,000,000 market for pre-commercial biologics and drug delivery products and services. To say it another way, we are participating in pre-commercial drug delivery today and plan to enter commercial drug delivery in the future, but we do not need these future drugs to be approved to generate meaningful revenue. Moving on to pillar number two, which is neuro navigation and robotics, we have made some tremendous progress recently. The launch of our 3.X software platform has been very successful, as we have added multiple new installations, especially in sites that are intent on using ClearPoint Neuro, Inc. not only in the MRI, but also in the operating room using CT imaging. The results from our limited market release were very positive, highlighting the advantages of our platform in accuracy, procedure time, radiation dose, and room turnover rate, which will enable multiple ClearPoint Neuro, Inc. navigation procedures to be performed in the same room each day. We expect the data from this early experience to be submitted for publication later this year. Our switch to a new European Notified Body has been successful, and the CE marking for the 3.X software represents a further step in establishing a successful certification track record under this new Notified Body. We expect that the 3.X software certification will go a long way toward consolidating our entire installed base under one software version to simplify training and to ensure our worldwide customers all have access to our latest software features. At the request of a number of pharma partners, we have now initiated the PMDA regulatory process in Japan and expect to perform our first cell therapy clinical trial cases sometime in the second half of this year. Our recently announced robotic platform is also making development progress, and we expect multiple product usability showcases with customers this year. Importantly, we plan to perform our very first preclinical studies using the ClearPoint Neuro, Inc. robotic platform at the new CAL facility before the end of this year. Again, given our unique MRI capabilities, our fast, simple, and predictable operating room performance, our clear focus on cranial robotic development, and our deep relationships with biopharma, which will fuel future volume, we believe that achieving 20% of the cranial navigation market is a reasonable goal to achieve in the years ahead. For pillar number three, laser therapy and access, we have made progress as well. In 2025, the PRISM system received FDA clearance expanding compatibility of the system with 1.5 Tesla power MRI scanners. This clearance gave us access to the other half of the U.S. laser therapy market, as previously we only had clearance for 3.0 Tesla strength magnets. As we look to 2026, we have now installed our first 1.5 Tesla sites and have proposals in front of numerous interested centers. In 2026, we expect additional pipeline progress as we seek European approval for PRISM, submit our Harmony 1.0 software including numerous PRISM visualization features, and publish our first tumor clinical trial enabled by PRISM to help us bridge beyond functional neurosurgery and into neuro-oncology. On the access side of the business, our drill partner Adior just this week received FDA clearance for the Velocity Alpha MR Conditional Power Drill, which is designed to reduce procedure time compared to our currently available hand twist drill. We are just now starting our limited market release and prioritizing early drug delivery sites and cases. These cell and gene therapy procedures often require multiple trajectories where we believe the Velocity MR drill will provide meaningful advantages and simplify the overall procedure. We believe that our laser therapy and access portfolio will continue to grow in popularity not only because of the many unique and differentiated features, but for the simple fact that the laser ablation workflow with ClearPoint Neuro, Inc. is arguably the most similar workflow to these future cell and gene therapy cases. In both laser and drug delivery, there are multiple different trajectories, there is the delivery of a volumetric therapeutic dose, there is the need for periprocedural catheter adjustments, and there is the need to include small, minimally invasive access points. Every laser procedure a hospital does with ClearPoint Neuro, Inc. today is getting their team more familiar with the drug delivery workflow of tomorrow. Practice makes perfect and permanent, and we continue to believe that achieving 20% of this total market is a reasonable near-term goal. And last but not least, pillar number four, which is neurocritical management and is made up of the various EarFlo assets included in the acquisition at the end of 2025. This is a new market for ClearPoint Neuro, Inc., but it is an important one as it fits our two-phase strategy perfectly. Number one, it allows us to participate today in an existing $500,000,000 market opportunity with a unique and differentiated product supported by growing clinical evidence. And number two, it gives us another drug delivery option for the brain that fills a historic gap in our portfolio for a flexible indwelling option. The EarFlo catheter is now being offered as yet another tool in our ecosystem that our biopharma partners can consider and trial for themselves at the CAL facility. The existing market for these intracranial procedures is arguably the largest that ClearPoint Neuro, Inc. can participate in today, and our clinical expertise, global reach, commercial footprint, and investment pipeline can only improve our chances to earn 20% of this approximately $500,000,000 market opportunity. All in all, we believe we have an excellent vision and strategy for the future of our company: Phase One to earn 20% of a combined $1,000,000,000 market opportunity, generate $200,000,000 in annual revenue, and get us comfortably to cash breakeven and profitability; and Phase Two to provide unwavering support to our unique ecosystem of drug delivery tools to help our biopharma partners treat the very first 1% of patients living with severe neurological diseases that has therapy candidates under FDA expedited review. If we accomplish these two goals, we will have built a $500,000,000 annual revenue business and helped a lot of patients along the way. These are the two phases of our company, and we are just getting started. We will now open for questions. Operator: The first question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed. Frank Takkinen: Great. Thanks for taking the questions and appreciate the comprehensive update. I was hoping to start with a follow-up related to the 2026 guidance. I think you called out some of the most recent FDA communications around rare diseases, then integration efforts and priorities as a reason for tightening that guidance a little bit. Maybe talk a little bit more about each of those elements, what you may have previously incorporated into guidance and now what current assumptions incorporate into guidance. And then as it relates to that, big picture, how should we think about organic growth versus growth? Obviously, I can see growth with Eris in there, so maybe the right way is just how should we think about organic growth? Joseph Burnett: Yes. Thanks for the question, Frank. So starting with the first question, which has to do with what is kind of included in the guidance and where we could kind of go from there. There are two things that I cited in my prepared remarks. One was sort of the FDA current condition around rare diseases. And the second one is really digging deeper into the Eris acquisition and figuring out if the prior priorities are the same as the current ClearPoint Neuro, Inc. ones. So on the rare disease side of things, I think as many of our investors are aware, the current positioning that the FDA has communicated to at least two of our partners this year has been that sort of a more rigorous clinical trial strategy, which historically has been incredibly difficult to do for rare diseases to execute these traditional Phase III studies. So based on that information and how it would impact our two companies, or two biopharma partners, we have effectively taken out any and all revenue associated with the commercial launch of those particular products, and also just the understanding that it might take a while to really get to the bottom, you know, if and when the FDA were to change course there. So in the event that some good news is created, in the case of uniQure or the case of REGENXBIO, it is possible we would revisit that guidance. But for now, we think the most appropriate thing to do is base our guidance on the information that we have in hand, which is the latest information that those two biopharma partners have presented publicly. So that is really where we are on the rare disease side of things. I think it is important to note, however, that the vast majority of the biopharma partners we are working with are on more established and larger markets, sort of less rare diseases and more large volume patient populations. The majority of those partners were already planning to do that same Phase III sham study. So this newest FDA guidance, we do not believe it carries over to timelines relative to these larger populations because the expedited review process always included doing a Phase III study. What they were often allowed to do is skip Phase II and go directly to Phase III, but that large multicenter, geographically expansive sham study was always in the mix. So that is one half of the equation. The other one has to do with Eris itself, and, you know, the biggest thing I can point to there—again, it is a very exciting product. We are learning a lot every single day, meeting customers. As I mentioned, they had an existing revenue base last year in that $8,000,000 to $9,000,000 range, give or take. What I would say the biggest change that we have made is really in our Europe strategy, where we have kind of hit the reset button as we think about European expansion and, very specifically, which distributors we want to continue working with versus which ones we would like a fresh start with at this point. So, if anything, we maybe took a little bit out of our European revenue piece, just based on this latest information. But again, if something happens on the positive side, we always reserve the right to revisit that guidance in the second half of the year. But that is kind of what is embedded in the guidance itself. Then, Frank, what was the second question that you had there? Frank Takkinen: Underlying core growth. Organic growth. Joseph Burnett: Yes, I would say we expect it to be pretty balanced between the two. I think I did make that comment that we expect all four of our segments—and if you want to add capital equipment as a fifth segment, I think all five of those—we plan to grow double digits in the year. Now, quarter to quarter, there might be a little bit of noise here and there, but I think the development pipeline, the fact that our commercial organization today is significantly larger than it was a year ago, I think that new clinical evidence coming out in each one of those four categories, and we are getting familiar with the ClearPoint Neuro, Inc. and Eris team starting to work together. We think both organic and inorganic growth coming from Eris could be relatively balanced, but all in that double-digit range. Frank Takkinen: Got it. That is helpful. And then I was hoping to ask a little bit more about the core billion-dollar market and path to $200,000,000. If you envision yourself on the other side of the integration of Eris and you are back to a point where the business is all integrated, how should we think about the durable growth rate? And what I am trying to get at is that pathway from today around that $50,000,000 to $60,000,000 revenue range to $200,000,000. How long could that take and what kind of growth rates should we expect to see over time? Joseph Burnett: Yes. I mean, I think if we generally can grow in that 15% to 20%, maybe even north of 20% range for the foreseeable future, that assumes that we are taking 1.5% to 2% share pretty much each year across all four of those. And again, there could be differences that take place in each one of those markets. You know, for example, when we get our GLP capability for the CAL facility, and we earn our very first large GLP study on behalf of one of our biopharma partners, a single study could be in that $15,000,000 to $20,000,000 range. So we could see a large bump in any given year based on our capability being ready and then a biopharma company hiring us to do that work for them. So we could have a leap one year to the next in the biologics and drug delivery side. You know, similarly, on the EarFlo technology, there is a lot of clinical evidence being supported. There is a randomized clinical trial actually supported by Eris called the ARCH trial where we expect the data readout at some point later this year. So that is a very, very large market where EarFlo is a relatively new technology, where if we had clinical evidence that showed not only patient improvement but also some economic benefits for a hospital where a patient leaves the hospital sooner or has less complications during the procedure itself, those are things that could really swing market share pretty quickly because this is not a high intensive training product. This is one where we can ship a pump into that hospital the next day and we can be training residents 24 hours a day to get them familiar with the technology. So, where we cannot get to the point where we can outline exactly which one of those will be the primary driver any given year—other than this year, them all growing double digits—we do feel comfortable on that 15%, certainly 15%, maybe even 20% from an organic standpoint, until we get to that $200,000,000 number. Frank Takkinen: Helpful. And then last one, Joe, we get a lot of questions on just the attachment to uniQure and obviously the volatility around FDA's communication there. The question I wanted to ask was really focusing on the diversified offering. You have got BlueRock and Neurona's assets coming as the next most likely near-term, big market opportunities that should really exemplify the value of a diversified offering. Maybe just talk a little bit more about those assets, when they could be on the market, and then coming back to just the value of having so many partners in expedited review and kind of deemphasizing the attachment on just one singular asset and what the model looks like over time. Joseph Burnett: Yes. So, Frank, I do not want to comment on the timing of our partner programs. They give their updates when they prefer to. So I am just going to stick to what they have said. If you go to the websites of BlueRock, Neurona, some of these other companies as well, I think they shy away from giving actual timing updates and rather simply provide the status of the current program and what phase of clinical trial they are in. As I mentioned a second ago, we have a new investor deck that is just going live today, which I think puts some of that diversity and some of that staging into language that I think our biotech investors will better understand to show the scale of how many programs that we are in and then how many are in preclinical versus Phase I/II versus Phase III and even in the case of PTC when that is commercialized. So I would encourage you to take a look through that, and I think it will provide some feedback there as to where we are. The other thing I would bring up, however, is that even these Phase III trials can provide meaningful revenue to ClearPoint Neuro, Inc. So a typical Phase III study that we are seeing or we are participating in could be anywhere from 60 to 120 patients that are studied, sometimes randomized two-to-one in the test arm versus the control arm. A 120 patients times five, 10, 15 studies that could be going on at the same time could again be a very meaningful volume, maybe even a thousand patients a year, that would just be still in this clinical trial phase. So again, we do not count that in that Phase Two opportunity of commercial drug delivery, but it is supporting the growth, in addition to the CAL, of that pre-commercial biologics line. And I think as I mentioned in the remarks, Q4 was the largest volume we ever saw of drug delivery. So patients are raising their hand and enrolling in these trials, and we expect many more to start here in 2026. Frank Takkinen: Very helpful. Thank you. Operator: The next question comes from the line of Anderson Schock with B. Riley Securities. Please proceed. Anderson Schock: So first, you called out more than 10 partners in expedited review pathways now, so implying at least one new partner in these pathways since the last call. Could you provide any more color on the indication and population size for this new partner or partners? Joseph Burnett: Yes. In some cases, it has been a new indication. In some cases, it is redundant in an existing indication. So the two largest ones that are under expedited review today would be Parkinson's disease and drug-resistant epilepsy, the MTLE. So those are the two that are, I think, the largest existing populations. The ones in addition to that are anything from glioma to Friedreich's ataxia to Huntington's disease with uniQure, as mentioned before, to a couple other rare genetic disorders as well. So I think there are eight total indications and maybe 13 partners that are under FDA expedited review. So, again, we have a little bit of overlap—I think it is four or five in Parkinson's alone, for example. So it is nice because it gives us much higher confidence when you look at a disease state like Parkinson's with over a million patients in the United States that are really waiting for a superior treatment. We have five, maybe six partners that are already under expedited review. And maybe that treatment is not that far away, but just as importantly, we have got four, five, maybe six of these shots on goal that are under expedited review. Again, maybe every one of them does not make it all the way through the regulatory gauntlet, but if one, two, three of them get approved, we could be very successful there. Anderson Schock: Okay. Got it. Thank you. And then you mentioned the first tumor clinical data for PRISM publishing this year, potentially expanding beyond functional neurosurgery and into neuro-oncology. How should we think of the timeline for this expansion in the TAM in neuro-oncology versus PRISM's current addressable market? Joseph Burnett: Yes. I would say it is really just a strength of our commercial team and how we are growing and evolving as well. If you think about the laser therapy market, it has historically been split between epilepsy and tumor, with functional neurosurgeons maybe doing the epilepsy procedures and neuro-oncologists doing the tumor procedures. Now, we are participating in tumor procedures today, but because of our navigation history, because of our biopharma partnerships, we have always been a little bit heavily weighted towards functional neurosurgery and movement disorders. So having a publication that is looking directly at our laser performance in a group of very sick tumor patients, I think, puts us in a situation where we can look customers in the eye and say yes, we are taking this very, very seriously, and we are going to be participating in multiple clinical trials moving forward, even if it is a customer base that we have not had quite the same experience as we have with functional. Anderson Schock: Okay, got it. Thank you for taking our questions. Joseph Burnett: Yes. Thanks, Anderson. Operator: Thank you. This concludes the question-and-answer session. I would like to turn the call back over to Joseph Burnett for closing remarks. Joseph Burnett: Well, thanks again for joining our call today. Our team feels like we have built an incredible foundation which will now serve as the launch pads for our two parallel strategies. We are on the path to helping treat tens of thousands of patients a year who suffer from many of the most frightening neurological diseases imaginable. Supporting this vision and supporting us on the road ahead. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good afternoon, and welcome to the Trevi Therapeutics Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Various remarks that management makes during this conference call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's most recent annual report on Form 10-K, which the company filed with the SEC this afternoon. In addition, any forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so even if its views change. I would now like to turn the conference call over to Jennifer Good, Trevi's President and CEO. Please go ahead. Jennifer Good: Good afternoon, and thank you for joining us for our fourth quarter 2025 earnings call and business update. Joining me today on this call are my colleagues, Dr. James Cassella, our Chief Development Officer; Farrell Simon, our Chief Commercial Officer; and David Hastings, our Chief Financial Officer. I want to welcome Dave to his first official earnings call with Trevi. His experience has already been felt in the company, and we feel very fortunate that we are able to add him to our leadership team at this important time of execution and growth. So welcome, Dave. I will make some comments on the business, and Dave will make some brief financial remarks. Then the team is happy to answer any questions you may have. 2025 was a major inflection point for growth at Trevi, driven by our positive data readouts in both the CORAL trial in patients with idiopathic pulmonary fibrosis or IPF related chronic cough and the RIVER trial in patients with refractory chronic cough or RCC. As a result of these data, we were able to raise capital, setting us up nicely for the next round of trials for each of our indications. That momentum has carried into the early part of this year as we have been preparing to initiate the next set of clinical trials. This work recently culminated in a positive End-of-Phase 2 meeting with the FDA for our IPF-related cough program. We believe the path forward for our registration trials is clear, and the team at Trevi has been moving aggressively to initiate our Phase III program. Let me provide you with an update on where we stand in each of our chronic cough indications. Beginning with our lead indication of Haduvio for the treatment of IPF-related chronic cough, at our recently held End-of-Phase 2 meeting with the FDA, we believe we gained overall alignment on the plan for the remaining development program and pathway to NDA. First, I want to share that the meeting was very collaborative and we were appreciative of the preparation and comments from the FDA, especially with all of the changes going on at the agency. We had constructive dialogue around each of our questions and left with a good understanding of the path forward. During our interaction, we confirmed the primary endpoint using the objective cough monitor and discussed the proposed key secondary endpoints and the evaluation of these endpoints. Based on the FDA's input, the company plans to conduct 2 pivotal Phase III clinical trials and obtained agreement on the remaining Phase I clinical studies to support an NDA submission. The company plans to conduct these 2 Phase III trials in parallel and is on track to initiate the clinical program. We plan to initiate the first trial in the second quarter of this year. This trial will be a global 52-week trial with a primary efficacy endpoint following 24 weeks of fixed dosing. We have planned for the trial to include approximately 300 patients. The second confirmatory Phase III trial, which we expect to initiate in the second half of this year will also be a global trial with a primary efficacy endpoint at 12 weeks and is estimated to enroll approximately 130 patients. The 2 studies are almost identical in design, except for the different duration for the primary efficacy endpoints and sample sizes. The reason for these differences is the FDA interest in a 24-week readout to support durability of effect in at least 1 of the trials. As for the end of the trials, the 52-week trial with the 24-week endpoint is powered for all of the key secondary endpoints that we would hope to include in the label and supports an adequate safety database. The second Phase III trial is studying a 12-week endpoint to confirm the primary efficacy outcomes along with providing additional safety through 12 weeks of dosing. IPF-related chronic cough is a new indication for the FDA, and we believe this pivotal program provides robust safety and efficacy data for a potential NDA submission. In the U.S., there are approximately 150,000 IPF patients, 2/3 of which have uncontrolled chronic cough. These cough patients have a high unmet need with no FDA-approved therapies. With our distinct mechanism of action and known safety and tolerability profile, we believe we are well positioned to have potentially the first therapy for the treatment of IPF-related chronic cough. Also a quick comment on the remaining Phase I studies. These are all standard label-enabling studies, which we had already been planning for in our development program, and we're aligned with what we had submitted to the FDA in our briefing document. Jim can give more color in Q&A if you are interested. Following alignment with the FDA on our IPF-related chronic cough program, we now intend to submit a meeting request and protocol to the FDA to request our non-IPF interstitial lung disease or non-IPF ILD-related chronic cough program. We intend to propose an adaptive Phase IIb trial to confirm dose and powering assumptions prior to rolling into 1 pivotal Phase III trial for approval. We are planning to file a supplemental NDA for this indication. We are planning to have this meeting in the third quarter of this year, and if all goes as planned with the FDA, initiate that trial by year-end. This population will include non-IPF ILD patients who suffer from lung fibrosis and chronic cough. We estimate there are approximately 228,000 non-IPF ILD patients with 50% to 60% having uncontrolled cough. This more than doubles the market opportunity of IPF chronic cough, and these patients are primarily seen by the same pulmonologists that see IPF patients. This keeps our clinical and commercial efforts efficient and creates synergies. Finally, for refractory chronic cough. We are planning to conduct a Phase IIb parallel arm dose-ranging trial with 3 doses and placebo. The protocol is drafted and being submitted to regulatory authorities, and we have selected sites to conduct this trial. This trial is interesting scientifically as we explore whether dosing in RCC patients is lower or equivalent to doses we are testing in the IPF chronic cough trial. We plan to initiate this trial in the second quarter of this year as well and have included a sample size reestimation readout when 50% of the patients complete the trial. It has been a busy time at Trevi preparing to launch this next round of clinical trials. Jim and his team have been working very hard to leverage the important learnings and relationships we have already built as well as to expand our clinical footprint into the U.S. We are excited to initiate these trials and begin enrolling patients. Before I close, I want to note there will be 2 important meetings we are preparing for in the second quarter where we hope to see many of you. The first is an in-person Investor and Analyst Day on May 7 from 10:00 a.m. to 12:00 p.m. followed by an optional lunch in New York City to discuss the company's clinical and commercial strategy. We will be joined by both IPF and RCC KOLs. At this event, we plan to lay out clinical trials and time lines in more detail, share recent commercial learnings as Farrell has been busy at work on based on our recent data, hear from KOLs on their perspective, and I also plan to discuss our active efforts around obtaining additional intellectual property. So it should be an informative event. We will also webcast the event live for those of you that can't join us in person. Second, we will also be very active at the American Thoracic Society, or ATS meeting this year with all of our submissions being accepted for either presentations or posters. We will be sharing some new data from our various trials at this meeting. We are planning on holding an investor event at ATS, where Jim and Dr. Philip Molyneaux, the lead investigator on our CORAL trial, will summarize and share the various data being presented at the conference. This meeting is being held in Orlando from May 17 to 19, with our ATS investor event being held on Monday, May 18. If you plan to attend ATS, please reach out to us as we would love to have you join us. So in closing, Trevi is well positioned to execute against our plan of becoming the leader in chronic cough, providing therapy for these patients where there are not good options and in the process, creating meaningful value for our shareholders. I will now turn it over to Dave for his remarks, and then we are happy to answer your questions. Dave? David Hastings: Thanks, Jennifer, and good afternoon, everybody. First, I just want to say I'm thrilled to be participating in my first earnings call as CFO of Trevi. And before moving to the financial results, I want to take a moment to talk about why I took this role. The company has impressive clinical data in indications of high unmet medical need that offer a significant commercial opportunity. Importantly, given their specialty nature, we can commercially launch our indications effectively. In addition, the company has a proven track record of using its capital efficiently as it progresses with its key clinical programs. Also, after meeting the team, I felt confident in their ability to execute and I'm excited about the opportunity to contribute. Now turning to our key financial metrics, which are cash runway and what that runway funds. We ended 2025 with approximately $188 million in cash, cash equivalents and marketable securities, which gives us an expected runway into 2028. This runway allows us to provide top line data in our key clinical trials. This includes our Phase IIb clinical trial in RCC, our Phase IIb clinical trial in non-IPF related chronic cough and importantly, top line data in our 12-week pivotal Phase III clinical trial in IPF-related chronic cough. So while we're well positioned from a cash runway perspective to reach key clinical milestones, it is important to ensure that Trevi is always appropriately capitalized given the key inflection points and significant clinical trial data readouts the company has in front of us. So with that, I'll now turn the call back over to the operator to open the call for Q&A. Operator? Operator: [Operator Instructions] And our first question comes from Roanna Ruiz with Leerink Partners. Roanna Clarissa Ruiz: A couple for me. I wanted to check on the remaining Phase I studies that you talked about with the FDA at the End-of-Phase 2 meeting. Could you elaborate a bit on what questions they're meant to answer and how efficiently you think you can complete them in the near term? James Cassella: Hi Roanna, this is Jim. Thanks for the question. So these are pretty much label informative studies. So specifically, the FDA has asked us to look at nerandomilast as a newly approved antifibrotic agent to see if there's any drug-drug interaction with that, we had previously done that with pirfenidone and nintedanib. So we were kind of expecting this one is going to be coming along. The idea there is to make sure that there's no PK drug interaction that could affect the PK levels of either nerandomilast or vice versa, the PK of nalbuphine ER. So that's the first one. That was kind of expected given that we just completed those other ones. The other 1 was related to our mechanism of drug metabolism. We are metabolized in part by cytochrome P450 liver enzymes, specifically, were metabolized by cytochromes P450, the 2C9 and 2C19 isoforms, we had planned on doing an inhibitor study to look at drugs that inhibit the enzymes to see if the effect -- if it affects RPK, the FDA wanted to just step more -- step further and look at inducers of those enzymes. So again, it's kind of routine, we'll be able to inform on the physicians through the label and what happens when we do that. Now what we had also proposed and was accepted was standard label-enabling studies on renal impairment, hepatic impairment, food effect and things like that. So we're in a good place there. I think we have a very good idea of what we're required to do for the pathway to the NDA. These are not rate limiting in any way. They can be done in parallel with the Phase III, and we'll be performing those as we go along. Roanna Clarissa Ruiz: Great. That's helpful. And a separate question on non-IPF ILD and talking about the -- going in front of the FDA about that trial design as well. Any design features that you particularly want to align with the FDA most? And is there anything that you expect maybe some questions or things you may have to have more of a discussion about with the FDA on? James Cassella: Yes, great question. I think the beauty of our timing here is that we're coming off of a very positive End-of-Phase 2 meeting in IPF. And you know IPF is a form of ILD, interstitial lung disease. So we're really looking at the other part of that ILD population. So I think a lot of the learnings that we have from the End-of-Phase 2 meeting directly relate to what we're looking to do in the non-IPF ILD. So everything we learned in the End-of-Phase 2 meeting in terms of study design, what the FDA is looking at for study duration, even our endpoints really will carry over. So what we want to do with that meeting is really introduce them to the concept that we're interested in this other part of the population. We are looking at doing this in terms of a Phase II, Phase III adaptive design, as Jen mentioned. The Phase II part is really -- this is a slightly different population. There will be other comorbidities associated with this non-IPF ILD population. So we're going to do some dose ranging in the Phase II part. The idea of the adaptive design is that we were able to pick our doses, determine what our effect size is, look at the variability in this population, immediately translate that into the Phase III study. There will be a data readout in between there. So we're basically going to lay out that concept with them in the Type C meeting that we plan on having with them. Operator: Our next question comes from Judah Frommer with Morgan Stanley. Judah Frommer: Congrats on the progress. Dave, congrats on joining the team. I guess maybe just first from us on non-IPF ILD. Was there any conversation in the End-of-Phase 2 about potentially adding an arm in the pivotal program for IPF that could include non-IPF patients if not, did you feel that it just wasn't the right format. And also in the End-of-Phase 2, can you help us with any color on discussion of 1 trial versus 2? I know you had always assumed that you'd be doing 2 trials here. But was there any discussion around that? James Cassella: Yes. So in terms of non-IPF ILD -- we -- the IPF program is our lead program. It has a very clear directive. It's a very distinct population. It's what we had actually talked about when we filed our IND. So we really kept it to the IPF part of the ILD population. The idea was that we would take the learnings from that meeting and then apply it to the ILD. So we did not have any direct conversations about that. I'll let Jen chime in on the second part. Jennifer Good: Yes. The 1 versus 2, Judah, I think we got good comments from the agency and had good dialogue with them in the meeting. As you know, there's sort of this in between phase now where there's this New England Journal article floating around that hasn't really translated down into FDA guidance. I think that causes a little bit of wondering what to do with that at FDA, especially for us because it's a brand-new indication, a chronic cough drug has not been approved, and this will be our first indication approved. So as our management team stepped away from everything we heard, we made the decision that it was best to really lean in on our lead indication here and conduct a robust trial so that we didn't get caught sort of in any kind of changes around view there. So it was really a decision we made as a company. There's a lot of confidence that we can run a successful study and these are not big trials because of our drug effect size. So I would say it was sort of room to move, probably either way there and we opted to protect our lead program and move forward with 2 studies. Judah Frommer: That makes sense. And then just 1 on refractory chronic cough. It sounds like you have a plan there. Just curious, I guess, on any read-through you'll be looking for in the P2X3 readout kind of around midyear and if that could impact the program? Jennifer Good: So it's interesting. That should read out in the third quarter. Obviously, important for patients. I do think our strategy is a bit different. We're going after treatment failure patients. The only read through there, I think probably particularly Jim will be interested in is kind of what did their placebo effect look like. I think we hope the trial works, sort of work or not work. I don't think it really impacts what we're doing. We will look at some of the trial details. I don't know that those will all be available in the third quarter. It may come later as they publish the data. But that's probably the most interesting thing. I don't know, Farrell, Jim, anything you'd add? No. James Cassella: No, I think that's right. Operator: Next question comes from Annabel Samimy with Stifel. Jayed Momin: This is Jayed on for Annabel. Congrats on the progress. I had 2 questions. The first 1 is just related to cash runway. It is sufficient for Phase IIb in RCC, the Phase IIb in non-IPF and a 12-week readout of IPFCC. Does that mean 24-week data, it doesn't cover 24-week IPFCC readout? David Hastings: Yes. So that's correct. This will get us through, obviously, those key clinical milestones you outlined. And as I mentioned, look, it's important that the company is always appropriately capitalized and we'll make sure that the funding will be there for all our key clinical studies. Jennifer Good: And Dave, can I just add 1 thing, history because I've been around this. I think what changed here fundamentally from our FDA meeting is that the FDA wants 52 weeks of controlled safety. So we have to keep our placebo arm on and placebo for 52 weeks, which means we can't readout that 24-week endpoint, until the end. So that's been a little bit of shift in the requirement. If we could read it out at 24 weeks, we would be able to cover all this. But now that we've got to leave that study blinded and go all the way to the end, that's where a little bit of this gap shows up. Having said all that, we're still nailing down exactly the non-IPF ILD plan and all that. David Hastings: Yes. Also, I'd just like to add, I mean, strategically, we could deploy the cash differently, right? But I think expanding the indications is important as well. So that's why getting the non-IPF ILD study going and getting data there is also very important. Jayed Momin: My other question was regarding secondary endpoints in the IPF pivotal trial. What are you guys thinking? Or is there any color you can give there? James Cassella: Sure. This is Jim. So it's very important in this program that we get the patient perspective. The primary endpoint is objective cough monitor. Of course, we use the same thing in the CORAL study. But also some of the PROs that we developed and used in the CORAL study, we'll be bringing forward into the Phase III program. These are primarily centered around patient perception of cough frequency, cough severity. We also have some very interesting data that came out of the CORAL study in terms of potential impact on subject perception of breathlessness, and so we are moving that up into a key secondary category because we have some very interesting findings there. And of course, it's a very important measure because patients do feel breathless after these coughing periods. So we think that's a very important endpoint. It's something that the patients are very concerned about. Jennifer Good: And Jim, that's one of the things we'll share at ATS. James Cassella: Yes, we have some great data to share at ATS. So I'm spilling the beans a little bit. Jennifer Good: Just only... James Cassella: Only a little bit. Operator: Our next question comes from Alexa Deemer with Cantor Fitzgerald. Alexa Deemer: Congrats on the great year. This is Alexa on for Josh. So 2 quick questions from me. The first being, do you expect the label dose in RCC to be the same as in IPF? And if not, do you expect to procure additional IP for dosing in RCC. And then the last question I have is, do you plan on sharing data from the RCC study this year? Jennifer Good: Yes. So I'll take that. Alexa, hi, by the way. So the label dose, that's part of what Jim's mission is. He's going to go off and figure that out. When you look at the crossover data, it appears that, that whole effect is there at the lowest dose, very early. And by 1 week, the first time we measured it. I think there's sort of a mechanistic reason of why that may be true that you need less drug. And so Jim is going to be really exploring the lower end of that dose range along with the QD dose we're going to look at actually. So we've sort of told Jim, once he figures out what's the appropriate dose, we'll figure out the strategy. And if we do end up below this dose range we're in now, there will be additional IP because there will probably be some new formulation work that needs to be done, which we're actually working on in parallel. So that was good. Your second question, I'm sorry, what was that? Alexa Deemer: Just if you plan on sharing data from the RCC study? Jennifer Good: Yes. Sorry, I didn't -- I only wrote the S part of that, and then I couldn't remember what that meant. Yes. So we have built in the sample size reestimation. We won't get all the way to the end of the RCC trial this year. We are targeting getting to that sample size reestimation readout by later this year. So we will hope to do that. When we initiate the study formally, we'll lay out guidance for both -- for that milestone as well as the full trial readout. Operator: Our next question comes from Serge Belanger with Needham. Serge Belanger: So a follow-up regarding the secondary endpoints. I think in your prepared comments, you mentioned the larger of the Phase III studies was powered to further with secondary endpoints to be included in the label. Just curious if that was an FDA request or it's a strategic decision by the company. And second question, just whether there was any discussion at the End-of-Phase 2 meeting regarding orphan drug designation or that's a conversation that takes place separately at a later time. Jennifer Good: Go ahead, Jim. James Cassella: I'll take the first part of that question. So it's really a strategic question, Serge, because the FDA is looking for 52 weeks of controlled data, safety data. And in that study because it has to run longer, it's most efficient that we sort of build in a little bit more into that study. So obviously, that's a study that contains our 24-week primary endpoint of fixed dosing. And also because we have -- we will meet our -- basically our safety database requirement for the 52 weeks on drug, it was easier and more efficient to build in all of our key secondary endpoints. Remember, I mentioned these are PROs. So they're not quite as clean a signal. They have a little bit more variability, add a little bit more end to the study. It was most efficient to build all that into the larger Phase III study. And then the second study is really just confirmatory with the 12-week endpoint. So it's really a matter of efficiency and strategy that we did it that way. Jennifer Good: Jim, we proposed that, FDA didn't make us do it, right? This is our proposal search, and they agreed with it. As far as the orphan drug question, it's a good question. We are going to file this year an application for orphan drug. As you've heard me say before, I'm skeptical whether we'll be able to get it because we're -- while IPF is orphan, we are looking at chronic cough in IPF, which is largely viewed as 1 of the most difficult chronic cough conditions. So they're probably going to look at that and realize that if it works in IPF chronic cough, it could work more broadly, but that's a question we want to answer. I don't want to assume that. So we will file. We'll ask the question. We wanted to get aligned with the FDA on our program first. So now that we've done that, we'll work to submit that application and get an answer to that question. Operator: [Operator Instructions] Our next question comes from Ryan Deschner with Raymond James. Ryan Deschner: You had any recent feedback since your big 2025 data readouts from either patients or physicians suggesting increased awareness of Haduvio or your programs in general, which might be able to inform on expectations for enrollment demand for the IPF chronic cough pivotal study and then I have 1 more question. Farrell Simon: Yes, Ryan, this is Farrell. So we've been doing a lot of work over the summer in terms of just understanding physicians' behaviors and key drivers of just liking. And what really comes up to the top of the list is the efficacy that was shown. So we've seen an increase in physician understanding. We've also been really active with the patient advocacy groups in the U.S. and ex U.S. environment, so that we understand how we can work with them to better support patients. This all nicely flows into the work that Jim and his team are doing in terms of clinical trial awareness and our team have our sights set on that. But we'll give a lot more details on the insights in the Investor and Analyst Day come May. Jennifer Good: Yes. I would say, as you know, Ryan, we are going to be entering the U.S. with these trials. And we've been staying close to that group. And while we've hosted receptions, we have a lot of these physicians show up in lobby. Jim and myself are getting entry into the trial. We've had good response time, right, on all our sites. So there's good awareness of our drug, our program, the unmet need. I think I'm excited about the enrollment curves here. I think we can do a good job. Farrell Simon: There's a lot of excitement as we reach out to the sites in the U.S. Clearly, very high interest in participating in this drug trial. Ryan Deschner: And then maybe quickly from a more general perspective. Are you anticipating meaningful read through your programs regarding the relatively new developments to FDA related to plausible mechanism, increased emphasis on Bayesian trial design or even recent turnover at the department. Jennifer Good: I would say no. I mean, that's what the beauty of this, Jim, you chime in. But the End-of-Phase 2 meeting, we have a very clear path forward, and that's the playbook we're going to execute against. I think fortunately, the division -- or the acting Division Director was very active in our meeting. So we know she's bought in and solid with that. There's going to be a lot of churn -- or there is churn going on in the leadership roles, we're not sort of under that branch. So I don't foresee that really affecting what we do because we're going to have our heads down for the next 2 years, executing the plan that was agreed to. So I don't know, Jim, anything you want to add? James Cassella: No. Other than that, I think you hit the nail on the head. We work with the division. The division was very clear on what the expectations are for the approval of a drug for cough, which they were very enthusiastic about. They see the Division Director really talked about the need here and the burden on the patients. So I think that was very clear. We have clear line of sight with this division on what needs to get done. I think that's the most important step that we're going to work towards. Operator: Our next question comes from Brandon Folkes with H.C. Wainwright. Brandon Folkes: Congrats on all the progress. Maybe just 2 for me, if that's all right. How do you think about moving forward into a Phase III in RCC in terms of timing post the Phase IIb? Do you expect to make a decision just in terms of sort of the second indication to market, where perhaps post that Phase IIb in RCC, we could see a bigger focus on the non-IPF-ILD as the second indication to market given the commercial overlap and then also the fact that you're probably going to get off-label use in RCC. Jennifer Good: So that's not the motivation. I would say, obviously, our lead indication is IPF. And I would say our second indication is ILD because they're attached at the hip. I do think, though, ILD, the non-IPF ILD and RCC are both going to be sNDAs. So they would be fast follow-on. So when IPF got approved, we would look to be in a position to file both of those really very closely together. I think if there was ever a resource issue on time, ILD would get prioritized because we'll be launching into those centers, and it makes a lot of sense with IPF. So yes, I think we think about the priorities internally, it's IPF, ILD, it's sort of close cousin. RCC, we will move along urgently, though. That is a big unmet need. I think our drug has shown good data there. And there's no reason we can't have that ready to go as soon as our IPF drug gets approved. We believe there's only going to be one Phase III trial to run on the heels of our IIb. So we'll be prepared to keep this moving. Brandon Folkes: Great. And then secondly, coming back to the Phase III in IPF chronic cough, can you just remind us or help us think about what's your thinking on the placebo effect in the longer 24-week duration? James Cassella: That's a great question. Really that question. I think we -- our CORAL study gave us a really good indication of the placebo response. We had about a 17% placebo response in terms of objective cough. We saw the response in our subjects come in within the first couple of weeks. And then it was a pretty steady response over that time for the active drug. Placebo was sort of bouncing around that range. It's a slightly smaller study. I don't think we think about it any differently going forward. I think that we are something that we need to figure out. I think we're sufficiently powered to find out what the effect is but it really is an unknown at this point, and we're going to find that out both in the 12-week trial and then in the longer trial. So I think it's a stay tuned. I think we're well powered to handle any perturbations around what that placebo response is. I think our primary endpoint -- our trial is powered over 90% for the primary and the key secondary endpoint. So we built in some safety net there as you would for a Phase III trial. But I think we're going to all find out together. Operator: Our next question comes from Debanjana Chatterjee with Jones. Debanjana Chatterjee: So sorry if I missed this and you've already clarified, but could you comment on the internal expectations around pace of recruitment and enrollment completion in the Phase III IPF cough trial? And I have a follow-up. James Cassella: Yes. We have good solid data from our CORAL study to lay out some expectations for recruitment. Given the size of the first Phase III, the larger one, we're expecting that enrollment should be about a year to enroll the trial. We're anticipating something between 80 and 100 sites. So I think with those kinds of parameters, the vast majority of those centers will be focused in the U.S., which I think offers all these PFF excellent care centers, where there are large numbers of patients. So I think the 1-year expectation is reasonable for a trial like that. Debanjana Chatterjee: So are you assuming for 1 year to recruit and then you have to follow patients for 52 weeks for safety reasons. So by the time, this is potentially approved, there could be other IPF drugs such as United Therapeutics' Tyvaso or BMS' admilparant that's potentially out there. Will you need to do additional, like Phase I drug-drug interaction studies to file? James Cassella: Depends on when those drugs get approved, theoretically, we would probably have to do a DDI study to make sure there's no effects on the PK. We do know from the mechanisms, whether or not we expect to see some kind of drug-drug interaction there. I think it will be a matter of timing. If we're done with our recruitment phase, then we're continuing the running of the study, then obviously, we won't need to bring in any more patients. So I think it's a matter of timing, Deb, and we'll see what happens. But it's not a big deal to do a Phase I study, DDI study. So I wouldn't see that as a barrier. Operator: Our next question comes from William Wood with B. Riley Securities. William Wood: So 2 for me, 1 upfront. So just thinking about in terms of your ILD study, you've mentioned that you're going to do an adaptive design. And I believe in the past, you've mentioned that you're going to stay away from sarcoidosis. But apart from that, how should we think about how your inclusion criteria could look? And should we really expect that to look into all sort of ILDs, including differential forms of pneumonia, just sort of discuss how we should think about that, if you would. And then I have a follow-up. James Cassella: Yes. We actually had a very insightful meeting with a group of KOLs last year. And it comes down to that -- the commonality that all these patients have, even though they may have different comorbid diseases is that they all have interstitial lung disease to a varying degree. They have a certain amount of scarring, that scarring can get worse over time, and they all have cough, whatever percentage that is. So what we came to was that there wouldn't be any basket-type trial where we're picking them based on the diagnosis that they have. We're going to base it on amount of fibrosis that they have and the amount of cough that they have. So I think it really minimizes it to the core essentials, and we think that the fibrosis is probably leading to the cough anyway. So it really does get to the fundamental issues. Now that doesn't mean we won't have to deal with comorbid conditions and conmeds and things like that. We'll work out those details, but I think that's the essence of the trial. William Wood: Makes sense. And then in terms of -- the FDA is sort of continually evolving. And so I was just curious if there's been any viewpoint change on how they're seeing nalbuphine potentially scheduling or not scheduling and just sort of if there's been any updates and interpretation there? Jennifer Good: I would say, William, we provided our human abuse potential study. We provided our data from our respiratory safety study, we had a consult on the meeting from controlled substance staff. It was a very constructive meeting. I would say, I think all of our interpretation is. FDA is less focused on the molecule because that's already unscheduled and focused on our formulation and whether there is anything unique about it that could change the profile around that. Our data has not showed that. Jim did a really nice job of doing a cut around their various terms. They'll look at the end of the study and there just isn't much there. So I've been living this ride from the beginning. And I would say I just continue to have stronger and stronger conviction that this drug will stay unscheduled. So nothing in the End-of-Phase 2 to change that. I would say very relaxed tenor around that generally and clear guidance about what they're interested, which quite honestly, was more around dependence than it was addiction. So I don't know, Jim, anything you want to add? James Cassella: Yes. No, but that's a good point. I think we laid out for them to plan on how we would pull together the data to support the conversation at the NDA time. So there's clearly very good datasets that need to be generated with the guidance of VA and CSS, where they put out these terms for adverse events that are related to these abuse terms. But as Jen said, there was a lot of discussion or meaningful discussion around observing whether or not there's physical dependence and withdrawal. Just for a point of reference, that's a label issue, not a scheduling issue. So again, there's 2 different aspects of this that they're interested in. So not that we expect to see any of that but that would be label as opposed to scheduling. Operator: Our next question comes from Kaveri Pohlman with Clear Street. Unknown Analyst: This is Christian. I'm on for Kaveri today. So you've mentioned that the 1-year IPF Phase III safety data set could start to teach you about things like dyspnea, exacerbations, hospitalizations and maybe even lung function trends over time. Will any of those be prespecified analyses? And what data would actually change how you think about the label or launch strategy? James Cassella: Yes. So there's a lot of things that we're going to be tracking. We are seeking approval for cough. I think that's first and foremost, we have to support that label. I think the 1 thing that we mentioned previously is that cough patients really do have concerns about shortness of breath. So we are moving breathlessness into the key secondary endpoint, that's clearly related. We are clearly going to be capturing data that would relate to these other things that you're referring to. So we do FVCs, we do other things, we'll look at hospitalizations. These are going to be patients living with their disease is a terminal condition. So we'll be tracking those things as well over the course of the year. Unknown Analyst: Got it. I appreciate the color. And I just have 1 more regarding Phase III IPF population. You've previously mentioned that you would be -- you would like the population to be as real world as possible and that it would be like the Phase IIb population, but with some broadening efforts. Could you possibly talk about which parts of the patient population you're intentionally broadening into versus the Phase II CORAL study? James Cassella: So there's a lot of carryover from the CORAL study. The CORAL study was really a great study in setting us up for this, not only in terms of dose ranging, but in terms of understanding the patient population. So we are broadening that. We're making as real world as possible, which is clearly what the FDA wants. There will be patients who are on background antifibrotic medications. That was true in CORAL. This is going to be true here. We don't have a cough count requirement coming into the trial. That was true in CORAL. That is true here. The FDA actually mentioned that nobody expects to find cough monitors in doctors' offices when the patients are going there. We actually have some more data that will be coming out at ATS that looks at minimum cough levels, and there was an arbitrary cutoff around 10 coughs per hour. There was some concern about maybe capping those. We are going to cap the number of coughs coming in under 10 coughs per hour. That came out of the CORAL study. So we're learning the CORAL study, but really it's a very similar population to that study. Operator: Thank you. I'm showing no further questions at this time. This concludes our question-and-answer session. I would now like to turn the conference back to Jennifer Good for any closing remarks. Jennifer Good: We appreciate you joining us for today's call. I know for all of you guys, this is getting to the end of your earnings season, so you're tired. We look forward to sharing our continued progress in the second quarter as we initiate clinical trials as well as at our Investor and Analyst Day in May as well as ATS. Thank you. Operator: Thank you. This concludes today's conference call. Thank you for attending. You may now disconnect.
Operator: Greetings. Welcome to Titan America's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Daniel Scott of Investor Relations. Thank you, and you may begin. Daniel Scott: Thank you, operator, and good afternoon to everyone on the line. Thank you for joining us for Titan America's Fourth Quarter and Full Year 2025 Conference Call. I am joined by Bill Zarkalis, President and Chief Executive Officer of Titan America; and Larry Will, Chief Financial Officer. Before we begin, I would like to remind you that earlier this afternoon, we released Titan America's fourth quarter and full year 2025 results, which are available on our website at ir.titanamerica.com, along with today's accompanying slide presentation. This call is being recorded, and a replay will be made available on our Investor Relations website. During the call, we will present both IFRS and non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for non-IFRS measures are available in today's press release and accompanying slides. Certain statements on today's call may be deemed to be forward-looking statements. Such statements can be identified by terms such as expect, believe, intend, anticipate and may, among others, or by the use of the future tense. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today as well as the risks and uncertainties described in our SEC filings. I will now turn the call over to Bill. Please go ahead. Vassilios Zarkalis: Thank you, Dan. Good afternoon, everyone, and thank you for joining us today for Titan America's Fourth Quarter and Full Year 2025 Financial Results Call. Before I get into the results, I want to take a moment to welcome Michael Bennett, who recently joined Titan America as Vice President, Investor Relations and Corporate Communications. We're very pleased to have him on the team. If you turn to Slide 4 in the presentation, I'd like to begin by highlighting what rendered 2025 a historic transformative year for Titan America marked by strategic milestones. In 2025, Titan America joined the roster of companies that trade on the New York Stock Exchange following a strong period of 11 years of achieving above-market performance and demonstrating we are passionate about providing innovative building materials and solutions that protect life and property, improve the quality of life, generate economic prosperity and connect communities. Equally remarkable was our performance in 2025. In the construction materials market that was affected by soft demand and economic uncertainty, Titan America delivered all-time high revenue, adjusted EBITDA, net income and operating cash flows. This success reflects the strength of our business model, disciplined decision-making, skillful execution across our operations and an unwavering focus on serving our customers. Titan America can grow and outperform organically even in challenging environments. At the end of the year, we concluded negotiations to acquire the Keystone Cement Company and signed an agreement in early January 2026. This strategic initiative marks a foundational investment in Titan American's new era of growth, represents an important step forward in advancing our long-term growth strategy and reflects our disciplined approach to expansion through M&A. Coming now to the specifics. The year presented a mixed demand environment. The residential sector remained challenging for yet another year throughout 2025 due to persistently elevated mortgage rates and low housing affordability. In contrast, robust demand from public sector projects driven by the Infrastructure Investment and Jobs Act and strong private nonresidential construction, particularly in data centers, manufacturing, logistics facilities and energy projects supported our performance. Our markets continue to benefit from population growth and business migration, particularly in Florida and the Carolinas, and the data center market remained exceptionally strong with Virginia continuing to represent the largest hyperscale data center market in the world. In the fourth quarter, we achieved 4% year-over-year revenue growth and 12% year-over-year adjusted EBITDA improvement. For the full year, we delivered record revenues, up approximately 2% and record adjusted EBITDA of $390 million. This represented a 75 basis points improvement in our adjusted EBITDA margin, demonstrating the inherent benefit of our vertically integrated business model and our cost efficiency despite a challenging market and macro environment. For the full year, our Florida business segment delivered strong results with solid infrastructure and private nonresidential construction demand offsetting a soft residential end market. Our investments in increased aggregates capabilities and our cost initiatives helped deliver record full year adjusted EBITDA in 2025, reflecting our disciplined execution during the year as well as the benefits of our strategic capacity investments. The Mid-Atlantic business segment was impacted by a combination of tariffs and soft demand in Metro New York and New Jersey, the only regions where we do not operate an integrated business model as well as adverse weather impacting the Mid-Atlantic. Resilient pricing, growth in infrastructure, data centers and private nonresidential investment as well as self-help from cost initiatives partially mitigated the impact from the headwinds in the region. Larry will provide further detail on the segment's performance and our capital investments for 2026 later on. Let's move now to Slide 5. As communicated, we have entered into an agreement to acquire the Keystone Cement Company in Bath, Pennsylvania, expanding our geographic reach in the Eastern Coast of our country while strengthening our vertically integrated footprint in the region. This transaction will add to our domestic cement production capacity. It is synergistic to our existing operations and this pending acquisition demonstrates our disciplined approach to value-creating M&A, and we believe positions us to capitalize on powerful secular growth trends in the region. Keystone is a modern cement facility with approximately 990,000 short tons of current clinker capacity and is well positioned to serve a greater than 6 million short ton addressable market across Pennsylvania, Ohio, Maryland and Delaware. These are markets where we have limited, if any, presence currently. Keystone's mineral assets are expected to support more than 50 years of cement production capacity, and the site presents meaningful future commercial aggregates opportunities that fits squarely within our growth playbook. The logistics and customer service network synergies with our existing operations are compelling. The Keystone plant is approximately 75 miles from our Essex Marine hub and approximately 200 miles from the Metro D.C. area, creating strong interconnectivity that we believe will enhance our strategic supply chain and customer service capabilities across the Mid-Atlantic. This acquisition adds to our domestic production capacity at what we believe is an attractive valuation relative to scarce high-cost greenfield or brownfield investment alternatives. The transaction is subject to regulatory approval and is currently under review. We believe it is strongly pro-competitive, and we look forward to providing updates in the near future. On Slide 6 now, it showcases a selection of key projects we participated in during the fourth quarter across both business segments. As we have shared in the past, these projects illustrate both the breadth of our market reach and our technical capabilities in providing specialized solutions across diverse construction sectors. I'd like to highlight today a few examples. At the top left of the slide, we have the Bentley Residences in Sunny Isles Beach in Miami. This more than 60-story ultra-luxury oceanfront condominium tower with more than 200 residences. The foundation work alone is requiring over 23,000 cubic yards of concrete, the largest in Florida history, supporting significant demand for structural concrete and building materials during construction. The next photo to the right shows the job site at the Kennedy Space Complex supporting next-generation starship missions, including a new launch tower and a dual pad lodge facility. The expansion will establish the Florida Space Coast as a major operational hub for starship missions, significantly increasing capacity for commercial and government space missions. The multiyear project is expected to require approximately 120,000 cubic yards of concrete, supporting substantial knock-on construction activity and materials demand across the Florida Space Coast region. On the bottom left of the side, we have PowerHouse 95. This project is a large-scale data center campus development near Fredericksburg in Virginia, located along the I-95 corridor. The project will be built on approximately 145 acres and is designed to support up to 800 megawatts of power capacity, making it one of the larger emerging data center developments in the region. PowerHouse 95 is intended to serve hyperscale technology and cloud computing companies, expanding the Northern Virginia data center ecosystem, Southward and supporting [indiscernible] construction projects. Larry will now provide a more detailed breakdown of our financial results and business segment performance. Larry? Lawrence Wilt: Thank you, Bill, and good afternoon, everyone. Moving to Slide 7. Let me share an overview of our fourth quarter and full year 2025 financial highlights. In 2025, weather played a meaningful role in our results, particularly in the first half of the year. We experienced harsh winter conditions in Q1 across our Mid-Atlantic region and saw continued adverse weather in Q2. Conditions improved by the middle of the year, enabling strong volume recovery in Q3 and our fourth quarter results also benefited from favorable comparison to the hurricane disrupted fourth quarter of 2024. For the fourth quarter, revenue was $406 million, an increase of 4% compared to $390 million in Q4 2024. Net income for the quarter was $44 million, an increase of 19% compared to $37 million in the prior year period. Adjusted EBITDA for the quarter was $94 million compared to $84 million in the prior year quarter, an increase of approximately 12%. Our Q4 adjusted EBITDA margin was 23.1%, up from 21.4% in Q4 2024, reflecting strong operational execution as we closed out the year. For the full year, we delivered revenue of $1.66 billion, up 1.8% compared to $1.63 billion in 2024. Revenue growth was driven primarily by product pricing improvements for aggregates and ready-mix concrete as well as increased aggregate sales volumes, partially offset by lower sales volumes for cement and concrete block, reflecting the ongoing softness in the residential market. Net income for the full year was $185 million, an increase of 12% compared to $166 million in the prior year. Adjusted EBITDA was $390 million, an increase of approximately 5% compared to $370 million in 2024. Our adjusted EBITDA margin expanded to 23.4%, up 75 basis points from 22.7% in 2024. This margin expansion reflects the benefits from our vertically integrated model, our strategic capacity investments, particularly in aggregates and effective cost management throughout the year. In Q4, operating cash flow was $81 million compared to $51 million in the prior year quarter. For the full year 2025, we delivered a record operating cash flow of $295 million compared to $248 million in 2024. After net capital expenditures of $43 million, free cash flow was $38 million in Q4 2025 compared to $27 million in Q4 2024 when net capital expenditures were $24 million. For the full year, free cash flow was $132 million after net capital expenditures of $163 million compared to $111 million after net capital expenditures of $137 million in 2024. As I will expand upon shortly, our net leverage ratio further improved to 0.64x at year-end 2025. Turning to Slide 8. Let me walk you through our sales volume performance by product line. The fourth quarter showed improved volume performance compared to the prior year quarter, which had been impacted by hurricane activity. Cement volumes increased 0.2% compared to the fourth quarter of 2024, reflecting improvements in Florida, driven by strong private nonresidential construction and infrastructure demand, partially offset by the decline in the Mid-Atlantic region. Aggregates volumes showed strong growth of 10.3% in the quarter, benefiting from the expanded production capacity in Florida. Fly Ash was up 23.2% on increased utility generation, while ready-mix volumes increased modestly with 0.6% growth. Concrete block volumes increased 9.8% in the quarter compared to the hurricane-impacted prior year quarter. For the full year 2025, our cement volumes decreased by 2.4% as continued weakness in the residential sector weighed on demand across our markets. This decline was partially mitigated by stronger demand from infrastructure and private nonresidential construction, including data centers and commercial development. We also saw stronger performance in our other product lines with aggregates volumes increasing by 15.7%, supported by our strategic investments and expanded production capacity. Fly Ash volumes grew by 20.9% from a low base, while ready-mix concrete volumes grew modestly by 0.2%. Concrete block volumes declined 2.1% year-over-year. Turning to Slide 9. Cement pricing in the fourth quarter was essentially flat, while aggregates increased 2.1% year-over-year. Ready-mix concrete pricing improved 0.9%, while concrete block pricing and Fly Ash pricing declined by approximately 2%. For the full year 2025, cement pricing remained resilient on a like-for-like basis, declining modestly by 0.4%, impacted primarily by unfavorable product and geographic mix. Aggregates pricing increased 2.8%, reflecting strong demand growth, while Fly Ash pricing increased 5.6%. Ready-mix concrete pricing improved 1.2%, while concrete block pricing declined 1.7%, impacted by softness in the single-family residential market and elevated regional capacity. Looking at Slide 10. Our Florida business segment delivered outstanding results in the fourth quarter and record performance for the year. Fourth quarter external revenue was $247 million, an increase of 5.1% compared to $235 million in the fourth quarter of 2024, driven by higher volumes in cement and aggregates. Concrete block volumes also improved from 2024's hurricane-affected quarter and the Florida segment adjusted EBITDA was $65 million in the fourth quarter, an increase of 22.5% compared to $53 million in the fourth quarter of 2024, primarily due to productivity improvements and the impact of higher sales volumes as compared to the hurricane-impacted prior year quarter. Florida's adjusted EBITDA margin expanded to 26.1%, up from 22.4% in the fourth quarter of 2024. For the full year, the Florida business segment revenue was $1.02 billion, an increase of 2.7% from $998 million in 2024. Full year segment adjusted EBITDA was $279 million, an increase of 11.6% from $250 million in 2024. Segment adjusted EBITDA margin expanded to 27.2% in 2025 from 25% in 2024, an improvement of 217 basis points. Looking ahead, we expect the Florida market to benefit from strong underlying long-term fundamentals. Population growth and business migration continue to support construction demand and infrastructure investments through projects funded by the moving Florida Forward program and IIJA. While single-family residential construction remained challenged, the structural housing deficit in Florida represents a significant long-term demand tailwind. On Slide 11, let me discuss our Mid-Atlantic business segment performance. For the fourth quarter, Mid-Atlantic external revenue was $159 million, an increase of 3% from $154 million in the fourth quarter of 2024, with volume growth supported by the release of project order book and favorable weather conditions relative to the prior year quarter. Mid-Atlantic segment adjusted EBITDA was $32 million in the fourth quarter compared to $34 million in the fourth quarter of 2024, a decline of 5.4% with segment adjusted EBITDA margin of 20.4% compared to 22.3% in the prior year quarter. For the full year, Mid-Atlantic revenue was $640 million, up 0.8% from $635 million in 2024. Full year segment adjusted EBITDA was $121 million compared to $135 million in 2024, a decline of 10.6% with segment adjusted EBITDA margin of 18.8% compared to 21.2% in 2024. As we mentioned throughout the year, our Mid-Atlantic segment's 2025 performance reflected 3 distinct headwinds: soft demand in the Metro New York and New Jersey markets, adverse weather in the first half of the year that suppressed volumes across Virginia and the Carolinas and higher raw material costs, including those from tariffs that were not fully offset by product price increases. Looking ahead to 2026, infrastructure demand remains high and data center construction remains robust in both scale and pace in the markets we serve. While tariffs remain in effect, they are expected to represent a smaller year-over-year headwind in 2026. Despite the challenges of 2025, our expectations for 2026 are constructive, and we see clear reason to be optimistic for improved performance in the Mid-Atlantic region. Now turning to the balance sheet and cash flows on Slides 12 and 13. As of December 31, 2025, we had $211.8 million of cash and cash equivalents and total debt of $462.4 million. Our net debt position was $250.7 million, representing a leverage ratio of 0.64x 2025 adjusted EBITDA, an improvement from the 0.71x at the end of the third quarter and 1.21x at the end of 2024. This strong leverage profile provides significant balance sheet capacity to pursue strategic growth opportunities while maintaining our disciplined approach to capital allocation as demonstrated by the previously announced agreement to acquire the Keystone Cement Company following regulatory approval. Operating cash flow for the year was $295 million and free cash flow was $132 million after $163 million in net CapEx investments. As indicated on Page 13, our next meaningful debt maturity is in July 2027. Slide 14 shows our CapEx profile for 2025 and 2024. Net capital expenditures in 2025 were $163 million and focused on several key areas. Among them, investments to expand capacity at our domestic cement plants in line with our previously communicated strategic plan, investments in vertical integration through ready-mix concrete and concrete block facilities that meet customer needs and represent a channel to market for our upstream construction materials, including cement and aggregates. Expanded access to limestone reserves near our Roanoke cement plant, and additional dragline investments in Florida aggregates, driving reliability and operational excellence. On Slide 15, I'll remind you of our capital allocation strategy. We remain focused on 3 key priorities: investing in the business, including organic growth opportunities, pursuing strategic M&A and providing returns to shareholders, all while maintaining a healthy net leverage profile. In 2026, our planned organic growth investments include innovative mining approaches at our aggregates production facility in Miami, development, permitting and construction of our previously announced precast lintel manufacturing facility in Florida, completion of our expanded processed engineered fuel investments at our Miami cement plant, investments in operations and efficiency of our marine import terminals in Virginia and New Jersey, expansion of our rail terminal network in Florida, enhancing our aggregates distribution capabilities, investments to increase our Pennsuco cement grinding capacity in line with our previously announced plans and our vertically integrated investments in ready-mix concrete and concrete block facilities to support upstream volumes and returns. I'd also like to announce that earlier today, our Board of Directors approved an issue premium distribution of $0.04 per share payable on May 8, 2026, to shareholders of record on April 20, 2026. With that, I'll turn it back to Bill for his closing remarks. Vassilios Zarkalis: Thank you, Larry. Let me say that in conclusion, 2025 was a record year for Titan America despite continued softness in the residential sector, tariffs and a number of challenges in the macro and geopolitical backdrop. We are proud of our strong financial performance in our first year as a public company, which reflects the effectiveness of our unique business model and the dedication of our team. Turning now to our 2026 outlook on Slide 16. In 2026, we expect the softness in the residential sector to continue. The recent surge in oil and energy prices introduces additional risks in an already complex and uncertain economic backdrop. Based on current market dynamics, with fears of inflation fueled by high energy costs, it seems that mortgage rates will remain broadly at current elevated levels and house affordability low. As a result, in 2026, we believe investment in the residential sector may be stabilizing at current lower levels with a much anticipated residential sector inflection point being potentially pushed into 2027. With continued residential softness in mind, our guidance for 2026 on a like-for-like basis anticipates low single-digit revenue growth compared to 2025 with modest expansion in our adjusted EBITDA margins. This outlook reflects our leading positions in our key markets, operational efficiencies and the ongoing benefits of our strategic investments. We remain focused on executing our growth blueprint in the years ahead. As we look to 2026 and beyond, we are excited about the strong growth opportunities ahead. The markets where we operate are the beneficiaries of significant tailwinds, including infrastructure investment, manufacturing reshoring and onshoring and emerging trends in resilient urbanization and overall construction technology. We continue to innovate and expand our product offerings, particularly focusing on meeting the evolving needs of our customers for sustainable, high-performance products, services and solutions. Our investments in new technologies and digital transformation are yielding tangible results in terms of operational efficiency, cost reduction and enhanced customer service. The proposed foundational acquisition of the Keystone Cement Company marks an important milestone in our journey, expanding our geographical footprint into Pennsylvania and Ohio, adding substantial cement production capacity and further strengthening our Mid-Atlantic positioning while reinforcing our commitment to unlocking significant value for all our stakeholders in the quarters and years ahead. Before we open the call for questions, I want to express my sincere gratitude to all our Titan America team members. Their dedication to safety, operational excellence and to serving our customers with care and quality every single day is what makes this company work. I'm proud of what they accomplished in 2025. With that, I'll turn the call over to the operator for the Q&A session. Operator? Operator: [Operator Instructions] Our first question comes from Anthony Pettinari with Citigroup. Asher Sohnen: This is Asher Sohnen on for Anthony. I was just wondering if you could walk through in a little more detail some of the puts and takes driving the guide for '26. I mean you talked already about the push out of kind of a resi recovery into 2027. But just on the infrastructure and private non-res side of the business, how would you compare your expectations now versus 3 months ago? And then also, are you maybe able to break out the guide for revenue between like price and volume? Lawrence Wilt: Yes. I'm afraid our phone went out here just for a minute. If you don't mind, could you just repeat the question? Sorry, very sorry about that. Asher Sohnen: Yes. So I was just asking about the puts and takes driving the guide. You talked about the resi recovery getting pushed to 2027. But I was wondering if you could talk about your expectations now versus 3 months ago for the private side and the infrastructure side. And then also within the revenue guidance for 2026, is there like a breakout between price and volume? Vassilios Zarkalis: We don't see any major change in relation to infrastructure and the private nonresidential side. It will continue strong. As we know from the statistics, about 50% of the IIJA funds have been spent. So we expect the rest to be spent in the next 3 years. And also, we expect the momentum to continue either with renewal of the IIJA this year in September or with a continuing resolution. And also, we see positive strength in certain parts of private nonresidential, as you know, data centers, logistics infrastructure, health and other elements like warehousing, the space center in Florida. So overall, we're very confident and optimistic about the non-resi elements. In relation to residential, there was anticipation that potentially in the second half of 2026, we're going to see the inflection point we all are awaiting. But of course, the recent geopolitical events with inflationary pressures potentially fueled by the high oil prices and, of course, the high energy prices. It seems unlikely that the Fed will proceed with reduction of the policy rates. And we see many analysts projecting mortgage rates to stay at or around 6%, so above the level that we were hoping will ease the affordability issues about housing and will trigger the inflection point. That's why we said that it seems likely that the inflection point is being pushed towards 2027. Asher Sohnen: That's helpful. And then switching gears, I wanted to ask about the Ohio and Pennsylvania markets that you're entering with Keystone. What makes those markets attractive? Can you just kind of compare and contrast those markets with your 2 existing markets? Lawrence Wilt: Okay. I think it's a territory that we're familiar with. We operate the Fly Ash part of our businesses there. You can see them on the map. I think we've scattered them on there -- in some slides that we've presented. So we deal with some of those customers today through that, not through the cement element. When you look at manufacturing, reshoring, Ohio, Pennsylvania are places of attraction and it's a place that we see good growth opportunities ahead. The plant is well set up to fix -- to serve both of those markets. And as we said in the opening comments, that facility also has the benefit of serving our Washington, D.C. area, and we can take then some of that logistics synergies into our business as well as we connect those 2 together. Operator: Our next question comes from Phil Ng with Jefferies. Jesse Barone: It's Jesse on for Phil. I just wanted to start with cement on pricing. There was a little bit of sequential decline. Just curious if that was kind of more of the mix pressures. And then if you could kind of remind us what you announced for 2026 and how those conversations are progressing? Vassilios Zarkalis: I think a safe assumption to say this is into the mix. As you recall, we report across the areas of Titan America. So there are elements of geography mix and also elements of packaging mix and delivery mix, whether it is pickup, customer pickup or delivery. So there is an element of mix. But still, of course, on a like-for-like element, you will see price increases in the low single digits. Now in relation to our announcements, we have announced $12 per ton across the areas where we operate for cement. We have announced $10 per cubic yard across the areas we operate for ready-mix concrete and $3 for aggregates finished goods. Jesse Barone: And were all those increases for January or were they spread out between January and April? Lawrence Wilt: Yes. I mean I think -- well, they were for January. And just based on the market, Jesse, we largely pushed those increases into April. That's -- I think the recent events and the war in Iran, for example, may give some additional impetus to increase those. But I think largely, what we'd expect, absent that, is to see price increases that would generally be in line with some of the increases that we have seen over the last year or so. So perhaps more in aggregates, more in ready-mix and a little less perhaps in cement. But we still are developing some of those internally, but that's what we would see today. Operator: Our next question comes from Chad Dillard with Bernstein. Charles Albert Dillard: So my question is on fuel cost. What share of that does that represent for your cost of sales? And then I guess, how much of the $100 price of oil is embedded in your guide? Or is this something that might potentially change as we need to mark to market? Lawrence Wilt: Yes. To answer the first question, fuel energy broadly represents about 8% of the cost of goods sold that we have slightly more than that as we closed out last year. You break that down between its components. Obviously, the kiln fuel has a piece, electricity has a piece and what you referred to at the end, their liquid fuel has a piece as well. Each of them have their own characteristics. We've invested, for example, in our capabilities for alternative fuels. We've invested in the capabilities to have multi-fuel sourcing, whether it's solid or natural gas at both cement plants in Roanoke and at Pennsuco. So we have some initiatives that we've taken to help mitigate some of those costs that you described. Having said that, when you look at liquid fuel, for example, we're at $5 per gallon today, this is public information. You can see it from EIA as registered every week. That's higher clearly than it was this time a year ago. For those things that are externally facing things like ready-mix concrete, there are built-in fuel surcharge mechanisms that would generally cover some of those cost increases that we would see. And then on the aggregate side, for example, that's a smaller piece of the overall total, call it, 1/3 then those things we address as we go along, perhaps through price increases that would be supported by those energy cost increases as we were saying before. Vassilios Zarkalis: So fundamentally, Chad, in relation to the energy bill altogether, I mean, in relation to the fuel, which is the biggest part for our plants. In cement, we have the capability to burn gas, coal, and alternative fuels. And we have recently invested in -- during the maintenance Roanoke, we installed our new state-of-the-art dual burner in order to increase our capability to burn multiple feeds and different types of fuel. And we are completing within April, our investment in new capabilities for alternative fuels in Pennsuco, which is going to grow the use of alternative fuels by 50%. So multiple levers here to face an increase in cost. And as Larry said, the other important element, which is the diesel cost for moving our products. We have automatic surcharges, which are included in our contracts for the products that we sell. Charles Albert Dillard: Okay. That's super helpful. And then just another question for you guys on the margin cadence. So you guys are guiding to a modest expansion in EBITDA margins. How should we think about that from a seasonality standpoint? On one hand, you have the tariff headwinds that probably anniversary towards the midpoint of the year. On the other hand, you have the, I guess, the fuel cost and the price increases to offset that. Just trying to level set how to think about that as we move through quarter-to-quarter. Vassilios Zarkalis: We participate -- we have deep penetration into infrastructure projects and major projects like data center. I mean you saw the example that we brought in terms of what we do in the Space Coast in Florida. These are projects that require large scale, proprietary technical capabilities, ultra-high-performance products that gives us an advantage in order to participate in high-value projects for the customers and also for ourselves, which allows us really to manage our margins successfully. And on top of that, like we've been discussing, we have in progress operational excellence and cost reduction initiatives. You are very well aware about our investment in digital transformation. Our real-time optimizers, I believe many analysts have visited in Pennsuco, which allows us to improve reliability to world-class levels to increase our throughput and our production rates and also optimize the use of raw materials and energy. All this leads to lower cost and margin expansion. On top of that, we have our proprietary maintenance -- the predictive maintenance tools, which are digital tools with machine learning that allows us to improve reliability, increase production, but also decrease our maintenance costs, which again add to the margins. And as we announced last year, we introduced a proprietary digital logistics technology, both in Florida and in Mid-Atlantic, which allows us to reduce our logistics costs and also improve our productivity in relation to cubic yards that we deliver per driver hour. All these had an impact in a very difficult backdrop in 2025, as you saw with our improvement in margins. And we expect the same to take place in 2026 as we continue our self-help initiatives in order to continue improving our margins. Operator: Our next question comes from Brian Brophy with Stifel. Brian Brophy: You mentioned increasing domestic cement capacity this year. Is that in relation to 1T or is something else driving that? And any color you can provide on how much you expect to grow capacity by? Lawrence Wilt: Yes. It's 2 things. One is... [Technical Difficulty] Operator: Ladies and gentlemen, please stand by. Ladies and gentlemen, thank you for your patience. We will be resuming shortly. Ladies and gentlemen, thank you once again for your patience. Larry, you may proceed. Lawrence Wilt: Yes. Thanks, operator. It's -- sorry, it's Larry here. We're going to go with the cell phone. Bill and I happen to be in Brussels. We had our Board meeting here today. So certainly something wrong with the fixed lines here. So we'll try it the old-fashioned way here with the cell phone. So hopefully, you can hear us. Brian, I'm not sure you heard the answer here. Brian Brophy: You just started answering. Lawrence Wilt: Yes. So your question was around the capacity expansion, where does it come from, right? So it's a combination of a couple of things. One, grinding capacity that we've talked about investing in the facilities like Pennsuco. We mentioned that in the prepared remarks and the reliability factors that come into place as well. These are the 2 main things that drive the increased production for this year. Brian Brophy: Okay. And then I guess similar question on the aggregate capacity side. Obviously, that was a pretty helpful driver last year. How are you thinking about opportunities to grow capacity there again this year? And you also mentioned some innovative mining approaches driving CapEx this year in the deck on the aggregate side. Just any more color on what you were referring to there. Vassilios Zarkalis: We're going to see, Brian, an increase in capacity and sales in this year, not at the same levels as last year, but we're going to see continued growth, whereas the investment that we have this year is going to give us a next step, the next wave of increased capacity most likely towards the second half of 2027. Operator: There are no further questions at this time. This now concludes our question-and-answer session. I'd like to turn the call back over to Larry for closing comments. Lawrence Wilt: Yes. Thanks, operator. And again, apologies for the difficulties we had with the telephones here. Thank you for your patience on that. And thank you for your time today. Obviously, we appreciate the interest in Titan America and look forward to obviously updating you on their progress as the first quarter call comes around in the early part of May. So thanks, and have a great rest of your day. Appreciate it. Operator: Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines, and have a wonderful day.
Operator: Good afternoon. Welcome to KESTRA MEDICAL TECHNOLOGIES, LTD. earnings conference call. This conference call is being recorded for replay purposes. We will be facilitating a question-and-answer session following prepared remarks from management. At this time, all participants are in a listen-only mode. I would now like to turn the call over to Neil Bhalodkar, Vice President of Investor Relations, for introductory comments. Neil Bhalodkar: Thank you, Victor. Good afternoon. Thank you for joining KESTRA MEDICAL TECHNOLOGIES, LTD.'s third quarter fiscal 2026 earnings call. With me today are Brian Webster, President and Chief Executive Officer, and Vaseem Mahboob, Chief Financial Officer. This call includes forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. These statements are based on KESTRA MEDICAL TECHNOLOGIES, LTD.'s current expectations, forecasts, and assumptions, which are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements due to various factors. Please review KESTRA MEDICAL TECHNOLOGIES, LTD.'s most recent filings with the SEC, particularly the risk factors described in our Form 10-K, for additional information. Any forward-looking statements provided during this call, including projections of future performance, are based on management's expectations as of today. KESTRA MEDICAL TECHNOLOGIES, LTD. undertakes no obligation to update these statements except as required by applicable law. With that, I will now turn the call over to Brian. Brian Webster: Thanks, Neil. Good afternoon, and thank you for joining us on today's conference call. Happy Saint Patrick's Day to all of our friends in Ireland. We are an Irish-domiciled company, so we are happy to celebrate along with them. We are excited to discuss the strong financial performance we had in the third quarter and the continued progress we are making on our key operational objectives. I would like to begin, though, by grounding us again in the KESTRA MEDICAL TECHNOLOGIES, LTD. mission: the lives we help protect each day and the patients, families, and clinicians we serve. The reality in cardiac care is that risk does not always resolve when a patient leaves the hospital. For many patients, vulnerability persists, and care needs evolve. During periods when risk remains elevated, a 64-year-old man with severe heart failure and a cardiac output measurement of only 10% to 15% was prescribed the Assure system. In the weeks that followed, a pattern of escalating clinical risk began to emerge. Over the course of about 20 days, the Assure system detected many episodes of SVT, which is a heart condition characterized by a rapid resting heart rate stemming from issues in the upper chambers of the heart. Automated KESTRA MEDICAL TECHNOLOGIES, LTD. CareStation alerts were generated for each episode, and the KESTRA MEDICAL TECHNOLOGIES, LTD. team stayed closely engaged with both the patient and the clinic. The physician responded to the alerts by promptly adjusting the patient's medications. Despite this, the arrhythmias persisted. During the Christmas holidays, the Assure system detected a severe ventricular arrhythmia and delivered a lifesaving shock. Immediately, the KESTRA MEDICAL TECHNOLOGIES, LTD. team coordinated with the emergency department, spoke directly with the on-call physician, and transmitted rhythm strips to facilitate informed clinical decision-making. After stabilization, this patient's situation required transfer to a higher-acuity hospital. During helicopter transport, the Assure system detected another life-threatening arrhythmia and delivered a second shock, protecting the patient at a critical moment while en route to advanced care. Because early detection was matched with clinician engagement, and because protection traveled with them across every transition of care, this vulnerable patient survived a rapidly declining clinical episode. This story represents more than a single intervention and illustrates how the cardiac recovery system supports patients across the recovery journey. What differentiates KESTRA MEDICAL TECHNOLOGIES, LTD. is not just the therapy we deliver, but the system we surround it with: intelligent detection and protection, clinical insight, and human engagement working together. In 2026, our team and technology supported many similar moments of intervention. As always, we remain mindful of the trust placed in us by clinicians, patients, and their families every day. Brian Webster: I would now like to turn to our recent financial performance. In the third quarter, we continued to reach more patients at risk of cardiac arrest, accepting over 5,400 prescriptions written for the Assure system. Revenue was $24,600,000, with growth of 63% compared to the prior-year period. Gross margin of 52.6% was up nine points year-over-year and 200 basis points sequentially, reflecting the attractive unit economics of our business model. This was the ninth quarter in a row of sequential gross margin expansion. We remain confident that KESTRA MEDICAL TECHNOLOGIES, LTD. is on a path to 70% plus gross margins over the next few years. With the strong revenue growth and margin expansion that KESTRA MEDICAL TECHNOLOGIES, LTD. is generating, we are seeing nice operating leverage in our business. This leverage supports the investments we are making in the company's key growth drivers that we believe will yield significant long-term value for KESTRA MEDICAL TECHNOLOGIES, LTD. and its stakeholders. Turning to the WCD market, we have previously noted that despite the overwhelming evidence that an external defibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized. Six out of seven patients that are indicated for a WCD are not being protected by one. We believe the innovation and clinical evidence we have brought to the category is beginning to change this. Based on our recent financials and that of the incumbent, we estimate the WCD market grew in the low- to mid-teens on a dollar basis in calendar year 2025. We are still in the early innings of market expansion, and we see this category growing into a multibillion-dollar market in the years ahead. Brian Webster: On last quarter's earnings call, we discussed the results from ACE PAS, our FDA post-approval study, which was presented in November. As a reminder, ACE PAS was the largest real-world prescribed prospective WCD study to date, with over 21,000 patients enrolled and protected. The study's findings corroborated what patients experience every day with the Assure system: low false alarm rates, comfort that drives higher wear-time compliance, and 100% successful conversion of dangerous arrhythmias. ACE PAS continues to be a major topic of conversation with clinicians, articulating the study's finding that patients were at elevated risk during the first 90 days post-hospitalization. Clinicians now have robust clinical data that shows the risk level of their patients is higher than they understood it to be, particularly early in the recovery and treatment journey. Brian Webster: We have also continued to learn from the body of data generated from the ACE PAS study, and we are pleased to announce today the FDA approval of our latest innovation, a new Assure algorithm update. This update further strengthens the performance of the Assure system. With this new update, we expect to see an even lower rate of false alarms and inappropriate shocks, which are critical measures of both patient experience and clinical performance. Enhancements like this are an important part of how we continue to improve the system and further differentiate KESTRA MEDICAL TECHNOLOGIES, LTD.'s technology in the wearable defibrillator market. Brian Webster: In mid-January, we announced another innovation, a strategic collaboration with BioBeat Technologies to expand diagnostic insight for patients prescribed the Assure WCD. The agreement is anchored by an exclusive license and co-development arrangement and included a $5,000,000 equity investment in MyoV. By way of background, BioBeat has developed the only clinically validated, FDA-cleared cuffless patch-worn ambulatory blood pressure monitoring device. It delivers continuous noninvasive blood pressure measurement over a 24-hour period for hypertension diagnosis and management in the outpatient cardiac recovery setting. KESTRA MEDICAL TECHNOLOGIES, LTD. intends to integrate BioBeat’s technology into our product portfolio to make ABPM data available for patients prescribed the Assure WCD. Hypertension affects approximately 120,000,000 Americans, and results from ACE PAS underscore the clinical relevance of the collaboration. As you may recall, 72% of the 21,000 patients studied in ACE PAS were hypertensive, highlighting the complexity of managing blood pressure during cardiac recovery, particularly during guideline-directed medical therapy optimization. Over time, we believe this collaboration will help us win additional market share, further differentiating our product from the incumbent. And more importantly, by providing additional clinical value and diagnostic insights to physicians, we believe it will result in them prescribing WCDs to more of their patients than heretofore have gone unprotected. Brian Webster: Moving on to other updates, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as calling on new potential Assure prescribers. As we have discussed previously, we are targeting geographies in which a high volume of WCD prescriptions are being written and where we also have strong in-network payer coverage. We ended calendar year 2025 with about 100 active sales territories and are tracking towards our goal of having about 130 sales territories by the end of our fiscal year in April. Brian Webster: I would also like to share a few updates on market access and reimbursement. First of all, as you may know, Florida is one of our largest states by patient fittings and also one of the states in which we have our highest market share. We have accomplished this despite not having a managed Medicaid provider number to utilize with Florida's managed Medicaid payers. Managed Medicaid plans cover nearly 90% of Florida's Medicaid enrollees. I am very pleased to share that we recently became an approved Florida managed Medicaid provider and have subsequently signed contracts with two of the state's four largest managed Medicaid plans. We are considering contracts with all the remaining managed Medicaid plans in Florida. Second, KESTRA MEDICAL TECHNOLOGIES, LTD. has recently been added to the Federal Supply Schedule for the U.S. Department of Veterans Affairs. The VA is the largest integrated health care network in the U.S. and covers 9,000,000 members, nearly 50% of whom are over the age of 65. We are honored to have the opportunity to protect veterans that are at risk of sudden cardiac arrest. And third, the monthly Medicare reimbursement rate for WCDs increased 2% up to $3,589 a month on January 1. Brian Webster: As you can see, we continue to bring more payers in network while also making progress on improving our RCM capabilities. At the time of our IPO twelve months ago, approximately 70% of our billings were for patients with in-network benefits. This figure is now in the low eighties. The higher in-network mix meaningfully increases our team's efficiency and positively impacts all of our revenue cycle management metrics. It is important to note that there are over 3,000 payers in the U.S., so there will still be a long tail of regional and local payers we are working to bring under contract. In conclusion, the fundamentals of KESTRA MEDICAL TECHNOLOGIES, LTD.'s story and business remain strong. The WCD market is expanding, KESTRA MEDICAL TECHNOLOGIES, LTD.'s revenue growth accelerated to over 60%, gross margin has increased meaningfully, and we have fortified our balance sheet. In the twelve months since our IPO, our execution has been strong across all elements of the business. The foundation we have built positions KESTRA MEDICAL TECHNOLOGIES, LTD. for strong and durable growth for years to come. I would like to thank our incredible team in the field and here at the home office in Kirkland for their passion and commitment to the KESTRA MEDICAL TECHNOLOGIES, LTD. mission. With that, I will now turn it over to Vaseem, who will discuss third quarter financial results in more detail and provide our updated fiscal year 2026 revenue guidance. Vaseem Mahboob: Thank you, Brian, and good afternoon, everyone. Total revenue was $24,600,000 in the third quarter, an increase of 63% compared to the prior-year period. Revenue growth was driven by a 58% year-over-year increase in prescriptions, reflecting market share gains with existing customers, activation of new accounts, expansion of our field team, and higher revenue per fit. Gross margin was 52.6% in the third quarter compared to 43.4% in the prior-year period. As Brian mentioned, we have now expanded our gross margin sequentially nine quarters in a row. The continued expansion in gross margin was driven by the attractive unit economics inherent in KESTRA MEDICAL TECHNOLOGIES, LTD.'s rental model, an increase in revenue per fit from more in-network patients, and a decline in cost per fit driven by volume leverage and cost improvement projects. In the quarters ahead, you should expect to see steady and consistent increases in our gross margin, as our rental model benefits significantly from volume and depreciation leverage. We remain confident in our ability to achieve 70% plus gross margins in the next few years. Vaseem Mahboob: We are also continuing to see improvements in all three key drivers of our conversion rate: our prescription fill rate, our BIN rate, and our collections performance. Our conversion rate in the third quarter was approximately 46%, up from an adjusted conversion rate of 43% in the prior-year period. As we continue to bring more payers in network and enhance our revenue cycle management capabilities, we expect to see benefits in revenue growth, gross margin, and our profitability profile. We are investing in revenue cycle AI tools and other automation projects that will continue to help improve all three elements of our conversion rate and drive operating leverage as we scale the business. Vaseem Mahboob: GAAP operating expenses were $47,700,000 in the third quarter and included $1,500,000 of nonrecurring costs from professional fees and expenses primarily related to the BioV transaction and our recent equity offering. GAAP operating expenses were $27,100,000 in the prior-year period. Excluding nonrecurring costs and stock-based compensation, operating expenses were $36,100,000 in 2026 compared to $24,800,000 in the prior-year period. The increase was primarily attributable to investments in commercial expansion and public company costs. GAAP net loss was $34,200,000 in the third quarter compared to a GAAP net loss of $21,800,000 in the prior-year periods. Adjusted EBITDA loss was $21,200,000 in the third quarter compared to an adjusted EBITDA loss of $16,300,000 in the prior-year period. Cash and cash equivalents totaled $291,000,000 as of January 31, which includes the net proceeds from our public equity offering in December. Vaseem Mahboob: Before I turn to guidance, one housekeeping item. At March, it will be twelve full months since we completed our IPO. As such, we will be eligible to file a shelf registration statement. While we have no need for additional capital at this time, corporate governance best practice is to file the shelf once eligible, and we plan on doing so in early April. I will now provide an updated fiscal year 2026 guidance. We are increasing revenue guidance to $93,000,000, representing growth of 55% compared to fiscal year 2025. This compares to prior guidance of $91,000,000 and our initial fiscal year 2026 guidance of $85,000,000. Underpinning this guidance is our expectation that we will continue to see strong growth in prescriptions as we increase market share with existing customers and activate new accounts. We expect revenue per fit to continue to benefit from a higher mix of in-network patients and improvements in our revenue cycle management capabilities. With that, operator, we have concluded our prepared remarks and are ready to proceed to the Q&A portion of the call. Brian Webster: Thank you. Operator? Operator: Thank you. We will now open for questions. To ask a question, you will need to press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please limit yourself to one question and one follow-up in the interest of time. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Travis Steed from Bank of America Securities. Your line is open. Travis Steed: Hey, congrats on the good quarter. I guess first, just kind of curious as you look into next year and think about early 2027 thoughts and the puts and takes you would talk about on the model from a high level, and if you are comfortable with the $133,000,000 that the Street is modeling for in consensus today. Vaseem Mahboob: Thanks for the question, Travis. We had a fantastic quarter, so thank you for that. As you know, our policy is only to comment about the full-year guidance for 2027 at the end of the Q4 call. But we can tell you that today, with our initial planning and process, we feel very confident that we can deliver top-tier medtech growth in 2027 and beyond. We will be happy to provide more color in the next earnings call. Travis Steed: Alright, great. That makes sense. And I did want to ask about the WCD market accelerating. I think you said low to mid-teens this year. Last quarter, I think it was close to 11%. So you are seeing a real acceleration. Any color you can give on the ground on what you are seeing that drives this acceleration and the durability of the higher market growth rate going forward? Brian Webster: Yes, thanks for that question, Travis. At the time of the IPO twelve months ago, we had the market growth on a dollar basis at about 8%. Then, as you just indicated on our last call, we had it somewhere closer to 11%. Now we are seeing it accelerate. I think what we are seeing is a couple of dynamics that are driving that. First of all, you have KESTRA MEDICAL TECHNOLOGIES, LTD. increasing the size of our commercial team, so we just have a bigger footprint. We have more voice out there in the market telling our story. And then you have clinical results that are driving the discussion, both from our competitor who released a big clinical study six months ago or so that pointed to elevated risk in this patient population, and then that was corroborated by our even bigger study that we released, which also pointed to higher risk in this patient population than many thought. So I think what we are seeing is a couple of clinical studies that are really identifying risks in the population, then you are seeing the expansion of the KESTRA MEDICAL TECHNOLOGIES, LTD. commercial team really driving that voice, and we are seeing our competitor coming to the realization that if they want to grow their business, they are going to have to expand the market because we are going to be taking a bunch of their share. So I think it is a combination of all those things that is leading to that market growth. We believe that we will continue to see the market growth as we continue to grow our commercial footprint and drive the clinical messages out into the market. Operator: One moment for our next question. Our next question will come from the line of Matthew O'Brien from Piper Sandler. Matthew O’Brien: Afternoon. Thanks so much for taking the question. First one is on the sequential bump that we saw in prescriptions. That is the best that you have done, I think, the last couple of years in terms of the data that we have had. I know, Brian, you talked a little bit about these different areas that are contributing from the new sales force to market expansion. Can you deconstruct where that improvement came from? Are you really accelerating the market, or is it more share shift right now versus market, and with everything that is going on, the market benefits maybe come over the next couple of years? Brian Webster: Thanks, Matt. When we deconstruct where the prescription growth is coming from, the good news for us is that we are seeing it come not just from productivity improvements in our base territory managers, but we are also seeing the new territory managers that we have been bringing on come up our productivity curve very consistently with our model. We are glad to see both of those dynamics. As we look at where that prescription growth is coming from, our math points to about 70% to 75% of that coming from installed base or current market share shift as we win market share, and about 25% of it coming from actual new prescribers. So we are seeing the early days of the benefit of the market expansion, but very clearly, Matt, with a market this big and an incumbent this large, most of the opportunity in the early days here is coming from winning current customers that are prescribing WCDs. Matthew O’Brien: Okay. Makes sense. As a follow-up, I would love to ask about gross margin because that was really good in the quarter. I am looking at the stock down a little bit in the aftermarket, and it might just be tech-related specifically, but I think it might have to do with the guide for the full year. Given all the momentum and the conversion rates, prescriptions are so strong. I think maybe some had been expecting a little bit more here for the full year. Can you talk about anything that is going on competitively or pricing-wise that could be a headwind here in fiscal Q4 versus just traditional conservatism on your part? Brian Webster: Thank you. Pricing is predictable. There are no headwinds in pricing. The competitive environment is one we know extremely well. From our perspective, we have grown the business in the mid-50% over the first few quarters of the year. We think as a starting point for the fourth quarter, that is a reasonable place to be. We are excited about growing our business by the mid-50% year over year. That is a significant achievement. We feel really good about that, and we feel really good about the trajectory we are on. I do not think there are any tailwinds other than we are just out there competing every day. It is a daily run-rate business, and we are focused on winning every day out in the market. Operator: Thank you. One moment for our next question. Our next question will come from the line of Larry Biegelsen from Wells Fargo. Your line is open. Nathan Trayback: Hi, this is Nathan Trayback on for Larry. Thanks for taking the question. Can you talk about what you are seeing from competition in the market? Just a follow-up to that, are your reps seeing any greater difficulty in taking share after ZOLL's recent upgrade to their WCD? Brian Webster: Thanks, Nathan. We are not hearing anything related to ZOLL's new larger WCD that they launched. I think they are in a slow launch of that product. They are not going to replace that massive fleet that they have overnight, and my guess is that only a fraction of the patients out there are even being offered that product at this point. We are not really hearing that as an obstacle or an issue. The competitive landscape remains the same in that you have an entrenched competitor who is trying to leverage their time in the seat, and they are doing that by trying to focus on being easy to do business with in terms of order processing, insurance coverage, and service level. Those are really the things that they can compete on because they know that from a product perspective, we have clear differentiation from their product. That is what we are seeing right now, but we have not seen any impact of their new rollout or their new product. Nathan Trayback: Okay, great. At a high level, you are approaching about 20,000 scripts by our math in fiscal 2026, and the market is approaching 140,000. There are still a good number of physicians that do not prescribe WCD. In your view, what is it going to take to get physicians off the sidelines and show more interest in WCD? Brian Webster: I think the market growth will continue. If we are in the low- to mid-teens today, then it is reasonable to think that over the next couple of years, as we expand our footprint, we are going to see that market growth continue to accelerate. But when it comes to really growing the market—doubling or tripling the market—it is going to require updates to the clinical guidelines. What we talked about with our ACE PAS study on the last call was that we felt like that was an important next step in the development of WCD clinical data and hopefully would allow us to come to the table and start to engage the societies around guidelines, and also help to clarify what are the remaining steps to get guidelines changed, if any, so that we can be focused on that. We are in the process now of working to get our ACE PAS study published, and that is the immediate next step for us. To really double and triple the market, which we think we are highly capable of doing, it is going to take some guidelines changes. Operator: Thank you. One moment for our next question. Our next question comes from the line of Michael Polark from Wolfe Research. Your line is open. Michael Polark: Hi. Good afternoon. Question on your vision for the sales force and the size of it. At the end of your fiscal 2025, you said territories were 80, and the vision was to double that over the next couple of years. I heard 130 targeted by April. If 80 doubles, it is 160 in, call it, fiscal 2027 by the end of the year. That would mean you are adding 30 territories in fiscal 2027 versus adding close to 50 in fiscal 2026. You just raised a bunch of fresh financing. Are you interested in going faster than that vision, or is that still the vision? Brian Webster: Mike, thanks for the question. We are in our FY 2027 planning process right now. In fact, we had our board meeting last week, and our board got their first look at our FY 2027 planning assumptions. We will be refining that over the next 60 days or so, and that will be one of the key questions. You are directionally right in your math in terms of what we have said before, and I think one of the questions will be, can we go faster and should we go faster? Capital is not our constraint right now. Being able to execute our business model and keep promises to the clinicians—those are the things that we are going to try and balance as we work our way through our planning process. That is definitely a topic on the table right now. We are excited about the progress we are making. There is certainly a contingent that is driving towards that outcome. Michael Polark: Helpful, Brian. For my follow-up, I want to ask on the conversion rate. If I squint, I see it up year on year, clearly, but versus the prior two quarters of the fiscal year, it is a little bit of a dip back down. Can you remind us, Vaseem or Brian, of the dynamic there? Is that simply the quarter that was just reported is January and deductibles reset, so patient collections are lower, bad debt is higher, or other influences you would have us think about quarter to quarter to quarter? Vaseem Mahboob: Great, thanks, Mike. We are really excited about all of the progress that we are making on rev cycle. Just a reminder, we have made a significant improvement in that rate. Fiscal year 2024, we were at 38%. 2025, we finished at 44%. In this most recent quarter, we had 46%. So we were up three points on an adjusted basis. At the same time, all KPIs that we talked about on our conversion rate are trending in the right direction, so we feel really good about where it is going. You are right; we had said that second-half conversion rates usually tend to be lower than the first half. That is because of the points that you cited, which are really the deductibles that reset in January and some of the claims that we normally hold back to make sure that we get a fair share of the claims that we submit. Again, great progress on conversion rate and all of the KPIs related to that, and we will continue to show progress. Operator: Thank you. One moment for our next question. Our next question will come from the line of Frederick Wise from Stifel. Your line is open. Frederick Wise: Good afternoon. Hi, Brian. Hi, Vaseem. I was hoping you could expand on your comments and get more in the weeds on a couple of topics. First, Florida. Brian, that sounds like really important and major news. You are the market share leader. You have signed two of the largest managed Medicaid plans, and it sounds like two others could be relatively imminent or soon. Help us understand better how big a deal it is and how to think about it. Does this overnight accelerate growth in Florida? Obviously, a huge market. Brian Webster: Thanks, Rick. We appreciate the question. We are excited about that. If you were to ask any of our Florida territory managers what their biggest challenge has been in the last year, they would say the lack of a Medicaid license. Removing that barrier is, as our chief commercial officer likes to say, like removing a big pebble from your shoe for the reps. In the actual account, when our rep is trying to convert a prescriber completely over to KESTRA MEDICAL TECHNOLOGIES, LTD., it is very difficult, impossible in fact, when you do not have that Medicaid number and the ability to serve that part of the population. It is a big population in Florida. That is a limiter on how high you can go on market share capture. This will definitely be a benefit to the Florida team. It will take a little time to roll through as we get the actual agreements in place and rolled out to our team, so it will not be an overnight thing. It will be something that we will see progress on quarter over quarter, but we are very excited about that. Vaseem Mahboob: Rick, I will add to that on the gross margin side. In some of the accounts that we had already converted and where we were taking all of those patients, we were basically getting a goose egg for those. Now, not only do you see faster acceleration of adoption to get more market share, you will also see a nice impact on our gross margins because for that business, which is where we have the highest market share in the state of Florida, you will see a nice tailwind on gross margin in that business as well. Frederick Wise: I was not going to ask you about gross margin this quarter because you did so well, but you brought it up. Cost per fit came in at, I think I am saying it right, 14% this quarter. How big a factor is that in the gross margin improvement? You keep doing outstandingly well. How much lower can it trend over time, and how big a factor is that in the mix of the multiple factors driving gross margin higher? Vaseem Mahboob: Thank you for that comment, Rick. We continue to make tremendous progress on gross margins, and as Brian mentioned in his prepared remarks, this is the ninth quarter now where we have shown sequential improvement. I was looking at it earlier—this is from massively north of negative 200% gross margins to where we have come. Incredible job by the team to get us there. In terms of the mechanics, other than the unit economics that we talk about, which is just inherent to the rental model where you get that depreciation leverage and volume leverage, we think that on some of the cost improvement programs—not on the hardware; remember, we have to protect that fleet and the fleet investment—on the disposable side, we have had some really nice cost improvement projects that completed last year that are now starting to really pay benefits in full because we are burning through the old inventory and the new inventory is coming at a lower cost. We will continue to see the team make really good unit cost reduction progress in the next few years. The good news is we have good line of sight to 70% plus gross margins that we aspire to, and this quarter is another proof point that we can get there. Frederick Wise: Gotcha. I am going to slip in one more if you do not mind. The FDA approval for your new algorithm—you talked about it a little bit, Brian. My question is to expand on your comments. As a prescriber or patient, what am I going to experience, and is that going to be an important or meaningful step? How meaningful is it once you get that all rolled out? Brian Webster: Thanks, Rick. We are very excited about that change. It is a change we have been working on for well over a year since we started to see some of our clinical data. As we started to get past 10,000 to 15,000 patients, we saw opportunities where we could further reduce the already market-leading false alarm rate and also reduce the inappropriate shock rate. The inappropriate shock rate is very low—we met all the FDA targets for that—but we saw an opportunity to get even better and create an even better clinical product. The false alarm rate, as you are aware, is related to patient compliance, and the inappropriate shock rate is related to patient safety. We did what we believe was the right thing: we looked at our data, learned from it, and then made adjustments to the algorithm to make it even better than it already is. I am proud of the team because we made choices when we decided to invest in that algorithm. We are going to be rolling that out coming up at HRS, and I think our team is going to be very excited. It will absolutely put us clearly differentiated on both of those metrics from any competitor, and it is going to help to validate our product one step further. Operator: Thank you. One moment for our next question. Next question will come from the line of Marie Thibault from BTIG. Your line is open. Marie Thibault: Hey, good evening. Happy Saint Patrick's Day, and thanks for taking the questions. I wanted to follow up on the Veterans Affairs win, now being on schedule there. Can you tell us a little bit more about KESTRA MEDICAL TECHNOLOGIES, LTD.'s plans on how to approach the network, expectations for the ramp there, and any other hurdles as you start to deploy into some of those VA hospitals? Brian Webster: Thanks, Marie. We appreciate the question. It is another big win in market access for KESTRA MEDICAL TECHNOLOGIES, LTD. As you are probably aware, if you are trying to market your product in a VA hospital and you do not have a Federal Supply Schedule number, then you are handicapped and spinning your wheels. Getting that number is essentially a license to go in and serve those institutions. We are rolling that out territory by territory because almost every territory in our commercial footprint has some VA institutions in it. We are now giving our reps the ability to go in and knock on those doors when they have not really had that ability before. It is a great opportunity. We have already seen, just in the last four to six weeks, some really terrific wins at some of these VA hospitals. It is a strategy we are going to continue to roll out. We are going to get the KESTRA MEDICAL TECHNOLOGIES, LTD. team really fired up about protecting these veterans who have protected us, and we are excited about that opportunity. Marie Thibault: I appreciate that. As a follow-up that is a little more high level, it was referenced earlier that your sequential uptick in prescriptions this quarter was the highest we have seen in your history here. I know one quarter may not be enough to call a trend, but it certainly looks like a nice acceleration. You have a lot of wind at your back: you have new reps on board, you have the ACE PAS data, you have done a lot of medical education, and you have had an expanded role for the clinical specialists as well. You have made a lot of changes that are beneficial as well. Any reason to think this acceleration or momentum cannot continue as we look ahead? Not asking for anything formal, but just from your own viewpoint. Brian Webster: If you want a really high-level answer, the answer is no. There is no reason. I think all of the things that you said are right on. We are investing—FY 2026 is a year of investment in the commercial footprint. We have been very clear about that as part of our strategy from the onset, and we have executed really well against that investment. As you know, it is no easy task to go out and recruit, hire, onboard, retain, train, and get them up the curve—hiring 50 new territories, which is essentially what we are going to end up doing this fiscal year. We are doing that. We are adding the clinical folks to anchor down some of those territories, as we have talked about, and we are investing in the future. Our intention is to build a long-term, durable commercial engine at KESTRA MEDICAL TECHNOLOGIES, LTD., and we are going to feed that engine with continuous innovation. That engine is going to have great innovation, great product differentiation, and great support because, at the end of the day, this is still a service business. We feel really good about the investments we are making and the foundation that we are building. Operator: Thank you. One moment for our next question. Our next question will come from the line of David Roman from Goldman Sachs. Your line is open. David Roman: Thank you. Good afternoon, everyone. I appreciate you taking the questions here. Maybe I could just start with the territory expansion that you discussed. Can you help connect the accelerated territory expansion to your revenue outperformance this year and the extent to which sustaining this revenue growth requires territory adds versus same-store sales growth? Brian Webster: Yes, David, thank you for the question. As you can appreciate, when you are growing a sales force, you are dealing with different dynamics. One dynamic is you add new territories, and the other dynamic is how quickly you can get them on board, get them up the productivity curve; that is a big question. The other question is, with all your base reps, can you continue to see productivity? What we do not want to have is a situation where the only way we can grow is by expanding sales territories. That is where we focus on productivity improvements in our team. We have invested heavily in training. We have invested heavily in innovation, which will continue to help productivity. I think what we are going to see over the course of the next year is a bunch of new territory managers who have a little time in the saddle, so to speak, and we are going to see them do some great things. I do not think that our model requires us to continually add new reps. We have lots of opportunity to gain market share and to grow the productivity levels on a territory level. As you combine and roll all those up, that equals growth without having to continue that really aggressive sales force expansion. David Roman: Then maybe just a follow-up. Vaseem, in the past you have talked about CapEx spending as one of the best leading indicators of your confidence in forward revenue growth. Can you talk about where you are in that cycle and how you are thinking about forward use of cash, and how we should translate the increased investments here into the forward outlook? It certainly looks like you are performing on revenue. I know you are not going to make FY 2027 comments here, but if I take your past comments on CapEx and try to tie it to the forward outlook, maybe you could help connect the dots there for us a little bit. Vaseem Mahboob: Sure. Thanks, David. We have talked about this in the past. The leading indicator for us, going down this path of building out the distribution team, would be to hire the CapEx because when you deploy those reps, you want to make sure they have the right level of inventory and can maintain their service level, which is critical in our business. As we have said, the planning assumption—or at least what we are guiding everyone on—is long term, 10% of our fittings are going to come from new units; 90% of them are going to come from reconditioned units, which means we are our largest supplier ourselves. I think the team has done a fantastic job to drive the returns engine. At the same time, when you do that math on the 10% coming from new units, that gets you to the CapEx numbers, including some of the replacement CapEx investments, to about $30,000,000 a year for the next couple of years at least. When the Q comes out, you will see that we had a $9,000,000 investment in CapEx in this quarter. It should give you a lot of comfort that that $9,000,000 investment is ahead of us going from the previously publicized number of 100 reps in November to 130 by the end of the year. David Roman: Okay. Then maybe just a quick follow-up to that. If I look at your cash burn in the quarter, excluding the BioBeat investment, it looks like mid-$20,000,000. Is that isolated to the quarter? How should we think about that number on a go-forward basis? Vaseem Mahboob: We are very happy with where we ended up on the cash burn. Again, like I said, $9,000,000 of that $28,000,000 burn was CapEx. $18,000,000 or $19,000,000 of that was the operating burn, and we feel that we are going to be in that range at least for this next year. David Roman: Thank you very much. Operator: Thank you. That will conclude our Q&A for today. I would now like to turn it back over to Brian for any closing remarks. Brian Webster: Thank you, and thank you everyone for the questions and for your attendance this afternoon. I just want to reiterate that we are very excited about the results that we saw in Q3. We are seeing the business model come together. We are seeing terrific performance out in the field as we scale up new reps, and I am very excited about the caliber of the new territory managers that we are hiring and the potential we have there. Q3 is a little bit of a challenging quarter for us because as a daily run-rate business, which KESTRA MEDICAL TECHNOLOGIES, LTD. very much is, when you get into the November–December holidays and then you get into the January new plan year for insurance, there are a lot of variables in Q3 that, quite frankly, make us nervous every year. Our team executed directly through those and delivered a fantastic quarter and, most importantly, continued to invest and build the infrastructure and the foundation that we need to create the long-term, durable growth engine that we are talking about. We are very pleased with the quarter and appreciate everybody joining the call. Thank you very much. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Operator: Thank you for standing by. This is the conference operator. Welcome to the lululemon athletica inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Howard Tubin, Vice President, Investor Relations for lululemon athletica. Please go ahead. Howard Tubin: Thank you, and good afternoon. Welcome to lululemon's Fourth Quarter Earnings Conference Call. Joining me today are Meghan Frank, interim Co-CEO and CFO; and Andre Maestrini, interim Co-CEO, President and Chief Commercial Officer. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements reflecting management's current forecast of certain aspects of lululemon's future. These statements are based on current information, which we have assessed, but by which its nature is dynamic and subject to rapid and even abrupt changes. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business, including those we have disclosed in our most recent filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we expressly disclaim any obligation or undertaking to update or revise any of these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our annual report on Form 10-K and in today's earnings press release. In addition, the comparable sales metrics given on today's call are on a constant dollar basis. The press release and accompanying annual report on Form 10-K are available under the Investors section of our website at www.lululemon.com. On today's call, Meghan will share an update on the action plan we laid out for you on our last earnings call. Andre will discuss our regional performance. Meghan will return to review our financials and guidance outlook, and then the team will be happy to take your questions. Before I turn the call over to Meghan, I'd like to remind investors to visit our investor site where you'll find a summary of our key financial and operating statistics for the fourth quarter as well as our quarterly infographic. Also, please note that the purpose of today's call is to discuss lululemon's 2025 financial results and 2026 outlook, and we ask that you keep your questions focused on our performance. Meghan Frank: Thanks, Howard. I'm glad to be here today to discuss our Q4 results, our outlook for 2026, and how we are executing our action plan to strengthen our brand, reaccelerate growth and create value for shareholders. Andre and I are working side-by-side with the senior leaders across our organization to drive our strategies forward to improve the U.S. business while also maintaining our international momentum and are making progress to deliver the performance we know is possible in all our regions. We have a healthy and loyal customer base that remains engaged and looking to us for great product and experiences. We have strong teams who are motivated and excited to bring our new innovations and product assortments to our guests. And we are working across the company to refine and advance our initiatives across product creation, product activation and enterprise enablement, which Andre and I will speak more about during our call today. We recognize there is more work to be done, and we have been course-correcting on a number of fronts, but we are encouraged by the guest response to our recent new product drops and activations. I'm grateful to our teams across the entire organization who remain committed to delivering products and experiences our guests love. Together, we are taking the right steps that will allow us to realize the full potential of lululemon. Before I speak to our action plan, I would like to call attention to today's announcement welcoming Chip Bergh to our Board of Directors. As you likely know, Chip Bergh is the former longtime President and CEO of the iconic brand, Levi Strauss. He's a seasoned public company executive who brings deep retail and brand expertise, and he has extensive experience guiding successful transformations and driving value creation at global category-defining companies. His appointment as a director comes after a comprehensive search by the Board and is part of the Board's thoughtful ongoing refreshment process that has brought 5 new directors to the Board over the last 5 years. I'd also like to acknowledge David Mussafer, one of our long-time directors, who has informed the Board that he won't be standing for reelection. We are grateful for David's many contributions to lululemon over the years. And with respect to the CEO search, I can share that our Board is running a robust search process and they've been meeting with highly qualified candidates. The process is moving forward, and we will provide an update on this topic at the appropriate time. I'll now dive into 3 components of our action plan: product creation, product activation, and enterprise enablement. During the fourth quarter, Andre and I dove deeper into each pillar of our plan and have been working with the teams across the organization to ensure we entered 2026 moving with focus and speed. We've been course-correcting where needed to restore and protect our brand health over time. A top priority for the management team as we enter the year is returning to full-price sales growth in North America. Through a series of steps that include the inflection of product newness and reducing the level of markdowns, SKU reduction and the rebalancing of inventory levels. This approach will reinforce our premium positioning that has long set lululemon apart from others while also protecting operating margin. So let's click down into product creation. Our priorities here are raising the bar on product design, delivering a consistent pulse of innovation, improving our speed to market and ensuring a relentless focus on product quality. Hopefully, you've been in our stores and visited our e-commerce sites and have seen some of our new innovations. I will take a moment to highlight a few of these for you including Unrestricted Power, our newest iteration of ShowZero and ThermoZen. Unrestricted Power is a new training collection for women and men. It is constructed from PowerLu, our newest technical fabric innovation, which uses our highest filament yarn count (sic) [ filament-count yarn ] and offers a remarkably soft feel while also providing incredible stretch and support. Guests have responded positively since the launch, and we look forward to an exciting future for this new franchise. Next, we recently announced an updated version of our ShowZero, no-show-sweat technology meant for high-sweat activities. This newest iteration of ShowZero was developed in collaboration with professional tennis player and lululemon ambassador, Frances Tiafoe and debuted at the BNP Paribas Open at Indian Wells earlier this month. The latest technology conceals sweat while also remaining incredibly lightweight and breathable. We plan to introduce new ShowZero products to guests later this year as we continue to scale the platform across activities and categories. And I also want to mention ThermoZen, our newest collection of insulated jackets and vests. These products offer warmth, water and wind resistance and superior softness, and are a great example of how we are leveraging our considerable expertise in developing technical apparel across our lifestyle and casual offerings. These are just some of the innovations that our team has been developing and we are encouraged by the response from guests to these offerings. When looking at our overall product assortment, you'll see it continue to evolve based on the strategic vision of our creative team. A few specific examples of what you can expect going forward include updates on some of our key lounge and lifestyle franchises, fewer logos, a more focused and coordinated color palette and a more edited assortment of our smaller accessories. This enables us to present a more refined, uniquely lululemon product assortment. As we introduce new and evolved product, we also recognize the importance of taking steps to further enhance and protect our product quality. I've been spending time with our supply chain team to ensure that as we shorten our go-to-market time line, we do not sacrifice on quality, maintaining the highest possible quality standards remains paramount for me and all of us at lululemon. Shifting to product activation. It is incredibly important that we ramp up our efforts to further engage existing guests, bring new guests into the brand and ensure all guests are made aware of our latest styles and innovation. Let me highlight 2 of our most recent activations for you, which occurred in the first quarter. The first is Studio Yet. This was a 3-week pop-up, high-performance training space in Los Angeles where we offered a variety of fitness classes taught by world-renowned trainers and coaches. The studio was a physical manifestation of our global Yet campaign, which focused on the relationship between going after big goals and the daily work needed to achieve them. Guest response to Studio Yet was fantastic with all classes selling out, significant media pickup across mainstream and social channels and it, along with the community events we hosted in conjunction with the L.A. Marathon, provided a halo effect and sales lift to our stores in the Los Angeles area. And I'll also highlight the success over the past few weeks of our sponsorship of the BNP Paribas Open Tennis Tournament in Southern California, one of the most popular tournaments for players and fans. This is the first year of our 3-year sponsorship and the long lines in response to our pop-up store, where approximately 2/3s of the visitors were new to lululemon, shows the significant potential for lululemon within the tennis community. These events demonstrate that when we engage with our guests through our unique activations, we see a tangible response, and this continues to reinforce the opportunity for lululemon going forward. When looking at our approach to integrated marketing, our plans continue to include more product-focused campaigns across social channels, which will leverage lululemon ambassadors and other influencers to help ensure our guests are aware of new styles, innovations and updates we're bringing into our assortments. Next, I'll turn to enterprise enablement, which includes our efforts to create efficiencies and manage costs across the company. While we have always been prudent with regard to expenses, we have been particularly vigilant over the last 2 years as sales trends in the U.S. have faced headwinds and tariff policy has added pressure. We are continuing with this vigilance into 2026, and we are targeting meaningful savings as we simplify our operations and focus on scaling more effectively while continuing to invest in key growth initiatives. Key work streams are increasing efficiencies across inventory management, supply chain and nonmerchandise procurement and reducing complexity while capitalizing on automation and AI opportunities. We know we must improve our performance in North America while continuing our momentum internationally. We have already taken decisive actions to position the business for sustainable growth. Looking forward, we have clear priorities and are moving with focus, speed and determination as we implement the strategies across our action plan. You can really feel the energy across the organization about the path forward and the team is excited about the opportunity ahead of us. I'll now turn the call over to Andre. Andre Maestrini: Thank you, Meghan. Like Meghan, I'm pleased to be here with you all. In my role overseeing our selling channels across all regions, I have the opportunity to spend considerable time in our stores, meeting with our leaders and educators and hearing from our guests. So I'm excited to share the highlights from our markets across the globe. Touching first on North America. We are actively making the changes needed to increase newness, enhance the guest experience in stores and online and improve our performance. We are building from a position of strength as we remain the #1 brand for women's activewear in the U.S. New guest acquisition, retention, engagement and key brand relevance metrics all remained solid in 2025. So let me speak to 3 of the strategies we are implementing to unlock growth in the region. First, as Meghan mentioned, we are focused on the growth of our full-price business. Looking at 2026, a primary goal in the North America is returning the business to healthier levels of full-price sales after seeing a higher markdown penetration in 2025. We are already seeing better full-price sell-through in Q1 relative to Q4, and we are targeting further improvement as we move through the year, driven by increased product newness, innovation and operating discipline. Second, we're enhancing the guest experience, both in-store and online. We recognize the importance of our store and e-commerce sites as guest touch points, and we are evolving the experience to better reflect the premium positioning of lululemon brand. In stores, our localization and curation enhancements continue. Our new design playbook features an elevated presentation with less density of product to better showcase our new styles and innovations, and to make the stores easier for guests to navigate and shop. We are also sharpening our focus on activity-based merchandising by offering clear destination for our core activities, including run, train and yoga, pilates within the store. These destinations allow for better storytelling and improve the shopping experience for guests. Our new store in SoHo reflects these enhancements, and we have been very happy with the guest response to these changes there and at other key locations. We will be rolling out these updates to additional doors in North America throughout 2026. And online, building on the new redesign of the site, we will continue to improve the guest journey with enhancements coming to our product display pages, checkout and overall storytelling. And third, we are increasing new style penetration across our assortment. Meghan already spoke to our product creation pillar. So I'll just add that in North America, with our new spring merchandise that is already hitting our stores and website, we have increased our new style penetration to approximately 35%. We know that our guests are looking for new styles and product from us. And when we deliver them effectively, we see strong response. In addition to what Meghan mentioned, other examples of successful new styles include EasyFive and the Groove Wide-Leg. Let me shift to our international business, where momentum remained strong. In China Mainland, our guests responding well to our product assortment in Q4 with outerwear and lounge being standout categories. The strength in outerwear was driven by Wunder Puff, which we feature in a localized brand campaign. More recently, we celebrated Chinese New Year with a campaign featuring world-renowned cellist Yo-Yo Ma, and offer guests the capsule collection comprised of some of our most iconic styles. This is an excellent example of how we continue to capitalize on locally relevant events to engage with guests in unique ways. In our Rest of the World segment now, let me highlight South Korea, one of our fastest-growing markets. Our localized approach to guest engagement, including targeted celebrity endorsement continues to resonate well, particularly among our younger guests. I would also highlight the strong response to our new store in Gangnam. This location showcases the newest expression of our brand similar to what we introduced in SoHo. It includes new design elements and detailing and acts as a hub for guests within the local community. In Milan, we saw the lululemon brand on the global stage at the Olympics as our partnership with the Canadian Olympic and Paralympic Committees continue. These games were our third as the official outfitter of Team Canada, a natural fit for our brand and help us acquire new guests by working with and outfitting elite athletes who perform at the highest level in their respective sports. To complete my around-the-world summary, I'll mention that with our franchise partner, the 100th lululemon store opened in EMEA in Warsaw, Poland earlier this month. This is an exciting milestone for the EMEA team and continues to demonstrate the long runway for growth within this region. The majority of stores in our international markets are company operated, but we strategically leverage our franchise model where it makes sense. Poland is a franchise market for us. And in 2026, our plans call for new franchise markets in Greece, Austria, Hungary, Romania as well as India. Before I turn the call back to Meghan, I want to express my confidence in the opportunity for lululemon in every market around the world, and I want to thank our team across our stores, distribution centers and corporate offices for your ongoing engagement with our guests and the tremendous enthusiasm you have for our brand. Meghan, back to you. Meghan Frank: Thanks, Andre. I'll now turn to our Q4 financial review and guidance outlook. For Q4, total net revenue rose 1% to $3.6 billion. Excluding the 53rd week in Q4 of 2024, net revenue rose 6% or 4% on a constant currency basis and comparable sales increased 2%. Within our regions and channels, excluding the 53rd week and in constant currency, results were as follows: North America revenue was flat with comparable sales down 2%. By country, revenue increased 3% in Canada and was down 1% in the U.S. In China Mainland, revenue increased 28% with comparable sales increasing 26%. Results were stronger than anticipated despite 2 discrete calendar shifts, which negatively impacted Q4, including earlier 11/11 events on our third-party e-commerce platform and the shift of Chinese New Year into Q1. Guests responded well to our product assortment with particular strength in outerwear and lounge. And in the Rest of World, revenue grew by 12% and comparable sales increased by 5%. In our store channel, sales were down 1%. We ended the quarter with a total of 811 stores globally. Square footage increased 11% versus last year driven by the addition of 44 net new lululemon stores since Q4 of 2024. During the quarter, we opened 15 net new stores and completed 7 optimizations. In our digital channel, revenues increased 9% and contributed $1.9 billion of top line. And by category, men's revenue increased 3% versus last year, women's increased 7%, and accessories and others grew 4%. Gross profit for the fourth quarter was $2 billion or 54.9% of net revenue compared to 60.4% in Q4 2024. Our gross margin decreased 550 basis points relative to last year and was driven primarily by the following: a 560 basis point decline in overall product margin, driven predominantly by tariff impact and higher markdowns. Tariffs had a gross negative impact of 520 basis points in the quarter, offset by 110 basis points related to our enterprise efficiency initiatives, while markdowns increased by 130 basis points. Deleverage on fixed cost was 30 basis points and foreign exchange had 40 basis points of favorable impact. Relative to our guidance for gross margin decline of approximately 580 basis points, the upside was driven primarily by a lower tariff impact and regional mix. Moving to SG&A. Our approach continues to be grounded in prudently managing our expenses while also continuing to strategically invest in our long-term growth opportunities. SG&A expenses were approximately $1.2 billion or 32.5% of net revenue compared to 31.5% of net revenue for the same period last year. The SG&A increase of 100 basis points was in line with our guidance and relates primarily to the negative impact of foreign exchange, fixed cost deleverage and ongoing investments to build brand awareness. These were partially offset by our ongoing initiatives to prudently manage costs across the enterprise. Operating income for the quarter was approximately $812 million, or 22.3% of net revenue compared to 28.9% of net revenue in Q4 2024. Tax expense for the quarter was $226 million or 27.8% of pretax earnings compared to an effective tax rate of 29.2% a year ago. The decrease in the effective tax rate relates primarily to a discrete tax benefit realized in the quarter and foreign exchange. The lower tax rate relative to our guidance contributed $0.15 to EPS. Net income for the quarter was $587 million or $5.01 per diluted share compared to earnings per diluted share of $6.14 for the fourth quarter of 2024. Capital expenditures were approximately $183 million for the quarter compared to approximately $235 million in the fourth quarter last year. Q4 spend relates primarily to investments to support business growth, including our investments in distribution centers, store capital for new locations, relocations and renovations, and technology investments. Turning to our balance sheet highlights. We ended the quarter with $1.8 billion in cash and cash equivalents and nearly $600 million of available capacity under our revolving credit facility. Inventory at the end of Q4 was $1.7 billion, an increase of 18% on a dollar basis. On a unit basis, inventory increased approximately 6%, below our guidance for an increase in the high single digits. The difference between dollar inventory growth and unit inventory growth relates predominantly to higher tariff rates relative to last year and foreign exchange. We are pleased with the composition of our inventory as we entered the spring season, as it is more reflective of our go-forward vision for the brand. During the quarter, we repurchased approximately 1.4 million shares at an average price of $188. For the full year, we repurchased $1.2 billion of stock. Let me now shift to our guidance outlook for 2026. As I mentioned, we are executing against our action plan, with particular emphasis on driving healthier full-price sales in North America. We're already seeing green shoots related to our new product launches and our recent brand activations. But I want to also acknowledge that an improvement in overall trends in North America will likely progress over the course of the year and into 2027 as we return to a healthier baseline of full-price sales. Let me also mention tariffs. For reference, in 2025, gross tariff costs were $275 million. We were able to offset approximately $62 million of this expense through our mitigation strategies, which was better than our initial expectations. Looking to 2026, we anticipate gross tariff impact of approximately $380 million with offsets from our enterprise efficiency initiatives of approximately $160 million within gross margin. Turning to our full year 2026 guidance outlook. We expect revenue to be in the range of $11.35 billion to $11.5 billion, representing growth of 2% to 4% relative to 2025. By region, we expect revenue in North America to be down 1% to 3%, with the U.S. down 1% to 3%. Baked into our total revenue guidance for North America is an improvement in full-price sales. We are already seeing better full-price selling relative to Q4, and we'd expect positive year-over-year growth in full price to begin in Q2 and continue into the second half, driven by the rollout of new styles, innovations and core updates over the course of the year. We expect revenue in China Mainland to be up approximately 20%, which takes into account our outperformance in 2025. Trends remained strong in Q1, and we're expecting a revenue increase of 25% to 30%, which includes a modest lift from the shift of Chinese New Year into the quarter. And in Rest of World, we expect revenue to increase in the mid-teens. Globally, we expect to open approximately 40 to 45 net new company-operated stores in 2026 and complete approximately 35 optimizations. This will contribute to overall square footage growth in the low double digits. Our new store openings in 2026 will include approximately 15 stores in North America including 8 in Mexico and 25 to 30 in our international markets, with the majority of these planned for China. While we are taking a disciplined approach to capital spending, we continue to see good returns from new store openings and store expansions as these strategies contribute to an improved shopping experience for existing guests, new guest acquisition, building brand awareness and community engagement. For the full year, we expect gross margin to decrease approximately 120 basis points relative to last year, driven predominantly by deleverage on fixed costs and ongoing investment in new store openings, optimizations and our distribution center network. We expect markdowns for the full year to improve modestly and tariffs to have a gross impact of 90 basis points, of which we expect to be able to offset almost all of it. Turning now to SG&A for the full year. While we intend to realize significant savings related to the enterprise enablement pillar of our action plan, we expect deleverage of approximately 130 basis points versus 2025 as we continue to strategically invest in our business to support future growth. These investments include market expansion, improving the guest experience by enhancing our omni capabilities and growing brand awareness. We are absorbing additional costs relative to last year as we layer back in certain expenses, including incentive comp, store labor hours, and we have onetime costs associated with the expected proxy contest this year. When looking at operating margins for the full year 2026, we expect it to decrease by approximately 250 basis points versus last year. For the full year 2026, we expect our effective tax rate to be approximately 30%, an increase from the 2025 effective tax rate of 29.5%. For the fiscal year 2026, we expect diluted earnings per share in the range of $12.10 to $12.30 versus EPS of $13.26 in 2025. Our EPS guidance excludes the impact of any future share repurchases. When looking at inventory, we expect dollar growth to be in the mid- to high single-digit range through 2026 with units flat to down slightly. With leaner inventories and improved chase capabilities, we are in a better position to read and react to guest demand and fuel momentum in stronger performing styles. We continue to have $1.2 billion remaining on our share repurchase program, which we will continue to utilize. Share repurchases remain our preferred method of returning cash to shareholders, and our repurchase levels in 2026 will likely be similar to those in 2025. Finally, for the full year, we expect capital expenditures to be approximately $725 million to $745 million. The spend reflects investments to support business growth, including capital for new locations, relocations and renovations, DC and technology investments. Our range of $725 million to $745 million is approximately 6% of revenue. Shifting now to Q1, we expect revenue in the range of $2.4 billion to $2.43 billion, representing 1-year growth of 1% to 3%. We expect to open approximately 6 net new company-operated stores and complete 6 optimizations. By region, we expect North America to decline in the mid-single digits with the U.S. also in that range and Canada is tracking slightly lower. We expect China Mainland to increase 25% to 30% and Rest of World to increase in the mid-teens. When looking at North America, as I mentioned, we are seeing good response to our new product launches and activations and are experiencing better full-price selling, but expect the inflection in total revenue to actualize over the course of the year. We expect gross margin in Q1 to decrease by approximately 380 basis points relative to Q1 of 2025. This decrease will be driven predominantly by higher tariff costs, ongoing investments in store openings and optimizations and our distribution network. We expect increased tariffs to have a gross negative impact of approximately 290 basis points with offsets of approximately 110 basis points. We expect markdowns to be up approximately 30 basis points versus last year. While full-price selling has improved meaningfully relative to Q4, we expect markdowns to begin to decrease versus prior year beginning in the second half. In Q1, we expect our SG&A rate to deleverage by 330 basis points relative to Q1 2025. This increase will be driven in part by timing related to brand activations, including the BNP Paribas Open, the Milan Olympics and Studio Yet as we have more events planned in the first half of the year versus the second half. In addition, there are discrete costs related to our proxy contest and expenses that we reduced last year that are layering back into this year related to store labor hours and incentive compensation. And we will continue to invest strategically in our growth initiatives and IT infrastructure. When looking at operating margin for Q1, we expect it to be 710 basis points lower than 2025 for the reasons I just mentioned. Turning to EPS. We expect earnings per share in the first quarter to be in the range of $1.63 to $1.68 versus EPS of $2.60 a year ago. We expect our effective tax rate in Q1 to be approximately 31.5%. I want to close today by saying that since Andre and I have stepped into our interim Co-CEO roles, we focused on engaging with our leaders and employees about the opportunities in front of us as we have worked to refine and implement initiatives that are part of our action plan. First and foremost, we are restoring the full-price health of our brand, and we are already seeing improvement in Q1. Other actions include testing a new design playbook in stores, rolling out enhancements to our e-commerce sites and working with the product teams to ensure that our design and merchandising choices emphasize athletic and technical apparel with lifestyle playing an important but supporting role. There is a renewed energy and enthusiasm across the business, in particular, where employees are seeing the product that is being introduced to guests that is in our pipeline. In fact, we've seen an increase in employee purchases as we introduce new innovations and product, which is an optimistic indicator that we're on the right path. Andre and I are encouraged by the progress we're seeing across the business, and we're inspired by the passion and commitment of our leaders and teams across the world. All of this reinforces our confidence in what's ahead for us. We recognize that it will take some time to see the benefits of these actions, but we are confident that these are the right moves to powerfully drive our brand forward in the near, mid and long term. We will now take your questions. Operator: [Operator Instructions] The first question comes from Brooke Roach with Goldman Sachs. Brooke Roach: When do you think the product assortment will be appropriate to deliver a return to inflection in North America growth? And how are you thinking about the headwind from the removal of markdowns throughout the year and the introduction of that new full-price selling product throughout the year? Meghan Frank: Thanks, Brooke. So as we mentioned, we are focused on reaccelerating the full-price health of our business. So in Q1, we will see a meaningful inflection relative to Q4. We expect in Q2 that we believe it would be approximately flat in full-price trend in North America and then flipping positive in the second half of the year. So that's how the year progresses. In terms of markdowns, we are lowering that penetration. So as we mentioned, we were up 130 basis points in Q4 and up 60 in the year in 2025. For 2026, we're expecting a modest improvement in markdowns for the full year, predominantly driven through the second half, and we are expecting just a modest increase in Q1. Brooke Roach: And just to clarify, are you seeing any improvement in your base business as you've put these new products into the assortment 1Q to date? Or is the improvement largely driven by the new product launches? Meghan Frank: We're definitely seeing improvement to date. So we've seen a meaningful inflection in terms of full price coming out of Q4 and into Q1. And it will take us some time to inflect and we think it will be sequential throughout the year, flipping positive as I mentioned in the second half, but seeing some really great green shoots. I mentioned some of these in terms of the new innovations. We launched Unrestricted Power, ThermoZen and ShowZero, which will be commercialized later this year. We also had an exciting run capsule that launched earlier this month. So we're building on that strength as we move throughout the quarter. It's still early, but definitely seeing some positive indicators. Also would point to, we did see employee sales pick up as well over the last few weeks as we introduced new product. Operator: The next question comes from Lorraine Hutchinson with Bank of America. Lorraine Maikis: As you work to inflect the North America sales trajectory to positive, are you doing any reassessing of your marketing, either dollars spent or types of marketing outreach to try to really bring in a new customer and reignite your existing? Or is it more status quo with the activation in grassroots styles? Meghan Frank: Thanks, Lorraine. I'd share -- I do think we're looking at our marketing strategy. So really focusing on engaging the guests, ensuring they're -- that newness is front and center and visible. I think you'll see us shift more into utilizing brand-appropriate influencers and ambassadors as we move throughout the year. We are really focused on our activations and engaging with our guests through those means. So I would say you saw some evidence of that in Q1 in terms of us being very active in, I would say, our activity activations. So with the BNP Paribas Open in Indian Wells with tennis, Milan Olympics. So really excited about the assortment that we showcased there and then also Studio Yet in L.A. We also had a Chinese New Year activation this year -- this quarter. Operator: The next question comes from Adrienne Yih with Barclays. Adrienne Yih-Tennant: Great. A couple of questions. Andre, on the 35% newness, can you talk about kind of whether that is obviously styles, which you mentioned or color choice and SKUs? And what products are you sunsetting to make room for the newness? And then along those same lines, how does the reporting structure of who makes final decisions for quantity, make, what to chase, et cetera, within the merchandising organization? I know Elizabeth Binder reports into you, but just trying to figure out how this -- the system is working in terms of that. And then my final question is, how much of the CapEx is AI tech-driven, like the tech stack to support AI? And how do you plan to use that and incorporate that into the business? Meghan Frank: Thanks, Adrienne. So we are moving our newness penetration from 23% in 2025 to 35% in '26. That is, I would say, new product never seen by the guest is how I'd frame that. So it's not just new colorways on existing products. It's truly a new product. So I would say in terms of sunsetting, we do have some SKU reduction as part of just being more pointed in our assortment and making that newness also more visible in our store and e-commerce expression. So that is a process we're going through as we assort the line. Jonathan Cheung, who's our Creative Director; as well as Liz Binder, our Chief Merchant, both report into me, and we've been leaning in together as we make these shifts. And then in terms of CapEx, we do have some investments in the AI space, shoring up our data and baseline so that we can move off of that. Really, I would say, our AI initiatives are focused on guest-facing, also enhancing our go-to-market calendar and supporting that speed aspect that we've discussed. So I would say it's an exciting and important part of how we're going after that enterprise enablement strategy. Operator: The next question comes from Laurent Vasilescu with BNP Paribas. Laurent Vasilescu: Meghan, it was very helpful in terms of understanding the newness of 35%. But for the audience, the North American full-price realization, can you maybe just unpack a little bit better in terms of -- like I think you mentioned 1Q is better than 4Q. But in terms of percentages, where is it now versus a couple of years ago? And where do you want that to go back for 2026? Meghan Frank: Yes. Thanks, Laurent. Yes. So if we look at 2025, we did have a higher markdown penetration than we would have liked. So it's illustrated by a 130 basis point increase in markdowns in Q4 and then 60 basis points for the year. We haven't broken out the penetrations in '26, but I would share, we expect to see a meaningful improvement in Q1. We're already starting to see that. But we are shifting from the lowest waterline in Q4. So we did have 130 basis points higher markdowns. So that points to having the most pressure on full price. So the sequential improvement is meaningful, but it will still underindex relative to our total top line. We do anticipate it will flip flat -- around flat in the second quarter and then the second half of the year would flip positive. We're really helping to enable this both through the newness curation as well as SKU reduction, and then the way we've positioned inventory for the year. So we have positioned units flat to slightly down. So really looking to read the trends on newness and chase where that's possible. As we've mentioned before, we have developed some capabilities -- enhanced capabilities in terms of our product team's ability to chase into what's working. So we believe this sets us up well for returning to healthy full-price sales penetration for the year and building off of that for the long term and in '26 as the opportunity presents itself. Laurent Vasilescu: Very helpful. And then I think you mentioned that square footage should grow low double digits. Just curious, whenever we find out about the new CEO. And if that individual wants to take a fresh look at that commitment. Can you maybe just unpack that a little bit more for the audience? How much of that is committed to for 2026? And then just a quick question here on marketing. I think in your 10-K, it's 5.7% of sales. Where should that go for 2026? Andre Maestrini: Yes. On your question, Laurent, about stores, we are taking a disciplined approach to capital spending and looking at our real estate project on a case-by-case basis. We continue to see good returns from new store openings and store expansions as these strategies contribute really to improve the shopping experience. So for 2025 to give you a number, NSOs are returning at above 100% ROI across both North America and the international markets. So representing a payback period of less than a year. So we feel confident with that. And also the strategy of optimization of existing doors in key influential cities to bigger format with proven quality traffic is solid. The productivity of our top larger stores is higher than the average of our fleet that is one of the best in the industry with sales per square foot over $1,400. So globally, to be precise, in '26, our plan calls for approximately 40 to 45 net new openings, which yields square footage growth to the low double digits. So with NAM, approximately 15 openings and international in between 25 to 30 openings with the majority in Mainland China. And for the marketing spending? Meghan Frank: Yes. And I'd just add, Laurent, from a store perspective, it's really a store-by-store look that the team is doing, being really mindful of where we're opening, making sure it's relevant for the guest and we've got the right positioning in each market. As Andre just mentioned, it's 15 stores in North America, the majority of which would be in Mexico. So we have just a small handful of new store openings and we are watching them closely. We would be largely committed through '26 to our square footage expansion plans, but the team feels really confident in them. I'd say from a marketing perspective, we are -- our guidance assumes we're relatively flat from a rate of sales perspective in terms of marketing spend. I think what you'll see is we're shifting the composition of that spend a bit more towards these impactful guest activations we discussed as well as utilizing brand-appropriate influencers and ambassadors as we move throughout this year. So I would say a little bit of a shift in strategy on the spend, same waterline, and we'll continue to monitor to the extent that it's working for us, and we'll continue to push into it. Thanks. Operator: The next question comes from Matthew Boss with JPMorgan. Matthew Boss: So Meghan, could you maybe speak to the bridge from 4% underlying revenue growth in the fourth quarter to the 1% to 3% in the first quarter and 2% to 4% for the year? Meaning maybe just if you could elaborate on the balance between the improvement in full-price selling that you're citing relative to what's offsetting or constraining revenue growth as we think about the course of the year. Meghan Frank: Yes, absolutely. So Q4, we're up 6%, excluding the 53rd week. And we did guide to 1% to 3% for Q1 and then 2% to 4% for the full year. I would say it's really the ramp of full price. So we had, I would say, the lowest waterline, as I mentioned in Q4, with markdown overpenetrating. We had 130 basis points of pressure in the markdown line in Q4. So we are improving that in Q1, but it will be still negative in Q1, flipping flat in Q2 and then accelerating in the second half of the year as we continue to build into it and then lap, I would say, the markdown performance that we had in the second half of '26. Matthew Boss: Great. And then, Meghan, just on the more than 200 basis points of operating margin contraction this year, how much of the decline do you see tied to more transitory items? And what do you see as the revenue growth necessary to see operating margins return to expansion multiyear? Meghan Frank: Yes. So we guided to 250 basis points decline. I would say the majority of that, when you step back from it, is add-backs of incentive comp and labor that we reduced in '25 and then also the proxy contest expenses. That's the majority of it as you step back. Obviously, we've got some headwinds and tariffs, but we're largely offsetting the year-over-year within the year. I do see this as the low waterline that we'll continue to build upon as we transition into '27. So really looking at getting back to that healthy full-price baseline. We're obviously having a little pressure on the fixed components of our P&L based on that revenue waterline of 2% to 4%. We haven't put a fine point on the leverage aspect. I think it will depend on the trajectory of the business, and then there are some decisions that we can make in terms of investment levels. So we'll definitely share more on that, but definitely expect it to improve from here. Operator: The next question comes from Paul Lejuez with Citi Research. Paul Lejuez: Lots of focus on the North America full-price improvement, but I'm just curious if we should read that as you guys being happy with full-price selling in the Rest of World and China. Maybe you can talk about how those regions compare from a full-price penetration perspective to the Americas. And then also maybe match that with what sort of level of newness do you see in those regions? Have the percentages also gone down? And are they also supposed to go back up in '26? Or has it been more constant there? Meghan Frank: Thanks, Paul. I would say we have not seen the headwind we've seen in North America in international regions in terms of full price. So still happy with the levels we're seeing there. That said, we do believe that the steps we're taking in our action plan in terms of product creation and activation will benefit all regions. But I would say we're still pleased with the trends there. I'll pass it to Andre just to add some more color on what we're seeing in the regions. Andre Maestrini: Yes, absolutely. I think that the model that has been developed to grow and expand in international is working because it generates full attention on the full price. And let me call out the different layers, which is, first, a brand-first approach, we are building the premium position of lululemon in activewear market in those key regions. Second, a diversified portfolio of product across the different activities where we want to lead in. Then this obsession of full price and minimal discounting and markdown. And also an elevated presentation in our stores and the guest experience across not only the key doors but also our online experience. And we are staying true to our community grassroot approach. We also keep standout events that generate organic traffic like the Summer Sweat Games, for example, in China. And that's why we are importing as a playbook to do Studio Yet that Meghan, you mentioned or our participation in the open of Indian Wells on new categories that we want to expand. So yes, as said, everything we are working on developing new styles and newness at the global level will also benefit all our markets to keep driving the focus and engaging the guest on full-price realization. Operator: The next question comes from Michael Binetti with Evercore. Michael Binetti: Could you speak a little bit to the Canada slower sales outlook in first quarter? Is that something you're seeing today, Meghan? Maybe just a few thoughts there. That market has been trending better than the U.S. for a little bit. I'm just curious what you're seeing in that market. And then maybe you could just help us -- you're shortening the time line on design from go-to-market. I think you diagnosed that as a pretty long time frame, 18 months plus. It's been a big focus for you. Could you just give us an update on what you're seeing there and some of the early progress or opportunities to shorten the lead times and what you think maybe that could go to as you look to kind of speed up the go-to-market process here? Meghan Frank: Yes. Thanks, Michael. So in terms of Canada, we're expecting -- we are inflecting full price across the North America region. The Canadian consumer has been a little bit more sensitive to markdowns. So we're seeing a little bit more of a pronounced impact there, I'd say. So that's what's driving that differential, but expect still the same opportunities in terms of assortment shift and focus on guests with our activations and think we'll reset to a better waterline. And then in terms of the go-to-market calendar, so we are going from about 18 to 24 months, we're expecting we could go to closer to 12 to 14 months over time. Really focused on tools, process and systems and leaning into automation, including in the AI space to lean into that calendar. We did mention that we have a new Head of Technology who's got an AI focus. We're excited about him joining the team and the things that we can unlock in that space. And there's -- I would say, a lot of energy in the business around this reduction and simplification of our process. Michael Binetti: Okay. And maybe if I can ask one follow-up. I think as I look back at last year, if I look at the first quarter, you mentioned that traffic was a little weaker than you'd liked in the quarter and the high-value guest was weak as well. You kind of gave us that breakout. Is that -- are you seeing better traction with the high-value guests as you start to flow the newness in and you start to get some confidence in the full-price selling as you at least start to improve sequentially from the fourth quarter here? Meghan Frank: Yes. I'd say it's early in the quarter. I'd like a little more time just to understand what's going on with the high-value guests. But I would say we're seeing, as I mentioned, great green shoots on some of the new product launches. And I would expect that extends to that guest as well. So we'll share more on what we're seeing as it progresses. Operator: The next question comes from Dana Telsey with Telsey Group. Dana Telsey: Nice to see the progress. As you think about the performance apparel market, and just the activewear market, did you grow share this quarter? Did it stay the same? What do you see in the growth of premium athletic and in performance apparel? And then with the early results, positive results to the new assortments coming in, is it bottoms? Is it tops? And what are you learning from that as you develop new products, but for the next time line for the balance of the year? Meghan Frank: Thanks, Dana. In terms of market share, so we maintained share in the total apparel market, and we lost about less than 1 point in activewear. So that's where we stand on that. As Andre mentioned, we maintained our position as the #1 women's activewear brand in the U.S. In terms of what's trending for category, tops and bottoms, we're seeing, I would say, some nice performance across both. The Unrestricted Power innovation, I mentioned we did in women's tights and men's shorts as well as a top, seeing some nice performance there. ThermoZen also was an outerwear innovation that we're excited about as well. We did also see some great performance out of a couple of bottoms that Andre mentioned, so EasyFive and then Groove Wide-Leg. And then we had a run capsule, which I would say encompass both tops and bottoms. So I would say it's both. And that had a lot of, I would say, energy around it in terms of fun and excitement in that run capsule. I think the team is really energized on building on the learnings in terms of what's working continuing to chase into as well as looking at how it informs our creative direction for upcoming seasons. Operator: The last question comes from Ike Boruchow with Wells Fargo. Irwin Boruchow: Meghan, can you just comment on the inventory ending in 4Q? How comfortable are you with that? I know the markdown is still expected to be up a little bit, but maybe just some more anecdotes there. And then what's your expectation for inventory as you move into 2Q and kind of the rest of the year? Meghan Frank: Great. Yes, I would say we're pleased with both the level and composition headed out of Q4. We guided to unit increase in the high single digits, and we came in up 6%, so cleaner than we expected. We did focus on cleaning out seasonal inventory and feel we're headed into '26 with an assortment that's more reflective of our go-forward strategy. In terms of how we're managing inventory in '26, I would say, throughout the year, we'd expect to see units approximately flat to slightly down. That would hold true for the end of Q1 as well. So that is part of how we're supporting driving that full-price inflection in our business and the return to a healthier baseline in terms of penetration. Operator: That's all the time we have for questions today. Thank you for joining the call, and have a nice day.
Operator: Greetings, and welcome to the IZEA Worldwide Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Francis, Vice President, Sales and Marketing Operations. Thank you. You may begin. John Francis: Good afternoon, everyone, and welcome to IZEA's Earnings Call covering the Fourth Quarter of 2025. I'm John Francis, VP, Sales and marketing operations at IZEA -- and joining me on the call are IZEA's Chief Executive Officer, Patrick Venetucci; and IZEA's Chief Financial Officer, Peter Biere. Thank you for being with us today. . Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q4 2025. If you would like to review those details, please visit our Investor Relations website at izea.com/investors. Before we begin, please take note of the safe harbor paragraph Included in today's press release covering IZEA's financial results and be advised that some of the statements we make today regarding our business, operations and financial performance may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. And with that, I would now like to introduce and turn the call over to IZEA's Chief Executive Officer Patrick Venetucci. Patrick? Patrick Venetucci: Thank you, John, and good afternoon, everyone. At the end of 2024, the leadership team and I have made a commitment to accelerate our path to profitability. I'm pleased to announce that at the end of 2025, we delivered on that commitment. Year-on-year, we broke even increased cash, held managed services revenue relatively flat, excluding Hoozu, and grew our enterprise accounts faster than the market. We achieved a net profit swing of $18.9 million, which is not only a first for this company, but is a notable event in the context of microcap public company turnarounds. Annual revenue was $31.2 million, a 13% decrease that reflects a deliberate strategic pivot toward long-term profitability compounded by broader macroeconomic headwinds. During the year, we successfully exited international markets and off-boarded lower-margin SMB accounts to prioritize a high potential enterprise portfolio. These internal shifts coincided with government-induced disruptions as [ DOGE ] and trade policies negatively impacted our government and retail accounts. Looking at the fourth quarter, revenue was $6.1 million, down 45% year-over-year. More than half of this variance was a direct result of our strategic client rationalization, while the balance can be attributed to delayed bookings in the second half of the year on a few key enterprise accounts and a conservative holiday marketing environment. Despite these strategic shifts and external headwinds, Managed services revenue, excluding Hoozu, remained resilient, finishing the year down a modest 2%. This relative stability masks significant underlying growth considering our enterprise accounts expanded well above industry growth rates. As we've strengthened and expanded our relationships with enterprise clients, we've been rewarded with more business. We have successfully scaled five enterprise accounts beyond the $1 million threshold each delivering double or triple-digit growth. Having largely worked through the attrition of our legacy SMB accounts, we believe the client portfolio is close to being stabilized, allowing the higher growth potential of our enterprise business to take center stage. Our sales and marketing efforts are attracting new clients and our pipeline reached a new high for the year with invitations to larger pitches growing. Lastly, we produced new work for Stellantis, Warner Bros., Georgia Pacific, Denon and many other leading brands consistently delighting our clients. Our restructured cost base was instrumental in our return to profitability this year. We achieved a 40% reduction in total operating expenses, driving a significant turnaround in cash operating profit to $0.7 million a substantial recovery from last year's $11.1 million cash operating loss. This disciplined approach further strengthened our balance sheet, putting an end to the cash burn. By implementing advanced human capital management systems, we have institutionalized this cost discipline to ensure our profitability is both sustainable and scalable. Looking ahead, our strategy is centered on a few core pillars. We are building deeper vertical expertise and executing key account plans on our enterprise accounts to maximized value for these high-potential clients. We are refocusing our SMB efforts on boutique accounts, clients with franchise business models so that our solution frameworks are highly repeatable. We are investing in high-tier talents who can level up our capabilities in creator strategy, media and commerce, which our enterprise clients are demanding. At the same time, we are extremely active in M&A discussions searching for companies that can build these capabilities faster and accelerate the growth of our enterprise client portfolio. It's important to note that given our low operating margin, an acquisition could be instantly accretive. Operationally, we are preparing to launch a proprietary technology platform which will enable our account managers to manage integrated creator campaigns at enterprise scale efficiently and effectively. This platform is infused with AI and tightly integrated with our unified operating model. In summary, we've reset the company's economic model in 2025 by creating operating leverage beyond cost reduction establishing durable breakeven economics where future revenue growth is expected to translate directly into profitability. This work has positioned the company for long-term success with a more focused client portfolio, a stronger leadership team, an engaging culture, significant client opportunity and incredible possibilities with IZEA's technology platform. With all of this momentum and opportunity ahead of us I am optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders, shareholders, clients and employees alike. With that, I'll turn the call over to Peter Biere, our Chief Financial Officer, for a closer look at the financial results. Peter Biere: Thank you, Patrick, and good afternoon, everyone. This afternoon, we reported our fourth quarter and full year 2025 results and filed our Form 10-K with the SEC. I'll focus today on the key drivers behind our operating performance add more color regarding our strategic repositioning and the resulting profitability improvement and provide an update on our cash position. All of today's comments exclude Hoozu, which we divested in December 2024. As Patrick described, we repositioned our business in early 2025 to prioritize larger recurring core enterprise accounts and reduce our exposure to lower margin project-based or high turnover client relationships. We refer to these collectively as noncore customers. Additionally, we reduced our annual cash operating costs in 2025 by over 40% and or $10 million, while increasing our investment in enterprise account management personnel where we're seeing growth. Overall, results show that we're on track posting positive cash from operations and breakeven net income for the year, both of which show significant improvement over 2024 results. Our strategic reset had a significant impact on 2025 contract bookings which declined by $10.3 million or 27% year-over-year. This decline reflects our intentional reduction in noncore customer activity, which accounted for the majority of the decline rather than weakness in our enterprise business. We ended 2025 with a $10.1 million contract backlog. Based on current pipeline opportunities and first quarter progress to date, we believe our bookings reset is largely behind us and expect to return to year-over-year bookings growth in early 2026. Given that revenue recognition for our managed services typically trails contract bookings by roughly seven months. 2025 revenue still reflected the runoff from noncore contracts booked prior to our repositioning, the majority of which concluded by the end of the second quarter of 2025. So we expect year-over-year revenue comparisons in the first half of 2026 to be lower, reflecting the absence of this noncore activity. We anticipate a return to year-over-year revenue growth in the second half of 2026 as revenue increasingly reflects our current mix of core enterprise engagements. Turning to results for the fourth quarter. Managed services revenue was $6 million, down from $9.8 million in the prior year quarter, reflecting our deliberate shift away from noncore accounts toward enterprise relationships. About half of the year-over-year decline relates to the expected runoff from noncore customers as a part of the strategic client rationalization, while the remainder primarily reflects the timing of bookings from several enterprise accounts and a more cautious holiday marketing environment. Operating expenses declined meaningfully to $4.4 million, down 40% year-over-year, driven primarily by lower sales and marketing spend and reduced employee and contractor costs, which reflect our structural cost reset. For the quarter, we reported a net loss of $1.2 million or $0.07 per share on 17.1 million shares outstanding compared to a net loss of $4.6 million in the prior year period or $0.27 per share on 17 million shares. This significant year-over-year improvement reflects the impact of our operating reset, improved cost structure and a higher quality customer mix. Adjusted EBITDA for the fourth quarter was negative $0.9 million compared to negative $2 million in the prior year quarter. As a reminder, in late 2024, we refined our non-GAAP definition of adjusted EBITDA to exclude nonoperating items, primarily interest income from our investment portfolio. And we restated the prior year amounts for comparability. A reconciliation of adjusted EBITDA to net income is included in the earnings release. We earned $0.4 million of interest income during the quarter primarily from cash balances held in a money market account following the maturity of all investment securities. And finally, we continue to operate with no debt on our balance sheet. In September 2024, we announced a commitment to repurchase up to $10 million of our common stock in the open market, subject to customary restrictions, which include regulatory limits on daily trading volume and company-imposed share price thresholds. Through December 31, 2025, cumulative repurchases totaled 561,950 shares for an aggregate investment of $1.4 million under the program. No shares were repurchased during the fourth quarter. We remain committed to a disciplined capital allocation approach, and we'll continue to evaluate repurchase activity in light of market conditions liquidity needs and alternative uses of capital. As of December 31, 2025, we had $50.9 million in cash and cash equivalents, a decrease of just $0.2 million from the beginning of the year. This compares favorably to the $13.1 million reduction in cash during 2024 and reflects improved operating performance and disciplined cost management. With $50.9 million in cash and investments at year-end, we believe we're well positioned to support organic business growth initiatives and pursue our strategic acquisition plans. Thank you for your time today. At this time, we invite our investors and analysts to share their questions so that we may provide clarity and insights. Operator: [Operator Instructions] And our first question today comes from Jon Hickman with Ladenburg Thalmann. Jon Hickman: So could you give us a little clarity on gross margins going forward? Kind of high [ accordingly ]. Patrick Venetucci: Yes, we don't give specific guidance, but I think we're on the right track. There's been an increase relative to the last couple of years. But more importantly, we really have our eye on net revenue. The real goal is to focus on growing the net revenue and keeping our cost structure aligned with that? Jon Hickman: Okay. And then kind of in line with Peter's comments about the first half of the year being lower than last year, but the second half being higher. In total, do you expect year-over-year growth in revenues? Patrick Venetucci: Yes, we're aiming for growth. I mean, this is a growth market. And so we're absolutely aiming for growth. Jon Hickman: Okay. And then one last question. You mentioned several times in acquisition strategy. So do you see like lots of targets out there? Is it lots of sellers? Or are things tight. Can you maybe elaborate on that? Patrick Venetucci: Sure. It's a very high priority. I'm spending a lot of time speaking with M&A targets. We're very active in the marketplace. As some of you know, I mean, this is my background. I've come from a space where I successfully was able to close quite a few deals in a short period of time. We're both tapping into my personal network of potential acquisition targets as well as working with quite a few investment bankers that specialize in this space. We're seeing good deal flow, and we're actively engaged at different stages of M&A. Jon Hickman: So to follow up. In the past, there's been kind of a big difference between private market values and public market values. Is that -- valuations an issue for you or [indiscernible]. Patrick Venetucci: I agree. There definitely is a difference in valuation. It's not an issue for us. I think it points out an opportunity for investors in terms of investing in IZEA, because the equity value is not exactly what we're seeing in the private markets for IZEA. However, from our perspective, I mean, we have enough cash to be able to buy at a fair market value. We're going to be disciplined. We're doing our homework and using various valuation methodologies and so forth and making sure that any investment that we make, we have certain, we're modeling out what our return on capital would be, and we have certain hurdle rates that we're striving to achieve. Jon Hickman: So are you interested in customers or technology, or both? Patrick Venetucci: Well, more customers, I mean, we've got ample technology. As you know, we shifted our strategy to be services first supported by technology. And so our acquisition strategy really reinforces some of the things we've been outlining throughout the year. Number one, the verticalization and enterprise accounts. So if there's an ability to add to our depth of certain verticals to add enterprise grade clients with recurring revenue and strong relationships. That's one area. The second area is capabilities. As I've also stated throughout the year, we're trying to increase our service offerings that we're able to sell to our enterprise client base. Having an integrated service offering is certainly part of our future. Operator: And your next question comes from Kris Tuttle with Blue Caterpillar. Unknown Analyst: I think one of the things that would be really helpful right now is you guys are obviously having a lot of terrific discussions with your clients and potential clients the last couple of months. I love an update on how are they thinking about IZEA in terms of their overall context? And not strictly speaking, competition, but going to creators directly or different strategies they might employ. I just love an update on how they're seeing you positioned relative to all the other things they have to consider and just some of your observations around that for this year. Patrick Venetucci: We -- there's a massive shift happening in marketing right now that we're catching the tailwind on. And that is as television audiences have been declining. In social media audiences, have been increasing. We're at what I've coined the social singularity, meaning that the audiences have flipped -- so social audiences are now larger than television audiences. And a lot of marketers are still structured to service the old system, the old way, which was it was television first. And they're struggling to be social first -- and the way to reach social audiences is through creators. Creators are essentially modern-day channels. And that's where IZEA comes in. I mean we're -- we provide those kinds of solutions to marketers. We help connect the brands with the creators. But we look at it more as a marketing partnership where we help them select and curate the right combination of creators. We cut the deals with them and that helps them reach the right audiences and connect with their consumers. Unknown Analyst: Okay. All right. I got it a little bit. And then one last point on just the -- when I looked at the enterprise value today, relative to the cash, it was quite low. And I'm wondering, like is that where you look in terms of deciding when to deploy some of that buyback, given the fact that you have M&A opportunities, but it wouldn't take a lot for the enterprise value to get close to 0 again. Patrick Venetucci: Yes. As in the past, we've been proponents of buybacks. Again, we believe that there's a lot of upside to this, and that's why we've done it in the past and continue to have a philosophy of doing buybacks at the right price. We're not coming out and staying in the specific price. But as I said before, I mean, we're looking at the market holistically and where we -- as John pointed out, there is a gap between what the private markets are valuing companies like ours and what the public markets are -- and so I think this is a great opportunity for investors. And with our capital, that's certainly one of our choices is to be an investor. And in the past, we've bought back. And if it continues to be that way, we'll continue to buyback. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. So I'll hand the floor back to John Francis for closing remarks. Thank you. John Francis: Thank you, Diego, and thank you, everyone, for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website, izea.com/investors. We appreciate your continued interest and support, and hope you'll join us for our next conference call to discuss our first quarter 2026 results. Thank you so much. Operator: Thank you, and this concludes today's call. All participants may disconnect.
Operator: Good afternoon, ladies and gentlemen, and thank you for joining DocuSign's Fourth Quarter Fiscal 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay on the Relations section of the website following the call. [Operator Instructions] I will now pass the call over to Matthew Sonefeldt, Head of Investor Relations. Thank you. You may begin. Matt Sonefeldt: Thank you, operator. Good afternoon, and welcome to DocuSign's Q4 Fiscal 2026 Earnings Call. Joining me on today's call are DocuSign's CEO, Allan Thygesen; and CFO, Blake Grayson. The press release announcing our fourth quarter fiscal 2026 results was issued earlier today and is posted on our Investor Relations website along with a published version of our prepared remarks. Before we begin, let me remind everyone that some of our statements on today's call are forward looking, including any statements regarding future performance. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different. In particular, our expectations regarding factors affecting customer demand and adoption are based on our best estimates at this time and are therefore subject to change. Please read and consider the risk factors in our filings with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date. And except as required by law, we assume no obligation to update these statements in light of future events or new information. During this call, we will present GAAP and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share count and information regarding free cash flows, billings and ARR. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. For information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's earnings press release, which can be found on our website at investor.docusign.com. I'd now would like to turn the call over to Allan. Allan Thygesen: Thank you, Matt, and good afternoon, everyone. In fiscal 2026, DocuSign's AI-native Intelligent Agreement Management, or IAM platform, establish clear market leadership as the agreement system of action for companies of all sizes. After just 18 months, IAM customers are generating over $350 million in ARR and delivering strong retention and expansion. We're proud of the improvements in product, go-to-market and operational execution over the past 3 years that have led us to this inflection point. We are positioned to begin accelerating the business. Fiscal 2026 was defined by consistent execution, positioning us for durable long-term growth. In Q4, revenue was $837 million, up 8% year-over-year, while billings exceeded $1 billion for the first time, growing 10% year-over-year. ARR ended at $3.3 billion, up 8% year-over-year. IAM represented 11% of ARR. Fiscal 2026 was our first year with non-GAAP operating margins of over 30% and free cash flow over $1 billion. In fiscal 2027, we expect to maintain operating margins at a similar level as we reinvest go-to-market efficiencies into increased R&D investment to accelerate our road map. We will also leverage strong cash flow generation to support our repurchase program, which we have expanded to $2.6 billion. In fiscal 2027, we're focused on 2 priorities to grow IAM. First, helping customers automate workflows and drive business results; and second, expanding our AI data and innovation advantage. IAM is an AI-native end-to-end platform that transforms how customers manage agreements across every part of an organization. In the front office, sales workflows connect to legal, finance and operations teams while also integrating with CRM platforms, enabling customers to close deals faster, deliver a better customer experience and gain meaningful top line benefits. In the back office, IAM's extraction and analysis capabilities enable a CFO in procurement use cases or general counsel and legal use cases to better manage vendor relationships and gain previously unattainable insights into the business across hundreds of thousands of documents using IAM as a system of action. Aon, a leading global professional services firm is implementing DocuSign's Intelligent Agreement Management to surface intelligence buried in its legacy agreements and delivered through Aon's Meridian capability, equipping colleagues with the clarity they need to serve clients more effectively. Bank of Queensland signed a 3-year strategic agreement and upgraded to IAM through the Microsoft Azure Marketplace. By leveraging our global partnership, Bank of Queensland will accelerate its digital transformation, streamline agreement workflows to reduce their cost to serve, improve speed to market and strengthen regulatory controls through deeper Microsoft integration. IAM is now the center of gravity across our direct sales, partner and product-led growth motions. Building on significant commercial momentum in fiscal 2027, we will scale IAM with enterprises by adding a top-down C-suite focused sales motion. We're launching IAM consumption-based subscription pricing in Q1. Our partner channel is increasingly emphasizing IAM and made an improved contribution to our direct business in Q4 with total partner contributed bookings growing by over 30% year-over-year. Our product strategy is also focused on delivering more use case value across organizations and enterprises. In fiscal 2027, IAM will cover more surface area for our customers by introducing new IAM SKUs for specific functions within companies, including IAM for HR and procurement. We're also building richer agentic tools for legal teams. This complements existing SKUs for sales and customer experience. We will continue to strengthen trust and compliance functionality through deeper permissioning, access management and auditing as well expanded IAM extensibility to more enterprise-focused third-party public and private applications. Recently launched AI-powered tools bolster IAM's workflow capabilities, Agreement Desk, Agreement Preparation and AI-Assisted Review streamline agreement creation. Workspaces and identity verification speed up secure agreement commitment and Custom Extractions and SCIM for DocuSign deliver sophisticated, scalable capabilities that enterprise customers require. You can see these in action in our demo videos found in the prepared remarks. eSignature remains a thriving part of our platform vision. In Q4, we added AI capabilities to eSignature that make every step of the signing process smarter and more trustworthy. We continue to see consistent year-over-year growth in the eSignature base, especially among customers spending $300,000 or more a year. Q4 envelope consumption once again increased year-over-year at near multiyear highs, while growth in envelope sent remains healthy and consistent. Our focus on improving sales engagement and reducing customer friction delivered year-over-year improvements in gross and dollar net retention. Three years ago, we recognized that AI would transform how agreements are managed, and we began building the AI-native platform that became IAM. We believe that Agreement Management was a natural extension of DocuSign's business and that we had unique competitive advantages. These include a deep understanding of customer agreement workflows and context, a large ecosystem with more than 1,100 integrations, market-leading security and compliance and customer trust and distribution relationships built over decades with companies around the world. Our AI data advantage continues to grow as customers invest in IAM. Today, the number of private consented agreements ingested has expanded to more than 200 million agreements in DocuSign Navigator, our intelligent repository, up from 150 million in December. AI search leader, Elastic, is deploying Navigator to automate contract workflows across the business, while fintech leader, Clasp, is leveraging Navigator and our suite of app extensions to automate agreement workflows and centralize as contract data. DocuSign AI models draw upon an enormous unmatched body of agreement data gathered over 2 decades. By leveraging our customer consented library of private contracts. We believe we can achieve up to a 15 percentage point improvement in precision and recall compared to our models trained on public contract data, while operating at incredible cost efficiency. We've optimized AI processing costs by upwards of 50x compared to running direct prompts on LLMs. We further extend our AI advantage by directly integrating with the leading AI providers. Last month, we partnered directly with Anthropic to make IAM available as part of Claude Cowork. The DocuSign MCP connector is available in beta today through Anthropic's Connectors Directory. It enables DocuSign customers to use Cowork's natural language prompts to automate agreement workflows and securely create, review, send and manage agreements in IAM, all with DocuSign's trusted security and access controls. In addition to Cowork, IAM also connects via MCP server to OpenAI's ChatGPT, Google Gemini, GitHub Copilot Studio and Salesforce's Agentforce. IAM's ability to integrate with customer workflows and third-party applications delivers significant value to our customers. leading venture-backed fintech company, Vestwell, connected IAM to its CRM and reduced the time required to create a new customer agreement package from 75 minutes to 5 minutes. Move Forward Financial, a real estate lender, is saving money and delivering a better customer experience by using IAM for sales. Payworks, a Canadian developer of workforce management software increased 24-hour contract completion rates from 55% to 87% and recovered more than $400,000 in annual sales representative productivity by integrating IAM workflows with a complex Salesforce implementation. Inside DocuSign, we're adopting AI across the organization, deploying new tools and enablement programs to boost productivity and gain efficiencies. The vast majority of our engineering organization is developing with AI and 60% of new code is AI assisted. In closing, we're proud of the immense value IAM delivers to customers by enabling them to build sophisticated and efficient agreement workflows and unlock the power of the data in their agreements. DocuSign IAM has emerged as the category-leading agreement management platform and puts DocuSign at the leading edge of AI innovation. I want to thank the entire DocuSign team for their dedication to helping our customers move faster, grow their businesses and operate more efficiently, all while transforming DocuSign into a durable long-term growth business. With that, let me turn it over to Blake. Blake Grayson: Thanks, Allan, and good afternoon, everyone. Fiscal 2026 represented a critical year for DocuSign as we continued our transformation, leveraging our recognized leading position amongst the world's most trusted software companies to help customers realize value from their full repository of agreements through IAM. With 1.8 million customers, representing most large enterprises, mid-market companies and over 1.5 million small businesses, we are in a unique position to provide the insights, productivity and velocity companies need to improve their performance, particularly via leveraging AI. Fiscal 2026 was both our first full year integrating IAM into our business as our primary growth driver and our first year generating over $1 billion in free cash flow. We are proud of the progress we've made over the past 3 years and aspire to even greater gains in the future. Q4 total revenue was $837 million and subscription revenue was $819 million, both up 8% year-over-year. For the full year fiscal 2026, total revenue was $3.2 billion, up 8% year-over-year and subscription revenue was also $3.2 billion, up 9% year-over-year. Revenue in Q4 and for the full year benefited from approximately 80 basis points and 20 basis points year-over-year, respectively, from foreign exchange rates. Additionally, as discussed in prior quarters, fiscal 2026 revenue also had a slight tailwind from digital add-ons that launched in late fiscal 2025. Our annual recurring revenue, or ARR, grew 8% year-over-year in fiscal 2026 to nearly $3.3 billion. This is consistent with our fiscal 2025 ARR growth rate of 8% year-over-year. ARR growth this year was driven by accelerating gross new bookings, primarily from IAM customers as well as gross retention improvements. Our ARR growth in fiscal 2025 was driven predominantly by gross retention as we made sizable gains that year. We're excited about the opportunity to accelerate our ARR growth in fiscal 2027 as we continue to become an even more valuable partner to our customers. As a reminder, and as detailed in our filings, ARR is calculated using fixed exchange rates set at the start of the fiscal year. Billings for Q4 were up 10% year-over-year and exceeded $1 billion for the first time in DocuSign's history. Approximately half of the Q4 billings outperformance relative to our guidance was driven by timing with the remainder from FX and bookings. For the full year fiscal 2026, billings were $3.4 billion, also up 10% year-over-year. Billings in Q4 and for the full year benefited by approximately 2.3% and 1.1% year-over-year, respectively, from foreign exchange rates. As a reminder, this quarter will be the last time we report on billings as a top metric as we shift to discussing ARR going forward. Please see Slide 29 in our Q4 earnings deck for a full summary of our top line metrics changes. The underlying foundation of our business remains durable and healthy. Our dollar net retention rate, or DNR, was 102% in Q4, up from 101% in the prior year showing moderate sequential improvement over the last 6 quarters. Both consumption, a measure of envelope utilization and the volume of envelope sent in Q4 continued to improve year-over-year with consumption remaining near multiyear highs across customer segments and verticals. We are seeing continued strong adoption of our IAM platform. In Q4 and after just over 18 months from launch, IAM represented over $350 million in ARR or 10.8% of total company ARR, up from 2.3% at the end of fiscal 2025. Although still early, our first IAM renewal cohorts are performing better than the company average, and we continue to see adoption rates for IAM features climb as users engage with the platform's expanding functionality. In Q4, total customers grew 9% year-over-year to over $1.8 million. We ended the quarter with 1,205 customers spending over $300,000 annually, a 7% increase year-over-year. International revenue surpassed 30% of total revenue in Q4 and grew 15% year-over-year. Our commitment to operating efficiency delivered strong profitability for the quarter and fiscal 2026. Non-GAAP gross margin for Q4 was 81.8%, down 50 basis points from the prior year due to ongoing costs associated with our cloud infrastructure migration, as discussed throughout the year. For fiscal 2026, non-GAAP gross margin was 82.0%, down 20 basis points on a year-over-year basis a better result than the anticipated full percentage point of headwind in our initial fiscal 2026 guidance as higher revenue partially offset the cloud migration impact. Non-GAAP operating income for Q4 was $247 million, up 10% year-over-year. Operating margin was 29.5%, up 70 basis points versus last year. For the full year, non-GAAP operating income was $968 million, up 9% year-over-year, with full year operating margin reaching 30% in the fiscal year for the first time in our company's history, representing a 30 basis point increase year-over-year. We ended fiscal 2026 with 7,044 employees, up modestly from 6,838 a year ago, as we continue to invest deliberately in roles focused on growing the IAM platform. While we are hiring across all of our global offices, the vast majority of our net new head count growth has come from, and we expect will continue to be in lower-cost locations. Also in fiscal 2026, we delivered our first year with over $1 billion of free cash flow, a 33% margin compared to 31% a year prior. In Q4, we generated $350 million of free cash flow, representing 25% year-over-year growth and a 42% margin. Strength in Q4 was driven primarily by improved collections efficiency as well as higher billing seasonality and the timing of billings. Our balance sheet remains strong. We ended the quarter with approximately $1.1 billion of cash, cash equivalents and investments. We have no debt on the balance sheet. In Q4, we also increased our buyback activity repurchasing $269 million in shares. This was our largest quarterly dollar buyback to date. For the full year fiscal 2026, we repurchased $869 million in stock representing 82% of our annual free cash flow. When including the additional funds used to offset taxes due on RSU vesting, this rate is slightly over 100% for the year. In Q4, we established a 10b5-1 program to repurchase shares before the open window rather than our typical buybacks that coincide with open trading windows after earnings. This mechanism extends the potential time frame for share buybacks, and we have already repurchased $158 million to date in Q1. In addition, today, we announced a $2 billion increase to our repurchase program, bringing our total remaining authorization to $2.6 billion. Our focus continues to be on improving free cash flow generation and redeploying excess capital opportunistically to shareholders. Non-GAAP diluted EPS for Q4 was $1.01, a $0.15 per share improvement from $0.86 last year. GAAP diluted EPS for Q4 was $0.44 versus $0.39 last year. For fiscal 2026, non-GAAP diluted EPS was $3.84 versus $3.55 in fiscal 2025, and GAAP diluted EPS was $1.48 versus $5.08 last year. As a reminder, GAAP earnings in fiscal 2025 were positively impacted by the tax valuation allowance released that year. In Q4 and fiscal 2026, the buyback program contributed to reducing our share count. Diluted weighted average shares outstanding for Q4 were 204.7 million, a decrease from 214.5 million last year. Basic weighted average shares outstanding for Q4 decreased by 2.8 million year-over-year to 200.5 million from 203.3 million total shares. With that, let me turn to guidance. For ARR, we anticipate accelerating growth in fiscal 2027 compared to the prior year. We expect a year-over-year growth rate range of 8.25% to 8.75% or an 8.5% year-over-year increase to $3.551 billion at the midpoint at the end of Q4 of fiscal 2027. We expect growth to be driven by gross new bookings, primarily from both new and expanding IAM customers as well as by gross retention improvements versus fiscal 2026. Related to this, we expect another year of modest improvement in DNR. We expect IAM to represent approximately 18% of our total ARR at the end of Q4 fiscal 2027, driving IAM to well over $600 million in ARR by the end of this year. This is our first year guiding to ARR and I want to provide some context on our philosophy and approach around it. Our guidance represents our current best estimates for both total ARR and IAM's trajectory based on the business data and bookings forecast available today. Therefore, we intend to only revise our ARR forecast as our underlying bookings expectations evolve for the entire year and not necessarily on a quarterly basis. As you are aware, our bookings are seasonally weighted more heavily to the second half of the year, in particular, Q4, which is typically our strongest quarter. As a result, updating our full year ARR forecast will depend on our visibility later into the year, which will take time to achieve. For total revenue in the first quarter and fiscal year 2027, we expect $822 million to $826 million in Q1 or an 8% year-over-year increase at the midpoint and $3.484 billion to $3.496 billion for fiscal 2027 or an 8% year-over-year increase at the midpoint. After adjusting for impacts from FX and the moderate tailwinds from digital add-ons in fiscal 2026, revenue growth is in line with the prior year. Beginning fiscal year 2027, we will only guide to total revenue, given that subscription revenue has now become the vast majority of our recognized revenue base, specifically 98% of our revenue in fiscal 2026. We will continue to report the breakdown between subscription and professional services and other revenue in the footnotes of our SEC filings based on materiality thresholds. For profitability, we expect non-GAAP gross margin to be between 80.8% to 81.2% for Q1 and between 81.5% and 82.0% for fiscal 2027. We expect non-GAAP operating margin to reach 29.0% to 29.5% for Q1 and 30.0% to 30.5% for fiscal 2027. Our fiscal 2027 operating margins guidance reflects a similar level of margin expansion as we saw in fiscal 2026. We expect non-GAAP fully diluted weighted average shares outstanding of 196 million to 201 million for Q1 and 190 million to 195 million for fiscal 2027, a meaningful reduction from the prior year as we expect that our buyback activity will more than offset dilution. For detailed commentary on top and bottom line factors to guidance, please see the Modeling Considerations appendix in our prepared remarks. In closing, fiscal 2026 was defined by the successful global rollout of IAM and our continued commitment to business fundamentals and improving efficiencies while redeploying excess capital to shareholders. As we look toward fiscal 2027, we remain focused on leveraging efficiency gains to drive product innovation and ultimately accelerating ARR growth delivering the long-term improvements that our customers, shareholders and employees will be proud of. That concludes our prepared remarks. With that, operator, let's open the call for questions. Operator: [Operator Instructions] Our first question is from Rob Owens with Piper Sandler. Rob, please check and see if your line is muted. Robbie Owens: Allan, in your prepared remarks, you talked about being positioned to accelerate the business, and clearly, that's reflected here in the ARR guide. And after 2 years of consistent growth now calling for modest acceleration. So maybe help us unpack what's underpinning that confidence. You talked about gross retention, net retention. But can you stack rank kind of the delta between the 2 with IAM playing a role, maybe speak to some of the top of funnel activity that you're seeing as well? And lastly, on that line -- along those lines, the level of conservatism that you have in this guidance relative to prior years? Allan Thygesen: Sure. Thanks for the question. Overall, I think we're really pleased with the momentum in the business. That's what's reflected in our guide. We continue to see, I think, very strong adoption of product market fit in the commercial segment and accelerating momentum in enterprise, which represents an even larger addressable opportunity. In terms of the drivers of the growth this year, it's a combination of new expansion bookings and retention. And both are very significant focus areas inside the company. On the expansion side, as I said, it cuts across segments, primarily driven by IAM. And on the retention side, of course, the bulk of the business is in design. And I think we're doing a better and better job on retention there reflected in the increasing DNR rates. We're starting to see a modest contribution from IAM as well, which has even higher retention, but it's still a very small part of the book. So that's not a huge driver this year, of course, will become more important as we go further out. Blake, I don't know if there's anything you want to add that? Blake Grayson: Yes. Just kind of ending question on the level of conservatism, I think, Rob, that was in your question. We forecast -- we continue to forecast and communicate what we see in the business. No change in our philosophy there. And as things develop over time, we'll continue to update, but no change in structure or anything like that. Operator: Our next question is from Tyler Radke with Citi. Tyler Radke: I appreciate all the disclosure and prepared remarks, you put out ahead of time and good to see the slight excel on the guide. I guess, Blake, you walked through sort of the guidance philosophy on ARR, which we understand is fundamentally a different metric than billings. But I guess as we just sort of look at the IAM piece implied within your guidance, I mean, very strong growth this year. I think you added about $280 million, $285 million of net new IAM in FY '24, which was up orders of magnitude -- or sorry, in FY '26 up orders of magnitude from the prior year. But if we look at your guide for next year for FY '27, it sort of implies like a similar amount of net new in IAM. So can you just help us understand, I mean, it seems like this is a business that's growing exponentially. You got a lot of new initiatives ahead. You talked about consumption pricing, the C-suite selling. So like why wouldn't that number continue to ramp? And maybe just sort of help frame that in the context of returning to double-digit growth, kind of what else do you kind of need to see to kick in to get back there? Blake Grayson: Sure. Thanks for the question. What we saw this year and what we're expecting to see next year, again, it's a pretty linear progression in the IAM share of ARR. You saw us go from 2.3% to 10.8% this year. We're forecasting approximately 18% by the end of next year. A lot of that has to do with renewal cycles, right? So how are we having those discussions with our customers, getting deeper into their business and a consultative approach around what's right for them. I would just say IAM is tracking as we hoped it would. I'm excited for it to become an even larger percentage of our business over time. It absolutely is a key growth lever for us to get to that aspirational double-digit growth rate. That, combined with improvements in gross retention, which not only are we making those in eSign, but also we are seeing in IAM contribute to that in small shares today just because we're getting our very first renewal cohorts through. But the combination of those 2 things, I think, helps us reach that longer-term aspirational goal of reaching double-digit growth. So hopefully, that helps. Operator: Our next question is from Mark Murphy with JPMorgan. Mark Murphy: Congrats, Allan. It's intriguing to see the 200 million documents have been adjusted into Navigator because I think theoretically, it would give you an accuracy advantage or performance advantage, if you compare it to LLMs that might be out there running queries on their own. You're also saying that the Anthropic partnership is central to your strategy. Could you comment on how much of a priority you want your own sovereign system Iris to be versus kind of working with Anthropic? And basically, how much of an accuracy advantage are you seeing when people are using Iris? Allan Thygesen: Yes. I start just at the highest level, AI has been fantastic for DocuSign over the last 3 years. I think we saw the potential impact on the agreement space early, articulated the IAM vision, you can see how that's powered some incremental growth for us. I want to distinguish between the agreement library and the processing that we do on that and then what's the UI that people interact with. On the data side, we have a huge advantage in using private consented agreements, not just public data. When we started with IAM, we were processing off public data. And now, as you mentioned, we've reached 200 million agreements that have been consented to be processed. And that's powering increased accuracy in our models. At the same time, because we're processing large amounts of data, we've taken significant steps to drive additional efficiency in how we process that data, and that's what's driving the very significant cost advantage that we have in processing these large data sets. So I think it's a -- we are certainly benefiting from the overall model innovation that the Anthropics and OpenAIs and Googles of the world are doing, building on top of that, leveraging the incredible CapEx innovation they're doing. But then we have our own proprietary access to data, workflows and trust from customers that adds to that. In terms of the user experience, we always have the philosophy that we want to reach users and enable them wherever they want to do their work. So they can certainly do that through the DocuSign UI. But we've always been available in Salesforce, in the SAPs of the world, Workday and many other applications. And so it's sort of a logical extension of that to now be available in the leading chatbots like Anthropics or OpenAI, which we announced last fall. And so I don't -- I view that as a continuation of our strategy. And you should expect to see us if new surfaces arise that are important to our customers, we want to make DocuSign data and actions available in those surfaces. Hopefully that helps. Operator: Our next question is from Patrick Walravens with Citizens JMP. Patrick Walravens: Great. And let me add my congratulations. If I could ask one for each of you. Allan, I was intrigued by the comment about the bank. I think it was maybe the Bank of Queensland that bought DocuSign through the Microsoft Azure Marketplace. So if you could just comment on the Microsoft relationship and how that's trending, that would be great. And then, Blake, for you, I've gotten e-mails about this. So if you wouldn't mind touching on where you are on your philosophy on stock-based comp, I think that would be appreciated by investors. Allan Thygesen: Yes. So on the Bank of Queensland deal, yes, we -- that was transaction through the Microsoft Azure Marketplace, and we've done a number of enterprise transactions there. As you all know, Microsoft has a number of Azure commitment agreements with large companies and often they appreciate being able to buy through that platform. But it's beyond just the convenience factor. I would say I've been thrilled with Microsoft as a partner. They really linked in here and we're a big part of the sale. In fact, a Microsoft leader presented that case at our conference last week to the entire partner community. So they've been fantastic, and we look forward to doing even more with them. Blake, I think there's a second question for you. Blake Grayson: Yes. Thanks, Patrick. So related to stock-based comp. We made a concerted effort around that line item. I think you'll see in the financials that stock-based comp grew -- I mean, it's been pretty flat actually for the past couple of years. Stock-based comp grew 2% year-over-year in fiscal '26. I think that was coming off a slight decrease, negative 1% in fiscal '25. And you can see that in our results if you just take SBC as a percentage of revenue. It's been declining in the past couple of years. And so we're happy with that. I expect it to decline again into fiscal '27. As you all know, there's been a number of actions that we've taken over the past years to manage stock-based comp around whether that's head count resource management, whether it's around fewer executive grants and also shift to more PSUs whether that's making adjustments to equity structures around leaning a bit more into cash comp. We recognize we still have work to do, but I'm proud of the continued progress that we're making and we're focused on continuing that. Allan Thygesen: Yes. So just to add to your question, you asked about Microsoft, but I don't want to -- since you mentioned Bank of Queensland, I think it's an important use case to talk about. So I think you all know that financial services has always been an important vertical for DocuSign. And of course, we powered many use cases from bank account onboarding to mortgages, to loan agreements, et cetera. But historically, we sat just at the end of the process, the execution moment, very important moment, very high value moment, but that has powered -- let's say we basically work with practically every bank, certainly all the large ones. But now we can essentially power the entire onboarding process from the initial presentation of the sign-up process to real-time data validation of the data that a customer enters to real-time identity verification of their documents and that they are present and then, of course, the execution moment and then writing the data back to whatever system powers the next step in the process, which is dramatic simplification and both improvement in the customer experience and improvement in internal efficiency. And Bank of Queensland is an example of one of the early customers for that end-to-end process. And I think we're going to do a lot more of that over the next couple of years. So I just thought that was an exciting use case, not just for what it illustrates about the Microsoft partnership, but what it illustrates for a use case that might not be well understood. Operator: Our next question is from Kirk Materne with Evercore ISI. S. Kirk Materne: I was wondering -- you could you just mentioned banks, and I was wondering, Allan, if you could just talk a little bit about what you guys are thinking about from a vertical perspective. I realize, you're a horizontal platform at its core. But I was just kind of curious what you're seeing in terms of either faster adoption in some verticals for IAM and maybe what you're doing to lean into some verticals where there's a really good product fit for that product? Allan Thygesen: Yes. Thanks for the question. At a high level, I would say we're still an incredibly broad application. And that's true for sign and it's as true for IAM. We see it adopted across the industries, across companies with different sizes and now across geographies. I would say that we are moving increasingly towards functional use cases. So the account sign-up example I just gave for banks, of course, is a customer experience front of the house type application. We also do that in B2B or B2B sales organization. That's, of course, been a long-standing partnership with Salesforce and we do that for other CRMs as well. And now increasingly, more use cases in procurement, where there's a lot of B2B contracting that happens and in HR, where the attraction and recruiting and onboarding of new employees, it mirrors in many ways, the bank account example that I gave you at the beginning. So we are focused on those functional use cases, if you will, more than specific industries to the extent that we focus on industries. Financial services, health care and government are 3 areas that we invest a little extra in because while they're complicated, they're high value, and we do well in them. But it's very broad from an industry perspective. S. Kirk Materne: Okay. That's super helpful. If I could just ask a follow-up for Blake. Just Blake, on gross retention, do you have any sense on how that changes with IAM customers for you all? I realize the cohorts are pretty new here, but I was just kind of curious if that's playing out the way you would have expected in terms of potentially higher gross retention for those customers? Blake Grayson: Yes. We are seeing -- and I'm going to preface this by a very early days of our first renewal cohort. So the sample size is pretty small. But even with that said, gross retention and dollar net retention rates for these IAM early renewal cohorts are better than the company average. So I would say cautiously optimistic, excited. It's frankly what we expected from this because just of all the feature functionality that comes with IAM and we'll see how that develops over time, but I'm cautiously optimistic about that so far. Operator: Our next question is from Allan Verkhovski with BTIG. Allan M. Verkhovski: Allan, it's interesting to see how you've optimized AI processing costs by upwards of 50x compared to running the direct prompts on LLMs. Why is IAM consumption-based pricing the right way of monetizing? And what were your top learnings from the quarter in conversations with your larger customers about how much of an uplift you can drive with IAM? And then I've got a quick follow-up with Blake after. Allan Thygesen: Yes. Just to be clear, the consumption pricing we're referring to is consumption, if you will, of service credits. It's not a straight up token type billing model. So you buy a certain amount of capacity. This of course is not new to DocuSign, as you all know, better than almost anyone. Our eSignature business has historically revolved around an envelope model. We pre-buy envelope capacity. You can take a business as sort of a generalization of that. Now with all the different ways we can deliver value with IAM, we've basically looked at how each of those products and use cases drive value and create a credit system. We've now used that with 40, 50 customers. They've been very enthusiastic. So both our customers and our sales teams appreciate that model, and so we're now rolling it out next month. And I think that will just power most of our enterprise business going forward. We still think that the -- for commercial customers, simpler pricing model, makes sense, but for enterprises where there's so many different ways to deliver value and grow value over time that a consumption-based credit model is the right approach, and that's been validated in the last 6 months of trialing. Allan M. Verkhovski: Got it. And then, Blake, is your internal time line for when you can get to 10% top line growth sooner, unchanged or later after this quarter and why? Blake Grayson: Yes. Just to be frank, on this, that is our long-term aspiration for us. It is for me in the long term achievable. If we can both grow expansion and accelerate gross new bookings and improve our retention rates, that's something we could do. The when on that is not as important to me at the moment. We're going to go as fast as we can at this company and provide value to our customers. I think it's something we can achieve. It's going to take some time for us, as you can see. But I'm really excited about the opportunity ahead. But as far as like time line or anything like that, nothing really to share. Operator: Our next question is from Josh Baer with Morgan Stanley. Josh Baer: A couple on the enterprise opportunity. One, Blake, you were mentioning that around like the linear progression of IAM as a percentage of ARR. I guess I'm wondering -- I know that wasn't like a comment about all years in the future. But I would expect with your positioning and kind of readiness in the enterprise for that to accelerate just because of the size of the enterprise opportunity and now unlocking that. Is there -- I mean, would that be the case? So like how are you thinking about the unlock of enterprise and the impact on that linearity? Allan Thygesen: Why don't you go first and then I'll add. Blake Grayson: Yes. I think, obviously, for us, we've got big aspirations for enterprise. It's still early days for us there. And you heard a couple of examples. You heard Aon's one that we're really excited about internally. And obviously, externally, the other ones that we've talked about. I think for us, we're just going to have to see how this ramps over time, right, is that as our customers use IAM and they experiment it and they use more of it, you can see that ramp over time, but it's a little bit like eSignature, right? You go into maybe through a division and then you're able to expand that to more users and whatnot. But I think that it's still early days for us. We're really excited about the opportunity. Our long-term success depends on growing the enterprise business. We're really excited about that, and we are very head-down focused in order to drive that. And Allan, I don't know if there's more to go on that. Allan Thygesen: Yes. Just on the enterprise topic, it's really shifting into gear for us. It's contributing more of the top line mix. And over time, I expect it ultimately to become a bigger part of our business than it has been historically in eSign. Just because of the addressable opportunity and the pain is so much larger. Just for purposes of illustration, I just want to double-click on the Aon example just for a second. So as you can imagine, Aon being an insurance business, their product is essentially agreements. They literally process hundreds of millions of documents. And they have a strategic project called Meridian. That's basically a customer portal where the customer can access all of their agreements with Aon and derive insights from those agreements and, of course, also create opportunities for additional value for Aon. And they chose DocuSign to power that, which we're honored by. That is a massively complex enterprise project and a project that is transformational in terms of the customer value proposition for Aon. And so it's sponsored by the highest level of the company. We're thrilled to be deeply engaged with them, and they are certainly pushing us in several areas. But that's what you want and expect from your largest customers and partners. And so there's a number of examples like that, but Aon was, I think, the most iconic of this quarter. Josh Baer: Really helpful. And just to stay on this topic, any way to frame the pipeline or demand for IAM specifically in the enterprise? And related, is there -- could there be any initiatives or are there any current initiatives of bringing customers on to AIM before the renewals that we are kind of just talking about with regard to the linear progression? Allan Thygesen: Yes. I mean, look, it's always the case in subscription business, the renewal creates a natural focus point, so to say, for discussions. But we are absolutely working to accelerate discussions with customers who are further out from their renewal and finding ways to do deals out of cycle. We have various contract structures to help facilitate that and as well as opportunity identification for our sales teams and our partners. And as you know, enterprise sales cycles are long anyway. And so you've got to start way ahead if you want to do a big deal like an Aon type deal. So yes, that is a focus. I don't think we'll ever be able to completely avoid the natural timing that's associated around renewals. It's just a fact of life, and customers also anticipate that and work towards that. But we are absolutely pulling a lot of levers to enable our sales teams, our partners and customers to have discussions as soon as customers frankly are ready to entertain them. Operator: Our next question is from Alex Zukin with Wolfe Research. Aleksandr Zukin: I guess maybe 2 quick ones for me. I'll ask the inverse of Tyler's question. If I think about the guidance around ARR, looking at the IAM flat and that implies non IAM ARR is going to actually get -- is guided to get a lot meaningfully better. So just curious what's driving kind of the confidence? Is that a gross retention dynamic continuing to improve? And then I've got a quick follow-up for Blake. Blake Grayson: Yes. Let me see if I can answer the question I think in the spirit and the way you're asking it. Is the -- if you look at the IAM net new ARR and you try to compare it to the company net new ARR, that can be a tricky comparison because the way to think about IAM is really not necessarily as an incremental brand new product, but it's a platform shift, right? Like we have got a lot of people in our in our -- a lot of customers in our installed base that are moving to IAM. And remember, IAM comes with the new signature offer as well. And customers are paying for that. That's part of their IAM deals that they're doing with us. So while IAM has many incremental features on top, it's also driving that platform shift. So I encourage you to think about it because of that as a platform. Use total company ARR when thinking about our absolute kind of dollar growth. For us, retention gains are critical. IAM is one of those big levers for us to be able to do that, that we think that will play out over time, right? Because you got to get somebody in -- a customer to move into IAM, keep them getting excited about it and then renew them as well. And so this is going to play out like over years for us. And I think that I'm really excited about it. But along with that, too, we're making gains in our company -- total company retention as well, which, as Allan said earlier, and I think all of you know, it's still predominantly an eSign business. And so for us, those 2 things matter a lot. I'm really excited to be able to improve upon the gains that we made this year and get even bigger ones next year. Aleksandr Zukin: Understood. And then maybe just with respect to the consumption-based pricing that you guys are introducing, I guess probably how much of the IAM ARR in the year that you're guiding to? Do you expect to be coming from consumption? Or are you not including any of that in the guide? And kind of how do we think about that progression as it applies to NRR improvements gradually throughout the year? Blake Grayson: So this is a -- we're launching subscription consumption-based pricing. So I would say the consumption element is all part of our ARR forecast, whether it's consumption or seats or not. And so I would encourage you to think about it that way. Like Allan said, this is a lot akin to what we do at envelopes today, right. That a person, a customer signs up for a subscription and then they get a capacity that they can utilize against it. So I don't think there's any big swing necessarily just because of the pricing plan. I think it's going to give us an opportunity to appeal to a lot more of these enterprise customers, and I think that's the best way for us to be able to increase usage over time. Allan Thygesen: Yes. I agree with all that. And I'd just say, look, it's primarily relevant in the enterprise space, which is a smaller, but accelerating part of our business. And of course, it does lend itself to, as you implied in your question, potentially realize more growth over time in accounts because you already have the pricing mechanism installed and it should be sort of easier to say, well, you just need more credits. And so let's see where it goes for this year. It's important for the enterprise go-to-market. And probably somewhat meaningful for the overall business, but not the primary driver. Operator: Our next question is from Rishi Jaluria with RBC Capital Markets. Rishi Jaluria: Wonderful. Maybe to start, not to keep harping on the ARR kind of question. But I guess just kind of taking a big value, right, you're guiding to effectively non-IAM ARR being flat, IAM ARR growing hyper growth, call it, 70%, 80%, depending on the assumptions you make, I get that there is a conversion element from it right? And so maybe I'll ask a question that we've been trying to figure out for a while. And hopefully, you have a decent amount of telemetry that make kind of some sort of preliminary indication, but just wanted to get a sense what sort of pattern of behavior do you see in terms of overall ACV, TCV, LTM, whatever sorry, LTV like whatever metric you want to use, but just in terms of so far as you've taken existing customers, move them from just the core eSignature to the IAM platform, how much higher does that spending look like? And then I've got a quick follow-up. Allan Thygesen: Sure. Yes. I mean our focus continues to be on driving our dollar net retention rate up. And that's -- we're going to do that in large part by making IAM the foundation, not only of our expansion strategy but also our retention strategy going forward. So talking about expansion rates, the stuff gets pretty tricky when you start to balance those components. And we are seeing in general, in the vast majority of cases, an expansion opportunity for our customers that are coming. We're not breaking that out. But we also need to see the early renewal cohort customers, and we're encouraged, like I said earlier about that. But it's something that for us, for IAM in total. It provides an expand and retention opportunity, but we're not breaking out the expansion rates right now. Rishi Jaluria: Understood. That's helpful. And then maybe just thinking going back to some of the partnerships that you have with Anthropic, you've got one with OpenAI. We've seen you highlighted on stage with them over the past several months. And it's coming at a time where clearly investors are worried about potential competition either from DIY using those platforms or the platforms themselves. Can you maybe talk a little bit about how is your conversation with both of those and any other model providers as well because I know you have the ability to work with most models out there. But just how those conversations have kind of changed over time and how you've been able to double down on a lot of the things that have made you successful in shaping the nature of the partnership? Allan Thygesen: Yes. Thanks. The reality is, I think every provider of chatbots, the leading ones like OpenAI and Anthropic and Google, but there are many others who are aiming to provide a chat interface to their customers. And as they think about how do I provide value in that chatbot, one of the most important data elements that you want to expose and process that you want to kick off is agreements. And so we've had a lot of inbound interest. Every major provider of models is interested in partnering with us on this, which is reflected in those announcements, and there'll be more like that. And so I just think we are well positioned as the system of record for agreements as well as a system of action, and we can power those actions through our own interface, through third-party agentic interfaces or third-party applications like Salesforce, SAP and Workday. And I'm very bullish on our position as the authority and logical top partner for companies with ambitions to retrieve agreement data, kickoff agreement processes, complete them. We're a good partner for that. And I think that's reflected in what you've seen in the public news. Operator: Our next question is from Scott Berg with Needham & Company. Unknown Analyst: This is [ John DeVries ] on for Scott. One question for us. We noticed the company is conducting some AB testing on self-serve eSignature plans. Have any pricing changes that have been incorporated into the fiscal '27 guidance? Blake Grayson: Well, I'll take that and Allan, you want to add on, go ahead. Our guidance reflects all of our plans for this fiscal year, including tests like that, like we're testing that at the moment. And we'll see how it goes. We're excited about it. But the guidance is a reflection of the plans that we have for this next fiscal year. Allan Thygesen: Yes. We're constantly -- in a digital business, you're constantly testing all kinds of new pricing and packaging. And this is just one of those that we're doing in a couple of geographies. And we'll see which ones work, and which don't. Operator: Our next question is from Brent Thill with Jefferies. Unknown Analyst: This is [ John Bain ] for Brent Thill. Question on AI. I mean, wondering which features or where you're seeing the most traction and momentum? And also whether you're seeing any meaningful usage or volume or lease through the chatbots? Allan Thygesen: Yes. On the first point, look, the foundational major AI platform feature was Navigator, which gives you access to your repository agreements. I think that still powers a tremendous amount of value for customers of all sizes. It's really remarkable. How many different ways people find value from that. But we're now increasingly delivering AI-enabled features across the agreement journey. So for example, we have automated Agreement Review, that's, I think, becoming a very expected thing. We are -- you'll see automated data validation, automated use of AI for identity verification and for risk assessment. We've launched a number of features in that area over the last 6 months. So really across the board, AI is wherever we can use that to power more value for customers, we're going to do that. And you can see that now across the various stages of the journey and in different functional workflows. And there's so much more to come here. So I'm very optimistic that this is going to power value delivery and innovation for us for a while. Operator: Our next question is from Patrick McIlwee with William Blair. Patrick McIlwee: Allan and Blake, one more on IAM, it's great to hear you're expecting absolute ARR from that product to nearly double this year. And I understand a lot of that growth is coming from existing customers transitioning, but can you just provide a quick update on what type of traction you're seeing in going out and winning net new customers with those incremental capabilities? And as we think about that, how you feel this solution is competing against other CLM vendors and broader workflow platforms? Allan Thygesen: Yes. I think that's going extremely well. It's an even larger part of our NewCo dollars then of normal renewals. And I think when you come in fresh, you get to position all the exciting things that IAM has to offer, whereas with some [ ESAB ] customers, they may have an existing perception of what's possible with agreements or what we can deliver for them and you need to change those perceptions. But NewCo will continue to be a core element of DocuSign's growth. Of course, all of our customers start as new customers and many of them started as small customers and grew into very large customers. And so that is an essential acquisition pipeline that we continue to invest in. With all that said, the primary focus of our go-to-market with IAM is with existing customers, and that's the vast majority of IAM revenue. And it's a huge advantage for DocuSign that we walk in. We already have your agreements. We're already a trusted group supplier. We're already generally very well perceived because of the quality of the side product and the experience customers had. And that's an amazing starting point for delivering value and for processing their agreements with AI that's unmatched by any other company. So I think we have a lot of data and product advantages. We also have huge distribution advantages. And that might not be as fully understood. But you can start to see that really come into play with the number of customers that we've already brought on to our new AI platform, a number of agreements that we've ingested and processed. Patrick McIlwee: Okay. Great. And just quickly, you touched on it in the prepared remarks, but the flat guidance for operating margins, understand you're reinvesting some efficiencies from the go-to-market side in R&D. Is there any context you can provide on what those investments are geared towards or what capabilities you're looking at as you invest there? Allan Thygesen: Yes. Maybe just first for context, I know you all know this, but I'm just going to repeat it anyway. We've gone from 20% operating margins to 30% operating margins over the last 3 years, growing revenue 30%, while we've dropped headcount 13%. So I think, DocuSign has been already on some of the improvements that you're all seeking. I think the decision we made in planning for this year is that we're rightsized for the opportunity ahead of the growth acceleration opportunity that we have. That doesn't mean that we're not reprioritizing aggressively inside the company. So we continue to seek incremental efficiency in our go-to-market motion. We've done a lot there, and there's going to be more opportunities and then we're investing some of that in our product and technology organization. The areas that we're investing in enterprise and AI, continued acceleration of our legal tech road map, federal, U.S. federal is a big opportunity for us. So those are examples of things. Security continues to be a key investment area. Those are 5 areas that got sort of incremental funding on top of baseline, freed up by some of the efficiencies and other functions. Operator: There are no further questions at this time. I would like to turn the conference back over to Allan for closing remarks. Allan Thygesen: Thank you, operator, and thank you to all for joining today's call. In closing, we are very excited about the value IAM is delivering to customers in their workflows and through our AI innovation. We will be positioned to begin accelerating the business in 2026 or fiscal '27 while generating strong efficiency and profitability. Thanks for your support. Look forward to talking next quarter. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Good afternoon. and welcome to the Q4 2025 Financial Results Conference Call for Intelligent Protection Management Corporation, better known as IPM for the quarter and year ended on December 31, 2025. At this time, all participants have been placed on a listen-only mode. Let me turn the floor over to Joe Diaz of Lytham Partners. Joe, please proceed. Joe Diaz: Good afternoon, and welcome to all participating on today's call to review the financial and operating results of IPM for the fourth quarter and year ended December 31, and 2025. As the operator indicated, my name is Joe Diaz, I'm a Lytham Partners. We are the Investor Relations representative for IPM. But now everyone should have access to the earnings results press release, which was issued after the close of market today. This call is being webcast and will be available for replay. During the course of this call, management will include statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. And including forward-looking statements about future results of operations, business strategies and plans, IPM relationships with its customers as well as market and potential growth opportunities. In addition, management may make forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today, and are subject to certain risks, uncertainties and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward-looking statements. these expectations and beliefs may not ultimately prove to be correct. A detailed discussion of such risks and uncertainties is contained in IPM filings with the SEC including its annual report on Form 10-K for the year ended December 31, 2025. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. On this call, management will refer to adjusted EBITDA, a non-GAAP measure, that when used in combination with GAAP results, provides investors with additional analytical tools to understand the company's operations. or adjusted EBITDA management has provided a reconciliation to the most directly comparable GAAP financial measure in the earnings press release which has been posted on the Investor Relations section of the company's website at www.ipm.com. As previously disclosed, on January 2, 2025, IPM completed its acquisition of Newtek Technology Solutions Inc. or NTS from NewtekOne Incorporated. The company also divested its Paltalk, Camfrog and lumbar applications and certain assets and liabilities related to such applications to Meteor Mobile Holdings Inc. which are referred to as the transfer assets. I'm joined today by Jason Katz, IPM's Chief Executive Officer; Jared Mills, IPM's President; and Kara Jenny, IPM's CFO. After Jason's remarks, we will hear from Kara then we will conclude with investor questions that were sent in advance of today's call. At this time, I'd like to turn the call over to Jason Katz. Jason, take it away. Jason Katz: Thanks, Joe. Good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We completed our first year of operations following our acquisition of NTS. It was a very good first year operating as a managed technology solutions provider. During 2025, we streamlined our service operations and our technology vendor partner licensing and manufacturing cost centers. We made significant progress on a number of key metrics, including managed recurring revenue growth, expense optimization and risk management. In the fourth quarter, revenue from our core business, managed IT, excluding web hosting, increased sequentially by 7%. Net loss narrowed by 42% and adjusted EBITDA was positive. Cash flow from operations was positive for both the quarter and the full year. And as of December 31, 2025, we had cash and cash equivalents totaling $8.4 million and no long-term debt. We have important differentiators that set us apart from our industry competitors, large and small and have significant competitive advantages of those peers that lack our level of expertise in highly regulated vertical markets, including legal, health care, finance and banking. Our success in these markets represents a large opportunity in the coming years. From a customer service perspective, our managed clients benefit from a VIP high-touch experience with a dedicated technology manager as a single point of contact as opposed to competitors in our industry that use automated voice response to phone calls, telephonic menus and handing off service calls to agents and call centers in foreign countries all of which can be frustrating and can impact the customer experience. We don't do any of that. Our clients speak directly to their IPM account team members who deeply understand the clients' needs and business goals. This is an important IPM customer service advantage that fuels our superior customer loyalty, so much so that in 2025, we retained all major clients while entering new markets with near 0 churn. Since the January 2025 acquisition of NTS, we have successfully integrated NTS into IPMs mission, vision and operations and service our customers without interruptions or downtime. We are well positioned to grow the company through the expansion of our service offerings to existing legacy NTS customers, new customers and our historical web hosting customer base. We continue to advance operationally with a focus on efficiency. And at the same time, we manage expense with the goal of driving value for all of our stakeholders. For full year 2025, we extended our Phoenix data center license agreement with an industry-leading provider through August 31, 2032, reinforcing a long-standing strategic relationship supporting our continued focus on scalable, secure and highly reliable digital infrastructure. We successfully achieved SOC 2 Type 1 compliance A key milestone in our ongoing commitment to safeguard and customer data and delivering trusted cybersecurity and cloud infrastructure solutions. We announced a collaborative growth initiative with AltiGen Technologies to refer integrated communications, AI-driven analytics and managed security and hosting solutions to their respective customers. We entered into a reseller agreement with MindsDB, a leading open source AI platform to provide its current and future customers with sophisticated AI capabilities. We initiated a collaboration with IT Ally, a trusted business technology services provider focused on lower middle market private equity firms and their portfolio companies. In May 2025, our Board of Directors approved a stock repurchase plan for up to $100,000 of outstanding common stock, which plan expires on the 1-year anniversary of such date. Pursuant to the repurchase plan since inception, we have purchased 151,258 shares, an average price of $1.99. There were no shares repurchased in the fourth quarter of 2025. We commenced offering Aura, a leading AI-powered online safety solution for business, families and individuals designed to help me the impact of data breaches, scams and other online threats to businesses and consumers. And finally, we initiated our Heroes program to provide a 10% discount on all IPM products and services to all existing and future military first responder, health care, teacher and veterinary business owners. Having our company transition to a pure play managed services technology provider over the course of the year has been gratifying. We look forward to many opportunities to dramatically expand our business in the coming years. With that, let me turn over the call to Kara Jenny, our CFO, for a summary of our financial results for the fourth quarter and full year 2025. Following Kara's remarks, we'll move into the Q&A and answer questions that were submitted by e-mail prior to this call. Kara, until yours. Kara Jenny: Thanks, Jason. For the 3 months ended December 31, 2020, revenue totaled $6.1 million. On a sequential basis, total revenue decreased 1.7% from the third quarter of 2025. And Revenue for the full year ended December 31, 2025, totaled $23.6 million. Total revenue by revenue component for the fourth quarter and year-ended December 31, 2025, were as follows: Managed Information Technology revenue was $3.9 million and $14.8 million, respectively. Procurement revenue was $1.5 million and $5.4 million, respectively. Professional services revenue was $0.4 million and $2.3 million, respectively, and subscription revenue was $0.3 million and $1.1 million, respectively. Operating loss from continuing operations for the fourth quarter ended December 31, 2025, totaled $0.8 million, operating loss from continuing operations for the full year ended December 31, 2025, totaled $4.7 million. Net loss for the 3 months ended December 31, 2025, totaled $0.6 million. Net loss for the full year ended December 31, 2025, totaled $2 million. We recorded an income tax benefit during the first quarter of 2025 of approximately $2.1 million in connection with our acquisition of NTS and the divestiture of our Auto, Camfrog and umber applications. Adjusted EBITDA for the 3 months ended December 31, 2025, was positive by $1,000. Adjusted EBITDA for the full year ended December 31, 2025, was negative $1.1 million. As of December 31, 2025, IPM had no long-term debt and cash and cash equivalents totaled $8.4 million, which included $10 million of restricted cash. Cash provided by continuing operations for the full year ended December 31, 2025, was $1.1 million. We reported deferred revenue of $3.9 million for the full year ended December 31, 2025, which will be recognized as revenue in future quarters as products and/or services are installed. We had more than 10,000 devices under management at December 31, 2025, representing the number of endpoints, servers and network devices that are outsourced to us under managed service agreements. That concludes my comments, and we will now move on to addressing online submitted questions. Joe Diaz: Jason, this is a great first year for IPM as a managed technology solutions provider. What did you consider the highlights of the year? What were your biggest challenges? And what are your expectations for 2026 and 2027. Jason Katz: As I mentioned, we're very pleased with our performance in our first full year as a managed technology solutions provider following the acquisition. Some of the highlights include the continued growth in the managed IT portion of our business a meaningful reduction in our net loss and the progress we've made at the EBITDA line. Notably, we reported positive adjusted EBITDA in the fourth quarter of 2025, which we view as an important milestone for the company. In terms of challenges, much of the uncertainty facing our industry comes from the evolving threat landscape and broader macroeconomic factors. Cybersecurity threats from bad actors overseas continue to target trickle infrastructure, and there are also uncertainties around issues such as tariffs and other policy developments. While we have not been directly impacted by these factors, our team remains very focused on proactively managing risk and ensuring that we are all well positioned to respond to potential changes in the operating environment. Looking ahead to 2026 and 2027, our team is highly focused on continuing to grow the business, both organically and where appropriate, through strategic acquisitions that we believe will be accretive to our long-term growth strategy. We are also very excited about the opportunities to incorporate various aspects of AI into our operations and product offerings. We believe these technologies will allow us to deliver greater value to our customers by helping them operate more efficiently, accelerate their growth and stay ahead in an increasingly dynamic technology landscape. Joe Diaz: Jared as President of the company, IPM customer churn is nearly nonexistent. How does IPM do that? Jared Mills: This is a great question because it speaks to the heart of who IPM is as a company. We're just as passionate about customer service and the overall customer experience as we are about reliability and security. It's what made this company great and it's our David and Goliath story. Not as a small American microcap public company earned a business we earn and keep the business we keep. It's good old-fashioned customer service. We invest heavily into the idea that people want to talk to people and ideally the same people they talked to yesterday. That means we build relationships, and that means we're high touch. And the result of that is a white glove VIP experience that, quite frankly, you can't get anywhere else. We care about the customer more than the technology here. And for that reason, our churn is nearly nonexistent. Joe Diaz: Jason, can you give us an update on how you think about the company's excess lease data center capacity and how best to exploit it. Jason Katz: Sure. We're very pleased to have renewed our lease agreement with one of the premier data center partners in the country, extending that relationship through 2032. That long-term partnership gives us the stability and capacity we need to support our growth plans. Their state-of-the-art facility not only enables us to scale our infrastructure as demand increases, but it also allows us to leverage their operational expertise and reliability in servicing our customers. From a strategic standpoint, this capacity gives us flexibility to support both organic growth and new opportunities within our managed services offerings. Overall, we believe the partnership positions us very well to deliver continued value to our customers while supporting sustainable growth for the business. Joe Diaz: Okay. That concludes our Q&A session. Let me turn the call over to Jason for closing remarks. Jason? Jason Katz: Thanks, everyone, for your support and for joining us today. We're very grateful for your interest in our business. We look forward to updating the market on our progress as we continue to execute on our business plan. We will talk with you again to review our 20,261st quarter results. Have a great day. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Gentlemen, thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome you to the Oklo Fourth Quarter and Full Year 2025 Financial Results and Business Update Conference Call. [Operator Instructions] I would now like to turn the conference over to Sam Doane, Senior Director of Investor Relations. Sam, please go ahead. Sam Doane: Good afternoon, and thank you for joining Oklo's Fourth Quarter and Full Year 2025 Company Update. I'm Sam Doane, Oklo's Senior Director of Investor Relations. Joining me today are Jake Dewitte, Oklo's Co-Founder and Chief Executive Officer; and Craig Bealmear, our Chief Financial Officer. After my opening remarks and the forward-looking statement disclosure, Jake will walk through the business update and strategic progress, and Craig will cover our financial results. Our remarks today include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. We encourage you to review the forward-looking statements disclosure included in our supplemental slides. Additional information on relevant risk factors is described in our filings with the SEC. We undertake no obligation to update forward-looking statements, except as required by law. With that, I'll turn the call over to Jake. Jake? Jacob Dewitte: Thanks, Sam. 2025 was a step change year for Oklo. We transitioned from product development into active project deployment across all of our business units. During the year, we broke ground on our first Aurora powerhouse at Idaho National Laboratory under the DOE Reactor Pilot Program, advanced key commercial partnerships across the value chain, including our early 2026 prepayment agreement with Meta to support plans for 1.2 gigawatt power campus and began initial construction activities on A3F at INL. We also completed the acquisition of Atomic Alchemy and made substantial construction progress at Groves in Texas, our first radioisotope test reactor. In fuel, we completed fast-spectrum plutonium criticality experiments supporting using plutonium as a bridge fuel. We announced the first phase of our advanced fuel center in Tennessee, and we progressed licensing activities across multiple assets. Taken together, 2025 was the year Oklo turned our platform strategy into deployed projects while also strengthening the balance sheet to fund that execution and our long-term growth. Before I go deeper into execution, it is also important to understand how much the external environment shifted over the last 2 years. In 2024 and 2025, U.S. nuclear policy moved toward a more execution-oriented posture across licensing, asset deployment, fuel supply and capital formation. You can see the 4 main pillars here. First, executive actions and regulatory direction focused on accelerating licensing and enabling first-of-a-kind projects. Second, federal support mechanisms, including tax credits, loan guarantees and direct financing tools are improving the pathway to fund projects. Third, fuel sovereignty measures are pushing domestic capability across the conversion, enrichment, HALEU and strategic fuel materials. And fourth, implementation of the ADVANCE Act is aimed at reducing friction and licensing and enabling more efficient deployment pathways. The policy backdrop has shifted from a light tailwind to a very strong tailwind for the nuclear sector, and Oklo is positioned to move in that environment. Going forward, we will talk about Oklo through 3 integrated business units: power, fuel and isotopes that together form a unique vertically integrated nuclear platform. Power is the clean baseload power and heat from our sodium fast reactors that can utilize a broad spectrum of fuels. Fuel provides Oklo with an integrated pathway to produce fuel required for our powerhouses as well as for our peers and competitors. This derisks deployment, strengthens long-term supply and unlocks nuclear energy abundance at scale through fuel recycling. And isotopes expand the platform into high-value products and services with strategic domestic importance that are natural co-products from our other business units. The key point is that integration across the value chain is designed to unlock multiple complementary value streams over time. And first is power. We are building the power business unit because demand for firm, reliable power is growing quickly across the country. From data centers to industrial customers to government applications, our customers need clean, dependable baseload power, not intermittent supply. Our Aurora powerhouses are expected to provide that kind of reliable baseload power, and our commercial model is built around long-term offtake agreements. Power is also foundational to the rest of our business platform. Power deployments create the demand that can scale our fuel production and fabrication capabilities over time and first deployments establish reference assets that improve repeatability for future campuses. Our experience building our power delivery capability has eliminated key opportunities in other parts of the ecosystem that we are leaning into building and scaling. So power is both a near-term customer solution and the foundation for broader platform scalability. Fuel is the second business unit, and it is one of the most important strategic parts of what we are building. Fuel availability remains one of the most significant rate limiters for new nuclear deployment. From inception, we have been building fuel capabilities to support our own deployment and broader advanced nuclear deployment. That starts with fabrication for us. Fuel fabrication converts raw fuel material into reactor-ready fuel forms. It is how we support Oklo reactors while also creating the potential to provide services to third-party reactors over time, either through directly fabricating fuel for them or hosting their fabrication lines in our factories. Oklo is also exploring opportunities to develop modern deconversion processes to streamline efficiencies, including what we recently announced with Centrus. This step has traditionally occurred at the fuel fabrication facilities themselves. But as we look at the future of nuclear fuel manufacturing, it makes a lot more sense to locate this with the enrichment facility. The second big part of our fuel strategy is recycling. Recycling can recover uranium for reuse, can recover and produce transuranic bearing material that can be used as fuel and advanced reactors, it can enable high-value isotope production and it can provide used fuel management solutions through recycling pathways. So fuel is both a deployment enabler in the near term and a scalable fuel cycle business over the long term. And the third business unit is isotopes. We are building this business because there are attractive high-value end markets across health care, industrial, space and defense applications because strategic domestic supply for many isotopes remains constrained. From life-saving therapies to the long-duration power supplies that have powered human space exploration to the future of remote monitoring and sensing for security purposes, isotopes are key material for humankind's future. We see those isotope opportunities as complementary to our power and fuel business units that can produce isotope co-products that the isotope business unit can then package and sell. At the same time, we are pursuing purpose-built production using reactors and facilities optimized for isotope production, and we see a services revenue opportunity through irradiation for advanced nuclear technology research and development, defense research and development, semiconductor doping and hardening and other applications. Taken together, isotopes expands the platform into high-value domestic supply for critical uses while strengthening the economics of the broader business. This slide shows how the 3 business units connect. In the conventional nuclear value chain, mining, enrichment, power generation and long-term waste storage are fragmented across different parties. Our strategy is to build a more integrated platform that links power production, fuel fabrication, fuel recycling and isotope production. When you can fabricate fuel into reactor-ready forms and recycle materials over time, you move from a one-way fuel cycle into a repeatable loop. That improves long-term fuel optionality, supports supply resilience and can unlock additional products across the value chain. It also creates new value streams. Recovered materials can support radioisotope production, which connects directly into our isotope business. So the objective is not just to deploy powerhouses. It is to build an integrated platform where power is an anchor product, fuel is an enabling system and isotopes extend the platform into high-value products and services. And the U.S. is uniquely positioned for a strategy like ours. The U.S. has generated roughly 20% of its electricity from nuclear power over the last 30-plus years, while producing a very small physical volume of used nuclear fuel. More than 90,000 metric tons of U.S. used nuclear fuel fits on a football field, about 10 meters high. That material is often described only as waste, but in reality, it contains enormous energy potential. The energy potential in U.S. used nuclear fuel is comparable in scale to the sum total of major global oil reserves. This is what makes recycling and reuse so strategically important. Used nuclear fuel is not just a liability to manage. It is also a major potential domestic energy resource if the infrastructure exists to put it back to work. That sets up the next slide, which is about one of the mechanisms now emerging to help build that broader life cycle infrastructure. The U.S. already has a major strategic energy reserve in used nuclear fuel, but realizing more of that value over time depends on building the infrastructure, capabilities and coordination needed to put it to work. That is why the DOE's Nuclear Lifecycle Innovation Campuses program is so important. DOE has framed this as a first step toward potential federal state partnerships to modernize the full nuclear fuel cycle using regional campus models that can co-locate key parts of the life cycle. As this model advances, it could reduce development friction, improve execution time lines and support more efficient investment across fuel, recycling, power and isotope-related infrastructure. As importantly, employing used nuclear fuel as a resource instead of treating it as a liability could change the power outlook for the U.S. over time, supporting advanced reactor fuel supply for generations, strengthening domestic radioisotope production and improving long-term used fuel management outcomes. From our standpoint, this matters because it reflects a more integrated model for building nuclear infrastructure in the United States, which is closely aligned with the strategy we are executing across our business units. We continue to be very supportive of state responses to the RFI and have started working with multiple states as they evaluate potential campus proposals. These efforts form the foundations for ensuring energy affordability and reindustrializing the nation. And this is where the strategy becomes tangible. Across power, fuel and isotopes, we are already building assets that support a more integrated nuclear development model to unlock nuclear energy abundance. On the power side, we have Aurora-INL, our first Aurora powerhouse at Idaho National Laboratory and Aurora Ohio, our planned clean energy campus in Pike County tied to our partnership with Meta. On the fuel side, we have A3F at INL, our first fuel fabrication facility and our advanced fuel center in Tennessee, which is our first phase of used nuclear fuel recycling infrastructure. And in isotopes, we are building Groves, our radioisotope test reactor in the Idaho p Radiochemistry Laboratory, which supports isotope processing and scale up. So when we say vertically integrated, this is what we mean, multiple real assets now moving forward across all 3 business units. Since our last company update, we have made meaningful progress across all aspects of the company. In power, Aurora-INL executed its DOE other transaction agreement under the Reactor Pilot Program, received DOE approval of the nuclear safety design agreement, continued construction activities, including blasting and signed with Siemens Energy for the power conversion system. We also signed the meta prepayment agreement in support of up to 1.2 gigawatts at Aurora, Ohio. In fuel, A3F received DOE approval of both the NSDA and the preliminary documented safety analysis, and it was selected under the DOE Advanced Nuclear Fuel Line Pilot Program. In recycling, we signed an agreement with TVA to explore fuel recycling, initiated site prework on our flagship recycling facility, completed NRC pre-application engagement, initiated a rolling NRC readiness review and were selected for DOE recycling R&D funding. We also completed a fast-spectrum plutonium criticality experiment and announced a joint venture initiative with Centrus around deconversion. And in isotopes, Groves executed its DOE OTA, received NSDA approval, submitted its PDSA and continued construction toward a July 4 criticality target. Separately, the Idaho Radiochemistry Laboratory obtained its NRC materials license. So this is execution across multiple assets, multiple licensing pathways and multiple business units, all moving forward in parallel. Aurora-INL is advancing on a DOE-first authorization pathway. We have already executed the OTA under DOE Reactor Pilot Program and received approval of the nuclear safety design agreement. Those are important because the OTA formally brings the project into the DOE authorization pathway and the NSDA locks in the safety and regulatory framework for the project. The next DOE milestones are the preliminary documented safety analysis, the documented safety analysis and then the readiness review and start-up approval. Each of those steps progressively aligns DOE and Oklo on a safety basis from final design and construction through start-up and operations. The significance here is that the DOE pathway allows us to keep advancing construction, procurement and system integration activities in parallel as the project moves forward. Alongside the authorization work, Aurora-INL is also advancing on execution and build readiness. On site development, we completed site characterization at INL. Site preparation is underway, including blasting and construction activities are progressing in line with the project plan. On procurement and supply chain, we have received responses for the majority of identified long lead component requests for proposal, supplier down selection is underway, and all major equipment now has vendors under contract. That includes the Siemens Energy contract for the power conversion system, active supply chain agreements for reactor module components and active vendor contracts for all major refueling equipment. So Aurora-INL is moving forward on both the physical site side and the supply chain side, which is what we want to see at this stage of a first deployment, and we are learning a lot on the way. Next is Aurora Ohio, where the key update is our agreement with Meta in support of a 1.2 gigawatt Aurora campus. The agreement advances plans for phase deployment with an initial phase of 150 megawatts targeted around 2030, and it is supported by prepayment for power structure designed to improve project certainty and support Phase 1 development. Importantly, Oklo expects to use funds from the prepayment agreement to support fuel procurement. We also own approximately 206 acres in Pike County, Ohio, which gives us a site to advance campus development in parallel with commercialization and permitting work. So this is an example of customer demand, commercial structure, site control and fuel planning, all starting to line up around a real deployment opportunity. Fuel availability is one of the key gating items for advanced nuclear deployment. So our fuel strategy is deliberately built around flexibility, supply optionality and execution readiness. As this slide shows, we are addressing that through strategic enablers, fuel supply pathways and strategic fuel partnerships. On the enabler side, our fast reactor technology is designed to be versatile across a wide range of fuel sources, and our fabrication capabilities are intended to convert different feed supplies into reactor-ready fuel. Over time, recycling can turn used fuel into a more repeatable strategic fuel supply. Oklo is pursuing a differentiated strategy here to help accelerate deployment even in the face of conventional supply chain bottlenecks. And on supply pathways, we are working with DOE managed materials, HALEU from conventional and advanced enrichment providers and recycled fuel supported through our own recycling and fabrication capabilities. And on partnerships, we are working with DOE, building relationships around enrichment and deconversion and developing opportunities around recycled fuel. The goal is to solve for near, mid- and long-term scale while maintaining flexibility as the market evolves. A3F has a very specific role in our deployment strategy. It is a purpose-built facility to fabricate fuel for Aurora-INL using an existing building at INL, where Oklo is installing and operating the fabrication equipment. On the authorization side, A3F was selected under DOE's Advanced Nuclear Fuel Line Pilot Program, which is intended to support accelerated licensing and construction of advanced fuel fabrication capabilities. Execution is already underway. Initial construction activities have begun, and A3F is advancing in parallel with Aurora-INL so that fuel fabrication does not become a deployment gating constraint. We have also received DOE approval of both the NSDA and the PDSA for A3F, which enables us to move forward with final design and construction. And notably, Oklo's PDSA was the first facility approved under DOE's Fuel Line Pilot Program, which is an important validation of the pathway we are using. Next is the Tennessee Advanced Fuel Center, which is our first major step toward building long-term recycling capability. On-site and development progress, we completed initial geotechnical surveys and soil borings at the Tennessee site and initiated site development activities. On regulatory and licensing progress, we completed our planned NRC pre-application engagement and initiated a rolling NRC readiness review in advance of a future license application. And on fuel supply and partnerships, we were selected for DOE recycling research and development funding. The broader point is that this project is advancing on the site, regulatory and funding fronts at the same time, which is how we intend to move recycling from concept into real long-term fuel supply infrastructure. Staying on fuel, this slide is about upstream fuel infrastructure and specifically uranium deconversion. We announced a potential joint venture with Centrus focused on deconversion, building on our prior relationship. What is strategically compelling is the intended location. Centrus' site in Pike County, Ohio, co-located with Centrus' enrichment operations and adjacent to our planned 1.2 gigawatt power campus. Deconversion is a critical upstream step in the domestic fuel supply chain and colocation has the potential to improve logistics, reduce friction and strengthen both cost and supply resilience over time. It is important to note that these deconversion capabilities can support Oklo's fuel needs and the fuel needs of other reactors and reactor types, including light-water reactors. So this is another example of how we are looking to expand fuel infrastructure alongside fabrication and recycling, while the current focus remains on initial venture structuring and project planning. Turning to isotopes. The Idaho Radiochemistry Laboratory is an important near-term asset and example of timely execution. We obtained the NRC materials license for the facility, which is a key operational milestone. The facility is expected to make first revenue this year, which also makes it one of the more near-term revenue-oriented pieces of our broader business. Strategically, the lab has the potential to provide the foundation for developing our isotope processing methods and then scaling them up to support future VIPR facilities. So this lab is well on its way to be both a practical operating asset and a foundational capability for scaling the isotopes business over time. Now to Groves, our first radioisotope test reactor deployment. Groves is moving through a DOE first authorization pathway, and we have already completed 2 important steps, executing the OTA under the Reactor Pilot Program and receiving approval of the NSDA. Those matter because the OTA formally brings the project under the DOE pathway, while the NSDA locks in the safety and regulatory framework for the project. The next milestones are approval of the PDSA, which has now been submitted, approval of the DSA and then the readiness review and start-up approval. Groves is progressing through a structured DOE first pathway that's designed to enable full project build-out and position the facility for start-up and operations. And rather than just talk about it, I want to show you what we've executed. We'll pause here for a short video from the Groves site, and then I'll come back and walk through the key build milestones. [Presentation] Jacob Dewitte: Now that you've seen the progress for the Groves project, here's where we are on the remaining path to criticality. Site development and the structure were completed in 5 months. The reactor tank is installed, fuel has been procured and interior mechanical, electrical and plumbing installation is in progress. Auxiliary equipment is also in various stages of procurement. From here, the focus is on finishing the remaining construction activities, final installation of reactor equipment, integrated system testing and fuel delivery. The current execution target is criticality by July 4. We and others are showing nuclear assets can be built and turned on in less than 10 months. These are real examples that shatter the widely held belief that nuclear is slow. Instead, we are demonstrating that new nuclear can deploy at pace. Groves is progressing rapidly. The structure is up, major components are in place, and the remaining work is the execution closeout and commissioning path to criticality. And one of the exciting things about this project is that it is fully executing a commercially viable sourcing strategy across all components and not relying on preexisting or nonscalable or nonviable components and capabilities. The lessons we are learning are teaching us a lot on the way to full commercial operations. Before moving on, it is worth taking a step back and explaining what Groves actually is. Groves is our first radioisotope test reactor. And strategically, it serves as a test platform for Atomic Alchemy's production scale VIPR reactor platform. It is named in honor of General Leslie Groves, who directed the Manhattan project. From a design standpoint, it is a pool-type, water cooled, non-pressurized reactor built for thermal neutron radiation using pressurized water reactor fuel bundles with low enriched uranium fuel. Why that matters is that Groves is not just a single asset. It is designed to give us practical experience across design, manufacturing, procurement, construction, installation and ultimately, operations. The value here is both near term and long term, near term in getting this first asset built and operating and long term in informing how future isotope production assets can be deployed and operated. And one important point across the company is that these assets are not all following the same licensing path. We are taking a tailored approach depending on the asset, the site and the development objective. For certain first-of-a-kind assets and DOE site projects, we are pursuing DOE authorization. That includes Aurora-INL, A3F and Groves. For broader commercial deployment and other non-DOE assets, we are pursuing the NRC pathway. That includes Aurora, Ohio, the Advanced Fuel Center in Tennessee and the Idaho Radiochemistry Laboratory, which received its NRC license earlier this year. The key takeaway is that we are not trying to force every asset through a single framework. We are using the pathway that best fits the specific asset and stage of development while also allowing lessons from early DOE authorized assets to inform future NRC licensed deployments. With that, I'll turn it over to Craig for the financial update. Craig? Richard Bealmear: Thanks, Jake. 2025 was a strong year for the company as we significantly strengthened our balance sheet such that capital can act as an enabler of the strategic agenda Jake has just presented. On a full year basis, Oklo has a loss from operations of $139.3 million, which was primarily driven by payroll, general business expenses and professional fees associated with the capital market and asset deployment activities. The operating loss also included noncash stock-based compensation expense of $41.8 million, which was impacted by the increase in the firm's share price during the year. Our loss before income taxes was $110.2 million, which included the benefit of interest and dividend income of $29.1 million from the investment in marketable securities. Additionally, on a full year basis, our cash used in operating activities was $82.2 million. This number is inclusive of approximately $13 million of prepaid capital project expense that will ultimately become property, plant and equipment and run through our cash flows for investing activities. When adjusting for this figure, we reached $69.2 million in adjusted cash used in operating activities, which was within our guidance we provided for 2025 cash used in operating activities of $65 million to $80 million, demonstrating disciplined management of the company's cash reserves while also capitalizing on the tailwinds to accelerate growth opportunities. The company intends to maintain a disciplined approach to cash management and capital allocation in 2026. We are raising our guidance for cash used in operating activities from $65 million to $80 million in 2025 to $80 million to $100 million in 2026. This measured increase will enable the company to expand headcount across its business units and execute on its business plans. As the company progresses asset deployments, we expect to increase our investment into projects across all 3 of our business units. We expect cash used in investing activities to range between $350 million and $450 million in 2026. This level of spend looks to drive progression of our strategy across all 3 business units, including powerhouse deployments at both Idaho National Labs and future power projects at locations such as Pike County, Ohio. Fuel development for both our first powerhouse in Idaho as well as progressing potential fuel projects that could utilize HALEU, plutonium or recycled transuranic fuel pathways. Isotope project for both Groves in Texas and potential projects in other locations and other uses to support the overall corporation. Oka ended 2025 with cash and marketable securities of $1.4 billion. During the first month of 2026, we also raised an additional $1.182 billion net of fees, completing our $1.5 billion ATM program. This financing provides Oklo with a strong balance sheet, leaving the company well positioned to benefit from ongoing policy and regulatory tailwinds and to execute on our business plans in 2026 and beyond. Operator, we are now ready for questions. Operator: [Operator Instructions] And your first question comes from Brian Lee with Goldman Sachs. Brian Lee: I appreciate all the updates here. Lots going on. Maybe just first one, you mentioned a lot of progress toward commercialization. I know there's a lot of focus around kind of the pipeline and customer status. Jake, can you maybe speak to where that sits today? Any new additions or conversion into binding agreements and any incremental visibility into more of that happening in 2026? Richard Bealmear: Brian, it's Craig. I'm not exactly sure why, but Jake just dropped off our line. I don't think it was because of the question. But I would say that clearly, Meta was an important anchor point towards that commercialization progress, as you mentioned. And kind of based on that, we continue to have conversations not only with Meta, but with other potential customers, both those we've announced and other ones that we're continuing to progress. But really, it is important that we think that Meta being an important anchor customer for us and the fact that we can do more not only in the Ohio location, but also with some of our kind of behind-the-meter on-campus customers. And not only in the data center space, but there's a lot of work going on with U.S. military, predominantly in Alaska, but not limited to there as well as other industrial customers. And it does look like Jake's jump back on. Jake, I went ahead and answer the question since I think you got disconnected. Jacob Dewitte: Yes, that's perfect. I was just -- I would say like I think at the end of the day, there's a pretty healthy pipeline that continues to kind of grow in different places. And I think one of the dynamics that's important is having Meta as a as one of the kind of basically a lead customer helps others want to come follow and kind of repeat that because sometimes finding the first customer is the biggest hurdle to get into. It creates a pretty powerful dynamic. And I think on top of that, like the location and how we've built the strategy around where we see a lot of opportunity in Ohio is going to continue to kind of grow and scale with us. Brian Lee: Okay. Yes. Fair enough. And then just a second question on the CapEx guidance here. The $350 million to $450 million in 2026, it's a pretty meaningful pickup. Again, lots going on, and it seems like some areas is accelerating. Can you maybe just provide a breakdown of where that CapEx is being allocated? You mentioned a couple of different locations. And then how should we think about the cadence into 2027 and future years off of this level? And then maybe just curious how much of the CapEx being allocated to the Meta Pike County site in Ohio? Richard Bealmear: Yes. So Brian, I'm not going to provide kind of a business unit by business unit or project-by-project breakdown at this point. And part of that is we're still doing a lot of work kind of refining cost estimates for certain projects as well as kind of progressing procurement activities across those projects. And it kind of feels like with where we are commercially, it would be good to kind of let those progress before throwing project bogeys out there as we're progressing procurement strategies. But that being said, it's progressing things across all 3 business units. But clearly, the Idaho project is an important piece of that spend, just given the criticality of getting that first power project up and off the ground. But we are also starting some preliminary work in places like Ohio for the meta powerhouses. And there's also quite a bit of work that's underway in recycling for projects -- for the potential project in Tennessee, things we're doing to get isotope projects off the ground. And there's also some scoping CapEx available for some of those fuel projects that Jake mentioned across HALEU, plutonium and transuranic fuels. In terms of '26 to '27, I think given the project pace of delivery, I do think that we'll continue to see CapEx that will be at those levels. But it's really just a reflection of multiple projects going on in multiple dimensions across all 3 business units. Jacob Dewitte: Yes. And I'll just echo, I think that's an important part about the positioning we have and also like the -- frankly, the ability to move more quickly and scale into the opportunity space as it is here and kind of set the direction and set ourselves up for a very long-term success by flexing into all of that is, I think, a very important thing to be doing, which is great that we're in a position to do it. Operator: Your next question comes from the line of Dimple Gosai with Bank of America. Dimple Gosai: Just a question on the regulatory strategy here, right? Can you give us a status update on the COLA timing and the PDC topical report review? Like how do you sequence the DOE authorization at INL with future NRC licensing for subsequent sites? And on the same topic, did the government shutdown at the end of last year and some of the staffing constraints that we heard of at the DOE and NRC move any internal licensing time lines or anything? And does this change the schedule at all in terms of deployment or filings or anything? That's the first question. Jacob Dewitte: Yes. I think -- I appreciate the questions. There's a couple of things in regulatory that are important. I think there's -- look, there's still, I think, sometimes some confusion about DOE authorization for NRC licensing and how these things all fit together. The key thing is DOE authorization allows us to do the most important thing, which is build, which is learn by building now in a faster path, which is what we just talked about and shared a lot of information on. The progress we've been able to make on the ore plan wouldn't have happened without that pathway going forward. And in many ways, arguably, this is the way the policies were set up a long time ago. And it dates back even a little more recently, but still some time ago, back in 2018, there was a bill passed into law and signed into law called the Nuclear Energy Innovation Capabilities Act, and that set the stage for using Department of Energy capabilities and resources, including the regulatory authorization side to support kind of the first of the kind of builds because DOE has just a wider range of regulatory experience and flexibility. And now with the executive orders, they directed a pretty clear approach and prioritization of DOE to leverage that and build the capabilities to do that, which, frankly, they largely already had. It just said put them to use to support these things, which is amazing because it's completely shattered the paradigms of the past. It's really illuminated a lot of the significant regulatory inefficiencies that have existed. On top of that, it sets a good pathway for us to then build that first plant. But then also what we expect to see coming from the NRC is part of the executive orders there that build on all the work from the ADVANCE Act before are driving a lot of new regulatory, frankly, pathways and development there that bridge from the DOE basically authorization itself. So we're expecting the NRC to fairly soon issue basically their approach, if you will, for converting a DOE authorized and built an operating facility to an NRC license facility, and we're in a great spot to be able to go through that and experience what that looks like. That inherently is not like a call out because you're not getting a license to build and operate the plant. The plant is rebuilt. So it's really a conversion process, which is cool. But they have to do the safety review and they have to reference and leverage everything before. Not only that, but we've also been working to include and loop in the NRC into our basically regulatory review with DOE. So they're seeing how it's done and they're getting experience watching and shattering those pieces, which is pretty powerful. And this is a key kind of opportunity to go, I think, faster. It's really -- it's hard to overstate the value of focusing on actually moving out of the way of sort of if you think about what a nuclear company historically would have to do, what our product was, if you really look at it objectively before these opportunities existed, our first product was really more built towards shipping permitting applications, right, paperwork. Now because of the DOE authorization approach, it's building while doing that, which allows us to learn and iterate way more quickly because naturally, things come up and evolve, and that helps you learn for really hard things that are actually really important to like deployment at scale. Now all of that also translates very effectively to what we're going to do with the NRC in Ohio. And I think what's pretty clear is DOE and their approaches and the milestones we fit with them show that they can do a safety review of certain fast tractors. And they've done a lot of those before because they oversaw the power plants that we build our legacy off of. On top of that, the NRC has also shown by recent developments that they've had, including, for example, the construction permit work with TerraPower that they can do that work as well and looping them into this and leveraging the experiences and expertise that DOE has because DOE has done this stuff before is quite constructive and quite efficient, frankly. So we're waiting to see the new framework from the NRC to start executing down the pathway of preparing to convert a license. But in parallel, we continue to work through effectively developing out the combined license. Now to submit for Ohio. That said, it's very important to also flag something else. Part of the executive order, there's significant regulatory work and rewriting going on that could significantly influence our approach in a constructive and productive way that we would expect to reduce costs and time lines as well as add additional regulatory kind of confidence and certainty. So that is all a very live situation as we speak, and we're watching eagerly as various things flow out from the NRC on that front. But it's fair to say that, that's probably going to be quite constructive, but also have some tweaks, if not more significant changes on our actual regulatory, I'll call it, semantic strategy. In other words, we still get an NRC license, but the vehicles by which we might do that may be a bit different because of what's happening at the NRC. That said, we've been preparing and continuing to go through the pathway of pre-application that addresses general and somewhat generic or cross-cutting issues that are important for licensing for us, and those will set the stage for us to actually have -- reference those in whatever application structure takes place going forward from the NRC. Again, at this point, we still expect a Part 52 combined license, but that's just because we haven't seen what the new menu of options are going to look like as well, which we expect to happen over the course of the next few months, and then we'll adapt kind of a strategy from there. But a couple of key things that we see are obviously just having the experience of going through the Aurora plant in Idaho under DOE authorization, going through the DOE regulatory process, having the NRC part of it, taking an iterative approach, learning by actually building and scaling that and then applying that outward. On top of that, we're also getting experience from NRC licensing already on the isotope side, having obtained an NRC license now. It's a great win. To your latter part of your question, Dimple, yes, we did face some delays on that with that license application back in the fall during the shutdown. But now we have the license in hand and off we go. I don't see any of the other effects that are, frankly, at this point materially affecting our progress on the other activities that we have going on with the NRC and with DOE. But that was definitely something that was noted. And then the last thing I'll just say is one important thing, too, that's very helpful is in the current frameworks, which again may evolve and change a little bit, but -- or frankly, a possibly, the approaches with what we're licensing and the work we've been doing on the isotope side, not just the material handling license, but the actual production reactor, like basically like the full commercial version of Groves that we've spent some NRC pre-application time with. That has a different pathway than what the commercial like Aurora power plant version has. And having the experience that we gained across both of those and what we're gaining on the recycling side and what we've done on fuel fabrication is very helpful because we see a whole spectrum of different parts of the NRC and can cross-connect best practices and help guide things from our development of an application as well as our engagement with them in the review process. And that helps in many, many ways in terms of some scaling efficiencies and bringing best practices from various business units across. And that's pretty unique for us because we're taking on that broad kind of set of -- broad set of projects. So yes, that's kind of the way I'm seeing that landscape evolve and how all this is moving forward. Operator: Your next question comes from the line of George Gianarikas with Canaccord Genuity. George Gianarikas: You mentioned in the past that about 70% of the Aurora powerhouse components are being sourced from nonnuclear supply chains, which is I think you brought Kiewit into the picture. Is there any update on what the 75-megawatt reactor CapEx should look like? And if not a complete update, maybe any early indication on the dollars per kilowatt there? Jacob Dewitte: Yes. I mean I think this is one of the things that's actively evolving from where we're at in terms of the build cycle and what we're seeing is doable and also what we're seeing can be done to either move some time lines to the left and build it faster and pay more to do that or not, right? But generally speaking, speed is a very important thing for us. So that's how we're trying to focus on this. It also gives us a lot of insights into then what we're going to do from a more, I would say, optimized strategy with the Ohio plants that would allow us to scale those according to what makes most sense from sort of like the experiences learned from the Idaho plant. So what that's all to say is we're going to have more information as we continue to get into the actual deeper works beyond some of the civil and prep works and have some relevant updates that come accordingly as they get deeper into it. But what we've learned on the procurement side is we've been able to find ways to pull schedule to the last in different ways constructively. We've been able to find ways to look at how some things can be accelerated, but one aspect of that is sometimes it helps the fact that we have the Aurora plants in Ohio coming afterwards because it can maybe accelerate some things here in Idaho to help us with other components and other parts and other sourcing for scaling those to the other Ohio plants and maybe having some benefits that happens that way. So the general view we have is it's evolving as we go through on this and as we develop and enhance the relationships we have and we look at different angles of attack on the different fronts of what drives costs and what doesn't and some things are candidly. Not worth necessarily driving the modernization for the first plant that we'd like to see in terms of the actual supply chain and the procurement of it. So we might pay a little bit more to move faster and other things that is working on that. It's a bit of a dynamic situation that we're continuing to evolve and look at. At the end of the day, though, like my view is like, generally speaking, all of these things can live like pretty much every part outside of the fuel can live outside of the nuclear like conventional supply chain. But I think what's really important is I think that paradigm has actually been sort of inverted as of late because there's -- we're seeing growth in the industry for the first time in a while. So you're actually seeing folks bring forward more disruptive approaches and kind of taking away some of the legacy models and approaches that were driving significant costs and inefficiencies by sort of locking into the status quo across different suppliers in different parts of the entire sort of value chain, if you will. And a pretty cool thing that we're seeing is that we can actually get to be, I don't know, a lot more thoughtful engagement from our partners about how to do that and more constructive engagement about knocking out some of the synthetic like nuclear cost multipliers that have existed before. I know I say this a lot, but it's hard to overstate the value of modern -- of basically taking out some of those nuclear cost multipliers, right? The "nuclear idiot index," if you will, is really, really high and is right to be changed by changing how we design, how we try to minimize and reduce parts that come in with some of the typical nuclear classifications to them by taking advantage of passive and enhanced safety features, but also by modernizing how our suppliers and ourselves actually deliver those plans. But we're finding that there are some places where, you know what, just easier to deal with what's legacy for the Idaho plant to get it up and running because that's more important. But that sets the stage for them how we can actually solve that problem in Ohio because we learned the best practices to do that. So it's pretty interesting to see that combo sort of evolving and taking shape. Generally speaking, though, we're seeing a very different way of engagement across most of the supply chain and not having some of the conventional legacy requirements. And what I really mean by that is not being a light-water reactor is actually really constructive. Counterintuitively, a value of that is not having to play in the legacy supply chains with the historical cost structures in place there. That's actually worth a ton because it gives us a lot more flexibility because we're not buying light-water reactor parts by and large. I mean yes, there's some similarities, but we're not a light-water reactor. So a lot of it is different. And that gives us a lot more flexibility. And it also helps us focus on where do we need to flex into building ourselves, what parts make the most sense to buy to go faster or build ourselves and maybe build ourselves to scale and build ourselves to deconstrained supply chains or build ourselves just to be cheaper. So it's an active growth aspect of the business, and it's also how we're looking at. Not just sort of the capital cost modeling and data sets, but also the long-term cost structures of the business and also like opportunities in the business. Operator: Your next question comes from the line of Ryan Pfingst with B. Riley Securities. Ryan Pfingst: Somewhat of a follow-up to some of the comments there, Jake. For the agreement with Meta, they ended up choosing 2 sodium-cooled reactor developers following their nuclear RFP process. Can you rehash some of the benefits of your design and why Meta might have chosen it? Jacob Dewitte: Yes. I think the answer right now is the fact that we've got -- I think they see the benefit of fast reactor technology between us and TerraPower, right? That's just repeating what you said. But basically, I think that translates across a couple of like vectors. One is the technical maturity, something that's vastly underappreciated even by a lot of nuclear experts. I think the fact is as a society, we built a lot of these plants, we've learned a lot about what doesn't work and what does work. And in the U.S., notably the experiences we got through EBR-II and FFTF, the ability that those plants had to achieve pretty exciting operational characteristics, both in terms of operating capacity factors, in terms of occupational dose rates, in terms of how to service and run those plants, right? Like their operating capacity factors were competitive and exceeded, in many cases, light-water plants at the time, which shows a lot of the inherent benefits of the technology itself. And it's the only technology that's really been able to do that. And on top of that, I think there's a clear project -- like clear trajectory on the cost benefits of sodium being a relatively materially benign fluid with commonly available steel. In other words, you can use it and it's quite compatible with stainless alloys. That's great in terms of opening up supply chains and reducing costs and avoiding major cost drivers of very exotic alloys you might need if you didn't have those benefits and then also not being pressurized and then having the benefits of being able to operate at relatively higher temperatures and then the features that come from that for passive heat rejection through the phenomenal heat transfer characteristics that sodium has as well as operating at higher temperatures and what you can do to reject heat to air because you're at slightly higher temperatures. So all in all, it translates to a lot of -- generally speaking, cost, I would say, cost benefits as well as the strong operational history and high technology readiness. I think those are big features there. Richard Bealmear: And Ryan, maybe just a couple of adds there. I think as we continue to emphasize in calls like this, the importance of having multiple seal pathways, I think, was another important point of distinction and being able to have proof points against those pathways. And I think another important part on Meta was already having a ROFR in place and access to land in Ohio, I think, was another important advantage. And then we've leveraged that land access even more with what we could potentially do with Centrus. Operator: Your next question comes from the line of Vikram Bagri with Citi. Vikram Bagri: I have 2 questions. I'll ask them together. First, maybe for you, Craig. Can you talk about the timing of Aurora-INL? It appears time line shifted slightly to the right with the change in language from late '27 to early '28. Now it says 2028. Am I reading that right? And what led to the shift in timing? Also, I see it's a 75-megawatt reactor. Can you talk about what the CapEx requirements for this reactor will be or when you will have a greater clarity into CapEx requirement? And then secondly, for you, Jake, I see you conducted fast-spectrum plutonium criticality experiment. Can you share what that entails and your expectation of timing of plutonium allocations that we've been looking forward to? Richard Bealmear: Yes, in terms of the last bit of your question, I'll take that first, that we're still doing a lot of work. And Jake kind of mentioned this dynamic of challenging the cost versus the time line because trying to bring time lines forward could have a cost element to it, and we're really trying to balance both of those pieces. And I think we'll have more information to share around what the cost of that first asset looks like later this year as well as how we look to bring costs down on future deployments. And in terms of the time line, I think I've been pretty consistent in the various investor meetings that I've been in that we're targeting a 2028 time line. We know it's an aggressive target, but we feel like the industry and our customers are pushing us towards being able to hit those time lines. And it's also, I think, important why we're doing things on project like growth where we can learn how to bring down capital costs and learn how to bring down project time lines as well. Jacob Dewitte: I think one thing we saw with the -- like what we're having happened with -- I think that basically, the time line elements are as we're putting all these things together, right, like we're -- we have a path of being able to start hitting important construction milestones this year, doing some plant commissioning work but getting the full plant into nuclear heat production just is going to really happen in 2028, right? It's just where it's going to be. So I think at this point, we're seeing that line up to make that kind of the case. We're always looking at different ways that might pull parts of the schedule to the left, and there might be some things that kind of help with that. But a lot of this gets to how we can execute on building this thing and doing it quickly and moving through learning and iterative processes relatively quickly. And I think it's important because we're trying to also make sure we capture lessons learned and not designing the fly to implement all those things, but that help us with Ohio. And that's important because that means that the follow-on plants are going to obviously show those improvements significantly. And that's a key thing about smaller reactors, right? The cost and time lines of iterations are just way lower. And that's how you really drive learning and scale as we see everywhere. On to the plutonium front, yes, it was pretty cool. We got to partner with Los Alamos National Laboratory and go out to the Nevada National Security Site. Basically, what we got to work with was a small plutonium like basically metal assembly that we used uranium as a reflector and plutonium was the primary fueling board and got to run it through some criticality basically benchmarks and tests as well as some reactivity measurements, which means you're actually taking the system, putting some power into it, heating it up a little bit and looking at the thermal expansion and the other effects that cause it to shut itself down naturally. It's important because while a lot of that data has been out there, doing it in this kind of way helped us get more fidelity in certain ranges of particular interest for us relevant to our use as well as just to enhance our overall models for validation purposes. It was pretty cool because it was really doing that, right? I think we're putting in a couple of kilowatts at most in terms of thermal power, but in a very small system that's literally very small, it matters and it was able to heat the system up and we got to see all those insanely like fast dynamics and responses. I've gotten to spend a little time around like a [ high-strainium ] fast reactor system in my past, but this thing was even faster in how it behaved. It's very, very like tightly responsive, which was awesome. And the way they ran it was just a pure testament to like how robust a small tightly coupled fast reactor is in terms of like inherent feedbacks and all those benefits. So that was helpful. We anticipate there's going to be more work there that just adds more fidelity to basically improve reactor performance and reduce some uncertainties throughout the system that ultimately translate to dollars saved or more dollars earned, right, for both. And then the other part of it is with the plutonium awards, we're expecting those things to kind of progress. I know the Department of Energy is going through the active kind of reviews of the request for applications they put out, and we're pretty excited about our positioning for that. But time lines, I think we'll watch it eagerly this quarter coming up, but I think it depends on a couple of factors that are still evolving. Operator: Your next question comes from the line of Jeffrey Campbell with Seaport Research Partners. Jeffrey Campbell: My first one is, will the deconversion discussions you've noted result in Centrus increasing its enrichment capabilities from its current small volumes? Or do you envision the deconversion capability is independent of any particular uranium enrichment supplier? Jacob Dewitte: I mean from the deconversion technology side that we've worked through and we've been developing out, it's pretty flexible. I mean it's based on a UF6 input. And try to supply some things we think can help scale and drive costs more effectively at the facility level. So it's pretty flexible. Part of why we explored it with Centrus to start is just given the positioning we have in Ohio, the fact we're going to be building a lot of plants right there by where they have it. There's some significant economies of scale of putting deconversion there as well as potentially fuel fabrication there and the reactors there. So you have a pretty cool campus that goes from enrichment to deconversion to fabrication to actual reactors, all in that general area and in a very attractive market to be in overall. So that's how we see kind of the opportunity on that. I think the space we see is -- I think we've got some cool technology pieces. We're eager to explore what that looks like to integrate with theirs, like their facility and their approach. The idea would be, of course, to support their significant growth and expansion. But yes, we see this as being broadly suited for any kind of uranium hexafluoride approach. So any of the, I'll call it, more conventional centrifuge enrichment approaches. When we talk with other enrichers that use uranium hexafluoride for different processes, similar benefit. And then there's some of the other technology developers that are working on true metal-to-metal kind of enrichment. And obviously, you don't need deconversion for that. And for us, that's also great because you can just take the metal right into fabrication. But it's kind of how we're looking at the landscape. Jeffrey Campbell: My second one is, I thought your point about pursuing different licensing pathways is interesting. Specific to fuel and fuel recycling, why did you choose the NRC licensing pathway for Tennessee? And how does this differ from the fuel facility licensing under DOE at INL? Jacob Dewitte: Yes. As we see it, like the DOE INL one set up very well under the -- well, first of all, we were going to need to make fuel for the Aurora plant. So a long time ago, we said, where can we do this and what's the fastest way to do this? And at the time and as it maintains to be true now is to use one of their existing buildings and set up the fabrication equipment there. But we want to scale that outward as soon as reasonably possible. And already sitting on a DOE facility, it just makes sense to have that under their kind of purview. So we look at how that can scale given the Reactor Pilot Program and the Fuel Line Production Pilot Program. In terms of the commercial kind of use case around the recycling, given where that is and it's designed to be a fully commercial facility, like that is something we see as taking an NRC licensing approach. Inevitably, by the way, we've also engaged with the NRC in pre-application on fuel fabrication because at some point, we're going to need full commercial fuel fabrication. So that also will end up becoming more -- become NRC licensed. But being able to get the repetitions of permitting and regulatory oversight and execution by actually building and operating these things under DOE authorization just moves faster and the programs were there for the fuel side. The NRC side, then we see those converting over to the NRC or at least helping inform where we do go fully with the full NRC license commercial fuel fab facility. And then it's similar that we're just kind of at that stage on the recycling piece already and needed to do a lot more pre-application work there because there's more, I would say, fundamental licensing-type topics to cover on recycling, and that's why we've been at that for several years now and why we're pretty excited to move into this kind of rolling readiness review after completing the major items we wanted to in the pre-application side. So that's actually part of the story that probably gets maybe a little bit underappreciated, but the progress made on NRC licensing for the recycling facility in Tennessee is quite exciting. It's quite staggering actually to see how much work has gone into that and how much progress has been made through pre-application getting ready for a full application submission. That said, with the DOE life cycle program out, I also -- I would not be surprised if there is a pathway that makes sense to pursue recycling through a DOE authorization approach for kind of a pilot facility. That's something we'll evaluate should that make sense to do. If it does make sense, then we'll kind of take our lessons learned to go there while we continue working with the NRC for full commercial scale. But we just see that all these DOE pathways allow us to move to first of a kind more quickly and then better position us for NRC licensing at scale. Operator: Your next question comes from the line of Sameer Joshi with H.C. Wainwright. Sameer Joshi: I just have one on the Atomic Alchemy Groves test reactor. There's roughly 3.5 months left for your target criticality on July 4. There is some amount of construction left and some procurement of auxiliary equipment left. How confident are you that you would meet that deadline? Jacob Dewitte: Yes. I mean this has been a great rallying drive for the company to both design and build quickly and also learn lessons quickly and iterate quickly. So like when you look at how far this has come, we feel pretty confident that we're going to be able to hit or meet that -- hit or beat that date of being able to pull rods and take the system critical. Fuel has been ordered. All the major items generally have been ordered. There's still some work about trying to see what we can do to make sure we build ourselves enough buffer time to be able to receive and manage all this. But it's a logistical effort to time all the permitting steps with the ability to receive the fuel, to load the fuel, have the equipment on hand, find some ways to maybe accelerate how we can come up with some solutions that allow us to have the right kind of things that are available now versus maybe what we want to have more commercial scale and have some replaceability for them for certain things on instrumentation and detection. But that's part of what this feature in this facility is for. It gives us the ability to run it, work with what's available and then have some flexibility to pivot those things in. But you look how far this has come by doing -- going from a bare field to excavation to putting a concrete in the foundation, putting in the vessel, loading that, building out the structure, having other major items in order, getting stuff ready to be received and installed, like it's pretty exciting how that's all coming together. So we feel very good about that. It's a challenge. It's not going to be easy, but we feel very good about the position we have. And I constantly am trying to say, how can we make sure we can move faster and do better. And what's interesting, too, is like there are going to be some other companies that are going to achieve criticality before that date probably, which is very exciting because, again, what I said is it shows there's a spectrum of solutions that are going to deliver on that. What's great about this one is it includes real civil works. And some of these other ones kind of are just a different scale. So they don't quite have that same effort or they're maybe using preexisting prefabricated fuel from DOE facilities or inventories and other things that kind of allow you to hit that kind of criticality milestone, which is awesome, like it's really important. But like part of what we've learned in this process is and with Groves that's so exciting to me is it's a full design build that wasn't using pre-existing stuff, right? Like I mean yes, there's some things that are on inventory and shelves from our suppliers, but it's not like we're trying to -- we're not using fuel that was already made by somebody else and sitting on some DOE warehouse or something like that. Like the whole thing has gone through from -- pretty much from scratch. And it's a pretty powerful story and us and our ability to actually build and deliver that and execute in building something that fast that's actually going to make real news -- it's going to be pretty cool. Operator: Your next question comes from the line of Sherif Elmaghrabi with BTIG. Sherif Elmaghrabi: Just one for me today. Craig mentioned the fact that you had land in Ohio help yield -- help win the deal with Meta. And I believe you got that land from an economic -- or with help from an economic development council in the state. So can you speak to why they saw Aurora powerhouses as an attractive use for the land? And do you see similar opportunities in other states? Jacob Dewitte: Yes. This is like -- this is -- I love this question. This goes back to like strategic vision that I think, Caroline, the co-founder saw here and some of the rest of our team saw with respect to these opportunities of taking federal land resources that were being sort of cleaned up and made available and repurposed for economic development and federal is a great position for that, right? If you're not familiar with the site, it is home to one of the largest enrichment plants in the whole world. It's incredible feet of industrial like might and strength. But as that plant was retired and they're looking at repurposing a lot of that land, it became an opportunity for saying, hey, there's a lot of infrastructure here that would make sense to build into, we should do this. And so back before ChatGPT, before kind of this recognition of an inflection point coming on power needs, we saw that, hey, there could be some opportunities to fight some power plants there. We're going to need fuel from Centrus. So we announced several years ago a relationship with them to potentially sell them power and be able to build some infrastructure there, including the power plants. And so we started working with them to do that and had that vision. And then all of a sudden, all these dynamics start to come together very attractively, all in a relatively short order, but we have found that position as a really useful thing to have. Along the way of doing that, we also learned the exact thing you're asking, which is, there's actually some good opportunities if we do that in the right way strategically at the right time, in other sites. And so yes, that is the thing we're doing. Like I think I alluded to earlier on the call is what we're -- everything we need to do to deliver power to customers is illuminating things and opportunities for us to do, in some ways, more, in many ways more and do it more efficiently and cost effectively by doing it ourselves and sort of leveraging our side. So instead of working with others who have the land, developing the land ourselves or partnering with folks to develop the land together and bringing power to is a pretty important differentiation for us. So we're pretty excited about like the opportunities we see around that. And by being -- because of our business model, we have to solve those things. So it's important because then we're forced to solve the really tricky things that actually make deployment hard, which isn't always just the building of the reactor, it's all the stuff around it. So our insights on that are actually allowing us to create a lot of value by doing those things. So yes, we see that, and we see other opportunities that are pretty exciting. And what they saw with us was they wanted nuclear in the area because they had a strong history of nuclear. They wanted economic growth because they had a lot of jobs that were in the area before that, but were then being phased out as decommissioning was kind of progressing. And we were well positioned to support some of that. Now we're going even bigger there. So there's a lot of opportunity that's going to come because of that. And I think they also saw that like from -- and obviously, I'm interpreting my opinion to them. I mean they're the best ones to ask directly, but like they also saw that we were -- like building power and infrastructure is great because it creates halo effects. And again, this was pre the whole data center boom, but it creates halo effects for other industries. And obviously, data centers get a lot of that attention now. But I think that's what they saw was if you build -- if you have some power plants coming here, you're going to probably have some other opportunities that come with that. So that's, I think, what they saw and how we saw it. Operator: Your next question comes from the line of Eric Stine with Craig-Hallum. Eric Stine: So obviously, the Meta agreement quite important, and it does create that mechanism for prepayment. But also, I would assume, predicated on a firm PPA. So just curious progress there. And you mentioned that other potential customers may want to follow this model. So maybe just talk about or characterize the PPA discussions with other potential customers. Jacob Dewitte: Yes. I guess like the way I kind of think of it is we -- this is one of the cool things about how we look at the landscape with what we've tried to position ourselves into is power is a massive need for a lot of folks and our ability to work with Meta was -- we positioned and structured so that like hey, they want us to be successful. We want to be successful. We also need to make sure just like they do kind of that we have the opportunity to work with different potential partners in different areas and in different ways. And the way we try to structure that agreement allows us to have the ability to obviously prioritize where we are in Ohio with them, but also provides opportunities for them to either work with us or others to work with us on either growing there or around there or in other sites. And so overall, like I think what we see is -- I mean we're seeing the inbound and the focus on actual structure now that we have an example of it really kind of change in a constructive way. So we're really talking about like meaningful binding offtakes that emulate similar dynamics to it to have a structure and look like prepayment that allow us to drive project certainty, but also allow us to make sure we're working with partners that are committed to sort of success here for us and have the right understanding and the right sort of, I'll call it, grace built into how they're going to work with us as well as commitment, and that's pretty important. And we're finding -- we found that like I think the tone and the tenor and the approach and the conversations we've had has focused into the major players are going to be the right ones to kind of look at there and has kind of accelerated the conversation set since announcing that deal. So we feel pretty -- I think I feel personally quite excited about how this sets the stage for how we're going to work with both Meta and potentially others as they come to the table. But we don't see a shortage of need or appetite. I mean there's way more opportunities. It's just -- it's a huge number of opportunities. But this does allow us to have a framework that helps us really know who and how to prioritize and who's going to come to the table with the right things that kind of show that commitment as a partner to help us actually execute successfully. I don't hope that kind of answers the question. I don't know, Craig, if you want to add anything to that, but... Richard Bealmear: No, I like that. Eric Stine: Okay. And just so on that, I mean so next step then would be to see a firm PPA with Meta. I mean is that the right way to think about this here with that mechanism now in place? And as an example, whether it's with Meta or someone else, it would be a firm PPA just to kind of move this area, this development potentially in Southern Ohio forward? Jacob Dewitte: Yes. I'd be kind of clear, like I think this is a binding commitment to provide power and -- from us, for them to buy power from us. So like what we see is this sets the stage to then get into the actual execution on the preprocurement on the longest lead items a fuel and some other items as well as ensuring the project into those stages. So then, yes, convert over to a PPA. I know we've been saying this for a long time, but the approach we've been taking with customers is not to rush to PPA, but find better binding offtake structures. And this is very much what we had in mind because overdefining the PPA now isn't the right answer versus having a binding commitment that allows us to scale into the right kind of PPA structure after this goes forward. And that's a very important like point of kind of distinguishment, I guess, or differentiation because of what this allows us to do to define that as we work through this with them. So yes, looking out over the next year or so, I imagine that's where we'll kind of see the PPA come together. But I mean part of that is the time lines are going to evolve a little bit based on exactly specific need sets and how to best structure this. But like at the end of the day, that's what's important here is that this is a binding offtake and a binding agreement to support that. Richard Bealmear: And Jake, I would just add, it's trying to progress both the asset deployment plans in lockstep with the commercial discussions on the PPA so we can make sure that we get the right asset-level returns. But clearly, the lock-in elements that Jake mentioned that we have with Meta really becomes an important enabler for the projects we intend to do in Ohio. Operator: Your next question comes from the line of Derek Soderberg with Cantor Fitzgerald. Derek Soderberg: Just one for me. Jake, government policy and the regulatory environment broadly has been pretty supportive. I'm wondering, based on your ongoing conversations with the DOE, the NRC, do you expect any new government programs or regulatory changes this year that potentially could help you guys accelerate your plans even faster? Jacob Dewitte: Yes. I think what we see is the government like -- I mean kind of gave a very long-ranging answer to Dimple earlier on this similarly. But like we do expect there to be additional like federal action that's continuing to be supportive and trying to find different ways to help accelerate around this. I think the Nuclear Lifecycles initiative is an important one. I think that's pretty also significantly underappreciated, but it's basically setting the stage for very significant federal commitments to states that are focused on addressing the back end of the nuclear fuel cycle and the natural economic development kind of approach to doing so is going to be anchored around recycling. So we're pretty excited about how that looks and what the benefits are going to be that trickle out from that. Additionally, from the executive orders, there's continuing to be significant activity around the NRC and kind of, let's say, reform and modernization work at the NRC that includes a significant amount of work going into modernizing and updating the -- like basically the suite of regulations there. And we're seeing some of that start to trickle outward, but we know there's a lot more coming. And I think that's going to play out across. I mean from what we can tell, like everything, which is generally, I think, a pretty darn good thing. So we expect there to be added clarity, enhanced schedule certainty, reduced time lines, reduce costs across the board around a whole bunch of different relevant things for us. And given we have so many projects and given we're doing so many things across the space because of the opportunity of integrating these things, we see that those line up really favorably for us to benefit from those. And in some ways, being agile and nimble like we are, gives us a better pathway to take advantage of those than if we had a license application in already. I know it sounds kind of funny, but that's kind of how we see the space. Operator: We have time for one more question, and that question comes from the line of Craig Shere with Tuohy Brothers. Craig Shere: So on Brian's CapEx question in 2027, Craig, you seem to suggest the investment spend could continue at 2026 levels. Depending on approvals and partner capital, is it possible to see a further stair stepping into next year? And given what seems like $2.5 billion of pro forma cash and investments, including the January ATM you hit, is it reasonable to say that, that's sufficient to carry you through at least to next year? And finally, do you have enough fuel for that 75 megawatts at INL? Richard Bealmear: So I'll let Jake answer the last question, but we're very well capitalized for 2026 and beyond. But -- and I think as we've talked about in earlier conversations, the one thing we've not yet been able to execute on, but it's definitely part of our overall long-term capitalization strategy is what we might be able to do at what I would call the asset-level financing approach. So things like project financing. And in terms of the level of spend, I think one thing that Jake talked 2.5 years at Oklo is expect the unexpected because I think we see more opportunities ahead of us than we did this time last year. But I do think what's going to happen in the years ahead is I think kind of the nature of the spend will change in terms of seeing more -- as our projects progress, especially in the fuel space, we talked a lot about recycling. I could see that kind of the split of the capital changing over time, which is also why I think it's important that we've been able to demonstrate an ability to raise capital in the capital markets. And we've got other levers at our disposal in the future, which would be project financing. We're having discussions with the energy -- with EDF, which used to be the loan program office. And we definitely make sure that the treasury team under Graeme Johnston's leadership is always kind of on top of the next thing. And I'm really proud of what the team achieved in 2025. Operator: That concludes our question-and-answer session. I would now like to turn the conference back over to Jake Dewitte, Co-Founder and Chief Executive Officer, for closing comments. Jacob Dewitte: Thank you, and thank you all for joining us today as we get into kind of the opportunities with -- or basically updates on all these opportunities that we're leaning into and executing against. 2025 was a pretty exciting year. It wrapped in a pretty high note and hit off to a really good start this quarter that we're currently in based on some of the milestones we talked about hitting with the Meta announcement, for example. I think as we continue to scale into building and execution, we are postured as a very, I think, strong position to learn through doing and something that has not been in the nuclear ecosystem in meaningful ways largely since kind of the 1960s, I would contend. And so very exciting time for the space, very exciting time to see all sorts of new things be learned in a modern context, including how to best design and build and deploy and scale across the ecosystem. Given our positioning and our posture and our business model, we're also uniquely suited to learn a lot about where the opportunities are for us to lean into, both in terms of where we can create value, whether we build things ourselves, whether we acquire, merge or buy companies or just partner with folks to buy sourcing or supplies from them or material from them. It gives us a lot of good insights about how to actually execute here. That's the key thing now. What we're solving for is broad, scaled nuclear execution, which really translates to how we can build, how we can license, we can operate, how we can source and supply in-house and do all the things we need to do to actually do what we're trying to achieve. We're also really excited by the progress we've made on the isotope side. We've shown we can obtain an NRC license. We've shown we can execute against DOE authorization across multiple lines, and we've shown that we can also build a real physical asset, a real reactor in incredible time lines and also internalize all those lessons learned, the things we've learned that are hard, the things we've learned that are easier, the things that didn't work and the things that do work and help apply those to where we go forward and aim for turning that reactor on by July 4, which will be a really exciting milestone for us. So with that, I'll go ahead and say thank you again for everyone who joined and look forward to the next quarterly update. Thank you all. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you all for joining, and you may now disconnect.
Operator: Good day, everyone, and welcome to comScore Fourth Quarter 2025 Financial Results. [Operator Instructions] Please note, this conference is being recorded. Now I would like to turn the call over to Mr. Kevin Burns, EVP of Business Operations. Please go ahead. Kevin Burns: Thank you, operator. Before we begin our prepared remarks, I'd like to remind all of you the following discussion contains forward-looking statements. These forward-looking statements include comments about our plans, expectations and prospects and are based on our view as of today, March 17, 2026. Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties. These risks and uncertainties include those outlined in our 10-K, 10-Q and other filings with the SEC, which you can find on our website or at www.sec.gov. We disclaim any duty or obligation to update our forward-looking statements to reflect new information after today's call. We will be discussing non-GAAP measures during this call, for which we've provided reconciliations in today's press release and on our website. Please note that we will be referring to slides on this call, which are also available on our website, www.comscore.com, under Investor Relations, Events and Presentations. I'll now turn the call over to comScore's Chief Executive Officer, Jon Carpenter. Jon? Jonathan Carpenter: Good evening, and thank you for joining us. 2025 was a solid year with meaningful progress as we further developed our leading cross-platform capabilities, all to achieve our objective of becoming the industry standard for modern measurement. Revenue for the full year was just over $357 million and adjusted EBITDA came in at $42 million, both ahead of 2024 performance. This was driven by 24% growth in our cross-platform solutions, along with double-digit growth in our local TV offering. Throughout the year, we had a number of important wins. One that I want to highlight is the launch of CCM, our cross-platform content measurement capability. CCM gives clients a more complete picture of the audience for any piece of content, whether it was viewed on linear TV, CTV or mobile device, all at the title level. Some of the largest broadcasters and technology companies in the world have already signed on, and we believe we're just scratching the surface. We've also deepened our relationships with the largest media companies, those that command the vast majority of ad dollars. Our cross-platform measurement solutions helped drive nearly 25% year-over-year growth across key technology clients. Additionally, our local business continued to execute at a high level, anchoring our cross-platform capability while delivering significant value to our broadcast network and agency partners, contributing to double-digit year-over-year growth. Beyond our commercial execution, we made meaningful progress simplifying our capital structure. At year-end, we closed a pivotal recapitalization with our preferred shareholders. The transaction eliminated $18 million in annual dividends, a $47 million special dividend obligation and our preferred holders also converted roughly $80 million in preferred shares into common shares at an attractive premium. And we were able to reduce the size of our Board, streamlining both costs and governance. This was an important first step, and we remain focused on continuing to simplify our business and strengthen our balance sheet as we move through 2026. I am proud of how our teams executed in 2025, and I'm excited about building on that momentum. But before I talk about where we're going, it's worth grounding everyone on where we've been. comScore has always led with innovation. We were the first company to make digital audiences measurable at scale. While others are only now figuring out how to combine big data and panels, comScore pioneered that work more than a decade ago. We also led the industry shift to big data TV audience measurement, giving us over 10 years of experience delivering stable measurement that reflects how people actually watch television. That history matters because it speaks to what comScore does when the industry is at an inflection point, and we're at one right now. The media landscape has fundamentally changed. Attention is fragmenting across AI-driven environments, platforms continue to wall off their data and creators across social platforms now command audience share that rivals traditional media. These shifts create a real challenge for advertisers, and they expose the limits of legacy measurement approaches. Our response is clear, become the defining standard for modern measurement. That means building a fully integrated flywheel connecting our offerings across planning, activation, buying and measurement with common metrics across the board. When our products work together, our clients can navigate this complexity with confidence rather than confusion. CCM is a clear example of this action. It allows advertisers to evaluate audiences for social creators alongside ad-supported connected television and linear TV and to plan true cross-platform campaigns from a single unified view. This is the flywheel capability that we're building. I look forward to sharing more -- looking ahead, we're also bringing forward innovation in AI measurement, an area that is only going to grow in importance for our clients. The early work here includes measuring which sources, LLMs and AI search tools are citing, how these tools are changing the way consumers discover brands and products and perhaps most importantly, how they're changing the way consumers make purchase decisions. What differentiates comScore is how we get this data. Our unique digital panel assets allow us to directly observe millions of AI search and AI chatbot interactions every single month. When we provide clients with single insights into how these tools are reshaping their businesses, it's based on real observed behavior, not just assumptions. CCM, AI measurement, a connected product flywheel. Our work in these areas is evidence that we're delivering all in service of one goal, establishing comScore as the standard for modern measurement. We look forward to sharing more about our progress and strategy with you throughout 2026. Now I'll turn it over to Mary Margaret to take you through our 2025 results. Mary Curry: Thank you, Jon. Total revenue for the year was $357.5 million, up 0.4% from $356 million in 2024 and in line with the guidance we gave on last quarter's earnings call. Content & Ad Measurement revenue of $304.3 million was up 1% from 2024, driven by growth in our cross-platform and local TV offerings. Cross-platform revenue of $50.3 million was up 24.4% compared to the prior year, driven by higher usage of our Proximic and CCR products, along with the successful rollout of CCM. Syndicated audience revenue of $253.9 million was down 2.6% from 2024, driven by declines in our national TV and syndicated digital offerings partially offset by growth from our other syndicated offerings, including double-digit growth in local TV from higher renewals and new business. Our movies business also posted solid growth, generating $38.4 million of revenue in 2025, up 3.4% from the prior year. Research & Insights Solutions revenue of $53.2 million was down 3.1% from 2024, primarily due to lower deliveries of certain custom digital products, partially offset by new business from our consumer brand health products. Adjusted EBITDA for the year was $42 million, up 2.6% from 2024, resulting in an adjusted EBITDA margin of 11.8%. These results are largely driven by our intentional decision-making around spend, which we calibrated throughout the year to align with our revenue expectations. Our core operating expenses for 2025 were up 1% year-over-year, primarily driven by an increase in employee incentive compensation, higher revenue share costs and higher panel costs, partially offset by lower data costs, most notably from the amendment we signed at the end of 2024 related to our data license agreement with Charter. We also made targeted investments in 2025, which contributed to the increase in operating expenses. As we've discussed on prior calls, we're focused on investing in areas that have the greatest potential to either accelerate top line growth or streamline our operations. In 2025, we invested in enhancing our cross-platform product suite and related sales teams, improving our panel footprint and integrating AI across the company, among other things. We believe these investments will continue to provide benefits to our business going forward. Our fourth quarter results tell a similar story with a couple of distinctions that I'll call out. Total revenue for the fourth quarter was $93.5 million, down 1.5% from $94.9 million the same quarter a year ago. Content & Ad Measurement revenue of $78.8 million was down 2.7% from 2024, primarily driven by lower revenue from our national TV and syndicated digital products, partially offset by growth from our cross-platform offerings. As Jon mentioned on our last earnings call, we expected cross-platform growth in the fourth quarter to be impacted by a strategy shift of one of our large retail media clients. This turned out to be the case, resulting in cross-platform revenue growth of just under 10% in Q4, lower than the growth we saw in previous quarters. We expect this to pick back up in 2026 with double-digit growth in cross-platform projected for the year. Our movies business generated revenue of $9.9 million in the quarter, resulting in 5.5% growth over Q4 of 2024. Research & Insights Solutions revenue of $14.6 million increased 5.3% from the prior year quarter, primarily due to new business from our consumer brand health products. Adjusted EBITDA for the quarter was $14.7 million, up 3.3% from the prior year quarter, resulting in an adjusted EBITDA margin of 15.7%. Our core operating expenses were down 4.4% compared to the fourth quarter of 2024, primarily due to lower employee compensation and data costs, partially offset by higher rev share costs. Looking ahead to 2026, we believe our revenue and adjusted EBITDA performance will continue to follow the trends we saw in 2025. We expect our cross-platform offerings, along with continued local TV adoption to play a significant role in shaping our business for 2026. As I mentioned earlier, we expect to see continued double-digit growth from our cross-platform offerings in 2026, which should offset the declines that we anticipate from our national TV and syndicated digital products. As such, we expect revenue in the first quarter of 2026 to be roughly flat compared to the first quarter of 2025. We also plan to continue making investments in key areas of the business with the goal of driving top line growth and streamlining our operations while remaining disciplined with overall spend as we work to improve our cash flow. We believe the recapitalization transaction was the first step in our strategy to transform comScore, putting us in a better position to evaluate additional strategic actions that have the potential to further streamline our capital structure, enhance our financial profile, unlock growth and simplify our business, all of which can contribute to generating cash flow and driving shareholder value. We plan to provide an update on our progress, along with our financial outlook for the rest of the year on our next earnings call. With that, I'll turn it back over to the operator for questions. Operator: [Operator Instructions] It comes from the line of Jason Kreyer with Craig-Hallum. Jason Kreyer: Just wanted to see if you can talk a little bit about the financial flexibility. With the structural changes that have been put in place in the business over the last few months, how does that open up kind of strategic flexibility or changes to how you want to run the business going forward? Jonathan Carpenter: Jason, thanks. Yes, as we move forward, I mean, I think one of the key elements here overall is just freeing up, again, $18 million in dividends that the preferred holders were entitled to, not having that obligation on a go-forward basis, better positions the company moving forward. I think some of the actions that the preferred holders took to reduce the size of the Board as part of that transaction that we announced helps us take down costs associated with running the Board. So I think both those things bode well in terms of freeing up the balance sheet to continue investing in the products that are going to drive the most meaningful growth going forward, namely our cross-platform execution. Jason Kreyer: Good to hear. Maybe staying on the cross-platform topic. Curious if you kind of can talk about the last several months, your ability to increase utilization of existing partners with your cross-platform solutions and then maybe a little bit of context on your ability to add new partners to cross-platform. Jonathan Carpenter: Yes. I think it's been a nice combination of both increased usage of our cross-platform audience product, Proximic across the client set. We are continuing to expand partnerships. We did so in the fourth quarter. We'll continue to do so and hope to be able to announce those in short order as we go through the early part of 2026 in terms of how the partnerships on the audience, the cross-platform audience capabilities is expanding. And then I'd just say on the cross-platform measurement products, CCM, really encouraged by the early adoption across the client set of that product really from launch through the end of the year, and we continue to see usage headed in the right direction on that front. And we still have a number of product features and enhancements that we're going to continue to roll out over the course of 2026. Jason Kreyer: All right. Good to hear more to come there. One last one for me. Just on the local side of the business, it seems that market is evolving, maybe creating more of a role for comScore. Just wondering what your thoughts are on the local market as we go forward. Jonathan Carpenter: Yes. I think certainly, in the traditional sense, the currency conversations continue to go very well for us in terms of those clients that are looking to transact more holistically against the comScore offering. We had some really good success on that over 2025 and the early readout in 2026 on -- as the renewals have come through, we fully anticipate that continuing. And then I just think as the world evolves to more audience-based buying across the ecosystem, we remain really the only place you can go to buy local audiences, local advanced audiences or specific local advanced targeting at the local market level at any meaningful scale. And as that side of the business continues to accelerate, that plays right into our wheelhouse. And of course, as you know, that product anchors our cross-platform capability, which really helps drive the overall robustness of what we're able to do in terms of attaching audiences, whether it be traditional linear to digital at a hyperlocal level, incredibly impactful. Steve, do you have anything else to add on local at all? Unknown Executive: No, I think that's totally in alignment. Operator: As I see no other questions in the queue, I will conclude this session and pass it back to Mr. Jon Carpenter for final remarks. Jonathan Carpenter: Great. Thank you. I'd like to just take a minute to thank our employees for their continued work to help us deliver for our clients. And further, I'd just like to thank our investors and clients for their continued trust and partnerships. Thanks, everyone, for joining us this evening, and I'm sure we'll be talking soon. Have a good night. Operator: Thank you. And this concludes our conference. Thank you for participating, and you may now disconnect.
Operator: Greetings, and welcome to Longeveron 2025 Full Year Financial Results and Business Update. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host, Jenny Kobin. Thank you. You may begin. Unknown Executive: Good afternoon, everyone, and thank you for joining us today to review Longeveron's 2025 Full Year Financial Results and Business update. After the U.S. markets closed today, we issued a press release with the financial results for 2025, which can be found under the Investors section of the Longeveron website. On the call today are Stephen Willard, Chief Executive Officer; Joshua Hare here, Co-Founder, Chief Science Officer and Executive Chairman of the Board; Nataliya Agafonova, Chief Medical Officer; and Lisa Locklear, Chief Financial Officer. As a reminder, during this call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our press releases and risk factors discussed in the company's filings with the Securities and Exchange Commission, which we encourage you to review. Following the company's prepared remarks, we will open the call to questions from covering analysts. With that, let me hand the call over to Stephen Willard, CEO. Steve? Stephen Willard: Thank you, Jenny, and thank you all for joining us today. I am excited and honored to join Longeveron at this pivotal moment for the company. The strength of the company's stem cell science and success in multiple clinical trials across several indications positions Longeveron to be a leader in the stem cell field. Upon assuming the role of CEO, I have had an immediate focus on 3 critical areas: first, securing necessary financial resources and planning efficient capital allocation. I'm delighted to report, as you have hopefully seen from our prior press releases, that we have secured $15 million in new capital from, among others, what I believe are 2 of the premier fundamental institutional investors in biopharma, Coastland Capital, that's Matthew Perry; and Janus Henderson Investments. We also have the potential to close a second tranche of an additional $15 million upon meeting certain milestones. We are grateful for their investment, support and shared vision of advancing stem cell therapies for the benefit of patients and their families. The initial capital from the financing provides runway comfortably into the fourth quarter of 2026. Second, this capital enables us to complete and deliver the results of the ELPIS II, our anticipated pivotal Phase IIb study in HLHS and potentially, if supported by the data, begin preparation of the company's first BLA with the U.S. FDA. Enrollment of the clinical trial was completed in June of last year, and we remain on track for reporting results in the third quarter of this year. Third, strategic partnering. We plan to pursue a robust partnering strategy across all of our development programs to accelerate potential time to market, increase capital use efficiency and leverage the greater resources of larger organizations. For HLHS, we believe that the optimal timing to secure a potential BLA and commercialization partner will be following the readout of the ELPIS II clinical trial results in the third quarter of this year. For Alzheimer's disease, we plan to leverage the strength of our Phase II data and clarity on the clinical pathway to a potential BLA for Alzheimer's disease to engage with potential funding commercialization partners. For pediatric dilated cardiomyopathy or PDCM, we intend to execute a single pivotal Phase II registrational study under our active FDA IND, leveraging an efficient development strategy appropriate for a rare pediatric disease. If successful, this study could form the basis of a potential BLA submission pending FDA alignment. Upon successful completion, we intend to pursue strategic partnership opportunities to support regulatory approval and commercialization. Finally, and potentially very significantly, are our opportunities for Priority Review Vouchers or PRVs. Our HLHS program has been granted rare pediatric disease designation by the FDA, which makes it eligible to receive a PRV upon approval of a BLA. And the same opportunity may exist for our PDCM program to also be eligible for PRV. Companies can either use the PRV to secure a speedier FDA review of a future therapy or sell it to another company. Since August of 2024, vouchers have been sold for between $150 million and $205 million each. Securing one or more PRVs would obviously be a tremendous financial outcome for the company and shareholders. In our recent private placement, we agreed to pursue a sale of a PRV received for HLHS if granted and that the investors would be entitled to 50% of the proceeds received from the potential future sale of the HLHS PRV. It is an exciting time for laromestrocel, the patients we serve, Longeveron and our shareholders. With that, I will turn the call over to Dr. Agafonova, our Chief Medical Officer, to touch on the clinical development programs. Nataliya? Nataliya Agafonova: Thank you, Steve, and good afternoon, everyone. As Steve mentioned, our HLHS program is the primary focus for us with a near-term pathway to potential approval in an area of clear unmet medical need. The Phase IIb clinical trial, ELPIS II, evaluating the potential of laromestrocel to improve right ventricular function and long-term clinical outcomes in infants with HLHS is nearing completion. Enrollment of 40 patients was completed in June of last year. Top line results from the ELPIS II trial are anticipated in the third quarter of 2026. Based on FDA feedback received in August 2024, ELPIS II may be considered a pivotal study subject to the trial results, which could potentially accelerate the regulatory pathway for laromestrocel. If supported by the data, we plan to initiate preparation for a potential biologic license application, BLA. This would represent our first BLA submission and targets a serious pediatric condition with significant unmet medical need. Our laromestrocel program in HLHS is designed to improve cardiac function in these children with the goal of potentially improving long-term clinical outcomes. The earlier Phase I ELPIS I study established the safety and feasibility of laromestrocel administration and provided supportive clinical observations that informed the design of the ongoing pivotal ELPIS II trial. Due to its small size and single-arm design, ELPIS I was not intended to evaluate efficacy outcomes. We look forward to sharing the results of the ELPIS II clinical trial in the third quarter. Pediatric dilated cardiomyopathy is a rare pediatric cardiovascular disease in which the muscles in one of the more of the heart chambers become enlarged or stretched dilated with nearly 40% of children with PDCM required the heart transplant or dying within 2 years of diagnosis. Our investigational new drug IND application for laromestrocel as a potential treatment for PDCM became effective in July 2025. This IND allows unbased advancement directly into a single pivotal Phase II registrational clinical trial, reflecting the serious nature of this rare pediatric disease and the significant unmet medical need. We currently anticipate planning and preparation for the study in 2026 with potential initiation of the study in 2027. I will hand the call over to Lisa Locklear, our Chief Financial Officer. Lisa? Lisa Locklear: Thank you, Nataliya, and good afternoon, everyone. This afternoon, we issued a press release and filed our annual report on Form 10-K, both of which present our financial results in detail, so I will touch on some highlights. Revenues for the year ended December 31, 2025, were $1.2 million and consisted of $1 million of clinical trial revenue and $0.2 million of contract manufacturing revenue. Revenues for the year ended December 31, 2024, were $2.4 million and consisted of $1.4 million of clinical trial revenue, $0.5 million of contract manufacturing lease revenue and $0.5 million of contract manufacturing revenue. 2025 revenues decreased $1.2 million or 50% when compared to 2024 as a result of lower participant demand for our Bahamas registry trial and reduced demand for contract manufacturing services from our third-party clients. General and administrative expenses for the year ended December 31, 2025, increased to approximately $12 million compared to $10.3 million for the same period in 2024. The increase of approximately $1.8 million or 17% was primarily related to an increase in personnel and related costs in 2025 as we increased headcount year-over-year and a onetime accrued severance cost for our former CEO. Research and development expenses for the year ended December 31, 2025, increased to approximately $12 million from $8.1 million for the same period in 2024. This increase of $3.9 million or 48% was primarily driven by a $2.2 million increase in personnel and related costs, including equity-based compensation, 1.4 million increase in CMC costs associated with technology transfer, including nonclinical manufacturing batches that advance our readiness for future commercial production as part of our BLA-enabling efforts and $0.2 million increase in amortization expense related to patent costs. Our net loss increased to approximately $22.7 million for the year ended December 31, 2025, from a net loss of $16 million for the same period in 2024. The increase in the net loss of $6.7 million or 41% was for the reasons outlined previously. Our cash and cash equivalents as of December 31, 2025, were $4.7 million with approximately $1.4 million in working capital. On March 11, we completed a private placement that raised gross proceeds of approximately $15.9 million. We're delighted to welcome Coastland Capital and Janus Henderson investors as key shareholders. As a result of the financing, we currently anticipate our existing cash and cash equivalents will enable us to fund operating expenses and capital expenditure requirements into the fourth quarter of 2026 based on our current operating budget and cash flow forecast. I will now hand the call over to Josh Hare, our Founder and Chief Science Officer. Josh? Joshua Hare: Thank you, Lisa. Good afternoon, everyone. As you've heard from the previous speakers, we believe we are on the cusp of pivotal data in HLHS which, if positive, would be an important step in our mission to help patients and families through the application of stem cell research. This important milestone for Longeveron reflects not only the continued advancement of laromestrocel, but also the significant progress occurring across the broader field of stem cell research, clinical application and commercialization. In recent years, we've seen increasing validation of cell therapy's role in regenerative medicine and its potential to address a wide range of serious conditions, reinforcing the promise of this rapidly evolving area of medicine. We believe these advances are helping to establish cell therapy as a potentially transformative approach for treating serious diseases with significant unmet medical need. Longeveron has been an active participation -- an active participant in this evolution. with multiple clinical stage programs, publications of clinical trial results in premier journals such as Nature Medicine and Cell stem cell and multiple stem cell therapy patents issued globally. The potential for stem cell therapies to address large and underserved patients -- underserved patient populations represent a significant opportunity, and we remain focused on executing our clinical, regulatory and strategic priorities to unlock the value of our platform. I will now turn the call back to Stephen. Stephen Willard: Thank you, Josh. The anticipated near-term pivotal clinical data for HLHS, the strengthening of our balance sheet, the support of high-quality fundamental investors and possibly our first BLA submission as well as potential partnerships across our development programs make this an extraordinarily exciting time for Longeveron. We deeply appreciate the support of all of our stakeholders and look forward to continuing collaboration and progress in the future. Operator, we would now like to open the call for questions from our covering analysts. Operator: [Operator Instructions] Our first question comes from Ram Selvaraju with H.C. Wainwright. Raghuram Selvaraju: Congratulations on all the recent progress, very exciting. I wanted to ask about the commercial perspectives as these pertain to scaled up manufacturing and CMC for laromestrocel were it to be approved in the HLHS indication? And also wanted to see if you could just enumerate for us again which potential areas of inquiry for laromestrocel could conceivably be eligible for PRVs in the future beyond HLHS? Stephen Willard: Sure. This is Steve. I'll take the second question. We could have a separate PRB for PDCM. In fact, we'll be seeking that very shortly. So there are 2 different PRVs that one of which has -- we sold half of to our investors and the other half is for us. And then the PDCM is entirely for us. With regard to the manufacturing in CMC, that is a priority for us going forward. It's a priority for us this year. We've made incredible strides with regard to it so far. We are engaged in a CDMO who will be able to do the manufacturing for us going forward, and it will free up our own laboratory space for other projects. Do you have a follow-on question, Ram? Raghuram Selvaraju: Yes. With respect to indications like, for example, Alzheimer's disease and age-related frailty, what potential nondilutive sources of capital to fund those initiatives? Could you access beyond the PRVs that you just enumerated? Stephen Willard: Great question. And the answer is it's going to be a real priority for us to seek licensing partners for both Alzheimer's disease and for age-related frailty. We've already got some preliminary conversations set up. I have a background in licensing. I ran a company called Flamel Technologies, ticker symbol FLML based in Lyon, France, and we had partnerships with 24 of the world's largest pharmaceutical companies. I have a pretty active Rolodex and Alzheimer's disease is a very attractive possibility for us now. and age-relating frailty, we have a wonderful paper in cell stem cell that just came out. I recommend it to you highly. And we already had incoming interest with regard to licensing that technology. So those 2 things will be on the priority list for 2026. Operator: Our next question comes from Boobalan Patheon with ROTH Capital Partners. Boobalan Pachaiyappan: Of course, congratulations on your new role. So firstly, with respect to the HLHS program, assuming the data is positive in 3 quarter -- third quarter '26, how sooner you can file for BLA for the HLHS program? And also, if you can provide some granularity in terms of whether you'll be filing your BLA on a rolling basis and also if you're expecting a priority review? Stephen Willard: Thank you very much for those questions. Josh, would you care to answer with regard to the various attractive things that have granted to us by the FDA with regard to HLHS? Joshua Hare: Yes. Thank you, Steve. Boobalan, thank you for the question. Yes, we are potentially eligible for rolling submission, which we would take advantage of if allowed by the FDA. At this stage, our next big milestone is, of course, the data readout, which will then trigger an end-of-phase meeting with the FDA to help determine the speed and timing of the application process because we have the rare pediatric disease designation, we are eligible for the rolling submission. And I believe we're also eligible for priority review based on the designations that we have. So of course, data permitting, our objective would be to initiate that regulatory process as quickly as possible and as allowed by the FDA. Perhaps I might also ask Nataliya to comment on that since she's so involved in that process. Nataliya Agafonova: Thank you so much, Josh, and thank you, Boobalan, for your question. So assuming the data are positive in third quarter of 2026, definitely, we would like to take advantage of following submission. And as you know, it's not only the readiness of clinical data and all the modules related to clinical data is also CMC, but we are going to take all the advantage and targeting BLA submission sometime in 2027. Boobalan Pachaiyappan: Okay. That's really helpful. And then in terms of PRV because that has been mentioned many times in today's call. So obviously, the most recent PRV was sold for a very high price of $205 million. This is from Fortress Biotech, right? But at the same time, we have a new sunset date for the PRV, which is September 2029, which is a little more than 3 years from today. So because the sunset date is a little far, do you expect any challenges in terms of monetizing PRV for a heavy premium given this new sunset date? Just curious. Stephen Willard: That's a great question. It's hard to predict out that part, but I don't I think prices immediately prior to that $205 million was a $2 million, $200 million from Jazz Pharmaceuticals. So the last 2 have been in the $200 million range. I would expect prices I would expect prices to remain strong for these as we approach 2029. Boobalan Pachaiyappan: All right. And then with respect to PDCM, pediatric dilated cardiomyopathy program, can you provide some context in terms of what would be the next step in this program? How sooner you can start your clinical study? I know your IND has been sort of cleared. So maybe provide some context in terms of the time line design and potential endpoints you could possibly explore? And also, I'm trying to understand what is the unmet need you're trying to address here with laromestrocel? Is it something that patients who would be treated with laromestrocel not seek the heart transplantation? Or is this an ambitious goal? Stephen Willard: Nataliya, would you care to respond to that? Nataliya Agafonova: Sure, absolutely. So Boobalan, on your first question about the timing of the PDCM, our goal was to initiate the trial this year. And due to finding, we were not able to achieve this. However, it's also a priority. And we are able to do feasibility assessment sometime this year and hopefully initiate the trial and open the -- start opening sites sometime in 2027. So -- as far as the -- go ahead. Boobalan Pachaiyappan: No, no, go ahead, sorry. Nataliya Agafonova: Yes. And the -- you asked also about -- can you remind me, you asked about timing and then... Boobalan Pachaiyappan: Design, sample size and also is the goal here to have patients not to seek transplantation? Nataliya Agafonova: Absolutely. So we are planning to use Hierarchical Composite Endpoint similar to the HLHS. And we include listings for transplant because the left ventricle is silent. So we would like to see less heart transplant and hospitalization. Those are very standard approach for heart failure patients, and we are utilizing that. FDA did accept that as a primary endpoint with a few comments, which we are going to do and address as a protocol amendment once they are ready to initiate the trial. And we are planning a 1-year study every 3 month administration with laromestrocel. And hopefully -- so the number of patients is 70 patients. And our goal was to do the trial globally, not just to U.S., but in all geographic area. But as I mentioned, we are planning to do feasibility this year, which is going to show us the high enrolling sites and the best geographic areas, et cetera. So hopefully, sometimes in our next call, we can give you an update on that. Stephen Willard: Josh, do you have any comments on that? Joshua Hare: Yes. Thank you, Steve. Yes, vis-a-vis the potential clinical outcome, laromestrocel in this population, we're very enthusiastic about the possibility for actually a meaningful disease modification effect here. This condition of dilated cardiomyopathy is something that affects both adults and children. In children, the clinical burden is much more severe than adults. It affects younger kids and the younger they are affected, more likely they are to have a poor outcome. So the death or transplant rate is extremely high in children in the first few years of life. And this is because it's a progressive illness. We don't have any disease -- we don't have any treatment modality to actually cure it, and it's treated with medications that are palliative medications. Laromestrocel has the potential to actually cure or reverse the disease. And evidence for that does come from studies done in the academic setting in adults that you can actually see a complete reversal and remission from the disease. So of course, we will only know that once the trial is done, but there is a reason -- there is some reasonable expectation here that the effect could be very substantial and could potentially be curative in these kids and prevent the need for heart transplant, not by prolonging the need for transplant potentially, but by actually completely reversing the need for it. So that at this point is a hypothesis. We can't say that, that is definitely going to happen, but the trial as designed will detect the ability to have the complete reversal of the disease and therefore, be one of the first true disease-modifying treatments for this condition. Stephen Willard: That's wonderful. Boobalan Pachaiyappan: Yes, maybe one last question, sorry. So obviously, you recently received a patent about Laro's used in sexual dysfunction in females. So this is a pretty interesting program. I'm trying to understand what's your strategy here? Is it -- do you envision this more of a partnered program rather than developing on your own? And also, do you expect this drug in this indication to be a short-term therapy or a long-term therapy? Stephen Willard: Josh, you take that one as well, please. Joshua Hare: Yes. Thank you. That's another great question. Yes. The finding of the improvement of female sexual dysfunction arose from our aging frailty work. And so this is an issue and the patent is related to older female individuals. This is a very important unmet need in this population as well. And there's a tremendous amount of interest in women's health in general that's emerging. It's particularly highlighted by the recent FDA decision to remove the black box warning on postmenopausal estrogen. And so I think we see a new era of focus on women's health in women in postmenopausal women. There's also the recognition in the field that sexual performance and sexual function at that stage of life is incredibly important for health and quality of life. And so we do see a big clinical need here and a physician community that's now very focused on this particular matter. In terms of development, I think this would be an indication that would be ripe for partnership as opposed to us going it alone. There would clearly be another study that would need to be done and a formal regulatory pathway with the FDA established. So in short, I do see this as addressing a very high unmet need and something that would be ripe for a partnership opportunity. Operator: We have reached the end of the question-and-answer session. I'd now like to turn the call back to Stephen Willard for closing comments. Stephen Willard: Thank you, operator, and thank you all for attending today's call. We greatly appreciate your interest and support and look forward to updating you on our continued progress. Thank you once again. Operator, you may end the call. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good afternoon. And welcome to the HealthEquity, Inc. Fourth Quarter and Full Year 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please note this event is being recorded. I would now like to turn the conference over to Richard Putnam. Please go ahead. Richard Putnam: Thank you, Gary. Hello, everyone. Thank you for joining us this afternoon. This is HealthEquity, Inc.'s fourth quarter fiscal 2026 earnings conference call. My name is Richard Putnam. I do Investor Relations for HealthEquity, Inc. Joining me today are Scott Cutler, President and CEO, Dr. Steve Neeleman, Vice Chair and Founder of the company, and James Lucania, Executive Vice President and CFO. Before I turn the call over to Scott for our prepared remarks, we note that the press release announcing our fourth quarter financial results was issued after the market closed this afternoon, and that it includes certain non-GAAP financial measures that we will reference here today. You can find a copy of today's press release, including reconciliations of these non-GAAP measures with comparable GAAP measures, on our Investor Relations website, which is ir.healthequity.com. Our comments and responses to your questions reflect management's view as of today, March 17, 2026, and they will contain forward-looking statements as defined by the SEC, including predictions, expectations, estimates, or other information that might be considered forward-looking. There are many important factors relating to our business which could affect our results. Forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from results from statements made here today. We caution against placing undue reliance on these forward-looking statements, and we encourage you to review the discussion of these factors and other risks that may affect our future results or the market price of our stock as detailed in our latest annual report on Form 10-K, which was filed just today, and subsequent periodic reports filed with the SEC. We assume no obligation to revise or update these forward-looking statements in light of new information or future events. With that out of the way, let's go to Scott. Scott Cutler: Thanks, Richard, and we welcome everybody for joining us today. I'll begin with our fiscal 2026 results and the strategic progress positioning us for fiscal 2027, Steve will address the regulatory environment, and Jim will walk through our financials and raised fiscal 2027 outlook. Fiscal 2026 was a year of accelerating earnings power for HealthEquity, Inc. as we delivered strong execution, significant margin expansion, and record HSA sales. We are proud of the team's execution and the progress we are making building this platform for the long term. In the fourth quarter, we delivered 23% adjusted EBITDA growth and more than 500 basis points of adjusted EBITDA margin expansion while adding a record 550,000 HSAs, resulting in more than 1,000,000 new HSAs from sales for the year, bringing total accounts to 17,800,000 and HSA assets to more than $36,000,000,000. Revenue grew 7% year over year and net income increased 89% to $49,700,000. Non-GAAP net income increased 33% and non-GAAP net income per diluted share grew 38% reflecting meaningful margin expansion. What you see in these results is the operating leverage inherent in the HealthEquity, Inc. platform as assets, engagement, and automation scale. We also returned more than $300,000,000 to our shareholders through our share repurchase program in fiscal 2026, reducing diluted shares outstanding by approximately 3%. At the center of our strategy is a flywheel helping members save, spend, and invest for healthcare. As engagement deepens across each dimension, the model becomes more valuable and more efficient. Greater engagement drives spending, balances, and long-term earnings power. We advanced each component in fiscal 2026. On save, total HSA assets increased 14% to more than $36,000,000,000, reinforcing the long-term value embedded in the platform. Importantly, asset growth continues to outpace account growth, reflecting higher balances per member and deeper engagement. On spend, we expanded the way members can use their HSAs by launching our market. Beyond HSAs, our platform also supports flexible spending accounts and commuter benefits, giving employers a single destination to administer the full spectrum of consumer-directed benefits. And on the invest component, HSA investors grew 10% year over year and invested assets now represent more than 50% of total HSA assets. Importantly, about 95% of HSA members still do not reach contribution limits and over 90% have not yet invested, creating significant opportunity for engagement-driven growth. Member engagement increasingly happens through our mobile platform. We now have more than 3,600,000 downloads of our app, reflecting the growing adoption of digital-first healthcare. That shift will only accelerate as younger consumers enter the system expecting to manage healthcare and finances digitally. Another advantage that becomes clear over time is the compounding value of our member cohorts. Each year we add new HSA members who grow balances, increase engagement, and become more valuable as their accounts mature. Some of the most valuable accounts on our platform today are those open more than a decade ago. The scale of our distribution is reflected in one simple fact. We added over 1,000,000 new HSAs from sales a year when the U.S. economy added just 181,000 jobs. That is a powerful reflection of the demand for 200 network partners and over 100,000 clients supported by a member-first secure mobile experience. Built over years, that advantage compounds as accounts mature and HSA assets grow, resulting in increased revenue and cash flow for us, which in turn funds our continued investment in innovation, security, and AI. We are also expanding HSA distribution into a large new retail healthcare channel. Our direct HSA enrollment platform expands access beyond employer-sponsored plans, enabling individuals to open and fund HSAs through our mobile and web experience. That is especially relevant for consumers selecting bronze plans on ACA exchanges, where we see a meaningful new retail distribution opportunity. As millions of households evaluate coverage options, our retail capabilities position us to capture incremental adoption. More broadly, healthcare affordability pressures continue to drive adoption of consumer-directed healthcare. As we previously shared, a third-party study across nearly 1,000,000 employees from several of our largest employer clients found that higher HSA adoption correlated with significantly lower per-employee healthcare costs while employees save more on premiums and taxes and grew their HSA balances. HSAs are becoming core infrastructure for how Americans plan and pay for healthcare. With that structural tailwind, trust remains foundational. On security, we continue to make measurable progress. In the fourth quarter, fraud reimbursements totaled approximately $300,000, putting our exit rate run rate at 0.1 basis points for the quarter, well below our target of one basis point of total HSA assets annually. Our team executed the highest performance level, reducing fraud cost to approximately 1.1 basis points during the fiscal year, placing HealthEquity, Inc. in the top percentile among comparable portfolios in the Visa network. We have also made meaningful progress improving card authorization performance, directly improving the member experience at checkout. Importantly, we are strengthening account protection while simplifying the member experience. Early-stage fraud detection has improved, false positives have declined, and authorization rates continue to strengthen. At the same time, passkey authentication is eliminating traditional passwords, enhancing security while simplifying account access, protecting members while preserving interchange economics. In a category where trust is everything, we are proving security and seamless experience can scale together. With that foundation in place, we have begun building the next-generation healthcare financial operating system, and AI is central to that evolution. AI will enable us to move from a phone- and manual-based service experience to a place where members are guided to resolve issues in real time across multiple channels. With 17,800,000 accounts and more than $36,000,000,000 in assets, we have the data density, transaction velocity, and integration footprint to deploy AI tools for our members responsibly. With millions of members and a growing flow of healthcare spending moving through the platform, our data scale enables AI applications that smaller platforms cannot easily replicate. AI will allow us to scale member engagement while lowering the cost to serve across the platform. We are embedding AI in three ways. First, elevating the member experience. As mentioned previously, our expedited claims solution has begun delivering faster reimbursements to members. HSA Answers and HealthEquity Assist are evolving into intelligent contextual support tools that guide members from voice to agentic chat and digital channels. Second, driving operational efficiency. We are already seeing impact as AI-driven automation reduces service costs while improving resolution speed. Over time, we expect AI-enabled self-service to help members resolve more needs directly within defined workflows, reducing reliance on live service interactions. Third, unlocking personalization at scale. Over time, we expect members to be able to use our AI applications to optimize contributions, identify tax savings opportunities, and make more informed spending and investing decisions. AI is becoming an earnings engine for HealthEquity, Inc., improving member experience while helping lower costs to serve and increase lifetime value per account over time. Additionally, that same intelligence will continue to extend beyond service to how members discover and access healthcare programs and products. That growing flow of healthcare spending creates an opportunity to help members discover and access services directly through our platform. Across the entire industry, Americans spent more than $40,000,000,000 from HSA accounts last year on qualified healthcare. More importantly, they more than replenished those funds by contributing more than $55,000,000,000, growing their HSA balances. As more healthcare spending moves through the platform, we see additional opportunities to bring more value to our members over time. In the fourth quarter, we launched our marketplace with early offerings focused on weight-loss programs, hormone replacement therapy, and healthcare wearables. Globally, these categories are experiencing rapid consumer adoption with an estimated total market spend of more than $100,000,000,000. Over time, we expect to expand our marketplace with additional products, programs, services, and partners. Our marketplace expands engagement inside the HSA while introducing new recurring revenue streams and increasing the share of healthcare spend flowing through our platform. Early adoption has been encouraging. We see strong initial retention rates among participating members. We are also seeing an increasing number of merchants highlighting HSA and FSA eligibility at checkout as a way to increase conversion and drive sales, reinforcing the growing role of tax-advantaged healthcare spending. All of this reinforces the operating leverage visible in our results. We enter fiscal 2027 as a three-year member of the exclusive Rule of 50 club. Members of this exclusive club deliver the sum of revenue growth and adjusted EBITDA margin in excess of 50. This is a designation typically associated with category-leading companies, and it is even more rare to see them sustained for longer periods of time. Based on guidance that Jim will provide in detail in a moment, we intend to make it four years in a row. That is the power of this model. As engagement, assets, and automation scale, earnings scale with them. As more Americans save, spend, and invest through HSAs, our flywheel strengthens. Accounts grow, assets deepen, engagement expands, and operating leverage follows. As we scale distribution, growing assets, expanding engagement, and an AI-enabled platform, HealthEquity, Inc. is building the financial infrastructure for how Americans will pay for healthcare. With that, I will turn it over to Steve to walk through the policy landscape. Steve? Steve Neeleman: Thank you, Scott. The policy environment for HSAs is the most constructive it has been in two decades. We believe we are at a genuine inflection point with healthcare affordability at the center of the conversation. Last year's Working Families Tax Cut Act, also known as the one big beautiful bill, expanded HSA eligibility to Americans selecting bronze plans offered on ACA exchanges. This law is the most significant structural change to the HSA market since the accounts were created. For the first time, millions of households purchasing coverage through the exchanges compare their plans with an HSA and access the same triple tax advantages that employer-sponsored participants have long benefited. This is a meaningful democratization of a tool that has historically skewed towards employer-covered workers. We continue to work closely with our health plan partners to simplify the process to enroll bronze plan members into HSAs. Beyond the ACA exchange expansion, we are encouraged by the broader legislative momentum. The current administration has put forth a healthcare proposal that includes HSAs as a core component, and several members of Congress have introduced legislation aimed at further expanding HSA eligibility. We are actively engaged with policymakers on both sides of the aisle to share what we see in the real world, how HSAs reduce per-employee healthcare costs, grow member savings, and give families genuine control over their healthcare spending. With HSAs, employers do not need to choose between saving money on benefits and ensuring healthcare financial security for their employees, they can have both. HealthEquity, Inc.'s scale and close partnerships position us well to convert this policy momentum into growth. When legislative changes create new eligible populations, our more than 200 network partners and 100,000 clients allow us to move quickly, educating and enrolling newly eligible members and helping them realize the full financial benefit of HSAs. Importantly, our strategy does not depend on any single legislative outcome. The secular trends towards consumer-directed healthcare are well underway across employers, retail consumers, and policymakers. Policy tailwinds accelerate that trend. I believe these efforts, along with our strategy, bring us closer to realizing the original mission we have for HealthEquity, Inc., to save and improve lives by empowering healthcare consumers. Now I will turn it over to Jim to discuss the financials. Jim? James Lucania: Thanks, Steve. I will review our fourth quarter and full year fiscal 2026 GAAP and non-GAAP financial results. A reconciliation of the GAAP to non-GAAP measures is included in today's press release. Starting with the fourth quarter, revenue increased 7% year over year to $334,600,000. Service revenue grew 2% year over year to $127,100,000. Custodial revenue increased 12% to $161,400,000, and the annualized yield on HSA cash was 3.57% for the quarter, reflecting high replacement rates and a continued mix shift of HSA cash toward enhanced rates. We ended the year with 58% of HSA cash in enhanced rates contracts. Interchange revenue grew 6% to $46,100,000, outpacing our 4% total account growth. Gross profit was $228,100,000, resulting in 68% gross margin, up from 61% in the fourth quarter last year, an expansion of more than 700 basis points. This reflects reduced fraud costs and continued service efficiency, as Scott detailed earlier. Service costs declined $17,000,000 year over year as fraud reimbursements totaled just $300,000 in the fourth quarter. As Scott mentioned, our investments in security and AI service technologies, our member-first secure mobile experience is delivering greater functionality and member satisfaction at a lower cost to serve. Net income for the fourth quarter was $49,700,000, or $0.58 per share, up 93% compared to the fourth quarter last year. Net income margin was 15%. Non-GAAP net income increased 33% to $81,800,000, and non-GAAP net income per share grew 38% to $0.95. Adjusted EBITDA was $132,900,000, up 23% compared to the fourth quarter last year. Adjusted EBITDA margin expanded over 500 basis points to 40% in the fourth quarter. Turning to the balance sheet, as of 01/31/2026, cash on hand was $319,000,000, as we generated $457,000,000 of cash flow from operations in fiscal 2026. Debt outstanding was approximately $957,000,000 net of issuance costs, after paying down another $25,000,000 of the revolver during the quarter. We repurchased approximately $82,000,000 of our outstanding shares during the quarter and over $300,000,000 during fiscal 2026. We have approximately $178,000,000 remaining on our previously announced share repurchase authorization. Our capital allocation priorities remain consistent: invest in organic growth, maintain optimal balance sheet flexibility to pursue industry consolidation opportunities, and return capital to shareholders. For fiscal 2026, we exceeded our guidance. Revenue was $1,313,000,000, up 9.5% compared to last year. GAAP net income was $215,200,000, or $2.46 per diluted share, with a net income margin at 16%. Non-GAAP net income was $349,800,000, or $4.00 per diluted share. Adjusted EBITDA was $566,000,000, up 20% from the previous year, representing a 43% adjusted EBITDA margin for the fiscal year. Before I detail our raised guidance and assumptions, let me update you on the interest rate forward contracts we discussed on prior calls. The first of these forward rate locks matured in connection with expiring basic rates contracts during the fourth quarter and allowed us to place funds in our enhanced rates program at above-market rates. We expect the remaining interest rate forward contracts, and additional contracts that we may enter, to further de-risk potential interest rate volatility on future HSA cash deposit contracts that flow into our enhanced rates program. At the end of the quarter, we had forward contracts on U.S. Treasury bonds in a notional amount of approximately $2,400,000,000 tied to contract maturities between March 2026 and January 2028, and a blended rate lock of 3.92%, not including the negotiated premium that we receive above the five-year Treasury benchmark on our enhanced rates placements. We expect to execute additional forward interest rate hedges depending on market conditions. We ended fiscal 2026 with an average yield of 3.53% on HSA cash assets and expect the average yield on HSA cash will be approximately 3.8% for fiscal 2027. Our custodial yield assumptions take into account forward hedges for the maturing contracts in fiscal 2027, and the projected HSA cash deployments, which are detailed in today's release. We also consider a range of forward-looking market indicators, including the secured overnight financing rate and mid-duration Treasury forward curves. These indicators are, of course, subject to change and are not perfect predictors of future market conditions, but they provide a consistent framework for how we set our outlook. Given our momentum in new account sales and assets, we are raising our guidance for fiscal 2027. This increase reflects strong execution to date and increased visibility into our fiscal 2027 trajectory. We now expect revenue between $1,405,000,000 and $1,415,000,000. GAAP net income is expected to be between $239,000,000 to $246,000,000, or $2.78 to $2.85 per share. We expect non-GAAP net income to be between $392,000,000 and $400,000,000, or $4.56 to $4.65 per share, based upon an estimated 86,000,000 shares outstanding for the year. Finally, we expect adjusted EBITDA to be between $618,000,000 and $628,000,000. We are pleased with how we exited fiscal 2026 and expect to make additional progress on growth and margin expansion in fiscal 2027. Our outlook reflects continued revenue growth, sustained margin expansion, and disciplined investment in technology, security, and sales and marketing. Our guidance also assumes continued capital return and a strong balance sheet. We expect to make additional share repurchases under the remaining $178,000,000 repurchase authorization and may further reduce borrowings on our revolver during fiscal 2027. With continued strong cash flows and available revolver capacity, we will maintain ample flexibility for portfolio acquisitions should attractive opportunities arise. Our guidance assumes GAAP and non-GAAP income tax rates of 25% and a diluted share count of 86,000,000, including common share equivalents. As in prior periods, our fiscal 2027 guidance includes a reconciliation of GAAP to the non-GAAP metrics, and a definition of all non-GAAP metrics can be found in today's earnings release. While we exclude the amortization of acquired intangible assets from non-GAAP net income, revenue generated from those acquired intangible assets is included. As a reminder, we plan to provide fiscal 2028 guidance following fiscal year 2027. Operator, please open the line for questions. Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Our first question today is from Mark Marcon with Baird. Please go ahead. Mark Marcon: Hey, good afternoon. Congratulations on the strong quarter and the raised guidance. I wanted to ask two questions. One, I thought the gross margin expansion was very impressive. If we strip out the fraud costs and adjust for that in the year ago, you still ended up having significant gross margin expansion despite the fact that you ended up having a lot of implementations in the fourth quarter. And you only have 3.7 or 3,600,000 downloads out of the 10.6 that you potentially could have. So I am wondering, how should we think about the gross margin potential going forward, particularly as you continue to roll out the AI initiatives and get more and more of the account holders to download the app and streamline their interactions. Scott Cutler: Is that your was that your one question? Mark Marcon: You said you had two. That is one, and then there is another. Scott Cutler: Oh, okay. I see a follow-up. Yeah. So on the gross margin expansion, look, we are incredibly proud of the work, obviously, that we did in driving down fraud costs, reflected in tremendous progress there. We are at or below our target run rate there. I think the other thing you are highlighting is also the progress that we have made on the service cost per account, and we are driving those operational efficiencies through technology changes, use of AI, automating many of the manual and phone-based interactions that we have today, while also improving service. We know that we are at the very beginning of our journey on AI, Mark, as we have talked about, but our team is maniacally focused on delivering a consistent end-to-end experience for our members and to be able to do that more efficiently. So I really think that we have got tremendous opportunities to continue to drive that gross margin expansion with a particular focus on the way that we deliver our service. And again, when we think about the opportunities there, it is obviously in how we serve our members, but it is also in a lot of the processes that we have with clients. And that is not something that we focused on as much last year, and it is going to be a big area for us, just to be more efficient in terms of how we work with new clients, how we onboard new members that are coming in through our client relationships. And, again, I expect us to make meaningful progress again this year on that. Mark Marcon: That is great. And just a quick follow-up. It is early in terms of expanding the platform in terms of having curated, whether it is weight loss or hormone or devices. But what are you seeing in terms of the level of engagement with the early users that have started to procure some of the services through the platform? What has the engagement gone up like? And what are you seeing in terms of the cash that they are actually putting into the system as they reenrolled? Scott Cutler: So we are still very early in that. And we have only got really three programs in weight loss and in hormone replacement and then in the wearables category. The metrics that we are going to be driving obviously starts with just engagement on the mobile platform. I do not think I answered your question on mobile, but driving our members into the mobile experience, we think, is a place where they start engagement. And then we want to be able to provide seamless opportunities where they are spending money on the programs that make sense and make sense for us to be able to introduce on it. And so what we are looking at is really members that sign up for those programs. If it is a program that persists over a longer period of time, for example, in weight loss, we want to make sure that they stay in that program, they choose to stay in that program, and you will be looking at traditional metrics like churn. We have been really pleased with the number of members that have signed up in those programs, the number of members that have stayed in those programs. And, again, we have only got a couple of months of cohorts to look at that, but we are very pleased with that progress. And then over time we are going to be introducing again other programs, other partners, other services. And again, the limited programs that we have today represent, as I said in my prepared comments, a market opportunity of over $100,000,000,000 of spend on things that consumers are already spending those dollars on. So we are very optimistic about the progress that we are seeing. And again, as you think about that relative to the guide that we have given, we have not incorporated a material marketplace revenue in our guide for this next year. So if we perform and if that performs well, we would hope for that to become a material part of our revenue going forward. Thanks, Mark. Operator: The next question is from Stan Berenshteyn with Wells Fargo. Please go ahead. Stan Berenshteyn: Hi, thanks so much. A couple of questions. First, maybe I missed this. I had some issues logging in. But do you have any comments related to the conversion you are getting out of the ACA cohort? If you can comment on that and what the cadence there is. Scott Cutler: Yeah, so I will talk about it and Steve can talk about how that is evolving. You know, as we said from the very beginning, this represents about a 10% expansion to the overall market in terms of potential accounts that could be added. We have said that those accounts will come over time. We really only started to see those accounts come in starting in January, associated with that enrollment season. Again, these are going to come into the market differently than associated with an employer, meaning that we will be looking to our plan partners to be able to go to market efficiently like we do, and it is also opened up via a retail one-to-one offering. We have the most attractive match for members that are signing up through that retail channel. We want to encourage them to do that, and we still see significant opportunity ahead because we are just very early stages of those that are moving to bronze plans for one, which we are seeing momentum there. And then two, just the awareness that historically these plans have not been tied or associated with qualification for an HSA and that member needs to be able to know that they are eligible. And so again, going at that with our plan partners is the way we are going to go about it. Again, we saw really great progress again in January with respect to how those are coming in. Steve, would you add to that? Steve Neeleman: I think you captured most of it. Stan, we are in early innings. As you know, the law was not signed until July 4, and at that point all the plans had been filed. And so then they were already named. It was really hard to find out when people ended up on the exchanges in November, December, January if they were even HSA qualified. Obviously, we have a head start on that now. So the goal, like I pointed out, is just make it really simple. One of the first things HealthEquity, Inc. did when we came out as a company was to make it easy for people in the employed markets to enroll in HSAs. I mean, most of our competitors are way behind us. You would have to go sign up for the high-deductible plan with your employer, then your employer would say, now go find yourself a HSA provider, and it was non-integrated. So we became the leader in the HSA space by integrating the benefits that you get from your employer. And, of course, our competitors followed suit, and that is not that much of innovation. We are seeking to do the same kind of stuff in the exchange markets where if somebody enrolls in a bronze plan it will be super simple. It will be integrated, get the account open, and then the key is that we have that relationship with that member to start helping them understand how to optimize that account. Fund it, spend through the account, use the marketplace, things like that. Early innings, but we are encouraged, and now at least we have a little bit of a running head start because the law did not pass after the plans were filed, if that makes sense. Stan Berenshteyn: That is helpful. And then a quick one here for Jim just to give him some airtime as well. Just big picture, I know you mentioned Rule of 50. You have another tailwind from asset research that is going to impact next year presumably. You have a lot of cash that you are going to be generating. What are your plans in terms of investing in the business? And do they change as you think about having that tailwind pretty much sunset after next year? Thanks. James Lucania: Yeah. No. I mean, I think as we sort of highlighted, right, there is no real change in our capital allocation philosophy. You are effectively seeing us using our free cash flow both to repurchase shares and to chip away at the line of credit we borrowed for the BenefitWallet deal. So no real change there. And you are right. We have got $4-plus billion that is going to reprice this year. Agreed, not as much influential on this year's potential growth than it will be for next year. But we fund the business first, and then with what is left is what we are repurchasing shares with and chipping away at the debt with what is left. Stan Berenshteyn: Right. Thank you. Operator: The next question is from George Hill with Deutsche Bank. Please go ahead. Max Young: Yes. Hi. It is Max Young for George. Thanks for taking the question. Could you talk about are there any early trends showing that members are reallocating HSA dollars toward GLP-1 marketplace offerings? And how might that influence custodial revenue and asset allocation behavior over time? Thanks. Scott Cutler: Thanks, Max. Yeah. So the early trends, again, we launched it in Q4. We have got three programs. We have had a significant number of our members sign up to those programs. As I said, it is going to be important that they sign up, they continue to stay in those programs, and that we expand the marketplace offerings over time. And so it is not just GLP or weight-loss programs, HRT and wearables. And so like I said, we are going to be driving that to become a material part of our revenue that will show up in service revenue, again over time. And what we see as our opportunity is that we are really connecting those dollars that are already being spent out of HSAs on these types of programs, bringing it into the platform experience. And the other trend that we are really excited about, and this is why we believe so strongly in the spend flywheel, is the behavior that we see is that when people spend on marketplace and when they spend dollars, they contribute those dollars and more. So they end up becoming larger savers, which is also an economic flywheel. We know also, and we have made great progress about moving from savers to spenders to also investors. An investor actually spends and saves more. So moving our members through that continuum is really important to driving what has always been a flywheel to the business. So the early trends are very positive. And, again, we expect that program to expand over time. Thanks, Max. Operator: The next question is from Steven Valiquette with Mizuho Securities. Please go ahead. Steven Valiquette: Thanks. Good afternoon, everybody. Just a quick question really on the macro and the unemployment trends and how you are sort of thinking about that in the guidance for fiscal 2027 that you just provided. Just any color in your thoughts and how you have factored that in would be helpful. Thanks. Scott Cutler: Yeah, certainly we observed the macro last year, 181,000 jobs created in the United States. I think what we see out in the market, and again against that backdrop, we delivered record HSA sales. That is represented by an affordability challenge for healthcare for employers, which is to say that the cost of benefits that employers are providing are growing much faster than wages. And so the thing that we are doing with our employers is giving them data and information and products to help them drive greater adoption, greater contribution, and if they follow those recommendations, they can reduce their cost per employee per year significantly in the thousands of dollars. And so healthcare affordability is driving growth in the market maybe more so than the macro headwinds. The other thing that drives this as well is essentially how Americans are feeling and are concerned about healthcare. So healthcare affordability for most Americans is the central issue as well, which again drives towards greater adoption of HSAs as a mechanism to be prepared financially for their future health. We do not see the macro environment changing. We think it is going to continue into this year. We think the other counteracting forces there around healthcare affordability and driving greater adoption are things like we have seen this year that have enabled us to be able to drive significant performance in the business despite that weaker macro backdrop. Steven Valiquette: Okay. Got it. Thanks. Scott Cutler: Thanks, Steven. Operator: The next question is from Brian Tanquilut with Jefferies. Please go ahead. Cameron (for Brian Tanquilut): Hi, this is Cameron on for Brian. I guess my question was when you are thinking about organic or engagement-driven growth, how are you thinking about that going forward and kind of that employment environment you were talking about? Scott Cutler: Yeah. So this kind of builds on Mark's question at the very beginning. Driving engagement is really important to driving the flywheel of save, spend, invest. We will actually measure engagement by how often people are engaging on the platform. It starts principally with the mobile device and the app. And so as you can see in the numbers that we put up this year, we have been driving several million downloads of our app. That is step one. Step two is we observe monthly active users of that app. That goes into just the quality of the overall app experience. Is it engaging? Is there a reason to come back? Marketplace is one of those things that gives an opportunity to come back. As we drive more engagement, again, all of the flywheels of save, spend, and invest get greater. So we are thinking about the business at the core central feature as what is the quality of that product experience? How engaging can we make it? Can we make it more routine in terms of healthcare, and then can we drive greater usage. One of the great advantages that we have is since our experience is also integrated already with our plan partners, every time you go to see a doctor, every time you go have a healthcare visit, you fulfill a pharmacy prescription, all of that is integrated into the experience. Those dollars are loaded into the mobile wallet. At any point in time where you might need to withdraw those dollars tax-free, you can do that. Every single time you do something, that is integrated into our experience. And that is a really important differentiator for us relative to the competition because we have such a deep integrated experience with our plan partners in going to the market, and that is just another way that helps drive that monthly usage and monthly engagement in the platform. And I still feel like we are actually also in the very early innings of what that product experience is going to look like because we are investing in that member-first experience, which is a new muscle for us. Operator: The next question is from Peter Warrandorf with Barclays. Please go ahead. Peter Warrandorf: Hey, thanks for the question. Actually just wanted to talk to you about the member lives that are coming in through the bronze plans versus traditional employee-sponsored plans. I mean, is there a difference in terms of, I know it is early, how those members are saving or spending? Just trying to understand maybe the relative value for those customers versus some of the traditional ones. Thanks. Scott Cutler: Yeah. Remember, in terms of that cohort, it is a few months old. And so it is so early. The early data points are encouraging in the sense that we are seeing really strong contributions. The performance of these accounts will evolve over time. When you think about the value of any HSA, the biggest driver of value is essentially just time. And so that time component is really important. We will be looking at those cohorts as they come in. And so, again, I think what we see in the early behavior is nice contributions, and those contributions are not coming with an employer match, which is also quite interesting. Again, remember that these are also coming to the market differently, meaning we might have to acquire that customer individually. We provide a bonus match for them if they contribute and those dollars stay in the account. That match is the highest of anybody in the industry. So we are driving that retail, and as Steve talked about, we are in the early phases of partner integration to be able to bring more of those bronze participants in at a greater scale through our partner relationships. Peter Warrandorf: Great. And then quickly, can I just follow up on the competitive landscape? Over this last selling season, did you see any pressure anywhere, any kind of pricing pressure, anything like that? Scott Cutler: The competitive landscape for us, I think, is reflected in the strength of our retention. So we have north of 98% retention of revenue from our existing accounts this year. We are also winning and expanding the market and taking market share greater than market growth. So that kind of reflects our ability to both retain the existing business as well as grow in competition. What I would say early into the sales season, and we are so early, but we are seeing a really strong pipeline develop in large enterprises, which we did not see this year. We have already had some really nice enterprise wins that are taking business from the competitors. And so we like that. We feel really strong about our ability to continue to retain the business, again focused on the quality of the service that we are providing and the quality of that product experience. And so I think, as you have seen in the last number of years, we are growing faster than the rest of the market, and we are taking more share. Thanks, Peter. Operator: The next question is from Alan Lutz with Bank of America Securities. Please go ahead. Deb (for Alan Lutz): Hey, this is Deb on for Alan. Thanks for taking my question. I guess the first one, again, I just want to circle back to the service margins, which trended nicely. I think you have talked about some of those drivers in the past. But just good to get an update on the cost makeup there as more users shift to the digital app. Could you just give us color on the breakdown between the technology component, human labor, and plastic cards in that COGS line item? And then how much more there is to do there in terms of automating maybe in the near term? Scott Cutler: Yeah. Great. So when you think about the service costs overall, really think of it in three buckets, almost equally divided: a third being member services, a third being client services, and a third being back office. On the member service, that is largely associated with the contacts that are coming in through the service center. The majority of those contacts today are coming in by phone, and we are increasingly looking at many of those journeys to automate those with agentic and real-time responses that do not require a phone interaction. Again, most of our interactions today are by phone, so we are moving into that agentic digital response very quickly. And that is a lot of the things that we started on last year. We are going to continue. That is where there is significant opportunity for AI. On the client side also, as I talked about, that is the other third. That is automating a lot of the file and file integration and process that we have in terms of onboarding and serving our existing clients. And then the other third would be the back office. As we think about AI across all of those journeys, it is really taking those things that can be automated, that are repeatable, where data can help us do that. And many of those things, for example, in the member service side, are fairly simple questions. I have lost a card. I want to replace a card. I do not know my password. If you download PassKey, you do not need that interaction anymore. I want to check my balance. We want to automate as many of those responses so that when we need to have a human interaction we can respond with empathy. It may be more detail-oriented and incredibly valuable in terms of that remarkable service experience that we strive to deliver. Thanks, Deb. Deb (for Alan Lutz): Yeah. That is very helpful. And then just one more. It seems like the AI and the impact on the labor market is a point of concern, and just curious how that is layering in, if at all, to the opportunities and activity level in M&A that you are seeing. We just want an update on what you are seeing in the market and how the landscape for opportunities in M&A in 2026 early on here look relative to the last couple years. Scott Cutler: I do not think there is any correlation between the massive adoption of AI and consolidation in this industry. I think we see significant opportunity in cost and productivity enhancements across every function of the business, but I do not think it has any correlation to the M&A market. And the reason for that is that when you look at the long tail of where HSA assets are held, it is held by banks that might be focused on a deposit. It might be a retirement company that is focused on retirement assets. That is the long tail of this market. And I do not see AI as being a driver or accelerator to that. Thanks, Deb. Next question is from David Larsen with BTIG. Please go ahead. David Larsen: Hi, congratulations on the good quarter. One of the questions I get asked from investors is, okay, if interest rates decline, is not that going to pressure your custodial revenue growth? So if interest rates were to decline by 50 basis points, say, in the back half of this year, when would that manifest in the form of slightly lower custodial yield growth? Would that take, like, three years to manifest? Thank you. Scott Cutler: Go ahead, Jim. You want to take that? James Lucania: Yeah. Sure. I mean, obviously, the movement of cash into the enhanced rates program would significantly slow down that movement. So I do not think about it that way. What would directly impact us is if short rates go down, the cash that we have deposited overnight, which is about $1,500,000,000, would be directly impacted. Now that is not particularly meaningful to the total quantum of cash that we deposit, but you should really just think of it as whatever is being replaced at that point in time that we have not hedged yet is going to be placed at 50 basis points lower than it would have been placed today or that the forward curve says it is going to be. The forward curve is strongly, deeply sloped up and to the right. So that is reflected in our guidance. That would be reflected in our long-term view that rates are going up, not down. The rates that matter to us, the five-year rates, short rates are forward curve is expected to go down. That is also factored into our guidance. So the outlook includes current expectations on rates. All things equal, we like higher rates than lower rates. But it is becoming less of an issue. Now we are at almost 60% at year end in enhanced rates. It does not take rocket science to look at the maturity curve and just say, hey, we are going to be pushing 80% in enhanced rates in the relatively near future. And then we are going to sort of call end of job on this basic rates to enhanced rates migration. And then what you should expect to earn in the HSA cash yield is the ten-year moving average of the five-year Treasury. So any movement within the year is only going to potentially have one-tenth of the impact on the entire portfolio because that is how those contracts generally reprice. Sort of one-tenth of it reprices each year at current rates. So you need a prolonged downward shift in rates, I should say, to really move that average. You are going to get a very slow moving average once we are complete with this migration, and that was the entire purpose of this. The extra alpha was nice, but the purpose of this migration was to reduce the standard deviation of these returns. And what I would love for you all to believe when we are done is that custodial revenue is actually just monthly recurring revenue, no different than my other lines. Will I get you all the way there? That remains to be seen, but that was the purpose of this enhanced rates migration strategy. David Larsen: That is very helpful. Thank you. And then in my mind, HSAs are a fantastic mechanism, probably the best, to improve cost trend. And since most employers are self-insured, there is enormous value in the HSAs. And with the marketplace, you are simply enhancing that overall value in my view. So, Scott, I think you mentioned you had four programs in the marketplace. GLP-1s is one of them. What are the other three? And then what sort of other programs would you add over time and how much improvement in cost trend could these marketplace products provide to your clients? And have any of your clients purchased any of them? Thanks. That is just one question. Right? Scott Cutler: Yeah. So one. To get so yeah. David, a couple of things. I mean, again, when you just think about the HSA industry overall, you do have to step back and remember that 95% of members do not contribute at the max. 92% do not invest this product, and yet it is a triple tax-advantaged product. And so we want to encourage people to actually use the product, and that again is why we go back to the flywheel. On marketplace specifically, again, repeating what I said before, we have three programs today. The other areas that we are going to expand are going to be other areas that are typically outside of what would be covered by insurance but are programs that consumers are spending a lot of money on but have to access licensed, qualified physicians to be able to do that. So think of all the opportunities around labs or skin or hair or products that are unlocked because of a doctor's prescription. In the wearable space, there are all sorts of interesting opportunities in digital health of products that we can bring into the marketplace. So there is not really a limit. The marketplace opportunity is in the hundreds and hundreds of billions of dollars that consumers are already spending dollars on. It is really just a question of what makes sense for us to naturally include that product into the marketplace. And again, what we see is that those consumers that spend in the marketplace, in addition to interchange, which we already monetize, we can monetize either in a take rate or an administrative fee associated with a program, and in that case, we are driving average revenue per user up over time, or per member up over time. Thanks, David. Operator: The next question is from Mitch Rubin with Raymond James. Please go ahead. Mitch Rubin (for Greg Peters): Good afternoon, guys. This is Mitch on for Greg Peters. Congrats on the quarter and the year. I wanted to ask if you guys are seeing any meaningful differences in balances or engagement from the ACA-driven retail members relative to your traditional base? Thanks. Scott Cutler: Yeah, I mean, I think this is the question that we just answered before. The cohort is too early. We are only a couple of months into it. We are pleased with the contribution behavior that we have seen. But again, since it is so early, it is very hard to know what it will look like over time. My expectation is they are going to perform like other cohorts. They develop in value and balances and spend and investment over the years to come. Thanks, Mitch. The next question is from David Roman with Goldman Sachs. Please go ahead. Jamie (for David Roman): Hey, thanks. You have got Jamie on for David. I wanted to dig into the dynamic where you have HSA cash growing 3% and HSA investments growing 26%. Really, what are the implications of that going forward? And I fully understand how you monetize the HSA cash. You have talked about that extensively on this call. But as the HSA investments grow and become a bigger portion of MEGs, how does that show up across the different revenue lines? Is interchange and service more levered to the growth in investments? And what are the margin implications given the different margin structures across those lines of revenue? Thank you. James Lucania: Yeah. I can take that one. Yeah. So you should not think of them as the same person. These are different parts of the cohorts that Scott was talking about earlier, different points along the journey. So in general, if you think of a higher-balance or just an older account, they are going to have a certain amount of assets and cash, and they are not going to grow or shrink that amount ever. So all incremental contributions are going to go into the investment account. All spending is going to come out of the investment account. So that is the marginal account that they are playing with. Yes, the cash, in reality, comes out of the checking account and gets replenished immediately from the investment account, but functionally, that is what is happening. So the accounts that are growing our total cash balance are the new accounts who have not built those balances yet. So there is a large cohort of HSAs that do not do anything in their cash account. They are just zero growth. Zero loss, zero gross. It is the new accounts that drive cash growth. Now on the investment side, we love investment growth. Obviously, look at it. It is growing massively. So we participate in that upside, but obviously at a different rate. So our sort of record-keeping fees, and think of them as mutual fund sub-account fees, as well as the fees from our registered investment adviser, we will earn in the mid-20s basis points on a blended basis on our invested assets, and that hits the service revenue line. We love the growth on both sides. Thanks, Jamie. Operator: This concludes our question and answer session. I would like to turn the conference back over to Scott Cutler for any closing remarks. Scott Cutler: Thanks everybody for the thoughtful questions, for the engaging dialogue. Hopefully the takeaway is that we are really pleased with the results for the quarter and for the year. We are optimistic about the future. As assets and engagement scale, the earning power of this platform continues to expand, and we really look forward to updating you on our continued progress as we go throughout this year. So thank you very much. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the NextNav Fourth Quarter 2025 Earnings Call. [Operator Instructions]. I would now like to turn the call over to [ Jarrod Pollock ], [ Jarrod ], please go ahead. Unknown Executive: Good afternoon, everyone, and welcome to NextNav's Fourth Quarter 2025 Earnings Conference Call. Participating on today's call are Mariam Sorond, NextNav's Chief Executive Officer; and Tim Gray, NextNav's Chief Financial Officer. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by use of the words may, anticipate, believe, expect, intend, should, could and similar expressions. Such forward-looking statements which may relate to NextNav forecast of future results, future prospects, developments and business strategies are subject to known and unknown risks, uncertainties and assumptions, many of which are outside NextNav's control and could cause actual results to differ. In particular, such forward-looking statements include the achievement of certain FCC-related milestones and FCC approvals. NextNav's projections, plans, objectives and expectations and NextNav's future business strategies and competitive position. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. You are cautioned not to place undue reliance upon the forward-looking statements, which speak only as of the date made, and NextNav undertakes no commitment to update or revise the forward-looking statements, except as required by law. For additional information regarding risks and uncertainties, please refer to the risk factors and other disclosures contained in the company's filings with the SEC. Following prepared remarks, the company will host an operator-led question-and-answer session. In addition, a replay of our discussion will be posted to the company's Investor Relations website. I'd now like to turn the call over to Ms. Sorond. Please go ahead, Mariam. Mariam Sorond: Thank you, Jared. Good afternoon, and thank you all for joining us today. I'll begin with an important update on our FCC process. Earlier this month, the FCC formerly sent a draft notice of proposed rulemaking or NPRM, focused on PNT technology and solutions to the White House OMB. This is a critical step in the process, and I am confident in the NPRM advancing to report an order. This development underscores the FCC's focus on addressing the national security urgency of identifying resilient backups and complements to GPS. It reflects an incredible milestone achieved in rapid time and extraordinary momentum under this administration. While I am thrilled it does not come as a surprise as this progress is consistent with the confidence I have expressed over the prior quarters regarding the FCC's direction. The NextNav team has worked tirelessly alongside a highly engaged FCC, and we are extremely proud of where we stand today. It marks significant validation of NextNav solution to a critical national security priority at a time of heightened global risk as adversaries continue to invest in their own terrestrial PNT capabilities. The U.S. must meet the moment. The under agency review of the NPRM is now progressing as expected. While we do not yet know specific content, we do know that NPRM can take many forms. And based on the strength and completeness of the existing record, we remain confident in a direct path to a report in order. NextNav plays an important role in a system of systems framework that combines multiple terrestrial and space-based capabilities to build redundancy and resiliency across America's critical infrastructure. a redundancy that exists today for our adversaries, including Russia and China, but not for the United States. NextNav proposed solution is a one-of-one within this system of systems framework requiring capabilities that only NextNav can provide a unique combination of wide-scale positioning, timing and 3D geolocation services which are commercially viable and we believe can be made available during the current administration. Moreover, our solution is future-proof and does not require taxpayer funding. The anticipated NPRM is supported by a well-developed and complete record. Though as we have stated on prior earnings calls, the exact timing of the process remains outside of our control. We applaud the administration and Chairman Carr for their actionable leadership on this issue and look forward to continuing to work constructively with the FCC and key stakeholders as the process moves forward. As the national conversation around resilience and critical infrastructure is expanding, NextNav is increasingly contributing to the highest levels of industry and policy leadership. To that end, I am pleased to have joined the CTIA Board of Directors and participated in my first Board meeting alongside a dynamic group of leaders. I look forward to advancing the association's mission and helping expand the capabilities of 5G networks in ways that strengthen America's national security infrastructure to ensure our industry remains a good standard for innovation, public safety and natural security globally. Furthermore, NextNav continued to advance dialogue across both regulatory and industry audiences through participation in recent events, including Mobile World Congress 2026 in Barcelona and the 2026 Milken South Florida dialogues. Discussions at these forums highlighted several key themes. First, there was clear recognition that multiple public and private sector organizations are working towards PNT capabilities with PNT increasingly viewed as the killer application for 5G and 6G, one that could be among the most valuable transformative uses of these networks. Second, it was clear that strengthening resiliency and vulnerable systems is essential both for deterrence and for regaining U.S. leadership in critical technologies. It was top of mind in discussions that GPS has clear vulnerabilities, including indoor coverage gaps, jamming and spoofing. And it takes as little as a $200 jammer purchased online to disrupt signals, let alone the capabilities of an adversary. Recent developments in the Middle East conflict, including widespread GPS and communications jamming highlight how quickly these disruptions can escalate and destabilize critical systems. That's why a ground component is essential. And NextNav has the largest footprint capable of delivering a unique combination of positioning, timing and 3D geolocation capabilities. Independent of our work with the FCC, NextNav continues to advance its technology and commercialization efforts. First, we are very proud to have begun operating the world's first 5G powered PNT network, marking an important step towards commercialization. While the FCC granted NextNav an experimental license to begin this testing in a defined geographic location, I will reiterate that the testing itself is for early commercialization purposes and is independent of the FCC's NPRM process. Next, we announced an expanded partnership with Japan's MetCom, we believe this partnership is a compelling validation of demand for resilient terrestrial 5G-based 3D PNT solutions and represents a potentially significant commercial opportunity beyond the U.S. market. Under the agreement, MetCom has licensed our technology to power new terrestrial timing services in major Japanese metropolitan areas, highlighting both the strength of the deal and the international scalability of our platform, particularly given our 3GPP standards-based approach, which makes technology partnerships outside the U.S. especially attractive. It is essential to support our allies in a complex geopolitical landscape. As a public company, strengthening our governance is important as we advance the terrestrial market-based backup and complement to GPS. With that, we are pleased to welcome Lisa Hook as our Board's new Lead Independent Director. She brings decades of public company board experience at the intersection of technology, telecommunications and National security. For experience as CEO of Neustart, a publicly traded global information services company, leading you through years of complex technology and policy make her an ideal thought partner as we execute on our mission. With that, I will turn things over to Tim for a review of our financials. Tim? Timothy Gray: Thank you, Mariam, and good afternoon, everyone. Based on the actions taken in 2025 to enhance the company's liquidity NextNav continues to hold a position of financial strength and strategic advantage with a strong cash position, valuable spectrum assets and the continued development of field testing of our resilient proven technology. On liquidity, we finished the fourth quarter with approximately $152 million in cash, cash equivalents and short-term investments. We will continue to manage our use of capital as we advance our ambitious goals, taking a deliberate approach to liquidity and commercialization. In addition, we have a significant number of warrants expiring in 2026 that have the potential to deliver over $200 million in additional capital depending on stock price performance. So let me be very clear that we believe we have significant runway in funding for multiple years. For our fourth quarter, a financial item of note. As a reminder, the gains or losses related to our outstanding private warrants and derivative liability fluctuate based on movements in our stock price. While last quarter, we had gains, this quarter, we're reporting losses. In the fourth quarter, we recognized losses of approximately $48 million associated with the change in the fair value of the derivative and warrant liability. The impact of these noncash losses resulted in our net loss for the quarter of roughly $68 million. These charges are a result of the funding the company took on earlier in 2025, which has put the company on very solid footing. With that, I'll turn the call over to the operator for questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Mike Crawford with B. Riley Securities. Michael Crawford: We were pleased to see that the FCC sent this promoting the development of PNT technologies to the OMB on March 2, but have you seen the content of what was actually sent. And do we know if that's any different from what has been contemplated previously? Mariam Sorond: Mike, thanks for the question. I -- the NPRM has been drafted. And it is in the inner agency review process. We have not seen the content, and that is part of the process, contents will be available the draft review will be available once it finalizes its interagency process with the NTIA [indiscernible] and OMB [indiscernible]. Michael Crawford: And then the data that you've been collecting shows that you get more precise PNT when you have a 10/5 channel. And so do you think that, that is something that's what we're likely going to see when we get an NPRM and eventually report in order? Mariam Sorond: Well, definitely, we've been testing and we're testing towards a 10 plus 5 capability, and that's part of our commercialization effort. And it's also just basically how 5G networks operate with respect to positioning, it becomes more accurate with the downlink being 10 megahertz. So we've made those studies over the FCC. And we remain confident that we're going to move forward with this FCC working with them to make sure that we meet the backup and complete requirements of GPS. Operator: Your next question comes from the line of David Joyce with Seaport Research Partners. David Joyce: Could you please provide any interesting learnings so far with your MetCom relationship? And perhaps connect that with how that might help with accelerated commercialization in the U.S.? Mariam Sorond: I think there's definitely an international opportunity. MetCom is part of that for us, and we're super excited about the partnership that we've had with them and this new development with respect to what they're doing in Japan. I think this is a solution that, as we have said, can be taken global and it does have a national opportunity. What we're facing today with a lot of the GPS or GNSS in general, jamming and spoofing issues is a global problem. So we will share the results of whatever MetCom does when they publicize it with the market. But right now, this is a great step advancing that partnership and relationship with us. Operator: That concludes our question-and-answer session. I will now turn the call back over to Mariam Sorond for closing remarks. Mariam Sorond: In closing, NextNav remains highly optimistic about the path ahead toward an FCC vote on an NPRM in the near term, with clear line of sight to a report in order, and we look forward to continued engagement with the FCC and key stakeholders. We are very proud of the progress we're making to deliver a resilient future-proof terrestial complement and backup to GPS, strengthening U.S. economic and national security at a critical moment in time. Thank you all. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance, a member of our team will be happy to help you. Good afternoon, and welcome to the Cibus, Inc. Fourth Quarter 2025 Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. At this time, I would like to turn the conference over to Carlo Broos, Chief Financial Officer. Sir, please go ahead. Carlo Broos: Thank you, and good afternoon. I would like to thank you for taking time to join us for Cibus, Inc.’s fourth quarter 2025 financial results and business update conference call and webcast. Presenting with me today is Peter R. Beetham, Co-Founder, Interim Chief Executive Officer, President, and COO, and Gregory F. Gocal, Co-Founder and our Chief Scientific Officer. Before we begin the call, I would like to remind everyone statements made on the call and webcast, including those regarding future financial results, future operational goals, and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to Cibus, Inc.’s SEC filings for a list of associated risks. This conference call is being webcast. The webcast link, along with our press release and corporate presentation, are available on the Investor Relations section of cibus.com to assist you in your analysis of our business. I will now turn the call over to Peter. Peter R. Beetham: Thanks, Carlo, and good afternoon, everyone. By any measure, 2025 was a landmark year for Cibus, Inc., not because of any single headline, but because of a convergence of key themes that are shaping the trajectory of the gene editing industry. Technology leadership, commercialization progress, scale, and regulatory momentum all arriving at the same time. We have seven rice customers representing over $200 million in potential annual royalty opportunity. We received our first customer payment from our sustainable ingredients program. We were selected by the UK government as a technology partner for its farming innovation program. And in a watershed moment, the EU finally reached political agreement on new genomic techniques legislation, something we have been helping to shape for many years. Gene editing is no longer an experiment. We believe it is the future of innovation in farming, food, and agriculture, and Cibus, Inc. has been positioned ahead of this innovation curve for a long time. We have shifted to a commercially driven company with a powerful technology engine. What makes this current moment particularly exciting is the intersection of our technology readiness and a change in how we believe seed companies are thinking about gene editing. For years, speed and scale were obstacles. Seed companies were interested, but the technology was not predictable enough to fit into their breeding programs. Our advancements in creating a more streamlined business with time-bound, predictable trait development have changed that equation. We can take a customer's elite germplasm, make a specific edit, and return it to them within 12 to 15 months. Because of that progress, we are beginning to see something important. These companies do not necessarily just want access to a trait; they want to get more deeply integrated with our technologies. This is a natural evolution of what we mean when we say that Cibus, Inc. can be an extension of our customers’ breeding programs. We receive their elite genetics, we make the edits, and we return improved material on a predictable schedule that allows for commercial planning and coordination that better align to their seed improvement and market growth strategies. Increasingly, the conversations we are having with potential customers are about ongoing genomic editing relationships, not just one trait in one crop, but the possibility of a broader engagement throughout their entire portfolio, where Cibus, Inc. can serve as a gene editing engine for their plant breeding capabilities. This is highlighting opportunities beyond traditional trait licensing, particularly in high-growth markets like India, Asia, and Latin America, where we see potential for what I have described as outsourced gene editing, with partners accessing our editing capabilities on an ongoing basis. As we explore these potential relationships, we are maintaining our core licensing and royalty frameworks surrounding the edits we make. The edits are the product. Cibus, Inc. edits the genome in elite genetics, and those edits are connected to royalty. Regardless of whether a partner comes to us for a single trait or for a comprehensive editing program, the value we create resides in the edits themselves, and we retain that value through our intellectual property and licensing structure. That is how we intend to build a durable, recurring cash flow that drives long-term shareholder value. So whether we are talking about trait licensing, editing services, or some combination thereof, the roads lead to the same payoff: an annual stream of royalties on the edits Cibus, Inc. makes. Now turning to our RISE program, which remains the foundation for near-term revenue generation and the clearest example of our core trait business model I just described. Remember, our seven RISE customers across the United States and Latin America represent an incredible $200 million in potential annual royalty opportunity through our herbicide tolerant traits. Importantly, we remain on track for initial market entry in Latin America in 2027, followed by the potential U.S. expansion in 2028 and entry into India and Asia closer to 2030. Perhaps the most significant development was with Interox. In January, we executed a nonbinding LOI establishing a framework for commercialization of herbicides on rice across key Latin American markets, starting with Ecuador and Colombia in 2027 and expanding into Peru, Central America, and the Caribbean. We have transferred some edited material back to interrupted registration work. We have recently received an import permit so we can return their elite rice genetics with two herbicide tolerant traits, and we expect to advance negotiations towards a definitive commercial agreement late in 2026. In addition, over the past year, we have demonstrated important progress in RISE, particularly in Latin America. Remember, this is a market that historically lacked access to advanced weed management solutions, and the demand for what we are offering is strong. Our partnership with SEAT, or FLAIR, which works with the Latin American Funds for Irrigated Rice and participates in the hybrid rice consortium for Latin America, gives us access to rice farmers across the region through a partner that has launched varieties in 17 countries. As we have previously mentioned, we also have signed agreements with Semiano and Semias del Hula, two important Colombian rice seed companies, and completed delivery of rice lines with our HT3 trait to an existing U.S. customer. Beyond the current partners that include our long-term herbicide partner, RTDC, we are pursuing initial access to the Brazilian market, one of the most significant rice geographies in Latin America, and potentially Argentina as well, representing substantial additional acreage opportunities. In India, we continue to work with AgBiar and RTDC to build seed company relationships where rice cultivation is approximately 120 million acres. Greg recently traveled to India and met with a number of leading seed companies and even the former Minister of Agriculture. The demand there is significant. In some areas, farmers are growing two rice crops in a year, and India’s regulatory acceptance of gene editing, demonstrated by the recent first planting of gene-edited rice in the country, positions India as a leading future market. We are initially targeting commercial launch in India around 2030, and we will keep you updated as we progress. On the development side, we are also expanding our trait portfolio in rice. Following successful 2024 field trial results for stacked gene-edited herbicide-tolerant traits, in March 2025, we expanded our efforts to include additional trait stacking to broaden weed management for crop protection. Stepping back, in just over a year, we have built a rice program that spans three continents and targets the world’s most important rice-growing region. That trajectory happened because our technologies deliver something seed companies have never had before: time-bound, predictable trait development in their elite germplasm. That is worth emphasizing, as it is a central component to the value proposition that Cibus, Inc. is delivering to customers. Another great example of how this trait portfolio model works in practice is through our collaboration with the John Inner Center on nutrient use sufficiency. That partnership is a funded program where we are applying our technologies to their breakthrough trait with potential to apply this across our entire crop portfolio. Different structure, same endpoint: elite germplasm, Cibus, Inc. technologies, Cibus, Inc. edits, Cibus, Inc. royalties. Now, regulatory. As part of this perfect storm of progress, we have seen very positive developments occur in the regulation of gene editing in significant jurisdictions around the world. At Cibus, Inc., we have been patient because we understood that the global regulatory framework would determine how fast this industry scales. In December, the EU reached political agreements on new genomic techniques legislation. This was a watershed moment. Europe represents approximately 100 million acres of greenfield opportunity because GMO technologies have been restricted for decades. The European Parliament plenary session is expected in late April. This is the next big milestone we are watching very closely. This comes on the heels of the UK precision bred organisms framework going live last November. We submitted our first PBO filings in January, and in February, we were selected for a DEFRA-funded consortium applying our RTDS technologies to light leaf spot resistance in oilseed rape. Being chosen by a national government as a technology partner is a powerful independent validation. Across the Americas, the momentum continues. California authorized gene-edited rice for planting for the first time, Ecuador confirmed our traits are equivalent to those developed using conventional breeding, and USDA APHIS has now given us 17 positive determinations. Just last week, Peru also confirmed gene-edited products will be considered similar to conventional rice varieties. This regulatory harmonization is accelerating commercial conversations globally. With that great news, I will pass the call over to Greg to discuss our opportunity pipeline, traits, and programs. Greg? Gregory F. Gocal: Thank you, Peter. I will keep my remarks focused on the key technical milestones that support both our priority programs and our broader opportunity pipeline. What I would add from the lab side is some perspective on the scientific results that helped drive our progress. In rice, in 2025, we realized an order of magnitude improvement in our editing efficiency. That translates to regenerated edited plants. We have optimized the reagents, cell culture conditions, the delivery mechanics, and the regeneration process, and we continue to push those boundaries with our strategic use of AI and machine learning toward identifying the right targets faster, predicting precise edit outcomes with greater confidence, and feeding those learnings back into each successive campaign. Combined with our semi-automated workflows and robotic assistance, the trait machine process is becoming faster, more scalable, and more efficient. That is what is enabling us to take on the kind of broader relationships Peter described, with the throughput and the consistency to serve as our partners’ ongoing editing capability. Turning to our opportunity pipeline, I wanted to highlight our significant 2025 technical progress across programs that are all available for partnership and represent meaningful future value. Starting with our canola traits, our second-generation herbicide-tolerant trait, HT2, delivered positive field trial results in North America last year, confirming both acceptable herbicide resistance and similar yield to the unedited parent. It is important to remember that HT2 validates the path for developing not only for that particular chemistry, but for any chemistry in this family, and is a trait that can be stacked with other herbicide systems. For sclerotinia resistance, bioassays for plants bearing two of our modes of action continue to demonstrate enhanced resistance, and our collaboration with BioGraphica, using their AI platform, has identified several new potential gene editing targets. Our RTDS platform gives us the precision to go after multiple modes of action for the same disease. That is something conventional approaches simply cannot do at our speed. It is important to note that both HT2 and sclerotinia resistance have multi-crop, multi-geography potential. In the UK, we completed our second year of field trials for pod shatter reduction in winter oilseed rape, showing encouraging performance in several customers’ germplasm. With the PBO legislation now in effect, our gene-edited material can now be grown like conventional germplasm, and we have submitted our first PBO filing. The DEFRA-funded Light Leaf Spot Consortium is a tremendous validation for our technologies’ abilities to target resistance to another key disease in winter oilseed rape, with 12 industry and academic partners and Cibus, Inc. selected as the gene editing technology partner. What makes this technically exciting is that we are applying our RTDS platform to develop durable disease resistance, a more complex challenge than herbicide tolerance, and one that demonstrates the increasing sophistication of what our gene editing system can deliver. On nutrient use, we continue our funded collaboration with the John Ennis Center on a breakthrough trait that has the potential to create significant commercial opportunities across our entire crop portfolio. This addresses the global fertilizer efficiency challenge, where only about one-third of the fertilizer applied in the field is typically available to be absorbed by plants. This is a complex biological system that requires targeted, specific edits—exactly the kind of problem our platform was designed to solve. On the wheat platform, we previously disclosed in 2024 successfully regenerated plants from single cells in a wheat cultivar. Single-cell regeneration is the gateway to applying our full RTDS editing capability in a new crop. Once we can do that, the entire trait development process for that crop opens up. That, in turn, spurs opportunities for further partner-funded development in one of the world's most cultivated crops, and as the European regulatory landscape becomes clearer, we are seeing increased interest. Similarly, in soybean, in early 2025, the company achieved sufficiently high editing rates enabling expanded development of its soybean platform in conjunction with partner-funded and/or supported programs. The key message I want to leave you with is this: our RTDS platform is performing across multiple crops and increasingly complex traits. Every one of these pipeline programs is available for partnership, and together, they represent significant optionality for the business. Our technical foundation, combined with growing regulatory evolution, positions us well to advance high-value traits through partnerships while maintaining focused execution on high-priority revenue drivers. I will now hand the call over to Carlo for the financial update. Carlo? Carlo Broos: Thank you, Greg. Looking at our financials for the fourth quarter, our cash and cash equivalents as of 12/31/2025 were $9.9 million. In January 2026, we raised $22.3 million in gross proceeds from our public offering. This capital raise meaningfully extends our runway and supports continued advancement of our RISE program and sustainable ingredients work as we move toward our near-term revenue milestones. Taking into account the impact of implemented cost-saving initiatives, including those implemented last week, and without giving effect to potential future financing transactions that Cibus, Inc. is pursuing, we expect that existing cash and cash equivalents are sufficient to fund planned operating expenses and capital expenditure requirements into late 2026. Importantly, our streamlined focus is also contributing to our extended runway, and we are pleased to have reduced operating expenses by approximately $10 million across R&D and SG&A for the full year of 2025. Moving to our operating results for the fourth quarter, research and development expense was $9.4 million for the quarter ended 12/31/2025, compared to $12.4 million in the year-ago period. This $3 million decrease is primarily due to cost reduction initiatives that we have implemented as part of our streamlined operational focus. Selling, general, and administrative expense was $5.1 million for the quarter ended 12/31/2025, compared to $6.8 million in the year-ago period. The $1.7 million decrease is also primarily due to cost reduction initiatives. Royalty liability interest expense, related parties, was $9.4 million for the quarter, compared to $8.2 million in the year-ago period. The $1.2 million increase is due to the recognition of interest expense on the royalty liability. Non-operating income, net, was nominal for the quarter, compared to income of $400,000 in the year-ago period. The decrease was driven by the fair value adjustment of the company's liability-classified common warrants. Net loss was $31.9 million for the quarter ended 12/31/2025, compared to $25.8 million in the year-ago period. During 2025, we completed consolidation of operations from our Oberlin facility into our San Diego headquarters and wound down operations at our Houltsue, Minnesota facility. These actions, along with workforce reductions, demonstrate tangible progress toward our goal of reducing annual net cash usage to approximately $30 million or less in 2026. This disciplined approach to capital allocation, combined with the January raise, extends our cash runway while positioning us to capture the significant biofragrance revenue opportunity ahead and meaningful commercial expansion from rice traits expected beginning in 2027. With that financial overview, let me turn it back to Peter for closing remarks. Peter R. Beetham: Thank you, Carlo and Greg. Let me close by putting this year in context. Cibus, Inc. has been the consistent force in precision gene editing. We have built the technologies from the ground up with scalable and accelerated processes. We have engaged with many global regulators to provide technical guidance. We have established the customer relationship, and now those investments are compounding. 2026 is all about execution and momentum. Here is what we are focused on. On rice, we are expanding customer relationships across the Americas and India, advancing toward a definitive commercial agreement with Interoc, and pursuing discussions that could open Brazil and Argentina. We expect to report on field results from Latin America later this year, along with progress on chemistry registrations supporting our 2027 commercial launch targets. On sustainable ingredients, we are formalizing our expanded partnership, targeting commercial scale production, and I believe we will be in a position to announce additional details on this program in the near term. This is a real revenue stream that is growing, and it demonstrates the breadth and broad potential of what our platform can deliver. On regulatory, the EU plenary vote expected in late April is one of the next major catalysts. That clarity is already reenergizing conversations with European partners and creating new opportunities. More broadly, I am excited about the evolution of our commercial model. The fact that we are bringing herbicide-tolerant rice to a crop that feeds billions of people is exciting not just for shareholders, but for global agriculture’s future. I continue to see Cibus, Inc. as a coiled spring, and I am so proud to be leading this team into what I believe will be a transformative year. Operator, we are now ready to take questions. Operator: We will now open for questions. We will take our first question from Matthew J. Venezia with AGP. Your line is open. Matthew J. Venezia: Hey, guys. Thank you for taking my questions, and congrats on the progress. Firstly, I wanted to ask about the EU NGT framework. I know this is a long time coming, but does this change the company's thought towards CapEx toward the canola WOS program in the future at all? I know that that is a crop that is probably bigger in Europe than over in the Americas. Peter R. Beetham: So, Matt, thanks so much for the question. You know, the EU regulatory progress is really a watershed moment. You know, it has been the gold standard in regulatory globally for a lot of plant breeding work. In the past, it was GMO, but now we are opening up the whole gene editing world, and, you know, essentially, we are going global, which is amazing. You can tell why I am excited about this is because it has taken a long time, and that has been some of our frustration, but it really does open up opportunities. You know, for example, Europe is 100 million acres of greenfield opportunity. They have never had traits through, you know, genetics with novel traits before, so this opportunity opens up. To your point, one of the major crops there is winter oilseed rape, and for us at Cibus, Inc., we have been developing a platform and a production system in winter oilseed rape that is really efficient. This is now what I was saying in the earlier remarks: when things come together like they have for us, all of a sudden we are in the situation where the EU regulatory fits, we have a production system, we can do it in a time-bound and predictable way, and we can cut years off timelines in plant breeding programs. So what we are seeing is really a lot of interest from the major seed companies in Europe, but also that opens up the rest of the world. I will hand it off to Greg because I am sure he has a few extra comments. Gregory F. Gocal: Yeah. Thanks, Peter, and thanks for the question, Matt. As you know, we have been running field trials for pod shatter in the UK the last couple of years, and we see that there is excellent performance of that trait in customer material where some of those customers feed the EU market and are using the regulatory system in the UK to be able to advance that material more quickly. The last thing I will highlight is the Light Leaf Spot collaboration, or DEFRA-funded consortium, where we are the gene editing partner, and many of the companies involved are seed companies that are core within Europe. Matthew J. Venezia: Got it. Thank you, guys, for that. Next, I just wanted to ask if you could take us through the next steps to commercialization in Latin America for rice, and what the milestones will look like that you will report to the Street as that process gets closer when we get into late 2026 and into 2027. Peter R. Beetham: Thanks, Matt. Let me give you the context of where we are on our commercialization path because this goes back to understanding that Cibus, Inc. has been able to build a process in rice in elite genetics. What I mean by elite genetics is the genetics that are really at the coalface of breeding programs. Our partnerships—our seven partnerships in the Americas, the five in Latin America—the genetics that we are working on and have worked on are their best genetics. They are elite genetics. The first step in that process is getting that material in and editing that material and getting it back to them within this 12 to 15 months’ time frame. We have been able to do that already, and we have made those edits in the elite genetics, and that is the first step in that path to commercialization. Also, earlier this year, we were really excited to work with Interrut, who has been a great partner for us, on a letter of intent with regards to the full commercialization of the first two traits, HT3 and HT1, starting out in Ecuador and Colombia. We came to agreement with that, and that is opening up the path to launch in 2027. They will take on the role of chemical registration for the herbicide over top of our traits in those countries. The material that we will report on during the year is the progress on that chemical registration and also the trait work that we are doing in their elite genetics and getting ready over the next winter to go into launch into 2027. Matthew J. Venezia: Great. Thank you, guys, for taking my questions, and congrats again on the progress. I will hop back in the queue. Peter R. Beetham: Thanks, Matt. Operator: We will move next to Laurence Alexander with Jefferies. Your line is open. Laurence Alexander: Good afternoon. I just wanted to touch on a couple of things. Can you give a sense for the kind of the trend line for the total number of acres touched by your technology, maybe 2025 versus 2026 versus 2027, if you have any kind of rough framework on that? Peter R. Beetham: Thanks, Laurence. Let me go back to where I was with Latin America. I think the key here is that we are targeting 5 to 7 million acres in the Americas, and within each of the companies that we deal with, they take up a portion of those acres. Over the first three years, we will see that growth and that scale to those number of acres with the two traits. That is the exciting part for me: once you are in that market, it is the stickiest business in the world because they are going to continue to take those elite materials into that marketplace and expand into those acres. As I have mentioned in my remarks, that represents potential of over $200 million annually for us. Building to that is going to take a couple of years through that process, and I think that is just the right acres in Latin America and the U.S. to start. What we also achieved in 2025 was the development of a relationship with AgBiar, with RTDC support, to look at the Indian market, which is a much bigger market, obviously, which is 120 million acres. We are not going to see in the first few years royalties come out of India. It will be towards the end of the decade, in 2029–2030, that we will start to see that progress, but that opens up, again, potentially another $200 million of annual royalties. So I think to your question, it starts once you get into the market, and that is our goal in Latin America in 2027. It really builds over the first three to four years. Laurence Alexander: Okay. Now secondly, can you help me with a couple of things around scale? First, given the progress you have made the last couple of years on the gene editing platform, if following the EU regulations potential partners are coming to you with GeneEdits as a service, what would be the kind of maximum throughput that you could do without doing a significant increase in your R&D expense or other investments? Peter R. Beetham: This is the great thing about building it from the ground up. The team here has done a wonderful job of combining cell biology with automation and also the genotyping and automation, and so it does not take an enormous team to run through genetics pretty quickly. There are some real synergies, and we are seeing that. One of the experiments we tried essentially was at Oberlin, which paid huge dividends because that really changed our production system to be more like manufacturing. Why I am telling you that, Laurence, is because that is what drives the scale and scalability. Then you put on top of that automation and the experience we have had. Now you add in AI, and we see some real efficiencies coming in the next year or so. As we have reported over the last six months particularly, we have really refined and streamlined our business, and that has been our major focus—building a system that we can scale to address the editing services as people come to us. That is the exciting part of what global regulatory opening up means, seeing companies come toward us with some really great ideas. Greg mentioned UK Innovate; that is a really good example. We have also worked with John Nisser Centre with nutrient use efficiency, which allows farmers to use less fertilizer. There are some really great things coming. I will hand to Greg because he is in charge of a lot of the scale-up. Gregory F. Gocal: Yep. Thanks, Laurence, for your question. A couple of things to add to Peter’s comment. Remember, because we are focused on using single cells from all of the crops that we work on, and because we are working with elite genetics, what we have seen both for canola/winter oilseed rape as well as for rice so far is that most of the lines that we work with from customers—many seed company customers—are performing well in cell culture. We also are in a place where, in addition to the royalty downstream, we will get some funding to cover those editing expenses as we make edits for either traits that we are licensing or traits that we develop ourselves into those materials. With modest increases in the size of the team, we can manage multiple crops and multiple lines—whether they are parents for hybrids or whether they are varieties—within the platform for a wide variety of traits. They may be traits that we are developing, they may be edits that a customer or a partnership wants us to make, or they may be edits that we have a partnership where both the partner and Cibus, Inc. work together to determine what those edits are. Excellent question. Thank you. Laurence Alexander: And then separately, can you help with the sort of when people come to you with GeneEdits as a service, if there is a kind of known value add—let us say a certain percentage increase in yield on a kind of rolling average crop price to keep it simple—what is the plausible, like, what kind of royalty rates are you discussing with customers now, and how has that changed compared to a few years ago? Peter R. Beetham: Thanks, Laurence. I think it is a great question because what we are seeing is an uptick in the idea behind getting gene editing done more as a service. But what really sets us apart at Cibus, Inc. is the speed and scalability, as we just talked about. Speed is critical. One of the things that I think has been challenging in the trait market previously is a trait may be handed off to a company, but you go through five or six years of backcrossing and testing before it gets to market. What we are seeing now with gene editing is we can do it in elite genetics and hand it back in a year’s time, and that allows them to integrate it into their plant breeding program as an extension. You stay ahead of the yield curve, you stay in the genetics, and that allows them to see the value add very quickly. When you can see the value add quickly, the negotiation on a trait royalty is very favorable to Cibus, Inc. We are in this to help the farmer, we are in this to help the seed company, and we share in that value together. When you can see the value add on an accelerated basis, it is an easier negotiation. Laurence Alexander: And then just lastly on the fragrances, similarly, can you give a sense for the scale of how many fragrances you could work on in one year if customers are interested at your current cost run rate? Peter R. Beetham: Laurence, a great question. We have been working on a couple of fragrances to start with. I think what we see is, again, acceleration once you have a platform to be able to build out an organism with those edits, and so in our case, it is yeast. Yeast genetics are quick. I think what we have been focused on is making sure that all the downstream production work with our partner has been done, and we have been able to show that. I think that is the exciting part—once you have that process, it can be accelerated. We know that there are probably about 17 fragrances out there that we would like to go after. We have been focused on the first few, but I think we can scale that pretty quickly. Laurence Alexander: Okay. Great. Thank you. Operator: Thanks, Laurence. We will move next to Alexander Noah Hantman with Sidoti and Company. Your line is open. Alexander Noah Hantman: Good afternoon, and thanks for taking questions. To start, just on the results, the collaboration revenue and earnings came in a little bit below consensus and what I projected. Could you talk a little bit about what did and did not convert in the fourth quarter and maybe anything that did not come through that might come through in the next couple of quarters? Carlo Broos: Thanks, Alex. This is Carlo. A great question. This is really timing. From a cash perspective, we are absolutely on track. We talked about this before, but this is the revenue recognition really linked to time spent by our people. If you look at upcoming numbers, you will see that we are absolutely on track as we spoke before. It is purely timing, Alex. Alexander Noah Hantman: Okay. Thanks. And then maybe to follow up on timing, congrats again on the initial commercial biofragrance sale. Can we talk a little bit about the potential to expand with the current customer and what conversations you are having with other potential customers and how we get to that ramp that you gave of $20 to $40 million a year? Peter R. Beetham: Thanks, Alex. This is Peter. Thanks for your question. I think the opportunities are broad when it comes to the sustainable ingredients program. What we are seeing in the fragrance side of things is different sectors we can go after. Fragrance is used very broadly across industries, and so we are obviously always looking at that. We have a strong partner right now, and we are working closely with them to build out later this year to full commercial scale, but also to expand that opportunity. It does not preclude us from going and looking more broadly. I think your question is very correct in that there is this opportunity that Cibus, Inc. would love to expand on. Alexander Noah Hantman: Great. Thank you. And then last one from us. I know you mentioned current funds until late 2026, third quarter. Can you talk a little bit about how you are thinking of financing from here and your flexibility with that and just kind of the range of options that you are thinking about? Peter R. Beetham: Thanks, Alex. I am going to hand this off to Carlo in a minute, but I do want to say a couple of comments up front because it is a really important question around how we are streamlining the business. The last couple of years have been all about efficiency and running to the near-term revenue. I think the team here has done an excellent job with some tough decisions along the way—some consolidation around facilities—but still, streamlining the business has been very much a focus for the management team and a focus across the whole organization. We continue to refine that. We continue to look for synergies in the organization. What we are also seeing is opportunities ahead of us. For us, the idea of automation, the idea of really utilizing the best parts of AI not only in the science but also in the back office and the administration of the company, is allowing us to really manage that cash burn. With that, I will hand off to Carlo to add some comments. Carlo Broos: Yeah. I think you said it well. I think two important things happened. 2025, the streamlining, and now, even recently, more streamlining. This allows us to focus on near-term revenues. That is the big thing. Then, of course, we had a January financing transaction, and, yeah, that will get proceeds, as you said, late into the third quarter. For me, most important, this allows us to focus on near-term revenues in rice and in the fragrance. Great context. Thank you. Peter R. Beetham: Thanks, Alex. Thank you. Operator: It does appear that there are no further questions at this time. I would now like to hand back to management for any additional or closing remarks. Peter R. Beetham: Thank you. I have only got a couple of closing remarks today. I think we went through the details of the business and showed that we have had an amazing year, and gene editing in general, the industry is, as I said before, not an experiment. This is happening now, and we are totally commercially driven going forward in 2026. I would like to thank you all for joining today as well. Some great questions, and I really appreciate that. For the three of us here, we are really proud to represent the team here at Cibus, Inc., and we are really looking forward to a strong future here in 2026, and we will keep you updated as we make that progress. Thank you all. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Good morning. Thank you for joining us today to discuss Consolidated Water Company's 2025 Full Year Operating and Financial Results. Hosting this call today is the Chief Executive Officer of Consolidated Water, Rick McTaggart; and the company's Chief Financial Officer, David Sasnett. Following their remarks, we'll open the call to your questions. [Operator Instructions] Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made by management during the call. I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay. Please see the instructions in yesterday's press release that has been posted to the Investor Relations section of the company's website. Now I'd like to turn the call over to Consolidated Water's CEO, Rick McTaggart. Sir, please go ahead. Frederick McTaggart: Thank you, Chloe, and good morning, everyone. Our retail, bulk and manufacturing revenues and operating incomes in 2025 were consistent with our expectations for the year. However, our services revenue did not perform as expected due completely to a permitting delay relating to our 1.7 million gallon per day seawater desalination project in Kalaeloa, Hawaii. We believe this type of delay is common for the complex multi-agency permitting process required for a project of this scale and has not been due to any failures on the part of consolidated water. In fact, over the past year, we have achieved all other major project milestones under this phase of the Hawaii project, which include successful pilot testing, receipt of confirmation from the Honolulu Board of Water Supply that we are able to produce water that is a reasonable match to the quality of their current water supply and that we are able to produce water that causes no detrimental impact to the Board of Water Supply system or their customers' assets. And then finally, we completed 100% of the design for this project. Achieving these other significant project milestones enables us to begin construction once all permits have been issued. We continue to work closely with the Honolulu Board of Water Supply and the regulatory authorities to advance the permitting process and mitigate schedule impacts. While our total revenue on a consolidated basis was slightly down compared to the previous year, our consolidated gross margin in terms of percentage and dollars improved and our consolidated net income from continuing operations noticeably increased compared to 2024. Gross profit generated by all 4 of our business segments increased in terms of percentage, which speaks very well for our attention to efficiency and cost control. Our retail water operations continued to grow in 2025, driven by the strength of the Cayman Islands economy and historically low rainfall in our exclusive utility service area on Grand Cayman. We saw ongoing growth in population and business activity on the island, coupled with very low precipitation, which resulted in a record volume of water sold to a record number of customers in 2025. Although our Caribbean-based bulk segment revenue declined slightly this past year, primarily due to lower fuel-related charges that we pass through to our customers, we achieved higher profitability in dollars and gross profit percentage in this segment. This improvement was driven by lower cost of revenue, reflecting our focus again on operational excellence in our Bahamas and Cayman Islands bulk businesses. Our Services segment revenue decreased in 2025, primarily due to the completion of 2 major design build projects in 2024 and the lull in Hawaii project activity while awaiting the issuance of a key project permit, and this was subsequent to completion of the pilot plant testing phase of the Hawaii project in early 2025. The Services segment revenue decrease is also due to a lesser extent to a decrease in nonrecurring consulting revenue, which actually has picked back up in the last quarter. The decrease in Services segment construction and consulting revenue was partially offset by a 9% increase in recurring revenue from O&M contracts. This increase in O&M revenue was attributable to incremental revenue generated by both our PERC Water subsidiary and REC in Colorado, and it includes revenue from a new municipal client in Southern California and from additional services provided to a large federal client for the second half of last year under a contract which expires at the end of this month. Our Manufacturing segment during the year continued to improve its revenue and gross margin, which reflects the production this past year of primarily higher-margin products for nuclear power and municipal water clients as well as our continued focus on maximizing efficiency and throughput of our facility. Completion of our new 17,500 square foot manufacturing facility in the third quarter of 2025 has further enhanced efficiency and throughput and is key to growing that business segment through continued customer and product diversification. And that diversification is occurring primarily in the municipal water client or municipal section of our business. Now before getting into recent developments and our outlook for the rest of the year and beyond, I'd like to turn the call over to our CFO, David Sasnett, who will take us through the financial details for 2025. David Sasnett: Thanks, Rick. Good morning, everyone. Our 2025 revenue totaled $132.1 million, which is a slight decrease of 1% from 2024. This decrease was primarily due to decreased revenue for our Services segment as well as a modest decrease in the bulk segment revenue. And these decreases were partially -- the decrease was partially offset by revenue increases in the Retail segment and in our Manufacturing segment. Retail revenue increased 6.6% to $33.6 million due to an 8.3% increase in the volume of water sold to a record 1.09 billion gallons, and this increase resulted from significantly lower rainfalls, in fact, historically low rainfall on Grand Cayman and an approximate 7% increase in the number of customer accounts in our license area. Our bulk segment revenue decreased less than 1%, and this decrease was due to a decline in energy prices, which decreased the energy pass-through component of our rates in the Bahamas operations. The decrease in Services segment revenue was primarily due to plant construction revenue decreasing from $18.6 million in 2024 to $13.5 million in 2025, and this decrease was a result of $8.2 million of additional revenue from PERC's contract with Liberty Utilities and $1.3 million in revenue from the Red Gate contract in Grand Cayman in 2024. These contracts were both substantially completed in mid-2024. Construction revenue recognized on the Hawaii project also declined by $2.9 million in 2025 due to completion of the pilot plant testing phase of the project. These decreases in construction revenue were partially offset by construction revenue generated under new contracts. Services segment revenue generated under our O&M contracts totaled $32.1 million in 2025, which represents an increase of 9% from 2024. The increase was due to incremental revenue generated by both PERC and by REC. Our Manufacturing segment revenue increased by $1.1 million or 6% to $18.7 million as compared to $17.6 million in 2024. Our gross profit for 2025 was $48.4 million, which represents 30% of total revenue as compared to $45.6 million or 34% of total revenue in '24. And this improvement is due to increases in both the Retail and Manufacturing segment revenue. Our net income from continuing operations in 2025 was $18.6 million or $1.16 per diluted share. This compares to net income of $17.9 million or $1.12 per diluted share in 2024. Including discontinued operations, our net income attributable to Consolidated Water shareholders in 2025 was $18.3 million or $1.14 per diluted share. This compares to net income of $28.2 million or $1.77 per diluted share in 2024. Turning to our balance sheet. During the year, CW-Bahamas accounts receivable balances decreased to $20.7 million as of December 31, 2025, as compared to $28.4 million as compared to -- as of December 31, 2024. This decrease was the result of receiving significant payments in addition to current billings on CW-Bahamas delinquent accounts receivable from the WSC. As of February 28, this receivable from the WSC amounted to $22.6 million. We continue to be in frequent contact with officials of the Bahamas government, who continue to express their intention to significantly reduce CW-Bahamas delinquent accounts receivable balances. However, we are presently unable to determine if or when such reduction will occur. Our cash and cash equivalents totaled $123.8 million as of December 31, 2025, and our working capital as of that date was $141.9 million, and our stockholders' equity was $221.7 million. The working capital and cash amounts as of December 31, 2025, represent a $24.4 million increase in cash and a $9.1 million increase in working capital from the prior year-end. And as we have consistently reported on our calls, our balance sheet currently has no significant outstanding debt. Our projected liquidity requirements for the balance of 2025 include capital expenditures for existing operations of approximately $11.1 million, and this includes approximately $1 million in the first half of 2026 for a project in Bahamas. We increased our quarterly cash dividend by 27.3% to $0.14 per share beginning in the third quarter of 2025, and we paid approximately $2.3 million in dividends in January of 2026. Our liquidity requirements may also include future quarterly dividends as such dividends are declared by our Board. And we continue to evaluate how to best utilize our ample cash balance and outstanding liquidity to increase shareholder value. So this completes our financial summary for the year, and I'll turn the call back over to Rick. Frederick McTaggart: Thanks, David. Looking at our retail water business in Grand Cayman, we were pleased with the continued growth there, as David mentioned, in sales and sales volumes. And our Caribbean-based bulk water business continued to generate long-term stable recurring revenue. Demand for our water in the Cayman Islands is affected by variations in the level of tourism and rainfall primarily. And according to the figures published by the Department of Tourism Statistics and Cayman, tourist air arrivals in the Cayman Islands increased by 2.9% to approximately 450,000 in 2025 compared to the previous year, and this likely contributed to our retail sales growth. And it's interesting to note, so preliminary statistics show that January this year has also been a banner month for tourism arrivals in the Cayman Islands. So we look forward to seeing how that ultimately impacts our sales. However, also in the first couple of months of this year, the weather was much wetter with about a 280% increase in rainfall for the first 2 months of 2026. So we also expect that is impacting our sales in 2026 in the first quarter. Regarding our Cayman Water utility license, in February of last year, we received a new concession from the government that authorizes and maintains the terms of our 1990 license until a new license from OfReg is enacted. Negotiations between Cayman Water and OfReg for a new license have been more active than in previous quarters, but remain ongoing. So looking again at the Hawaii project, this past quarter, we completed -- or this past quarter, we completed 100% of the design of the seawater desalination plant for BWS, and we're focused on obtaining the remaining permits needed to allow our client to issue a notice to proceed with construction of the project. This includes actively responding -- our activities include actively responding to regulatory inquiries and coordinating with the BWS to mitigate schedule impacts. The deferral of construction activities essentially has shifted anticipated revenue recognition and associated cash flows related to the Hawaii project into future periods. We anticipate that construction of the project will recommence or will commence later this year and see the construction phase of this major project substantially adding to our revenue and earnings growth in later reporting periods. Our Construction Service segment revenue is anticipated to remain below the record we achieved in 2023 until the initiation of construction of the Hawaii project. Looking more at our Services segment. As announced this past quarter, we were awarded 2 water treatment plant construction projects, new projects including a $3.9 million drinking water plant expansion in Colorado and an $11.7 million wastewater recycling plant in Northern California. The revenue attributable to these projects is expected to be realized primarily this year, and the combined value of these projects totals obviously $15.6 million. The first project was secured by REC, our Colorado subsidiary, and this drinking water plant expansion will help us to build a resume to pursue additional design build opportunities in Colorado. As announced during the fourth quarter, our PERC Water subsidiary secured the other contract to construct a wastewater recycling plant for San Francisco Bay Area Golf Club. This innovative project, which will convert untreated wastewater into irrigation water is expected to save 36 million to 38 million gallons of potable water annually for the golf club. Because this facility will be constructed below ground, we decided to start construction of the project when the rainy season ends in Northern California to minimize construction delays. Therefore, we expect revenue from this project to be recognized primarily this year. In the meantime, we have been lining up subcontracts and ordering long lead equipment for the project. So it continues. PERC Water's customized design report or CDR program delivers comprehensive project-specific plans for water infrastructure, incorporating life cycle costs, schedule and performance metrics. These reports minimize risk and optimize plant performance for our clients by providing cost, schedule and water quality certainty and have been particularly attractive to large homebuilders and private utilities. In Arizona, PERC continues to use its CDR program to pursue several design build opportunities for developers in the Phoenix metropolitan area. As was the case with the Liberty Utilities project in Arizona a few years ago, we believe that some or all of these CDRs will ultimately lead to a design build contract for these important wastewater treatment facilities. But as I mentioned, these opportunities typically have a longer sales cycle. Regarding our manufacturing operations, in August 2025, we finished expanding our facility in Fort Pierce, Florida by adding 17,500 square feet of plant space, bringing the total manufacturing space to 47,500 square feet. This expansion allows us to handle more production volume and manage several projects at once. It's particularly well timed as there has been a significant increase in bidding activity for municipal water projects in Florida. Given the extended lead times associated with these municipal initiatives, we anticipate that they will contribute to growth in 2027. We believe that our extensive experience manufacturing large-scale nanofiltration and RO systems as well as our location in Fort Pierce, Florida, positions us well to continue growing that part of the business in the Florida market. And as reported previously, we hold an NQA-1 certification from 2 major nuclear industry companies, and we see renewed interest in U.S. nuclear power solutions. These specialized manufacturing qualifications also position us for continued growth. As we move through the year ahead, we believe our diversified business segments will continue to deliver improved results to shareholders. This includes continued growth in our retail business in Grand Cayman, our long-term stable recurring revenue from our Caribbean-based bulk water business and the growth potential of our U.S.-based manufacturing, design, build and O&M businesses. As the global demand for clean water continues to grow, our strong balance sheet enables us to move quickly on desalination and water infrastructure opportunities in the Caribbean and North America as well as any potential strategic acquisitions or partnerships. So with that, I'd like to open the call up for questions. Chloe? Operator: [Operator Instructions] The first question today comes from Gerry Sweeney with ROTH Capital. Gerard Sweeney: I wanted to ask a couple more questions on the Hawaii desal project. Just curious as to what that permit is and who's responsible for obtaining the permit. Frederick McTaggart: Well, I guess that would be all right to say it's the state historical preservation department. I think we mentioned it in the call in November. I mean that permit is required before we can put in applications for all the building permits and ground clearance permits and that sort of thing. We're making progress on it. It's just a very slow process for everybody. It's not just us. Gerard Sweeney: Got it. So is Consolidated responsible for that permit? Or is the city responsible for it? Frederick McTaggart: The client is responsible for that. And they've been dealing with all the inquiries and that sort of thing from the department. Gerard Sweeney: Got it. And once that is received, then you do have to put in some other building permits, et cetera. Is that -- did I understand that correctly? Frederick McTaggart: That's correct. Yes. Some of this permit is a prerequisite for applying for a number of other permits. That's my understanding. Gerard Sweeney: Got you. Best guess, I mean, once the historical permit is achieved, I mean, do you have any idea of how long the other permits take? Or is that sort of a little open-ended just because of the nature of permitting? Frederick McTaggart: I mean, again, my understanding is that they're a bit more straightforward. We have finished the design and so it would be a matter of getting the regulators to sign off on the various parts of that design so that we could get moving on building permits. I mean I'm just -- I'm a little reluctant. I mean, you can see what's happening because you got delayed from last year in the fourth quarter. I mean, with the stock price and that sort of thing, it's very difficult to predict these sorts of things. So that's why we said in our notes that later this year, I mean, we would expect certainly for the construction to start sometime this year. But to say exactly what quarter it is, is somewhat difficult at this point. Gerard Sweeney: No, that's understandable. I was just curious as to what are some of the other sort of milestones or steps post the historical permits. So that helps frame out when and how it all develops. So that's helpful. And then the other thing I want to talk about was just the O&M revenue that's ticked back up in the quarter. I think you mentioned a couple of project wins, but I think also another project was expiring. But that's around, I think, PERC and REC, I'm talking about, not the Caribbean. But how does that business look in pipeline and opportunity on a go-forward basis? Frederick McTaggart: There's a lot going on there, Gerry. I mean there's a couple of really big opportunities that we're chasing right now. One of them, the -- it's very competitive. I mean these are bigger O&M opportunities. We think we have certain advantages. Obviously, they're both in Southern California, and we think our presence there and our record helps us. But it's a competitive market, and we're just working through trying to get some of these. It could be big winners for us if we get these projects. Gerard Sweeney: Got it. All right. And then one last question. Obviously, the West Bay facility was completed that I think 1 million gallons a day of water. How do we -- I think it was finished in the fourth quarter last year, but how do we think about that? I mean, that adds incremental volume. I don't think it's going to be used up right out of the gate or that may be the case, but I'm just curious as to how much of that water or the 1 million gallons a day sort of spoken for are going to be used if you have a visibility on that. Frederick McTaggart: Well, I mean, last year, we used it because we had pretty big quarters. I think we look at maybe like a 5-year horizon, 5- to 10-year horizon on our asset planning. So it kind of depends on what this higher rainfall is going to do this year because we base our production capacity on peak demand, which typically occurs in December, January, February, those sort of months and then it starts getting wetter in the summer. So demand tapers off. But I mean we use that capacity, and we had to -- we put in the original 1 million gallons, I guess, about 2.5 years ago, and then we immediately started expanding it because we needed the additional capacity. If you look at our volume growth over the last 5 years, it's quite -- since post-COVID, it's quite remarkable. Operator: [Operator Instructions] The next question comes from John Bair with Ascend Wealth Advisors. John Bair: I probably ought to know this by now, but how quickly are the energy cost recovery increases reflected in your bulk services? Is that on a monthly, quarterly? How does that work? Frederick McTaggart: It's monthly. We look at the average cost for fuel and electricity every month, and then we charge the client back for that. John Bair: Okay. All right. And then the next one, you mentioned a federal contract for services that's finishing up at the end of the month, I believe it was. Is that a renewable contract? And if it is, is it something that's open for bid? Or is it over and done with? Frederick McTaggart: Yes. We bid for that back during COVID, and it's been renewed every year since. Our understanding is there were some other -- it has nothing to do with our performance or their willingness to renew with us in particular. The -- I guess the military had other things that they had to deal with on that base, and they gave it -- our understanding is that, that contract is being given to a municipal entity that's right next door to the base. So they didn't bid it out. They just -- they gave it to this public utility, municipal utility. John Bair: Okay. And then you did talk in general in your prepared remarks about project opportunities and so forth. And I was just kind of curious, so there's a lot of municipal projects that are out there. Just wondering how much is -- if you can speak to the balance between public-private opportunities versus purely the public projects. In other words, is there, for example, opportunities in data center water aspects that maybe is a bigger opportunity for you? Frederick McTaggart: Yes. I mean we're not chasing the data center stuff, honestly, John. I mean the stuff I'm talking about is kind of rock solid municipal business. So particularly in Florida, I mean, there's been changes to regulations for shallow aquifer withdrawals and that sort of thing. So any new capacity, drinking water capacity that's being built, if the cities have already exceeded their shallow water withdrawal permits and they're having to go into the deeper aquifers, which are more saline. So it gives us a big opportunity on the low-pressure RO market. I mean there's -- I mean there's a number of projects. They're all municipal. So just name a city up the East Coast of Florida, and they're all looking at expanding their production capacity for drinking water. So Pompano Beach, Delray Beach, West Palm Beach, Stuart, Port St. Lucie, all up there. There's a number of projects that are going on that give us opportunities to build the equipment. So we've made a lot of progress over the last few years working with the consulting engineers in Florida, and they really love our products and our quality, and we're getting spec-ed in on a number of these projects. John Bair: That's good to hear. That kind of leads in a little bit to my last question here. And wondering if there's any new opportunities, any new market opportunities that are addressable by your Manufacturing segment, given that you've expanded it and so forth, you're looking at any new potential market opportunities to provide equipment? Frederick McTaggart: Yes. I mean you kind of can view the municipal RO system market as sort of a renewed opportunity. I mean we hadn't gotten that much business out of that market for a number of years, and we're focused more on producing smaller equipment and assemblies and piping and that sort of thing. This larger space in Fort Pierce gives us the opportunity to participate in a much bigger way in the municipal water market and to make these large assemblies at production skids that are required for those types of plants. So that's really where we're focusing at the moment. And then there's other -- the nuclear market. I mean, there's -- we continue to make products for that market. It's a little bit more cyclical, I guess, than what we're seeing in the municipal market right now. There's just a very strong demand for that type of equipment. So that's where we're focusing our effort. John Bair: And that nuclear market, is that more domestic? Or is it global, I guess, broadly speaking? Is it pretty much... Frederick McTaggart: Yes. The 2 clients that we have, I mean, they sell domestically and globally. I don't really have that sort of number off the top of my head, but I know there's projects in the U.S., in Canada and Japan, things like that, Korea that these products are used on. Operator: All right. At this time, this concludes our question-and-answer session. I'd like to now turn the call back over to Mr. McTaggart. Sir, please go ahead. Frederick McTaggart: Yes. I'd just like to thank everybody for joining us today, and happy St. Patrick's Day, by the way. And I look forward to speaking with everybody when we release our Q1 report in May. Take care. Thank you. Operator: Thank you. Before we conclude today's call, I would like to provide the company's safe harbor statement that includes cautions regarding forward-looking statements made during today's call. The information that we have provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the company's future revenue, future plans, objectives, expectations and events, assumptions and estimates. Forward-looking statements can be identified by the use of words or phrases usually containing the words believe, estimate, project, intend, expect, should, will or similar expressions. Statements that are not historical facts are based on the company's current expectations, beliefs, assumptions, estimates, forecasts and projections for its business and the industry and markets related to its business. Any forward-looking statements made during this conference call are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, tourism and weather conditions in the areas we serve, the economic, political and social conditions of each country in which we conduct or plan to conduct business, our relationships with the government entities and other customers we serve, regulatory matters, including resolution of the negotiations for the renewal of our retail license on Grand Cayman, our ability to successfully enter new markets and various other risks as detailed in the company's periodic report filings with the Securities and Exchange Commission. For more information about risks and uncertainties associated with the company's business, please refer to the Management's Discussion and Analysis of Financial Conditions and Results of Operations and Risk Factors sections of the company's SEC filings, including, but not limited to, its annual report on the Form 10-K and quarterly reports for Form 10-Q. Any forward-looking statements made during the conference call speaks as of today's date. The company expressly disclaims any obligations or undertaking to update or revise any forward-looking statements made during the conference call to reflect any changes in its expectations with regard thereto or any changes in its events, conditions or circumstances of which any forward-looking statement is based, except as required by law. I would like to remind everyone that this call will be available for replay starting later this evening. Please refer to yesterday's earnings release for dial-in replay instructions available via the company's website at cwco.com. Thank you for attending today's presentation. This concludes the conference call. You may now disconnect.
Geopolitical conflict in Iran has driven oil prices to ~$100, raising inflation risks and complicating Fed rate cut expectations. Fed rate cut probabilities have sharply declined, with markets now pricing in a more hawkish stance and increased uncertainty.
